Araujo v. Pennymac Loan Services, LLC

Filing 12

ORDER granting 7 Motion to Dismiss for Failure to State a Claim --- For the reasons set forth in the ATTACHED WRITTEN MEMORANDUM AND ORDER, Defendant's motion to dismiss this action is granted in its entirety, with prejudice, and Defendant's motion for the award of attorney's fees and costs is denied. The Clerk of the Court is directed to close this case. SO ORDERED by Judge Dora Lizette Irizarry on 9/23/2015. (Irizarry, Dora)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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CARMEN ARAUJO,
:
:
Plaintiff,
:
:
-against:
:
PENNYMAC LOAN SERVICES, LLC,
:
:
Defendant.
:
:
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DORA L. IRIZARRY, United States District Judge:

MEMORANDUM & ORDER
15-CV-00062 (DLI)(LB)

Plaintiff Carmen Araujo (a/k/a Carmen Castro) (“Plaintiff”) filed the instant action
against PennyMac Loan Services, LLC (“Defendant”), alleging violations of the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. (“§ 1692”), and the Real Estate
Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601, et seq. The action was commenced on
behalf of Plaintiff and a putative class. Plaintiff alleges that Defendant, as servicer for her
mortgage loan, failed to provide certain disclosures and notices required by statute. Defendant
moves, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, for dismissal of the
Complaint on the grounds that it fails to state a claim upon which relief may be granted, and is
time barred in part. Plaintiff opposes. For the reasons set forth below, Defendant’s motion to
dismiss is granted.
BACKGROUND
Plaintiff, a New York resident, obtained a note and mortgage from Wells Fargo, N.A. on
October 5, 2006 in connection with a property in Queens, New York.

(See Complaint

(“Compl.”) ¶¶ 2, 22-23, Docket Entry No. 1; Ex. 1 to the Decl. of Jordan M. Smith in Supp. of
Mot. to Dismiss (“Smith Aff.”), Docket Entry No. 7.) Her mortgage thereafter was assigned

several times, most recently to a PennyMac affiliated loan trust. (See Compl. ¶ 32; Ex. 2 to the
Smith Aff.) Effective July 7, 2011, the servicing of Plaintiff’s mortgage was transferred to
Defendant. (See Ex. 3 to the Smith Aff.)
Plaintiff subsequently filed for Chapter 7 bankruptcy on May 29, 2013, filed for a second
time on October 10, 2014, and, finally, for a third time on February 11, 2015.1 (See Compl. ¶ 38;
see also Def. Mem. in Supp. of Mot. to Dismiss (“Def. Br.”) at 2-3, Docket Entry No. 8.) During
the course of the second bankruptcy, Plaintiff contacted Defendant about her mortgage and was
connected with a customer representative. (See Compl. ¶¶ 39-40.) Speaking through Kashif
Hassan, a credit advisor she had retained, Plaintiff told the representative that she wished to
dispute amounts Defendant was seeking to collect because she never received any notice that her
mortgage had been transferred to Defendant.2 (See id. ¶¶ 37, 41.) Plaintiff also requested that
Defendant provide her with the “original note for [her] mortgage as well as loan documents.”
(See Compl. ¶¶ 37-43.) On October 30, 2014, Defendant responded by sending Plaintiff a copy
of her note (the “Unstamped Note”), accompanied by a communication that stated: “[Defendant]
recently received a request for copies of your loan documents for the above referenced loan. We
have enclosed the documents requested.” (See Ex. E to the Compl.)
Thereafter, on November 20, 2014, Defendant allegedly forwarded to Plaintiff a copy of
a filing from the second bankruptcy. (See Compl. ¶ 53.) Among the various attachments to the

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In support of its motion to dismiss, Defendant initially argued that Plaintiff lacked standing to bring this action
because proceedings in the third bankruptcy were ongoing. By letter dated April 13, 2015, Defendant withdrew that
defense because the bankruptcy action was dismissed. (See Docket Entry No. 11.)
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The Complaint seems to conflate two independent events: (i) the assignment of Plaintiff’s mortgage to a
PennyMac affiliated loan trust; and (ii) the transfer of servicing for Plaintiff’s mortgage to Defendant. It is not clear
from the factual background in the Complaint which event Plaintiff is referencing with respect to the allegation that
she did not receive “letters of transfer” from Defendant, (see Compl. ¶ 36), but the causes of action she asserts are
premised on allegations that Defendant was obligated to provide notice of servicing transfer. (See id. ¶ 62-66.)

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filing was a copy of Plaintiff’s note (the “Stamped Note”), bearing the following stamped
indorsement and signature that allegedly were absent from the Unstamped Note:
WITHOUT RECOURSE
PAY TO THE ORDER OF
Bank of America, National Association [in handwriting]
WELLS FARGO BANK, N.A.
BY ___[Signature of Joan M. Mills]___
Joan M. Mills
ALLONGE ATTACHED FOR THE
PURPOSE OF ENDORSING THE NOTE
(See Compl. ¶¶ 54-55); see also Ex. A to PennyMac Loan Services LLC’s Motion for Relief
from the Stay, In re Carmen L. Araujo, 14-45115, Docket Entry No. 12-2 (Bankr. E.D.N.Y. Nov.
20, 2014).
Plaintiff contends that these facts establish several violations of the FDCPA and RESPA.
With respect to the FDCPA, the Complaint alleges that: (i) the Unstamped Note, which omitted
the stamped indorsement and signature present on the Stamped Note, was deceptively altered in
violation of § 1692e; (ii) the communication that Defendant sent to Plaintiff on October 30,
2014, attaching the Unstamped Note, referenced an incorrect loan number in violation of §
1692e, as did a recording of mortgage assignment, dated June 18, 2013, that was filed with the
New York Office of the City Register; (iii) Defendant’s October 30, 2014 communication also
violated § 1692e(11) by failing to disclose that Defendant was a debt collector; and (iv) the
defects in the preceding documents also violated 1692f, as did Defendant’s mass purchasing of
consumer debt, failure to provide notice of servicing transfer, and failure to record that Plaintiff
disputed her debt on the ground she never received such notice. (See Compl. ¶¶ 56-62.) With
respect to RESPA, the Complaint alleges only that Defendant failed to provide notice of
servicing transfer when it began servicing Plaintiff’s mortgage. (See id. ¶¶ 63-66.)

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DISCUSSION
I.

Motion to Dismiss Standard
Under Rule 8(a) of the Federal Rules of Civil Procedure, pleadings must contain a “short

and plain statement of the claim showing that the pleader is entitled to relief.” Pleadings are to
give the defendant “fair notice of what the claim is and the grounds upon which it rests.” Dura
Pharms., Inc. v. Broudo, 544 U.S. 336, 346 (2005) (quoting Conley v. Gibson, 355 U.S. 41, 47
(1957), overruled in part on other grounds by Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)).
“The pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “A pleading that offers
‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not
do.’” Id. (quoting Twombly, 550 U.S. at 555).
Under Rule 12(b)(6), a defendant may move, in lieu of an answer, for dismissal of a
complaint for “failure to state a claim upon which relief can be granted.” To resolve such a
motion, courts “must accept as true all [factual] allegations contained in a complaint,” but need
not accept “legal conclusions.” Iqbal, 556 U.S. at 678. For this reason, “[t]hreadbare recitals of
the elements of a cause of action, supported by mere conclusory statements, do not suffice” to
insulate a claim against dismissal. Id. “[A] complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly,
550 U.S. at 570). Notably, courts may only consider the complaint itself, documents that are
attached to or referenced in the complaint, documents that the plaintiff relied on in bringing suit
and that are either in the plaintiff’s possession or that the plaintiff knew of when bringing suit,

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and matters of which judicial notice may be taken. See, e.g., Roth v. Jennings, 489 F.3d 499, 509
(2d Cir. 2007).
II.

FDCPA
The FDCPA was enacted to “protect consumers from a host of unfair, harassing, and

deceptive debt collection practices without imposing unnecessary restrictions on ethical debt
collectors.” S. Rep. No. 95-382, at 1696 (1977). In furtherance of that aim, § 1692e prohibits a
“debt collector” from using any “false, deceptive, or misleading representation or means in
connection with the collection of any debt.” Similarly, § 1692e(11) requires a disclosure to the
consumer that “the debt collector is attempting to collect a debt.” To determine whether a given
communication runs afoul of those provisions, courts apply an objective standard measured by
how the “least sophisticated consumer” would interpret the communication. See Clomon v.
Jackson, 988 F.2d 1314, 1318-20 (2d Cir. 1993).
However, a communication falls within the ambit of those provisions only if it is made
“in connection with the collection of [a] debt.” See 28 U.S.C. § 1692e. Courts in this Circuit
recognize certain principles that guide the determination of whether a given communication was
made in connection with the collection of a debt. As relevant here, courts have consistently held
that the “FDCPA’s protections are not triggered by communications initiated by someone other
than the debt collector.” See Boyd v. J.E. Robert & Co., 2010 WL 5772892, at *13 (E.D.N.Y.
Mar. 31, 2010); see also Derisme v. Hunt Leibert Jacobson P.C., 880 F. Supp. 2d 339, 368-69
(D. Conn. 2012); Nichols v. Washington Mut. Bank, 2007 WL 4198252, at *4-5 (E.D.N.Y. Nov.
21, 2007).
Thus, the FDCPA does not apply to a communication reflecting a debt collector’s
ministerial response to a consumer inquiry. As one court in this Circuit has explained: “[T]he

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purpose of § 1692 is to ensure that communications initiated by the debt collector (not the
consumer) are not deceptive or unfair . . . . [thus] when the consumer initiates the
communications, many of the policy reasons behind the FDCPA disappear.” Gorham-Dimaggio
v. Countrywide Home Loans, Inc., 2005 WL 2098068, at *2 (N.D.N.Y. Aug. 30, 2005) (FDCPA
inapplicable where defendant was not “attempting to collect a debt” but was “merely responding
to [the plaintiff’s] inquiries as to how she could bring her mortgage current.”); see also Derisme,
880 F. Supp. 2d at 368-69; Boyd, 2010 WL 5772892, at *13.
Here, Plaintiff’s claims under § 1692e and § 1692e(11), which purportedly arise from
Defendant’s October 30, 2014 communication, fail as a matter of law because that
communication was not made in connection with the collection of a debt. The undisputed facts
establish that Plaintiff contacted Defendant on October 30 to request a copy of her mortgage
documentation. That same day, Defendant responded in a communication that enclosed a copy
of Plaintiff’s note. The communication did not demand or seek to induce any payment, discuss
any specifics of the underlying debt, or make any representation except that Defendant was in
receipt of Plaintiff’s inquiry and had enclosed the requested documentation.

As such,

Defendant’s communication merely provided a ministerial response to Plaintiff’s inquiry and,
therefore, did not trigger the FDCPA protections pursuant to which Plaintiff brings her claims.
The same conclusion is compelled with respect to Plaintiff’s claim that a June 18, 2013
recording of mortgage assignment, on file with the New York Office of the City Register,
violated § 1692e by incorrectly listing the number assigned to her loan.

Plaintiff cannot

demonstrate that the recording was a “communication” by a “debt collector” within the purview
of the FDCPA, much less that the recording was made in connection with the collection of a

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debt.

See 15 U.S.C. § 1692e; see also 15 U.S.C. §§ 1692a(2), 1692a(6) (defining

“communication” and “debt collector” under the FDCPA).
Even if the FDCPA were applicable, Plaintiff’s claim under § 1692e would still fail
because she does not identify any “false, deceptive or misleading” representation by Defendant.
A communication is false, misleading, or deceptive if it is “open to more than one reasonable
interpretation, at least one of which is inaccurate.” Easterling v. Collecto, Inc., 692 F.3d 229,
233 (2d Cir. 2012) (quoting Clomon, 988 F.2d at 1319). Plaintiff alleges only that: (i) a
recording of mortgage assignment, dated June 18, 2013, incorrectly listed the number assigned to
her loan; (ii) the same incorrect loan number was reflected on the communication she received
from Defendant on October 30, 2014, enclosing the Unstamped Note; and (iii) the Unstamped
Note omitted an indorsement evident on the Stamped Note she later received.
However, those purported inaccuracies appear to be natural incidents of the several
assignments and transfers of servicing that occurred with respect to Plaintiff’s mortgage. Thus,
the deceptive loan number alleged by Plaintiff evidently was in use since at least July 7, 2011,
when the servicing of Plaintiff’s mortgage was transferred to Defendant. (See Ex. 3 to the Smith
Aff.) Similarly, rather than reflecting any deceptive alteration, the Stamped Note appears to
represent merely a later-in-time version of Plaintiff’s original note that was indorsed upon the
assignment of her mortgage. (See Ex. A to the Compl.) Absent additional facts to advance her
claim beyond the speculative level, Plaintiff has not adequately alleged a false, misleading, or
deceptive device within the ambit of § 1692e.
Finally, Plaintiff purports to bring a claim under § 1692f, which prohibits a debt collector
from using “unfair or unconscionable means to collect or attempt to collect any debt.” That
claim similarly fails as a matter of law, as it relies on the same alleged conduct by Defendant that

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was the basis for Plaintiff’s failed claims under § 1692e. See Foti v. NCO Fin. Sys., Inc., 424 F.
Supp. 2d 643, 667 (S.D.N.Y. 2006) (“However, [the complaint] is deficient in that it does not
identify any misconduct beyond that which [plaintiffs] assert violate other provisions of the
FDCPA.”); see also Moore v. Diversified Collection Services, Inc., 2009 WL 1873654, at *4
(E.D.N.Y. June 29, 2009) (“Because the [§ 1692f] claim is wholly duplicative of the others and
is unsupported by the complaint, it must be dismissed.”); Tsenes v. Trans-Cont’l Credit and
Collection Corp., 892 F. Supp. 461, 466 (E.D.N.Y. 1995). Although Plaintiff alleges in passing
other conduct that purportedly violated § 1692f, for example Defendant’s mass purchasing of
consumer debt and failure to record a verbal dispute with Plaintiff, those allegations as pleaded
are without merit and do not support a claim under the FDCPA.
III.

RESPA
Plaintiff alleges a violation of RESPA pursuant to a provision of its implementing

regulation that requires a transferee servicer to provide the borrower with notice of any servicing
transfer within fifteen days from the effective date of the transfer.3 See 12 C.F.R. § 1024.33; see
also 12 U.S.C. § 2605. Plaintiff’s claim is premised on the allegation that she did not receive
notice of servicing transfer in June 2013, when her mortgage was assigned to a PennyMac
affiliated loan trust. (See Compl. ¶ 36.) However, there is nothing in the Complaint or the
record before the Court indicating that a servicing transfer actually occurred with respect to
Plaintiff’s mortgage at that time. Rather than providing any factual support for her claim,
Plaintiff instead relies implicitly on the assumption that the assignment of her mortgage in June
2013 coincided with a transfer of servicing responsibilities to Defendant, for which it was

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Plaintiff purports to bring its RESPA claim under 24 C.F.R. § 3500.21(d), which would have been in effect at the
time Defendant began servicing Plaintiff’s mortgage and allegedly was required to furnish notice, but is no longer
operative as a result of a transfer of regulatory authority from the United States Department of Housing and Urban
Development to the Consumer Financial Protection Bureau. See 79 F.R. 34224-01 (June 16, 2014).

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required to provide notice.

As such, Plaintiff’s claim is entirely conclusory and must be

dismissed. See Roth v. CitiMortgage, Inc., 2013 WL 5205775, at *7 (E.D.N.Y. Sept. 11, 2013),
aff’d 756 F.3d 178 (2d Cir. 2014) (dismissing RESPA claim where plaintiff’s allegations were
“conclusory and unsupported by the factual allegations” in the complaint.)
Moreover, to rebut Plaintiff’s allegation that she never received the required notice,
Defendant has produced a copy of a servicing transfer letter it claims to have sent Plaintiff when
it began servicing her mortgage. (See Ex. 3 to the Smith Aff.; see also Def. Br. at 3, 10.) Dated
August 2, 2011, the letter reflects that the servicing of Plaintiff’s mortgage was transferred to
Defendant effective July 7, 2011.4 Even if Plaintiff could prove that she never received that
letter through some fault of Defendant, her claim still would have expired in or around July 2014
under the applicable three-year statute of limitations. See 12 U.S.C. § 2614 (providing for a
three-year statute of limitations for violations of 12 U.S.C. § 2605, which addresses the
obligation of a transferee servicer to provide notice); see also Papapietro v. Popular Mortg.
Servicing Co., 2014 WL 5824682, at *6 (E.D.N.Y. Nov. 10, 2014) (claim that defendant violated
RESPA by failing to provide notice of servicing transfer was barred by applicable three-year
statute of limitations); Lee v. E*Trade Fin. Corp., 2013 WL 4016220, at *4 (S.D.N.Y. Aug. 6,
2013). However, the Complaint in this action was not filed until January 2015, rendering its
claim under RESPA untimely.
Finally, even assuming that Plaintiff’s claim was timely, it still would fail because the
Complaint does not allege any actual damages proximately caused by Defendant’s purported
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The Court may properly consider the servicing transfer letter put forth by Defendant, without converting the
instant motion to one for summary judgment, because the Complaint incorporates it by reference. See, e.g., ATSI
Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007). Notably, to the extent the letter contradicts
allegations in the Complaint, the Court is not necessarily required to accept those allegations as true. See, e.g., Olin
Corp. v. E.I. Dupont De Nemours and Corp., 2006 WL 839415, at *1 (W.D.N.Y. Mar. 27, 2006) (“If the documents
referenced in the complaint contradict the facts alleged by the plaintiff, the documents control and the court need not
accept as true the plaintiff’s allegations.” (citing Feick v. Fleener, 653 F.2d 69, 75 & n.4 (2d Cir. 1981.))

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RESPA violation. See, e.g., Corazzini v. Litton Loan Servicing LLP, 2010 WL 6787231, at *12
(N.D.N.Y. June 15, 2010) (“[T]he courts have consistently dismissed complaints under RESPA
if they do not allege actual damages or state merely that in a conclusory fashion the defendant
caused damages to the plaintiff.”); see also Roth, 2013 WL 5205775, at *7 (dismissing RESPA
claim where plaintiff failed to plead actual damages proximately caused by the defendant’s
alleged violation of RESPA); Gobarty v. Wells Fargo Bank, N.A., 2012 WL 1372260, at *5
(E.D.N.Y. Apr. 18, 2012). Nor does the Complaint allege a “pattern or practice” of noncompliance with RESPA’s provisions that would entitle Plaintiff to statutory damages under
RESPA. See 12 U.S.C. § 2605(f)(1)(B); see also Gobarty, 2012 WL 1372260, at *5 (dismissing
RESPA claim for statutory damages where plaintiff failed to plead violations sufficiently
numerous to show a pattern of non-compliance by defendant).
IV.

Attorney’s Fees
Defendant seeks an award of costs and attorney’s fees pursuant to 15 U.S.C. §

1692k(a)(3), which permits a court to grant such relief upon a finding that an action under the
FDCPA “was brought in bad faith and for the purpose of harassment.” Several courts have held
that a defendant seeking to avail itself of that provision must furnish evidence of bad faith by the
plaintiff, not just by his or her counsel. See, e.g., Puglisi v. Debt Recovery Solutions, LLC, 822
F. Supp. 2d 218, 233 (E.D.N.Y. 2011); Hasbrouck v. Arrow Fin. Servs. LLC, 2011 WL 1899250,
at *7 (N.D.N.Y. May 19, 2011); see also Spira v. Ashwood Fin. Inc., 358 F. Supp. 2d 150, 161
(E.D.N.Y. 2005).

Here, although the meritless claims in the Complaint call into question

whether Plaintiff had a good faith basis for bringing this action, Defendant has not provided any
evidence that Plaintiff pursued it for the purpose of harassment. Accordingly, the relief sought

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by Defendant is not warranted and the Court finds that no costs or attorney’s fees should be
awarded.
CONCLUSION
In accordance with the foregoing, Defendant’s motion to dismiss this action is granted in
its entirety, with prejudice, and Defendant’s motion for the award of attorney’s fees and costs is
denied.
SO ORDERED.
Dated: Brooklyn, New York
September 23, 2015
______________/s/______________
DORA L. IRIZARRY
United States District Judge

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