Deborah Walton v. Bank of America Corporation

NONPRECEDENTIAL  DISPOSITION   To  be  cited  only  in  accordance  with  Fed.  R.  App.  P.  32.1 United States Court of Appeals For  the  Seventh  Circuit Chicago,  Illinois  60604   Submitted  June  1,  2015*   Decided  June  10,  2015       Before             JOEL  M.  FLAUM,  Circuit  Judge             FRANK  H.  EASTERBROOK,  Circuit  Judge             MICHAEL  S.  KANNE,  Circuit  Judge       No.  14-­‐‑3718   Appeal   from   the   United   States   District   Court   for   the   DEBORAH  WALTON,   Southern   District   of   Indiana,     Plaintiff-­‐‑Appellant,   Indianapolis  Division.       v.     No.  1:11-­‐‑cv-­‐‑00685-­‐‑SEB-­‐‑DML   BANK  OF  AMERICA  CORPORATION   Sarah  Evans  Barker,  Judge.   and  BANK  OF  AMERICA,  N.A.,     Defendants-­‐‑Appellees.   Order     One  part  of  the  Real  Estate  Settlement  Procedures  Act  requires  servicers  of  home   loans  to  respond  to  borrowers’  requests  for  information,  explanation,  and  correction.  12   U.S.C.  §2605(e).  The  Act  refers  to  “qualified  written  requests,”  which  we  abbreviate  to   “requests.”  When  this  suit  began,  Deborah  Walton  advanced  several  claims  against   Bank  of  America  and  affiliated  firms  (collectively  “the  Bank”),  but  all  have  been  re-­‐‑                                                                                                 *   After   examining   the   briefs   and   the   record,   we   have   concluded   that   oral   argument   is   unnecessary.   See  Fed.  R.  App.  P.  34(a);  Cir.  R.  34(f).     No.  14-­‐‑3718   Page  2   solved  or  abandoned  except  for  her  contention  under  the  Act  that  the  Bank  failed  to  re-­‐‑ spond  to  two  requests  she  made,  one  in  May  2010  and  the  other  that  November.  The   district  court  granted  summary  judgment  in  the  Bank’s  favor.  2014  U.S.  Dist.  LEXIS   42599  (S.D.  Ind.  Mar.  28,  2014).     Walton  borrowed  from  the  Bank  to  finance  two  parcels  of  real  estate.  She  paid  the   real  estate  taxes  without  the  need  for  an  escrow  account.  In  October  2009  the  Bank   (without  explanation)  increased  Walton’s  minimum  monthly  payments.  Six  months  lat-­‐‑ er,  after  Walton  protested,  the  Bank  told  her  that  she  had  fallen  roughly  $35,000  behind   in  taxes,  which  the  Bank  had  paid  on  her  behalf  and  was  now  collecting  on  top  of  the   principal  and  interest.  (Contracts  allowed  the  Bank  to  pay  any  taxes  or  other  charges   that  might  come  ahead  of  the  Bank’s  security  interests.  It  is  not  clear  whether  the   $35,000  the  Bank  sought  to  collect  represent  taxes  or  other  items,  because  as  we  explain   later  the  Bank  has  not  adequately  responded  to  Walton’s  requests.)     In  response  to  Walton’s  protest,  the  Bank  undertook  to  collect  the  money  in  60   monthly  installments  rather  than  12,  as  it  initially  had  proposed.  The  Bank  told  Walton   that  she  must  remit  $2,635  a  month;  her  monthly  principal  and  interest  had  been  $2,071.   Walton  did  not  accept  the  Bank’s  calculation  and  started  sending  monthly  checks  for   $2,182.55,  which  the  Bank  accepted  through  September  2010.  The  next  month,  however,   the  Bank  began  to  reject  her  tenders,  informing  her  that  the  payments  would  not  bring   the  loan  current  and  were  defective  for  the  additional  reason  that  they  did  not  allocate   the  money  between  the  two  loans.  That  fall  the  Bank  commenced  a  foreclosure  action  in   state  court  with  respect  to  one  of  the  properties.  Since  December  2010  Walton  has  not   made  any  payments  at  all,  and  the  Bank  has  reported  her  to  credit  agencies.     Walton  contends  (and  the  record  shows)  that  the  Bank  acknowledged  receipt  of  the   May  2010  request;  according  to  Walton,  the  Bank  never  supplied  any  information  and   did  not  correct  the  records  as  she  requested.  She  made  a  second  request  in  November   2010  (its  caption  was  “SECOND  REQUEST”),  and  again  the  Bank  acknowledged  receipt   and  promised  a  response.  But  according  to  Walton’s  affidavit,  no  response  was  forth-­‐‑ coming.  The  Bank  does  not  contend  that  it  responded  substantively  to  the  May  2010  re-­‐‑ quest,  but  it  maintains  that  it  did  respond  to  the  November  2010  request.  It  filed  with   the  district  court  a  letter,  on  a  law  firm’s  stationery,  dated  February  2,  2011.  Walton’s   affidavit  swears  that  she  had  not  seen  such  a  letter  until  it  was  produced  in  this  litiga-­‐‑ tion—and  she  also  maintains  that  it  is  substantively  inadequate.  Some  of  Walton’s  more   recent  filings  are  difficult  to  reconcile  with  the  affidavit  of  non-­‐‑receipt;  for  the  purpose   of  summary  judgment,  however,  we  must  take  the  record  in  the  light  most  favorable  to   Walton  and  assume  that  she  stands  by  the  affidavit  of  non-­‐‑receipt.     No.  14-­‐‑3718   Page  3   In  granting  summary  judgment  against  Walton,  the  district  court  made  three  princi-­‐‑ pal  rulings:  first,  that  the  May  2010  request  must  be  ignored  because  it  is  neither  men-­‐‑ tioned  in  nor  attached  to  the  complaint;  second,  that  the  February  2011  letter  adequately   dealt  with  the  November  2010  request;  and  third,  that  in  any  event  Walton  had  not  suf-­‐‑ fered  any  compensable  damages.  We  do  not  agree  with  these  rulings.     The  district  court  did  not  identify  any  rule  requiring  a  plaintiff  to  mention  all  re-­‐‑ quests  by  date  or  to  attach  all  of  them  to  a  complaint.  The  Rules  of  Civil  Procedure  es-­‐‑ tablish  a  claim-­‐‑pleading  system,  not  a  fact-­‐‑pleading  system.  See,  e.g.,  Erickson  v.  Pardus,   551  U.S.  89  (2007).  Walton’s  complaint  alleges  that  she  made,  and  the  Bank  ignored,  a   request  for  information  and  correction.  The  number  of  requests  a  customer  makes  is  not   essential  to  a  plausible  claim—and  Fed.  R.  Civ.  P.  8  requires  no  more  than  plausibility.   See  Bell  Atlantic  Corp.  v.  Twombly,  550  U.S.  544  (2007).  Details  such  as  how  many  re-­‐‑ quests  were  made,  and  the  dates  they  bore,  are  the  province  of  discovery  and  litigation-­‐‑ control  orders  such  as  those  under  Fed.  Civ.  P.  12(e)  (more  definite  statement)  or  16(b)   (scheduling  order).  Walton  alerted  the  Bank  in  discovery  to  her  two  requests—and  the   Bank  has  never  claimed  ignorance  or  confusion  about  the  nature  of  Walton’s  claims.   Nor  could  it.  After  all,  the  Bank  acknowledged  the  May  2010  request  soon  after  receiv-­‐‑ ing  it,  and  the  November  2010  request  was  captioned  “SECOND  REQUEST.”  Even   without  the  latitude  allowed  to  pro  se  plaintiffs  such  as  Walton,  this  was  enough  to  alert   the  Bank  that  it  needed  to  show  compliant  responses  to  each  of  two  requests.     The  Bank  does  not  contend  that  it  provided  a  complying  response  to  the  May  2010   request.  It  maintains  that  it  satisfied  the  November  2010  request,  but  its  evidence  falls   short  in  two  respects:  first,  the  record  does  not  show  that  the  letter  dated  February  2,   2011,  was  sent  to  Walton;  second,  that  letter  is  inadequate  even  if  sent  and  received.     The  Bank  did  not  submit  an  affidavit  from  the  law  firm  explaining  how  the  letter   was  dispatched  to  Walton  (if  indeed  it  was  sent);  instead  the  letter  came  with  a  declara-­‐‑ tion  by  a  bank  official  who  did  not  supply  any  information,  based  on  either  personal   knowledge  or  details  about  how  the  Bank  maintains  its  records,  tending  to  show  that   the  letter  had  been  sent.  Because  the  record  does  not  show  that  the  letter  was  sent,  it  is   unnecessary  to  decide  whether  the  Act  is  satisfied  by  a  response  that  is  lost  in  transit.   The  Act  says  that  the  servicer  “shall  provide”  certain  information,  12  U.S.C.  §2605(e);   we  cannot  find  any  decision  or  regulation  addressing  the  question  whether  the  word   “provide”  is  satisfied  by  mailing  a  response  that  goes  awry.  (The  question  is  not  wheth-­‐‑ er  mailing  creates  a  presumption  of  receipt,  which  it  does;  the  question  is  whether  re-­‐‑ ceipt  is  necessary  at  all.)  Since  the  record  does  not  show  mailing  or  other  delivery,  the   issue  need  not  be  pinned  down.  What’s  more,  if  receipt  is  essential,  the  record  does  not   allow  summary  judgment  for  the  additional  reason  that  Walton  has  sworn  that  she  did   No.  14-­‐‑3718   Page  4   not  receive  the  February  2011  letter.  The  Bank  denigrates  Walton’s  affidavit  as  “self-­‐‑ serving,”  but  that  is  irrelevant.  It  is  based  on  personal  knowledge,  and  the  fact  that  Wal-­‐‑ ton  is  an  interested  party  no  more  allows  her  affidavit  to  be  ignored  than  it  would  allow   the  Bank’s  evidence  to  be  ignored.  See,  e.g.,  Widmar  v.  Sun  Chemical  Corp.,  772  F.3d  457,   459–60  (7th  Cir.  2014);  Hill  v.  Tangherlini,  724  F.3d  965,  967–68  &  n.1  (7th  Cir.  2013).     Even  if  sent  and  received,  the  February  2011  letter  still  would  not  support  the  Bank’s   position,  because  it  does  not  tell  Walton  how  the  Bank  came  to  the  conclusion  that  she   owed  an  extra  $35,000.  The  letter  and  a  declaration  from  one  of  the  Bank’s  vice  presi-­‐‑ dents  assert  that  the  Bank  had  received  a  “notice”  from  a  tax  assessor  about  unpaid  tax-­‐‑ es,  but  neither  the  law  firm  nor  the  Bank  itself  sent  Walton  a  copy  of  this  notice  or  any   bill  from  any  jurisdiction.  Nor  did  the  Bank  show  that  it  has  paid  $35,000  (or  any  other   sum)  to  the  assessor.  The  Act  is  not  satisfied  by  generalities;  to  comply  with  a  request,  a   mortgage  servicer  must  provide  information  and  not  just  its  own  say-­‐‑so.  Walton  denies   that  she  owed  the  extra  $35,000;  if  it  wanted  to  collect,  the  Bank  had  to  show  that  a  valid   bill  for  items  that  could  trump  its  security  interest  was  received  and  paid.  (Walton   asked  for  a  full  escrow  statement  and  did  not  specify  other  documents  explicitly,  but   the  request  for  an  accounting  (coupled  with  her  dispute  of  the  Bank’s  claim  about  the   amount  due)  implies  a  request  for  information  about  the  sums  the  Bank  sought  to  col-­‐‑ lect.  The  law  firm’s  letter  omitted  even  a  full  escrow  analysis,  however,  asserting  that   the  Bank  had  discarded  the  annual  statement  required  by  12  U.S.C.  §2609(c);  it  told   Walton  that  she  should  look  the  information  up  herself  on  the  Bank’s  web  site.)     As  for  damages:  If  the  Bank’s  claim  to  $35,000  is  unsupported,  as  Walton  asserts,   then  all  the  late  fees  the  Bank  has  assessed  (or  collected  from  Walton’s  monthly  checks),   and  any  fees  (including  attorneys’  fees)  Walton  has  incurred  in  the  foreclosure  litiga-­‐‑ tion,  could  in  principle  be  awarded  as  damages.  The  district  court  thought  that  because   some  of  these  fees  predated  the  November  2010  request,  Walton  had  failed  to  show  loss.   But  many  of  these  charges  post-­‐‑date  the  May  2010  request.  And  it  is  not  clear  what  to   make  of  other  losses  Walton  may  have  incurred.  If  the  Bank  had  provided  timely  and   adequate  information,  would  Walton  have  continued  to  make  payments  after  December   2010?  Would  the  information  have  led  the  Bank  to  conclude  that  Walton’s  monthly   payments  of  $2,182.55  were  adequate?  Would  the  Bank  have  refrained  from  reporting   delinquencies  that  (Walton  maintains)  damaged  her  in  other  ways,  such  as  causing  her   to  bear  more  onerous  terms  to  purchase  other  parcels?  The  Act  authorizes  “actual  dam-­‐‑ ages,”  12  U.S.C.  §2605(f)(1)(A),  a  phrase  that  implies  compensation  for  any  loss  proxi-­‐‑ mately  caused  by  a  violation.  It  also  authorizes  additional  damages  of  up  to  $2,000  for  a   “pattern”  of  violations,  §2605(f)(1)(B),  and  a  judge  might  find  a  pattern  in  the  Bank’s   failure  to  respond  adequately  (or  at  all)  to  Walton’s  two  letters.  She  may  or  may  not  be   No.  14-­‐‑3718   Page  5   able  to  prove  quantifiable  loss,  but  the  record  does  not  permit  an  adverse  decision  on   summary  judgment.     The  judgment  with  respect  to  claims  resting  on  the  Act  is  vacated,  and  the  case  is   remanded  for  proceedings  consistent  with  this  order.  Walton  has  abandoned  her  other   claims,  so  the  judgment  otherwise  is  affirmed.