DeJesus et al v. BAC Home Loans Servicing, LP et al
Filing
29
ORDER granting 18 Motion to Dismiss; granting 22 Motion to Dismiss for Failure to State a Claim. Ordered by Judge Kiyo A. Matsumoto on 9/26/2014. For the reasons set forth in the enclosed Memorandum and Order, defendants BAC and Frenkel Lambert's motions to dismiss are granted, and the complaint is dismissed in its entirety with prejudice. The Clerk of Court is respectfully requested to enter judgment in favor of defendants and close this case. (Alagesan, Deepa)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------------- X
JUAN DEJESUS and SANTA DEJESUS, as
individuals and on behalf of others
similarly situated,
MEMORANDUM AND ORDER
Plaintiffs,
13-CV-2864(KAM)(VVP)
-againstBAC HOME LOANS SERVICING, LP, fka
COUNTRYWIDE HOME LOANS SERVICING, LP
AND FRENKEL, LAMBERT, WEISS, WEISMAN &
GORDON, LLP,
Defendants.
--------------------------------------- X
MATSUMOTO, United States District Judge:
On May 15, 2013, plaintiffs Juan DeJesus and Santa
DeJesus (“plaintiffs”) filed the instant Complaint against BAC
Home Loans Servicing, LP, fka Countrywide Home Loans Servicing,
LP (“BAC”) and Frenkel, Lambert, Weiss, Weisman & Gordon, LLP
(“Frenkel Lambert” and together, “defendants”), on behalf of
themselves and others similarly situated, alleging violations of
the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et
seq. (“FDCPA”) and § 349 of the New York General Business Law
(“GBL”).
Plaintiffs seek damages for the alleged FDCPA
violations by defendants during the course of a pending state
foreclosure action against them.
Defendants have moved to
dismiss the Complaint as time-barred and for failure to state a
claim upon which relief can be granted pursuant to Federal Rule
of Civil Procedure 12(b)(6).
Defendant Frenkel Lambert has
moved in the alternative for pre-answer summary judgment against
plaintiffs pursuant to Federal Rule of Civil Procedure 56.
For
the reasons that follow, defendants’ motions to dismiss the
Complaint are granted with prejudice, because any amendment by
plaintiff would be futile.
BACKGROUND
Plaintiffs’ complaint (ECF No. 1, Complaint) contains
few factual allegations, which are taken to be true for the
purpose of deciding the instant motions and can be summarized as
follows.
On July 28, 2008, plaintiffs, residents of Kings
County, New York, obtained a mortgage loan for $497,350 from All
American Home Mortgage Corp. (“All American”), which was
recorded by Mortgage Electronic Registration Systems (“MERS”) as
nominee for All American.
(Compl. ¶¶ 18-19.)
On June 15, 2010,
defendant Frenkel Lambert filed a foreclosure action on behalf
of BAC (BAC Home Loans Servicing, LP fka Countrywide Home Loans
Servicing, LP v. Juan De Jesus, Santa De Jesus, et al., Index
No. 15133/2010 (the “Foreclosure Action”)) against plaintiffs in
the Supreme Court of New York, Kings County.
(Compl. ¶ 20.)
BAC’s complaint (the “Foreclosure Complaint”) averred that BAC
was the holder of both the note and the mortgage by way of
assignment.
(Id. ¶ 21.)
The Foreclosure Complaint only
attached, however, an assignment of the mortgage and not an
2
assignment of the note.
(Id.)
The Foreclosure Complaint stated
that the balance of principal was owed to BAC as the “sole, true
and lawful owner of the said note and mortgage securing the
same.”
(Id. ¶¶ 22-23.)
The Foreclosure Complaint further
alleged in relevant part:
The note and mortgage were assigned to BAC Home Loans
Servicing, LP, fka Countrywide Home Loans Servicing,
LP by an assignment which is in the process of being
recorded. Plaintiff is also in possession of the
original note with a proper endorsement and/or allonge
and is therefore, the holder of both the note and
mortgage, which passes as incident to the note. A copy
of the mortgage and assignment is annexed hereto as
Exhibit B.
(ECF No. 18-5, Decl. of Barry Weiss (“Weiss Decl.”) Ex. C ¶ 4.)1
At some point in 2011, BAC sent a letter to plaintiffs informing
them that, as of July 1, 2011, the servicing of their mortgage
loan was transferred to another entity and BAC would no longer
be the loan servicer.
(Id. ¶ 26.)
Although this change
occurred after the Foreclosure Action had been filed in state
court, neither BAC nor Frenkel Lambert notified the state court
that BAC was no longer the loan servicer for plaintiffs’
mortgage.
(Id. ¶ 27.)
Plaintiffs allege in their complaint in this action,
upon information and belief, that both BAC and Frenkel Lambert
1
In resolving a motion to dismiss, “courts may consider the full text of
documents that are quoted in the complaint or documents that the plaintiff
either possessed or knew about and relied upon in bringing the suit.” Holmes
v. Air Line Pilots Ass’n, Int’l, 745 F. Supp. 2d 176, 193 (E.D.N.Y. 2010)
(internal quotation marks omitted).
3
are “debt collectors” as defined in 15 U.S.C. § 1692a(6) and
that they regularly attempt to collect consumer debts alleged to
be due to another.
(Id. ¶¶ 10, 13-14.)
Plaintiffs allege that
it is defendants’ policy and practice to collect money from
mortgagees by commencing foreclosure proceedings, to communicate
false information to New York courts in collecting alleged
debts, and to engage in false or misleading collection attempts
for the sole purpose of harassing consumers.
(Id. ¶¶ 35-39.)
In accordance with those practices, according to plaintiffs,
defendants attempted to collect an alleged debt from plaintiffs
via the Foreclosure Action. (See id. ¶ 15.)
The other relevant facts in this case, also the
subject of the still-pending Foreclosure Action, are taken from
the parties’ statements pursuant to Local Civil Rule 56.1 and
the admissible evidence contained in the exhibits cited and
annexed to the parties’ motion papers, and are undisputed unless
otherwise indicated.
The court views the facts in the light
most favorable to the nonmoving party with respect to each
motion.
Prior to filing the Foreclosure Action, Frenkel
Lambert gained physical possession of the original note signed
by plaintiffs and note allonge, which had been endorsed to
Countrywide Bank, FSB and then endorsed by Countrywide Bank, FSB
in blank.
(ECF No. 18-2, Weiss Decl ¶ 5); see also ECF No. 18-
4
4, Weiss Decl. Ex. B at 2-5.)
Frenkel Lambert had also received
a copy of the plaintiffs’ mortgage and an assignment of the
mortgage to BAC dated May 21, 2010.
Weiss Decl. Ex. B at 6-17.)
(Weiss Decl. ¶ 5; see also
Plaintiffs contend that they are
“without knowledge as to whether [the submitted copies of the
note, note allonge, mortgage, and mortgage assignment] are ‘true
and correct’ copies of those documents.”2
(ECF No. 19,
Counterstatement of Material Facts (“Pls.’s Stmt.”).)
The Foreclosure Complaint alleged that plaintiffs
failed to make mortgage payments due on June 1, 2009 and their
default continued for a period in excess of 15 days. (Weiss
Decl. Ex. C ¶ 8).
The Foreclosure Action was filed
approximately one year later on June 18, 2010, and a default was
entered against plaintiffs after they failed to answer the
Foreclosure Complaint.
(Weiss Decl. ¶ 6, Ex. C.)
Plaintiffs,
through their counsel, Abel Pierre, Esq., who also represents
them in this case, moved to vacate their default in answering
the Foreclosure Complaint on March 10, 2011.
(Weiss Decl. ¶ 7;
see also ECF No. 18-6, Weiss Decl. Ex. D, Mot. to Vacate
2 In support of its motion to dismiss, BAC submitted a declaration from Susan
E. Magaddino, an “AVP/OPS Team Manager” for Bank of America, N.A., successor
by merger to BAC. (See ECF No. 23, Decl. of Susan Magaddino (“Magaddino
Decl.”.) In her declaration, Ms. Magaddino states that she has access to and
is familiar with the business records relating to the “history,
administration and collection activities” of plaintiffs’ mortgage, and that
the relevant records “were made at or near the time of the actions or events
they reflect by, or from information transmitted from, a person with
knowledge of the subject transaction in the regular practice and ordinary
course of business.” (Id. ¶¶ 4-5.)
5
Default.)
Frenkel Lambert, as counsel for BAC, filed an
affirmation in opposition to the motion to vacate on April 29,
2011, and Mr. Pierre submitted a reply affirmation on May 14,
2013.
(Weiss Decl. ¶¶ 8-9.)
The fully-briefed motion was
submitted to the Honorable Kenneth Sherman of the Supreme Court
of New York, Kings Country on May 22, 2013,3 and is still pending
as of the date of this Memorandum and Order.
(Id. ¶ 10.)
After filing their motion to vacate their default in
the Foreclosure Action, plaintiffs were notified by BAC that it
would no longer be the servicer for plaintiffs’ mortgage.
On
July 1, 2011, BAC advised plaintiffs that it had merged with and
into Bank of America, N.A., which took over servicing
plaintiffs’ loan.
(Compl. ¶ 26; ECF No. 23, Magaddino Decl. ¶
8; see also Magaddino Decl. Ex. C.)
Plaintiffs state that,
after receiving the letter from BAC, they did not know what
entity held their loan and to whom they should make payments.
(ECF No. 19-2, Aff. of Juan DeJesus in Opp. to [Frenkel
Lambert’s] Mot. to Dismiss ¶ 6; ECF No. 19-2, Aff. of Santa
DeJesus in Opp. to [Frenkel Lambert’s] Mot. to Dismiss ¶ 6.)
Plaintiffs also allege that defendants never informed the state
court that BAC was no longer servicing the loan.
(Compl. ¶ 27.)
Plaintiffs filed the instant action on May 15, 2013,
3
Plaintiffs aver that they do not know when the motion was submitted to the
Kings County Supreme Court. (Pls.’s Stmt. ¶ 6.)
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one day after Mr. Pierre submitted a reply affirmation in
support of plaintiffs’ motion to vacate the default in the
Foreclosure Action.
On September 27, 2013, defendant BAC served
a motion to dismiss the complaint and defendant Frenkel Lambert
served a motion to dismiss and motion for summary judgment on
plaintiffs.
Plaintiffs served their opposition papers on
November 4, 2013, and defendants replied and filed the fullybriefed motions on November 18, 2013.
DISCUSSION
I.
Standard of Review
Pursuant to Rule 12(b)(6), a plaintiff’s complaint
must be dismissed if it fails to state a claim upon which relief
can be granted.
Fed. R. Civ. P. 12(b)(6).
In considering a
motion to dismiss, the court must “accept as true all
allegations in the complaint and draw all reasonable inferences
in favor of the non-moving party.”
Gorman v. Consol. Edison
Corp., 488 F.3d 586, 591-92 (2d Cir. 2007) (internal citations
omitted).
Nonetheless, a complaint must “contain sufficient
factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
To be plausible, the alleged factual
content must “allow[] the court to draw the reasonable inference
that the defendant is liable for the misconduct
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alleged.”
Matson v. Bd. of Educ. of City Sch. Dist. of NY, 631
F.3d 57, 63 (2d Cir. 2011) (quoting Iqbal, 556 U.S. at 678).
While “detailed factual allegations” are unnecessary and
unexpected, the court must be able to “infer more than the mere
possibility of misconduct.”
Iqbal, 556 U.S. at 678-679.
If the
complaint permits no such inference, “it has not ‘show[n]’—‘that
the pleader is entitled to relief.’”
Id. (quoting Fed. R. Civ.
P. 8(a)(2)).
II.
FDCPA Claims
Plaintiffs allege that BAC and Frenkel Lambert engaged
in unfair and deceptive practices under §§ 1692d, 1692e, and
1692f of the FDCPA by initiating foreclosure proceedings that
BAC did not have authority to pursue and by failing to inform
the foreclosure court of the shift of the servicing of
plaintiffs’ mortgage from BAC to BANA after their merger.
Defendants argue that plaintiffs’ claims are time-barred under
the FDCPA and fail to state a claim as a matter of law. For the
reasons discussed below, plaintiffs’ FDCPA claims are dismissed
as untimely.
The FDCPA requires that a claim under the statute be
filed “within one year from the date on which the violation
occurs.”
15 U.S.C. § 1692k(d); see also Kearney v. Cavalry
Portfolio Services, LLC, No. 12-cv-860, 2014 WL 3778746, at *4
(E.D.N.Y. Jul. 31, 2014).
Plaintiffs commenced this action on
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May 15, 2013; thus, any claims must have accrued by May 15, 2012
in order to be timely under the FDCPA.
The complaint alleges
that defendants made false and misleading statements in a
foreclosure action they commenced on June 15, 2010 against the
plaintiffs and others in New York State Supreme Court.
¶¶ 20-25.)
(Compl.
The only other misstatement specifically alleged in
the complaint is defendants’ alleged failure to notify the state
court that BAC was no longer the servicer of plaintiffs’ loan, a
change that became effective on July 1, 2011.
(Id. ¶¶ 26-28.)
Because plaintiffs fail to allege FDCPA violations by defendants
on or after May 15, 2012, their claims are untimely.
To avoid the result of the FDCPA’s statute of
limitations, plaintiffs argue that the defendants “committed a
new violation of the FDCPA each and every time they filed a
document or made a statement in the foreclosure action
concerning BAC’s authority...to proceed with the action.”
(ECF
No. 19-3, Pls.’s Mem. of Law in Opp. to [Frenkel Lambert’s] Mot.
to Dismiss (“Opp. to Frenkel Lambert”) at 12; see also ECF No.
27, Pls.’s Mem. of Law in Opp. to [BAC’s] Mot. to Dismiss (“Opp.
to BAC”) at 15.)
Plaintiffs’ reliance on Sierra v. Foster &
Garbus, 48 F. Supp. 2d 393, 395 (S.D.N.Y. 1999), in support of
their timeliness argument is misplaced.
In that case, the
district court dismissed the plaintiff’s FDCPA claim as timebarred because the alleged violative communication took place
9
more than one year prior to plaintiff’s commencement of his
FDCPA claim.
In finding the plaintiff’s claim to be untimely,
the court rejected the plaintiff’s theory that subsequent
communications relating to the same initial violation
constituted independent violations of the FDCPA.
Id. (“If
plaintiff’s theory were correct, however, his cause of action
could be kept alive indefinitely because each new communication
would start a fresh statute of limitations.”).
The other cases cited by plaintiff are similarly
inapposite.
In Coble v. Cohen & Slamowitz, LLP, 824 F. Supp. 2d
568, 570 (S.D.N.Y. 2011), the plaintiffs’ cause of action
included affirmative misrepresentations in connection with
invalid affidavits that were alleged to have occurred within the
one-year statute of limitations, and the court held that those
claims could proceed as timely-filed.
The Coble court concluded
that the FDCPA claims against two other defendants, however,
were time-barred because “the complaint does not specifically
allege defendants violated the FDCPA with respect to [those
defendants] within a year of the commencement of this action.”4
Id. at 571.
Here, plaintiffs have not alleged any specific
violations by defendants within the one-year statutory period;
instead, they attempt to argue that the fact that the
4
The court ultimately denied defendants’ motion to dismiss those claims after
finding that equitable tolling applied. Id. at 572. As discussed below,
plaintiffs in this case have not alleged facts suggesting that their claims
are subject to equitable tolling.
10
Foreclosure Action is ongoing requires a finding that their
FDCPA claim is timely.
The established law in this Circuit does
not support such a result.
Plaintiffs’ claims accrued at the
time the Foreclosure Action was filed (and/or when they received
the July 1, 2011 notice of the BAC and BANA merger).
See Calka
v. Kucker, Kraus & Bruh, LLP, No. 98 CIV. 990, 1998 WL 437151,
at *3 (S.D.N.Y. Aug. 3, 1998) (action based on filing of
improper lawsuit accrues when complaint is filed, not when later
documents are filed).
Thus, taking the facts as alleged to be true, the
FDCPA violation occurred when the Foreclosure Action was filed
on June 15, 2010 or when BAC notified plaintiffs of the change
in loan servicer on or before July 1, 2011.
The instant
complaint was filed on May 15, 2013, more than one year after
the purported violations, and plaintiffs have not alleged facts
suggesting that their claims are subject to equitable tolling.
Accordingly, plaintiffs’ claims are barred by the FDCPA’s oneyear statute of limitations.
III. General Business Law
In addition to the federal FDCPA claims, plaintiffs
assert a claim under New York GBL § 349.
The court generally
should decline to exercise jurisdiction over the pendent state
claim after having dismissed plaintiffs’ federal claims.
See
United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966);
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Somin v. Total Cmty. Mgmt. Corp., 494 F. Supp. 2d 153, 160
(E.D.N.Y. 2007).
In the alternative, however, plaintiffs’ claim
under GBL § 349 is unsustainable on the facts alleged in the
complaint.
GBL § 349 prohibits all “[d]eceptive acts or practices
in the conduct of any business, trade or commerce or in the
furnishing of any service in this state.”
GBL § 349(a).
A
plaintiff bringing a claim under GBL § 349 must allege that “(1)
the act or practice was consumer-oriented; (2) the act or
practice was misleading in a material respect; and (3) the
plaintiff was injured as a result.”
Fritz v. Resurgent Capital
Servs., LP, 955 F. Supp. 2d 163, 173 (E.D.N.Y. 2013) (citing
Spagnola v. Chubb Corp., 574 F.3d 64, 74 (2d Cir. 2009)).
To establish that a defendant’s conduct was “consumeroriented,” plaintiffs must allege that defendants’ “acts or
practices have a broader impact on consumers at large.”
Id.
(quoting Oswego Laborers' Local 214 Pension Fund v. Marine
Midland Bank, 85 N.Y.2d 20, 25 (N.Y. 1995)).
“Private contract
disputes, unique to the parties, [do] not fall within the ambit
of the statute.”
Id.
Here, the acts alleged by plaintiffs
affected plaintiffs alone and are unlikely to have a “broader
impact on consumers at large.”
Plaintiffs’ claim arises out of
a foreclosure proceeding against plaintiffs in which they
dispute the validity of the assignment of their note and
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mortgage to BAC.
Because this is a dispute that is unique to
the parties involved, plaintiffs have failed to plead a
consumer-oriented practice by defendants.
Accordingly, the GBL
§ 349 claim is dismissed.
IV.
Motion to Strike Class Allegations
BAC also moves, in the alternative, to strike the
class allegations from the complaint.
“Motions to strike are
generally looked upon with disfavor.”
Calibuso v. Bank of Am.
Corp., 893 F. Supp. 2d 374, 383 (E.D.N.Y. 2012) (internal
citations omitted).
The issues raised by BAC are premature and
properly dealt with on a motion for class certification;
however, because the court dismisses plaintiffs’ complaint in
its entirety, the court need not address the motion to strike.
V.
Leave to Replead
In their opposition brief, plaintiffs request leave to
amend their complaint pursuant to Rule 15(a) in the event the
Court grants defendants’ motions to dismiss. (Opp. to Frenkel
Lambert at 14-16; see also Opp. to BAC at 42.)
Although leave
to amend is liberally granted in accordance with Federal Rule of
Civil Procedure 15(a)(2), the district court has the discretion
to deny leave to amend for “undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice
to the opposing party by virtue of allowance of the amendment,
13
futility of amendment, etc.”
Ruotolo v. City of N.Y., 514 F.3d
184, 191 (2d Cir. 2008) (internal quotation marks omitted)
(quoting Foman v. Davis, 371 U.S. 178, 182 (1962)); McCarthy v.
Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007).
Because plaintiffs’ FDCPA claims are untimely, their request for
leave to amend is denied, as any amendment would be futile.
CONCLUSION
For the reasons discussed above, defendants’ motions
to dismiss are granted, and the complaint is dismissed in its
entirety with prejudice.
The Clerk of Court is respectfully
requested to enter judgment in favor of defendants and close
this case.
SO ORDERED.
Dated:
September 26, 2014
Brooklyn, New York
_________
/s/
Kiyo A. Matsumoto
United States District Judge
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