UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Henry L. Farrin, Jr.

v. Civil No. 15-cv-102-LM Opinion No.

Nationstar Mortgage LLC

O R D E R

Henry Farrin brings suit alleging that Nationstar Mortgage

LLC (“Nationstar”) violated New Hampshire’s Unfair, Deceptive,

or Unreasonable Collection Practices Act (RSA 358-C); the Fair

Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681b; and the Fair

Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692e.

Farrin alleges that, while serving in Afghanistan, Nationstar

sent him several letters and left him numerous voicemails in an

effort to collect on his mortgage debt, which had been

discharged in bankruptcy. Farrin also alleges that the efforts

to collect his discharged mortgage debt continued even after he

returned from Afghanistan, and that Nationstar unlawfully

accessed his credit report. Nationstar moves for summary

judgment on all claims. Farrin objects to the motion on the

grounds that material factual disputes preclude summary

judgment. Standard of Review

“The court shall grant summary judgment if the movant shows

that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(a). “A genuine dispute is one that a reasonable

fact-finder could resolve in favor of either party and a

material fact is one that could affect the outcome of the case.”

Flood v. Bank of Am. Corp.,

(1st Cir. 2015). The

court credits the evidence that supports the non-moving party

and draws all reasonable inferences in his favor. Burns v.

Johnson,

(1st Cir. 2016). Therefore, in reviewing

a motion for summary judgment, the court’s function is not “‘to

weigh the evidence and determine the truth of the matter but to

determine whether there is a genuine issue for trial.’”

(quoting Anderson v. Liberty Lobby, Inc.,

(1986)).

Background

On October 16, 2007, Henry Farrin obtained a loan of

$229,900 and signed a note with Taylor, Ben & Whitaker Mortgage

Co. as lender that was secured by a mortgage on his property in

Epsom, New Hampshire. A second lien was recorded on the

property in 2008 by Robert and Jerelyn Hill for $143,582.

2 By 2010, Farrin had experienced personal and financial

difficulties and was unable to make the mortgage payments. He

unsuccessfully sought a modification of the loan from Ocwen Loan

Servicing, LLC. He then vacated the property in March 2010 and

surrendered the property to Ocwen in October 2010. Ocwen

changed the locks on the house and put a notice in the window.1

Ocwen did not foreclose on the mortgage.

On February 7, 2012, Farrin filed for bankruptcy under

Chapter 7. He received a discharge on June 6, 2012.2 In

December 2012, Ocwen asked Farrin to waive his rights under the

1 Farrin does not provide any explanation of the content of the notice.

2 The discharge operates to discharge Farrin’s personal liability on the note, but does not affect the lender’s title interest in the property. The lender retains the right to foreclose on the mortgaged property despite the discharge of the debtor’s liability on the note. In re Ladebush, Bk. No. 11- 10763-JMD,

, at *7 (Bankr. D.N.H. Feb. 18, 2016) (citing Johnson v. Home State Bank,

(1991), and Farrey v. Sanderfoot,

(1991)). The distinction is that while personal liability for the note is discharged in bankruptcy, the lender may recover the deficiency due on a mortgage loan through an action in rem against the debtor under the mortgage, that is by foreclosure. Summers v. Fin. Freedom Acquisition LLC,

(1st Cir. 2015); In re Canning,

(1st Cir. 2013); Worrall v. Fed. Nat’l Mortg. Ass’n, No. 13-cv-330-JD,

, at *6 (D.N.H. Nov. 20, 2013). The debtor may eliminate the mortgage by surrendering the mortgaged property to the lender. Canning,

. The lender is not required to accept the surrender but cannot use the refusal as a subterfuge to coerce full payment of the loan from the debtor.

3 Servicemembers Civil Relief Act (“SCRA”) and to consent to

foreclosure.3 In response, Farrin offered Ocwen a deed to the

property in lieu of a foreclosure. Ocwen did not accept a deed

in lieu of a foreclosure because of the Hills’ lien on the

property. Ocwen apparently made no further efforts to resolve

the foreclosure issue.

Since 2007, Farrin has served as the supply sergeant for

medevac units in the New Hampshire National Guard. In April

2013, Farrin was deployed to Afghanistan; he returned in January

2014.

On May 16, 2013, while Farrin was in Afghanistan,

Nationstar became the servicer on Farrin’s mortgage. Nationstar

sent Farrin a letter on May 31, 2013, to inform him of the

change in servicers. Thereafter and until June 2015, Nationstar

sent Farrin monthly statements of his mortgage account, which

included disclaimers that the statement was not intended as an

attempt to collect a discharged debt. Nationstar also sent

3 The SCRA “provides foreclosure protections to servicemembers.” JPMorgan Chase Bank, N.A. v. Healey, No. 12- 11922-JCB,

, at *1 (D. Mass. Apr. 2, 2014). “Specifically, the SCRA provides that a ‘sale, foreclosure, or seizure of property for a breach of an obligation’ conducted while the party is in the military or during a designated period thereafter ‘shall not be valid ... except ... (1) upon a court order granted before such sale, foreclosure, or seizure; or (2) if made pursuant to an agreement [between the parties].’”

(quoting

(c)).

4 Farrin other correspondence about contact information at

Nationstar, insurance on the property, foreclosure options, tax

statements, and notices about the SCRA. Some of the notices

included disclaimers stating that the notice was an attempt to

collect a debt unless the debt had been discharged in bankruptcy

and then the notice was for informational purposes only.

In January 2014, when Farrin returned from Afghanistan, he

found “tons” of messages on his cell phone from Nationstar that

stated the call was an attempt to collect a debt. Nationstar’s

records show that the calls were for collection purposes.

Nationstar made a total of ninety-nine calls to Farrin’s cell

phone, called his office telephone fifty times, and sent him

thirty letters.4 He told Nationstar to stop contacting him, but

the communications continued. Farrin believed that Nationstar

was trying to collect the outstanding balance on the loan from

him, despite the bankruptcy discharge.

On July 31, 2014, Nationstar obtained Farrin’s consumer

credit report. Nationstar characterizes its action as a “soft

pull” of credit information, which allows it to access certain

information, such as Farrin’s current and former address and

whether he is in the military, but does not become public or

4 Nationstar disputes that the calls were for the purpose of collecting a debt and points to Farrin’s deposition testimony about the calls in which Farrin said he could not remember if anyone told him he owed Nationstar money during the calls.

5 negatively impact Farrin’s credit. Nationstar asserts that it

obtained Farrin’s credit report for “account review purposes.”

On March 25, 2015, Farrin brought suit against Nationstar.

He alleges that Nationstar’s actions, including the telephone

calls and written communications, violated RSA 358-C, the FDCPA,

and FCRA.

Discussion

Nationstar moves for summary judgment on all claims. It

asserts that that neither the FDCPA nor RSA 358-C prohibits its

communications with Farrin and that a portion of Farrin’s FDCPA

claim is time barred. Nationstar further contends that, because

it obtained Farrin’s credit reports for a permissible purpose,

it did not violate FCRA. Farrin objects on all grounds but does

not address the statute of limitations argument.5

5 Nationstar complains that Farrin’s objection did not comply with the factual statement requirement under Local Rule 56.1 and exceeded the page limit under Local Rule 7.1(a)(3). While Nationstar is correct that Farrin’s objection fails to incorporate a factual statement and his filings exceed the page limit, the court will consider Farrin’s filings despite his failure to comply with the local rules. See LR 1.3(b). Farrin is put on notice that the local rules, including page limits, apply in this case.

6 A. Mays Declaration

Nationstar submitted two declarations from O.E. “Gene”

Mays, II, one in support of its motion for summary judgment, see

doc. no. 20-2 (“first Mays declaration”) and one in support of

its reply. See doc. no. 24-2 (“second Mays declaration”).

Farrin contends that the court should disregard both

declarations because they are based on “information and belief”

and not on personal knowledge. He also argues that the court

should disregard the first Mays declaration for the additional

reason that it conflicts with Mays’s deposition testimony.

The court considers both declarations in ruling on

Nationstar’s motion for summary judgment. Although both

declarations conclude with the statement that the declaration is

true to the best of Mays’s “information and belief,” both

specifically state that the information in the declarations is

based on Mays’s personal knowledge. Therefore, the declarations

are acceptable. See HMC Assets, LLC v. Conley, No. CV 14-10321-

MBB,

, at *2 (D. Mass. Aug. 22, 2016); Rios Colon

v. United States,

(D.P.R. 2012).

Farrin also argues that the first Mays declaration

conflicts with his deposition testimony and, therefore, should

be disregarded as a “sham.” Specifically, Farrin notes that

Mays testified at his deposition that Nationstar pulled Farrin’s

credit report for “skip tracing” purposes, but stated in his

7 declaration that Nationstar pulled the report for “account

review purposes.” Farrin has not explained why Mays’s statement

in his declaration conflicts with his deposition testimony,

rather than “merely explains, or amplifies upon” the testimony.

Gillen v. Fallon Ambulance Serv.,

(1st Cir.

2002). Therefore, the court considers both declarations.

B. FDCPA

Nationstar first argues that some of its communications to

Farrin, those that occurred before March 25, 2014, cannot be

considered for purposes of the FDCPA claim because they are

barred by the one-year statute of limitations. See 15 U.S.C

§ 1692k(d). Farrin failed to respond to the limitations defense

except to say in his surreply that he “did not and does not

waive claims for FDCPA violations prior to March 25, 2014.”

Doc. no. 26 at 2. Nationstar also challenges the FDCPA claim on

the merits.

1. Statute of Limitations

Under the FDCPA, suit must be filed “within one year from

the date on which the violation occurs.” § 1692k(d); McCarthy

v. WPB Partners, LLC, No. 16-cv-081-LM,

, at *7

(D.N.H. July 26, 2016). An FDCPA claim arising from collection

letters may accrue on the date when the letter was mailed or

8 received. Simard v. LVNV Funding, LLC, No. 10-11009-NMG,

, at *3-4 (D. Mass. Sept. 9, 2011).

Farrin makes no argument of any kind to avoid the one-year

limitation period. Because his complaint was filed on March 25,

2015, communications before March 25, 2014, cannot be considered

for purposes of the FDCPA claim.6

2. Violation of the FDCPA

To succeed on a claim under the FDCPA, a plaintiff must

show that “‘(1) [he] was the object of collection activity

arising from consumer debt, (2) defendants are debt collectors

as defined by the FDCPA, and (3) defendants engaged in an act or

omission prohibited by the FDCPA.’” Jones v. Experian

Information Solutions, No. 14-10218-GAO,

, at *3

(D. Mass. July 19, 2016) (quoting Rhodes v. Ocwen Loan

6 Farrin does not contend in his objection or surreply that Nationstar’s actions constitute a course of conduct. See Devlin v. Law Offices of Howard Lee Schiff, P.C., No. 11-11902-JGD,

, at *6 (D. Mass. Sept. 25, 2012) (“District courts are not of a single view as to how the one-year statute of limitations for the FDCPA applies to a course of conduct, some of which occurred within the limitations period and some of which preceded it.” (internal quotation marks omitted)). Because Farrin does not advance that argument in his objection or surreply, the court does not address it here. See Coons v. Indus. Knife Co., Inc.,

(1st Cir. 2010) (The First Circuit has “emphasized that judges are not obligated to do a party’s work for him, ‘searching sua sponte for issues that may be lurking in the penumbra of the motion papers.’” (quoting United States v. Slade,

(1st Cir. 1992))).

9 Servicing, LLC,

(D. Mass. 2014)).

Farrin asserts that Nationstar violated the FDCPA by asserting

in communications with him that he owed a debt based on his

mortgage loan that had been discharged in bankruptcy.7

Nationstar argues that the disclaimers included in its

correspondence with Farrin preclude his FDCPA claim because the

disclaimers notified Farrin that Nationstar was not collecting a

debt.8 The disclaimers on which Nationstar relies appear in

different forms.

For example, Nationstar sent Farrin monthly “Mortgage Loan

Statements” that listed the address of the mortgaged property,

provided an “Explanation of Amounts Payable” with an “Amount

Due” by a certain date, and provided the interest rate and the

principal balance. Under a heading of “Important Messages,” was

the following:

This statement is sent for informational purposes only and is not intended as an attempt to collect, assess, or recover a discharged debt from you, or as a, [sic] or demand for payment from, any individual protected by the United States Bankruptcy Code. If this account is active or has been discharged in a bankruptcy proceeding, be advised this communication is for

7 Although Farrin does not cite the provision of the FDCPA that Nationstar violated, he appears to refer to § 1692e(2)(A). See, e.g., Lannan v. Levy & White, --- F. Supp. 3d ---,

(D. Mass. May 11, 2016).

8 To the extent Nationstar is attempting to argue that it did not violate the FDCPA because it was required to send certain communications to Farrin under the SCRA, its theory is far from clear.

10 informational purposes and is not an attempt to collect a debt. Please note, however Nationstar reserves the right to exercise its legal rights, including but not limited to foreclosure of its lien interest, only against the property securing the original obligation.

The statement provided a number to call to discontinue the

statements. At the bottom of the statement, however, is a

payment slip that directs Farrin to detach and “Return with your

Payment.” It states the total amount due and provides space to

indicate the payment to be made.

Nationstar also sent “point of contact” letters to Farrin

to assist him “with the various workout options that may be

available” and to assist with questions about his “loan status.”

The letters listed a person, address, and telephone number. The

following statement appears at the end of each letter:

If this account is active or has been discharged in a bankruptcy proceeding, be advised this communication is for informational purposes only and not an attempt to collect a debt. Please note, however, we reserve the right to exercise the legal rights only against the property securing the original obligation.

Additionally, Nationstar sent Farrin five notices for

foreclosure prevention that began by directing Farrin to “Act

Now” to contact Nationstar about foreclosure prevention options.

The notices list two options – to stay in the home and make

mortgage payments or to leave the home. At that point, however,

Farrin had already left the home and had offered a deed in lieu

of foreclosure. The notices provide a deadline, telling Farrin

11 he “must respond” by the date provided. At the bottom of each

notice in smaller print is the following statement:

This is an attempt to collect a debt and any information obtained will be used for that purpose. However, if this debt is involved in a bankruptcy or has been discharged in a bankruptcy proceeding, this communication is not an attempt to collect a debt against you and any information obtained or given will be for informational purposes only.

Nationstar contends that the disclaimers in its communica-

tions effectively notified Farrin that the communications were

not for debt collection. In support, Nationstar argues that the

validity of the disclaimers was upheld in LaCourse v. Ocwen Loan

Servicing, LLC, No. 14-cv-013-LM,

, at *9-10

(D.N.H. Apr. 7, 2015).

In LaCourse, however, Ocwen sent only two letters after

receiving notice that the plaintiffs were represented by counsel

and those letters were in response to the plaintiffs’ requests

for information from Ocwen. Id. at *10. In that context, the

disclaimer in each letter was sufficient to avoid being a

communication in connection with the collection of a debt in

violation of the FDCPA. Id.

Here, Farrin represents and Nationstar does not dispute

that it sent many letters and notices and made many calls to

Farrin about the amount of the outstanding loan. Nationstar has

not shown that the number of communications after March 24,

12 2014, is significantly reduced compared to the total.9

Nationstar does not provide any facts to show that Farrin

requested those communications from Nationstar. In fact, the

record shows that Farrin demanded that Nationstar stop

contacting him.

Under these circumstances, the effectiveness of

Nationstar’s disclaimers cannot be determined as a matter of

law. Other courts have concluded that statements and notices

about loans and amounts due, despite similar disclaimers, raise

jury questions as to whether the communications were in

“connection with the collection of any debt” under the FDCPA.10

See, e.g., Prindle v. Carrington Mortg. Servs., LLC, No. 3:13-

cv-1349-J-34PDB,

, at *15 (M.D. Fl. Aug. 16,

9 Nationstar admits that it sent monthly statements and several other types of correspondence until June 2015. Although the record does not contain a precise factual showing as to numbers, it appears that there were a significant number of communications.

10 Nationstar argues that courts which have found similar disclaimers insufficient were applying the “least sophisticated consumer” standard rather than the “unsophisticated consumer” standard used by the First Circuit. Nationstar, however, has not sufficiently explained the material differences between the standards, and courts in the First Circuit have found little or no distinction between the two standards. See In re Murray,

(Bankr. D. Mass 2016); Laccinole v. Assad, No. 14- 404 S,

, at *5 (D.R.I. Mar. 7, 2016); Forcier v. Creditors Specialty Serv., Inc., No. 13-cv-444-LM,

, at *5 (D.N.H. Nov. 17, 2014). The Supreme Court has not addressed the distinction, if one exists. See Sheriff v. Gillie,

, 1602 n.6 (2016).

13 2016); Green v. Specialized Loan Servicing, LLC, No. 15-cv-513-

jdp,

, at *4-5 (W.D. Wisc. July 21, 2016); Radney

v. Bayview Loan Servicing, LLC, No. 15-cv-9380,

,

at *3-4 (N.D. Ill. June 30, 2016). Therefore, Nationstar has

not shown that it is entitled to summary judgment on the FDCPA

claim, except as to communications that occurred prior to March

25, 2014, which are excluded from the claim.

C. RSA 358-C

Under RSA 358-C, “[n]o debt collector shall collect or

attempt to collect a debt in an unfair, deceptive or

unreasonable manner as defined in this chapter.” RSA 358-C:2.

Farrin contends that Nationstar violated RSA 358-C:2 by claiming

that Farrin still owed the discharged debt and might be liable

for additional fees. See RSA 358-C:3, VII & VIII. In support

of summary judgment, Nationstar argues that because of the

disclaimers in its communications with Farrin, those

communications did not contain any false representations about

the debt or fees.

Because RSA 358-C is the state analog of the FDCPA and New

Hampshire has little case law addressing the statute, FDCPA

cases are used to analyze claims under RSA 358-C. Dionne v.

Fed. Nat’l Mortg. Ass’n, No. 15-cv-056-LM,

, at

*9 (D.N.H. June 14, 2016). In asserting that it is entitled to

14 summary judgment on Farrin’s UDUCPA claim, Nationstar relies on

the same arguments it made in regard to its FDCPA claim. See

doc. no. 20-1 at 24. For the reasons stated above, those

arguments are unavailing.

Nationstar also relies on Pruden v. CitiMortgage, Inc., No.

12-cv-452-LM,

(D.N.H. May 23, 2014), in which

the debtor and lender entered into a forbearance agreement. The

agreement provided that the debtor would continue to receive

collection letters, which could be disregarded as long as the

forbearance payments were current. Id. at *14. The court

concluded that the agreement provided sufficient warning of the

collection letters to preclude liability under RSA 358-C:3, VII.

Unlike the parties in Pruden, Farrin and Nationstar did not

enter a forbearance agreement. Instead, Nationstar relies on

the disclaimers in its communications with Farrin to avoid the

misrepresentation charges. Given the obvious differences

between a forbearance agreement and the various disclaimers in

Nationstar’s communications, Pruden does not support

Nationstar’s position.

In this case, the number of calls, notices, and letters and

the content of those communications show that a material factual

dispute exists as to whether Nationstar’s communications were

misrepresentations “of the character, extent or amount of the

debt” or representations of increases in the debt due to fees in

15 violation of RSA 358-C:3, VII or VIII. Therefore, Nationstar is

not entitled to summary judgment on the RSA 358-C claim.

D. FCRA

Nationstar contends that Farrin cannot show a violation of

FCRA, and, even if Farrin could show a violation, he cannot show

that any such violation was willful.11 In support, Nationstar

argues that it had a permissible purpose to obtain Farrin’s

credit report under FCRA.

Under FCRA,

[a] person shall not use or obtain a consumer report for any purpose unless – (1) the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section; and (2) the purpose is certified in accordance with section 1681e of this title by a prospective user of the report through a general or specific certification.

§ 1681b(f). A permissible purpose to obtain a report includes

when the person “intends to use the information in connection

with a credit transaction involving the consumer on whom the

information is to be furnished . . . [for] review or collection

of an account of, the consumer.” § 1681b(a)(3)(A). The court

must determine whether, viewing the facts in the light most

favorable to Farrin, there is a material factual dispute both as

11 Farrin alleges that Nationstar willfully violated FCRA in violation of 15 U.S.C. § 1681n. He does not allege that Nationstar negligently violated FCRA under 15 U.S.C. § 1681o.

16 to whether Nationstar had a permissible purpose to obtain

Farrin’s credit report under FCRA and, if not, whether

Nationstar willfully violated FCRA. See, e.g., Murray v.

Indymac Bank, F.S.B., No. 04 C 7669,

, at *3

(N.D. Ill. June 13, 2005) (noting that a court should analyze

separately whether a defendant violated FCRA and whether there

is sufficient evidence of negligence or willfulness).

1. Violation of FCRA

Nationstar argues that it had a permissible purpose to

obtain Farrin’s credit report for several reasons, including

that it properly obtained Farrin’s credit information as part of

its review “of an account of . . . the consumer” as allowed

under § 1681b(a)(3)(A). Farrin argues that Nationstar did not

have a permissible purpose to obtain his credit report under

that section of FCRA.

Whether a defendant may permissibly obtain a consumer’s

credit report under § 1681b(a)(3)(A) after a bankruptcy

discharge depends on the specific circumstances of each case.

Compare Radney,

, at *4 (holding that defendant

entitled to access plaintiff’s credit report after bankruptcy

discharge where plaintiff had not yet surrendered possession of

the property and foreclosure proceedings were still ongoing at

the time of the credit pull) with Barton v. Ocwen Loan

17 Servicing, LLC, Civ. No. 12–162 (MJD/JJG),

, at

*4-5 (D. Minn. Oct. 25, 2013) (holding that defendant not

entitled to access plaintiff’s credit report where defendant

knew of discharge and had been given the name of borrower’s

bankruptcy attorney to verify the discharge). Even if

Nationstar accessed Farrin’s credit report for an impermissible

purpose, the court must still determine whether a genuine issue

of material fact exists regarding whether Nationstar willfully

violated FCRA. Because the record evidence shows that

Nationstar did not willfully violate FCRA, the court assumes

without deciding that a material factual dispute exists as to

whether Nationstar obtained Farrin’s credit report for an

impermissible purpose.12

2. Willful Violation

“Any person who willfully fails to comply with any

requirement imposed under this subchapter with respect to any

consumer is liable to that consumer” for damages, costs, and

attorneys’ fees as provided in the statute. § 1681n(a); Spokeo,

Inc. v. Robins,

(2016). Willful

12 Nationstar also asserts that it had a right to obtain Farrin’s credit report under §§ 1681b(a)(2) and 1681b(a)(3)(F). Because the parties focus their arguments as to willfulness on whether Nationstar had the right to obtain Farrin’s credit report for account review purposes under § 1681b(a)(3)(A), the court focuses its willfulness analysis on that section of FCRA.

18 violations include both intentional acts and those “taken in

‘reckless disregard’ of the statute.” Fryer v. A.S.A.P. Fire &

Safety Corp., Inc.,

(1st Cir. 2011) (quoting

Safeco Ins. Co. of Am. v. Burr,

(2007)).

Recklessness is an objective standard, and a company acts in

reckless disregard of the statute if “the action is not only a

violation under a reasonable reading of the statute’s terms, but

shows that the company ran a risk of violating the law

substantially greater than the risk associated with a reading

that was merely careless.” Safeco,

. Even though

a company’s conduct may constitute a violation of FCRA, it

cannot be a willful violation unless the conduct is “objectively

unreasonable.”

. “So long as the conduct adopted by

the company ‘could reasonably have found support in the courts,’

no willful violation exists and the reporting agency is entitled

to summary judgment as a matter of law.” Sheldon v. Experian

Info. Solutions, Inc., No. 08–5193,

, at *4 (E.D.

Pa. Sept. 28, 2010) (quoting Safeco,

n.20).

Nationstar contends that Farrin’s account remained open for

purposes of § 1681b(a)(3)(A), despite his discharge and

surrender of the property, because Farrin had an ongoing

relationship with Nationstar. In support, Nationstar states

that Farrin remained the title holder of the property, had

offered a deed in lieu of foreclosure, had not waived his rights

19 under the SCRA, and refused to verify identifying information.

Nationstar also states that it needed the credit report for

“skip tracing” to verify Farrin’s address and to determine his

military status for purposes of the SCRA. Nationstar contends

that, therefore, it was permitted to do an account review under

§ 1681b(a)(3)(A) and obtained Farrin’s credit report for a

permissible purpose.

Nationstar contends that even if it was incorrect and it

did not have a permissible purpose to obtain Farrin’s credit

report for an account review under § 1681b(a)(3)(A), its

interpretation of the statute was not objectively unreasonable

and, therefore, it did not recklessly disregard FCRA when it

obtained Farrin’s credit report.13 In support, Nationstar

asserts that its interpretation of the statute comports with the

interpretations by the courts in Saumweber v. Green Tree

Servicing, LLC, No. 13-cv-03628 (SRN/SER),

(D.

Minn. May 19, 2015), Germain v. Bank of Am., N.A., No. 13-cv-

676-bbc,

(W.D. Wisc. Nov. 7, 2014), and Levine

v. World Fin. Network Nat’l Bank,

(11th Cir.

2009); that no circuit court has found to the contrary; and that

13 Farrin contends that Nationstar willfully violated FCRA because it acted in reckless disregard of the statute, not because it intentionally violated the statute.

20 the Federal Trade Commission has not issued guidance to support

Farrin’s position.

In response, Farrin argues that Nationstar’s interpretation

of § 1681b(a)(3)(A) was objectively unreasonable. Farrin argues

that he did not have a “credit relationship” with Nationstar at

the time it obtained his credit report, which is a necessary

prerequisite for Nationstar to review Farrin’s account. Farrin

also argues that Saumweber and Germain do not support

Nationstar’s interpretation and that the law has developed since

Levine.

a. Credit Transaction

Farrin notes that § 1681b(a)(3)(A) provides that a person

may obtain a consumer report only when he does so “in connection

with a credit transaction involving the consumer.” He argues

that once his mortgage was discharged in bankruptcy, the parties

no longer had a credit relationship and, therefore, Nationstar’s

act of obtaining his credit report was not done in connection

with a credit transaction involving a consumer.

In support, Farrin cites Pintos v. Pacific Creditors Ass’n,

(9th Cir. 2010). In Pintos, the Ninth Circuit

addressed whether the defendant had obtained the plaintiff’s

credit report as a result of “a credit transaction involving the

consumer” under § 1681b(a)(3)(A). The court noted that the

21 “credit transaction” at issue arose from a towing company that

had towed the plaintiff’s car, sold it without her permission,

and then authorized the defendant to obtain the plaintiff’s

credit report to collect on a deficiency claim arising out of

charges for towing and impounding the plaintiff’s car. The

court held that the defendant did not have a permissible purpose

to obtain the plaintiff’s credit report under § 1681b(a)(3)(A)

because the credit transaction at issue did not involve the

plaintiff. The court reasoned that the claim against the

plaintiff “did not result from a transaction initiated by” the

plaintiff and, therefore, did not “involve” her for purposes of

FCRA. Id. at 676.

Here, however, Farrin voluntarily entered into the credit

transaction at issue, i.e., his mortgage loan. The factual

circumstances in Pintos are “far different” from the situation

in which a plaintiff “voluntarily entered into mortgage loans

and then failed to make payments.” Germain,

, at

*5 (distinguishing Pintos). To the extent Farrin argues that

his bankruptcy discharge terminated the parties’ credit

relationship, he offers no case law to support that assertion.

Indeed, the only court that has directly confronted that

question decided it in favor of Nationstar’s position here, and

specifically held that a discharge does not, by itself, end the

22 credit relationship between a borrower and a lender. Id. at

*5-6.

Therefore, Farrin’s argument concerning the lack of a

credit relationship between the parties is without merit. Even

if it had merit, however, Nationstar’s belief that it still had

a credit relationship with Farrin after his bankruptcy

discharge, particularly in light of Germain, cannot be described

as objectively unreasonable.

b. Case Law

Nationstar cites two recent district court cases that hold

that a defendant is entitled to access the plaintiff’s credit

report after a bankruptcy discharge. See Saumweber,

, at *3-5; Germain,

, at *5-8. It also

relies on Levine as supporting a loan servicer’s right to obtain

a borrower’s credit report even after the borrower’s account was

closed. Nationstar argues that in light of this case law and

the lack of authority to the contrary, its interpretation of

§ 1681b(a)(3)(A) was not objectively unreasonable and,

therefore, it did not recklessly disregard FCRA when it obtained

Farrin’s credit report. Farrin argues that it is objectively

unreasonable to rely on Levine in light of subsequent district

court opinions, and that Saumweber and Germain are

distinguishable.

23 In Levine, the Eleventh Circuit upheld a finding of no

willfulness where the defendant’s act of selling the plaintiff’s

credit report occurred after the plaintiff had paid his balance

and closed his account. The plaintiff argued that the defendant

committed a willful violation of FCRA because there could be no

permissible purpose to pull his credit report where his account

was closed and there was no active account for the defendant to

review. The court found the relevant language “ambiguous” on

whether the statute “contains an absolute prohibition against

the sale of credit reports to former creditors whose accounts

are closed and paid in full.”

(internal

citations and quotation marks omitted). The court further noted

the lack of circuit authority or authoritative guidance to the

contrary. See

The Eleventh Circuit decided Levine in 2009, and the

Circuit has issued no decision since Levine calling its holding

into question. Thus, Levine is still good law and Nationstar’s

reliance on it as support for a company’s right to pull a

consumer’s credit report for purposes of reviewing both open and

closed accounts is not objectively unreasonable.

There are two problems with Farrin’s argument that the law

has developed to the point where it would have been unreasonable

for Nationstar to rely on Levine. First, as discussed, Levine

is still good law. Second, Nationstar relies on more than just

24 Levine. Nationstar relies on a line of recent district court

cases in the context of a post-discharge credit pull which stand

for the proposition that a discharge, by itself, is not enough

to render a company’s post-discharge credit pull a violation of

FCRA. See, e.g., Saumweber,

, at *3-5 (holding

that post-discharge credit pull not FCRA violation where

plaintiff remained in possession of home and continued to make

payments); Germain,

, at *5-8 (holding that post-

discharge credit pull not FCRA violation where plaintiff

remained in property and offered a deed in lieu of foreclosure).

Farrin points to district court cases in which the courts

held that defendants were not entitled to access plaintiff’s

credit reports post-discharge under FCRA. See Barton,

, at *4-5; Godby v. Wells Fargo Bank, N.A.,

(S.D. Ohio 2008) (holding that defendant not

entitled to access plaintiff’s credit report after discharge

where plaintiff’s account was closed, and although plaintiff’s

name was still on the title, plaintiff had surrendered her

rights to the property). Although these cases support Farrin’s

argument, they underscore that courts look to the circumstances

of each case to determine whether a defendant is entitled to

access a plaintiff’s credit report after a bankruptcy discharge.

Here, it is undisputed that Farrin still held title to the

property and Nationstar remained the servicer. While a jury may

25 conclude that Nationstar’s post-discharge credit pull

constitutes a FCRA violation, Nationstar’s reliance on Levine

and the post-discharge line of district court cases to conclude

otherwise cannot be described as “objectively unreasonable.”

The Supreme Court has made clear that where there is

support in the case law for more than one reasonable

interpretation, a defendant cannot be liable for a willful

violation under FCRA for adopting one of those interpretations:

Where, as here, the statutory text and relevant court and agency guidance allow for more than one reasonable interpretation, it would defy history and current thinking to treat a defendant who merely adopts one such interpretation as a knowing or reckless violator. Congress could not have intended such a result for those who followed an interpretation that could reasonably have found support in the courts, whatever their subjective intent may have been.

Safeco,

n.20

For these reasons, Nationstar is not liable for a willful

violation of FCRA and is entitled to summary judgment on Count

II.

Conclusion

For the foregoing reasons, defendant’s motion for summary

judgment (document no. 20) is granted as to Count II and as to

the FDCPA claim in Count III to the extent it is based on

26 actions or conduct that occurred before March 25, 2014, and is

otherwise denied.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

October 28, 2016

cc: Scott C. Borison, Esq. D. Kyle Deak, Esq. Peter A. Holland, Esq. John C. Lynch, Esq. Thomas J. Pappas, Esq. Roger B. Phillips, Esq. Kenneth Stout, Esq.

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