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United States v. Advocate Law Groups of Florida, P.A.

United States District Court, M.D. Florida, Orlando Division

September 27, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
ADVOCATE LAW GROUPS OF FLORIDA, P.A., JON B. LINDEMAN, JR., and EPHIGENIA K. LINDEMAN, Defendants. and LUCIA HURTADO, NOEMI ROMAN, and ARGENTINA ROQUE, Intervenor-Plaintiffs,

          ORDER

          John Antoon II United States District Judge.

         The United States of America and three Intervenor-Plaintiffs bring this action under the Fair Housing Act (FHA) against Advocate Law Groups of Florida, P.A. (ALG), Jon Lindeman, Jr., and Ephigenia Lindeman-a law firm, its general managing partner, and its chief financial officer, respectively. (Compl., Doc. 1; Compl. in Intervention, Doc. 30). Plaintiffs allege that Defendants violated several of the FHA's anti-discrimination provisions by targeting Hispanic homeowners for "unfair and predatory loan modifications and foreclosure rescue services." (Doc. 1 ¶ 11; see also Doc. 30 ¶¶ 2-3 (alleging a "mortgage modification scam" and "predatory advertising")).

         Defendants now move under Federal Rule of Civil Procedure 12(b)(6) to dismiss Plaintiffs' claims for failure to state a claim for which relief can be granted, arguing that even taken as true, Plaintiffs' allegations do not state a cause of action under the FHA. (Mots., Docs. 12 & 50). Defendants alternatively move for a more definite statement under Federal Rule of Civil Procedure 12(e). Having reviewed the parties' submissions[1] and pertinent law, the Court grants Defendants' motions but will allow repleading of some of Plaintiffs' claims.

         I. Legal Standards

         "A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "[D]etailed factual allegations" are not required, but "[a] pleading that offers 'labels and conclusions' or' a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "To survive a [Rule 12(b)(6)] 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.'" Id. (quoting Twombly, 550 U.S. at 570). In considering a motion to dismiss brought under Rule 12(b)(6), a court limits its "consideration to the well-pleaded factual allegations, documents central to or referenced in the complaint, and matters judicially noticed." LaGrasta v. First Union Sec, Inc., 358 F.3d 840, 845 (11th Cir. 2004).

         II. Factual and Procedural Background[2]

         A. Allegations in the Complaints (Docs. 1 & 30)

         Defendant ALG is a law firm with its principal place of business in Miami Lakes, Florida, and several offices throughout the state, including in Orlando. (Doc. 1 ¶ 8). "From 2009 through at least 2015, ALG purported to be a legal services provider and offered loan modification and foreclosure rescue services." (Id.). Defendant Jon Lindeman (Mr. Lindeman) is an attorney who opened ALG with his wife, Defendant Ephigenia K. Lindeman (Mrs. Lindeman) in 2008. (Id. ¶ 9). Mr. Lindeman serves as the General Managing Partner and President of ALG, (Id., while Mrs. Lindeman-a non-lawyer-is ALG's Chief Financial Officer, Director of Marketing, and Chief Mortgage Investigator and Auditor, (id. ¶ 10).

         Defendants allegedly "deliberately targeted . . . homeowners because of their Hispanic national origin for a scheme involving unfair and predatory loan modifications and foreclosure rescue services." (Id. ¶ 11). They did so by using "Spanish-language advertising that falsely promised to cut . . . mortgage payments in half." (Id. ¶ 12). Defendants allegedly charged thousands of dollars in advance fees as well as ongoing monthly fees of up to $550, urging homeowners "to stop making monthly mortgage payments and to stop communication with their lenders." Id.

         In their advertisements, Defendants misrepresented that they "could quickly obtain mortgage modifications that would reduce homeowners' mortgage payments, " but "Defendants took little action to obtain modifications." (Id. ¶ 14). Defendants allegedly "exploited the limited English proficiency of homeowners by advertising and conducting meetings in Spanish but then requiring "clients to sign English-language contracts, with only payment provisions translated." (Id. ¶ 17). The three Intervenor-Plaintiffs owned homes in Orlando, and the stories of their dealings with Defendants are similar.

         1. Intervenor Hurtado

         In February 2014, while current on her mortgage but facing a scheduled payment increase, Intervenor Lucia Hurtado-a native of Colombia who is limited English proficient-went to ALG's office in Orlando seeking mortgage modification assistance after viewing a Spanish-language ALG advertisement on television. (Doc. 1 ¶¶ 5, 24-27; Doc. 30 ¶¶ 28, 30-33). Hurtado signed a retainer agreement that required an advance fee of $5, 700 for mortgage modification assistance. (Doc. 1 ¶ 28; Doc. 30 ¶ 41). An ALG employee instructed Hurtado to stop making mortgage payments, and Hurtado complied. (Doc. 1 ¶29).

         After paying ALG about $2, 000 within a few weeks of signing the retainer agreement, Hurtado paid monthly installments of $535 to ALG. (Id. ¶ 31). The ALG employee with whom she met told her "that she would be fined if she ever stopped paying ALG the monthly fee." Id. ¶ 30). And when Hurtado called ALG, she "was never able to speak with anyone about the details of her case." (Id. ¶ 35).

         Over the course of about fourteen months, Hurtado paid ALG approximately $8, 420, "but she never received a mortgage modification or an offer of a modification while working with ALG." (Id. ¶ 37; see also Doc. 30 ¶ 55). In March 2015, Hurtado's loan servicer initiated foreclosure proceedings, and ALG entered an appearance in the case the following month. (Doc. 1 ¶ 36). In June 2015, Hurtado asked ALG to cancel its services, but ALG did not withdraw from her case until July 23, 2015. (Id. ¶ 38). Ultimately, Hurtado "resorted to selling her house in a short sale" after not obtaining a mortgage modification. (Id. ¶ 39; see also Doc. 30 ¶ 54).

         2. Intervenor Roman

         Intervenor Noemi Roman is a native of Puerto Rico who is limited English proficient. (Doc. 1 ¶ 6; Doc. 30 ¶ 57). In February 2010, after not paying her mortgage for two months, Roman went to ALG's office in Orlando to seek mortgage modification assistance after hearing and viewing advertisements on Spanish-language radio and television. (Doc. 1 ¶¶ 41-43). The ALG employee with whom Roman met falsely promised "that ALG could reduce the[] mortgage payment by half, " advised Roman to stop making mortgage payments, and told her not to accept correspondence or calls from her bank. (Id. ¶¶ 44-45; see also Doc. 30 ¶¶ 61 & 63). Roman followed these instructions and made no further mortgage payments. (Doc. 1 ¶45; Doc. 30 ¶ 74). Roman paid $4, 800 for ALG's promised loan modification services, taking out a loan to do so. (Doc. 1 ¶ 48; Doc. 30 ¶¶ 67-68).

         In June 2010, Roman's lender filed a foreclosure complaint in state court and two weeks later offered Roman a mortgage modification. (Doc. 1 ¶ 52). ALG, however, advised Roman to reject the modification offer. (Id., ). Roman paid over $13, 500 for ALG's services but never obtained a mortgage modification, (id. ¶ 61; Doc. 30 ¶ 86). Ultimately, the lender was granted summary judgment and Roman's home was sold to a third party at a foreclosure sale. (Doc. 1 ¶¶ 56-58).

         3. Intervenor Roque

         Intervenor Argentina Roque is a native of the Dominican Republic who is limited English proficient. (Id. ¶ 7; Doc. 30 ¶ 88). In January 2010, after seeing an advertisement on Spanish-language television for ALG's services, Roque went to ALG's Orlando office seeking assistance with a mortgage modification. (Doc. 1 ¶¶ 64-65; Doc. 30 ¶¶ 90-91). There, an ALG employee told Roque not to make further mortgage payments and that "she should use the money set aside for the mortgage payment to pay ALG instead." (Doc. 1 ¶ 66; see also Doc. 30 ¶ 93). Doing as instructed, Roque stopped making mortgage payments. (Doc. 1 ¶ 66; Doc. 30 ¶ 99). Roque paid ALG a fee of $2, 800 in installments from January to May 2010. (Doc. 1 ¶ 67; Doc. 30 ¶ 99).

         Roque's lender initiated foreclosure proceedings in April 2010. (Doc. 1 ¶ 71; Doc. 30 ¶ 105). After the first case was dismissed for lack of prosecution in June 2013, the lender filed again in March 2014. (Doc. 1 ¶¶ 71-72; Doc. 30 ¶¶ 105-06). Although ALG entered an appearance in the foreclosure case, it did not file a responsive pleading. (Doc. 1 ¶ 72; Doc. 30 ¶ 106). Roque tried to terminate her relationship with ALG, but ALG staff told her "that if she did not continue making payments to ALG she could lose her home to foreclosure." (Doc. 1 ¶ 74; see also Doc. 30 ¶ 108). ALG eventually withdrew as counsel in the foreclosure case in February 2015, (Doc. 1 ¶ 77), and Roque obtained a loan modification offer from her lender with the free assistance of a nonprofit organization, (Id. ¶ 79; see also Doc. 30 ¶ 112). Roque had paid ALG more than $18, 500. (Doc. 1 78; Doc. 30 ¶ 111).

         B. Procedural History

         The FHA, which reflects "the policy of the United States to provide ... for fair housing, " 42 U.S.C. § 3601, creates several mechanisms for enforcement of its provisions. See 42 U.S.C. §§ 3610 & 3612 ("Administrative enforcement" and "Enforcement by Secretary, " respectively); id. § 3613 ("Enforcement by private persons"); id. § 3614 ("Enforcement by Attorney General"). This case originated under both the administrative enforcement provisions of §§ 3610 and 3612 as well as the Attorney General enforcement provisions of § 3614.

         Hurtado, Roman, and Roque filed complaints of national origin discrimination with the Secretary of Housing and Urban Development under 42 U.S.C. § 3610(a).[3] (Doc. 1 ¶81; Doc. 30 ¶ 113). The Secretary then investigated the complaints, "determined that reasonable cause existed to believe that Defendants engaged in illegal discriminatory housing practices against each of the" Intervenors, (Doc. 1 ¶ 83; see also Doc. 30 ¶ 115), and, on September 6, 2018, issued a Charge of Discrimination against Defendants under 42 U.S.C. § 3610(g)(2)(A), [4] (Doc. 1 ¶ 84; Doc. 30 ¶ 116).

         "When a charge is filed under section 3610 ..., a complainant, a respondent, or an aggrieved person on whose behalf the complaint was filed[] may elect to have the claims asserted in that charge decided in a civil action" in lieu of an administrative hearing. 42 U.S.C. § 3612(a). Defendants made such an election, (Doc. 1 ¶ 85; Doc. 30 ¶ 118), and the Secretary then authorized the Attorney General to commence a civil action, [5] (Doc. 1 ¶ 87; Doc. 30 ¶ 119). The Attorney General accordingly filed this lawsuit on October 29, 2018, recounting the experiences of the Hurtado, Roman, and Roque families and alleging violations of several of the FHAs anti-discrimination provisions-42 U.S.C. §§ 3604(a), 3604(b), 3605, and 3617. (Doc. 1). And, invoking its authority under § 3614, the United States also alleges in its Complaint that the Defendants engaged in a pattern or practice of FHA violations. (Doc. 1 at 22-23); see 42 U.S.C. § 3614(a) (allowing the Attorney General to commence a civil action "[w]henever the Attorney General has reasonable cause to believe that any person ... is engaged in a pattern or practice of resistance to the full enjoyment of any rights granted by this subchapter or that any group of persons has been denied any of the rights granted by this subchapter and such denial raises an issue of general public importance").

         And the FHA allows "[a]ny aggrieved person with respect to the issues to be determined in a civil action . . . [to] intervene as of right in that civil action." 42 U.S.C. § 3612(o)(2). Hurtado, Roman, and Roque moved to intervene under this provision, (see Doc. 28), and the Court granted that motion, (see Doc. 29). Intervenor-Plaintiffs then filed their Complaint in Intervention on March 18, 2019, alleging, like the United States, violations of §§ 3604(a), 3604(b), 3605, and 3617. (Doc. 30). Defendants now move to dismiss all claims in both the United States' Complaint and the Complaint in Intervention under Federal Rule of Civil Procedure 12(b)(6), asserting that their alleged actions do not amount to housing discrimination under the FHA.

         III. Discussion

         A. 42 U.S.C. ยง 3604(a) (Interveners' Count I and part of ...


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