Kowalski v. Seterus, Inc., 2:16-cv-00160-JAW
| Decision Date | 09 January 2017 |
| Docket Number | 2:16-cv-00160-JAW |
| Parties | HENRY KOWALSKI, Plaintiff, v. SETERUS, INC., Defendant. |
| Court | U.S. District Court — District of Maine |
This case arises out of a series of communications regarding mortgage loan payments and insurance for property located in Maine that a debt collector sent to a mortgagor both after a judgment of foreclosure had been entered on the property and after the statutory redemption period had expired. The debt collector moves to dismiss the action, arguing that all of the communications were lawful and accurate. Because the Court concludes that the mortgagor has pleaded sufficient facts to establish that the debt collector violated several provisions of federal and state debt collection acts by attempting to collect money not owed by the mortgagor, the Court denies the motion to dismiss in its entirety.
On March 11, 2016, Henry Kowalski filed a complaint against Seterus, Inc. (Seterus) alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., the Maine Fair Debt Collection Practices Act (MFDCPA), 32 M.R.S. §§ 11001 et seq., and the Maine Consumer Credit Code (MCCC), 9-A M.R.S. §§ 1-101 et seq. Compl. (ECF No. 1). On April 28, 2016, Seterus moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Def.'s Mot. to Dismiss for Failure to State a Claim Upon Which Relief May be Granted (ECF No. 8). Mr. Kowalski subsequently amended his complaint on May 18, 2016, removing his claim that a violation of the MCCC is a per se violation of the Maine Unfair Trade Practices Act (UTPA), 5 M.R.S. §§ 205-A et seq. Pl.'s First Am. Compl. (ECF No. 9) (Am. Compl.). He objected to Seterus' motion to dismiss the original complaint on the same day. Pl.'s Obj. to Def.'s Mot. to Dismiss (ECF No. 10). Seterus then moved to dismiss the amended complaint on May 27, 2016 and withdrew its initial motion to dismiss four days later. Def.'s Mot. to Dismiss Pl.'s Am. Compl. for Failure to State a Claim Upon Which Relief May be Granted (ECF No. 13) (Def.'s Mot.); Notice of Withdrawal of Doc. (ECF No. 14). On June 16, 2016, Mr. Kowalski objected to the motion to dismiss the amended complaint. Pl.'s Obj. to Def.'s Mot. to Dismiss Pl.'s Am. Compl. for Failure to State a Claim Upon Which Relief May be Granted (ECF No. 15) (Pl.'s Opp'n). Seterus replied on July 1, 2016. Def. Seterus Inc.'s Reply Mem. in Further Supp. of its Mot. to Dismiss Pl.'s Am. Compl. for Failure to State a Claim Upon Which Relief May be Granted (ECF No. 17) (Def.'s Reply).
Henry Kowalski is an 84-year-old retired military veteran who lives in New Jersey with his wife Lois. Am. Compl. ¶ 12. Seterus, formerly known as Kyanite Financial Business Services, Inc., is a loan servicing entity incorporated in Delaware with a principal place of business in North Carolina. Id. ¶ 4.
On or about March 9, 2007, Mr. Kowalski executed and delivered to Aegis Wholesale Corporation (Aegis) a promissory note in the original principal amount of $408,750.00. Id. ¶ 13. To secure this note, Mr. Kowalski and his two sons, John C. Weber and Brad J. Kowalski, executed and delivered to Mortgage Electronic Registration Systems, Inc., acting as nominee for Aegis, a mortgage on Mr. Kowalski's real property located in Bryant Pond, Oxford County, Maine. Id. ¶ 14. The mortgage was assigned to OneWest Bank FSB (OneWest). Id. ¶ 16.
Mr. Kowalski originally bought the Bryant Pond property to move into after retirement. Id. ¶ 17. He and his wife began living in the property for several months each year. Id. ¶ 18. In or around 2009, Mr. Kowalski fell on difficult financial times and entered into a forbearance plan on the loan. Id. ¶ 19. He believed that he was still on the forbearance plan when OneWest initiated a foreclosure action on the property in October 2009; the action was later dismissed. Id. ¶ 20.
In June of 2013, OneWest filed a second foreclosure action against Mr. Kowalski and his two sons in the Maine District Court in South Paris. Id. ¶ 21. After failed attempts to resolve the foreclosure through the Foreclosure Diversion Program, Mr. Kowalski and his sons entered into a Stipulated Judgment of Foreclosure (Stipulated Judgment) on May 26, 2015. Id. ¶¶ 22, 23; id. Attach. 1 Stip. J. ofForeclosure and Order of Sale (Stip. J.). The Stipulated Judgment provided for a waiver of any deficiency on the loan and a release of personal liability on the note. Am. Compl. ¶ 22; Stip. J. at 2. The Kowalskis had 90 days to redeem the mortgage. Am. Compl. ¶ 25; Stip. J. at 2. They vacated the property in August 2015. Am. Compl. ¶ 26. On August 24, 2015, the 90-day redemption period expired; the Kowalskis did not redeem the property. Id. ¶¶ 27-28.
After the Judgment, Mr. Kowalski and his wife were under the impression that everything was taken care of with respect to the mortgage debt and Bryant Pond property. Id. ¶ 29. Then, in or around May 2015, Seterus began delivering to Mr. Kowalski monthly account statements alleging over $200,000 due on the loan. Id. ¶ 32. The notices that Seterus sent Mr. Kowalski differ from the types of notices Seterus typically sends customers advising them of reinstatement figures. Id. ¶ 68; id. Attach. 14 Sample Reinstatement Notice (Sample Notice). Seterus sent Mr. Kowalski statements dated July 16, 2015, August 17, 2015, September 16, 2015 and November 16, 2015. Am. Compl. ¶¶ 33, 36-38. Seterus sent the account statements to Mr. Kowalski's P.O. Box in Sumner, Maine and Mr. Kowalski's son Brad notified him of the statements each month. Id. ¶¶ 34, 39.
Additionally, on or around November 20, 2015, a representative from Seterus called Mr. Kowalski at his home in New Jersey in an attempt to collect on the mortgage loan debt. Id. ¶ 40. Mr. Kowalski explained that he believed the debt had been taken care of in court and that he had an attorney, but the Seterus representative claimed there was no attorney on record. Id. ¶¶ 41-42. Therepresentative explained that "if Mr. Kowalski did not pay the over $200,000 he owed on the loan, Seterus would foreclose on his home"; Mr. Kowalski feared this meant that Seterus could take his New Jersey home. Id. ¶¶ 43-44.
In severe distress over the potential loss of his New Jersey home and Seterus' continued attempts to collect on over $200,000, Mr. Kowalski contacted his son Brad. Id. ¶ 45. Brad attempted to contact Seterus to understand what was happening, but Seterus refused to speak with him. Id. ¶ 46. Mr. Kowalski and his sons were worried that something had gone wrong at court and the Stipulated Judgment had not gone through. Id. ¶ 47. Brad contacted their foreclosure attorney, Andrew Kull, and retained him again to deal with Seterus' attempts to collect on the mortgage loan. Id. ¶ 48. Attorney Kull delivered a cease and desist letter to Seterus on November 20, 2015 by facsimile and included a copy of the Stipulated Judgment; Seterus acknowledged receipt of the facsimile on the same day. Id. ¶¶ 49, 51. Mr. Kowalski was relieved and hoped that Attorney Kull's actions would stop Seterus from trying to collect on the mortgage loan. Id. ¶ 52.
However, Seterus sent Mr. Kowalski another account statement dated December 16, 2015, and Mr. Kowalski again feared that Seterus "would not stop until the debt was paid, either by him or by taking his New Jersey home." Id. ¶¶ 53-54. In a letter dated January 4, 2016 to Attorney Kull, Seterus stated that it would no longer call Mr. Kowalski or his sons, or send correspondence to them, except for those "legally required." Id. ¶ 56. Seterus asserted in the letter that Mr. Kowalski and his sons Id. Seterus sent another account statement dated January 18, 2016 and a statement dated January 22, 2016 providing a principal and escrow reconciliation directly to Mr. Kowalski. Id. ¶¶ 58, 59.
In February 2016, Mr. Kowalski retained Andrea Bopp Stark, his current counsel. Id. ¶ 60. Attorney Stark delivered a demand letter to Seterus dated February 3, 2016 alleging violations of UTPA, the FDCPA, and the MFDCPA. Id. ¶ 61. Seterus received the letter on February 8, 2016 but did not reply. Id. ¶¶ 62-63. Seterus sent another account statement to Mr. Kowalski, c/o Attorney Stark, dated February 16, 2016, and has continued to send communications regarding the mortgage loan to Mr. Kowalski, both directly and via his attorney, since March 11, 2016, the date Mr. Kowalski filed the complaint in this Court. Id. ¶¶ 64-67.
In addition to the account statements, Seterus sent a notice to Mr. Kowalski, c/o Attorney Stark, dated March 17, 2016 regarding lender placed insurance on the property that stated "SETERUS IS ATTEMPTING TO COLLECT A DEBT" and that the cost of the policy, $2,850.60, was assessed to Mr. Kowalski. Id. ¶ 69. The property sold at a foreclosure auction on March 29, 2016. Id. ¶ 70. On April 26, 2016, Seterus sent two separate notices directly to Mr. Kowalski regarding the lender placed insurance stating that the premium for the policy, $2,772.71, was charged to Mr. Kowalski. Id. ¶ 71.
As a result of Seterus' continued attempts to collect on the mortgage loan, Mr. Kowalski has become severely distressed. Id. ¶ 72. He and his wife believed thattheir New Jersey home was in jeopardy of being lost to foreclosure and became afraid to answer the door for fear it was the sheriff telling them to leave. Id. Mr. Kowalski became very agitated and has a heart condition that causes his heart to race when he is distressed. Id. ¶ 75. He also became very moody and reserved and stopped going out as much to eat or do yard work. Id. ¶ 76. He shut down and would sit inside quietly. Id. He was frustrated, anxious, and confused about why Seterus was...
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