H/T Dave Kreiger

SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES, UNLIMITED JURISDICTION

ALEXANDER POLONSKY; BRIAN
ZAGHI each individually, and on behalf of
all others similarly situated,
Plaintiffs,

vs.

WELLS FARGO BANK & COMPANY, a
Delaware Corporation; WELLS FARGO
BANK, NATIONAL ASSOCIATION; and
DOES 1 through 50, inclusive,
Defendants.

CLASS ACTION COMPLAINT FOR:
1. WRONGFUL
TERMINATION/RETALIATION
IN VIOLATION OF CALIFORNIA
LABOR CODE § 1102.5;
2. WRONGFUL TERMINATION IN
VIOLATION OF PUBLIC POLICY;
3. VIOLATION OF BUSINESS &
PROFESSIONAL CODE §§ 17200
and 17203 – UNLAWFUL
BUSINESS PRACTICES
4. FAILURE TO PAY WAGES.

IT’S NOT JUST WELLS FARGO…IT’S ALLLLLL OF THEM!!!

CNN MONEY-

Wells Fargo CEO John Stumpf is running “a criminal enterprise” and should be fired or even jailed, several members of Congress claimed.

Rep. Michael Capuano on Thursday said the Wells Fargo (WFC) scandal and the people who lead the bank reminded him of “the guys who ran Enron,” evoking a company that was found guilty of massive financial fraud.

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Sunday – October 2, 2016

Foreclosure Workshop #22 (A Two-Hour Special with Guest Virginia Parsons):

U.S. Bank, Trustee v. Mattos — A Case Study on How the Hawaii Supreme Court on September 15, 2016 While Conducting Oral Argument Confronted Some of the Most Important Present Issues in Securitized Trust Judicial Foreclosure Litigation.

Those who miss this important live broadcast can listen to it on the Past Broadcast Section of our Website at www.foreclosurehour.com shortly after it airs live on KHVH-AM News Radio in Honolulu and simultaneously throughout the United States on the iHeart Internet App.

EVERY SUNDAY 3:00 PM HAWAII 6:00 PM PACIFIC 9:00 PM EASTERN ON KHVH-AM (830 ON THE DIAL) AND ON iHEART RADIO

WSJ-

After repeated efforts to salvage Italy’s most troubled banks, the country’s government is leaning on an unlikely would-be savior: James Dimon.

The J.P. Morgan Chase & Co. chairman and chief executive is an Italophile, his bank has long had a presence in Italy and it has built close ties to the government. It also offers what few European banks can: a vast balance sheet to back a cleanup operation.

Resuscitating Italy’s banks is a daunting task laden with risk, and it is among the central challenges of European finance. The Italian banking system is burdened by hundreds of billions of euros of bad loans, and many of its smaller banks are on their knees. Postcrisis rules curtail the Italian government’s ability to ride to the rescue with bailouts, leaving the job to the private sector.

[WALL STREET JOURNAL]

image: (Reuters/Yuri Gripas)

Bloomberg –

California, the nation’s largest issuer of municipal bonds, is barring Wells Fargo & Co. from underwriting state debt and handling its banking transactions after the company admitted to opening potentially millions of bogus customer accounts.

The suspension, in effect immediately, will remain in place for 12 months. A “permanent severance” will occur if the bank doesn’t change its practices, State Treasurer John Chiang said Wednesday. The state also won’t add to its investments in Wells Fargo securities. Chiang already replaced Wells Fargo with Loop Capital for two muni deals totaling about $527 million that will be sold next week.

“Wells Fargo’s venal abuse of its customers by secretly opening unauthorized, illegal accounts illegally extracted millions of dollars between 2011 and 2015,” Chiang said in a news conference in San Francisco. “This behavior cannot be tolerated and must be denounced publicly in the strongest terms.”

[BLOOMBERG]

Baroni v Wells Fargo, Nationstar Et Al Motion to Amend With SAC by DinSFLA on Scribd

Filed Reply Baroni v Wells Fargo, Nationstar by DinSFLA on Scribd

RT-

CNN MONEY-

Wells Fargo CEO John Stumpf will forfeit much of his 2016 salary — including his bonus and $41 million in stock awards — as the bank launches a probe into its phony accounts scandal.

The fallout from the controversy has also resulted in its first major executive departure. Carrie Tolstedt, who headed the division that created the fake accounts, has left the company. Tolstedt was planning on retiring at the end of 2016, but she has exited the company ahead of schedule.

WMC Action News 5 –

A Shelby County Circuit Court lawsuit and government records revealed a pattern of fraud allegations against mortgage-servicing company Nationstar Mortgage.

The WMC Action News 5 Investigators launched an investigation of the Dallas-based mortgage-servicer after it foreclosed on the Cordova, Tennessee, home of Linda Howard. Howard and her husband had owned the home since 1998. Her attorney Kevin Snider produced records that proved Howard never missed a payment since Nationstar Mortgage started servicing her mortgage in 2011.

Also according to the records, Nationstar Mortgage suddenly started refusing her monthly payments in February of this year. From February to May, the company sent her payments back with statements posting thousands of dollars in unexplained fees like “property inspections” and “disbursement insurance.”

“I wrote them. I called them. And I got no response,” Howard said.

[WMC Action News 5]

JD SUPRA-

Preparing For A World When Lis Pendens Protections Are All But Ober

“BEWARE REAL PROPERTY LITIGATORS” warns a former chair of the Real Property, Probate and Trust Law Section of the Florida Bar.

This advice, given in response to a new appellate ruling blunting the protections of Florida’s lis pendens statute, signals the potential apocalyptic impact of a decision by the Fourth District Court of Appeal in Ober v. Town of Lauderdale-By-The-Sea.  While this decision marks a win for municipalities around the state dealing with unoccupied “zombie” properties, it could haunt the foreseeable future for lenders, borrowers, and junior lien-holders.

Under Florida law, a lis pendens provides formal notice to all interested parties of an pending legal action to enforce a lien encumbering a given property. Florida’s lis pendens statute states that the recording of a lis pendens effectively bars the enforcement of any subsequently recorded liens against the property unless the lienholder intervenes in the proceedings within 30 days. The statute also provides that anyone who acquires an interest in the property during the “pendency of the action” shall take that interest subject to the rendering of a final judgment in such action.

[SD SUPRA]

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Sunday – September 25, 2016

What Every Homeowner Needs To Know About the Latest Foreclosure Trends and Developments in American Law in Order To Survive in an Inconsistent Legal System Largely Out of Service Which Treats Like Cases Differently.
——————–

It is a natural law of Justice in virtually every legal system in the history of the world that “like cases should be treated alike,” except it seems in the field of foreclosure defense in America where national inconsistency has become the norm.

Thus, for nearly a tumultuous decade following the Mortgage Crisis of 2008, American Courts have created a record of contradiction, confusion, and uncertainty, ignoring established rules of evidence and even its own case precedents governing other areas of the law, while often pompously looking the other way in the tradition of Pontius Palate, routinely favoring lenders, often misusing the doctrine of stare decisis to protect previously egregiously mistaken case precedents.

Exacerbating the crucifixion of homeowners has been the proliferation of conflicting judicial decisions, unprincipally treating like foreclosure cases differently between federal and state courts, treating like foreclosure cases differently between courts in different states, and treating like foreclosure cases differently even within the same federal or state court and even among individual judges on the same multi-judge bench in the same jurisdiction.

Homeowners facing foreclosure need therefore to recognize such inconsistencies and understand the latest foreclosure trends and developments in their own particular jurisdiction in order to survive in a legal system largely out of service.

On this Sunday’s Foreclosure Hour, we will examine some of the most important recent foreclosure trends and developments nationally, illustrated in a few recent cases, encouraging listeners that in order to survive foreclosure, armed with knowledge of what other courts nationally may be doing, they need however nevertheless to better understand their own jurisdiction and their own individual foreclosure judge rather than primarily focusing as they too often do on what is happening in other state or federal jurisdictions or even what other judges are doing in their own jurisdiction.

Those who miss this important live broadcast can listen to it on the Past Broadcast Section of our Website at www.foreclosurehour.com shortly after it airs live on KHVH-AM News Radio in Honolulu and simultaneously throughout the United States on the iHeart Internet App.

EVERY SUNDAY 3:00 PM HAWAII 6:00 PM PACIFIC 9:00 PM EASTERN ON KHVH-AM (830 ON THE DIAL) AND ON iHEART RADIO

J.P. Morgan Chase Bank, Defendant, represented by Frederick B. Burnside, Davis Wright Tremaine, LLP, Kaley L. Fendall, Davis Wright Tremaine, LLP & Kevin H. Kono, Davis Wright Tremaine, LLP.

OPINION AND ORDER

ANN AIKEN, District Judge.

Plaintiff William J. Paatalo seeks a declaratory judgment deeming null and void the 2009 foreclosure of his home loan and trustee’s sale of the property securing the loan. The lender and original trustee was Washington Mutual Bank, F.A. (“WaMu”). Defendant JPMorgan Chase was the purchaser of the property at the trustee’s sale and the assignee of many of WaMu’s assets and liabilities after WaMu’s failure during the financial crisis.

The parties filed cross-motions for summary judgment. For the reasons set forth below, plaintiffs motion is denied, defendant’s motion is granted, and this case is dismissed.

BACKGROUND

In 2004, plaintiff purchased real property in Yachats, Oregon (“the property”) for $449,500. Compl. ¶ 1. In 2006, he refinanced the property by obtaining an $880,000 “Option Arm” loan and a nearly $110,000 home equity line of credit (“HELOC”) from WaMu. Id. ¶ 2. In 2007, the HELOC was increased to $155,000. Id. ¶ 3. Both loans were secured by deeds of trust on the property. Id. ¶ 2.

Plaintiff alleges WaMu misapplied payments and reported false derogatory information to credit reporting agencies on the HELOC account. Id. ¶ 5. After disputing those actions with WaMu, plaintiff alleges he began to suspect fraud. Id. ¶ 6. He alleges WaMu inflated the appraised value of his property, falsified his income on his loan application without his knowledge or consent, and committed numerous violations of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq., including “fail[ing] to provide proper `Notices of Rescission’ on the 2006 loans[.]” Id.

Plaintiff further alleges he sent a written “Notice of Rescission” on both loans to WaMu in March 2008. Id. He asserts WaMu responded with a letter declining his rescission and attaching a “payoff quote” of just under one million dollars. Id. ¶ 7. According to plaintiff, the letter stated he could not rescind unless he first paid off the amount of the debt in full — something he was unable to do. Id. In July 2008, plaintiff filed suit in this Court against WaMu, alleging violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. See Paatalo v. Wash. Mut. Bank, 2011 U.S. Dist. LEXIS 46350, *1 (D. Or. Apr. 27, 2011).

On September 25, 2008, at the “height of the global financial crisis, [WaMu] was seized by its regulator . . . in what has been described as `the largest bank failure in U.S. history.'” Anchor Savs. Bank, FSB v. United States, 121 Fed. Cl. 296, 302 (Fed. Cl. 2015) (quoting Robin Sidel et al., WaMu Is Seized, Sold Off to JP. Morgan, In Largest Failure in US. Banking History, Wall Street Journal, Sept. 26, 2008, availableatwww.wsj.com/articles/SB122238415586576687). Pursuant to a Purchase and Assumption Agreement, the Federal Deposit Insurance Corporation (“FDIC”) transferred many of WaMu’s assets and liabilities to defendant. Id.; Compl. ¶ 28. After WaMu’s failure, plaintiffs pending claims against WaMu “went to the FDIC,” pursuant to the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), 12 U.S.C. §§ 1811 et seq. Compl. ¶ 8. In 2011, plaintiffs suit against WaMu was dismissed due to plaintiffs failure to file an administrative claim with the FDIC within the allotted timeframe. Paatalo, 2011 U.S. Dist. LEXIS 46350 at *5.

Plaintiff alleges that WaMu recorded a “Notice of Default and Election to Sell” in connection with the property on April 2, 2009. Compl. ¶ 10. A set of additional documents were recorded in connection with the property on July 31, 2009. Id. ¶ 11. Those documents included a Notice of Foreclosure, Trustee’s Notice of Sale, and affidavits claiming WaMu was the beneficiary of plaintiffs’ deeds of trust. Id. At the trustee’s sale, defendant purchased the property for $410,000 cash, and on August 18, 2009, a Trustee’s Deed was issued to defendant for the property. Id. ¶ 13.

In October 2010, defendant filed an ejectment action against plaintiff in Lincoln County Circuit Court. Id. ¶ 14; Fendall Deel. ¶ 2 & Ex. A May 11, 2016. Plaintiff filed an answer and asserted a host of counter-claims, including claims for declaratory relief, illegal foreclosure, and fraud. Fendall Deel. ¶ 3 & Ex. B May 11, 2016. On June 2, 2011, the court granted defendant’s motion to dismiss plaintiffs counterclaims, granted defendant’s motion to voluntarily dismiss the ejectment complaint, and dismissed the case. Id. ¶¶ 4, 5 & Exs. C, D. Defendant filed an appeal. Id. ¶ 6 & Ex. E. On July 12, 2011, while the appeal was pending, defendant sold the property to a third-party purchaser. Compl. ¶ 16.

In November 2012, the parties signed a settlement agreement (“the settlement agreement”).^[1] Fendall Deel. ¶ 7 & Ex. F May 11, 2016. Pursuant to the agreement, plaintiff voluntarily dismissed his appeal in state court. The agreement also contained a mutual release of claims, the terms of which are discussed in more detail later in this Opinion.

Plaintiff filed this lawsuit after the Supreme Court decided Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790 (2015). Before Jesinoski, the federal courts were split in their interpretation of the provisions of TILA governing a borrower’s right to rescind a loan. Some courts, including the Ninth Circuit, had held that when a lender denied a request to rescind, the borrower was required to file a lawsuit to enforce his or her rescission rights, and that such a suit must be filed within three years of closing. SeeYamamoto v. Bank of N.Y., 329 F.3d 1167, 1172 (9th Cir. 2003) (holding that when a lender contests a borrower’s right to rescind, “it cannot be that the security interest vanishes immediately upon the giving of notice”). Other courts disagreed, holding that a notice of rescission automatically voids the lender’s security interest. SeeSherzer v. Homestar Mtg. Servs., 707 F.3d 255, 258 (3d Cir. 2013) (rejecting the argument “that an obligor must both send written notice and file suit within three years of the closing date”). In Jesinoski, a unanimous Supreme Court held “rescission is effected” at the time the borrower gives notice of intent to rescind, so long as the notice is given within the statutory time period. Jesinoski, 135 S. Ct. at 792. Plaintiff argued Jesinoski made clear the loan was rescinded in 2008, when he sent the letter to WaMu; WaMu’s security interest in the property was voided at that time; and, as a result, defendant never obtained a valid interest in the property through the trustee’s sale. Plaintiff asked this Court to declare (1) plaintiff is the sole owner of the property; (2) the foreclosure of the Deeds of Trust was null and void; and (3) all documents recorded on or against title to the subject property after the March 29, 2008 notices of rescission are null and void. Compl. at 9.

Defendant moved to dismiss for failure to state a claim. On November 12, 2015, this Court issued an opinion and order denying defendant’s motion to dismiss (“November 2015 Opinion”) because “if—as plaintiff alleges—WaMu failed to provide the required disclosures and plaintiff delivered written notice of rescission in March 2008, the rescission was effected and the security interest in plaintiffs property voided at that time.” Paatalo v. JPMorgan Chase Bank, 146 F. Supp. 3d 1239, 1244 (D. Or. 2015).

Defendant then filed an answer, asserting various affirmative defenses, including defenses of release and waiver stemming from the 2012 Settlement Agreement. Am. Answer ¶¶ 44, 45. Plaintiff moved to strike defendant’s affirmative defenses and for judgment on the pleadings. On February 24, 2016, this Court struck defendant’s preclusion and estoppel defenses but otherwise denied plaintiffsmotion(“February 2016 Opinion”). Paatalo v. JPMorgan Chase Bank, 2016 U.S. Dist. LEXIS 44093, *6 (D. Or. Feb. 24, 2016). With respect to the defenses of release and waiver, the February 2016 Opinion explained that “[e]ven assuming the questions of fact related to rescission are resolved in plaintiffs favor, [the settlement agreement] might bar plaintiff from asserting his claims in this action.” Id.

Before the Court now are the parties’ cross-motions for summary judgment.

STANDARD

Summary judgment is appropriate if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party has the burden of establishing the absence of a genuine issue of material fact. Id.; Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial.Celotex Corp., 477 U.S. at 324. “Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party’s favor.” Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201, 1207 (9th Cir. 2008).

DISCUSSION

I. Conferral Pursuant to Local Rule 7-1

As a preliminary matter, I must address plaintiffs counsel’s conferral obligations. Defendant’s counsel states that plaintiffs counsel “conferred” on plaintiffs summary judgment motion via a short email stating, in its entirety, “Just wanted to confer with you that my Client and I will be filing a motion for summary judgment in the next 10 to 14 days. I assume you will oppose but just wanted to confer so I can file when we have it prepared. Thanks!” Fendall Deel. ¶2 & Ex. 1 Apr. 18, 2016. Defendant’s counsel wrote back that a more substantive conversation would be necessary to meet the parties’ conferral obligations. Id ¶ 3 & Ex. 2. Plaintiffs counsel never responded to that message, and he filed the motion without further conferral. Id. ¶ 4. Plaintiffs counsel has not addressed conferral in his filings.

“When conferring about a dispositive motion, the parties must discuss each claim, defense, or issue that is the subject of the proposed motion.” L.R. 7-1(a)(2). This is not a meaningless procedural requirement; it exists “to encourage parties to confer and resolve disputes amicably whenever possible, thus preserving judicial resources for only those disputes that truly require court intervention.” Kazemy v. BMW of N. Am., LLC, 2014 WL 3667217, *2 (D. Or. Jul. 17, 2014). Here, conferral could have streamlined plaintiffs motion, most notably by bringing to light that the parties planned to introduce different versions of the notices to rescind from WaMu’s files.

Plaintiffs counsel’s three-sentence email did not even come close to meeting the standard imposed by the local rule. Plaintiffs counsel is admonished in the future to comply with the local rules, and reminded that the Court has discretion to deny any motion on the basis of failure to meet conferral obligations. L.R. 7-1(a)(3).

II. Questions of Material Fact Regarding Rescission of the Loan

To prevail on his claims, plaintiff must show that he had a conditional right to rescind the loan and that he exercised that right within the relevant timeframe. Paatalo, 146 F. Supp. 3d at 1245-46. Plaintiff contends he has met this burden. To the contrary, I conclude substantial questions of material fact remain as to both issues, and that plaintiffs motion for summary judgment must be denied.

Congress enacted TILA “to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uniformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” Hauk v. JP Morgan Chase Bank USA, 552 F.3d 1114, 1118 (9th Cir. 2009) (quoting 15 U.S.C. § 1601) (quotation marks omitted). TILA provides special rescission rights for loans secured by a borrower’s principal dwelling. 15 U.S.C. § 1635(a); Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 701 (9th Cir. 1986). TILA’s “buyer’s remorse” provision, Semar, 791 F.2d at 701, grants buyers the right to rescind within three days of either “the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later[.]” 15 U.S.C. § 1635(a). This provision creates two separate rescission rights. The first is an “unconditional” right to rescind, good for three business days after the transaction.Jesinoski, 135 S. Ct. at 792. The second is a “conditional” right, and exists only if the lender has failed to provide the required information, forms, and disclosures or if those materials are deficient. Id.; 12 C.F.R. § 226.23(a)(3). The conditional right expires after three years or upon sale of the property “[e]ven if a lender never makes the required disclosures.” Jesinoski, 135 S. Ct. at 792 (emphasis in original).

A. Plaintiff’s Conditional Right to Rescind

Plaintiff argues he never received written notice of his write to rescind. In support of this argument, he introduced copies of two documents, each titled Notice of Right to Cancel, which he obtained from defendant through discovery. The notices include plaintiffs name and address, but they are unsigned and undated. Paatalo Aff. Ex. BB at 1, 3 Mar. 25, 2016 (doc. 22-5). In an affidavit accompanying his Motion for Summary Judgment, plaintiff states WaMu never provided the unsigned notices to him. Paatalo Aff. at 4 Mar. 25, 2016 (doc. 22-3). In response, defendant produced two different documents, also titled Notice of Right to Cancel. The forms are similar but not identical to the unsigned documents introduced by the plaintiff. These documents, however, bear plaintiffs signature or initials and contain dates corresponding to plaintiffs August 2006 refinance and September 2007 increase in the HELOC. Dunn Deel. Exs. 1-3. Plaintiff, for his part, states he has “no recollection of ever seeing or signing” those documents. Paatalo Aff. at 2 Apr. 21, 2016 (doc. 27-1). Accordingly, there remain questions of material fact as to whether WaMu gave plaintiff written notice of his right to rescind.

In the alternative, plaintiff argues the notices are deficient under TILA and its accompanying regulations. Specifically, he argues that the notices fall short of 12 C.F.R. § 226.23(b)(1)(iv)’s requirement to disclose the effects of rescission because they do not state that rescission of the loan extinguishes the lender’s security interest, as set forth in 12 C.F.R. § 226.23(d)(1). But the notices plainly contain such a statement. The signed notices introduced by defendant each explain, under the heading “Your Right to Cancel,” that canceling the transaction also cancels the security interest in the home. Dunn Deel. Exs. 1-3. The unsigned notices introduced by plaintiff contain similar statements. Paatalo Aff. Ex. BB Mar. 25, 2016. The notices do not track the exact language of section 226.23(d)(1), but neither does the model form contained in Appendix H to the TILA regulations. Compare 12 C.F.R. 226.23(d)(1) (security interest becomes “void” upon rescission) with 12 C.F.R. § 1026 Appx. H (“Rescission Model Form (General)” stating that “[i]f you cancel the transation, the (mortgage/lien/security interest) is also cancelled”). With respect to explaining what happens to the security interest after rescission, each notice in the record is either identical to or substantially similar to this model form. That is precisely what the regulations require. 12 C.F.R. § 226.23(b)(2). Plaintiff has not shown that any of the notices in the record, signed or unsigned, are deficient under the regulations.

B. Plaintiff’s Exercise of the Right to Rescind

Plaintiff alleges he sent a handwritten letter on or about March 29, 2008, notifying WaMu he intended to exercise his right to rescind. Paatalo Aff. at 2 Mar. 25, 2016. He attached a copy of a handwritten letter to his Motion for Summary Judgment. Id Ex. BB. The letter states “[b]ecause I’m in within 3-years of the loan closings, I hereby rescind and demand a full return of all money I have paid to date, and a cancellation of the contracts.” Id (capitalization normalized and emphasis omitted). Plaintiff contends introduction of this letter irrefutably proves he exercised his right to rescind in 2008.

Defendant does not concede that plaintiff sent a rescission letter to WaMu in 2008. Rather, defendant points out that plaintiff has introduced no proof of mailing despite asserting he sent the letter by certified mail. Defendant further asserts the files it inherited from WaMu contained neither a copy of the letter nor WaMu’s purported response with the payoff quote. The only evidence plaintiff sentthe letter to WaMu or that WaMu received it is plaintiffs own testimony. Accordingly, there remains a material question of fact regarding whether plaintiff notified WaMu within years of his intent to rescind the loan. Plaintiffs motion for summary judgment must be denied.

II. Release of Claims in the Agreement

Defendant contends it is entitled to summary judgment because the release of claims in the settlement agreement bars plaintiff from bringing the claims asserted in this lawsuit. I agree.

The settlement agreement provides it will be interpreted according to Oregon law.See Fendall Deel. Ex.Fat 7-8 May 11, 2016. Under Oregon law, “[a] release is a contract in which one or more parties agrees to abandon a claim or right.” Lindgren v. Berg, 772 P.2d 1336, 1339 (Or. 1989). Releases are favored in Oregon because “[c]ertainty and judicial economy are served when parties can negotiate settlement of their disputes with confidence that their settlement agreements will be upheld and enforced by the courts.” Id.; accord Graves v. Tulleners, 134 P.3d 990, 997 (Or. Ct. App. 2006). Although interpretation of the terms of a release sometimes is a question of fact for the jury, “[i]f the terms of a release agreement are unambiguous, the construction of the contract is a question for the court and is treated as a matter of law.” Pioneer Res., LLC v. D.R. Johnson Lumber Co., 68 P.3d 233, 245 (Or. Ct. App. 2003) (quotation marks omitted).

The settlement agreement states that “except as more specifically stated herein, the Parties wish to finally andforever resolve all claims, disputes, and differences between them regarding . . . the Account . . . and the Property.” Fendall Deel. May 11, 2016 Ex. Fat 4 (emphasis added). The settlement agreement defines “the Account” as the deed of trust dated August 10, 2006 and the promissory notes associated with that deed of trust. Id. It also specifies that “the Property” is the same Yachats property at issue in the instant lawsuit. Id. The settlement agreement further provides that “it is the desire and intention of each of the Parties to effect a final and completeresolution of all claims and causes of action” they “ha[ve] or may have] against one another” related to “the Account” or “the Property.” Id at 4-5 (emphasis added). Accordingly, the parties agreed to “forever” release one another

from all claims, counter-claims, third-party claims, demands, obligations, judgments, actions, causes of action, appeals, liens and liabilities for injuries, losses, and damages, whether personal, property, economic, non-economic, exemplary or punitive, whether now known or unknown, foreseen or unforeseen, liquidated or unliquidated, that in any way relate to, arose or arise out of the Account or the Property that in any way relate to, arose or arise out of any occurrence, act, or omission that could have been alleged in the Action brought by or on behalf of Chase against Defendant . . . or by or on behalf of Defendant against Chase. . . . relating to the Account or the Property.

Id at 5-6.

Plaintiff first argues that his current claims are not covered by the release because he could not have asserted them until the Supreme Court decided Jesinoski. In the November 2015 Opinion, this Court acknowledged that “had [plaintiff] made the arguments he now makes [regarding Jesinoski] at the time of the trustee’s sale, they would have been foreclosed by Ninth Circuit precedent.” Paatalo, 146 F. Supp. 3d at 1247. Nonetheless, plaintiffs claims fall within the scope of the release. The phrase “could have been alleged” in the release modifies the words “occurrence,” “act,” and “omission”; it does not modify “claim,” “demand,” or any other similar term. The release is clearly intended to sweep broadly to include any and all claims arising out of the factual dispute at issue in the 2010 state-court lawsuit. Moreover, the release specifically states that it covers claims that are “unknown” or “unforeseen.” The inclusion of both terms suggest coverage of claims currently available but not known to the parties and coverage of claims that have not yet arisen and are not predicted to arise by the parties. Finally, terms such as “forever,” and “complete” drive home the parties’ intent to fully resolve their differences related to the property, deed of trust, and notes. Plaintiffs current claims are covered by the release because they arise out of occurrences, acts, and omissions he could have alleged in the 2010 state court action.

Next, plaintiff contends his request for declaratory relief in this action is not covered by the release because rescission under TILA is remedy, not a “claim” or a “cause of action.” This semantic argument is an attempt to escape the clear intent of the release. The most straightforward interpretation of the release is as a promise not to sue each other in the future over the property or deed of trust. Plaintiff then filed this lawsuit against defendant, asking the Court to declare that the property is his and the trustee’s sale is void. This is plainly a claim, cause of action, or demand covered by the release.

Plaintiff also avers that the release should be invalidated on the ground of mutual mistake. His theory is that Jesinoski revealed both parties entered into the settlement agreement under the misconception that defendant had rights to the property it never possessed. Accepting for the sake of argument that the parties’ failure to anticipate a change in the law^[2] may correctly be termed a “mistake of fact,” the argument is unavailing here. In Oregon, “mutual mistake is not a basis on which to void a release agreement.” Raymondv. Feldmann, 853 P.2d 297, 299 (Or. Ct. App. 1993); Graves,134 P.3d at 997. Rather, releases in settlement agreements may be invalidated only on grounds of misrepresentation or unconscionable conduct. Graves, 134 P.3d at 997. In Wheeler v. White Rock Bottling Co., 366 P.2d 527, 530 (Or. 1961), a personal injury case, the Oregon Supreme Court acknowledged the “attractive policy reasons for adopting a rule that would permit perfectly honorable releases to be repudiated in the event of aggravation of an injury or the discovery of undiagnosed injuries.” However, the court ultimately determined those policy concerns were outweighed by the “less compassionate but equally sound policy reasons for requiring persons of legal age and capacity to stand by their covenants, including bargains containing an element of chance.” Id. Plaintiff signed a broad release of claims and received valuable consideration in return. The bargain he struck included an element of chance. He is now bound to the terms of that agreement, even though an “undiagnosed injury” in the form of a forfeited Jesinoski argument has materialized.

Finally, plaintiff asserts defendant is not entitled to summary judgment because it has not counterclaimed to vacate the rescission. This argument ignores the fact that defendant is not seeking any relief from this Court. Plaintiff is seeking a declaration he is the owner of the property. The release bars him from seeking that relief in an action against defendant. Defendant is under no obligation to make a counterclaim to succeed in its motion for summary judgment.

The unambiguous terms of the release in the settlement agreement bar this lawsuit. Defendant is entitled to summary judgment on its affirmative defense of release.

Defendant also is entitled to summary judgment on its affirmative defense of waiver. Waiver is the intentional relinquishment of a known right. Oracle Am., Inc. v. or. Health Ins. Exch. Corp., 145 F. Supp. 3d 1018, 1043 (D. Or. 2015). Through the release, plaintiff knowingly and intentionally waived his right to take any future legal action against defendant with respect to the property and the deed of trust. The change in the law effected by Jesinoski does not invalidate this waiver. Cf United States v. Cardenas, 405 F.3d 1046, 1048 (9th Cir. 2005) (refusing to invalidate defendant’s appeal waiver even though the Supreme Court’s intervening decision inUnited States v. Booker, 543 U.S. 220 (2005) substantially changed federal sentencing law).

CONCLUSION

Plaintiffs Motion for Summary Judgment (doc. 22) is DENIED. Defendant’s Motion for Summary Judgment (docs. 37 & 39) is GRANTED and this case is DISMISSED. Defendant’s request for oral argument is DENIED as unnecessary.

IT IS SO ORDERED.

[1] By its terms, the agreement is confidential. A copy was filed under seal in this case. Details of the agreement will be discussed in this opinion only as necessary to resolve the parties’ motions.

[2] Chase argues that Jesinoski did not change in the law, citing Rivers v. Roadway Express, Inc., 511 U.S. 298, 312-13 & n.12 (1994) for the proposition that when the United States Supreme Court interprets a statute, “it is explaining its understanding” of what the statute “has always meant.” It is true that Jesinoski did not change the law in the sense that it did not change the meaning of TILA. However, Jesinoski indisputably changed the governing case law in the Ninth Circuit, which had previously interpreted TILA incorrectly.

Here is the smoking gun – White House and Treasury behind land grab…………..

Miami Herald-

A federal judge on Tuesday ordered the U.S. Treasury Department to release more than 50 documents it tried to keep secret in a lawsuit over government-backed mortgage giants Freddie Mac and Fannie Mae.

The plaintiff is Miami-based mutual fund Fairholme Fund, which filed suit in the Federal Court of Claims in 2013. Fairholme is one of many Freddie and Fannie investors suing the federal government in different venues. The plaintiffs claim the government illegally seized the companies’ earnings after the bailout. The Obama administration says it is acting within the guidelines of Congressional legislation.

Judge Margaret Sweeney has previously ordered the government to release documents over which it exerted executive privilege. The latest batch of documents — mainly internal memos and correspondence between top Treasury officials and the White House — will remain under seal, available only to Fairholme’s attorneys.

NYT-

John Stumpf, Wells Fargo’s chief executive and chairman, speaking to the Senate Committee on Banking, Housing, and Urban Affairs on Tuesday. Credit Gabriella Demczuk for The New York Times

John Stumpf, the chairman and chief executive of Wells Fargo, won a dubious achievement award from one of his interrogators during Tuesday’s scorching hearings on Capitol Hill. The bank’s yearslong practice of opening bogus accounts for customers and charging fees to do so, said Senator Jon Tester, Democrat of Montana, had united the Senate Banking Committee on a major topic for the first time in a decade. “And not in a good way,” he added.

But this was not the first time problematic and pervasive activities at Wells Fargo succeeded in uniting a disparate group. After observing years of abusive mortgage loan servicing practices at the bank, an increasing number of judges hearing foreclosure cases after the financial crisis grew to understand that banks could not always be trusted in their pleadings.

This was a major shift: For decades, the nation’s courts had been largely pro-bank when hearing foreclosure cases, accepting what big financial institutions produced in documentation and amounts owed by borrowers.

“Wells didn’t intentionally educate judges. They didn’t raise their hand and say, ‘Judge, we’re sorry,’” said O. Max Gardner III, a prominent foreclosure defense lawyer who teaches consumer counsel how to represent troubled borrowers. “It was people really digging in and having the resources and the time to ask the right questions about what they were doing with the money.” Those practices included levying improper fees and incorrectly foreclosing on homes.

[NEW YORK TIMES]

Recall all those illegal foreclosures happening in Utah on or about August of 2010? Well back in the day it was exposed that Federal Judge Clark Waddoups’ old law firm where he work for Parr, Brown, Gee & Loveless for nearly 30 years had a conflict of interest since they represent Bank of America and threw out the injunction therefore Bank of America’s foreclosure company (ReConTrust) was allowed to foreclose once again. As of 2008, drew a pension from the law firm.

Now he’s on this case and I am hoping the attorney’s on this case dig into any other possible conflicts that will not end up like the BOA case. I haven’t found any connection to Wells Fargo but just wanted to throw this out in case anyone can find this information out.

H/T LEXOLOGY and Gary Dubin

ERICK MARQUEZ, et al., Plaintiffs-Appellants,
v.
WEINSTEIN, PINSON & RILEY, P.S., et al., Defendants-Appellees.

Daniel A. Edelman, for Plaintiff-Appellant.

Joel D. Bertocchi, for Defendant-Appellee.

David M. Schultz, for Defendant-Appellee.

Michael D. Slodov, for Defendant-Appellee.

Justin Michael Penn, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 1:14-cv-00739, John J. Tharp, Jr., Judge.

Before WOOD, Chief Judge, and POSNER and ROVNER, Circuit Judges.

ROVNER, Circuit Judge.

Plaintiffs-appellants Erick Marquez, Iraida Garriga, and Doris Russel brought an action, individually and on behalf of a class, against defendants-appellees Evan L. Moscov, his law firm Weinstein, Pinson & Riley, P.S. (“Weinstein”), and debt collection agency NCO Financial Systems, Inc. (NCO), alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., arising out of the defendants’ attempt to collect on student loan debts allegedly owed by the plaintiffs. The gravamen of the complaint was that the defendants included a misleading and deceptive statement in a paragraph of the debt-collection complaint they filed against the plaintiffs in state court. The district court granted the initial motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), and after the plaintiffs filed their second amended complaint, granted a subsequent motion to dismiss as well, this time with prejudice. The plaintiffs now appeal that dismissal.

This case arose from complaints filed in state court by the defendant Weinstein, on behalf of NCO and signed by Moscov as their attorney, (the “debt collectors”) seeking repayment of student loans from the plaintiffs (the “consumers”).^[1] Those complaints contained typical language for such cases, reciting the loan agreement and the outstanding principal amount, and alleging the breach of that loan agreement and the corresponding damages. However, following those allegations, and immediately preceding the prayer for relief, the debt collectors included Paragraph 12 in the complaints, which stated:

12. Pursuant to 11 U.S.C. § 1692g(a), Defendants are informed that the undersigned law firm is acting on behalf of Plaintiff to collect the debt and that the debt referenced in this suit will be assumed to be valid and correct if not disputed in whole or in part within thirty (30) days from the date hereof.

The plaintiffs in the FDCPA action before us assert that Paragraph 12 violated the FDCPA in that it was misleading and deceptive as to both the manner and timing of their response to the state lawsuit. The central issue in this appeal is whether the district court erred in determining that paragraph 12 of the state law complaint was not misleading or deceptive as a matter of law, and therefore granting the motion to dismiss the FDCPA claim. We review de novo a district court’s decision to grant a motion to dismiss under Rule 12(b)(6), accepting as true all well-pleaded factual allegations and drawing all reasonable inferences in favor of the plaintiff. McMillan v. Collection Professionals, Inc., 455 F.3d 754, 758 (7th Cir. 2006).

Before considering whether the district court properly held that Paragraph 12 was not misleading or deceptive as a matter of law, we must address a preliminary matter. NCO argues that we need not address the FDCPA challenge at all because 15 U.S.C. § 1692e does not regulate the content of state court pleadings. That issue was properly preserved because it was presented, and rejected, in the district court.^[2]

In Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 F.3d 470, 473 (7th Cir. 2007) and O’Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 941 n.1 (7th Cir. 2011), we postponed for a future case the question of whether § 1692e of the FDCPA covers the process of litigation. This is that future case, as the issue is squarely presented to us and the answer is necessary to resolution of this appeal. Numerous circuits already have addressed this issue, and often in nearly identical reasoning, have concluded that pleadings or filings in court can fall within the FDCPA. See, e.g., Kaymark v. Bank of Am., N.A., 783 F.3d 168, 176-77 (3d Cir. 2015); Goldman v. Cohen, 445 F.3d 152, 155-56 (2nd Cir. 2006); Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 231 (4th Cir. 2007); Stratton v. Portfolio Recovery Associates, LLC, 770 F.3d 443, 449-50 (6th Cir. 2014), as amended (Dec. 11, 2014); Powers v. Credit Mgmt. Servs., Inc., 776 F.3d 567, 573-74 (8th Cir. 2015); Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1031-32 (9th Cir. 2010); James v. Wadas, 724 F.3d 1312, 1316 (10th Cir. 2013); Miljkovic v. Shafritz & Dinkin, P.A., 791 F.3d 1291, 1297-1300 (11th Cir. 2015). Those circuits almost uniformly base their conclusion on the Supreme Court’s analysis in Heintz v. Jenkins, 514 U.S. 291 (1995), as well as on the amendment to the FDCPA following that decision. We agree with the reasoning of those circuits and for those same reasons conclude that § 1692e of the FDCPA applies to the statement in Paragraph 12 of the state court complaint at issue here.

In Heintz, Darlene Jenkins had borrowed money from Geiner Bank to purchase an automobile. Id. at 293. She defaulted on that loan, and the bank’s law firm sued her in state court to recover the balance owed. In an effort to settle the case, an attorney for the bank’s law firm, George Heintz, sent a letter to Jenkins’ lawyer listing the amount that she owed. Jenkins filed suit alleging that the letter violated the FDCPA in that it contained a false statement of the amount that she owed the bank. The district court dismissed the lawsuit holding that the FDCPA was inapplicable to lawyers, but we reversed and the Supreme Court agreed with us, holding that the FDCPA applies to “the litigating activities of lawyers.” Id. at 294. Heintz had argued that the Court should construe the statute as containing “an implied exemption for those debt-collecting activities of lawyers that consist of litigating,” but the Court rejected that interpretation. Id. at 295. The Court held that the FDCPA applies to attorneys who “`regularly’ engage in consumer-debt-collection activity, even when that activity consists of litigation.” Id. at 299.

Although the communication at issue in Heintz was a letter rather than a legal pleading, the Court recognized the applicability of the FDCPA even to attorneys whose debt-collection activity consisted of litigation, and nothing in that analysis commands a differentiation between the two. Nothing in the broad language in Heintz would support an interpretation that would apply the FDCPA to attorneys whose debt collection activity consisted of litigation, but limit it to only those representations made by those attorneys outside of that litigation. The conclusion that the FDCPA applies to legal pleadings is supported by a post-Heintz amendment enacted by Congress. In the post-Heintz amendment, Congress exempted legal pleadings from a specific provision in the FDCPA, but did not exempt it from the FDCPA as a whole. Specifically, 15 U.S.C. § 1692e prohibits a debt collector from using any false, deceptive or misleading representation in connection with the collection of any debt. The statute itemizes sixteen communications that constitute violations of that provision, including at § 1692e(11), the failure to disclose in the initial written communication to the consumer that the debt collector is attempting to collect a debt and that any information will be used for that purpose. After Heintz was decided in 1995, however, Congress amended § 1692e(11) to exclude formal legal pleadings from that requirement, with the amended version now stating that “this paragraph shall not apply to a formal pleading made in connection with a legal action.” By providing that sub-section 1692e(11) did not apply to a formal pleading made in connection with a legal action, the implication is that § 1692e as a whole other than § 1692e(11) applies to formal legal pleadings. Otherwise, the amendment would be merely superfluous, exempting formal legal pleadings from one specific requirement in the act even though legal pleadings were not subject to any provisions of the act already. It is “a cardinal principle of statutory construction” that “a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.” TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001); United States v. Michalek, 54 F.3d 325, 335-36 (7th Cir. 1995). A natural interpretation of that provision which gives meaning to all words is that Congress, post-Heintz, envisioned § 1692e of the FDCPA as applying to communications in the form of legal pleadings as well as communications in other forms such as letters, and that it sought to exempt legal pleadings from only § 1692e(11).

That interpretation is consistent with the purpose of the FDCPA, “to eliminate abusive debt collection practices, to ensure that those debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 577 (2010); 15 U.S.C. § 1692(e). That purpose would be undermined if the FDCPA was inapplicable to communications that occurred in the context of litigation, particularly in the debt collection area in which judgments are overwhelmingly reached through forfeiture, and thus misleading or deceptive statements are more likely to influence the response of the defendant without ever coming to the attention of the court in any meaningful way. In fact, although we have not previously addressed the question of whether pleadings fall within § 1692e of the FDCPA, we have already decided a number of FDCPA cases alleging FDCPA violations in state court filings (in which this issue was presumably not raised), thus illustrating that the dangers addressed in the FDCPA arise in the context of pleadings just as in other forms of communication. See O’Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 948 (7th Cir. 2011)(Tinder, J., concurring) and cases cited therein. Accordingly, we hold that representations may violate § 1692e of the FDCPA even if made in court filings in litigation. Accord Kaymark, 783 F.3d at 176-77; Powers, 776 F.3d at 574; Miljkovic, 791 F.3d at 1297; Stratton, 770 F.3d at 450; James, 724 F.3d at 1316; Donohue, 592 F.3d at 1031-32; Sayyed, 485 F.3d at 231; Goldman, 445 F.3d at 155-56.

We turn then to the question of whether the district court erred in holding that Paragraph 12 was “plainly and clearly not misleading” as a matter of law and dismissing the case on that basis. Dist. Ct. Op. at 8. The FDCPA provides that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt,” including, but not limited to the false representation of “the character, amount, or legal status of any debt.” 15 U.S.C. § 1692e generally and § 1692e(2)(A). In McMillan v. Collection Professionals Inc., 455 F.3d 754, 759 (7th Cir. 2006), we noted that a determination of whether a statement is false, deceptive or misleading, like a determination as to whether a statement is confusing under the FDCPA, is a fact-bound determination of how an unsophisticated consumer would perceive the statement. We cautioned in McMillan that in determining whether a statement is confusing or misleading, a district court must “tread carefully” because “district judges are not good proxies for the `unsophisticated consumer’ whose interest the statute protects.” Id. Accordingly, Rule 12(b)(6) dismissal on that issue is appropriate only if there is no set of facts consistent with the pleadings under which the plaintiffs could obtain relief. Id.

In its effort to collect the student loan debt, the debt collectors initially sent each of the consumers a demand letter, which informed them that they were in default on their loan payments and demanded payment of the outstanding balance. Pursuant to § 1692g of the FDCPA, that letter contained a statement informing the consumers that they had 30 days after receipt of the notice to dispute the validity of the debt, and provided that “[u]nless you dispute this debt, or any portion of it, within 30 days from receipt of this notice, we will assume the debt to be valid.” The demand letter instructs the consumer to dispute the debt by either calling a toll free number or submitting a dispute in writing to their law offices.

The debt collectors subsequently filed suit against the consumers and served the consumers with a summons and complaint in that state court action. The summons informed the consumers that they had to file an appearance by a specified date approximately 30 days after issuance, and an answer to the complaint before the time period set forth in the applicable subsections of paragraph 3 or 4 on the reverse side of the summons. Unfortunately, that standard summons form contained an error, in that paragraphs 3 or 4 contain no subsections, and the relevant subsections for the consumers were contained in paragraph 2 on that reverse side of the summons. Paragraph two provided that for amounts less than $10,000, the consumer only needs to file an appearance but not an answer unless otherwise ordered by the court, but that for amounts over $10,000, an answer must be filed no more than 10 days from the appearance date (return date) set forth on the summons. In all capitalized letters for emphasis, the summons also declared that if the consumer failed to do so “A JUDG-MENT BY DEFAULT MAY BE TAKEN AGAINST YOU FOR THE RELIEF ASKED IN THE COMPLAINT, A COPY OF WHICH IS HERETO ATTACHED.” Thus, the summons directs the consumers to the complaint, both in determining the answer and in the relief that could be imposed. The complaint, however, in paragraph 12 declares: “Pursuant to 11 U.S.C. § 1692g(a), Defendants [consumers] are informed that the undersigned law firm is acting on behalf of Plaintiff [debt collector] to collect the debt and that the debt referenced in this suit will be assumed to be valid and correct if not disputed in whole or in part within thirty (30) days from the date hereof.” The court erred in holding that the paragraph 12 declaration would not be misleading or deceptive as a matter of law.

Paragraph 12 is misleading to the unsophisticated consumer both as to the proper timing to respond to the complaint and as to the manner of response. A plain reading of the summons and the complaint would cause a consumer to believe that he had until the date in the summons to file an answer and contest the claim, but that beyond the 30-day period in paragraph 12 he could no longer contest the validity or correctness of the debt. Because the 30-day period would expire before the date that the answer had to be filed for each of the litigants, those provisions in conjunction would lead an unsophisticated consumer to believe that he had that 30-day period to dispute the debt and beyond that period he could not dispute that debt in his answer. For each plaintiff in this FDCPA action, the time period for “disputing the debt” was shorter than the time period provided by law for the answer. For instance, for one plaintiff in this FDCPA action, the complaint provided that the debt must be disputed by December 14 while the answer was not due, according to the summons, until December 23. Paragraph 12 thus effectively shortened the time period provided in the summons for the consumer to answer, because the consumer had been told in paragraph 12 that he only had the 30-day period to dispute the validity or correctness of the debt. That would cause an unsophisticated consumer to believe that beyond that time period in Paragraph 12 for disputing the debt, even if filing an answer, the validity of the debt could no longer be disputed in that answer.

The language used in Paragraph 12 is particularly pernicious in that regard. The language regarding the 30-day dispute period was not merely lifted from the demand letter, which provided that unless the debt was disputed within that 30-day period, “we [the debt collector] will assume the debt to be valid.” [emphasis added] Nor does that language track § 1692g(a)(3), which provides that if consumers do not dispute the debt within 30 days of the written notice, “the debt will be assumed to be valid by the debt collector.” The language in Paragraph 12 differs in a material way from those provisions, in that it does not contain the limiting language that the debt will be considered valid by the debt collector, instead stating that after the 30-day period “the debt will be considered valid.” The presence of such language in a court complaint, cross-refer-enced in the summons, would lead an unsophisticated consumer to believe that the debt will be considered valid by the court if not disputed within that 30 days, because the relevant language that would have limited the assumption to only the debt collector is absent from Paragraph 12, whether intentionally or otherwise. Whether the consumer is a sophisticated or unsophisticated consumer, one cannot say—as the district court did — that reading the summons and paragraph 12 in relation to each other is to interpret it in a “bizarre or idiosyncratic fashion.” It is in fact a rational reconciliation of the two provisions.

Magnifying the problem, that sentence regarding the 30-day period to dispute the debt mirrored the earlier demand letter to the consumers informing them of their rights to dispute the debt. The inclusion of that sentence in the complaint would lead an unsophisticated consumer to believe that she must dispute the debt through the procedures outlined in the earlier letter, rather than in an answer in court, or she would forfeit her right to contest the debt. That would place the consumers at risk of losing their rights in court if they disputed the debt through contact with the debt collectors rather than in the form of an answer.

The district court’s reading of the provisions illustrates the problem with its analysis. The district court characterizes Paragraph 12 as providing that a consumer could dispute the “debt” and that the “debt” will be valid if not disputed, not as providing that the legal claim to collect it will somehow be resolved. Therefore, according to the district court, the consumer might attempt to dispute the debt directly with the debtcollection firm but could not view that as a sufficient response to the lawsuit. The problem with the court’s interpretation is twofold. First, it asks us to assume that an unsophisticated consumer will distinguish the “disputing of a debt” from “disputing a claim to collect that debt.” But an unsophisticated consumer is unlikely to distinguish those concepts. In fact, even at oral argument counsel for defendants alternated between stating that the plaintiffs could dispute the debt by answering the complaint and that they could dispute it by contacting the law firm. Given the shortened time frame for disputing the debt set forth in Paragraph 12, the notion that the dispute should be in the form of the answer illustrates the problem — its 30-day provision would thereby shorten the time for the answer. Moreover, the court acknowledges that the consumer may be led to dispute the debt directly with the debt collector. Yet if a consumer was led to believe that she had to pursue a dispute directly with the debt collector, as the district court acknowledges, then that same consumer is also likely to believe that if she fails to do so within the 30-day period, the debt is assumed to be valid and correct, and cannot be contested in the court action. This is particularly true because, as previously discussed, the wording in paragraph 12 has moved the phrase “by the debt collector” so that it no longer clarifies who will assume the debt to be valid. Finally, paragraph 12 is simply improper in its entirety at this stage of the proceedings, as the failure to dispute the debt will have no impact on the court case. Its presence in the complaint serves no purpose, as conceded by counsel for defendant. Its function in the complaint is only to mislead. In Ruth v. Triumph Partnerships, 577 F.3d 790, 800 (7th Cir. 2009), we recognized that suits alleging deceptive or misleading statements fall within three distinct categories: (1) “cases involving statements that plainly, on their face, are not misleading or deceptive;” (2) “cases involving statements that are not plainly misleading or deceptive but might possibly mislead or deceive the unsophisticated consumer,” for which plaintiffs must produce extrinsic evidence to prove that unsophisticated consumers find the statements to be so; and (3) communications which are plainly deceptive and misleading to an unsophisticated consumer as a matter of law. See also Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317, 322-23 (7th Cir. 2016). The district court held that the statements in this case rest within the first category, but they fall within the third. For the reasons stated above, we hold that Paragraph 12 is misleading and deceptive as a matter of law, and that the district court erred in reaching the opposite conclusion. Accordingly, the district court erred in granting the motion to dismiss.

The decision of the district court is REVERSED and the case REMANDED for further proceedings consistent with this opinion.

[1] The terms “plaintiff” and “defendant” can cause confusion in this case, because the defendants in the state court collection action are the plaintiffs here, and vice versa. To avoid such confusion, we will refer to the plaintiffs and defendants in the state court action as debt collectors and consumers, and use the terms plaintiff and defendant to refer to the parties in this FDCPA action.

[2] NCO attempts to raise a number of other issues on appeal that were not properly presented to the district court, but those arguments are waived and we do not address them. Puffer v. Allstate Ins. Co., 675 F.3d 709, 718 (7th Cir. 2012).

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2016 ME 141
Docket: BCD-15-430
Argued: April 7, 2016
Decided: September 13, 2016
Panel: ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.
Majority: MEAD, GORMAN, HJELM, and HUMPHREY, JJ.
Dissent: ALEXANDER and JABAR, JJ.
ALEC T. SABINA et al.
v.
JPMORGAN CHASE BANK, N.A.
GORMAN, J.
[¶1] Alec T. and Emma L. Sabina appeal from a judgment entered in the
Business and Consumer Docket (Murphy, J.) dismissing their action against
JPMorgan Chase Bank, N.A., (Chase), in which they claimed that Chase failed to
comply with the statute governing the discharge of a mortgage, 33 M.R.S.
§ 551 (2015). We vacate the judgment and remand the matter for further
proceedings.
I. BACKGROUND
[¶2] The Sabinas filed their amended complaint against Chase in the
Business and Consumer Docket on April 27, 2015. They alleged the following

2
facts, which we view as admitted for purposes of this appeal. See Andrews v.
Sheepscot Island Co., 2016 ME 68, ¶ 2, 138 A.3d 1197.
[¶3] In March of 2011, the Sabinas received a loan from Chase that was
secured by a mortgage on their real property in Portland. When they finished
paying off the mortgage in October of 2013, Chase executed a written
mortgage release and recorded that document in the Cumberland County
Registry of Deeds. The registry then returned the recorded mortgage release
to Chase. Chase mailed a copy of the document to the Sabinas, but it retained
the actual document that it received from the registry. The Sabinas claimed
that Chase violated 33 M.R.S. § 551 by failing to mail them the “original”
mortgage release document.1
[¶4] Chase moved to dismiss the action pursuant to M.R. Civ. P.
12(b)(6). After a hearing in July of 2015, the court granted Chase’s motion
and dismissed the case with prejudice. The court concluded that 33 M.R.S.
§ 551 is ambiguous as to whether a mortgagee complies with the statute when
it mails a copy of the mortgage release, as opposed to the “original,” to the
mortgagor. Construing section 551 strictly as a “penal” statute, the court
concluded that mailing a copy of the recorded document accomplishes the
1 The Sabinas also brought their claim as a class action on behalf of similarly situated borrowers.
See M.R. Civ. P. 23. Their class action allegations are not at issue in this appeal.

3
purpose of the statute, noting that the statute does not contain the word
“original.” This appeal followed.
II. DISCUSSION
[¶5] Reviewing a trial court’s dismissal for failure to state a claim upon
which relief can be granted pursuant to M.R. Civ. P. 12(b)(6), “we view the
facts alleged in the complaint as if they were admitted.” Nadeau v. Frydrych,
2014 ME 154, ¶ 5, 108 A.3d 1254 (per curiam) (quotation marks omitted).
“We review the legal sufficiency of the complaint de novo and view the
complaint in the light most favorable to the plaintiff to determine whether it
sets forth elements of a cause of action or alleges facts that would entitle the
plaintiff to relief pursuant to some legal theory.” Id. (quotation marks
omitted).
[¶6] We review a trial court’s interpretation of a statute de novo as a
question of law. Efstathiou v. Aspinquid, Inc., 2008 ME 145, ¶ 57, 956 A.2d
110. We look first to the plain language of the statutory provision at issue to
determine its meaning, and “we interpret [statutory] provisions according to
their unambiguous meaning unless the result is illogical or absurd.”
MaineToday Media, Inc. v. State, 2013 ME 100, ¶ 6, 82 A.3d 104 (quotation
marks omitted). Interpreting the plain language of a statute also involves

4
considering the statute’s “subject matter and purposes . . . and the
consequences of a particular interpretation.” Dickau v. Vt. Mut. Ins. Co.,
2014 ME 158, ¶ 21, 107 A.3d 621. “[O]nly if the statute is ambiguous will we
look to extrinsic indicia of legislative intent such as relevant legislative
history.” Strout v. Cent. Me. Med. Ctr., 2014 ME 77, ¶ 10, 94 A.3d 786
(quotation marks omitted).
[¶7] When a mortgagor performs his or her payment obligations
according to the mortgage, the mortgagee’s security interest in the subject
property is extinguished. 4 Richard R. Powell, Powell on Real Property
§ 37.33[1]-[2] at 37-226 (Michael Allan Wolf ed., 2005). Generally, so that the
cloud on the property owner’s title is removed, the mortgagee must execute
and record a formal instrument of release or satisfaction. Id. In Maine, the
discharge of a mortgage is governed by 33 M.R.S. § 551.2
2 Title 33 M.R.S. § 551 (2015) provides, in its entirety:
§ 551. Entry on record; neglect to discharge
A mortgage only may be discharged by a written instrument acknowledging
the satisfaction thereof and signed and acknowledged by the mortgagee or by the
mortgagee’s duly authorized officer or agent, personal representative or assignee.
The instrument must recite the name or identity of the mortgagee and mortgagor, or
their successors in interest and the record location of the mortgage discharged.
The instrument, when recorded, has the same effect as a deed of release duly
acknowledged and recorded.
Within 60 days after full performance of the conditions of the mortgage, the
mortgagee shall record a valid and complete release of mortgage together with any

5
[¶8] Section 551 first explains how mortgages are discharged after
payment in full: “by a written instrument acknowledging the satisfaction” of
the mortgage that, “when recorded, has the same effect as a deed of release
duly acknowledged and recorded.” 33 M.R.S. § 551. Next, the statute requires
the mortgagee to undertake two actions: first, within a specific time period, it
instrument of assignment necessary to establish the mortgagee’s record ownership
of the mortgage. Within 30 days after receiving the recorded release of the
mortgage from the registry of deeds, the mortgagee shall send the release by first
class mail to the mortgagor’s address as listed in the mortgage agreement or to an
address specified in writing by the mortgagor for this purpose. As used in this
paragraph, the term “mortgagee” means both the owner of the mortgage at the time
it is satisfied and any servicer who receives the final payment satisfying the debt. If
a release is not transmitted to the registry of deeds within 60 days, the owner and
any such servicer are jointly and severally liable to an aggrieved party for damages
equal to exemplary damages of $200 per week after expiration of the 60 days, up to
an aggregate maximum of $5,000 for all aggrieved parties or the actual loss
sustained by the aggrieved party, whichever is greater. If multiple aggrieved parties
seek exemplary damages, the court shall equitably allocate the maximum amount. If
the release is not sent by first class mail to the mortgagor’s address as listed in the
mortgage agreement or to an address specified in writing by the mortgagor for this
purpose within 30 days after receiving the recorded release, the mortgagee is liable
to an aggrieved party for damages equal to exemplary damages of $500. The
mortgagee is also liable for court costs and reasonable attorney’s fees in any
successful action to enforce the liability imposed under this paragraph. The
mortgagee may charge the mortgagor for any recording fees incurred in recording
the release of mortgage and any postage fees incurred in sending the release to the
mortgagor.
With respect to a mortgage securing an open-end line of credit, the 60-day
period to deliver a release commences after the mortgagor delivers to the address
designated for payments under the line of credit a written request to terminate the
line and the mortgage together with payment in full of all amounts secured by the
mortgage. The mortgagee may designate in writing a different address for delivery
of written notices under this paragraph.
All discharges of recorded mortgages, attachments or liens of any nature
must be recorded by a written instrument and, except for termination statements
filed pursuant to Title 11, section 9-1513, acknowledged in same manner as other
instruments presented for record and no such discharges may be permitted by entry
in the margin of the instrument to be discharged.

6
must “record[3] a valid and complete release of mortgage”; second, “[w]ithin
30 days after receiving the recorded release of the mortgage from the registry
of deeds, the mortgagee shall send the release by first class mail to the
mortgagor’s address.” 33 M.R.S. § 551. The statute also provides for
exemplary damages in the event that the mortgagee fails to complete either
action. 33 M.R.S. § 551.
[¶9] Based on the statute’s plain language, we conclude that it
unambiguously requires the mortgagee to send to the mortgagor the
mortgage release document that it receives from the registry, and not a copy
of that document. After requiring the mortgagee to record “a valid and
complete release of mortgage,” the statute then states, in the next sentence,
that within thirty days after receiving “the recorded release” from the registry
of deeds, the mortgagee must mail “the release” to the mortgagor. 33 M.R.S.
§ 551 (emphases added). The Legislature’s use of the definite article “the”—
as opposed to the indefinite article “a” or the phrase “a copy of”—indicates
that it intended to require the mortgagee to mail the same document that it
3 Used in this sense, the “recording” of a document like a mortgage release involves no more and
no less than sending the document to the appropriate registry with the required fee. Compare
Black’s Law Dictionary 1465 (10th ed. 2014) (defining the verb “record” as “[t]o deposit (an
original or authentic official copy of a document) with an authority” and providing, as an example,
“she recorded the deed in the county property office”), with id. at 1473 (defining “register of deeds”
as “[a] public official who records deeds, mortgages, and other instruments affecting real property”
(emphasis added)).

7
receives from the registry of deeds.4 See Lydon v. Sprinkler Servs., 2004 ME 16,
¶¶ 13-14, 841 A.2d 793.
[¶10] Although the dissent is correct to note that, at one time, the only
purpose of the statute was to ensure that discharges are filed with the county
registries, see Dissenting Opinion ¶ 16, that changed in 2011, when the
Legislature added the two sentences that are at issue here. See P.L. 2011,
ch. 146, § 1 (effective Sept. 28, 2011). The relevant language added by the
Legislature is highlighted below:
Within 60 days after full performance of the conditions of
the mortgage, the mortgagee shall record a valid and complete
release of mortgage together with any instrument of assignment
necessary to establish the mortgagee’s record ownership of the
mortgage. Within 30 days after receiving the recorded release of
the mortgage from the registry of deeds, the mortgagee shall send
the release by first class mail to the mortgagor’s address as listed in
the mortgage agreement or to an address specified in writing by the
mortgagor for this purpose. As used in this paragraph, the term
“mortgagee” means both the owner of the mortgage at the time it
is satisfied and any servicer who receives the final payment
satisfying the debt. If a release is not transmitted to the registry
of deeds within 60 days, the owner and any such servicer are
jointly and severally liable to an aggrieved party for damages
equal to exemplary damages of $200 per week after expiration of
4 Because we conclude that section 551’s mailing provision is unambiguous, we do not address
the parties’ arguments regarding the “penal” or “remedial” nature of the statute. See Violette v.
Macomber, 125 Me. 432, 434, 134 A. 561 (1926) (“The rule of strict construction of a penal law is
subordinate to the rule of reasonable, sensible construction . . . .”); see also 3 Norman J. Singer & J.D.
Shambie Singer, Statutes and Statutory Construction § 58:1 at 103 (7th ed. 2008) (“Strict
construction cannot be used to defeat the clear intent of the statute . . . .”); id. § 59:8 at 228 (“[W]hen
legislative intent can be determined from the language of the statute, it will be given effect without
resort to other aids of construction.”).

8
the 60 days, up to an aggregate maximum of $5,000 for all
aggrieved parties or the actual loss sustained by the aggrieved
party, whichever is greater. If multiple aggrieved parties seek
exemplary damages, the court shall equitably allocate the
maximum amount. If the release is not sent by first class mail to the
mortgagor’s address as listed in the mortgage agreement or to an
address specified in writing by the mortgagor for this purpose
within 30 days after receiving the recorded release, the mortgagee
is liable to an aggrieved party for damages equal to exemplary
damages of $500. The mortgagee is also liable for court costs and
reasonable attorney’s fees in any successful action to enforce the
liability imposed under this paragraph. The mortgagee may
charge the mortgagor for any recording fees incurred in recording
the release of mortgage and any postage fees incurred in sending
the release to the mortgagor.
Id. (emphases added). We agree that we must always endeavor to avoid
creating an absurd result when attempting to determine the Legislature’s
intent. Here, however, where the language is not ambiguous, we must accept
that, by adding this language, the Legislature intended to create a new
obligation for mortgagees. See Wong v. Hawk, 2012 ME 125, ¶ 8, 55 A.3d 425
(“Words in a statute must be given meaning and not treated as meaningless or
superfluous.” (quotation marks omitted)).
[¶11] The Legislature’s choice not to use the word “original” does not
make the statute ambiguous. In fact, as became clear at oral argument, use of
the word “original” would likely have created ambiguity. Chase argues that
many registries now accept submission of electronic documents for recording,

9
and so the “wet ink original” may never reach the registry. Electronic
recording was not alleged in this case but, assuming that such a possibility
exists, a mortgagee that submits a document electronically can still mail to the
mortgagor the release that it receives from the registry, as required by the
statute.5
[¶12] To the extent that the Sabinas argue that section 551 requires a
mortgagee to mail to the mortgagor the “wet ink original” document, even
where the registry of deeds never receives that document, we cannot agree
that the statute imposes such a requirement. The mailing requirement
commands the mortgagee to give the legally operative mortgage release
document to the mortgagor. The document the mortgagee must mail to the
mortgagor, therefore, is the recorded mortgage release document that the
mortgagee receives from the registry of deeds, even when that document is
not the “wet ink original.”
[¶13] Here, in their amended complaint, the Sabinas alleged that Chase
mailed a copy of the recorded mortgage release document that it received
from the registry, instead of the actual document. Because these allegations
5 Neither party has asserted that Maine’s registries return recorded mortgage releases to
mortgagees only in electronic format. If the registries start to do so, however, the Legislature may
wish to clarify how a mortgagee could “send the release by first class mail” to a mortgagor,
33 M.R.S. § 551.

10
were sufficient to state a claim that Chase violated section 551, the trial court
erred when it dismissed the action, and we vacate the judgment and remand
the case for further proceedings.6
The entry is:
Judgment vacated. Remanded for further
proceedings consistent with this opinion.

image: REUTERS

Report to the Congress and the
Financial Stability Oversight Council
Pursuant to Section 620 of the Dodd-Frank Act

Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency

bcreg20160908a1

“Do I think it’s fair? Tough shit,” said Eisman, now a managing director at Neuberger Berman.

Reuters-

Steve Eisman, the maverick investor whose exploits in the subprime housing market were at the center of “The Big Short”, says bankers should stop griping about regulation.

Eisman made a name (and fortune) for himself by accurately predicting the housing crash, and was played by Steve Carell in the film of Michael Lewis’s 2010 book.

Speaking at a Miami conference of the securitization industry – whose excesses were blamed for much of the crash – he said bankers now should not be whining about tougher new rules.

[REUTERS]

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Sunday – September 18, 2016

Ten Hidden Secrets Why More Than 70 Million MERS Mortgages in the United States Are Absolutely Void That Securitized Trusts Desperately Do Not Want You or Your Judge To Know.
——————–

There is no longer any need to argue in court frustratingly and largely in vain about violations of pooling and servicing agreements or cutoff dates of REMIC trusts to prove that your mortgage is void, for there are even more compelling reasons, ten independent reasons to be exact, heretofore largely unknown, why almost all securitized trust mortgages and deeds of trust in the United States are absolutely void as a matter of law.

Listen to this Sunday’s Edition of The Foreclosure Hour and learn if your mortgage is one of more than 70 million mortgages in the United States that are absolutely void and unenforceable based upon one or more or all of these ten hidden secrets and why.

And learn how you and all of our listeners nationwide can bring this new knowledge effectively to the attention of state and federal foreclosure courts in defense of your home.

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