Hart v. FCI Lender Servs., Inc.

• Decision Date: 12 August 2015
• Docket Number: No. 14–191–CV.,14–191–CV.
• Citation: 797 F.3d 219
• Parties: Matthew J. HART, on behalf of plaintiff and the class defined herein, Plaintiff–Appellee. v. FCI LENDER SERVICES, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

797 F.3d 219

Matthew J. HART, on behalf of plaintiff and the class defined herein, Plaintiff–Appellee.

v.FCI LENDER SERVICES, INC., Defendant–Appellee.

No. 14–191–CV.

United States Court of Appeals, Second Circuit.

Argued: Aug. 27, 2014.

Decided: Aug. 12, 2015.

Daniel A. Edelman (Cathleen M. Combs, Tiffany N. Hardy, on the brief), Edelman, Combs, Latturner & Goodwin, LLC, Chicago, IL, for Matthew J. Hart.

Preston L. Zarlock (Spencer L. Durland, on the brief), Phillips Lytle LLP, Buffalo, N.Y., for FCI Lender Services, Inc.

Before: WINTER, RAGGI, and CARNEY, Circuit Judges.

Opinion

SUSAN L. CARNEY, Circuit Judge:

Matthew J. Hart sued FCI Lender Services, Inc. (“FCI”), his mortgage loan servicer and a debt collector, seeking damages under the Fair Debt Collection Practices Act (“FDCPA” or the “Act”), 15 U.S.C. § 1692 et seq., on behalf of himself and others similarly situated. Hart asserts that FCI violated the Act by sending him two written communications that failed to comply with FDCPA requirements that debt collectors timely provide certain notices to debtors. The first of the communications is a letter advising Hart that FCI had assumed mortgage servicing responsibilities related to Hart's mortgage loan. The second is a payment statement that FCI sent Hart some months later. The Act's notice obligations are triggered by a debt collector's “initial communication with a consumer in connection with the collection of any debt.” 15 U.S.C. § 1692g.

The United States District Court for the Western District of New York (Charles J. Siragusa, Judge ) granted FCI's motion to dismiss Hart's amended complaint for failure to state a claim, ruling principally that the letter, which the court viewed as primarily a transfer-of-servicing informational notice sent pursuant to the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605, was not also a communication sent “in connection with the collection of any debt” under the FDCPA. See Hart v. FCI Lender Servs., Inc., No. 13–CV–6076, 2014 WL 198337 (W.D.N.Y. Jan. 15, 2014). The District Court also ruled that Hart failed to allege (adequately or otherwise) that FCI violated the FDCPA by mailing the payment statement. Finally, the District Court denied Hart leave to file a second amended complaint. On appeal, Hart challenges all three rulings.

Construing the FDCPA in light of its remedial purposes, we agree with Hart that he has adequately alleged that FCI sent the letter “in connection with the collection of [a] debt,” thereby triggering the FDCPA's initial notice requirements. We accordingly vacate the judgment and remand for further proceedings, without addressing Hart's alternative arguments that the later payment statement triggered those requirements and that he should have been given a further opportunity to amend his complaint.

BACKGROUND

We draw this narrative from the allegations of Hart's first amended complaint, see App. 113–32, including the documents attached to the amended complaint as exhibits, see Fed.R.Civ.P. 10(c). We accept Hart's well-pleaded factual allegations as true and draw all reasonable inferences in his favor. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

Hart, a mortgagor, filed suit under the Act seeking damages from FCI, a corporation offering “a full spectrum of loan servicing, collection and foreclosure services locally or nationally.” Am. Compl. ¶ 8. As an “integral part of its business,” FCI regularly collects payments on “non[-]performing” loans—that is, loans that are in default. Id. ¶ 11. Hart's case rests primarily on a letter sent to him by FCI in July 2012 (the “Letter”), after FCI assumed loan servicing obligations for Hart's mortgage loan from GMAC Mortgage, LLC (“GMAC”), the prior servicer. Hart was in default on his mortgage loan when FCI assumed servicing responsibilities.

The text of the Letter requires our close scrutiny. Entitled “Transfer of Servicing Letter” and dated “7/17/2012,” it consists of one and one-half pages on FCI letterhead in the format of a signed letter, and two numbered pages of attachments. App. 123–26. In the body of the Letter, FCI notifies Hart that FCI has become his mortgage loan servicer: The text begins, “Please be advised that effective June 28, 2012 the servicing of your mortgage loan with GMAC Mortgage, LLC, secured by a Deed of Trust/Mortgage on real property, has been assigned to FCI Lender Services, Inc.” App. 123. It informs Hart that his loan number has been changed and instructs that “[b]eginning June 28, 2012 you should mail your payments, including all past due payments, to FCI Lender Services, Inc.....” Id. The Letter provides relevant timing, payment, and correspondence particulars about the transfer.

The body of the Letter also refers expressly to consumer rights conferred by section 6 of RESPA. Congress enacted RESPA to protect consumers from certain “abusive practices” that had developed “in some areas of the country” with respect to the settlement process used for residential real estate purchases and sales. 12 U.S.C. § 2601(a). RESPA obligates a new servicer of certain types of mortgage loans timely to notify the borrower of the change in servicer and to provide certain other information regarding the transfer. See id. § 2605(c). Reflecting (as none dispute) FCI's effort to meet its obligations under RESPA, the Letter's body identifies the effective date of the servicing transfer, provides phone numbers for both FCI and GMAC, and further details Hart's rights under RESPA regarding (for example) the timeliness of payments sent during the transfer period and how a consumer may dispute aspects of his account.

The Letter's third page (the first page of the attachment) plays a pivotal role here. Entitled “IMPORTANT NOTICES—PLEASE READ,” it contains the following language, in the following format (insofar as reproducible here):

NOTICE

THIS IS AN ATTEMPT TO COLLECT UPON A DEBT, AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE

YOU HAVE THE FOLLOWING RIGHTS

THIS DEBT WILL BE ASSUMED TO BE VALID UNLESS YOU DISPUTE ITS VALIDITY WITHIN 30 DAYS AFTER RECEIVING THIS NOTICE.

IF YOU NOTIFY THIS OFFICE IN WRITING THAT THE DEBT IS DISPUTED WITHIN 30 DAYS, THIS OFFICE WILL MAIL TO YOU VERIFICATION OF THE DEBT OR A COPY OF THE JUDGMENT AGAINST YOU.

THIS OFFICE WILL PROVIDE YOU WITH THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR (IF DIFFERENT FROM THE CURRENT CREDITOR) UPON YOUR WRITTEN REQUEST WITHIN 30 DAYS.

IT IS IMPORTANT THAT YOU UNDERSTAND THAT YOU HAVE THE RIGHT TO ENFORCE THE ABOVE NOTICE.

FAIR DEBT COLLECTION PRACTICES ACTS

The federal Fair Debt Collection practices Act ... require[s] that, except under unusual circumstances, collectors may not contact you before 8 a.m. or after 9 p.m. They may not harass you by using threats of violence or arrest or by using obscene language. Collectors may not use false or misleading statements or call you at work if they know or have reason to know that you may not receive personal calls at work. For the most part, collectors may not tell another person, other than your attorney or spouse, about your debt. Collectors may contact another person to confirm your location or enforce a judgment. For more information about debt collection activities, you may contact the Federal Trade Commission at 1–877–FTC–HELP or www.ftc.gov.

App. 125(sic).¹ The attachment is not separately signed, and it follows the signature line appearing on the second page of the main body of the Letter. See App. 124.

On February 13, 2013, Hart filed this suit against FCI as a putative class action, alleging that FCI violated the FDCPA by sending the Letter and, inter alia, “failing to identify the current creditor” and “misstat[ing] the debtor's rights,” Compl. ¶ 28—information that the Act requires a debt collector to provide within five days of an “initial communication with a consumer in connection with the collection of any debt,” 15 U.S.C. § 1692g. Hart sought an award of statutory damages.² In an amended complaint filed some months later, Hart added allegations that his mortgage was in default when it was transferred to FCI for servicing and that FCI regularly and as an integral part of its business collected debts, both factors that he contended rendered FCI a “debt collector” under the Act. Hart attached as an exhibit to the amended complaint both the Letter and a December 28, 2012 payment statement (the “Payment Statement”) sent by FCI to Hart and showing past-due amounts of $31,736.43, as well as the principal balance of Hart's loan and late charges due.See App. 128.

FCI moved under Fed.R.Civ.P. 12(b)(6) to dismiss the amended complaint for failure to state a claim, arguing principally that as a matter of law the Letter was not FCI's “initial communication ... in connection with the collection of any debt” under the FDCPA. The District Court accepted that argument and granted FCI's motion to dismiss. See Hart, 2014 WL 198337, at *7–8. In light of deadlines imposed by a scheduling order entered in the interim,³ the District Court concluded further that Hart was not entitled to amend his complaint a second time to add allegations that the Payment Statement, too, gave rise to notice obligations under the Act. See id. at *7.

Hart timely appealed.

DISCUSSION

Hart maintains that the Letter was sent “in connection with the collection of [a] debt.” In the alternative, he contends that the amended complaint plausibly established that the Payment Statement triggered FCI's notice obligations and that the District Court abused its discretion in denying him leave to further amend his complaint to add new allegations relating to the Payment Statement. FCI responds, in essence, that: (1) the Letter was intended merely to comply with RESPA by providing certain information—that is, it was not aimed at “collect[ing] [a] debt”—and thus did not trigger the FDCPA's notice requirements; (2) Hart failed to plead adequately that the Payment Statement served as a predicate for an...