JOSE L. LINARES, District Judge.
This matter comes before the Court by way of Defendant Stern Lavinthal & Frankenberg LLC ("Stern Lavinthal")'s Motion for Judgment on the Pleadings. (ECF No. 15.) The Court has considered the parties' submissions and decides this matter without oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons set forth below, the Court denies Stern Lavinthal's motion.
Plaintiff Steven Psaros purchased the property at 81 Arlington Ave, Hawthorne, NJ in 1999 and has resided there since that time. (ECF No. 1 ("Compl.") ¶ 6.) In January 2008 Plaintiff entered into a refinance loan whereby Plaintiff executed a promissory note payable to Mortgage Line Financial Corp, and also executed a mortgage to secure the loan. (Id. ¶¶ 7, 8.) Plaintiff alleges that he specifically negotiated the 2008 loan so that property insurance and real estate taxes would paid directly by Plaintiff, rather than through an escrow account managed by the lender. (Id. ¶ see also id. Ex. 1 ("Escrow Waiver").)
On September 22, 2010 BAC Home Loans Servicing, L.P. by way of its counsel Stem Lavinthal filed a debt collection foreclosure action under New Jersey docket F-46572-10. (Id. ¶ 11.) Stem Lavinthal was not retained to pursue debt collection activities until after the loan was in default. (Id. ¶ 12.)
June 2013 Plaintiff received a letter from Green Tree advising that effective June 1, 201 servicing was transferred to Green Tree. (Id. ¶ 13; id. Ex. 2.) By way of letters dated June 17, 3 and July 18, 2013, Green Tree requested that Plaintiff send proof of property insurance to a designated Fax number. (Id. ¶¶ 14, 16; id. Exs. 3, 5.) On July 30, 2013 Plaintiffs insurance agent sent proof of property insurance to the designated fax number provided by Green Tree. (Id. ¶ 17; id. Ex. 6.) By way of letter dated August 4, 2013, Green Tree advised Plaintiff that force-placed insurance was obtained by Green Tree, and the policy (effective June 1, 2013) had an annual premium of $3,661.00. (Id. ¶ 19; id. Ex. 8.) After receiving the August 4, 2013 letter, Plaintiff again sent proof of insurance to Green Tree. (Id. ¶ 20; id. Ex. 9.)
March 2014, a motion was granted in the foreclosure debt collection lawsuit substituting Green Tree as foreclosing plaintiff. (Id. ¶ 22.)
On April 24, 2015, Stem Lavinthal, on behalf of Green Tree, filed a motion for entry of judgment in the foreclosure action. (See id. Ex. 11 at 1-2 ("State Court Notice of Motion").) As part the State Court Notice of Motion, Stem Lavinthal stated that it "shall file the attached Certification of Proof of Amount Due required by law which will establish that there is due upon Plaintiffs obligation and mortgage the sum of $377,287.24 as of April 9, 2015, together with interest thereon." (Id. at 2.) In an attached document captioned "Proof of Amount Due Affidavit and Schedule" and dated April 23, 2015, Green Tree employee Danielle Froelich executed a certification of amount due, which included the sum of $10,974.37 for "Home Owners Insurance Premiums" due as of April 9, 2015 within the $377,287.24 total amount due. (Compl ¶ 23; id. Ex. 11 at 4-7 ("State Court Proof of Amount Due").) Additionally, Stem Lavinthal attorney Donna M. Miller submitted a "Certification of Diligent Inquiry'' which states in relevant part as follows:
(Compl. Ex. 11 at 8-9 ("State Court Cert. of Diligent Inquiry").)
Plaintiff alleges that all times pursuant to the 2008 Mortgage Loan contract, Plaintiff has maintained an insurance policy on the property, has sent all insurance premiums to the insurance carrier to pay for the hazard insurance policy, and has provided copies of same to the loan servicer upon request. (Id. ¶¶ 24, 26.) Accordingly, Plaintiff avers that Green Tree has not incurred costs of $10,974.37 for payment of insurance premiums. (Id. ¶ 25.)
Plaintiff commenced this action on June 24, 2015, two months after the alleged false representation occurred, by filing a two count Complaint. (Compl.) With respect to Stem Lavinthal, Plaintiff alleges that it violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA") by demanding payment of insurance premiums that were not actually owed under Plaintiff's loan agreement. (Id. at 6-8.)
August 17, 2015, Stem Lavinthal filed an Answer to the Complaint, which includes a cross-claim against its client Green Tree. (ECF No. 11.) On October 9, 2015: Stem Lavinthal filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b) (ECF No. 13); withdrew the Motion to Dismiss so that it could be re-filed as a Motion for Judgment on the Pleadings (ECF No. 14); and filed the instant Motion for Judgment on the Pleadings (ECF No. 15; see No. 15-2 ("Mov. Br.")). On October 26, 2015, Green Tree filed an Answer to Stem Lavinthal's cross-claim and filed a cross-claim against Stem Lavinthal. (ECF No. 21.) On October 28, Stem Lavinthal filed an Answer to Green Tree's cross-claim. (ECF No. 23.) On November 23, 2015, Plaintiff filed opposition to the instant motion (ECF No. 25 ("Opp. Br.")), and on November 30, 2015, Stem Lavinthal filed a reply (ECF No. 26 ("Reply Br.")).
Under Federal Rule of Civil Procedure 12(c), "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). "The pleadings are considered to be `closed' after the complaint and answer have been filed, along with any reply to additional claims asserted in the answer." Liberty Int'l Underwriters Canada v. Scottsdale Ins. Co., 955 F.Supp.2d 317, 323 (D.N.J. 2013) (citation omitted). When a party makes a motion for judgment on the pleadings based on the defense of failure to state a claim upon which relief can be granted, the Court "appl[ies] the same standards as under Rule 12(b)(6)." Turbe v. Gov't of Virgin Islands, 938 F.2d 427, 428 (3d Cir.1991); see Caprio v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 146 (3d Cir. 2013).
To withstand a motion to dismiss for failure to state a claim, "a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id.
To determine the sufficiency of a complaint under Twombly and Iqbal in the Third Circuit, the court must take three steps: first, the court must take note of the elements a plaintiff must plead to state a claim; second, the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth; finally, where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief. See Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011) (citations omitted). "In deciding a Rule 12(b)(6) motion, a court must consider only the complaint, exhibits attached to the complaint, matters of the public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents." Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010). Among the public records a court may examine in order to resolve a motion to dismiss is a judicial proceeding from a different court or case, court must be mindful of the distinction between the existence of a fact and its truth. S. Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Grp. Ltd., 181 F.3d 410, 426, 427 n.7 (3d Cir. 999).
The purpose of the FDCPA is "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). When Congress passed the legislation in 1977, it found that "[a]busive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and invasions of individual privacy." Id. § 1692(a). "As remedial legislation, the FDCPA must be broadly construed in order to give full effect to these purposes." Caprio, 709 F.3d at 148. Accordingly, the Court must "analyze the communication giving rise to the FDCPA claim `from the perspective of the least sophisticated debtor.'" Kaymark v. Bank of America, N.A., 783 F.3d 168, 174 (3d Cir. 2015) (quoting Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008). Furthermore, "[t]he FDCPA is a strict liability statute to the extent it imposes liability without proof of an intentional violation." Allen ex Martin v. LaSalle Bank, N.A., 629 F.3d 364, 368 (3d Cir. 2011).
To 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 Act 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. 201 (citation omitted). Here, Plaintiff has alleged all four elements (Compl. ¶¶ 28, 29, 33, 35), and Stern Lavinthal does not dispute the first three prongs. At issue is the fourth prong: whether Stern Lavinthal violated a provision of the FDCPA in attempting to collect the debt.
Plaintiff alleges that Stern Lavinthal violated 15 U.S.C. § 1692e by making and/or using "false, deceptive and/or misleading representations in connection with its effort to collect a debt" (id. ¶ 35(a)), in particular with respect to "the character and amount of the debt it sought to collect from Plaintiff, in violation of 15 U.S.C. § 1692e(2)." (Id. ¶ 35(b).) The relevant statute states as follows:
15 U.S.C. § 1692e.
The issue before the Court is whether Stern Lavinthal violated § 1692e when it filed the State Court Notice of Motion and the State Court Cert. of Diligent Inquiry. As noted, the State Court Notice of Motion stated that Stern Lavinthal "shall file the attached Certification of Proof of Amount Due required by law which will establish that there is due upon Plaintiff's obligation and mortgage the sum of $377,287.24 as of April 9, 2015, together with interest thereon." (Id. at 2.) State Court Notice of Motion referenced the State Court Proof of Amount Due, in which Green Tree employee Danielle Froelich included the sum of $10,974.37 for "Home Owners Insurance Premiums" in the $377,287.24 total amount due. (State Court Proof of Amount Due at 3.) With respect to the State Court Cert. of Diligent Inquiry, Stern Lavinthal attorney Donna M. Miller stated in relevant part as follows:
(State Court Cert. of Diligent Inquiry at 1-2.)
Stem Lavinthal moves for dismissal on two grounds. First, Stem Lavinthal contends that its alleged conduct does not implicate the FDCPA because it did not make a false representation. (Mov. Br. at 13-17; Reply Br. at 6-11.) Stem Lavinthal contends that Plaintiff's claim fails as a matter law because the State Court Cert. of Diligent Inquiry "is utterly devoid of any false representations whatsoever" and that there is a fundamental and dispositive distinction between affirmatively "certifying the accuracy" of Green Tree's statements, as Plaintiff alleges in the Complaint, versus merely filing a "Certification of Diligent Inquiry," as required by the New Jersey Court Rules. (Mov. Br. at 3-4, 6-9, 13-17; Reply Br. at 6-11.) Second, Stem Lavinthal alternatively argues that Plaintiff waived his right to contest the amount owed to Green Tree by declining to oppose the underlying foreclosure, (Mov. Br. at 18-19; Reply Br. at 12-13), and similarly argues that the doctrine of judicial estoppel prohibits Plaintiff from taking a position inconsistent with his decision to forego any defense in the underlying foreclosure action (Mov. Br. at 1; Reply Br. at 13-14).
In opposition, Plaintiff first argues that because Stem Lavinthal's motion "includes several exhibits not directly relating to the controversy'' the Court should either deny the motion outright or convert it to one for summary judgment. (Opp. Br. at 5-7.) Second, Plaintiff argues that the motion should be denied as procedurally untimely because the pleadings were still open when it was filed, thus making Rule 12(c) inapplicable on its face. (Id. at 7-8.) Third, even if the motion is considered procedurally proper, Plaintiff contends that the Complaint sets forth a valid claim for relief under the FDCPA: by seeking to collect $10,974.37 not owed by Plaintiff (included in the total amount sought of $377,287.24), Stem Lavinthal violated 15 U.S.C. § 1692e(2) because it made a false representation of the amount of debt owed. (Opp. Br. at 8-13.) Plaintiff argues that Stem Lavinthal has not established the lone defense to liability where a debt collector has engaged in conduct that violates the FDCPA, and avers that "Stem Lavinthal cannot evade its responsibilities as a debt collector by blaming its client for providing it with factually inaccurate information used in the process of collecting a debt." (Id. at 13-15(citing15 U.S.C. § 1692k(c)).) Finally, Plaintiff argues that a debtor has no obligation to notify a debt collect that it has engaged in conduct violating the FDCP A prior to the debtor filing suit under the FDCPA, such that concepts of waiver and judicial estoppel are inapplicable to Plaintiffs claims. (Id. at 15-19.)
Court agrees with Plaintiff.
When interpreting a statute, the court must begin with the text. Allen ex rel. Martin v. LaSalle Bank, N.A., 629 F.3d 364, 367 (3d Cir. 2011). "If the statute's plain language is unambiguous and expresses [Congress's] intent with sufficient precision, we need not look further. Id. (citation omitted). But if the "literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters," then we are obligated to "construe statutes sensibly and avoid constructions which yield absurd or unjust results." United States v. Fontaine, 697 F.3d 221, 227 (3d Cir. 2012) (internal citations and quotation marks omitted). Where the plain meaning of a statute would lead to an absurd result, we presume "the legislature intended exceptions to its language [that] would avoid results of this character." Gov't of Virgin Islands v. Berry, 604 F.2d 221, 225 (3d Cir. 1979) (quoting United States v. Kirby, 74 U.S. (7 Wall.) 482, 487, 9 L.Ed. 278 (1868)).
A plain reading of the statute leads to the conclusion that a violation has occurred. In pertinent part, § 1692e(2)(A) prohibits the "false representation of . . . [the] amount . . . of any debt[.]" Id. Here, Plaintiff has alleged that Stem Lavinthal made a false representation with respect to "the character and amount of the debt it sought to collect from Plaintiff, in violation of 15 § 1692e(2)." (Compl. ¶ 35(b).) Specifically, Plaintiff alleges that "Stem Lavinthal's demand for payment of $10,974.37 was a demand for funds not owed and fees not incurred" (id. ¶ 35(d)), and that "Stem Lavinthal affirmed the use of false allegations in an effort to collect money not owed by Plaintiff' by filing the State Court Cert. of Diligent Inquiry (id. ¶ 35(c)). In essence, construing the Complaint in a light most favorable to Plaintiff, the Complaint alleges that when Stem Lavinthal attempted to collect $377,287.24 from Plaintiff on behalf of Green Tree, Stem Lavinthal misrepresented the amount of the debt in violation of the statute because the total amount sought included $10,974.37 in Horne Owners Insurance Premiums which were allegedly not owed to Green Tree. Accepting the allegations as true, as the Court must at this stage, the Court finds that Plaintiff has sufficiently alleged a violation of the statute's plain language. Because the statute's language is plain, the Court's function is "to enforce it according to its terms," so long as "the disposition required by that [text] is not absurd." Alston v. Countrywide Fin. Corp., 585 F.3d 753, (3d Cir. 2009) (quoting Lamie v. U.S. Tr., 540 U.S. 526, 534 (2004)).
Finding a violation here, as required by a straightforward application of the plain language of the statute, is not absurd; rather, it is consistent with the Third Circuit's recent decisions in McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240, 248 (3d Cir.) cert. denied, 135 S.Ct. 487 (2014) and Kaymark v. Bank of America, N.A., 783 F.3d 168 (3d Cir. 2015). In McLaughlin, a mortgagor alleged that a law firm representing the mortgagee had falsely represented the amount of the debt in a debt collection demand letter by including not-yet-incurred fees. Third Circuit held that the mortgagor had stated a claim under § 1692e, reasoning that "[a]s drafter of the Letter, [the law firm] is responsible for its content and for what the least sophisticated debtor would have understood from it." 756 F.3d at 246.
Kaymark extended this rationale from a demand letter to a formal pleading in a foreclosure action. Kaymark, a mortgagor alleged that when a law firm initiated foreclosure proceedings on behalf of the mortgagee, the body of the foreclosure complaint filed by the law firm falsely represented the amount of the debt in violation of § 1692e by including not-yet-incurred attorneys' fees, report fees, and property inspection fees. Id. at 171. Despite the fact that the alleged misrepresentation was contained in a foreclosure complaint, the Third Circuit held that the mortgagor had adequately stated a claim under § 1692e, upon an analysis of "the statutory text, as well at the case law interpreting the text[.]" Id. at 176.
First, the Court noted that it is "well-established in this Circuit" that "the FDCPA covers attorneys engaged in debt collection litigation[.]" Id. at 176-77 (citing Heintz v. Jenkins, 514 U.S. 291 (1995) (holding that attorneys "engage[d] in consumer-debt-collection activity, even when that activity consists of litigation" are covered by the FDCPA); Piper v. Portnoff Law Assocs., 396 F.3d 227, 234 (3d Cir. 2005) ("[I]f a communication meets the [FDCPA's] definition an effort by a `debt collector' to collect a `debt' from a `consumer,' it is not relevant that came in the context of litigation.")).
The holdings and underlying rationale in McLaughlin and Kaymark suggest that the FDCPA extends to the facts of this case. Keeping in mind that "[a]s remedial legislation, the FDCPA must be broadly construed in order to give full effect to [Congress's] purposes," Caprio, 709 F.3d at 148 (3d Cir. 2013), the Court finds that Plaintiff's allegations that Stem Lavinthal falsely represented the amount of the debt when it filed the State Court Notice of Motion and State Court Cert. of Diligent Inquiry in an attempt to collect the debt on behalf of the mortgagee are sufficient to state a claim under § 1692e(2). In other words, when analyzing the text of the statute and relevant case law interpreting it, the Court cannot say that Congress intended to exempt litigation activities such as these from the purview of the FDCPA. As the Third Circuit noted, "[a]bsent a finding that `the result [will be] so absurd as to warrant implying an exemption for' FDCPA claims involving foreclosure actions, [the Court] is not empowered to disregard the plain language the statute." Kaymark, 783 F.3d at 179 (quoting Heintz, 514 U.S. at 295). "Thus, [defendant's] arguments are more `properly addressed to Congress,' which `is, of course, free to amend the statute accordingly.'" Id. (quoting Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, U.S. 573, 604 (2010)).
Stem Lavinthal argues that because Plaintiff did not contest the amount of the debt in the foreclosure proceeding, he either waived his right to assert a claim under the FDCPA, or the Court should judicially estop him from doing so. Generally speaking, waiver is a "voluntary relinquishment—express or implied—of a legal right to advantage[.]" Black's Law Dictionary 1611 (8th ed. 2004). That has not occurred here. First, the Third Circuit has made clear that "a consumer is not required to seek validation of a debt he or she believes is inaccurately described in a debt communication as a prerequisite to filing suit under § 1692e." McLaughlin, 756 F.3d at 248; see also 15 U.S.C. § 1692g(c) ("The failure of a consumer to dispute the validity of a debt . . . . may not be construed by any court as an admission of liability by the consumer."). The Court also notes that the State Court Notice of Motion and the State Court Cert. of Diligent Inquiry—the documents giving rise to liability here—were filed in April 2015. Plaintiff initiated this lawsuit in June Thus, again keeping mind that "[a]s remedial legislation, the FDCPA must be broadly construed in order to give full effect to [Congress's] purposes," Caprio, 709 F.3d at 148 (3d Cir. 201 the Court does not find that Plaintiff waived his right to assert a claim under the FDCPA. By failing to contest the amount owed in the foreclosure proceeding.
For similar reasons, the Court also declines to impose the doctrine of judicial estoppel, which is "a judge-made doctrine that seeks to prevent a litigant from asserting a position inconsistent with one that she has previously asserted in the same or in a previous proceeding." Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 358 (3d Cir. 1996). In short, Plaintiff did not assert a position in the foreclosure proceeding. He filed this lawsuit instead, which for the reasons explained above appears to be well within his rights.
For the reasons above, the Court denies Stem Lavinthal's motion. An appropriate Order accompanies this Opinion.
