Dale Dowers v. Nationstar Mortgage, LLC

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DALE DOWERS; DEBRA DOWERS, No. 15-15178
Plaintiffs-Appellants,
D.C. No.
v. 2:14-cv-01679-
JCM-PAL
NATIONSTAR MORTGAGE, LLC;
WELLS FARGO BANK, NA; WELLS
FARGO BANK MINNESOTA, NA, OPINION
Trustee Banc of America Alternative
Loan trust series 2003–2007,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Argued and Submitted December 15, 2016
San Francisco, California
Filed March 31, 2017
Before: Diarmuid F. O’Scannlain, Ronald M. Gould,
and Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge Gould
2 DOWERS V. NATIONSTAR MORTGAGE
SUMMARY*
Home Loans
The panel affirmed in part and reversed in part the district
court’s Fed. R. Civ. P. 12(b)(6) dismissal of plaintiffs’ action
asserting claims relating to the defendants’ servicing of
plaintiffs’ home loan.
Affirming in part, the panel held that plaintiffs’ Fair
Debt Collection Practices Act claims under 15 U.S.C.
§§ 1692c(a)(2), 1692d, and 1692e failed because the
defendants did not engage in “debt collection” and were not
acting as “debt collectors.” Reversing in part, the panel
disagreed with the district court’s dismissal with respect to
the claim under 15 U.S.C. § 1692f(6), and held that that
provision governed defendants’ alleged conduct because it
expressly applied to the enforcement of security interests
such as a deed of trust. The panel concluded that the district
court should not have dismissed Count Four on the ground
that Nationstar Mortgage, LLC was engaging in conduct
related to non-judicial foreclosure.
The panel held that the district court correctly dismissed
plaintiffs’ claim of intentional infliction of emotional distress.
The panel concluded that plaintiffs’ allegations did not meet
the first element of extreme and outrageous conduct for such
a claim under Nevada law.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
DOWERS V. NATIONSTAR MORTGAGE 3
The panel held that the district court properly dismissed
plaintiffs’ claim of a violation of the Nevada Deceptive Trade
Practices Act. The panel agreed with the district court’s
prediction that the Supreme Court of Nevada would hold that
real estate loans did not fall within the Act.
COUNSEL
Mark C. Fields (argued), Law Offices of Mark C. Fields, Los
Angeles, California, for Plaintiffs-Appellants.
Ariel Stern (argued) and Natalie L. Winslow, Akerman LLP,
Las Vegas, Nevada, for Defendants-Appellees.
OPINION
GOULD, Circuit Judge:
Plaintiffs Dale and Debra Dowers filed this action against
Defendants Nationstar Mortgage, LLC (“Nationstar”), Wells
Fargo Bank, N.A. (“WFB”), and Wells Fargo Bank
Minnesota, N.A. (“WFB Minnesota”), asserting claims
relating to Defendants’ servicing of Plaintiffs’ home loan.
Plaintiffs alleged violations of the Fair Debt Collection
Practices Act (“FDCPA”), intentional infliction of emotional
distress (“IIED”), and a violation of the Nevada Deceptive
Trade Practices Act (“DTPA”). The district court dismissed
Plaintiffs’ complaint. With respect to the FDCPA claims, the
district court found that Plaintiffs did not state a claim for
relief because Defendants’ alleged conduct was a non-judicial
foreclosure attempt, not debt collection. We affirm the
district court except for its dismissal of Count Four, which
4 DOWERS V. NATIONSTAR MORTGAGE
asserts a violation of 15 U.S.C. § 1692f(6). That
provision—unlike the other three FDCPA provisions under
which Plaintiffs allege violations—governs a “business the
principal purpose of which is the enforcement of security
interests.” 15 U.S.C. § 1692a(6). Because Plaintiffs allege
conduct related to the enforcement of a security interest, that
claim should not have been dismissed on the ground that
Defendants were not collecting a debt.
I
A
In May 2003, Plaintiffs refinanced a loan on their Las
Vegas home by executing a Note and Deed of Trust with
Bank of America, N.A. (“Bank of America”).1 In August
2003, Bank of America assigned the Note to WFB
Minnesota. On January 28, 2010, ReconTrust Company,
N.A. (“ReconTrust”), acting as Bank of America’s agent,
recorded a notice of default on Plaintiffs’ loan. The next day,
Bank of America assigned the Deed of Trust to WFB
Minnesota, and WFB Minnesota substituted ReconTrust as
the trustee under the Deed of Trust. On April 12, 2010,
Plaintiffs filed a voluntary petition for protection under
1
These facts are taken from the allegations in Plaintiffs’ complaint,
the exhibits attached to the complaint, and the publicly-recorded
documents Defendants attached to their motion to dismiss. See Akhtar v.
Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012) (“When reviewing a motion
to dismiss we consider only allegations contained in the pleadings,
exhibits attached to the complaint, and matters properly subject to judicial
notice.” (internal quotation marks omitted)); Lee v. City of Los Angeles,
250 F.3d 668, 689 (9th Cir. 2001) (“[A] court may take judicial notice of
matters of public record.” (internal quotation marks omitted)).
DOWERS V. NATIONSTAR MORTGAGE 5
Chapter 7 of the Bankruptcy Code, and on July 21, 2010, they
received a discharge under 11 U.S.C. § 727.
On September 23, 2013, Bank of America, acting “as
attorney in fact” for WFB, substituted MTC Financial, Inc.,
doing business as Trustee Corps (“Trustee Corps”), as the
trustee under the Deed of Trust. A week later, Trustee Corps
recorded a notice of default on Plaintiffs’ loan. On
November 13, 2013, Nationstar sent Plaintiffs a letter stating
that Bank of America had assigned to Nationstar the servicing
rights to Plaintiffs’ loan.
In light of the notice of default, a Nevada foreclosure
mediator held a mediation between Plaintiffs and the lenders.
During the mediation, the lenders could not produce the
original loan documents. On February 13, 2014, the
mediation office sent the parties a notice stating that, based
on the mediator’s recommendation, it would not issue a
Certificate of Foreclosure.
On March 25, 2014, Nationstar sent Plaintiffs a letter
stating, “You are in default under the terms of the conditions
of the mortgage loan for failure to pay the required
installments when due. Nationstar intends to enforce the
provision of the Note and related security instrument[].” It
also stated, “If you do not pay the full amount of the default,
Nationstar may accelerate the entire sum of both principal
and interest due and payable, and invoke any remedies
provided for in the Note and security instrument, including
but not limited to the foreclosure sale of the property.” At the
end of March 2014, a Nationstar representative called
Plaintiffs and was “rude, bullying, and abusive.” In light of
these communications—and his belief that the outcome of the
foreclosure mediation rendered Defendants incapable of
6 DOWERS V. NATIONSTAR MORTGAGE
foreclosing on Plaintiffs’ home—Mark Fields, Plaintiffs’
attorney, wrote Nationstar a letter on April 2, 2014. Fields
asserted that Nationstar’s threat to foreclose was unlawful and
also requested that all communications from Nationstar be
directed to Fields, rather than to Plaintiffs. Fields also
demanded that Nationstar repudiate its threat to foreclose,
confirm that the Note owner had possession of the original
loan documents, and confirm that Nationstar would not
initiate any foreclosure proceedings until it obtains a
certificate of foreclosure from the foreclosure mediation
program.
Between May and June of 2014, Nationstar called
Plaintiffs three times and placed written notices on Plaintiffs’
door, stating in bold capital letters: “important,” “please call,”
“please be ready to give your account number,” and “we are
expecting your call today.” On June 18, 2014, Nationstar
sent a loan statement directly to Plaintiffs. Fields sent
Nationstar and Trustee Corps an email on June 25, 2014,
reasserting his previous demands and adding a demand that
Trustee Corps rescind the notice of default it had recorded on
January 29, 2010. Nationstar sent a letter to Fields stating
that it intended to respond by July 23. On July 15, Fields
emailed Nationstar and Trustee Corps objecting to the
delayed response and again demanding that the notice of
default be rescinded. Trustee Corps rescinded the notice of
default on July 16.
On July 21, 2014, a Nationstar representative sent Fields
a letter asserting that Nationstar did not receive notice of
Fields’s representation of Plaintiffs until July 3, 2013, and
that the owner of the Note was WFB Minnesota. With
respect to Fields’s demand that Nationstar confirm WFB
DOWERS V. NATIONSTAR MORTGAGE 7
Minnesota’s possession of the loan documents, the letter
stated:
[T]here are some circumstances where the
owner has given temporary possession of the
loan note to the servicer. The owner does this
in order to ensure that the servicer is able to
perform the services and duties incident to the
servicing of the mortgage loan, such as
foreclosure actions, bankruptcy cases, and
other legal proceedings.
Nationstar sent a letter directly to Plaintiffs on August 26,
stating that Plaintiffs’ home may be referred to foreclosure
within fourteen days. On August 27, a Nationstar
representative sent Fields a letter refusing to answer whether
it “or the lender” could provide the documents Fields had
requested because such information “does not pertain directly
to the servicing of the loan, does not identify any current
servicing errors, and/or is considered proprietary and
confidential.” Fields responded with two emails to a
Nationstar representative on August 27, accusing Nationstar
of falsely claiming to possess the Note and demanding that
Nationstar prove that it or WFB Minnesota had possession of
the Note. Two days later, Fields sent further emails to the
same Nationstar representative as well as Nationstar’s CEO
and COO, repeating his prior demands. Nationstar responded
to Fields on September 4, but did not respond to the demands.
As a result of these events, Plaintiffs alleged that they
moved out of Las Vegas, have experienced severe emotional
distress, and that Ms. Dowers “cries herself to sleep from the
abuse, stress, uncertainty, and lies she has suffered.”
8 DOWERS V. NATIONSTAR MORTGAGE
B
Plaintiffs sued Defendants in Nevada state court, asserting
six causes of action. Counts One through Four assert
violations of four different FDCPA provisions: 15 U.S.C.
§§ 1692c(a)(2), 1692d, 1692e, and 1692f(6). Count Five
asserts a claim of IIED, and Count Six asserts a violation of
the DTPA. Defendants removed the case to federal court and
successfully moved to dismiss the entire complaint under
Federal Rule of Civil Procedure 12(b)(6). Plaintiffs timely
appealed.
II
We have jurisdiction to review the district court’s order
dismissing Plaintiffs’ complaint, 28 U.S.C. § 1291, which we
review de novo, O’Brien v. Welty, 818 F.3d 920, 929 (9th Cir.
2016). To determine whether dismissal under Rule 12(b)(6)
was appropriate, we accept as true Plaintiffs’ nonconclusory
factual allegations, construe all reasonable inference in favor
of Plaintiffs, and ask whether the facts are sufficient to state
a claim to relief that is plausible on its face. See Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009).
III
Defendants contend that Plaintiffs’ FDCPA counts fail to
state a claim for relief because Defendants did not engage in
“debt collection” and were not acting as “debt collectors.”
We agree that the claims under 15 U.S.C. §§ 1692c(a)(2),
1692d, and 1692e fail for that reason. With respect to the
Section 1692f(6) claim, however, we disagree. That
provision governs Defendants’ alleged conduct because it
DOWERS V. NATIONSTAR MORTGAGE 9
expressly applies to the enforcement of security interests such
as a deed of trust.
A
The FDCPA defines a “debt collector” in relevant part as:
any person who . . . [engages] in any business
the principal purpose of which is the
collection of any debts, or who regularly
collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be
owed or due another. . . . For the purpose of
section 1692f(6) of this title, such term also
includes any person who . . . [engages] in any
business the principal purpose of which is the
enforcement of security interests.
15 U.S.C. § 1692a(6). A “debt” is “any obligation or alleged
obligation of a consumer to pay money arising out of a
transaction.” 15 U.S.C. § 1692a(5). Each of the four FDCPA
provisions under which Plaintiffs sue applies to only the
conduct of a “debt collector.” See id. § 1692c(a)(2) (“[A]
debt collector may not communicate with a consumer in
connection with the collection of any debt . . . if the debt
collector knows the consumer is represented by an attorney
with respect to such debt . . . .”); id. § 1692d (“A debt
collector may not engage in any conduct the natural
consequence of which is to harass, oppress, or abuse any
person in connection with the collection of a debt.”); id.
§ 1692e (“A debt collector may not use any false, deceptive,
or misleading representation or means in connection with the
collection of any debt.”); id. § 1692f (“A debt collector may
not use unfair or unconscionable means to collect or attempt
10 DOWERS V. NATIONSTAR MORTGAGE
to collect any debt.”). It follows that if Defendants were not
acting as “debt collectors” when interacting with Plaintiffs,
these claims should be dismissed.
B
Our decision in Ho v. ReconTrust Co., 840 F.3d 618 (9th
Cir. 2016), makes clear that the district court properly
dismissed Plaintiffs’ claims under Sections 1692c(a)(2),
1692d, and 1692e. There, Ho purchased a home using
borrowed funds secured by a deed of trust, of which
ReconTrust was the trustee. Id. at 619–20. After Ho missed
a payment, ReconTrust mailed to Ho notices of default and
sale, both of which advised Ho that ReconTrust would initiate
a non-judicial foreclosure if Ho did not make her loan
current. Id. at 620. Ho brought a claim under Section 1692e
against ReconTrust, alleging that the notices misrepresented
the amount she owed. Id.
We affirmed the dismissal of Ho’s Section 1692e claim
because ReconTrust’s conduct, as alleged, did not amount to
debt collection activity. ReconTrust was enforcing a security
interest, not collecting a debt, which, “[f]or the purposes of
the FDCPA, . . . is synonymous with ‘money.’” Id. at 621
(quoting 15 U.S.C. § 1692a(5)). “The object of a non[-
]judicial foreclosure is to retake and resell the security, not to
collect money . . . . Thus, actions taken to facilitate a non-
judicial foreclosure . . . are not attempts to collect ‘debt’ as
that term is defined by the FDCPA.” Id. We rejected Ho’s
argument that ReconTrust’s notices amounted to debt
collection because they had the effect of prompting Ho to pay
money she owed, explaining that it was the lien that prompted
Ho to pay off her loan, not ReconTrust’s actions. Id. (“The
fear of having your car impounded may induce you to pay off
DOWERS V. NATIONSTAR MORTGAGE 11
a stack of accumulated parking tickets, but that doesn’t make
the guy with the tow truck a debt collector.”); see also id. at
623–24.
We also reasoned that Section 1692a(6)’s clause
establishing a more expansive definition of “debt collector”
for purposes of Section 1692f(6) compels the conclusion that
security interest enforcers are not debt collectors for purposes
of the entire FDCPA. Id. at 622. As noted, that clause states,
“[f]or the purpose of section 1692f(6),” a debt collector “also
includes” a security interest enforcer. 15 U.S.C. § 1692a(6)
(emphasis added). Not only does the “also includes”
language make clear that, for purposes of the FDCPA outside
of Section 1692f(6), a security interest enforcer is not a debt
collector, but also this clause “would be superfluous if all
entities that enforce security interest were already included in
the definition of debt collector for purposes of the entire
FDCPA.” Ho, 840 F.3d at 622.
At bottom, Ho held that while the FDCPA regulates
security interest enforcement activity, it does so only through
Section 1692f(6). As for the remaining FDCPA provisions,
“debt collection” refers only to the collection of a money
debt.
This controlling precedent precludes Plaintiffs’ claims
under 15 U.S.C. §§ 1692c(a)(2), 1692d, and 1692e. Nothing
in Plaintiffs’ complaint suggests that Defendants engaged in
the collection of a money debt. The complaint does not
allege that WFB or WFB Minnesota engaged in any
collection-related activity, and the allegations suggest only
that Nationstar was engaged in enforcement of the Deed of
Trust, a security interest.
12 DOWERS V. NATIONSTAR MORTGAGE
Plaintiffs try to distinguish Ho by arguing that
Nationstar’s alleged conduct was not necessary to enforce the
trust beneficiary’s security interest. But that fact, even if true,
does not lead to the conclusion that Nationstar engaged in
debt collection.2 Nationstar’s conduct was not an attempt to
collect a money debt, which is a necessary element of a claim
under Sections 1692c(a)(2), 1692d, or 1692e. Ho commands
that Plaintiffs cannot assert a claim under those FDCPA
provisions unless Nationstar was collecting a money debt.3
C
The district court erred, however, when it dismissed
Plaintiffs’ claim under Section 1692f(6) on the ground that
Nationstar was not collecting a debt.
Unlike under Sections 1692c(a)(2), 1692d, and 1692e, the
definition of debt collector under Section 1692f(6) includes
2
In Ho, the inability under California law to obtain a deficiency
judgment following non-judicial foreclosure was integral to our
conclusion that ReconTrust’s actions taken to facilitate a non-judicial
foreclosure were not attempts to collect debt. Ho, 840 F.3d at 621. Here,
Nevada law would have similarly prohibited Nationstar from obtaining a
deficiency judgment against the Dowers had Nationstar non-judicially
foreclosed on the property. See Nev. Rev. Stat. § 40.455(3).
3
Plaintiffs also contend that construing the term “debt collector” in
this manner amounts to granting security interest enforcers “blanket
immunity.” We disagree. As explained below, Section 1692f(6) directly
regulates the conduct of security interest enforcers. Further, Ho’s holding
that the FDCPA does not regulate the conduct of security interest
enforcers (outside of Section 1692f(6)) in no way immunizes Defendants
from claims arising under other sources of law. It only clarifies that
Plaintiffs cannot invoke the FDCPA (outside of Section 1692f(6)) on the
facts alleged.
DOWERS V. NATIONSTAR MORTGAGE 13
a person enforcing a security interest. 15 U.S.C. § 1692a(6).
Section 1692f(6) regulates more than just the collection of a
money debt. It prohibits:
[t]aking or threatening to take any nonjudicial
action to effect dispossession or disablement
of property if – (A) there is no present right to
possession of the property claimed as
collateral through an enforceable security
interest; (B) there is no present intention to
take possession of the property; or (C) the
property is exempt by law from such
dispossession or disablement.
15 U.S.C. § 1692f(6).
The district court dismissed all four of Plaintiffs’ FDCPA
claims because Defendants’ conduct “relate[d] to non-judicial
foreclosure attempts.” But Section 1692f(6) regulates non-
judicial foreclosure activity. Again, Ho is instructive: when
contrasting Section 1692f(6) with the other FDCPA
provisions, we noted that ReconTrust was clearly a debt
collector for purposes of Section 1692f(6) because
ReconTrust was enforcing a security interest. See Ho,
840 F.3d at 622. Here, Plaintiffs alleged that Nationstar
threatened to take non-judicial action to dispossess Plaintiffs
of their home without a legal ability to do so. Such conduct
is exactly what Section 1692f(6) protects borrowers against.
As a result, the district court should not have dismissed Count
Four on the ground that Nationstar was engaging in conduct
related to non-judicial foreclosure.
14 DOWERS V. NATIONSTAR MORTGAGE
IV
The district court correctly dismissed Plaintiffs claims of
IIED and of violation of the DTPA. To state a claim of IIED
under Nevada law, Plaintiffs must allege “(1) extreme and
outrageous conduct with either the intention of, or reckless
disregard for, causing emotional distress, (2) the plaintiff’s
having suffered severe or extreme emotional distress and
(3) actual or proximate causation.” Olivero v. Lowe, 995 P.2d
1023, 1025 (Nev. 2000) (quoting Star v. Rabello, 625 P.2d
90, 91–92 (Nev. 1981)). Plaintiffs’ allegations did not meet
the first element of extreme and outrageous conduct. Such
conduct must be “outside all possible bounds of decency” and
“regarded as utterly intolerable in a civilized community.”
Maduike v. Agency Rent-A-Car, 953 P.2d 24, 26 (Nev. 1998)
(internal quotations marks omitted). The complaint alleges
that Nationstar threatened to foreclose on a property without
authority to do so because it did not possess the original loan
documents, contacted Plaintiffs directly after Plaintiffs’
attorney told it not to do so, and delayed the rescission of a
previously-recorded notice of default. Assuming these facts
to be true, Defendants’ conduct does not meet the threshold
of extreme and outrageous as it has been described by the
Supreme Court of Nevada. See State v. Eighth Judicial Dist.
Ct. ex rel. Cty. of Clark, 42 P.3d 233, 241 (Nev. 2002);
Barmettler v. Reno Air, Inc., 956 P.2d 1382, 1386 (Nev.
1998); Maduike, 953 P.2d at 26.
With respect to Plaintiffs’ DTPA claim, the complaint
does not identify which provision of the DTPA Plaintiffs
contend Defendants have violated. While the Supreme Court
of Nevada has not settled this issue, we agree with the district
court in predicting that the Supreme Court of Nevada would
hold that real estate loans do not fall within the DTPA. The
DOWERS V. NATIONSTAR MORTGAGE 15
DTPA governs transactions relating to “goods and services,”
see Nev. Rev. Stat. §§ 598.0915–598.0925, 598.0934, and a
real estate loan is neither a good nor a service within the
meaning of this statute.
V
The district court properly dismissed Plaintiffs’ claims of
violations of 15 U.S.C. §§ 1692c(a)(2), 1692d, and 1692e;
IIED; and violation of the DTPA. The district court erred,
however, by dismissing Plaintiffs’ claim under 15 U.S.C.
§ 1692f(6) on the ground that Defendants’ alleged conduct
constituted enforcement of a security interest. Section
1692f(6) regulates such conduct.
AFFIRMED in part, REVERSED in part, and
REMANDED.