Beard v. Ocwen Loan Servicing, LLC
| Decision Date | 15 August 2016 |
| Docket Number | CIVIL NO. 1:14-CV-1162 |
| Parties | JAYNIE L. BEARD, Plaintiff v. OCWEN LOAN SERVICING, LLC, UDREN LAW OFFICES, P.C., and CATHY MOORE, Defendants |
| Court | U.S. District Court — Middle District of Pennsylvania |
We are considering a motion in limine. (Doc. 93). This case relates to a complaint filed by Plaintiff alleging that Defendants violated multiple sections of the Fair Debt Collection Practices Act (FDCPA). (Doc. 1). On September 24, 2015, following consideration of cross-motions for summary judgment, we granted Plaintiff summary judgment as to liability. (Doc. 51). The issue of damages is all that remains. On May 11, 2016, in anticipation of a damages jury trial, Defendants filed a joint motion to "preclude (1) any and all evidence concerning attorney's fees or costs [incurred by Plaintiff while defending a] mortgage foreclosure action/appeal and (2) the introduction of any and all documents and testimony concerning the foreclosure action." (Doc. 93). For the reasons discussed below, we will deny Defendants' motion.
In 2012, Plaintiff defaulted on her home loan for the second time in two years. Plaintiff's mortgage servicer, Defendant Ocwen Loan Servicing (Ocwen), offered Plaintiff a loan modification agreement, which she declined. (Doc. 50 at 2). Thereafter, in September 2013, Plaintiff contacted Ocwen and requested a reinstatement quote - the amount necessary to bring her mortgage out of default. (Id.). Ocwen provided its foreclosure counsel, Defendant Udren Law Offices, with the reinstatement figures, and Udren's legal assistant, Defendant Cathy Moore, prepared and faxed the quote to Plaintiff's attorney. (Id. at 2-3). The quote indicated that Plaintiff owed $6,418 in past due payments. (Id.). It also included over $1,500 in costs and fees that had not been incurred - namely, filing costs and fees from a state foreclosure action that had not been filed. Plaintiff did not pay the quoted amount. (Id. at 4).
On January 9, 2014, Ocwen, through Udren, filed a foreclosure action against Plaintiff in the Court of Common Pleas of Dauphin County. (Doc. 44-5). In April 2014, that action was dismissed on procedural grounds at the preliminary objection stage. (Id.). After an amended complaint was also dismissed, Ocwen appealed the dismissal. (Id.). The Superior Court of Pennsylvania affirmed. Ocwen Loan Servicing v. Beard, No. 641 MDA 2015, 2016 WL 764638 (Pa. Super. Ct. Feb. 26, 2016).
During the pendency of the state foreclosure action, Plaintiff filed her complaint in this court, alleging that Defendants' inclusion of unincurred fees and costs in the reinstatement quote violated the Fair Debt Collection Practices Act (FDCPA). (Doc. 1). Upon consideration of cross-motions for summary judgment, we agreed with Plaintiff, finding that Defendants violated 15 U.S.C. §§ 1692e(2)(A)-(B), (10) and 1692f(1). (Doc.51). Accordingly, we granted Plaintiff summary judgment as to liability, but we left the issue of damages to be resolved by a jury.
In an attempt to settle the damages issue, we held a conference on March 17, 2016. Prior to the conference, we ordered Plaintiff to provide a particularized statement of damages and attorneys' fees. (Doc. 77). At the conference, Defendants disputed, among other things, Plaintiff's calculation of attorneys' fees. They objected to the fact that Plaintiff's calculation of attorneys' fees included over one hundred hours expended in defense of the state foreclosure action and appeal. In response, Plaintiff's counsel asserted that the fees were recoverable pursuant to the FDCPA's civil liability provision.1 Specifically, he claimed that the fees were collectible under § 1692k(a)(3) - the FDCPA's fee-shifting provision - or alternatively, as actual damages under § 1692k(a)(1). Ultimately, the parties did not agree on the amount of damages and attorneys' fees, and we set trial for May 2016.
Because we expressed doubt during the settlement conference, Plaintiff's counsel, in anticipation of trial, requested that we rule on whether we would allow Plaintiff to submit the foreclosure attorneys' fees on a fee petition pursuant to the FDCPA's fee-shifting provision. If not, counsel wanted to pursue the fees as actual damages at trial.We informed Plaintiff's counsel orally that we would not permit him to submit the foreclosure attorneys' fees pursuant to the FDCPA's fee-shifting provision, see § 1692k(a)(3) (), but would allow him to submit the fees to the jury as evidence of actual damages. Plaintiff's counsel, therefore, included documentation of the foreclosure fees in his list of trial exhibits. Upon seeing the exhibits, Defendants objected and requested time to file a motion to exclude the foreclosure fees as evidence of actual damages. We granted their request. (Doc. 92).
Defendants make five arguments in support of their position: (1) the attorneys' fees are not recoverable as actual damages pursuant to the "American Rule"; (2) if the fees are indeed recoverable as actual damages, they can only be recovered if the filing of the state court action, itself, was the basis of the FDCPA violation - which is not the case here; (3) Plaintiff cannot recover the attorneys' fees because her complaint did not plead any facts related to the foreclosure action or list the fees in the prayer for relief; (4) Plaintiff is precluded from collecting the attorneys' fees because she did not disclose documents or witnesses related to the fees in her initial disclosures or during discovery; and (5) any evidence related to the foreclosure action should be excluded because it is irrelevant and the probative value is substantially outweighed by a danger of confusion, misleading the jury, and unfair prejudice. (Doc. 94; Doc. 99). We address the arguments in seriatim and find none availing.
Pursuant to the "American Rule," each party to a lawsuit bears its own attorneys' fees. Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 247 (1975). Yet, there are judicially and legislatively created exceptions to the American Rule. Id. at 256 (). Defendants recognize that the FDCPA contains a legislatively created exception for attorneys' fees, § 1692k(a)(3), but they argue the exception only applies to attorney fees expended in prosecuting the FDCPA violation, not attorneys' fees expended in state court actions. (Doc. 94 at 5-7). Therefore, they claim that the American Rule precludes Plaintiff's recovery of the foreclosure attorneys' fees as actual damages. (Id.).
Defendants' argument, however, is undercut by a consensus of district court opinions to the contrary. District courts have generally permitted attorneys' fees and costs incurred in state court proceedings to be recovered as actual damages of a FDCPA violation. Accord Walton v. Pereira, 995 F. Supp. 2d 437, 441 (W.D. Pa. 2014); Shepherd v. Law Offices of Cohen & Slamowitz, 668 F. Supp. 2d 579, 580 (S.D.N.Y. 2009); Evenson v. Palisades Collection, LLC, No. 2:13-cv-1226, 2014 WL 5089429 at *1-5 (S.D. Ohio Oct. 9, 2014); Sanko v. Riverwalk Holdings, LTD, No. 12cv1203, 2013 WL 3821553 at *3-4 (S.D. Cal. May 30, 2013); Hinderliter v. Legal Recovery Law Offices, Inc., No. 12cv2709, 2013 WL 3833982 at *1-2 (S.D. Cal. April 24, 2013); Armbruster v. Hecker, No. 3:06-cv-1149, 2010 WL 1643599 at *2 (M.D. Pa. April 22, 2010) (permitting out-of-pocketexpenses); Lowe v. Elite Recovery Solutions L.P., No. CIV S-07-0627, 2008 WL 324777 at *3 (E.D. Cal. Feb. 5, 2008); Owens v. Howe, No. 1:04-cv-152, 2004 WL 6070565 at *16 (N.D. Ind. Nov. 8, 2004).
We reconcile this consensus with the American Rule by returning to the purpose of the FDCPA. The FDCPA is a remedial statute. Douglass v. Convergent Outsourcing, 765 F.3d 299, 302 (3d Cir. 2014). To remedy deceptive debt collection practices, the FDCPA (1) creates a private right of action against debt collectors for violations of its provisions, (2) permits the recovery of actual damages, (3) permits the recovery of statutory damages, and (4) authorizes the recovery of attorneys' fees incurred while prosecuting a FDCPA violation. § 1692k. These civil liability and fee-shifting provisions, together, show an unmistakable congressional intent to make victims of abusive debt practices whole. Thus, we find it clear that Congress has created a legislative exception to the American Rule to permit the recovery of all attorneys' fees caused by FDCPA violations. Caprio v. Healthcare Revenue Recovery Grp., 709 F.3d 142, 148 (3d Cir. 2013) (). Therefore, while we agree with Defendants that the language of § 1692k(a)(3) speaks only to attorneys' fees incurred while prosecuting FDCPA violations - thereby preventing Plaintiff from recovering the foreclosure fees pursuant to a fee petition - we agree with our sister courts that attorneys' fees incurred in state court are recoverable as actual damages pursuant to § 1692k(a)(1).
Next, recognizing that district courts do permit the recovery of attorneys' fees as actual damages, Defendants argue alternatively that courts only permit therecovery of the fees if the filing of the state action was itself the violation of the FDCPA. (Doc. 99 at 4-8). Because the foreclosure action filed in the Court of Common Pleas of Dauphin County was not the basis of the FDCPA violations in this case, Defendants assert that Plaintiff cannot recover the attorneys' fees incurred in defending it. (Id.).
Defendants read too narrowly the district...
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