Haber v. Bank of Am., N.A.

JOSEPH & GINA HABER,individually and on behalf of all others similarly situated, Plaintiffs, v. BANK OF AMERICA, N.A.,and REDC DEFAULT SOLUTIONS, Defendants.

CIVIL ACTION No. 14-0169

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JUNE 27, 2014

MEMORANDUM OPINION

PRATTER, J.

This action arises from the communications between Bank of America ("BOA") and REDC Default Solutions ("REDC"), on the one hand, and Joseph and Gina Haber, on the other, regarding the Habers' mortgage.

The Habers, individually and on behalf of putative class members, sued BOA and REDC for alleged violations of the Fair Credit Reporting Act ("FRCA"), 15 U.S.C. § 1681 et seq., and the Fair Debt Collections Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. The Habers claim that BOA and REDC violated the FCRA by pulling the Habers' consumer credit reports without statutory authorization and then basing their denial of the Habers' opportunity to participate in a cooperative short-sale-in-lieu-of-foreclosure program ("short sale program") on the information in those reports. The Habers also claim that BOA and REDC violated the FDCPA by sending them misleading letters regarding their mortgage and a potential opportunity to participate in the short sale program.

BOA and REDC separately have moved to dismiss (Docket Nos. 14 & 15). The Court will grant in part and deny in part both Motions.

I. BACKGROUND

Joseph and Gina Haber purchased their home in 2005 and entered into a mortgage agreement. "During all times relevant to this action," the Habers assert, their "mortgage loan was serviced by Bank of America." Compl. ¶ 51 (Docket No. 1). In December 2010, BOA and the Habers entered into a permanent mortgage modification. Compl. ¶ 52. On January 13, 2013, the Habers received a letter ("Solicitation Letter"), on BOA letterhead, that stated it was from REDC on behalf of BOA. The Solicitation Letter explained that REDC "would like to help [the Habers] prevent the upcoming foreclosure on" the Habers' property by offering to discuss the possibility of the Habers' participation in a "cooperative short sale program." Solicitation Letter, Compl. Ex. A. Mrs. Haber then allegedly called REDC and spoke with representative Alonzo Robinson, who is identified specifically by name in the Solicitation Letter. During this phone conversation, the Habers aver, Mrs. Haber told Mr. Robinson that "she and her husband were current on their payments under the Modification and could not understand why Bank of America and REDC were suggesting that they were in imminent risk of foreclosure, such as to warrant a short sale." Compl. ¶ 54.

After this conversation, on January 24, 2013, the Habers received another letter ("Decline Letter"), also on a BOA letterhead. The Decline Letter notified the Habers that "we are unable to offer you a cooperative short sale" because "your loan is not eligible for a Cooperative Short Sale Program at this time because after being offered a Cooperative Short Sale you notified us on January 23, 2013 that you did not wish to participate in the program." Decline Letter, Compl. Ex B.

Then the Decline Letter, apparently (at least, in BOA and REDC's view) because of an employee's failure to delete instructions from a template from which the Letter was created, went on to state that "our credit decision was based in whole or in part on information in a report from the consumer reporting agencies listed below."¹ Decline Letter. This statement is the basis for the Habers' claim in Count I of the Complaint that BOA and REDC violated the FRCA because they obtained the Habers' (and putative class members') credit reports without initiation, authorization, or a firm offer of credit, in violation of 15 U.S.C. § 1681b. See Compl. ¶¶ 73-84. Additionally, the Habers claim in Count II that BOA and REDC violated the FCRA because they did not include in the Decline Letter "notification information which would allow Plaintiffs to request the nature of the information obtained by Defendants from third parties or affiliates which was the basis for the denial of Plaintiffs and Class members for participation in the cooperative short sale program," in violation of 15 U.S.C. § 1681m(b) and (d). See Compl. ¶ 92; see also id. ¶¶ 10, 85-95.

Additionally, in Count III, the Habers plead specific violations of the FDCPA, namely, 15 U.S.C. §§ 1962e and 1692f, for misleading and deceptive communications by a "debt collector." Bank of America and REDC, in moving to dismiss, each argue that they do not meet the statutory definition of "debt collectors" under 15 U.S.C. § 1692a(6).

II. STANDARD OF REVIEW

A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint. Although Rule 8 of the Federal Rules of Civil Procedure requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), "in order to 'give thedefendant fair notice of what the . . . claim is and the grounds upon which it rests,'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted) (alteration in original), the plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do," id.

To survive a motion to dismiss, the plaintiff's complaint must plead "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). Specifically, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. The question is not whether the claimant "will ultimately prevail . . . but whether his complaint [is] sufficient to cross the federal court's threshold." Skinner v. Switzer, 131 S. Ct. 1289, 1296 (2011) (citation and internal quotation marks omitted). Thus, assessment of the sufficiency of a complaint is "a context-dependent exercise" because "[s]ome claims require more factual explication than others to state a plausible claim for relief." W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir. 2010).

In evaluating the sufficiency of a complaint, the Court adheres to certain well-recognized parameters. For one, the Court "must consider only those facts alleged in the complaint and accept all of the allegations as true." ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994); see also Twombly, 550 U.S. at 555 (stating that courts must "assum[e] that all the allegations in the complaint are true (even if doubtful in fact)"); Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010) ("[A] court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents."). The Court must also accept as true all reasonable inferences emanating from the allegations, and view those facts and inferences in the light most favorable tothe nonmoving party. Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989); see also Revell v. Port Auth., 598 F.3d 128, 134 (3d Cir. 2010). But that admonition does not demand that the Court ignore or discount reality. The Court "need not accept as true unsupported conclusions and unwarranted inferences," Doug Grant, Inc. v. Greate Bay Casino Corp., 232 F.3d 173, 183-84 (3d Cir. 2000) (citations and internal quotation marks omitted), and "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice," Ashcroft, 556 U.S. at 678; see also Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (explaining that a court need not accept a plaintiff's "bald assertions" or "legal conclusions" (citations omitted)). Finally, "if a [claim] is vulnerable to 12(b)(6) dismissal, a district court must permit a curative amendment, unless an amendment would be inequitable or futile." Phillips v. County of Allegheny, 515 F.3d 224, 236 (3d Cir. 2008).

III. DISCUSSION

For the following reasons, the Court will deny BOA's and REDC's Motions to Dismiss with respect to Count I (unlawful obtainment of consumer reports under the FCRA) and Count III (violation of the FDCPA), because the Court finds that the Habers have plausibly stated that BOA and/or REDC "pulled" their consumer reports and that BOA and REDC are "debt collectors." But the Court will grant BOA's and REDC's Motions to Dismiss with respect to Count II, because the Habers have not plausibly alleged that either Defendant took "adverse action" against them based on their consumer reports.

A. Fair Credit Reporting Act Claims

BOA and REDC both claim that language in the Decline Letter upon which the Habers rely was included "based entirely on clerical errors . . . that do not plausibly suggest that there ever was a consumer report, let alone that [BOA] obtained [their] consumer report." BOA Mot. 5; see REDC Mot. 3-6. The Court disagrees.

The FCRA applies predominantly to statutorily-defined credit reporting agencies, but it also "imposes civil liability on '[a]ny person who . . . fails to comply with any requirement imposed' by the statute." Fuges v. Sw. Fin. Servs., Ltd., 707 F.3d 241, 246-47 (3d Cir. 2012) (quoting 15 U.S.C. §§ 1681n, 1681o). Negligent violation of any requirement results in liability in the amount of actual damages; willful noncompliance subjects the violator to either actual or statutory damages. Id. (citing 15 U.S.C. §§ 1681o(a)(1), 1681n(a)).

1. Violation of 15 U.S.C. § 1681b for Unauthorized Obtainment of Consumer Reports (Count I)

In Count I, the Habers claim that BOA and REDC violated the FCRA because they "willfully obtain[ed] a consumer report for a purpose that is not authorized by the FCRA," Huertas v. Galaxy Asset Mgmt., 641 F.3d 28, 34 (3d Cir. 2011) (citing 15 U.S.C. §§...