Kevin Prescott v. Seterus, Inc. ( 2017 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 16-15370
Non-Argument Calendar
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D.C. Docket No. 0:13-cv-62338-BB
KEVIN PRESCOTT,
Plaintiff-Appellant,
versus
SETERUS, INC.,
Defendant-Appellee.
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Appeal from the United States District Court
for the Southern District of Florida
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(April 11, 2017)
Before ED CARNES, Chief Judge, JORDAN and ROSENBAUM, Circuit Judges.
PER CURIAM:
Seterus, Inc. is Kevin Prescott’s mortgage servicer. After Prescott defaulted
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on his mortgage in August 2012, Seterus began preparing to initiate foreclosure
proceedings against him. Prescott then asked Seterus to reinstate his mortgage as
permitted by the security instrument.
Seterus sent Prescott a letter informing him of the amount he would have to
pay to reinstate his loan. Included in the amount due were $1,125 in incurred
attorney’s fees and $3,175 in “estimated” attorney’s fees. Prescott paid the
reinstatement amount and Seterus later repaid him the estimated fees because they
were not incurred before the mortgage was reinstated.
Prescott sued Seterus under the federal Fair Debt Collection Practices Act
(“Federal Act”) and the Florida Consumer Collection Practices Act (“Florida
Act”). He claimed that charging him the estimated fees violated the federal and
state acts because he was not obligated under the mortgage to pay estimated
expenses, only actual ones. The district court granted summary judgment to
Seterus. We reversed. Prescott v. Seterus, Inc., 635 F. App’x 640 (11th Cir.
2015). We concluded that the least sophisticated consumer would not have
understood the mortgage instrument to obligate Prescott to pay Seterus’
“estimated” legal expenses. Id. at 644–45.
We based that conclusion, in part, on the fact that the mortgage instrument
used past-tense language to describe the expenses — including attorney’s fees —
that Precott could be required to pay. Id. The contract obligated him to pay only
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those fees “incurred” or “disbursed” by Seterus for “services performed in
connection with [his] default.” Id. We said that Seterus did violate the Federal
Act. Id. at 643.
As to the Florida Act, establishing liability under that statute requires a
showing of actual knowledge on the lender’s part. Id. at 646. Because the district
court had not yet considered whether the record showed a genuine dispute of
material fact as to Seterus’ actual knowledge, we remanded the case to the district
court to consider that question. Id.
On remand, the district court awarded summary judgment to Prescott on his
Federal Act claim, but granted summary judgment to Seterus on Prescott’s Florida
Act claim. It concluded that the evidence in the record would not support a jury’s
conclusion that Seterus actually knew that its behavior was prohibited by the
Florida Act. This is Prescott’s appeal from the judgment entered against him on
his Florida Act claim.
“We review a district court’s grant of summary judgment de novo.” Dolphin
LLC v. WCI Cmtys., Inc., 715 F.3d 1243, 1247 (11th Cir. 2013). “The moving
party bears the burden of establishing the absence of a genuine issue of material
fact and that it is entitled to judgment as a matter of law.” Id. In determining
whether it has met that burden, “we review the evidence and all factual inferences
therefrom in the light most favorable to the non-moving party, and resolve all
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reasonable doubts about the facts in favor of the non-movant.” Kingsland v. City of
Miami, 382 F.3d 1220, 1226 (11th Cir. 2004).1
The Florida Act requires that a plaintiff establish that a creditor had actual
knowledge that “the debt is not legitimate” or that “the right [the creditor is
seeking to enforce] does not exist.” Fla. Stat. § 559.72(9). It does not require that,
in every case, the creditor know that the Florida Act forbids its conduct. That
being said, it may be that a right does not exist because the Florida Act says so.
But a purported debt could also be “illegitimate” because no debt-creating
instrument currently obligates the debtor to pay it. See Read v. MFP, Inc., 85 So.
3d 1151, 1155 (Fla. 2d DCA 2012) (“Thus, for example, a plaintiff may establish a
violation of section 559.72(9) by showing that the debt collector . . . attempted to
collect a debt that had already been satisfied.”). In that case, the defendant would
not have to know what the Florida Act says to know that the debt was illegitimate.
If the defendant knew that no instrument obligated the debtor to pay the purported
debt, that would be sufficient to create liability under the Florida Act. To the
extent that the district court concluded otherwise, it was mistaken.
Here, Prescott contends that Seterus violated the Florida Act by trying to
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Seterus contends that Prescott lacked standing because it refunded the $3,175 in
estimated legal fees that it collected, leaving Prescott unable to show an injury in fact. It is
mistaken. Prescott was deprived of the use of his money for at least some period of time. That is
sufficient to establish an injury in fact. See Koziara v. City of Casselberry, 392 F.3d 1302, 1305
(11th Cir. 2004) (“An injury in fact cannot be an abstract injury. . . . A plaintiff must point to
some type of cognizable harm, whether such harm is physical, economic, reputational,
contractual, or even aesthetic.”) (emphasis added) (citations omitted).
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collect fees that it knew were not authorized by the mortgage instrument. That
contention does not require proof that Seterus knew its conduct violated the Florida
Act: Seterus would have no right to collect fees not authorized by the mortgage
even if the Florida Act had never been enacted. The Florida Act only requires
proof that Seterus had actual knowledge that the mortgage did not authorize
charging Prescott for estimated legal fees.
We agree with Prescott that there is a genuine dispute of material fact as to
Seterus’ knowledge in this case. The mortgage instrument speaks in terms of
“services performed” and fees “incurred” or “disbursed.” And the only part of the
instrument that could be read to authorize Seterus to charge estimated fees is a
vague statement requiring Prescott to “take such action as Lender may reasonably
require to assure that Lender’s interest in the Property and rights under the Security
Instrument and [Prescott’s] obligation to pay the sums secured by [the] Security
Instrument shall continue unchanged.” A reasonable jury could read this contract,
conclude that any reasonable lender reading the contract would have known that it
could not charge estimated fees, and infer that Seterus had actual knowledge based
on that conclusion. There is other evidence in the record — such as the deposition
testimony of Seterus’ corporate representative under Rule 30(b)(6) of the Federal
Rules of Civil Procedure — that could lead to the opposite conclusion. But that
type of conflict in the evidence is precisely the sort of dispute that cannot be
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resolved at summary judgment.
Seterus argues that Prescott waived any argument that it was not entitled to
summary judgment in two ways. First, he failed to reply to its renewed motion for
summary judgment. But Prescott filed his own motion for summary judgment,
which basically amounts to the same thing.
Second, Seterus points to Prescott’s failure to file a response to Seterus’
statement of undisputed facts in accordance with Local Rule 56.1(b). But the
district court did not base its decision on that local rule and does not appear to have
limited its review of the record according to it. In fact, it denied as moot Seterus’
motion to deem admitted the facts in its statement of undisputed material facts.
We will not base our decision on the district court’s local rules where it has
declined to do so. See Atwater v. Nat’l. Football League Players Ass’n, 626 F.3d
1170, 1175 n.5 (11th Cir. 2010).
For those reasons, the district court erred by granting summary judgment to
Seterus on Prescott’s Florida Act claims. The grant of summary judgment is
REVERSED and the case is REMANDED for further proceedings consistent with
this opinion.
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