Wilson v. Ocwen Loan Servicing, Llc

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

E.D. Pa.April 17, 2017

1 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA STEVEN V. WILSON, Plaintiff, v. OCWEN LOAN SERVICING, LLC, Defendant. Civil Action No. 5:17-cv-00938-LS DEFENDANT OCWEN LOAN SERVICING, LLC’S MOTION TO DISMISS COMPLAINT Pursuant to Rules 12(b)(6) and 12(b)(7) of the Federal Rules of Civil Procedure, Defendant Ocwen Loan Servicing, LLC (“Ocwen”) respectfully moves the Court for an order dismissing all of the claims asserted by plaintiff Steven V. Wilson (“plaintiff”) in the Complaint filed in the above-captioned matter on March 1, 2017 (“Complaint”). The Court should dismiss the Complaint in its entirety for the reasons set forth in the accompanying memorandum of law in support of the motion to dismiss plaintiff’s Complaint, which Ocwen is filing contemporaneously with this motion. WHEREFORE, Defendant Ocwen Loan Servicing, LLC respectfully requests that the Court dismiss the Complaint in its entirety and award such other relief as the Court deems appropriate. Case 5:17-cv-00938-LS Document 3 Filed 04/17/17 Page 1 of 3 2 Respectfully submitted, OCWEN LOAN SERVICING, LLC By its attorneys, /s/ David R. Fine Dated: April 17, 2017 David R. Fine K&L GATES LLP 17 North Second Street, 18th Floor Harrisburg, PA 17101 (717) 231-4500 (telephone) (717) 231-4501 (facsimile) Brian M. Forbes (pro hac vice pending) Robert W. Sparkes, III (pro hac vice pending) Laura P. Rich (pro hac vice pending) K&L GATES LLP State Street Financial Center One Lincoln Street Boston, MA 02111 (617) 261-3100 (telephone) (617) 261-3175 (facsimile) Case 5:17-cv-00938-LS Document 3 Filed 04/17/17 Page 2 of 3 3 CERTIFICATE OF SERVICE I certify that I filed the attached document with the Court’s ECF system such that the following should receive service automatically: Joseph L. Quinn, III, Esq. 152 E. High Street, Ste. 100 Pottstown, PA 19464 Attorney for Plaintiff /s/ David R. Fine David R. Fine Case 5:17-cv-00938-LS Document 3 Filed 04/17/17 Page 3 of 3 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA STEVEN V. WILSON, Plaintiff, v. OCWEN LOAN SERVICING, LLC, Defendant. Civil Action No. 5:17-cv-00938-LS [PROPOSED] ORDER The Court, having read and considered Ocwen Loan Servicing, LLC’s Motion to Dismiss and its supporting briefs, and having heard the arguments of counsel, HEREBY ORDERS that: IT IS THEREFORE ORDERED that the claims asserted by plaintiff Steven V. Wilson in the Complaint filed in the above-captioned matter are dismissed. IT IS SO ORDERED, that said Motion is GRANTED. United States District Judge Case 5:17-cv-00938-LS Document 3-1 Filed 04/17/17 Page 1 of 1 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA STEVEN V. WILSON, Plaintiff, v. OCWEN LOAN SERVICING, LLC, Defendant. Civil Action No. 5:17-cv-00938-LS MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT OCWEN LOAN SERVICING, LLC’S MOTION TO DISMISS COMPLAINT David R. Fine K&L GATES LLP 17 North Second Street, 18th Floor Harrisburg, PA 17101 (717) 231-4500 (telephone) (717) 231-4501 (facsimile) Brian M. Forbes (pro hac vice pending) Robert W. Sparkes, III (pro hac vice pending) Laura P. Rich (pro hac vice pending) K&L GATES LLP State Street Financial Center One Lincoln Street Boston, MA 02111 (617) 261-3100 (telephone) (617) 261-3175 (facsimile) Attorneys for Ocwen Loan Servicing, LLC Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 1 of 23 i TABLE OF CONTENTS Page TABLE OF CONTENTS ........................................................................................................ i I. INTRODUCTION ..................................................................................................... 1 II. BACKGROUND ....................................................................................................... 2 III. STANDARD OF REVIEW ....................................................................................... 5 A. Rule 12(b)(7) .................................................................................................. 5 B. Rule 12(b)(6) .................................................................................................. 5 IV. ARGUMENT ............................................................................................................. 6 A. Plaintiff’s Failure to Join his Co-borrower Wife, an Indispensable Party, Warrants Dismissal .............................................................................. 6 B. Plaintiff Fails to State a Plausible Claim for Relief Under the Fair Debt Collection Practices Act ........................................................................ 7 1. Plaintiff fails to allege that Ocwen is a “debt collector” subject to the provisions of the FDCPA ............................................ 8 2. Plaintiff also fails to state a plausible claim for relief under Section 1692f(1) of the FDCPA ........................................................ 9 C. Plaintiff Cannot State a Claim Under the Truth in Lending Act ................. 12 1. TILA does not provide a borrower with a private right of action ................................................................................................ 12 2. Plaintiff’s TILA claim is barred by the one-year statute of limitations ........................................................................................ 14 D. Plaintiff Fails to Plead a Plausible Breach of Contract Claim ..................... 15 1. Pennsylvania law does not recognize an action for breach of contract premised solely on an alleged statutory violation.......... 15 2. The Complaint lacks allegations to plausibly support each element of a breach of contract claim as required by Fed. R. Civ. P. 8............................................................................................ 16 V. CONCLUSION ........................................................................................................ 17 Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 2 of 23 ii TABLE OF AUTHORITIES Cases Page(s) Abraham v. Ocwen Loan Servicing, LLC, No. CIV.A. 14-4977, 2014 WL 5795600 (E.D. Pa. Nov. 7, 2014) ...................................10, 11 Andrew v. Ivanhoe Fin., Inc., No. 07-729, 2008 WL 2265287 (E.D. Pa. May 30, 2008) .......................................................14 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .............................................................................................................6, 17 Barnes v. Carrington Mortg. Servs., LLC, 2016 WL 3018693 (D.N.J. May 24, 2016) ..............................................................................13 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) ...................................................................................................................6 Benner v. Bank of Am., N.A., 917 F. Supp. 2d 338 (E.D. Pa. 2013) .................................................................................10, 11 In re Cmty. Bank of N. Virginia Mortg. Lending Practices Litig., 954 F. Supp. 2d 360 (W.D. Pa. 2013) ....................................................................................5, 7 Cummings v. Allstate Ins. Co., 832 F. Supp. 2d 469 (E.D. Pa. 2011) .........................................................................................6 Frank B. Fuhrer Wholesale Co. v. MillerCoors LLC, No. 13-1155, 2013 WL 5875819 (W.D. Pa. Oct. 30, 2013) ....................................................15 Jones v. Select Portfolio Servicing, Inc., No. CIV. A. 08-972, 2008 WL 1820935 (E.D. Pa. Apr. 22, 2008) .......................................8, 9 Joussett v. Bank of Am., No. 15-6318, 2016 WL 5848845 (E.D. Pa. Oct. 6, 2016) .......................................................13 McAndrew v. Deutsche Bank Nat’l Trust Co., 977 F. Supp. 2d 440 (M.D. Pa. 2013) ..................................................................................8, 16 Pennsy Supply, Inc. v. Am. Ash Recycling Corp. of Pennsylvania, 895 A.2d 595 (Pa. Super. 2006) ...............................................................................................16 Popson v. Galloway, No. 10-CV-77E, 2010 WL 2985945 (W.D. Pa. July 27, 2010) ...............................................11 Sarsfield v. Citimortgage, Inc., 667 F. Supp. 2d 461 (M.D. Pa. 2009) ......................................................................................16 Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 3 of 23 iii Shand-Pistilli v. Prof’l Account Srv. Inc., No. 10-1808, 2010 WL 2978029 (E.D. Pa. Jul. 26, 2012) ................................................10, 12 Taggert v. Wells Fargo Home Mortg., Inc., No. 10-cv-00843, 2012 WL 4462787 (E.D. Pa. Sept. 27, 2012) ...............................................8 Threadgill v. Armstrong World Indus., Inc., 928 F.2d 1366 (3d Cir. 1991)...................................................................................................13 Thurmond v. SunTrust Banks, Inc., No. 11-1352, 2014 WL 2921623 (E.D. Pa. June 26, 2014) ...............................................5, 6, 7 Toscano v. Nat’l Auto. Dealers Ass’n, No. 14-763, 2015 WL 5013029 (E.D. Pa. Aug. 24, 2015) ......................................................16 Tutanji v. Bank of Am., No. 12-887 (JLL), 2012 WL 1964507 (D.N.J. May 31, 2012) ..................................................9 Umland v. PLANCO Fin. Servs., Inc., 542 F.3d 59 (3d Cir. 2008).................................................................................................15, 16 Vilkofsky v. Specialized Loan Servicing, Inc., No. 16-cv-01291-NBF, 2017 WL 839493 (W.D. Pa. Mar. 3, 2017) .................................13, 14 Statutes 12 U.S.C. § 2609 ......................................................................................................................15, 16 15 U.S.C. § 1602 ............................................................................................................................13 15 U.S.C. § 1638 ..........................................................................................................12, 13, 14, 15 15 U.S.C. § 1640 ................................................................................................................12, 13, 14 15 U.S.C. § 1641 ......................................................................................................................12, 13 15 U.S.C. § 1692a ............................................................................................................................8 15 U.S.C. § 1692e ............................................................................................................................8 15 U.S.C. § 1692f .................................................................................................................. passim 73 P.S. § 201-2(xxi) .........................................................................................................................1 Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 4 of 23 iv Other Authorities Fed. R. Civ. P. 8 ...............................................................................................................................6 Fed. R. Civ. P. 12 .....................................................................................................................5, 6, 7 Fed. R. Civ. P. 19 .....................................................................................................................5, 6, 7 Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 5 of 23 1 Defendant Ocwen Loan Servicing, LLC (“Ocwen”) respectfully submits this memorandum of law in support of its motion to dismiss the claims asserted by plaintiff Steven V. Wilson (“plaintiff”) in the Complaint filed on March 1, 2017 (“Complaint”). I. INTRODUCTION Plaintiff’s claims are predicated on conclusory allegations regarding the written loan- modification agreement provided to him by Ocwen in 2012 in connection with the servicing of his mortgage loan. See Complaint (“Compl.”) ¶¶ 1-5. Specifically, plaintiff’s allegations and causes of action relate to the inclusion of a balloon-payment disclosure set forth in the loan- modification agreement. See id. Plaintiff also alleges that Ocwen failed to provide him with monthly mortgage statements and annual escrow analysis statements in connection with his loan, and that these failures resulted in his default on his loan payments and foreclosure. See id. ¶¶ 6- 7. Plaintiff asserts claims for: (1) violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 P.S. § 201-2(xxi); (2) violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq.; (3) violation of the Truth in Lending Act (“TILA”), 12 U.S.C. § 1638(f); and (4) breach of contract. Each of plaintiff’s claims is fatally flawed, and the Court should dismiss the Complaint in its entirety. First, plaintiff fails to name Ellen M. Wilson, his wife and the co-borrower on the subject loan, as a party to the action. Mrs. Wilson is a necessary and indispensable party and her absence warrants dismissal of all of plaintiff’s claims under Rules 12(b)(7) and 19 of the Federal Rules of Civil Procedure. Second, plaintiff’s FDCPA claims are not actionable because he fails to sufficiently allege that Ocwen is a “debt collector” subject to the FDCPA. And, even if he had done so, the Complaint fails to sufficiently allege threshold facts necessary to establish a plausible claim for violation of Section 1692f of the FDCPA. Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 6 of 23 2 Third, TILA does not provide a mortgage loan borrower, like plaintiff, with a private right of action against a loan servicer, like Ocwen, for alleged failures to send monthly loan statements. Even if it did, plaintiff’s claim is barred by TILA’s one-year statute of limitations. Finally, plaintiff’s breach of contract claim fails to state a plausible cause of action because it is improperly based only on purported violations of federal statutory provisions and the Complaint does not set forth sufficient fact-based allegations to plausibly support each of the necessary elements of the claim. II. BACKGROUND The Complaint alleges that, on or about April 30, 2007, plaintiff executed an Adjustable Rate Note (“Note”), pursuant to which he promised to repay his lender, Chase Home Finance LLC, the original principal amount of $142,500.00 over thirty years. See Complaint (“Compl.”) ¶ 15; Ex. A to Compl. As security for the Note, plaintiff executed a mortgage, dated April 30, 2007 (“Mortgage”). See Compl. ¶ 15; Ex. B to Compl. The Note and Mortgage were executed by both plaintiff and his wife, co-borrower Ellen M. Wilson (“Mrs. Wilson”). See Compl. ¶ 7; Exs. A & B to Compl. Ocwen acquired the servicing rights to plaintiff’s Mortgage some time after the origination of the loan. See Compl. ¶ 17. Plaintiff alleges that, in 2011, he “suffered a hardship, and fell behind on his mortgage payments.” Id. ¶ 18. Then, on May 8, 2012, he filed for bankruptcy protection. Id. ¶ 19. On or about September 4, 2012, plaintiff alleges that Ocwen offered him a loan-modification and sent him a copy of a loan-modification agreement (the “Loan-Modification Agreement”). See id. ¶¶ 20, 23; Ex. C to Compl. (“[Ocwen] is offering you this Loan Modification Agreement…which modifies the terms of your home loan obligations as described in detail below…”). The Loan-Modification Agreement provided for the reduction of the principal balance of plaintiff’s mortgage loan to $139,710.80, and the reduction of plaintiff’s monthly mortgage Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 7 of 23 3 payments significantly from an initial monthly payment amount of $1,240.03.1 See Compl. ¶¶ 15, 16, 20; see Ex. C to Compl. at 1. In fact, the Agreement lowered plaintiff’s monthly payment of principal and interest, excluding escrow, to $423.08 and, with escrow payments, to $795.82 per month. See Ex. C to Compl. at 1. The Loan-Modification Agreement also removed the adjustable interest rate, provided for a fixed interest rate, and reduced the rate from 9.9 per cent to 2.0 per cent for the remaining life of the loan. See Compl. ¶¶ 15, 20; Ex. C to Compl. at 2. The Loan-Modification Agreement also included a balloon disclosure, which informed plaintiff that, in addition to his monthly payments, he would be required to make a single balloon payment due on May 1, 2037,2 to pay off the remaining principal balance and any other outstanding amounts due under his loan at maturity. See Compl. ¶ 21. The Agreement provided that the final balloon payment would be “in an amount equal to all remaining amounts under the Note and Modification” as of May 1, 2037. Ex. C to Compl. at 3. The balloon disclosure similarly provided that: The loan modification for which you have applied contains a balloon provision. This means that even if you make all payments full and on time, the loan will not be paid in full by the final payment date. A single balloon payment will be due and payable in full on 5/1/37, provided that all payments are made in accordance with the loan terms and the interest rate does not change for the entire loan term. The balloon payment may vary depending on your payment history, and, if you have an adjustable rate mortgage, any interest rate changes that occur during the life of the loan. 1 The Complaint alleges that, under the terms of his Note, plaintiff was required to make “monthly payments of principal and interest in the amount of $1,240.03 for the first twenty-three (23) months of the loan” and that, thereafter, monthly payments would be in an amount that varied upon the LIBOR standard interest rate. See Compl. ¶ 16. 2 Although the Complaint alleges that the Loan-Modification Agreement requires a single balloon payment due on “July 1, 2037” (see Compl. ¶ 21), the Agreement plainly states that due date for the balloon payment is May 1, 2037. See Ex. C. to Compl. at 2. Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 8 of 23 4 Id. at 4. Plaintiff signed the balloon disclosure directly below the above-quoted language. See id. Mrs. Wilson also executed the balloon disclosure. Id. Several years after entering into the favorable Loan-Modification Agreement, plaintiff now complains that the balloon-payment disclosure “does not reveal the amount of the balloon payment or even how such payment will be calculated.” Compl. ¶ 21. He further contends that the alleged failure to disclose the amount of the balloon payment “leaves open the possibility that the balloon payment includes amounts charged for interest,” which could purportedly render the Loan-Modification Agreement’s 2.000 per cent interest rate “materially false and misleading.” Id. Notwithstanding his after-the-fact concerns, plaintiff admits that he and his wife executed the Loan-Modification Agreement and the balloon disclosure and returned the signed Agreement to Ocwen on September 18, 2012. Id. ¶¶ 23, 25; Ex. C to Compl. at 3-4. In doing so, plaintiff agreed that he understood that “th[e] agreement is legally binding and that it affects [his] rights” and he confirmed that he “had the opportunity to obtain independent legal counsel concerning th[e] Agreement and [is] signing th[e] Agreement voluntarily and with full understanding of its contents and meaning.” Ex. C to Compl. at 3. Plaintiff also alleges - based on speculation - that before the balloon payment becomes due he may need to obtain a new loan in order to finance his balloon payment but that he may or may not be able to obtain financing. See Compl. ¶ 25. Plaintiff alleges that, after entering into the Loan-Modification Agreement in September 2012, he continued to make monthly payments to Ocwen but that Ocwen did not provide him monthly loan statements or annual escrow analysis statements between September 2012 and the fall of 2015. See id. ¶¶ 26-28. Ocwen allegedly refused to accept payments from plaintiff in the fall of 2015 (id. ¶ 29), and, in response to plaintiff’s inquiry regarding the refusal, plaintiff alleges that an Ocwen representative first informed him that he was in default and that arrears Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 9 of 23 5 existed on the loan because “the loan payment was increased by Ocwen every year due to an increasing escrow compound” (id. ¶ 30). As a result of plaintiff’s default on his loan obligations, he alleges that foreclosure proceedings were commenced, which lead to the entry of a foreclosure judgment against him and Mrs. Wilson on January 23, 2017.3 Id. ¶ 32. III. STANDARD OF REVIEW A. Rule 12(b)(7) Rule 12(b)(7) of the Federal Rules of Civil Procedure requires the dismissal of an action for failure to join an indispensable party as required by Fed. R. Civ. P. 19. Thurmond v. SunTrust Banks, Inc., No. 11-1352, 2014 WL 2921623, at *7 (E.D. Pa. June 26, 2014). An indispensable party is one “who is subject to service of process and whose joinder will not deprive the court of subject matter jurisdiction” if: (A) in that person’s absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may: (i) as a practical matter impair or impede the person’s ability to protect the interest; or (ii) leave an existing party subject to substantial risk of incurring double, multiple or otherwise inconsistent obligations because of the interest. Fed. R. Civ. P. 19(a)(1). If joinder of such a party is not feasible, a complaint must state the reasons for failing to join that party to the action. Fed. R. Civ. P. 19(c); see also In re Cmty. Bank of N. Virginia Mortg. Lending Practices Litig., 954 F. Supp. 2d 360, 383 (W.D. Pa. 2013) (explaining that plaintiff bears the burden to show infeasibility of joinder). B. Rule 12(b)(6) Under Rules 8(a) and 12(b)(6), a complaint must be dismissed for failure to state a claim upon which relief may be granted where it fails to set forth sufficient factual allegations to support a plausible right to recovery - a right to relief that rises well above the speculative or 3 Plaintiff alleges that after the commencement of the foreclosure action, he and Mrs. Wilson separated and are currently engaged in divorce proceedings. Compl. ¶ 33. Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 10 of 23 6 even a conceivable level. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). To survive a motion to dismiss, it is “no longer sufficient to allege mere elements of a cause of action; instead ‘a complaint must allege facts suggestive of the proscribed conduct.’” Cummings v. Allstate Ins. Co., 832 F. Supp. 2d 469, 470 (E.D. Pa. 2011) (quoting Twombly, 550 U.S. at 563 n.8). The Court may only credit those allegations that are pled with sufficient factual content to raise a plausible, not merely a “probable,” right to recovery. Iqbal, 556 U.S. at 678 (“Rule 8 … does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions”). Where, as here, “the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-‘that the pleader is entitled to relief’” and the Complaint must be dismissed. Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). IV. ARGUMENT A. Plaintiff’s Failure to Join his Co-borrower Wife, an Indispensable Party, Warrants Dismissal The Court should dismiss the Complaint in its entirety because plaintiff has failed to join Mrs. Wilson, his wife and the co-obligor on the subject loan. Mrs. Wilson is a necessary and indispensable party under Rule 19 and her absence mandates dismissal under Rule 12(b)(7). In an action arising out of a mortgage loan, a plaintiff’s co-obligor on the loan is an indispensable party who must be joined. Thurmond, 2014 WL 2921623, at *7. This is because a co-obligor “has the same legal rights as [p]laintiff, and, thus, an interest in this litigation.” Id. Where a plaintiff has failed to satisfy his burden to show why joinder of the non-party co-obligor is not feasible, dismissal of the complaint is required. See In re Cmty. Bank of N. Virginia Mortg. Lending Practices Litig., 954 F. Supp. 2d at 383 (dismissing TILA and RESPA claims where plaintiffs failed to join their spouses and did not identify why joinder was infeasible). Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 11 of 23 7 Here, the Note, Mortgage, and Loan-Modification Agreement clearly establish that plaintiff and Mrs. Wilson are co-obligors on their mortgage loan, which forms the basis of plaintiff’s claims. See Exs. A-C to Compl. Indeed, plaintiff identifies Mrs. Wilson as a “co- borrower” in the Complaint and alleges that Ocwen’s purported conduct resulted in a foreclosure action against both him and Mrs. Wilson. See Compl. ¶¶ 7, 32, 33. Mrs. Wilson also signed each of the above-referenced loan documents. See Exs. A-C to Compl. Plaintiff acknowledges, as he must, that Mrs. Wilson has the same legal rights as he does, which effectively confirms her status as a necessary and indispensable party to this action. See Thurmond, 2014 WL 2921623, at *7. Mrs. Wilson’s absence materially threatens to impair her rights and interests in the mortgage loan and would also subject Ocwen to “substantial risk of incurring double, multiple or otherwise inconsistent obligations.” Fed. R. Civ. P. 19(a)(1)(B). As such, Mrs. Wilson is a necessary and indispensable party to this action under Rule 19. Plaintiff, moreover, fails to identify, allege, or even suggest any reasons as to why Mrs. Wilson was not or cannot be joined. The Complaint is silent on the issue. This falls well short of plaintiff’s pleading burden. See Fed. R. Civ. P. 19(c) (“When asserting a claim for relief, a party must state … the reasons for not joining [an indispensable party].”); In re Cmty. Bank of N. Virginia Mortg. Lending Practices Litig., 954 F. Supp. 2d at 383. Accordingly, because plaintiff has failed to name a necessary and indispensable party and has offered no explanation for his failure, the Court should dismiss each of plaintiff’s claims under Rule 12(b)(7). B. Plaintiff Fails to State a Plausible Claim for Relief Under the Fair Debt Collection Practices Act Plaintiff’s FDPCA claims are flawed and cannot survive a motion to dismiss. Plaintiff asserts claims against Ocwen for alleged violations of the FDCPA, §§ 1692e(2)(A) and 1692f(1), based on the Loan-Modification Agreement and the balloon disclosure included therein. See Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 12 of 23 8 Compl. ¶¶ 41-47. The FDCPA claims rest on two assertions: (1) that Ocwen “attempt[ed] to collect an amount from Plaintiff that is not expressly authorized by the agreement creating the debt,” in alleged violation of 15 U.S.C. § 1692f(1) (see id. ¶ 44); and (2) that Ocwen “misrepresented the amount, character and legal status of plaintiff’s mortgage debt,” in violation of 15 U.S.C. § 1692e(2)(A) (see id. ¶ 45). For the reasons set forth below, plaintiff’s FDCPA claims fail to state plausible causes of action and should be dismissed. 1. Plaintiff fails to allege that Ocwen is a “debt collector” subject to the provisions of the FDCPA Plaintiff fails to plead sufficient facts to allege that Ocwen is a “debt collector” within the meaning of the FDCPA and, thus, Ocwen is not subject to liability under the statute and plaintiff has failed to set forth a plausible claim for relief. See 15 U.S.C. § 1692a. Under the FDCPA, a “debt collector” is defined as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” Id. § 1692a(6). The definition of “debt collector,” however, expressly excludes those who collect or attempt to collect a debt “which was not in default at the time it was obtained.” Id. § 1692a(6)(F) (emphasis added). Accordingly, the servicer of a residential mortgage loan is not a “debt collector” under the FDCPA if the loan in question was not in default when acquired by the servicer. Jones v. Select Portfolio Servicing, Inc., No. CIV. A. 08-972, 2008 WL 1820935, at *7 (E.D. Pa. Apr. 22, 2008) (dismissing FDCPA claim where plaintiff “put[] forth no allegation that the mortgage at issue was in default at the time SPS started servicing it”); McAndrew v. Deutsche Bank Nat’l Trust Co., 977 F. Supp. 2d 440, 447-48 (M.D. Pa. 2013); Taggert v. Wells Fargo Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 13 of 23 9 Home Mortg., Inc., No. 10-cv-00843, 2012 WL 4462787, at *4 (E.D. Pa. Sept. 27, 2012); Tutanji v. Bank of Am., No. 12-887 (JLL), 2012 WL 1964507, at *3 (D. N.J. May 31, 2012). The Complaint is devoid of allegations to suggest, let alone support a plausible inference, that the plaintiff’s loan was in default at the time that Ocwen acquired the servicing rights to the loan. Plaintiff alleges only that Ocwen began servicing his mortgage loan “[a]t an unknown date after the origination of Plaintiff’s loan” (Compl. ¶ 17), and that, as a result of a hardship, he fell behind on his mortgage payments in 2011 (Id. ¶ 18). Noticeably absent is any allegation that his loan was in default at the time that Ocwen began servicing it or that otherwise sets forth the status of his loan at that time. Accordingly, plaintiff has failed to plead sufficient fact-based allegations to support an inference that Ocwen was a “debt collector” subject to the FDCPA, and has thus failed to state a plausible claim under the FDCPA. See Jones, 2008 WL 1820935, at *7. For this reason, the Court should dismiss both of plaintiff’s FDCPA claims. 2. Plaintiff also fails to state a plausible claim for relief under Section 1692f(1) of the FDCPA Putting aside plaintiff’s failure to sufficiently allege that Ocwen is a “debt collector” subject to the FDCPA, the Complaint also lacks allegations to state a plausible claim under Section 1692f(1) of the FDCPA. Indeed, plaintiff’s allegations offer nothing more than a formulaic recitation of the statutory provision with no factual enhancement and are defeated by the very documents attached to his Complaint. Section 1692f generally prohibits the use of “unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f. Section 1692f(1) specifically prohibits “[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” See id. § 1692f(1). “The only inquiry under § 1692f(1) is whether the Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 14 of 23 10 amount collected was expressly authorized by the agreement creating the debt or permitted by law ....” Abraham v. Ocwen Loan Servicing, LLC, No. CIV.A. 14-4977, 2014 WL 5795600, at *13 (E.D. Pa. Nov. 7, 2014) (quoting Benner v. Bank of Am., N.A., 917 F. Supp. 2d 338, 354 (E.D. Pa. 2013)). “A complaint will be deemed deficient under [Section 1692(f)] if it does not identify any misconduct beyond [that] which plaintiffs assert violate[s] other provisions of the FDCPA.” Shand-Pistilli v. Prof’l Account Srv. Inc., No. 10-1808, 2010 WL 2978029, at *6 (E.D. Pa. Jul. 26, 2012). Here, plaintiff alleges that Ocwen violated Section 1692f(1) by “attempting to collect an amount from the Plaintiff that is not expressly authorized by the agreement creating the debt.” See Compl. ¶ 44. Plaintiff relies solely on allegations related to the balloon-payment disclosure and its alleged failure to “reveal the amount of the balloon payment or even how such a payment will be calculated.” Id. ¶ 21. Other than these allegations, the Complaint simply recites the statutory elements of an FDCPA claim, unsubstantiated by any specific facts or details as to actions taken, representations made, or other actual conduct by Ocwen that even could constitute an attempt to collect an amount not authorized by the agreement creating the debt. As an initial matter, Judge Padova has dismissed a Section 1692f claim based on virtually-identical allegations in a similar case. See Abraham, 2014 WL 5795600, at *13.4 In that case, the Court found that Ocwen’s in-house loan-modification agreement authorized Ocwen to collect a balloon payment, and therefore, a Section 1692f claim could not be sustained. More specifically, the Court reasoned: 4 Although Judge Padova held that plaintiffs in the Abraham action pled plausible claims for violation of the UTPCPL and Section 1692(e)(A) of the FDCPA, the complaint at issue did not suffer the same threshold flaws as plaintiff’s Complaint here - specifically, a failure to join a necessary and indispensable party and a failure to sufficiently allege that Ocwen is a “debt collector” under the FDCPA. See Abraham, 2014 WL 5795600, at *4-9. Ocwen, moreover, disputes that plaintiff’s balloon-disclosure based claims here have any merit or that plaintiff is entitled to any damages or other relief. Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 15 of 23 11 Having disclosed the total amount of the principal balances of Plaintiffs’ loans, including the balloon payment, collection of the total principal was “authorized” by the loan modification agreements themselves, irrespective of the failure to also disclose the subtotal amount constituting each loan’s balloon payment, or how that subtotal part of the total principal would be calculated. Id. The exact same rationale applies here. Plaintiff’s Loan-Modification Agreement expressly authorizes collection of the balloon payment, as a subset of the total principal balance disclosed in the Agreement.5 Indeed, the Loan-Modification Agreement explicitly states the total principal balance of plaintiff’s modified loan as $139,710.80, an amount inclusive of the estimated balloon payment. Ex. C to Compl. at 1. As to the balloon payment, the Loan-Modification Agreement expressly provides that: [Y]ou promise to make payments of principal and interest on the same day of each succeeding month until 5/1/37 at which time a final balloon payment in an amount equal to all remaining amounts under the Note and Modification will be due. Id. at 3. The Agreement also includes a separate “Balloon Disclosure” which states that: “[t]he loan modification for which you have applied contains a balloon provision … [a] single balloon payment will be due and payable in full on 5/1/37.” Id. at 4. Thus, by its plain terms, the Loan- Modification Agreement explicitly authorizes collection of the total principal balance and the balloon payment. See id. Plaintiff admits as much in the Complaint. See Compl. ¶ 21. As collection of “the[se] amount[s] is expressly authorized by the agreement,” plaintiff’s Section 1692f(1) claim cannot stand and should be dismissed. See 15 U.S.C. § 1692f(1); Abraham, 2014 WL 5795600, at *13; Benner, 917 F. Supp. 2d at 355-56 (dismissing § 1692f(1) claim based on assessment of property inspection fees where such fees were expressly allowed by the mortgage agreement); Popson v. Galloway, No. 10-CV-77E, 2010 WL 2985945, at *7 (W.D. Pa. July 27, 5 The Loan-Modification Agreement, which modifies plaintiff’s Note and Mortgage, is the relevant agreement creating the debt at issue. See Ex. C to Compl. at 2-4. Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 16 of 23 12 2010) (to state a claim under § 1692f(1), plaintiff must allege that the amount defendant sought to collect was contrary to either the agreement that created the debt or the law). Apart from allegations that the balloon-payment disclosure in the Agreement violates other provisions of the FDCPA, the Complaint contains no other allegations to support plaintiff’s Section 1692f claim. Plaintiff’s inability to allege other, independent conduct that was allegedly unfair and unconscionable under Section 1692f further supports dismissal of this claim. See Shand-Pistilli, 2010 WL 2978029, at *6. For all of these reasons, the Court should dismiss plaintiff’s claim under Section 1692f(1) of the FDCPA. C. Plaintiff Cannot State a Claim Under the Truth in Lending Act Plaintiff’s TILA claim is equally subject to dismissal. First, TILA does not provide a private right of action against loan servicers in the circumstances alleged in the Complaint. Second, plaintiff’s claim is barred by application of TILA’s one-year statute of limitations. 1. TILA does not provide a borrower with a private right of action Plaintiff’s TILA claim is fundamentally flawed for the simple reason that TILA does not provide a mortgage loan borrower with a private right of action to sue loan servicers, like Ocwen, for alleged violations of Section 1638(f). Section 1638(f) of TILA generally requires loan servicers, among others, to provide borrowers with periodic, typically monthly, billing statements regarding their loan accounts. See 15 U.S.C. § 1638(f). It is clear, however, that this provision may not be privately enforced against a loan servicer by an aggrieved borrower. Although TILA does provide for private rights of action for certain of its provisions against specific parties, those private rights of action are limited to claims that fall within either Section 1640 or 1641 of TILA. See 15 U.S.C. §§ 1640, 1641. Neither applies here. Section Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 17 of 23 13 1640(a)(1), upon which plaintiff relies, creates a private right of action against “any creditor[6] who fails to comply with any requirement imposed under [TILA].” Id. (emphasis added). Ocwen is not the creditor of plaintiff’s loan, nor is it alleged to have ever been a creditor. Similarly, Section 1641 applies only to a creditor’s assignees, and expressly limits a loan servicer’s potential assignee liability to situations where “the servicer is or was the owner of the obligation.” Id. § 1641(f)(1). TILA does not contain, reference, or even suggest a private right of action to enforce any of its provisions against “servicers” generally. See 15 U.S.C. §§ 1640, 1641. In other words, the plain statutory provisions of TILA do not subject non-assignee loan servicers to private lawsuits by borrowers seeking to enforce Section 1638(f)’s requirements. Courts have consistently recognized that TILA does not create a private right of action against loan servicers (unless the servicer “is or was the owner of the obligation”). See Vilkofsky v. Specialized Loan Servicing, Inc., No. 16-cv-01291-NBF, 2017 WL 839493, at *8 (W.D. Pa. Mar. 3, 2017) (holding no cause of action against servicer under TILA); Barnes v. Carrington Mortg. Servs., LLC, 2016 WL 3018693, at *1 (D.N.J. May 24, 2016) (“Courts applying TILA uniformly hold that there is no servicer liability under TILA.”).7 6 Under TILA, a “creditor” is defined as one who “(1) regularly extends … consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement.” 15 U.S.C. § 1602. 7 Although one court in this district allowed a TILA claim against a loan servicer to survive a motion to dismiss, that case is not dispositive nor persuasive authority. See Joussett v. Bank of Am., No. 15-6318, 2016 WL 5848845, at *8-9 (E.D. Pa. Oct. 6, 2016). In Joussett, the court lumped three defendants (the originating creditor, the then-current owner, and the servicer) together, considered the claims against them collectively, and, most importantly, did not directly address whether TILA provides a private cause of action against a loan servicer. See id. at *2, *9. Because the relevant issue here was not addressed by the Joussett Court (nor was it briefed or raised by the parties), the Joussett decision is of little value and should be disregarded. See Threadgill v. Armstrong World Indus., Inc., 928 F.2d 1366, 1371 (3d Cir. 1991) (“The doctrine of stare decisis does not compel one district court judge to follow the decision of another.”). Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 18 of 23 14 Plaintiff’s TILA claim is predicated on Ocwen’s alleged conduct as the servicer of his mortgage loan. Compl. ¶¶ 13-14, 17, 49. Plaintiff does not allege or contend that Ocwen was a creditor or an assignee subject to TILA liability; Ocwen is not and has never been the owner of plaintiff’s loan. See generally Compl. Accordingly, plaintiff lacks a private right of action under TILA, and his claim fails as a matter of law. See Vilkofsky, 2017 WL 839493, at *8. 2. Plaintiff’s TILA claim is barred by the one-year statute of limitations Even if plaintiff had a private right of action under TILA, his claim still fails because it is time-barred under the applicable statute of limitations. A TILA action for damages must be brought “within one year from the date of the occurrence of the violation.” 15 U.S.C. § 1640(e); Andrew v. Ivanhoe Fin., Inc., No. 07-729, 2008 WL 2265287, at *4 (E.D. Pa. May 30, 2008) (“There is a one-year statute of limitations on affirmative TILA … damage claims”). Plaintiff’s TILA claim is based on the allegation that Ocwen “failed to transmit billing cycle statements to Plaintiff” as required by 15 U.S.C. § 1638(f)(1). See Compl. ¶¶ 27, 50-51. Plaintiff alleges that Ocwen failed to provide these monthly loan statements beginning “after the time of the loan modification agreement in September 2012.” See id. ¶ 27. Accordingly, TILA’s one-year statute of limitations began to run on or around September 2012, and it expired more than three years before the filing of the Complaint on March 1, 2017. Even if plaintiff claims that he was somehow unaware that he did not receive monthly loan statements in 2012 (or in 2013, 2014, or 2015), plaintiff’s claim is still time-barred. That is because, at the latest, plaintiff learned of the alleged failure to send billing statements (which allegedly lasted for 3 years) by the “fall of 2015.” Compl. ¶¶ 27-31. Thus, plaintiff’s TILA claim would have expired, at the latest possible date, by the fall of 2016, at least 4 months before he filed the Complaint. The Court should dismiss this claim as time-barred. See 15 U.S.C. § 1640(e); Andrew, 2008 WL 2265287, at *5 (dismissing late-filed TILA claims). Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 19 of 23 15 D. Plaintiff Fails to Plead a Plausible Breach of Contract Claim 1. Pennsylvania law does not recognize an action for breach of contract premised solely on an alleged statutory violation Plaintiff’s breach of contract claim fails to state a plausible claim for relief because it is based solely on Ocwen’s purported breach of federal statutory duties. Specifically, plaintiff’s breach of contract claim alleges only that Ocwen “breached its statutory duty to transmit monthly billing statements to Plaintiff” as required by TILA, 15 U.S.C. § 1638(f)(1), and “failed to provide required annual escrow statements to Plaintiff” as required by the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2609(c)(2). Compl. ¶¶ 56-60. These allegations are insufficient to sustain plaintiff’s breach of contract claim because neither federal statutory duties nor statutes that do not create a private right of action can be incorporated into a contract-based cause of action. First, plaintiff’s contract claims are improperly based on federal statutory requirements, which may not be implicitly incorporated into a private contract or form the basis for a breach of contract claim. See Umland v. PLANCO Fin. Servs., Inc., 542 F.3d 59, 66 (3d Cir. 2008) (commenting on lack of authority permitting “state-law [breach of contract] claim based on violation of federal tax law”). Simply put, plaintiff cannot transform alleged federal statutory requirements into claims for breach of contract. See id. Second, the statutes upon which plaintiff relies also cannot support a breach of contract claim because those statutes do not provide plaintiff with a private right of action. “[I]f the statute sought to be incorporated into the contract does not create a private right of action for a plaintiff directly under the statute, it cannot form the basis for a breach of contract claim.” Frank B. Fuhrer Wholesale Co. v. MillerCoors LLC, No. 13-1155, 2013 WL 5875819, at *7 (W.D. Pa. Oct. 30, 2013), aff’d 602 F. App’x 888 (3d Cir. 2015). Plaintiff’s breach of contract claim is Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 20 of 23 16 predicated on violations of TILA and Section 2609 of RESPA, neither of which provide for a private right of action against Ocwen under these circumstances. See supra Section IV.C.1 (TILA does not create a private right of action against servicers); McAndrew, 977 F. Supp. 2d at 447 (holding RESPA § 2609 does not create a private right of action); Sarsfield v. Citimortgage, Inc., 667 F. Supp. 2d 461, 467 (M.D. Pa. 2009) (same). Plaintiff may not attempt to “use state common law to circumvent the absence of a private right of action under [TILA and RESPA],” and his breach of contract claim should be dismissed as a matter of law. See Umland, 542 F.3d at 66. 2. The Complaint lacks allegations to plausibly support each element of a breach of contract claim as required by Fed. R. Civ. P. 8 Plaintiff’s breach of contract claim is also devoid of sufficient factual allegations to satisfy Rule 8 of the Federal Rules of Civil Procedure. Under Pennsylvania law, a cause of action for breach of contract requires: (1) the existence of a contract and the content of its essential terms; (2) a breach of a specific duty imposed by the contract; and (3) resultant damages. See Toscano v. Nat’l Auto. Dealers Ass’n, No. 14-763, 2015 WL 5013029, at *4 (E.D. Pa. Aug. 24, 2015). To survive a motion to dismiss, “every element must be specifically pleaded.” Pennsy Supply, Inc. v. Am. Ash Recycling Corp. of Pa., 895 A.2d 595, 600 (Pa. Super. 2006). Apart from the alleged statutory duties discussed above, plaintiff’s Complaint is utterly devoid of any basis to support a breach of contract claim. Indeed, plaintiff fails to provide any allegations specifying an actual and particular contract, let alone the specific and essential contractual terms, that Ocwen allegedly breached. Instead, plaintiff relies on the vague and conclusory statement that “[Ocwen] breached its contract with Plaintiff.” See Compl. ¶ 61. Yet, he never identifies a single actual contract between him and Ocwen on which he purports to base Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 21 of 23 17 his breach of contract claim. Merely stating that a breach occurred, without more, does not meet Rule 8(a)’s plausibility standard and is wholly insufficient to state a plausible claim for relief against Ocwen. See Iqbal, 556 U.S. at 678, 681. V. CONCLUSION For the foregoing reasons, Ocwen respectfully requests that the Court grant its motion, dismiss plaintiff’s Complaint and all claims alleged therein, and award such other relief as the Court deems appropriate. Respectfully submitted, OCWEN LOAN SERVICING, LLC By its attorneys, /s/ David R. Fine Dated: April 17, 2017 David R. Fine K&L GATES LLP 17 North Second Street, 18th Floor Harrisburg, PA 17101 (717) 231-4500 (telephone) (717) 231-4501 (facsimile) Brian M. Forbes (pro hac vice pending) Robert W. Sparkes, III (pro hac vice pending) Laura P. Rich (pro hac vice pending) K&L GATES LLP State Street Financial Center One Lincoln Street Boston, MA 02111 (617) 261-3100 (telephone) (617) 261-3175 (facsimile) Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 22 of 23 18 CERTIFICATE OF SERVICE I certify that I filed the attached document with the Court’s ECF system such that the following should receive service automatically: Joseph L. Quinn, III, Esq. 152 E. High Street, Ste. 100 Pottstown, PA 19464 Attorney for Plaintiff /s/ David R. Fine________________ David R. Fine Case 5:17-cv-00938-LS Document 3-2 Filed 04/17/17 Page 23 of 23