Martin v. Trott Law, P.C.

198 F.Supp.3d 794

Brian J. MARTIN and Yahmi Nundley, Plaintiffs,

v.TROTT LAW, P.C., David A. Trott, Jane Doe, and John Doe, Defendants.

Case Number 15-12838

United States District Court, E.D. Michigan, Southern Division.

Signed July 26, 2016

Diana Gjonaj, Paul F. Novak, Milberg LLP, Detroit, MI, Andrew J. McGuinness, Ann Arbor, MI, for Plaintiffs.

Charity A. Olson, Olson Law Group, Ann Arbor, MI, Bruce L. Segal, Joseph Aviv, Honigman, Miller, Bloomfield Hills, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS, GRANTING MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT, AND ORDERING SCHEDULING CONFERENCE

DAVID M. LAWSON, United States District Judge

Plaintiffs Brian J. Martin and Yahmi Nundley have filed the present lawsuit, as members of a putative class, alleging that the defendants violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq. , and the Michigan Regulation of Collection Practices Act (RCPA), Mich. Comp. Laws § 445.251, by sending certain letters to these consumers in an effort to foreclose their residential mortgages. They allege that the letters were misleading in several different respects, discussed below, and violated specific sections of the federal and state statutes. They have sued Trott Law, P.C. (formerly known as Trott & Trott, P.C.) and its former principal, David Trott, individually. Each defendant has filed a separate motion to dismiss the first amended complaint. The plaintiffs have filed a motion to amend their complaint a second time to change certain allegations, add two new counts, and add a plaintiff. The Court heard oral argument on these motions on March 3, 2016. The first amended complaint states claims in several of the counts for which relief can be granted against both defendants. However, counts III and IV, premised on the theory that the omission of attorney's fees from the dunning letters, and on the mistaken premise that any such fees were subject to an inapplicable statutory cap, fail to state any plausible claim for relief under either the FDCPA or the RCPA. Furthermore, plaintiff Martin's claims under the FDCPA are time-barred. The proposed amended complaint, except for counts III and IV, would not be futile, and there is no reason to disallow the other proposed additions. Therefore, the motions to dismiss will be granted in part and denied in part, and the motion for leave to file a second amended complaint will be granted.

I. Factual Background

The lawsuit is premised on the dunning letters Trott Law sent to each of the plaintiffs. Plaintiff Martin alleges that within a few days of May 3, 2012, he received the following letter on letterhead of "Trott & Trott, a Professional Corporation":

Dear Borrower(s):

This office represents Bank of America, N.A., which is the creditor to which your mortgage debt is owed or the servicer for the creditor to which the debt is owed. This matter was referred to this office to foreclose the mortgage. As of the date of this letter the total indebtedness is:

Principal Balance     $143,059.85
Unpaid Interest       $  6,035.95
Late Charge                $45.45
Corporate Advance         $101.75
Total:                $149,243.00

Under the terms of your mortgage, the creditor has elected to accelerate the total indebtedness. It may, however, be possible to reinstate the mortgage, subject to the creditor's approval, by paying all past due installments, late charges, delinquent taxes, insurance premiums, costs and fees incurred in the foreclosure. Requests for reinstatement information must be received and approved by this office before the date of the sheriff's sale. Please call (248) 593-1302 for information concerning reinstatement.

The debt described above will be assumed to be valid by this office, the creditor's law firm, unless you, the debtor/consumer, within thirty (30) days after the receipt of this notice, dispute the validity of the debt, or any portion thereof. If you notify this office in writing within thirty (30) days of the receipt of this notice, that the debt, or any portion thereof, is disputed, we will obtain a verification of the debt and a copy of the verification will be mailed to you. If the debt is based on a judgment, a copy of the judgment will be provided to you upon request.

If the creditor named in paragraph one of this letter is not the original creditor, and if you make a written request to this office within thirty (30) days from the receipt of this notice, the name and address of the original creditor will be mailed to you.

Written requests should be addressed to:

FAIR DEBT COLLECTION CLERK—FC X

Trott & Trott, P.C.

31440 Northwestern Highway, Ste 200

Farmington Hills, MI 48334-2525

Please contact this office at the aforementioned number if you are on active military duty. To the extent your original obligation has been discharged, or is subject to an automatic stay of bankruptcy under Title 11 of the United States Code, this notice is for compliance and/or informational purposes only and/or is notice of the creditor's intent to enforce a lien against the property and does not constitute a demand for payment or an attempt to impose personal liability for such obligation.

Yours very truly,

Trott & Trott, P.C.

FORECLOSURE DEPARTMENT

NOTICE REQUIRED BY THE FAIR DEBT COLLECTIONS PRACTICES ACT 15 U.S.C. SECTION 1692g AS AMENDED

1. The amount of the debt is stated in paragraph one of the letter which is attached hereto.

2. The name of the creditor to whom the debt is owed, or the servicing agent for the creditor to whom the debt is owed, is set forth in paragraph one of the letter which is attached hereto.

3. The debt described in the letter attached hereto will be assumed to be valid by this office, the creditor's law firm, unless you, the debtor/consumer, within thirty (30) days after the receipt of this notice, disputes the validity of the debt or any portion thereof.

4. If you notify this office, in writing, within thirty (30) days of the receipt of this notice, that the debt, or any portion thereof, is disputed, we will obtain a verification of the debt and a copy of the verification will be mailed to you.

5. If the creditor named in paragraph one of the Letter attached hereto is not the original creditor, and if you make a written request to this office within thirty (30) days from the receipt of this notice, the name and address of the original creditor will be mailed to you.

6. Any information obtained from you will be used for the purpose of foreclosing the mortgage that is in default.

7. Written requests should be addressed to: FAIR DEBT COLLECTION CLERK—FC X

Trott & Trott, P.C.

31440 Northwestern Highway, Ste 200

Farmington Hills, MI 48334-2525

Am. Compl. Ex. A.

Plaintiff Nundley alleges that she received a similar letter within a few days of August 12, 2014, which stated:

Dear Borrower(s):

This office represents 21st Mortgage Corporation. This matter was referred to this office to foreclose the mortgage. Under the terms of your mortgage, our client has elected to accelerate the total indebtedness due and owing under the mortgage. Because of interest, and other charges that may vary from day to day, the total amount due may differ depending on the day of payment.

As of the date of this letter the total indebtedness is:

Principal Balance     $68,000.00
Unpaid Interest       $26,070.78
Late Charge              $302.43
Corporate Advance         $10.53
       Total:         $94,362.68

Identification of Creditor: The mortgage debt is owed to 21st Mortgage Corporation. 21st Mortgage Corporation is the servicer of the debt. The mortgage loan payments are made to the servicer.

Unless you notify this office within thirty (30) days after receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within thirty (30) days after receiving this notice, that you dispute the validity of this debt, this office will obtain a verification of the debt or a copy of the judgment, if applicable, and mail a copy of such verification or judgment to you. If you request, in writing, within thirty (30) days after receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.

Please contact this office if you are on active military duty. To the extent the mortgage debt has been discharged, or is subject to an automatic stay of bankruptcy under Title 11 of the United States Code, this notice is for compliance and/or informational purposes only and/or is notice of the creditor's intent to enforce a lien against the property and does not constitute a demand for payment or an attempt to impose personal liability for such obligation.

Yours very truly,

Trott & Trott, P.C.

Am. Compl. Ex. B.

Both letters began with the legend: "THIS FIRM IS A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT. ANY INFORMATION WE OBTAIN WILL BE USED FOR THAT PURPOSE." Each of these letters, the plaintiffs allege in their amended complaint, violate specific provisions of the FDCPA and the RCPA.

In counts I and II, the plaintiffs allege that because the letters purport to be sent by an attorney, but in reality were sent by administrative personnel without any attorney review or supervision, the defendants violated section 1692e(3) of the FDCPA, 15 U.S.C. § 1692e(3) (prohibiting any "false representation or implication that any individual is an attorney or that any communication is from an attorney"), and section (a) of the RCPA, Mich. Comp. Laws § 445.252(a) (prohibiting communication in any "misleading or deceptive manner, such as using the stationery of an attorney ... unless the regulated person is an attorney"). In counts III and IV, they allege that the letters did not state the correct amount of the debt, because they underestimated the amounts owed by not including certain attorney's fees. See 15 U.S.C. § 1692g(a)(1) (requiring the written...