Judge Bridget Brennan, nominated by President Biden to the Northern District of Ohio, upheld the right of a homeowner to proceed with a federal lawsuit under the Fair Debt Collection Practices Act (FDCPA) for misconduct in connection with the servicing of her mortgage and attempted foreclosure of her home. Specifically, Judge Brennan refused to dismiss a suit by the homeowner against a defense law firm that, the homeowner claimed, had engaged in misrepresentation and other misconduct. The October, 2022 decision was in Ruckman v PHH Mortgage Corp.
What’s the lawsuit about?
Angela Ruckman owns a home in Mansfield, Ohio, subject to a home loan mortgage requiring monthly payments. PHH Mortgage Corporation has serviced the mortgage on behalf of a large national bank. Ruckman regularly made mortgage payments since she purchased the home in 2005, but fell behind on the mortgage in early 2020. The bank and the Clunk, Hoose law firm (“Clunk”) that represented it filed a state court lawsuit in March 2020 to foreclose on Ruckman’s mortgage and seize the property.
Ruckman and PHH negotiated a mortgage modification, under which Ruckman made a number of payments. Disputes arose, however, on whether she had properly executed the modification agreement and continued to make all payments. Ruckman still lives in the house and the state foreclosure suit was dismissed, but disputes continue. Ruckman filed suit in federal court against PHH for violation of federal rules regulating servicers and against Clunk to recover damages for violating the FDCPA because of misrepresentations and other misconduct. Clunk moved to dismiss the claims against it as a matter of law, asserting that Ruckman could not proceed with discovery or trial.
What did the judge decide and why is it important?
Judge Brennan denied the motion so that Ruckman can proceed with her consumer protection case against Clunk. She explained that FDCPA is an “extraordinarily broad statute” designed to provide remedies for consumers like Ruckman for unfair debt collection practices. She specifically rejected Clunk’s claim that Ruckman must prove it made “knowing” misrepresentations to the state court or others in connection with its debt collection efforts. Instead, she made clear, based on precedent, that a consumer like Ruckman “does not need to prove knowledge or intent to establish liability.” Proof of any “materially false” or “misleading representation” is sufficient, she went on, even if based on “mistakes of law” or fact.
Under this standard, Judge Brennan held, Ruckman could go forward with her FDCPA claim. The case clearly presented a number of disputes of “material fact” on whether Ruckman properly executed the modification agreement and made necessary payments, and on whether Clunk made material and harmful misrepresentations to the state court and to her in its debt collection efforts. Ruckman had the right, Judge Brennan concluded, to seek to prove her claims and recover damages under the FDCPA.
Brennan’s ruling is important not only to homeowner Angela Ruckman. It will also help other consumers who are victimized by unfair debt collection practices and seek to vindicate their rights under FDCPA. Both of Ohio’s Senators, Republican Rob Portman (who has since retired) and Democrat Sherrod Brown, supported Brennan’s nomination to the bench. This holding by Judge Brennan serves as an example of an important decision by a fair-minded federal judge nominated by President Biden with bipartisan cooperation and as a reminder of the importance of confirming more such judges to our federal courts.