Reese v. Ellis, Painter, Ratterree & Adams, LLP

• Citation: 23 Fla. L. Weekly Fed. C 986,678 F.3d 1211
• Decision Date: 01 May 2012
• Docket Number: No. 10–14366.,10–14366.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)
• Parties: Izell REESE, Raven Reese, Plaintiffs–Appellants, v. ELLIS, PAINTER, RATTERREE & ADAMS, LLP, Defendant–Appellee.

678 F.3d 1211

23 Fla. L. Weekly Fed. C 986

Izell REESE, Raven Reese, Plaintiffs–Appellants,

v.ELLIS, PAINTER, RATTERREE & ADAMS, LLP, Defendant–Appellee.

No. 10–14366.

United States Court of Appeals, Eleventh Circuit.

May 1, 2012.

David C. Ates, David Ates, PC, Atlanta, GA, John R. Ates, Ates Law Firm, PC, Alexandria, VA, for Plaintiffs–Appellants.

Christine L. Mast, Joseph Hall Wieseman, Hawkins, Parnell, Thackston & Young, LLP, Atlanta, GA, Robert B. Gilbreath, Hawkins, Parnell, Thackston & Young, LLP, Dallas, TX, for Defendant–Appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before DUBINA, Chief Judge, CARNES, Circuit Judge, and FORRESTER, ^* District Judge.

CARNES, Circuit Judge:

Izell and Raven Reese defaulted on a loan that they had secured by giving the lender a mortgage on their property. A law firm representing the lender sent the Reeses a letter and documents demanding payment of the debt and threatening to foreclose on the property if they did not pay it. The Reeses then filed a putative class action lawsuit against the law firm, alleging that its communication violated the Federal Debt Collection Practices Act, 15 U.S.C. § 1692e. The district court dismissed the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), finding that the law firm was not a “debt collector” under § 1692a(6) and that the letter and documents it sent were not covered by § 1692e. This is the Reeses' appeal.

I.

The Reeses currently live on a piece of property in Roswell, Georgia, that they purchased in 2004 with the help of a $650,000 loan from Provident Funding Associates, L.P.¹ To get that loan, the Reeses signed a promissory note and executed a security deed giving Provident a mortgage on their property. A few years later, the Reeses defaulted on the promissory note.

On June 3, 2009, Provident's law firm, Ellis, Painter, Ratterree & Adams LLP (“the Ellis law firm”), mailed the Reeses a collection or “dunning” notice, which consisted of a cover letter and three documents. The subject line of the cover letter states:

RE: Note, dated July 23, 2004, in the principal amount of $650,000.00 from Izell Reese and Raven Reese to Provident Funding Associates, L.P.

Security Deed, dated July 23, 2004, from Izell Reese and Raven Reese to Mortgage Electronic Registration Systems, Inc., as nominee for Provident Funding Associates, L.P., describing certain real property known as 4037 Thessa Cove, Roswell, Georgia.

The first paragraph of the letter describes Provident as the “Lender” and “current holder of the above-referenced Note ... and Security Deed,” and explains that the Ellis law firm represents Provident. The letter continues:

This letter is to advise you that your Note has been and is declared to be in default for non-payment and Lender hereby demands full and immediate payment of all amounts due and owing thereunder.

This letter is also to advise you that [Provident] intends to enforce the provisions of the Note and Security Deed relative to payment of attorney's fees. In accordance with Georgia law, you are hereby notified that unless you pay all amounts due and owing under the Note and Security Deed within ten (10) days of the date you receive this letter, reasonable attorney's fees will be added to the total amount for which collection is sought.

Unless your loan is satisfied in accordance with this demand, the foreclosure sale of the above-referenced real property will be conducted....

A partner of the Ellis law firm signed the letter. Under the signature is a disclaimer in bold font that says: “THIS LAW FIRM MAY BE ATTEMPTING TO COLLECT A DEBT ON BEHALF OF THE ABOVE–REFERENCED LENDER.”

The first of the three documents attached to the letter is a “NOTICE OF SALE UNDER POWER,” which states that Provident plans to sell the Reeses' property at a public auction on July 7, 2009. The second document is entitled “NOTICE REQUIRED BY THE FAIR DEBT COLLECTION PRACTICES ACT[,] 15 USC 1601 ET SEQ, AS AMENDED,” which explains that the debt described in the cover letter would be presumed valid unless the Reeses disputed its validity within thirty days. The third document explains that military service members have additional statutory rights to avoid foreclosure. Printed in big, bold letters at the bottom of the second document is this warning: “THIS LAW FIRM IS ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION OBTAINED BY US WILL BE USED FOR THAT PURPOSE.” (Emphasis added.) The bottom of the third document contains a similar warning: “THIS LAW FIRM IS ACTING AS A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT.”

A few months after receiving the dunning letter and documents, the Reeses filed in federal district court a complaint against the Ellis law firm for violations of the FDCPA. The complaint alleges that the law firm is a “debt collector,” that it “sought to collect debts” from the Reeses, and that its letter contains “false, deceptive[,] or misleading representation[s]” in violation of 15 U.S.C. § 1692e.² The Reeses filed the complaint and sought statutory damages on behalf of a proposed class consisting of the “more than five hundred” people who received similar letters and documents from the Ellis law firm. See15 U.S.C. § 1692k(a)(2) (providing that plaintiffs may recover statutory damages from a debt collector for any violation of the FDCPA). They attached to the complaint the entire contents of the dunning notice (the cover letter and the three attached documents).

The Ellis law firm moved to dismiss the complaint for failure to state a claim, arguing that the firm is not subject to the requirements of § 1692e because it is not a “debt collector” and sending the letter and other documents did not amount to debt collection activity but instead was merely an attempt to enforce a client's security interest. A magistrate judge issued a report recommending granting that motion to dismiss, which the district court did.

II.

We review de novo a district court's interpretation of a statute. United States v. Dodge, 597 F.3d 1347, 1350 (11th Cir.2010) (en banc). We also review de novo the grant of a motion to dismiss under Rule 12(b)(6), “accepting the allegations in the complaint as true and construing them in the light most favorable to the plaintiff.” Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir.2009). A complaint must state a facially plausible claim for relief, and “ ‘[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Wooten v. Quicken Loans, Inc., 626 F.3d 1187, 1196 (11th Cir.2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009)). Because the Ellis law firm's dunning letter and enclosed documents were attached to the Reeses' complaint as an exhibit, we treat them as part of the complaint for Rule 12(b)(6) purposes. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir.1997).

A.

We begin our analysis by highlighting the difference between a promissory note and a security interest. A promissory note is a contract evidencing a debt and specifying terms under which one party will pay money to another. See Black's Law Dictionary 1089 (8th ed. 2004) (defining “promissory note” as an “unconditional written promise, signed by the maker, to pay absolutely and in any event a certain sum of money either to, or to the order of, the bearer or a designated person”); see alsoGa.Code Ann. § 11–9–102(a)(64) (“ ‘Promissory note’ means an instrument that evidences a promise to pay a monetary obligation....”). By contrast, a security interest is not a promise to pay a debt; it is an interest in some collateral that a lender can take if a debtor does not fulfill a payment obligation. See Black's Law Dictionary 1384 (8th ed. 2004) (defining a “security” as “[c]ollateral given or pledged to guarantee the fulfillment of an obligation”). A mortgage is a type of security interest with real property as the collateral. See Black's Law Dictionary 1031 (8th ed. 2004); see alsoGa.Code Ann. § 44–14–30 (“A mortgage in this state is only security for a debt and passes no title.”).

This case involves both a promissory note and a security interest. The Ellis law firm's letter to the Reeses states that the Reeses had granted to Provident a “Note” for $650,000 (a promissory note) and had given Provident a “Security Deed” in their real property (a mortgage). Under that promissory note and security deed, Provident was entitled to foreclose on the Reeses' property if they defaulted on the promissory note.

B.

With the distinction between a promissory note and a security interest in mind, we turn to the question of whether the Reeses' complaint states a plausible claim for relief. The FDCPA prohibits a “debt collector” from using a “false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. That means in order to state a plausible FDCPA claim under § 1692e, 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.

The analysis is clearer if we start with the second element and evaluate whether the Reeses' complaint sufficiently alleges that the Ellis law firm's letter and enclosures are an attempt to collect a “debt” within the meaning of the FDCPA. That evaluation involves a question of statutory interpretation and “begins where all such inquiries must begin: with the language of the statute itself.” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989). The FDCPA broadly defines the word “debt”:

The term “debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or...