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Financial Services Law Insights and Observations

Sixth Circuit Holds PTFA Preempts Less Restrictive State Law, May Be Used To Establish State Law Causes Of Action

Foreclosure Tenant Rights


On February 7, the U.S. Court of Appeals for the Sixth Circuit held that while the Protecting Tenants at Foreclosure Act (PTFA) provides no private cause of action, plaintiffs may use violations of the PTFA to establish elements of a state law cause of action. Mik v. Fed. Home Loan Mortgage Corp., No. 12-6051, 2014 WL 486214 (6th Cir. Feb. 7, 2014). Tenants filed suit alleging they were unlawfully evicted from their rental home after their landlord defaulted on her mortgage and the property was sold at a foreclosure sale. The trial court held that the tenants only asserted claims under the PTFA, which does not grant a private right of action, and dismissed the complaint. On appeal, the Sixth Circuit affirmed that the PTFA does not provide a private cause of action, and that, under the Supremacy Clause, the PTFA preempts state law that is less restrictive of tenants. However, it held that, because tenants have no opportunity to raise PTFA as a defense in cases where successors in interest do not initiate judicial proceedings, they must be permitted to use available state law causes of action, such as wrongful eviction, to enforce the PTFA’s protections. To hold otherwise, the court explained, would render the PTFA’s protections virtually meaningless because “a foreclosure sale purchaser could ignore its protections with impunity, bypass judicial process and evict any tenant without notice or court process.” The court held that, here, the tenants’ allegations that the successor failed to meet certain requirements of the PTFA were sufficient to support a claim for the tort violation of wrongful eviction. The court did not find that the tenants similarly sufficiently alleged due process violations and outrageous infliction of emotional distress under Kentucky law. The court reversed in part and affirmed in part, and remanded for further proceedings.