United States District Court, E.D. Pennsylvania
Austin McHugh United States District Judge
2012, Wells Fargo brought a mortgage foreclosure action
against Sonya Hoffmann, but lost following a bench trial. In
2016, it sued her again on the same debt, prompting Hoffmann
to file the present action, in which she charges (for a
second time) that Wells Fargo and its lawyers violated
various consumer protection laws. Before me now are Motions
to Dismiss filed by Wells Fargo and its co-defendants. The
main issue is whether the verdict in Hoffmann's favor in
the 2012 foreclosure action had a claim preclusive effect
that would render subsequent attempts to collect on the debt
unlawful. Because I find that Wells Fargo had a colorable,
albeit uncertain, legal basis for bringing the second
foreclosure action, and because the defendants in this case
refrained from abusive, oppressive, or unconscionable conduct
in their attempts at debt collection, all but two of
Hoffmann's claims fail.
Prior Litigation and Pending Foreclosure Action
August, 1998, Plaintiff Sonya Hoffmann borrowed $39, 784 from
Avstar Mortgage to purchase a house in Darby, Pennsylvania.
Accordingly, she executed a promissory note (Note) and a
mortgage (Mortgage) to Avstar, its successors and assigns.
Over the next twelve-odd years, the Mortgage and Note
frequently changed hands, until, after at least five
assignments, it came into the possession of Defendant Wells
legal troubles with Wells Fargo date back to May 2012, when
Wells Fargo accelerated her outstanding debt and brought a
foreclosure action against her in Pennsylvania state court
seeking recovery of $33, 076.30 (2012 Foreclosure). During
the 2012 Foreclosure trial, Wells Fargo's counsel,
Defendant Phelan Hallinan Diamond & Jones (PHDJ),
revealed for the first time that the previous holders of
Hoffmann's mortgage had made two unrecorded assignments
of that instrument to the Government National Mortgage
Associations (Ginnie Mae). This revelation led Hoffmann in
2013 to sue Wells Fargo and PHDJ in federal court. There, she
argued that the unrecorded assignments to Ginnie Mae deprived
Wells Fargo of valid title to the Mortgage and that Wells
Fargo and PHDJ's attempt to foreclose therefore violated
the Fair Debt Collection Practices Act (FDCPA) and the
Pennsylvania Unfair Trade Practices and Consumer Protection
March 2013, while Hoffmann's federal suit was pending,
the state court resolved the 2012 Foreclosure in her favor.
However, the court's decision was based on Wells
Fargo's failure to satisfy its evidentiary burden by
producing a witness at trial who could authenticate the
Note-a holding that shed no light on the legal significance
of the unrecorded assignments to Ginnie Mae.
federal action therefore moved forward.
2015, the case had proceeded to discovery and PHDJ had
retained Kenneth Goodkind, and his firm, Flaster/Greenberg.
In preparing PHDJ's defense, Goodkind deposed Hoffmann on
November 13, 2015. During her deposition testimony, Hoffmann
told Goodkind that she was working to connect buyers and
sellers of Treaty of Versailles-or
“Versailles”-Bonds.When Goodkind pressed for details,
Hoffmann revealed that she would soon receive “over
$100, 000” for her brokerage services. This prompted
the following exchange:
Q. Do you have any plans for that money?
Mr. Pearson [(Hoffmann's counsel)]: Objection, beyond the
scope of discovery.
Q. You can answer.
A. Yeah, to pay my bills.
Mr. Pearson: Objection.
Q. Do you intend to pay your mortgage arrears?
Q. Have you notified Wells about that?
Q. Have you notified anybody on the lender's side or
Phelan about that?
Q. And this could happen as soon as --- it could happen this
Am. Compl. Ex. 12 at *20.
January 2016, having heard nothing more from Hoffmann
regarding her Versailles Bond income, Goodkind sent an e-mail
to Hoffmann's lawyer, David Pearson. Under the heading
“PRIVILEGED AND CONFIDENTIAL SETTLEMENT COMMUNICATION,
” Goodkind wrote:
Your client mentioned at her deposition that she anticipated
receiving a six figure payment around the start of the new
year from the Treaty of Versailles bond work she does, and
that she would be able to use those funds to cure her
defaults . . . Please . . . let me know what she is willing
to offer in settlement.
Am. Compl. Ex. 3 at 3. Pearson responded that “in the
typical settlement, the defendant agrees to pay the
plaintiff, not the other way around, ” id. at
2, and the matter of Hoffmann's Versailles Bond income
eventually was dropped.
March 2016, with the 2013 federal action still unresolved but
entering its endgame, Wells Fargo sent Hoffmann a letter
titled “Notice of Intention to Foreclose” (Notice
Letter). The letter warned that Wells Fargo planned to again
initiate foreclosure proceedings unless Hoffmann tendered
within 30 days a lump-sum payment of $32,
351.63. When Hoffmann failed to cure her default
as directed by the Notice Letter, Wells Fargo made good on
2012, Wells Fargo retained PHDJ to bring a foreclosure action
against Hoffmann. PHDJ began by sending Hoffmann a letter
dated April 13, 2016 (Debt Validation Letter). In that
letter, PHDJ explained that it was a debt collector acting on
behalf of Wells Fargo, and listed Hoffmann's total
outstanding debt as $57, 619.91-the sum of her unpaid
principal balance and late charges, as well as interest and
escrow advances that had been accruing since July 2011. The
letter also warned that unless Hoffmann disputed the validity
of her debt, PHDJ would commence an in rem action to
foreclose on the Darby property. It does not appear that
Hoffmann submitted any dispute to PHDJ, and the latter filed
a foreclosure complaint on April 29, 2016 (2016
Wells Fargo's Monthly Billing Notices and Credit
the 2012 and 2016 Foreclosures sought to recover
Hoffmann's entire outstanding principal balance, Wells
Fargo continued to send Hoffmann monthly billing notices
following the commencement of both actions. Hoffmann submits
one such notice, dated June 16, 2016 (June Notice), as a
representative of the set. The June Notice lists monthly
scheduled payments of principal, interest, and escrow
advances in the amounts of $130.41, $134.27, and $581.59,
respectively. It further warns that these payments will be
added to the “Total payment due 7/01/16, ” which
is listed as $35, 466.71.
with these notices, at all relevant times, it was Wells
Fargo's practice to inform Equifax and other Credit
Reporting Agencies (CRAs) that Hoffmann had failed each month
to tender her scheduled mortgage payment. The CRAs duly
included a record of each missed payment on Hoffmann's
credit report. In early June 2016, Hoffmann sent Equifax a
“Request for Research Form, ” notifying it of a
dispute concerning the information on her credit report that
had been provided by Wells Fargo. In a section of the form
titled “Reason for Dispute, ” Hoffmann checked a
box labeled “other” and wrote “see attached
court ruling, ” meaning the decision in the 2012
Foreclosure. The Research Request Form thus made clear that
Hoffmann's dispute had something to do with the 2012
Foreclosure, but otherwise offered no insight into the nature
of her objections.
Equifax alerted Wells Fargo to the existence of
Hoffmann's dispute. In response, Wells Fargo verified
Hoffmann's account information and made a note reflecting
the fact that the information that it provided to Equifax was
in dispute. Equifax then sent Hoffmann a report summarizing
the resolution of her research request. Regarding the
information provided by Wells Fargo, the report explained:
We have researched the credit account. . . . The results are:
We verified that this item belongs to you. Additional
information has been provided from the original source
regarding this item. If you have additional questions about
this item please contact: Wells FARGO Home Mortgage, PO Box
10335, DES MOINES IA 50306-0335 Phone: (800) 288-3212
Am. Compl. Ex. 10.
The Present Action
previous federal action finally came to an end on August 2,
2016, when I entered summary judgment for PHDJ on all
remaining claims. With the ink barely dry on that Order,
Plaintiff initiated the present action on August 8, 2016.
Plaintiff now argues that the 2012 Foreclosure had a claim
preclusive effect that barred subsequent attempts to collect
on her debt. On this theory, she maintains that Goodkind
violated various provisions of the FDCPA and UTPCPL when he
tried to induce Plaintiff to settle her debt during and
shortly after her November 2015 deposition. Plaintiff brings
similar FDCPA and UTPCPL claims against PHDJ and Wells Fargo.
Plaintiff also argues that Wells Fargo misrepresented the
status of her debt, both by failing to notify Equifax and
other CRAs that the debt was in dispute following the 2012
Foreclosure, and by sending Plaintiff monthly notices even
after it had terminated her right to make monthly payments by
accelerating her debt. Finally, Plaintiff maintains that
Wells Fargo violated the Fair Credit Reporting Act because it
did not adequately investigate her dispute concerning the
information it provided to Equifax.
now move to dismiss Plaintiff's claims pursuant to Rule
12(b)(6). For the reasons that follow, Defendants'
Motions to Dismiss are granted in all respects, except as to
Plaintiff's claim against Goodkind and Flaster/Greenberg
arising under 15 U.S.C. § 1692g, and her claim against
Wells Fargo under § 1692e(8).
complaint is properly dismissed under Rule 12(b)(6) when it
fails “to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). In considering a
12(b)(6) motion, the court must first separate the factual
and legal elements of a claim, accepting as true all
well-pleaded facts while disregarding any legal conclusions.
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.
2009). The court must then “determine whether the facts
alleged in the complaint are sufficient to show that the
plaintiff has a ‘plausible claim for
relief.'” Id. (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009)).
enacted the FDCPA to “eliminate abusive debt collection
practices by debt collectors, ” and “to insure
that those debt collectors who refrain from using abusive
debt collection practices are not competitively
disadvantaged.” 15 U.S.C. § 1692(e).
To prevail on an FDCPA claim, a plaintiff must prove that (1)
she is a consumer, (2) the defendant is a debt collector, (3)
the defendant's challenged practice involves an attempt
to collect a ‘debt' as the Act defines it, and (4)
the defendant has violated a provision of the FDCPA in
attempting to collect the debt.
Jensen v. Pressler & Pressler, 791 F.3d 413, 417
(3d Cir. 2015). The parties seem to agree that Plaintiff is a
consumer within the meaning of the FDCPA, but they dispute
whether Plaintiff has satisfied the other three elements of
her FDCPA claims. Because Plaintiff's FDCPA claims vary
by defendant, I discuss separately her allegations against
Goodkind and Flaster/Greenberg, PHDJ, and Wells Fargo.
FDCPA Claims Against Goodkind and Flaster/Greenberg
FDCPA claims against Goodkind and his firm,
Flaster/Greenberg, arise from Goodkind's questions during
the November 13, 2015 deposition and from his follow-up
e-mails to Plaintiff's counsel in January 2016. Plaintiff
describes these actions as “conduct the natural
consequence of which is to harass, oppress, or abuse in
connection with the collection of a debt.” Am. Compl.
at 9 (quoting 15 U.S.C. § 1692d). Plaintiff also brings
claims under § 1692e, which prohibits debt collectors
from using “any false, deceptive, or misleading
representation or means in connection with the collection of
any debt”; and § 1692f, which prohibits the use of
“unfair or unconscionable means” to collect a
debt, including the “collection of any amount . . .
unless such amount is expressly authorized by the agreement
creating the debt or permitted by law.” Finally,
Plaintiff characterizes Goodkind's deposition questions
and follow-up e-mails as “initial communications”
within the meaning of § 1692g. As such, Plaintiff
maintains that Goodkind was required to send within five days
a written notice detailing various specified information
regarding the debt.
first argues that Plaintiff's Amended Complaint fails to
establish that he or Flaster/Greenberg engaged in any debt
collection activity, or were debt collectors within the
meaning of the statute. Lacking these requisite elements of
an FDCPA claim, Goodkind argues that Plaintiff's Amended
Complaint must be dismissed. I disagree.