Opinion
NO. 04-1252
07-22-2004
ATUAHENE OPPONG, Appellant v. FIRST UNION MORTGAGE CORPORATION; WELLS FARGO HOME MORTGAGE, INC.; FRANCIS S. HALLINAN
On Appeal From the United States District Court for the Eastern District of Pennsylvania
(D.C. Civ. No. 02-cv-02149)
District Judge: Honorable Eduardo C. Robreno Submitted Under Third Circuit LAR 34.1(a)
July 14, 2004 Before: SLOVITER, NYGAARD AND CHERTOFF, CIRCUIT JUDGES
JUDGMENT
This cause came on to be heard on the record from the United States District Court for the Eastern District of Pennsylvania and was submitted pursuant to Third Circuit LAR 34.1. On consideration whereof, it is now here
ORDERED AND ADJUDGED by this court that the judgment of the District Court entered December 30, 2003 be and the some is hereby AFFIRMED IN PART, VACATED IN PART, and REMANDED for further proceedings. All of the above in accordance with the opinion of this Court.
ATTEST:
/s/
Chief Deputy Clerk DATED: July 22, 2004 Certified as a true copy and issued in lieu
of a formal mandate on 11/30/04 Teste: /s/
Clerk, U.S. Court of Appeals for the Third Circuit UNREPORTED - NOT PRECEDENTIAL On Appeal From the United States District Court for the Eastern District of Pennsylvania
(D.C. Civ. No. 02-cv-02149)
District Judge: Honorable Eduardo C. Robreno Submitted under Third Circuit LAR 34.1(a)
July 14, 2004 Before: SLOVITER, NYGAARD AND CHERTOFF, CIRCUIT JUDGES (Filed: July 22, 2004 ) OPINION PER CURIAM
Atuahene Oppong appeals the District Court's grant of summary judgment for the Defendants, holding that none of the Defendants were "debt collectors" under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692g(a) et seq.
Oppong's action arises out of the defendants' efforts to foreclose on a defaulted mortgage secured by Oppong's residence. The underlying facts are well-known to the parties and are fully set forth in the District Court's Memorandum Opinion. Oppong filed this action in the District Court in April, 2002, claiming that the defendants violated the FDCPA by failing to give him proper notice of the validation of his debt, and by using deceptive, fraudulent, unfair and unconscionable collective practices against him. With respect to defendant Hallinan, Oppong claimed that Hallinan violated § 1692d when he verbally threatened and physically assaulted Oppong on August 21, 2001, at an impromptu meeting between Oppong and attorneys Shah-Jani and Hallinan in the hallway of the Common Pleas Court. Oppong raised related state law claims and sought damages. The defendants filed motions for summary judgement in May, 2003. On December 30, 2003, the District Court granted summary judgment for the defendants.
Oppong alleged that Hallinan told Oppong that he would take Oppong's house away from him. Oppong then asked Hallinan if he "wanted to shake hands on it," reaching out his hand to Hallinan. In response, Hallinan angrily shook Oppong's hand "with a vengeance" and a "vieious grip."
The District Court determined that First Union Mortgage Corporation ("First Union"), successor in interest of Corestates Mortgage Corporation ("Corestates") through merger, was the original creditor of Oppong's loan and mortgage in 1995. First Union continued to service the loan after it was sold to the Federal Loan Mortgage Corporation shortly after closing in 1995. Oppong defaulted on his loan sometime after August, 1997. The District Court held that First Union met one of the FDCPA's statutory exceptions to the definition of "debt collector" based on the undisputed fact that Oppong's debt was not in default at the time it was originally obtained by First Union. See 15 U.S.C. § 1692a(6)(F)(iii). As for Wells Fargo Home Mortgage Inc. ("Wells Fargo"), the District Court held that although Wells Fargo obtained its interest in the loan and mortgage by assignment after Oppong had defaulted and therefore did not satisfy the statutory exception, it was not a "debt collector" in any event. The District Court held that, absent any proffer by Oppong showing otherwise, record evidence indicated that the principal purpose of Wells Fargo's business was the making and servicing of mortgages and loans, not debt collection. See § 1692a(4); Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 404 (3d Cir. 2000). With regard to Hallinan, the District Court found that Oppong failed to meet his burden of showing that Hallinan was regularly engaged in debt collection activity, and thus, in the absence of any genuine dispute of material fact, the District Court held that Hallinan was not a debt collector under the FDCPA. The District Court declined to rule on the state law claims, dismissing them without prejudice. Oppong appealed.
Oppong did not name Hallinan's law firm, Federman & Phelan, as a party defendant.
We have jurisdiction to review the District Court's final order pursuant to 28 U.S.C. § 1291 and exercise plenary review over its grant of summary judgment pursuant to Fed. R. Civ. P. 56(c). Mitchell v. Eastman Kodak Co., 113 F.3d 433, 437 (3d Cir. 1997). As the District Court explained, summary judgment is appropriately entered only when "there is no genuine issue as to any material fact" and "the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 50(c). Facts and inferences drawn from those facts must be viewed in the light most favorable to the non-moving party. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976). When the moving party has pointed to material facts tending to show there is no genuine issue for trial, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts...Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). After careful review of the record, we agree with the District Court's decision to grant summary judgment for defendants First Union and Hallinan. We will affirm the District Court's grant of summary judgment as to defendant First Union substantially for the reasons stated in the District Court's Memorandum Opinion. As discussed below, we will affirm summary judgment in Hallinan's favor on alternate grounds. See Univ. of Md. v. Peat Marwick Main & Co., 923 F.2d 269, 275 (3d Cir. 1991). However, we will vacate the District Court's grant of summary judgment in Wells Fargo's favor and remand for further proceedings.
Turning to the District Court's ruling as to defendant Hallinan, a "debt collector" is defined by the amended FDCPA as "any person who uses any instrumentality of interstate commerce or the mails 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." 15 U.S.C.A. § 1692(a)(6). The FDCPA applies to attorneys whose practices meet the definition of "debt collector" under the law. See Heintz v Jenkins, 514 U.S. 291 (1995). An attorney may "regularly" render debt collection services even if the service does not comprise the principal purpose of the attorney's legal practice. Garrett v. Derbes, 110 F.3d 317, 318 (5th Cir. 1997). Factors to consider are the volume of debt collection activity in the relevant time period, the existence of an ongoing relationship between the attorney and the lender and the fraction of the attorney's business that comprises debt collection services. See Crossley v. Lieberman, 868 F.2d 566, 569 (3d Cir. 1989) (holding that the attorney was a "debt collector" under the FDCPA where the debt collection comprised a principal part of the attorney's practice, he had an ongoing relationship with the lender for at least ten years, and he had filed a total of 175 mortgage foreclosures in one and a half years). If the volume of an attorney's debt collection services is great enough, it is irrelevant that such services make up a small percentage of the total practice; the attorney still renders them "regularly." See Garrett v. Derbes, 110 F.3d at 318.
Hallinan, as the moving party, had the burden of producing evidence to support the grant of summary judgment as a matter of law with regard to his "debt collector" status under the FDCPA. Although Payoff Figure and Reinstatement Figure documents on the letterhead of the non-party law firm, Federman & Phelan, L.L.D., explicitly state "this firm is a debt collector attempting to collect a debt," these documents fail to shed any light on the extent to which Hallinan himself was engaged in debt collecting activities. Thorough review of the record reveals no evidence with regard to the particulars of Hallinan's law practice. Consequently, we find that the District Court erred in concluding that Hallinan was not a "debt collector" under the FDCPA in the absence of any supporting evidence.
See Complaint, Exhibit "C".
For different reasons, however, we agree with the District Court that summary judgment in Hallinan's favor is warranted. Assuming for purposes of summary judgment that Hallinan is a debt collector as defined by the FDCPA and that Oppong's allegations concerning Hallinan are true, we find that Hallinan's conduct on August 21, 2001 does not amount to a violation of § 1692d of the FDCPA. Section 1692d prohibits a debt collector from engaging "in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt." 15 U.S.C. § 1692d. Taken in context, Hallinan's remark that he was going to take Oppong's house away simply indicated Hallinan's opinion on the likely outcome of the state court foreclosure proceedings. As for the physical contact between the two men, it was limited to a handshake initiated by Oppong himself, and thus, the natural consequence of such conduct can hardly be said to have been harassing, oppressive, or abusive.
As for Wells Fargo, the District Court determined that the defendant was not a "debt collector" under the FDCPA, holding that Oppong offered no evidence to support a finding that the collection of debts was the "principal purpose" of Wells Fargo's business or that Wells Fargo was "regularly engaged" in debt collection. Just as in Hallinan's case, the District Court erroneously held Oppong to the statutory burden of proof at summary judgment. However, we will not affirm the District Court's judgment because we believe that a genuine issue of material fact exists precluding summary judgment on the issue of Wells Fargo's debt collector status.
The FDCPA applies only to "debt collectors." Creditors are generally not subject to the FDCPA. Pollice v. National Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000). We agree with the District Court that Wells Fargo is not a creditor under the FDCPA because Oppong's loan was already in default at the time it was assigned to Wells Fargo for servicing. The question is not as clear when it comes to deeiding as a matter of law whether Wells Fargo meets the definition of "debt collector" under the FDCPA.
The February 26, 2001 transfer letter to Oppong from First Union and Wells Fargo describes Wells Fargo's business as a diversified financial services company, a home lender providing mortgage servicing to its customers, which suggests, as the District Court noted, that Wells Fargo's principal business purpose may be servicing loans and not debt collection. However, the transfer letter also contained the initial communication required by 15 U.S.C. § 1692g as follows: "Wells Fargo Home Mortgage is required by the Fair Debt Collection Practices Act to inform you that if your loan is currently delinquent or in default, as your loan servicer, we are attempting to collect a debt, and any information obtained will be used for that purpose..." The initial communication is generalized, addressing an unspecified number of debtors whose loans might be overdue or in default, which suggests that Wells Fargo may be regularly engaged in debt collection even though its principal business purpose may be servicing un-defaulted or non-delinquent mortgage loans. Admittedly, the current record is somewhat bare on the issue. We attribute the scant record to Wells Fargo's failure to provide any other evidence from which the District Court could determine that Wells Fargo is not a debt collector as a matter of law at summary judgment. Thus, we conclude that a material factual issue exists regarding Wells Fargo's debt collector status, and accordingly the District Court should not have granted summary judgment in Wells Fargo's favor.
Wells Fargo urges this Court to affirm the District Court's grant of summary judgment on two alternate grounds: (1) that Wells Fargo substantially complied with the FDCPA's notice requirements; and (2) Oppong's FDCPA claims are barred by the doctrines of issue and claim preclusion. We decline. Given the factual questions regarding the alleged substantive violations of the FDCPA by Wells Fargo and the extent to which doctrines of issue or claim preclusion apply in this case, we will remand this claim so that the District Court may consider these issues in the first instance. In so doing, we express no opinion on the underlying merits.
We have carefully reviewed Oppong's remaining arguments on appeal, and we find them to be meritless. Accordingly, we will affirm the judgment of the District Court as to defendants First Union and Hallinan. We will vacate the judgment of the District Court as to defendant Wells Fargo and remand the matter for further proceedings consistent with this opinion. First Union's motion for summary affirmance is granted.