United States District Court, W.D. Pennsylvania
THOMAS E. OWENS and DONNA OWENS, Plaintiffs,
RESIDENTIAL CREDIT SOLUTIONS, INC., Defendant.
REPORT AND RECOMMENDATION
ROBERT C. MITCHELL, Magistrate Judge.
Plaintiffs, Thomas E. Owens and Donna Owens brought the present action against Defendant Residential Credit Solutions, Inc. ("RCS") on August 26, 2014. On October 20, 2014, RCS filed a motion to dismiss Plaintiffs' complaint. [ECF No. 9]. Plaintiffs responded to RCS's motion to dismiss on December 29, 2014 [ECF No. 13], and RCS submitted a reply on January 13, 2015. [ECF No. 15]. For the reasons that follow, it is respectfully recommended that RCS's motion to dismiss [ECF No. 9] be granted. It is specifically recommended that Plaintiffs' Fair Debt Collection Practices Act ("FDCPA") claim and Real Estate Settlement Procedures Act ("RESPA") claim be dismissed with prejudice and that the Court decline to exercise jurisdiction over the remaining state law claims.
Plaintiffs, Thomas E. Owens and Donna Owens brought this action on August 26, 2014 alleging that Defendant, Residential Credit Solutions, Inc. ("RCS") violated various provisions of the Fair Debt Collections Act ("FDCPA"), the Real Estate Settlement Procedures Act ("RESPA"), the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), and that RCS breached a prior settlement agreement between Plaintiffs and RCS's predecessor in interest, JPMorgan Chase in connection with the allegedly improper servicing and application of payments made by Plaintiffs to the mortgage securing their personal residence.
Because this case involves a prior lawsuit brought against RCS and others, the Court will provide a factual background of the prior lawsuit before discussing the claims presented in the current lawsuit.
1. Plaintiffs' 2012 Lawsuit 
Plaintiffs are owners of a personal residence located in Pennsylvania and obtained a mortgage secured by the property from EMC Mortgage Corporation in or about 1996. Plaintiffs filed a Chapter 13 Bankruptcy in the Western District of Pennsylvania on or about March 30, 2006. Sometime thereafter, JPMorgan Chase Bank ("JPMorgan") became the owner and servicer of Plaintiffs' mortgage loan. On October 27, 2011, the Bankruptcy Court entered an Order that cured Plaintiffs of "any and all monetary defaults as of the payment date for which the Trustee last made a distribution, and no additional interest, law fees, or penalties [could] be assessed for time period or payments due prior to that date." United States Bankruptcy Court Order of Oct. 27, 2011, No. 06:21929. In or about July 2011, Plaintiffs allege that they resumed making monthly mortgage payments, but JPMorgan informed Plaintiffs that the mortgage payments were insufficient because they failed to account for escrow charges, and on many occasions, their mortgage loan payments were returned without being credited to their account. On May 1, 2012, RCS became the servicer of Plaintiffs' loan, and JPMorgan remained the owner of the loan.
Plaintiffs commenced an action in this Court against RCS and JPMorgan on July 31, 2012 claiming that, inter alia, RCS violated the FDCPA. See Owens v. JPMorgan Chase, (W.D.Pa. Civ. Act. No. 12-1081). RCS filed a motion to dismiss Plaintiffs' claims against it, which was ultimately granted. The Court found that Plaintiffs' FDCPA claim against RCS failed because Plaintiffs could not allege that their mortgage was in default when RCS became the loan servicer. Specifically, in dismissing Plaintiffs' FDCPA claim against RCS, the Court found as follows:
[A] mortgage servicer will be considered a debt collector under the FDCPA if the mortgage was "already in default at the time the mortgage-servicer began servicing the loan." Ruff [v. America's Servicing Co., ] 2008 WL 1830182, at *5 [(W.D.Pa. April 23, 2008)].... Therefore, the operative question is whether Plaintiffs' mortgage was in default on May 1, 2012, the time that RCS took over servicing Plaintiffs' loan.
Plaintiffs provide only the threadbare legal conclusion that RCS is a "debt collector" as defined under the FDCPA. Plaintiffs have not alleged that their mortgage was in default at the time RCS became the loan servicer. To the contrary, Plaintiffs' bankruptcy was closed for approximately one year before RCS obtained the servicing rights, and Plaintiffs claim that once they resumed making the monthly mortgage payments in July 2011, the payments were "timely" and "in fact [Plaintiffs] made payments substantially greater than that provided for in their bankruptcy." Plaintiffs have failed to adequately allege that the mortgage was in default at the time RCS obtained the servicing rights; therefore, their claim that RCS violated the FDCPA is dismissed.
Owens v. JPMorgan Chase Bank, 2013 WL 2033149, at *4 (W.D.Pa. May 14, 2013). Plaintiffs thereafter filed a motion to amend their complaint, which was ultimately denied because the amendment did nothing but add "sweeping legal buzz words and conclusions[, ]" and amendment would be futile. Owens v. JPMorgan Chase Bank, 2013 WL 3343145, at *3 (W.D.Pa. July 2, 2013).
Plaintiffs and JPMorgan negotiated and entered into a settlement agreement sometime thereafter. On October 14, 2013, the parties filed a stipulation of dismissal pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii) and Plaintiffs dismissed its claims against ...