Diaz v. First Marblehead Corp., Case No: 6:14-cv-1338-Orl-31TBS
| Decision Date | 03 November 2014 |
| Docket Number | Case No: 6:14-cv-1338-Orl-31TBS |
| Court | U.S. District Court — Middle District of Florida |
| Parties | JOCELYN Y. DIAZ, Plaintiff, v. THE FIRST MARBLEHEAD CORPORATION, NATIONAL COLLEGIATE TRUST and PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, INC., Defendants. |
Pending before the Court is Defendant Pennsylvania Higher Education Assistance Agency, Inc., d/b/a American Education Services' ("AES") Motion for Attorneys' Fees. (Doc. 17). Upon due consideration I respectfully recommend that the motion be granted.
The motion is based in part upon what occurred in the earlier filed case of Soto et al. v. Citimortgage, Inc. et al, Case Number 6:14-cv-263-28DAB. There, plaintiffs Maria and Raul Soto brought claims against Citimortgage, Inc., Gladstone Law Group, P.A. (the "Law Firm"), and attorney Nusrat Mansoor for violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§1692-1692o. (Case Number 6:14-cv-263-JA-DAB, Doc. 1). The Sotos alleged that the Law Firm and Mansoor, acting on behalf of Citimortgage, prepared and filed a residential mortgage foreclosure complaint against them. (Id.). The summons and complaint served on the Sotos' included a notice containing language they claimed violated the FDCPA. (Id.).
To prevail on a claim under the FDCPA, "a plaintiff must allege and prove that: '(1) the plaintiff has been the object of collection activity arising from consumer debt, (2) the defendant is a debt collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA.'" Locke v. Wells Fargo Home Mortg., No. 10-60286-Civ, 2010 WL 4941456, at *3-4 (S.D. Fla. Nov. 30, 2010). The FDCPA only applies to debt collectors. Khadija v. Fannie Mae, CIVIL ACTION FILE NO 1:12-cv-02519-WSD-AJB, 2012 WL 6681736, at *7 (N.D. Ga. Nov. 30, 2012) (citing Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1123 (11th Cir. 2004)).
The term "debt collector," as used in the FDCPA is a term of art. It means a person who uses an instrumentality of interstate commerce or the mails in a business in which the principal purpose is to collect debts or who regularly collects or attempts to collect debts owed or due another. 15 U.S.C. § 1692a(6). The servicer of a debt is not a "debt collector," under the Act. See Reese v. JPMorgan Chase & Co., 686 F. Supp. 2d 1291, 1307 (S.D. Fla. 2009) (citation omitted) (Under the FDCPA, "consumer's creditors, a mortgage servicing company, or an assignee of a debt are not considered 'debt collectors,' as long as the debt was not in default at the time it was assigned."); see also 15 U.S.C. §1692a(6)(F)(iii).
Citimortgage filed a motion to dismiss the Sotos' claim on the ground that it was the mortgage loan servicer and thus, as a matter of law, not a debt collector for purposes of the FDCPA. (Case Number 6:14-cv-263-JA-DAB, Doc. 20). Four days later, on April 22, 2014, the Sotos voluntarily dismissed their FDCPA claims against Citimortgage. (Case Number 6:14-cv-263-JA-DAB, Docs. 26-27, 29). The Sotos were represented by attorney N. James Turner. (Id.).
Plaintiff Jocelyn Y. Diaz employed Mr. Turner to file this lawsuit alleging that she obtained two student loans, both of which are serviced by AES.1 (Doc. 1, ¶¶ 19-20). She complained that from August 2012 through January 2013, AES phoned her daily in an attempt to collect a debt, and that it failed to offer her any repayment options, causing her to infer that AES wanted her to default on the loans. (Id., ¶¶ 38-39). In July, 2014, she sent a letter to AES, requesting, among other things, proof of the alleged debts, a complete account history, and AES' authorization to collect the debts. (Id., ¶ 42). AES wrote in response that it needed "the complete trade line account number(s) [Plaintiff] wished to be validated." (Id., at 14). Ms. Diaz' complaint alleged that the letter from AES was false, deceptive, and misleading. (Id., ¶¶ 44-48).
Ms. Diaz amended her complaint before it was served on AES. (Doc. 9). Her amended complaint alleges that "Defendant, AES, is the servicer of the two student loan [sic] referred to above and alleged to be owed by Plaintiff." (Id., ¶ 34). AES, like Citimortgage in the Soto case, motioned the Court to dismiss Ms. Diaz' amended complaint with prejudice on the ground that loan servicing companies are not "debt collectors" under the FCPA. (Doc. 13). In its motion, AES prayed for an award of its attorney's fees and costs. (Id. at 5). Five days after AES filed its motion, Ms. Diaz voluntarily dismissed this action without prejudice. (Doc. 15). Upon receipt of Plaintiff's notice, the Court entered its Order dismissing the case without prejudice, with "each party to bear its own fees and costs." (Doc. 16). Thirteen days after the Court's Order was docketed, AES filed the pending motion for an award of its attorney's fees pursuant toFED. R. CIV. P. 54(d), and 15 U.S.C. § 1692k(a)(3). Ms. Diaz has filed a memorandum in opposition to the motion. (Doc. 18).
The first issue to be decided is the effect of the Court's Order dismissing the case. (Doc. 16). AES seeks relief from this Order under FED. R. CIV. P. 60. (Doc. 17 at 2 n. 2). Ms. Diaz does not address this part of the motion in her memorandum. No answers or motions for summary judgment were filed in this case. A "plaintiff may dismiss an action without a court order by filing a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment[.]" FED. R. CIV. P. 41 (a)(1)(A)(i). "[A] Rule 41(a)(1) voluntary dismissal is effective immediately and requires no action by the district court." Univ. of S. Ala. v. Am. Tocacco Co., 168 F.3d 405, 409 (11th Cir. 1999). Voluntary dismissal under this rule is a "self-executing," "legally operative act of dismissal," and "moots all pending motions, obviating the need for the district court to exercise its jurisdiction." Id. at 409 (citing Nix v. Fulton Lodge No. 2 of the Int'l Ass'n of Machinists, 452 F.2d 794, 797-98 (5th Cir. 1971))2; D&W Health Servs., Inc. v. Sebelius, Civil Action No. 10-319-JJB-SCR, 2011 WL 2552522, at * 2 (M.D. La. June 27, 2011); Derr v. Swarek, 766 F.3d 430, 439-441 (5th Cir. 2014). When the district court enters a subsequent order related to the Rule 41(a)(1)(A)(i) notice, that order is superfluous. Derr, 766 F.3d at 4440-41; cf. Anago Franchising, Inc. v. ECO Bldg. Svcs. LLC, 677 F.3d 1272, 1275 (11th Cir. 2012); SmallBizPros, Inc. v. MacDonald, 618 F.3d 458, 461 (5th Cir. 2010); Boran v. United Migrant Opportunity Servs., 99 F. App'x 64, 66-68 (7th Cir.2004); Johnson v. Pringle Dev., Inc., No. 5:05-cv-37-Oc-10GRJ, 2006 WL 2189542, at *2 n. 9-10 (M.D. Fla. Aug. 1, 2006). A motion to dismiss a complaint made pursuant to Rule 12(b)(6) also does not terminate Plaintiff's right to dismiss under Rule 41. Frank v. Trilegiant Corp. Inc., No. 10 CV 5211 (DRH)(ARL), 2012 WL 214100, at *2 (E.D.N.Y. Jan. 24, 2012); Int'l Comms., Inc. v. Rates Tech, Inc., No. CV 88-0377, 1988 WL 49214, at *1 . So I conclude that the Order was unnecessary and does not bar AES' motion. If the Court disagrees, then I respectfully recommend that it grant AES relief from the Order pursuant to Rule 60.
Section 1692k(a)(3) of the FDCPA provides that the Court may award a defendant its reasonable attorneys' fees and costs upon a finding that the action was brought in bad faith and for the purpose of harassment. 15 U.S.C. § 1692k(a)(3). Ms. Diaz' failure to state a claim against AES upon which this Court could have granted relief "does not equate to a finding that she proceeded in bad faith and for the purpose of harassment by bringing this claim." Heald v. Ocwen Loan Svcng, LLC, No. 3:13-cv-993-J-34JRK, 2014 WL 4639410, at *6 n.16 (M.D. Fla. Sept. 16, 2014). Bad faith is found where "a plaintiff both knew that his or her claim was meritless and pursued it with the purpose of harassing the defendant." Montero-Hernandez v. Palisades Collection, Inc., No. 6:12-cv-1736-Orl-22KRS, 2014 WL 505119, at *5 (M.D. Fla. Feb. 7, 2014). The Eleventh Circuit has said that "a finding of bad faith is warranted where an attorney knowingly or recklessly pursues a frivolous claim ..." Id. (citing Schwartz v. Millon Air, Inc., 341 F.3d 1220, 1225-26 (11th Cir. 2003)).
When Mr. Turner prepared and filed Ms. Diaz' complaint and amended complaint he alleged that AES was the servicer of the loans in question. The general rule is "that aparty is bound by the admissions in his pleadings." Best Canvas Prods. & Supplies, Inc. v. Ploof Truck Lines, Inc., 713 F.2d 618, 621 (11th Cir. 1983). Based on his experience in the Soto case, Mr. Turner knows loan servicers are not debt collectors for purposes of the FDCPA. This leads me to conclude that he knew his client's claim was frivolous and still chose to pursue it. This is sufficient in my view to show that the claim against AES was filed in bad faith and for purposes of harassment, or for some other improper purpose. Therefore, I respectfully recommend that the Court find AES is entitled to recover its reasonable attorney's fees pursuant to 15 U.S.C. § 1692k(a)(3).
The general rule is that clients are responsible for the acts and omissions of the attorneys they select to represent them. The United States Supreme Court has observed that:
Petitioner voluntarily chose this attorney as his representative in the action, and he cannot now avoid the consequences of the acts or omissions of this freely selected agent. Any other notion would be wholly inconsistent with our system of representative litigation, in which each party is deemed bound by the acts of his lawyer-agent and is considered to have notice of all facts, notice of which can be charged upon the attorney.
Link v. Wabash R&R Co., 370 U.S. 626, 633-34 (1962) (internal quotation and...
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