The Seventh Circuit issued a decision in Milam v. Selene Finance today, an FDCPA case where the Court punted on the merits but addressed standing in a manner that may be notable for practitioners.
Ramona Milam sued Selene Finance, the servicer of her home mortgage, after Selene sent her a letter threatening acceleration and foreclosure if she did not cure her default within 35 days. MIlam promptly made a payment, but alleged that Selene did not intend to actually accelerate or foreclose until her loan was at least 120 days delinquent, and argued that the bluff was a prohibited practice under the FDCPA and Illinois law. Selene argued that, under the mortgage, it was entitled to notice and an opportunity to cure before being sued–an agreement the district court accepted and dismissed the case.
On appeal, the Seventh Circuit sua sponte challenged Milam’s standing, since Milam did make a payment that everyone agreed was owed and was overdue, and finding her broad reference to “the time-value of money” as not a sufficiently clear injury under Article III. The court found any question of Article III injury cured by post-argument supplemental briefing, though, which (1) explained that “interest was not accruing on her mortgage loan due to her late payment, so she avoided no added interest expense by paying before Selene could legally force her hand” and (2) explained that the would have otherwise used the money to cover health insurance premiums and other necessities–expenses she had to incur overdraft fees and take out other loans to cover once she paid Selene.
Turning to the merits, the Seventh Circuit found that, as a matter of law based on the pleadings, it was unclear whether Selene was an assignee or a mere delegee of the initial mortgage lender. Thus, dismissal under Rule 12(b)(6) was improper and the court reversed and remanded for further factual development.
