Burns v. Seterus, Inc.
ORDER granting 7 Motion to Dismiss the first case of action for Failure to State a Claim; granting 7 Motion for Extension of Time to Answer. Signed by Hon. Michael A. Telesca on 1/11/17. (JMC)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
LAURIE A. BURNS,
Plaintiff Laurie A. Burns (“plaintiff”) brings this action
against defendant Seterus, Inc. (“defendant”) alleging violations
of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.
(“FDCPA”), and the Telephone Consumer Protection Act, 47 U.S.C.
deceptive, unfair and abusive letters and made telephone calls to
plaintiff in attempt to collect a debt related to her mortgage loan
that had been discharged in bankruptcy.
The original complaint was filed on September 19, 2016 and, on
November 17, 2016, defendant moved to dismiss the first cause of
action in the original complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6), contending that plaintiff’s first cause of
action under the FDCPA fails to allege any facts to show that its
communications with plaintiff constituted attempts to collect a
On December 2, 2016, plaintiff filed the first amended
complaint, prior to any responsive pleading by defendant, in which
she alleged that defendant attempted to collect a consumer debt
communications by letter and an automated telephone dialing system.
The First Amended Complaint.
The memorandum of law submitted by defendant in support of its
motion to dismiss addresses the original complaint only, and it has
not moved to dismiss the first amended complaint.
the filing of an amended complaint, the prior motion to dismiss is
rendered moot and can be denied on that basis. See Byng v.
Middlebrooks v. Conway, 2007 WL 2437118, at *5 n. 9 (W.D.N.Y. 2007)
(“An amended complaint supercedes a prior complaint”); Taylor v.
Abate, 1995 WL 362488, at *2 (E.D.N.Y. 1995).
In the alternative,
however, a court is entitled to “consider the merits of the
motion in light of the amended complaint.” Sussman-Automatic Corp.
v. Spa World Corp., 15 F. Supp. 3d 258, 265 (E.D.N.Y. 2014).
this case, plaintiff’s memorandum of law submitted in opposition to
the motion to dismiss, addresses her first amended complaint.
Defendant’s reply brief addresses the first amended complaint as
well, asserting that the amendments made to the original complaint
do not correct its deficiencies.
Both parties also agree that
defendant’s motion to dismiss is not rendered moot by the filing of
the first amended complaint.
The Court will therefore address the
motion to dismiss as to the first amended complaint.
Here, on December 23, 2005, plaintiff signed a note and
mortgage to Precision Financial, Inc., which was secured by her
property located at 285 Erath Drive, Rochester, New York (the
Chapter 7 bankruptcy petition in the United States Bankruptcy Court
for the Western District of New York, and, on July 21, 2009, the
bankruptcy court granted her a discharge under Section 727 of
Title 11. Plaintiff occupied the property as her primary residence
until July 2009.
In a telephone conversation in February 2014, a representative
of defendant, Seterus, Inc., advised plaintiff that defendant had
acquired the servicing rights to her mortgage.
“During that call,
bankruptcy in 2009, that she had discharged her obligation on the
premises.” First amended complaint, ¶ 37.
She further requested
that defendant cease all communication with her. Plaintiff alleges
that from February 2014 to the present, defendant continued to
initiate multiple telephone calls by using an automated telephone
dialing system or by transmitting an artificial or prerecorded
voice message to her.
“In . . . virtually every telephone
conversation that [defendant] had with [p]laintiff during that
period, [defendant] attempted to persuade [p]laintiff to apply to
reinstate her mortgage.” First amended complaint, ¶ 40.
attempt to persuade her to reinstate her mortgage and recommended
that plaintiff transfer her property to the mortgage holder by
executing a deed in lieu of foreclosure. First amended complaint,
Defendant’s Motion to Dismiss the First Cause of Action.
Rule 12(b)(6) provides for dismissal of a complaint where a
plaintiff has “fail[ed] to state a claim upon which relief can be
In determining whether a complaint states a claim, the
plaintiff’s favor. See ATSI Communications, Inc. v. Shaar Fund,
Ltd., 493 F.3d 87, 98 (2d Cir.2007).
While the complaint need not
include detailed factual allegations, the “grounds of [plaintiff’s]
entitlement to relief” must be shown. Bell Atlantic Corp. v.
Twombly, __ U.S.__, 127 S.Ct. 1955, 1964-1965 (2007).
such a motion, “a district court may consider the facts alleged in
the complaint, documents attached to the complaint as exhibits, and
documents incorporated by reference in the complaint.” DiFolco v.
MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010).
“A motion to
dismiss for failure to state a claim pursuant to Rule 12(b)(6) is
designed ‘merely to assess the legal feasibility of a complaint,
not to assay the weight of evidence which might be offered in
5797023, at *7 (D. Conn. 2015), quoting Ryder Energy Distribution
(2d Cir. 1984).
The FDCPA defines a “debt” as “any obligation or alleged
obligation of a consumer to pay money arising out of a transaction
in which the money, property, insurance, or services which are the
subject of the transaction are primarily for personal, family, or
household purposes, whether or not such obligation has been reduced
to judgment.” 15 U.S.C. § 1692a(5).
Here, the exhibits to the
first amended complaint indicate that plaintiff’s “debt” is alleged
to be a hazard insurance policy purchased by defendant for the
subject property in 2014.
Defendant concedes that plaintiff’s
premiums” but asserts that its hazard insurance notices “were not
attempts to demand payment from [p]laintiff” and, therefore, “are
not subject to the FDCPA.” Defendant’s reply memorandum, p. 2.
The hazard insurance notices sent by defendant to plaintiff
are attached as exhibits to the first amended complaint.
notice advises plaintiff, essentially, that hazard insurance has
been purchased by defendant at plaintiff’s expense.
dated February 12, 2016, defendant informed plaintiff as follows:
At your expense, we have purchased a renewal insurance
policy to protect our interest in the property.
premium cost for purchasing this insurance is shown on
the attached policy declaration.
You are solely
responsible for the repayment of this cost. The premium
for the attached policy may be charged to your escrow
account. If you do not have an escrow account, we may
establish an escrow account in accordance with the terms
of your loan documents unless prohibited by applicable
First amended complaint, Exhibit C. In smaller print at the bottom
of this notice is the following disclosure statement:
THIS COMMUNICATION IS FROM A DEBT COLLECTOR AS
[DEFENDANT] SOMETIMES ACTS AS A DEBT COLLECTOR.
[DEFENDANT] IS ATTEMPTING TO COLLECT A DEBT AND ANY
INFORMATION OBTAINED WILL BE USED FOR THE PURPOSE.
HOWEVER, IF YOU ARE IN BANKRUPTCY OR RECEIVED A
BANKRUPTCY DISCHARGE OF THIS DEBT, THIS LETTER IS NOT AN
ATTEMPT TO COLLECT THE DEBT.
THIS NOTICE IS BEING
FURNISHED FOR YOUR INFORMATION AND TO COMPLY WITH
APPLICABLE LAWS AND REGULATIONS. IF YOU RECEIVE OR HAVE
RECEIVED A DISCHARGE OF THIS DEBT THAT IS NOT REAFFIRMED
IN A BANKRUPTCY PROCEEDING, YOU WILL NOT BE PERSONALLY
RESPONSIBLE FOR THE DEBT.
First amended complaint, Exhibit C.
The Second Circuit has held that the terms of the FDCPA must
be interpreted liberally “to achieve [its] underlying Congressional
purpose,” which is to “‘eliminate abusive debt collection practices
by debt collectors, to insure that those debt collectors who
refrain from using abusive debt collection practices are not
competitively disadvantaged, and to promote consistent State action
to protect consumers against debt collection abuses.’”•Avila v.
Riexinger & Assocs., LLC, 817 F.3d 72, 75 (2d Cir. 2016), quoting
15 U.S.C. § 1692(e).
Defendant contends that the hazard insurance
letters sent to plaintiff did not constitute an attempt to collect
a “debt” but were necessary notices to satisfy its obligation under
RESPA, 12 U.S.C. §§ 2601, et seq., which requires a servicer of a
federally-related mortgage to obtain force-placed hazard insurance
if there is “a reasonable basis to believe the borrower has failed
to comply with the loan contracts requirements to maintain property
insurance.” 12 U.S.C. § 2605(k)(1)(a).
The Court notes that apart from demanding proof of insurance
from plaintiff and advising her that she was “solely responsible
for repayment of the cost” of the insurance policy obtained by
defendant, there was no
demand for payment, discussion of a
deadline to pay, threats in the event of nonpayment, or mention of
plaintiff’s underlying mortgage debt. The letters further informed
plaintiff that the insurance policy obtained by defendant could be
“cancelled at any time by providing [defendant] acceptable proof of
insurance.” First amended complaint, Exhibit C.
property has expired, demanding proof of insurance, and informing
her that defendant had purchased hazard insurance for the property
on her behalf, and ultimately at her expense, did fall not “within
the ambit of the FDCPA.” Dyer v. Select Portfolio Servicing, Inc.,
108 F.Supp.3d 1278, 1282 (M.D. Fla. 2015)(letter concerning hazard
insurance, which did not reference debt, reflect that debt was past
due, demand payment, or threaten consequences, did not fall under
Notwithstanding the statement informing plaintiff that she was
responsible for the cost of the insurance policy, plaintiff has
failed to alleged facts sufficient to demonstrate that the hazard
insurance letters were sent in connection with the collection of a
The context of the notices, which fail to include any
statement of by when, how, and to whom the alleged debt must be
paid, demonstrate that they were not sent in connection with the
contention, the Court finds the bankruptcy disclaimer contained in
the letters to be sufficiently prominent and unambiguous to put
even the least sophisticated consumer on notice that she would not
be personally responsible for the alleged debt.
The Court further finds that plaintiff has failed to state a
claim under the FDCPA stemming from an unspecified number of
telephone calls that she received from defendant.
The first cause
of action alleges only that the “calls were annoying and harassing”
and fails to assert facts sufficient to demonstrate that defendant,
with the intent to annoy, abuse, or harass, was attempting to
collect a debt during those calls.
Consequently, the first cause
of action does not survive on this basis and is, accordingly,
For the foregoing reasons, defendant’s motion to dismiss the
first of cause of action (Docket No. 7) in the first amended
complaint (Docket No. 8) is granted.
ALL OF THE ABOVE IS SO ORDERED.
S/ MICHAEL A. TELESCA
HONORABLE MICHAEL A. TELESCA
UNITED STATES DISTRICT JUDGE
January 11, 2017
Rochester, New York
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