Werner v. Selene Fin., LLC

DIANA WERNER,individually and on behalf of others similarly situated, Plaintiff, v. SELENE FINANCE, LLC,and FRIEDMAN VARTOLO, LLP, Defendants.

No. 17-cv-06514 (NSR)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

March 22, 2019

OPINION & ORDER

NELSON S. ROMÁN, United States District Judge

Plaintiff Diana Werner ("Plaintiff") brings this putative class action on behalf of herself and those similarly situated, pursuant to 15 U.S.C. §1692, et. seq, the Fair Debt Collection Practices Act ("FDCPA"), against Defendant Friedman Vartolo, LLP ("Defendant FV") and against Selene Finance, LLC ("Defendant Selene") asserting the following New York law claims: (1) Breach of contract, (2) deceptive trade practices under New York General Business Law § 349, (3) unjust enrichment, (4) breach of fiduciary duty, (5) misrepresentation, (6) defamation, (7) bad faith, (8) negligent infliction of emotional distress, (9) intentional infliction of emotional distress, (10) tort of outrage, and (11) unconscionability. (Am. Notice of Removal, Ex. A ("Complaint"), ECF No. 7.) Presently before the Court are Defendants' motions to dismiss the Complaint pursuant to Federal Rule of Civil Procedure Rule12 (b)(6). (ECF Nos. 19 & 27.)

For the following reasons, Defendant FV's motion to dismiss is DENIED and Defendant Selene's motion to dismiss is GRANTED.

BACKGROUND

The following facts are derived from the Complaint, documents attached or referenced in the Complaint, and matters of which the Court may take judicial notice and are accepted as true for the purposes of this motion.¹

On or about February 25, 2008, Plaintiff received a $400,000 loan from SunTrust Mortgage, Inc. ("SunTrust"), and she executed a note and mortgage ("Mortgage Loan") on her property at 11 Weitz Road, East Fishkill, New York ("Property") as collateral.² (Compl. ¶ 22); (Def. Selene's Mot. to Dismiss Ex. 2 ("Mortgage Agreement"), ECF No. 20-1.) The Mortgage Loan was recorded on April 23, 2008. (Id.) The Mortgage Agreement required Plaintiff to make installment payments on specified dates and to pay the entire debt to the debtholder if she defaulted. (Id.) On or about October 1, 2009, Plaintiff defaulted on her obligation to make regular payments. (Id.) Thereafter, SunTrust commenced a mortgage foreclosure action ("Foreclosure Action") in New York State Supreme Court, County of Duchess.

Around October 2015, Plaintiff received a letter from Defendant Selene, dated October 26, 2015, which indicated that it was about the Mortgage Loan.³ (Def. Selene's Mot. to Dismiss Ex. 1 ("Trial Modification Plan Letter")); (Compl. ¶¶ 21 & 24.) Specifically, the subject line ofthe Trial Modification Plan Letter included the loan number and the address for the Property, and the letter included the date and amount of the Mortgage Loan on the next page. (Def. Selene's Mot. to Dismiss Ex. 1.) In the opening sentence, Plaintiff is "offer[ed] the enclosed Trial Modification Plan . . . as the first step to retain [her] home." (Def. Selene's Mot. to Dismiss Ex. 1.) Additionally, the Trial Modification Plan Letter specified that Plaintiff "must comply with all of the terms to be considered for a modification or other permanent assistance" and that Plaintiff should return the "signed and initialed Agreement" to Defendant Selene by November 9, 2015. (Id.); (Compl. ¶ 21). However, the Trial Modification Plan Letter appeared to propose two different payment schedules. (Compl. ¶ 23.)

The first payment schedule ("first schedule") was explained on page two of the Trial Modification Plan Letter under the heading "Trial Modification Plan." (Def. Selene's Mot. to Dismiss Ex. 1.) There, Plaintiff first was reminded that she was in default on the February 25, 2008 Mortgage Loan and then was provided with a trial payment plan. (Id.) The plan included a list of seven scheduled payments,⁴ the first due on October 30, 2015 in the amount of $5,343.82, with set dates and payment amounts. (Id.) In total, the seven payments amounted to $20,606.38. Upon completion of the trial payment plan, the loan would be modified according to specifiedterms. (Id.) Plaintiff initialed each page of the Trial Modification Plan and signed on the signature line on page five. (Id.)

Page six of the Trial Modification Plan Letter seems to introduce a second payment schedule ("second schedule") and states that the attached authorization agreement "when signed by [Plaintiff] and returned to Selene, will evidence [Plaintiff's] agreement to establish automatic transfers from [her] bank account on draft dates and draft amounts shown on the attached agreement." (Id.) The final page, titled Authorization Agreement for Preauthorized Payments, contains a list of six draft dates and payment amounts,⁵ with the first payment to be made on November 15, 2015 in the amount of $3,543.76. (Id.) The six payments totaled $16,662.56. Plaintiff did not sign her name on the line for the borrower's signature on that page of the letter. (Id.)

On November 9, 2015, Plaintiff made an initial payment to Defendant in the amount of $3,573.76. (Compl. ¶ 28); (Pl.'s Opp'n to Selene Ex. 2.). Defendant informed Plaintiff that her payment was short because the initial payment due was actually $5,343.82 which was the required initial payment under the first schedule. (Compl. ¶ 29.) Accordingly, Plaintiff sent Defendant $1,800.07 by check dated November 19, 2016, making her total payment to that point $5,375.83. (Id. ¶ 30.) Along with the check, Plaintiff submitted a letter asking Defendant for clarification on the payment schedule. (Id. ¶ 31.) Plaintiff proceeded to send checks to Defendant, which were cashed, for the December 2015 through April 2016 payments. (Id. ¶¶ 32 - 38.) Plaintiff alleges that her payments were submitted in accordance to the second schedule,but the required amount for the December 1, 2015 payment in that schedule was $2,943.76 and Plaintiff's check for that December payment, which was submitted late due to UPS's unavailability over the Thanksgiving holiday weekend, was only for $2,543.76.⁶ (Compl. ¶ 32); (Mem. of Law of Law by Pl. Diana Werner in Opp'n to Def. Selene Finance, LLC's Mot. to Dismiss ("Pl.'s Def. Selene Opp'n") (attaching the check Plaintiff references in her Complaint), ECF No. 21.)) Plaintiff's remaining payments were made for $2,543.76 and were timely through the conclusion of both payment schedules on April 1, 2016. After the end of both payment schedules, Plaintiff submitted payments for May and June 2016, each for $2,543.76, which were also cashed by Defendant. (Id. ¶¶ 39 - 40.) Plaintiff alleges that despite "receiving regular payments from Plaintiff and depositing those checks, Defendants accused her of default and threatened her with foreclosure and the prospect of losing her home." (Id. ¶ 41.) Defendant Selene then breached the Trial Modification Plan by reporting Plaintiff to credit reporting agencies and partnering with Defendant FV to collect on the Mortgage Loan. (Id. ¶¶ 43 & 45.)

Meanwhile, on January 14, 2016, the debtholder was granted a judgment of foreclosure and sale in the Foreclosure Action.⁷ (Def. Selene's Mot. to Dismiss ("Foreclosure Judgment") Ex. 8.) Around October 10, 2016, Defendant FV, on behalf of Defendant Selene, attempted tocollect on the Mortgage Loan by sending Plaintiff a letter on Defendant FV's letterhead ("Collection Letter"). (Compl. ¶¶ 115 - 18.) The Collection letter began with the heading "THE FAIR DEBT COLLECTIONS PRACTICES ACT" and informed Plaintiff that Defendant FV represented Defendant Selene in connection with the Mortgage Loan. (Id. ¶¶ 120 - 21.) The letter included required disclosures under the FDCPA and informed Plaintiff that she was in default on her loan. (Id. ¶¶ 122 - 23.)

Plaintiff filed the instant action in state court on June 27, 2017. On August 25, 2017, Defendant Selene removed the action from state court to federal court, pursuant to 28 U.S.C. §§ 1331, 1441 and 1446. (ECF No. 1.) Defendant Selene filed an amended notice of removal, adding Defendant FV who consented to the Removal, on August 30, 2017. (ECF No. 7 & Ex. B.)

STANDARD ON A MOTION TO DISMISS

Under Rule 12(b)(6), courts must consider whether the complaint "contain[s] sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); accord Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir. 2010). In determining whether a complaint states a plausible claim for relief, a district court must consider the context and "draw on its judicial experience and common sense." Iqbal, 556 U.S. at 662 (quoting Twombly, 550 U.S. at 555). A claim is facially plausible when the factual content pleaded allows a court "to draw a reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678.

To survive a motion to dismiss, a complaint must supply "factual allegations sufficient 'to raise a right to relief above the speculative level.' " ATSI Commc'ns, Inc. v. Shaar Fund,Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Twombly, 550 U.S. at 555). At the motion to dismiss stage, courts must take all material factual allegations as true and draw reasonable inferences in the non-moving party's favor, but courts are "not bound to accept as true a legal conclusion couched as a factual allegation," or to credit "mere conclusory statements" or "[t]hreadbare recitals of the elements of a cause of action." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).

Although courts are generally confined to the facts alleged in the complaint for the purposes of a motion to dismiss, Cortec Indus. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991), courts may also consider documents referenced in the complaint, documents the plaintiff relied on in bringing suit and which are either in the plaintiff's possession or which the plaintiff knew about when bringing suit, on...