Fitch et al v. Federal Housing Finance Agency et al

Filing 59

MEMORANDUM AND ORDER granting 42 Motion to Dismiss for Failure to State a Claim as to Harmon Law Offices, P.C.- So Ordered by Chief Judge John J. McConnell, Jr. on 12/16/2019. (Barletta, Barbara)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
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KENNETH FITCH and
ESTATE OF DIANNE L. FITCH,
Plaintiffs,

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v.

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FEDERAL HOUSING FINANCE
AGENCY; FEDERAL NATIONAL
MORTGAGE ASSOCIATION; WELLS
FARGO BANK, N.A.; HARMON LAW
OFFICES, P.C.; and 266 PUTNAM
AVENUE, LLC,
Defendants.

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C.A. No. 18·214·JJ.tvi·PAS

_______________________ )
MEMORANDUM AND ORDER
JOHN J. MCCONNELL, JR., United States District Judge.
Defendant Harmon Law Offices, P.C. ("Harmon") moves to dismiss the single
claim in Count VI that Kenneth Fitch and the Estate of Dianne L. Fitch 1 levels
against it for violating the Fair Debt Collection Practices Act ("FDCPA"). ECF No. 42.
Because the Court agrees with Harmon that it did not act as a debt collector in
representing the mortgagee in the non-judicial foreclosure of the Fitch's property,
Harmon's motion is GRANTED.

In opposing Harmon's motion, Plaintiffs agree to remove the Estate of Dianne
L. Fitch from Count VI; when the Court uses the term "Plaintiff' in this Order, it is
refening to Mr. Fitch only.
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I.

BACKGROUND
The Court takes the allegations m Plaintiff's Complaint as true for the

purposes of Harmon's motion.
Ms. Fitch executed a note on a $96,648.00 loan on December 31, 2009 on a
property in Cumberland, Rhode Island, and a mortgage as security for the note. ECF
No. 1 at. 11 48. She was tho sole owner of the property; Mr. Fitch was not a party to
tho loan transaction and did not sign the note. Id. lVIr. Fitch appears to have executed
the mortgage but. only in his capacity as a noU"vested spouse. lVIs. Fitch passed away
on April 7, 2014. Id. at 1113.
On or about March 31, 2017, the loan went into default for nonpayment. Wells
Fargo hired Harmon to bring foreclosure proceedings. I d. at 11 52. On April 20, 2017,
Harmon sent a notice of foreclosure sale. Id. at 11 53. Harmon advertised the notice
of sale during May, June, and July 2017 in the Pawtucket Times newspaper. On
July 28, 2017, the Kay Street property was sold at foreclosure auction. Id. at

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56.

Months later in December 2017, Mr. Fitch was appointed administrator oflVIs. Fitch's
estate. The Estate of Ms. Fitch and Mr. Fitch filed an eight count Complaint against
Federal Housing Finance Agency, Federal National Mortgage Association ("Fannie
Mae"), Wells Fargo Bank, N.A., Harmon, and 266 Putnam Avenue, LLC, alleging
violations of various statutes and clue process.
II.

STANDARD OF REVIEW
To survive a motion under Rule 12(b)(G) of the Federal Rules of Civil Procedure,

a "complaint must contain sufficient factual matter, accepted as true, to 'state a claim

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to relief that is plausible on its face."' Ashcmft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombl;~ 550 U.S. 544, 570 (2007)). "The plausibility
inquiry necessitates a two·step pavane." Garcfa-Catalan v. United States, 734 F.3d
100, 103 (1st Cir. 2013). "First, the court must distinguish 'the complaint's factual
allegations (which must be accepted as true) from its conclusory legal allegations
(which need not be credited)."' I d. (quoting JY[orales-Cruz v. Univ. of P.R., 676 F.3d
220, 224 (1st Cir. 2012)). "Second, the court must determine whether the factual
allegations are sufficient to support 'the reasonable infm·ence that the defendant is
liable for the misconduct alleged."' Gmda-Catalan, 734 F.3d at 103 (quoting Haley

v. Ci~v of Boston, 657 F.3d 39, 46 (1st Cir. 2011)).

"In determining whether a

complaint crosses the plausibility threshold, 'the reviewing court [must] draw on its
judicial experience and common sense."' Garcfa-Catalan, 734 F.3d at 103 (quoting

Iqbal, 556 U.S. at 679).
III.

DISCUSSION
Harmon conducted a nonjudicial foreclosure proceeding on behalf of Wells

Fargo and Fannie Mae to enforce their security interests in the Fitch's property after
the Fitch's failure to make payments. In Count VI 2 of the Complaint, the only count
to address Hannon's alleged conduct, Mr. Fitch alleges that Harmon sent a notice of
sale to him on April 20, 2017 about a foreclosure sale to take place that summer.

z The Complaint lists the FDCPA claim as Count V, but numerically it should
be Count VI. ECF No. 1 at 27.
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Hannon conducted tho foreclosure sale on July 28, 2017 after publishing notices of
sale in the Pawtucket '!Ymes from May 22, 2017 until July 27, 2017.
The Complaint allegations aro not particularly pointed, rendering a decision
on a motion to dismiss tricky. Harmon levels several arguments in support of its
motion to dismiss but emphasizes its argument that Harmon is not a "debt collector"
as defined in the FDCPA. Because the Court finds that Harmon's conduct did not
put it in the category of an FDCPA debt collector, it will address Harmon's conduct
in executing· the foreclosure on Wells Fargo and Fannie Mae's behalf first.
According to the FDCPA, a "debt collector" is defined as a person

111

any

business "the principal purpose of which is the collection of any debts, or who
regularly collects or attempts to collect, directly or indirectly, debts owed or asserted
to be owed or clue another." 15 U.S.C. § 1692a(6). The United States Supreme Court
dealt with the parameters of this definition in Obduskey v. JJ!!cCartby & Holthus LLP,
139 S. Ct. 1029, 1036-38 (2019). The Supreme Court noted that Congress wrote a
pnmary definition, which it recognized would include a business, like Harmon,
engaged

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nonjudicial foreclosure proceedings.

Id. at 1036 (quoting § 1692a(6))

("(F]oreclosure is a means of collecting a debt. And a business pursuing nonjudicial
foreclosures would, under the capacious language of the Act's primary definition, be
one that 'regularly collects or attempts to collect, directly or indirectly, debts."').

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The Supreme Court also noted that Congress included a "limited-purpose
definition," that explains "'[f]or the purpose of section 1692f(6)' 3 a debt collector
'also includes' a business, ... , 'the principal purpose of which is the enforcement of
security interests"' Id. at 1037 (quoting§ 1692a(6)). Focusing on the addition of the
word "also" and giving it its full effect, the Supreme Comt concluded that "the limited·
purpose definition narrows the primary definition, so that the debt·collector·related
prohibitions of the FDCPA (with tho exception of § 1692f(6)) do not apply to those
who, ... , are engaged in no more than security-interest enforcement." Id. at 1037.
In conclusion, the ObduskeyCourt was convinced "that, but for§ 1692f(6), those who
engage in only nonjudicial foreclosure proceedings are not debt collectors within the
moaning of tho Act." Id. at 1038; see also King v. Wells Fargo Home JYfortg:, Civil
Action No. 11·10781-GAO, 2013 WL 1196664, at *3 (D. Iviass. Mar. 25, 2013); Speleos

v. BAG Home Loans SeTv., L.P., 824 F. Supp. 2d 226 (D. Mass. 2011).
Given the Obduskey Court's definitive ruling on this issue under similar
factual circumstances, the Comt applies that holding to Mr. Fitch's case. Hannon
was engaged by Wells Fargo and Fannie Mae to begin foreclosure proceedings to
protect their security interest in the Fitch's property therefore it was not a debt

Subsection 1692(f)(G) prohibits a debt collector from "[t]aking or threatening
to take any nonjudicial action to effect dispossession or disablement of property if (A)
there is no present right to possession of the property ... ; (B) there is no present
intention to take possession of the property; or (C) the property is exempt by law from
such dispossession or disablement." This section thus does not provide an additional
definition for debt collect01·; it merely lists additional prohibitions on a debt collector's
acts.
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collector under the FDCP A:' Mr. Fitch's claims in Count VI for violating the FDCPA
must be dismissed.
IV.

CONCLUSION
Mr. Fitch does not state a claim for a violation of the FDCPA on which he is

entitled to relief. The Court GRANTS Harmon's motion to dismiss Count VI. ECF
No. 42.

John J. McConnell, Jr.
United States District Judge
December 16, 2019

The Court also considered that Congress decided to treat "security interest
enforcement differently from ordinary debt collection in order to avoid conflicts with
state nonjudicial foreclosure schemes" that provide protections and benefits to
debtors. Obduslw;~ 139 S. Ct. at 1037.
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