Cohen v. Rosicki, Rosicki & Assocs., P.C.

• Citation: 897 F.3d 75
• Decision Date: 23 July 2018
• Docket Number: Docket No. 17-950-cv,August Term, 2017
• Parties: Aaron COHEN, on behalf of himself and all others similarly situated, Plaintiff-Appellant, v. ROSICKI, ROSICKI & ASSOCIATES, P.C., Ditech Financial LLC, Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

897 F.3d 75

Aaron COHEN, on behalf of himself and all others similarly situated, Plaintiff-Appellant,

v.ROSICKI, ROSICKI & ASSOCIATES, P.C., Ditech Financial LLC, Defendants-Appellees.

Docket No. 17-950-cv

August Term, 2017

United States Court of Appeals, Second Circuit.

Argued: October 2, 2017

Decided: July 23, 2018

Daniel A. Edelman, Edelman, Combs, Latturner & Goodwin, LLC, Chicago, Illinois (Tiffany N. Hardy, Edelman, Combs, Latturner & Goodwin, LLC, Chicago, Illinois; Shimshon Wexler, The Law Office of Shimshon Wexler, PC, Decatur, Georgia, on the brief ), for Plaintiff-Appellant.

Henry Mascia (Cheryl F. Korman, on the brief ), Rivkin Radler LLP, Uniondale, New York, for Defendant-Appellee Rosicki, Rosicki & Associates, P.C.

Martin C. Bryce, Jr. (Adam P. Hartley, Alexander Kommatas, on the brief ), Ballard Spahr LLP, New York, New York, for Defendant-Appellee Ditech Financial, LLC.

Mary McLeod, General Counsel, John R. Coleman, Deputy General Counsel, Steven Bressler, Assistant General Counsel, Nandan M. Joshi, Joseph Frisone, Counsel, Consumer Financial Protection Bureau, Washington, D.C., for Amicus Curiae Consumer Financial Protection Bureau, in support of Plaintiff-Appellant.

Before: Sack, Raggi, and Carney, Circuit Judges.

Sack, Circuit Judge:

The plaintiff, Aaron Cohen, brings this putative class action against Ditech Financial LLC ("Ditech"), Cohen's mortgage-loan servicer, and Rosicki, Rosicki & Associates, P.C. ("Rosicki"), the servicer's law firm, alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. , in connection with their attempt to initiate foreclosure proceedings on his home. The district court (the late Leonard D. Wexler, Judge ) granted the defendants' motions to dismiss. We conclude that the district court erred in dismissing Cohen's FDCPA claims on the ground that the enforcement of a security interest through foreclosure proceedings is not debt collection for purposes of the FDCPA. We nevertheless affirm because Cohen has failed to plausibly allege that the defendants violated the FDCPA.

BACKGROUND

Factual Background¹

On or about August 11, 2005, Cohen obtained a mortgage loan of $359,650 from Sterling Empire Funding Associates, Ltd. ("Sterling") to finance the purchase of his personal residence in Pomona, Rockland County, New York. Cohen has been in default on this mortgage since 2009. On June 1, 2010, Cohen's mortgage and note was assigned to Countrywide/Bank of America, which on June 10, 2013, transferred its rights in the mortgage and note to Green Tree Servicing LLC ("Green Tree"). Green Tree, through its attorney Rosicki, filed a foreclosure action summons and complaint with respect to the mortgaged property against Cohen in New York Supreme Court Rockland County on March 11, 2015. After the foreclosure action was filed, Green Tree changed its name to Ditech.² The defendants mailed copies of the summons and foreclosure complaint to Cohen.

The complaint in the foreclosure action asserts that Green Tree is the "holder of the subject note and mortgage, or has been delegated the authority to institute a mortgage foreclosure action by the owner and holder of the subject mortgage and note." App'x at 37. The summons states that Green Tree is "the creditor to whom the debt is owed" and provides that "[u]pon your written request within 30 days after receipt of this notice, Rosicki, Rosicki & Associates P.C. will provide you with the name and address of the original creditor if different from the current creditor." App'x at 34.

New York law requires foreclosure plaintiffs to file two additional documents at the onset of a foreclosure proceeding. First, such a plaintiff must attach to the complaint a "Certificate of Merit" signed by the plaintiff's attorney that "certif[ies] that the attorney has reviewed the facts of the case and that ... to the best of such attorney's knowledge, information and belief there is a reasonable basis for the commencement of such action and that the plaintiff is currently the creditor entitled to enforce rights under such documents." N.Y. C.P.L.R. § 3012-b(a). Second, "[a]t the time that proof of service of the summons and complaint is filed with the county clerk, plaintiff shall file with the county clerk a specialized request for judicial intervention (RJI), on a form prescribed by the Chief Administrator of the Courts." N.Y. Comp. Codes R. & Regs. tit. 22, § 202.12a(b)(1). The RJI must contain, inter alia , "the name of the mortgage servicer," and "shall request that a settlement conference be scheduled." Id.

Here, Green Tree filed in Supreme Court the Certificate of Merit (the "Certificate") on March 11, 2015, the same date that the foreclosure complaint was filed there. The Certificate was signed by Green Tree's attorney and certified that Green Tree "is the creditor entitled to enforce rights" under the mortgage note and related documents. App'x at 93–94. Green Tree subsequently filed the RJI with the court on March 26, 2015. App'x at 99–101. The RJI identifies the nature of the action as a mortgage foreclosure proceeding and seeks a "Residential Mortgage Foreclosure Settlement Conference." App'x at 99–100. Cohen received copies of the Certificate and RJI from the defendants.

Cohen subsequently submitted a "qualified written request" to Ditech requesting information relating to the servicing of the loan.³ On September 23, 2015, Ditech sent Cohen a letter in response, which states that "[t]he servicing of the above account was transferred from Bank of America, N.A. to Ditech effective June 1, 2013" and that the account is owned by "Fannie Mae."⁴ App'x at 110. The letter further explains, "Please be aware Ditech did not originate nor owns [sic] the account; it merely services it for a third party and can provide information from the servicing transfer date forward." Id. Finally, the letter advises Cohen that "the owner does not service the account. All correspondence and inquiries concerning the account should be addressed to the account servicer, Ditech .... The servicer has authority to act on the owner's behalf with regard to the administration of the account and respond to any questions about the account." Id.

Procedural History

On December 1, 2015, Cohen filed this putative class action against Ditech and its foreclosure counsel, Rosicki, seeking to recover statutory damages under the FDCPA. See 15 U.S.C. § 1692k(a) (providing that a court may award up to $1,000 in statutory damages for violation of the FDCPA). Cohen alleges that the defendants violated two different provisions of the FDCPA by identifying Green Tree, and not the Federal National Mortgage Association ("Fannie Mae"), as the creditor in the foreclosure complaint, Certificate, and RJI. Specifically, Cohen alleges that the defendants violated 15 U.S.C. § 1692e, which prohibits false, deceptive, or misleading representations made in connection with collecting a debt, and 15 U.S.C. § 1692g(a), which requires debt collectors to provide debtors with the name of the "creditor to whom the debt is owed" within five days of an "initial communication with a consumer in connection with the collection of any debt."

The defendants moved to dismiss Cohen's complaint under Federal Rule of Civil Procedure 12(b)(6). On March 24, 2017, the district court dismissed Cohen's complaint, concluding that Cohen had failed to state a claim upon which relief can be granted because the "enforcement of a security interest through foreclosure proceedings that do not seek monetary judgments against debtors" does not qualify as debt collection within the scope of the FDCPA. Cohen v. Ditech Fin. LLC , No. 15-CV-6828 (LDW), 2017 WL 1134723, at *3, 2017 U.S. Dist. LEXIS 43443 (E.D.N.Y. Mar. 24, 2017). The district court reasoned that because "Green Tree elected to commence an action to foreclose on the mortgage and the ‘communications’ at issue were made in the context of enforcing its security interest ... there was no attempt to enforce a debt actionable under the FDCPA." Id. Cohen then timely filed this appeal.

DISCUSSION

I. Standard of Review

"We review de novo a district court's grant of a defendant's motion to dismiss." City of Pontiac Gen. Emps' Ret. Sys. v. MBIA, Inc. , 637 F.3d 169, 173 (2d Cir. 2011). 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). "A complaint is also deemed to include any written instrument attached to it as an exhibit, materials incorporated in it by reference, and documents that, although not incorporated by reference, are integral to the complaint." L-7 Designs, Inc. v. Old Navy, LLC , 647 F.3d 419, 422 (2d Cir. 2011) (brackets and internal quotation marks omitted).

II. Standing

Ditech argues that Cohen lacks standing under Article III of the Constitution to bring this action. Because standing is a "threshold matter" in determining whether the district court had jurisdiction to hear and decide this case, Anderson Grp., LLC v. City of Saratoga Springs , 805 F.3d 34, 44 (2d Cir. 2015) (internal quotation marks omitted), we address standing at the outset of our analysis.

To satisfy the "irreducible constitutional minimum" of Article III standing, a plaintiff must demonstrate (1) "injury in fact," (2) a "causal connection" between that injury and the complained-of conduct, and (3) a likelihood "that the injury will be redressed by a favorable decision." Lujan v. Defs. of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal quotation marks omitted).

According to Ditech, Cohen lacks standing because he has alleged only a "bare [statutory] procedural violation, divorced from any concrete harm," which is insufficient to satisfy the injury-in-fact requirement under Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540,...