CHILLEMI v. PHELAN HALLINAN & DIAMOND, PC. et al

Filing 72

MEMORANDUM AND ORDER that Defendant Phelan's 62 Motion to Dismiss is granted with prejudice. The Clerk is directed to close the file. Signed by Judge Peter G. Sheridan on 9/19/2018. (mps)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Delores Chillemi,
Civil Action No.
3:17-cv-10507 (PGS) (LHG)

Plaintiff,
v.

MEMORANDUM
AND ORDER

Phelan Hallinan & Diamond, PC, and U.S.
Bank, NA,
Defendants.

SHERIDAN, U.S.D.J.
This matter comes before the Court on a motion filed by Defendant Phelan Haflinan
Diamond & Jones (Phelan) to dismiss for lack of subject matter jurisdiction. Plaintiff alleges
Defendants wrongfully initiated a foreclosure action, in violation of the Fair Debt Collection
Practices Act (FDCPA), 15 U.S.C.
(NJCFA), N.J.S.A.

§ 56:8-1

§

to -20.

1692 to l692p, and the New Jersey Consumer Fraud Act

(See Complaint).

Phelan claims it recently acquired

“documentary evidence which confirmed.. that this matter falls outside the scope of” the FDCPA
.

and the NJCFA. ECF 62-1.
Under Federal Rule of Civil Procedure 1 2(h)(3), “If the court determines at any time that
it lacks subject matter jurisdiction, the court must dismiss the action.” The FDCPA defines debt
as, in pertinent part, requiring a showing that the “obligation to pay money” is “primarily for
personal, family, or household purposes.” 15 U.S.C.

§

1692a(5). “Many courts have found that

the FDCPA does not apply to debts associated with investment properties because the debt was

not incurred for ‘personal, family, or householdpurposes.” Akinfaderin-Abua v. Dimaiolo, 2014

WL 345690, at *3 (D.N.J. Jan. 30, 2014) (collecting cases). Federal District Courts do not have
jurisdiction under the FDCPA over disputes relating to obligations that are outside the statutory
definition of debt. See Staub v. Harris, 626 F.2d 275 (3d Cir. 1980).
Plaintiff, in completing the refinance application, represented that the property was for
“investment”; indicated her “present address” was different from the property that was the subject
of the loan; and stated that the property was a rental with $2,137.50 monthly income. (Certification
of Yoder, Exhibit A, at 1-3). Finally, the loan closing instructions indicate that the property
type/occupancy is “1 Family/Investment Prop.” Id. at 5. Even accepting Plaintiffs argument that
the purpose of the refinance was for “Cash-Out/Other,” see id. at 1, the loan amount was primarily
used to refinance the investment property, see id. at 3.
The evidence presented with Phelan’s application establishes that the obligation at issue is
for plaintiffs rental property. The refinancing was therefore not “primarily for personal, family,
or household purposes,” and is outside the FDCPA definition of debt. 15 U.S.C. §1692a(5). The
Court therefore lacks subject matter jurisdiction to adjudicate this dispute and shall not exercise
supplemental jurisdiction over Plaintiffs NJCFA claim under 28 U.S.C.

§

1367(a).

ORDER

Having carefully reviewed and taken into consideration the submissions of the parties, as
well as the arguments advanced; for good cause shown, and for the foregoing reasons,
IT IS on this

t

day of September, 2018,

ORDERED that Defendant Phelan’s motion to dismiss be and hereby is GRANTED with
prejudice. The clerk is directed to close the file.

PETER G. SHERIDAN, U.S.D.J.

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