Green v. Specialized Loan Servicing LLC

• Decision Date: 11 March 2019
• Docket Number: No. 17-15681,17-15681
• Parties: PAUL A. GREEN, Plaintiff - Appellant, v. SPECIALIZED LOAN SERVICING LLC, Defendant - Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

PAUL A. GREEN, Plaintiff - Appellant, v. SPECIALIZED LOAN SERVICING LLC, Defendant - Appellee.

No. 17-15681

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

March 11, 2019

[DO NOT PUBLISH]

Non-Argument Calendar

D.C. Docket No. 6:16-cv-01298-RBD-KRS

Appeal from the United States District Court for the Middle District of Florida

Before WILLIAM PRYOR, BRANCH, and ANDERSON, Circuit Judges.

PER CURIAM:

Paul Green brought this action under the Fair Debt Collections Practices Act ("FDCPA"), arguing that Specialized Loan Servicing LLC ("SLS") violated the FDCPA because it attempted to collect mortgage debt beyond the five-year statute of limitations. Green stopped paying his mortgage in 2008 and has not made payments since then. Based on a default in 2008, in 2009 the lender accelerated the debt and filed a foreclosure action against Green, which was dismissed in 2011. In 2015, after Green's continued failure to make payments on the mortgage, the lender again accelerated the debt and filed another foreclosure action based on a second default. Green alleges that by seeking the full amount of debt, including the amount of payments that came due more than five years earlier, SLS engaged in unlawful debt collection of time-barred debts.

The case presents three primary issues, all in the context of potential FDCPA violations: (1) whether the 2015 Foreclosure Complaint filed by SLS constituted unlawful debt collection of time-barred amounts; (2) whether the 2017 Mortgage Statement sent to Green by SLS constituted unlawful attempted debt collection of time-barred payments; and (3) whether the district court erred by not addressing whether SLS had attempted unlawful debt collection of attorney's fees. For the following reasons, we affirm.

I. BACKGROUND

Paul Green executed a Note and Mortgage for approximately $180,000 at an adjustable rate in September 2006. Deutsche Bank was the lender, and SLS was the servicer of the mortgage. The Note provided that failure to pay the full amount of each monthly payment would constitute a default under the Note. In the event of adefault, the Note allowed the note holder to, at its discretion, give Green notice of acceleration, such that all sums secured by the mortgage would come due if the overdue amount was not paid by a certain date.

In 2008, Green stopped making payments on the loan even though he still owed $176,448.41, and did not resume making payments. In February 2009, Deutsche Bank filed a foreclosure action against Green based on a default in 2008. According to Green, the case was eventually involuntarily dismissed in 2011 for "Plaintiff's failure to file an amended complaint by the deadline set by the court."¹

In April of 2015, SLS sent Green a notice of default ("2015 Notice of Default") based on his missed payment of July 1, 2010, and subsequent payments. The Notice of Default also warned Green that continued failure to pay "may result in acceleration of the entire balance outstanding." As Green continued to be delinquent in his payments, Deutsche Bank (through its loan servicer, SLS) then filed another foreclosure suit against Green on June 30, 2015 ("2015 Foreclosure Complaint"), alleging that he defaulted by failing make the payment that was due July 1, 2010, and all subsequent payments, and that SLS was accelerating the note,meaning Green then owed the full remaining balance due to SLS. The foreclosure complaint asked the court to "ascertain the amount due to Plaintiff for principal and interest on the Mortgage and Note and for late charges, abstracting, taxes, expenses, and costs, including attorney's fees, plus interest thereon."

Green initially filed his Complaint against SLS in state court in Brevard County, Florida, on June 6, 2016. SLS then filed a notice of removal in July of 2016, and the district court stayed the case until the foreclosure case² against Green was dismissed in February 2017.³ SLS then moved to dismiss Green's Complaint, and Green filed an Amended Complaint.

Green's Amended Complaint alleged that SLS violated the FDCPA by trying to collect the debt owed under the mortgage even though some of the amount owed was supposedly barred from recovery under Florida's applicable five-year statute of limitations.

SLS moved to dismiss for failure to state a claim, arguing that the Amended Complaint failed as a matter of law. The district court agreed. In particular, the court cited to Garrison in holding that Green's argument regarding the Floridastatute of limitations for debt collection is "a matter to be raised as a defense in a foreclosure case—not as an affirmative claim under an FDCPA claim related to a mortgage." Garrison v. Caliber Home Loans, Inc., 233 F. Supp. 3d 1282, 1293-94 (M.D. Fla. 2017). The court also found that none of the requested payment amount was time-barred. Green appealed.

II. LEGAL STANDARD

This Court reviews de novo the decision of a district court to grant a motion for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Cinotto v. Delta Air Lines Inc., 674 F.3d 1285, 1291 (11th Cir. 2012). "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 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (quotations omitted)). This standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

III. DISCUSSION

The FDCPA prohibits certain debt collection methods, particularly "false, deceptive, or misleading representation or means in connection with the collection of any debt" and "unfair or unconscionable means" of debt collection. 15 U.S.C. § 1692e-f. "The inquiry is not whether the particular plaintiff-consumer was deceived or misled; instead, the question is whether the 'least sophisticatedconsumer' would have been deceived by the debt collector's conduct." Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1258 (11th Cir. 2014) (quotations omitted); see also LeBlanc, 601 F.3d at 1194 (quoting Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993)) ("'The least sophisticated consumer' can be presumed to possess a rudimentary amount of information about the world and a willingness to read a collection notice with some care."). The FDCPA subjects violators to civil liability. 15 U.S.C. § 1692k(a) (establishing liability to the affected consumer, consisting of actual damages, additional damages, and costs, including attorney's fees); see also Clomon, 988 F.2d at 1321-22 .

To overcome a motion to dismiss a FDCPA claim, a plaintiff must allege "among other things, (1) that the defendant is a 'debt collector' and (2) that the challenged conduct is related to debt collection." Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1216 (11th Cir. 2012). Threatening and initiating litigation to collect time-barred debt can result in a violation. Crawford, 758 F.3d at 1259 ("[W]e must examine whether [the debt collector's] conduct—filing and trying to enforce in court a claim known to be time-barred—would be unfair, unconscionable, deceiving, or misleading towards the least-sophisticated consumer.").

A. Statute of Limitations for Amount Owed

Green alleges that SLS violated the FDCPA by pursuing the 2015 foreclosure action and attempting to collect time-barred debt.⁴ The district court dismissed his claim "because the [Florida statute of limitations] does not reduce the amount that a mortgagee can recover in a foreclosure action that is brought within five years of the accrual date of the action." Green v. Specialized Loan Servicing LLC, 280 F. Supp. 3d 1349, 1356 (M.D. Fla. 2017). The primary issue in this appeal—a timely foreclosure action based on a default within the prior five years and filed after an acceleration clause is invoked—is whether a party can seek the amounts of installment payments due prior to five years before the action.

Compared to other debt, mortgage debt is "unique" in its nature, due to the "continuing obligations of the parties in that relationship." See Singleton v. Greymar Assocs., 882 So. 2d 1004, 1007 (Fla. 2004). "When the promissory note secured by the mortgage contains an optional acceleration clause [i.e., the entireamount of the loan comes due upon default], the foreclosure cause of action accrues, and the statute of limitations begins to run, on the date the acceleration clause is invoked or the stated date of maturity, whichever is earlier." Smith v. F.D.I.C., 61 F.3d 1552, 1561 (11th Cir. 1995); see also Kipnis v. Bayerische Hypo-Und Vereinsbank, AG, 202 So. 3d 859, 861 (Fla.), opinion after certified question answered, 844 F.3d 944 (11th Cir. 2016) (noting that the "statute of limitations runs from the time the cause of action accrues"). The Note contains just such an acceleration clause, and SLS gave Green notice of intent to accelerate the full amount of the note on April 8, 2015, and declared it accelerated in its foreclosure complaint of June 30, 2015.

The Florida Supreme Court has held that "if the mortgagee's foreclosure action is unsuccessful for whatever reason, the mortgagee still has the right to file subsequent foreclosure actions—and to seek acceleration of the entire debt—so long as they are based on separate defaults." Bartram v. U.S. Bank Nat'l Ass'n, 211 So. 3d 1009, 1020 (Fla. 2016) (quoting Dorta v. Wilmington Tr. Nat. Ass'n, No. 5:13-cv-185-Oc-10PRL, 2014 WL 1152917, at *6 (M.D. Fla. Mar. 24, 2014), aff'd sub nom. Dorta v. Citibank Nat'l Assoc. for Lehman Bros.-BNC Mortg. Loan Tr. 2007-3, 707 F. App'x 660 (11th Cir. 2017)). "[E]ach subsequent default accruing after the dismissal of an earlier foreclosure action creates a new cause of action." Id. "Therefore, with each subsequent default, the statute of limitations runsfrom the date of each new default providing the mortgagee the right, but not the...