Robert Smith v. EVB

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1873
ROBERT C. SMITH,
Plaintiff - Appellant,
v.
EVB, a Virginia Corporation,
Defendant – Appellee,
and
ARCHIE C. BERKELEY, JR.,
Defendant.
No. 11-1081
ROBERT C. SMITH,
Plaintiff - Appellant,
v.
EVB, a Virginia Corporation; ARCHIE C. BERKELEY, JR.,
Defendants - Appellees.
Appeals from the United States District Court for the Eastern
District of Virginia, at Richmond. James R. Spencer, Chief
District Judge. (3:09-cv-00554-JRS)
Submitted: June 29, 2011 Decided: July 12, 2011
Before WILKINSON and WYNN, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Vacated and remanded by unpublished per curiam opinion.
Robert C. Smith, Appellant Pro Se. Samuel Miles Dumville, Stacy
Leann Haney, Alison Ross Wickizer Toepp, REED SMITH, LLP;
Michele Mulligan, Richmond, Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
In these consolidated appeals, Robert Smith appeals
the district court’s grant of summary judgment in favor of
Archie C. Berkeley and EVB as well as the court’s award of
$22,235.90 in attorneys’ fees. For the reasons that follow, we
vacate the judgment of the district court and remand.
In 2004, Robert Smith obtained a credit loan (the
“2004 loan”) from the Bank of Goochland (“BOG”) through Piedmont
Construction, LLC (“Piedmont”) a company owned by Smith. The
loan had an initial principal balance of $210,000 and a maturity
date of June 30, 2005. Between 2004 and 2006, Smith renewed the
loan three times, and each time submitted a disbursement request
and authorization (“DRA”) form. On each DRA form, a box was
checked indicating that the primary purpose of the loan was
“Business (Including Real Estate Investment).” Smith argues,
however, that he made contemporaneous representations to BOG
officers that the loan was for personal purposes only.
According to Smith, the purpose of the 2004 loan was
the purchase and ownership of Smith’s personal residence (“the
Wilton House”). Smith contends that he created Piedmont for the
sole purpose of obtaining the loan and owning the property (“the
Wilton Plat”) on which the Wilton House sat. Although the 2004
loan was made to Piedmont, it was secured by an interest in
Smith’s residence. According to Smith and his accountant,
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Piedmont has never conducted any other commercial activity and
its sole function was to hold the property Smith used as his
residence.
In 2006, Smith personally obtained a second loan (the
“2006 loan”) from BOG for $250,000. The DRA accompanying this
loan stated that it was primarily for personal, family, or
household purposes. Smith used $200,000 of the 2006 loan to pay
off the balance of the 2004 loan. It is undisputed that Smith
has always represented that the 2006 loan was for personal
purposes.
In 2008, BOG assigned the 2006 loan to EVB. EVB and
its substitute trustee, Archie Berkeley, claimed that Smith
defaulted on his obligations under the note and Smith claims
that EVB and Berkeley threatened foreclosure of the Wilton Plat.
Smith brought a complaint against EVB and Berkeley under the
Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-
1692p (2006). He claimed in his complaint that EVB and Berkeley
failed to provide Smith with a copy of the assignment agreement,
made threatening phone calls, and intentionally published a
foreclosure notice that they knew to be based on false financial
information.
Berkeley answered the complaint. Rather than
answering, EVB joined a motion to dismiss, or in the
alternative, for summary judgment, filed by Berkeley. EVB and
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Berkeley’s main contention in support of dismissal or summary
judgment was that the 2006 loan was not a “debt” within the
meaning of the FDCPA. In response, Smith moved for leave to
file an amended complaint. The district court granted leave to
amend with respect to the complaint against EVB only because
Smith could, as a matter of right, amend his complaint at any
time before a responsive pleading was filed. The court granted
summary judgment in favor of Berkeley and denied leave to amend
on the grounds that amendment would be futile.
The district court based its decision to award summary
judgment in favor of Berkeley on two conclusions: that Smith was
estopped from arguing that the 2004 loan was a personal debt,
and that because the 2006 loan paid off the 2004 loan, it too
was a business debt. EVB answered the amended complaint and
moved for summary judgment, and Smith moved, pursuant to Fed. R.
Civ. P. 59(e), to alter or amend the judgment in favor of
Berkeley.
The district court denied the Rule 59 motion and
granted summary judgment in favor of EVB. The court ruled that
Smith’s amended complaint and opposition to summary judgment had
failed to change the court’s ruling as it was applied in its
grant of summary judgment in favor of Berkeley. The court also
ruled that Smith had failed to put forth a proper reason for
Rule 59 amendment, and denied the motion.
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The court ultimately awarded attorneys’ fees to EVB
and Berkeley totaling over $22,000. The court concluded that
any filings (including opposition to summary judgment and the
Rule 59 motion) that were made after the initial grant of
summary judgment to Berkeley were frivolous and Smith, an
attorney, should have known to cease. Smith has timely appealed
the orders granting summary judgment and the fee order.
We review de novo a district court’s order granting
summary judgment and view the facts in the light most favorable
to the nonmoving party. Rowzie v. Allstate Ins. Co., 556 F.3d
165, 167 (4th Cir. 2009). Summary judgment is appropriate when
no genuine issue of material fact exists and the moving party
“is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). Summary judgment will be granted unless “a reasonable
jury could return a verdict for the nonmoving party” on the
evidence presented. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986).
The purpose of the FDCPA is “to protect consumers from
unfair debt collection practices.” Mabe v. G.C. Svcs. Ltd.
P’ship, 32 F.3d 86, 87 (4th Cir. 1994). Thus, in order for the
FDCPA to apply, the regulated practices must be used to collect
a “debt.” Id. The FDCPA defines “debt” as “any obligation or
alleged obligation of a consumer to pay money arising out of a
transaction in which the money, property, insurance, or services
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which are the subject of the transaction are primarily for
personal, family, or household purposes[.]” 15 U.S.C.
§ 1692a(5); Perk v. Worden, 475 F. Supp. 2d 565, 568 (E.D. Va.
2007). As we have noted, the case law interpreting this section
of the FDCPA is “sparse.” Mabe, 32 F.3d at 88.
When interpreting the definition of “debt” under the
FDCPA, some courts have looked to analogous provisions of the
Consumer Credit Protection Act, 15 U.S.C. §§ 1601-1693r (2006).
See Bloom v. I.C. Sys., Inc., 972 F.2d 1067, 1068
(9th Cir. 1992). When classifying a loan under the Truth in
Lending Act, for example, courts typically “examine the
transaction as a whole, paying particular attention to the
purpose for which the credit was extended in order to determine
whether the transaction was primarily consumer or commercial in
nature.” Id. Courts have “looked to the substance of
transactions to determine whether they fall under the ambit of
consumer protection statutes [such as the FDCPA]” Perk, 475 F.
Supp. 2d at 569.
Here, we do not address Smith’s contentions that the
district court erred in allowing EVB and Berkeley to argue
estoppel and that the court erred in estopping Smith from
arguing that the 2004 loan was a personal transaction. Rather,
we conclude that even if the court acted properly in employing
estoppel to determine that the 2004 loan was commercial in
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nature, the court erred in concluding that the 2006 loan was
similarly commercial.
In this case, the district court itself noted that the
FDCPA is concerned “with the substance of the transaction as
opposed to the form.” The “substance” of the 2006 loan,
however, was clearly personal in nature. Even assuming that the
2004 loan was commercial, Smith took the 2006 loan out in his
own name with the purpose of paying off the 2004 loan. As a
practical matter, the 2006 loan allowed Smith to transfer the
mortgage on his home from Piedmont to himself. Indeed, Smith
represented to BOG in 2006 that the loan was for personal use,
and the record is uncontroverted that the loan had a entirely
personal purpose — essentially taking over the debt on Smith’s
home.
On appeal, EVB repeatedly emphasizes that the 2004
loan was a business transaction. This argument misses the mark
by ignoring the purposes of the 2006 loan. Although related to
a purported business transaction, the 2006 loan concerned
Smith’s personal finances, his personal residence, and was taken
out in his own name. In other words, it was a personal loan.
We therefore vacate the district court’s judgment with
respect to the underlying merits and remand. Because the fee
order that is being appealed is based on the now-vacated grant
of summary judgment, we vacate that order without prejudice to a
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motion for fees at the conclusion of the district court
proceedings on remand. We dispense with oral arguments because
the facts and legal contentions are adequately presented in the
materials before the court and argument would not aid the
decisional process.
VACATED AND REMANDED
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