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Fischer v. Federal National Mortgage Association

United States District Court, S.D. Florida

March 26, 2018




         THIS CAUSE comes before the Court on (1) Defendant Rushmore Loan Management Services, LLC's (“Rushmore”) Motion for a More Definite Statement as to Counts 1, 4, 6, & 7, and Motion to Dismiss Count 5 of Plaintiff's Complaint (the “Rushmore Motion”) [ECF No. 5]; (2) Defendant JPMorgan Chase Bank, N.A.'s (“Chase”) Motion to Dismiss Counts I, II, III, IV, VI, and VII, or Alternatively for a More Definite Statement (the “Chase Motion”) [ECF No. 22]; and (3) Defendants Federal National Mortgage Association and Seterus, Inc.'s (individually “Fannie Mae” and “Seterus” and collectively the “Fannie Mae Defendants'”) Motion to Dismiss (the “Fannie Mae Motion”) [ECF No. 29] (collectively, the “Motions”). The Court has carefully considered the Complaint for Damages and Demand for Jury Trial [ECF No. 1] (“Complaint”), the responses and replies to the Motions, and the applicable law and is otherwise fully advised. For the reasons that follow, the Motions are granted.

         I. BACKGROUND

         Plaintiff, Joseph Fischer, is a real estate investor who runs a small real estate investment business that purchases, repairs, and sells real property. Plaintiff obtained a loan from the “Bank”[1] secured by a mortgage on an investment property located in Pompano Beach, Florida (the “Investment Property”). Plaintiff made timely monthly payments and otherwise complied with all terms of his mortgage and note, including his obligation to make payments to an escrow account for use by the Bank to pay Plaintiff's creditors. Notwithstanding Plaintiff's timely escrow payments, the Bank failed to pay Plaintiff's property taxes for several years during the term of the loan. The Bank ultimately paid the taxes, fees, and accumulated interest to prevent a lien from being placed on the Investment Property.

         The Bank subsequently sought to charge Plaintiff for the incurred penalties, late fees, and underlying property taxes. Plaintiff notified the Bank that the charges were improper because he had already paid the amounts owed for his taxes into the designated escrow fund. However, the Bank continued to attempt to collect these amounts from Plaintiff. To that end, on May 7, 2013, the Bank filed a foreclosure lawsuit in Broward County, Florida, case number CACE-13-011475, alleging that Plaintiff failed to make required payments on the loan. On October 13, 2015, the Bank ended the suit by filing a Notice of Voluntary Dismissal. Despite the dismissal of the foreclosure action, the Bank continued to harass Plaintiff with phone calls and by reporting a deficiency on Plaintiff's credit report.

         On June 30, 2017, Plaintiff commenced this action. Plaintiff's Complaint asserts one federal claim under the Fair Debt Collection Practices Act (Count I), invoking federal question jurisdiction under 28 U.S.C. § 1331, and six state law claims (Counts II-VII), invoking the Court's diversity jurisdiction under 28 U.S.C. § 1332. See [ECF No. 1] ¶¶ 1, 2. Counts I, IV, VI, and VII are alleged against all Defendants. Counts II and III are alleged against Fannie Mae and Chase. Count V is alleged solely against Rushmore.


         “To survive a motion to dismiss, a complaint must contain 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)). Although this pleading standard “does not require ‘detailed factual allegations, ' . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (quoting Twombly, 550 U.S. at 555).

         Pleadings must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citation omitted). Indeed, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 556 U.S. at 679 (citing Twombly, 550 U.S. at 556). To meet this “plausibility standard, ” a plaintiff must “plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678 (citing Twombly, 550 U.S. at 556). When reviewing a motion to dismiss, a court must construe the complaint in the light most favorable to the plaintiff and take the factual allegations therein as true. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir.1997).


         Defendants seek dismissal on the grounds that the Complaint is an improper “shotgun” pleading, the Court lacks jurisdiction, and that the state law counts fail to state a claim under Federal Rule of Civil Procedure 12(b)(6). In addition, Rushmore argues that the Florida Consumer Collection Practices Act claim, alleged solely against Rushmore, fails because the debt at issue is not a consumer debt. The Court addresses the arguments below.

         A. The FDCPA Only Applies to Consumer Debt

         Plaintiff brings a claim against Defendants under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”), for their attempts to collect payments under Plaintiff's mortgage and their initiation of the foreclosure lawsuit. “[T]he statutory language [of the FDCPA] . . . limits application of the FDCPA to debts arising from consumer transactions.” Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367, 1371 (11th Cir. 1998) (emphasis in original). The FDCPA defines a “debt” as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to a judgment.” 15 U.S.C. § 1692a(5) (emphasis added). “To this end, courts have consistently required that plaintiffs prosecuting FDCPA claims demonstrate that the underlying property giving rise to the debt relates to personal, family or household purposes; alternatively stated, the debt may not arise from a primarily business purpose.” Williams v. Edelman, Case No. 05-60653, 2005 WL 8154686, *4 (S.D. Fla. Oct. 6, 2005) (dismissing FDCPA claim where plaintiff's allegations failed to establish that the debt in question did not arise from a primarily business purpose); Lingo v. City of Albany Dept. of Cmty. & Econ. Dev., 195 F. App'x 891, 893 (11th Cir. 2006) (holding that the FDCPA did not apply to plaintiff's business development loan); see also Scarola Malone & Zubatov LLP v. McCarthy, Burgess & Wolff, 638 F. App'x 100, 102 (2d Cir. 2016) (stating that he FDCPA does not cover “actions arising out of commercial debts.”).

         “Courts construing the FDCPA have generally held . . . that the relevant time for determining the nature of the debt is the time at which the debt was created . . . .” Booth v. Mee, Mee & Hoge, P.L.L.C., No. 07-CV-1360, 2010 WL 988473, *4 (W.D. Okla. Mar. 15, 2010) (citing Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, and Clark L.L.C., 214 F.3d 872, 874 (7th Cir. 2000)). In Miller, the Seventh Circuit addressed circumstances comparable to those at bar. Miller, 214 F.3d at 874. There, Chief Judge Posner analyzed whether a mortgage was subject to the FDCPA when the property secured by the mortgage was originally plaintiff's personal residence, but then later converted into a rental property that generated income. Id. The Miller defendant argued that the FDCPA did not apply to the loan on the grounds that the debt was not a consumer debt at the time of default because the home was being utilized as a rental property. Id. The court analyzed the statutory language and held “that the relevant time [to determine if the FDCPA applies] is when the loan is made, not when collection is attempted.” Id. Thus, the Court found that the loan constituted consumer debt under the FDCPA because the plaintiff used the property as his personal home at the time ...

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