Lilly v. Bayview Loan Servicing, LLC
Filing
30
OPINION AND ORDER denying 15 motion to dismiss. Signed by Judge John E. Steele on 10/4/2017. (RKR)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
HAYDEE LILLY,
Plaintiff,
v.
Case No:
2:17-cv-345-FtM-99MRM
BAYVIEW LOAN SERVICING, LLC,
Defendant.
OPINION AND ORDER
This matter comes before the Court on defendant’s Motion to
Dismiss (Doc. #15) filed on August 1, 2017.
Plaintiff filed a
Response in Opposition (Doc. #20) on August 25, 2017.
A Reply
(Doc.
well
#26)
and
Sur-Reply
(Doc.
#28)
supplemental authority (Doc. #29).
were
filed,
as
as
For the reasons set forth
below, the Motion to Dismiss is denied.
I.
On June 20, 2017, plaintiff Haydee Lilly (plaintiff or Lilly)
filed a four-count Complaint (Doc. #1) against defendant Bayview
Loan Servicing, LLC (defendant or Bayview) alleging violations of
the Florida Consumer Collection Practices Act (FCCPA), Fla. Stat.
§ 559.72(9); and Sections 1692e(2)(1), 1692e(10), and 1692f of the
Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et
seq.
The claims are based on mortgage statements that Bayview
sent plaintiff throughout December 2016 and February-March of 2017
(the Mortgage Statements) (Doc. #1-8).
Mortgage
Statements
were
sent
for
Plaintiff alleges the
the
improper
purpose
of
collecting on a mortgage debt for which her personal liability had
been discharged in bankruptcy.
Plaintiff’s Complaint alleges the following: On or about
November 9, 2006, plaintiff incurred a consumer debt in conjunction
with a first mortgage to purchase property located in Fort Myers,
Florida (the Subject Property).
(Doc. #1, ¶ 6.)
On or about
January 26, 2010, plaintiff filed a voluntary Chapter 7 bankruptcy
petition, listing the first mortgage as being owed to BAC Home
Loans Servicing, LP.
(Id. at ¶¶ 8-9.)
intent
the
to
surrender
proceedings.
Subject
(Id. at ¶ 10.)
Plaintiff indicated her
Property
in
the
bankruptcy
Plaintiff received an order of
discharge on May 24, 2010, which was mailed to BAC.
(Id. at ¶
14.)
Subsequent
to
the
entry
of
the
order
of
discharge,
the
mortgage debt at issue was sold to another party, and Bayview
became the servicer of the debt on behalf of the new owner.
#1, ¶ 16.)
auction,
(Doc.
In 2013, the Subject Property was sold at a foreclosure
and
a
Certificate
of
Title
was
issued
to
Hamlet
Homeowner’s Association 1 (Doc. #1-7).
1
The condominium association foreclosed on a junior lien.
The mortgage serviced by Bayview is the first mortgage on the
Subject Property (Doc. #1, ¶ 9) and foreclosure of the junior lien
does not affect the first mortgage. See Bank of America, N.A. v.
- 2 -
Defendant began sending the Mortgage Statements in December
2016.
When Bayview sent the Mortgage Statements to plaintiffs,
its mortgage had not been foreclosed and continued to encumber the
Subject Property.
Plaintiff responded with this lawsuit, claiming
that defendant’s actions constitute willful, intentional, gross,
and flagrant violations of the FDCPA and FCCPA, alleging various
physical and emotional injuries as a result.
(Doc. #1, ¶¶ 23-24.)
Bayview moves to dismiss all claims, arguing that the Mortgage
Statements
do
not
constitute
communications
sent
for
debt-
collection purposes in light of the Eleventh Circuit’s recent
opinion in Helman v. Bank of America, 685 F. App’x 723 (11th Cir.
Apr. 12, 2017) (per curiam).
Bayview also seeks dismissal because
plaintiff failed to comply with the pre-suit notice and cure
requirements of her mortgage agreement.
In response, plaintiff
argues that Helman is an unpublished case that has no precedential
value, and the applicable case law supports her claim that the
Mortgage Statements were sent for debt-collection purposes.
so
arguing,
plaintiff
alleges
that
the
Mortgage
In
Statements
included an amount due, a tear-off payment coupon with a due date,
and a late fee if payment is not received by the due date.
#1, ¶¶ 18-21.)
(Doc.
Plaintiff also responds that because the mortgage
was discharged in bankruptcy, the contractual provisions in the
Kipps Colony II Condominium Ass’n, Inc., 201 So. 3d 670, 675 (Fla.
2d DCA 2016).
- 3 -
mortgage
contract
were
no
longer
enforceable;
therefore
the
mortgage’s pre-suit notice and cure provisions are inapplicable
here.
II.
Under Federal Rule of Civil Procedure 8(a)(2), a 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).
This obligation “requires more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action will
not do.”
(citation
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
omitted).
To
survive
dismissal,
the
factual
allegations must be “plausible” and “must be enough to raise a
right to relief above the speculative level.”
Id. at 555.
See
also Edwards v. Prime Inc., 602 F.3d 1276, 1291 (11th Cir. 2010).
This requires “more than an unadorned, the-defendant-unlawfullyharmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citations omitted).
In deciding a Rule 12(b)(6) motion to dismiss, the Court
must accept all factual allegations in a complaint as true and
take them in the light most favorable to plaintiff, Erickson v.
Pardus, 551 U.S. 89 (2007), but “[l]egal conclusions without
adequate factual support are entitled to no assumption of truth.”
Mamani v. Berzain, 654 F.3d 1148, 1153 (11th Cir. 2011) (citations
omitted).
“Threadbare recitals of the elements of a cause of
- 4 -
action, supported by mere conclusory statements, do not suffice.”
Iqbal, 556 U.S. at 678.
“Factual allegations that are merely
consistent with a defendant’s liability fall short of being
facially plausible.”
Chaparro v. Carnival Corp., 693 F.3d 1333,
1337 (11th Cir. 2012) (internal citations omitted).
Thus, the
Court engages in a two-step approach: “When there are well-pleaded
factual allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an entitlement
to relief.”
Iqbal, 556 U.S. at 679.
III.
A. Related to Debt Collection
The
FDCPA
seeks
“to
eliminate
practices by debt collectors.”
abusive
debt
15 U.S.C.A. § 1692.
collection
To that end,
debt collectors are prohibited, inter alia, from using "any false,
deceptive, or misleading representation or means in connection
with the collection of any debt,” 15 U.S.C. § 1692e, and from
employing “unfair or unconscionable means to collect or attempt to
collect any debt.”
Id. § 1692f.
“A demand for immediate payment
while a debtor is in bankruptcy (or after the debt’s discharge) is
‘false’ in the sense that it asserts that money is due, although,
because of the . . .
is not.”
2004).
discharge injunction (11 U.S.C. § 524), it
Randolph v. IMBS, Inc., 368 F.3d 726, 728 (7th Cir.
A post-discharge demand for payment is thus “presumptively
wrongful under the [FDCPA].”
Id.
- 5 -
Plaintiff contends that Bayview violated the FDCPA and FCCPA
when it sent the Mortgage Statements in an attempt to collect on
a
debt
it
knew
had
bankruptcy proceeding.
already
been
discharged
in
plaintiff’s
“[I]n order to state a plausible FDCPA
claim under § 1692e [and 1692f,] a plaintiff must allege, among
other things, (1) that the defendant is a “debt collector” and (2)
that the challenged conduct is related to debt collection.”
Reese
v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1216
(11th Cir. 2012).
The FCCPA is construed in accordance with the
FDCPA.
Oppenheim v. I.C. Sys., Inc., 627 F.3d 833, 839 (11th Cir.
2010).
Thus, the issue currently before this Court 2 is whether
the Complaint adequately alleges that the Mortgage Statement is
“related to debt collection.” 3
Not
all
communications
that
a
creditor
sends
a
debtor
regarding a discharged debt are “related to debt collection.”
Although the FDCPA does not expressly set forth what constitutes
collection-related activity, the Eleventh Circuit has held that
“if a communication conveys information about a debt and its aim
2
Bayview has not conceded that it is a “debt collector” but
does not challenge this element in the instant motion.
3
In other words, the question is whether the Mortgage
Statement constitutes a “dunning letter.” See LeBlanc v. Unifund
CCR Partners, 601 F.3d 1185, 1189 n.7 (11th Cir. 2010) (per curiam)
(“Since ‘dunning’ means ‘to make persistent demands upon [another]
for payment,’ a ‘dunning letter’ may be considered as simply
another name for a letter of collection.” (alteration in original)
(citation omitted)).
- 6 -
is at least in part to induce the debtor to pay, it falls within
the scope of the Act.”
Caceres v. McCalla Raymer, LLC, 755 F.3d
1299, 1302 (11th Cir. 2014) (citing Romea v. Heiberger & Assocs.,
163
F.3d
111,
116
(2d
Cir.
1998)).
Stated
differently,
a
communication comes within the purview of the FDCPA where it is
made with “an animating purpose of . . . induc[ing] payment by the
debtor.”
Dyer v. Select Portfolio Servicing, Inc., 108 F. Supp.
3d 1278, 1281 (M.D. Fla. 2015) (quoting Grden v. Leikin Ingber &
Winters PC, 643 F.3d 169, 173 (6th Cir. 2011) (citations omitted)).
The issue of whether a particular communication’s animating
purpose is to induce a debtor to pay is determined through the
eyes of the “least sophisticated consumer.” 4
F.3d at 1303; LeBlanc, 601 F.3d at 1193, 1201.
See Caceres, 755
In making this
determination, the district court must “look to the language of
the [communication] in question, specifically to statements that
demand payment [and] discuss additional fees if payment is not
tendered.”
Pinson v. Albertelli Law Partners LLC, 618 F. App’x
551, 553 (11th Cir. 2015) (per curiam) (citations omitted).
key
question
is
whether
“the
least
4
sophisticated
The
consumer,”
Nevertheless, “[c]ourts have interpreted the least
sophisticated consumer standard in a way that protects debt
collectors from liability for unreasonable misinterpretations.”
Tucker v. CBE Grp., Inc., 710 F. Supp. 2d 1301, 1305 (M.D. Fla.
2010).
- 7 -
reading such language in its entirety, would believe that the
sender was attempting to induce payment on a debt.
“Obviously communications that expressly demand payment will
almost
certainly
payment
by
omitted).
the
have
[an
debtor.”
animating]
purpose”
of
Grden,
F.3d
173
643
at
“induc[ing]
(citations
A demand for payment can also be implicitly made.
Pinson, 618 F. App’x at 553-54; see also Gburek v. Litton Loan
Servicing LP, 614 F.3d 380, 385 (7th Cir. 2010) (“[T]he absence of
a demand for payment is just one of several factors that come into
play in the commonsense inquiry of whether a communication from a
debt collector is made in connection with the collection of any
debt.”).
In determining whether a communication seeks to induce
payment by way of an implicit demand, courts consider, among other
factors, whether the communication “states the amount of the debt,
describes how the debt may be paid, [and] provides the phone number
and address to [which to] send payment.”
Pinson, 618 F. App’x at
553; see also Dyer, 108 F. Supp. 3d at 1282 (granting motion to
dismiss where “none of the letters discussed specifics of the
underlying debt, such as the terms of payment or deadlines”).
In Helman v. Bank of America, the Eleventh Circuit did not
alter the standard that the Court is to apply when examining debt
collection activity as set forth above.
The Court agrees that the
parties in this case are in much of the same position as Helman;
that is, that a debtor obtained a mortgage from a bank, debtor
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declared bankruptcy, bank sought to collect on the debt following
a bankruptcy discharge, bank allegedly knew that it had no such
right because of the discharge, and therefore the bank was in
violation of the FDCPA and FCCPA.
But an examination of the
mortgage statement language in Helman and those in this case reveal
that that there is little similarity between the communications. 5
In Helman, the monthly statements contained the following
language:
FOR INFORMATION PURPOSES
. . . .
The Impact of the Bankruptcy: Our records indicate that
in the past you received a discharge of this debt in a
bankruptcy case.
Section 524 of the Bankruptcy Code
tells us the discharge of this debt means you have no
personal obligation to repay it.
The discharge also
protects you from any efforts by anyone to collect this
discharged debt as a personal liability of the debtor.
You cannot be pressured to repay this debt.
On the
other hand, the security agreement allows foreclosure if
the requirements under the loan documents are not met.
685 F. App’x at 728.
circumstances
of
this
The court there found that “under the
case
the
express
language
of
the
home
mortgage monthly statement could not be clearer,” and that a least
sophisticated consumer “reading the notice with some care, would
5
Bayview has attached a copy of the offending home equity
line of credit statement from the Helman case (Doc. #15-4) and
requests that the Court take judicial notice of the statement
without converting the motion into one for summary judgment.
(Doc. #1, n.8.) The Court sees no objection from plaintiff but
judicial notice is largely unnecessary because the statements are
explained in a fair amount of detail in the Helman decision.
- 9 -
be informed that she (1) has no personal obligation to repay the
debt; (2) is not personally liable for the debt; and (3) cannot be
pressured to repay the debt.”
added).
685 F. App’x at 728 (emphasis
The court also found that the language in the home equity
line of credit statement 6 was a closer call, but this was not the
only information available to the debtor, and coupled with the
monthly
statement,
a
least
sophisticated
consumer
believe she was personally liable for the debts.
would
not
Id. at 728-29.
In contrast, the Mortgage Statement at issue in this case
contains the following language:
Bankruptcy Notice
Our records reflect that you are presently a debtor in
an active bankruptcy case or you previously received a
discharge in bankruptcy. This statement is being sent
to you for informational purposes only. It should not
be construed as an attempt to collect a debt against you
personally.
However, we retain our rights under the
security instrument, including the right to foreclose
our lien.
(Doc. #1-8.)
Statement
Failure
to
Under the heading “Delinquency Notice,” the Mortgage
states:
“You
are
bring
your
loan
late
on
current
6
your
may
mortgage
result
in
payments.
fees
If You Are Currently a Debtor in Bankruptcy:
This statement is being furnished for informational
purposes only and should not be construed as an attempt
to collect against you personally.
While your
obligation to Bank of America, N.A. may be discharged,
by operation of law, Bank of America, N.A. has retained
the ability to enforce its rights against the property
securing this loan should there be a default.
685 F. App’x at 729.
- 10 -
and
foreclosure – the loss of your home.
days delinquent on your mortgage.”
As of 3/16/17 you are 3180
(Id.)
There is also a payment
coupon, with a total amount due of $135,960.34, stating: “If you
are currently a party in a bankruptcy case and you choose to make
a voluntary payment, detach and return bottom remittance portion
with your payment.”
(Id.)
Unlike Helman, the Court is unable to conclude under the
circumstances of this case that the cumulative effect of the
Mortgage Statement’s language from the perspective of the least
sophisticated consumer would not be seen as an attempt to collect
a debt for which personal liability had already been discharged.
The statements are not similar to the language the Helman court
was presented with.
The language in Helman expressly stated that
the debtor had no personal obligation to repay the debt and no one
could force her to do so.
No language even remotely resembling
the same was used in this case.
Therefore, the Court declines to
follow the result reached in Helman as defendant urges here.
The
Court is convinced that the Complaint sufficiently alleges that
the Mortgage Statement constitutes an attempt to collect a debt.
The Court’s conclusion is amply supported by case law and
Helman did not change this.
The Pinson court determined that two
letters “contained an implicit demand for payment, because they
stated the amount of the debt, described how the debt could be
paid, and informed [the plaintiff] how he could tender payment.”
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618 F. App’x at 554.
In Leahy-Fernandez v. Bayview Loan Servicing,
LLC, mortgage statements were deemed communications sent in an
attempt to collect a debt where they listed a total amount due,
contained a payment coupon, mentioned other payment options, and
stated that a fee would be charged for late payments.
Supp. 3d 1294, 1303-04 (M.D. Fla. 2016).
159 F.
Similarly, in Patton v.
Ocwen Loan Servicing, LLC, the plaintiff sufficiently alleged that
the defendant’s written communication attempted to collect a debt,
despite
the
presence
of
“for
informational
purposes
only”
language, because the statement included a due date, the past due
amount, a payment address, and a detachable payment coupon.
No.
6:11-CV-445-ORL-19, 2011 WL 1706889, at *5 (M.D. Fla. May 5, 2011);
see also Goodin v. Bank of Am., N.A., 114 F. Supp. 3d 1197, 1206
& n.10 (M.D. Fla. 2015) (letters containing payment instructions,
a due date, and an amount due had animating purpose of encouraging
payment
despite
being
labeled
“FOR
INFORMATION
PURPOSES”
and
containing disclaimer language).
Just because a disclaimer says that the communication “‘is
not an attempt to collect a debt,’ does not make that true,
especially in view of indications on the face of the document that
the communication is intended to obtain money and is connected to
a present or former obligation to pay an indebtedness.”
Donnelly-
Tovar v. Select Portfolio Servicing, Inc., 945 F. Supp. 2d 1037,
1048 (D. Neb. 2013).
Here, the Mortgage Statement does contain
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such
indications
and
Bayview’s
boilerplate,
hypothetical
disclaimer language is immediately followed by a “however” clause
reserving Bayview’s legal rights.
probable)
that
the
least
It is thus plausible (if not
sophisticated
consumer
reading
the
disclaimer would not understand that she could refrain from making
payments without incurring additional fees or exposing herself to
future legal action.
Rather, she would feasibly be induced to
make payments to avoid those repercussions.
Defendant further argues that dismissal is warranted because
Lilly’s bankruptcy discharge informed her that it “prohibited any
attempt to collect a debt that had been discharged but that a
creditor may have the right to enforce a valid lien such as a
security interest after bankruptcy, if that lien was not avoided
or eliminated,” which is consistent with Bayview’s right to seek
payment under 11 U.S.C. § 524.
Yet this is just one factor that
goes into the Court’s consideration of whether a consumer would
have been misled by the statements.
28.
Helman, 685 F. App’x at 727-
But more significant than this is the language used in the
Monthly Statements themselves which the Court believes could have
been misleading despite the assurances she was given with her
discharge.
B. Pre-Suit Notice and Opportunity to Cure
Defendant alternatively argues that even if the Court finds
that Helman is not dispositive of this suit, dismissal is still
- 13 -
warranted because she failed to allege that she complied with her
mortgage’s notice and opportunity to cure provision prior to filing
this lawsuit, a condition precedent to which she is contractually
bound.
Yet none of the cases cited by defendant involve a
situation in which the debtor has obtained a discharge of the debt
in bankruptcy.
A discharge order enjoins creditors from taking
action to collect on any discharged debt and defendant otherwise
sites no authority for the proposition that a debtor would still
be bound by the provisions of that discharged debt.
Therefore,
the Motion to Dismiss on this basis is denied.
Accordingly, it is hereby
ORDERED AND ADJUDGED:
Defendant’s Motion to Dismiss (Doc. #15) is DENIED.
DONE and ORDERED at Fort Myers, Florida, this
October, 2017.
Copies:
Counsel of Record
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4th
day of
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