Glazer v. Chase Home Finance LLC

Glazer v. Chase Home Finance LLC, __ F.3d ___, Case No. 10-3416 ( 6th Cir. January 14, 2013)
The Court affirmed the trial court's finding that the mortgage servicer was not a debt collector under the Fair Debt Collection Practices Act and that a subservicer who attempts to collect debts owed to another which was not in default at the time it was obtained by the servicer is exempt from the definition of "debt collector" under 28 U.S.C. Sec. 1692a(6). The Court also affirmed the trial court's denial of plaintiff's motion to amend as untimely where it was filed four months after discovery of new evidence and after the magistrate had already recommended dismissal of the claim against the subservicer. The Court reversed the trial court's finding that the law firm that filed the foreclosure suit was not a "debt collector" under the FDCPA. Following the Third and Fourth Circuits, and rejecting contrary authority, the Court found that foreclosure proceedings were attempts to collect payment of a debt, and, therefore, subject to the FDCPA, even if no deficiency judgment was being sought and without regard to whether the foreclosure proceedings were judicial or non-judicial in nature. The Court further found that attorneys whose principal business is mortgage foreclosure or who regularly perform that function are "debt collectors" and reversed the dismissal of the FDCPA claim against the law firm and the dismissal of the state law claims and remanded for further proceedings.
Procedural context: 
The trial court adopted the recommendations of the magistrate and dismissed FDCPA claims against a mortgage subservicer and its employees and against its law firms. The Court also denied plaintiff's motion for leave to amend its complaint. On appeal, the Sixth Circuit affirmed the dismissal as to the mortgage subservicer and its employees but reversed as to the dismissal of the FDCPA claims against the law firm.
Heir of deceased borrower filed suit against mortgage servicer, Chase Home Finance, and lawyers who conducted foreclosure which occurred after borrower died and mortgage went into default. The mortgage originator (Coldwell Banker) had sold the mortgage to Fannie Mae shortly after origination. Coldwell also assigned its servicing rights to JP Morgan Chase Bank. JP Morgan subsequently assigned servicing rights to Chase Home Finance. In preparation for foreclosure, Chase's attorneys prepared an assignment of he mortgage and promissory note from JP Morgan to Chase, even though JP Morgan no longer owned the mortgage, having transferred previously to Fannie Mae. In the foreclosure suit, the borrower's heir was named as a party interest. After initially granting summary judgment for Chase, the court vacated that ruling and demanded that Chase's lawyers produce the original note for inspection. Chase later dismissed the foreclosure action without prejudice. While the foreclosure suit was pending, the heir filed suit alleging that Chase,its employees and its law firm violated the FDCPA by falsely stating that Chase owned the note and mortgage, improperly scheduling the foreclosure sale and refusing to verify the debt upon request. The trial court granted summary judgment for Chase and the law firm on the federal claims and declined to exercise discretionary jurisdiction over the state law claims, and denied plaintiff's leave to amend. The plaintiff appealed to the Sixth Circuit.
Griffin and Kethledge, Circuit Judges; Thapar, District Judge