Venechanos v. Green Tree Servicing, LLC et al
Filing
16
MEMORANDUM (Order to follow as separate docket entry)Signed by Honorable William J. Nealon on 7/14/15. (ao)
UNITED STATES DISTRICT COURT FOR
THE MIDDLE DISTRICT OF PENNSYLVANIA
MARY ANN T. VENECHANOS,
Plaintiff
v.
GREEN TREE SERVICING, LLC;
X,Y,Z CORPORATIONS,
Defendants
:
:
:
:
:
:
:
:
CIVIL ACTION NO. 3:14-CV-2268
(Judge Nealon)
MEMORANDUM
On November 27, 2014, Plaintiff, Mary Ann T. Venechanos, filed an
amended complaint against Defendants Green Tree Servicing, LLC (“Green
Tree”) and X,Y,Z Corporations1 alleging that Defendants violated the Fair Debt
Collection Practices Act,15 U.S.C. § 1692, et seq. (“FDCPA”). (Doc. 3). On
March 5, 2015, Green Tree filed a motion to dismiss pursuant to Federal Rule of
1.
To date, Plaintiff has not supplied the names of the “X,Y,Z Corporations.”
In the amended complaint, Plaintiff has only complained about the actions
of Green Tree, not any actions of “X,Y,Z Corporations.” (Doc. 3, p. 4).
Plaintiff’s sole reference to X,Y,Z Corporations in her amended complaint
is:
X,Y,Z Corporations, business identities whose identities are not
known to Plaintiff at this time, but which will become known upon
proper discovery. It is believed and averred that such entities play a
substantial role in the commission of the acts described in this
complaint.
(Id.). Moreover, the record does not reflect that Plaintiff has served X,Y,Z
Corporations with the amended complaint. See FED. R. CIV. P. 4(m).
Civil Procedure 12(b)(6). (Doc. 8). On March 21, 2015, Plaintiff filed her brief in
opposition.2 (Doc. 13). On April 1, 2015, Green Tree filed its reply brief. (Doc.
15). For the reasons set forth below, Green Tree’s motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6) will be granted in part and denied in part.
I.
BACKGROUND
Plaintiff’s amended complaint makes the following allegations: During
August 2014, Plaintiff received a written communication from Green Tree entitled
“‘FACTS,’ ‘WHAT DOES GREEN TREE SERVICING LLC (“Green Tree”) DO
WITH YOUR PERSONAL INFORMATION’” (“Notice”). (Doc. 3, pp. 6, 20-22).
The Notice indicates that Green Tree is entitled to share its customers’ personal
information “for joint marketing with other financial companies.” (Id. at pp. 7,
20). The shareable personal information can include a customer’s Social Security
number, income, account balances, payment history, credit history, and credit
scores. (Id. at p. 20). The Notice defines “joint marketing” as “[a] formal
agreement between non-affiliated financial companies[3] that together market
2.
On March 25, 2015, this Court granted Plaintiff’s motion for leave to file,
nunc pro tunc, a response in opposition to Green Tree’s motion to dismiss
and accepted Plaintiff’s brief as filed on March 21, 2015. (Doc. 14).
3.
The Notice defines “non-affiliates” as “[c]ompanies not related by common
ownership or control. They can be financial and non-financial companies.”
(Doc. 3, p. 21). “Non-affiliates” can include “providers of financial services
2
financial products or services to” the customer. (Doc. 3, p. 21). The Notice also
states that its customers cannot limit Green Tree’s sharing of personal information
“for joint marketing with other financial companies.” (Id. at p. 20). The Notice
does not disclose that it was sent from a debt collector. (Id. at p. 6).
A portion of the Notice is dedicated to providing the customer with
information as to how they should contact Green Tree in order to limit its sharing
of that customer’s information. (Id. at p. 20). Within that section, Green Tree
provides a toll free phone number that customers can call to speak with a
“customer service representative” who will “prompt you through your choice(s).”
(Id.). Below this section, Green Tree provides the customer with a “Mail-in
Form,” which is an alternative means for a customer to limit the sharing and/or use
of his/her information. (Id.). According to the form, it “may be mailed to: Green
Tree Servicing, LLC, Privacy Department, PO Box 6172, Rapid City, SD 577096172.” (Id.).
Plaintiff’s first count in her amended complaint alleges that Green Tree
violated section 1692e(11) of the FDCPA because the Notice does not disclose
that it was a written communication from a debt collector. (Id. at pp. 5-6).
or insurance, such as mortgage bankers or insurance companies and agents
and non-financial companies such as retailers, direct marketing companies
or contractors.” (Doc. 3, p. 21).
3
Plaintiff’s second count alleges that Green Tree violated sections 1692c(b), 1681e,
and 1692d of the FDCPA. (Doc. 3, pp. 7-8). Plaintiff claims that Green Tree
violated section 1692c(b) by sharing Plaintiff’s personal information “for joint
marketing with other financial companies.” (Id. at p. 7). Plaintiff alleges that
Green Tree violated section 1692e “by making a false and misleading statement
that [it] was entitled to” share Plaintiff’s personal information “for joint marketing
with other financial companies,” and that Plaintiff “could not choose to limit that
sharing of such information.” (Id. at p. 8). Finally, Plaintiff claims that Green
Tree violated section 1692d of the FDCPA “by engaging in harassment or abuse
by stating or implying that [it] was entitled to” share Plaintiff’s personal
information “for joint marketing with other financial companies,” and that
“Plaintiff could not choose to limit the sharing of such information.” (Id.).
Plaintiff makes the following requests for relief: at least one dollar ($1.00)
in actual damages, one thousand dollars ($1,000.00) for statutory damages,
damages for Plaintiff’s frustration, confusion, and emotional distress that resulted
from Green Tree’s “illegal collection activity,” attorney’s fees, injunctive relief
barring further unlawful collection activity, “a reasonable plaintiff incentive fee
4
for representing the class in this action, in an amount no less than $5,000.00,”4 and
“other such relief as this Honorable Court may deem just and proper.” (Doc. 3, pp.
15-18).
II.
STANDARD OF REVIEW
Green Tree’s motion is brought pursuant to Federal Rule of Civil Procedure
12(b)(6). “This rule provides for the dismissal of a complaint, in whole or in part,
if the plaintiff fails to state a claim upon which relief can be granted.”
Suessenbach Family v. Access Midstream, 2015 U.S. Dist. LEXIS 40900, at *2
(M.D. Pa. Mar. 31, 2015) (Mannion, J.). The moving party bears the burden of
showing that no claim has been stated. Hedges v. United States, 404 F.3d 744,
750 (3d Cir. 2005). All factual allegations are accepted as true and all inferences
are construed in the light most favorable to the non-moving party. Kaymark v.
Bank of Am., N.A., 2015 U.S. App. LEXIS 5548, at *7 (3d Cir. Apr. 7, 2015)
(citing Fleisher v. Standard Ins. Co., 679 F.3d 116, 120 (3d Cir. 2012)).
4.
Plaintiff’s amended complaint is styled as “a class action lawsuit for
damages brought by an individual consumer for Defendant(s)’ alleged
violations of the” FDCPA. (Doc. 3, p. 1). To date, the alleged class has not
been certified pursuant to Federal Rule of Civil Procedure 23(c). Further,
Plaintiff failed to move for a determination under Federal Rule of Civil
Procedure 23(c)(1), as to whether the case is to be maintained as a class
action, within the ninety (90) day window set forth in Local Rule 23.3.
M.D. Pa. L.R. 23.3.
5
“[D]ismissal is appropriate only if, accepting all of the facts alleged in the
complaint as true, the plaintiff has failed to plead ‘enough facts to state a claim to
relief that is plausible on its face.’” Suessenbach Family, 2015 U.S. Dist. LEXIS
40900, at *2 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)). The
non-moving party’s allegations must be sufficient to “raise a right to relief above
the speculative level.” Twombly, 550 U.S. at 544. “This requirement ‘calls for
enough fact[s] to raise a reasonable expectation that discovery will reveal evidence
of’ necessary elements of the plaintiff’s cause of action.” Suessenbach Family,
2015 U.S. Dist. LEXIS 40900, at *2-3 (quoting Twombly, 550 U.S. at 544).
“Furthermore, in order to satisfy federal pleading requirements, the plaintiff must
‘provide the grounds of his entitlement to relief,’ which ‘requires more than labels
and conclusions, and a formulaic recitation of the elements of a cause of action
will not do.’” Id. (quoting Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d
Cir. 2008)). Since Plaintiff attached the Notice as an exhibit to her complaint, it
will be treated as part of the pleading. FED. R. CIV. P. 10(c).
“Generally, the court should grant leave to amend a complaint before
dismissing it as merely deficient.” Id. (citing Fletcher-Harlee Corp. v. Pote
Concrete Contractors, Inc., 482 F.3d 247, 252 (3d Cir. 2007); Grayson v. Mayview
State Hosp., 293 F.3d 103, 108 (3d Cir. 2002); Shane v. Fauver, 213 F.3d 113,
6
116-17 (3d Cir. 2000)). “Dismissal without leave to amend is justified only on the
grounds of bad faith, undue delay, prejudice, or futility.” Alston v. Parker, 363
F.3d 229, 236 (3d Cir. 2004).
III.
DISCUSSION
Prior to the enactment of the FDCPA, Congress discovered “abundant
evidence of the use of abusive, deceptive, and unfair debt collection practices by
many debt collectors.” 15 U.S.C. § 1692(a). Further, Congress also found that
“[a]busive debt collection practices contribute to the number of personal
bankruptcies, to marital instability, to the loss of jobs, and to invasions of
individual privacy.” 15 U.S.C. § 1692(a). In 1977, Congress enacted the FDCPA:
“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.”
Douglass v. Convergent Outsourcing, 765 F.3d 299, 301-02 (3d Cir. 2014)
(quoting 15 U.S.C. § 1692(e)). “As remedial legislation, the FDCPA must be
broadly construed in order to give full effect to these purposes.” Caprio v.
Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 148 (3d Cir. 2013).
To accomplish these goals, Congress enacted the FDCPA to create “a
private right of action against debt collectors who fail to comply with its
7
provisions.” Grubb v. Green Tree Servicing, LLC, 2014 U.S. Dist. LEXIS
100886, at *9 (D.N.J. 2014) (citing 15 U.S.C. § 1692k; Marx v. Gen. Revenue
Corp., 133 S. Ct. 1166, 1171 n.1 (2013); Brown v. Card Serv. Ctr., 464 F.3d 450,
453 (3d Cir. 2006)). The Third Circuit Court of Appeals has stated that to prevail
on an FDCPA claim a plaintiff must prove that:
(1) she is a consumer, (2) the defendant is a debt collector, (3)
the defendant’s challenged practice involves an attempt to
collect a “debt” as the Act defines it, and (4) the defendant has
violated a provision of the FDCPA in attempting to collect the
debt.
Douglass, 765 F.3d at 303 (citing Piper v. Portnoff Law Assocs., Ltd., 396 F.3d
227, 232 (3d Cir. 2005)).
Plaintiff claims that Green Tree violated the FDCPA on at least two (2)
separate occasions. (Doc. 3, pp. 5-8). First, Plaintiff alleges that the Notice sent
by Green Tree violated sections 1692d and 1692e of the FDCPA. (Id. at pp. 5-8).
Second, relying on a portion of the language in the Notice, Plaintiff alleges that at
least one (1) communication, if not more, from Green Tree to an unauthorized
third party violated section 1692c(b) of the FDCPA. (Id. at pp. 7-8). Green Tree
argues that Plaintiff’s claims are not actionable under the FDCPA and thus, should
be dismissed under Federal Rule of Civil Procedure 12(b)(6). The viability of
Plaintiff’s claims will be addressed seriatim below.
8
A.
The Notice
According to Green Tree, Plaintiff’s claim that the Notice was sent in
violation of sections 1692d and 1692e of the FDCPA should be dismissed
because, inter alia, it was not a communication made in connection with the
collection of a debt as required under the FDCPA.5 (Doc. 11, pp. 4-7). “Each of
these provisions deals with debt collectors’ representations to debtors. We
analyze such communications ‘from the perspective of the least sophisticated
debtor.’” McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240, 246 (3d
Cir. 2014) (quoting Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008);
Brown, 464 F.3d at 454). “This low standard ‘effectuate[s] the basic purpose of
the FDCPA: to protect all consumers, the gullible as well as the shrewd.’” Id.
(quoting Rosenau, 539 F.3d at 221).
Section 1692d of the FDCPA prohibits a debt collector from engaging in
“any conduct the natural consequence of which is to harass, oppress, or abuse any
person in connection with the collection of a debt.” 15 U.S.C. § 1692d. Section
5.
Green Tree also argues that Plaintiff’s claims that the Notice violated
sections 1692d and 1692e of the FDCPA should be dismissed because the
Notice “was required by the Gramm-Leach-Bliley Act (‘Gramm-Leach’).”
(Doc. 11, p. 7). As discussed in more detail below, these claims will be
dismissed on separate grounds and thus, no opinion is expressed regarding
Green Tree’s argument that the aforementioned claims should be dismissed
because the Notice was required by Gramm-Leach.
9
1692e of the FDCPA prohibits a debt collector from using “any false, deceptive, or
misleading representation or means in connection with the collection of any debt.”
15 U.S.C. § 1692e. Plaintiff alleges that Green Tree specifically violated
subparagraph eleven (11) of section 1692e, which prohibits a debt collector from
failing:
to disclose in the initial written communication with the
consumer and, in addition, if the initial communication with the
consumer is oral, in that initial oral communication, that the
debt collector is attempting to collect a debt and that any
information obtained will be used fo that purpose, and the
failure to disclose in subsequent communications that the
communication is from a debt collector, except that this
paragraph shall not apply to a formal pleading made in
connection with a legal action.
15 U.S.C. § 1692e(11). Consequently, sections 1692d and 1692e of the FDCPA
require that the prohibited conduct be taken “in connection with the collection of”
a debt. 15 U.S.C. §§ 1692d, 1692e.
“The [FDCPA]’s substantive provisions [] make clear that it covers conduct
‘taken in connection with the collection of any debt.’” McLaughlin, 756 F.3d at
245 (quoting Simon v. FIA Card Servs., 732 F.3d 259, 265 (3d Cir. 2013)). Thus,
the FDCPA “‘does not apply to every communication between a debt collector and
a debtor.’” Everage v. Nat’l Recovery Agency, 2015 U.S. Dist. LEXIS 30329, at
*16 (E.D. Pa. Mar. 11, 2015) (quoting Gburek v. Litton Loan Servicing LP, 614
10
F.3d 380, 384-85 (7th Cir. 2010)). “[A] threshold requirement for application of
the FDCPA is that the prohibited practices are used in an attempt to collect a
‘debt.’” Zimmerman v. HBO Affiliate Grp., 834 F.2d 1163, 1167 (3d Cir. 1987)).
“Put differently, activity undertaken for the general purpose of inducing payment
constitutes debt collection activity.” McLaughlin, 756 F.3d at 245 (citations
omitted). The Third Circuit has “cited with approval the Sixth Circuit’s ruling that
‘for a communication to be in connection with the collection of a debt, an
animating purpose of the communication must be to induce payment by the
debtor.’” Everage, 2015 U.S. Dist. LEXIS 30329, at *16 (quoting Simon, 732
F.3d at 266).
In McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240 (3d Cir.
2014), the Third Circuit addressed whether the letter at issue constituted conduct
taken in connection with the collection of a debt. The letter in McLaughlin stated
that the defendant “is a debt collector attempting to collect a debt” and that the
information obtained by defendant “may be used for that purpose,” “namely to
collect a debt.” Id. at 246. The court also found that the letter had a “invoice-like
presentation.” Id. Furthermore, the Third Circuit noted that the letter informed
the recipient “how to obtain ‘updated . . . payoff quotes,’ meaning how to obtain
current information about the amount that would have to be paid to satisfy the
11
debt.” McLaughlin, 756 F.3d at 246. The Third Circuit stated that:
[i]ndeed, communications that include discussions of the status
of payment, offers of alternatives to default, and requests for
financial information may be part of a dialogue to facilitate
satisfaction of the debt and hence can constitute debt collection
activity.
Id. at 245-46 (citing Simon, 732 F.3d at 266). However, the Third Circuit stated
that “a communication need not contain an explicit demand for payment to
constitute debt collection activity.” Id. at 245 (citing Simon, 732 F.3d at 266).
With this in mind, the Third Circuit held that the letter at issue constituted debt
collection activity because it was activity undertaken for the general purpose of
inducing payment. Id. at 246. Specifically, the court stated that:
[i]t is reasonable to infer that an entity that identifies itself as a
debt collector, lays out the amount of the debt, and explains
how to obtain current payoff quotes has engaged in a
communication related to collecting a debt.
Id.
In Gregory v. Home Retention Servs., 2014 U.S. Dist. LEXIS 164769
(D.N.J. 2014), the District Court, using the standard set forth in McLaughlin,
addressed whether the defendant’s letter qualified as a communication in
connection with the collection of a debt under the FDCPA. Id. at *10-11 (“courts
focus on the communication’s principal purpose”) (citing McLaughlin, 756 F.3d at
12
245; Simon, 732 F.3d 265-67; Grubb, 2014 U.S. Dist. LEXIS 100886, at *15-16).
The defendant argued that because the letter at issue did not explicitly demand that
the plaintiff make a payment, it did not qualify as a communication under the
FDCPA. Gregory, 2014 U.S. Dist. LEXIS 164769, at *11. The court disagreed,
and found that plaintiff had “plausibly pleaded that the Letter’s principal purpose
was to collect the debt.” Id. In reaching this conclusion, the court noted that the
letter at issue “does explicitly state, ‘[t]his communication is from a debt collector
attempting to collect a debt. Any information you provide . . . will be used for that
purpose.’” Id. The court also noted that the letter stated “that it aims to ‘obtain a
more affordable payment for you,’ and it includes what appears to be a payoff
figure: ‘[a]s of the date of this letter the amount necessary to bring your mortgage
current is $39,034.15.’” Id.
Looking to the instant circumstances, the analysis begins and ends with
whether the Notice was sent “in connection with” the collection of a debt.
McLaughlin, 756 F.3d at 245 (“The statute’s substantive provisions [] make clear
that it covers conduct ‘taken in connection with the collection of any debt.’”)
(quoting Simon, 732 F.3d at 265). While Plaintiff alleges that “[a]t all times
mentioned herein, [Green Tree] was attempting to collect on an alleged ‘debt’
against Plaintiff, as that term ‘debt’ is defined by 15 U.S.C. § 1692a of the
13
FDCPA,” (Doc. 3, p. 5), she has not offered any facts to support this conclusion.
Her claims rest solely on the Notice sent by Green Tree to Plaintiff, and thus, it
forms the sole basis for the analysis as to whether the Notice constitutes a
communication in connection with the collection of a debt.
Consequently, the key inquiry is whether it is plausible that an animating
purpose of the Notice was to induce payment. Because this case comes before this
Court on a motion to dismiss, the actual purpose of Green Tree’s Notice is not at
issue. Rather, the issue is whether it is plausible, based on the facts alleged in the
complaint, that one of the animating purposes of the Notice was to induce payment
by Plaintiff.
Clearly, the general purpose of the Notice was to inform Plaintiff of Green
Tree’s privacy policy regarding its customers’ personal information. (Id. at pp.
20-24). Because the Notice’s general purpose fails to support a finding that the
Notice was sent to induce a payment by a debtor, this Court must look to other
plausible animating purposes, if any, of the Notice. However, looking within the
four corners of the Notice, it is determined that no other plausible animating
purpose can be derived and thus, it is not plausible that the Notice was sent induce
payment by a debtor.
At the outset, the Notice does not contain any reference to the alleged
14
“debt.” (Doc. 3, pp. 20-24). Also, the Notice does not ask Plaintiff to make a
payment, direct her on how to make a payment, or even provide the outstanding
balance of the alleged debt. (Id.). The Notice does not discuss the status of her
payment, alternatives to default, nor does it request any financial information from
Plaintiff. (Id.). Further, the Notice does not identify Green Tree as a debt
collector. (Id.). Rather, the Notice identifies it as a “[f]inancial compan[y].” (Id.).
The Notice also does not identify Plaintiff as a debtor, but rather as a “consumer”
and “customer.” (Id.). Green Tree also describes the Notice as a “notice.” (Id. at
p. 21) (“Who is providing this notice?”). Moreover, the overall layout of the
Notice does not weigh in favor of a finding that it was sent to induce a payment by
a debtor. (Id. at pp. 20-24).
It is noteworthy that, while Green Tree does not demand a return response,
it does provide the recipient with options as to how they can respond to the Notice.
(Id. at p. 20). However, such a response is optional and solely concerns the
Plaintiff’s choice to limit the sharing and/or use of her personal information. (Id.).
According to the Notice, if the recipient chooses to exercise her option to limit
Green Tree’s use and/or sharing of personal information they can communicate
that decision by calling a toll free number to speak with a “customer service
representative” who will “prompt [them] through” the available choices. (Id.).
15
The recipient also has the choice to communicate their decision without speaking
to a Green Tree representative. Specifically, if a consumer wishes to limit Green
Tree’s sharing they can complete the detachable “Mail-in Form” and mail it to
Green Tree’s “Privacy Department.” (Doc. 3, p. 20). Thus, a consumer could
respond to the Notice by expressing her choice as to Green Tree’s ability to share
her personal information simply by communicating solely with Green Tree’s
“Privacy Department.” (Id.). Consequently, this portion of the Notice provides
further support for a determination that Green Tree was concerned with informing
Plaintiff about her rights to limit the sharing/use of her personal information,
instead of inducing a payment by a debtor.
Plaintiff’s only allegation weighing in favor of finding that it is plausible
that an animating purpose of the Notice was to induce some form of payment from
Plaintiff is the nature of the parties’ relationship. Specifically, Plaintiff states that
she established a debt collector-debtor relationship with Green Tree when her
defaulted mortgage was “assigned or transferred” to Green Tree. (Id. at p. 5).
However, discussed in more detail below, this fact, alone, is insufficient to
establish that she has plead enough facts to state a claim to relief that is plausible
on its face under sections 1692d and 1692e of the FDCPA.
In Olson v. Midland Funding, LLC, 578 F. App’x 248 (4th Cir. 2014), the
16
United States Court of Appeals for the Fourth Circuit addressed the issue presently
at bar. Although Olson is not binding precedent, its facts are sufficiently similar
to the present circumstances to render it persuasive.
The plaintiff in Olson alleged that the defendant violated section
1692c(a)(2) of the FDCPA by sending a “privacy notice directly to him, knowing
that he was represented by counsel.” Olson, 578 F. App’x at 251. Alternatively,
plaintiff asserted that, even if the FDCPA does not bar all communications, the
privacy notice was a “communication ‘in connection with the collection of any
debt’” and thus, prohibited by the FDCPA. Id.
The Fourth Circuit Court of Appeals decided not to address plaintiff’s first
argument because it concluded “that the privacy notice was not a prohibited
communication under the FDCPA.” Id. The court reasoned that the absence of a
demand for payment, the nature of the parties relationship, and the objective
purpose and context of the communication weighed in favor of a finding that the
privacy notice at issue was not a communication “in connection with the collection
of any debt.” Id. (citing Gburek, 614 F.3d at 385; Grden v. Leikin Ingber &
Winters PC, 643 F.3d 169, 173 (6th Cir. 2011)). Specifically, the court stated:
[w]hile the only relationship between [plaintiff] and
[defendant] was that of a debtor and debt collector, this
relationship alone is not sufficient to plausibly assert that a
17
communication devoid of any reference to [plaintiff’s]
outstanding debt is made in connection with an attempt to
collect the debt.
Olson, 578 F. App’x at 251.
Similar to the notice in Olson, the Notice here does not demand payment
and has an objective purpose. (Doc. 3, pp. 20-23). As the Fourth Circuit found in
Olson, it is determined that the aforementioned factors, along with the context of
the Notice, weigh in favor of finding that it is not a communication in connection
with the collection of any debt. Furthermore, the Fourth Circuit found that the
debtor-debt collector relationship, alone, was insufficient to find that the
communication constituted debt collection activity. This Court likewise finds that
Plaintiff’s debtor-debt collector relationship, alone, is insufficient to establish that
the Notice is a communication in connection with the collection of a debt.
It should be noted that some courts have held that a privacy rights notice
can qualify as a communication sent in connection with the collection of a debt.
In Ruth v. Triumph Partnership, 577 F.3d 790 (7th Cir. 2009), a privacy rights
notice was sent in an envelope that also contained a collection letter. Id. at 79899. The United States Court of Appeals for the Seventh Circuit found the fact the
privacy rights notice was sent with a collection letter clearly established that it was
an attempt to collect a debt and that “any information obtained will be used for
18
that purpose.” Ruth, 577 F.3d at 798-99.
In Castro v. Green Tree Servicing, LLC, 959 F. Supp. 2d 698 (S.D.N.Y.
2013), the District Court for the Southern District of New York addressed whether
a privacy rights notice sent by Green Tree constituted a communication sent in
connection with the collection of a debt. Id. at 712-15. Citing to Ruth as
persuasive authority, the District Court held that the privacy rights notice was sent
in connection with the collection of a debt. Id. at 715. The court reasoned that
because the privacy notice was sent in the same envelope as a collection letter, it
was “clearly” an attempt to collect a debt and “that ‘any information obtained will
be used for that purpose.’” Id.
In Smith v. NCO Financial Systems, 2009 U.S. Dist. LEXIS 51576 (E.D.
Pa. 2009), the United States District Court for the Eastern District of Pennsylvania
denied the defendant’s motion for judgment on the pleadings, which asserted that
plaintiff failed to state a claim upon which relief can be granted. Id. at *1. The
plaintiff’s claims were based, at least in part, on the plaintiff’s receipt of
defendant’s privacy rights notice. Id. at *2. According to the plaintiff, the privacy
rights notice violated section 1692e and 1692e(5) of the FDCPA because it
threatened to take action that “‘cannot legally be taken or that is not intended to be
taken.’” Id. at *13. Specifically, the privacy rights notice stated that the debt19
collector could collect non-public information about the consumer from employers
and others to verify the information submitted by the debtor. Smith, 2009 U.S.
Dist. LEXIS 51576, at *11-12. The District Court found that plaintiff adequately
alleged a violation of section 1692e and 1692e(5) of the FDCPA. In reaching this
conclusion, the District Court found that it was sufficiently alleged that the privacy
notice was a communication sent in connection with the collection of a debt. Id. at
*12. Notably, similar to the circumstances in Ruth and Castro, the privacy rights
notice in Smith was sent in the same envelope as a collection letter. Id. at *2.
The present circumstances are distinguishable from those in Ruth, Castro,
and Smith. Here, Plaintiff does not allege that the Notice was sent in the same
envelope as a collection letter, or any other documents. (Doc. 3). Consequently,
the Notice here constitutes the sole basis for Plaintiff’s claims that Green Tree
violated sections 1692d and 1692e of the FDCPA.
As a result of the foregoing, this Court rejects as implausible the claim that
an animating purpose of the Notice was to induce payment by Plaintiff. Thus,
Green Tree’s mailing of the Notice to Plaintiff does not qualify as a violation of
section 1692d or 1692e of the FDCPA because it was not sent in connection with
the collection of a debt. As a result, Defendant’s motion to dismiss Plaintiff’s
claims raised under section 1692d and 1692e of the FDCPA will be granted, and
20
these claims will be dismissed. Furthermore, because granting leave to amend
these claims would be futile, they will be dismissed without leave to amend.
B.
Green Tree’s Alleged Communication with an Unauthorized
Third-Party
Plaintiff’s remaining claim alleges that Green Tree violated section
1692c(b) of the FDCPA when it shared her personal information with an
unauthorized third party. (Doc. 3, p. 7). With regard to communication with third
parties, the FDCPA provides:
Except as provided in section 1692b of this title, without the
prior consent of the consumer given directly to the debt
collector, or the express permission of a court of competent
jurisdiction, or as reasonably necessary to effectuate a post
judgment judicial remedy, a debt collector may not
communicate, in connection with the collection of any debt,
with any person other than the consumer, his attorney, a
consumer reporting agency if otherwise permitted by law, the
creditor, the attorney of the creditor, or the attorney of the debt
collector.
15 U.S.C. § 1692c(b); see Shand-Pistilli v. Prof’l Account Servs., Inc., 2010 U.S.
Dist. LEXIS 75056, at *9 (E.D. Pa. 2010) (“The FDCPA prohibits debt collectors
from communicating with third parties ‘in connection with the collection of any
debt’ except as to acquire ‘location information.’”) (quoting 15 U.S.C. §
1692c(b)).
According to the Notice, which Plaintiff received in August 2014, Green
21
Tree can begin to share a new customer’s information thirty (30) days from the
date the Notice was sent. (Doc. 3, pp. 6, 20, 23). At the conclusion of this thirty
(30) day period, Green Tree can begin to share the following information
regarding the new customer: Social Security number, income, account balances,
payment history, credit history, and credit scores. (Id.). While a customer can
limit some of Green Tree’s sharing, they cannot stop Green Tree from sharing this
information with “other financial companies” for “joint marketing” purposes.
(Id.). The Notice defines “joint marketing” as a “formal agreement between nonaffiliated financial companies that together market financial products or services”
to the customer. (Id. at p. 21). The Notice states that Green Tree’s joint marketing
partners “include providers of financial services or insurance, such as mortgage
bankers or insurance companies and agents; and non-financial companies, such as
retailers, direct marketers or contractors.” (Id.). The Notice states that Green
Tree’s joint marketing partners “include providers of financial services or
insurance, such as mortgage bankers or insurance companies and agents; and nonfinancial companies, such as retailers, direct marketers or contractors.” (Id. at p.
20).
Accepting all factual allegations as true and construing all inferences in the
light most favorable to the non-moving party, it is entirely plausible that Green
22
Tree’s communication with an unauthorized third party constitutes a
communication in connection with the collection of a debt. See Simon, 732 F.3d
at 266 (Third Circuit “noted that a ‘communication’ need only convey
‘“information regarding a debt” and is not limited to specific requests for
payment.’”) (quoting Allen ex rel. Martin v. LaSalle Bank, N.A., 629 F.3d 364,
368 n.5 (3d Cir. 2011)). Green Tree allegedly gave an unauthorized third party
Plaintiff’s personal and financial information regarding the debt in order for that
unauthorized third party to market financial products or services to Plaintiff.
(Doc. 3, pp. 7, 20-22). Thus, it is plausible that an animating purpose of Green
Tree’s communication with an unauthorized third party at issue was to induce
Plaintiff into using such products or services in relation to a future payment on the
debt.
Furthermore, the sharing of personal information with an unauthorized party
is the type of conduct that the FDCPA was enacted to eliminate. 15 U.S.C. §
1692(a) (Congress identified “invasions of individual privacy” as an “abusive
practice” used by debt collectors). Moreover, such a reading of the amended
complaint and the FDCPA comports with the Third Circuit’s guidance regarding
the FDCPA as “‘remedial legislation.’” Douglass, 765 F.3d at 302 (quoting
Caprio, 709 F.3d at 148). According to the Third Circuit, the FDCPA’s status as
23
remedial legislation requires that courts broadly construe it in order to give full
effect to its purposes. Douglass, 765 F.3d at 302; see Smith, 2009 U.S. Dist.
LEXIS 51576, at *6.
As a result of the foregoing, Plaintiff’s allegations sufficiently nudge her
section 1692c(b) claim across the line from conceivable to plausible, Twombly,
550 U.S. at 570, to warrant a denial of Green Tree’s motion to dismiss regarding
Plaintiff’s section 1692c(b) claim. Put another way, Plaintiff’s section 1692c(b)
claim is sufficient to, at the very least, raise a right to relief above the speculative
level at this very early stage of the litigation. Further, Plaintiff has alleged
“‘enough fact[s] to raise a reasonable expectation that discovery will reveal
evidence of’ necessary elements of the plaintiff’s cause of action.” Suessenbach
Family, 2015 U.S. Dist. LEXIS 40900, at *2-3 (quoting Twombly, 550 U.S. at
544). Consequently, it is determined that Green Tree has not established that
Plaintiff has failed to state a claim for relief under section 1692c(b) of the FDCPA.
Thus, Green Tree’s motion to dismiss Plaintiff’s claim under section 1692c(b) of
the FDCPA will be denied.
C.
Plaintiff’s Request for Leave to Amend Complaint
Plaintiff’s brief in opposition also seeks leave to amend her complaint.
(Doc. 13, pp. 1, 4). Specifically, Plaintiff asserts in her brief in opposition that
24
she:
may have additional causes of action related to Defendant’s
failure to comply with the National Mortgage Settlements,
United States v. Bank of America, et. al., U.S. District Court
for the District of Columbia, 12-cv-00361, and requests leave
to amend the Complaint in lieu of those possible claims.
(Doc. 13, p. 4).
Plaintiff was entitled to amend her complaint “as a matter of course” within
twenty-one (21) days after service of the motion to dismiss at issue. FED. R. CIV.
P. 15(a)(1)(B). However, Plaintiff failed to amend her complaint within the time
allowed under Rule 15(a)(1)(B), and now can only do so with the opposing party’s
written consent or leave of court. FED. R. CIV. P. 15(a)(2).
Plaintiff’s attempt to obtain leave to amend her complaint is improper.
Failure to attach a draft amended complaint “‘is fatal to a request for leave to
amend.’” United States ex rel. Zizic v. Q2Administrators, LLC, 728 F.3d 228, 243
(3d Cir. 2013) (quoting Fletcher-Harlee Corp., 482 F.3d at 252). Here, Plaintiff
made her request without attaching a draft amended complaint. (Doc. 13). Thus,
Plaintiff’s request for leave to amend will be denied.
IV.
CONCLUSION
In light of the foregoing, Green Tree’s motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6) will be denied in part and granted in part.
25
Specifically, Green Tree’s motion to dismiss Plaintiff’s claim that Green Tree
violated sections 1692d and 1692e of the FDCPA will be granted. While Green
Tree’s motion to dismiss Plaintiff’s claim that it violated section 1692c(b) of the
FDCPA will be denied. Lastly, Plaintiff’s request for leave to amend her
complaint will be denied.
A separate Order will be issued.
DATE: July 14, 2015
/s/ William J. Nealon
United States District Judge
26
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?