Young v. Green Tree Servicing LLC et al

Filing 38

MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that defendant's motion to dismiss [Doc. # 25 ] is granted with respect to plaintiff's claim under the Missouri Merchandising Practices Act. IT IS FURTHER ORDERED that defendant's mot ion to dismiss is denied as to plaintiff's claim that defendant violated the Fair Debt Collection Act (FDCPA) by attempting to collect an improper fee. The defendants motion to dismiss is granted as to all other claims under the FDCPA.. Signed by District Judge Carol E. Jackson on 9/16/16. (KKS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MORLYNE YOUNG,

)
)
Plaintiff,
)
)
vs.
)
)
DITECH FINANCIAL, LLC, formerly known )
as GREEN TREE SERVICING, LLC,
)
)
Defendant.
)

Case No. 4:15-CV-1331 (CEJ)

MEMORANDUM AND ORDER
This matter is before the Court on the motion of defendant Green Tree
Servicing, LLC, to dismiss plaintiff’s claims, pursuant to Fed.R.Civ.P. 12(b)(6).
Plaintiff has filed a response in opposition and the issues are fully briefed.
Plaintiff Morlyne Young, who proceeds pro se, alleges that defendant Ditech
Financial, LLC, improperly reported negative mortgage information that was
entered in his credit reports. Plaintiff filed suit asserting claims based on the Fair
Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681, et seq., the Fair Debt Collection
Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., the Gramm-Leech-Bliley Act, 15
U.S.C. §§ 6801, et seq., and the Dodd–Frank Wall Street Reform and Consumer
Protection Act of 2010 (Dodd–Frank), Pub.L. No. 111–203, 124 Stat. 1376 (2010)
(codified in various sections of Titles 7, 12, and 15 of the U.S. Code). On April 14,
2016, the Court dismissed plaintiff’s claims under the Fair Credit Reporting Act, the
Gramm-Leech-Bliley Act, and the Dodd-Frank Act, with prejudice, and plaintiff’s
FDCPA claim without prejudice. [Doc. #15]. On June 8, 2016, plaintiff filed an
amended

complaint

asserting

claims

under

the

FDCPA

and

Merchandising Practices Act (MMPA), Mo.Rev.Stat. §§ 407.010 et seq.

the

Missouri

I.

Allegations

According to the amended complaint, in April 2015, plaintiff applied to the St.
Louis County Partnership for a commercial loan in the amount of $265,000. The
Partnership found a disqualifying entry on plaintiff’s credit report and declined to
process the loan application. When plaintiff reviewed his credit report, he found a
derogatory entry from defendant for a debt on a mortgage. According to plaintiff,
the debt exceeded the seven-year statute of limitations and included an additional
$2,300 fee that was not authorized by the original contract.1
II.

Legal Standard

The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal
sufficiency of the complaint. Fed. R. Civ. P. 12(b)(6). The factual allegations of a
complaint are assumed true and construed in favor of the plaintiff, “even if it strikes
a savvy judge that actual proof of those facts is improbable.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 556 (2007) (citing Swierkiewicz v. Sorema N.A., 534 U.S.
506, 508 n.1 (2002)); Neitzke v. Williams, 490 U.S. 319, 327 (1989) (“Rule
12(b)(6) does not countenance . . . dismissals based on a judge’s disbelief of a
complaint’s factual allegations.”); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)
(stating that a well-pleaded complaint may proceed even if it appears “that a
recovery is very remote and unlikely”). The issue is not whether the plaintiff will
ultimately prevail, but whether the plaintiff is entitled to present evidence in

1

According to a May 23, 2015, billing statement from Green Tree, plaintiff owed
$82,440.67, consisting of $80,126.67 in principal and $2,314.00 for “pre-charge off
expenses.” The account became delinquent on November 23, 2008, and there were no
transactions on the account between November 23, 2014, and May 23, 2015. [Doc. #27-5
at 1-2].See also Doc. #10-2 at 3-4 (April 23, 2015 billing statement showing no
transactions between October 23, 2014 and April 23, 2015). The billing statement includes
the following notice: “This communication is from a debt collector. It is an attempt to collect
a debt any information obtained will be used for that purpose.”

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support of his claim. Scheuer, 416 U.S. at 236. A viable complaint must include
“enough facts to state a claim to relief that is plausible on its face.” Twombly, 550
U.S. at 570; see id. at 563 (stating that the “no set of facts” language in Conley v.
Gibson, 355 U.S. 41, 45–46 (1957), “has earned its retirement”); see also Ashcroft
v. Iqbal, 556 U.S. 662, 678–84 (2009) (holding that the pleading standard set forth
in Twombly applies to all civil actions). “Factual allegations must be enough to raise
a right to relief above the speculative level.” Twombly, 550 U.S. at 555.
When ruling on a motion to dismiss, a court generally may not consider
matters outside the pleadings. Porous Media Corp. v. Pall Corp., 186 F.3d 1077,
1079 (8th Cir. 1999) (citations omitted). It may, however, consider matters of
public records, materials that do not contradict the complaint, exhibits attached to
the pleadings, and materials necessarily embraced by the complaint. Mills v. City of
Grand Forks, 614 F.3d 495, 498 (8th Cir. 2010). In conjunction with his opposition
to

Green

Tree’s

motion

to

dismiss,

plaintiff

has

provided

copies

of

his

correspondence with defendants and his credit reports. These materials are
necessarily embraced by the complaint and so the Court has considered them.
III.

Discussion
A.

Plaintiff’s MMPA Claim

Defendant argues that plaintiff’s MMPA claim is preempted by a provision of
the FCRA, 15 U.S.C. § 1681t(b)(1)(F), which prohibits state regulations on “any
subject matter regulated under Section 1681s–2.” Section 1681s–2, in turn,
regulates the responsibilities of furnishers of information to consumer reporting
agencies, including the reporting of negative or inaccurate information. Plaintiff’s
claims that defendant violated the MMPA by improperly reporting the alleged

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mortgage debt are thus preempted by the FCRA. Tyson v. Nationstar Mortgage,
LLC, No. 4:15CV00763 ERW, 2016 WL 3348400, at *7 (E.D. Mo. June 16, 2016).
In his opposition to dismissal, plaintiff cites Sibley v. Firstcollect, Inc., 913 F.
Supp. 469, 473 (M.D. La. 1995), to support his contention that the FCRA does not
preempt his MMPA claim. At issue in Sibley was whether the plaintiff could bring
FDCPA claims based on a debt collector’s failure to comply with state licensing
requirements. The defendant argued that the FDCPA preempted state-law licensing
requirements. The court disagreed, citing the plain language of 15 U.S.C. § 1692n,
which explicitly preserves the power of the states to regulate debt collection
practices, so long as the state laws are not inconsistent with the FDCPA. However,
the FCRA’s preemption provision is more restrictive than that of the FDCPA and it
explicitly preempts claims against furnishers of information for reporting inaccurate
information. This is the very claim that plaintiff asserts here and the MMPA claim
must be dismissed.
B.

Plaintiff’s FDCPA Claims

Plaintiff generally alleges that defendant’s debt collection efforts and conduct
abused him. Section 1692d prohibits “conduct the natural consequence of which is
to harass, oppress, or abuse any person in connection with the collection of a debt,”
including using threats or profanity, placing repeated phone calls, or calling without
identifying the caller. Plaintiff has not identified any conduct by defendant that can
be characterized as harassing, oppressive or abusive and thus has not stated a
claim under § 1692d.
Plaintiff alleges that defendant improperly reported his mortgage credit
history to the credit bureaus. Such conduct potentially violates § 1692e(8), which

4

prohibits “communicating . . . credit information which is known or which should be
known to be false.” However, according to allegations in the complaint, plaintiff did
not notify defendant that he disputed the debt until after the derogatory
information appeared in his credit reports, and he does not make any factual
allegations to support a claim that defendant reported the mortgage debt after
learning that it was false or disputed. Accordingly, this claim must be dismissed.
See Wilhelm v. Credico, Inc., 519 F.3d 416, 418 (8th Cir. 2008) (noting that
plaintiff presented no evidence that reports were made to credit agencies after debt
collector learned the debt was disputed).
Plaintiff also alleges that defendant misrepresented itself as a nondebt
collector. Section 1692e generally prohibits debt collectors from using “any false,
deceptive, or misleading representation or means in connection with the collection
of any debt.” However, the billing statements clearly identify that defendant is a
debt collector. Plaintiff does not identify any other communication from defendant
in which it misrepresented its status and attempted to collect a debt. This claim will
be dismissed.
Plaintiff alleges that defendant tried to collect an improper fee that was not
authorized by the original contract. Section 1692e(2)(a) prohibits “the false
representation of . . . the . . . amount . . . of any debt,” while § 1692f(1) bars the
“collection of . . . 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.”

Although defendant moves to dismiss all of

plaintiffs’ FDCPA claims, it does not assert any grounds for dismissing this specific
claim in its motion. Therefore, plaintiff will be allowed to proceed on this claim.

5

Plaintiff alleges that defendant attempted to collect on a debt that had
expired or exceeded the Missouri statute of limitations. In the Eighth Circuit, “no
violation of the FDCPA has occurred when a debt collector attempts to collect on a
potentially time-barred debt that is otherwise valid” without “a threat of litigation or
actual litigation. Freyermuth v. Credit Bureau Services, Inc., 248 F.3d 767, 771
(8th Cir. 2001) (“[A] statute of limitations does not eliminate the debt; it merely
limits the judicial remedies available.”). Plaintiff does not allege that defendant
threatened to bring suit or actually sued in order to collect on the debt and this
claim must be dismissed.
Plaintiff also alleges that defendant did not timely provide privacy or opt-out
notices. The FDCPA does not provide a remedy for these claims and they will be
dismissed.
Accordingly,
IT IS HEREBY ORDERED that defendant’s motion to dismiss [Doc. #25] is
granted with respect to plaintiff’s claim under the Missouri Merchandising Practices
Act.
IT IS FURTHER ORDERED that defendant’s motion to dismiss is denied as
to plaintiff’s claim that defendant violated the Fair Debt Collection Practices Act
(FDCPA) by attempting to collect an improper fee. The defendant’s motion to
dismiss is granted as to all other claims under the FDCPA.

CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE

Dated this 16th day of September, 2016.

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