Geary v. Green Tree Servicing, LLC, Case No. 2:14-cv-00522

BRIAN GEARY, et al., Plaintiffs, v. GREEN TREE SERVICING, LLC, Defendant.

Case No. 2:14-cv-00522

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

March 20, 2015

JUDGE ALGENON L. MARBLEY

Magistrate Judge Deavers

OPINION & ORDER

I. INTRODUCTION

This matter is before the Court on Defendant Green Tree Servicing LLC's Motion to Dismiss Complaint, or in the Alternative, to Strike Class Allegations With Request for Oral Argument ("Motion to Dismiss"). (Doc. 3). For the reasons set forth herein, Defendant Green Tree Servicing LLC's Motion to Dismiss is DENIED IN PART and GRANTED IN PART.

II. BACKGROUND

Plaintiffs Brian and Connie Geary ("Plaintiffs") bring this action against Defendant Green Tree Servicing LLC ("Green Tree" or "Defendant") for alleged violations of the Fair Debt Collection Practices Act ("FDCPA" or "the Act"). On August 18, 2011, Plaintiffs, residents of Lancaster, Ohio, jointly filed a voluntary petition for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Southern District of Ohio. (Compl., Doc. 1, ¶ 9). Plaintiffs each received a Chapter 7 discharge on December 6, 2011. (Id., ¶ 11). On December 22, 2011, their bankruptcy case was closed. (Id.).

At the time Plaintiffs filed their Chapter 7 bankruptcy petition, they were "behind" on payments for an automobile loan (the "Loan") serviced by CitiFinancial through CitiFinancialServicing LLC (collectively, "CitiFinancial"). (Id., ¶ 12-13). CitiFinancial was a secured creditor and received notice of Plaintiffs'' bankruptcy case.

Plaintiffs entered into a Reaffirmation Agreement with CitiFinancial (the "Reaffirmation Agreement"), which was filed in Plaintiffs' bankruptcy action on December 2, 2011. (Id., ¶ 14-15). The Reaffirmation Agreement reaffirmed the Loan debt in the amount of $2,350.00 with a 6.00% annual interest rate. It also included a repayment schedule, which established that, beginning December 1, 2011, Plaintiffs would make 24 monthly payments of $140.15 each for a total payment of $3,363.00. (Id., ¶ 16-17). Desiring to pay the Loan off in 20 months instead of 24, Plaintiffs timely made 20 monthly payments to CitiFinancial (from December 2011 through July 2013), each for $174.00, for a total payment of $3,480.00. (Id., ¶ 18).

Plaintiffs allege that, although "[t]he Gearys total payments on the Loan were sufficient to fully pay the reaffirmed debt...CitiFinancial continued sending statements to the Gearys, and placing phone calls to Gearys, attempting to collect additional amounts." (Id., 19-20). Plaintiffs claim that they "made several attempts" to resolve the matter with CitiFinancial, "but CitiFinancial refused to properly adjust the account," "continued its collection efforts," and "refused multiple requests from the Gearys' to deliver title to the subject automobile." (Id., ¶ 20-22).

Plaintiffs aver that "[i]n or around October 2013, CitiFinancial sold and/or assigned servicing of the Loan to Green Tree Servicing LLC." (Id., ¶ 23). The servicing transfer of Plaintiffs' Loan was effective on November 1, 2013. (Id., ¶ 24).

Plaintiffs allege that on October 16, 2013, Green Tree sent Plaintiffs a letter ("Initial Communication"). (Pl. Exh. A, Doc. 1-2). The letterhead on which the Initial Communication was typed displayed the logos of both CitiFinancial and Green Tree. (Id.). The InitialCommunication welcomed Plaintiffs to Green Tree and informed them that, effective November 1, 2013, "the servicing of your loan - that is, the right to collect loan payments from you - is being transferred from CitiFinancial to Green Tree." (Id.). The letter also notified Plaintiffs that Green Tree would begin posting payments to Plaintiffs' account "on or about November 11, 2013," and that Plaintiffs "should be receiving [their] first statement...the week of November 18, 2013." Further, the Initial Communication included information about a variety of methods Plaintiffs could contact or get more information about Green Tree, including Green Tree's website, phone number, and mailing address. In addition, the letter noted that Plaintiffs' "monthly payment amount" was $140.32, listed a "payment due" date of "11/15/2013," and stated a "principal balance" or $904.13.

The Initial Communication also included a detachable "Initial Payment Coupon." The Initial Payment Coupon included Plaintiffs' names, address, and account number. It stated the "Total Due" as $140.32. The Initial Communication also contained information about auto-pay options and bill payment services. Plaintiffs' Complaint avers that the Initial Communication did not include "the 30-day Debt Validation language specified in 15 U.S.C. §1692g(a)(3)-(5)." (Doc. 1, ¶ 25(e)).

Plaintiffs allege that after the Initial Communication was sent, "Green Tree continued sending the Gearys 'Monthly Billing Statements' and other written correspondence attempting to collect" on the Loan. (Id., ¶ 28). On November 14, 2013, Plaintiffs assert that they received a letter from Green Tree informing them that $1,101.60 was owed. This letter contained "the 30-day Debt Validation language" required by the FDCPA in §1692g. (Pl. Exh. B, Doc. 1-2).

In response to the November 14, 2013 letter, Plaintiffs claim they sent Green Tree a letter via certified mail (the "Dispute Letter"), dated November 21, 2013, "disputing the debt andinforming Green Tree that the amount in question had been discharged pursuant to the Gearys' bankruptcy and the Reaffirmation Agreement." (Doc. 1, ¶ 31). Plaintiffs allege that Green Tree received and signed for the Dispute Letter on December 4, 2013. (Id., ¶ 32). Plaintiffs assert that they had several conversations with Green Tree representatives from December 2013 through March 2014, during which Plaintiffs explained that the Loan had been reaffirmed, the reaffirmed debt had been paid in full, and any further amounts owed were discharged pursuant to bankruptcy. (Id., ¶¶ 37-54). Nevertheless, Plaintiffs allege that Green Tree continued to attempt to collect on the Loan through written correspondence and collection calls demanding payment. (Id., ¶ 35).

Plaintiffs also claim that, despite multiple requests, Green Tree has refused to deliver the automobile's title to Plaintiffs, and that Green Tree provided negative reporting to various credit bureaus which has resulted in Plaintiffs being denied credit. (Id., ¶¶ 56-59). On March 11, 2014, Plaintiffs' counsel sent a "demand letter" to Defendant "seeking to resolve the matter." Plaintiffs allege that their counsel never received a response from Defendants. (Id., ¶¶ 54-55).

On June 3, 2014, Plaintiffs filed their Complaint against Defendant, alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 ("FDCPA"). Specifically, Plaintiffs' Complaint asserts that Defendant committed four distinct FDCPA violations: (i) violation of 15 U.S.C. §1692e(2)(A) (Count One), for the use of a false, deceptive, or misleading representations in connection with the collection of a debt and for falsely representing the character, amount, or legal status of the Loan debt, in billing statements, collection calls, and/or other Loan account correspondence; (ii) violation of 15 U.S.C. §1692g(a) (Count Two), for failing to send a follow-up written notice containing the 30-day Debt Validation language within five days of sending the Initial Communication; (iii) violation of 15 U.S.C. §1692g(b) (Count Three), for Defendant'sfailure to send written documentation providing verification of the debt it sought to collect; and (iv) violation of 15 U.S.C. §1692e(14) (Count Four), for use, in the Initial Communication, of letterhead containing the name "CitiFinancial," a business, company, or organization name other than the true name of Green Tree's business, company, or organization.

In addition, Plaintiffs bring two separate class action claims. First, in Class Count One, Plaintiffs allege systemic violations of 15 U.S.C. §1692g(a) for Defendant's failure to send borrowers written notice containing the required 30-day Debt Validation language within five days of sending the initial form letter described (the same conduct alleged in individual Count Two). In Class Count Two, Plaintiffs allege systemic violations of 15 U.S.C. 1692e(14) for the use of letterhead containing the name of a financial institution other than the true name of Green Tree's business, company, or organization (the same conduct alleged in individual Count Four). In Class Counts Three and Four, Plaintiffs request declaratory relief for the alleged violations described in Class Count One and Class Count Two.

In response to Plaintiffs' Complaint, Defendant filed its Motion to Dismiss, asking this Court to dismiss Counts II, III, and IV of Plaintiffs' Complaint for failure to state a claim upon which relief can be granted, pursuant to Fed.R.Civ.P 12(b)(6). In the alternative, Defendants ask this Court to strike Plaintiffs' class allegations in Class Counts I and II, pursuant Rule 23(c)(1)(A). This matter has been fully briefed and is ripe for review.

III. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) allows for a case to be dismissed for "failure to state a claim upon which relief can be granted." Such a motion "is a test of the plaintiff's cause of action as stated in the complaint, not a challenge to the plaintiff's factual allegations." Golden v. City of Columbus, 404 F.3d 950, 958-59 (6th Cir. 2005). Thus, the Court must construe thecomplaint in the light most favorable to the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008). The Court is not required, however, to accept as true mere legal conclusions unsupported by factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). Although liberal, Rule 12(b)(6) requires more than bare assertions of legal conclusions. Allard v. Weitzman, 991 F.2d 1236, 1240 (6th Cir. 1993) (citation omitted).

Further, a complaint...