RANDOLPH SELLERS, individually and on behalf of a class of persons similarly situated, TABETHA SELLERS, individually and on behalf of a class of persons similarly situated, Plaintiffs - Appellants,
RUSHMORE LOAN MANAGEMENT SERVICES, LLC, Defendant-Appellee.
from the United States District Court for the Middle District
of Florida D.C. Docket No. 3:15-cv-01106-TJC-PDB
WILSON, JILL PRYOR, and THAPAR, [*] Circuit Judges.
PRYOR, CIRCUIT JUDGE.
Randolph and Tabetha Sellers filed for Chapter 7 bankruptcy,
the bankruptcy court issued a discharge order, which relieved
them from personal liability on their discharged debts and
generally barred creditors from taking actions to collect
those debts. Despite the discharge order, Rushmore Loan
Management Services, LLC, the servicer for the Sellerses'
home mortgage, sent them monthly statements for their
Rushmore sent statements after the discharge order was
entered, the Sellerses sued Rushmore seeking class
certification on claims arising under the Fair Debt
Collection Practices Act ("FDCPA"), 15 U.S.C.
§ 1692 et seq., and the Florida Consumer
Collection Practices Act ("FCCPA"), Fla. Stat.
§ 559.55 et seq. The Sellerses alleged that
Rushmore made false, deceptive, and misleading
representations when it sent mortgage statements and
attempted to collect on their mortgage debt after they
received a Chapter 7 discharge. The district court denied
class certification, concluding that for each claim
individualized inquiries predominated over issues common to
the proposed class. In reaching this conclusion, the district
court relied, at least in part, on its determination that the
question of "whether the Bankruptcy Code precluded
and/or preempted the FDCPA and FCCPA" presented an
individualized rather than a common issue. Doc. 62 at
Sellerses appeal the district court's denial of class
certification. After careful review and with the benefit of
oral argument, we conclude that the district court abused its
discretion when it determined that Rushmore's preclusion/
preemption defense raised an individualized issue. We vacate
and remand so that the district court may consider again the
Sellerses' class certification motion in light of our
conclusion that this question is common to all class members.
Sellerses obtained a loan secured by a mortgage lien on their
home in Keystone Heights, Florida. When they defaulted on the
loan, the holder of the mortgage filed a foreclosure action.
While the foreclosure action was pending, the Sellerses moved
out of the home.
moving out, the Sellerses filed for Chapter 7 bankruptcy,
which triggered a stay of the foreclosure action. In the
bankruptcy proceeding, the Sellers did not reaffirm the
mortgage debt. The bankruptcy court entered a discharge
order, which functioned as an injunction that generally
prohibited the Sellerses' creditors from taking any steps
to collect the discharged debts. See 11 U.S.C.
§ 524(a)(2) (stating that the discharge order
"operates as an injunction against . . . an act to
collect, recover or offset any such debt as a personal
liability of the debtor"). With respect to the mortgage
debt, the discharge order released the Sellerses from
personal liability on the mortgage, but the mortgage holder
continued to have a lien against the property. See
Dewsnup v. Timm, 502 U.S. 410, 418 (1992). If the
Sellerses had remained in their home, the Bankruptcy Code
would have allowed the mortgage holder to try to collect on
the mortgage so long as its actions were limited to
"seeking or obtaining periodic payments" in lieu of
foreclosing on the home. See 11 U.S.C. §
two years after the discharge order was entered, Rushmore
took over servicing the Sellerses' loan. Despite the
discharge, Rushmore sent the Sellerses monthly mortgage
statements that appeared to seek payment on the mortgage
debt. For a period of eight months, Rushmore sent the
Sellerses monthly statements in the form of "Mortgage
Statement I." In the top right corner of these
statements was a box listing the "Payment Due Date"
and "Amount Due" along with a notice that if
payment was received after a certain date, a late fee would
be charged. Doc. 28-1 at 19. The "Amount Due" was
listed as more than $70, 000, and it increased with each
monthly statement. Directly below that box was a disclaimer:
This communication is from a debt collector and any
information received will be used for that purpose. This does
not imply that Rushmore Loan Management Services is
attempting to collect money from anyone whose debt has been
discharged pursuant to (or who is under the protection of)
the bankruptcy laws of the United States; in such instances,
it is intended solely for informational purposes.
Id. Below the disclaimer was an "Explanation of
Amount Due," which itemized the principal, interest,
escrow, monthly payment due, total fees and charges, and
overdue payments on the loan. The first page also warned that
"IF YOU ARE [sic] FORECLOSURE
OR BANKRUPTCY, the amount listed here may not be the
full amount necessary to bring your account current."
Id. The bottom of the first page included a
detachable payment coupon that listed a "Due Date,"
an "Amount Due," a "Late P[a]ym[en]t
Amount," and instructions to make checks payable to
Rushmore. Id. In addition, Rushmore included with
Mortgage Statement I an envelope for the Sellerses to use to
remit their payment.
Rushmore revised its form mortgage statement. For a period of
seven months, Rushmore sent the Sellerses monthly statements
in the form of "Mortgage Statement
II." These statements were in many ways similar
to the Mortgage Statement I form. First, the top of these
statements remained the same with a box listing the
"Payment Due Date" and "Amount Due" along
with a notice that if payment was received after a certain
date, a late fee would be charged. Doc. 33-9 at 2. Second,
the statements continued to include the same disclaimer and
"Explanation of Amount Due" information as the
earlier statements. Id. Third, the statements
included the same warning to borrowers "IN
FORECLOSURE OR BANKRUPTCY"
that "the amount listed here may not be the full amount
necessary to bring your account current." Id.
Rushmore did make some changes to the format of Mortgage
Statement II. The statements no longer included a payment
coupon. In place of the payment coupon, Rushmore printed this
This is an Informational Statement for borrowers in
bankruptcy or borrowers whose debt has been discharged in
bankruptcy. It is not an attempt to collect a debt. Please
note that even if your debt has been discharged in bankruptcy
and you are no longer personally liable on the debt, the
lender may, in accordance with applicable law, pursue its
rights to foreclose on the property securing the debt. If you
do not wish to receive informational statements in the
future, please call Rushmore toll-free at (888) 504-6700.
Id. And Rushmore added an additional disclaimer to
the end of the statement, at the bottom of the fifth page:
Rushmore Loan Management Services LLC is a Debt Collector,
who is attempting to collect a debt. Any information obtained
will be used for that purpose. However, if you are in
Bankruptcy or received a Bankruptcy Discharge of this debt,
this letter is being sent for informational purposes only, is
not an attempt to collect a debt and does not constitute a
notice of personal liability with respect to the debt.
Id. at 6.
the period when the Sellerses were receiving statements in
the form of Mortgage Statement I, the state court entered a
final judgment of foreclosure on the Keystone Heights home.
The property then was sold at a foreclosure sale. After the
final judgment of foreclosure was entered, for a period of
ten months, Rushmore continued to send monthly mortgage
statements in the form of Mortgage Statement I or Mortgage
receiving the mortgage statements, the Sellerses filed a
putative class action against Rushmore in federal district
court, bringing FDCPA and FCCPA claims. First, the Sellerses
alleged that Rushmore violated the FDCPA by sending monthly
mortgage statements that "attempted to collect a debt
and represented that it had a legal right to collect upon
discharged monetary amounts." Doc. 1 at ¶ 46. The
Sellerses alleged that this conduct violated the FDCPA, which
prohibits the use of "false, deceptive, or misleading
representation[s]" including by making false
representations about "the character, amount, or legal
status of [a] debt." 15 U.S.C. § 1692e(2)(A).
According to the Sellerses, when Rushmore took the action of
sending the monthly statements, it falsely represented that
it had a legal right to collect the mortgage debt from the
Sellerses and also falsely represented the legal status of
the Sellerses alleged that Rushmore's conduct violated
the FCCPA. By sending the mortgage statements, the Sellerses
alleged, Rushmore had "claim[ed] and attempt[ed] to
enforce a debt which was not legitimate and not due and
owing." Doc. 1 at ¶ 66. As with the FDCPA claim,
the Sellerses' contention that the debt could not be
enforced was based on their allegation that any amounts they
owed on the mortgage ...