Default Litigation Case Law Update For Ohio, Indiana, Kentucky, And Michigan

Common litigation issues which a creditor may face are allegations of violations of RESPA and FDCPA as well as the Automatic Stay in Bankruptcy Court. Each of these imposes separate responsibilities and liabilities on the part of lenders, investors, services, and debt collectors. However, these are very different. Below is an update on recent cases involving these issues.


RESPA, which stands for the Real Estate Settlement Procedures Act of 1974, includes Regulation X, which is a Consumer Financial Protection Bureau regulation pursuant to §1022(b) of the Dodd-Frank Act. This regulation prohibits a loan servicer from foreclosing on a property if the consumer has submitted a complete loss mitigation package. The regulation provides an exception if the servicer has sent the consumer a notice that the consumer is not eligible for any loss mitigation and the appeal process is not applicable. This regulation further provides that the consumer may enforce these provisions.

However, for a consumer to enforce the provisions, the consumer must demonstrate that the lender’s failure to comply resulted in actual damages to the consumer. Also, if the consumer can demonstrate a pattern or practice of noncompliance on the part of the lender, then the consumer may recover additional damages.

This was the issue before the United States District Court, Western District of Kentucky, in Evelyn Miller v. Caliber Home Loans, Inc., 2018 WL 935439. In its decision, the court addressed a split within the district courts in the Sixth Circuit and ultimately decided that a consumer may not proceed with a RESPA claim by merely making a “threadbare claim” for actual damages. In addition, the Court concluded that to recover under RESPA, a consumer must allege that the damages were, in fact, caused by the purported violations.


The FDCPA, which stands for the Fair Debt Collections Practices Act, was enacted by Congress to eliminate abusive debt collection practices by debt collectors. When faced with an FDCPA violation, the Courts will apply a strict liability standard, which means that a consumer may recover statutory damages, including attorney fees and costs, if the debt collector violates the FDCPA, even if the consumer suffers no actual damages. The FDCPA prohibits debt collectors from using “false, deceptive or misleading representations or means in connection with the collection of a debt.

In Allison v. Specialized Loan Servicing, LLC 2018 WL 989547, before the United States District Court, Western District of Kentucky and in Hagy, III v. Demers & Adams, 2018 WL 914953, before the United States Court of Appeals for the Sixth Circuit the FDCPA was before the court.

It is of particular importance that the Sixth Circuit Court of Appeals, which has yet to take a position on the issue of whether the FDCPA covers communications with a consumer’s attorney, did not decide that issue as the Court determined that the consumer, in this case, did not have standing to assert their claim. In doing so, the Sixth Circuit followed the Supreme Court’s lead in the Spokeo—that to satisfy the injury in fact requirement, the consumer must point to some harm, other than the fact of a “bare procedural violation.” In the Hagy action, the consumer alleged that failure to provide the required notice that a particular communication was from a debt collector, on a letter sent to the consumer’s attorney, was a violation of the FDCPA. The 6th Circuit determined that the consumer failed to identify an injury caused by the debt collector and dismissed the action.

However, in the Henry decision, the District Court decided that certain communications did violate the FDCPA for failure to disclose that they were a communication from a debt collector. In its decision, the Court focused on whether the least sophisticated consumer would determine that the purpose of the communication was to induce payment by the consumer. In this case, the issue was not a communication between attorneys, as in Hagy; rather, the communication was letters and door hangers sent by the servicer to the borrower.

In addition to whether the necessary disclosure is on the communication, the Court further directed that the notice must be large enough to be easily read, sufficiently prominent to be noticed, and it must not be overshadowed or contradicted by other messages or notices.


Once a bankruptcy case is filed, all property, including civil causes of action, is the property of the bankruptcy estate. Thus, the bankruptcy trustee is the only party that has standing to pursue claims on behalf of the estate, unless the trustee abandons the claim. The question before Ohio’s Third District Court of Appeals in Wells v. Hughes, 2017-Ohio-8684, was when does that abandonment occur?

Pursuant to 11 U.S.C. § 544 (a)-(c), the trustee abandons property by either: (1) giving notice of the abandonment to creditors; (2) after court order and notice to creditors upon motion by a party in interest; or (3) by leaving a scheduled asset unadministered at the close of a case. Therefore, the mere filing of a report of no assets does not act as an abandonment, until the close of the case.

If you have any questions or would like to discuss this or other default-related matters in Ohio, Indiana, Kentucky or Michigan, feel free to reach out to me at

Thank you!

Daniel A. Cox


Wood + Lamping LLP

This entry was posted in Articles.
  • About the Author


    Daniel A. Cox

    Daniel Cox is a partner and manages the Default Litigation Practice Area which handles accounts in Ohio, Indiana, Michigan, and Kentucky. The majority of his practice focuses on assisting clients to manage their commercial and residential Default Litigation and Default related matters including Foreclosure, Bankruptcy, Forfeiture, Evictions, Appeals, Code Violations, Lender Liability Litigation, Loss Mitigation, Mediations, Best Practices and Risk Management.  He focuses on providing consultation and risk analysis in the effort to reduce costs and minimize risk per account to protect his client’s interests.

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