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Russell v. SN Servicing Corp.

United States District Court, N.D. West Virginia

April 21, 2017

PATRICK RUSSELL, on behalf of himself and all others similarly situated, Plaintiff,
v.
SN SERVICING CORPORATION AND NPML MORTGAGE ACQUISITIONS, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED CLASS ACTION COMPLAINT [DKT. NO. 27]

          IRENE M. KEELEY UNITED STATES DISTRICT JUDGE.

         Pending before the Court is the motion to dismiss filed by defendants, SN Servicing Corporation (“SN Servicing”) and NPML Mortgage Acquisitions, LLC (“NPML”) (collectively “defendants”), seeking to dismiss the plaintiff's first amended class action complaint. For the reasons that follow, the Court GRANTS in PART and DENIES in PART the defendants' motion. (Dkt. No. 27).

         I. BACKGROUND

         The plaintiff, Patrick Russell (“Russell”), secured a $20, 000 home equity loan from Equity South Mortgage on December 20, 1999. That loan had a maturity date of January 1, 2015, and required Russell to make monthly payments towards principal and interest until either the loan was paid off or the maturity date, whichever occurred first. As of May 2015, Russell had not made a payment on the loan in over twelve years.

         Sometime after Russell's default, NPML purchased the loan and retained SN Servicing to undertake collection efforts. On May 28, 2015, SN Servicing sent two letters to Russell. The first, entitled “Notice of Assignment, ” informed Russell that NPML had assigned the loan for servicing, that is, for collection efforts, to SN Servicing (“May 28 Assignment Letter”). (Dkt. No. 22-2). The second was a notice pursuant to the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., informing Russell that SN Servicing was attempting to collect a debt for NPML (“May 28 Collection Letter”). (Dkt. No. 22-3). The May 28 Collection Letter also informed Russell that, upon request made within thirty days, SN Servicing would provide him with the name and address of the original lender.

         The complaint alleges that both letters violated the FDCPA. The May 28 Collection Letter allegedly failed to inform Russell specifically that he must make the request for the original lender's name and address in writing. Further, neither letter indicated that the statute of limitations had expired and the terms of the loan therefore were no longer enforceable.

         SN Servicing sent a third letter to Russell on September 2, 2015 (“September 2 Letter”), warning him that “[i]t is imperative that you contact the office within 15 days from the date of this letter (09/17/2015) or we will have no alternative but to initiate legal action as allowed by your state.” (Dkt. No. 22-4). This letter failed to note that the statute of limitation on the loan had expired. Moreover, despite the letter's warning, SN Servicing did not initiate any legal action. In his amended complaint, Russell alleges that SN Servicing's warning that it intended to take legal action was false, misleading, or deceptive because SN Servicing knew at the time that it could not take any action on the stale debt.

         Finally, SN Servicing sent Russell two bills, on October 7, 2015, and January 6, 2016, stating that the loan was delinquent by 4, 449 days and 4, 541 days, respectively. A payment ticket was attached to each bill indicating that the amount due for the outstanding August 1, 2003 payment was $218.90, and that, as of January 6, 2016, the total payment due was $33, 053.90.

         Russell's amended complaint alleges seven violations of the FDCPA and the West Virginia Consumer Credit Protection Act (“WVCCPA”) based on false, deceptive, or misleading business practices. (Dkt. No. 22). Counts I, II, III, IV, VI, VII allege that the defendants engaged in deceptive business practices when they “threatened to file legal action against Plaintiff, when no such action could be taken because the debt was time-barred by the statute of limitations.” Counts II and III further allege that the defendants threatened litigation even though they never intended to take such action. Finally, Count V alleges that the defendants failed to include statutorily mandated information in their initial May 28 Collection Letter, by failing to notify Russell that he must request information about the original creditor in writing.

         II. STANDARD OF REVIEW

         In assessing a motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must accept all well-pled facts contained in the complaint as true and construe those facts in the light most favorable to the plaintiff. Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc, 591 F.3d 250, 255 (4th Cir. 2009). However, “legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement fail to constitute well-pled facts for Rule 12(b)(6) purposes.” Id. (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In deciding on the motion, the court may consider “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). The court “may also consider documents attached to the motion to dismiss, so long as they are integral to the complaint and authentic.” Philips v. Pitt Cty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citing Blankenship v. Manchin, 471 F.3d 523, 526 n.1 (4th Cir. 2006)).

         A complaint should be dismissed “if it does not allege ‘enough facts to state a claim to relief that is plausible on its face.'” Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Facial plausibility is established once the factual content of a complaint ‘allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Nemet Chevrolet, 591 F.3d at 256. Detailed factual allegations are not required, but the facts alleged must be sufficient “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.

         III. DISCUSSION

         The defendants first argue that the Court should dismiss NPML as a defendant because it is not a “debt collector” as defined under the FDCPA. (Dkt. No. 28 at 7). Next, they argue that Counts I, II, III, IV, VI, and VII must be dismissed because the debt is in fact not time-barred and remains subject to collection. They further contend that those counts must be dismissed because Russell failed to allege sufficiently that SN Servicing threatened an action it did not intend to take.

         The defendants also maintain that the Court should dismiss Count V of the amended complaint because it does not relate back to the original complaint and, consequently, was not pled within the applicable limitations period. Finally, they argue that the September 2 Letter was not a communication intended to collect a debt and therefore is not actionable under the FDCPA. The Court will address each of these arguments in turn.

         A. NPML is Not a Debt Collector Under the FDCPA

         The defendants seek to dismiss NPML on all counts because it is not a “debt collector, ” which the FDCPA defines as “any person who uses any instrumentality of interstate commerce or the mails in 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 due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). On the other hand, it defines a “creditor” as “any person who offers or extends credit creating a debt or to whom a debt is owed.” 15 U.S.C. § 1692a(4).

         Generally, a debt collector is an entity that “collects debt on behalf of a creditor, ” while a creditor is one “to whom the debt is owed.” Henson v. Santander Consumer USA, Inc., 817 F.3d 131, 135 (4th Cir. 2016), cert. granted, 137 S.Ct. 810 (mem) (U.S. Jan. 13, 2017) (No. 16-349). Notably, “when a creditor collects its debt for its own account, it is not generally acting as a debt collector.” Id. at 135-36.

         There is, however, an exception to this rule when the “principal purpose of a person's business is to collect debt.” Id. at 135-36. In Henson, the Fourth Circuit determined that § 1692a(6) defines a debt collector as “(1) a person whose principal purpose is to collect debts; (2) a person who regularly collects debts owed to another; or (3) a person ...


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