Kaymark v. Bank of Am., N.A.
| Decision Date | 07 April 2015 |
| Docket Number | No. 14–1816.,14–1816. |
| Citation | 783 F.3d 168 |
| Parties | Dale KAYMARK, individually and on behalf of other similarly situated current and former homeowners in Pennsylvania, Appellant v. BANK OF AMERICA, N.A.; Udren Law Offices, P.C. |
| Court | U.S. Court of Appeals — Third Circuit |
Jonathan R. Burns, Esq., Michael P. Malakoff, Esq., Argued, Malakoff, Doyle & Finberg, Pittsburgh, PA, for Appellant Dale Kaymark.
Thomas L. Allen, Esq., Argued, Nellie E. Hestin, Esq., Reed Smith, Pittsburgh, PA, Marc A. Goldich, Esq., Andrew J. Soven, Esq., Reed Smith, Philadelphia, PA, for Appellee Bank of America, N.A.
Jonathan J. Bart, Esq., Argued, Wilentz, Goldman & Spitzer, Philadelphia, PA, for Appellee Udren Law Offices, P.C.
Before: FUENTES, FISHER and KRAUSE, Circuit Judges.
Dale Kaymark defaulted on a mortgage held by Bank of America, N.A. (“BOA”). On behalf of BOA, Udren Law Offices, P.C. (“Udren”) initiated foreclosure proceedings against Kaymark in state court. The body of the Foreclosure Complaint listed certain not-yet-incurred fees as due and owing, which Kaymark alleges violated several state and federal fair debt collection laws and breached the mortgage contract. Because we conclude that Kaymark has sufficiently pled that the disputed fees constituted actionable misrepresentation under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., we will reverse the District Court's order dismissing certain FDCPA claims against Udren but affirm its dismissal of all other claims.
Kaymark refinanced his home in Coraopolis, Pennsylvania, in December 2006, executing a note for $245,600 and granting BOA a mortgage. The mortgage was insured by Fannie Mae (“FNMA”). The terms of the mortgage state, in pertinent part:
App. 72a (¶ 14), 75a (¶ 22) (emphases added).
Kaymark experienced a drop in income in June 2011 and failed to make his mortgage payments. On August 1, 2011, BOA sent Kaymark an “Act 91 Notice” of pre-foreclosure delinquency pursuant to Pennsylvania's Housing Finance Agency Law, 35 P.S. § 1680.403c, which requires mortgage-holders considering foreclosure to send homeowners a notice as a prerequisite to initiating formal action. An Act 91 notice must, among other things, include an itemized breakdown of the total amount past due as of the date of the notice and inform the homeowner that he is entitled to thirty days plus three additional days for mailing to meet with a consumer credit counseling agency to attempt to resolve the delinquency. Id. Kaymark alleges his Act 91 Notice was improper by attempting to collect three months payment when, at the date of mailing, Kaymark was only two months in arrears, and by misrepresenting the time within which Kaymark had to meet with a credit agency as thirty days, instead of thirty-three days.
Over a year later, on September 13, 2012, Udren, on behalf of BOA, filed a verified Foreclosure Complaint against Kaymark in the Court of Common Pleas of Allegheny County, Pennsylvania. The body of the Foreclosure Complaint included an itemized list of the total debt, stating that the following items were due and owing as of July 12, 2012:
The above figures are calculated as of 07/12/2012[.] App. 47a.
Kaymark alleges that the $1,650 in attorneys' fees, $325 in title report fees, and $75 in property inspection fees (or $2,050 total) were not actually incurred as of July 12, two months before the foreclosure action was filed on September 13. Kaymark also alleges that the fees were improperly calculated on a fixed basis. Appellees retort that fixed fees are contemplated under the FNMA servicing guide, which sets the maximum foreclosure fee, or cap, for attorneys' fees at $1,650. See App. 85a–86a.
Kaymark contested the foreclosure action, which is still pending in the Allegheny County Court of Common Pleas. As such, Kaymark has never paid the disputed fees. The parties do not dispute that these fees were ultimately incurred in the course of the foreclosure action or that the fees were ultimately reasonable. See App. 6a n. 4.
In February 2013, Kaymark filed a complaint on behalf of himself and a putative class against BOA and Udren (collectively, “Appellees”) in the Court of Common Pleas of Allegheny County. In the original complaint, Kaymark alleged that Appellees violated the Pennsylvania Loan Interest and Protection Law (“Act 6”), 41 P.S. § 101 et seq., because the Foreclosure Complaint sought attorneys' fees which were not “actually incurred” upon commencement of the foreclosure action. Id. § 406. Appellees removed the case to the U.S. District Court for the Western District of Pennsylvania and filed motions to dismiss on the grounds that Kaymark's mortgage exceeded the maximum baseline figure to be governed under Act 6.
In response, Kaymark filed an amended complaint, asserting the following four counts on the bases of the alleged misrepresentations in the Foreclosure Complaint and/or Act 91 Notice: Count I, against BOA, for violating § 2270.4(b)(5)(ii), (v), (x), and (6)(i) of the Pennsylvania Fair Credit Extension Uniformity Act (“FCEUA”), 73 P.S. § 2270.1 et seq.; Count II, against Udren, for violating §§ 1692e(2)(A), (5), (10), and 1692f(1) of the FDCPA; Count III, against both BOA and Udren, for violating the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 P.S. § 201–1 et seq., by virtue of the violations of the FCEUA or by engaging in certain “unfair or deceptive acts or practices,” in violation of § 201–2(4)(v) and (xxi); and Count IV, against BOA, for common law breach of contract.
BOA and Udren again moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The Magistrate Judge issued a Report and Recommendation (“R & R”) to grant the motions on December 11, 2013. It reasoned that Kaymark's FDCPA claim that Appellees were not authorized to list not-yet-incurred flat fees in the Foreclosure Complaint was “rather hypertechnical,” App. 136a, and that “nowhere do the loan documents or any state or federal law prohibit listing attorneys' fees and other fixed costs at the time of filing the complaint, but are reasonably expected to be incurred,” App. 135a. It also explained that Kaymark “pled himself out of the state causes of action” because he did not show any actual loss or damage. App. 125a.
The District Court adopted the R & R and granted the motions to dismiss in their entirety, with prejudice, on March 31, 2014. Agreeing that the inclusion of not-yet-incurred fees was not prohibited by the mortgage contract or other state or federal laws, the District Court dismissed the FDCPA claim. It also concluded that Kaymark failed to demonstrate an actual loss as a result of the alleged misrepresentations, and, therefore, that he failed to state a claim under the UTPCPL and the FCEUA. For the same reasons (i.e., failure to plead actual loss), the District Court dismissed Kaymark's breach of contract claim against BOA. Kaymark timely appealed.
The District Court exercised jurisdiction over Kaymark's FDCPA claim under 28 U.S.C. § 1331 and supplemental jurisdiction over Kaymark's state-law claims under 28 U.S.C. § 1367. This Court exercises jurisdiction under 28 U.S.C. § 1291.
We exercise plenary review over a district court's grant of a motion to dismiss under Rule 12(b)(6). See Fleisher v. Standard Ins. Co., 679 F.3d 116, 120 (3d Cir.2012). “To survive a motion to dismiss, a complaint must contain sufficient factual allegations, taken as true, to ‘state a claim to relief that is plausible on its face.’ ” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). We accept all factual allegations as true and construe all inferences in the light most favorable to the plaintiff. Id.
Congress enacted the FDCPA in 1977 “to eliminate abusive debt collection practices by debt collectors.” 15 U.S.C. § 1692(e). The Court has repeatedly held that “[a]s remedial legislation, the FDCPA must be broadly construed in order to give full effect to these purposes,” Caprio v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 148 (3d Cir.2013), and, as such, we analyze the communication giving rise to the FDCPA claim “from the perspective of the least sophisticated debtor,” Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir.2008) (internal quotation marks omitted).
Kaymark alleges that, by attempting to collect fees for legal services not yet performed in the mortgage foreclosure, Udren violated 15 U.S.C. § 1692e —specifically, § 1692e(2)(A), (5), and (10) —which imposes strict liability on debt collectors who “use any false, deceptive, or misleading representation or means in connection with the collection of any debt,” and § 1692f(1) by attempting to collect “an[ ] amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.”
Bearing on these claims, the parties dispute the relevance of our intervening decision in McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240 (3d Cir.2014)...
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