Yeager et al v. Ocwen Loan Servicing, LLC

Filing 70

OPINION. Signed by Honorable Judge Myron H. Thompson on 2/22/2017. (wcl, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, SOUTHERN DIVISION
RICHARD A. YEAGER and
DEANA J. YEAGER,
individually and on behalf
of a class of similarly
situated individuals,
Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC,
Defendant.

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CIVIL ACTION NO.
1:14cv117-MHT
(WO)

OPINION
Plaintiffs Richard A. Yeager and Deana J. Yeager
bring claims under the Fair Debt Collection Practices
Act

(FDCPA),

defendant

15

Ocwen

U.S.C.
Loan

§§ 1692,

Servicing,

et

LLC

seq.,
for

against

failing

to

provide a notice of debt validation by the deadline
prescribed by the statute.
court

on

the

recommendation

This case is before the
of

the

United

States

Magistrate Judge that Ocwen Loan’s renewed motion for
judgment on the pleadings be denied.

Also before the

court are Ocwen Loan’s objection to the recommendation.

After an independent and de novo review of the record,
the court is of the opinion that the objection should
be

sustained,

the

recommendation

rejected,

and

the

renewed motion granted.

I. BACKGROUND
A. Statutory Framework
Congress enacted the FDCPA 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).

The

FDCPA

defines

consumers’

rights, establishes requirements for debt collectors,
and sets forth penalties for violations of the statute,
including actual and statutory damages.

See 15 U.S.C.

§§ 1692 et seq.
The

validation-notice

requirement

of

the

FDCPA

requires a debt collector to send a written notice to
2

the consumer with information about the debt, such as
the amount of the debt and the creditor’s name, while
providing notice about the consumer’s right to dispute
the debt and the effects of the consumer’s failure to
do so.

The debt collector must send the validation

notice to the consumer “[w]ithin five days after the
initial communication with [the] consumer in connection
with

the

collection

of

any

debt

...

unless

the

[]

information is contained in the initial communication
or

the

consumer

§ 1692g(a).1

The

1.
In
provides:

full,

has

paid

purpose

the

the
of

debt.”
the

15

U.S.C.

validation-notice

validation-notice

requirement

“Within
five
days
after
the
initial
communication with a consumer in connection
with the collection of any debt, a debt
collector
shall,
unless
the
following
information
is
contained
in
the
initial
communication or the consumer has paid the
debt, send the consumer a written notice
containing-(1) the amount of the debt;
(2) the name of the creditor to whom the debt
is owed;
(continued)
3

requirement is to “eliminate the recurring problem of
debt collectors dunning the wrong person or attempting
to collect debts which the consumer has already paid.”
S. Rep. No. 95-382, at 4 (1977), as reprinted in 1977
U.S.C.C.A.N. 1695, 1699; accord FTC Staff Commentary,
53 Fed. Reg. 50,097, 50,108-50,109 (1988) (stating that
validation-notice

requirement

“is

intended

to

assist

(3) a statement that unless the consumer,
within thirty days after receipt of the notice,
disputes the validity of the debt, or any
portion thereof, the debt will be assumed to be
valid by the debt collector;
(4) a statement that if the consumer notifies
the debt collector in writing within the
thirty-day period that the debt, or any portion
thereof, is disputed, the debt collector will
obtain verification of the debt or a copy of a
judgment against the consumer and a copy of
such verification or judgment will be mailed to
the consumer by the debt collector; and
(5) a statement that, upon the consumer’s
written request within the thirty-day period,
the debt collector will provide the consumer
with the name and address of the original
creditor,
if
different
from
the
current
creditor.”
15 U.S.C. § 1692g(a).
4

the

consumer

contacts

when
wrong

the

a

debt

consumer

collection

efforts”).

requirement

is

collector

legislation.”

a

at

the

The

inadvertently
start

of

his

validation-notice

“significant

feature

of

[the]

S. Rep. No. 95-382, at 4 (1977), as

reprinted in 1977 U.S.C.C.A.N. 1695, 1699.

B. Factual Background
Ocwen

Loan

is

collection of debts.
2012,

the

Holdings,

company
Inc.

and

a

corporation

engaged

in

Compl. (doc. no. 1) ¶ 5.
acquired
its

various

Homeward

the

In late

Residential

residential

mortgage

loan-servicing and origination-operating subsidiaries.
Id. ¶ 9.

The servicing rights to the Yeagers’ mortgage

loan was among those included in the acquisition.

Id.

¶ 11.
On

or

initially
entitled
WELCOME

about

March

contacted
“NOTICE

TO

OCWEN

OF

the

15

or

Yeagers

SERVICING

LOAN

16,
by

Ocwen

sending

TRANSFER

SERVICING,
5

2013,

LLC.”

a

Loan

letter

(RESPA)
Id.

and

¶ 15;

Compl. Ex. A (doc. no. 1-1) at 2.

The letter informed

the Yeagers that, effective April 1, 2013, Ocwen Loan
would service their loan; provided contact information;
made

certain

frequently
that

Ocwen

disclosures;

asked

and

answered

collect a debt.”

The

“is

Loan

questions.

collector

a

debt

letter

a

list

also

of

stated

attempting

to

Compl. Ex. A (doc. no. 1-1) at 4.

Ocwen Loan maintains that it sent the letter to comply
with the Real Estate Settlement Procedures Act (RESPA),
which

mandates

that

a

mortgage

loan

servicer

shall

notify the borrower in writing of a sale of the loan
servicing “not less than 15 days before the effective
date

of

loan.”

transfer

of

the

servicing

of

the

mortgage

12 U.S.C. § 2605(b)(2)(A).2

2.
Ocwen
Loan
has
argued
that,
in
its
communications with the Yeagers, it was stuck between a
rock and a hard place:
RESPA required it to send the
March 15, 2013, communication 15 days prior to the
effective date of transfer.
However, sending a
validation notice before Ocwen Loan had a legal right
to collect the debt on April 1, 2013, risked FDCPA
liability for false or misleading representations
pursuant to 15 U.S.C. § 1692e.
See Ocwen Loan Motion
(continued)
6

The letter did not set forth the FDCPA information:
the amount of the debt or the name of the creditor to
whom the debt was owed; a statement that, unless the
consumer within 30 days after receipt of the notice
disputed the validity of the debt, the debt would be
assumed to be valid; a statement that, if the consumer
notified the debt collector within the 30-day period
that the debt was disputed, the debt collector would
mail verification of the debt to the consumer; and a
statement
within

that,

the

upon

30-day

the

consumer’s

period,

the

debt

written

request

collector

would

provide the consumer with the name and address of the
original creditor.
Yeagers

received

Compl. (doc. no. 1) ¶ 15.
no

other

communication

or

written

notice within five days after the initial letter.
¶ 16.

The

Id.

The Yeagers claim that the above omissions in

the initial letter, and Ocwen Loan’s failure to send

for Judgment on the Pleadings (doc. no. 27) at 13-15.
In other words, Ocwen Loan would have sent notice that
it was the creditor when, in fact, it was not yet.
7

another communication within five days thereafter that
contained

the

missing

information,

constitute

a

violation of the validation-notice requirement of the
FDCPA, 15 U.S.C. § 1692g(a).

Compl. (doc. no. 1) ¶ 20.

On April 2, 2013, Ocwen Loan sent the Yeagers a
letter that included the information missing from the
initial

contact

necessary

to

validation-notice requirement.

satisfy

the

FDCPA’s

Answer (doc. no. 26)

¶ 15 & Answer Ex. A (doc. no. 26-1).

C. Procedural Background
In February 2014, the Yeagers filed a complaint
against Ocwen Loan, asserting a putative class-action
lawsuit that the company had violated the FDCPA.
claim

that

Ocwen

Loan

violated

their

They

statutory

procedural right to timely receipt of the validation
notice

required

§ 1692g(a).

They

by

the

FDCPA.

allege

that

the

See

15

company

U.S.C.
did

not

provide all of the information in the validation notice
within five days of the company’s initial contact on
8

March 15, 2013.

They have not alleged any additional

harm or material risk of harm beyond this statutory
violation.
provided

The pleadings also reveal that Ocwen Loan

the

Yeagers

with

information

sufficient

to

satisfy the validation-notice requirement by April 2,
2013.

Thus, the Yeagers’ claim rests solely on the

contention that the company failed to comply with the
validation-notice requirement until 13 days after the
statutory deadline.
Ocwen

Loan

filed

an

answer

and

a

motion

for

judgment on the pleadings pursuant to Rule 12(c) and
12(h)(2)-(h)(3)
Procedure,

of

arguing

the
that

Federal
the

Rules

Yeagers

lacked

of

Civil

standing

because the validation notice to which they say they
were entitled was in fact sent to them by the company
the day after it acquired servicing rights to their
loan.

On

the

magistrate

judge’s

recommendation,

the

court denied that motion “with leave to Ocwen Loan to
renew

its

standing

arguments

at

any

time

after

the

Supreme Court’s decision in [Spokeo, Inc. v. Robins,
9

135 S. Ct. 1892 (2015) (granting cert.)].”

Order (doc.

no. 39) at 2.
After the Supreme Court released its decision in
Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), Ocwen
Loan renewed its motion for judgment on the pleadings
as

to

the

issue

of

standing,

the

magistrate

judge

recommended denying the motion, and Ocwen Loan objected
to the magistrate judge’s recommendation.

II. LEGAL STANDARD
Rule 12(c) permits a motion for judgment on the
pleadings

“[a]fter

the

pleadings

are

early enough not to delay trial.”
12(c).

closed[,]

but

Fed. R. Civ. P.

“Judgment on the pleadings is appropriate when

there are no material facts in dispute, and judgment
may be rendered by considering the substance of the
pleadings and any judicially noticed facts.”

Hawthorne

v. Mac Adjustment, Inc., 140 F.3d 1367, 1370 (11th Cir.
1998)

(internal

citations

omitted).

In

deciding

a

motion for judgment on the pleadings, the facts in the
10

complaint are accepted as true and viewed in the light
most favorable to the nonmoving party.
On

a

motion

for

judgment

on

Id.

the

pleadings,

the

court may consider documents attached to the pleadings,
such as those documents attached to the complaint and
answer in this case.

Horsley v. Feldt, 304 F.3d 1125,

1134 (11th Cir. 2002).
III. DISCUSSION
Article

III

of

the

Constitution

limits

the

jurisdiction of the federal courts to litigants with
standing to sue.

Spokeo, Inc. v. Robins, 136 S. Ct.

1540, 1547 (2016). To establish standing, a “plaintiff
must have (1) suffered an injury in fact, (2) that is
fairly

traceable

to

the

challenged

conduct

of

the

defendant, and (3) that is likely to be redressed by a
favorable judicial decision.”

Id.

And, “[w]here, as

here, a case is at the pleading stage, the plaintiff
must

‘clearly

element.”

...

allege

facts

demonstrating’

each

Id. (quoting Warth v. Seldin, 422 U.S. 490,

518 (1975)).
11

This

case

turns

on

the

standing, injury in fact.
a

plaintiff

is

first

requirement

for

To establish injury in fact,

required

to

show

that

he

or

she

“suffered ‘an invasion of a legally protected interest’
that is ‘concrete and particularized’ and ‘actual or
imminent, not conjectural or hypothetical.’”
136

S.

Ct.

at

1548

(quoting

Lujan

v.

Spokeo,

Defenders

of

Wildlife, 504 U.S. 555, 560 (1992)).
Ocwen Loan argues that the Yeagers have failed to
satisfy

the

‘concreteness’

requirement.
requirement

Concreteness
that

must

particularization.
concrete,

the

be

136

injury

aspect
is

of
an

established
S.

must

Ct.
be

at

the

injury

“independent”
in

addition

1548.3

“‘real,’

To
and

to
be
not

3. For an injury to be “particularized,” it “must
affect the plaintiff in a personal and individual way,”
rather than reflect a generalized grievance.
Spokeo,
136 S. Ct. at 1548 (quoting Lujan, 504 U.S. at 560
n.1).
Because the Yeagers allege that Ocwen Loan
failed to comply with statutory notice requirements in
communications directed specifically at them concerning
their individual mortgage loan, this requirement is not
at issue here.
12

‘abstract.’”

Id.

(quoting

Webster’s

Third

New

International Dictionary 472 (1971)).

A harm may be

concrete even if it is “intangible.”

Spokeo, 136 S.

Ct. at 1549.
“[B]oth history and the judgment of Congress play
important roles” in determining “whether an intangible
harm constitutes injury in fact.”

Id.

Thus, “it is

instructive to consider whether an alleged intangible
harm

has

a

close

relationship

to

a

harm

that

has

traditionally been regarded as providing a basis for a
lawsuit

in

addition,

English
because

or

American

Congress

is

courts.”
well

Id.

“In

positioned

to

identify intangible harms that meet minimum Article III
requirements,

its

judgment

important.

Thus,

status

legally

facto
law.’”

of

injuries

...

is

Congress

cognizable

that

were

also
may

instructive

‘elevat[e]

injuries

previously

to

and
the

concrete,

de

inadequate

in

Id. (quoting Lujan, 504 U.S. at 578).

Here,

the Yeagers rely on “Congress’ role in identifying and

13

elevating intangible harms.”

Spokeo, 136 S. Ct. at

1549.
Relying on Congress’s role “does not mean that a
plaintiff

automatically

requirement

whenever

a

satisfies
statute

the

injury-in-fact

grants

a

person

a

statutory right and purports to authorize that person
to sue to vindicate that right.

Article III standing

requires a concrete injury even in the context of a
statutory violation.”

Id.

Thus, an allegation of “a

bare procedural violation, divorced from any concrete
harm,”

would

not

necessarily

“satisfy

injury-in-fact requirement of Article III.”

the

Id.

However, a “risk of real harm” associated with a
“violation

of

a

procedural

right”

can

“in

some

circumstances” satisfy the requirement of concreteness.
Id.

In Spokeo, the Supreme Court explained: "[T]he law

has

long

even

if

measure.

permitted
their
See,

recovery

harms
e.g.,

may

be

by

certain

difficult

Restatement

tort
to

(First)

§§ 569 (libel), 570 (slander per se) (1938).
14

victims

prove
of

or

Torts

Just as

the common law permitted suit in such instances, the
violation of a procedural right granted by statute can
be

sufficient

in

injury in fact.

some

circumstances

to

constitute

In other words, a plaintiff in such a

case need not allege any additional harm beyond the one
Congress has identified.”

Id. (emphasis in original).

The Court then offered two examples: “Federal Election
Comm’n v. Akins, 524 U.S. 11, 20–25 (1998) (confirming
that

a

group

of

voters’

‘inability

to

obtain

information’ that Congress had decided to make public
is

a

sufficient

injury

in

fact

to

satisfy

Article

III),” and “Public Citizen v. Department of Justice,
491 U.S. 440, 449 (1989) (holding that two advocacy
organizations’ failure to obtain information subject to
disclosure

under

the

Federal

Advisory

Committee

Act

‘constitutes a sufficiently distinct injury to provide
standing to sue’).”
Because
violation,

the
the

Spokeo, 136 S. Ct. at 1549-50.

Yeagers
ultimate

allege
question

merely
for

a

this

procedural
court,

as

framed by the Spokeo Court when it remanded its case to
15

the lower court for reconsideration, is: “whether the
particular procedural violation[] alleged in this case
entail[s]

a

degree

of

risk

concreteness requirement.”

sufficient

to

meet

the

Id. at 1550.4

In answering this question, this court is guided by
other language in Spokeo.

In Spokeo, a consumer sued a

website operator for an allegedly willful violation of
the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681,
et seq., for publishing inaccurate information about
him.

Id. at 1544.

The complaint did not include any

allegation that the false information was actually used
to the plaintiff’s detriment. Id. The Supreme Court,
after

emphasizing

defining

the

the

harm,

important
stated

role

that,

of
with

Congress
the

in

FCRA,

4.
Because the Yeagers allege a procedural
violation, their reliance on Church v. Accretive
Health, Inc., 654 Fed. App’x 990 (11th Cir. 2016), is
misplaced. As it was undisputed that the alleged debt
collector never provided information required by the
FDCPA, Church concerned the alleged violation of a
substantive right: consumers’ “right to receive the
required disclosures in communications governed by the
FDCPA.” Id. at 994, 995 n.2.
16

“Congress plainly sought to curb the dissemination of
false information by adopting procedures designed to
decrease

that

risk,”

id.

at

1550,

and

offered

this

important dictum in remanding the case to the lower
court:
any

“[N]ot all inaccuracies cause harm or present

material

readily

to

risk

mind

difficult

to

incorrect

zip

of

is

an

imagine
code,

concrete harm.”

harm.

An

example

incorrect
how

the

without

Id.

zip

that

code.

It

dissemination
more,

could

comes
is

of

an

work

any

With this, the Court clearly

signaled that common sense should play a crucial role
in determining whether there is standing to assert a
violation of a procedural right.

In other words, one

should not be distracted by minnows when the aim of the
statute is trout.
Here, the Yeagers allege a notice delay of 13 days
and nothing more.

There is no evidence that the delay

has in any way undermined the FDCPA’s goal of providing
a

consumer

with

notice

of,

and

an

opportunity

challenge, a creditor’s debt information.
17

to

Surely, the

Spokeo common-sense principle dictates that this delay,
unaccompanied by any harm or material risk of harm,
does not “entail a degree of risk sufficient to meet
the concreteness requirement.”

Id.

What the Yeagers

have is a minnow; the trout are still out there.
Yeagers,

therefore,

lawsuit.

Cf.

lack

standing

to

bring

The
this

Nicklaw v. Citimortgage, Inc., 839 F.3d

998, 1001 (11th Cir. 2016) (holding that, because there
was no evidence of harm or material risk of harm, the
plaintiff lacked standing to bring a suit for statutory
damages based on the defendant’s belated recordation of
a certificate of discharge of the plaintiff’s mortgage,
which a New York statute required to be recorded within
30 days after satisfaction of the mortgage);5 Dutta v.

5.
Ocwen Loan contends that Nicklaw is a spotted
dog opinion, that is, that it is on all fours with
their argument that the Yeagers lack standing.
The
court does not agree. That mere delay is insufficient
to support standing to bring a claim under one statute
does not mean that it is insufficient to support
standing to bring a similar claim under a different
statute.
Whether delay is, by itself, sufficient to
(continued)
18

State Farm Mut. Auto. Ins. Co., No. 3:14-cv-04292-CRB,
2016

WL

6524390,

at

*3

(N.D.

Cal.

Nov.

3,

2016)

(Breyer, J.) (concluding that plaintiff lacked standing
to sue insurance company under the FCRA where company’s
disclosure of information to consumer three days after
the

statutory

deadline

caused

no

harm),

appeal

docketed, No. 16-17216 (9th Cir. Dec. 1, 2016).6
At oral argument on February 15, 2017, the court
inquired of counsel for the Yeagers whether, if allowed
to amend their complaint, they could allege any harm or
material risk of harm that attended the delay.
said no.

Counsel

Therefore, an amendment would be futile.

***

support standing depends upon the aims and structure
of, and the rights conferred by, the statute at issue.
6.
The court need not reach whether any FDCPA
validation-notice delay, no matter how long, would fail
to support standing. It is merely saying that a delay
as brief as the one alleged by the Yeagers, without any
attendant harm or material risk of harm, does not.
19

Because the Yeagers have failed to establish they
suffered
Article
their

a

concrete

III

FDCPA

magistrate

standing,
suit.7

judge’s

injury
this
Ocwen

sufficient
court
Loan’s

recommendation

may

to

not

sustain
entertain

objection
will

be

to

the

sustained,

the recommendation will be rejected, and Ocwen Loan’s
renewed motion for judgment on the pleadings will be
granted.
An appropriate judgment will be entered.
DONE, this the 22nd day of February, 2017.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE

7.
The court’s conclusion in this case does not
necessarily
foreclose
alternative
avenues
for
enforcement
of
the
validation-notice
requirement.
Ocwen
Loan
argues
that,
in
addition
to
those
circumstances where consumers allege harm or material
risk of harm sufficient to possess Article III
standing, the validation-notice requirement may also be
enforced by the Consumer Financial Protection Bureau
(CFPB)
through
administrative
adjudications
or
litigation. 12 U.S.C. §§ 5563(a) & 5564(a) (conferring
enforcement authority over consumer financial laws to
CFPB);
12
U.S.C.
§§ 5481(12)
&
(14)
(defining
applicable laws to include FDCPA).