COHEN v. SPECIALIZED LOAN SERVICING et al
OPINION FILED. Signed by Judge Robert B. Kugler on 1/20/17. (js)
NOT FOR PUBLICATION
(Docs. No. 10, 13)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Noel P. COHEN, III,
Civil No. 16-4234 (RBK/JS)
SERVICING, et al.,
KUGLER, United States District Judge:
Plaintiff Noel P. Cohen, III (“Plaintiff”), pro se, brings claims against Defendants
Specialized Loan Servicing (“SLS”) and Phelan Hallinan & Diamond, P.C. (“PHDJ”)
(collectively, “Defendants”) for violations of the Fair Debt Collection Practices Act (“FDCPA”),
15 U.S.C. § 1692 et seq. This matter is before the Court upon SLS’s and PHDJ’s respective
Motions to Dismiss (Docs. No. 10, 13). For the reasons set forth in this Opinion, SLS’s Motion
is GRANTED IN PART, and PHDJ’s Motion is GRANTED.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This matter arises out of a mortgage loan that Plaintiff took out on October 20, 2006.
Compl. ¶ 9. Plaintiff alleges that, following a foreclosure action initiated by the U.S. Bank
National Association in the Superior Court of New Jersey, Hudson County, Defendants engaged
in collection practices that violated the FDCPA. Id. ¶ 10. In particular, Plaintiff pleads that PDHJ
continued attempting to collect the debt even after Plaintiff sent a notice to cease all collection
activities. Id. ¶ 13. With regards to SLS, the Complaint alleges that it failed to obtain verification
of the debt: SLS sent a letter to Plaintiff on May 26, 2016 stating it had been transferred
servicing rights to the loan, Plaintiff responded with a notice of dispute on June 13, 2016
requesting verification and validation of the debt, and SLS purportedly never provided such
verification. Id. ¶¶ 11–12.
Plaintiff filed a Complaint on July 11, 2016 bringing claims under 15 U.S.C. §§ 1692c(a),
1692c(c), 1692g(b), and 1692i of the FDCPA (Doc. No. 1). Id. ¶¶ 20–22. On August 23, 2016
and September 2, 2016, SLS and PHDJ each brought respective Motions to Dismiss (Docs. No.
STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss an action for failure
to state a claim upon which relief can be granted. When evaluating a motion to dismiss, “courts
accept all factual allegations as true, construe the complaint in the light most favorable to the
plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff
may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)
(quoting Phillips v. Cty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). A complaint survives a
motion to dismiss if it contains sufficient factual matter, accepted as true, to “state a claim to
relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). It
is not for courts to decide at this point whether the non-moving party will succeed on the merits,
but “whether they should be afforded an opportunity to offer evidence in support of their
claims.” In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 215 (3d Cir. 2002). While
“detailed factual allegations” are not necessary, a “plaintiff’s obligation to provide the grounds of
his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal quotations
omitted); see also Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009).
In making this determination, the court conducts a three-part analysis. Santiago v.
Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the court must “tak[e] note of the
elements a plaintiff must plead to state a claim.” Id. (quoting Iqbal, 556 U.S. at 675). Second, the
court should identify allegations that, “because they are no more than conclusions, are not
entitled to the assumption of truth.” Id. (quoting Iqbal, 556 U.S. at 679). “[T]hreadbare recitals
of the elements of a cause of action, supported by mere conclusory statements,” do not suffice.
Id. at 131 (quoting Iqbal, 556 U.S. at 678). Finally, “where there are well-pleaded factual
allegations, a court should assume their veracity and then determine whether they plausibly give
rise to an entitlement for relief.” Id. (quoting Iqbal, 556 U.S. at 679). This plausibility
determination is a “context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 556 U.S. at 679. A complaint cannot survive a motion to
dismiss where a court can only infer that a claim is merely possible rather than plausible. Id.
A. Rooker-Feldman Abstention
SLS and PHDJ argue that the Rooker-Feldman doctrine bars Plaintiff’s claims from this
Court. The Supreme Court decisions in Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), and
District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), established the basic
principle that a federal district court cannot exercise jurisdiction if it would result in
“overturn[ing] an injurious state-court judgment.” Exxon Mobil Corp. v. Saudi Basic Indus.
Corp., 544 U.S. 280, 292 (2005). According to the Third Circuit:
there are four requirements that must be met for the Rooker-Feldman doctrine to
apply: (1) the federal plaintiff lost in state court; (2) the plaintiff “complain[s] of
injuries caused by [the] state-court judgments”; (3) those judgments were
rendered before the federal suit was filed; and (4) the plaintiff is inviting the
district court to review and reject the state judgments . . . . The second and fourth
requirements are the key to determining whether a federal suit presents an
independent, non-barred claim.
Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 166 (3d Cir. 2010)
(quoting Exxon Mobil, 544 U.S. at 284).
Courts in this District have declined to exercise jurisdiction where the matter directly
challenged a state foreclosure decision. See, e.g., Hua v. PHH Mortg. & Phelan Hallinan &
Diamond, No. Civ. 14-7821 (JBS/AMD), 2015 WL 5722610, at *6 n.9 (D.N.J. Sept. 29, 2015);
Willoughby v. Zucker, Goldberg & Ackerman, LLC, No. Civ. 13-7062 (FSH), 2014 WL
2711177, at *3 (D.N.J. June 16, 2014). The Rooker-Feldman doctrine, however, does not bar a
claim where the plaintiff is not “attempting to solicit direct federal review of the [state] courts’
decisions.” Conklin v. Anthou, 495 F. App’x 257, 262 (3d Cir. 2012). Plaintiff here attacks not
the foreclosure decision itself but the practices used by Defendants to collect the debt. As such,
Rooker-Feldman does not apply and is not grounds to bar the matter from proceeding.
B. Colorado River Abstention
SLS additionally argues that the Court should abstain from hearing the case under
Colorado River. Pursuant to Colorado River abstention, a federal court may abstain from
asserting jurisdiction where: (1) “there is a parallel state proceeding that raises substantially
identical claims [and] nearly identical allegations and issues,” and (2) “‘extraordinary
circumstances’ meriting abstention are present” pursuant to a multifactor test. Nationwide Mut.
Fire Ins. Co. v. George V. Hamilton, Inc., 571 F.3d 299, 308 (3d Cir. 2009) (internal quotations
and citations omitted). Federal and state proceedings are parallel where they “involve the same
parties and substantially identical claims, raising nearly identical allegations and issues, and
when plaintiffs in each forum seek the same remedies.” Golden Gate Nat. Sr. Care, LLC v.
Minich ex rel. Estate of Shaffer, 629 F. App’x 348, 350 (3d Cir. 2015) (internal quotations and
SLS contends that courts in this District have invoked Colorado River abstention in cases
where there was a concurrent state foreclosure action. See, e.g., Ruffolo v. HSBC Bank USA,
N.A., No. Civ. 14-638 (MAS)(DEA), 2014 WL 4979699, at *4 (D.N.J. Oct. 3, 2014); Benedict v.
Jpmorgan Chase Bank, N.A, No. Civ. 15-2293 (FLW), No. Civ. 15-3343 (FLW), 2016 WL
310752, at *2 (D.N.J. Jan. 26, 2016). Those federal proceedings, however, involved claims that
were also present in the parallel state proceeding; those plaintiffs for example challenged the
standing of the defendants in the underlying foreclosure suit. Id. This matter, by contrast, does
not dispute the foreclosure itself but how Defendants collected the debt following the foreclosure
decision. Because the federal and state cases here do not contain substantially identical claims,
this Court will not refrain from asserting jurisdiction under Colorado River.
The FDCPA provides a cause of action to consumers who have been subjected to “the
use of abusive, deceptive, and unfair debt collection practices.” 15 U.S.C. § 1692(a). A plaintiff
bringing an FDCPA claim must show that “(1) she is a consumer, (2) the defendant is a debt
collector, (3) the defendant’s challenged practice involves an attempt to collect a ‘debt’ as the
Act defines it, and (4) the defendant has violated a provision of the FDCPA in attempting to
collect the debt.” Douglass v. Convergent Outsourcing, 765 F.3d 299, 303 (3d Cir. 2014).
Because the FDCPA is a remedial statute, courts construe it broadly. Lesher v. Law
Offices of Mitchell N. Kay, PC, 650 F.3d 993, 997 (3d Cir. 2011). Courts should analyze
“[l]ender-debtor communications potentially giving rise to claims under the FDCPA” under the
“least sophisticated debtor” standard. Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir.
2008) (quoting Brown v. Card Serv. Ctr., 464 F.3d 450, 454 (3d Cir. 2006)). This is not a
standard of reasonableness, because “a communication that would not deceive or mislead a
reasonable debtor might still deceive or mislead the least sophisticated debtor.” Brown, 464 F.3d
at 454. Although the standard is low, it still “prevents liability for bizarre or idiosyncratic
interpretations of collection notices by preserving a quotient of reasonableness and presuming a
basic level of understanding and willingness to read with care.” Wilson v. Quadramed Corp., 225
F.3d 350, 354–55 (3d Cir. 2000) (quoting United States v. Nat’l Fin. Servs., Inc., 98 F.3d 131,
136 (4th Cir. 1996)).
Plaintiff alleges that Defendants violated 15 U.S.C. §§ 1692c(a), 1692c(c), 1692g(b), and
1692i of the FDCPA. The Court addresses each claim in turn.
Plaintiff first asserts that he did not give SLS permission to communicate with him in
violation of § 1692c(a). Section 1692c(a) requires a debt collector to obtain consent prior to
contacting a consumer in certain situations: where the time or place is unusual, the debt collector
knows the consumer is represented by an attorney, and at the consumer’s place of employment.
The Complaint provides no indication that any of those situations apply here. As such, the Court
dismisses the claim under § 1692c(a) without prejudice.
Section 1692c(c) requires a debt collector to cease further communication with the debtor
under certain circumstances. In particular, § 1692c(c) provides:
If a consumer notifies a debt collector in writing that the consumer refuses to pay
a debt or that the consumer wishes the debt collector to cease further
communication with the consumer, the debt collector shall not communicate
further with the consumer with respect to such debt, except-6
(1) to advise the consumer that the debt collector’s further efforts are being
(2) to notify the consumer that the debt collector or creditor may invoke specified
remedies which are ordinarily invoked by such debt collector or creditor; or
(3) where applicable, to notify the consumer that the debt collector or creditor
intends to invoke a specified remedy.
Plaintiff here asserts that SLS and PHDJ continued attempting to collect the debt after he told
them to cease further communications. The pleadings, however, provide only a formulaic
recitation of provision § 1692c(c), and contain no supporting factual matter. Because Rule
12(b)(6) requires more to make out a plausible claim for relief, the Court dismisses this claim
Plaintiff alleges that Defendants SLS and PHDJ failed to verify and validate the debt
upon Plaintiff’s notification.1 Section 1692g(b) provides:
If the consumer notifies the debt collector in writing within the thirty-day period .
. . that the debt, or any portion thereof, is disputed, . . . the debt collector shall
cease collection of the debt, or any disputed portion thereof, until the debt
collector obtains verification of the debt . . . and a copy of such verification . . . is
mailed to the consumer by the debt collector.
Thus, once a consumer exercises the statutory right to dispute the debt, the debt collector must
cease collection activities until providing verification of the debt. See, e.g., Zaborac v. Phillips &
Cohen Assoc., Ltd., 330 F. Supp. 2d 962, 966 (N.D. Ill. 2004).
SLS contends that upon receiving Plaintiff’s notice of dispute it responded with a letter
verifying the debt, and attaches a copy of the letter to its Motion to Dismiss. In considering a
Rule 12(b)(6) motion to dismiss, a court may consider only the allegations of the complaint,
The Complaint appears to mistakenly allege a violation of § 1692g(b) as § 1692g(a). Compl. ¶
documents attached or specifically referenced in the complaint if the claims are based on those
documents, and matters of public record. See Winer Family Trust v. Queen, 503 F.3d 319, 327
(3d Cir. 2007). If matters outside the pleadings are presented to the court, the court has discretion
to either convert the motion to dismiss into a motion for summary judgment, or ignore the
matters outside the pleadings and continue to treat the filing as a motion to dismiss. Kurdyla v.
Pinkerton Sec., 197 F.R.D. 128, 131 (D.N.J. 2000). For the court to convert the motion to one for
summary judgment, both parties must (1) have notice that the motion could be treated as one for
summary judgment, and (2) have been given a reasonable opportunity to present relevant
materials. Fed. R. Civ. P. 12(c); see Carver v. Plyer, 115 F. App’x 532, 536–37 (3d Cir. 2004).
The Court here will exercise its discretion to first provide the parties notice and then convert
SLS’s Motion to Dismiss the § 1692g(b) claim to a motion for summary judgment.
Regarding Plaintiff’s § 1692g(b) claim against PHDJ, Plaintiff never asserts that he wrote
to PHDJ to dispute the debt and trigger PHDJ’s obligation to obtain verification. The Court thus
dismisses the § 1692g(b) claim against PHDJ without prejudice.
Plaintiff also alleges a violation of § 1692i, which requires that an action to enforce an
interest in real property securing the consumer’s obligation be brought “only in a judicial district
or similar legal entity in which such real property is located.” In this case, the underlying
foreclosure action was brought in New Jersey Superior County, Hudson County by a third party,
U.S. Bank National Association, and there is no evidence that SLS or PHDJ initiated the suit.
Thus, neither Defendant brought an action to enforce an interest in real property of Plaintiff’s to
trigger § 1692i, and the Court dismisses this claim with prejudice.
For the foregoing reasons, SLS’s Motion to Dismiss is GRANTED IN PART. PHDJ’s
Motion to Dismiss is GRANTED.
s/ Robert B. Kugler
ROBERT B. KUGLER
United State District Judge
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