Portia Ishee v. Federal Natl Mortgage Assoc

Case: 15-60129 Document: 00513422634 Page: 1 Date Filed: 03/14/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-60129 United States Court of Appeals
Fifth Circuit
FILED
PORTIA B. ISHEE, March 14, 2016
Lyle W. Cayce
Plaintiff - Appellant Clerk
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, also known as Fannie
Mae; GREEN TREE SERVICING, L.L.C.,
Defendants - Appellees
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 2:13-CV-234
Before JOLLY and JONES, Circuit Judges, and MILLS,* District Judge.
PER CURIAM:**
Plaintiff-Appellant Portia Ishee brought suit against Federal National
Mortgage Association (“Fannie Mae”) and Green Tree L.L.C., alleging breach
of contract, willful breach of contract, conversion, fraud, breach of the duty of
good faith and fair dealing, intentional infliction of emotional distress,
* District Judge of the Northern District of Mississippi, sitting by designation.
**Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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defamation, violations of the Fair Debt Collection Practices Act (“FDCPA”), 1
violations of the Real Estate Settlement Procedures Act (“RESPA”), 2 and
violations of the Mississippi S.A.F.E. Mortgage Act (“SAFE Act”). 3 This is an
appeal of the district court’s order entered on February 6, 2015, granting
summary judgment in favor of appellees Fannie Mae and Green Tree L.L.C.,
and dismissing all claims.
For the reasons set forth below, we reverse and remand in part, vacate
and remand in part, and affirm in part. Specifically, we reverse the district
court’s holding that no genuine issue of material fact existed regarding
whether there was an agency relationship between Fannie Mae and its
previous loan servicer, GMAC. We vacate the portion of the district court’s
decision dismissing Ishee’s vicarious liability-based claims against Fannie Mae
for emotional distress, conversion, fraud, breach of the duty of good faith and
fair dealing, defamation, and breach of contract, since the district court’s
dismissal of those claims was based entirely on its finding that there was no
genuine issue of material fact regarding whether an agency relationship
existed between Fannie Mae and GMAC. We affirm the district court’s
decision in all other respects.
I.
Ms. Ishee executed a deed of trust and signed a promissory note in
November 2006 in favor of GMAC Mortgage, LLC encumbering her homestead
in the principal amount of $100,000. Fannie Mae bought the note in December
2006, pursuant to a mortgage selling and servicing contract between Fannie
Mae and GMAC. GMAC continued to service the loan.
1 15 U.S.C. § 1692, et seq.
2 12 U.S.C. § 2601, et seq.
3 MISS. CODE ANN. § 81-18-3, et seq.
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A fire destroyed Ms. Ishee’s home in September 2010. Ms. Ishee had
home owner’s insurance through Alfa Insurance. On November 4, 2010, Alfa
issued a check to GMAC in the amount of $99,623.48—the payoff amount
provided by GMAC to Alfa’s adjuster. GMAC received the check, but did not
apply the funds to Ms. Ishee’s account. Instead, GMAC deposited the money
to escrow, and designated Ms. Ishee’s payment as “unapplied funds.” GMAC
conducted inspections of the destroyed property on December 30, 2010, and
again on January 13, 2011, both times charging the inspections to Ms. Ishee’s
account. GMAC continued to hold the funds as “unapplied,” and force-placed
insurance on the now-vacant lot at Ms. Ishee’s expense. Ms. Ishee made
multiple requests for GMAC to apply the insurance funds to her account.
GMAC refused to do so, contending that even if it were to apply the insurance
proceeds to Ms. Ishee’s account, there would still remain a balance owed due
to late fees, interest, insurance fees, and inspection fees. GMAC eventually
began foreclosure proceedings.
GMAC declared bankruptcy in May 2012, and Green Tree acquired the
rights to service the loan. Relying on GMAC’s records, Green Tree initially
considered Ms. Ishee to be in default, and continued with foreclosure. Green
Tree, however, soon learned that GMAC was in possession of Ms. Ishee’s
insurance proceeds. Green Tree promptly credited the proceeds to her account,
forgave any “late fees,” and refunded any payments that Ms. Ishee was forced
to make as a result of GMAC’s apparent misconduct.
Ms. Ishee brought this action against the defendants, alleging that,
under Mississippi agency law, Fannie Mae was liable for the actions of its loan
servicers, GMAC and Green Tree. Ishee also alleged that Green Tree was
liable for GMAC’s actions as a successor in interest. She demanded actual
damages, emotional damages, punitive damages, interest, and attorney’s fees.
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On August 22, 2014, Fannie Mae and Green Tree moved for summary
judgment on all of Ms. Ishee’s claims. Ms. Ishee also moved for partial
summary judgment as to liability for several of her claims. On February 6,
2015, the district court granted the Appellees’ motions for summary judgment,
based in large part on its finding that Fannie Mae was not liable for the actions
of its loan servicers. The court further found that Green Tree was not
responsible for the actions of GMAC, and that Green Tree had not itself
committed any breach of contract. The court denied Ms. Ishee’s motions for
partial summary judgment, and dismissed her remaining claims.
II.
This Court reviews a district court’s grant of summary judgment de novo,
applying the same standard as the district court. E.E.O.C. v. R.J. Gallagher
Co., 181 F.3d 645, 652 (5th Cir. 1999). The party moving for summary
judgment bears the burden of informing the court of the basis for its motion,
and identifying the portions of the record that demonstrate the absence of a
genuine issue of material fact. Washburn v. Harvey, 504 F.3d 505, 508 (5th
Cir. 2007). The non-movant then must come forward with specific facts
showing there is a genuine issue for trial. Id. “‘If the evidence is merely
colorable, or is not significantly probative,’ summary judgment is appropriate.”
Cutting Underwater Technologies USA, Inc. v. Eni U.S. Operating Co., 671
F.3d 512, 517 (5th Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986)). We review all facts in the light most favorable to the non-
movant and affirm only when there is no genuine issue of material fact, and
the moving party is entitled to judgment as a matter of law. Washburn, 504
F.3d at 508; Fed. R. Civ. P. 56(c). Should we conclude that evidence exists so
as to create a genuine issue of material fact – such that the matter should have
gone to trial – this Court must reverse and remand.
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III.
Although the parties have developed many claims, the primary issue is
whether Fannie Mae may be liable for the actions of its servicers. Finding that
no agency relationship existed between Fannie Mae and its servicers, the
district court granted summary judgment in favor of the defendants and
consequently dismissed Ms. Ishee’s claims.
“Under Mississippi agency law, a principal is bound by the actions of its
agent within the scope of that agent's real or apparent authority.” Miller v.
Shell Oil Co., 783 So. 2d 724, 727 (Miss. Ct. App. 2000). Mississippi law
provides the framework by which we determine whether a party is an
independent contractor or an employee:
[1] Whether the principal master has the power to terminate the
contract at will; [2] whether he has the power to fix the price in
payment for the work, or vitally controls the manner and time of
payment; [3] whether he furnishes the means and appliance for
the work; [4] whether he has control of the premises; [5] whether
he furnishes the materials upon which the work is done and
receives the output thereof, the contractor dealing with no other
person in respect to the output; [6] whether he has the right to
prescribe and furnish the details of the kind and character of work
to be done; [7] whether he has the right to supervise and inspect
the work during the course of employment; [8] whether he has the
right to direct the details of the manner in which the work is to be
done; [9] whether he has the right to employ and discharge the
subemployees and to fix their compensation; [10] and whether he
is obliged to pay the wages of said employees.
Woodring v. Robinson, 892 F. Supp. 2d 769, 776 (S.D. Miss. 2012) (citing Kisner
v. Jackson, 159 Miss. 424, 132 So. 90 (1931)).
As this non-exhaustive list of factors indicates, Mississippi agency law is
principally concerned with the issue of control. Kossuth Trucking, Inc. v.
Caterpillar, Inc., 941 So. 2d 903, 907 (Miss. Ct. App. 2006) (“With all the
variations in tests, and despite some indications already mentioned that none
of the factors are more important than the others, the principal focus now is on
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the issue of control.”). The district court found that there was no genuine issue
of material fact regarding whether Fannie Mae exercised sufficient control over
GMAC to establish an agency relationship. In deciding that Fannie Mae did
not exercise sufficient control over GMAC’s actions to establish an agency
relationship, the district court focused principally on the Servicing Guide, a
document prepared by Fannie Mae for its loan servicers, and meant to “set
forth the broad parameters under which servicers should use their sound
professional judgment as mortgage servicers in the performance of their
duties.”
We agree that the Servicing Guide, on its own, does not show that Fannie
Mae exercised sufficient control over GMAC’s actions to create a genuine issue
of fact regarding whether an agency relationship existed between Fannie Mae
and its servicers. The Servicing Guide, however, is not dispositive on the issue
of agency. The evidence pertaining to the Reports of Hazard Insurance Loss
documents (better known as “Form 176s”) does create a genuine issue of fact
regarding whether Fannie Mae exercised sufficient control over GMAC’s
actions to establish an agency relationship. 4
A Form 176 is a report that Fannie Mae requires its loan servicers to
submit documenting the receipt of property loss insurance. Importantly, these
reports also include “recommendations” from the loan servicer regarding what
should be done with received insurance proceeds (e.g., accept a pay-off, apply
insurance proceeds to mortgage debt). Fannie Mae, in turn, reviews these
4 The district court considered the Form 176s when deciding whether Fannie Mae
ratified GMAC’s wrongful conduct. The court, however, did not address whether the Form
176s established “control” sufficient to impose vicarious liability irrespective of whether
GMAC relayed to Fannie Mae the information necessary to make an informed decision
regarding Ms. Ishee’s loan. See, e.g., Lane v. Oustalet, 873 So. 2d 92, 95–96 (Miss. 2004) (“The
law of agency generally imputes knowledge and information received by an agent in
conducting the business of a principal to the principal, even where that knowledge or
information is not communicated by the agent to the principal.”).
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recommendations, either endorsing them or voicing its objections to the
servicer’s proposed course of action. Furthermore, as a Fannie Mae
representative testified, Fannie Mae’s loan servicers “were required to abide
by Fannie Mae’s decisions” regarding whether to carry out the
“recommendation” stated in a Form 176. The lone Form 176 in the record is
between Fannie Mae and Green Tree. GMAC also submitted Form 176s to
Fannie Mae, but they have since been destroyed pursuant to Fannie Mae’s
document retention policy.
Simply put, this evidence regarding the way in which Form 176s were
used undercuts Fannie Mae’s assertions that its loan servicers are able to
conduct their routine servicing duties without the need for Fannie Mae’s direct
involvement or approval. Stated differently, the Form 176s, when viewed in
the light most favorable to Ishee, arguably show that Fannie Mae expected to
be informed when insurance proceeds were received by a servicer, and that
Fannie Mae had input regarding how those insurance proceeds were to be
applied to the plaintiff’s account. Drawing all reasonable inferences in favor
of Ms. Ishee, a jury could find that these documents show that Fannie Mae
exercised a degree of control over its loan servicers—including GMAC—
sufficient to establish an agency relationship.
Fannie Mae contends that the Form 176 in the record does nothing to
establish an agency relationship between Fannie Mae and GMAC, as the
document concerns Fannie Mae’s relationship with GMAC’s successor, Green
Tree. Testimony from Fannie Mae’s own representatives, however, indicates
that GMAC also submitted Form 176s to Fannie Mae, and that these
documents also included servicer “recommendations” regarding Ms. Ishee’s
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mortgage. 5 There is also testimony from Fannie Mae representatives that
Fannie Mae gave instructions to GMAC regarding what to do with Ms. Ishee’s
insurance proceeds, telling GMAC to “continue with foreclosure and reduce the
foreclosure bid amount by the insurance proceeds.”
At oral argument, Fannie Mae acknowledged that it did give specific
instructions to GMAC regarding what to do with Ms. Ishee’s insurance
proceeds. 6 Fannie Mae nevertheless contends that it exercised no control over
GMAC because GMAC ultimately failed to comply with Fannie Mae’s
instructions. Elsewhere in testimony, however, Fannie Mae representatives
conceded that all loan servicers, including GMAC, were “required to abide by
Fannie Mae’s decisions” with respect to actions recommended in Form 176
reports. A jury may well decide that GMAC’s failure to abide by Fannie Mae’s
instruction is indicative of a lack of the control needed to establish an agency
relationship, notwithstanding the testimony that, pursuant to their
relationship, GMAC was “required” to abide by Fannie Mae’s instructions
regarding the recommendations set forth in Form 176 documents. At the
summary judgment stage, however, this Court’s task is simply to determine if
a genuine issue of material fact exists, not to weigh conflicting evidence.
Because we find, on the record before us, that a genuine issue of material fact
exists regarding whether there was an agency relationship between Fannie
Mae and GMAC, we reverse the district court’s grant of summary judgment on
this issue.
Furthermore, we vacate the district court’s order dismissing Ishee’s
vicarious liability-based claims against Fannie Mae for infliction of emotional
5 As stated, these documents are unavailable only because Fannie Mae destroyed
them pursuant to its document retention policy
6 In fact, Fannie Mae’s statements at oral argument indicate that GMAC lacked the
authority apply the proceeds to Ishee’s delinquent account without first receiving Fannie
Mae’s approval.
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distress, conversion, fraud, breach of the duty of good faith and fair dealing,
defamation, and breach of contract, because the district court’s dismissal of
these claims was based entirely on its finding that there was no genuine issue
of material fact regarding whether an agency relationship existed between
Fannie Mae and GMAC. In vacating the district court’s dismissal of these
claims, we stress that we make no determination regarding Fannie Mae’s
ultimate liability. 7 Still, given that the district court has yet to consider the
merits of Ms. Ishee’s claims based on GMAC’s conduct, we decline to do so for
the first time on appeal.
IV.
On all remaining issues, however, we affirm the district court’s
judgment. First, we affirm the district court’s grant of summary judgment in
Green Tree’s favor on the claims alleging vicarious liability. There are,
ostensibly, two avenues by which Green Tree may be liable for the actions of
GMAC: (1) as GMAC’s successor in interest, and (2) by ratifying the actions of
GMAC. We address each briefly.
As succinctly explained by the District Court,
The general rule in Mississippi is “that a corporation which
acquires all of the assets, but no stock, of another corporation does
not also acquire the debts and liabilities of the original.” There are
only four exceptions to the general rule: “(1) When the successor
expressly or impliedly agrees to assume the liabilities of the
predecessor; (2) When the transaction may be considered a de facto
merger; (3) When the successor may be considered a mere
continuation of the predecessor; or (4) When the transaction was
fraudulent.”
7 For example, we question whether Ishee can recover for GMAC’s alleged breach of
contract when it appears that Green Tree has already repaid her for any loss resulting from
GMAC’s misconduct. We also note that Fannie Mae originally raised an affirmative defense
to any agency-based claims under Federal Crop Insurance Co. v. Merrill, 332 U.S. 380 (1947).
The defense was argued to the district court, but not addressed in the district court’s opinion.
The issue was not briefed on appeal.
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Ishee v. Fed. Nat’l Mort. Ass'n, 2015 WL 518682, at *10 (S.D. Miss. Feb. 6,
2015) (quoting Huff v. Shopsmith, 786 So. 2d 383, 387–88 (Miss. 2001) (internal
citation omitted).
Green Tree came to service Ms. Ishee’s loan following GMAC’s
bankruptcy and the subsequent sale of its assets. The bankruptcy court’s order
explicitly stated that Green Tree purchased the servicing rights “free and
clear” of any vicarious liability claims based on GMAC’s conduct. Accordingly,
the district court did not err in granting Green Tree’s motion for summary
judgment on this ground. Furthermore, regarding Ms. Ishee’s theory that
Green Tree “ratified” the actions of GMAC after taking over the loan servicing
contract, there is no evidence to support her claim. In fact, all evidence points
to the opposite conclusion. After a brief investigation into the status of Ms.
Ishee’s loan and property, Green Tree applied the insurance funds to the note,
canceled the deed of trust, refunded the excess funds to Ms. Ishee, and
otherwise righted the wrongs committed by GMAC. By the time the district
court issued its judgment, Ms. Ishee’s note was paid in full, her property
released, and she was refunded a total of $1,474.56. As opposed to ratifying
the actions of GMAC, it appears that Green Tree successfully dismantled the
wrongful actions taken by GMAC. Accordingly, the district court was correct
in the granting of summary judgment in favor of Green Tree on the issue of
ratification and/or successor in interest liability.
We also affirm the district court’s grant of summary judgment regarding
any breach of contract claim based on either Green Tree’s or Fannie Mae’s own
actions. Ishee has identified no contract provision that Fannie Mae breached,
as she instead points only to the contract provisions regarding loan servicers’
obligations. Regarding Green Tree, Ms. Ishee has offered no evidence of
breaching conduct on Green Tree’s part. Indeed, as stated, the evidence shows
that, upon learning of GMAC’s alleged misconduct, Green Tree promptly
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corrected the situation by applying the insurance proceeds to Ms. Ishee’s
account and forgiving any fees accrued during the delay.
Regarding Ms. Ishee’s RESPA claim, we agree with the district court’s
conclusion that Ms. Ishee’s complaint, which contains only a passing reference
to RESPA, does not allege a sufficient RESPA claim. We further affirm the
grant of summary judgment against Ms. Ishee’s SAFE Act claims, since Ms.
Ishee does not dispute that the SAFE Act does not create a private cause of
action. We also affirm the district court’s grant of summary judgment
regarding Ms. Ishee’s FDCPA claims. Ms. Ishee has alleged only that Green
Tree was a “debt collector” under the statute, and Ms. Ishee does not take issue
with the district court’s finding that she failed to offer any evidence that Green
Tree violated the FDCPA.
Lastly, with respect to any tort claims based on either Fannie Mae’s or
Green Tree’s own conduct, Ms. Ishee does not meaningfully address the district
court’s dismissal of these claims on appeal. Accordingly, we affirm the district
court’s grant of summary judgment on these claims. See Douglas W. ex rel.
Jason D.W. v. Houston Indep. Sch. Dist., 158 F.3d 205, 210–11 n. 4 (5th Cir.
1998) (per curiam) (even when the appellant listed a legal question in his
statement of issues, his “failure to provide any legal or factual analysis of [the]
issue on appeal waive[d] that issue.”). 8
V.
For the foregoing reasons, we REVERSE the district court’s grant of
summary judgment regarding whether an agency relationship existed between
Fannie Mae and GMAC. We VACATE the portion of the district court’s
8 After Fannie Mae and Green Tree filed motions for summary judgment, Ms. Ishee
filed separate motions for partial summary judgment regarding her breach of contract,
conversion, defamation, infliction of emotional distress, and RESPA claims. She also sought
summary judgment in her favor regarding the issue of agency. For the reasons stated, we
affirm the district court’s denial of these motions for partial summary judgment.
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decision dismissing Ishee’s vicarious liability-based claims against Fannie Mae
for infliction of emotional distress, conversion, fraud, breach of duty of good
faith and fair dealing, defamation, and breach of contract, because the district
court’s dismissal of those claims was based entirely on its finding that there
was no genuine issue of material fact regarding whether an agency
relationship existed between Fannie Mae and GMAC. We AFFIRM dismissal
of Green Tree and AFFIRM the district court’s decision in all other respects.
We REMAND for proceedings consistent with this opinion.
REVERSED IN PART; VACATED IN PART;
AFFIRMED IN PART; REMANDED.
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