Chlubicki et al v. Pennymac Loan Services, LLC
MEMORANDUM (Order to follow as separate docket entry)Consistent with the discussion above and the authorities identified in that discussion, the Court finds that Defendants Motion to Dismiss Plaintiffs Amended Complaint (Doc. 13) must be denied. An Order consistent with this determination will be filed contemporaneously.Signed by Honorable Richard P. Conaboy on 3/12/18. (cc)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
John and Lori Chlubicki,
Civil No. 3:17-cv-01485
(Judge Richard P. Conaboy)
Pennymac Loan Services, LLC,
We consider here Defendant’s Motion to Dismiss Plaintiffs’
Complaint Pursuant to Rule 12 (b)(6) of the Federal Rules of
Civil Procedure. (Doc. 13). Defendant’s motion has been fully
briefed (Docs. 14,15,16 and 19) by the parties and is ripe for
I. Operative Legal Standard.
In McTernan v. City of York, 577 F.3d 521, 530 (3d Cir.
2009), the Third Circuit Court of Appeals set out the standard
applicable to a motion to dismiss in light of the United States
Supreme Court’s decisions in Bell Atlantic Corp v. Twombly, 550
U.S. 433 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009).
“[T]o survive a motion to dismiss, a complaint
must contain sufficient factual matter,
accepted as true to ‘state a claim that relief
is plausible on its face.’” Iqbal, 129 S. Ct.
at 1949 (citing Twombly, 550 U.S. at 570). The
Court emphasized that “only a complaint that
states a plausible claim for relief survives a
motion to dismiss.” Id. at 1950. Moreover, it
continued, “[d]etermining whether a complaint
states a possible claim for relief will … be a
context-specific task that requires the
reviewing Court to draw on its traditional
experience and common sense.” Id. (citation
McTernan, 577 F.3d at 530. The Third Circuit discussed the effect
of Twombly and Iqbal in detail and provided a road map for
district courts presented with a motion to dismiss for failure to
state a claim in a case filed just a week before McTernan, Fowler
v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009).
[D]istrict Courts should conduct a two-part
analysis. First, the factual and legal elements
of a claim should be separated. The district
court must accept all of the complaint’s wellpleaded facts as true, but may disregard any
legal conclusions. [Iqbal, 129 S. Ct. at 1949.]
Second, a district court must then determine
whether the facts alleged in the complaint are
sufficient to show that the Plaintiff has a
“plausible claim for relief.” Id. at 1950.
other words, a complaint must do more than
allege a Plaintiff’s entitlement to relief. A
complaint has to “show” such an entitlement with
its facts. See Philips v. Co. of Alleghany, 515
F. 3d 224, 234-35 (3d Cir. 2008). As the Supreme
Court instructed in Iqbal, “[w}here the wellpleaded facts do not permit the Court to infer
more that the mere possibility of misconduct,
the complaint has alleged--but it has not shown-that the pleader is entitled to relief.” Iqbal,
129 S. Ct. at 1949. This “plausibility”
determination will be a “context-specific task
that requires the reviewing Court to draw on its
judicial experience and common sense.” Id. at
Fowler, supra, at 210-11.
The Circuit Court’s guidance makes clear that legal
conclusions are not entitled to the same deference as well-pleaded
facts. In other words, “the court is ‘not bound to accept as true a
legal conclusion couched as a factual allegation.’” Guirguis v.
Movers Specialty Services, Inc., No. 09-1104, 2009 WL 3041992, at
*2 (3d Cir. September 24. 2009) (quoting Twombly, 550 U.S. at 555)
II. Factual Background.1
Plaintiffs’ Complaint (Doc. 1) alleges that Defendant
violated the Fair Debt Collection Practices Act (“FDCPA”) by
engaging in deception to collect the debt. The debt in question was
Plaintiffs’ mortgage with PennyMac Mortgage Investment Trust.
Defendant’s business involved the collection of debts owed to
PennyMac Mortgage Investment Trust. Plaintiffs allege further that
the deceptive practices Defendant engaged in were committed
during three phone calls Plaintiff Lori Chlubicki had with three
separate representatives of Defendant in January of 2016. Each of
these phone calls were initiated by Lori Chlubicki and each
concerned Plaintiffs’ attempt to determine their responsibilities
under their mortgage. The mortgage had fallen more than 30 days
overdue because of a combination of medical issues and a reduction
in Plaintiffs’ income.
These phone calls were placed on January 7, 11, and 13, 2016
and, according to Plaintiffs, had one common denominator -- each
involved a misrepresentation from one of Defendant’s agents that
the loan was in “active foreclosure”. Also, each of these
conversations included an assertion that Plaintiff should
immediately bring the loan current to avoid the consequences of a
foreclosure. Defendant, however, had not initiated a foreclosure at
The factual recitation is faithful to the allegations of Plaintiffs’ Complaint. This must
be the case because the law requires that we accept as true Plaintiffs’ well-pleaded factual
allegations. See Iqbal, supra, at 1949.
the time of these telephone conversations. As a consequence,
Plaintiffs’ depleted their 401K account to bring the loan current.
Plaintiffs contend that, because of Defendant’s misrepresentations
regarding the existence of an “active foreclosure”, they suffered
financial detriment by prematurely accessing their retirement
account. Plaintiffs assert that Defendant’s misrepresentations
violated various provisions of the FDCPA including 15 U.S.C. §§
1692e, 1692e(5) 1692(10) and 1692f.
III. Legal Discussion.
The Plaintiff in an FDCPA case must prove four things:
that she is a consumer; (2) that the Defendant is a debt
collector; (3) that the Defendant’s action involved an “attempt to
collect a debt” as defined by the FDCPA; and (4) that the
Defendant violated a provision of the FDCPA in attempting to
collect the debt. Douglass v. Convergent Outsourcing, 765 F.3d
299,303 (3d Cir. 2014). Activity undertaken for the general
purpose of inducing payment constitutes debt collection. Simon V.
FIA Card Services, 732 F.3d 259,265 (3d Cir. 2013). The FDCPA,
specifically 15 U.S.C. § 1692e, explicitly prohibits debt
collectors from using “any false, deceptive or misleading
representation or means in connection with the collection of any
debt.” One of the non-exclusive listed practices prohibited by
section 1692e is false representation regarding “the character,
amount, or legal status of any debt.” (Emphasis added).
A. Whether the case must be dismissed because Plaintiffs
originated the communications with the Defendant?
Defendant’s motion is based upon the idea that, because
Plaintiff Lori Chlubicki initiated all three calls in question, no
communication from any of Defendant’s employees during those
conversations could be entitled to the protection afforded by the
FDCPA. Defendant would have the Court conclude that multiple
district court cases in the Second Circuit have correctly held
that “ the purpose of § 1692 is to ensure that communications
initiated by the debt collector (not the consumer) are not
abusive, deceptive, or unfair.” See DiMaggio v. Countrywide Home
Loans, Inc., 2005 WL2098068 at *2-3 (N.B.N.Y. August 30, 2005).
While the DiMaggio court seemed to find some talismanic
prophylactic effect in the fact that the consumer in that case had
initialed contacted with the Defendant, our reading of that case
finds that reasoning dubious.2 The DiMaggio Court relied heavily on
the idea that it had not been able to identify a case where the
FDCPA afforded protection to a consumer who had initiated a
communication with a creditor. This Court is not sanguine that the
inability to find such a case constitutes proof that the FDCPA
We note that DiMaggio cites to Kropelnicki v. Singer, 290 F.3d 18,127 (2d Cir. 2002),
for the proposition that, when a consumer initiates communication with a debt collector, many
of the policy reasons behind the FDCPA disappear. Kropelnicki does not explicitly state this
and, having read Kropelnicki, that is an interpretation of Kropelnicki that this Court finds
unjustified. Based upon our reading of Kropelnicki we find that it does not lend support to
Defendant’s argument here.
shields every communication by a debt collector in a call
initiated by a debtor. Debtors often have valid reasons to contact
debt collectors. Defendant here would have the Court find that in
the course of such a call no misrepresentation, however egregious,
by the debt collector is to be actionable under the FDCPA. The
various authorities cited by Defendant in support of this
assertion are insufficient to convince this Court to adopt this
Plaintiffs cite a case from our circuit that discussed the
cases relied upon by Defendant here. That case, Trunzo v. Citi
Mortgage, 876 F. Sup 2d 521, 536 (W.D.Pa. 2012), held: ”(t)his
Court does not find that the aforementioned cases (those relied
upon by the Defendant in this case) stand for the proposition that
any and all responses to a consumer-initiated communication
automatically fall outside the reach of the FDCPA. Responsive
communications from debt collectors can easily be both
informational and attempts to collect a debt.” With due respect
for the district court opinions cited by defendant, we find the
Trunzo opinion to be better-reasoned and more reflective of the
primary purposes of the FDCPA – -“[t]o eliminate abusive debt
collection practices by debt collectors, to ensure 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.” 15 U.S.C. § 1692e. Nothing in § 1692 compels,
or even suggests, that a debt collector may enjoy “open season” on
a consumer who initiates contact with a legitimate concern.
In this case at this stage we must accept Plaintiffs’
assertions that: (1) they are consumers; (2) the Defendant is a
debt collector; (3) Defendant’s agents/employees engaged in an
abusive practice (the misrepresentation that Plaintiffs’ mortgage
was in an “active foreclosure)” in their attempt to collect a
debt; and (4) that Defendant’s agents/employees violated § 1692e
(2)(A) by misrepresenting the legal status of the debt. Thus,
Plaintiffs have pleaded all necessary elements of a claim under
the FDCPA. See Douglass, supra. We reiterate that we find no legal
significance in the fact that the Plaintiffs initiated the
conversations that are at the root of this case. The proper focus
here is the content of these conversations and the outcome of this
case is wholly dependent upon the fact finders’ interpretation of
who said what to whom.
B. Whether the Plaintiffs have standing to pursue this action?
Defendant raises the issue of standing, as a seeming after
thought, in its Reply Brief (Doc. 16). There is irony in Defendant
raising the issue of standing in a case that it removed from the
Lackawanna County Court of Common Pleas. Nevertheless, it is
axiomatic that federal courts must continually ensure that the
parties to a law suit have standing because standing is an
essential element of subject matter jurisdiction. See 28 U.S.C. §
Standing entails three elements: (1) the Plaintiff must have
suffered an “injury in fact” -- an invasion of a legally protected
interest which is (a) concrete and particularized, and (b) actual
or imminent; (2) existence of a causal connection between the
injury and the conduct complained of; and (3) a likelihood that
the injury will be redressed by a favorable decision. Lujan v.
Defenders of Wildlife, 504 U.S. 55, 560 (1992). Defendant’s sole
basis for challenging standing in this case is its contention that
Plaintiffs have suffered no “injury or fact”. (Doc. 16 at 8-9).
Defendant asserts that Plaintiffs’ depletion of their retirement
account cannot constitute an “injury in fact” since Plaintiffs
were obligated to repay the mortgage loan in any event. (Id.) The
Court sees no significance in the fact that Plaintiffs had a valid
obligation to Defendant. Indeed, if the obligation to repay a
valid debt was a defense to all conduct engaged in by a debt
collector, the FDCPA would be emasculated.
The Court finds that, despite Plaintiffs’ undeniable
obligation to repay the loan, they have still suffered a “concrete
and particularized injury in fact”. If Plaintiff’s had not been
led to believe that their loan was in “active foreclosure” and,
thus, subject to imminent sale (Amended Complaint at ¶¶ 44-48),
they would not have felt the need to deplete their retirement
account and could have sought other means to bring the loan
current.3 As Plaintiffs point out (Doc. 19 at 5-6) “a plaintiff’s
allegations of financial harm will easily satisfy each of these
components (of a concrete and particularize injury in fact), as
financial harm is a ‘classic’ and ‘paradigmatic form’ of injury in
fact.” Cottrell v. Alcon Laboratories, 874 F.3d 154,163 (3d Cir.
2017). The injury in fact requirement is “very generous” to
claimants, demanding only that the claimant “allege some specific,
‘identifiable trifle’ of an injury. Id. at 162 (citing Goldman v.
Wilson, 672 F.2d 1145, 1151 (3d Cir. 1982). Crediting, as we must,
the factual allegations of Plaintiffs’ Amended Complaint the Court
concludes that Plaintiffs have satisfied the liberal standards for
determining standing referenced above.
Consistent with the discussion above and the authorities
identified in that discussion, the Court finds that Defendant’s
Motion to Dismiss Plaintiffs’ Amended Complaint (Doc. 13) must be
denied. An Order consistent with this determination will be filed
In assessing whether standing exists, we assume that a Plaintiff has stated valid legal
claims. Warth v. Seldin, 422 U.S. 490,500 (1975).
BY THE COURT
S/Richard P. Conaboy
Richard P. Conaboy
UNITED STATES DISTRICT JUDGE
DATED: March 12, 2018
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