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Cigler v. Ocwen Loan Servicing LLC

United States District Court, N.D. Indiana, Hammond Division

May 9, 2014

Joseph A. Cigler, Plaintiff,
Ocwen Loan Servicing LLC, Defendant.



A. Introduction

Plaintiff Cigler filed an action against Defendant Ocwen Loan Servicing LLC alleging violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692g, for failure to send required notices within five days after Defendant first communicated with Plaintiff in connection with his home mortgage. Before the Court is Defendant's motion to dismiss the case in its entirety for failure to state a claim (DE 15).

B. Background

According to the facts taken from the Complaint (DE 1) and its attached exhibits, Plaintiff's home loan was transferred from State Bridge to Defendant. On May 9, 2013, Defendant sent Plaintiff a service-transfer notice pursuant to Section 6 of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2650c. (Ex. A, DE 1.) The letter, titled "Notice of Assignment, Sale or Transfer of Servicing Rights" begins with a welcome message: "Ocwen Loan Servicing, LLC ("Ocwen") would like to welcome you as a new customer." The letter then indicates Defendant's contact information, how and where Plaintiff should make payments, disclosures under RESPA, and a disclosure of credit reporting for delinquent payments. A payment coupon is also attached to the last page of the letter. The payment coupon shows the account number, Plaintiff's name, the return address, and an empty box labeled "amount due."

A document with frequently asked questions also came with the letter. The document, among other things, confirmed that Ocwen is a debt collector:

Ocwen Loan Servicing, LLC is a debt collector attempting to collect a debt, any information obtained will be used for that purpose. However, if the debt is in active bankruptcy or has been discharged through bankruptcy, this communication is not intended as and does not constitute an attempt to collect a debt.

One day later, Defendant sent an account statement to Plaintiff. (Ex. B, DE 1.) The account statement contains Plaintiff's account and balance information, such as outstanding balance, interest rate, past dues, late charges, and service fees.

On May 18, 2013, Ocwen sent Plaintiff another letter. (Ex. C, DE 1.) This letter states that Plaintiff's hazard insurance on his home has expired and that the loan agreement requires Plaintiff to maintain such insurance.

Plaintiff filed this action on October 1, 2013. Plaintiff alleged in the Complaint that "at no time did [the] defendant provide [the] plaintiff with the disclosures" required by the FDCPA.

On December 6, 2013, Defendant filed a motion to dismiss. Defendant argues that Plaintiff's allegation is solely based on the communication in Exhibit A. Since the letter is not "a communication in connection with the collection of any debts" under the FDCPA, the Court should dismiss the entire case under Rule 12(b)(6).

C. Standard of Review

The purpose of a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim is to test the sufficiency of the pleading, not to decide the merits of the case. See Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). Federal Rule of Civil Procedure Rule 8(a)(2) provides that a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." However, "recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 661, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007))[1]. As the Supreme Court has stated, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Id. Rather, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). A complaint is facially plausible if a court can reasonably infer from factual content in the pleading that the defendant is liable for the alleged wrongdoing. Id. (citing Twombly, 550 U.S. at 570). The Seventh Circuit has synthesized the standard into three requirements. See Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). "First, a plaintiff must provide notice to defendants of her claims. Second, courts must accept a plaintiff's factual allegations as true, but some factual allegations will be so sketchy or implausible that they fail to provide sufficient notice to defendants of the plaintiff's claim. Third, in considering the plaintiff's factual allegations, courts should not accept as adequate abstract recitations of the elements of a cause of action or conclusory legal statements." Id.

D. Discussion

(1) Servicing-Transfer Notice is Not Covered by FDCPA

Among other things, the FDCPA requires a debt collector to send debt validation notices "within five days after the initial communication with a consumer in connection with the collection of any debt." 15 U.S.C. § 1692g(a). The parties do not dispute that Defendant is a debt collector. Rather, they disagree on whether the service transfer notice constitutes the communication "in connection with the collection of any debt" under § 1692g.

While the statute does not define this phrase, the Court of Appeals of the Seventh Circuit has set forth several factors to consider whether a communication is within the scope of FDCPA: (1) whether the communication contains a demand for payment, (2) the nature of the parties' relationship, and (3) the purpose and context of the communications. Gburek v. Litton Loan Servicing LP, 614 F.3d 380, 385 (7th Cir. 2010) (letters asking for plaintiff's financial information were attempts to collect debt because they were sent to induce settlements)

Within this framework, Defendant has cited several district court cases to support his position. In Shelley v. Ocwen Loan Servicing LLC, Case No. 1:13-CV-506-RLY-DKL, 2013 WL 4584649 (S.D. Ind. Aug. 28, 2013), the letter in dispute alerted the plaintiffs that the servicing of their loans would be transferred to Ocwen, as well as when and how this transition would occur. Furthermore, the letter included the heading "Next Payment Due" and a temporary payment coupon which contained the title "Due Date." The amount due, however, was not included in the letter. On the second page, the letter provided the following sentence: "this is an attempt to collect a debt and any information obtained will be used for that purpose..." After applying the factors supplied by Gburek, Judge Young ruled that letter was merely informational and thus not within the scope of the FDCPA. The letter did not demand a specific payment or discuss the delinquency of the underlying debt, especially because the terms of payment were not even listed. Id. at *7.

Furthermore, in Thompson v. BAC Home Loans Servicing, L.P., Case No. 2:09-cv-311-TS, 2010 WL 1286747 (N.D. Ind. Mar. 26, 2010), Judge Springmann has reached the same conclusion in view of similar facts. In Thompson, the notice provided payment instructions, payment address, and a payment coupon which contained the amount due. The notice also informed the plaintiff that his mortgage had been transferred to a new servicer. Furthermore, the letter included a warning for credit reporting if the recipients failed to make payments. Id. at *3. The court found that the notice was informational. Specifically, the notice did not declare plaintiff's mortgage in default, nor demand any payments accordingly. Id. at *4. In addition, Judge Springmann found that the language "this communication is from a debt collector attempting to collect a debt, and any information obtained will be used for that purpose" did not alter the nature of the communication. Id. at *5.

In another case, Gillespie v. Chase Home Finance, LLC, Case No. 3:09-cv-191-TS, 2009 WL 4061428 (N.D. Ind. Mar. 26, 2010), the letter stated that the plaintiffs' loans had been transferred to the Homeowner's Assistance Department as a result of unresolved delinquency. The letter further suggested the recipients to call the Department which had a variety of options to resolve their delinquencies. Id. at *2. Judge Springmann ruled that the letter was informational in nature because it did not provide the terms of payment or a deadline, threaten further collection proceedings, or demand payment in any form. The court also found that the nature of the communication was not altered either by addressing a debt that was delinquent in its status, or by incorporating the required disclosure under 15 U.S.C. §1692e(11)[2]. Id. at *4-6.

Plaintiff Cigler argued that Gillespie cannot be regarded as good law after Gburek since the communication at issue in Gillespie is similar to the ones in Gburek and the Seventh Circuit has reached a different conclusion in Gburek. This argument, however, is too overarching. Gburek held that the absence of a demand for payment is just one of several factors that come into play in this inquiry. Gburek, 614 F.3d at 385. Rather than overruling prior district court cases with similar facts, Gburek summarizes the reasoning of Gillipsie and other cases like it into one of the factors of the analysis.

After analyzing prior decisions in this Circuit, the Court agrees with Defendant that the communication in Exhibit A is not an attempt to collect debt. The letter at issue here is most similar to the communications in Thompson and Shelley. The letter does not demand anything; rather, it informs Plaintiff that his loan has been transferred to Ocwen and provides a new address for payments. As in Shelley and Thompson, the communication includes a temporary payment coupon. While the payment coupon in Shelley contains a due date and the coupon in Thompson has a due date and the amount due, Defendant's letter includes neither a due date nor the amount due, which resembles much less a demand for payment. Furthermore, in the frequently asked questions section, the enclosure merely provides information on payment arrangements with the new servicer regarding the past dues. It does not set any deadlines for the recipients to make the payment. As Shelley and Thompson have held that the letters are not a communication in connection with the collection of any debt, the Court reaches the same conclusion regarding the communication in this case.

Plaintiff relies heavily on Gburek to support his position. The letter he received, however, is different from the letters in Gburek. Unlike Gburek, the letter here does not mention that the loan is delinquent. It does not request Plaintiff's financial information, nor induce Plaintiff to settle the debt by threatening further legal actions or foreclosure. Even though page two of the letter states that late payments, missed payments, and defaults may be reflected on the credit report, this is insufficient to show that Ocwen has threatened Plaintiff to pay or settle the debt.

Plaintiff also argued that the sentence: "Ocwen Loan Servicing, LLC is a debt collector attempting to collect a debt: any information obtained will be used for that purposes..." proves that the letter is an attempt to collect debt. However, Courts in this Circuit have already ruled that such statement does not alter the nature of the communication. Thompson, 2010 WL 11286747 at *5; Shelley, 2013 WL 4584649 at *5; Gburek, 614 F.3d at 386 n.3; Gillespie 2009 WL 4061428 at *6.

In addition, Plaintiff, in his response brief, argues that the only relationship Ocwen has with Plaintiff is the collection of debt. But that fact alone is not dispositive to the outcome of the case. See Shelley, 2013 WL 4584649 *6. The letter in dispute was sent to establish a relationship between parties, rather than to pursue a debt from the existing relationship. Thus, Plaintiff's argument does not support a conclusion that the letter was sent in communication with the collection of any debt.

(2) Exhibit B is An Attempt to Collect Debt

Plaintiff argues that, if Exhibit A is not an attempt to collect the debt, Exhibit B attached to the Complaint nevertheless is a communication in connection with the collection of a debt. The Court agrees.

Exhibit B is an account statement which provides detailed information on amount due, due date, late charges, and current fees/expenses outstanding. (Ex. B, DE 1.) The account statement is regarded as part of the pleading since it is attached to Cigler's complaint. Fed.R.Civ.P. 10(c). This detailed account information obviously relates to debt collection. Furthermore, Exhibit B is the next letter Cigler received after receiving Exhibit A. Because Exhibit A is not covered under the statute and Exhibit B is an attempt to collect debt, the Court treats Exhibit B as an initial communication regarding the collection of debt.

E. Conclusion

Although Exhibit A is not a communication in connection with the collection of debt under 15 U.S.C. § 1692g, Exhibit B does fall within the scope of the statute. Since Cigler has alleged that he did not receive any statutory required disclosure within five days after receiving Exhibit B, he has met the pleading requirements under Rule 12(b)(6). Defendant's motion to dismiss (DE 15) is denied.


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