August 23, 2019

Tenth Circuit: Genuine Issue of Material Fact Existed as to Whether Plaintiff Suffered Emotional Damages Because of Defendant Loan Servicers’ Actions

The Tenth Circuit published its opinion in Llewellyn v. Allstate Home Loans, Inc. on Thursday, March 28, 2013.

Plaintiff Glen Llewellen purchased property located in Aurora, Colorado. In connection with this purchase, Plaintiff executed a note with Allstate Home Loans. The loan was funded by Allstate’s subsidiary, Equity Pacific Mortgage, Inc., (“EPMI”). Plaintiff timely made his first monthly payment. Shortly thereafter, Nomura Credit and Capital, Inc. (“NCCI”) purchased the loan and transferred the servicing rights to Ocwen. On the date of the transfer, Plaintiff’s loan was current.

Prior to the service transfer to Ocwen, Plaintiff initiated the process of refinancing the loan. Plaintiff signed the refinance documents on June 1, 2006, but did not advise the closing agent that the servicing rights had been transferred to Ocwen. Plaintiff then spoke with an Ocwen representative on June 5 and incorrectly informed Ocwen that his loan had been refinanced—at the time, he had not yet delivered the funds to the closing agent. Two days later, Plaintiff delivered the funds he owed to close the transaction.

On June 14, the closing agent wired the refinancing payoff funds to Washington Mutual Bank, identifying EPMI as the beneficiary. EPMI wired the funds to Allstate on July 11. From there, it remains unclear what became of the funds. It is undisputed, however, that neither Ocwen nor NCCI ever received the payoff funds.

Ocwen sent Plaintiff a past-due notice on the loan and a letter discussing foreclosure and its alternatives. Ocwen then provided a negative credit report regarding Plaintiff to a credit reporting agency (“CRA”).

Plaintiff called Ocwen and informed their representative his loan had been refinanced and his new loan was being serviced by Washington Mutual. The representative informed Plaintiff that Ocwen had not received any payoff funds and advised him to speak with Washington Mutual to obtain details about the status of the loan. Ocwen sent Plaintiff another past due notice and issued a foreclosure referral to the law firm of Castle Meinhold & Stawiarski, LLC (“CMS”).

After receiving the foreclosure referral from Ocwen, CMS sent a letter to Plaintiff informing him that CMS had been retained to commence foreclosure proceedings against the property.

Plaintiff sent a fax to CMS with a copy of a HUD settlement statement showing that EPMI was to receive the refinancing funds, and a letter from Washington Mutual to Plaintiff stating that if OCWEN was to be paid off and was not, please contact the closing agent for research on the payoff. CMS forwarded the information to Ocwen.

Over the course of the following months, Plaintiff’s loan was transferred to NCC Servicing, and Ocwen continued to file negative credit reports regarding Plaintiff. Plaintiff’s credit report was not reversed, in spite of assurances that it would be addressed.

Glen Llewellyn filed this action asserting a Fair Debt Collection Practices Act claim, a Fair Credit Reporting Act claim, and a state law outrageous conduct claim against Ocwen and Nomura Credit and Capital (the “Ocwen Defendants”) based on their alleged credit reporting inaccuracies, and asserting an FDCPA and an outrageous conduct claim against Castle Meinhold & Stawiarski in connection with the foreclosure actions it took against Plaintiff. The district court granted summary judgment for the Defendants on each of Plaintiff’s claims. Plaintiff appealed, arguing summary judgment was inappropriate on his Fair Credit Reporting Act (“FCRA”) and Fair Debt Collection Practices Act (“FDCPA”) claims.


Plaintiff alleges the Ocwen Defendants violated § 1681s-2(b) of the FCRA. Under this section, a furnisher of information who has received notice of a dispute from a CRA is required to: (1) investigate the disputed information; (2) review all relevant information provided by the CRA; (3) report the results of the investigation to the CRA; (4) report the results of the investigation to all other CRAs if the investigation reveals that the information is incomplete or inaccurate; and (5) modify, delete, or permanently block the reporting of the disputed information if it is determined to be inaccurate, incomplete, or unverifiable. Pinson v. Equifax Credit Info. Servs., Inc., 316 F. App’x 744, 750 (10th Cir. 2009).

The district court granted summary judgment to the Ocwen Defendants, concluding Plaintiff had failed to provide evidence of actual damages, either economic or emotional, or willfulness, to support his FCRA claim.

A. Economic Damages

Plaintiff argued he suffered economic damages as a result of the Ocwen Defendants’ alleged violation of the FCRA. The record showed that Plaintiff’s credit score dropped three points during these events. Plaintiff’s allegations that his credit score dropped over 100 points as a result of Ocwen’s actions were conclusory allegations and did not create a genuine issue of material fact. Additionally, Plaintiff provided no evidence he had applied for, and been denied, additional loans. Accordingly, the district court’s grant of summary judgment in favor of the Ocwen Defendants was affirmed on this basis.

B. Emotional Damages

Plaintiff alleged that, as a result of the Defendants’ actions, his health began to rapidly deteriorate.

Plaintiffs who rely on their own testimony to establish emotional harm must “explain [their] injury in reasonable detail and not rely on conclusory statements. Bagby v. Experian Info. Solutions, Inc., 162 F. App’x 600, 605 (7th Cir. 2006). An injured person’s testimony alone may suffice to establish damages for emotional distress provided he reasonably and sufficiently explains the circumstances surrounding the injury.

Viewing Plaintiff’s affidavit in the light most favorable to him and drawing  all reasonable inferences in his favor, the Tenth Circuit concluded Plaintiff provided sufficient evidence he suffered emotional damages as a result of the Ocwen Defendants’ actions. His affidavit created a genuine dispute as to whether the Ocwen Defendants’ actions caused him to suffer emotional damages.

C. Willful Violation

Plaintiff contended he was entitled to statutory and punitive damages under 15 U.S.C. § 1681n because the Ocwen Defendants willfully violated the FCRA. The Tenth Circuit concluded that, at most, Plaintiff offered evidence that the Ocwen Defendants negligently violated their obligations, which was insufficient to support a claim.


A. Claims Against Ocwen Defendants

Plaintiff alleged the Ocwen Defendants violated the FDCPA by communicating or threatening to  communicate to CRAs false information concerning his credit worthiness after being informed that the debt had been paid off and by failing to communicate the debt was in dispute after Plaintiff notified them of this fact.

The FDCPA applies only to “debt collectors.” Because the Ocwen Defendants acquired Plaintiff’s loan on May 15, 2006, when it was undisputedly current, they are not considered debt collectors under the FDCPA. The Tenth Circuit found no basis from which to conclude the Ocwen Defendants qualified as debt collectors under the FDCPA.

B. Claims Against CMS

Plaintiff’s FDCPA claim against CMS is barred by the one-year statute of limitations.

Order granting summary judgment to the Ocwen Defendants on Plaintiff’s FCRA claim based on his alleged emotional damages REVERSED and REMANDED for further proceedings. The district court’s order is otherwise AFFIRMED.

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