Belcher v. Ocwen Loan Servicing, LLC

Filing 44

ORDER granting in part 25 --motion to dismiss; amended complaint due 1/6/2017. Signed by Judge Steven D. Merryday on 12/15/2016. (BK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
TIMOTHY J. BELCHER,
Plaintiff,
v.

CASE NO. 8:16-cv-690-T-23AEP

OCWEN LOAN SERVICING, LLC,
Defendant.
____________________________________/

ORDER
Timothy J. Belcher sues (Doc. 22) Ocwen Loan Servicing, LLC, under
15 U.S.C. § 1692, the Fair Debt Collection Practices Act (federal act); and
Section 559.55, Florida Statutes, the Florida Consumer Collection Practices Act
(Florida act). Ocwen moves (Doc. 25) under Rule 12(b)(6), Federal Rules of Civil
Procedure, to dismiss Belcher’s amended class-action complaint.
According to the complaint, in 2006 Belcher financed the purchase of a house
with a loan secured by a mortgage. (Doc. 22 at 4) Belcher defaulted and applied for
assistance under a federally sponsored program. (Doc. 22 at 5) Ocwen offered
Belcher a trial period for the assistance program. (Doc. 22 at 6) Belcher paid the
initial trial-period amount and continued timely payments. Belcher alleges that
Ocwen violated the federal act and the Florida Act by attempting collection efforts on
the principal loan after Belcher commenced the trial plan. (Doc. 22 at 39)

Ocwen argues that a February 2014 consent order in another action fails to
provide Belcher with a private right of action and thus cannot form the basis of
Belcher’s claims (Doc. 25 at 5); that the “Home Affordable Modification Program”
(HAMP) trial plan contradicts Belcher’s claims (Doc. 25 at 7); that Belcher’s federal
and state claims fail as a matter of law (Doc. 25 at 9; Doc. 25 at 12); and that the
amended complaint must be dismissed because Belcher — before filing the lawsuit —
failed to notify Ocwen in accord with the mortgage’s pre-suit notice-and-cure
requirement. (Doc. 25 at 14)
1. The Ocwen Consent Order
In February 2014 in the U.S. District Court for the District of Columbia
Ocwen entered into a consent order in an action by the Consumer Financial
Protection Bureau and several states. Ocwen violated, among other laws, Florida’s
Deceptive and Unfair Trade Practices Act “in connection with its servicing and
collections practices with respect to administration of [federally sponsored] assistance
programs.” (Doc. 22 at 23) Ocwen asserts that Belcher’s amended complaint in this
action “is comprised of [claims] that solely rely upon the consent order” and that the
consent order fails to provide a private right of action. (Doc. 25 at 5) However,
Belcher asserts no private right of action under the consent order; Belcher sues under
the federal act and the Florida act. (Doc. 34 at 4)

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2. The “HAMP” Trial Plan
Following Belcher’s default Ocwen communicated with Belcher and offered a
trial “HAMP plan.” Ocwen argues that Belcher’s agreement to the HAMP plan,
which includes, among other things, Belcher’s consent to receive foreclosure and
eviction notices, “contradicts” Belcher’s federal and Florida claims and therefore
requires dismissal of the claims. (Doc. 25 at 7–8)
Belcher can sue under the federal act and Florida act regardless of the HAMP
plan. Neither the federal act nor the Florida act permits a consensual waiver of the
alleged claims. Although the Eleventh Circuit provides no guidance on whether a
consumer may waive a statutory protection under the acts, other courts hold that a
consumer may not waive a statutory right.* The legislation was “adopted . . . to
protect customers from debt collectors’ abusive practices.” (Doc. 34 at 6)
Accordingly, Belcher’s HAMP plan does not preclude a right of action under the
federal act and the Florida act.
3. The Federal Act
15 U.S.C. § 1692d states that:
A debt collector may not engage in any conduct the natural
consequence of which is to harass, oppress, or abuse any person in
connection with the collection of a debt. Without limiting the general

*

“[A] ‘right conferred on a private party, but affecting the public interest, may not be waived
or released if such waiver or release contravenes the statutory policy.” Brooklyn Savings Bank v.
O'Neil, 324 U.S. 697, 704 (1945); accord New York v. Hill, 528 U.S. 110, 116 (2000). “A consumer’s
consent cannot waive protection from the practices the FDCPA seeks to eliminate . . . . Permitting
such a waiver would violate the public policy goals pursued by the FDCPA.” Clark v. Capital Credit &
Collection Services, Inc., 460 F.3d 1162, 1171 n. 5 (9th Cir. 2006).

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application of the foregoing, the following conduct is a violation of this
section:
(1) The use or threat of use of violence or other criminal means
to harm the physical person, reputation, or property of any
person.
(2) The use of obscene or profane language or language the
natural consequence of which is to abuse the hearer or reader.
(3) The publication of a list of consumers who allegedly refuse
to pay debts, except to a consumer reporting agency or to
persons meeting the requirements of section 1681a(f) or
1681b(3) of this title.
(4) The advertisement for sale of any debt to coerce payment of
the debt.
(5) Causing a telephone to ring or engaging any person in
telephone conversation repeatedly or continuously with intent
to annoy, abuse, or harass any person at the called number.
(6) Except as provided in section 1692b of this title, the
placement of telephone calls without meaningful disclosure of
the caller’s identity.

Belcher alleges that “[Ocwen’s] actions and omissions constitute violations
of . . . § 15 U.S.C. 1692d.” (Doc. 22 at 49) The amended complaint fails to allege
facts establishing that Ocwen used or threatened violence, used obscene language,
published Belcher’s name in a debtors list, harassed Belcher, or otherwise acted in a
manner likely to violate Section 1692d.
Also, Belcher alleges a violation of Section 1692e(4) and Section 1692e(10).
Section 1692e(4) prohibits “[the] representation or implication that nonpayment of
any debt will result in the arrest or imprisonment of any person or the seizure,
garnishment, attachment, or sale of any property or wages of any person unless such

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action is lawful and the debt collector or creditor intends to take such action.”
Section 1692e(10) prohibits “[t]he use of any false representation or deceptive means
to collect or attempt to collect any debt or to obtain information concerning a
consumer.”
The “second delinquency notice” (Doc. 22-8) and the “third delinquency
notice” (Doc. 22-9) each state that “[failure] to bring your loan current may result in
fees and foreclosure — the loss of your home.” (Doc. 34 at 7) Before Belcher’s
receipt of the delinquency notices Ocwen informed Belcher’s counsel that “any
foreclosure of the property would be placed on hold as long as timely payments were
made during the trial period for the assistance program.” (Doc. 22 at 7) “Ocwen
unequivocally represented to Mr. Belcher that the non-payment of his unmodified
mortgage loan would result in the sale of his property despite Ocwen’s lack of intent
to initiate or continue any foreclosure proceeding against him while he participated
in the trial plan.” (Doc. 34 at 7) Therefore, the amended complaint adequately
alleges facts sufficient to state a claim under Section 1692e(4).
In evaluating a claim under Section 1692e(10), Crawford v. LVNV Funding,
LLC, 758 F.3d 1254, 1258 (11th Cir. 2014), holds that the “least sophisticated
consumer test” applies. Belcher argues that “Ocwen’s collection effort during the
[HAMP plan] are deceptive because [Ocwen] continues to threaten incurrence of
additional fees or the foreclosure of [Belcher’s] home if the delinquent payments on
the unmodified mortgage loan are not paid [Doc 22-8; Doc. 22-9], despite the

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consumer’s compliance with the trial plan. The notices are deceptive to consumers
who would reasonably interpret [the notices] as requiring [a consumer] to bring the
unmodified loan current in addition to or in lieu of paying the trial period amount.”
(Doc. 34 at 8) Therefore, Belcher alleges facts sufficient to state a claim under
Section 1692e(10).
Section 1692f states that “[a] debt collector may not use unfair or
unconscionable means to collect or attempt to collect any debt . . . . [t]he following
conduct is a violation of this section: (1) The 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.” Ocwen argues that Belcher “merely repeat[s] the statutory language without
any factual allegations supporting a violation of the statute.” (Doc. 25 at 11)
Belcher alleges that Ocwen attempted to collect a fee from Belcher for service
of process, which never occurred. (Doc. 22 at 8) The mortgage agreement
(Doc. 22-1 at 11) “permits Ocwen to ‘charge . . . fees for services performed in
connection with Borrower’s default.’” (Doc. 34 at 8–9) Under the mortgage
agreement the lender may charge the borrower only for services performed.
(Doc. 34 at 9) The amended complaint properly alleges that Ocwen attempted to
collect fees for services not performed, the collection of which is not authorized by
the mortgage. (Doc. 34 at 9) Thus Belcher sufficiently alleges a violation of
Section 1692f(1).

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4. The Florida Act
Section 559.72(7), Florida Statutes, provides that “no person shall . . .
[w]illfully communicate with the debtor or any member of her or his family with
such frequency as can reasonably be expected to harass the debtor or her or his
family, or willfully engage in other conduct which can reasonably be expected to
abuse or harass the debtor or any member of her or his family.” Belcher fails to
allege any fact demonstrating that Ocwen willfully communicated with Belcher or his
family at a level reasonably expected to constitute abuse or harassment. In fact the
“amended complaint fails to include any facts that reflect any communications
between Ocwen and [Belcher] . . . all of the alleged letters [Doc. 22-8; Doc. 22-9] and
phone calls [Doc. 22 at 31] were between Ocwen and [Belcher’s] counsel . . . . [T]he
minimal facts found in [the] amended complaint, which only include
communications with [Belcher’s] counsel, cannot constitute harassment of the
debtor, as a matter of law.” (Doc. 25 at 12)
Section 559.72(9), Florida Statutes, states that “no person shall . . . [c]laim,
attempt, or threaten to enforce a debt when such person knows that the debt is not
legitimate, or assert the existence of some other legal right when such person knows
that the right does not exist.” Ocwen asserts that Belcher “wholly fail[s] to identify,
provide, or attach any documentation or specific proof sufficient to support a claim
that Ocwen had ‘actual knowledge of impropriety, or of overreach’ upon which a
Section 559.72(9) claim can be based.” (Doc. 25 at 13) Belcher argues that Ocwen’s

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first, second and third delinquency notices violate Section 559.72(9) “because the
debt from the unmodified mortgage amount was unenforceable under the settlement
terms of Ocwen’s consent [order] . . . and [because] Ocwen had actual knowledge of
the settlement terms” that “prohibited Ocwen from making ‘collection efforts while
the borrower (i) is making timely payments under a trial loan modification or (ii) has
submitted a complete loan modification application, and a modification decision is
pending.’” (Doc. 34 at 9)
Belcher argues that Ocwen violated Section 559.72(9) by attempting to collect
money by sending delinquency notices after Belcher sent a letter agreeing to the
HAMP plan. Further, Belcher argues that, because of the consent order, “Ocwen
had actual knowledge that Mr. Belcher’s unmodified loan amounts were not
collectable during a trial period.” (Doc. 34 at 10) As Belcher states, “Ocwen
misconstrues the use of [the consent order] by Mr. Belcher and the consent [order’s]
relationship to the causes of action . . . . [Belcher’s] claims are not based on
[Ocwen’s] violations of the consent [order] . . . but rather are based on [Ocwen’s]
attempts to collect a debt that is not owed and to assert a legal right that does not
exist.” (Doc. 34 at 4) Accordingly, Belcher alleges facts sufficient to state a claim
under Section 559.72(9).
5. The Mortgage’s Pre-Suit Notice-and-Cure Requirement
Ocwen insists on dismissal of the action because Belcher failed to meet an
obligation under the mortgage to provide notice of a breach before suing. (Doc. 25

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at 14) Belcher responds that Ocwen, as a loan servicer, cannot enforce the notice
provision because Ocwen is a non-party to the contract and the claims in the
amended complaint “do not ‘arise from’ the [contract] or the lender’s action.”
(Doc. 34 at 10) Belcher asserts several arguments about the notice requirement’s
failing to apply in this instance. However, “[b]ecause the causes of action arise
directly from alleged deceptive business practices that are prohibited by the FDCPA
and FCCPA, rather than the mortgage itself . . . the notice-and-cure provision is
inapplicable.” (Doc. 34 at 13) Belcher has a statutory right of action that is
independent from the requirement under the mortgage agreement to give pre-suit
notice.
CONCLUSION
Ocwen’s motion (Doc. 25) to dismiss is GRANTED IN PART. Belcher’s
claim under 15 U.S.C. § 1692(d) and claim under Section 559.72(7), Florida
Statutes, is DISMISSED Belcher may proceed under 15 U.S.C. § 1692(e)(4),
15 U.S.C. § 1692(e)(10), 15 U.S.C. § 1692(f), and Section 559.72(9), Florida Statutes.
No later than JANUARY 6, 2017, Belcher must again amend the complaint to
conform to this order.
Rule 10(b) states that “[i]f doing so would promote clarity, each claim founded
on a separate transaction or occurrence . . . must be stated in a separate count.” In
this action, pleading the claims separately would promote clarity. In Count I,
Belcher alleges that “[d]efendant’s actions and omissions constitute violations of the

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FDCPA . . . including, but not limited to, 15 U.S.C. § 1692d, 1692e, and 1692f.”
(Doc. 22 at 12). In Count II, Belcher alleges that “[d]efendant’s actions and
omissions constitute violations . . . including, but not limited to, FLA. STAT.
§ 559.72(7) and 559.72(9).” (Doc. 22 at 13) Belcher must amend his complaint in
accord with Rule 10(b) and allege each separate claim in a separate count.
ORDERED in Tampa, Florida, on December 15, 2016.

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