In an unpublished decision on Monday, Slorp v. Lerner, Sampson, & Rothfuss, the Sixth Circuit affirmed a judgment dismissing claims arising out of a mortgage foreclosure case, but reversed the district court’s denial of leave to amend to add RICO claims and sent the case back for further proceedings. The case arose in the aftermath of the state court foreclosure action in which the foreclosing bank ultimately dismissed the suit after questions concerning an assignment came to light. The homeowner responded with a federal lawsuit challenging debt collection practices at the bank’s law firm and other parties. The case is notable in two respects.
First, the case illustrates the prevalence and importance of unpublished opinions. The district court had relied on a prior unpublished Sixth Circuit opinion (Livonia) in order to determine that the plaintiff lacked standing. This panel went on at length discussing Livonia because that opinion “has confounded some courts and litigants,” and “has generally received more attention than an unpublished opinion might warrant.” Interestingly, however, the Court in this opinion elected not to publish it and issue a binding pronouncement on the state of the circuit’s law. Essentially, the Court distinguished Livonia and chalked up some of the confusion to some lack of precise language, but of course this illustrates the reason loose language in unpublished opinions can have significant repercussions. Moreover, when turning to another aspect of its analysis concerning the FDCPA, the Court surveyed the jurisprudence in other circuits, which largely consisted of unpublished opinions. Unpublished opinions therefore continue to have significant impact both within their circuits and elsewhere.
Second, the Court reversed the district court’s refusal to allow the RICO amendment, which had been premised on a lack of injury. The Sixth Circuit rejected this, and found that the attorneys’ fees that the plaintiff had incurred in connection with the foreclosure action were “real and quantifiable damages,” meaning that the plaintiffs had alleged sufficient injury to person or property. The Court also held that the plaintiffs had alleged a sufficient pattern of racketeering based on the state court complaint and the improper assignment. As a result, it ultimately held that the district court erred in determining that the amendment to add a RICO claim would be futile. Concurring, Judge Sutton agreed that the RICO claim should be sent back but he would not have elaborated on the RICO cause of action, and instead would have simply reversed the district court’s holding that there was no recognizable injury.
