FILED
NOT FOR PUBLICATION
APR 3 2020
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
VERL A. BRANTNER, Estate of, Nos. 18-35983
19-35316
Plaintiff-Appellee,
D.C. No. 2:17-cv-00582-TSZ
v.
OCWEN LOAN SERVICING LLC, a MEMORANDUM*
Delaware limited liability company,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Washington
Thomas S. Zilly, District Judge, Presiding
Argued and Submitted March 6, 2020
Seattle, Washington
Before: IKUTA and R. NELSON, Circuit Judges, and OLIVER,** District Judge.
Ocwen Loan Servicing, LLC (“Ocwen”) appeals a jury verdict holding it
liable to the Estate of Verl Brantner (“the Estate”) for violations of the Washington
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Solomon Oliver, Jr., United States District Judge for
the Northern District of Ohio, sitting by designation.
Consumer Protection Act (“CPA”). We have jurisdiction under 28 U.S.C. § 1291,
and we reverse and remand.
As a matter of law, Ocwen did not violate the three provisions of the
Washington Consumer Loan Act (“CLA”) on which the Estate based its per se
CPA claim. See Leingang v. Pierce Cty. Med. Bureau, Inc., 930 P.2d 288, 297
(Wash. 1997) (en banc). First, even assuming the Estate is a “borrower” for
purposes of the CLA,1 section 31.04.290(1)(c) of the Revised Code of Washington
imposes duties on loan servicers who require borrowers to make payments (in
addition to their loan payments) that are held in an escrow account, and then used
by the loan servicer “for payment of insurance, taxes, and other charges with
respect to the property.” When read in context and according to its plain language,
this provision is inapplicable to Ocwen’s receipt of insurance proceeds from an
insurer. See Lake v. Woodcreek Homeowners Ass’n, 243 P.3d 1283, 1288 (Wash.
2010) (en banc) (holding that statutory interpretation requires close adherence to
the statute’s plain meaning).
1
We reject Ocwen’s argument that the Estate does not qualify as a
“borrower” for purposes of the CLA and therefore lacks constitutional standing.
Without deciding the statutory question, we conclude that the Estate adequately
alleged that it suffered a concrete injury traceable to Ocwen’s actions that would be
redressed by a favorable decision. See Spokeo, Inc. v. Robins, 136 S. Ct. 1540,
1547 (2016). Therefore, the Estate had constitutional standing to bring its per se
CPA claim based on violations of the CLA.
2
Likewise, section 31.04.290(1)(e) of the Washington Code, which requires a
loan servicer to “[p]romptly correct any errors and refund any fees assessed to the
borrower resulting from the servicer’s error[s],” is inapplicable to Ocwen’s failure
to make a timely insurance claim or to apply insurance proceeds to the balance of
the loan expeditiously. In context, the statutory provision refers to corrections and
refunds of fees imposed on the borrower, not to a loan servicer’s mistakes in
handling insurance policies it obtained to protect its collateral.
Finally, assuming without deciding that a violation of section 208-620-
900(3)(c) of the Washington Administrative Code (the regulation implementing
section 31.04.290(1)(b) of the Revised Code of Washington) could constitute a per
se violation of the CPA, it also does not apply to Ocwen’s conduct. In context, the
regulation requires a loan servicer to notify the borrower if the loan servicer
receives a payment from the borrower but does not credit it to the borrower’s
account, and instead places it in a suspense account. See, e.g., RCW
§ 31.04.290(1)(b) (stating that this obligation applies to payments received “at the
address where the borrower has been instructed to make payments,” raising the
inescapable inference that such payments are from the borrower). This duty does
not apply to the loan servicer’s receipt of insurance proceeds from an insurer.
3
Because the three provisions of the CLA that served as the basis for the
Estate’s per se CPA claim are inapplicable as a matter of law to Ocwen’s handling
of the insurance claim and proceeds, the district court erred in allowing the Estate’s
CPA claim to proceed to the jury on a per se theory. This error was not harmless.
At trial, the Estate did not argue or present evidence showing that the public has an
interest in the parties’ dispute, which is necessary to satisfy the “public interest”
element of a stand-alone CPA claim. See Hangman Ridge Training Stables, Inc. v.
Safeco Title Ins. Co., 719 P.2d 531, 537 (Wash. 1986) (en banc). Rather than
present evidence showing a practice that “injured other persons” or “had the
capacity to injure other persons,” RCW § 19.86.093(3), the Estate sought to
establish the public-interest element exclusively by proving that Ocwen violated
the CLA, which per se satisfies the public-interest element. Thus, it is not “‘more
probable than not’ that a properly instructed jury ‘would have reached the same
verdict’”—that Ocwen violated the CPA—if the district court had not allowed the
Estate’s per se theory to go forward. Frost v. BNSF Ry. Co., 914 F.3d 1189, 1194
(9th Cir. 2019) (quoting Galdamez v. Potter, 415 F.3d 1015, 1025 (9th Cir. 2005)).
Accordingly, we must reverse and remand for a new trial so that a jury may
determine whether Ocwen violated the CPA without reliance on a per se theory
based on violations of the CLA.
4
Because we reverse the jury verdict, we also reverse the district court’s
award of attorneys’ fees and its award of treble damages. RCW § 19.86.090.
REVERSED AND REMANDED.
5