Jeannie K. May Plaintiff- Appellee
Nationstar Mortgage, LLC Defendant-Appellant Jeannie K. May Plaintiff- Appellant
Nationstar Mortgage, LLC Defendant-Appellee
Submitted: December 15, 2016
from United States District Court for the Eastern District of
Missouri - St. Louis
WOLLMAN and SMITH,  Circuit Judges, and WRIGHT,
WRIGHT, District Judge.
Jeannie K. May commenced this action to recover damages under
state and federal law arising from the debt-collection
practices of Appellant/Cross-Appellee Nationstar Mortgage,
Inc. A jury found in favor of May on her invasion-of-privacy
claim and her claim that Nationstar negligently violated the
Fair Credit Reporting Act. The jury awarded May compensatory
damages on both claims and punitive damages on her
appeal, Nationstar argues that insufficient evidence supports
the jury's award of punitive damages because May failed
to present clear and convincing evidence that Nationstar
acted with an evil motive or with a reckless indifference to
May's rights. In the alternative, Nationstar contends
that the punitive damages award is unconstitutionally
excessive in violation of the Due Process Clause of the
Fourteenth Amendment to the United States Constitution. May
cross-appeals, challenging the district court's exclusion
of testimony at trial and its jury instruction addressing the
Real Estate Settlement Practices Act. We affirm.
purchased a home in Overland, Missouri, secured by a $100,
000 mortgage in 2007. Shortly thereafter, she stopped making
mortgage payments and filed for Chapter 13 bankruptcy.
Through the bankruptcy process, May entered a five-year
payment plan to pay down her mortgage and arrears. Although
Nationstar acquired the servicing rights to May's
mortgage in 2010, Nationstar did not communicate directly
with May because of the pending bankruptcy. When May's
debt was discharged from bankruptcy in January 2013, she
requested monthly mortgage statements from Nationstar.
received her first mortgage statement in March 2013. The
statement erroneously included thousands of dollars in
"lender-paid" expenses. Also, rather than applying
a $51 credit to May's account, Nationstar improperly
debited $5, 162 from the account. Nationstar's errors
caused its records to incorrectly reflect a delinquency of
$8, 534.94 on May's mortgage. Nationstar initiated
received her first collection call from Nationstar in March
2013, the same month that she began receiving mortgage
statements. May immediately contacted Nationstar, but
Nationstar's employees-acting on erroneous
records-informed May that she was delinquent on her mortgage.
During the next several months, May regularly received calls
from Nationstar at her home, in public and, most often, at
April 2013, prompted by a call from May, Nationstar submitted
May's file to its research department. Nationstar
determined on May 15, 2013, that it had made an accounting
error in May's account and directed its cash department
to credit the account from Nationstar's internal
bankruptcy fund. Nationstar's cash department rejected
the requested credit, however, because May had been
discharged from bankruptcy and her account no longer
reflected a bankruptcy code. Nationstar's research
department never followed up on this discrepancy, and
Nationstar never credited May's account.
Nationstar resumed its collection efforts and presented May
with two options-vacate her home or accept a loan
modification. The proposed loan modification would have added
the erroneously calculated arrears to May's principal
balance. May refused, and Nationstar initiated the loan
modification anyway. May repeatedly attempted to correct the
accounting errors by calling and sending written complaints
to Nationstar. Although May continued tendering monthly
mortgage payments, Nationstar began rejecting the payments in
September 2013 because its internal policy required it to
accept only full payments. Nationstar deemed May's
payments insufficient because of its erroneous determination
that her account was in arrears. Nationstar initiated its
foreclosure process. May retained counsel.
December 19, 2013 letter, May's attorney attempted to
explain May's circumstances to Nationstar. In response,
Nationstar's correspondence verified the debt and
enclosed the note, deed of trust and a payment history.
May's attorney requested a substantive response.
Nationstar in turn notified May of the February 24, 2014
foreclosure sale. Thereafter, Nationstar conducted frequent
inspections of May's residence, allegedly in preparation
for the foreclosure sale.
filed this lawsuit together with a motion for a temporary
restraining order to stop the foreclosure sale. As relevant
here, May alleged that Nationstar's conduct (1) violated
her right to privacy under Missouri law, (2) constituted
negligent reporting under the Fair Credit Reporting Act, (3)
willfully violated the Fair Credit Reporting Act, (4)
violated the Fair Debt Collection Practices Act, and (5)
violated the Real Estate Settlement Practices Act. Nationstar
removed the action to the Eastern District of Missouri and
cancelled the foreclosure sale. Nationstar's subsequent
investigative and remedial process took several months. On
April 28, 2014, Nationstar credited the erroneously deducted
$5, 162 to May's account, but Nationstar did not remove
the improper "lender-paid" expenses or correct the
rejection of May's monthly payments. Nationstar's
revised records continued to erroneously indicate that
May's account was delinquent. The account balance on
May's mortgage was not corrected until October 2014.
trial, May recounted her experience with Nationstar. This
included May's repeated efforts to remedy her account
with Nationstar and stop Nationstar's collection
practices. May's credit score was also adversely affected
because Nationstar reported a delinquent debt that she did
not owe. May and her physician testified that May experienced
symptoms of severe stress attributable to Nationstar's
conduct, including abdominal pain, vomiting, depression and
anxiety. May testified that Nationstar ignored her repeated
requests to stop calling her, particularly at work, and that
Nationstar's employees spoke to her in a mocking and
sarcastic manner on several occasions. May argued that
Nationstar's corporate culture unduly focused on
collection efforts, which prevented Nationstar from
correcting her account sooner.
admitted that it made many mistakes when servicing May's
account, but disputed May's allegations that these
mistakes were intentional or the product of an
institutionalized corporate practice. To counter May's
suggestion that Nationstar was motivated by profit when it
sought to foreclose on May's home, Nationstar presented
evidence that it loses money when it forecloses on a
jury awarded May $50, 000 in compensatory damages and $400,
000 in punitive damages for Nationstar's invasion of her
privacy, in violation of Missouri law, and $50, 000 in
compensatory damages for Nationstar's negligent
reporting, in violation of the Fair Credit Reporting Act. The
district court subsequently denied Nationstar's motion to
alter or amend the judgment. Nationstar's appeal and
May's cross-appeal follow.
advances two arguments, in the alternative, that challenge
the award of punitive damages. First, Nationstar argues that
insufficient evidence supports the jury's award of
punitive damages because May failed to present clear and
convincing evidence that Nationstar acted with an evil motive
or a reckless indifference to May's rights.
Alternatively, Nationstar challenges the constitutionality of
the punitive damages award, arguing that because it is
excessive, the award violates the Due Process Clause of the
Fourteenth Amendment to the United States Constitution. We
address each argument in turn.
asserts that insufficient evidence supports the jury's
award of $400, 000 in punitive damages because the evidence
fails to establish that Nationstar acted with ill-will or
malice. Rather, according to Nationstar, the evidence
supports the conclusion that Nationstar's errors were
made in good faith. May counters that Nationstar was notified
of its mistakes and its conduct thereafter demonstrated a
"reckless disregard" to May's rights. By
concluding that Nationstar acted with a reckless indifference
to her rights, May contends, the jury found Nationstar's
persistent collection efforts-despite May's payment
history and debt protests-were inconsistent with
Nationstar's claimed good faith.
exercising diversity jurisdiction, as we do here, we apply
the forum state's substantive law to any state-law
claims. See Bazzi v. Tyco Healthcare Grp., LP, 652
F.3d 943, 946 (8th Cir. 2011). Under Missouri law, punitive
damages may be awarded for invasion of privacy. Engman v.
Sw. Bell Tel. Co., 591 S.W.2d 78, 81-82 (Mo.Ct.App.
1979). The purpose of punitive damages is not to compensate
the plaintiff, but rather to punish and deter the defendant.
Rodriguez v. Suzuki Motor Corp., 936 S.W.2d 104, 110
(Mo. 1996). As such, punitive damages are an extraordinary
and harsh remedy that should be awarded sparingly.
Id. Whether the evidence is sufficient to support an
award of punitive damages is a question of law, ...