Robey v. Shapiro, Marianos & Cejda, L.L.C.

• Decision Date: 18 January 2006
• Docket Number: No. 04-5163.,04-5163.
• Citation: 434 F.3d 1208
• Parties: Richard ROBEY, on behalf of himself and others similarly situated, Plaintiff-Appellant, v. SHAPIRO, MARIANOS & CEJDA, L.L.C.; Theresa Marianos; Kirk J. Cejda; Gerald Shapiro; Mortgage Electronic Registration Systems, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1208

434 F.3d 1208

Richard ROBEY, on behalf of himself and others similarly situated, Plaintiff-Appellant, v. SHAPIRO, MARIANOS & CEJDA, L.L.C.; Theresa Marianos; Kirk J. Cejda; Gerald Shapiro; Mortgage Electronic Registration Systems, Inc., Defendants-Appellees.

No. 04-5163.

United States Court of Appeals, Tenth Circuit.

January 18, 2006.

Submitted on the briefs: Lawrence A.G. Johnson, Tulsa, OK, for Plaintiff-Appellant.

Victor E. Morgan, Gerald L. Jackson, Crowe & Dunlevy, Tulsa, OK, Richard C. Ford, Crowe & Dunlevy, Oklahoma City, OK, Melvin R. McVay, Jr., Heather L. Hintz, Phillips, McFall, McCaffrey, McVay & Murrah, P.C., Oklahoma City, OK, for Defendants-Appellees.

Before KELLY, SEYMOUR, and MURPHY, Circuit Judges.

SEYMOUR, Circuit Judge.

This appeal involves claims brought under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692o. Plaintiff Richard Robey is appealing the order entered by the district court dismissing his first amended complaint under FED.R.CIV.P. 12(b)(6). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.^*

I.

A. Background.

This case arises out of a state-court foreclosure action filed by defendant Mortgage Electronic Registration Systems, Inc. (MERS) against Robey in Tulsa County, Oklahoma. MERS was represented in the foreclosure action by defendant Shapiro, Marianos, & Cejda, L.L.C. (the Lawyer Defendants).¹ In the foreclosure petition, the Lawyer Defendants requested that MERS be awarded both a money judgment and a judgment of foreclosure, and they also requested additional relief, including that MERS be awarded "a reasonable attorney's fee." Aple.App. at 50. MERS ultimately dismissed the foreclosure action without prejudice, however, and MERS was not awarded any attorney's fees. Id. at 152-55.

Prior to the dismissal of the foreclosure action, Robey filed this action against MERS and the Lawyer Defendants, alleging they violated the FDCPA when they sought to recover a "reasonable attorney's fee" in the foreclosure action. According to Robey, the request for a "reasonable attorney's fee" was an unfair debt collection practice under 15 U.S.C. § 1692f(1) because: (1) MERS and the Lawyer Defendants had agreed that the Lawyer Defendants would handle the foreclosure action for a flat fee; and (2) the flat-fee agreement was never disclosed to the state court. Robey also asserted pendent state-law claims against defendants. The state-law claims included a claim that MERS violated Oklahoma law by failing to reveal that it was not the holder of the promissory note being sued on in the foreclosure action.

B. District Court's Dismissal Order.

Pursuant to FED.R.CIV.P. 12(b)(1) and (b)(6), defendants filed motions to dismiss Robey's first amended complaint, arguing that: (1) Robey lacked standing to assert his claims because he had not suffered an injury in fact in the foreclosure action; and (2) Robey failed to state a claim upon which relief could be granted related to the foreclosure action because an award of attorney's fees was authorized by Oklahoma law and the terms of Robey's mortgage.

In ruling on defendants' motions to dismiss, the district court addressed only defendants' second argument. The court began its analysis on that point by noting the following:

Under the FDCPA, "[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f. "Unfair or unconscionable" is defined to include "[t]he collection of any amount (including any interest, fee, charge or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law." 15 U.S.C. § 1692f(1).

Robey v. Shapiro, Marianos & Cejda, L.L.C., 340 F.Supp.2d 1062, 1064 (N.D.Okla.2004). Applying these provisions, the court rejected Robey's claim that the request in the foreclosure petition for a "reasonable attorney's fee" was an unfair debt collection practice under § 1692f(1), and therefore concluded that Robey had failed to state a claim under the FDCPA. As the court explained:

To put it simply, Plaintiff's position is unsupported. Oklahoma law permits the recovery of a reasonable attorney's fee in a mortgage foreclosure action as the prevailing party. Okla. Stat. tit. 42 § 176. Plaintiff's mortgage at the time the foreclosure was filed and the demand letter was sent provided for the recovery of "reasonable attorney's fees customarily charged in the area." ...

Plaintiff's citation to various statutes and unrelated authorities is novel but misguided. Plaintiff would have this Court attempt to connect several seemingly unrelated state statutes to arrive at a conclusion that Shapiro's and MERS's practices are prohibited by a federal law represented in the FDCPA.... Plaintiff also cites to various other inapplicable cases and statutes pertaining to attorney ethics in an attempt to persuade this Court to adopt a heretofore unrecognized position under the FDCPA. This Court declines to do so. The fees sought in the prayer of the foreclosure action [are] authorized by statute and the agreement between the mortgagee and mortgagor. Plaintiff's attempt to transform Shapiro's and MERS's actions into something sinister is lacking. At best, the failure to disclose the flat fee arrangement is a matter best left to the determination of the court presiding over the foreclosure. The practice, however, does not violate the FDCPA.

Id. at 1064-65.

With regard to Robey's claim against MERS for failing to reveal it was not the holder of the promissory note, the district court noted that the claim was "only referenced in the introduction of the First Amended Complaint and Count II of the Pendent State Claims section of the pleading." Id. at 1065. The court thus "interpret[ed] the claim to be only based in state law and not the FDCPA." Id. Having determined that "the sole claim based in federal law [had to be] dismissed," id., the court then declined to exercise supplemental jurisdiction over Robey's state-law claims, id. (citing 28 U.S.C. § 1367(c)(3)).

II.

A. Standing Issue.

"Article III, Section 2 of the United States Constitution extends the judicial power only to `Cases' or `Controversies.' A dispute is an Article III `Case' or `Controversy' only if the plaintiff can establish what is known as `constitutional standing.'" Carolina Cas. Ins. Co. v. Pinnacol Assurance, 425 F.3d 921, 926 (10th Cir.2005). Constitutional standing exists if the plaintiff:

show[s] [that] (1) it has suffered an "injury in fact" that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Id. (quotation omitted). Moreover, Congress may expand the range or scope of injuries that are cognizable for purposes of Article III standing by enacting statutes which create legal rights. Thus, as the Supreme Court has explained, "Congress may enact statutes creating legal rights, the invasion of which creates [constitutional] standing, even though no injury would exist without the statute." Linda R.S. v. Richard D., 410 U.S. 614, 617 n. 3, 93 S.Ct. 1146, 35 L.Ed.2d 536 (1973); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 578, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (stating that "[t]he ... injury required by Art. III may exist solely by virtue of statutes creating legal rights," and that this "principle involve[s] Congress' elevating to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law") (quotations omitted); Akins v. Fed. Election Comm'n, 101 F.3d 731, 736 (D.C.Cir.1996) (en banc) ("Although Congress may not `create' an Article III injury that the federal judiciary would not recognize, ... Congress can create a legal right (and, typically, a cause of action to protect that right) the interference with which will create an Article III injury." (citations omitted)), vacated on other grounds, 524 U.S. 11, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998).

Congress "may also ... place additional restrictions on who can sue, imposing requirements of `statutory standing.'" Carolina Cas. Ins. Co., 425 F.3d at 926 (quotation omitted). As we recently explained, it is important to distinguish between constitutional standing and statutory standing:

Because constitutional standing is necessary to the court's jurisdiction, as a general rule it must be addressed before proceeding to the merits. See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 96-97, 97 n. 2, 118 S.Ct. 1003, 140 L.Ed.2d 210 ... (1998)....

On the other hand, statutory standing need not be addressed if the court determines that the plaintiff loses on the merits anyway.

Id.

Because Robey was not actually ordered to pay any attorney's fees in the state-court foreclosure action, defendants argued in district court that Robey had not suffered any injury and therefore lacked standing to pursue his claims under the FDCPA. In its order dismissing Robey's claims under Rule 12(b)(6), the district court acknowledged the standing issue but chose not to address it, explaining that "[a]lthough Plaintiff may well lack standing to bring this action ..., this Court chooses not to address this issue, given the dismissal of the FDCPA claim." Robey, 340 F.Supp.2d at 1065. In light of the Supreme Court's decision in Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 93-102, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998), however, the district court should have decided the standing issue first, at least as it pertains to Robey's constitutional standing for purposes of Article III. See Gold v. Local 7 United Food & Commercial Workers Union, 159 F.3d 1307, 1309-10 (10th Cir.1998) (stating that "Steel requires that a federal court satisfy itself of subject matter...