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Scott v. 360 Mortgage Group, LLC

United States District Court, S.D. Florida

August 30, 2017

JAMES W. SCOTT, Plaintiff,
360 MORTGAGE GROUP, LLC, Defendant.



         This Cause is before the Court upon Defendant 360 Mortgage Group, LLC’s (“Defendant”) Motion to Dismiss Case with Prejudice, ECF No. [14] (the “Motion”). The Court has reviewed the Motion, all supporting and opposing submissions, the record and applicable law, and is otherwise fully advised. For the reasons that follow, Defendant’s Motion is granted in part and denied in part.

         I. BACKGROUND

         Plaintiff is a citizen of Florida who owns a home in Deerfield Beach, Florida. ECF No. [1] at ¶¶ 5, 8. Defendant is currently the loan servicer for Plaintiff’s home mortgage loan. Id. at ¶ 8. The original lender on the mortgage was Sovereign Lending Group (“Sovereign”), with whom Plaintiff at some point completed a refinance. See Id. at ¶ 16. In June of 2016, Plaintiff was confronted by one of his neighbors due to Sovereign’s title company mistakenly placing Plaintiff’s name on the neighbor’s title and the neighbor’s name on Plaintiff’s title. Id. at ¶¶ 16-18. After that matter was resolved, Plaintiff “began questioning the original lender and title company for answers to make sure his title was not clouded.” Id. at ¶ 19.

         In August of 2016, Defendant sent Plaintiff a letter stating that it was the new servicer of his mortgage. Id. at ¶ 20. The letter did not indicate where the assignment of Plaintiff’s mortgage to Defendant was recorded. Id. at ¶ 23. Plaintiff checked the public records but was unable to find any assignment of his mortgage to Defendant. Id. at ¶¶ 21-22.

         On April 7, 2017, in order to “check on the validity of the loan[,]” Plaintiff sent Defendant a “qualified written request,” to which Defendant never responded. Id. at ¶ 24. On April 29, 2017, Plaintiff sent Defendant a second “qualified written request.” Id. at ¶ 25. Also on April 29, 2017, after discovering that Mortgage Electronic Registration Systems, Inc. (“MERS”) “was acting solely as nominee for Lender” with respect to his mortgage, Plaintiff sent MERS a “request for the ‘milestones’” on the mortgage. Id. at ¶ 26. Plaintiff checked MERS’ website, and on it found that Defendant “is listed as the current active servicer.” Id. at ¶ 27.

         On May 10, 2017, Plaintiff received from Defendant a letter in response to his second qualified written request, which “contained information that [Plaintiff] already had from public records[,]” such as a copy of the mortgage and note from Sovereign. Id. at ¶ 28. Defendant stated in the letter that it was the “Holder” of the note and the “Owner” of the loan. Id. at ¶ 29.

         On May 15, 2017, Plaintiff received from Defendant a letter in response to the request for milestones that he sent to MERS, which MERS had forwarded to Defendant in order for Defendant to answer on its behalf. Id. at ¶ 30. The letter, according to the Complaint, indicated that MERS is the “recorded lienholder of [the] property on behalf of [Defendant]” and stated that Plaintiff’s county would reflect MERS as the lienholder on behalf of Defendant. Id. at ¶¶ 31-32. Plaintiff was unable to find any assignment indicating such in the public records. Id. at ¶ 31. On that point, the letter advised Plaintiff as follows: “No assignment is required to be recorded with your county as long as . . . MERS is the recorded lienholder. An assignment, which would be from MERS to [Defendant], would only be recorded in the event legal proceedings are ever required.” Id. at ¶ 33.

         On May 26, 2017, Plaintiff, proceeding pro se, initiated the instant action against Defendant, asserting in his Complaint the following four claims for relief: a violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601, et seq. (“RESPA”) (Count I); a violation of the Truth in Lending Act, 15 U.S.C. § 1601, et seq. (“TILA”) (Count II); violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”) (Count III); and a violation of the Florida Consumer Collection Practices Act, Fla. Stat. § 559.55, et seq. (“FCCPA”) (Count IV). Defendant moves to dismiss the Complaint in its entirety, advancing three supporting arguments: (1) Plaintiff lacks standing to bring this case because Plaintiff alleges damages based upon Defendant’s and/or MERS’ failure to record the assignment of his mortgage-which according to Defendant “underlies” each of Plaintiff’s claims-to which there is no corresponding cause of action, as there is no duty in Florida to record the assignment of a mortgage; (2) relatedly, MERS is an indispensable party to this case (and its absence requires dismissal) because Plaintiff “seeks to attack the lack of an assignment from MERS to Defendant”; and (3) each of Plaintiff’s claims otherwise fails to state a claim under which relief can be granted. ECF No. [14] at 4, 7-9. The Court will address each of Defendant’s arguments in turn.


         Rule 8 of the Federal Rules requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although a complaint “does not need detailed factual allegations,” it must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl.Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining that Rule 8(a)(2)’s pleading standard “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation”). In the same vein, a complaint may not rest on “‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557 (alteration in original)). “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. These elements are required to survive a motion brought under Rule 12(b)(6) of the Federal Rules of Civil Procedure, which requests dismissal for “failure to state a claim upon which relief can be granted.”

         When reviewing a motion under Rule 12(b)(6), a court, as a general rule, must accept the plaintiff’s allegations as true and evaluate all plausible inferences derived from those facts in favor of the plaintiff. See Miccosukee Tribe of Indians of Fla. v. S. Everglades Restoration Alliance, 304 F.3d 1076, 1084 (11th Cir. 2002); AXA Equitable Life Ins. Co. v. Infinity Fin. Grp., LLC, 608 F. Supp. 2d 1349, 1353 (S.D. Fla. 2009). However, this tenet does not apply to legal conclusions, and courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555; see Iqbal, 556 U.S. at 678; Thaeter v. Palm Beach Cnty. Sheriff’s Office, 449 F.3d 1342, 1352 (11th Cir. 2006). Moreover, “courts may infer from the factual allegations in the complaint ‘obvious alternative explanations,’ which suggest lawful conduct rather than the unlawful conduct the plaintiff would ask the court to infer.” Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010) (quoting Iqbal, 556 U.S. at 682). A court considering a Rule 12(b) motion is generally limited to the facts contained in the complaint and attached exhibits, including documents referred to in the complaint that are central to the claim. See Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir. 2009); Maxcess, Inc.v. Lucent Technologies, Inc., 433 F.3d 1337, 1340 (11th Cir. 2005) (“[A] document outside the four corners of the complaint may still be considered if it is central to the plaintiff’s claims and is undisputed in terms of authenticity.”) (citing Horsley v. Feldt, 304 F.3d 1125, 1135 (11th Cir. 2002)).

         The Court employs “less stringent standards” in assessing pro se pleadings, such as the Complaint in this case. See Lampkin-Asam v. Volusia Cty. Sch. Bd., 261 F. App’x 274, 276-77 (11th Cir. 2008) (quoting Hepperle v. Johnston, 544 F.2d 201, 202 (5th Cir. 1976)). However, the Court may not act as counsel for a party or rewrite deficient pleadings, and pro se litigants must still adhere to well-established pleading standards. See Id. (citing McNeil v. United States, 508 U.S. 106, 113 (1993) and GJR Invs., Inc. v. County of Escambia, Fla., 132 F.3d 1359, 1369 (11th Cir. 1998)).


         A. Standing

         Defendant’s argument that Plaintiff lacks standing is flawed in that it essentially relies upon a distortion of, and disregard for, the specific claims asserted by Plaintiff. Defendant’s standing argument goes as follows: “[T]here is no cause of action for failure to record an assignment of a mortgage, which is just notice to third parties of the assignment. Therefore, Plaintiff lacks standing to bring this case.” ECF No. [14] at 7 (emphasis in original) (internal citation omitted).[1] But despite Defendant’s broad standing challenge to “this case” generally, Defendant does not identify where in the Complaint Plaintiff actually asserts the above mentioned cause of action.

         As to the specific claims that Plaintiff does assert, Count I asserts a RESPA violation premised on Defendant’s alleged failure as a loan servicer to properly and timely respond to Plaintiff’s purported qualified written requests. Count II asserts a TILA violation based on Defendant’s allegedly inadequate initial notification to Plaintiff upon being assigned Plaintiff’s mortgage. Notably, the potential success of these two claims does not depend in any way on a recording (or lack thereof) of the assignment of Plaintiff’s mortgage. As to the remaining two counts, Count III asserts three separate FDCPA violations and Count IV asserts one FCCPA violation, all of which are based on Defendant’s alleged utilization of false or misleading representations and unfair or unconscionable means in collecting on Plaintiff’s mortgage. None of Plaintiff’s four claims constitute a cause of action seeking to establish liability on Defendant (or MERS for that matter) specifically for a failure to record the assignment of the mortgage. At most, in Counts III and IV, Plaintiff appears to challenge Defendant’s claimed status with respect to his mortgage based on the lack of a public recording of the assignment. See, e.g., ECF No. [1] at ¶ 34 (alleging that “Defendant continues to collect and threatens to foreclose on [Plaintiff’s] property without a valid recorded assignment in public records” ); id. at ¶ 49 (alleging a FDCPA violation based on Defendant’s threat to take action that cannot be legally taken); id. at ¶ 54 (alleging a FCCPA violation based on Defendant’s assertion of a legal right that it knows does not exist). The essence of the statutory violations alleged in these Counts is that Defendant engaged in activities that it had no right to engage in-not that Defendant or anyone else failed to do something that the law required be done (e.g., ensuring the public recording of an uncontested mortgage assignment).[2] To the extent that Plaintiff alleges the lack of a publicly recorded assignment of his mortgage to Defendant, Plaintiff does not do so as a basis for liability in and of itself. Defendant’s attempt to construe Plaintiff’s Complaint otherwise is of no avail.

         Importantly, Defendant offers no argument that Plaintiff lacks standing to bring any of the specific claims he has asserted. Nor could it, as it is Plaintiff’s mortgage that serves as the underlying loan or purported debt for purposes of the respective statutes under which Plaintiff’s claims are brought, and each of those statutes explicitly provide for a private cause of action. See 12 U.S.C. § 2605(f)(1) (RESPA); 15 U.S.C. § 1640(a) (TILA); 15 U.S.C. § 1692k (FDCPA); Fla. Stat. § 559.77 (FCCPA); cf. Fuller, 888 F. Supp. 2d at 1270-71 (finding that a county court clerk lacked standing to bring Florida common law claims against MERS where the state statute MERS allegedly violated did not explicitly create a right of action, and reasoning that “common law claims may not be premised on a violation of a statute where that statute is devoid of a private right of action”). Instead, Defendant simply relies on the Fuller case for the general proposition that Plaintiff lacks standing to bring this case. See ECF No. [14] at 6-7. But, as explained below, that reliance is woefully misplaced.

         In Fuller, MERS sought to dismiss, based in part on standing grounds, a class action lawsuit brought against it and another defendant by a Florida circuit court clerk on behalf of himself and other circuit court clerks in Florida. 888 F. Supp. 2d at 1264. The clerk alleged that MERS’ system of electronically tracking the transfers of mortgages and mortgaging servicing rights-which involves the designation of MERS as the mortgagee of record on the public records, but otherwise does not involve the public recording of transfers made between MERS members-contravened Florida law pertaining to the recording of mortgages. Id. at 1264-67. As relief, the clerk sought to recover through various Florida common law claims unpaid recording fees that would have otherwise been paid to the plaintiff clerks for physical recordings on the public records. Id. As the court explained, “[i]n essence, [the clerk sought] damages based upon a theory of a deprivation of recording fees for documents that were not recorded with him.” Id. at 1269. According to MERS, however, the clerk lacked standing because the Florida statute he claimed MERS had violated, Fla. Stat. § 28.222, did not create a cause of action and merely outlined the clerk’s duties and responsibilities for recording documents. Id. at 1268.

         The court ultimately agreed with MERS that the clerk lacked standing, though notably not from an Article III standpoint. Specifically, with respect to Article III standing requirements, the court found that the clerk had sufficiently alleged an injury in fact by alleging that “the MERS recording system both usurps his lawful authority to maintain public land records and reduces the amount of revenue his office receives.” Id. at 1269-70. The court explained further: “In addition, [the clerk] alleges that this ‘non-public recording’ interferes with the integrity of the public records by misstating that MERS is the true mortgage holder and rendering the public unable to identify who has the true mortgage interest in the property.” Id. at 1270.

         Rather, the court found dispositive that Fla. Stat. § 28.222 did not provide a right of action. See Id. at 1270-71. On that point, the clerk argued that the absence of a cause of action in Fla. Stat. § 28.222 was irrelevant because his common law claims were “independent of a statutory violation” and the statute was “simply the ‘statutory source’” of his ...

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