Summary
holding that a defendant law firm was engaged in debt collection activity under the FDCPA when it sent an allegedly deceptive notice to the plaintiff along with a mortgage foreclosure complaint
Summary of this case from U.S. Bank Nat'l Ass'n v. CapparelliOpinion
Case No.13-cv-22624-UU
10-16-2013
MARCEL ROTENBERG, Plaintiff, v. MLG, P.A., Defendant.
ORDER ON MOTION TO DISMISS
THIS CAUSE comes before the Court upon Defendant's Motion to Dismiss, (D.E. 20), filed on September 11, 2013. The motion has been fully briefed, and is ripe for determination.
THE COURT has reviewed the pertinent portions of the record and is otherwise fully advised in the premises.
BACKGROUND
The facts pertinent to this motion, interpreted in the light most favorable to the Plaintiff, are as follows. MLG, P.A. ("MLG"), is a law firm that regularly collects or attempts to collect debts for other parties. See First Amended Complaint ¶7. Marcel Rotenberg mortgaged his primary residence for personal, family, or household purposes, and subsequently defaulted on the loan. Id. at ¶18. The Bank of New York Mellon ("New York Mellon"), the creditor and mortgagee, retained MLG and filed suit seeking to foreclose on the security interest and collect on the debt in the Circuit Court for the Eleventh Judicial Circuit of Florida, in and for Miami-Dade County. Id. at ¶¶ 20, 21. The complaint requests:
That an accounting may be had and taken under the direction of this Court of what is due the Plaintiff for principal and interest on said mortgage and note, and for the cost, charges and expenses, including attorney's fees and title search cost, and advancements which Plaintiff may be put to or incur in and about this suit, and that the Defendant(s) found responsible for same be ordered to pay the Plaintiff herein the amount so found to be due it; ... and that a deficiency judgment be entered if applicable ... ."Id. at ¶24 (emphasis added). Along with the complaint, MLG served Mr. Rotenberg with a document misstating that Mr. Rotenberg must respond in writing to preclude the presumption of validity under 15 U.S.C. § 1692e(a)(3), id. at ¶¶ 33, 34, 38, and incorrectly indicating that the complaint specified the amount of still owed. Id. at ¶¶ 34, 39.
Plaintiff then filed this suit, alleging that the misstatements in the notice provided to Mr. Rotenberg are deceptive, and thus in violation of 15 U.S.C. §1692e. Id. at ¶43. Defendant now moves to dismiss the complaint for failure to state a claim, and because the claim is purportedly barred by Fed. R. Civ. P. 13(a) and the Florida litigation privilege. D.E. 20 at 2.
LEGAL STANDARD
On a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court considers only the four corners of the complaint, along with any documents incorporated into the complaint by reference. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Factual allegations in the complaint are taken as true and construed in the light most favorable to the plaintiff. Edwards v. Prime Inc., 602 F.3d 1276, 1291 (11th Cir. 2010). The Court does not view each fact in isolation, but rather considers the complaint in its entirety. Tellabs, Inc., 551 U.S. at 322.
Conclusory allegations will not suffice to state a claim; the complaint must allege sufficient facts to state a plausible claim to relief. See Ashcroft v. Iqbal, 556 U.S. 662 (2009) ("[T]he complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face."). This means that the factual content of the complaint must "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678. Mere "labels and conclusions" are insufficient, "and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Dismissal for failure to state a claim is proper if the factual allegations are not 'enough to raise a right to relief above the speculative level.'" Edwards, 602 F.3d at 1291 (quoting Rivell v. Private Health Care Systems, Inc., 520 F.3d 1308, 1309 (11th Cir. 2008)).
ANALYSIS
Failure to State a Claim
___To establish a claim under the Federal Debt Collection Practics Act ("FDCPA"), a plaintiff must show: "(1) the plaintiff has been the object of collection activity arising from consumer debt, (2) the defendant is a debtor collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA". Sanz v. Fernandez, 633 F. Supp. 2d 1356, 1359 (S.D. Fla. 2009) (quoting Pescatrice v. Orovitz, P.A., 539 F.Supp.2d 1375, 1378 (S.D.Fla.2008)). Plaintiff alleges that Defendant violated Section 1692e of the FDCPA, which prohibits debt collectors from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e; see LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1193 (11th Cir. 2010). Defendant argues that Plaintiff fails to allege that Defendant engaged in (1) "debt collection activity"and (2) conduct prohibited by Section 1692e.
Debt Collection Activity
Defendant argues that its allegedly deceptive communication was related to its enforcement of a security interest, which does not constitute debt collection activity under the FDCPA. D.E. 20 at 2. However, "a communication related to debt collection does not become unrelated to debt collection simply because it also relates to the enforcement of a security interest." Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1218 (11th Cir. 2012); Birster v. Am. Home Mortgage Servicing, Inc., 481 F. App'x 579, 583 (11th Cir. 2012)( "[A]n entity can both enforce a security interest and collect a debt.").
Here, it is clear that Defendant was in part attempting to collect on the underlying debt, as the complaint sought a deficiency judgment, which by definition is granted only when proceeds from a foreclosure sale do not offset the amount owed on the underlying debt. See Battle v. Gladstone Law Grp., P.A., 12-14458-CIV, 2013 WL 3297552, *2 (S.D. Fla. June 28, 2013) (finding that defendant engaged in debt collection activity when its state court complaint requested enforcement of a promissory note in addition to foreclosure of a mortgage); Glazer v. Chase Home Fin. LLC, 704 F.3d 453, 461 (6th Cir. 2013) ("[T]he existence of redemption rights and the potential for deficiency judgments demonstrate that the purpose of foreclosure is to obtain payment on the underlying home loan."). Defendant thus was engaged in debt collection activity under the FDCPA when it sent the allegedly deceptive communication to Plaintiff.
Act Prohibited by the FDCPA
Defendant argues that a debt collector's filing a foreclosure complaint, and communication of "related papers," are not actionable under the FDCPA. D.E. 20 at 2. However the two cases Defendant cites in support of this contention are inapposite. In Vega v. McKay, the court held that the filing of a foreclosure complaint does not constitute an "initial communication," which, under Section 1692g(a), triggers a duty on the part of the debt collector to notify the debtor of certain validation rights. 351 F.3d 1334, 1337 (11th Cir. 2003). But Section 1692e creates liability for deceptive "representations or means," not deceptive "first communications," and that the filing of a complaint does not trigger a statutory duty to give notice has nothing to do with the issue of whether deceptive means related to an enforcement action are actionable under Section 1692e.
In Acosta v. Campbell, the second case cited by Defendant, the court held that a letter sent between counsel of mortgagees regarding a foreclosure action did not constitute a "communication" with a third-party, which would violate Section 1692c(b). 309 Fed.Appx. 315, 320-21 (11th Cir. 2009). But again, Section 1692e creates liability for deceptive "representations and means," not deceptive "communications," which has a unique statutory definition. 15 U.S.C. § 1692a(2). Further, the rationale behind the holding in Acosta was that the purpose of Section 1692c(b) is to protect the privacy of debtors, and that the information contained in the letter did not implicate the debtor's privacy interests because the mortgagee receiving the letter would have otherwise learned the information through the impending public foreclosure proceedings. Acosta, 309 Fed.Appx. At 320-21.
The purpose of Section 1692e is not to protect a debtor's privacy; it is to reign in the once rampant deceptive practices of debt collectors. Immunizing deceptive practices merely because they relate to an enforcement action would run counter to this purpose. See McKnight v. Benitez, 176 F. Supp. 2d 1301, 1306 (M.D. Fla. 2001) (noting that the general purpose of the FDCPA is to curb abusive debt collection practices).
Defendant was not required to notify Plaintiff of his validation rights, see Acosta, 309 Fed.Appx. at 320-21, but having decided to voluntarily send Plaintiff information concerning those rights, may be held liable under Section 1692e when that information is false or deceptive. See Battle v. Gladstone Law Grp., P.A., 12-14458-CIV, 2013 WL 3297552, *2 (S.D. Fla. June 28, 2013) (finding that plaintiff sufficiently plead a violation of Section 1692e by asserting that defendant sent plaintiff a deceptive document along with a foreclosure complaint). Because Defendant does not dispute as part of the pending motion that the information was false or deceptive, Plaintiff has sufficiently alleged that Defendant violated Section 1692e of the FDCPA.
Compulsory Counterclaim
___Without providing any support or argument, Defendant asserts that Plaintiff's FDCPA claim is barred because it should have been filed as a compulsory counterclaim in the state court foreclosure action. The Federal Rules of Civil Procedure dictate whether the claim is barred. See, e.g., 6 Fed. Prac. & Proc. Civ. § 1409 (3d ed.) ("[R]egardless of differing state or foreign standards on asserting counterclaims, federal law governs in any action in the federal district court."); Seattle Totems Hockey Club, Inc. v. Nat'l Hockey League, 652 F.2d 852, 854 (9th Cir. 1981); A.L. Williams Corp. v. Faircloth, 120 F.R.D. 135, 138 (N.D. Ga. 1987). Because Plaintiff's FDCPA claim is brought against MLG, who was not a party in the foreclosure action, the claim could only have been filed as a third-party claim in this suit. Under Fed. R. Civ. P. 14, no claims against third parties are compulsory; Plaintiff was free to file suit against MLG in a separate proceeding, and its FDCPA claim is not barred.
Florida Litigation Privilege
Defendant's final argument, that it is fully immune pursuant to Florida's litigation privilege, also fails, as the privilege does not bar federal claims. See Pescatrice v. Orovitz, 539 F. Supp. 2d 1375, 1380 (S.D. Fla. 2008) ("To the extent Defendants argue that this proposed settlement offer is protected by a state 'absolute litigation privilege' for statements made during litigation, that privilege would only apply to state court claims, and not the FDCPA."); Battle v. Gladstone Law Grp., P.A., 12-14458-CIV, 2013 WL 3297552, *4 (S.D. Fla. June 28, 2013) (holding that the Florida litigation privilege does not protect a debt collector from liability under Section 1692e for deceptive communications made in connection with a state court action). Accordingly, it is hereby
ORDERED AND ADJUDGED that Defendant's Motion to Dismiss, (D.E. 20), is DENIED. Defendant SHALL file its answer to Plaintiff's complaint within 10 days.
DONE AND ORDERED in Chambers at Miami, Florida, this 16th day of October, 2013.
/s/_________
UNITED STATES DISTRICT JUDGE cc:
counsel of record via cm/ecf