McWhorter et al v. Ocwen Loan Servicing LLC et al
MEMORANDUM OPINION AND ORDER - For the reasons discussed above, the Court GRANTS Western Unions motion to dismiss the plaintiffs amended complaint. (Doc. 11). The Court DENIES Ocwens motion to dismiss the plaintiffs amended complaint with respect to Mr. Fielder (Doc. 9). With respect to Mr. McWhorter, the Court DEFERS ruling on Ocwens motion to dismiss the plaintiffs amended complaint pending a period of limited discovery. On or before September 7, 2017, Mr. McWhorter shall submit a copy of his trial modification agreement with GMAC, if such an agreement exists, and any other documentation related to his trial modification that speaks to whether the trial modification superseded his original loan agreement with GMAC. Signed by Judge Madeline Hughes Haikala on 8/3/2017. (KEK)
2017 Aug-03 AM 10:41
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
HAROLD McWHORTER and
OCWEN LOAN SERVICING, LLC
and WESTERN UNION BUSINESS
SOLUTIONS (USA), LLC,
Case No.: 2:15-cv-01831-MHH
MEMORANDUM OPINION AND ORDER
In this putative nationwide class action, plaintiffs Harold McWhorter and
Robert Fielder allege that defendants Ocwen Loan Servicing, LLC and Western
Union Business Solutions (USA), LLC violated the Fair Debt Collection Practices
Act (FDCPA), 15 U.S.C. § 1692f(1), by charging customers a convenience fee to
make loan payments online and over the telephone. (Doc. 2, ¶¶ 1–2, 9, 11–12).
Pursuant to Federal Rule of Civil Procedure 12(b)(6), the defendants ask the Court
to dismiss the plaintiffs’ amended complaint. (Docs. 9, 11).1 For the reasons
Ocwen also asks the Court to dismiss the plaintiffs’ amended complaint pursuant to Federal
Rule of Civil Procedure 12(b)(1). (Doc. 9, p. 3). The defendants contend that because the
plaintiffs told Ocwen customer service agents in March and July of 2015 that they were not
represented by counsel, “a cloud of doubt exists” as to whether the plaintiffs “authorize counsel
to act on their behalf.” (Doc. 9, pp. 5–7). To eliminate this doubt and to ensure that a case or
controversy exists under Article III of the United States Constitution, the defendants ask the
stated below, the Court grants Western Union’s motion to dismiss (Doc. 11),
denies Ocwen’s motion to dismiss with respect to Mr. Fielder (Doc. 9), and defers
ruling on Ocwen’s motion to dismiss with respect to Mr. McWhorter (Doc. 9)
pending a period of limited discovery.
RULE 12(b)(6) STANDARD
Under Rule 12(b)(6), a defendant may move to dismiss a complaint for
“failure to state a claim upon which relief can be granted.” See FED. R. CIV. P.
12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, a complaint—or in this
case, an amended complaint—must contain “a short and plain statement of the
claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). In
considering a defendant’s motion to dismiss a complaint, a district court generally
accepts the plaintiff’s allegations as true and asks whether the plaintiff alleges facts
that allow the district court to “draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Aschcroft v. Iqbal, 556 U.S. 662, 678 (2009);
see Maledy v. City of Enter., 2012 WL 1028176, at *1 (M.D. Ala. Mar. 26, 2012).
Court to require an “affidavit or signed declaration from the Plaintiffs . . . confirming that they
do continue to authorize counsel to act on their behalf.” (Doc. 9, p. 6).
Rule 11 of the Federal Rules of Civil Procedure provides a safeguard against the potential for an
attorney to file a lawsuit on behalf of a client without the client’s consent. The plaintiffs’
attorneys have sworn pursuant to Rule 11 that the plaintiffs authorized them to prosecute this
lawsuit and that the Court has subject matter jurisdiction over this action. (Doc. 2, ¶¶ 5, 13, 25).
On the basis of these representations, the Court is satisfied that it may exercise subject matter
jurisdiction over this case. Accordingly, the Court denies Ocwen’s motion to dismiss this action
pursuant to Rule 12(b)(1).
A district court is “not bound to accept as true a legal conclusion couched as a
factual allegation.” Iqbal, 556 U.S. at 678; Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555 (2007) (internal quotation marks omitted).
In its motion to dismiss, Ocwen challenges the merits of some of the factual
allegations in the plaintiffs’ amended complaint. In doing so, Ocwen relies on
documents that are central to the plaintiffs’ claims. In resolving the motions to
dismiss, the Court may consider these documents without converting Ocwen’s
motion to dismiss into a motion for summary judgment because the documents are
central to the plaintiffs’ claims, and no party challenges the authenticity of the
documents. See Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1053 n. 12 (11th
Mr. McWhorter and Mr. Fielder purchased homes using consumer loans.
(Doc. 2, ¶ 7). Ocwen eventually acquired servicing rights to the loans. (Doc. 2, ¶
8). Mr. Fielder’s loan was in default when Ocwen acquired it. (Doc. 2, ¶ 8). Mr.
McWhorter alleges that his loan was in default when Ocwen acquired it, but
Ocwen challenges the allegation. (See Doc. 2, ¶ 8; Doc. 16, p. 3).
When Mr. McWhorter and Mr. Fielder made loan payments to Ocwen online
and over the telephone, Ocwen and Western Union charged convenience fees, or
“Speedpay” fees, to process those payments. (Doc. 2, ¶¶ 9, 11). Western Union
collected the fees from Mr. McWhorter and Mr. Fielder and remitted a portion of
the fees to Ocwen. (Doc. 2, ¶ 11).
Mr. McWhorter and Mr. Fielder assert that the defendants’ imposition of the
Speedpay fees and Western Union’s remittance of a portion of those fees to Ocwen
violate the FDCPA. (Doc. 2, ¶¶ 20, 22, 33, 35). Mr. McWhorter and Mr. Fielder
seek class certification for their FDCPA claims, declaratory and injunctive relief,
statutory damages, and attorney’s fees and costs. (Doc. 2, p. 9).2
Mr. McWhorter and Mr. Fielder allege that Ocwen and Western Union
violated the FDCPA by charging them a Speedpay fee to pay their loans online and
over the telephone. (Doc. 2, ¶¶ 20, 22, 33, 35). Ocwen and Western Union argue
that because the FDCPA applies only to debt collectors and because neither of
them is a debt collector with respect to the plaintiffs, the Court should dismiss this
action. (Docs. 9, 11). Ocwen also argues that, even if it is a debt collector, the
Mr. McWhorter and Mr. Fielder seek to represent two nationwide classes pursuant to Federal
Rule of Civil Procedure 23. With respect to their claim against Western Union, Mr. McWhorter
and Mr. Fielder seek to represent a class of “[a]ll individuals in the United States who, during the
applicable limitations period, paid a convenience fee through Western Union’s Speedpay service
in connection with a loan being serviced by a debt collector as defined by the FDCPA.” (Doc. 2,
¶ 14). With respect to their claim against Ocwen, Mr. McWhorter and Mr. Fielder seek to
represent a class of “[a]ll individuals in the United States who, during the applicable limitations
period paid a convenience fee through Western Union’s Speedpay service in connection with any
loan being serviced by Ocwen, and as to which Ocwen obtained those servicing rights at a point
in time when the loan was in default.” (Doc. 2, ¶ 26).
Court should dismiss the plaintiffs’ claims because, as a matter of law, Speedpay
fees do not violate the FDCPA. (Doc. 9).
Western Union’s motion to dismiss
“[W]hether an individual or entity is a ‘debt collector’ is determinative of
liability under the FDCPA.” Birster v. Am. Home Mortg. Servicing, Inc., 481 Fed.
Appx. 579, 581–82 (11th Cir. 2012). Because the plaintiffs’ factual allegations,
taken as true, do not allow the Court to draw the reasonable inference that Western
Union is a debt collector, the plaintiffs have failed to state a claim against Western
Union. See p. 2, above.
The FDCPA defines “debt collector” as one who “regularly collects or
attempts to collect, directly or indirectly, debts owed or due or asserted to be owed
or due another.” 15 U.S.C. § 1692a(6). In addition, a debt collector is “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.”
amended complaint, Mr. McWhorter and Mr. Fielder state that “Western Union
regularly collects or attempts to collect, directly or indirectly, debts owed another
and it is therefore a debt collector within the meaning of the FDCPA.” (Doc. 2, ¶
21). The Court does not credit this “formulaic recitation of the elements of a[n
FDCPA claim].” Iqbal, 556 U.S. at 678.
Mr. McWhorter and Mr. Fielder also allege that Western Union acted as
Ocwen’s “partner . . . in facilitating their debt collection activity” by “demand[ing]
an additional payment [from the plaintiffs] in the form of a fee for using
Speedpay.” (Doc. 2, ¶¶ 11, 21). According to the plaintiffs, “Western Union
collected this money from Plaintiffs and remitted a portion of it back to Ocwen.”
(Doc. 2, ¶ 11). These allegations do not support the reasonable inference that
Western Union “regularly collects or attempts to collect . . . debts owed or due or
asserted to be owed or due another” or that Western Union is a “business the
principal purpose of which is the collection of . . . debts.” 15 U.S.C. § 1692a(6).
Instead, the plaintiffs’ allegations indicate that Western Union provided a
service to Ocwen and the plaintiffs, and Western Union received payment for that
service. As the plaintiffs state in their amended complaint, the money that Western
Union allegedly collected “both on its own behalf and on behalf of [Ocwen]” was
not debt, but rather “an additional payment.” (Doc. 2, ¶ 11). Accordingly, the
plaintiffs have not plausibly alleged that Western Union is a debt collector within
the meaning of the FDCPA, and the Court grants Western Union’s motion to
dismiss the plaintiffs’ amended complaint. (Doc. 11).
Ocwen’s motion to dismiss
Whether Ocwen is a debt collector
Ocwen argues that it is not a debt collector with respect to Mr. McWhorter
because Mr. McWhorter’s loan was not in default when Ocwen acquired servicing
rights to it. (Doc. 9, pp. 12–15). With respect to Mr. Fielder, Ocwen argues that it
did not act as a debt collector because a bankruptcy court discharged Mr. Fielder’s
personal debt in 2013. (Doc. 9, pp. 8–12).
Under the FDCPA, a person who acquires servicing rights to a debt is not a
debt collector for purposes of that debt if the debt “was not in default at the time it
was obtained.” 15 U.S.C. § 1692a(6)(F)(iii); see Schlosser v. Fairbanks Capital
Corp., 323 F.3d 534, 536 (7th Cir. 2003). The FDCPA does not define default.
Instead, “‘the determination of whether a debt is in default is to be made by a court
on a case-by-case basis, and . . . applicable contractual or regulatory language
defining the point of default may be instructive.’” Church v. Accretive Health,
Inc., 2014 WL 7184340, at *3 (S.D. Ala. Dec. 16, 2014) (quoting Kapsis v. Am.
Home Mortg. Servicing, Inc., 923 F.Supp. 2d 430, 440 (E.D.N.Y. 2013))
(alteration supplied by Church).
When Ocwen acquired Mr. McWhorter’s loan on February 15, 2013, Mr.
McWhorter had completed a trial loan modification that he and his prior loan
servicer, GMAC Mortgage, LLC, had entered as a prerequisite for Mr.
McWhorter’s participation in the United States Treasury Department’s Home
Affordable Modification Program (HAMP). (Doc. 9-1, ¶ 28; Doc. 9-7, pp. 2–3).
Under the HAMP guidelines, “[s]uccessful completion [of the trial period] means
that the borrower is current (under the MBA delinquency calculation) at the end of
the Trial Period.”3 Ocwen argues that, because Mr. McWhorter’s completion of
the trial period brought him current on his loan with GMAC, Mr. McWhorter’s
loan was not in default under the FDCPA when Ocwen acquired it. (See Doc. 18,
p. 6). Mr. McWhorter contends that an individual who is “current” under the
HAMP guidelines for purposes of the MBA delinquency calculation is not
necessarily current for purposes of an FDCPA claim and that Mr. McWhorter was
in default on his original mortgage until he and Ocwen entered into a permanent
loan modification agreement on March 1, 2013. (See Doc. 16, p. 6; Doc. 30, p.
The Court agrees that the HAMP guidelines are not dispositive of whether
Mr. McWhorter was in default when Ocwen acquired his loan from GMAC, but
The guidelines can be viewed at https://www.treasury.gov/press-center/pressreleases/Documents/modification_program_guidelines.pdf. No party challenges the authenticity
of the guidelines, and the Court may take judicial notice of them. FED. R. EVID. 201.
“MBA” stands for Mortgage Bankers Association. Under the MBA convention, “a loan is ‘past
due’ when a scheduled payment is unpaid for 30 days or more.” OFFICE OF THRIFT SUPERVISION,
https://www.occ.gov/static/news-issuances/ots/press-releases/ots-pr-2008-27a.pdf (last visited
June 13, 2017).
the guidelines are instructive. See Church, 2014 WL 7184340, at *3. Here, they
weigh in favor of a finding that Mr. McWhorter’s loan was not in default when
Ocwen acquired it.
The Seventh Circuit Court of Appeals reached a similar conclusion in Bailey
v. Security National Servicing Corporation, 154 F.3d 384, 387 (7th Cir. 1998). In
that case, the court of appeals found that plaintiffs “who initially defaulted on their
home mortgage loan but later negotiated a forbearance agreement which gave them
a fresh start” were not in default on their debt within the meaning of the FDCPA
when the defendants acquired their loan. Bailey, 154 F.3d at 385, 387. The Court
reasoned that “[c]ommon sense and the plain meaning of the [FDCPA] require that
we distinguish between . . . a defaulted debt and . . . a debt owed under a brand
new payment plan.” Id. at 387. Failure to make such a distinction, the Bailey
court explained, would be equivalent to “saying that a debtor in default can never
have his slate wiped clean or [be] given a last chance to become credit-worthy
under a new plan.” Id.
The record in this case demonstrates that, based on Mr. McWhorter’s
completion of the trial modification, Ocwen entered into a permanent loan
modification agreement with Mr. McWhorter on March 1, 2013. (Doc. 9-8). This
permanent modification is the type of “brand new payment plan” contemplated by
the Seventh Circuit Court of Appeals in Bailey, and Mr. McWhorter concedes that
his loan no longer was in default after he and Ocwen entered into the permanent
modification. See p. 8, above. It is unclear at this juncture, however, whether the
trial loan modification that Mr. McWhorter completed before Ocwen acquired his
loan also constitutes a “renegotiated payment plan” that supersedes the original
loan agreement. Bailey, 154 F.3d at 387.
Without considering additional documentation related to the trial loan
modification, the Court cannot determine whether the trial loan modification was a
superseding agreement that gave Mr. McWhorter a “fresh start,” as in Bailey, or
merely a set of payments that rendered Mr. McWhorter eligible for the permanent
modification but did not affect his status under the original loan agreement.
Accordingly, the Court defers ruling on whether Ocwen is a debt collector until the
Court reviews additional documents related to the trial modification.
To state a plausible claim under the FDCPA, Mr. Fielder must allege not
only that Ocwen is a debt collector, but also “‘that [Ocwen’s] challenged conduct
is related to debt collection.’” See Pinson v. JP Morgan Chase Bank, Nat’l Ass’n,
646 Fed. Appx. 812, 814 (11th Cir. 2016) (quoting Reese v. Ellis, Painter,
Ratterree & Adams, LLP, 678 F.3d 1211, 1216 (11th Cir. 2012)). Ocwen argues
that Mr. Fielder has not plausibly alleged that the company is a debt collector or
that the company’s conduct with respect to Mr. Fielder was related to debt
collection because “any debt [Mr. Fielder] personally had on his home loan was
discharged in bankruptcy” before the challenged conduct occurred. (See Doc. 9, p.
8). The Court disagrees.
On March 26, 2013, after Ocwen acquired servicing rights to Mr. Fielder’s
loan, Mr. Fielder filed a Chapter 7 bankruptcy petition. (Doc. 1 in Case 13-01384,
United States Bankruptcy Court, Northern District of Alabama). 5 On June 24,
2013, the Bankruptcy Court entered an order granting Mr. Fielder “a discharge”
under Chapter 7 of the Bankruptcy Code. (Doc. 18, p. 1 in Case 13-01384); see
also 11 U.S.C. § 727. The order includes a list of debt categories that were not
discharged, and the list does not include home loans. (Doc. 18, p. 2 in Case 1301384). The Court reasonably infers, and the parties do not dispute, that Mr.
Fielder’s home loan was discharged by the June 24, 2013 order.
After the Bankruptcy Court discharged Mr. Fielder’s legal obligation to pay
his home loan debt, Ocwen sent Mr. Fielder monthly statements entitled “Special
Notice In The Event You Have Filed Bankruptcy.” (Doc. 9-1, ¶ 19; see also Doc.
9-3, p. 2). One such notice states:
If you have received an Order of Discharge in a Chapter 7 case filed
under the Bankruptcy Code of the United States, this notice is not
The record for Mr. Fielder’s bankruptcy action is available on PACER. The Court takes
judicial notice of that record. Bobadilla v. Aurora Loan Servs., LLC, 478 Fed. Appx. 625, 627
(11th Cir. 2012) (“‘A court may take judicial notice of its own records and the records of inferior
courts.’”) (quoting United States v. Rey, 811 F.2d 1453, 1457 n. 5 (11th Cir.1987)). The Court
cites to Mr. Fielder’s bankruptcy records by document and case number.
intended as an attempt to collect any debt from you personally. If you
have received an Order of Discharge in a Chapter 11, 12 or 13
bankruptcy case, this notice is not an attempt to collect a pre-petition
debt pursuant to a completed and confirmed Bankruptcy Plan. If the
foregoing applies to you, this notice is sent to you only as a
preliminary step to an ‘In Rem’ foreclosure on the mortgage against
the above-referenced property. Provisions may be contained within
the mortgage/deed of trust that require notice prior to foreclosure.
As such, this is not an attempt to assert that you have any personal
liability for this debt contrary to any entered Bankruptcy Order of
Mortgage payments on the above referenced account are past due,
which has caused a default under the terms of the Mortgage or Deed
of Trust. As of June 9, 2015, the following amounts are past due:
Principal and Interest
Insufficient Funds Charges
Suspense Balance (CREDIT)
Interest Reserve Balance (CREDIT)
TOTAL AMOUNT PAST DUE
On or before July 17, 2015, payment may be remitted by [sic] us via
money transfer, bank check, money order or certified funds for the
entire total amount past due to the appropriate address listed at the
bottom of page two of this notice. Any amount(s) that become due in
the interim must also be received.
If the account is not brought current in a timely manner, it may result
in our election to exercise our right to foreclose on the property.
Upon acceleration, the total obligation will be immediately due and
payable without further demand. In foreclosure proceedings, we are
entitled to collect the total arrearage in addition to any expenses of
foreclosure, including but not limited to reasonable attorney’s fees and
After acceleration of the debt, but prior to foreclosure, the mortgage
loan may be reinstated, depending on the terms of the note and
mortgage, any payments received and/or any relevant prior court
order. We encourage you to review the provisions of the note and
mortgage. Please be aware that, after acceleration of the debt, there
may be expenses and attorney’s fees and costs incurred by us to
enforce the terms of the mortgage agreement, in addition to the
overdue amount on the mortgage. Any payment to reinstate the
mortgage loan after acceleration must therefore include an amount
sufficient to cover such expenses and fees incurred. Payments
received that are less than the amount to reinstate the mortgage loan
will be returned and will not stop any foreclosure proceedings that
have begun. PRIOR TO SUBMITTING A PAYMENT, PLEASE
CALL US TO VERIFY THE EXACT AMOUNT DUE ON THE
(Doc. 9-3, pp. 3–4) (emphasis in notice).6 The notice lists four methods by which
Mr. Fielder may pay the past due amount. (Doc. 9-3, p. 3).
According to Ocwen, the above communication cannot be related to debt
collection because Mr. Fielder’s personal debt on his home loan ceased to exist
after the Bankruptcy Court discharged it. (Doc. 9, p. 8); see also Arruda v. Sears,
The bottom of each page of the monthly statement contains a disclaimer entitled “Notice
Regarding Bankruptcy,” which states in relevant part:
Please be advised that this letter is in no way an attempt to collect either a prepetition, post petition or discharged debt. . . . If you have received an Order of
Discharge in a bankruptcy case, any action taken by us is for the sole purpose of
protecting our lien interest in the underlying property and is not an attempt to
recover any amounts from you personally.
(Doc. 9-3, pp. 2–6).
Roebuck & Co., 310 F.3d 13, 23 (1st Cir. 2002) (explaining that a “discharge
extinguishes . . . the personal liability of the debtor”) (citation and internal
quotation marks omitted) (alteration provided by Arruda). Ocwen argues instead
that the above communication—and, indeed, all of the company’s challenged
conduct—constitutes an attempt to enforce a security interest. (Doc. 9, pp. 8–12).
Because, according to Ocwen, “the FDCPA regulates debt collection, and not the
enforcement of in rem mortgage security interests that remain after [a] debt has
been discharged in bankruptcy,” Mr. Fielder has failed to state a claim under the
FDCPA. (Doc. 9, p. 8).
The fact that conduct may “relate to the enforcement of a security interest
does not prevent [that conduct] from also relating to the collection of a debt.”
Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1217 (11th Cir.
2012). Nor does the fact that the Bankruptcy Court discharged Mr. Fielder’s debt
prevent Ocwen from engaging in debt collection activity with respect to the
In Roth v. Nationstar Mortgage, LLC, the district court held that a plaintiff
whose debt had been discharged in bankruptcy stated an FDCPA claim where a
loan servicer sent her an “Informational Statement” that expressly indicated that it
was not an attempt to collect debt yet “list[ed] the total amount due, contain[ed] a
payment due date, stat[ed] that a late fee w[ould] be charged for an untimely
payment, [and gave] six possible payment methods.” Roth v. Nationstar Mortg.,
LLC, 2016 WL 3570991, *3 (M.D. Fla. July 1, 2016). The district court reasoned
that “‘if a communication conveys information about a debt and its aim is at least
in part to induce the debtor to pay, it falls within the scope of the [FDCPA].’” Id.
at *2 (quoting Caceres v. McCalla Raymer, LLC, 755 F.3d 1299, 1302 (11th Cir.
In other words, according to the Roth decision, a communication is related to
debt collection if “it is made with ‘an animating purpose of . . . induc[ing] payment
by the debtor.’” Roth, 2016 WL 3570991 at *2 (quoting Dyer v. Select Portfolio
Servicing, Inc., 108 F. Supp. 3d 1278, 1281 (M.D. Fla. 2015)) (alteration provided
To determine whether a communication’s animating purpose is to
induce payment, the district court stated, courts should look “through the eyes of
the least sophisticated consumer.” Roth, 2016 WL 3570991 at *3 (citation and
internal quotation marks omitted).
Viewed through the eyes of the least sophisticated consumer, Ocwen’s
“Special Notice” appears to have been made with an animating purpose to induce
payment by Mr. Fielder. The notice states the past due amount that Mr. Fielder
owed on his mortgage, describes how Mr. Fielder may pay that amount, and
provides multiple addresses to which Mr. Fielder may send payment. (See Doc. 93). In addition, the notice “threaten[s] consequences for non-payment.” Roth,
2016 WL 3570991 at *4; (see Doc. 9-3, p. 4) (“If the account is not brought current
in a timely manner, it may result in our election to exercise our right to foreclose
on the property.”).
As in Roth, “it is . . . difficult to conceive of any credible reason for [Ocwen]
to send the [notice] other than to pressure [Mr. Fielder] into making payments on
the mortgage debt for which h[is] personal liability had already been discharged.”
Roth, 2016 WL 3570991 at *3. Also as in Roth, Ocwen’s disclaimer that the
notice was not an attempt to collect debt “‘is insufficient to shield [Ocwen] as a
matter of law from liability at this stage of the litigation.’” Id. (quoting LeahyFernandez v. Bayview Loan Servicing, LLC, 159 F. Supp. 3d 1294, 1303 (M.D.
Fla. 2016). Accordingly, the Court finds that Mr. Fielder has plausibly alleged that
Ocwen acted as a debt collector and engaged in conduct related to debt collection
with respect to his discharged debt.
Whether the Speedpay fees violate the FDCPA
Ocwen argues that, even if it were a debt collector that engaged in conduct
related to debt collection with respect to Mr. McWhorter and Mr. Fielder, the
Court should dismiss the plaintiffs’ claims because Speedpay fees do not violate
the FDCPA as a matter of law. (Doc. 9, pp. 16–27). The Court disagrees.
15 U.S.C. § 1692f(1) makes it unlawful for a debt collector to collect “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.” 15 U.S.C. § 1692f(1). Citing an unpublished Sixth
Circuit case and an unpublished district court case from California, Ocwen argues
that the Speedpay fees in question here do not violate the FDCPA because the fees
were optional and avoidable. (Doc. 9, pp. 18–19) (citing Lee v. Main Accounts,
Inc., 1997 WL 618803, at *1 (6th Cir. Oct. 6, 1997) and Flores v. Collection
Consultants of Cal., 2015 WL 4254032, at *10 (C.D. Cal. Mar. 20, 2015)). In
addition, Ocwen argues that the Speedpay fees are authorized by the Electronic
Fund Transfer Act (EFTA) and are thus “permitted by law.” (Doc. 9, pp. 23–27).
The Court is not persuaded by Ocwen’s arguments. As the plaintiffs point
out in their response brief, Ocwen overlooks the fact that the courts in Lee and
Flores concluded that the convenience fees in those cases did not violate the
FDCPA in part because the optional fees “did not inure benefits to the collector.”
Flores, 2015 WL 4254032 at *9. Here, the plaintiffs allege that Ocwen kept a
portion of the Speedpay fees. (See Doc. 16, p. 12; Doc. 2, ¶ 11). Ocwen has
presented, and the Court has found, no controlling case law holding that an
additional fee does not violate the FDCPA when, as here, the underlying contract
does not authorize the fee and the debt collector receives all or some of the fee.
With respect to Ocwen’s argument that the Speedpay fees are permitted by
law, the Court agrees with the district court in Newman v. Checkrite California,
Inc. that “the word ‘permitted’ requires that the defendants identify some state
statute which ‘permits,’ i.e. authorizes or allows, in however general a fashion, the
fees or charges in question.” 912 F. Supp. 1354, 1368 (E.D. Cal. 1995). As the
Second Circuit explained, “[i]f state law neither affirmatively permits nor
expressly prohibits service charges, a service charge can be imposed only if the
customer expressly agrees to it in the contract.” Tuttle v. Equifax Check, 190 F.3d
9, 13 (2d Cir. 1999).
The plaintiffs did not expressly agree to the Speedpay fees in their contracts
with Ocwen, and Ocwen has presented no Alabama law that authorizes a debt
collector to impose convenience fees and collect a portion of those fees. The
EFTA is not a state statute, and, moreover, the EFTA merely “provide[s] a basic
framework establishing the rights, liabilities, and responsibilities of participants in
electronic fund and remittance transfer systems.” 15 U.S.C. § 1693(b). The EFTA
does not authorize a debt collector to collect an additional convenience fee in
connection with an amount owed on a principal obligation.
Accordingly, Mr. Fielder has sufficiently alleged that Ocwen violated
§ 1692f(1) when it charged him Speedpay fees to make mortgage payments. If the
Court finds that Ocwen is a debt collector with respect to the Mr. McWhorter (see
pp. 6–10, above), then Mr. McWhorter will have stated a claim under § 1692f(1).
For the reasons discussed above, the Court GRANTS Western Union’s
motion to dismiss the plaintiffs’ amended complaint.
DENIES Ocwen’s motion to dismiss the plaintiffs’ amended complaint with
respect to Mr. Fielder (Doc. 9).
With respect to Mr. McWhorter, the Court
DEFERS ruling on Ocwen’s motion to dismiss the plaintiffs’ amended complaint
pending a period of limited discovery.
On or before September 7, 2017, Mr. McWhorter shall submit a copy of his
trial modification agreement with GMAC, if such an agreement exists, and any
other documentation related to his trial modification that speaks to whether the trial
modification superseded his original loan agreement with GMAC.
DONE and ORDERED this August 3, 2017.
MADELINE HUGHES HAIKALA
UNITED STATES DISTRICT JUDGE
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