United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT June 28, 2007
Charles R. Fulbruge III
Clerk
No. 04-60526
CYNTHIA BROWN,
Plaintiff-Counter Defendant-Appellant,
versus
JOHN C. MORRIS, III, Etc.; ET AL.,
Defendants,
JOHN C. MORRIS, III, also known as Jay,
Both in his individual and official capacity;
MORRIS AND ASSOCIATES,
Defendants-Appellees,
ABN AMRO MORTGAGE GROUP INC.,
Defendant-Counter Claimant-Appellee.
Appeal from the United States District Court
for the Southern District of Mississippi
(1:00-CV-498-GuRo)
Before SMITH, BARKSDALE, and DENNIS, Circuit Judges.
PER CURIAM:*
A jury found against Cynthia Brown on her claims against ABN
AMRO Mortgage Group, Inc., and John Morris and his law firm, Morris
& Associates (collectively, Morris), for, inter alia, violation of
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.
(FDCPA). Brown primarily contests the denial of her post-verdict
motion for judgment as a matter of law (JMOL). AFFIRMED.
I.
In 1993, Brown executed a promissory note and deed of trust to
finance her home in Gulfport, Mississippi. The note was for
$72,350 (payable monthly, with a final payment due 1 January 2001);
it was eventually assigned to Atlantic Mortgage & Investment
Corporation (AMIC). On 18 November 1999, ABN AMRO purchased all of
AMIC’s stock; the two corporations merged on 14 January 2000. ABN
AMRO, as the surviving corporation, became the holder and servicer
of Brown’s note.
Between 1998 and 2000, Brown was frequently late with her
monthly note payments; she made none after the payment due 1
February 2000. Accordingly, in August 2000, ABN AMRO engaged
Morris to foreclose on Brown’s home. Morris took steps toward
completing a non-judicial foreclosure, and a foreclosure sale was
scheduled for 27 October 2000. Defendants, however, voluntarily
ceased foreclosure efforts on that date.
Brown filed this action that October. At trial in 2004 she
asserted, inter alia: claims under the FDCPA and Real Estate
Settlement Procedures Act, 12 U.S.C. § 2601 et seq. (RESPA); and
state-law claims for, inter alia, negligence, breach of contract,
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and intentional infliction of emotional distress. ABN AMRO
counterclaimed for the amount owed under the note.
At the close of the evidence, the district court granted JMOL:
in favor of ABN AMRO and Morris on Brown’s intentional-infliction-
of-emotional-distress claim; and in favor of ABN AMRO on the FDCPA
claim, some of the RESPA claims, and its counterclaim, subject to
the jury’s finding the amount owed.
Subsequently, for all remaining claims, including under the
FDCPA against Morris, the jury found for defendants and awarded ABN
AMRO approximately $97,000 on its counterclaim. Brown’s post-trial
motions for JMOL, or in the alternative, a new trial and
remittitur, were denied.
II.
Primarily at issue are the district court’s JMOL rulings. In
the light of these rulings’ not being erroneous, the denial of the
alternative motion for a new trial or remittitur is also upheld.
Also at issue is whether the district court erred: in
permitting ABN AMRO to pursue its counterclaim; in its jury
instructions; and in permitting testimony about settlement
discussions. To the extent Brown raises issues regarding her
negligent-infliction-of-emotional-distress claim, we do not
consider them; Brown voluntarily dismissed that claim. Similarly,
we do not consider her inadequately-briefed contentions regarding
discovery rulings. Despite Brown’s pro se status, these claims are
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waived. See FED. R. APP. P. 28(a)(9)(A); Grant v. Cuellar, 59 F.3d
523, 524 (5th Cir. 1995).
A.
Brown contests the district court’s close-of-the-evidence and
post-verdict JMOL rulings. A JMOL ruling is reviewed de novo.
E.g., Huss v. Gayden, 465 F.3d 201, 205 (5th Cir. 2006). JMOL is
proper when “a party has been fully heard on an issue during a jury
trial and the court finds that a reasonable jury would not have a
legally sufficient evidentiary basis to find for the party on that
issue”. FED. R. CIV. P. 50(a)(1) (as amended effective 1 December
2006; stylistic changes only, see advisory committee’s note).
“[A]ll reasonable inferences [are made] in favor of the nonmoving
party”. Huss, 465 F.3d at 205.
1.
For her FDCPA claims, Brown contests: the close-of-the-
evidence JMOL for ABN AMRO; and the post-verdict JMOL-denial.
a.
In granting JMOL to ABN AMRO on Brown’s FDCPA claims at the
close of the evidence, the district court held: ABN AMRO acquired
Brown’s mortgage by merger, rather than by transfer or assignment;
and, accordingly, it was not an FDCPA debt collector, pursuant to
15 U.S.C. § 1692a(6)(F)(iii) (exempting from the definition any
person conducting collection activities “concern[ing] a debt which
was not in default at the time it was obtained by such person”).
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Brown contends that exemption is inapplicable, maintaining ABN AMRO
“obtained” her mortgage while it was in default.
Because the FDCPA does not define the term “obtained”, we may
look to the act’s legislative history in interpreting it. See,
e.g., Goswami v. Am. Collections Enter., Inc., 377 F.3d 488, 492-93
(5th Cir. 2004). “The Senate Report accompanying the FDCPA
explained that the purpose of the act was ‘to protect consumers
from a host of unfair, harassing, and deceptive debt collection
practices without imposing unnecessary restrictions on ethical debt
collectors.’” Peter v. GC Servs. L.P., 310 F.3d 344, 351-52 (5th
Cir. 2002) (quoting S. REP. NO. 95-382 (1977), at 1-2, reprinted in
1977 U.S.C.C.A.N. 1695, 1696). That report, inter alia:
“intend[ed] the term ‘debt collector[]’ ... to cover all third
persons who regularly collect debts for others”, S. REP. NO. 95-382,
at 3; and stated “[t]he primary persons intended to be covered are
independent debt collectors”, id.
Along that line, our court has at least implicitly interpreted
“obtained” to be synonymous with “assigned”. See Perry v. Stewart
Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (“The legislative
history of section 1692a(6) indicates conclusively that a debt
collector does not include the consumer’s creditors, a mortgage
servicing company, or an assignee of a debt, as long as the debt
was not in default at the time it was assigned.”).
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ABN AMRO, a mortgage company, was not specifically assigned
Brown’s mortgage for debt-collection purposes. Rather, ABN AMRO
acquired it through its merger with Brown’s previous mortgage
company. Accordingly, ABN AMRO did not “obtain” her mortgage while
it was in default.
b.
The jury found Morris was not a “debt collector” pursuant to
the FDCPA. It defines a “debt collector” as “any person who uses
any instrumentality of interstate commerce or the mails in any
business the principal purpose of which is the collection of debts,
or who regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due
another”. 15 U.S.C. § 1692a(6). Whether a party “regularly”
attempts to collect debts is determined, of course, by the volume
or frequency of its debt-collection activities. See Garrett v.
Derbes, 110 F.3d 317, 318 (5th Cir. 1997).
Morris testified he is involved primarily in non-judicial
foreclosures. Brown contends: a non-judicial foreclosure is per
se FDCPA debt collection; and, accordingly, Morris is per se an
FDCPA debt collector.
Brown’s contention, however, ignores § 1692a(6)’s distinction
between debt collection and enforcement of a security interest.
See § 1692a(6) (“[f]or the purpose of section 1692f(6) of this
title, [‘debt collector’] also includes any person who uses any
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instrumentality of interstate commerce or the mails in any business
the principal purpose of which is the enforcement of security
interests”); Kaltenbach v. Richards, 464 F.3d 524, 527 n.3 (5th
Cir. 2006) (acknowledging this distinction). Consistent with this
distinction, our court has at least implicitly recognized that a
foreclosure is not per se FDCPA debt collection. See Kaltenbach,
464 F.3d at 527 (where defendant initiated an executory-process
foreclosure on plaintiff’s home, our court stated the issue as
“whether [defendant] is subject to § 1692g if he satisfies the
general definition of a debt collector, even though he was merely
enforcing a security interest in his dealings with [plaintiff]”).
Accordingly, Morris is not per se an FDCPA debt collector.
2.
Brown challenges the JMOL rulings against her remaining RESPA,
negligence, and breach-of-contract claims. Regarding the close-of-
the-evidence JMOL for ABN AMRO on some of her RESPA claims, Brown
does not show the district court erred in concluding, pursuant to
24 C.F.R. § 3500.21(d)(1)(i), ABN AMRO was not required to provide
her with a post-merger notice of the transfer of servicing rights.
Further, Brown fails to point to adequate record evidence
establishing she was entitled to a verdict on her negligence,
breach-of-contract, and remaining RESPA claims.
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B.
Next, Brown maintains the district court erred in granting ABN
AMRO leave to amend to pursue its counterclaim because, inter alia,
the district court lacked jurisdiction over it. Challenges to
subject-matter jurisdiction are reviewed de novo, e.g., Crockett v.
R.J. Reynolds Tobacco Co., 436 F.3d 529, 531 (5th Cir.), cert.
denied, 126 S. Ct. 2945 (2006); leave-to-amend rulings, for abuse
of discretion, e.g., Triad Elec. & Controls, Inc. v. Power Sys.
Eng’g, Inc., 117 F.3d 180, 192 (5th Cir. 1997).
Needless to say, ABN AMRO’s counterclaim involves many of the
facts relevant to Brown’s other claims, including: Brown’s rights
and obligations under the note; her failure to make payments; and
defendants’ efforts to obtain payment. Accordingly, the district
court had supplemental jurisdiction over the counterclaim and did
not abuse its discretion in allowing it to be asserted. See 28
U.S.C. § 1367; Plant v. Blazer Fin. Servs., Inc., 598 F.2d 1357,
1364 (5th Cir. 1979) (holding, in truth-in-lending case, a state
debt-collection counterclaim was compulsory because “the obvious
interrelationship of the claims and rights of the parties, coupled
with the common factual basis of the claims, demonstrates a logical
relationship between the claim and counterclaim”).
C.
Brown next challenges the jury instructions. Properly
challenged instructions are reviewed for abuse of discretion.
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E.g., Fiber Sys. Int’l, Inc. v. Roehrs, 470 F.3d 1150, 1158 (5th
Cir. 2006). To establish error, the challenging party must first
show the instruction as a whole “creates substantial doubt as to
whether the jury was properly guided”. Green v. Adm’rs of the
Tulane Educ. Fund, 284 F.3d 642, 659 (5th Cir. 2002). Even if the
instruction was erroneous, we will not reverse if it “could not
have affected the outcome of the case”. Id. Further, a party
challenging the failure to include a requested instruction must
show it properly states the law. E.g., Russell v. Plano Bank &
Trust, 130 F.3d 715, 719 (5th Cir. 1997).
For the first time on appeal (mandating plain-error review),
Brown asserts error in the jury’s being instructed that,
“[o]rdinarily, the mere activity of foreclosing ... under a deed of
trust is not the collection of a debt within the meaning of the
[FDCPA] unless other actions are taken beyond those necessary to
foreclose under the deed of trust, and were taken in an effort to
collect a debt”. As discussed supra, a non-judicial foreclosure is
not per se FDCPA debt collection. Brown fails to show this
instruction “creates substantial doubt as to whether the jury was
properly guided”. Green, 284 F.3d at 659. There was no reversible
plain error. See Fiber Sys., 470 F.3d at 1158.
Brown next maintains the district court erred in refusing her
requested FDCPA instructions. As discussed supra, Brown has not
established that a reasonable jury could not have found that Morris
9
was not an FDCPA debt collector. Accordingly, Brown’s requested
instructions, which did not pertain to that threshold
determination, “could not have affected the outcome of the case”.
Green, 284 F.3d at 659.
Further, Brown contends the jury should have been instructed
that, under Mississippi law, Morris owed her a trustee’s heightened
duty of care as to all foreclosure-related matters. Brown fails,
however, to provide relevant authority for such an instruction.
Finally, Brown asserts the contributory-negligence and
mitigation-of-damages instructions were erroneous. These
instructions, however, “could not have affected the outcome of the
case”, id., because the jury found no negligence, or FDCPA or RESPA
violations, by defendants.
D.
Brown contends the trial court improperly permitted Morris to
testify about settlement discussions, in violation of Federal Rule
of Evidence 408. Evidentiary rulings are reviewed for an abuse of
discretion. E.g., Hodges v. Mack Trucks, Inc., 474 F.3d 188, 198
(5th Cir. 2006); see FED. R. EVID. 103. An erroneous evidentiary
ruling is reversible error only if it affected substantial rights
of the complaining party. E.g., Hodges, 474 F.3d at 199; see FED.
R. EVID. 103(a).
Morris’ testimony was: “[T]o this day in every discussion I
have had with Ms. Brown she has insisted either through her
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attorneys or personally that she was not going to pay for this
house”. Brown fails to show its admission affected her substantial
rights. The testimony does not refer to settlement discussions.
Further, the district court subsequently instructed the jury it was
not to consider Morris’ reference to statements made through
attorneys.
III.
For the foregoing reasons, the judgment is
AFFIRMED.
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