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Jason Slimm, Brandi N. Slimm v. Bank of America Corporation

May 2, 2013


The opinion of the court was delivered by: Hillman, District Judge:


This matter comes before the Court by way of Defendants Bank of America Corporation, Bank of America, N.A., BAC Home Loans Servicing, LP, ReconTrust Company, N.A., and Mortgage Electronic Registration Systems, Inc.'s Motion to Dismiss Plaintiffs' Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons expressed below, Defendants' Motion shall be granted in its entirety.


This matter stems from a mortgage foreclosure action. Plaintiffs Jason D. Slimm, Brandi N. Slimm,*fn1 and Robert H. Obringer*fn2 own property in Camden County, New Jersey.*fn3 (Compl. ¶¶ 4-6.) Defendants Bank of America Corporation and Bank of America, N.A. (collectively hereinafter "Bank of America"),*fn4 BAC Home Loans Servicing, LP ("BAC"), ReconTrust Company, N.A. ("ReconTrust"), Countrywide Financial Corporation ("Countrywide"),*fn5 and Mortgage Electronic Registration Systems ("MERS")*fn6 are financial institutions or private companies engaged in the business of servicing mortgages. (Id. ¶¶ 7-13.) Defendant BAC Home Loans Servicing, LP ("BAC") is a subsidiary of Bank of America that services defaulted mortgages. (Id. ¶ 9.) Defendant Federal Home Loan Mortgage Corporation ("Freddie Mac") is a government-sponsored enterprise that services mortgages. (Id. ¶ 14.) Defendant Aurora Bank FSB ("Aurora Bank") is a privately-held bank based in Wilmington, Delaware. (Id. ¶ 15.) Defendant CGW Realty is a real estate agency located in Cherry Hill, New Jersey, and Defendant Denise Toft is one of its associates. (Id. ¶¶ 16, 17.) Defendants Aurora, Freddie Mac, CGW Realty, and Toft have not responded to Plaintiffs' Complaint, and are not parties to the instant Motion to Dismiss. Accordingly, the findings made in the instant Memorandum Opinion only apply to Defendants Bank of America, BAC, ReconTrust, and MERS.

On September 28, 2006, Plaintiffs executed a promissory note evidencing a $187,267.00 mortgage loan at a six percent (6%) interest rate. (Defs.' Mot. Dismiss, Ex. B, Note.)*fn7 Pursuant to the terms of the Note, Plaintiffs were required to make a monthly payment of $1,122.76 to Aurora Bank for principal and interest due on the loan. (Id.) The Note was secured by a mortgage, also dated September 28, 2006, which formed a lien on their property.

(Defs.' Mot. Dismiss, Ex. C, Mortgage Instrument.) According to Plaintiffs, shortly after acquisition of the loan, Defendants Bank of America, BAC, and ReconTrust began to service the loan. (Compl. ¶ 12.) It is unclear from the record when each company actually assumed service of the loan. However, the record indicates that BAC transferred service of the loan to its parent company, Bank of America, N.A., on July 1, 2011. (Pl.'s Resp. Opp'n, Obringer Cert., Ex. B ).

On March 10, 2010, Defendant Bank of America began to effectuate a foreclosure proceeding on Plaintiffs' property.*fn8

(Id. ¶ 31.) On May 21, 2010, the Slimms contacted Bank of America to attempt to work out an arrangement by which they could avoid foreclosure and maintain possession of their home by participating in a loan modification.*fn9 (Id. ¶ 36.) According to Plaintiffs, Bank of America agreed to a modification of their loan agreement pursuant to the federal Home Affordable Modification Program in December of 2010. (Id. ¶ 42.)

Plaintiffs contend that they agreed to participate in the loan modification program in January of 2011, and thereafter submitted all of the required documentation to Bank of America and were in frequent contact with its representatives, who repeatedly indicated to them that their modification was close to being approved and was "in the final stages." (Id. ¶¶ 45, 49.) On February 3, 2012, however, the Slimms received notification that their loan modification was denied. (Id.) Despite receipt of the denial letter, the Slimms aver that Bank of America continued to communicate with them after this, insisting that their modification was still being arranged and that "one additional document was needed." (Id. at ¶ 50.) Plaintiffs allege that they complied with every request made by Defendants, but that Defendants "intentionally and wrongfully toyed" with them during this process. (Id.)

Plaintiffs filed the instant Complaint before this Court on September 14, 2012, asserting violations of the Fair Debt Collection Practices Act, Fair Credit Reporting Act, New Jersey Consumer Fraud Act, promissory estoppel, Truth in Lending Act, and Racketeer Influenced and Corrupt Organizations Act. On October 31, 2012, Defendants filed the instant Motion to Dismiss Plaintiffs' Complaint in its entirety. Plaintiffs filed a Response in Opposition on November 19, 2012, to which Defendants replied on November 26, 2012. Plaintiffs then filed a sur- reply*fn10 on November 28, 2012. Accordingly, this matter is now ripe for judicial review.


The Court has federal question subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331.*fn11 Specifically, this matter arises under 15 U.S.C. §§ 1601, 1692, 1681 and 18 U.S.C. § 1961. Accordingly, the Court has jurisdiction over Plaintiff's federal claims pursuant to 28 U.S.C. § 1331, and may exercise supplemental jurisdiction over Plaintiff's state law claims according to 28 U.S.C. § 1367.


When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Under the liberal federal pleading rules, it is not necessary to plead evidence, and it is not necessary to plead all the facts that serve as a basis for the claim. Bogosian v. Gulf Oil Corp., 562 F.2d 434, 446 (3d Cir. 1977). However, "[a]lthough the Federal Rules of Civil Procedure do not require a claimant to set forth an intricately detailed description of the asserted basis for relief, they do require that the pleadings give defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Baldwin Cnty. Welcome Ctr. v. Brown, 466 U.S. 147, 149-50 n.3 (1984)(quotation and citation omitted).

A district court, in weighing a motion to dismiss, asks "'not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claim.'" Bell Atlantic v. Twombly, 550 U.S. 544, 563 n.8 (2007) (quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see also Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) ("Our decision in Twombly expounded the pleading standard for 'all civil actions' . . . ."); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) ("Iqbal . . . provides the final nail-in-the-coffin for the 'no set of facts' standard that applied to federal complaints before Twombly.").

Following the Twombly/Iqbal standard, the Third Circuit has instructed a two-part analysis in reviewing a complaint under Rule 12(b)(6). First, the factual and legal elements of a claim should be separated; a district court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Fowler, 578 F.3d at 210 (citing Iqbal, 129 S. Ct. at 1950). 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. (quoting Iqbal, 129 S. Ct. at 1950). A complaint must do more than allege the plaintiff's entitlement to relief. Id.; see also Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (stating that the "Supreme Court's Twombly formulation of the pleading standard can be summed up thus: 'stating . . . a claim requires a complaint with enough factual matter (taken as true) to suggest' the required element. This 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element").

A court need not credit either "bald assertions" or "legal conclusions" in a complaint when deciding a motion to dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997). The defendant bears the burden of showing that no claim has been presented. Hedges v. U.S., 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)).

Finally, a court in reviewing a Rule 12(b)(6) motion must only consider the facts alleged in the pleadings, the documents attached thereto as exhibits, and matters of judicial notice. S. Cross Overseas Agencies, Inc. v. Kwong Shipping Grp. Ltd., 181 F.3d 410, 426 (3d Cir. 1999). A court may consider, however, "an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document." Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). If any other matters outside the pleadings are presented to the court, and the court does not exclude those matters, a Rule 12(b)(6) motion will be treated as a summary judgment motion pursuant to Rule 56. Fed. R. Civ. P. 12(b).


In the instant Motion to Dismiss, Defendants argue that each and every one of Plaintiffs' claims fail as a matter of law, and that the Complaint therefore must be dismissed in its entirety. Plaintiffs disagree, and contend that all of their claims are viable and withstand dismissal. The Court considers each argument and response in turn below.

A. The Fair Debt Collections Practices Act

The Fair Debt Collection Practices Act ("FDCPA") prohibits the use of abusive, deceptive, and unfair debt collection practices by debt collectors. 15 U.S.C. § 1692, et seq. In order to successfully bring a claim under the Act, a plaintiff must show that: (1) the defendant is a "debt collector," and (2) the defendant debt collector engaged in prohibited practices in an attempt to collect a debt. Siwulec v. Chase Home Fin., LLC, No.Civ.A.10-1875, 2010 WL 5071353, at *2-3 (D.N.J. Dec. 7, 2010); see also Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000); FTC v. Check Inves., Inc., 502 F.3d 159, 171 (3d Cir. 2007). A "debt collector" is defined under the Act as:

[A]ny 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 [to] another.

15 U.S.C. § 1692a(6); see also Pollice, 225 F.3d at 403; Glover v. FDIC, 698 F.3d 139, 152 n.8 (3d Cir. 2012). Stated differently, the FDCPA applies to entities and persons that collect debts on behalf of others. As such, it generally does not apply to creditors attempting to collect debts on their own behalf.*fn12 See Staub v. Harris, 626 F.2d 275, 277 (3d Cir. 1980)("The [FDCPA] does not apply to persons or businesses collecting debts on their own behalf."); Schaffhauser v. Citibank (S.D.) N.A., 340 F. App'x 128, 130 n.4 (3d Cir. 2009); Aubert v. Am. Gen. Fin., Inc., 137 F.3d 976, 978 (7th Cir. 1998) ("Creditors who collect in their own name and whose principal business is not debt collection . . . are not subject to the Act. . . . Because creditors are generally presumed to restrain their abusive collection practices out of a desire to protect their corporate goodwill, their debt collection activities are not subject to the Act unless they collect under a name other than their own."). It has also been recognized that the FDCPA does not apply to mortgage servicing companies if the loan in question was not in default when acquired by the server. See Stolba v. Wells Fargo & Co., No.Civ.A.10-6014, 2011 WL 3444078, at *2 (D.N.J. Aug. 8, 2011) (citing Siwulec, 2010 WL 5071353 at *3; Dawson v. Dovenmuehle Mortg., Inc., No.Civ.A.00-6171, 2002 WL 501499, at *5 (E.D. Pa. Apr. 3, 2002); Scott v. Wells Fargo Home Mortg. Inc., 326 F.Supp.2d 709, 718 (E.D. Va. 2003); James v. Wells Fargo Bank, N.A., No.Civ.A.10-1205, 2011 WL 1874707, at *3 (D. Utah May 17, 2011)) (further citation omitted).

In order to place this matter in context, it is first important to note the relationships of the parties here. Under these factual circumstances, Aurora Bank is the creditor to whom the debt is owed because it is the entity that extended the promissory note secured by the mortgage instrument. (Compl. ¶¶ 84-85.) The debt was at some point in time purchased, assigned, or transferred to several of the Defendants for collection purposes. (Id. ¶ 86.) According to Plaintiffs, at varying points in time, Defendants Bank of America, BAC, and ReconTrust serviced the mortgage loan. (Id. ¶¶ 12, 86.)*fn13

Defendants argue that the FDCPA claims against them must be dismissed because they are not considered "debt collectors" under the definition provided by the Act.*fn14 In response, Plaintiffs argue that Defendants are subject to the FDCPA's terms because they have purchased, assumed assignment of, or serviced their debt for collection purposes. In so arguing, Plaintiffs rely on a written letter sent to them by Defendant Bank of America in February of 2011 in which Defendant expressly stated in the "fine print" that "this communication is from a debt collector attempting to collect a debt." (Pls.' Resp. Opp'n, Obringer Cert., Ex. B ).

Our sister court in this District previously addressed this precise scenario in Siwulec v. Chase Home Finance, LLC, 2010 WL 5071353 at *4-5. In Siwulec, the plaintiff entered into a mortgage loan with Washington Mutual, Inc., and defendant Chase Home Finance began to service the loan shortly thereafter. Id. at *1. The plaintiff subsequently defaulted on the loan, and Chase sought to collect the debt. Id. The plaintiff brought suit, claiming that the defendant violated the FDCPA. Id. In so doing, the plaintiff relied on language contained in a written notice she received from Chase, which stated that: "We are a debt collector. This is an attempt to collect a debt, and any information obtained will be used for that purpose." Id. The court, however, found that the defendant's own statement that it was a debt collector did not automatically mean that it was a debt collector for FDCPA purposes. Id. at *5 (relying on Nwoke v. Countrywide Home Loans, Inc., 251 F. App'x 363 (7th Cir. 2007)). Rather, in order for the defendant to be held liable under the FDCPA, the court found that it had to meet the requirements of a debt collector as specifically defined in the Act. Siwulec, 2010 WL 5071353 at *5.

This Court finds the reasoning of the Siwulec Court to be persuasive here. Merely because Bank of America previously referred to itself as a debt collector in the fine print of a notice that it sent to Plaintiffs does not, in and of itself, mean that Defendant actually is considered to be a debt collector for purposes of FDCPA liability. Rather, the proper inquiry here is whether Defendants are considered to be debt collectors under the definition provided by the FDCPA.

Plaintiffs allege that Defendants Bank of America, BAC, and ReconTrust are liable under the FDCPA because they "have either purchased the debt, been assigned the debt for collection or are servicers of the debt[.]" (Pls.' Resp. Opp'n at 13; Compl. ¶ 12.) As indicated above, it has previously been recognized that a mortgage servicing company is not considered to be a debt collector under the FDCPA if the loan in question was not in default when it was acquired by the server. See Stolba, 2011 WL 3444078 at *2; Siwulec, 2010 WL 5071353 at *3; Dawson, 2002 WL 501499 at *5. This is because the term "debt collector" does not include "any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity . . . concerns a debt which was not in default at the time it was obtained by such person." 15 U.S.C. § 1692a(6)(F). In Siwulec, the court dismissed the plaintiff's FDCPA claim because she failed to sufficiently allege that her loan was in default at the time when the defendant began servicing the loan. 2010 WL 5071353 at *5-6. The court specifically recognized that, "[w]hile Plaintiff is not required at this stage to know the exact date Chase began servicing the loan, she is required to plead some facts - rather than no facts - that would raise her claim above the speculative level. . . . Accordingly, the Court holds that Plaintiffs' allegations that Chase is a 'debt collector' under the FDCPA are insufficient under the Iqbal and Twombly standard." Id.

Here, Plaintiffs likewise fail to allege that their debt was in default when Defendants began servicing the loan. As pointed out by the Siwulec Court, while Plaintiffs are not required at this stage to know the exact date when Defendants began servicing the loan, they must at least plead enough facts to raise their claims above the bar of speculation. Plaintiffs here, however, have not alleged when each Defendant assumed service of the loan, when the loan was purchased or assigned from one Defendant to another, or when they themselves defaulted on the loan. All that is alleged is that Bank of America, BAC, and ReconTrust all "purchased and/or serviced the debt" at some point in time, and that Bank of America commenced a foreclosure action against them on March 10, 2010. (Compl. ¶ 12, 31.) Such threadbare allegations are insufficient to satisfy the pleading requirements set forth under the Federal Civil Rules.

Moreover, the Court briefly pauses to specifically address Defendant Bank of America's potential role as a debt collector under the facts of this case. On the one hand, Plaintiffs have pled that Bank of America was the specific entity that commenced a foreclosure action against them on March 10, 2010. (Compl. ¶ 31.) On the other hand, however, the record indicates that Defendant BAC transferred service of Plaintiffs' loan to its parent company, Bank of America, N.A., on July 1, 2011. (Pls.' Resp. Opp'n, Obringer Cert., Ex. B) Under these circumstances, if the foreclosure on Plaintiffs' property commenced in March of 2010, then the loan must have already been in default when Bank of America assumed service of it from BAC in July of 2011. In such a scenario, it is possible that Bank of America could potentially be considered a debt collector if the obligation was already in default when the debt was assigned or transferred. Pollice, 225 F.3d at 403.

However, even if Plaintiffs could show that Bank of America was a debt collector under the FDCPA because the loan was already in default when it was transferred, they nonetheless would need to satisfy the second prong of the FDCPA in order for it to be held liable under the Act - i.e., to show that Bank of America engaged in "prohibited practices" in an attempt to collect the debt. "Prohibited practices" under the FDCPA include: the use of violence, obscenity, and profane language; repeated annoying phone calls; and false representations about "the character, amount, or legal status of any debt." O'Brien v. Valley Forge Specialized Educ. Servs., No.Civ.A.03-5695, 2004 WL 2580773, at *3 n.3 (E.D. Pa. Nov. 10, 2004) (citing 15 U.S.C. § 1692d-f). Other examples of prohibited practices include falsely representing that a dunning letter was sent by an attorney or that nonpayment would result in arrest or imprisonment, or otherwise indicating that the debtor committed a crime by failing to make payment on the loan. See FTC v. Check Inv., Inc., 502 F.3d 159, 166 (3d Cir. 2007); see also Wallace v. Bank of Am., No.Civ.A.11-38, 2011 WL 3859745, at *6 (D.N.J. Aug. 30, 2011) (Simandle, J.)

Here, Plaintiffs allege that Defendants "used false and misleading tactics, harassment and unconscionably abusive tactics (including deception) causing [them] to feel oppressed and frustrated." (Compl. ¶ 90.) This allegation, however, is a mere parroting of the text of the statute. The pleading requirements of the Federal Civil Rules require Plaintiffs to provide more than threadbare recitations. The only indication of an abusive or misleading action in the Complaint with respect to the FDCPA is the allegation that Defendants reported false and inaccurate information about Plaintiffs to a credit reporting agency. (Id. ¶ 91.) The FDCA, however, explicitly exempts the release of delinquent debt-payers' identities to consumer reporting agencies from its definition of prohibited harassing and abusive conduct. See 15 U.S.C. § 1692d(3).*fn15 Therefore, even if Plaintiffs could successfully show that Defendant Bank of America - or Defendants BAC or ReconTrust, for that matter - met the definition of a "debt collector" under the FDCPA, their claim would nonetheless fail because they have not alleged that Defendants engaged in any manner of debt collection practices prohibited by the Act. Accordingly, Plaintiffs' FDCPA claim brought against Bank of America, BAC, and ReconTrust shall be dismissed.

B. The Fair Credit Reporting Act

The Fair Credit Reporting Act ("FCRA") was created by Congress to protect consumers from the transmission of inaccurate information and to promote credit reporting practices that utilize relevant and current information in a confidential and responsible manner. Cortez v. Trans Union, LLC, 617 F.3d 688, 706 (3d Cir. 2010) (McKee, Chief J.) (internal citations omitted). In drafting the statute, Congress sought to "'ensure fair and accurate credit reporting, promote efficiency in the banking system, [] protect consumer privacy,'" and to "preserve the consumer's privacy in the information maintained by consumer reporting agencies." Fuges v. Southwest Fin. Servs., Ltd., 707 F.3d 241, 247 (3d Cir. 2012) (quoting Safeco Ins. Co. of Am. v. ...

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