WALKER et al v. PHELAN HALLINAN DIAMOND & JONES, LLP

Filing 2

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE CYNTHIA M. RUFE ON 8/31/2017. 9/1/2017 ENTERED AND COPIES MAILED TO PRO SES.(kp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CIVIL ACTION

WILLIAM WALKER
SHEILA WALKER

FILED
SEP 0 1 2017

v.

KATE BARKMAN, Clerk

NO. 17-3633

PHELAN HALLINAN DIAMOND &
JONES

By

MEMORANDUM

Sl,;t
AUGUST

RUFE, J.

Dep. Clerk

, 2017

Plaintiffs William and Sheila Walker bring this civil action against the law firm of Phelan
Hallinan Diamond & Jones, LLP ("Phelan") pursuant to the Fair Debt Collection Practices Act
("FDCP A"), for allegedly making false, deceptive, or misleading representations to collect a
debt. See 15 U.S.C. § 1692(e). Plaintiffs seek leave to proceed informapauperis. The Court
will grant plaintiffs leave to proceed in forma pauperis and dismiss the complaint.
I.

FACTS

In April of 2014, Phelan initiated a mortgage foreclosure proceeding against the plaintiffs
in state court on behalf of their client Citimortgage. Phelan also represented Citimortgage's
successors in interest-Bayview Loan Servicing, LLC and MTGLQ Investors, L.P. According
to the complaint, Phelan obtained a judgment against plaintiff in August of 2016, and sold and
purchased plaintiffs' property at a sheriffs sale on April 4, 2017. Plaintiffs allege that Phelan's
filing of the foreclosure lawsuit and any efforts to pursue that lawsuit, including the sheriffs
sale, violated the FDCPA because plaintiffs were granted a discharge in bankruptcy court in
November of2013.

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Plaintiffs attached notices and other legal documents to the complaint that were served on
them in connection with the foreclosure litigation. The Court understands plaintiffs to be
alleging that two notices filed by Phelan in the foreclosure proceeding-a November 29, 2016
"notice of the date of continued sheriffs sale" and a February 6, 2017 "notice of the date of
continued sheriffs sale"-are misleading. Plaintiffs suggest that the notices are misleading
because Phelan was not authorized to collect the debt (presumably because of the bankruptcy
discharge) and/or because Phelan did not adequately represent itself. Plaintiffs also allege that
Phelan engaged in "deceptive" means of collecting a debt by moving forward with the April 4,
2017 sheriffs sale even though plaintiffs had filed a notice to remove the case to federal court.

II.

STANDARD OF REVIEW

Plaintiffs are granted leave to proceed in forma pauperis because it appears that they are
incapable of paying the fees to commence thi~ civil action. Accordingly, 28 U.S.C. §
1915(e)(2)(B)(ii) requires the Court to dismiss the complaint if it fails to state a claim.
To survive dismissal 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)
(quotations omitted). "Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice." Id. The Court may also consider exhibits attached
to the complaint and matters of public record in determining whether plaintiffs have stated a
claim, see Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006), and may address
affirmative defenses that are obvious from the face of the complaint. See Ball v. Famiglio, 726
F.3d 448, 459 (3d Cir. 2013), abrogated on other grounds by, Coleman v. Tollefson, 135 S. Ct.
1759, 1763 (2015). As plaintiffs are proceeding prose, the Court construes their allegations
liberally. Higgs v. Att 'y Gen., 655 F.3d 333, 339 (3d Cir. 2011 ).

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III.

DISCUSSION

The FDCPA prohibits debt collectors from making false, deceptive, or misleading
representations to collect a debt. See 15 U.S.C. § 1692(e). "A claim under the FDCPA 'may be
brought ... within one year from the date on which the violation occurs."' Glover v. FD.JC,
698 F.3d 139, 148 (3d Cir. 2012) (quoting 15 U.S.C. § 1692k(d)). When a FDCPA claim is
based on a defendant's allegedly improper pursuit oflitigation to collect a debt, the FDCPA's
one-year statute of limitations accrues at the latest when the plaintiff is served with process. See
Schaffhauser v. Citibank (S.D.) NA., 340 F. App'x 128, 130-31 (3d Cir. 2009) (per curiam); Hua
v. Mortg., No. 14-7821(JBS/AMD),2015 WL 5722610, at *3 (D.N.J. Sept. 29, 2015). Here, it
is apparent from the complaint and attached exhibits that plaintiffs were served more than a year
before they initiated this lawsuit. Accordingly, any claims based on Phelan's initiation or
prosecution of the 2014 foreclosure proceeding are time-barred. 1
Plaintiffs have also failed to state a claim based on their allegations that the notices of the
sheriff's sale were deceptive. It is clear from notices attached to the prior federal complaint filed
by plaintiffs, Civ. A. No. 16-2253, which are a matter of public record, that Phelan clearly
identified itself as a debt collector in connection with the 2014 lawsuit. Documents attached to
the current complaint reflect that an attorney from Phelan entered his appearance for
Citimortgage's successors in interest, including MTGLQ Investors, L.P., which was most
recently substituted as the plaintiff in the foreclosure action against plaintiff. Accordingly, it
would have been obvious to even the least sophisticated debtor receiving the notices regarding

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Notably, plaintiffs filed a FDCPA lawsuit against Phelan on May 9, 2016, related to Phelan's
conduct in connection with the same foreclosure proceeding at issue in this case. See Walker v.
Phelan Hallinan Diamond & Jones, LLP, E.D. Pa. Civ. A. No. 16-2253. The Court dismissed
the complaint in that case for failure to state a claim and gave plaintiffs an opportunity to file an
amended complaint, which they failed to do.
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the sheriffs sale that the attorneys for Phelan represented entities seeking to collect a debt from
plaintiffs via the foreclosure proceeding. See Simon v. FIA Card Servs. NA, 639 F. App'x 885,
888 (3d Cir. 2016); see also Rhodes v. US Bank Nat'! Ass'n, --- F. Supp. 3d ---, Civ. A. No. 155135, 2017 WL 770941, at *3 (E.D. Pa. Feb. 27, 2017) ("The communications at issue do not
violate the FDCPA as a matter oflaw, as all of the communications were sent while the state
court proceedings were pending, and Ms. Rhodes, who represented herself in that litigation,
cannot have been unaware that U.S. Bank was attempting to collect a debt by foreclosing on the
mortgage and that KML represented U.S. Bank."); Barrows v. Chase Manhattan Mortg. Corp.,
465 F. Supp. 2d 347, 360 (D.N.J. 2006) (holding that "where a law firm clearly represents a
mortgagee in a foreclosure action against a mortgagor, and has previously issued the required
'mini-Miranda' warnings in writing, its subsequent communications with the debtor need not
identify the law firm as a debt collector so long as the communication clearly and directly relates
to the pending litigation."). To the extent plaintiffs believe the notices were improper because
the underlying litigation violated the FDCPA, those claims are time-barred as discussed above.
Plaintiffs also allege that Phelan violated the FDCP A by moving forward with the sheriffs
sale after they had filed a notice to remove the foreclosure case to this Court. See Citimortgage,
Inc. v. Walker, E.D. Pa. Civ. A. No. 17-1493. It is apparent that the Walkers improperly tried to
remove the case, despite knowing from a prior removal attempt that subject matter jurisdiction
was lacking, see Citimortgage v. Walker, E.D. Pa. Civ. A. No. 14-3881, in an effort to avoid the
sheriffs sale scheduled for the following day. Indeed, the notice of removal was not even
docketed until the day of the sheriffs sale. The matter was almost immediately remanded to the
Philadelphia Court of Common Pleas for lack of subject matter jurisdiction. Id. (Apr. 11, 2017
order). In remanding the case, the Court noted that it was the Walkers' second inappropriate

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attempt to remove their case to federal court. Id.

It is difficult to see how Phelan violated the

FDCP A under such circumstances.

IV.

CONCLUSION

For the foregoing reasons, the Court will dismiss plaintiffs complaint. It is apparent that
plaintiffs claims based on the foreclosure proceeding are time-barred and that the remaining
claims are based on matters that are not actionable. Accordingly, the Court concludes that
amendment would be futile. An appropriate order follows, which shall be docketed separately.

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