In Heinz v. Carrington Mortgage Services LLC, the Eighth Circuit ruled that the mere inclusion of a boilerplate disclosure language does not transform an otherwise benign information communication into one intended to induce the debtor to pay under the “purpose of animation” test. Which makes an overall consideration of the purpose of an individual communication to determine whether it involves the protections of the FDCPA.
In July 2017, Carrington Mortgage Services LLC (Carrington) became the mortgage manager for applicant David Heinz. By the time Carrington became the mortgage manager, Heinz’s loan was already in default and a foreclosure sale was scheduled for the first of the following month. As Heinz had previously submitted several loss mitigation requests to his former agent, he contacted his state attorney general’s office (AGO) for assistance in the loss mitigation request from Carrington. Subsequently, the forced sale of the Heinz property was postponed until November 14, 2017.
Between August and November 2017, Heinz asked Carrington to help mitigate the losses through a loan modification. As part of these requests, Heinz sent Carrington various financial information, but Carrington informed Heinz on several occasions that he had not provided all the necessary information and that his request was considered incomplete. In particular, Carrington sent a letter to Heinz on October 8, 2017, stating that his loan modification request had been canceled due to being incomplete, and he sent another letter on October 20, 2017 to AGO, retailer the background to Heinz’s attempts to submit a loss mitigation claim and further stating that Carrington had not received all of the necessary documentation.
According to the AGO, on November 7, 2017, Carrington informed the AGO that Heinz’s request had been sent to its underwriting department and that it was awaiting a final decision. Additionally, Carrington said an application sent to underwriting was considered complete and would force a postponement of a foreclosure sale. However, the foreclosure sale proceeded as planned on November 14, 2017. Despite repeated requests from the AGO to rescind the sale, Carrington did not respond until May 15, 2018, when he sent a letter, stating that there would be no cancellation. Specifically, this letter stated that Carrington would not cancel the sale because Heinz had not provided all of the documents necessary to complete its loss mitigation request.
Heinz filed a lawsuit against Carrington in state court on June 8, 2018, alleging a violation of the FDCPA and two state law causes of action. However, at the summary judgment stage, only the FDCPA claim remained. At this point, the district court issued summary judgment in favor of Carrington, finding that Carrington’s communications and conduct while dealing with Heinz were not related to an attempt to collect a debt under the test. of the “animation objective”. Finding that Carrington could not be found by a jury for communicating to Heinz for this purpose, the district court dismissed his claim.
On appeal, Heinz argued that the district court had wrongly reduced the “animation objective” test. In particular, Heinz relied on the Supreme Court ruling in Obduskey v. McCarthy & Holthus LLP argue that non-judicial foreclosure is a debt collection activity and that every foreclosure-related communication at issue was by extension an attempt to collect a debt. Rejecting this argument, the Eighth Circuit held that “[a]While non-judicial foreclosure is a debt collection activity, it does not follow that any communication generated during a non-judicial foreclosure is made “in connection with the collection of a debt”.
The Eighth Circuit noted that “[a]Although the [October 8] letter read, “If your loan is in arrears, collection activity may continue, including referral to foreclosure or foreclosure sale,” this catch-all reference, conditional on collection activity, which uses the word “If” does not mean that the letter was sent “in” connection with the collection of a debt. “[t]its communication is from a debt collector and it is for the purpose of collecting a debt and any information obtained will be used for that purpose, “the inclusion of such a boilerplate statement”[does] not automatically trigger the protections of the FDCPA, as well as the absence of such [disclosures] has no decisive significance. Because the “primary purpose” of the letters was not to induce Heinz to pay off his unpaid debt, this catch-all language did not turn communication into a debt collection activity despite plain language indicating otherwise.
This case provides debtors in the Eighth Circuit (and elsewhere) with excellent advice on the proper use of boilerplate language in communications with debtors. While this may seem contrary to the plain language of the FDCPA, the mere use of boilerplate language is (at least in the Eighth Circuit) insufficient to transform a disclosure of information into a debt collection activity that might otherwise trigger the protections of the FDCPA.
