10th Circuit Dismisses Claims for Violations of Foreclosure Law

The Tenth Circuit has affirmed dismissal of claims for violations of foreclosure law for reasons of preclusion and failure to state plausible claims for relief.  The plaintiff in the action was a debtor who counterclaimed for breach of contract and breach of implied duty of good faith and fair dealing against the bank and the servicer (collectively “defendants”) who filed for foreclosure on the plaintiff’s mortgage loan.  Those claims were dismissed in Oklahoma state court, which gave rise to plaintiff filing three claims in federal court.

Plaintiff alleged that the defendants violated the Fair Housing Act (FHA) because plaintiff had filed a disability discrimination complaint with HUD, HUD had notified the defendants of the discrimination complaint, and the defendants had discriminated and retaliated against plaintiff by failing to review plaintiff’s loss-mitigation request.

Plaintiff also alleged that defendants violated RESPA because they did not provide timely notice of a transfer of the servicing rights on the loan and the new servicer did not review plaintiff’s loss mitigation application that was pending before the sheriff’s sale.  Lastly, plaintiff alleged that defendants violated Fair Debt Collection Practices Act (FDCPA) by sending communications to plaintiff even though defendants knew that plaintiff was represented by an attorney.

The court dismissed plaintiff’s FHA and RESPA claims because both claims were prohibited due to Oklahoma preclusion laws, which bar claims when (1) the party asserting the claim could have raised it as a defense in the first case, and (2) success on the later claim would nullify the first judgment or impair the rights established in it.  The FDCPA claim was not prohibited, however, because the plaintiff could not have raised this claim in her answer because it was based on events that occurred after the initial judgment.

Despite this, the court dismissed the FDCPA claims for failure to state a plausible claim for relief because none of the notices that were sent to the plaintiff amounted to a “communication” under the FDCPA.