Lakeesha G. Giles v. Wells Fargo Bank, N.A.

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 12-15567
Non-Argument Calendar
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Docket No. 1:11-cv-00405-KD-M
LAKEESHA G. GILES,
Individually and on behalf of all similarly
situated individuals,
Plaintiff-Appellant,
versus
WELLS FARGO BANK, N.A.,
Defendant-Appellee.
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Appeal from the United States District Court
for the Southern District of Alabama
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(May 23, 2013)
Before WILSON, ANDERSON, and EDMONDSON, Circuit Judges.
PER CURIAM:
LaKeesha G. Giles appeals the district court’s grant of summary judgment in
favor of Wells Fargo Bank, N.A. (“Wells Fargo”). Giles’s complaint alleged that
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Wells Fargo violated the Truth in Lending Act, 15 U.S.C. § 1601 et seq. (“TILA”),
by failing to provide notice of a transfer of ownership in Giles’s mortgage loan, as
required by section 1641(g). No reversible error has been shown; we affirm.
In 2007, Giles executed a Promissory Note (“Note”) in favor of America
South Mortgage Corporation. 1 The Note was secured by a mortgage on real
property (“Mortgage”) which named Mortgage Electronic Registration Systems,
Inc. (“MERS”) as the mortgagee.
The Mortgage identified America South as the “Lender” and described
MERS as “a separate corporation that is acting solely as a nominee for Lender and
Lender’s successors and assigns.” The Mortgage conveyed to MERS (as nominee)
legal title to the property and granted to MERS (as nominee) the power of sale.
The Mortgage also said that “MERS holds only legal title to the interests granted
by [Giles] . . . , but, if necessary to comply with law or custom, MERS (as nominee
for Lender and Lender’s successors and assigns) has the right: to exercise any or
all of those interests, including, but not limited to, the right to foreclose and sell the
Property; and to take any action required of Lender including, but not limited to,
releasing and canceling this Security Instrument.”
In late 2007, the Federal National Mortgage Association (“Fannie Mae”)
purchased the Note. In 2008, servicing of the loan was transferred to Wells Fargo.
1
Sometime later, America South executed an allonge to the Note, transferring ownership of the
Note to AmTrust Bank; and AmTrust Bank endorsed the allonge in blank.
2
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Pursuant to guidelines governing the relationship between Fannie Mae and Wells
Fargo, Wells Fargo held the original executed Note as a custodian on behalf of
Fannie Mae.2
In June 2010, Wells Fargo sent Giles a “Notice of Acceleration of
Promissory Note and Mortgage” notifying Giles that, because she had defaulted on
her payments, Wells Fargo would commence foreclosure proceedings. In July
2010, MERS executed an “Assignment of Mortgage” (“Assignment”), transferring
to Wells Fargo “all right, title and interest of [MERS] in and to that certain
Mortgage executed by [Giles], . . . together with the note and indebtedness secured
by the Mortgage, and all interest of [MERS] in and to the property described in
said Mortgage.” On appeal, Giles acknowledges that “[i]t is undisputed that the
purpose of the assignment was . . . to allow Wells Fargo to conduct a foreclosure in
its own name and that this was required by Fannie Mae’s Guidelines.” 3 Wells
Fargo did not provide a Notice of New Creditor to Giles following the Assignment.
In October 2010, Wells Fargo conducted a foreclosure sale of Giles’s
property and conveyed legal title to the property to the highest bidder: Fannie Mae.
2
Fannie Mae’s Guidelines specify that “the document custodian has custody of the note for
Fannie Mae’s exclusive use and benefit.”
3
Fannie Mae’s Guidelines on foreclosure proceedings say “[w]hen MERS is the mortgagee of
record, the servicer must prepare an assignment from MERS to the servicer and bring the
foreclosure in its own name . . . [and] [t]he assignment must be prepared and executed before the
foreclosure begins.”
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Giles filed this civil action, alleging that Wells Fargo failed to abide by
section 1641(g)’s notice requirement, which Giles asserted was triggered by the
Assignment. The district court granted Wells Fargo’s motion for summary
judgment, concluding that Wells Fargo was not required to provide notice under
section 1641(g).
We review a district court’s grant of summary judgment de novo, viewing
all evidence and drawing all reasonable inferences in favor of the non-moving
party. Galvez v. Bruce, 552 F.3d 1238, 1241 (11th Cir. 2008). Summary
judgment is appropriate where the record presents no genuine issues of material
fact and where the moving party is entitled to judgment as a matter of law.
Swisher Int’l, Inc. v. Schafer, 550 F.3d 1046, 1050 (11th Cir. 2008). “Once the
movant adequately supports its motion, the burden shifts to the nonmoving party to
show that specific facts exist that raise a genuine issue for trial.” Dietz v.
Smithkline Beecham Corp., 598 F.3d 812, 815 (11th Cir. 2010).
Section 1641(g) requires that, within “30 days after the date on which a
mortgage loan is sold or otherwise transferred or assigned to a third party, the
creditor that is the new owner or assignee of the debt shall notify the borrower in
writing of such transfer . . . .” 15 U.S.C. § 1641(g)(1). Based on its plain
language, section 1641(g)’s disclosure obligation is triggered only when ownership
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of the “mortgage loan” or “debt” itself is transferred, not when the instrument
securing the debt (that is, the mortgage) is transferred.
But Giles argues that, under Alabama law, “the transfer of a mortgage also
transfers the obligation the mortgage secures unless the parties to the transfer agree
otherwise.” See Crum v. LaSalle Bank, N.A., 55 So. 3d 266, 269 (Ala. Civ. App.
2009). Alabama law also requires that a foreclosure be undertaken only by an
entity entitled to receive the money secured by the mortgage. See Ala. Code § 35-
10-1.
Even if we assume -- without deciding -- that Wells Fargo became the owner
of both the Mortgage and the Note as a result of the Assignment, Wells Fargo was
not subject to section 1641(g)’s notice requirement because the Assignment was
made “solely for [Wells Fargo’s] administrative convenience.” See 15 U.S.C. §
1641(f). Under section 1641(f), a servicer “shall not be treated as the owner of the
obligation” -- and, thus, is not subject to section 1641(g)’s notice requirement -- if
the servicer was assigned the obligation “solely for the administrative convenience
of the servicer in servicing the obligation.” Id.
The phrase “administrative convenience” is not defined by TILA. In
construing the statute’s language, “we ‘start with the assumption that the
legislative purpose is expressed by the ordinary meaning of the words used.” In re
James, 406 F.3d 1340, 1343 (11th Cir. 2005). The term “convenience” means
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“fitness or suitability for performing an action or fulfilling a requirement.”
Merriam-Webster Online Dictionary, http://www.merriam-webster.com/dictionary
(last visited Mar. 25, 2013). And the term “administration” means of or relating to
the act or process of managing. See id. (defining “administrative” as “of or
relating to administration,” “administration” as “the act or process of
administering,” and “administering” as “managing”). Thus, the ordinary meaning
of the phrase “administrative convenience” is that which permits a person to
perform an action or fulfill a requirement in the process of managing whatever is
being managed.
To the extent that Wells Fargo was assigned the Note, the assignment
enabled Wells Fargo both to conduct a valid foreclosure proceeding under
Alabama law and, therefore, to carry out its duties as servicer to Fannie Mae.
Thus, the Assignment was “administratively convenient” to Wells Fargo. And
Fannie Mae’s Guidelines make clear that such assignment was temporary and
made solely for the purpose of completing the foreclosure proceeding. 4
4
The Guidelines provide that, except in limited circumstances such as in foreclosure actions,
“Fannie Mae is at all times the owner of the mortgage note . . . [and] “at all times . . . is the
holder of the mortgage note.” When a servicer, acting in its own name, represents Fannie Mae’s
interests in a foreclosure action, however, Fannie Mae temporarily gives the servicer possession
of the mortgage note “to ensure that a servicer is able to perform the services and duties incident
to servicing of the mortgage loan.” When the foreclosure action is complete, “possession [of the
mortgage note] automatically reverts to Fannie Mae, and Fannie Mae resumes being the holder
for itself.”
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Giles argues that, because Fannie Mae saved itself some trouble and
benefitted from avoiding conducting the foreclosure in its own name, the
Assignment was not made “solely” for Wells Fargo’s administrative convenience.
But, as the district court explained, “if a servicer could not avail itself of the
[“administrative convenience”] exception because its principal received some
benefit, then the exception itself would be a nullity; the reason Fannie Mae
contracts out the servicing of the loan (including foreclosure) is because it benefits
Fannie Mae to do so.” That Fannie Mae benefitted from having Wells Fargo
conduct the foreclosure proceeding did not change the fact that the Assignment
itself enabled Wells Fargo to fulfill its obligations as servicer.
Because Wells Fargo falls within the scope of section 1641(f)’s
“administrative convenience” exception, it was not required to notify Giles of the
Assignment. No genuine issue of material facts exists; Wells Fargo was entitled to
summary judgment.
AFFIRMED.
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