He v. Ocwen Loan Servicing, LLC
MEMORANDUM & ORDER granting in part and denying in part 9 Motion to Dismiss for Failure to State a Claim; For the foregoing reasons, Defendant's motion to dismiss (Docket Entry 9) is GRANTED IN PART and DENIED IN PART. Specifically, Plaintiff's Section 349 claim is DISMISSED, however, the balance of Defendant's motion is DENIED. So Ordered by Judge Joanna Seybert on 7/14/2016. C/ECF (Valle, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
MEMORANDUM & ORDER
-againstOCWEN LOAN SERVICING, LLC,
Kenneth B. Schwartz, Esq.
The Schwartz Law Group, P.C.
326 Broadway, Suite 203
Bethpage, New York 11714
Constantine Philip Economides, Esq.
Patrick G. Broderick, Esq.
Matthew Miles Spritz, Esq.
Greenberg Traurig, LLP
777 S. Flager Drive, Ste. 300 East
West Palm Beach, Florida 33401
Shane Matthew Biffar, Esq.
Greenberg Traurig, LLP
200 Park Ave., 28th Fl.
New York, New York 10166
SEYBERT, District Judge:
Plaintiff, Zhan He (“Plaintiff”) commenced this action
on August 5, 2015, against Ocwen Loan Servicing, LLC (“Defendant”)
Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq., and New York
General Business Law § 349 (“Section 349”) when it refused to
consider Plaintiff’s loss mitigation application.
the Court is Defendant’s motion to dismiss the Complaint (Docket
Entry 9.) For the following reasons, Defendant’s motion is GRANTED
IN PART and DENIED IN PART.
Plaintiff was the owner of real property located in Glen
Cove, New York (“the Property”) and Defendant was the servicer of
Plaintiff’s mortgage on the Property.
(Compl. ¶¶ 6-7.)
November 2011, Defendant commenced a foreclosure action against
Plaintiff and a judgment of foreclosure and sale was issued against
the Property on December 4, 2013.
(Compl. ¶¶ 8-9.)
Defendant, the foreclosure sale was originally scheduled to take
place on March 11, 2014, but was subsequently rescheduled several
times for reasons unknown.
(See Def.’s Br, Docket Entry 10, at
Plaintiff alleges in the Complaint that she submitted a
Loss Mitigation Application (the “Application”) to Defendant on
June 16, 2015, seeking to sell her Property through a “short” sale
in an effort to avoid the foreclosure sale.
(See Compl. ¶ 12.)
The next day, however, Defendant rejected Plaintiff’s Application,
explaining that “the discount (short) sale package was not received
until too close to the confirmed foreclosure sale date that was
(Compl. ¶ 15.)
The following facts are taken from the Complaint and are
presumed to be true for the purposes of this Memorandum and
Defendant issued a Notice of Sale, scheduling the foreclosure sale
for July 21, 2015.
The foreclosure sale was held on that date and
the Property was sold.
(Compl. ¶¶ 10, 13.)
evaluate her Application prior to the foreclosure sale in violation
of RESPA and Section 349.
(Compl. ¶¶ 16-32.)
court is Defendant’s motion to dismiss.
Pending before the
(Docket Entry 9.)
Application was untimely and (2) Plaintiff’s Section 349 claim
fails because Plaintiff did not plead “deceptive conduct which
went beyond his contractual dispute” with Defendant.
at 3, 8.)
In deciding a Rule 12(b)(6) motion to dismiss, the Court
applies a “plausibility standard,” which is guided by “[t]wo
Aschroft v. Iqbal, 556 U.S. 662, 678, 129 S.
Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009); accord Harris v. Mills,
572 F.3d 66, 71-72 (2d Cir. 2009).
First, although the Court must
accept all allegations as true, this “tenet” is “inapplicable to
legal conclusions;” thus, “[t]hreadbare recitals of the elements
of a cause of action, supported by mere conclusory statements, do
Iqbal, 556 U.S. at 679; accord Harris, 572 F.3d at
Second, only complaints that state a “plausible claim for
relief” can survive a Rule 12(b)(6) motion to dismiss.
U.S. at 679.
Determining whether a complaint does so is a
“context-specific task that requires the reviewing court to draw
on its judicial experience and common sense.”
Id.; accord Harris,
572 F.3d at 72.
Furthermore, in deciding a motion to dismiss, the Court
is confined to “the allegations contained within the four corners
of [the] complaint.”
Pani v. Empire Blue Cross Blue Shield, 152
F.3d 67, 71 (2d Cir. 1998).
However, this has been interpreted
broadly to include any document attached to the complaint, any
reference, any document on which the complaint heavily relies, and
anything of which judicial notice may be taken.
See Chambers v.
Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002) (citations
omitted); Kramer v. Time Warner Inc., 937 F.2d 767, 773 (2d Cir.
Plaintiff’s Claims Under RESPA and 12 C.F.R. § 1024.41
RESPA is a consumer protection statute that was enacted
by Congress to “insure that consumers throughout the Nation are
provided with greater and more timely information on the nature
practices that have developed in some areas of the country.”
The Consumer Financial Protection Bureau (“CFPB”)
is charged with creating rules, regulations, and interpretations
necessary to achieve RESPA’s purpose.
See 12 U.S.C. § 2617(a).
Plaintiff alleges in this case that Defendant failed to consider
his Application in violation of 12 C.F.R. § 1024.41, a rule
promulgated by the CFPB concerning loss mitigation procedures for
See 12 C.F.R. § 1024.41; see Gresham v.
Wells Fargo Bank, N.A., --- F. App’x ----, 2016 WL 1127717, at *2
(5th Cir. 2016).
Section 1024.41 specifically “prohibits a loan
servicer from initiating foreclosure if a mortgagor has submitted
a loan-modification application unless certain conditions are
Ray v. U.S. Bank Nat’l Ass’n, 627 F. App’x 452, 456 (6th
Borrowers have a private right of action under RESPA
against lenders who evaluate a loss mitigation application while
at the same time pursuing foreclosure.
See Kilgore v. Ocwen Loan
Servicing, LLC, No. 13–CV–5473 2015 WL 698108, at *9 (E.D.N.Y.
Mar. 6, 2015); Wenegieme v. Bayview Loan Servicing, No. 14-CV9137, 2015 WL 2151822, at *2 (S.D.N.Y. May 7, 2015), appeal
dismissed (Aug. 27, 2015); 12 U.S.C. § 2605(f).
Defendant argues in its motion to dismiss that is was
not required to review and consider Plaintiff’s Application, prior
to the foreclosure sale, because the application was submitted too
(Def.’s Br. at 4-5.)
Defendant specifically relies upon
provisions of Section 1024.41 requiring a mortgage servicer to
review and consider a loss mitigation application received “more
received only thirty-five days before the scheduled foreclosure
The Court disagrees.
A mortgage servicer need not consider a loss mitigation
12 C.F.R. § 1024.41(c)(1), (g)(1); see also
Gresham, 2016 WL 1127717, at *2.
In this case, however, the
Complaint alleges that the foreclosure sale was not scheduled at
the time Defendant received Plaintiff’s application.
a situation is not addressed within Section 1024.41, according to
the CFPB’s official commentary, “[i]if no foreclosure sale has
been scheduled as of the date that a complete loss mitigation
application is received, the application is considered to have
been received more than 90 days before any foreclosure sale.”
Consumer Financial Protection Bureau’s Official Staff Commentary
on Regulation X, 2014 WL 2195779, at *3 (June 2016).
the CFPB’s Commentary is not controlling legal authority.
however, the Court finds the Commentary to be highly persuasive
because it fills a gap in the text of Section 1024.41 and squarely
According to the Complaint, Plaintiff’s Application was received
by Defendant before the foreclosure sale was scheduled.
application must be “considered to have been received more than 90
days before any foreclosure sale.”
Defendants therefore may
not rely upon the thirty-seven-day window as a basis to dismiss
III. Section 349 Claim
Defendant also moves to dismiss Plaintiff’s Section 349
Section 349 prohibits “[d]eceptive acts or practices in
the conduct of any business, trade or commerce or in the furnishing
of any service.”
N.Y. GEN. BUS. L. § 349(a).
To successfully state
a claim under Section 349, “‘a plaintiff must demonstrate that (1)
the defendant’s deceptive acts were directed at consumers, (2) the
acts are misleading in a material way, and (3) the plaintiff has
been injured as a result.’”
Kilgore v. Ocwen Loan Servicing, 89
Goldsmith, 230 F.3d 518, 521 (2d Cir. 2000)); see also Kapsis v.
Consumer-oriented conduct is “conduct that potentially affects
similarly situated consumers.”
Kapsis, 923 F. Supp. 2d at 449;
see Kilgore, 89 F. Supp.3d at 535 (noting that the “gravamen of
allegations” of injury are insufficient to support a plausible
claim for relief under Section 349).
Plaintiff’s allegations are
insufficient to make out the first element of a Section 349 claim
because he fails to plead facts showing that any deceptive conduct
occurred beyond Plaintiff’s dispute with Defendant regarding her
2d at 449.
See Kilgore, 89 F. Supp. 3d at 536; Kapsis, F. Supp.
See O.K. Petroleum v. Travelers Indem. Co., No. 09-
CV-10273, 2010 WL 2813804, at *5 (S.D.N.Y. July 15, 2010) (“In
order to survive this motion, Plaintiffs were required to plead
contractual dispute between these parties.”).
“represented itself as a duly authorized servicer of mortgage loans
that would act in accordance with the requirements of governing
law” as provided under RESPA and its regulations.
(Compl. ¶ 31.)
demonstrate conduct that injured similarly situated consumers.
Therefore, Plaintiff’s Section 349 claim is DISMISSED.2
For the foregoing reasons, Defendant’s motion to dismiss
The Court need not address Defendant’s additional arguments
because they rely upon documents outside of the pleadings.
Chambers v. Time Warner, Inc., 282 F.3d 147, 154 (2d Cir. 2002);
Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 46 (2d
Cir. 1991); Hoo-Chong v. Citimortgage, Inc., No. 15-CV-4051,
2016 WL 868814, at *3 (E.D.N.Y. Mar. 7, 2016)
Specifically, Plaintiff’s Section 349 claim is DISMISSED, however,
the balance of Defendant’s motion is DENIED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
14 , 2016
Central Islip, New York
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