[Cite as HSBC Bank USA, Natl. Trust Co. v. Teagarden, 2013-Ohio-5816.]


                                  IN THE COURT OF APPEALS

                              ELEVENTH APPELLATE DISTRICT

                                  TRUMBULL COUNTY, OHIO


HSBC BANK USA, NATIONAL TRUST                         :          OPINION
COMPANY, AS TRUSTEE FOR MASTR
REPERFORMING LOAN TRUST 2005-1,                       :

                 Plaintiff-Appellee,                  :
                                                                 CASE NO. 2012-T-0091
        - vs -                                        :

ROBERT J. TEAGARDEN, et al.                           :

                 Defendants/Third Party               :
                 Plaintiffs-Appellants,
                                                      :
       -vs -
                                                      :
WELLS FARGO BANK NATIONAL
ASSOCIATION,                                          :

                 Third Party Defendant.               :


Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 2010 CV
2417.

Judgment: Affirmed in part, reversed in part, and remanded.


Scott A. King and Terry W. Posey, Jr., Thompson Hine, L.L.P., Austin Landing 1,
10050 Innovation Drive, Suite 400, Dayton, OH 45342 and Matthew I. McKelvey,
Lerner, Sampson & Rothfuss, 120 East Fourth Street, Suite 800, P.O. Box 5480,
Cincinnati, OH 45202 (For Plaintiff-Appellee).

Philip D. Zuzolo and Patrick B. Duricy, Zuzolo Law Office, LLC, 700 Youngstown-
Warren Road, Niles, OH 44446 (For Defendants/Third Party Plaintiffs-Appellants).



DIANE V. GRENDELL, J.
       {¶1}    Defendants-appellants, Robert J. Teagarden and Shelley R. Teagarden,

appeal two Judgment Entries of the Trumbull County Court of Common Pleas,

dismissing the Teagardens’ counterclaims and granting summary judgment in favor of

plaintiff-appellee, HSBC Bank USA, National Trust Company. The issues before this

court are whether the original lender may be a debt collector for the purposes of the Fair

Debt Collection Practices Act (FDCPA) when the debt is assigned to a third party;

whether the one-year statute of limitations for FDCPA actions precludes claims based

on false affidavits filed in a prior foreclosure action; whether there is justifiable reliance

on false affidavits to support a fraudulent misrepresentation claim when the veracity of

the affidavits was contested; whether the failure to comply with federal mortgage

servicing guidelines may sustain a cause of action for breach of contract; whether the

term “branch office” as used in federal regulations refers only to offices with qualified

mortgage servicing personnel; and whether actual damages are a necessary element to

state a valid claim for a violation of the Real Estate Settlement Procedures Act

(RESPA).      For the following reasons, we affirm in part and reverse in part the

Judgments of the court below.

       {¶2}    On September 13, 2010, HSBC Bank filed a Complaint in Foreclosure and

for Reformation of Deed against the Teagardens and others1 in the Trumbull County

Court of Common Pleas. HSBC Bank alleged that it was the holder of a note secured

by a mortgage, executed by the Teagardens, and that there is a balance of $72,764.05

due on the note.




1. Other defendants, not parties to this appeal, included: the Trumbull County Treasurer, the United
States of America, and Alan D. York.


                                                 2
      {¶3}   On December 8, 2010, the Teagardens filed their Answer, Affirmative

Defenses, & Counterclaim. The Teagardens counterclaimed against HSBC Bank and

third party defendant-appellee, Wells Fargo Bank, N.A., as the servicing agent for

HSBC Bank. The Teagardens raised claims under the FDCPA and the Ohio Consumer

Sales Practices Act (CSPA), and for fraudulent misrepresentation, breach of contract,

and abuse of process.

      {¶4}   On February 12, 2011, HSBC Bank and Wells Fargo filed a Motion to

Dismiss the Teagardens’ Counterclaim.

      {¶5}   On July 5, 2011, the Teagardens filed an Amended Answer, Affirmative

Defenses, & Counterclaim, adding an additional claim for violation of the RESPA.

      {¶6}   On July 18, 2011, HSBC Bank and Wells Fargo filed a Motion to Dismiss

the Teagardens’ Amended Counterclaim.

      {¶7}   On November 2, 2011, the trial court issued a Judgment Entry, granting

HSBC Bank and Wells Fargo’s Motion to Dismiss with respect to the Teagardens’

counterclaims for violations of the FDCPA and CSPA, fraudulent misrepresentation, and

breach of contract.

      {¶8}   On November 18, 2011, HSBC Bank and Wells Fargo filed their Reply to

Amended Counterclaim.

      {¶9}   On August 7, 2012, HSBC Bank and Wells Fargo filed a Motion for

Summary Judgment.

      {¶10} On October 18, 2012, the trial court issued a Judgment Entry, granting

HSBC Bank and Wells Fargo summary judgment with respect to the Teagardens’

counterclaims for abuse of process and violation of the RESPA. The court further found




                                          3
that HSBC Bank was entitled to judgment on the note in the amount of $72,764.05, plus

interest. The court did not find that foreclosure of the note was appropriate, “until the

Court determines which of the costs, advances, and other charges requested by the

Plaintiff [HCBS Bank] are allowable in the interest of justice.”

       {¶11} On November 8, 2012, the Teagardens filed their Notice of Appeal. On

appeal, they raise the following assignments of error:

       {¶12} “[1.] The trial court erred by dismissing the appellants’ counterclaims

under the Fair Debt Collection Practices Act, Ohio Consumer Sales Practices Act,

Fraudulent Misrepresentation, and Breach of Contract.”

       {¶13} “[2.] The trial court erred by granting summary judgment in favor of

appellees as to their fulfillment of all conditions precedent and against appellants as to

the affirmative defense regarding compliance with the loss mitigation guidelines.”

       {¶14} “[3.] The trial court erred by granting summary judgment in favor of

appellees on appellants’ claim under the Real Estate Settlement Procedures Act.”

       {¶15} Under the first assignment of error, the Teagardens challenge the

dismissal of their counterclaims for violations of the FDCPA, violations of the CSPA,

fraudulent misrepresentation, and breach of contract, pursuant to HSBC Bank and

Wells Fargo’s Motion to Dismiss.2

       {¶16} Under Ohio’s Civil Rules, a defendant may plead the “failure to state a

claim upon which relief can be granted” by motion. Civ.R. 12(B)(6). “In order for a court

to dismiss a complaint for failure to state a claim upon which relief can be granted

(Civ.R. 12(B)(6)), it must appear beyond doubt from the complaint that the plaintiff can


2. On May 7, 2013, the Teagardens filed notice that they were withdrawing their claims regarding the
CSPA.


                                                 4
prove no set of facts entitling him to recovery.” O’Brien v. Univ. Community Tenants

Union, Inc., 42 Ohio St.2d 242, 327 N.E.2d 753 (1975), syllabus.             In making this

determination, all factual allegations contained in the complaint must be presumed true

and the non-moving party is entitled to the benefit of all reasonable inferences. Mitchell

v. Lawson Milk Co., 40 Ohio St.3d 190, 192, 532 N.E.2d 753 (1988).

       {¶17} The Teagardens’ Amended Counterclaim alleged that HSBC Bank and

Wells Fargo violated the FDCPA by engaging in harassing and abusive conduct (15

U.S.C. 1692d), making false and misleading representations (15 U.S.C. 1692e), and

using unfair or unconscionable means to collect a debt (15 U.S.C. 1692f).

       {¶18} In order to establish a claim under the FDCPA, the “defendant must be a

‘debt collector’ as defined by the Act.” Wallace v. Washington Mut. Bank, F.A., 683

F.3d 323, 326 (6th Cir.2012); Montgomery v. Huntington Bank, 346 F.3d 693, 698 (6th

Cir.2003) (“[a]s a matter of law, liability under §§ 1692d and 1692e [and 1692f] can only

attach to those who meet the statutory definition of a ‘debt collector’”).

       {¶19} A “debt collector” is defined by the FDCPA as “any person who uses any

instrumentality of interstate commerce or the mails in any business the principal

purpose of which is the collection of any debts, or who regularly collects or attempts to

collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”

15 U.S.C. 1692a(6). Excluded from this definition of a “debt collector,” is “any person

collecting or attempting to collect any debt owed or due or asserted to be owed or due

another to the extent such activity * * * concerns a debt which was originated by such

person.” 15 U.S.C. 1692a(6)(F)(ii).




                                              5
       {¶20} In the present case, Wells Fargo was the original lender, i.e., originator of

the debt, of $76,401 to the Teagardens, and identified as such in the note creating the

debt. Therefore, Wells Fargo does not meet the statutory definition of a “debt collector”

and cannot be held liable under the FDCPA.

       {¶21} The Teagardens argue that, even if Wells Fargo “is considered the formal

creditor in the original note,” it “is now (and was) collecting debt that is owned by

HSBC.” The reasoning behind this argument, however, completely circumvents the

plain language of the FDCPA, which presupposes that a person is “collecting * * * any

debt * * * owed or due another.” Under the Teagardens’ interpretation, the exclusion

under (F)(ii) is rendered meaningless. As other courts have concluded, the fact that the

original creditor transferred the debt to another party and subsequently attempts to

collect the debt on behalf of the other party does not render the original creditor a “debt

collector” for the purposes of the FDCPA. Neff v. Flagstar Bank, FSB, S.D.Ohio No.

2:11-cv-1136, 2013 U.S. Dist. LEXIS 104536, 11 (July 25, 2013) (the “transfer and

reacquisition of the debt is [not] legally relevant” to the original creditor’s exempt status

under the FDCPA); Capital One Bank (USA) v. Rhoades, 8th Dist. Cuyahoga No.

93968, 2010-Ohio-5127, 2010 Ohio App. LEXIS 4313, 8 (“Capital One is the original

creditor, and as such, * * * cannot be in violation of the FDCPA”).

       {¶22} The Teagardens argue, in the alternative, that Wells Fargo is subject to

the FDCPA as a creditor who, “in the process of collecting his own debts, uses any

name other than his own which would indicate that a third person is collecting or

attempting to collect such debts.” 15 U.S.C. 1692a(6).




                                             6
        {¶23} “A creditor collecting its own debt becomes subject to the FDCPA ‘when it

uses a name that implies that third party [sic] is involved in collecting its debts,

“pretends to be someone else” or “uses a pseudonym or alias.”’” (Citations omitted.)

Wolfe v. Bank One Corp., 433 F.Supp.2d 845, 847 (N.D.Ohio 2005); Hayes v. Asset

Recovery Mgt. Group, Ltd., N.D.Ohio No. 3:10CV1098, 2011 U.S. Dist. LEXIS 89920, 9

(Aug. 12, 2011) (“[t]o state a claim under the ‘false name’ exception, plaintiff must allege

the defendants misrepresented themselves a[s] independent debt collectors during one

or more of the abusive actions allegedly violating the FDCPA”).

        {¶24} In the present case, Wells Fargo consistently dealt with the Teagardens

as Wells Fargo Home Mortgage, Inc., Wells Fargo Bank, N.A., or Wells Fargo Equity

Enhancement Program.        The Amended Counterclaim identifies Wells Fargo Home

Mortgage as “a division” of Wells Fargo Bank.         Wells Fargo Equity Enhancement

Program is described therein as a payment plan that the Teagardens “were on” which

“required that [they] pay half of their monthly payment every two weeks resulting in an

additional equity payment every year.” The Teagardens fail to allege they ever believed

any of these entities was a third party independent of Wells Fargo Home Mortgage, the

lender identified in the note. The Amended Counterclaim does allege that Wells Fargo

misrepresented that it was the “holder of the loan” at a time when it was performing “as

the mortgage servicer.”      This allegation, however, does not raise a reasonable

inference, even among the least sophisticated of consumers, that Wells Fargo used a

false name to create the impression that another party was attempting to collect the

debt.




                                             7
       {¶25} Since the facts alleged in the Teagardens’ Amended Counterclaim

demonstrate that Wells Fargo is not a “debt collector” for the purposes of the FDCPA,

we need not consider whether any action taken by Wells Fargo violates the FDCPA.

       {¶26} Unlike Wells Fargo, HSBC Bank was found to be subject to the provisions

of the FDCPA.       The Teagardens’ Amended Counterclaim alleged that, in a prior

foreclosure action filed in March 2008 (Trumbull C.P. No. 2008 CV 00621), HSBC Bank

submitted an affidavit to the trial court falsely stating that it was the holder of the note as

of 2005. The 2008 foreclosure action was dismissed without prejudice on the grounds

that HSBC Bank lacked standing to bring the action.

       {¶27} In the present case, the trial court found that the statements made in the

affidavits from the 2008 foreclosure action were entitled to absolute witness immunity,

as set forth in Briscoe v. LaHue, 460 U.S. 325, 335, 103 S.Ct. 1108, 75 L.Ed.2d 96

(1983) (“the common law provided absolute immunity from subsequent damages liability

for all persons * * * who were integral parts of the judicial process”). The court also

noted, and the Teagardens’ counsel conceded at oral argument, that the purportedly

false affidavits on which the FDCPA claims were based were filed outside of the one-

year limitations period for such claims. 15 U.S.C. 1692k(d).

       {¶28} The Teagardens counter that their FDCPA claims were not solely based

on the false affidavits, but also “for attempts to collect improper and illegal fees and

costs.” The Teagardens’ argument does not resolve the statute of limitations problem,

as the only illegal fees and costs identified in their Counterclaim are those associated

with the prior foreclosure actions.     Specifically, the Counterclaim alleged that Wells

Fargo and HSBC Bank “knowingly submit[ed] false affidavits to falsely establish




                                              8
standing in order to defeat the Defendants[’] defenses and complete the foreclosure in

order to profit from improper fees and costs.” Since the claims based on the affidavits

are time-barred, claims based on the underlying fees and costs are likewise time-barred

and the issue of witness immunity is rendered moot.

       {¶29} The third count of the Teagardens’ Amended Counterclaim was for

fraudulent misrepresentation. The elements of a claim for fraudulent misrepresentation

are:

       {¶30} (1) a representation, or where there is a duty to disclose,

              concealment of a fact, (2) which is material to the transaction at

              hand, (3) made falsely, with knowledge of its falsity, or with such

              utter disregard and recklessness as to whether it is true or false

              that knowledge may be inferred, (4) with the intent of misleading

              another into relying on it, (5) justifiable reliance upon the

              representation   or   concealment,    and   (6)   a   resulting   injury

              proximately caused by the reliance.

(Citation omitted.) Bencivenni v. Dietz, 11th Dist. Lake No. 2012-L-127, 2013-Ohio-

4549, ¶ 43.

       {¶31} The Teagardens contend that the trial court improperly dismissed their

counterclaims for fraudulent misrepresentation against Wells Fargo and HSBC Bank by

taking judicial notice of the 2008 foreclosure action. In dismissing this claim, the court

stated:

       {¶32} Having taken judicial notice of the Teagardens’ position in Case 08

              CV 621, the Court does not agree that there was any reliance by




                                            9
             the Teagardens upon any representation of HSBC or Wells Fargo

             in that case. In fact, the Teagardens filed counterclaims in that

             case and disputed just about everything represented by HSBC.

             Ultimately, the Teagardens[’] position on standing was proven

             correct and that case was dismissed.

      {¶33} We need not consider whether the trial court’s taking judicial notice of the

Teagardens’ position in the 2008 foreclosure action was proper, since the allegations of

the Amended Complaint conclusively demonstrate the same lack of reliance on the

assertions of the false affidavits. The Amended Complaint asserts that, despite the

false affidavits, “[t]he Teagardens fought the [2008] foreclosure based on standing and

were successful and the Court dismissed the [2008] foreclosure without prejudice.”

With respect to reliance, the Amended Complaint sets forth the following:

      {¶34} The Teagardens have a foreseeable and justifiable reliance that

             Wells Fargo will engage in the litigation process in good faith and

             not fabricate evidence, including but not limited to the true holder of

             the loan, to further their own case for justified profit.         The

             Teagardens relied on these affidavits in creating a defense to the

             foreclosure and prosecuting their counterclaims.         These false

             statements increased the fees and costs assessed to their own

             loan and also increased their own attorney fees and costs in

             defending the foreclosure.

      {¶35} Reliance on Wells Fargo’s good faith and honesty or on the substance of

the affidavits as the basis for defenses/counterclaims is not the sort of detrimental




                                           10
reliance essential to state a claim for fraudulent misrepresentation. The Teagardens

cannot claim to have relied on Wells Fargo’s false representations regarding standing to

their detriment when they actively contested the veracity of those statements. N. Shore

Neurological Serv., Inc. v. Midwest Neuroscience, Inc., 9th Dist. Lorain No.

08CA0009373, 2009-Ohio-2429, ¶ 13 (“[a] person cannot claim to have justifiably relied

on something he knew to be false”); compare Andersons, Inc. v. Consol, Inc., 348 F.3d

496, 506 (6th Cir.2003) (“plaintiff’s negligent and/or intentional misrepresentation claims

concerning such an omission necessarily fail,” where, “[p]er plaintiff’s own concession, *

* * [the] claim is not that plaintiff relied on [the misrepresentation] by acting to its

detriment, but that defendant acted to plaintiff’s detriment in perpetrating [the

misrepresentation]”). Accordingly, it is demonstrable from the face of the Amended

Complaint that the Teagardens failed to plead a valid claim for fraudulent

misrepresentation.

       {¶36} The Teagardens’ breach of contract claim was based on Wells Fargo’s

and HSBC Bank’s failure to follow the loss mitigation guidelines mandated by the

Department of Housing and Urban Development (HUD) as part of the single family

mortgage insurance program. The trial court dismissed the breach of contract claim on

the grounds that no private right of action exists for violations of the National Housing

Act.

       {¶37} On the issue of government insured mortgages, federal law generally

holds that:

       {¶38} HUD regulations require a mortgagee to undertake certain actions

              before accelerating a loan for payment default, including giving a




                                            11
              default notice and in many cases attending a face-to-face meeting

              with the mortgagor before a third month’s default.    24 C.F.R. §

              203.602 and § 203.604. While these regulations do not provide a

              mortgagor with a private right of action, Mitchell v. Chase Home

              Finance LLC, 06-CV-2099-K, 2008 U.S. Dist. LEXIS 17040, 2008

              WL 623395, at *3 (N.D. Tex. March 4, 2008), if they are

              incorporated into the various loan documents * * *, they become

              enforceable by the parties to the loan documents.       Sinclair v.

              Donovan, 11-cv-00010, 2011 U.S. Dist. LEXIS 128220, 2011 WL

              5326093 (S.D. Ohio Nov. 4, 2011) * * *.

Silveira v. Wells Fargo Bank, N.A., Bankr.Mass. No. 11-44812-MSH, 2013 Bankr.

LEXIS 1904, 45 (May 3, 2013).

       {¶39} The precedents, both federal and state, further recognize that “[a] failure

of a mortgagee to adhere to the HUD servicing requirements in the regulations can be

an affirmative defense to foreclosure, but does not form the basis for a claim.” Wells

Fargo Bank, N.A. v. Favino, N.D.Ohio No. 1:10 CV 571, 2011 U.S. Dist. LEXIS 35618,

36 (Mar. 31, 2011); BAC Home Loans Serv., LP v. Taylor, 2013-Ohio-355, 986 N.E.2d

1028, ¶ 17 (9th Dist.).

       {¶40} In the present case, the original note expressly incorporated federal

regulations, providing: “In many circumstances regulations issued by the Secretary [of

Housing and Urban Development] will limit Lender’s rights to require immediate

payment in full in the case of payment defaults.        This Note does not authorize

acceleration when not permitted by HUD regulations.”




                                          12
       {¶41} The Teagardens contend that, although the HUD servicing requirements

do not create a private right of action, they may, when duly incorporated into a mortgage

contract, serve as the basis for a cause of action under state law. This distinction

between a private right of action under federal law and a cause of action arising under

state law has been recognized in several decisions relied upon by the Teagardens.

Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 581 (7th Cir.2012) (“[t]he absence of a

private right of action from a federal statute provides no reason to dismiss a claim under

a state law just because it refers to or incorporates some element of the federal law”);

Ortega v. Wells Fargo Bank, N.A., N.D.Ohio No. 3:11CV01734, 2012 U.S. Dist. LEXIS

11409, 17 (Jan. 31, 2012) (“[p]laintiff’s contract law claims do not * * * find their

foundation in promulgated [Home Affordable Modification Program] guidelines, or from

any federal law,” but “arise from protections the state of Ohio has afforded to its citizens

in their contractual dealings with other persons and entities”).

       {¶42} In a factually similar situation, the note and mortgage “at issue * * *

unambiguously provide[d] that the rights of the lender in the cause of default by the

borrower are ‘limited by regulations of the Secretary [of Housing and Urban

Development or his or her designee].’” Taylor, 2013-Ohio-355, at ¶ 19. The court of

appeals found the argument that HUD regulations did not create a private right of action

to be irrelevant: “by contract, [the mortgagee] was required to comply with the HUD

regulations governing acceleration and foreclosure, and the [mortgagors] were entitled

to use any failure to do so as a shield in the subsequent foreclosure case.” Id.

       {¶43} The Teagardens’ breach of contract claim, nevertheless, fails under state

law.   There is abundant state law precedent that the failure to comply with HUD




                                            13
regulations, when incorporated into the mortgage contract, constitutes a defense to the

foreclosure action (similar to notice provisions) rather than a basis for a breach of

contract claim. Id. at ¶ 17; U.S. Bank, N.A. v. Detweiler, 191 Ohio App.3d 464, 2010-

Ohio-6408, 946 N.E.2d 777, ¶ 53 (5th Dist.) (“[t]he HUD regulations, incorporated within

the terms of the default and/or acceleration provisions, include those requirements

found in 24 CFR § 203.602 and 24 CFR § 203.604,” and, “therefore, are conditions

precedent”); U.S. Bank, N.A. v. Stewart, 2nd Dist. Montgomery No. 21775, 2007-Ohio-

5669, ¶ 73 (“the HUD regulations also contained additional requirements for

foreclosure”); GMAC Mtge. of Pennsylvania v. Gray, 10th Dist. Franklin No. 91AP-650,

1991 Ohio App. LEXIS 6004, 10 (Dec. 10, 1991) (“[a] mortgagee who participates in the

[Mortgage Insurance Program] is required to comply with certain guidelines in dealing

with a mortgagor in default”).

       {¶44} We further note that the HUD regulations relied upon by the Teagardens

as the basis for their breach of contract action would not become operative until, and

unless, the Teagardens were in default under the mortgage.             This fact alone

demonstrates that the failure to comply with those regulations cannot support an action

for breach. An essential element of a claim for breach of contract under Ohio law is

“performance by the plaintiff.” Lapping v. HM Health Servs., 11th Dist. Trumbull No.

2000-T-0061, 2001 Ohio App. LEXIS 5634, 8 (Dec. 14, 2001). To claim that Wells

Fargo breached the HUD regulations to accelerate the mortgage, the Teagardens would

necessarily have to be in default and, therefore, could not claim to have performed

under the mortgage. Ogle v. Bank of Am., N.A., 924 F.Supp.2d 902, 915 (N.D.Ohio

2013) (by “admittedly [having] stopped making mortgage payments * * * [t]he Ogles




                                          14
have therefore failed to plead performance and accordingly, have failed to adequately

plead a breach of contract claim”); Favino, 2011 U.S. Dist. LEXIS 35618, at 28 (“[s]ince

Favino has failed to allege facts to prove his own performance, he cannot satisfy the

second element of a breach of contract claim”). Accordingly, the failure to comply with

HUD regulations may be raised as a defense in a foreclosure action, but does not

support an action for breach.

       {¶45} The first assignment of error is without merit.

       {¶46} In the second assignment of error, the Teagardens argue the trial court

erred in granting summary judgment in favor of HSBC Bank where a genuine issue of

material fact existed as to whether HSBC Bank complied with the HUD regulations,

specifically Section 203.604 of Title 24 of the Code of Federal Regulations.

       {¶47} Pursuant to Civil Rule 56(C), summary judgment is proper when (1) the

evidence shows “that there is no genuine issue as to any material fact” to be litigated,

(2) “the moving party is entitled to judgment as a matter of law,” and (3) “it appears from

the evidence * * * that reasonable minds can come to but one conclusion and that

conclusion is adverse to the party against whom the motion for summary judgment is

made, that party being entitled to have the evidence * * * construed most strongly in the

party’s favor.” A trial court’s decision to grant summary judgment is reviewed by an

appellate court under a de novo standard of review. Grafton v. Ohio Edison Co., 77

Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). “Under this standard, the reviewing court

conducts an independent review of the evidence before the trial court and renders a

decision de novo, i.e., as a matter of law and without deference to the conclusions of




                                            15
the lower court.” (Citation omitted.) U.S. Bank Natl. Assn. v. Martz, 11th Dist. Portage

No. 2013-P-0028, 2013-Ohio-4555, ¶ 10.

      {¶48} “It is the intent of the Department [of Housing and Urban Development]

that no mortgagee shall commence foreclosure or acquire title to a property until the

[mortgage servicing] requirements of this subpart have been followed.”             24 C.F.R.

203.500; 24 C.F.R. 203.606(a) (“[b]efore initiating foreclosure, the mortgagee must

ensure that all servicing requirements of this subpart have been met”).

      {¶49} (b) The mortgagee must have a face-to-face interview with the

              mortgagor, or make a reasonable effort to arrange such a meeting,

              before three full monthly installments due on the mortgage are

              unpaid. If default occurs in a repayment plan arranged other than

              during a personal interview, the mortgagee must have a face-to-

              face meeting with the mortgagor, or make a reasonable attempt to

              arrange such a meeting within 30 days after such default and at

              least   30   days   before   foreclosure   is    commenced   *   *    *.

              (c) A face-to-face meeting is not required if:

      {¶50}      (1) The mortgagor does not reside in the mortgaged

                 property,

      {¶51}      (2) The mortgaged property is not within 200 miles of the

                 mortgagee, its servicer, or a branch office of either,

      {¶52}      (3) The mortgagor has clearly indicated that he will not

                 cooperate in the interview,




                                             16
      {¶53}      (4) A repayment plan consistent with the mortgagor’s

                 circumstances is entered into to bring the mortgagor’s

                 account current thus making a meeting unnecessary, and

                 payments thereunder are current, or

      {¶54}      (5) A reasonable effort to arrange a meeting is unsuccessful.

      {¶55} (d) A reasonable effort to arrange a face-to-face meeting with the

              mortgagor shall consist at a minimum of one letter sent to the

              mortgagor certified by the Postal Service as having been

              dispatched.   Such a reasonable effort to arrange a face-to-face

              meeting shall also include at least one trip to see the mortgagor at

              the mortgaged property, unless the mortgaged property is more

              than 200 miles from the mortgagee, its servicer, or a branch office

              of either, or it is known that the mortgagor is not residing in the

              mortgaged property.

24 C.F.R. 203.604.

      {¶56} The evidence before the trial court was that, on April 16, 2010 (about five

months before HSBC Bank filed the underlying foreclosure), Wells Fargo sent a letter to

the Teagardens, advising them as follows: “Your mortgage loan is in default. Please

contact us immediately to discuss your situation. We would like to meet with you to

review your financial situation and determine possible options to assist you in bringing

your loan current.”    As to whether the Teagardens received this letter, Shelley

Teagarden testified: “I just can’t remember.”




                                           17
       {¶57} Robert Bateman, an employee of Wells Fargo, testified that “Wells Fargo,

as servicer for HSBC Bank USA, * * * does not have a branch servicing office with

personnel trained in debt collection under HUD’s Loss Mitigation policies within 200

miles of the [subject] property.” Sarah M. Twyford, a paralegal for the Teagardens’

counsel, testified and submitted evidence of eleven “Wells Fargo Home Mortgage”

offices within 100 miles of the subject property.

       {¶58} We find that a genuine issue of material fact exists as to whether Wells

Fargo complied with the requirement to have a face-to-face meeting with the

Teagardens prior to filing the foreclosure action. In particular, there was no evidence in

the record that the letter sent by Wells Fargo was certified by the postal service, as

required in 24 C.F.R. 203.604(d); nor was there evidence that a trip was made to see

the mortgagors at the mortgaged property. Therefore, the grant of summary judgment

in HSBC Bank’s favor was inappropriate. Washington Mut. Bank v. Mahaffey, 154 Ohio

App.3d 44, 2003-Ohio-4422, 796 N.E.2d 39, ¶ 53 (2nd Dist.) (“the evidence in the

record fails to establish, as a matter of law, that the bank has satisfied the face-to-face

meeting requirements set forth in C.F.R, Section 203.604 * * *[;] [a]ccordingly, there is a

genuine issue of material fact concerning Mahaffey’s equitable defense alleging the

bank’s failure to comply with that regulation”).

       {¶59} HSBC Bank argues that, as a matter of law, it is exempted from the

requirement of holding a face-to-face meeting with the Teagardens since the mortgaged

property is not within 200 miles of a Wells Fargo branch office. HSBC Bank relies on a

webpage, General Servicing Frequently Asked Questions, maintained by HUD, which




                                             18
explains what is meant by the 200-mile exception. HSBC Bank maintains that Question

11 on the FAQ webpage, provided as follows:

      {¶60} The Department is aware that many Mortgagees maintain “branch

             offices” that deal only with loan origination and some of these

             offices may only be staffed part-time. For the most part, individuals

             that staff an origination office are not familiar with servicing issues

             and are not trained in debt collection or HUD’s Loss Mitigation

             Program. The Department has always considered that the face-to-

             face meeting must be conducted by staff that is adequately trained

             to discuss the delinquency and the appropriate loss mitigation

             options with the mortgagor.          Therefore, for the purpose of this

             discussion, the face-to-face meeting requirement referenced in 24

             CFR 203.604 relates only to those mortgagors living within a 200-

             mile radius of a servicing office.

According to HSBC Bank, “[w]hile the Teagardens submitted a printout stating that there

were multiple Wells Fargo offices within 200 miles of the Property, they submitted no

evidence that any of these offices was a mortgage servicing office under 24 C.F.R. §

203.604.”

      {¶61} We reject HSBC Bank’s interpretation of a “branch office” for several

reasons. Initially, the webpage cited by Wells Fargo, as of this writing, does not contain

a Question 11 or any explanation of what is meant by a “branch office.” Nothing on the

webpage cited currently requires that the branch office be a servicing office with




                                            19
personnel trained in HUD mitigation policies. HUD.gov, General Servicing Frequently

Asked Questions,

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/nsc/faqgnsrv

(accessed December 19, 2013). Moreover, several Ohio appellate courts have rejected

the interpretation of “branch office” formerly provided by the FAQ webpage.           Wells

Fargo v. Phillabaum, 192 Ohio App.3d 712, 2011-Ohio-1311, 950 N.E.2d 245, ¶ 13-16

(4th Dist.); Wells Fargo Bank, N.A. v. Isaacs, 1st Dist. Hamilton No. C-100111, 2010-

Ohio-5811, ¶ 10. Finally, we find nothing particularly ambiguous about the term “branch

office” or authoritative about a webpage addressing frequently asked questions.

       {¶62} Wells Fargo next argues that the face-to-face meeting requirement was

satisfied by virtue of a special forbearance agreement, discussed with the Teagardens

prior to filing a first foreclosure action in 2006, and by virtue of mediations which

occurred during the pendency of a second foreclosure action in 2008. We disagree.

Both of the prior foreclosure actions were ultimately dismissed without prejudice.

Whatever interactions occurred with the Teagardens with respect to those actions did

not satisfy the meeting requirement with respect to the third foreclosure, filed in 2010.

       {¶63} Lastly, Wells Fargo asserts that failure to comply with the servicing

guidelines only precludes foreclosure of the mortgage (which the trial court did not order

in its Judgment), but has no bearing on the money owed under the note. Again, we

disagree. The terms of the note state that, in the event of default, the lender may

require immediate payment in full of the principal balance, “except as limited by

regulations of the Secretary in the case of default payments,” and acceleration of the

note is not authorized “when not permitted by HUD regulations.” Although the HUD




                                            20
regulations properly limit the lender’s right to foreclose the mortgage, here, they are

expressly incorporated as a limit on the lender’s right to accelerate the note. Taylor,

2013-Ohio-355, at ¶ 18 (“the HUD regulations were incorporated into the note and

made a part of the contract”); Christenson v. CitiMortgage, Inc., D.Colo. No. 12-cv-

02600-CMA-KLM, 2013 U.S. Dist. LEXIS 133445, 22 (Sept. 18, 2013) (“[t]he Court

agrees with the majority view that compliance with the HUD regulations is a condition

which must occur prior to the lender being able to accelerate and foreclose the debt and

that the borrower may use any failure to comply with the regulations ‘as a shield in the

subsequent foreclosure case’”) (citations omitted).

         {¶64} The second assignment of error is with merit.3

         {¶65} In their third assignment of error, the Teagardens contend that the trial

court erred by granting summary judgment in favor of Wells Fargo on their RESPA

claim.

         {¶66} Under RESPA, a loan servicer has the duty to respond to a borrower’s

qualified written request stating the borrower’s belief that the account balance is in error.

12 U.S.C. 2605(e)(1). Specifically, “the servicer shall * * * make appropriate corrections

in the account of the borrower * * * and transmit to the borrower a written notification of

such correction (which shall include the name and telephone number of a

representative of the servicer who can provide assistance to the borrower);” or “after

conducting an investigation, provide the borrower with a written explanation or

3. We note that HSBC Bank maintained that compliance with the HUD regulations is an affirmative
defense for which the borrower bears the burden of proof. We further acknowledge that some courts
have treated the issue of compliance as an affirmative defense while others have treated it as a condition
precedent. E.g., Favino, 2011 U.S. Dist. LEXIS 35618, at 36 (affirmative defense); Wells Fargo Bank,
N.A. v. Hazel, 10th Dist. Franklin No. 11AP-1061, 2012-Ohio-5770, ¶ 13 (condition precedent). Given the
procedural peculiarities of the present case, i.e., the Teagardens raised the issue of compliance as a
counterclaim, and the fact that both parties submitted evidentiary materials regarding compliance, this
court need not, and does not, express any opinion on the issue.


                                                   21
clarification that includes[,] * * * to the extent applicable, a statement of the reasons for

which the servicer believes the account of the borrower is correct as determined by the

servicer.” 12 U.S.C. 2605(e)(2)(A) and (B).

          {¶67} In the present case, the Teagardens sent Wells Fargo a qualified written

request on May 3, 2010, disputing various fees and charges associated with two prior

foreclosure actions. On May 28, 2010, Wells Fargo responded that “[t]he terms of the

Note and Mortgage/Deed of Trust outline the conditions under which we can accelerate

the collection of the debt,” and, “[a]s these conditions were met, our foreclosure action is

valid.”

          {¶68} The Teagardens’ claim fails, however, because they failed to present any

evidence of damages as a result of the alleged RESPA violation.               “Courts have

determined that actual damages must be pled as part of any RESPA claim and any

alleged loss must be related to the alleged RESPA violation itself.” Mattison v. PNC

Bank, N.A., S.D.Ohio No. 3:13-cv-061, 2013 U.S. Dist. LEXIS 106721, 23 (July 30,

2013) (cases cited). The Teagardens broadly claim that their actual damages include

“foreclosure related expenses and non-economic damage, out-of-pocket expenses,

attorneys’ fees and costs, aggravation, frustration, embarrassment, loss of time, loss of

enjoyment of life, and stress.” None of these purported damages are connected in any

way to Wells Fargo’s response to the Teagardens’ qualified written request; rather, they

derive from the years spent litigating the preceding foreclosure actions.               The

Teagardens have presented no evidence or convincing argument that the damages

alleged were suffered as a result of Wells Fargo’s terse explanation as to why it

believed the prior foreclosure actions were justified. Anderson v. Barclays Capital Real




                                             22
Estate, Inc., N.D.Ohio No. 3:09CV2335, 2010 U.S. Dist. LEXIS 68327, 19 (June 18,

2010) (“[t]he damages alleged must * * * be damages suffered ‘as a result of the failure’

to satisfy a RESPA duty”) (citation omitted). Summary judgment on the RESPA claim

was properly entered.

       {¶69} The third assignment of error is without merit.

       {¶70} For the foregoing reasons, the Judgment Entries of the Trumbull County

Court of Common Pleas, dismissing the Teagardens’ counterclaims, are affirmed; the

Entry entering summary judgment in favor of HSBC Bank on the note is reversed, and

this matter is remanded for further proceedings consistent with this opinion. Costs to be

taxed against the parties equally.



THOMAS R. WRIGHT, J., concurs,

COLLEEN MARY O’TOOLE, J., concurs in part, dissents in part, with a
Concurring/Dissenting Opinion.


                       ____________________________________



COLLEEN MARY O’TOOLE, J., concurs in part, dissents in part, with a
Concurring/Dissenting Opinion.


       {¶71} The majority only finds appellants’ second assignment of error with merit.

Because this writer finds all three of appellants’ assignments well-taken, I concur in part

and dissent in part.

       {¶72} Under their first assignment of error, appellants argue in their appellate

brief that the trial court erred by dismissing their counterclaims under the FDCPA,




                                            23
CSPA, fraudulent misrepresentation, and breach of contract. However, after appellants

filed their brief and before oral arguments in this matter, they filed a notice to withdraw

their CSPA claims. Thus, those claims will not be considered.

       {¶73} This court stated in Andrews v. Lampert, 11th Dist. Lake No. 2002-L-022,

2003-Ohio-2370, ¶11:

       {¶74} “A defendant may move to dismiss a complaint for failure to state a claim

upon which relief can be granted, according to Civ.R. 12(B)(6). An appellate court’s

review of a dismissal under Civ.R. 12(B)(6) is de novo. West v. Sheets, 11th Dist. No.

2001-L-183, 2002-Ohio-7143, at ¶9, citing Mitchell v. Speedy Car X, Inc. (1998), 127

Ohio App.3d 229, 231 * * *. In order for a court to dismiss a complaint under Civ.R.

12(B)(6), ‘“(* * *) it must appear beyond doubt from the complaint that the plaintiff can

prove no set of facts entitling him to recovery.”’ Taylor v. London (200), 88 Ohio St.3d

137, 139 * * *, quoting O’Brien v. Univ. Comm. Tenants Union, Inc. (1975), 42 Ohio

St.2d 242, * * *, syllabus. ‘“A complaint should not be dismissed for failure to state a

claim merely because the allegations do not support the legal theory on which the

plaintiff relies. Instead, a trial court must examine the complaint to determine if the

allegations provide for relief on any possible theory.”’ Firstmerit Corp. v. Convenient

Food Mart, Inc. (Mar. 7, 2003), 11th Dist. No. 2001-L-226, 2003-Ohio-1094, at ¶7,

quoting Fahnbulleh v. Strahan, 73 Ohio St.3d 666, 667, * * * (1995).             Thus, ‘in

construing a complaint upon a motion to dismiss for failure to state a claim, we must

presume that all factual allegations of the complaint are true and make all reasonable

inferences in favor of the non-moving party.’ Mitchell v. Lawson Milk Co. (1988), 40

Ohio St.3d 190, 192, * * *.” (Parallel citations omitted.)




                                             24
       {¶75} Appellants present six issues under their first assignment of error. Under

their first issue, appellants argue that the trial court erred in granting dismissal of their

counterclaim for FDCPA violations. They maintain that both HSBC and Wells Fargo are

debt collectors and allege that the court erred in finding only HSBC subject to the

FDCPA.

       {¶76} Under the FDCPA, a “debt collector” is defined as “any person who * * *

regularly collects or attempts to collect * * * debts owed or due or asserted to be owed

or due another.”     15 U.S.C. 1692a(6).      The statutory definition of “debt collector”

excludes:

       {¶77} “[A]ny person collecting or attempting to collect any debt owed or due or

asserted to be owed or due another to the extent such activity (i) is incidental to a bona

fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which

was originated by such person; (iii) concerns a debt which was not in default at the time

it was obtained by such person; or (iv) concerns a debt obtained by such person as a

secured party in a commercial credit transaction involving the creditor.”         15 U.S.C.

1692a(6)(F).

       {¶78} The record establishes that Wells Fargo was the original creditor. Due to

that fact, the trial court held that Wells Fargo could not be subject to the provisions of

the FDCPA. However, Wells Fargo, even as the formal creditor in the original note, can

be a “debt collector” as it relates to appellants’ FDCPA claims.         See Pressman v.

Southeastern Fin. Group, Inc., E.D. Pa. Civil Action No. 94-5244, 1995 U.S. Dist. LEXIS

17961, *9-10 (Nov. 30, 1995) (holding that there was an issue of fact as to whether a

financing company was a creditor or a debt collector where, although the financing




                                             25
company was the formal creditor in the original note signed by the consumer, the debt

was in fact owed to another party, and the financing company in substance collected the

debt for that party, remitting funds to it only as and when they were received from the

consumer debtor).

      {¶79} Under Pressman, although Wells Fargo was the original creditor, it is now,

and was, collecting a debt owned by HSBC.           Thus, a reasonable factfinder could

conclude that Wells Fargo is a debt collector covered by the FDCPA. I believe that

appellants pled facts that would establish their entitlement to relief under the FDCPA

against both HSBC and Wells Fargo.

      {¶80} Appellants also allege that Wells Fargo is subject to the FDCPA under the

“false name” provision. The FDCPA treats a creditor as a debt collector if the creditor,

“in the process of collecting his own debts, uses any name other than his own which

would indicate that a third person is collecting or attempting to collect such debts.” 15

U.S.C. 1692a(6). “A creditor collecting its own debt becomes subject to the FDCPA

‘when it uses a name that implies that [a] third party is involved in collecting its debts,

“pretends to be someone else” or “uses a pseudonym or alias.”’” Wolfe v. Bank One

Corp., 433 F.Supp.2d 845, 847 (N.D.Ohio 2005), citing Maguire v. Citicorp Retail

Services, Inc., 147 F.3d 232, 235 (2d Cir.1998) (quoting Villarreal v. Snow, 1996 U.S.

Dist. LEXIS 11930, 1996 WL 473386 at *3 (N.D.Ill. Aug. 19, 1996).

      {¶81} Whether Wells Fargo is a creditor using names that suggest the

involvement of third parties must be evaluated from the standpoint of the least

sophisticated consumer, an objective test used to judge whether a communication or

other conduct violates the FDCPA. See Harvey v. Great Seneca Fin. Corp., 453 F.3d




                                            26
324, 329 (6th Cir.2006).       “The basic purpose of the least-sophisticated-consumer

standard is to ensure that the FDCPA protects all consumers, the gullible as well as the

shrewd. This standard is consistent with the norms that courts have traditionally applied

in consumer-protection law.” Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir.1993).

      {¶82} The names or programs in this case include “Wells Fargo Bank N.A.,” or

its former name “Wells Fargo Home Mortgage, Inc.,” and “Wells Fargo Equity

Enhancement Program.”         It is reasonable for appellants, or any least sophisticated

consumer, to believe a third party at some point or another was collecting their loan, as

the names or programs used throughout the collection process suggest the involvement

of a possible third party collector. Thus, this writer determines that appellants’ “false

name” theory is well-taken.

      {¶83} I believe appellants’ first issue is with merit.

      {¶84} Under their second issue, appellants contend in their appellate brief that

the witness immunity doctrine does not preclude a finding of liability under the FDCPA,

CSPA, and fraudulent misrepresentation. They maintain that Wells Fargo and HSBC

are not protected by witness immunity from FDCPA violations for submitting false

affidavits in furtherance of collecting upon a debt. Appellants further suggest that their

claims under the FDCPA, CSPA, and fraudulent misrepresentation are permitted

because immunity does not extend to the “complaining witness.”

      {¶85} As stated, appellants have withdrawn their CSPA claims. Thus, that issue

will not be addressed.

      {¶86} “The doctrine of absolute witness immunity generally bars claims based

upon allegedly false testimony.” Etapa v. Asset Acceptance Corp., 373 F.Supp.2d 687,




                                            27
690 (E.D. Ky.2004). In this case, HSBC and Wells Fargo are not protected by witness

immunity from FDCPA violations for submitting false affidavits in court in furtherance of

collecting upon a debt.

      {¶87} Appellants correctly point out that “Congress addressed the issue of

immunity expressly and extended it only as far as § 1692k(c) [the bona fide error

defense] provides. To insist that some unarticulated, common law immunity survived

the creation of the FDCPA would be to fail to give effect to the scope of the immunity

articulated in the text.”   Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 232 (4th

Cir.2007). See also Gionis v. Javitch, Block & Rathbone, LLP, 6th Cir. Nos. 06-3048 &

06-3171, 2007 U.S. App. LEXIS 14054 (June 6, 2007) (finding that litigation immunity,

witness immunity, nor qualified immunity under the First Amendment shields defendants

from liability under the FDCPA).

      {¶88} Testimony presented in the form of an affidavit may be protected under

absolute witness immunity, however, this immunity does not extend to the “complaining

witness.”    See Todd v. Weltman, Weinberg & Reis Co., L.P.A., 434 F.3d 432 (6th

Cir.2006).   It follows that immunity does not attach due to the submission of false

affidavits in order to gain a financial benefit. The conduct here was undertaken to

further the self-interest of a debt collector by using false affidavits.    Thus, witness

immunity should not have been applied to shield HSBC and Wells Fargo from the

consequences      of   misconduct   in   violation   of   the   FDCPA      and   fraudulent

misrepresentation.

      {¶89} I believe appellants’ second issue is with merit.




                                           28
       {¶90} Under their third issue, appellants maintain that the trial court erred in

taking judicial notice of prior proceedings in a motion to dismiss and finding that they did

not plead justifiable reliance.

       {¶91} “[A] trial court can take judicial notice of prior proceedings in the same

case between the same parties.” In re Veverka, 11th Dist. Ashtabula No. 98-A-0053,

1999 Ohio App. LEXIS 4654, *20 (Sept. 30, 1999), citing Diversified Mtge. Investors,

Inc. v. Athens Cty. Bd. of Revision, 7 Ohio App.3d 157 (4th Dist.1982).

       {¶92} In its November 2, 2011 judgment, the trial court stated:

       {¶93} “Having taken judicial notice of the Teagardens’ position in Case 08 CV

621, the Court does not agree that there was any reliance by the Teagardens upon any

representation of HSBC or Wells Fargo in that case. In fact, the Teagardens filed

counterclaims in that case and disputed just about everything represented by HSBC.

Ultimately, the Teagardens position on standing was proven correct and that case was

dismissed.”

       {¶94} This writer’s reading of the foregoing judgment reveals that the trial court

had already taken judicial notice of appellants’ position regarding justifiable reliance in

Case No. 08 CV 621. I fail to see any error here.

       {¶95} I believe appellants’ third issue is without merit.

       {¶96} Under their fourth issue, appellants argue that the statute of limitations

does not preclude their FDCPA claim.

       {¶97} Claims under the FDCPA are subject to a one year statute of limitations.

15 U.S.C. 1692k(d).




                                             29
       {¶98} Appellants’ amended counterclaim alleged that Wells Fargo and HSBC

violated the FDCPA by filing false affidavits in the prior actions.        The amended

counterclaim further indicated that appellants were also bringing FDCPA claims for

attempts to collect improper and illegal fees and costs. In June 2010, appellants were

informed in response to a Qualified Written Request (“QWR”) that the fees and costs

from the two previous foreclosures were not going to be removed.           The attempted

collection of these charges occurred in June 2010, and are continuing.

       {¶99} In their opposition to the motion to dismiss, appellants rebutted the statute

of limitations argument by indicating that the fees and costs were still being collected

and that the violation was ongoing. To the extent that any claims under the FDCPA fall

outside the one-year limit, appellants raised claims for recoupment as an affirmative

defense. See Riley v. Montgomery, 11 Ohio St.3d 75, 77-78 (1984).

       {¶100} I believe appellants’ fourth issue is with merit.

       {¶101} Under their fifth issue, appellants contend that the CSPA applies to Wells

Fargo and HSBC.

       {¶102} As stated, because appellants have withdrawn their CSPA claims, their

fifth issue will not be addressed.

       {¶103} Under their sixth issue, appellants allege that the lack of a federal private

right of action does not preclude their affirmative claims arising out of the failure to

follow the HUD loss mitigation requirements. Appellants admit that there is no private

right of action to enforce HUD regulations directly, but assert that they may do so as

part of a state law breach of contract claim.




                                             30
       {¶104} “The absence of a private right of action from a federal statute provides no

reason to dismiss a claim under a state law just because it refers to or incorporates

some element of the federal law. * * * To find otherwise would require adopting the

novel presumption that where Congress provides no remedy under federal law, state

law may not afford one in its stead.” Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547,

581 (C.A.7 2012). The lack of a private right of action does not preclude other claims,

including breach of contract and breach of fiduciary duty.          See, e.g., Sinclair v.

Donovan, S.D. Ohio Nos. 1:11-CV-00010, 1:11-CV00079, 2011 U.S. Dist. LEXIS

128220 (Nov. 4, 2011).

       {¶105} Here, the HUD requirements were included in the contract. The failure to

follow the guidelines is a condition precedent to being able to foreclose. If employed in

good faith, the failure to comply with the loss mitigation requirements could have

resolved this matter in September 2005.           The record reveals that appellants first

encountered problems with their mortgage due to miscommunication related to the

Equity Enhancement Program, which provided a half payment every two weeks.

Although required, no face-to-face meeting ever occurred. In August 2006, appellants’

$900.00 repayment plan payment was rejected under the pretext that it was past due.

Another face-to-face meeting was required but never conducted.            Under the facts

presented, appellants stated a claim for breach of contract and the duty of good faith

and fair dealing.

       {¶106} I believe appellants’ sixth issue is with merit.

       {¶107} To the extent indicated, I believe appellants’ first assignment of error is

well-taken.




                                             31
      {¶108} In their second assignment of error, appellants do not challenge HSBC’s

standing to enforce the note and foreclose the mortgage. They also do not contest their

nonpayment default under the loan. Rather, appellants contend the trial court erred by

granting summary judgment in favor of HSBC as to its fulfillment of all conditions

precedent and against appellants as to the affirmative defense regarding compliance

with the loss mitigation guidelines.    They maintain their payments were wrongfully

rejected and HSBC did not comply with HUD’s face-to-face meeting requirement, a

condition precedent to foreclosure.

      {¶109} This court stated in Meloy v. Circle K Store, 11th Dist. Portage No. 2012-

P-0158, 2013-Ohio-2837, ¶5-6:

      {¶110} “Summary judgment is a procedural tool that terminates litigation and thus

should be entered with circumspection. Davis v. Loopco Industries, Inc., 66 Ohio St.3d

64, 66 * * * (1993). Summary judgment is proper where (1) there is no genuine issue of

material fact remaining to be litigated; (2) the movant is entitled to judgment as a matter

of law; and (3) it appears from the evidence that reasonable minds can come to but one

conclusion, and, viewing the evidence in the non-moving party’s favor, that conclusion

favors the movant. See e.g. Civ.R. 56(C).

      {¶111} “When considering a motion for summary judgment, the trial court may not

weigh the evidence or select among reasonable inferences.            Dupler v. Mansfield

Journal Co., 64 Ohio St.2d 116, 121 * * * (1980). Rather, all doubts and questions must

be resolved in the non-moving party’s favor. Murphy v. Reynoldsburg, 65 Ohio St.3d

356, 359 * * * (1992). Hence, a trial court is required to overrule a motion for summary

judgment where conflicting evidence exists and alternative reasonable inferences can




                                            32
be drawn. Pierson v. Norfork Southern Corp., 11th Dist. No. 2002-A-0061, 2003-Ohio-

6682, ¶36. In short, the central issue on summary judgment is, ‘whether the evidence

presents sufficient disagreement to require submission to a jury or whether it is so one-

sided that one party must prevail as a matter of law.’ Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 251-252 * * * (1986). On appeal, we review a trial court’s entry of

summary judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105 * * *

(1996).” (Parallel citations omitted.)

       {¶112} The Ninth District recently stated in BAC Home Loans Servicing, LP v.

Taylor, 9th Dist. Summit No. 26423, 2013-Ohio-355, ¶13-14:

       {¶113} “‘[W]here the note or mortgage instrument requires prior notice, the

provision of this notice is a condition precedent that must be demonstrated by the

moving party under Civ.R. 56.’ [LaSalle Bank, N.A. v. Kelly, 9th Dist. No. 09CA0067-M,

2010-Ohio-2668,] ¶13-14. * * * [W]hen a loan is subject to HUD regulations, those

regulations create conditions precedent to foreclosure. * * *

       {¶114} “[I]f the terms of the note and mortgage subject it to HUD regulations

regarding default and acceleration, then a homeowner may use a servicer’s failure to

comply with those regulations to defend a foreclosure action.         * * * [A] bank’s

noncompliance with HUD regulations may bar a foreclosure action if the bank fails to

meet its burden under Civil Rule 56 to support its summary judgment motion with

acceptable evidence that it satisfied the HUD regulations applicable to default and

acceleration.” (Citations omitted.)

       {¶115} The Taylor court also held that “[e]vidence that a post-filing mediation

failed is not evidence tending to show compliance with the federal regulation.” Taylor,




                                           33
supra, at ¶21. The Ninth District reversed and remanded the judgment of the trial court

after concluding that “the note and mortgage are subject to HUD regulations regarding

default and acceleration and the evidence in the record fails to establish, as a matter of

law, that [the mortgagee] satisfied 24 C.F.R. 203.604 requiring a face-to-face meeting

with the mortgagor before filing a foreclosure action.” Id. at ¶23.

       {¶116} In this case, appellants’ payments were wrongfully rejected, the note was

accelerated in 2006, and no face-to-face meeting was conducted before initiating

foreclosure proceedings. Because HSBC and Wells Fargo failed to have a face-to-face

meeting with appellants, throughout the requisite timeframe in these proceedings, they

are precluded from foreclosure. HUD regulations state that “[t]he mortgagee must have

a face-to-face interview with the mortgagor, or make a reasonable effort to arrange such

a meeting, before three full monthly installments due on the mortgage are unpaid.” 24

C.F.R. 203.604(b). A “reasonable effort” “shall consist at a minimum of one letter sent

to the mortgagor * * * [and] shall also include at least one trip to see the mortgagor at

the mortgaged property * * *.” 24 C.F.R. 203.604(d). However, there are exceptions to

the requirement. A face-to-face meeting is not required when “[t]he mortgaged property

is not within 200 miles of the mortgagee, its servicer, or a branch office of either[.]” 24

C.F.R. 203.604(c)(2).

       {¶117} In the case at bar, HSBC argues that because there are no Wells Fargo

“servicing” branches within 200 miles of appellants’ home, HSBC is exempted from the

face-to-face meeting requirement under the guidelines.         However, the definition of

branch office is unambiguous. See Wells Fargo Bank, N.A. v. Isaacs, 1st Dist. Hamilton

No. C-100111, 2010-Ohio-5811, ¶9-10.         In addition, appellants submitted a printout




                                            34
stating there were multiple Wells Fargo offices within 200 miles of the property at issue.

The note and mortgage are subject to HUD regulations regarding default and

acceleration and the evidence in the record fails to establish that Wells Fargo, and thus,

HSBC, satisfied the face-to-face meeting requirement.

       {¶118} For the reasons stated, I agree with the majority that appellants’ second

assignment of error is with merit.

       {¶119} In their third assignment of error, appellants allege that the trial court erred

by granting summary judgment on the RESPA claim.

       {¶120} “Congress enacted RESPA in 1974 to protect home buyers from inflated

prices in the home purchasing process.” Schuetz v. Banc One Mtge. Corp., 292 F.3d

1004, 1008 (9th Cir.2002). The statute provides:

       {¶121} “The Congress finds that significant reforms in the real estate settlement

process are needed to insure that consumers throughout the Nation are provided with

greater and more timely information on the nature and costs of the settlement process

and are protected from unnecessarily high settlement charges caused by certain

abusive practices that have developed in some areas of the country.”              12 U.S.C.

2601(a).

       {¶122} RESPA sets forth certain duties of a loan servicer following borrower

inquiries. Upon receipt of a proper QWR, a servicer must either “make appropriate

corrections in the account of the borrower,” or conduct an investigation and provide the

borrower a written explanation or clarification that includes “a statement of the reasons

for which the servicer believes the account of the borrower is correct as determined by

the servicer. * * * ” 12 U.S.C. 2605(e)(2)(A) and (B)(i).




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      {¶123} Based on the foregoing, servicers may disagree with a borrower’s

interpretation of the account, and must explain the reason for the disagreement. “Under

RESPA, it is irrelevant whether the servicer’s understanding of the loan modification

agreement is correct, so long as it is reasonable.” Vassalotti v. Wells Fargo Bank, N.A.,

732 F.Supp.2d 503, 509 (E.D. Pa.2010); 12 U.S.C. 2605(e)(2)(B).

      {¶124} An allegation that a servicer failed to adequately respond to a party’s

QWR is sufficient to state a claim. See Anderson v. Barclays Capital Real Estate, Inc.,

N.D. Ohio No. 3:09CV2335, 2010 U.S. Dist. LEXIS 68327, *15 (June 18, 2010).

      {¶125} In this matter, appellants’ QWR demanded that Wells Fargo remove

charges from their account related to the prior two dismissed foreclosures.          The

charging of fees and costs that were associated with a lawsuit where there was no legal

capacity to sue is not permitted.       See Foster v. D.B.S. Collection Agency, 463

F.Supp.2d 783, 805 (S.D. Ohio 2006). Wells Fargo indicated it was not removing any

related charges. As a result of Wells Fargo’s response, no possible investigation could

have been conducted.

      {¶126} The question of whether Wells Fargo’s belief was reasonable should have

been reserved for the jury. At a minimum, it is at least a question of fact as to whether

the belief was reasonable. Thus, the trial court should not have entered summary

judgment on appellants’ RESPA claim.

      {¶127} I believe appellants’ third assignment of error is with merit.

      {¶128} For the foregoing reasons, I believe appellants’ three assignments of error

are well-taken. This writer would reverse the judgment of the Trumbull County Court of

Common Pleas and remand the matter for further proceedings.




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{¶129} Thus, I concur in part and dissent in part.




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