Dale Wheatley v. JP Morgan Chase Bank , 860 F.3d 629 ( 2017 )

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 16-2649
___________________________
Dale E. Wheatley; Stacy Franklin
lllllllllllllllllllllPlaintiffs - Appellants
v.
JPMorgan Chase Bank, N.A.; U.S. Bank, N.A.; Select Portfolio Servicing, Inc.
lllllllllllllllllllllDefendants - Appellees
____________
Appeal from United States District Court
for the Western District of Missouri - St. Joseph
____________
Submitted: March 7, 2017
Filed: June 20, 2017
____________
Before RILEY,1 Chief Judge, GRUENDER, Circuit Judge, and GRITZNER,2 District
Judge.
____________
RILEY, Chief Judge.
1
The Honorable William Jay Riley stepped down as Chief Judge of the United
States Court of Appeals for the Eighth Circuit at the close of business on March 10,
2017. He has been succeeded by the Honorable Lavenski R. Smith.
2
The Honorable James E. Gritzner, United States District Judge for the
Southern District of Iowa, sitting by designation.
Dale Wheatley and his ex-wife Stacy Franklin sued several financial entities
for foreclosing on the mortgage loan Wheatley took out on Franklin’s house. The
district court3 held the foreclosure was justified and granted the defendants summary
judgment. Wheatley appeals with respect to his claims under the Missouri
Merchandising Practices Act (MMPA), Mo. Rev. Stat. § 407.020. Franklin appeals
on her claims for tortious interference with contract. With appellate jurisdiction
under 28 U.S.C. § 1291, we affirm the judgment.
I. BACKGROUND
In 2006, Franklin wanted to cash out her equity and refinance her house in
Cosby, Missouri, but her credit was not good enough to qualify for a loan. Wheatley
verbally agreed to help Franklin accomplish more or less the same result by taking
out a mortgage himself and buying the house from her, on the understanding that
Franklin would be responsible for paying off the loan and Wheatley would deed her
the property when she did. In 2009, Franklin missed several payments and the loan
went into default.4
After first agreeing to a repayment plan with the loan servicer, EMC Mortgage
Corporation, Wheatley applied for a loan modification. EMC ultimately offered
Wheatley a modification in May 2010. The modification agreement was conditioned
upon Wheatley affirming the truth of several statements, including: “I am
experiencing a financial hardship, and as a result, am either in default under the Loan
Documents or a default is imminent.” In an attached affidavit, Wheatley claimed he
3
The Honorable Robert E. Larsen, United States Magistrate Judge for the
Western District of Missouri, to whom the case was referred for final disposition by
consent of the parties under 28 U.S.C. § 636(c).
4
This was actually the second default. The first default, about a year earlier,
was resolved when Wheatley convinced the loan servicer to modify the loan by
having Franklin’s stepfather falsely claim to be leasing the house.
-2-
did not have enough cash on hand to afford his mortgage payments on top of his basic
living expenses. Wheatley also noted he did not live in the house and paid rent and
utilities elsewhere. And he repeatedly had told EMC representatives that Franklin
made the mortgage payments, not him.
Wheatley signed the modification agreement and returned it to EMC. EMC
also signed the agreement, but did not actually put the modification into effect. EMC
had miscalculated Wheatley’s unpaid balance—double-counting some interest that
had been capitalized—so the repayment terms in the agreement did not match the
(lower) amount Wheatley actually owed, which caused EMC’s automated computer
system to reject the modification. Thus, the changes to the loan were never
processed, EMC’s records showed the loan still being in default, and EMC continued
sending Wheatley notices of default and foreclosure. Wheatley spoke with EMC
representatives many times, but the issue was never resolved.
Starting in 2009, EMC’s loan-servicing portfolio was acquired by JPMorgan
Chase Bank, N.A. (Chase), which fully assumed servicing Wheatley’s loan in May
2011. Chase representatives tried to work with Wheatley to resolve the apparent
default, but by then he had become frustrated with his unsuccessful dealings with
EMC and stopped responding. About two years later, Chase brought in Select
Portfolio Servicing, Inc. (SPS), a sub-servicer, to handle Wheatley’s loan. SPS
briefly tried to work the issue out with Wheatley, but he was still not cooperating.
Then, in August 2013, SPS held a foreclosure sale, where U.S. Bank, N.A., the
successor trustee for the trust that owned Wheatley’s loan (along with others), bought
the house with a full-credit bid.
Wheatley and Franklin sued Chase in Missouri state court. After Chase
removed the case, see 28 U.S.C. § 1441(a) (removal); id. § 1332(a)(1) (diversity
jurisdiction), Wheatley and Franklin amended their pleadings to add claims against
U.S. Bank and SPS. The operative complaint raised four counts, all by both plaintiffs
-3-
against all three defendants: wrongful foreclosure, breach of contract, tortious
interference, and deceptive or unfair practices in violation of the MMPA. The district
court granted summary judgment for the defendants on all four counts, but Wheatley
and Franklin only appeal the last two, each separately taking one count.
II. DISCUSSION
We review the grant of summary judgment de novo. See, e.g., Dupps v.
Travelers Ins. Co., 80 F.3d 312, 313 (8th Cir. 1996). The interpretation and
application of state law is also a legal issue we decide de novo. See id. Summary
judgment is appropriate if “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). The district
court held the defendants had the right to foreclose on the house, so Wheatley’s
MMPA claims failed as a matter of law because he could not prove his loss was
caused by any misconduct of the defendants, as opposed to his own “noncompliance
with the loan documents.” The legality of the foreclosure was likewise fatal to
Franklin’s tortious-interference claims, according to the district court, because it
meant Franklin could not establish the “absence of justification” that is a necessary
element of such a claim, see, e.g., Cmty. Title Co. v. Roosevelt Fed. Sav. & Loan
Ass’n, 796 S.W.2d 369, 372 (Mo. 1990). We agree as to both the foreclosure being
justified and the consequences of that fact for the plaintiffs’ claims.5
5
We reject the defendants’ suggestion that by not appealing the summary
judgment on the wrongful-foreclosure count, Wheatley and Franklin abandoned any
challenge to the legality of the foreclosure. The choice to let an adverse ruling stand
on a particular claim while appealing others does not constitute a binding concession
that the district court was right about every (or any) legal issue wrapped up in the
unappealed holding. There is no rule that Wheatley and Franklin needed to appeal
every theory of liability that might logically rest on a particular proposition—here,
that the foreclosure was not justified—to be able to advance that proposition on
appeal. Cases about treating a failure to raise an issue as a waiver or forfeiture, see,
e.g., Sidebottom v. Delo, 46 F.3d 744, 750 (8th Cir. 1995), are beside the point, for
the simple reason that Wheatley and Franklin do argue (clearly and at length) that the
-4-
The modification agreement explicitly provided it would only “amend and
supplement” the existing loan documents “[i]f [Wheatley’s] representations . . .
continue[d] to be true in all material respects.” (Emphasis added). By clear
implication, if Wheatley’s material representations were not true, the agreement did
not “amend and supplement” anything, the existing version of the loan stayed in
default, and foreclosure remained an authorized remedy. That is what happened here.
In the modification agreement, Wheatley affirmed: “I am experiencing a
financial hardship, and as a result, am . . . in default under the Loan Documents.” At
its core, that statement was a representation about the reason for the default—that it
was “a result” of a financial hardship Wheatley was suffering. And in that key (and
material) respect it was untrue. The record, including Wheatley’s deposition
testimony, is clear that the missed payments and default were caused by Franklin’s
inability to pay, not Wheatley’s.
Wheatley protests because EMC knew it was Franklin who made the payments
on the house. Irrelevant. Nothing Wheatley might have told EMC about his
arrangement with Franklin could have made it true when he said the default was the
result of his own financial condition, or changed his clear statement into a
representation about Franklin’s financial condition. Nor does it make any difference
whether, as Wheatley claims, he could not have afforded the mortgage himself,
because there is no evidence Wheatley would have made the payments if he had the
money.6 By all indications, whether the debt was paid depended entirely on whether
foreclosure was not justified.
6
For the first time in his reply brief, Wheatley faults the district court for
reading his allegations about his own “financial hardship” as addressing whether he
could have afforded the monthly mortgage payments. According to Wheatley, he
actually meant he could not have afforded the (much larger) lump sum due on the
defaulted loan. We find that explanation dubious and the point likely forfeited, but
in any event the distinction is immaterial. There is no more evidence Wheatley would
-5-
Franklin paid it. Because the amounts due apparently would have gone unpaid
regardless of whether Wheatley could afford them, Wheatley’s financial
condition—whatever it was and whatever EMC knew about it—had no bearing on the
truthfulness of his representation about the reason for the default.
Wheatley and Franklin make no argument that, even if Wheatley lied in the
modification agreement, the foreclosure was still unlawful. Thus we need not address
the district court’s other reason for upholding the foreclosure—that Wheatley’s
arrangement with Franklin violated the due on sale provision of his Deed of Trust.
Nor do we need to consider the defendants’ arguments that there was not enough
evidence of what exactly each of them did to incur liability on each count, because
Wheatley and Franklin do not suggest any way their MMPA or tortious-interference
claims could survive the foreclosure being legal.
III. CONCLUSION
Summary judgment for the defendants was proper. Affirmed.
______________________________
have paid off the lump sum if he had the money than he would have made the
monthly payments.
-6-