O'Brien et al v. Seterus, Inc.

Filing 23

ORDER Granting in Part and Denying in Part 7 Motion to Dismiss. Closing Case. Signed by Judge Robin L. Rosenberg on 7/24/2015. (ar2) NOTICE: If there are sealed documents in this case, they may be unsealed after 1 year or as directed by Court Order, unless they have been designated to be permanently sealed. See Local Rule 5.4 and Administrative Order 2014-69.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 9:15-CV-80300-ROSENBERG
DONALD A. O’BRIEN & VANDA
M. O’BRIEN,
Plaintiffs,
v.
SETERUS, INC.,
Defendant.
______________________________/
ORDER GRANTING IN PART AND DENYING
IN PART DEFENDANT’S MOTION TO DISMISS
This matter is before the Court on Defendant’s Motion to Dismiss [DE 7]. The Motion has
been fully briefed. The Court has reviewed the documents in the case file and is fully advised in
the premises. For the reasons set forth below, Defendant’s Motion is granted in part and denied in
part, and this case is dismissed due to the Court’s lack of subject matter jurisdiction.
I.

BACKGROUND

Plaintiffs defaulted on their home mortgage. Defendant is the servicer of Plaintiffs’ home
mortgage and since Plaintiffs’ default Defendant has caused regular drive-by inspections of
Plaintiffs’ home to occur. Also since their default, Plaintiffs sent a letter, which they consider to
have been a qualified written request under the Real Estate Settlement Procedures Act, to
Defendant. Although Defendant responded to the letter, Plaintiffs determined that the response
was insufficient. This lawsuit followed, with Plaintiffs alleging one count under the Real Estate
Settlement Procedures Act (pertaining to the letter sent by Plaintiffs) and one count under the

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Florida Consumer Collection Practices Act (pertaining to the propriety of the drive-by
inspections).
II.

LEGAL STANDARD

In considering a motion to dismiss, the Court must accept the allegations in a complaint as
true and construe them in a light most favorable to the plaintiffs. See Resnick v. AvMed, Inc., 693
F.3d 1317, 1321 (11th Cir. 2012). At the pleading stage, the Complaint need only contain a “short
and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). All that is required is that there are “enough facts to state a claim to relief that is plausible
on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007).
III.

ANALYSIS AND DISCUSSION

Defendant argues that Plaintiffs’ Complaint should be dismissed on three grounds: (1)
Plaintiffs’ RESPA claim should be dismissed because Defendant fully complied with RESPA via
its response to Plaintiffs’ letter, (2) Plaintiffs cannot allege a RESPA violation that caused them
damages, and (3) Plaintiffs cannot allege a cause of action under the FCCPA because the drive-by
inspections at issue were authorized under the terms of Plaintiffs’ mortgage. Each point is
addressed in turn.
1. Defendant’s Response to Plaintiffs’ Letter
Under the Real Estate Settlement Procedures Act, a loan servicer must respond to a written
request for information that pertains to the servicing of the loan. See 12 C.F.R. § 1024.36(d)(1).
The letter Plaintiffs sent to Defendant contained the following requests for information:
(A) Please provide a complete life of loan history.
(B) I am in receipt of your recent mortgage statement dated November 18, 2014, and
would like a detailed explanation as to why you have been conducting regular
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property inspection and charging this account for same. A copy is attached hereto.
Specifically, I am inquiring about the following as relates [sic] to property
inspections:
(1) Please state if you have any reason to believe the subject property is vacant
and/or not in good condition, and if yes, please state the reason.
(2) Please identify the specific section of the mortgage that you rely upon to
authorize any property inspections on the subject property
(3) Please advise why you believe that monthly property inspections are reasonable
or appropriate to protect the lender’s interest in the subject property
(4) Please identify the date upon which you first ordered a property inspection to be
conducted on the subject property
(5) Please state the frequency with which you conduct or cause to be conducted
property inspections upon the subject property
(6) Please state whether you received specific instructions from the owner/lender
of the subject loan to conduct or cause to be conducted property inspections
upon the subject property
(7) The date each property inspection was conducted
(8) Copies of each and every property inspection invoice, report, photographs
taken (if applicable)
(9) Proof of payment for the amounts specified and charged to the account
DE 1-3. Defendant’s response amounted to fifty-two pages, including the following letter:

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DE 1-4. As noted in the above letter, Defendant enclosed copies of the payment history provided
by the prior servicer of the mortgage as well as payment history for the period of time Defendant
serviced the mortgage. Defendant also provided invoices for all property inspections. Finally,
Defendant provided a statement detailing the amount required to pay the loan in full.
Plaintiffs’ position is that Defendant’s response was lacking as to their request under B(1)
(the reason Defendant believed the property to be unoccupied or in poor condition), B(3) (how the
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monthly inspections of Plaintiffs’ property were reasonable), B(6) (whether the owner of
Plaintiffs’ mortgage had specifically requested drive-by inspections), and B(9) (proof of payment
of the amounts specified for drive-by inspections).
Analyzing Defendant’s responses on the foregoing requests, the Court finds that Defendant
did answer Plaintiffs’ queries. Plaintiffs asked for the reason Defendant believed the property at
issue to be unoccupied or in poor condition. Defendant’s response was that property inspections
were conducted on a certain timetable, once a default occurred, in order to protect the
mortgage-holder’s interest in the property, pursuant to the terms of the signed mortgage securing
the loan. Thus, easily inferable from Defendant’s response is the implicit answer that the historical
condition of the property and the occupancy of the property were irrelevant to the inspections. The
property was to be inspected regardless of Plaintiffs’ alleged occupancy, pursuant to the terms of
the mortgage.
Plaintiffs asked how the monthly inspections were reasonable. Defendant’s answer to this
question was clearly inferable and amounted to the same answer discussed above. Plaintiffs asked
whether the owner of the property had specifically requested property inspections occur.
Defendant’s answer to this question was clearly inferable from the response outlined above—the
inspections occur pursuant to the authorization contained in mortgage documents, and a specific
request from the mortgage holder was irrelevant to Defendant’s actions. Finally, Plaintiffs asked
for proof of payment of the drive-by inspections. Defendant responded by providing invoices for
the inspections.
Although Defendant did not give Plaintiffs the answers they desired, or respond with the
level of specificity Plaintiffs apparently requested, Defendant did answer—the property

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inspections were conducted solely because the terms of the mortgage allowed for it—which
Plaintiffs consented to when they executed the mortgage. See Whittaker v. Wells Fargo Bank,
N.A., No. 12:cv-98, 2014 WL 5426497, at *8 (M.D. Fla. Oct. 23, 2014) (“[RESPA] does not
require the servicer to provide the resolution or the explanation desired by the borrower; it requires
the servicer to provide a statement of its reasons.”). Whether or not Defendant’s exercise of
inspection authority was reasonable, or performed without breaching any contractual provisions, is
a question for a different cause of action—not the Real Estate Settlement Procedures Act. RESPA
requires a servicer to respond to requests for information. Defendant did so. Plaintiffs’ RESPA
claim must therefore be dismissed, as the allegations in their Complaint (by virtue of the attached
exhibits) do not state a claim under RESPA.
2. Plaintiffs’ Failure to Allege Damages Under RESPA
Defendant argues that Plaintiffs cannot allege damages for their RESPA claim.
Defendant’s position is that fees associated with a sending qualified written request for
information cannot equate to RESPA damages because, were this so, RESPA claims would have
damages built-in. But this does not limit Plaintiffs’ claim. Plaintiffs’ claim is that they were
required to send a second qualified written request for information because Defendant improperly
responded to the first such request. Damages associated with a second qualified written request,
because of an improper response by a defendant, have been found to qualify as actual damages
under RESPA. See Russell v. Nationstar Mortg., LLC, No. 14-61977-CIV, 2015 WL 541893
(S.D. Fla. Feb. 10, 2015). The propriety of Plaintiffs’ damages claim therefore turns on the
propriety of Defendant’s response which, as the Court has previously discussed, was proper under
RESPA. The Court therefore need not devote further discussion on the issue of damages.

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3.

Plaintiffs’ FCCPA Claim

Defendant argues that Plaintiffs have failed to state a claim under the FCCPA. Plaintiffs
have brought their FCCPA claim under section 559.72(9), Florida Statues, which prohibits a
“[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.” The issue continues to be the drive-by inspections. Defendant argues there can be
no FCCPA claim when its decision to have the drive-by inspections was clearly authorized by the
terms of the mortgage:

DE 7-1.1 The Court is required, however, to accept Plaintiffs’ allegations as true. Plaintiff has
alleged that:
66. Upon information and belief, SETERUS is aware that the subject property is
owner-occupied and that the property is in good repair.
67. SETERUS has employed unlawful practices, policies, and procedures by
causing to be charged fees which were not actually incurred, and/or which exceed
the actual cost of the services rendered, and by rendering services that SETERUS
has no reasonable basis to perform.
68. SETERUS engages is [sic] such practice to minimize the costs incurred in
servicing Plaintiffs’ mortgage, whilst maximizing profit, all at the expense of
Plaintiff.
69. Upon information and belief, SETERUS performs property inspections in order
to increase its billing of Plaintiffs and borrowers at large.
70. Upon information and belief, SETERUS does not use the reports generated
from the property inspections for any useful purpose.
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The Court may consider the terms of the mortgage when, as here, the document is central to Plaintiffs’ claims and is
undisputed in terms of authenticity. See Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002). After Defendant
provided Plaintiffs’ mortgage in an attachment to their Motion to Dismiss, Defendant raised no objection to the
authenticity of the document or the terms contained therein. There can be no question that the terms of the mortgage
(with respect to inspections) are central to Plaintiffs’ claims.

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DE 1. In accepting allegations such as these as true, courts have permitted FCCPA claims to
proceed, even when the terms of the underlying mortgage permitted inspections:
Plaintiff’s affirmative answers to questions on her loan modification application
would have alerted Defendant to Plaintiff’s occupancy in the residence and
continuing desire to remain prior to the relevant [property inspection related fees].
Plaintiff’s mortgage expressly provides that, upon default, the lender may charge
Plaintiff for fees in connection with services rendered to protect the lender’s
interest in the property, such as property inspection and valuation fees. Even so,
taking as true that the lender/loan owner did not require or request the monthly
[property inspection related fees], and that Defendant was aware of the fact that
Plaintiff remained and had a continuing wish to remain in the property and had
represented that she was maintaining the property, Plaintiff has alleged enough to
draw a reasonable inference that the [property inspection related] fees were
unlawfully incurred and assessed to Plaintiff.
...
On the same basis as outlined with respect to the FDCPA, the Court finds that
Plaintiff has sufficiently alleged a violation of the FCCPA, Fla. Stat § 559.72(9).
Tysenn v. Select Portfolio Servs., Inc., No. 15-60381-CIV (S.D. Fla. May 14, 2015). The Court
finds the reasoning in cases such as Tysenn persuasive because, as here, it is the allegation that
Defendant knew, essentially, that an inspection of Plaintiffs’ property was unnecessary and
unreasonable, and that the purpose of the inspection was not for the benefit of the owner of the
mortgage, but solely for the servicer’s financial gain.

As such, Plaintiffs have sufficient

allegations to plausibly assert a claim under the FCCPA and survive Defendant’s Motion to
Dismiss.
One matter remains, that of subject matter jurisdiction. By virtue of the Court’s dismissal
of Plaintiffs’ RESPA claim there is no longer federal question jurisdiction in this case. In the
absence of a federal claim, the Court elects to exercise its discretion in favor of dismissing

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Plaintiffs’ state-law claim under the FCCPA. See United Mine Workers v. Gibbs, 383 U.S. 715,
726 (1966). The Court also examines, however, whether diversity jurisdiction exists in this case.
According to Plaintiffs’ Complaint, the parties are citizens of different states. Diversity
jurisdiction requires, however, an amount in controversy of at least $75,000. 28 U.S.C. § 1332(a).
Plaintiffs’ allegations are that Defendant has conducted thirty-five drive-by inspections and that
Defendant is liable for statutory damages of up to one thousand dollars per violation. Therefore,
even if the Court were to allow that some additional inspections have occurred since the filing of
this suit, and even if the Court were to include the possibility Plaintiffs could recover attorney’s
fees, the amount in controversy in this suit is still far from the necessary threshold of $75,000. See
Cohen v. Office Depot, Inc., 204 F.3d 1069, 1080 (11th Cir. 2000) (allowing for attorney’s fees in
the $75,000 calculation in some circumstances). The Court concludes on the face of the Complaint
that Plaintiffs’ sole surviving count under the FCCPA does not satisfy the Court’s diversity
jurisdiction. Plaintiffs’ FCCPA claim is therefore dismissed for lack of subject matter jurisdiction.
IV.

CONCLUSIONS AND RULING

It is therefore ORDERED AND ADJUDGED that Defendant’s Motion to Dismiss [DE 7]
is GRANTED IN PART AND DENIED IN PART, that Plaintiffs’ RESPA claim is
DISMISSED WITH PREJUDICE, and that Plaintiffs’ FCCPA claim is DISMISSED for lack of
subject matter jurisdiction. The Clerk of the Court is directed to CLOSE THIS CASE.
DONE and ORDERED in Chambers, Fort Pierce, Florida, this 24th day of July, 2015.

________________________________
ROBIN L. ROSENBERG
UNITED STATES DISTRICT JUDGE
Copies furnished to Counsel of Record

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