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Cannon v. United Guaranty Residential Insurance Co.

United States District Court, S.D. Indiana, Indianapolis Division

March 2, 2017



          RICHARD L. YOUNG, JUDGE United State District Court

         In this action, Plaintiffs Suzanne E. Cannon and Jeffrey A. Cannon, Jr. (“Plaintiffs”) allege in Counts I, III and IV, that United Guaranty Residential Insurance Co. (“United”) violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and in Counts II and V, violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. 1681 et seq. United has moved for summary judgment as to each Count. In addition, Plaintiffs assert in Count IV that the Koch Law Firm, P.C. (“Koch”) and Jason McAuley (collectively, “Koch Defendants”) violated the FDCPA. The Koch Defendants have moved for summary judgment on Count IV.

         For the reasons set forth below, United's Motion for Summary Judgment is GRANTED; and the Koch Defendants' Motion for Summary Judgment is GRANTED.

         I. Factual Background

         As this motion is for summary judgment brought by the Defendants, the court must take the facts and all reasonable inferences that arise therefrom in the light most favorable to Plaintiffs. Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th Cir. 1996).

         United is a private mortgage insurance company that provides an array of insurance products and services, including first-lien mortgage guaranty insurance. (Affidavit of Dale Priddy (“Priddy Aff.”) ¶ 4). It also insures lenders against the increased risk of borrower default related to mortgages with high loan-to-value ratios. When a borrower on an insured loan fails to make their mortgage payments, the lender files an insurance claim with United and, if allowed, United then issues a claim payment covering the lender's loss. Upon making a claim payment, United attempts to recoup its payment to the lender pursuant to the terms of the insurance policy. United does not furnish information to credit reporting agencies. (Id.).

         United insured Plaintiffs' mortgage under United Guarantee Certificate # 12059506 (the “Policy”). (Id. ¶ 9). On or about April 1, 2011, Wells Fargo instituted foreclosure proceedings against Plaintiffs in the Hamilton Superior Court, under Cause Number 29D03-11-8-MF-008642. Wells Fargo obtained summary judgment in its favor on July 26, 2012, and a Decree of Foreclosure was entered. The mortgaged property was sold at a Sheriff's sale on November 8, 2012.

         Following the sale of the property, on September 4, 2013, Wells Fargo submitted a claim under the Policy; United paid $25, 488.77 to Wells Fargo in accordance with the Policy. (Priddy Aff. ¶ 10).

         Pursuant to the Policy, United was entitled to recoup its payments thereunder:

(a) (i) The Company shall be subrogated, as set forth in Section 6.2(a)(ii) to the Insured's rights of recovery against the Borrower and any other Person relating to the Loan or to the Property, unless such subrogation rights are prohibited as a matter of law or pursuant to Section 6.2(b)(i) the Company has determined not to pursue such rights. The Insured shall execute and deliver at the request of the Company such instruments and papers and undertake such actions as may be necessary to transfer, assign and secure such rights. The Insured shall refrain from any action, either before or after payment of a Loss hereunder, that shall prejudice such rights.

(Id. ¶¶ 9, 11; Id. Ex. A at 30). However, pursuant to Indiana law, United was only permitted to collect the deficiency balance from the debtor, which in this case was $21, 161.79. United then sought to recoup the $21, 161.79 from Plaintiffs. (Priddy Aff. ¶ 11).

         Specifically, on October 14, 2013, United sent a letter to Plaintiffs regarding the amount they owed and demanded that Plaintiffs reimburse United $21, 161.79 that it had paid under the Policy. (Id. ¶ 12). The letter stated, in part,

This letter concerns the deficiency remaining on the above-referenced loan. As the private mortgage insurer of the loan, United Guaranty Residential Insurance Company (“United Guaranty”) has paid a claim on behalf of its insured, FHLMC, and has been assigned and/or is fully subrogated to the rights of its insured to assert claims against you as a result of your default in payment on the loan and the resulting deficiency after the foreclosure sale.

(Filing No. 42-2 at 2). Plaintiffs sent United a letter on October 16, 2013, that sought validation of the debt; however, United has nothing in its records indicating that it received such a letter, (Priddy ...

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