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Schmidt v. Fein, Such, Kahn & Shepard, P.C.

United States District Court, D. New Jersey

August 29, 2018

DEBORA SCHMIDT and JAMES T. SCHMIDT, Plaintiffs,
v.
FEIN, SUCH, KAHN & SHEPARD, P.C., Defendant.

          OPINION

          KEVIN MCNULTY, UNITED STATES DISTRICT JUDGE.

         Debora and James T. Schmidt bring this action under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, against the attorneys who represented their mortgagee in connection with collection efforts and, ultimately, foreclosure. The defendant, Fein, Such, Kahn & Shepard, P.C. (the "Fein firm") has filed a motion (ECF no. 7) under Rule 12(b)(6) to dismiss the complaint for failure to state a claim. For the reasons stated below, the motion will be denied.

         I. The Complaint

         The allegations of the Complaint are taken as true for purposes of this motion only. Mr. and Mrs. Schmidt purchased a residence at 14 Nina Place, Randolph, New Jersey, in 2002. In 2007, they refinanced their mortgage with Wells Fargo Bank. In the fall of 2016, following unfortunate financial reverses, the Schmidts defaulted on their mortgage.

         The Fein firm, acting as a debt collector, sent the Schmidts a letter stating that they had not made their loan payment for August 2016. In actuality, they made the August payment within the grace period. They acknowledge, however, that they failed to make payments in September 2016 and thereafter.

         A state court action in foreclosure followed, in which the plaintiff was represented by the Fein firm. The plaintiff was an HSBC trust, which claimed to have obtained the mortgage by assignment. This claim of assignment, according to the plaintiffs, was fraudulent because the assignment violated the trust's Pooling and Servicing Agreement (PSA) in that it occurred after the trust's operations closed and was in default at the time of the transfer.

         In January 2017, the Fein firm, acting as a debt collector, sent the Schmidts three letters. Two of them stated that HSBC held the mortgage, and one held that Wells Fargo held the mortgage. Because HSBC allegedly did not actually own the debt, and for other reasons, these letters misrepresented the debt in a manner that would confuse a reasonable person, and hence violated the FDCPA.[1]

         II. Standard on a motion to dismiss

         Defendants have moved to dismiss the Complaint for lack of jurisdiction, citing the Rooker-Feldman doctrine (see infra). Rule 12(b)(1) governs jurisdictional challenges to a complaint. These may be either facial or factual attacks. See 2 Moore's Federal Practice § l2.3O[4] (3d ed. 2007); Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A facial challenge asserts that the complaint does not allege sufficient grounds to establish subject matter jurisdiction. Iwanowa v. Ford Motor Co., 67 F.Supp.2d 424, 438 (D.N.J. 1999). A court considering such a facial challenge assumes that the allegations in the complaint are true. See Cardio-Med. Assoc, Ltd. v. Crozer-Chester Med. Ctr., 721 F.2d 68, 75 (3d Cir. 1983); Iwanowa, 67 F.Supp.2d at 438. It "review[s) only whether the allegations on the face of the complaint, taken as true, allege facts sufficient to invoke the jurisdiction of the district court." Common Cause of Penn. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009) (quoting Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006)). In short, the standard on a facial jurisdictional challenge is similar to the usual motion to dismiss for failure to state a claim under Rule 12(b)(6).[2]

         Rule 12(b)(6), Fed. R. Civ. P., provides for the dismissal of a complaint, in whole or in part, if it fails to state a claim upon which relief can be granted. The defendant, as the moving party, bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a Rule 12(b)(6) motion, a court must take the allegations of the complaint as true and draw reasonable inferences in the light most favorable to the plaintiff. Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (traditional "reasonable inferences" principle not undermined by Twombly, see infra).

         Federal Rule of Civil Procedure 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiffs obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the complaint's factual allegations must be sufficient to raise a plaintiffs right to relief above a speculative level, so that a claim is "plausible on its face." Id. at 570; see also Umland v. PLANCO Fin. Sent., Inc., 542 F.3d 59, 64 (3d Cir. 2008). That facial-plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement'... it asks for more than a sheer possibility." Iqbal, 556 U.S. at 678.

         III. Analysis

         1. Rooker-Feldman

         The Fein firm moves to dismiss the complaint under the Rooker-Feldman doctrine. See District of Columbia Court of Appeals v. Feldman,460 U.S. 462, 482 (1983); Rooker v. Fidelity Trust Co.,263 U.S. 413, 416 ...


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