Lee v. Select Portfolio Servicing, Inc.

REPLY BRIEF re MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM MOTION to Dismiss for Lack of Standing and Failure to State a Claim

N.D. Ga.August 4, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION Daniel LEE on behalf of himself and all others similarly situated, Plaintiff, v. SELECT PORTFOLIO SERVICING, INC., Defendant. ) ) ) ) ) ) ) ) ) ) ) CIVIL ACTION FILE NO. 1:16-cv-01080-CC-WEJ REPLY BRIEF IN FURTHER SUPPORT OF DEFENDANT SELECT PORTFOLIO SERVICING, INC.’S MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED CLASS ACTION COMPLAINT Plaintiff Daniel Lee’s Opposition brings into sharp focus the misguided nature of the Fair Debt Collection Practices Act (“FDCPA”) claims he asserts against Defendant Select Portfolio Servicing, Inc. (“SPS”). In addressing each of his two claims, Plaintiff fails to submit a single applicable authority to explain, let alone prop up the purported violations he alleges. Without any basis for his claims, Plaintiff’s Amended Complaint should be dismissed as a matter of law. Plaintiff’s first claim alleges that SPS, in a letter sent to Plaintiff on June 16, 2015 (the “June Letter”), failed to inform Plaintiff that the required FDCPA disclosures were on page 4 of the June Letter. But SPS had no statutory obligation to do so. Any obligation SPS had under the FDCPA was fulfilled by conspicuously Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 1 of 12 2 placing the disclosure on the same page as the text of the letter. Consistent with the FDCPA’s expectation that a consumer will read a debt collection letter in its entirety, SPS conspicuously placed the disclosure language on the same page as the body of the letter so fulfilling the FDCPA’s requirements. Plaintiff fails to present any authority to the contrary. Plaintiff’s second claim also fails. Plaintiff asserts that non-judicial foreclosure is not “legal action” and, as a result, SPS purportedly violated the FDCPA by threatening “legal action” it could not take - foreclosure of a Georgia property - in a July 30, 2015 letter (the “July Letter”). Plaintiff fails to cite a single authority that strictly interprets the FDCPA’s reference to “legal action” so to exclude non-judicial foreclosure. In fact, Plaintiff’s own authorities detract from his theory. Finally, Plaintiff also raises for the first time that he intended to plead yet another violation of the FDCPA in his Amended Complaint and SPS did not address this supposed claim. Specifically, Plaintiff asserts that SPS did not possess the security deed for Plaintiff’s property when it threatened to foreclose and thus it threatened “legal action” it could not take. In his Amended Complaint, Plaintiff fails to separate this supposed cause of action from his claim concerning non- judicial foreclosure, as well as leaving the supposed claim bereft of supporting Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 2 of 12 3 factual allegations. Pursuant to Rule 8(a), SPS cannot address a claim that fails to appear on the face of Plaintiff’s Amended Complaint. I. SPS included disclosure language in the text of the June Letter Plaintiff asserts that SPS violated the FDCPA “by placing mandated [disclosures] on the back of [the June 16, 2015] letter without any reference on the front to alert the Plaintiff and putative class members to turn the page for additional important [legal] information…” despite the disclosure appearing on the same page as the text of the letter. Opp. at 1. This theory misconstrues the FDCPA, which carries no such requirement. It also runs afoul of the well-founded principle that Plaintiff is expected to review the letter in its entirety. Had he done so, he would have undoubtedly arrived at the FDCPA disclosure language. Plaintiff insists that case law supports his position, but his own authorities hold otherwise. Plaintiff’s two cited authorities reflect that courts are concerned with situations where consumers will not find the disclosure language even if they read the entire letter. Specifically, these authorities require that, when a disclosure appears on the reverse side without any other text of the letter, the letter must indicate on the front of the page that the disclosure appears on the reverse side. See McStay v. I.C. Sys., Inc., 308 F.3d 188, 189 (2d Cir. 2002); Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 298 (2d Cir. 2003). Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 3 of 12 4 In McStay, the Second Circuit described defendant’s debt collection letter as having the entire text of the letter on one side of the page, while the disclosure language appeared on the reverse side, with no other text from the letter appearing with it. McStay, 308 F.3d at 189 (“At the bottom of the front page, but before the signature line, the letter read, ‘NOTICE: SEE REVERSE SIDE FOR IMPORTANT INFORMATION.’ The reverse side contained, in larger size print than the front of the letter, the following language, known as the “validation notice”). In that instance, it was necessary to provide the recipient with notice of the location of the disclosure language because the recipient would not otherwise find it. Miller is just alike. On the front side, immediately after the signature and a “detach and return” section, the letter contained a note telling the reader to “SEE REVERSE SIDE FOR IMPORTANT NOTICE.” Miller, 321 F.3d at 298. On the reverse side, separate from the text of the actual letter, the defendant recited the FDCPA’s disclosure language. Id. For that reason, the appellate court found it necessary to include a signal that disclosure language appeared on the reverse side. Id. These cases stand in contrast to the June Letter. SPS placed its disclosure language on the same page as the text of the letter, directly beneath SPS’ signature. See FAC, Ex. A at 4. As a result, the June Letter need not identify that the Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 4 of 12 5 disclosure language appears on the back of the letter because “[e]ven the least sophisticated debtor is bound to read collection notices in their entirety.” Bradshaw v. Bank of Am., N.A., No. 1:12-CV-3784-RWS, 2013 WL 6669233, at *7 (N.D. Ga. Sept. 16, 2013); see also In re Martinez, 266 B.R. 523, 532 (Bankr. S.D. Fla. 2001), aff’d 311 F.3d 1272 (11th Cir. 2002). Reading the June Letter in its entirety, as is expected under the least sophisticated consumer test, would draw Plaintiff’s attention to the disclosure language. II. Plaintiff fails to support his theory that SPS’ July Letter violates the FDCPA Not once does Plaintiff cite authority in which courts, interpreting the FDCPA, try to splice the meaning of “legal action” down the lines of judicial versus non-judicial foreclosure. Nevertheless, Plaintiff reasserts his theory that SPS violated the FDCPA by making reference to “legal action” in the July Letter regarding the potential of foreclosure since, according to Plaintiff, SPS could not take “legal action” in Georgia because it is a non-judicial foreclosure state. Opp. at 11.1 But, like with his other claim, Plaintiff’s authorities undermine his theory, leaving him with no basis under the FDCPA. Plaintiff entirely fails to submit an FDCPA case where a court combs through the meaning of “legal action” so to exclude non-judicial foreclosure from 1 As SPS stated in its Motion to Dismiss, even accepting as true Plaintiff’s belief that “legal action” under the FDCPA only refers to court proceedings, Georgia’s non-judicial foreclosure includes court proceedings. Mot. at 15-16. Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 5 of 12 6 its definition. Id. Nor are his alternative authorities more persuasive. Plaintiff points to the definition of “Action” under the Georgia Civil Practice Act. Id. For purposes of the provisions of Georgia’s Civil Practice Act - the rules of practice within Georgia’s court system - “Action” is defined as “the judicial means of enforcing a right.” O.C.G.A. § 9-2-1(1). Nowhere, however, does that provision direct that the definition of “Action” must extend throughout Georgia’s entire statutory code.2 And the Georgia Supreme Court’s analysis in Housing Auth. Of Savannah v. Greene, 259 Ga. 435, 437 (1989) went no further than to cite how “action” is defined “[u]nder the Georgia Civil Practices Act….” Id. (emphasis added). Plaintiff cannot take the definition of “action” in the context of Georgia’s court rules to paint broad brush strokes across all of Georgia law. Moreover, even Plaintiff’s excerpted text from Black’s Law Dictionary betrays his theory. Opp. at 11. Plaintiff’s own definition states that “legal action” refers to something “typically leading to [a] proceeding within the jurisdiction’s court system.” Id. (emphasis added). Typically does not mean exclusively, and 2 Statutory interpretation of Georgia law requires the reader to give words their ordinary meaning, except “words of art” connected to a particular subject matter. See O.C.G.A. § 1-3-1(b). In the context of Title 9 of the Georgia code - the Civil Practice Act - “Action” is a word of art. No such meaning is imbued upon “action” in relation to Title 44, where foreclosure’s requirements are set forth. Indeed, Title 44 uses the term “Action” in a non-uniform matter, including “actions” unrelated to court proceedings. See, e.g., O.C.G.A. § 44-12-244 (“[the commissioner] shall forthwith take appropriate action to transfer the record of ownership of said securities into the name of the commissioner.” (emphasis added). Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 6 of 12 7 Plaintiff provides no reason why the Court should adhere to a narrow definition of “legal action” that excludes non-judicial foreclosure. Either way, the same point gets across - that SPS sent the letter to warn Plaintiff that it was weighing whether to legally foreclose on his property. III. Plaintiff never pled a separate cause of action concerning SPS’ right to foreclose Plaintiff cannot use his Opposition to plead a new cause of action into his Amended Complaint. Plaintiff, in his Opposition, asserts that SPS “did not address the Plaintiff’s claim of threatening to foreclose when the Defendant or its stated principal did not have a security deed upon which to exercise the power of sale in.” Opp. at 2 fn. 1. While SPS did not address this supposed claim, it omitted it only because the claim is not apparent on the face of Plaintiff’s Amended Complaint and therefore fails to meet the requirements set forth in Federal Rules of Civil Procedure 8 and 10. Federal Rule of Civil Procedure 8(a) requires that a complaint provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012). The purpose is to “give the defendant fair notice of what the … claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “Each allegation [in a pleading] must be simple, concise and direct.” Fed. R. Civ. P. 8(d)(1) (emphasis added). Separate claims must be set forth in numbered Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 7 of 12 8 paragraphs and “each claim founded on a separate transaction or occurrence ... must be stated in a separate count or defense.” Fed. R. Civ. P. 10(b). Courts within the Eleventh Circuit will reject pleadings that are “difficult to discern the precise number of claims [p]laintiff intends to assert, let alone the legal basis and factual support for each.” Kareem v. Ocwen Loan Servicing, LLC, No. 9:15-CV- 80638, 2015 WL 7272765, at *1 (S.D. Fla. Nov. 18, 2015) Here, SPS had no basis to believe its right to foreclose on Plaintiff’s property formed the basis for a cause of action. Nor can SPS glean any alleged facts to support this supposed claim from Plaintiff’s Amended Complaint. Stuck in the middle of Plaintiff’s cause of action regarding Georgia’s status as a non- judicial foreclosure state, Plaintiff makes two passing references to what he now calls a standalone claim: Defendant violated § 1692f(6)(A) by threating to [foreclose] thereby taking non-judicial action to effect dispossession of the Plaintiff’s property when there is no security deed granted or assignment therefore in favor of the Defendant or its stated principal, U.S. Bank as trustee. Compl. at ¶ 38; see also id. at ¶ 1. No other factual allegation concerning this purported claim appears on the face of Plaintiff’s Amended Complaint. Moreover, Plaintiff never alleges a single fact to support his conclusion that “there is no security deed granted or assignment therefore in favor of the Defendant or its stated principal, U.S. Bank as trustee.” See FAC, generally. SPS Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 8 of 12 9 cannot begin to defend against this supposed claim without even a mere threadbare allegation to explain it. See Giles v. Wal-Mart Distribution Ctr., 359 F. App’x 91, 92 (11th Cir. 2009) (affirming dismissal of complaint that “lacked information regarding dates of incidents or identities of the alleged bad actors, did not differentiate which facts supported which claims, and did not state claims simply and concisely in numbered paragraphs each limited to a single set of circumstances.”). It is Plaintiff’s obligation to plainly, concisely and separately state the alleged facts and claims in order to provide SPS with the opportunity to address each cause of action. SPS cannot defend against a claim not stated on the face of Plaintiff’s Amended Complaint. CONCLUSION For all these reasons, SPS respectfully requests that the Court dismiss Plaintiff’s Amended Complaint with prejudice. [SIGNATURE ON FOLLOWING PAGE] Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 9 of 12 10 Respectfully submitted this 4th day of August, 2016. By: /s/ Christopher A. Riley CHRISTOPHER A. RILEY Georgia Bar Number 605634 MICHAEL J. BARRY Georgia Bar Number 211899 ALSTON & BIRD LLP 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Telephone: 404-881-7000 Facsimile: 404-881-7777 chris.riley@alston.com mike.barry@alston.com Attorneys for Defendant Select Portfolio Servicing, Inc. Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 10 of 12 11 CERTIFICATE OF COMPLIANCE Pursuant to LR 7.1D, the undersigned certifies that the foregoing complies with the font and point selections permitted by LR 5.1B. This document was prepared on a computer using the Times New Roman font (14 point). Respectfully submitted, this 4th day of August, 2016. By: /s/ Christopher A. Riley CHRISTOPHER A. RILEY Georgia Bar Number 605634 Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 11 of 12 12 CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the foregoing was filed on August 4, 2016, with the Court and served electronically through the CM/ECF system to all counsel of record registered to receive a Notice of Electronic Filing for this case. By: /s/ Christopher A. Riley CHRISTOPHER A. RILEY Georgia Bar Number 605634 Case 1:16-cv-01080-CAP-WEJ Document 20 Filed 08/04/16 Page 12 of 12