SUSAN C. BUCKLEW, District Judge.
This cause comes before the Court on Defendant's Motion to Dismiss or for a More Definite Statement.
In deciding a motion to dismiss, the district court is required to view the complaint in the light most favorable to the plaintiff.
Plaintiffs Nicholas and Gretchen France filed suit against Defendant Ditech Financial, LLC asserting three claims: (1) violations of Florida's Consumer Collection Practices Act, (2) violations of the Fair Debt Collection Practices Act, and (3) violations of the Telephone Consumer Protection Act. In support of these claims, Plaintiffs allege the following in their amended complaint (Doc. No. 13).
On October 5, 2009, a mortgage was recorded against Plaintiffs' property in connection with a promissory note dated September 28, 2009. Beginning around September of 2013, Plaintiffs started having financial difficulties and fell behind on their loan payments, which caused the loan to go into default.
Around May 1, 2014, Defendant took over servicing for the loan. Thereafter, on December 16, 2015, Defendant initiated a foreclosure action against Plaintiffs in state court. On January 25, 2016, Andrew Lyons, Esq. filed his appearance as counsel on behalf Nicholas and Gretchen France.
On July 12, 2016, Nicholas and Gretchen France filed their answer and affirmative defenses in the foreclosure action. One of their affirmative defenses challenged the validity of the underlying loan debt; specifically, they disputed the amount of the underlying loan debt and Defendant's legal right to collect the debt.
On November 2, 2016, Lyons sent Defendant a written demand for verification of the underlying loan debt and a notice to cease and desist communication with Nicholas and Gretchen France. Additionally, the letter specifically stated that Nicholas and Gretchen France were giving notice of their withdrawal of any prior consent to be contacted for any purpose at home, at work, by cell phone, by mail, by email, or otherwise.
Plaintiffs contend that at no time had they given Defendant prior express consent to contact them on their cell phones using an automatic telephone dialing system ("ATDS") or an artificial pre-recorded voice. However, despite never giving express consent and despite expressly withdrawing any prior consent, Plaintiffs received 327 calls to their cell phones from Defendant using an ATDS and/or pre-recorded voice from May 2014 through October 2017.
Additionally, despite being told to cease and desist direct communication with Plaintiffs, Defendant contacted Plaintiffs via the mail 23 times during the period of November 2016 through October 2017. Twelve of those times consisted of mailings asking that Plaintiffs pay a certain amount of money by a certain date. These mailings also stated that Plaintiffs would be assessed a late fee of $62.46 if payment from Plaintiffs was not received by Defendant by the 16th of each month.
Additionally, on ten occasions, Defendant contacted Plaintiffs by mail for the purpose of collecting the underlying loan debt by asking Plaintiffs to submit documents to be considered for loss mitigation options. These mailings were an attempt to induce Plaintiffs to contact Defendant in order to pay the debt or to discuss loan mitigation options in direct contravention to Lyons' cease and desist letter. Finally, on one occasion, Defendant mailed Plaintiff a letter asking them to pay the escrow shortage of $2,132.22.
Plaintiffs contend that Defendant's conduct was done willfully and that it was harassing to Plaintiffs. As a result, Plaintiffs assert three claims against Defendant: (1) violations of Florida's Consumer Collection Practices Act ("FCCPA"), (2) violations of the Fair Debt Collection Practices Act ("FDCPA"), and (3) violations of the Telephone Consumer Protection Act ("TCPA"). In response, Defendant filed the instant motion to dismiss.
Defendant moves to dismiss the amended complaint in its entirety. Accordingly, the Court will address each argument below.
Plaintiffs assert claims for violations of the FDCPA and FCCPA. Florida Statute § 559.77(5) provides that when applying and construing the FCCPA, due consideration and great weight shall be given to the interpretations of the federal courts relating to the FDCPA. Therefore, the Court considers these two claims together.
One of the ways that Plaintiffs contend that Defendant violated the FCCPA and FDCPA is by communicating directly with them after Lyons filed his notice of appearance in the foreclosure lawsuit. Florida Statute § 559.72(18) and 15 U.S.C. § 1692c(a)(2) both provide that in collecting a debt, a debt collector shall not communicate with a debtor if the debt collector knows that the debtor is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address.
Defendant responds that its communications with Plaintiffs after Lyons filed his notice of appearance was not a violation of the FCCPA or FDCPA. Specifically, Defendant argues that its knowledge of Lyons' representation of Plaintiffs in the foreclosure lawsuit is not sufficient knowledge that Lyons was representing Plaintiffs with respect to the underlying debt, because Defendant was not suing to collect on the underlying promissory note. Defendant is correct that a lawsuit to foreclose on a mortgage is different than the collection of the underlying debt, because payment of funds is not the objective of a foreclosure action.
However, Plaintiffs point out that Defendant's mortgage foreclosure complaint asks the state court to: (1) determine the amounts due under the promissory note and mortgage; (2) order the clerk of court to sell the property; and (3) retain jurisdiction in order to enter a deficiency judgment if the proceeds of the sale are insufficient to cover the amount due. (Doc. No. 19-1). Plaintiffs point out that courts have found that foreclosure lawsuits that also seek a deficiency judgment are considered debt collection activity.
Next, Defendant argues that Plaintiffs' FDCPA claim fails, because Defendant is not a debt collector as defined by the FDCPA.
15 U.S.C. § 1692a(6). However, the FDCPA excludes from this definition "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." 15 U.S.C. § 1692a(6)(F)(iii). Thus, "creditors and loan servicers are not `debt collectors' for purposes of the FDCPA if they acquired or began servicing a loan prior to the debtor defaulting."
Defendant points out that Plaintiffs allege that Defendant took over servicing for the loan around May 1, 2014. Defendant also argues that according to Defendant's foreclosure complaint, which contains the allegation that Plaintiffs defaulted on the underlying debt in June of 2015, Defendant began servicing the debt before it was in default. Therefore, Defendant argues that it is not a debt collector under 15 U.S.C. § 1692a(6)(F)(iii). The Court rejects this argument.
While the Court can take judicial notice of the foreclosure lawsuit, which was referenced in Plaintiffs' amended complaint (Doc. No. 13, p. 4), the Court cannot assume that the factual allegations contained in Defendant's foreclosure complaint are true.
Next, Defendant appears to argue that it is not a debt collector because it is collecting its own debt. Again, Defendant improperly relies on the state court foreclosure complaint to support this factual assertion.
Next, Defendant argues that Plaintiffs' FDCPA and FCCPA claims should be dismissed, because Plaintiffs have not sufficiently alleged that Defendant's communications were made in connection with the collection of a debt.
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Defendant specifically argues that twenty-two of the mailings at issue in this case were not made in connection with the collection of a debt. The parties seem to agree that twelve of those mailings consisted of monthly mortgage loan statements and ten of those mailings were loss mitigation letters. Accordingly, the Court will analyze both types of mailings.
Plaintiffs allege in their complaint that the monthly mailings asked that Plaintiffs pay a certain amount of money by a certain date. These mailings also stated that Plaintiffs would be assessed a late fee of $62.46 if payment from Plaintiffs was not received by Defendant by the 16th of each month. However, pursuant to 12 C.F.R. § 1026.41, a servicer of a mortgage loan must send the borrower a monthly statement that provides certain information, including: (1) the amount due; (2) the payment due date; and (3) the amount of any late payment fee and the date on which such fee will be imposed.
The parties disagree as to whether the sending of the monthly mortgage loan statements to Plaintiffs were communications in connection with the collection of a debt. Plaintiffs contend that they were, and therefore, the communications violate their cease and desist directive.
Defendant cites to Brown v. Select Portfolio Servicing, Inc., 2017 WL 1157253, at *4 (S.D. Fla. Mar. 24, 2017), in which the court relied on the Consumer Financial Protection Bureau's ("CFPB") guidance to conclude that the monthly mortgage statements were not communications in connection with the collection of a debt. Pursuant to 15 U.S.C. § 1692k(e), there is no liability under the FDCPA when the debt collector's act or omission is done in good faith in conformity with any advisory opinion of the CFPB. On October 15, 2013, the CFPB issued Bulletin 2013-12, in which it concluded that a mortgage "servicer that is considered a debt collector under the FDCPA with respect to a borrower that provides disclosures to and communicates with the borrower pursuant to [12 C.F.R. § 1026.41] . . ., notwithstanding a `cease communication' instruction sent by the borrower, is not liable under the FDCPA." CFPB Bulletin 2013-12, p. 6 (October 15, 2013).
Defendant acknowledges that if the monthly mortgage statements contain debt collection language in addition to the information required by § 1026.41, then the monthly mortgage statements could be considered communications in connection with the collection of a debt.
Plaintiffs, however, also argue that their monthly mortgage statements from November of 2016 through October of 2017 falsely represented that Plaintiffs would be assessed a late fee of $62.46 if their payment was not received by Defendant by the 16th of each month. Plaintiffs have alleged in their complaint that their mortgage debt was accelerated in January of 2016, and as a result, they could not be assessed any late fees after that date. Specifically, Plaintiffs argue that once a borrower is in default and the loan is accelerated, the full amount of the loan becomes due immediately and there remains no obligation on the buyer to continue to make monthly payments, and thus, no late fees can accrue after acceleration.
However, late fees may accrue after acceleration if the mortgage specifically provides for it.
The provision as issue provides the following, in relevant part:
(Doc. No. 19-1, p. 16). This provision does not provide that in order to reinstate the mortgage, Plaintiffs must pay late fees that would have accrued after acceleration had acceleration not been declared. Conversely, in
Accordingly, in the instant case, after the mortgage was accelerated, Defendant could no longer charge Plaintiffs a late fee, even in order to reinstate the mortgage. Therefore, Plaintiffs have sufficiently alleged that the monthly statements at issue provided incorrect information about the assessment of late fees, which can support Plaintiffs claims under the FDCPA and FCCPA for Defendant's attempt to collect a fee for which it had no legal or contractual right to collect. 15 U.S.C. § 1692f(1); Fla. Stat. § 559.72(9). Therefore, the Court denies Defendant's motion on this issue.
Plaintiffs also allege in their complaint that Defendant contacted them by mail for the purpose of collecting the underlying loan debt by asking Plaintiffs to submit documents to be considered for loss mitigation options. Plaintiffs allege that these mailings were an attempt to induce Plaintiffs to contact Defendant in order to pay the debt or to discuss loan mitigation options in direct contravention to Lyons' cease and desist letter.
There is not a blanket rule regarding whether loss mitigation letters constitute debt collection activity; instead, the content of the letters must be analyzed.
Plaintiffs have not attached the loss mitigation letters to their complaint, but they have alleged that the letters were sent in an attempt to induce Plaintiffs to contact Defendant in order to pay the debt. At the motion to dismiss stage, this allegation is sufficient.
Next, Defendant argues that Plaintiffs cannot recover statutory damages under the FCCPA for each alleged violation; instead, they are limited to statutory damages of $1,000 per plaintiff.
Plaintiffs have not responded to this argument, and the Court interprets their silence as agreement with Defendant's contention. Accordingly, the Court grants Defendant's motion on this issue and finds that an award of statutory damages under the FCCPA cannot exceed $1,000 per plaintiff.
Plaintiffs also assert a claim for violations of the TCPA. Specifically, Plaintiffs allege that Defendant made 327 calls to their cell phones using an ATDS and/or pre-recorded voice from May 2014 through October 2017 without their consent. As explained below, Defendant makes two arguments in support of dismissal of this claim.
First, Defendant argues that the TCPA claim should be dismissed because Plaintiffs fail to allege sufficient facts to support their contention that Defendant used an ATDS. The Court disagrees and finds that Plaintiffs have alleged sufficient facts to support their contention that Defendant used an ATDS. Specifically, Plaintiffs allege that they would often receive automated pre-recorded messages from unanswered calls, which is indicative of the use of an ATDS. (Doc. No. 13, ¶ 31). Additionally, they give an example of a March 8, 2017 phone call that Gretchen France answered, during which she experienced a period of silence for several seconds and then a mechanical clicking noise prior to a live person coming on the line, which is also indicative of the use of an ATDS. (Doc. No. 13, ¶ 36-37). The Court finds that these additional details are sufficient to support Plaintiffs' contention that Defendant used an ATDS.
Next, Defendant argues that given that the phone calls were intentionally placed to communicate with Plaintiffs specifically, an inference can be drawn that the phone calls were not made by an ATDS, which calls phone numbers using a random or sequential number generator. Pursuant to 47 U.S.C. § 227(a)(1), an ATDS is defined as "equipment which has the capacity — (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers."
Plaintiffs respond that the FCC has interpreted the statutory definition of an ATDS to include predictive dialers, which make calls from a list of numbers fed into the device.
Second, Defendant argues that the TCPA claim should be dismissed because Plaintiffs and Defendant have an established business relationship as debtors and creditor. Defendant argues that the FCC "created an express exemption for calls made to a party with whom the caller has an established business relationship" and cites to 47 C.F.R. § 64.1200(a)(2)(iv). (Doc. No. 15, p. 18). However, as of October 16, 2013, that regulation no longer exists.
Next, Defendant argues that Plaintiffs' FCCPA, FDCPA, and TCPA claims are compulsory counterclaims that should have been raised in the state court foreclosure lawsuit. Furthermore, Defendant argues that Plaintiffs' failure to assert them in the state court foreclosure action results in a waiver of these claims.
Plaintiffs respond that these claims were not compulsory counterclaims, because they did not arise out of the same transaction or occurrence as the foreclosure action. The Court agrees with Plaintiffs that the FDCPA claim is not logically related to the state court foreclosure action.
Based on the above, it is ORDERED AND ADJUDGED that Defendant's Motion to Dismiss or for a More Definite Statement (Doc. No. 15) is
