Jerry S. Estep, et al., Plaintiffs,
Manley Deas Kochalski, LLC, Defendant.
OPINION AND ORDER
JAMES L. GRAHAM, District Judge.
This is an action brought pursuant to the Fair Debt Collection Practices Act ("FDCPA"), by plaintiffs Jerry S. Estep and Amber Estep against defendant Manly Deas Kochalski, LLC, an Ohio law firm. Plaintiffs allege that on March 29, 2011, defendant filed a complaint in foreclosure against them on behalf of Wells Fargo Bank, N.A., in the Court of Common Pleas of Franklin County, Ohio, styled as Case No. 11-CV-004005. Complaint, ¶ 5. Plaintiffs further allege that on December 12, 2011, they received a form letter from defendant, attached as Exhibit A to the complaint in the instant case, advising them of the requirements for continued occupancy of the property upon transfer of title to the Department of Housing and Urban Development ("HUD"). Complaint, ¶ 6. Plaintiffs contend that this correspondence violated several provisions of the FDCPA. This matter is before the court on defendant's motion pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss the complaint for failure to state a claim for which relief may be granted.
I. Rule 12(b)(6) Standards
In ruling on a motion to dismiss under Rule 12(b)(6), the court must construe the complaint in a light most favorable to the plaintiffs, accept all well-pleaded allegations in the complaint as true, and determine whether plaintiffs undoubtedly can prove no set of facts in support of those allegations that would entitle him to relief. Erickson v. Pardus , 551 U.S. 89, 94 (2007); Bishop v. Lucent Technologies, Inc. , 520 F.3d 516, 519 (6th Cir. 2008); Harbin-Bey v. Rutter , 420 F.3d 571, 575 (6th Cir. 2005). To survive a motion to dismiss, the "complaint must contain either direct or inferential allegations with respect to all material elements necessary to sustain a recovery under some viable legal theory." Mezibov v. Allen , 411 F.3d 712, 716 (6th Cir. 2005). Conclusory allegations or legal conclusions masquerading as factual allegations will not suffice. Id.
While the complaint need not contain detailed factual allegations, the "[f]actual allegations must be enough to raise the claimed right to relief above the speculative level, " Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007), and must create a reasonable expectation that discovery will reveal evidence to support the claim. Campbell v. PMI Food Equipment Group, Inc. , 509 F.3d 776, 780 (6th Cir. 2007). A complaint must contain facts sufficient to "state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570. "The plausibility standard is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009). Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief. Id . Determining whether a complaint states a plausible claim for relief is "a contextspecific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. Where the facts pleaded do not permit the court to infer more than the mere possibility of misconduct, the complaint has not shown that the pleader is entitled to relief as required under Fed.R.Civ.P. 8(a)(2). Id.
Plaintiffs must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555; see also Ashcroft, 129 S.Ct. at 1949 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."); Association of Cleveland Fire Fighters v. City of Cleveland, Ohio , 502 F.3d 545, 548 (6th Cir. 2007).
II. Plaintiffs' Claims
Plaintiffs' claims are based on a form letter attached as Exhibit A to their complaint. This letter, dated December 12, 2011, is addressed to "OCCUPANT" at 388 Murray Hill Road North, Columbus, OH 43228, which is also the address where plaintiffs allegedly reside. See Complaint, ¶ 3. Below the address, the letter states "Re:" followed by the case caption and number of the foreclosure action in the common pleas court filed by Wells Fargo against plaintiffs, the FHA case number, the loan number, and defendant's file number. The text of the letter states:
The mortgage for the property in which you are living is about to be foreclosed (sometimes referred to as repossessed). We expect that ownership of the property will be transferred to Wells Fargo probably within the next 60 to 90 days. Shortly thereafter, it is probable that ownership will be transferred to the Secretary of Housing and Urban Development (HUD).
HUD generally requires that there be no one living in properties for which it accepts ownership unless certain conditions are met. We have enclosed a copy of those conditions in Attachment 1. These conditions should be read carefully to help you decide whether you wish to apply to continue living in the house.
If you wish to submit a request to continue to live in this property after HUD becomes owner, your written request must be received by HUD within 20 days of the date at the top of this letter. Oral requests are not permitted. We recommend that you use the enclosed Attachment 2, "Request for Occupied Conveyance, " in making your request as it gives HUD information it needs to make its decision. Also, complete boxes 1, 7 and 8 on Attachment 3, "Request for Verification of Employment, " and send it to HUD with your request. If you have additional information which you wish to include with your request you may write it on additional pages which can be attached to the form.... If you believe that you can meet the condition for temporary, permanent, or long-term illness or injury... you should say so in your request and include documentation supporting your claim.
Complaint, Ex. A. The letter goes on to advise that if "HUD approves your request for occupancy, it will be for a temporary period." The letter further states that if HUD denies the request, that denial may be appealed. The letter then states, under the heading "IMPORTANT NOTICE, " that "YOU MUST REPLY TO THE HUD OFFICE IN WRITING WITHIN 20 DAYS OF THE DATE ON THIS LETTER OR YOU WILL BE REQUIRED TO MOVE FROM THE PROPERTY." Complaint, Ex. A. Attached to the letter are HUD forms for requesting occupancy of a conveyed residence.
Plaintiffs allege that the HUD letter: 1) constituted a communication with plaintiffs by defendant knowing that plaintiffs were represented by counsel, in violation of 15 U.S.C. §1692c(a)(2); 2) threatened to take action that cannot be legally taken or that is not intended to be taken in connection with the collection of any debt, in violation of 15 U.S.C. §1692e(5); 3) falsely represented that within 60 to 90 days, ownership of the property would transfer to Wells Fargo, in violation of 15 U.S.C. §1692e(10); 4) falsely represented that if plaintiffs did not send in the enclosed documents within 20 days of the date of the letter, they would be required to move from their home, in violation of §1692e(10); and 5) threatened to take possession of plaintiffs' property when there was no present right to possession of the property, in violation of 15 U.S.C. §1692f.
III. Motion to Dismiss
A. HUD Letter Not a "Communication" Within Scope of the FDCPA
Defendant first argues that all of plaintiffs' claims under the FDCPA fail because the HUD occupant letter was not a "communication" within the scope of the FDCPA. The purpose of the FDCPA is "to eliminate abusive debt collection practices by debt collectors[.]" 15 U.S.C. §1692(e); Gionis v. Javitch, Block, Rathbone, LLP , 238 F.Appx. 24, 27 (6th Cir. 2007). Violations under the FDCPA are analyzed under the "least sophisticated consumer" test. Id. at 28. This test is objective, and asks whether there is a reasonable likelihood that an unsophisticated consumer who is willing to ...