In Heinz v. Carrington Mortgage Services LLC, the Eighth Circuit held that the mere inclusion of boilerplate disclosure language does not transform an otherwise benign informational communication into one meant to induce payment by the debtor under the “animating purpose” test, which makes a holistic consideration of an individual communication’s purpose to determine whether it implicates the protections of the FDCPA.
In July 2017, Carrington Mortgage Services LLC (Carrington) became the servicer of plaintiff David Heinz’s mortgage loan. At the time Carrington became the mortgage servicer, Heinz’s loan was already in default and a foreclosure sale was scheduled for the first of the following month. As Heinz had already submitted multiple loss mitigation applications to his previous servicer, he contacted his state’s attorney general’s office (AGO) for assistance in applying for loss mitigation with Carrington. Thereafter, the foreclosure sale of Heinz’s property was postponed to November 14, 2017.
Between August and November of 2017, Heinz made requests to Carrington for assistance with loss mitigation via a modification of his loan. In connection with these requests, Heinz mailed to Carrington various financial information, however Carrington informed Heinz on multiple occasions that he failed to provide all the necessary information and that his application was considered incomplete. In particular, Carrington sent one letter to Heinz on October 8, 2017, stating that his loan modification application had been cancelled due to being incomplete, and he sent another letter on October 20, 2017 to the AGO, detailing the background of Heinz’s attempts to submit a loss mitigation application and further stating that Carrington had not received all the necessary documentation.
According to the AGO, on November 7, 2017, Carrington notified the AGO that Heinz’s application had been sent to its underwriting department and was awaiting a final determination. Further, Carrington stated that an application sent to underwriting was considered complete and would force the postponement of a foreclosure sale. However, the foreclosure sale proceeded as scheduled on November 14, 2017. Despite repeated requests by the AGO to rescind the sale, Carrington did not respond until May 15, 2018 when it sent a letter, stating that there would be no recission. Specifically, this letter stated that Carrington would not rescind the sale because Heinz failed to provide all the necessary documentation to complete his loss mitigation application.
Heinz filed a suit against Carrington in state court on June 8, 2018, alleging violation of the FDCPA and two state law causes of action. However, by the summary judgment stage, only the FDCPA claim remained. At that point, the district court granted summary judgment in favor of Carrington, concluding that Carrington’s communications and conduct while dealing with Heinz were not in connection with an attempt to collect a debt under the “animating purpose” test. Finding that Carrington could not be found by a jury to have made communications to Heinz with this purpose, the district court dismissed his claim.
On appeal, Heinz argued that the district court erroneously narrowed the “animating purpose” test. In particular, Heinz relied on the Supreme Court’s decision in Obduskey v. McCarthy & Holthus LLP to argue nonjudicial foreclosure is a debt collection activity and that each communication related to the foreclosure at issue was by extension an attempt to collect a debt. Rejecting this argument, the Eighth Circuit reasoned that “[a]lthough nonjudicial foreclosure is a debt collection activity, it does not follow that any communication generated during a nonjudicial foreclosure is made ‘in connection with the collection of a debt.'”
The Eighth Circuit noted that “[a]lthough the [October 8] letter stated, ‘if your loan is delinquent collection activity may continue, including referral to foreclosure or foreclosure sale,’ this boilerplate, conditional reference to collection activities, which uses the word ‘if,’ does not mean that the letter was sent ‘in connection with the collection of a debt.'” Even more notable, the Eighth Circuit held that although each letter plainly stated that “[t]his 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, just as the absence of such [disclosures] does not have dispositive significance.” Because the “animating purpose” of the letters was not to induce Heinz to pay his outstanding debt, this boilerplate language did not turn the communication into debt collection activity despite the plain language stating otherwise.
This case provides debt collectors in the Eighth Circuit (and elsewhere) with excellent guidance on the appropriate use of boilerplate language in communications with debtors. Although it 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 an informational communication into debt collection activity that might otherwise trigger the protections of the FDCPA.
