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Capozio v. JP Morgan Chase Bank, NA

United States District Court, E.D. Pennsylvania

November 7, 2017

MARK CAPOZIO, et al. Plaintiffs




         Presently before this Court is the motion to dismiss filed by Defendant JP Morgan Chase Bank, NA (“Defendant” or “Chase”), pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6), in which Defendant seeks the dismissal of all of the federal and state claims asserted against it by Plaintiffs Mark Capozio and Linda Capozio (“Plaintiffs”). [ECF 13]. Plaintiffs have opposed the motion. [ECF 16]. The issues raised in the motion to dismiss have been fully briefed[1] and are now ripe for disposition. For the reasons stated herein, Defendant's motion to dismiss is granted, in part, and denied, in part.


         On December 27, 2016, Plaintiffs filed an amended class action complaint against Defendant essentially claiming that Defendant has uniformly engaged in illegal and deceptive business practices in violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692, et seq., the Pennsylvania Unfair Trade Practices and Consumer Protection Laws Act (“UTPCPL”), 73 Pa. Cons. Stat. §201-1, et seq., the Fair Credit Extension Uniformity Act (“FCEUA”), 73 Pa. Cons. Stat. §2270.1, et seq., (collectively, “Pennsylvania's Consumer Protection Laws”), the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §2605, et seq., and Section 524 of the United States Bankruptcy Code, specifically the discharge injunction.[2] [ECF 9]. In essence, Plaintiffs contend that Defendant failed to honor the parties' negotiated agreement that Plaintiffs' future mortgage and escrow payments would not include a sum for insurance premiums, and as a consequence, Defendant misapplied Plaintiffs' monthly mortgage payments resulting in the incurrence of late fees and other penalties.

         Defendant filed the underlying motion to dismiss and argues that Plaintiffs have failed to allege facts sufficient to sustain their pleading burden for each of their claims. [ECF 13]. When ruling on Defendant's motion to dismiss, this Court must accept, as true, all relevant and pertinent factual allegations in the amended complaint and construe these facts in the light most favorable to Plaintiffs. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). The salient allegations of the amended complaint are summarized as follows:

On January 23, 2008, Plaintiffs filed for Chapter 13 bankruptcy protection. (Am. Compl. at ¶10). On December 26, 2009, Citi Residential Lending, Inc., sold Plaintiffs' mortgage, note, and service rights to Defendant. (Id. at ¶11(d)-(e)). When the loan was transferred to Defendant, the loan was in default. (Id. at ¶91). On March 13, 2013, Plaintiffs' bankruptcy trustee sent Defendant a Notice of Cure Payment, “proclaiming that, unless Chase . . . challenged the discharge, the mortgage arrears would be deemed ‘cured, ' and, therefore, current.” (Id. at ¶18). Defendant did not respond to the notice. (Id.). Plaintiffs were discharged from bankruptcy on October 24, 2013. (Id. at ¶10).
By letter dated December 28, 2015, Defendant transmitted to Plaintiffs a separate loan modification agreement (the “Loan Modification”), which was subsequently edited by the parties, with such edits initialed. (Id. at ¶27, Exs. F-1 and F-3). The Loan Modification with the initialed edits was signed by the parties on December 30, 2015. (Id. at Ex. F-3). Plaintiffs contend that these documents evidence and/or memorialize the parties' agreement that Plaintiffs' future mortgage payments were not to include sums for insurance premiums to be escrowed.[3]
On April 1, 2016, and thereafter, Plaintiffs made monthly mortgage payments which did not include an amount for insurance premiums escrow. (Am. Compl. at ¶¶49-63). Defendant placed what it deemed to be the insufficient payments in “suspense” account, resulting in Plaintiffs' mortgage account to be, in effect, a month late. (Id. at ¶¶52-53). Defendant subsequently applied late charges to Plaintiffs' mortgage account. (Id. at ¶¶57, 59, 61, 63).
On March 10, 2016, Plaintiffs sent Defendant what Plaintiffs contend was a “Qualified Written Request” (“QWR”) under RESPA, to which Plaintiffs allege Defendant did not respond fully and timely. (Id. at ¶¶40, 43, Ex. N).


         A court may grant a motion to dismiss an action under Rule 12(b)(6) if the complaint “fail[s] to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When considering a Rule 12(b)(6) motion to dismiss, a court must “accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions.” Fowler, 578 F.3d at 210-11. The court must determine “whether the facts alleged in the complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.'” Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). The complaint must do more than merely allege the plaintiff's entitlement to relief: it must “show such an entitlement with its facts.” Id. (citations omitted).

         To determine the sufficiency of a complaint, “a court . . . must take three steps.” Connelly v. Lane Constr. Corp., 809 F.3d 780, 787 (3d Cir. 2016). First, a court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Id. (quoting Iqbal, 556 U.S. at 675). Second, the court must identify allegations that are merely legal conclusions “because they . . are not entitled to the assumption of truth.” Id. While a complaint need not assert detailed factual allegations, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. Third, a court should assume the veracity of all well-pleaded factual allegations and “then determine whether they plausibly give rise to an entitlement to relief.” Connelly, 809 F.3d at 787 (quoting Iqbal, 556 U.S. at 679).

         A court may determine that a complaint's factual allegations are plausible if the court is able “to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)) (alterations in original). In other words, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss under Rule 12(b)(6), “a plaintiff must allege facts sufficient to ‘nudge [his] claims across the line from conceivable to plausible.'” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 570). “Although the plausibility standard ‘does not impose a probability requirement, ' it does require a pleading to show ‘more than a sheer possibility that a defendant has acted unlawfully.'” Connelly, 809 F.3d at 786 (citations omitted). Reviewing the plausibility of the complaint is a “context-specific” inquiry and requires a court to “draw on its experience and common sense.” Iqbal, 556 U.S. at 663-64.


         As noted, Plaintiffs assert that Defendant violated various federal and state statutes, including the FDCPA, RESPA, and Pennsylvania's Consumer Protection Laws. In its motion to dismiss, Defendant argues that each of the claims should be dismissed because Plaintiffs have failed to allege facts sufficient to state a claim. Plaintiffs' claims and Defendant's arguments in opposition thereto are addressed infra.

         Plaintiffs' FDCPA Claims

         At Count I, Plaintiffs allege that Defendant has violated the FDCPA by engaging in various prohibited practices as a “debt collector.” Defendant moves to dismiss this claim as a matter of law on the basis that it is not a “debt collector” as the term is defined in the FDCPA because it is alleged to be the owner of the mortgage loan at issue and is not “in any business the principal purpose of which is the collection of any debts.” In light of the United States Supreme Court's recent decision in Henson v. Santander Consumer USA Inc., 137 S.Ct. 1718 (2017), which expressly abrogated the holding of Federal Trade Commission v. Check Investors, Inc., 502 F.3d 159 (3d Cir. 2007), this Court agrees with Defendant.

         At issue in Henson was whether Santander Consumer USA Inc., (“Santander”), which “purchased the defaulted loans from CitiFinancial” and then sought to collect on those loans, was a “debt collector” for purposes of the FDCPA. 137 S.Ct. at 1720. The Court of Appeals for the Fourth Circuit had ruled in Santander's favor, holding that Santander was not seeking to collect on debts “owed . . . another, ” as required to meet the statutory definition of a “debt collector, ” but that Santander “sought instead only to collect debts that it purchased and owned.” Id. at 1721. At the time, a circuit split existed on the issue, which included the Third Circuit's contrary decision in Federal Trade Commission, supra. The Supreme Court resolved the split ...

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