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holding "a person or business is not a 'debt collector' if the debt sought to be collected is not due or owed to another (i.e., it originated with the person or business collecting it) or if the debt[or] was not in default"
Summary of this case from Elbert v. RoundPoint Mortg. Servicing Corp.Opinion
Case No. 8:20-cv-137-T-30SPF
02-24-2020
Kathleen TURNER, Plaintiff, v. PHH MORTGAGE CORPORATION, as successor by merger to Ocwen Loan Servicing, LLC, Defendant.
Young Vincent Kim, Consumer Law Attorneys, Clearwater, FL, for Plaintiff. Timothy Allen Andreu, Diana Nicole Evans, Bradley Arant Boult Cummings LLP, Tampa, FL, for Defendant.
Young Vincent Kim, Consumer Law Attorneys, Clearwater, FL, for Plaintiff.
Timothy Allen Andreu, Diana Nicole Evans, Bradley Arant Boult Cummings LLP, Tampa, FL, for Defendant.
ORDER
JAMES S. MOODY, JR., UNITED STATES DISTRICT JUDGE Kathleen Turner has a mortgage for which PHH Mortgage Corporation, as successor by merger to Ocwen Loan Servicing, LLC, is the servicer. On six occasions, Turner made her mortgage payment via phone, for which PHH charged her a convenience fee of either $7.50 or $19.50 to ensure same-day acceptance and posting of the payment. Turner is now suing PHH, alleging the convenience fees violate the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. ("FDCPA"), and its Florida counterpart, the Florida Consumer Collection Practices Act, §§ 559.55 et seq. , Florida Statutes ("FCCPA").
PHH moves to dismiss, raising several arguments why the convenience fees do not violate either debt collection act. The Court agrees these convenience fees are not debts owed another as contemplated under the acts because they were for a separate service offered by PHH. So the Court will grant PHH's motion and dismiss this action.
BACKGROUND
Turner took out a mortgage for property in Largo. At some point, she defaulted. Later, the loan was transferred to PHH for servicing.
PHH partnered with Western Union to provide a Speedpay service, which allows payments made via telephone and online to be posted and processed the same day. PHH and Western Union share these fees. PHH has other options for accepting payment that do not require payment of additional fees and do not ensure same-day posting and processing.
In response to this lawsuit, PHH acknowledged that it charged Turner fees for its Speedpay service on six dates: April 10, 2014; June 2, 2015; November 27, 2018; December 6, 2018; January 3, 2019; and January 16, 2019. For the first two fees, PHH charged Turner $19.50; for the remaining fees, Turner was charged $7.50.
Turner alleges the fees charged by PHH violate the FDCPA, specifically § 1692f, and the FCCPA, § 559.72(9), Florida Statutes.
MOTION TO DISMISS STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows a complaint to be dismissed for failure to state a claim on which relief can be granted. When reviewing a motion to dismiss, courts must limit their consideration to the well-pleaded allegations, documents central to or referred to in the complaint, and matters judicially noticed. See La Grasta v. First Union Securities, Inc. , 358 F.3d 840, 845 (11th Cir. 2004) (internal citations omitted); Day v. Taylor , 400 F.3d 1272, 1276 (11th Cir. 2005). Courts must accept all factual allegations as true and view the facts in a light most favorable to the plaintiff. See Erickson v. Pardus , 551 U.S. 89, 93–94, 127 S. Ct. 2197, 2200, 167 L. Ed. 2d 1081 (2007).
Legal conclusions, however, "are not entitled to the assumption of truth." Ashcroft v. Iqbal , 556 U.S. 662, 664, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In fact, "conclusory allegations, unwarranted factual deductions or legal conclusions masquerading as facts will not prevent dismissal." Davila v. Delta Air Lines, Inc. , 326 F.3d 1183, 1185 (11th Cir. 2003). To survive a motion to dismiss, a complaint must instead contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation marks and citations omitted). This plausibility standard is met when the plaintiff pleads enough factual content to allow the court "to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (internal citations omitted).
DISCUSSION
PHH argues this action should be dismissed with prejudice for failure to state a claim for the following reasons: (1) the fee for using the Speedpay service, which PHH calls a "convenience fee," is not a debt under either act; (2) PHH is not a debt collector because (a) the convenience fee is not due another and (b) Turner was not in default on her mortgage when PHH began servicing it; (3) PHH did not "collect" the convenience fee as that term is contemplated in the acts; (4) PHH had a separate agreement with Turner regarding the convenience fee; (5) the convenience fee is permitted by federal and Florida law; and (6) the convenience fee is not incidental to the primary mortgage debt. Turner, unsurprisingly, opposes these arguments. As explained below, the Court agrees with PHH that the convenience fee is not a debt owed another, and, therefore, is not actionable under either act. Instead, it is a fee incurred in a separate agreement between the parties to ensure same-day posting and processing of Turner's mortgage payments—an optional service that Turner voluntarily incurred.
PHH also argues that the first four calls are barred by the FDCPA's one-year statute of limitations, and the first two calls are barred by the FCCPA's two-year statute of limitation. (Doc. 4, pp. 3–4). Turner concedes this point in her response, so the Court will accordingly dismiss those claims as unopposed.
The FDCPA and FCCPA impose civil liability on "debt collectors" for prohibited acts. Harris v. Liberty Cmty. Mgmt., Inc., 702 F.3d 1298, 1299 (11th Cir. 2012). The FDCPA defines a "debt collector" as one who engages "in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6) ; Harris , 702 F.3d at 1302. The term "debt collector," though, does not include "any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity ... concerns a debt which was originated by such person." § 1692a(6)(F)(ii) ; see also Pinson v. JP Morgan Chase Bank, Nat. Ass'n , 646 F. App'x 812, 815 (11th Cir. 2016). The term "debt collector" also does not include "any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity ... concerns a debt which was not in default at the time it was obtained by such person." § 1692a(6)(F)(iii).
The FCCPA's definition of "debt collector" mirrors the FDCPA's definition. § 559.55(7)(f).
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So a person or business is not a "debt collector" if the debt sought to be collected is not due or owed to another (i.e. , it originated with the person or business collecting it) or if the debt was not in default. See Buckman v. Am. Bankers Ins. Co. of Fla. , 115 F.3d 892, 895 (11th Cir. 1997) (concluding bail bondsman was not a "debt collector" because debt originated with bondsman); Helman v. Bank of Am. , 685 F. App'x 723, 726 (11th Cir. 2017) (concluding original mortgagee is not subject to FDCPA because it originated the loan).
Here, assuming arguendo the convenience fee is a debt, the Court concludes PHH is not a debt collector because (1) the debt was not in default and (2) the debt originated with PHH. As explained above, Turner used PHH's optional Speedpay service to ensure same-day posting and processing of her mortgage payments. This optional service had a separate fee that originated with PHH—not Turner's mortgagee. And when Turner became obligated to pay the convenience fee, Turner was not in default in her obligation to pay it. So PHH was not operating as a debt collector under the FDCPA or FCCPA when it collected the convenience fee in exchange for its Speedpay service.
In reaching this conclusion, the Court concludes the cases cited by Turner that discuss credit card processing fees are inapposite. In those cases, there was no allegation that the fee charged was for a separate service (i.e. , same-day posting and processing of mortgage payments) as Turner readily admits here. Instead, those cases concerned situations in which servicers charged a separate fee depending on the method of payment. Those courts discussed whether the processing fees were permitted under the original agreement between the creditor and debtor, or whether those fees were pass-through fees for which the debt collector did not incur a profit. See e.g. Acosta v. Credit Bureau of Napa County , 2015 WL 1943244 **2–4 (N.D. Ill. April 29, 2015) ; Weast v. Rockport Fin., LLC , 115 F. Supp. 3d 1018, 1022–23 (E.D. Mo. 2015). In other words, these cases did not involve a separate service being offered by the servicer in exchange for payment of the fee, which is the case here.
So because the Court concludes PHH was collecting a fee for a separate, optional service, that the fee for such service originated with PHH, and that Turner was not in default when PHH collected the fee for the service, PHH is not a "debt collector" under the FDCPA or FCCPA. The Court, therefore, must dismiss this action with prejudice.
Accordingly, it is ORDERED AND ADJUDGED that:
1. Defendant PHH Mortgage Corporation as successor by merger to Ocwen Loan Serviving, LLC's Motion to Dismiss (Doc. 4) is GRANTED.
2. This action is DISMISSED WITH PREJUDICE.
3. All pending motions are denied as moot.
4. The Clerk is directed to close this case.
DONE and ORDERED in Tampa, Florida, this 24th day of February, 2020.
ORDER ON RECONSIDERATION
This CAUSE comes before the Court upon Plaintiff's Motion for Reconsideration (Dkt. 16) and Defendant's Response in Opposition (Dkt. 17). Upon consideration of the motion, response, and being otherwise advised in the premises, the Court concludes that the motion should be denied.
A court may grant reconsideration if one of the following grounds applies: "(1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or manifest injustice." Stalley v. ADS Alliance Data Sys., Inc. , 296 F.R.D. 670, 687 (M.D. Fla. 2013). "A motion for reconsideration must demonstrate why the court should reconsider its prior decision and set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision." Fla. Coll. of Osteopathic Med., Inc. v. Dean Witter Reynolds, Inc. , 12 F. Supp. 2d 1306, 1308 (M.D. Fla. 1998) (internal quotations omitted).
Plaintiff requests that the Court reconsider the dismissal of this action with prejudice. To summarize, the Court agreed with Defendant's argument on its motion to dismiss that the subject convenience fees did not violate either the Fair Debt Collection Practices Act ("FDCPA") or the Florida Consumer Collection Practices Act ("FCCPA") (collectively, the "Acts"). The Court concluded that the convenience fees were not debts owed to another as contemplated under the Acts because they were for a separate service.
Plaintiff's motion does not persuade the Court that reconsideration is appropriate. Plaintiff points to three recent decisions in which Judge Middlebrooks of the Southern District of Florida denied motions to dismiss FDCPA claims in similar Speedpay cases. But, as Defendant points out, this is not an intervening change in controlling law because the Eleventh Circuit has not addressed these issues. Clearly, the district courts conflict on these matters as both parties acknowledge. But another district court interpreting the law differently is not a proper basis for a motion for reconsideration. See, e.g. , Granite State Ins. Co. v. Am. Bldg. Materials, Inc. , No. 8:10-CV-1542-T-24, 2012 WL 204220, at *2 (M.D. Fla. Jan. 24, 2012) ("[D]isagreement" with the Court's application of law "is not a proper basis for reconsideration or rehearing of the Court's decision.").
In sum, the Court respectfully disagrees with Judge Middlebrooks's rulings on this matter. The Court's conclusion that the convenience fee at issue is not a debt owed another and, therefore, is not actionable under either the FDCPA or the FCCPA is well-supported. The Court does not depart from its conclusion that the convenience fees were "incurred in a separate agreement between the parties to ensure same-day posting and processing of [Plaintiff's] mortgage payments—an optional service that [Plaintiff] voluntarily incurred." Dkt. 15 at 4. Because district courts conflict on this matter, the more appropriate course is to deny Plaintiff's motion and have the Eleventh Circuit decide this unsettled issue of law.
Accordingly, it is ORDERED AND ADJUDGED that:
1. Plaintiff's Motion for Reconsideration (Dkt. 16) is denied.
DONE and ORDERED in Tampa, Florida, this 19th day of March, 2020.