Federal Judge Slams Wells Fargo for Violation of Debt Collector’s Act in Florida

 

EDITOR’S NOTE: this is why I am encouraging attorneys to take cases involving foreclosure, even if the foreclosure itself is problematic. The FDCPA federal counterpart essentially states the same rules. These cases allow for damages and recovery of attorney fees that might aid in the cost of protracted litigation by a pretender lender. Most of my clients are receiving these contacts even after they have expressly told the caller that they are represented by counsel and even that there is a lawsuit pending. I would add that there is clearly a question as to whether the offer of modification is an admission against interest that the loan is in default and that therefore the current “default” is waived.

Danielle Kelley of our firm Garfield, Kelley and White has been writing about this for some time. She firmly believes, and I agree with her, that the time has come to file these actions. I would suggest that a debt validation letter be sent under the FDCPA and that the “borrower” obtain a title and securitization report as well, in order to shore up the potential setoffs and counterclaims against the pretender lender. But the good part of this law is that even if the caller is in fact the true lender or creditor, they must follow the rules — or pay the penalty.

2013 U.S. Dist. LEXIS 172716, *


ANDREW CONKLIN, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.

Case No. 6:13-cv-1246-Orl-37KRS

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA, ORLANDO DIVISION

2013 U.S. Dist. LEXIS 172716

December 8, 2013, Decided
December 9, 2013, Filed 

CORE TERMS: collection, mortgage, debt-collection, phone, cell, collect a debt, telephone, solicitations, exemption, consumer, foreclosure, landline, factual allegations, security interest, express consent, prerecorded, foreclose, servicer, exempt, foreclosure action, emergency calls, business relationship, cellular phones, telephone-solicitation, categorically, communicate, pre-suit, exempted, notice

COUNSEL:  [*1] For Andrew Conklin, Plaintiff: Richard S. Shuster, LEAD ATTORNEY, Shuster & Saben, LLC, Satellite Beach, FL.

For Wells Fargo Bank, N.A., a foreign corporation, Defendant: Aaron S. Weiss, LEAD ATTORNEY, Carlton Fields, PA, Miami, FL; April Y. Walker, LEAD ATTORNEY, Carlton Fields, PA, Orlando, FL; Michael Keith Winston, LEAD ATTORNEY, Carlton Fields, PA – West Palm Beach, West Palm Beach, FL.

JUDGES: ROY B. DALTON, JR., United States District Judge.

OPINION BY: ROY B. DALTON, JR.

OPINION

ORDER

This cause is before the Court on the following:

1. Plaintiff’s Complaint (Doc. 2), filed August 15, 2013;

2. Defendant Wells Fargo’s  Click for Enhanced Coverage Linking SearchesMotion to Dismiss Plaintiff Andrew Conklin’s Complaint and Supporting Legal Memorandum (Doc. 12), filed August 28, 2013; and

3. Plaintiff Andrew Conklin’s Response to Motion to Dismiss (Doc. 18), filed September 23, 2013.

Upon consideration, the Court finds that Defendant’s motion is due to be denied.

BACKGROUND

Defendant is the loan servicer on Plaintiff’s mortgage. (Doc. 2, ¶ 4.) In 2010, Defendant sued Plaintiff to foreclose on his house. (Doc. 18, p. 1.) Defendant allegedly continued to communicate about the foreclosure directly to Plaintiff after he was represented by counsel; this led Plaintiff  [*2] to file a previous Florida Consumer Collection Practices Act (“FCCPA”) claim against Defendant. (Id. at 1-2.) That case later settled. (Id. at 2.)

Then, earlier this year, Defendant allegedly resumed calling Plaintiff’s cell phone. (Doc. 2, ¶¶ 16-18.) After one of the calls, Defendant left a voicemail stating: “This is . . . your mortgage servicer, calling in regards to your mortgage. . . . This is an attempt to collect a debt . . . .” (Id. ¶ 16.) Plaintiff accordingly filed this suit in state court, alleging that Defendant has violated the FCCPA and the Telephone Consumer Protection Act (“TCPA”). (Id. ¶¶ 10-26.) Defendant removed the case to this Court on the basis of federal-question jurisdiction. (Doc. 1.)

Defendant now moves to dismiss the Complaint, arguing that it fails to state either an FCCPA or a TCPA claim. 1 (Doc. 12.) Plaintiff opposes. (Doc. 18.) This matter is ripe for the Court’s adjudication.

FOOTNOTES

1 Defendant also argues that Plaintiff failed to give pre-suit notice, which was allegedly required by Plaintiff’s mortgage. (Doc. 12, pp. 2-4.) First, this suit is about the calls, not the mortgage; thus, the mortgage is not “central” to the Complaint, and the Court declines to consider  [*3] it at the motion-to-dismiss stage. See Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005). Second, the Court is skeptical that a contractual requirement of pre-suit notice to allow the other party an opportunity to cure a breach is applicable to this action, which is not on the contract itself. Nevertheless, because the Court declines to consider this argument now, it will not preclude Defendant from raising it at a later point.

STANDARDS

A plaintiff must plead “a short and plain statement of the claim.” Fed. R. Civ. P. 8(a)(2). On a motion to dismiss, the Court limits its consideration to “the well-pleaded factual allegations.” La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004). The factual allegations in the complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). In making this plausibility determination, the Court must accept the factual allegations as true; however, this “tenet . . . is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). A pleading that offers mere “labels and conclusions” is therefore insufficient. Twombly, 550 U.S. at 555.

DISCUSSION

I. FCCPA

The  [*4] FCCPA provides that “[i]n collecting consumer debts, no person shall . . . [c]ommunicate with a debtor if the person knows that the debtor is represented by an attorney with respect to such debt . . . .” Fla. Stat. § 559.72(18). Defendant argues that Plaintiff has failed to state an FCCPA claim because: (1) enforcing a security instrument does not amount to debt collection within the meaning of the FCCPA; (2) Plaintiff has not alleged that Defendant was attempting to collect a debt; and (3) Plaintiff has not alleged that Defendant “communicated” with him within the meaning of the FCCPA. (Doc. 12, pp. 4-6.) The Court disagrees.

It is true that “a mortgage foreclosure action itself” does not qualify as debt collection under the FCCPA. Trent v. Mortg. Elec. Registration Sys., Inc., 618 F. Supp. 2d 1356, 1360-61 (M.D. Fla. 2007) (Corrigan, J.) (noting that Fair Debt Collection Practices Act (“FDCPA”) case law applies to FCCPA cases); see also Warren v. Countrywide Home Loans, Inc., 342 F. App’x 458, 460 (11th Cir. 2009) (“[F]oreclosing on a security interest is not debt collection activity [for the purposes of § 1692g of the FDCPA].”). However, the action at issue here is not the invocation  [*5] of “legal process to foreclose,” see Trent, 618 F. Supp. 2d at 1361, but rather debt collection calls made outside that judicial process. It is not as if these calls were made to notify Plaintiff of the foreclosure action or to attempt to comply with the statute. Cf. Diaz v. Fla. Default Law Grp., P.L., No. 3:09-cv-524-J-32MCR, 2011 U.S. Dist. LEXIS 68541, 2011 WL 2456049, at *4 (M.D. Fla. Jan. 3, 2011) (Corrigan, J.) (“The timing of the filing of the foreclosure complaints [just weeks before the communications] confirms that defendant was not using the [alleged debt collection] letters in an attempt to collect the debt outside the foreclosure process.”). Rather, the calls were made years into the underlying foreclosure action, and after Plaintiff previously filed an FCCPA claim for this very same behavior, in an explicit attempt to collect a debt. (Doc. 2, ¶ 16 (“This is . . . your mortgage servicer, calling in regards to your mortgage. . . . This is an attempt to collect a debt . . . .”).) To try to claim now that these calls were made in an attempt to foreclose the security interest rather than to collect a debt is simply disingenuous. See Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1217 (11th Cir. 2012)  [*6] (holding that a letter explicitly stating that the defendant was attempting to collect a debt plainly constituted debt-collection activity, and noting that “[t]he fact that the letter and documents relate to the enforcement of a security interest does not prevent them from also relating to the collection of a debt”). To give credence to that argument would be to give carte blanche to any holder of secured debts to harass consumers in the process of foreclosure, and as the U.S. Court of Appeals for the Eleventh Circuit aptly noted, “That can’t be right. It isn’t.” Id. at 1218.

Plaintiff has alleged that Defendant bypassed his lawyer and called him directly to discuss payment on his mortgage and to attempt to collect a debt. (Doc. 2, ¶¶ 16-18.) This is precisely the kind of behavior that the FCCPA was designed to prevent. The Court therefore finds that Plaintiff has sufficiently stated an FCCPA claim, and Defendant’s motion is due to be denied on that ground.

II. TCPA

The TCPA prohibits making any call using an autodialer to any cell phone, except for emergency calls or calls where the called party has given prior consent. 47 U.S.C. § 227(b)(1)(A)(iii). Defendant argues that all debt-collection  [*7] calls, including those made to cell phones, are categorically exempt from the TCPA. (Doc. 12, p. 7.) However, the case on which Defendant relies for that proposition, Meadows v. Franklin Collection Serv., Inc., 414 F. App’x 230 (11th Cir. 2011), is distinguishable from the one at bar.

In Meadows, the plaintiff was suing under two provisions of the TCPA which are inapplicable here: § 227(b)(1)(B), regarding landlines, 2 and § 227(c)(5), regarding telephone solicitations. 3 Id. at 235-36. Neither of those provisions apply in this case, as Plaintiff is suing under § 227(b)(1)(A)(iii), regarding cell phones. (See Doc. 2, ¶ 21.) Though Meadows does broadly state that “the FCC has determined that all debt-collection circumstances are excluded from the TCPA’s coverage,” that statement is dicta and is also qualified by the narrow holding of the case, which was specifically based on the landline and telephone-solicitation provisions. 414 F. App’x at 235.

FOOTNOTES

2 The court held that the defendant did not violate the landline provision because it had an existing business relationship with the intended recipient of the call and the call was made for a commercial, non-solicitation purpose—both explicit  [*8] exemptions from that provision of the TCPA. Meadows, 414 F. App’x at 235 (citing In re Rules & Regulations Implementing Tel. Consumer Prot. Act of 1991, 7 FCC Rcd. 8752, 8773 (Oct. 16, 1992) (“[P]rerecorded debt collection calls would be exempt from the prohibitions on such calls to residences as: (1) calls from a party with whom the consumer has an established business relationship, and (2) commercial calls which do not adversely affect privacy rights and which do not transmit an unsolicited advertisement.” (emphasis added)).

3 The court held that the defendant did not violate the telephone-solicitation provision because the calls made were debt collections, not telephone solicitations. Meadows, 414 F. App’x at 236. The court rightly noted that the FCC has determined that debt-collection calls are “not subject to the TCPA’s separate restrictions on telephone solicitations.Id. (citation and internal quotation marks omitted) (emphasis added).

Further, this Court must read that statement in Meadows in conjunction with the FCC ruling on which it relies, which provides that “prior express consent [in debt-collection calls made to cell phones] is deemed to be granted only if the wireless  [*9] number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed.” In re Rules & Regulations Implementing Tel. Consumer Prot. Act of 1991, Request of ACA Int’l for Clarification & Declaratory Ruling, 23 FCC Rcd. 559, 564-65 (Dec. 28, 2007) (FCC Ruling). This ruling clarifies that not all debt-collection calls to cell phones are categorically exempted from the TCPA—unlike the broad exemptions for landline debt-collection calls and telephone solicitations, which are based on the content of the call itself. See id. at 561-62 (“[P]rerecorded debt collection calls are exempted from Section 227(b)(1)(B) of the TCPA which prohibits prerecorded or artificial voice messages to residences.”), 565 (“[C]alls solely for the purpose of debt collection are not telephone solicitations . . . . Therefore, calls regarding debt collection . . . are not subject to the TCPA’s separate restrictions on ‘telephone solicitations.'”). Rather, with regard to cell phones, a debt collector must show that the debtor provided the number during the debt transaction; only then will a debt-collection call fall under the consent exception in  [*10] the cell-phone provision. See Gager v. Dell Fin. Servs., LLC, 727 F.3d 265, 273 (3d Cir. 2013) (“The only exemptions in the TCPA that apply to cellular phones are for emergency calls and calls made with prior express consent. Unlike the exemptions that apply exclusively to residential lines, there is no . . . debt collection exemption that applies to autodialed calls made to cellular phones. Thus, the content-based exemptions invoked by [the defendant] are inapposite.”).

In sum, debt-collection calls to cell phones are only exempt from the TCPA if the debtor had prior express consent, in the form of a number provided by the debtor during the transaction giving rise to that debt. See FCC Ruling, 23 FCC Rcd. at 564-65. As Plaintiff has pled that he did not give consent or alternatively revoked consent (Doc. 2, ¶¶ 22-23), he has adequately stated a TCPA claim, and Defendant’s motion is due to be denied on that ground. It will be Defendant’s task to prove consent at the summary-judgment stage. See FCC Ruling, 23 FCC Rcd. at 565 (putting the burden on the caller to show consent); see, e.g., Osorio v. State Farm Bank, F.S.B., 859 F. Supp. 2d 1326, 1330-31 (S.D. Fla. 2012) (reviewing the issue  [*11] of consent and revocation on summary judgment).

CONCLUSION

Accordingly, it is hereby ORDERED AND ADJUDGED that Defendant Wells Fargo’s  Click for Enhanced Coverage Linking SearchesMotion to Dismiss Plaintiff Andrew Conklin’s Complaint and Supporting Legal Memorandum (Doc. 12) is DENIED.

DONE AND ORDERED in Chambers in Orlando, Florida, on December 8, 2013.

/s/ Roy B. Dalton Jr.

ROY B. DALTON JR.

United States District Judge

 

6 Responses

  1. Are any of you finding your comments are not getting registered right right on Neils summary of comments.

  2. This would be hilarious if it wasn’t so afflicting… The imbeciles this country breeds all lining up to sign the petition “Support Karl Marx for president”. Truly sad.

  3. @ The A Man, your so right and it is about the title been broken and not by the borrower, and for what and why is not of our concern, but only that it was done. If the Note has no debt its no longer a Note as there is no contract between the two parties.

    The only modification were only loans that the debt was purchase and not done so with a blank Note, as if the loan Note was conveyed in blank could not modify the loan because as why Ginnie Mae the allege owner did not purchase the debt.

    You have 4.2 million application go through the HAMP, FHA HAMP & VA HAMP yet only 530,000 modifications were completed. Why? It was to divert attention away from the fact that the alleged leaders did not possess ownership. If you kept the homeowner funneling through the slaughterhouse think that the only one that could help was Obama, the homeowners did not want to bit the hand that was helping them.

    Had homeowners know early all this money from the Fed would not have been able to be given to these banks at zero to .5%. It a beautiful crime because its got the President of the United States in code calling the homeowners bums (not responsible who wanted to live outside of their mean) while allowing the CRA to take the blame with Barney Frank, and behind it all were the Obama campaign donors.

    NY voting Democrats and those running the Fed set us up, where the first two years of Obama terms you could not question him, as he just got healthcare passed which was suppose to be the holy grail. So the banking community had a 2yr head start and judges following what was second nature and that was the homeowner was in the wrong, and stamp the foreclosures as done!

    Now we are 5yrs behind the crime and everybody got to deal with the fact they were dead wrong and parties with “No Standing” were in courts were saying they were “holding the Notes” but the did not say they were the “holder in due course”, and that because the Note were separated from the DEBTS!

  4. Stay focused Neil Once the chain of title is broken the game is over. there is no credtor. There are multiple creditors. The borrower did not break the chain of title. The so called Lender servicer whatever you want to call it broke the chain of title, Why would they break the chain of title with such deep consequences. The truth none of my business. But in order to reap the Unjust enrichment. Actuall a loan modification at this point would be aiding and abbeting in the alleged sceam.

    The attorneys job is to get us to that point in the safest and cheapest route.

    Great article Neil

    MERRY CHRISTMAS AND HAPPY NEW YEARS.

    I just saw a movie with Clint Eastwood. Pale Rider Nothing has changed.

  5. I don’t know if in Florida if Washington Mutual Bank (WaMu) did business of not as it does not seen so, because the handling of the WaMu government insured loans are a gold mine as the loan were not purchased, and there was a separation on the Note & debt (not the mortgage or deed of trust).

    You cannot foreclose on a debt if you are not owed a debt. If you are not in possession of the Note because you signed it in blank and physically relinquish the Note, your financial interest has come to an end.

    When WaMu agreed in Jul 31, 2006 to allow Wells Fargo to mortgage service the 1.3 million government insured loans, then those loans were forever out of the hand of WaMu as the entire building they were housed in was purchase by Wells Fargo.

    What this did if and when WaMu transfer to Wells Fargo is act as a bankruptcy remote procedure as it took the Notes that were suppose to already be in the possession of Ginnie Mae, with WaMu acting as mortgage servicer and custodian of record.

    However what also wrong with this arrangement is that Ginnie Mae is not a home mortgage loan lender and itself cannot collect a payment, so it cannot delegate another to collect for it. But under cover of Wells as a lender and servicer and taking physical possession for Ginnie Mae, it presented itself to the courts as the holder of the Note, being careful to not say “holder in due course/lien holder” and was allowed to place assignment putting itself into title.

    One in title Wells would uses the Administrative Foreclosure to by pass the courts, where there would be a need to provide a receipt of a purchase. Next Wells Fargo would submit a False Claim as owner of the loans and receive illegal payments from the FHA Mortgage Insurance Premium and VA Guaranty Fund!

    Wells Fargo is that lead that uncovers the GLITCH in the entire Ginnie Mae pooling system. However what taking place in these settlements is an attempt to rescind the entire securities by paying off the “investors” as most borrowers had no clue of a securities and in most case of the large lenders they always had physical possession as the custodian of record for the Fannie, Freddie or Ginnie.

    There are as reported by the OCC & Fed that 800,000 loan did not even get reviewed for one of the HAMPs, and if you understand that Ginnie Mae under no conditions could authorize a modification and from the OCC matrix it give as a break down of numbers that of the 4.2 million, that 20% were government insured loan and 86% of those were Ginnie pooled loans, which put you at around 800,000 loans that applied but could not be authorized by the recorded at MERS “investor” in Ginnie Mae!

  6. “[F]oreclosing on a security interest is not debt collection activity [for the purposes of § 1692g of the FDCPA].”

    Here we have it again and again. People don’t lose because they fail to fight or don’t have an attorney. They lose because they don’t understand what the real issues are. Consumers need to go after breaches of consumer laws (Respa, Tila, Fdcpa, TCPA, etc.)

    Securitization or lack thereof is for regulators to investigate and prosecute. Judges understand it. Homeoners don’t and get bent out of shape as soon as anyone tells them that securitization is NOT their problem. Have an audit of your entire loan done exclusevely with the purpose of FOLLOWING THE MONEY. Any other reason is a sure loser.

    “Rather, with regard to cell phones, a debt collector must show that the debtor provided the number during the debt transaction; only then will a debt-collection call fall under the consent exception in.”… “In sum, debt-collection calls to cell phones are only exempt from the TCPA if the debtor had prior express consent, in the form of a number provided by the debtor during the transaction giving rise to that debt”

    Don’t give your cell phone number and/or attack as soon as any bank, mortgage servicer, debt collector and such starts harassing you on your cell if you never allowed it in the first place. People need to start going on the attack and become relentless in their pursuit of the banks. No two ways about it.

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