BRIAN R. MARTINOTTI, District Judge.
Before this Court is a Motion to Dismiss filed by Defendants Phelan Hallinan Diamond & Jones, P.C. a/k/a Phelan Hallinan and Schmieg, P.C. ("Phelan Hallinan"), Phelan Hallinan and Schmieg, L.L.C. ("Phelan Hallinan Schmieg"), Rosemarie Diamond ("Diamond"), Francis S. Hallinan ("Hallinan"), and Lawrence T. Phelan ("Phelan") (collectively "Defendants")
For the purposes of this Motion to Dismiss, the Court accepts the factual allegations in the Amended Complaint as true and draws all inferences in the light most favorable to the plaintiff. See Phillips v. Cty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008).
Phelan Hallinan is a high-volume mortgage foreclosure law firm with its principal place of business in Philadelphia, Pennsylvania and an office in Mount Laurel, New Jersey. (ECF No. 26 ¶ 15.) Phelan, Hallinan, and Schmieg are each equity partners at Phelan Hallinan whereas Diamond is a managing partner responsible for overseeing the firm's New Jersey operations. (ECF No. 26 ¶¶ 16-19.)
At all times relevant to this litigation, Kraft resided at an address in Middletown, New Jersey (the "Premises"). (ECF No. 26 ¶ 25.) Kraft acquired ownership of the Premises by inheritance when his father passed away in 1996. (ECF No. 26 ¶ 26.) The Premises was apparently encumbered by a mortgage, which PNC Mortgage Corporation, the mortgagor, assigned to the Federal National Mortgage Association ("FNMA") on March 3, 1994. (ECF No. 26 ¶ 29.) On September 29, 2006, Washington Mutual N.A. ("Washington Mutual"), a predecessor in interest to Wells Fargo regarding the mortgage on the Premises, commenced a property foreclosure action in the Superior Court of New Jersey against Kraft due to non-payment.
Kraft contends "Washington Mutual and Wells Fargo never possessed the original note, never owned or controlled the underlying debt, and never obtained a valid assignment of the note" as the original note was lost while in the possession of FNMA. (ECF No. 26 ¶¶ 37-38.)
Kraft contends that on June 9, 2011, New Jersey Supreme Court Chief Justice Rabner "entered an Order requiring that in all [New Jersey] foreclosure actions where a default judgment has been entered . . . the plaintiff . . . must file with the court and serve on the parties a Plaintiff's Counsel's Certification of Diligent Inquiry" containing "certain information and attesting to the truth, accuracy and authenticity of factual assertions and documents" before a sheriff's sale can occur. (ECF No. 26 ¶ 49.)
Kraft alleges Courtney "never reviewed the original or true copy of the original note" because it was "lost and never transferred" and that as such, Courtney could not "confirm the accuracy and authenticity of the original promissory note because it was lost." (ECF No. 26 ¶¶ 66-67.) Similarly, Kraft contends Rochkind could not confirm the accuracy of the recorded assignments to Washington Mutual and Wells Fargo because FNMA never transferred or delivered the original note. (ECF No. 26 ¶¶ 68-70.) Accordingly, Kraft claims the "Phelan Defendants chose to proceed with false certifications and false representations of the legal status of the debt to give the false impression of having a legal status it did not enjoy." (ECF No. 26 ¶ 51.)
On December 28, 2017, Kraft filed the Complaint asserting a violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692-1692p against the Defendants. (ECF No. 1.) On December 29, 2017, summonses were issued to the Defendants. (ECF No. 3.) Because Kraft had not served the Complaint, on April 26, 2018, this Court issued a Notice of Call for dismissal of the Complaint pursuant to Federal Rule of Civil Procedure 4(m). (ECF No. 4.)
On May 14, 2018, Kraft wrote a letter to the Court indicating that Defendants had agreed to waive formal service of process and that he expected waiver forms from Defendants' counsel, Kenneth Goodkind, Esq, which would subsequently be supplied to the Court. (ECF No. 7.) Accordingly, Kraft requested that this Court vacate its May 7, 2018 Order of Dismissal. (Id.) On May 17, 2018, Defendants submitted a letter opposing Kraft's request to vacate the Order of Dismissal. (ECF No. 8.) On May 23, 2018, this Court vacated the May 7, 2018 Order of Dismissal and allowed Kraft 45 days from the date of the Order to effectuate service on the Defendants and supply proof thereof. (ECF No. 9.)
On January 16, 2019, Defendants filed a Motion to Dismiss Kraft's Complaint, asserting a lack of subject matter jurisdiction pursuant to Rule 12(b)(1), insufficient service of process pursuant to Rule 12(b)(5), and failure to state a claim pursuant to Rule 12(b)(6). (ECF No. 23.) On February 7, 2019, in apparent response to the Motion to Dismiss, Kraft filed the Amended Complaint against the Defendants asserting a claim for false or misleading representations, in violation of the FDCPA ("Count One") and unfair practices, in violation of the FDCPA ("Count Two"). (ECF No. 26.) On March 4, 2019, Defendants filed a Motion to Dismiss Kraft's Amended Complaint on identical grounds. (ECF No. 28.) On April 1, 2019, Kraft filed an Opposition to Defendants' Motion to Dismiss.
On April 5, 2019, this Court issued a Text Order indicating that it was in receipt of the moving papers pertaining to Defendants' Motion to Dismiss and Kraft's Opposition thereto, and that as such, it considered the matter fully briefed. (ECF No. 34.) On April 18, 2019, Kraft filed a Motion for Reconsideration of this Court's April 5, 2019 Text Order determining the matter to be fully briefed. (ECF No. 35.)
"When subject matter jurisdiction is challenged under Rule 12(b)(1), the plaintiff must bear the burden of persuasion." Symczyk v. Genesis Healthcare Corp., 656 F.3d 189, 191 n.4 (3d Cir. 2011) (quoting Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)). No presumption of truthfulness is accorded to the plaintiff's allegations. Atkinson, 473 F.3d at 509.
When faced with a Rule 12(b)(1) challenge to jurisdiction, the court "must start by determining whether [it is] dealing with a facial or factual attack to jurisdiction." Id. "If [it] is a facial attack, the court looks only at the allegations in the pleadings and does so in the light most favorable to the plaintiff." "If [it] is a factual attack, however, it is permissible for a court to review evidence outside the pleadings." Id. Moreover, the trial court is free to weigh and evaluate the evidence in determining whether its jurisdiction has been demonstrated. Symczyk, 656 F.3d at 191 n.4 (citing Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1997)). A jurisdictional challenge is a factual challenge if "it concerns not an alleged pleading deficiency, but rather the actual failure of [plaintiff's] claims to comport with the jurisdictional prerequisites." Atkinson, 473 F.3d at 514.
In deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a district court is "required to accept as true all factual allegations in the complaint and draw all inferences in the facts alleged in the light most favorable to the [plaintiff]." Phillips v. Cty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008). "[A] complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). However, the 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." Id. (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A court is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan, 478 U.S. at 286. Instead, assuming the factual allegations in the complaint are true, those "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555.
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim for relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 570). "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for misconduct alleged." Id. This "plausibility standard" requires the complaint allege "more than a sheer possibility that a defendant has acted unlawfully," but it "is not akin to a probability requirement.'" Id. (quoting Twombly, 550 U.S. at 556). "Detailed factual allegations" are not required, but "more than an unadorned, the defendant-harmed-me accusation" must be pled; it must include "factual enhancements" and not just conclusory statements or a recitation of the elements of a cause of action. Id. (citing Twombly, 550 U.S. at 555, 557).
"Determining whether a complaint states a plausible claim for relief [is] . . . a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not `show[n]'—`that the pleader is entitled to relief.'" Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). However, courts are "not compelled to accept `unsupported conclusions and unwarranted inferences,'" Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (quoting Schuylkill Energy Res. Inc. v. Pa. Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997)), nor "a legal conclusion couched as a factual allegation." Papasan, 478 U.S. at 286.
While, as a general rule, the court may not consider anything beyond the four corners of the complaint on a motion to dismiss pursuant to Rule 12(b)(6), the Third Circuit has held that "a court may consider certain narrowly defined types of material without converting the motion to dismiss [to one for summary judgment pursuant to Rule 56]." In re Rockefeller Ctr. Props. Sec. Litig., 184 F.3d 280, 287 (3d Cir. 1999). Specifically, courts may consider any "`document integral to or explicitly relied upon in the complaint.'" Burlington Coat Factory, 114 F.3d at 1426 (quoting Shaw, 82 F.3d at 1220).
Defendants argue this Court should dismiss Kraft's Amended Complaint as they were not properly served, the Amended Complaint lacks subject matter jurisdiction, and the Amended Complaint fails to state a claim upon which relief may be granted. (ECF No. 28-1 at 1-4.) Kraft argues that he is a proper plaintiff pursuant to the FDCPA as his case is analogous to those involving water and sewage debt obligations, which qualify as consumer debts pursuant to the FDCPA. (ECF No. 32 at 4-8.) This Court addresses the arguments in turn.
Pursuant to Federal Rule of Civil Procedure 4(m), if a defendant is not served within 90 days after a complaint is filed, the court must dismiss the action without prejudice against that defendant, or order that service be made within a specified time. See Fed. R. Civ. Pro. 4(m). On April 26, 2018, this Court issued a Notice of Call for dismissal of the Complaint pursuant to Rule 4(m), as Kraft had not served the Complaint upon the Defendants and on May 7, 2018, this Court entered an Order of Dismissal without prejudice pursuant to Rule 4(m). (ECF Nos. 4 & 5.) Thereafter, this Court vacated its dismissal of the case and issued an Order indicating that Kraft has 45 days from the date of the Order, May 23, 2018, within which to effectuate service and file proof of same. (ECF No. 9.)
On July 13, 2018, Kraft requested that summonses be issued to Defendants. (ECF Nos. 12 & 13.) This request was made outside of the court-imposed 45-day deadline, which expired on July 8, 2018. This Court issued a second Notice of Call for dismissal on December 13, 2018 (ECF No. 14), only after which time Kraft requested for summonses to be issued to Defendants. (ECF Nos. 15 & 16.) Accordingly, Kraft did not properly serve the Defendants until December 17, 2018, well past the deadline set by this Court.
Kraft argues that his failure to properly effectuate service was due, in part, to Defendants' failure to cooperate with his requests to have them waive service. (ECF No. 32 at 2.) However, it is the burden of the plaintiff only to ensure that a defendant has been served. Grand Entm't Grp., Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 493 (3d Cir. 1993). Accordingly, Defendants' alleged failure to cooperate with a request for a service waiver does not constitute justifiable excuse for failure to effectuate service. See MCI Telecomms. Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1097 (3d Cir. 1995) (holding that "good cause" may excuse late service and that factors to consider in determining whether good cause exists include the reasonableness of the plaintiff's efforts to serve, prejudice caused to defendants, and whether plaintiff moved for an enlargement of time to serve). Therefore, Defendants' Motion to Dismiss for lack of service is
Defendants argue even if they had been properly served, Kraft may not proceed under the FDCPA as he is not a proper plaintiff pursuant to the statute. The two-count Amended Complaint asserts violations of Section 1692(e) of the FDCPA, alleging Defendants made false and misleading representations, and Section 1692(f) of the FDCPA, alleging unfair practices. (ECF No. 26 at 12-25.) Typically, "[t]o prevail on an FDCPA claim, a plaintiff must prove that (1) she is a consumer, (2) the defendant is a debt collector, (3) the defendant's challenged practice involves an attempt to collect a `debt' as the [FDCPA] defines it, and (4) the defendant has violated a provision of the FDCPA in attempting to collect the debt." Douglass v. Convergent Outsourcing, 765 F.3d 299, 303 (3d Cir. 2014); see also Jensen v. Pressler & Pressler, 791 F.3d 413, 417 (3d Cir. 2015). Even when accepting the allegations in the Amended Complaint as fact, Kraft still fails to establish a prima facie case of a FDCPA violation, and as such, the Amended Complaint must be dismissed.
Kraft is not a "consumer" for the purposes of the FDCPA. The term "consumer" means "any natural personal obligated or allegedly obligated to pay any debt." 15 U.S.C. § 1692(a)(3). To have standing to bring an action pursuant to the FDCPA, a plaintiff must allege that he or she actually owes a debt. Benali v. AFNI, Inc., No. 15-3605, 2017 WL 39558, at *6 (D.N.J. Jan. 4, 2017) (granting summary judgment where a plaintiff testified that the debt owed was not "his"). Here, Kraft has not alleged that he owes any debt. Kraft's deceased father and ex-wife, Princiotta, were the original mortgagors of the mortgage serviced by Washington Mutual and Wells Fargo. (ECF No. 26 ¶ 78.) Kraft alleges he is a "natural person obligated or allegedly obligated to pay the underlying debt of the mortgage" (ECF No. 26 ¶¶ 11, 86, 89), however, he is not one of the original mortgagors, and did not sign the mortgage or promissory note. (ECF No. 26 ¶¶ 66; ECF No. 28-4, Ex. B).
Kraft contends he qualifies as a consumer pursuant to the FDCPA because he is a "homeowner . . . within the purview of the FDCPA as he is a natural person obligated or alleged to be obligated to pay the aforesaid principal debt . . . incidental to the mortgage because of a covenant that runs with the aforesaid residential property." (ECF No. 26 ¶ 89.) However, even if there were some covenant in the mortgage, such would still be insufficient to establish Kraft as a consumer owing a debt for the purposes of the FDCPA. Actions premised on a mortgagor's promissory note are in personam, therefore, in the event of a default, the mortgagee may foreclose on the property to satisfy the debt and should there be a deficiency, may recover personally only against a signatory to the promissory note. See In re Matter of Estate of Zahn, 702 A.2d 482, 485-87 (N.J. App. Div. 1997). Kraft does not allege that he signed the promissory note and therefore has not alleged any debt owed by him. Kraft's contention that he is obligated to pay this debt is a merely a bald, conclusory statement which this Court may not consider in ruling on Defendants' Motion to Dismiss. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (holding that "conclusory or `bare-bones' allegations will no longer survive a motion to dismiss").
In further support of his argument that he constitutes a "consumer" pursuant to the FDCPA, Kraft cites Pollice v. Nat'l Tax Funding, 225 F.3d 379 (3d Cir. 2000) and Piper v. Portnoff Law Assocs., 396 F.3d 227 (3d Cir. 2005). Both decisions are wholly inapplicable to the issues present in this litigation. In Pollice, the Third Circuit held that a homeowner's obligation to pay money to government entities for water and sewer service constituted a debt for the purposes of the FDCPA, and thus they were consumers and proper plaintiffs pursuant to the statute, stating:
Pollice, 225 F.3d at 400 (citations omitted)
In Piper, the Third Circuit reaffirmed the holding in Pollice in confirming that a law firm's efforts to recover money on behalf of its client, a municipality, for delinquent tax and water bills fell within the purview of the FDCPA. Piper, 396 F.3d at 233-34. These cases are distinguishable from this matter. Both cases cited by Kraft address water and sewer charges as "debts" under the FDCPA, and do not concern a foreclosure whatsoever, nor whether a non-signatory to a promissory note may be deemed to owe a debt on his or her property. Moreover, Pollice explicitly held that a prerequisite to recognizing a plaintiff as an FDCPA consumer is maintaining a debt obligation that arose from a transaction. Pollice, 225 F.3d at 400. Here, Kraft has not alleged that he was party to any transaction, nor has he alleged facts indicating that he is liable for any debt. Accordingly, Kraft lacks standing to pursue his claims under the FDCPA. As the Amended Complaint only asserts causes of actions pursuant to the FDCPA, Defendants' Motion to Dismiss is
For the reasons set forth above, Defendants' Motion to Dismiss is
Fed. R. Civ. Pro. 4(m).
