Opinion
CIVIL ACTION NO. 5:23-CV-363
2024-02-26
John KOONTZ, on behalf of Himself and all others similarly situated, Plaintiff, v. SN SERVICING CORPORATION and Land Home Financial Services, Inc., Defendants.
Jonathan R. Marshall, Denali S. Hedrick, Bailey & Glasser LLP, Charleston, WV, Jason E. Causey, Bordas & Bordas, PLLC, Wheeling, WV, for Plaintiff. Blake N. Humphrey, Alex J. Zurbuch, Frost Brown Todd, LLC, Charleston, WV, for Defendants, SN Servicing Corporation. Tai Shadrick Kluemper, Nicholas P. Mooney II, Spilman Thomas & Battle, PLLC, Charleston, WV, for Defendants, Land Home Financial Services, Inc.
Jonathan R. Marshall, Denali S. Hedrick, Bailey & Glasser LLP, Charleston, WV, Jason E. Causey, Bordas & Bordas, PLLC, Wheeling, WV, for Plaintiff.
Blake N. Humphrey, Alex J. Zurbuch, Frost Brown Todd, LLC, Charleston, WV, for Defendants, SN Servicing Corporation.
Tai Shadrick Kluemper, Nicholas P. Mooney II, Spilman Thomas & Battle, PLLC, Charleston, WV, for Defendants, Land Home Financial Services, Inc.
ORDER
JOHN PRESTON BAILEY, UNITED STATES DISTRICT JUDGE.
Pending before this Court are two (2) Motions to Dismiss, filed by Defendant SN Servicing Corporation [Docs. 6 & 7] and Defendant Land Home Financial Services, Inc. [Docs. 8 & 8-7], Plaintiff filed a Memorandum in Opposition to Defendants' Motions to Dismiss [Doc. 15]. Both Defendant SN Servicing Corporation and Defendant Land Home Financial Services, Inc. Filed Replies. See [Docs. 19 & 20]. This matter is now ripe for adjudication. For the reasons that follow, this Court will grant the Motions to Dismiss.
Given the similarities of the Motions to Dismiss, plaintiff filed one joint response.
I. Background
Plaintiff resides in Marshall County, West Virginia, and entered into a mortgage loan with CitiFinancial, Inc. ("CitiFi"). [Doc. 1-1 at ¶¶ 4, 9]. Under plaintiff's contract with CitiFi, "if a payment is not paid in full within 10 days of its due date, Borrower will be charged 5.0% of the amount in default, not to exceed $15.00." [Id. at ¶ 10]. Subsequently, CitiFi transferred responsibility for collecting plaintiff's payments to Defendant SN Servicing Corporation ("Defendant SNSC"). [Id. at ¶ 12]. As alleged in the Complaint, Defendant SNSC "assessed and collected late fees of $23.67, in violation of the contract and applicable law" [id. at ¶ 13] and "continued, to assess additional late fees in excess of the amount allowed by contract for several months afterward" [id. at ¶ 15]. The Complaint also states that Defendant SNSC "refused to accept certain payments from Plaintiff, including on or about January 10, 2023, when Plaintiff attempted to make a full payment." [Id. at ¶ 16].
Beginning in June 2023, Defendant Land Home Financial Services, Inc. ("Defendant LHFS") took over the servicing responsibilities for plaintiff's loan. [Id. at ¶ 18]. As alleged in the Complaint, Defendant LHFS "continued to bill" plaintiff for "these excessive late charges each month through the present in monthly statements." [Id. at ¶ 19]. The Complaint also states that Defendant LHFS and its agent, Reisenfeld & Associates, sent plaintiff letters "collecting and attempting to collect these excessive late fees." [Id. at ¶ 20]. Plaintiff also alleges that both Defendant SNSC and Defendant LHFS "failed to respond timely to [his] request for information dated June 15, 2023." [Id. at ¶ 22].
Plaintiff notes that Defendant LHFS "only partially responded on October 30, 2023." [Doc. 1-1 at ¶ 22].
On November 13, 2023, plaintiff filed a complaint against Defendant SNSC and Defendant LHFS in the Circuit Court of Marshall County, West Virginia. See [Doc. 1-1]. Thereafter, on December 19, 2023, Defendants SNSC and LHFS removed
this case to this Court and invoked this Court's jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367(a). See [Doc. 1].
In the Complaint, plaintiff pursues two (2) claims on behalf of himself and two classes of West Virginia and nationwide borrowers. In Count I, plaintiff alleges three (3) discrete violations of the West Virginia Consumer Credit Protection Act, W.Va. Code §§ 46A-1-101 to 8-102 ("WVCCPA"):
The Proposed Classes are asserted in the Complaint. See [Doc. 1-1 at ¶ 24-37].
43. By charging late fees in excess of those allowed in Plaintiff's and putative class members' contracts, Defendants have engaged in repeated violations of the WVCCPA, including but not limited to:
a. Collecting or attempting to collect fees, which are neither expressly authorized by any agreement creating or modifying the obligation or by statute or regulation, in violation of W.Va. Code § 46A-2-128(d);
b. Falsely representing or implying the character, extent, or amount of a claim against a consumer in violation of W.Va. Code § 46A-2-127(d);
c. Threatening to take any action prohibited by Chapter 46A of the West Virginia Code or other law regulating the debt collector's conduct in violation of W.Va. Code § 46A-2-124(f); and
d. By collecting amounts beyond what is permitted by § 46A-3-112 & 113.
44. By refusing to accept Plaintiff's payments made in accordance with the terms of his contract with Defendants, Defendants have engaged in repeated violations of Article 2 of the WVCCPA, including but not limited to:
a. Refusing to credit upon receipt all payments made in accordance with the terms of the contract in violation of W.Va. Code § 46A-2-115(c) and § 46A-3-111;
b. Using fraudulent, deceptive or misleading representations or means to collect or attempt to collect claims in violation of W.Va. Code § 46A-2-127; and
c. Using unfair or unconscionable means to collect or attempt to collect any claim in violation of W.Va. Code § 46A-2-128.
45. By refusing to provide information requested by the Plaintiff, the Defendants violated W.Va. Code § 46A-2-114(2) and § 46A-2-124(f).
[Doc. 1-1 at ¶¶ 43-45]. In Count II, plaintiff alleges a claim under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692-1692p ("FDCPA") on behalf of a national class. Specifically, plaintiff alleges that "[b]y charging late fees in excess of those allowed in Plaintiff's and putative class members' contacts, Defendants have repeatedly violated the FDCPA." [Id. at ¶ 53].
Of importance here, on August 8, 2017, plaintiff filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Northern District of West Virginia. See In re John R. Koontz, 5:17-BK-00798 (Bankr. N.D. W. Va. Aug. 8, 2017) (Flatley, J.) [Doc. 6-2 (hereinafter "the Petition")].
This Court may take judicial notice of Plaintiff's Chapter 7 bankruptcy. See Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009); Witthohn v. Fed. Ins. Co., 164 Fed.App'x. 395, 396 (4th Cir. 2006); Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989) (explaining that "[t]he most frequent use of judicial notice of ascertainable facts is in noticing the content of court records" (internal quotation marks omitted)). Moreover, considering this fact does not covert this motion into one for summary judgment. See Woods v. City of Greensboro, 855 F.3d 639, 642 (4th Cir. 2017) (citing Philips, 572 F.3d at 180) (recognizing that, in ruling on a Rule 12(b)(6) motion, courts "consider as true all well-pleaded allegations in the complaint, matters of public record, and documents attached to the motion to dismiss that are integral to the complaint and of unquestioned authenticity").
On the Petition, plaintiff indicated that he sought to retain the property and "cure arrearage and keep making payments." [Doc. 6-2 at 46]. On December 13, 2017, Judge Flatley entered an Order of Discharge as to plaintiff, absolving him of any personal obligation on the loan. See [Doc. 6-3]. The Order of Discharge specified that "a discharge removes the debtors' personal liability for debts owed before the debtors' bankruptcy case was filed." [Id. at 1].
Following plaintiff's bankruptcy discharge, Defendant SNSC sent plaintiff certain correspondence pertaining to its continued lien interest in the property. See [Doc. 1-1 at ¶ 14]. For instance, on February 2, 2023, Defendant SNSC sent a letter to plaintiff, therein explaining:
IF YOU HAVE PREVIOUSLY RECEIVED A DISCHARGE IN BANKRUPTCY AND THIS DEBT WAS NOT REAFFIRMED, THIS CORRESPONDENCE IS NOT AND SHOULD NOT BE CONSTRUED TO BE AN ATTEMPT TO COLLECT SUCH A DEBT AS YOUR PERSONAL LIABILITY, BUT IS INSTEAD A STEP IN THE ENFORCEMENT OF A MORTGAGE LIEN AGAINST YOUR PROPERTY.
[Doc. 6-4]. The February 2, 2023 letter further stated:
If you are currently in bankruptcy or have received a discharge in bankruptcy, this notice is not intended as an attempt to collect a debt as a personal liability, but is solely an effort to retain whatever rights we hold in the property that secures the debt, as evidenced by the security instrument.
[Id.].
On March 8, 2023, Defendant SNSC sent another letter to plaintiff regarding his loan, therein confirming receipt of a $622.27 payment that had been made by plaintiff. See [Doc. 6-5]. As to the payment, the March 8, 2023 letter noted that "[t]hese funds are not being credited to the account." [Id.]. The March 8, 2023 letter also explained:
IF YOU HAVE PREVIOUSLY RECEIVED A DISCHARGE IN BANKRUPTCY AND THIS DEBT WAS NOT REAFFIRMED, THIS CORRESPONDENCE IS NOT AND SHOULD NOT BE CONSTRUED TO BE AN ATTEMPT TO COLLECT SUCH A DEBT AS YOUR PERSONAL LIABILITY, BUT IS INSTEAD A STEP IN THE ENFORCEMENT OF A MORTGAGE LIEN AGAINST YOUR PROPERTY.
[Id. (emphasis in original)]. Soon after the February 2, 2023 and March 8, 2023 letters were sent, Defendant SNSC was replaced
As to the letters sent by Defendant SNSC to Plaintiff, this Court is permitted—at the Rule 12(b)(6) stage—to "consider [materials] incorporated into the complaint by reference ... so long as they are integral to the Complaint and authentic." See United States ex rel. Oberg v. Pennsylvania Higher Educ. Assistance Agency, 745 F.3d 131, 136 (4th Cir. 2014) (internal quotation marks omitted); see also Fabian v. Home Loan Center, Inc., 2014 WL 1648289, at *3 (N.D. W. Va. Apr. 24, 2014) (Bailey, C.J.) ("While a court ruling on a motion to dismiss ordinarily may not consider evidence outside the pleadings, consideration of certain materials—including any documents integral to the complaint, matters of public record, and other similar matters subject to judicial notice—is permissible."). Here, both the February Letter and the March Letter are integral to the Complaint and are otherwise authentic, such that this Court may consider them in ruling on the pending Motions to Dismiss.
by Defendant LHFS as servicer of plaintiff's loan.
II. Standard of Review
A complaint must be dismissed if it does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (applying the Twombly standard and emphasizing the necessity of plausibility). When reviewing a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must assume all of the allegations to be true, must resolve all doubts and inferences in favor of the plaintiff, and must view the allegations in a light most favorable to the plaintiff. Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999).
When rendering its decision, the Court should consider only the allegations contained in the Complaint, the exhibits to the Complaint, matters of public record, and other similar materials that are subject to judicial notice. Anheuser-Busch, Inc. v. Schmoke, 63 F.3d 1305, 1312 (4th Cir. 1995). In Twombly, the Supreme Court, noted that "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do...." Twombly, 550 U.S. at 555, 570, 127 S.Ct. 1955 (upholding the dismissal of a complaint where the plaintiff's did not "nudge[] their claims across the line from conceivable to plausible.").
This Court is well aware that "[M]atters outside of the pleadings are generally not considered in ruling on a Rule 12 Motion." Williams v. Branker, 462 F. App'x 348, 352 (4th Cir. 2012). "Ordinarily, a court may not consider any documents that are outside of the Complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment." Witthohn v. Fed. Ins. Co., 164 F. App'x 395, 396 (4th Cir. 2006). However, the Court may rely on extrinsic evidence if the documents are central to a plaintiff's claim or are sufficiently referred to in the Complaint. Id. at 396-97.
III. Analysis
A. FDCPA
The FDCPA protects consumers from "abusive debt collection practices" by debt collectors. 15 U.S.C. § 1692(a). Specifically, the FDCPA regulates the activities of a "debt collector," defined 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." 15 U.S.C. § 1692a(6); Heintz v. Jenkins, 514 U.S. 291, 294, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995). A debt is covered by the FDCPA if it is an "obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." 15 U.S.C. § 1692a(5).
To succeed on a FDCPA claim a plaintiff must demonstrate that "(1) the plaintiff has been the object of collection activity arising from consumer debt, (2) the defendant is a debt [] collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission
prohibited by the FDCPA." Dikun v. Stretch, 369 F.Supp.2d 781, 784-85 (E.D. Va. 2005) (Lee, J.); Johnson v. BAC Home Loans Servicing, 867 F.Supp.2d 766, 776 (E.D.N.C. 2011) (Fox, J.).
With respect to plaintiff's FDCPA claim, the following arguments are advanced: Defendant LHFS asserts plaintiff lacks standing to assert claims as a consumer [Doc. 8-7 at 11-12];
Defendant SNSC asserts although Defendant SNSC is a "debt collector" within the meaning of the FDCPA, in this case, Defendant SNSC was not attempting to collect a debt against plaintiff when it sent correspondence regarding the loan [Doc. 7 at 10-11]; and
Defendant SNSC asserts that plaintiff cannot make a viable FDCPA claim given the statute's definition if the term "debt" [id. at 11-12].
This Court will now address the three (3) elements plaintiff must demonstrate to succeed with a FDCPA claim.
i. Plaintiff has not sufficiently alleged that he has been the object of collection activity arising from consumer debt.
Consumer debt is defined as an obligation to pay money arising from a transaction whose subject (e.g., property) is primarily for personal, family, or household purposes. 15 U.S.C. § 1692a(5) (emphasis added).
The FDCPA's definitional section, 15 U.S.C. § 1692a, defines a "debt" as: "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes."
15 U.S.C. § 1692a (emphasis added). "Although this language is broad, it is plain that the sine qua non of a debt is the existence of an obligation (actual or alleged)." Arruda v. Sears, Roebuck & Co., 310 F.3d 13, 23 (1st Cir. 2002) (citing Ernst v. Jesse L. Riddle, P.C., 964 F.Supp. 213, 215 (M.D. La. 1997)). Notably, "a discharge extinguishes only 'the personal liability of the debtor.'" Johnson v. Home State Bank, 501 U.S. 78, 83, 111 S.Ct. 2150, 115 L.Ed.2d 66 (1991) (quoting 11 U.S.C. § 524(a)(1)). That is so because "a bankruptcy discharge extinguishes only one mode of enforcing a claim—an in personam action—while leaving intact another—an in rem action." Id. at 84, 111 S.Ct. 2150.
Here, plaintiff alleges he is a debtor on a residential mortgage loan. See [Doc. 1-1 at ¶ 2, 9, 12, 18]. Plaintiff asserts he is obligated or allegedly obligated to pay a debt under the consumer laws asserted in the Complaint.
Defendants first argue that they were not attempting to collect a debt against plaintiff when correspondence was sent regarding the loan. See [Doc. 7 at 10-11; Doc. 8-7 at 11-12]. Second, Defendants argue plaintiff cannot make a viable FDCPA claim given the statute's definition of the term "debt" because there is no obligation—either actual or alleged—with respect to plaintiff and the loan. See [Doc. 7 at 11-12; Doc. 8-7 at 11-12].
a. Plaintiff is not obligated or allegedly obligated to pay his consumer debt.
Plaintiff stresses his voluntary decision to make monthly payments post-bankruptcy, in order to avoid foreclosure, in a process known as a "ride-through." Plaintiff relies on the District Court of Maryland's decision in Farber v. Brock & Scott, LLC, 2016 WL 5867042, at *9 (D. Md. Oct. 6, 2016) (Chuang, J.), for the proposition that a ride-through creates an obligation or alleged obligation because "the consequence
[of failing] to pay would result in loss of possession."
The Farber opinion, however, is in direct conflict with this Court's prior decisions, as well as decisions in the Southern District. Specifically, this Court has already determined that "[t]he choice to continue making payments in order to retain collateral does not give rise to an 'alleged obligation.'" Fabian v. Home Loan Center, Inc., 2014 WL 1648289, at *5 (N.D. W. Va. Apr. 24, 2014) (Bailey, C.J.) (citing Ballard v. Bank of America, N.A., 2013 WL 5963068 (S.D.W. Va. Nov. 7, 2013) (slip op.)). In Ballard, Judge Copenhaver has explained:
The court of appeals for the First Circuit has recognized in analyzing similar issues arising under the [FDCPA], that the option to pay money to retain collateral is not equivalent to a personal obligation to repay a discharged debt. This is so because the sine qua non of a debt [under the FDCPA] is the existence of an obligation (actual or alleged). So too under the WVCCPA.
2013 WL 5963068, at *11 (S.D. W.Va. Nov. 7, 2013), aff'd sub nom. Ballard v. Bank of Am., NA, 578 Fed.App'x. 226 (4th Cir. 2014); see also Hanshaw v. Wells Fargo Bank, N.A., 2015 WL 5345439, at *15 (S.D. W. Va. Sept. 11, 2015) (Johnston, J.) (relying on Fabian and Ballard to conclude that plaintiff's were not obligated or allegedly obligated to repay a debt).
Here, Plaintiff's voluntary decision to make payments does not give rise to an actual or alleged obligation. There is no obligation-either actual or alleged—with respect to plaintiff and the loan. And that is because of the uncontroverted fact that plaintiff's personal obligation on the loan was discharged by way of his Chapter 7 bankruptcy proceedings. See Home State Bank, 501 U.S. at 83, 111 S.Ct. 2150 (recognizing that a "discharge extinguishes... 'the personal liability of the debtor'").
b. Plaintiff has not been the object of collection activity.
The FDCPA "only applies to communications sent in connection with the collection of a debt." Lovegrove v. Ocwen Home Loans Servicing, L.L.C., 666 Fed. App'x. 308, 311 (4th Cir. 2016) (citing 15 U.S.C. § 1692e (prohibiting false, deceptive, or misleading representations "in connection with the collection of any debt"); id. § 1692f (prohibiting unfair or unconscionable means "to collect or attempt to collect any debt")). "Although there is no bright-line rule, '[d]etermining whether a communication constitutes an attempt to collect a debt is a "commonsense inquiry" that evaluates the "nature of the parties' relationship," the "[objective] purpose and context of the communication []," and whether the communication includes a demand for payment.'" Lovegrove v. Ocwen Home Loans Servicing, L.L.C., 666 Fed.App'x. 308, 311 (4th Cir. 2016) (quoting In re Dubois, 834 F.3d 522, 527 (4th Cir. 2016) (citing Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 385 (7th Cir. 2010))).
The facts at issue in this case are highly analogous to those underlying the Fourth Circuit's unpublished, yet persuasive, decision in Lovegrove. In Lovegrove, a plaintiff "defaulted on his mortgage ... and [subsequently] received a Chapter 7 bankruptcy discharge of that debt." See 666 Fed.App'x. at 309. After the debt was discharged, the plaintiff's mortgage servicer sent plaintiff a monthly mortgage statement that listed "the principal balance, the next payment due date, a payment coupon, and the total amount due." Id. The statement also included a disclaimer that provided as follows: "If ... the obligation referenced in this statement has been discharged
in bankruptcy, this statement is for informational purposes only and is not an attempt to collect a debt." Id. at 310.
The Fourth Circuit held that the statements "[did] not constitute an attempt to collect a debt" and therefore did not "implicate[]" the FDCPA. See id. at 311-12. The Fourth Circuit ruled that the statements were "for informational purposes only, were non-threatening in nature, and contained clear and unequivocal disclaimers to establish that they were not in connection with the collection of a debt under [the plaintiff's] circumstances." Id. Thus, the Court explained, "[a]rmed with [the] knowledge [of the straightforward disclaimers], and the understanding that his debt had been discharged in bankruptcy, [the plaintiff] should have known that [the mortgage servicer] was not attempting to collect a debt from him." Id. at 312.
Similar to the facts at issue in Lovegrove, the above-styled action "is a case where a debtor, who has been discharged in bankruptcy, but continues to live in a... home [secured by a mortgage], received documents that contain clear disclaimers indicating that they are not an attempt to collect a debt" from him. See 666 Fed.App'x. at 312 (emphasis added).
The letters make clear that Defendant SNSC was not attempting to collect a debt against plaintiff when it sent correspondence regarding the loan. For instance, on February 2, 2023, Defendant SNSC sent a letter to plaintiff, therein explaining:
IF YOU HAVE PREVIOUSLY RECEIVED A DISCHARGE IN BANKRUPTCY AND THIS DEBT WAS NOT REAFFIRMED, THIS CORRESPONDENCE IS NOT AND SHOULD NOT BE CONSTRUED TO BE AN ATTEMPT TO COLLECT SUCH A DEBT AS YOUR PERSONAL LIABILITY, BUT IS INSTEAD A STEP IN THE ENFORCEMENT OF A MORTGAGE LIEN AGAINST YOUR PROPERTY.
[Doc. 6-4]. The February 2, 2023 letter further stated:
If you are currently in bankruptcy or have received a discharge in bankruptcy, this notice is not intended as an attempt to collect a debt as a personal liability, but is solely an effort to retain whatever rights we hold in the property that secures the debt, as evidenced by the security instrument.
[Id.].
Here, plaintiff has not alleged sufficient facts that he has been the object of collection activity arising from consumer debt. There is no dispute that plaintiff had a mortgage, which would be considered "consumer debt." However, as this Court held in Fabian, "[t]he choice to continue making payments in order to retain collateral does not give rise to an 'alleged obligation.' Even though plaintiff's FDCPA claim fails, this Court will address the remaining two (2) elements.
ii. Plaintiff has sufficiently alleged that Defendants are debt collectors as defined by the FDCPA.
The FDCPA defines a debt collector as any person who uses any instrumentality of interstate commerce or the mails 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.
Plaintiff has alleged in the Complaint that Defendants SNSC and LHFS are "'debt collectors' within the meaning of the [FDCPA.] See 15 U.S.C. § 1692a(6)." [Doc. 1-1 at ¶ 48]. There is no dispute by defendants. Specifically, Defendant SNSC
states that "SNSC is a 'debt collector' within the meaning of the FDCPA...." [Doc. 7 at 11]. And Defendant LHFS, in its correspondence with plaintiff, states "This communication is from a debt collector...." [Doc. 8-7 at 4].
Here, it is clear that Defendants SNSC and LHFS are "debt collectors" as defined by the FDCPA.
iii. Plaintiff has alleged that Defendants have engaged in an act or omission prohibited by the FDCPA.
However, plaintiff has failed to allege all elements required for a FDCPA case.
Conduct prohibited by the FDCPA includes the "use of false, deceptive, or misleading representation or means in connection with the collection of any debt" (15 U.S.C. § 1692e) and the use of "unfair or unconscionable means" to collect a debt (15 U.S.C. § 1692f)—conduct in which plaintiff contends Defendants have engaged. [Doc. 1-1 at ¶¶ 47-54].
Other prohibited conduct includes harassing, oppressive or abusive conduct (15 U.S.C. § 1692d) and failure to validate a debt (15 U.S.C. § 1692g).
In reviewing the FDCPA count, it is evident plaintiff has not alleged sufficient facts to meet the basic pleading requirements of Rule 8(a). The FDCPA claim makes only the general allegation that
Federal Rule of Civil Procedure 8(a) reads:
(a) CLAIM FOR RELIEF. A pleading that states a claim for relief must contain:
(1) a short and plain statement of the grounds for the court's jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support;
(2) a short and plain statement of the claim showing that the pleader is entitled to relief; and
(3) a demand for the relief sought, which may include relief in the alternative or different types of relief.
52. By charging late fees in excess of those allowed in Plaintiff's and putative class members' contracts, Defendants have repeatedly violated the FDCPA.
[Doc. 1-1 at ¶ 52]. The other paragraphs within Count II of the Complaint assert that defendants are "debt collectors," states the two FDCPA sections at issue-15 U.S.C. §§ 1692e & 1692f-and asserts that plaintiff and the putative class members have suffered damages. No other allegations are contained in Count II. However, the court is mindful of its duty to liberally construe plaintiff's Complaint and thus considers whether the Complaint, when viewed in its entirety, states a violation of any of the sections identified above.
a. False or Misleading Representations—15 U.S.C. § 1692e
Section 1692e provides that a "debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of debt." The statute contains sixteen (16) subsections listing types of conduct that are considered false, deceptive, or misleading. Plaintiff's Complaint does not allege a violation under any particular subsection. Plaintiff's allegations against Defendants are limited to Defendants "charging late fees in excess of those allowed in Plaintiff's and putative class members' contracts" [Doc. 1-1 at ¶¶ 9-22, 52], Defendants sending "letters collecting and attempting to collect these excessive late fees" [id. at ¶ 20] and "Both Defendants, in violation of applicable law, fail[ing] to respond timely to Plaintiff's request for information dated June 15, 2023" [id. at ¶ 21].
Here, with respect to 15 U.S.C. § 1692e, plaintiff alleges the following:
51. The FDCPA also prohibits debt collectors' use of "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e.
[Id. at ¶ 51]. In the "FACTS" section, plaintiff's asserts that
20. Defendant Land Home Financial Services, Inc., and its agent Reisenfeld & Associates also sent Plaintiff letters collecting and attempting to collect these excessive late fees.
[Id. at ¶ 20].
Plaintiff has failed to plead facts to support a violation of section 1692e. As noted above, plaintiff does not allege a violation under any particular subsection and does not provide a short and plain statement showing that the plaintiff is entitled to relief. Plaintiff merely cites to the applicable statute and provides threadbare recitals of any facts to support his claim under section 1692e.
b. Unfair or Unconscionable Attempts To Collect the Debt—15 U.S.C. § 1692f
The "unfair practices" section of the FDCPA prohibits debt collectors from using "unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f. The statute does not define "unfair or unconscionable," but it does provide a non-exhaustive list of conduct that violates the section. See id. Cognizant that it could not anticipate every improper practice used by debt collectors, Congress enacted section 1692f to catch conduct not otherwise covered by the FDCPA. See S.Rep. No. 95-382, at 4 (Aug. 2, 1977), 1977 U.S.C.C.A.N. 1695, 1698 ("[T]his bill prohibits in general terms any harassing, unfair, or deceptive collection practice. This will enable the courts, where appropriate, to proscribe other improper conduct which is not specifically addressed."). See also Albritton v. Sessoms & Rogers, P.A., 2010 WL 3063639, at *5 (E.D.N.C. Aug. 3, 2010) (Howard, J.) (explaining a cause of action under section 1692f "is a sort of catch-all, picking up unfair practices that manage to slip by §§ 1692d & 1692e"); Edwards v. McCormick, 136 F.Supp.2d 795, 806 (S.D. Ohio 2001) ("§ 1692f serves a backstop function, catching those 'unfair practices' which somehow manage to slip by §§ 1692d & 1692e"). Accordingly, a complaint will be deemed deficient under this provision if it "does not identify any misconduct beyond which [p]laintiff's assert violate other provisions of the FDCPA." Foti v. NCO Fin. Sys., Inc., 424 F.Supp.2d 643, 667 (S.D. N.Y. 2006) (citation omitted). Accord Winberry v. United Collection Bureau, Inc., 697 F.Supp.2d 1279, 1292 (M.D. Ala. 2010) (explaining there is "a growing consensus, at least among district courts, that a claim under § 1692f must be based on conduct either within the listed provisions, or be based on conduct which falls outside of those provisions, but which does not violate another provision of the FDCPA" and collecting cases).
Here, with respect to 15 U.S.C. § 1692f, plaintiff alleges the following:
50. The FDCPA specifically prohibits using "unfair or unconscionable means to collect or attempt to collect any debt... [including] [t]he collection of any amount (including any fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law." 15 U.S.C. § 1692f (emphasis added).
[Doc. 1-1 at ¶ 50]. In the "FACTS" section, plaintiff asserts that
10. The contract contained a provision on late fees which provided that "if a payment is not paid in full within 10 days of its due date, Borrower will be charged 5.0% of the amount in default, not to exceed $15.00."
* * *
13. On several occasions, SN Servicing Corporation assessed and collected late fees of $23.67, in violation of the contract and applicable law.
14. For instance, on January 12, 2023, SN Servicing Corporation assessed to Plaintiff a late fee in the amount of $23.67.
15. Defendant SN Servicing Corporation continued to assess additional late fees in excess of the amount allowed by contract for several months afterward.
* * *
19. Defendant Land Home Financial Services, Inc. has continued to bill Plaintiff for these excessive late charges each month through the present in monthly statements.
20. Defendant Land Home Financial Services, Inc., and its agent Reisenfeld & Associates also sent Plaintiff letters collecting and attempting to collect these excessive late fees.
[Id. at ¶¶ 10, 13-15, 19-20].
Here, plaintiff's Complaint does allege misconduct to support a section 1692f claim. However, plaintiff is unable to satisfy all three (3) elements to succeed on a FDCPA claim.
B. WVCCPA
The WVCCPA provides a cause of action to a "consumer" to recover damages for a creditor's violations. § 46A-5-101(1). A "consumer" is defined as "any natural person obligated or allegedly obligated to pay any debt." § 46A-2-122(a). On December 13, 2017, the bankruptcy court discharged plaintiff's obligation to pay the debt owed on his loan. Thus, when plaintiff filed suit on November 13, 2023, he was not a "consumer" under the WVCCPA. Plaintiff, however, contends that he is a "consumer" under the WVCCPA definition and asserts that a bankruptcy discharge is no bar to a claim under the WVCCPA where that claim arises out of post discharge violations. [Doc. 15 at 22-25].
This Court has discussed the issue of statutory standing under the WVCCPA. In Fabian v. Home Loan Ctr., Inc., 2014 WL 1648289, at *5-6 (N.D.W. Va. Apr. 24, 2014) (Bailey, C.J.), the plaintiff's, who had borrowed money for a mortgage, filed for bankruptcy and received a discharge of their debt in 2010. In 2013, they filed a claim under the WVCCPA against the loan originator and the loan holder for violations that allegedly occurred prior to their bankruptcy discharge. The loan originator moved to dismiss the claim, arguing that, because the "plaintiffs' personal obligation to repay their [mortgage loan] debt was discharged in bankruptcy, plaintiffs are excluded from the [WVCCPA's] definition of 'consumer,' depriving them of standing under the [WVCCPA's] terms." Fabian, 2014 WL 1648289, at *5.
This Court agreed and concluded that, once the plaintiff's received a bankruptcy discharge for their mortgage loan debt, they no longer were "consumers" under the WVCCPA, and therefore lacked standing to bring a claim under the Act. The undersigned explained: "Plaintiff's have failed to demonstrate that they are allegedly obligated to pay within the meaning of the Act. Consequently, plaintiffs lack standing to bring their WVCCPA unconscionability claim, as they are not 'consumers' within the meaning of § 46A-2-122(a)." Id., at *6.
Plaintiff offers up various reasons why this Court's decision in Fabian might be incorrect as a matter of law. Plaintiff suggests that another line of federal court cases—Guthrie v. PHH Mortg. Corp., 79 F.4th 328 (4th Cir. 2023), Garfield v.
Ocwen Loan Serv., LLC, 811 F.3d 86 (2d Cir. 2016), Farber v. Brock & Scott, 2016 WL 5867042 (D. Md. Oct. 6, 2016) (Chuang, J.), Weber v. Wells Fargo, 2021 WL 833949 (N.D. W. Va. Mar. 4, 2021) (Kleeh C.J.), and Barnhill v. FirstPoint, Inc., 2017 WL 2178439 (M.D. N.C. May 17, 2017) (Biggs, J.)—along with a slew of West Virginia state court cases should control.
Judge Kleeh's decision in Weber does not apply Garfield, as plaintiff suggests. See [Doc. 15 at 19]. The Weber case does not even mention Garfield, and it should not be seen an indication that the Northern District has applied a Fourth Circuit ruling favoring plaintiff. On the contrary, Judge Kleeh determined that the plaintiff — who did not sign the note on the debt at issue, but retained the property following the death of her husband —was not a "consumer" within the meaning of the WVCCPA because she was not obligated on the note, and the defendant did not allege that she was obligated to pay the note. See Weber, 2021 WL 833949, at *8-9. Judge Kleeh then dismissed plaintiff's WVCCPA and FDCPA claims. Id. at *10.
Unlike in Fabian, many of the federal court cases cited by plaintiff's involve telephone calls by which lenders sought to collect on debts discharged in connection with bankruptcy and not written correspondence (as is the case here), such that the cases are distinguishable on the facts. Moreover, plaintiff relies on these cases to suggest that Fabian somehow applies only to pre-discharge bankruptcy conduct. This distinction is one without a difference.
As this Court held in Fabian, plaintiff's bankruptcy discharge foreclosed the possibility of his filing suit against Defendants under the WVCCPA.
IV. Conclusion
The Motions to Dismiss [Doc. 6 & 8] are GRANTED. The Complaint is hereby DISMISSED.
It is so ORDERED.