RUBEN PALAZZO, V. BAYVIEW LOAN SERVICING, LLC

Summarized by Timothy Anzenberger , Adams and Reese LLP
2 days 17 hours ago

Case Type:

Consumer

Case Status:

Affirmed

Citation:

24-2169 (4th Circuit, Mar 20,2026) Published

Tag(s):

Ruling:

The Fourth Circuit affirmed summary judgment for mortgage servicers, holding that monthly statements, payoff statements, and 1098 tax forms sent to a debtor during a Chapter 13 bankruptcy were purely informational and not debt collection activity. Clear disclaimers negated any perceived intent to collect a debt, and so the debtor failed to establish threshold elements of his claims for alleged violations of the automatic stay, among other things.

Procedural context:

During his Chapter 13 bankruptcy case, Appellant Ruben Palazzo received various communications and documents from his mortgage servicers. Contending those communications constituted actions to collect a debt, Palazzo sued the servicers (i.e., Appellees Bayview Loan Servicing, LLC and Manufacturers and Traders Trust Company (M&T Bank)) while his bankruptcy case was pending. The case was initially referred to the bankruptcy court, but the reference was later revoked by the district court, which handled the case thereafter. Palazzo's operative complaint alleged four counts: (1) contempt for violating the automatic stay under 11 U.S.C. § 1327; (2) violation of the automatic stay under 11 U.S.C. § 362; (3) violations of Maryland's Consumer Debt Collection Act; and (4) violations of the FDCPA. The parties filed cross-motions for summary judgment in two phases. On Counts I and II, the district court granted summary judgment to the servicers, holding that the communications at issue were purely informational and not attempts to collect a debt. Palazzo appealed, but the Fourth Circuit dismissed the appeal as interlocutory. The parties then filed cross-motions for summary judgment on Counts III and IV. The district court granted summary judgment to the servicers on Count III (i.e., the FDCPA claim), again concluding that none of the written communications were attempts to collect a debt. The district court declined to exercise supplemental jurisdiction over Count IV (i.e., the state law claims) and dismissed the case without prejudice after Palazzo indicated he would refile in state court. Palazzo then appealed the entire case to the Fourth Circuit, which affirmed without dissent in a published opinion. On Count III (FDCPA), the court held that none of the servicers' communications (i.e., monthly statements, payoff statements, or 1098 tax forms) constituted debt collection activity, because the statements carried clear disclaimers disavowing any intent to collect, the payoff statements were sent at Palazzo's own request, and the tax forms contained no demand for payment. On Count II (automatic stay), the court affirmed summary judgment on the same basis, holding that purely informational documents do not violate the automatic stay under 11 U.S.C. § 362(a). On Count IV (Maryland Consumer Debt Collection Act), the court affirmed the district court's decision to decline supplemental jurisdiction after all federal claims were resolved.

Facts:

In 2007, Palazzo obtained a mortgage through SunTrust Mortgage, Inc. After falling behind on payments, he entered into a repayment agreement with SunTrust in 2010. In December 2013, SunTrust transferred servicing of the loan to Bayview Loan Servicing LLC, with Manufacturers and Traders Trust Company (M&T Bank) servicing the loan on Bayview's behalf. Palazzo filed for Chapter 13 bankruptcy in February 2016, triggering an automatic stay of debt collection activities. After plan confirmation, and while Palazzo's bankruptcy was pending, the servicers regularly sent him written communications concerning his mortgage obligation, some of which he had requested himself. These communications fell into three categories: monthly account statements, payoff statements, and 1098 tax forms. The monthly account statements listed the outstanding loan balance, interest rate, interest paid, fees owed, amounts due after the bankruptcy concluded, due dates for post-bankruptcy payments, and attached payment coupons. Each monthly statement also contained a prominent "Bankruptcy Message" at the top of its first page, which read: "Our records show that you are a debtor in bankruptcy. We are sending this statement to you for informational and compliance purposes only. It is not an attempt to collect a debt against you." The statements also instructed Palazzo to pay the Trustee rather than the servicers if his plan required it and offered him the option to stop receiving statements. The servicers also sent two payoff statements, both at Palazzo's request. Each payoff statement advised Palazzo what it would cost to pay off the loan in full and included payment instructions and payment form. Both payoff statements carried bankruptcy disclaimers similar to those on the monthly statements. One disclaimer stated: "if you are currently in bankruptcy, or if you have been granted a bankruptcy discharge, this is not an attempt to collect a debt from you, nor is it an attempt to impose personal liability on you for your debt." Another similarly stated: "To the extent that your obligation has been discharged or is subject to an automatic stay of bankruptcy this notice is for compliance and informational purposes only and does not constitute a demand for payment or any attempt to collect such obligation.". Finally, Bayview sent Palazzo 1098 tax documents in 2019 and 2020. These forms listed interest paid, remaining principal, property taxes, and some additional fees, but they made no demand for payment and included no instructions on how to make a payment. Palazzo filed suit against the servicers, alleging that these communications constituted prohibited debt collection activity in violation of the automatic stay and that the documents contained inaccurate figures in violation of federal and state consumer protection laws.

Judge(s):

Judge Thacker wrote the opinion, in which Judge King and Judge Wynn joined.

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