Opinion
CIVIL ACTION NO. 3:17-CV-01664
07-24-2018
ROBERTE DARBOUZE, et al., Plaintiffs, v. DITECH FINANCIAL, LLC f/k/a GREEN TREE SERVICING, LLC, Defendant.
(CONABOY, J.)
() REPORT AND RECOMMENDATION
This federal civil action was initiated by the plaintiffs, Roberte Darbouze and Jean O. Duclair, when they filed a pro se complaint on September 15, 2017. (Doc. 1). In their complaint, the plaintiffs seek damages and injunctive relief against the defendant, Ditech Financial LLC f/k/a Green Tree Servicing LLC ("Ditech"), for violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Federal Trade Commission Act ("FTCA"), 15 U.S.C. § 41 et seq., arising out of and in connection with mortgage foreclosure proceedings in state court.
The defendant has moved to dismiss the complaint for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 6). The motion is fully briefed and ripe for disposition. (Doc. 7; Doc. 11; Doc. 12).
I. BACKGROUND
In January 2004, the plaintiffs took out a loan from GMAC Bank, secured by a mortgage on a real estate parcel located in Monroe County, Pennsylvania. The mortgagee designated in the mortgage was Mortgage Electronic Registration Systems, Inc., as nominee for GMAC Bank. On February 2, 2004, the mortgage was recorded by the county recorder of deeds in Mortgage Book 2180, Page 8665. On May 10, 2007, an assignment of mortgage was recorded by the county recorder of deeds in Mortgage Book 2304, Page 9910, assigning the mortgage to GMAC Mortgage, LLC. On September 5, 2013, an assignment of mortgage was recorded by the county recorder of deeds in Mortgage Book 2426, Page 6544, assigning the mortgage to Green Tree Servicing LLC ("Green Tree"). Effective August 31, 2015, Green Tree merged with two other companies and changed its name to Ditech Financial LLC ("Ditech").
On March 9, 2017, Ditech initiated a foreclosure action in the Court of Common Pleas for Monroe County, Pennsylvania, against the plaintiff's property, alleging that the mortgage was in default because they had ceased making monthly payments in July 2016.
In their pro se complaint, the plaintiffs allege various irregularities in the state mortgage proceedings, including unspecified "multiple misrepresentations and outright false statements in court filings" by Ditech, and an incident in which they did not receive timely notice of a settlement conference. They appear to allege that they had "filed a 'dispute' of the debt," but Ditech continued to report the debt to an unidentified consumer reporting agency without correcting the allegedly inaccurate, but unspecified, information. For relief, the plaintiffs request an award of injunctive relief and monetary damages or civil penalties.
II. LEGAL STANDARD
Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes a defendant to move to dismiss for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "Under Rule 12(b)(6), a motion to dismiss may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds the plaintiff's claims lack facial plausibility." Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). Although the Court must accept the fact allegations in the complaint as true, it is not compelled to accept "unsupported conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation." Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (quoting Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007)).
Under Rule 12(b)(6), the defendant has the burden of showing that no claim has been stated. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991); Johnsrud v. Carter, 620 F.2d 29, 32-33 (3d Cir. 1980); Holocheck v. Luzerne County Head Start, Inc., 385 F. Supp. 2d 491, 495 (M.D. Pa. 2005). Although a plaintiff is entitled to notice and an opportunity to respond to a motion to dismiss, he has no obligation to do so—he may opt to stand on the pleadings rather than file an opposition. The Court must nevertheless examine the complaint and determine whether it states a claim as a matter of law. Stackhouse v. Mazurkiewicz, 951 F.2d 29, 30 (3d Cir. 1991); Anchorage Assocs. v. Virgin Islands Bd. of Tax Review, 922 F2d 168, 174 (3d Cir. 1990). In deciding the motion, the Court may consider the facts alleged on the face of the complaint, as well as "documents incorporated into the complaint by reference, and matters of which a court may take judicial notice." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).
In addition to the complaint itself, we have considered the civil complaint and the docket report from the underlying state mortgage foreclosure action, the recorded mortgage and assignments of mortgage, and a certificate of merger concerning Green Tree's corporate name change (Doc. 7-1), all of which are public records of which we may properly take judicial notice. See Fed. R. Evid. 201; Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2007); Pennsylvania v. Brown, 373 F.2d 771, 778 (3d Cir. 1967); Gagliardi v. Kratzenberg, 188 Fed. App'x 86, 88 n.3 (3d Cir. 2006) (per curiam); Hall v. Live Nation Worldwide, Inc., 146 F. Supp. 3d 1187, 1192 (C.D. Cal. 2015); Zomolosky v. Kullman, 70 F. Supp. 3d 595, 607 n.16 (D. Del. 2014); Grant v. Aurora Loan Servs., Inc., 736 F. Supp. 2d 1257, 1263-64 (C.D. Cal. 2010). All of these documents are also incorporated by reference into the complaint, except for the certificate of merger, which documents a fact expressly acknowledged by the plaintiffs in their complaint. (See Doc. 1 ¶ 20).
III. DISCUSSION
A. FCRA Claim
In Count I of their complaint, the plaintiffs claim that Ditech violated the following provision of the FCRA:
A person shall not furnish information relating to a consumer to any consumer reporting agency if—
15 U.S.C. § 1681s-2(a)(1)(B). The plaintiffs have failed to plausibly allege facts in support of this claim. They have not specified the allegedly inaccurate information in their complaint, nor have they alleged how or to whom they "disputed" the information. They have alleged nothing more than unsupported legal conclusions. See Morrow, 719 F.3d at 165.(i) the person has been notified by the consumer, at the address specified by the person for such notices, that specified information is inaccurate; and
(ii) the information is, in fact, inaccurate.
Regardless of the adequacy of their pleadings, the plaintiffs cannot state a claim under this provision as a matter of law, because there is no private right of action under 15 U.S.C. § 1681s-2(a). See 15 U.S.C. § 1681s-2(c); Huertas v. Galaxy Asset Mgmt., 641 F.3d 28, 34 (3d Cir. 2011) (per curiam); Vulings v. Trans Union, LLC, 115 F. Supp. 3d 538, 541 (E.D. Pa. 2015).
Accordingly, it is recommended that the plaintiffs' FCRA claim be dismissed for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
B. FDCPA Claim
In Count II of their complaint, the plaintiffs claim that Ditech violated two provisions of the FDCPA. They claim that Ditech "used false representations concerning the character, amount, or legal status of Plaintiffs' alleged debt," in violation of 15 U.S.C. § 1692e(2)(A), and that Ditech failed to communicate to a consumer reporting agency that they disputed the alleged debt, in violation of 15 U.S.C. § 1692e(8).
In pertinent part, the FDCPA provides that:
A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
. . . .
(2) The false representation of—
(A) the character, amount, or legal status of any debt . . . .
15 U.S.C. § 1692e.
. . . .
(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a debt is disputed.
But Ditech is not a "debt collector" under the FDCPA. As the Supreme Court of the United States has recently held, "the Act defines debt collectors to include those who regularly seek to collect debts 'owed . . . another.'" Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718, 1721 (2017); see also 15 U.S.C. § 1692a(6) (defining "debt collector" as a person "who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another") (emphasis added).
Instead, Ditech appears to fit under the statutory definition of a "creditor," which includes "any person . . . to whom a debt is owed." 15 U.S.C. § 1692a(4). This definition includes an exception for a person who "receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another," id. (emphasis added), but here the assignment of mortgage to Green Tree, Ditech's predecessor-by-merger, occurred nearly three years before the debt went into default.
[B]y its plain terms this language seems to focus our attention on third party collection agents working for a debt owner—not on a debt owner seeking to collect debts for itself. Neither does this language appear to suggest that we should care how a debt owner came to be a debt owner—whether the owner originated the debt or came by it only through a later purchase. All that matters is whether the target of the lawsuit regularly seeks to collect debts for its own account or does so for "another."Henson, 137 S. Ct. at 1721. Thus, a debt purchaser like Ditech may collect debts for its own account without triggering the statutory definition of a "debt collector" and the corresponding obligations imposed upon debt collectors by § 1692e. See id. at 1722.
Under the statute, it appears possible for the owner of a debt to qualify as a debt collector as well in two circumstances noted, but not ruled upon, by Henson: (1) when the owner of the debt regularly acts as a third party collection agent for debts owed to others; or (2) when the owner of the debt is engaged "in any business the principal purpose of which is the collection of any debts." See 15 U.S.C. § 1692a(6); Henson, 137 S. Ct. 1721. The plaintiffs here have not alleged—plausibly or otherwise—that Ditech regularly acts as a third party collection agent for debts owed to others, or that Ditech's principal purpose is the collection of any debts. --------
Accordingly, because Ditech sought to collect a debt for its own account, rather than as a third party collection agent seeking to collect a debt owed to another, it is recommended that the plaintiffs' FDCPA claim be dismissed for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
C. FTCA Claim
In Count III of their complaint, the plaintiffs claim that Ditech's conduct constituted "unfair or deceptive acts or practices in or affecting commerce," 15 U.S.C. § 45(a), and thus violated the FTCA. But there is no private right of action under the FTCA. See Gilliam v. Nat'l Comm'n for Certification of Physician Assistants, Inc., 727 F. Supp. 1512, 1514 (E.D. Pa. 1989); Waldo v. N. Am. Van Lines, Inc., 669 F. Supp. 722, 726 (W.D. Pa. 1987).
Accordingly, it is recommended that the plaintiffs' FTCA claim be dismissed for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
D. Leave to Amend
The Third Circuit has instructed that if a pro se complaint is vulnerable to dismissal for failure to state a claim, the district court must permit a curative amendment, unless an amendment would be inequitable or futile. Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002); see also Pagano v. Ventures Tr. 2013-I-HR, Civil Action No. 3:15-CV-01489, 2016 WL 750272, at *11 (M.D. Pa. Jan. 22, 2016) (pro se RESPA and state-law claims). Based on the record before the Court, it is clear that amendment in this case would be futile. It is therefore recommended that the complaint be dismissed without leave to amend.
IV. RECOMMENDATION
For the foregoing reasons, it is recommended that:
1. The defendants' motion to dismiss (Doc. 6) be GRANTED;
2. The complaint (Doc. 1) be DISMISSED with prejudice for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure; and
3. The Clerk be directed to CLOSE this case. Dated: July 24, 2018
s/ Joseph F . Saporito , Jr.
JOSEPH F. SAPORITO, JR.
United States Magistrate Judge NOTICE
NOTICE IS HEREBY GIVEN that the undersigned has entered the foregoing Report and Recommendation dated July 24, 2018. Any party may obtain a review of the Report and Recommendation pursuant to Local Rule 72.3, which provides:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636(b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or
recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses or recommit the matter to the magistrate judge with instructions.
Failure to file timely objections to the foregoing Report and Recommendation may constitute a waiver of any appellate rights. Dated: July 24, 2018
s/ Joseph F . Saporito , Jr.
JOSEPH F. SAPORITO, JR.
United States Magistrate Judge