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Pearson v. LaSalle Bank

June 9, 2009

RUTH E. PEARSON
v.
LASALLE BANK, ET AL



The opinion of the court was delivered by: Goldberg, J.

MEMORANDUM AND ORDER

Plaintiff, Ruth E. Pearson, has brought suit under the Fair Debt Collections Practices Act (hereinafter "FDCPA") against LaSalle Bank, EMC Mortgage Corporation (hereinafter "EMC"), Mortgage Electronic Registration Systems, Inc. (hereinafter "MERS"), and the law firm Grenen & Birsic, P.C. and individual shareholders of Grenen & Birsic (hereinafter collectively referred to as "Grenen & Birsic"). Plaintiff alleges that the Defendants made false, misleading and deceptive representations in violation of the FDCPA in their commencement of a mortgage foreclosure action. Grenen & Birsic have filed a Motion to Dismiss, which, for the reasons set forth below, will be granted.

I. FACTS SET FORTH IN THE FDCPA COMPLAINT

On July 23, 2004, Plaintiff entered into a mortgage agreement with MERS and Decision One Mortgage Company.*fn1 Thereafter, the mortgage was assigned to LaSalle Bank. The complaint next alleges that: "Defendant Grenen & Birsic was retained by Defendant EMC to collect from Plaintiff, on behalf of Defendant LaSalle, on the note and mortgage." (FDCPA Complaint, ¶ 11). While somewhat vague, we understand this to mean that EMC was LaSalle's agent regarding the collection of this debt, and that EMC in turn hired Grenen & Birsic to initiate a collection suit.

On June 15, 2007, Grenen & Birsic filed a mortgage foreclosure action against Plaintiff in the Chester County Court of Common Pleas. After Plaintiff objected to the original foreclosure complaint, Grenen & Birsic filed an amended foreclosure complaint on August 16, 2007. (For purposes of clarity, we will refer to the amended foreclosure complaint filed in Chester County as "the foreclosure complaint," while the complaint before this Court will be referred to as "the FDCPA Complaint"). The foreclosure complaint filed by Grenen & Birsic essentially forms the basis for Plaintiff's FDCPA claims.

According to Plaintiff, the foreclosure complaint contains numerous inaccuracies and misrepresentations as follows: The foreclosure complaint incorrectly stated that Grenen & Birsic represented LaSalle when, in fact, they represented EMC; the foreclosure complaint listed EMC's address in place of LaSalle's address; the foreclosure complaint was verified by an employee of EMC rather than an employee of LaSalle; the assignment attached to the foreclosure complaint, which transferred the mortgage and note from MERS to LaSalle, was executed on July 18, 2007 by an employee of EMC, although the assignment identified the employee as working for MERS; the assignment was backdated to December 29, 2004; and the attached Act 91 Notice had been sent by EMC, which was not the mortgagee or lender.*fn2 (FDCPA Complaint, ¶¶ 12, 15, 17-25, 27-30).

Plaintiff filed the FDCPA Complaint against LaSalle, EMC, MERS and Grenen & Birsic on April 21, 2008, in the Chester County Court of Common Pleas. The FDCPA complaint alleges four counts: (1) violations of the Fair Debt Collection Practices Act; (2) violations of the Pennsylvania Fair Credit Extension Uniformity Act; (3) violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law; and (4) a claim for counsel fees under 42 Pa. C.S. § 2503(9). On May 16, 2008, EMC removed the case to federal court. Defendants MERS, EMC and LaSalle subsequently filed answers to the Complaint, and on October 9, 2008, Grenen & Birsic filed the Motion to Dismiss before the Court.

II. STANDARD OF REVIEW F.R.C.P. 12(b)(6)

When ruling on a motion to dismiss, a court must accept the facts pleaded in the complaint as true and construe them in the light most favorable to the plaintiff. Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir. 2000). A court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984).

III. FAIR DEBT COLLECTION PRACTICES ACT ("FDCPA"), 15 U.S.C. § 1692, et seq.

The FDCPA was intended to "eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). "The [FDCPA] provides a remedy for consumers who have been subjected to abusive, deceptive, or unfair debt collection practices by debt collectors." Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379, 400 (3d Cir. 2000). "Among the practices prohibited is the use of 'any false, deceptive or misleading representation or means in connection with the collection of any debt.'" Zimmerman v. HBO Affiliate Group, 834 F.2d 1163, 1167 (3d Cir. 2000) (quoting 15 U.S.C. § 1692e). To determine whether or not a defendant's communications were false, deceptive or misleading, courts apply the "least sophisticated consumer" standard, which is intended to ensure that the FDCPA protects all consumers, the gullible and the shrewd. Wilson v. Quadramed Corp., 225 F.3d 350, 354 (3d Cir. 2000).

Grenen & Birsic first argue that the cause of action against them under the FDCPA should be dismissed because any misrepresentations made by the other defendants should not be imputed to them. They also assert that the effect of these misrepresentations was de minimis.

A close reading of the Complaint reflects that there are allegations of misrepresentation levied directly against Grenen & Brisic. Indeed, the FDCPA Complaint states that the firm purported to represent LaSalle when they actually represent EMC. Further, in paragraph thirty-two (32) of the FDCPA Complaint, Plaintiff alleges "[a]t all times relevant hereto, in connection with the alleged note and mortgage, [Grenen & Birsic] were operating with their client or clients' full approval and authority and kept their client or clients fully informed of all actions." Viewing the FDCPA Complaint in the light most favorable to Plaintiff, these claims tend to refute Grenen & Birsic's assertion that the allegations of fraud were levied against other defendants and are not imputable to them.

Moreover, precedent cited by Grenen & Birsic does not support their argument that allegations of misrepresentations should not be imputed to them. The main case cited by Grenen & Birsic, Ahmed v. I.C. System, Inc., 2005 WL 3533111, *5 (W.D. Pa. Dec. 20, 2005), does not deal with a debt collector passing along incorrect information, but rather states that unlawful action by the creditor (in that case, improperly contacting a credit bureau) cannot be imputed to the debt collector. The other case cited by Grenen & Birsic, Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1032 (6th Cir. 1992), deals with the passing along of incorrect information, but in the context of a motion for summary judgment, ...


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