Borg v. Phelan, Hallinan, Diamond & Jones, PLLC

Filing 60

ORDER: Plaintiff Kelly Borg's Motion for Class Certification (Doc. # 52 ) is denied for lack of standing. Signed by Judge Virginia M. Hernandez Covington on 5/22/2017. (DMD)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
KELLY BORG, on behalf of
herself and all other
similarly situated
individuals,
Plaintiff,
v.

Case No. 8:16-cv-2070-T-33TGW

PHELAN, HALLINAN, DIAMOND
& JONES, PLLC,
Defendant.
______________________________/
ORDER
This matter comes before the Court pursuant to Plaintiff
Kelly Borg’s Motion for Class Certification (Doc. # 52), filed
on May 1, 2017. Defendant Phelan, Hallinan, Diamond & Jones,
PLLC filed its response on May 15, 2017. (Doc. # 58). Because
the Court determines Borg lacks standing, the Motion is
denied.
I.

Background
In 2005, Borg took out a mortgage to purchase a primary

residence. (Doc. # 1 at ¶ 10). U.S. Bank National Association,
which is the client of the law firm Phelan, later obtained
ownership of Borg’s mortgage obligation. (Id. at ¶ 11). Wells
Fargo Bank, N.A. services the loan. (Id.).

1

On February 8, 2016, after Borg allegedly defaulted on
the

mortgage,

Phelan,

on

behalf

of

U.S.

Bank,

filed

a

foreclosure action in the Thirteenth Judicial Circuit in and
for Hillsborough County, Florida, against Borg and “Unknown
Tenants.” (Id. at ¶¶ 12-14; Doc. # 52-1). That case is the
second foreclosure action filed against Borg. (Doc. # 1 at ¶
12). However, Borg prevailed in the first foreclosure action.
(Id.).

The

second

foreclosure

action

is

ongoing

and

no

judgment has been entered. (Borg Dep. Doc. # 54 at 18:10-13).
On July 19, 2016, Borg filed her class action Complaint
in this Court against Phelan, alleging Phelan violated the
Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq.
(FDCPA), during its representation of U.S. Bank in the ongoing
foreclosure action. (Doc. # 1 at ¶ 14). Neither U.S. Bank nor
Wells Fargo are parties in this case. Rather, Borg alleges
only that Phelan violated the FDCPA during the foreclosure
action in four ways: (1) “attempting to collect monthly
installment payments due beyond Florida’s five year statute
of limitations”; (2) “assess[ing] charges against borrowers
for

serving

process

on

‘unknown

tenants’”;

(3)

“falsely

claim[ing] that [Phelan’s] client, U.S. Bank, is the ‘holder’
of the note at issue and, thus, entitled to sue [Borg] . .

2

.”;

and

(4)

previously

“omitting

subject

to

the
a

fact

prior

that

[Borg’s]

foreclosure

home

was

lawsuit”

and

“fail[ing] to [file a second ‘Notice of Intent to Foreclosure’
letter]

prior

to

instituting

the

second

state

court

foreclosure.” (Id. at ¶¶ 15-18). The Complaint alleges Phelan
commits similar violations in the many other foreclosure
actions it initiates. (Id. at 4-6). Then, on August 16, 2016,
Phelan filed a motion to dismiss the Complaint, which the
Court denied. (Doc. ## 6, 27). Thereafter, Borg voluntarily
dismissed two of the four class allegations in the Complaint.
(Doc. # 43).
On

May

1,

2017,

Borg

filed

her

Motion

for

Class

Certification. (Doc. # 52). Although there are two remaining
class allegations in the Complaint, Borg is only pursuing
class certification as to the fees charged by Phelan for
service on unknown tenants. (Id. at 1). Borg
class as:

defines

the

“All persons in Florida during the 12 months

preceding the filing of this lawsuit in which [Phelan] filed
a foreclosure action seeking to collect on charges against
borrowers for serving process against ‘unknown tenants.’”
(Id.). Borg argues it violates Florida law for Phelan to
charge her and the other class members for such unknown tenant
fees. (Doc. # 52 at 2-3). According to Borg, “service of
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process on an unknown tenant is as a matter of law a nullity,
making these charges improper and, therefore, a violation of
the FDCPA.” (Id. at 3).
Phelan filed its response on May 15, 2017, arguing that
Borg lacks standing to
represent

the

class.

bring her claim and thus cannot

(Doc.

#

58).

Alternatively,

Phelan

argues the proposed class lacks commonality and typicality,
and Borg would not be an adequate representative of the class.
II.

Legal Standard
To certify a class action, the moving party must satisfy

a number of prerequisites. First, the named plaintiff must
demonstrate standing. Vega v. T-Mobile USA, Inc., 564 F.3d
1256, 1265 (11th Cir. 2009). Second, the putative class must
meet all four requirements enumerated in Federal Rule of Civil
Procedure 23(a). Id. Those four requirements are “numerosity,
commonality, typicality, and adequacy of representation.” Id.
(quoting Valley Drug Co. v. Geneva Pharm., Inc., 350 F.3d
1181, 1188 (11th Cir. 2003)). Third, the putative class must
fit into at least one of the three class types defined by
Rule 23(b). Id. Relevant to this case, Rule 23(b)(3) permits
certification of a class where (1) common questions of law or
fact

predominate

over

questions

affecting

class

members

individually, and (2) a class action is the superior method
4

for resolving these common questions. Id. A party moving for
certification of a Rule 23(b)(3) class in this Court also
faces the added hurdle of proposing a cost-effective means of
providing notice to putative class members. M.D. Fla. R.
4.04(b). The party moving to certify any class or subclass
ultimately bears the burden of proving that all prerequisites
are met. See Brown v. Electrolux Home Prods., Inc., 817 F.3d
1225, 1233– 34 (11th Cir. 2015).
III. Analysis
“A

plaintiff’s

standing

to

bring

and

maintain

her

lawsuit is a fundamental component of a federal court’s
subject matter jurisdiction.” Baez v. LTD Fin. Servs., L.P.,
No. 6:15-cv-1043-Orl-40TBS, 2016 WL 3189133, at *2 (M.D. Fla.
June 8, 2016)(citing Clapper v. Amnesty Int’l USA, 133 S. Ct.
1138, 1146 (2013)). The doctrine of standing “limits the
category of litigants empowered to maintain a lawsuit in
federal court to seek redress for a legal wrong.” Spokeo,
Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016), as revised (May
24, 2016). To establish standing, “[t]he 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.
“‘The party invoking federal jurisdiction bears the burden of
5

establishing’ standing.” Clapper, 133 S. Ct. at 1148 (quoting
Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)).
The injury in fact requirement is the most important
element. Spokeo, 136 S. Ct. at 1547. An injury in fact is
“‘an

invasion

of

a

legally

protected

interest’

that

is

‘concrete and particularized’ and ‘actual or imminent, not
conjectural or hypothetical.’” Id. at 1548 (quoting Lujan,
504 U.S. at 560). The injury must be “particularized,” meaning
it “must affect the plaintiff in a personal and individual
way.” Spokeo, 136 S. Ct. at 1548 (quoting Lujan, 504 U.S. at
560

n.1).

Additionally,

the

injury

must

be

“concrete,”

meaning “it must actually exist.” Spokeo, 136 S. Ct. at 1548.
The Supreme Court in Spokeo emphasized that a plaintiff cannot
“allege

a

bare

procedural

violation,

divorced

from

any

concrete harm, and satisfy the injury-in-fact requirement of
Article III.” Id. at 1549.
Borg insists the $45 service fee that will be added to
any judgment entered against her in the foreclosure case is
an injury in fact that establishes standing for her and the
putative class. (Doc. # 52 at 9-12). According to Borg,
[She] has alleged economic harm because [she], and
every putative class member[] she seeks to
represent, are having at least $45 added to their
total debt by [Phelan] for service of an “unknown
tenant.” And while that money may not actually be
6

paid until a judgment is entered, it nonetheless is
part of a debt owed by each putative class member.
That debt (or at least the increased amount) is, in
turn, reported as part of what [Borg] owes to banks,
lenders, etc.
(Id. at 9).
Borg cites a record for her account kept by Phelan’s
client that lists charges related to the prior foreclosure
action in which Borg prevailed, including the unknown tenant
service fee. (Doc. # 52-2). While Borg has not produced a
similar record for her current foreclosure action, she notes
“[Phelan’s] corporate representative [Mr. Lenzi] testified
that [such charges] still, are in fact, incurred and passed
on to the borrowers.” (Doc. # 52 at 11). Also, for the current
foreclosure action, Phelan did serve “a friend of [Borg’s]
who happened to be at her house and opened the door” as if he
were an unknown tenant. (Id. at 6-7; Doc. # 57-1).
For the sake of argument, the Court will assume the
record of fees from Borg’s past foreclosure is representative
of how Phelan and its client are tracking the litigation costs
for Borg’s current foreclosure action. In that past record,
which is labeled as a “Corporate Advance History Screen,” the
charges to Borg’s account include a $170 charge for process
service fees, which includes a $45 fee for service on an
unknown tenant. (Doc. # 52-2; Lenzi Dep. Doc. # 53 at 32:107

17). Other charges include $952.50 for filing fees and $910
in attorney’s fees. (Doc. # 52-2).
Phelan counters that Borg has not yet incurred an injury
because Borg “is not yet obligated to pay the $45” for the
ongoing foreclosure action and neither Phelan nor its client
ever demanded payment of the $45 fee from her. (Doc. # 58 at
4-6). Borg admitted she never received a letter from Phelan
saying she owes the $45 fee for service on an unknown tenant.
(Borg Dep. Doc. # 54 at 14:13-18). And Mr. Lenzi, the managing
partner of Phelan, confirmed Phelan had not demanded payment
of the $45 fee from Borg:
Q:
Okay. What I just want to nail down, when it’s
charged to her account, Ms. Borg, to this day, still
has not been given any letter or judgment or order,
or anything else at this point in time actually
asking for that $45; isn’t that correct?
A:

Yes.

(Lenzi Dep. Doc. # 53 at 36:17-22). Rather, in accordance
with its typical practice, Phelan would have charged the
service fee to its client, who then would have added the
charge to a record for Borg’s account. (Id. at 7:15-9:5;
30:19-31:3;

34:13-17).

Such

a

record

of

litigation

fees

charged by Phelan’s client serves as a “judgment worksheet”
tracking “the figures that would be provided by [Phelan’s]
client to prepare the final judgment” in Borg’s foreclosure

8

case. (Id. at 30:16-31:3; 34:13-21). But the foreclosure
action is still ongoing so no judgment of foreclosure has
been entered and the issue of fees and costs has not been
adjudicated by the state court. (Borg Dep. Doc. # 54 at 18:1013). There is no evidence Phelan has submitted a calculation
of its litigation costs to the court in Borg’s foreclosure
action. Nor is there evidence Phelan has argued to that court
that the specific $45 service fee is lawful and should be
awarded to its client.
Still, as Borg emphasizes, Mr. Lenzi acknowledged in his
deposition that the foreclosure complaint requests “an addup of the fees and costs and interest accrued, [and] that the
Court award a judgment allowing us to recover[] those fees,
costs, and accrued interests,” including the $45 service fee.
(Lenzi Dep. Doc. # 53 at 37:22-24). To be precise, the
foreclosure complaint’s prayer for relief requests the court
“award[] Plaintiff its attorney[’s] fees, costs, interest,
[and] advances.” (Doc. # 52-1 at 6). Thus, the foreclosure
complaint

requests

a

ruling

stating

Phelan’s

client

is

entitled to a recovery of its fees and costs if judgment is
entered in its favor. Borg asserts this general request for
an award of all fees, which would include the allegedly
unlawful $45 unknown tenant service fee, is a violation of
9

the FDCPA because it is an attempt to collect a debt that is
not legally owed. (Doc. # 52 at 2-3).
Even if Phelan’s request for reimbursement of the $45
fee in the event judgment is entered against Borg violates
the FDCPA, Borg would still lack Article III standing to bring
that claim. “Article III standing requires a concrete injury
even in the context of a statutory violation.” Spokeo, 136 S.
Ct. at 1549. Not all statutory violations “cause harm or
present any material risk of harm.” Id. at 1550. The Court
finds Borg has not yet incurred a concrete injury as a result
of the $45 service fee Phelan hopes to recover, nor is there
a sufficiently

material risk of harm

that Borg will be

required to pay the fee. Cf. Braitberg v. Charter Commc’ns,
Inc., 836 F.3d 925, 930 (8th Cir. 2016)(finding no Article
III

standing

defendant

where

cable

the

plaintiff

consumer

company

“violated

a

asserted

[statutory]

duty

the
to

destroy personally identifiable information by retaining that
information longer than the company should have kept it”
without alleging the information was disclosed or used in any
way or identifying a material risk it would be).
Borg

correctly

notes

intangible

injuries

may

be

“concrete” for standing purposes. Spokeo, 136 S. Ct. at 1549
(“Although tangible injuries are perhaps easier to recognize,
10

we

have

confirmed

in

many

of

our

previous

cases

that

intangible injuries can nevertheless be concrete.”); see also
Church v. Accretive Health, Inc., 654 F. App’x 990, 995 (11th
Cir.

2016)(holding

disclosures

to

the

which

plaintiff’s

she

was

failure

entitled

to

under

receive

the

FDCPA

constituted a concrete injury). Still, the injury supposedly
incurred by various class members — “having at least $45 added
to their total debt by [Phelan] for service of an ‘unknown
tenant’” — is not intangible. (Doc. # 52 at 9). Having
unlawful fees added to a debt is a tangible economic injury.
But Borg has not incurred that injury.
And while some threatened injuries may support standing,
the risk of the $45 fee being added to Borg’s foreclosure
judgment is too speculative to establish standing. See Susan
B. Anthony List v. Driehaus, 134 S. Ct. 2334, 2341 (2014)(“An
allegation of future injury may suffice if the threatened
injury is ‘certainly impending,’ or there is a

‘substantial

risk’ that the harm will occur.” (quoting Clapper, 133 S. Ct.
at 1147, 1150 n.5)). First, the litigation fees and costs,
including the unknown tenant service fee, will only be owed
by Borg if Phelan’s client prevails in the foreclosure action.
See Fla. Stat. § 57.041(1) (“The party recovering judgment
shall recover all his or her legal costs and charges which
11

shall be included in the judgment . . .”). Mr. Lenzi clarified
that the unknown tenant fee is only paid by the borrower in
a foreclosure action if a judgment is entered against the
borrower:
Q:
That $45 service charge for service of the
unknown tenant is passed on to the live person named
in the foreclosure lawsuit and added to their
account, [] right?
A:

It’s possible.

. . . .
Q:

What do you mean “it’s possible”?

A:
Depending on whether or not the borrower ends
up paying the loan, or judgment’s entered, or if
there’s other loss mit[igation] options.
Q:
But in every instance, the $45 is charged to
the borrower, correct?
. . . .
A:

Yeah, it could be.

Q:

I’m not clear on what you mean, “it could be.”

A:
If the file would go through to judgment, yes,
it would be charged.
(Lenzi Dep. Doc. # 53 at 8:7-9:5).
It is uncertain whether a foreclosure judgment will be
entered against Borg for her alleged default on her mortgage.
Cf. Whitmore v. Arkansas, 495 U.S. 149, 159-60 (1990)(“It is
just not possible for a litigant to prove in advance that the
judicial system will lead to any particular result in his

12

case. Thus, . . . there is no amount of evidence that
potentially could establish that Whitmore’s asserted future
injury

is

real

and

immediate.”

(citation

and

internal

quotation marks omitted)). Indeed, Borg states she prevailed
in the first foreclosure proceeding brought against her.
(Doc.

#

1

at

¶

12).

If

Borg

prevails

in

the

current

foreclosure action, or reaches a settlement with Phelan’s
client, or goes through an alternate loss mitigation process,
then Borg would not owe the $45 service fee.
Therefore, Borg’s assertion “while that money may not
actually be paid until a judgment is entered, [the $45 fee]
nonetheless is part of a debt owed by each putative class
member,” is incorrect. (Doc. # 52 at 9). The $45 for service
on unknown tenants is a fee Phelan charges to its own client
and tracks along with other litigation costs to be recouped
if judgment is subsequently entered against the borrower.
Under Borg’s reasoning, all other litigation costs tracked by
Phelan’s client — including the attorney’s fees and filing
fee for the foreclosure action — have already been added to
Borg’s debt simply because Phelan would move to recover them
if its client prevails. But, without a judgment adjudicating
Phelan’s client as the prevailing party and taxing those
costs, Borg does not owe those costs.
13

Next, even if a foreclosure judgment is entered against
Borg, it is speculative whether the $45 fee will actually be
added to the judgment. While Phelan may request the fee as
part of its costs in the foreclosure action, the state court
may determine the fee is unreasonable or not taxable to Borg.
In this action, Borg argues it is contrary to Florida law for
the unknown tenant fee to be taxed against her. (Doc. # 52 at
2-3). Borg is free to raise this argument with the state
court, which would not impose the fee on Borg if it agrees
the service on an unknown tenant was improper and the fee
unlawful. See Seminole Cty. v. Koziara, 881 So. 2d 83, 85 n.2
(Fla. 5th DCA 2004)(“If (as there almost never is) there is
a genuine dispute over an identified item of taxable costs,
the court should conduct a hearing to resolve the dispute.”);
Tacher

v.

Mathews,

845

So.2d

332,

334

(Fla.

3d

DCA

2003)(noting section 57.041(1), Fla. Stat., mandates that the
prevailing party shall recover all lawful court costs).
Thus, Borg will incur the $45 economic injury of which
she complains only if (1) she loses the foreclosure action
and (2) the state court then decides — erroneously, in Borg’s
eyes — that the service fee should be added to the judgment
pursuant to Florida law. Such an abstract injury is not
enough.

See

O’Shea

v.

Littleton,
14

414

U.S.

488,

494

(1974)(“Abstract injury is not enough. It must be alleged
that the plaintiff ‘has sustained or is immediately in danger
of sustaining some direct injury.’”(citation omitted)); see
also Clapper, 133 S. Ct. at 1150 (“We decline to abandon our
usual reluctance to endorse standing theories that rest on
speculation about the decisions of independent actors.”).
As

Borg

does

not

have

standing

to

bring

a

claim

challenging the $45 unknown tenant service fee, she cannot
serve as representative of the proposed class. Therefore,
Borg’s Motion for Class Certification (Doc. # 52) is denied
for lack of standing.
Accordingly, it is now
ORDERED, ADJUDGED, and DECREED:
Plaintiff Kelly Borg’s Motion for Class Certification
(Doc. # 52) is DENIED for lack of standing.
DONE and ORDERED in Chambers in Tampa, Florida, this
22nd day of May, 2017.

15