United States District Court, S.D. West Virginia, Charleston
MEMORANDUM OPINION AND ORDER
T. Copenhaver, Jr., United States District Judge
is Reverse Mortgage Solutions, Inc.'s ("RMS")
motion to dismiss, filed February 3, 2017.
Factual and Procedural Background
action, the plaintiff, Dewilla Woods ("Mrs.
Woods"), alleges that the defendant, RMS, has violated
various West Virginia common and statutory laws in connection
with the origination and servicing of a reverse mortgage
transaction between the parties. A reverse mortgage, or a
reverse annuity mortgage, is “a nonrecourse loan
secured by real property which (1) [p]rovides cash advances
to a borrower based on the equity in a borrower's
owner-occupied principal residence . . . [and] (2) [r]equires
no payment of principal or interest until the entire loan
becomes due and payable." W.Va. Code § 47-24-3
(2016); see also Reverse Annuity Mortgage,
Black's Law Dictionary (10th ed. 2014).
Woods is a resident of Kanawha County, West Virginia.
Complaint ("Compl.") ¶ 1. RMS, a Texas company
doing business in West Virginia, is a real estate investment
company specialized in "making and servicing residential
real estate mortgage loans." Id. ¶ 9. On
July 14, 2012, Mrs. Woods and her late husband, Billy R.
Woods ("Mr. Woods"), closed on a reverse mortgage
with Reverse Mortgage USA, Inc ("USA") and the
Secretary of Housing and Urban Development
("Secretary"). Id. ¶¶ 15, 36;
see Defendant's Memorandum in Support
("Mem. in Supp."), Exhibit ("Exh.") B at
1. USA then "transferred both ownership and servicing
rights ... to [RMS]. " Id. ¶ 39.
October, 2016, Mrs. Woods first learned that the reverse
mortgage contract included the following closing chargesi
a. . . . origination fee of $2, 775.00 . . .;
b. . . . recordation charges and . . . "recording
c. . . . "validation" fee;
d. . . . "mobile courier" and "courier"
e. . . . "tax cert fee";
f. . . . fee paid to USA for flood certification; g. $350.00
"Notary Fee"; [and]
h. . . . $550.00 charge for the . . . appraisal, which the
Woods had already paid in full.
Id. ¶ 40 (quotations in original). In addition,
USA charged the Woods over $7, 000 in "settlement
charges." Id. ¶ 41.
a few months after the July, 2012 [, ] closing/' Mr.
Woods passed away. Id. ¶ 47. Mrs. Woods,
"over the next several years, " began missing
payments on her home's taxes and hazard insurance
premiums (together, the "property charges") as
those payments became due. Id. ¶ 52. "As a
result, RMS force-placed . . . hazard insurance on the home[3
and began paying the . . . real estate taxes."
Id. ¶ 53.
began calling and writing Mrs. Woods, "demanding full
and immediate payment of the insurance and tax charges"
under the threat of foreclosure. Id. ¶ 54. Mrs.
Woods responded that she was unable to pay RMS
"immediately and in full" because her monthly
income had been reduced after her husband's passing.
Id. ¶ 51, 55. Mrs. Woods requested that she be
permitted to subscribe to a monthly payment plan to pay off
the amount owed, id. ¶¶ 55-56, but RMS
"told Mrs. Woods it would only accept payment in full
and that if she did not make full payment, her home would
eventually be sold, " id. ¶ 59.
August 1, 2016, RMS sent Mrs. Woods a letter stating that, to
avoid foreclosure, Mrs. Woods must pay within 30 days
"$73, 783.25 and any other payments, late charges or
fees that may become due prior to the curing of the
default/' including "attorney fees and other . . .
charges." Id. ¶¶ 64-67. "Mrs.
Woods was unable to pay the amount demanded."
Id. ¶ 70. RMS foreclosed on the home and
scheduled the foreclosure sale for November 1, 2016.
Id. ¶ 71.
Woods instituted this action on November 1, 2016, in the
Circuit Court of Kanawha County. Pertinently, in Counts II
and III, Mrs. Woods claims that RMS' efforts at
collecting outstanding payments violated the debt collection
provisions of the West Virginia Consumer Credit and
Protection Act ("WVCCPA"), W.Va. Code ch. 46A. In
Count IV, Mrs. Woods alleges that the reverse mortgage
included fees made unlawful by the WVCCPA; the West Virginia
Residential Mortgage Lender, Broker and Servicer Act (the
"Residential Mortgage Act"), W.Va. Code ch. 31,
art. 17; and the Reverse Mortgage Enabling Act (the
"Reverse Mortgage Act"), W.Va. Code ch. 47, art.
24. In Count VII, Mrs. Woods insists that RMS breached
"express provisions of the contract, as well as its duty
of good faith and fair dealing." Mrs. Woods seeks,
inter alia, actual damages, a declaration voiding
the reverse mortgage and declaring it unenforceable,
injunctive relief requiring RMS to engage in loss mitigation
efforts, and civil penalties pursuant to the WVCCPA.
filed an answer on December 30, 2016, and removed the action
to this court on January 6, 2017, invoking the court's
diversity jurisdiction. On February 3, 2017, RMS moved to
dismiss Counts II, III, IV, and VII of the complaint. First,
RMS contends that, "[a]s a matter of law, RMS is not a
debt collector" within the purview of the WVCCPA. Mem.
in Supp. at 4. Second, RMS insists that the Count IV claims
are barred by the applicable statute of limitations and that,
regardless, the closing charges were permissible under the
Residential Mortgage Act. Id. at 7-10. Last, RMS
asserts that Mrs. Woods has failed to identify any provision
of the reverse mortgage contract that RMS allegedly breached.
Id. at 11-12.
procedural note, Mrs. Woods points out, and RMS agrees, that
because RMS filed its motion to dismiss under Federal Rule of
Civil Procedure 12(b)(6) after it filed an answer, the motion
is converted to a motion for judgment on the pleadings under
Rule 12(c). Plaintiff's Response ("Resp.") at
8-9; Defendant's Reply ("Reply") at 1 n.l;
see Burbach Broad. Co. of Del, v. Elkins Radio
Corp., 278 F.3d 401, 405 (4th Cir. 2002) ("Because
[the defendant's] answer had been filed, the pleadings
were closed at the time of the motion. Thus, we construe the
[12(b)(6)] motion as one for judgment on the
pleadings.")- As explained below, the conversion
"does not have a practical effect upon [the court's]
review." Edwards v. City of Goldsboro, 178 F.3d
231, 243 (4th Cir. 1999).
Motion for Judgment on the Pleadings Standard
Rule of Civil Procedure 8(a)(2) requires that a pleading
"contain ... a short and plain statement of the claim
showing that the pleader is entitled to relief."
Correspondingly, Rule 12(b)(6) provides that a pleading may
be dismissed for a "failure to state a claim upon which
relief can be granted."
12(h)(2) provides that the defense of failure to state a
claim upon which relief can be granted as set forth in Rule
12(b)(6) may be raised 'by motion for judgment on the
pleadings, or at the trial on the merits.' Therefore, as
a matter of motions practice, " a Rule 12(b)(6) motion
to dismiss filed after the close of pleading "should be
viewed as a Rule 12(c) motion for judgment on the pleadings
raising the defense of failure to state a claim upon which
relief can be granted." Edwards, 178 F.3d at
243 (quoting Fed.R.Civ.P. 12(h)(2)) (citing 5A Charles Alan
Wright & Arthur R. Miller, Federal Practice and
Procedure § 1367, at 514-15 (2d ed. 1990) and
Republic Steel Corp. v. Penn. Eng' g Corp., .
785 F.2d 174, 182 (7th Cir. 1986}). "However, the
distinction is one without a difference, as . . . [a]
district court . . . appl [ies] the same standard for Rule
12 (c) motions as for motions made pursuant to Rule
12(b)(6)." Burbach Broad. Co., 278 F.3d at 406
(citing Edwards, 178 F.3d at 243 and Pacific
Ins. Co. v. Am. Nat' 1 Fire Ins. Co., 148 F.3d 396,
405 (4th Cir. 1998)).
survive a motion to dismiss, a pleading must recite
"enough facts to state a claim to relief that is
plausible on its face." Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007); see also Monroe
v. City of Charlottesville, 579 F.3d 380, 386 (4th Cir.
2009) (quoting Giarratano v. Johnson, 521 F.3d 298,
302 (4th Cir. 2008)). In other words, the "[f]actual
allegations must be enough to raise a right to relief above
the speculative level." Twombly, 550 U.S. at
555 (citation omitted); see also Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) ("A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.");
Andrew v. Clark, 561 F.3d 261, 266 (4th Cir. 2009)
(quoting Twombly, 550 U.S. at 555).
resolving a motion pursuant to Rule 12(b)(6)[, ] a district
court cannot consider matters outside the pleadings without
converting the motion into one for summary judgment."
Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th
Cir. 2013) (citing Fed.R.Civ.P. 12(d)). "A court may,
however, consider a 'written instrument' attached as
an exhibit to a pleading, 'as well as [documents]
attached to the motion to dismiss, so long as they are
integral to the complaint and authentic.'"
Id. (alteration in original) (internal citation
omitted) (quoting Fed.R.Civ.P. 10(c) and Phillips v. Pitt
Cty. Mem'1 Hosp, , 572 F.3d 176, 180 (4th Cir.
2009)); see also 5B Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure, §
1357 (3d ed. 2017) ("Numerous cases . . . have allowed
consideration of matters incorporated by reference or
integral to the claim . . . and exhibits attached to the
complaint whose authenticity is unquestioned . . . .");
cf. Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 322-23 (2007) (stating that, in the
context of deciding on a motion under 12(b)(6) "whether
the pleaded facts give rise to a 'strong' inference
of scienter, " courts may consider "documents
incorporated into the complaint by reference").
district court's evaluation of a motion to dismiss is
underlain by two principles. First, when considering a motion
to dismiss, the court "must accept as true all of the
factual allegations contained in the [pleading]."
Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing
Twombly, 550 U.S. at 555-56). In doing so, factual
allegations should be distinguished from "mere
conclusory statements, " which are not to be regarded as
true. Iqbal, 556 U.S. at 678 ("[T]he tenet that
a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions.").
Second, the court must "draw all reasonable factual
inferences ... in the [nonmovant's] favor."
Edwards v. City of Goldsboro, 17 8 F.3d 231, 244
(4th Cir. 1999); see also Jenkins v. McKeithen, 395
U.S. 411, 421 (1969) ("[T]he complaint is to be
liberally construed in favor of plaintiff.").
Counts II and III - Violation of the WVCCPA's Debt
Counts II and III, Mrs. Woods alleges that RMS pursued debt
collection practices made unlawful by the WVCCPA. Compl.
¶¶ 77-78. Of relevance here, the WVCCPA provides
that "[n]o debt collector shall use any fraudulent,
deceptive or misleading representation or means to collect or
attempt to collect claims, " W.Va. Code § 46A-2-127
(2016), and that "[n]o debt collector may use unfair or
unconscionable means to collect or attempt to collect any
claim, " id. § 46A-2-128. Resolution of
these issues first requires careful review of the statutory
definitions of the WVCCPA.
A "debt collector" is defined as "any person
or organization engaging directly or indirectly in debt
collection." Id. § 46A-2-122(d).
The act of "debt collection" is defined as
"any action, conduct or practice of soliciting claims
for collection or in the collection of claims owed or due or
alleged to be owed or due by a consumer." Id.
And "claims, " of which a debt collector collects,
are defined as "any obligation or alleged obligation of
a consumer to pay money arising out of a transaction in which
the money, property, insurance or service which is the
subject of the transaction is primarily for personal, family
or household purposes." Id. § 4
reasons explained below, the court concludes (1) that RMS was
a "debt collector" and (2) that the payments it
sought to collect from Mrs. Woods were "claims, "
each within the scope of the WVCCPA. Consequently, RMS'
motion for judgment of Counts II and III on the pleadings
must be denied.
insists that it is a creditor, not a debt collector, placing
it outside the purview of the WVCCPA. Reply at 3-4. RMS notes
that the 2015 amendments to the civil remedy provision of the
WVCCPA, § 46A-5-101(1), include a cause of action
against both creditors and debt collectors, rather than
against only creditors as the statute was written before.
Id. at 3""4°
Compare § 46A-5-10K1) (2016) ("If a
creditor or debt collector has violated the provisions of
this chapter applying to . . . any prohibited debt collection
practice . . . .") with § 46A-5-101(1)
(1996) ("If a creditor has violated the provisions of
this chapter applying to . . . any prohibited debt collection
practice . . . ."). RMS argues that the West Virginia
Legislature, by including "debt collector, "
intended to draw the same distinction between debt collectors
and creditors as drawn by the federal Fair Debt Collection
Practices Act ("FDCPA"), 15 U.S.C. § 1692 et
seq., which exempts creditors from liability for
debt collection activities. Reply at 4.
Woods responds that RMS was a "debt
collector''' within the scope of the statute,
asserting that the longstanding meaning of "debt
collector" under the WVCCPA is broad and includes any
party attempting to collect a debt, including creditors.
Resp. at 14-15 (citing Thomas v. Firestone Tire &
Rubber Co., 164 W.Va. 763, 768-69 (1980) (finding that
the WWCPA's debt collection provisions "appl[y]
alike to all who engage in ...