Anderson v. Hill Wallack Llp et alBRIEF in OppositionD.N.J.November 7, 2016UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY Civil Action No. 3:16-cv-02437- FLW-LHG Motion Returnable: November 21, 2016 OPPOSITION OF DEFENDANT BSI FINANCIAL SERVICES’ MOTION TO DISMISS THE COMPLAINT Adam Deutsch, Esq. Denbeaux & Denbeaux 366 Kinderkamack Road Westwood, NJ 07675 (201) 664-9167 adeutsch@denbeauxlaw.com Attorneys for Plaintiff Karen Anderson KAREN ANDERSON, Plaintiff, vs. HILL WALLACK LLP; SENECA MORTGAGE SERVICING, LLC.; BSI FINANCIAL SERVICES a/k/a SERVIS ONE, INC.; OHA NEWBURY VENTURES, L.P.; GOSHEN MORTGAGE LLC; JOHN DOES I-X, Defendants. i Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 1 of 31 PageID: 421 TABLE OF CONTENTS STATEMENT OF FACTS RELEVANT TO THE BSI FINANCIAL SERVICES MOTION TO DISMISS ……………………………………………………………………………… 1 LEGAL ARGUMENT………………………………………………………………………………………… 3 I. LEGAL STANDARD ON THE MOTION TO DISMISS BEFORE THE COURT…………………………………………………………………………………………………… 3 a. The Court Must Strike the Certifications and Exhibits of BSI Which Inappropriately Seek to Expand the Record of the Complaint in Violation of Fed.R.Civ.P.12(b) (6)…………………………………………………………………………………………………… 4 II. PLAINTIFF’S COMPLAINT SETS FORTH A CLAIM FOR RELIEF FOR VIOLATION OF THE FAIR DEBT COLLECTION PRACTICES ACT…………………………………………………………………………………………………………… 7 a. The Complaint Sufficiently Alleges that BSI Engaged in Conduct that Violates 15 U.S.C. §1692c… 9 b. The Complaint Sufficiently Alleges that BSI Engaged in Conduct that Violates 15 U.S.C. §1692d… 14 i. i. BSI’s Statute of Limitations Argument Does Not Accurately Reflect the Law and Cannot Result in Dismissal of the Claim……………………… 18 c. The Complaint Sufficiently Alleges that BSI Engaged in Conduct that Violates 15 U.S.C. §1692e… 20 d. BSI’s Conduct is not Excused by it’s interpretation of 12 C.F.R. §1024.36 of the Real Estate Settlement Procedures Act………………………………………………………………… 22 CONCLUSION…………………………………………………………………………………………………… 24 ii Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 2 of 31 PageID: 422 TABLE OF AUTHORITIES CASES Ashcroft v. Iqbal, 556 U.S. 662, 696 (U.S. 2009) 3,4 Bell Atl. Corp. v. Twombly, 550 US. 544 (2007)… 3,4,12 Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d, 1358, 1362 (3d Cir. Pa. 1992)……………………………………………… 17 Brooks v. Hussman Corp. 878 F.2d 115, 116 (3d Cir. 1989)……………………………………………………………………………………………………………… 6 Bryson v. Brand Insulations, Inc., 621 F.2d 556 (3d Cir. 1980)……………………………………………………………………………………………………………… 6 Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)………………………………………………………………………………………………… 5 Cable v. Allied Interstate, Inc. 2012 U.S. Dist. LEXIS *5-6 169344 (M.D. P.a. 2012)……………………………………………………………… 15 Castle v. Cohen, 840 F.2d 173, (3d Cir. 1988)…… 6 Christy v. EOS CCA 905 F. Supp. 2d 648, 654 (E.D. P.a. 2012)……………………………………………………………………………………………………………… 15 Chung v. Shapiro & Denardo, LLC 2015 U.S. Dist. LEXIS 76860 (D.N.J. 2015)………………………………………………………………………………………… 13 Clay v. Dep’t of the Army 239 Fed. Appx. 705 (3d Cir. 2007)……………………………………………………………………………………………………………… 6 Donald J. Trump Casino Sec. Litig., 7F.3d 357, 368 (3d Cir. 1993)……………………………………………………………………………………………………………… 5 Douglass v. Convergent Outsourcing, 756 F.3d 299, 303 (3d Cir. 2014)……………………………………………………………………………………………………………… 7,8 Dutton v. Wolpoff & Abramson 5, F.3d 649 (3d Cir. iii Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 3 of 31 PageID: 423 1993)……………………………………………………………………………………………………………… 21 Evankavitch v. Green Tree Servicing, LLC 2015 U.S. App. LEXIS 12024 (3d Cir. July 13, 2015)……………………………………………… 8 Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 385 (7th Cir. 2010)……………………………………………………………………………………………………………… 11 Jensen v. Pressler & Pressler, 791 F.3d 413, 421 (3d Cir. 2015)……………………………………………………………………………………………………………… 9 Kaymark v. Bank of America, N.A. 783 F.3d 168, 174 (3d Cir. 2015)……………………………………………………………………………………………………………… 9 Kliesh v. Select Portfolio Servicing, Inc. 527 F.App’x 102 (3d Cir. 2013)………………………………………………………………………………………………… 20 Lesher v. Law Offices of Mitchell N.Ka, P.C., 650 F.3d 993, 996 (3d Cir. 2011)……………………………………………………………………………………… 8 Magnum v. Action Collection Serv., Inc. (9th Cir. 2009)……………………………………………………………………………………………………………… 20 Marshall-Mosby v. Corporate Receivables, Inc. 205 F.3d 323 (7th Cir. 2000)………………………………………………………………………………………………… 20 Martin v. LaSalle Bank, N.A. 629 F.3d 364, 368 (3d Cir. 2011)……………………………………………………………………………………………………………… 9 McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240, 245- 246, (3d Cir. Pa. 2014)……………………………………………………………… 11,12 Monday Clark v. Bonded Adjustment Co. (E.D.Wash 2001) 20 Neitzke v. Williams, 490 U.S., 319, 327 (1989)… 4 Rush v. Portfolio Recovery Assocs., LLC 977 F. Supp. 2d 414, 429 (D.N.J. 2013)………………………………………………………………………………………… 16,17 Schuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686 (1974)…………………………………………………………………………………………………………… 3 iv Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 4 of 31 PageID: 424 Simon v. FIA Card Servs., N.A., 732 F.3d 259, 264 (3d Cir. 2013)……………………………………………………………………………………………………………… 3-4,11 Sutton v. Ocwen Loan Servicing, LLC No. 16-CV-81234, 2016 WL 4417688 (S.D. Fla. Aug 19, 2016)……………………………………… 23 Synscort, Inc. v. Sequential Software, Inc. 50 F.Supp. 2d 318, 325-26 (D.N.J. 1999)……………………………………………………………………… 5 Turner v. Prof’l Recovery Servs., Inc., 956 F. Supp.2d 573 (D.N.J. 2013)………………………………………………………………………………………… 17,19 Vilinsky v. Phelan Hallinan & Diamond, P.C., 640 F. App’x 139, 141 (3d Cir. 2016)…………………………………………………………………………… 12 STATUTES AND REGULATIONS 15 U.S.C. §1692(a)…………………………………………………………………………… 8 15 U.S.C. §1692c(a)(2)………………………………………………………………… 10 15 U.S.C. §1692a(3)………………………………………………………………………… 8 15 U.S.C. §1692a(6)………………………………………………………………………… 9 15 U.S.C. §1692c………………………………………………………………………………… passim 15 U.S.C. §1692d………………………………………………………………………………… 14,18,19 15 U.S.C. §1692e………………………………………………………………………………… 7,20,21 15 U.S.C. 1692k…………………………………………………………………………………… passim RULES Fed.R.Civ.P. 12(b)(6)…………………………………………………………………… passim v Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 5 of 31 PageID: 425 Fed.R.Civ.P. 12(d)…………………………………………………………………………… 5 Fed.R.Civ.P.56……………………………………………………………………………………… 5,6 vi Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 6 of 31 PageID: 426 STATEMENT OF FACTS RELEVANT TO THE BSI FINANCIAL SERVICES MOTION TO DISMISS Plaintiff has owned and resided in the real property located at 540 Undercliff Avenue, Edgwater, New Jersey since 1999. [ECF 1 ¶9-10] In September 2009 Plaintiff entered into refinance mortgage loan agreement with Bank of America, N.A. [ECF 1 ¶11] After the loan closed it was sold multiple times. [ECF 1 ¶12] Due to unforeseen economic circumstances, Plaintiff defaulted on the mortgage loan in 2011. [ECF 1 ¶13] On October 15, 2014 debt collection law firm McCabe, Weisberg & Conway, P.C. filed a debt collection foreclosure action on behalf of Ventures Trust 2013-I-H-R by MCM Capital Partners, LLC, its trustee, under New Jersey Superior Court docket F-043267-14. [ECF 1 ¶14] On May 4, 2015 Plaintiff, through her counsel, filed a contesting Answer in the foreclosure debt collection litigation and the parties exchanged discovery. [ECF 1 ¶16-17] On May 6, 2015 Defendant BSI Financial Services (“BSI”) received a Qualified Written Request sent by Plaintiff. [ECF 1 ¶18] The Qualified Written Request states in part: I am currently represented by Joshua W. Denbeaux, Esq. of Denbeaux & Denbeaux, 366 Kinderkamack Road, Westwood, New Jersey 07675. Their telephone number is (201) 664-8855. I let you know this fact because I do not wish to have any communication from you with regard to my loan as I want everything to go directly to my attorney. 1 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 7 of 31 PageID: 427 [ECF 1 p25] Plaintiff retained legal counsel in relation to the mortgage debt because she did not wan to be directly contacted by the mortgage company, and any related debt collectors. Plaintiff wanted to avoid contact in an effort to be free from anxiety, physical and mental effects of collection communications. [ECF 1 ¶20] On May 10, 2015 an employee of BSI identified as Kevin Martin left a detailed message on Plaintiff’s answering machine in which payment and loss mitigation options were discussed, as well as the threat of a foreclosure. [ECF 1 ¶21] By letter dated May 13, 2015, BSI sent a letter to Plaintiff at her home, in response to the Qualified Written Request. [ECF 1 ¶22; ECF 1 p32] The correspondence from BSI identifies Plaintiff’s account number, property address, the creditor to whom the debt is owed, and it states “This is an attempt to collect a debt. Any information obtained will be used for that purpose.” [ECF 1 ¶23; ECF 1 p32] By letter dated May 13, 2015, BSI sent a letter to Plaintiff at her home. [ECF 1 ¶24; ECF 1 p35-40] The letter solicits payment from Plaintiff and provides instructions on how to pay money to BSI. [ECF 1 ¶24. The letter states in part: The total amount needed to pay the loan in full is broken down for you in the payoff calculation. … 2 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 8 of 31 PageID: 428 This is an attempt to collect a debt. Any information obtained will be used for that purpose. … Please submit your payoff via certified funds or wire transfer to BSI FINANACIAL SERVICES. CERTIFIED FUNDS OR WIRE TRANSFERS MUST BE RECEIVED BY OUR OFFICE BY 3:30 P.M. (ET) ON A NORMAL BUSINESS DAY (MONDAY THROUGH FRIDAY) TO BE CREDITED THAT DAY. Funds received after 3:30 P.M. (ET) on 05/31/15 will require additional interest of $75.7405 per day. Mail Certified Funds to: … [ECF 1 ¶24; ECF 1 p35-40] By letter dated May 21, 2015 BSI Financial Services sent a letter to Plaintiff at her home. [ECF 1 ¶26; ECF 1 p41-42] The letter states “This is an attempt to collect a debt. Any information obtained will be used for that purpose.” [Id.] LEGAL ARGUMENT I. LEGAL STANDARD ON THE MOTION TO DISMISS BEFORE THE COURT. The legal standard for a motion to dismiss under Fed.R.Civ.P. 12(b)(6) is well settled and straightforward. The purpose of the motion to dismiss is to test the sufficiency of the complaint. See Schuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686 (1974). In doing so the Court is to follow the legal standard set forth by the U.S. Supreme Court in Bell Atl. Corp. v. Twombly, 550 US. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 696 (U.S. 2009). Under the standard, the Court is to treat all allegations in the complaint as true and to view them in a light most favorable to the claimant. Simon v. FIA Card Servs., N.A., 732 3 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 9 of 31 PageID: 429 F.3d 259, 264 (3d Cir. 2013). Motions to dismiss brought pursuant to Fed.R.Civ.P. 12(b)(6) may only be granted if a court finds the Plaintiff has failed to set forth fair notice of what the claim is and the grounds upon which it rests. Bell Atl. Corp. v. Twombly, 550 US. 544, 555 (2007). The Court is not charged with the duty to determine whether the claimant is likely to ultimately prove its legal claims, instead the claimant must be permitted to proceed so long as the allegations if proven could result in establishing liability. See Ashcroft v. Iqbal, 556 U.S. 662, 696 (U.S. 2009) (citing Neitzke v. Williams, 490 U.S., 319, 327 (1989)). Reviewing the Complaint and assuming all facts to be true, there is no question that Plaintiff’s claim for relief is viable under the Fed. R. Civ. P. 12(b)(6) standard. Plaintiff has set forth the factual basis for the claim with citation to the applicable statute(s). Accordingly, the Court should deny motions of the several defendants so the case may proceed on the merits. a. The Court Must Strike the Certifications and Exhibits of BSI Which Inappropriately Seek to Expand the Record of the Complaint in Violation of Fed.R.Civ.P.12(b)(6). Plaintiff does not directly address Defendant’s evidentiary submissions because they are beyond the permissible scope of the 4 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 10 of 31 PageID: 430 motion before the Court1. On a motion to dismiss, the Court cannot consider the evidentiary proffers of Defendant that expand the record beyond the Complaint filed by Plaintiff. The applicable rule states: Result of Presenting Matters Outside the Pleadings. If, on a motion under Rule 12(B)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion. Fed.R.Civ.P. 12(d). The rule prohibits consideration of evidence submitted by the movant that are not “integral to” the complaint. In Re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997); Synscort, Inc. v. Sequential Software, Inc. 50 F.Supp. 2d 318, 325-26 (D.N.J. 1999); See In re Donald J. Trump Casino Sec. Litig., 7F.3d 357, 368 (3d Cir. 1993)(explaining “a court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff’s claims are based on the document.”). The submissions which include affidavits, do not meet the standard of being “integral to the complaint.” In the event that the Court considers the submissions of 1 If the Court elects to consider the evidence and convert the application to a Fed.R.Civ.P.56 Motion for Summary Judgment, Plaintiff will address the expanded record. Plaintiff will address the submissions after receiving required notice from the Court. 5 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 11 of 31 PageID: 431 Defendant, the Third Circuit requires that the parties be provided advanced notice. “Fed.R.Civ.P. 56(c) expressly requires a minimum of ten days’ notice to a nonmoving party on any motion for summary judgment.” Brooks v. Hussman Corp. 878 F.2d 115, 116 (3d Cir. 1989). The Third Circuit Court of appeals has consistently reversed summary judgment orders where District Courts have converted a Fed.R.Civ.P. 12(b)(6) motion to a motion for summary judgment without providing advanced explicit notice to the nonmoving party. See Castle v. Cohen, 840 F.2d 173, (3d Cir. 1988); Bryson v. Brand Insulations, Inc., 621 F.2d 556 (3d Cir. 1980); Clay v. Dep’t of the Army 239 Fed. Appx. 705 (3d Cir. 2007). The unverified submissions of Defendant contradict the plainly worded allegations of the Complaint. By necessity, the submissions of Defendant suggest that either Plaintiff or Defendant is wrong. The time to determine these questions of fact will occur during discovery. By example, Defendant claims that Plaintiff’s assertion that a person identified as Kevin Martin could not have left a voice message on Plaintiff’s answering machine in May 2015 must go to discovery. Defendant claims that Kevin Martin was not an employee of BSI at that time. However, in discovery, Plaintiff will produce the audio recording of the voice message in which the caller identifies himself as Kevin Martin. If the Court converts the motion to a 6 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 12 of 31 PageID: 432 F.R.Civ.P. 56 motion for summary judgment, Plaintiff will produce the audio recording and the Court will find a genuine issue of disputed material fact that would result in denial of the motion. The more prudent approach is to ignore Defendant’s expansion of the record and permit the case to proceed to discovery. II. PLAINTIFF’S COMPLAINT SETS FORTH A CLAIM FOR RELIEF FOR VIOLATION OF THE FAIR DEBT COLLECTION PRACTICES ACT. There are four elements to an FDCPA claim and Plaintiff has met the pleading burden of each element against each defendant. A Plaintiff must allege “(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, 756 F.3d 299, 303 (3d Cir. 2014). In this case, Plaintiff has alleged all of these elements as to BSI. Accordingly, the motion to dismiss should be denied. Congress enacted the FDCPA in 1977 “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). Congress noted 7 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 13 of 31 PageID: 433 that such abusive debt collection practices contribute to the number of personal bankruptcies, marital instability, the loss of jobs, and invasions of individual privacy. Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014), citing 15 U.S.C. §1692(a); see also Lesher v. Law Offices of Mitchell N.Ka, P.C., 650 F.3d 993, 996 (3d Cir. 2011); Evankavitch v. Green Tree Servicing, LLC 2015 U.S. App. LEXIS 12024 (3d Cir. July 13, 2015). It is against this backdrop that Plaintiff seeks relief before this Court. The Complaint satisfies the first element of the FDCPA by alleging that “Plaintiff is a consumer as that term is defined by 15 U.S.C. §1692a”. [ECF 1 ¶53] The FDCPA defines “consumer” as “any natural person obligated or allegedly obligated to pay any debt.” 15 U.S.C. §1692a(3). The Complaint sets forth specific facts establishing that Plaintiff is a natural person under obligation to pay a debt. [ECF 1: Complaint ¶9-11]. The Complaint satisfies the second element of the FDCPA by alleging that BSI is a debt collector. [ECF 1: Complaint ¶55] BSI became the loan servicer in relation to the Plaintiff after the debt went into default and therefore it is a debt collector under the FDCPA. Congress defined “debt collector” to be any entity “in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts 8 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 14 of 31 PageID: 434 to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. §1692a(6). In its review of this motion to dismiss, the Court must apply the least sophisticated consumer standard. Kaymark v. Bank of America, N.A. 783 F.3d 168, 174 (3d Cir. 2015). Using this standard, the Court is directed to inquire whether the allegedly false or misleading statement “has the potential to affect the decision-making process of the least sophisticated debtor; in other words, it must be material when viewed through the least sophisticated debtor’s eyes.” Jensen v. Pressler & Pressler, 791 F.3d 413, 421 (3d Cir. 2015). Furthermore, the “FDCPA is a strict liability statute to the extent it imposes liability without proof of an intentional violation.” Allen ex rel. Martin v. LaSalle Bank, N.A. 629 F.3d 364, 368 (3d Cir. 2011) a. The Complaint Sufficiently Alleges that BSI Engaged in Conduct that Violates 15 U.S.C. §1692c. Plaintiff’s claim for relief under 15 U.S.C. §1692c is based on telephonic and written correspondence made by BSI to Plaintiff in an attempt to collect a debt. All of the alleged conduct giving rise to this claim occurred within the year prior to Plaintiff’s filing of the complaint and accordingly all of the alleged conduct falls within the applicable statute of 9 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 15 of 31 PageID: 435 limitations imposed by 15 U.S.C. §1692k. Section 1692c states in part: §1692c. Communication in connection with debt collection (a) Communication with the consumer generally. Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt -- … (2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer. 15 U.S.C. §1692c Section 1692a(2) of the Fair Debt Collection Practices Act defines the term “communication as follows: The term ‘communication’ means the conveying of information regarding a debt directly or indirectly to any person through any medium. 15 U.S.C. §1692a(2) As of May 4, 2015, BSI knew Plaintiff was represented by legal counsel in relation to the mortgage loan. BSI knew this because that is the date Plaintiff filed her responsive pleading to the foreclosure debt collection action in New Jersey Superior Court that sought to enforce the mortgage loan. [ECF 1 ¶16] At the latest, BSI knew Plaintiff was represented by legal counsel in relation to the mortgage debt on May 6 when it received the 10 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 16 of 31 PageID: 436 Plaintiff’s Qualified Written Request. [ECF 1 ¶18-19] The Qualified Written Request specifically advises BSI that Plaintiff is represented by legal counsel and that all communications should be directed to counsel. [ECF 1 ¶19; ECF 1 p25-28]. Any communication by BSI directed at Plaintiff in connection with the collection of a debt made after May 6, 2016 is a violation of 15 U.S.C. §1692c. Each of the communications in question were made in connection with the collection of a debt as required by 15 U.S.C. §1692c and as broadly interpreted by the Third Circuit Court of Appeals. In 2014 the Court explained: The FDCPA "regulates 'debt collection'" but does not define the term. Simon v. FIA Card Servs., N.A., 732 F.3d 259, 265 (3d Cir. 2013). The statute's substantive provisions, however, make clear that it covers conduct "taken in connection with the collection of any debt." Id. (internal quotation marks and citations omitted). Put differently, activity undertaken for the general purpose of inducing payment constitutes debt collection activity. Id.; see also Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 385 (7th Cir. 2010) (describing "the commonsense inquiry of whether a communication from a debt collector is made in connection with the collection of any debt"). Thus, a communication need not contain an explicit demand for payment to constitute debt collection activity. Simon, 732 F.3d at 266. Indeed, communications that include discussions of the status of payment, offers of alternatives to default, and requests for financial information may be part of a dialogue to facilitate satisfaction of the debt and hence can constitute debt collection activity. Id. McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240, 245-246, (3d Cir. Pa. 2014) 11 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 17 of 31 PageID: 437 In McLaughlin the Third Circuit determined that the debt collector’s letter was sent in connection with the collection of a debt because it plainly stated the collector is a “debt collector attempting to collect a debt.” Id. at 246 Viewing such a communication from the objective perspective of the least sophisticated consumer, there is no question the communication is sent in connection with the collection of a debt when it plainly states as much2. Paragraph 21 of the Complaint states that on May 10, 2015 a BSI employee identified as Kevin Martin left a detailed voice message on Plaintiff’s answering machine. The message included a discussion of payment and loss mitigation options for Plaintiff, and made a threat of foreclosure. [ECF 1 ¶21] Defendant claims that no person by the name of Kevin Martin was employed by BSI on May 10, 2015. The Court should disregard this claim at the motion to dismiss stage. Procedurally, the Court is merely to look to the pleadings to determine if sufficient facts have been stated to place Defendant on notice of the claim. See Bell Atl. Corp. v. Twombly, 550 US. 544, 555 2 Defendant’s reliance on Vilinsky v. Phelan Hallinan & Diamond, P.C., 640 F. App’x 139, 141 (3d Cir. 2016) is misplaced. In Vilinsky, the communication in question did not state that it was “an attempt to collect a debt.” The communications sent by BSI more closely model those discussed in the McLaughlin v. Phelan Hallinan & Schmieg, LLP where the same law firm was held to have violated the FDCPA. Mclaughlin v. Phelan Hallinan & Schmieg, LLP 756 F.3d 240 (3d Cir. 2014). 12 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 18 of 31 PageID: 438 (2007) Moreover, during discovery, Plaintiff will provide Defendant with the recording of the voice message in which the caller identifies himself as Kevin Martin. BSI’s two letters dated May 13, 2015 attached to the Complaint as Exhibits 2 and 3 were sent in connection with the collection of a debt to Plaintiff’s home. [ECF 1 p30-33] The letters explicitly state “[t]his is an attempt to collect debt. Any information obtained will be used for that purpose.” Id. At the motion to dismiss stage of the case, BSI cannot disavow its own written declarations that the letters were sent as an attempt to collect a debt. See Chung v. Shapiro & Denardo, LLC 2015 U.S. Dist. LEXIS 76860 (D.N.J. 2015) (Finding a letter sent by debt collection law firm stating “[t]his is an attempt to collect a debt and any information obtained will be used for that purpose” establishes unequivocally on a motion to dismiss that the communication was for debt collection purposes.) Similarly, the third letter sent by BSI to Plaintiff’s home dated May 13, 2015, marked Exhibit 4 to the Complaint, is also a communication in connection with the collection of a debt. [ECF 1 p35-39] As with Exhibits 2 and 3 of the Complaint, Exhibit 4 explicitly states “This is an attempt to collect a debt.” [ECF 1 p36] The letter also provides a detailed itemization of the amount owed to payoff the loan. [ECF 1 p37] The letter not only sets forth the unpaid principal balance, interest, late charges, 13 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 19 of 31 PageID: 439 and other fees, the letter provides instructions for making payments on the loan. The letter further provides a disclaimer that the letter should be construed as a demand for payment unless Plaintiff has filed for bankruptcy. [ECF 1 p38-39] Lastly, the May 21 letter marked Exhibit 5 to the Complaint, sent by BSI to Plaintiff’s home was also sent in connection with the collection of a debt. As with the letters marked Exhibit 2-4, Exhibit 5 explicitly states “This is an attempt to collect a debt. Any information obtained will be used for that purpose.” [ECF 1 p41-42] At this stage of the litigation, the Court is to view the facts set forth in the Complaint as true. So long as Plaintiff has set forth sufficient factual allegations sufficient to place Defendant on notice of its alleged violation of the FDCPA, the pending motion must be denied. Plaintiff’s complaint does not merely recite facts, it is accompanied by documentary evidence where available. Plaintiff has met her burden to sustain a cause of action against BSI for violation of 15 U.S.C. §1692c. b. The Complaint Sufficiently Alleges that BSI Engaged in Conduct that Violates 15 U.S.C. §1692d. To achieve the goal articulated in 15 U.S.C. 1692 of eliminating abusive debt collection practices that contribute to broad harms including “invasions of individual privacy,” Congress enacted 15 U.S.C. 1692d. Section 15 U.S.C. 1692d 14 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 20 of 31 PageID: 440 specifically prohibits a debt collector from engaging “in an conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” 15 U.S.C. 1692d. As with other sections of the Fair Debt Collection Practices Act, §1692d is drafted in an expansive form that purposefully does not articulate every conceivable act that would exhibit the conduct violating the provision. Cable v. Allied Interstate, Inc. 2012 U.S. Dist. LEXIS *5-6 169344 (M.D. P.a. 2012); Christy v. EOS CCA 905 F. Supp. 2d 648, 654 (E.D. P.a. 2012) The allegations in this lawsuit are that BSI frequently called Plaintiff in pursuit of debt collection efforts. Plaintiff then retained legal counsel in part so she could be free from the anxiety of constantly receiving debt collection phone calls. BSI knew Plaintiff retained legal counsel in relation to the debt and continued to send debt collection correspondence to Plaintiff’s home and leave debt collection messages on Plaintiff’s answering machine anyway. [ECF 1 ¶58] The allegations as to BSI’s conduct in relation to §1692d include the following: b. Between February 23, 2015 and May 10, 2015 BSI Financial Services left at least eleven messages on Plaintiff’s answering machine relating to Plaintiff’s default, attempts to collect the debt and making specific reference to foreclosure. The messages were heard or could have been heard by other persons and 15 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 21 of 31 PageID: 441 had the natural consequences to harass, oppress, and/or abuse Plaintiff. c. In total, BSI Financial Services left more than 45 messages on Plaintiff’s answering machine. The repeated phone calls and messages were made with the intent to annoy, abuse or harass Plaintiff. [ECF 1 ¶58] The allegations demonstrate sufficient facts to sustain a cause of action at this stage of the case. During discovery, Plaintiff will provide recordings of the messages which will demonstrate to the fact finder that BSI’s conduct rises to the level of harassment, oppression and/or abuse that Congress sought to prevent by enacting 15 U.S.C. §1692d. Plaintiff’s pleading explains “Plaintiff retained counsel in relation to the mortgage debt in part because she did not want to be directly contacted and wanted to be free from the anxiety, physical and mental effects of collection communications.” [ECF 1 ¶20] Defendant knew Plaintiff was represented by counsel, knew 15 U.S.C. §1692c prohibited BSI from communicating directly with Plaintiff in connection with the collection of a debt, and BSI did so anyway. “The question of whether a debt collector engages in ‘harassing, annoying, or abusive’ conduct is ordinarily an issue of fact for the jury.” Rush v. Portfolio Recovery Assocs., LLC 977 F. Supp. 2d 414, 429 (D.N.J. 2013) Due to the fact sensitive nature of 15 U.S.C. §1692d claims, District Courts in the Third Circuit have 16 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 22 of 31 PageID: 442 consistently permitted well pleaded claims to move into discovery and be resolved at summary judgment in the defendant’s favor only where no reasonable jury could find that the proven conduct resulted in harassing, abusive, or oppressive conduct. See Rush v. Portfolio Recovery Assocs., LLC 977 F. Supp. 2d 414, 431 (D.N.J. 2013) (Finding “these assertions are enough to merit a genuine dispute of fact as to the number, frequency, and timing of phone calls Portfolio made to Plaintiffs. Because a genuine dispute of fact exists, I cannot determine, as a matter of law, that Portfolio’s conduct unequivocally did not violated §1692d(5). See Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d, 1358, 1362 (3d Cir. Pa. 1992) Instead I find it appropriate in this case, like in most cases, that the question of whether Portfolio’s conduct harassed, oppressed, or abused Plaintiffs is a question of fact for a jury to decide.”); Turner v. Prof’l Recovery Servs., Inc., 956 F. Supp.2d 573 (D.N.J. 2013). In this case, Plaintiff sought reprieve from collection phone calls made by BSI pursuant to her legal rights. BSI violated Plaintiff’s rights by continuing to make debt collection phone calls and leave messages on Plaintiff’s answering machine. The context of the calls made after BSI became affirmatively prohibited under 15 U.S.C. §1692c from contacting Plaintiff directly, adds to the likelihood that a 17 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 23 of 31 PageID: 443 reasonable fact finder could determine BSI’s conduct had the natural consequence to harass, oppress or abuse the plaintiff. Here, BSI’s conduct demonstrates complete disregard for Plaintiff, and the requirements of the Fair Debt Collection Practices Act. i. BSI’s Statute of Limitations Argument Does Not Accurately Reflect the Law and Cannot Result in Dismissal of the Claim. Defendant seeks to skew the burden on the motion to dismiss by alleging that most of the harassing, oppressive and/or abusive conduct occurred more than a year prior to the commencement of this litigation. The argument wrongly suggests that the conduct taking place more than a year before the complaint cannot be considered in determining whether BSI violated 15 U.S.C. §1692d3. [ECF 29-5 p20-22] Section 1692d is about context. If a reasonable jury can determine that the aggregate actions taken by a debt collector in connection with the collection of a debt have the natural consequences to harass, oppress, or abuse any person, a violation of 15 U.S.C. §1692d has been alleged. 3 As a threshold matter, Plaintiff contends the facts alleged in the Complaint are sufficient to sustain a cause of action for violation of 15 U.S.C. §1692d by considering only the conduct that occurred within one year of the filing of the complaint. 18 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 24 of 31 PageID: 444 Claims brought under 15 U.S.C. §1692d must be viewed in the aggregate because Courts have looked to §1692d (unlike the rest of the statute) as often requiring some pattern of practice. See Turner v. Prof’l Recovery Servs., 956 F.Supp. 2d 573, 578 (D.N.J. 2013)(“Actual harassment or annoyance turns on the volume and pattern of calls made… There is no consensus as to the amount and pattern of calls necessary for a court to infer a debt collector intended to annoy, abuse, or harass a debtor.”) Because the Courts have generally held that there is a minimum threshold of repeat conduct before a claim accrues, §1692d claims necessarily require a long term view of conduct. Moreover, viewing §1692d in the aggregate does not change the penalty for a violating debt collector. Pursuant to 15 U.S.C. §1692k, statutory damages are capped at $1,000.00 whether BSI committed one act or 100 acts in violation of the Fair Debt Collection Practices Act. 15 U.S.C. §1692k(a)(2). In the context of this litigation, the Complaint alleges that the egregiousness of BSI’s actions increased with each communication made after BSI received a written reminder that Plaintiff was represented by counsel. In a vacuum and without the benefit of context, reviewing the debt collection communications that occurred before Plaintiff issued the written reminder, the claim could fall short of satisfying §1692d. 19 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 25 of 31 PageID: 445 Lastly, Plaintiff notes that many Courts have held the statute of limitations under 15 U.S.C. §1692k is procedural, not jurisdictional. See Magnum v. Action Collection Serv., Inc. (9th Cir. 2009); Marshall-Mosby v. Corporate Receivables, Inc. 205 F.3d 323 (7th Cir. 2000); Monday Clark v. Bonded Adjustment Co. (E.D.Wash 2001). It is irrelevant that extension of the statute of limitations is used sparingly in the Third Circuit. See ex Kliesh v. Select Portfolio Servicing, Inc. 527 F.App’x 102 (3d Cir. 2013) Within this case, Plaintiff’s §1692d claim is not based exclusively on BSI’s conduct more than a year prior to commencement of the litigation. The acts occurring outside of a year are merely recited to establish that BSI’s most recent wrongful conduct was the crowning jewel of its harassing behavior. c. The Complaint Sufficiently Alleges that BSI Engaged in Conduct that Violates 15 U.S.C. §1692e. The Complaint clearly articulates that BSI engaged in debt collection activity in violation of 15 U.S.C. §1692e(11). Plaintiff’s claim is that an employee of BSI left messages on Plaintiff’s answering machine in connection with the collection of a debt and failed to state that the “communication is from a debt collector.” The complaint further specifies the dates of the phone calls in question as April 28, May 4, and May 10, 20 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 26 of 31 PageID: 446 2015. [ECF 1 ¶59] Plaintiff has alleged facts with the requisite specificity to establish a claim under section 1692e(11). That provision of the Fair Debt Collection Practices Act states: The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action. 15 U.S.C. §1692e(11) (emphasis added) The Third Circuit Court of Appeals has determined that the plain language of 15 U.S.C. §1692e(11) unequivocally requires all follow up communications made by a debt collector must include a warning disclosing that the communication is from a debt collector. See Dutton v. Wolpoff & Abramson 5, F.3d 649 (3d Cir. 1993) Each of the messages left by BSI on Plaintiff’s answering machines failed to provide the required warning. Defendant attempts to defeat the claim by arguing that the communications did not occur. [ECF 29-5 p17] In support of the argument, Defendant provides inadmissible testimony that impermissibly expands the Fed.R.Civ.P. 12(b)(6) record. More importantly, the allegation of Defendant does not disprove the allegations of Plaintiff. The messages left by BSI on 21 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 27 of 31 PageID: 447 Plaintiff’s answering machine states that the caller is Kevin Martin of BSI. Defendant claims that Kevin Martin was not an employee of BSI at the time the calls took place. Defendant does not claim the phone calls and messages did not occur. Plaintiff will provide proof of the phone calls and messages during discovery including her phone records and audio records of the messages. The messages will support the allegations set forth by Plaintiff in the Complaint as true. Defendant’s motion must be denied and the claim permitted to move forward. d. BSI’s Conduct is not Excused by it’s interpretation of 12 C.F.R. §1024.36 of the Real Estate Settlement Procedures Act. Defendant asks this Court to find that it bears no liability for violating the Fair Debt Collection Practices Act because it was attempting to comply with the Real Estate Settlement Procedures Act. What Defendant describes as a “Hobson’s choice” is nothing more than fantastical legal argle- bargle. The argument is unpersuasive and must be disregarded at this stage of the litigation4. Nothing about 15 U.S.C. §1692c and 12 C.F.R. §1024.36 are inconsistent and BSI could have easily complied with its 4 Plaintiff notes that the only defense under the Fair Debt Collection Practices Act is 15 U.S.C. §1692k(c) which requires the debt collector to demonstrate “by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” That standard cannot be met on a Fed.R.Civ.P. 12(b)(6) application. 22 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 28 of 31 PageID: 448 obligations under both statutes. The regulatory language of 12 C.F.R. §1024.36 contradicts Defendant’s claim that to comply with the Real Estate Settlement Procedures Act it was obligated to send the written correspondence in question to Plaintiff’s home rather than her legal counsel. Nothing in the regulation requires information to be sent to a borrower’s home. Defendant’s brief recites the portion of the regulation it claims to have relied upon. [ECF 29-5 p26] Defendant interpreted the words “providing the borrower with” to mandate that the information be sent to the borrower’s home. According to Defendant, sending the requested information to any location other than the Defendant’s home would result in a violation of the Real Estate Settlement Procedures Act. This is an unreasonable interpretation of 12 C.F.R. §1024.36 for which no authority exists. The only authority Defendant relies upon is Sutton v. Ocwen Loan Servicing, LLC No. 16-CV-81234, 2016 WL 4417688 (S.D. Fla. Aug 19, 2016). The issues in that case could not be further from the allegations against BSI herein. Most notably, the Sutton involves only a Real Estate Settlement Act claim and provides not interpretation of that statutes impact on the Fair Debt Collection Practices Act. Instead, the claim in Sutton is a tenuous allegation that the loan servicer violated the Real Estate Settlement Procedures Act by sending the statutorily 23 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 29 of 31 PageID: 449 required acknowledgement of the debtor’s Request For Information to the debtor rather than the debtor’s attorney. Id. at *5 Looking at the argument, the Court wrote: The question before the Court, therefore, turns on whether an acknowledgment of receipt of an RFI may be sent directly to the consumer ultimately requesting the information, or whether it must be sent to the consumer’s attorney who has mailed the RFI. Id. at 5 Even the Sutton Court did not rule that the Real Estate Settlement Procedures Act requires a response to a Request for Information to be sent to the borrower’s home. The Court instead held “under the plain meaning of 12 C.F.R. §1024.36(c), the statute does not contain a requirement with respect to where an acknowledgment should be sent.” Id. at 3 Plaintiff has not alleged that Defendant BSI failed to comply with the Real Estate Settlement Procedures Act. The record of Sutton demonstrates that BSI could have complied with 12 C.F.R. §1024.36 and 15 U.S.C. §1692c, but instead chose not too. CONCLUSION Plaintiff has gone beyond the minimum standard in setting forth facts together with proofs to allege that BSI has violated the Fair Debt collection Practices Act. The Defendant’s motion is without merit in law or fact and must be denied. 24 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 30 of 31 PageID: 450 Dated November 7, 2016 /s/ Adam Deutsch Adam Deutsch, Esq. Denbeaux & Denbeaux Counsel for Plaintiff 25 Case 3:16-cv-02437-BRM-LHG Document 40 Filed 11/07/16 Page 31 of 31 PageID: 451
