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Muir v. AM Solutions, LLC

United States District Court, E.D. Pennsylvania

August 1, 2019

ADOLPH MUIR, et al., Plaintiffs
v.
AM SOLUTIONS, LLC, et al., Defendants.

          OPINION

          SLOMSKY, J.

         I. INTRODUCTION

         This case arises from alleged violations by Defendants of both the Fair Debt Collection Practices Act (“FDCPA”) and Pennsylvania's Loan and Interest Protection Act 6 of 1974 (“Act 6”) in connection with a prior mortgage foreclosure action filed in state court by Defendant AM Solutions (“AM Solutions”) against Plaintiffs Adolph and Doris Muir (“Plaintiffs”), an elderly married couple living in North Philadelphia. In the foreclosure action, AM Solutions alleged that Plaintiffs had defaulted on a home mortgage executed in 1983 for $6, 500. The home is located at 2141 North Woodstock Street, Philadelphia, Pennsylvania. Including interest and fees, AM Solutions contended in the foreclosure action that the amount owed rose dramatically over the years, and that Plaintiffs now owe $83, 635.77 on the mortgage. For their part, Plaintiffs deny signing the mortgage and submit that they have never met the mortgagee, have no memory of executing the mortgage, and have never made or received any form of payment under the terms of the alleged mortgage. (Doc. No. 13.)

         On June 18, 2018, Plaintiffs filed an Amended Complaint against AM Solutions and its attorneys. In this Complaint, Plaintiffs allege that AM Solutions, and its attorneys Defendant DwaldmanLaw, P.C. (“DWaldmanLaw”) and Defendant Law Offices of Damian G. Waldman (“LODGW”) are debt collectors that sent communications in violation of the FCDPA and Act 6 while attempting to collect the alleged debt. In Count I and II, Plaintiffs allege that Defendants violated the FDCPA. In Count III, Plaintiffs seek to remove the cloud on their property by quieting title on their home. In Count IV, Plaintiffs allege that a Notice of Intention to Foreclose sent by Defendant AM Solutions violated Section 403 of Act 6.

         On August 1, 2018, Defendants filed the present Motion to Dismiss the Amended Complaint. Defendants argued that (1) the Court should dismiss all claims for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), and (2) the Court should dismiss all claims against LODGW for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).[1] (Doc. No. 20.) On May 3, 2019, [2] Plaintiffs filed a Response in Opposition to the Motion to Dismiss for failure to state a claim. (Doc. No. 46.) On May 22, 2019, Defendants submitted a Reply in further support of the Motion to Dismiss. (Doc. No. 48.)

         The Motion to Dismiss for failure to state a claim is now ripe for disposition. For the reasons stated below, the Motion will be denied.

         II. BACKGROUND

         A. Factual Background

         Plaintiffs Adolph and Doris Muir have lived in their home at 2141 North Woodstock Street, Philadelphia, Pennsylvania for nearly forty-one years. (Doc. No. 13 at 1.) They purchased the home on July 5, 1978 for $4, 500 and have lived there since that date. (Id. at 5.) To the best of their recollection, they did not execute any mortgage to finance the purchase of the property. (Id. at 4.)

         On February 23, 2017, Plaintiffs received in the mail three separate documents sent by Defendant DWaldmanLaw and LDOGW on behalf of Defendant AM Solutions. (Doc. No. 40.)

         The first document was a Validation Notice.[3] The Validation Notice stated:

This firm may be considered a debt collector attempting to collect a debt. This notice is being sent to you in an attempt to collect the indebtedness referred to herein. Any information obtained from you will be used for that purpose. Pursuant to the Fair Debt Collection Act, 15 U.S.C. §§ 1692 et seq. (1977), you may dispute the validity of the debt or any portion thereof. If you do so in writing within thirty (30) days of receipt of this letter, the creditor will obtain and provide you with written verification thereof; otherwise the debt will be assumed to be valid. Likewise, if requested within thirty (30) days of receipt of this pleading, creditor will send you the name and address of the original creditor if different from above.

(Doc. No. 13 at 24.) The second document was a Notice of Intention to Foreclose[4] that stated:

         Dear Adolph and Doris Muir:

Dwaldmanlaw, P.C. represents AM Solutions, LLC (“Lender”), the holder of a Mortgage on your property located at: 2141 N. Woodstock St., Philadelphia, PA which Mortgage is in SERIOUS DEFAULT because your Loan has reached its maturity date of February 14, 1986. Your lender's records indicate you have not made the minimum monthly payments since September 14, 1998. Your account is past due as follows:
Unpaid installments: $61, 506.61
Unpaid fees: $3, 967.14
TOTAL DUE: $65, 473.65
*** If you do not cure this default within THIRTY (30) DAYS, you will become liable for reasonable attorney's fees not to exceed $175.00 plus costs. Our clients intends to exercise its right to accelerate the mortgage payments at that time. This means whatever is owing on the original amount borrowed will be considered due immediately and you may lose the chance to pay off the original Mortgage in monthly installments. If full payments of the amount of default is not made within THIRTY (30) DAYS, Lender also intends [to] start a lawsuit to foreclose on your mortgaged property.

(Id. at 25.) The third document was an Act 91 Notice[5] that claimed Plaintiffs had defaulted on monthly payments for nearly nineteen years and owed $65, 473.65. (Id. at 28.) The part of the notice discussing the nature of the default stated:

YOUR LOAN HAS REACHED ITS MATURITY DATE, AND YOU HAVE NOT MADE MONTHLY MORTGAGE PAYMENTS for the following months and the following amounts are now past due:
Monthly Payments from September 14, 1998 though and including February 14, 2017 as follows:
Monthly Payments of $278.31 due on September 14, 1998 through and including February 14, 2017 in the amount of $278.31.
TOTAL PAYMENT IN DEFAULT: $61, 506.51
UNPAID FEES: $3, 967.14
TOTAL AMOUNT PAST DUE:$65.473.65

(Id.)

         Plaintiffs were “surprised and confused” by the Notices because they had no memory of executing a mortgage on their home, nor did they recall receiving any money secured by the mortgage. (Doc. No. 13 at 6.) As a result, they did not send the requested payments to AM Solutions. On April 19, 2017, having received no payments, AM Solutions, through DWaldmanLaw and LODGW, filed the mortgage foreclosure action against Plaintiffs in the Court of Common Pleas of Philadelphia County.[6] See AM Solutions, LLC v. Muir, Civ. No. 02534 (Ct. Com. Pl. Philadelphia, filed Apr. 19, 2017).

         In the state court complaint, AM Solutions asserted that on February 14, 1983, Plaintiffs executed a mortgage on their home in favor of Harry Friedman, and that the mortgage was then recorded in the Office of the Recorder of Deeds of Philadelphia County on February 18, 1983. (Doc. No. 40-1 at 5-6.) The mortgage, which was attached to the Amended Complaint, states:

Whereas, the Mortgagor, in and by a certain Obligation in Writing, obligatory under the hand and seal of the Mortgagor, duly executed, bearing even date herewith, stands firmly bound unto the Mortgage in the sum of THIRTEEN THOUSAND ($13, 000) Dollars; lawful money of the United States of America, conditioned for the payment to the Mortgagee of the just sum of SIXTY-FIVE HUNDRED ($6, 500) Dollars lawful money as aforesaid, together with interest thereon at the rate of Fifteen (15%) per cent per annum in monthly installments of not less than $225.33 each beginning one month from the date thereof and a like amount on the same day of each and every month thereafter, the said monthly installment to be applied first to interest at the aforesaid rate on the principal sum or so much thereof as shall remained unpaid, and the balance of each monthly installment to be applied on account of the principal, and the balance of principal, together with accrued interest remaining unpaid, shall be paid at the expiration of three (3) years from the date thereof . . . .

(Doc. No. 13 at 35.)

         As evidenced above, the terms of the mortgage state that Harry Friedman, who is listed as the mortgagee's trustee, [7] agreed to loan Plaintiffs $6, 500, payable with 15% annual interest over three years through monthly payments of no less than $225.33 beginning on March 1, 1983. (Id.)

         Plaintiffs deny ever signing this mortgage. (Id. at 9.) They do not remember executing such a mortgage on their home, nor do they recall meeting an individual named Harry Friedman. (Id.) Moreover, Bernard Muir, Plaintiffs' “distant” cousin, who had witnessed the purported mortgage, “had no involvement in financial matters involving Plaintiffs.” (Id. at 8.)

         AM Solutions became the holder of the alleged mortgage through an assignment, which was recorded on August 15, 2016. (Id.) According to Plaintiffs, AM Solutions is a business that “acquires, manages, and liquidates defaulted residential mortgages” as well as “regularly engages in the collection of consumer debts by filing lawsuits in mortgage foreclosure[s].” (Doc. No. 13 at 3.) Defendants admit that AM Solutions, in its debt collection activities, purchases debt “in default for the purposes of collecting upon that debt.” (Doc. No. 20 ¶ 19.) AM Solutions engages in foreclosure litigation in Philadelphia County; it has filed ten mortgage lawsuits in 2017 alone. (Doc. No. 13 at 3.)

         As alleged in the Amended Complaint, DWaldmanLaw and LODGW “represent AM Solutions” and sent the Notices to Plaintiffs in “an attempt to collect a debt.” (Doc. No. 13 at 25-26). Plaintiffs allege DWaldmanLaw is “a collection and foreclosure law firm” and “regularly engages in the collection of consumers debts by filing lawsuits in foreclosure.” (Doc. No. 13 at 4.) Additionally, the Notice of Intention to Foreclose states that “this firm may be considered a debt collector attempting to collect a debt” and listed the firm's second email as “paforeclosures@dwaldmanlaw.com.” (Doc. No. 13. at 25-26.) The Amended Complaint further alleges that DWaldmanLaw has filed “no less than 16 mortgage foreclosure lawsuits on behalf of its clients.” (Id.) Ten of the sixteen lawsuits were filed on the behalf of AM Solutions. (Id.) The Notices were sent from LODGW's mailroom and contained LODGW's contact information. (Doc. No. 40-1.) Both documents prominently displayed LODGW's telephone and fax numbers. (Id.)

         In the state Foreclosure Complaint, AM Solutions alleged that Plaintiffs owed $83, 645.77, and provided the following chart to demonstrate how it arrived at that sum:

Unpaid Principal Balance

$13, 000

Accrued Interest from 2/14/1983 to 4/30/17 (the per diem interest accruing on this debt is $5.34 and that sum should be added each day after 4/30/17)

$66, 668.63

Fees at Charge-Off

$3, 967.14

TOTAL

$83, 635.77

         B. Plaintiffs File an FDCPA Claim in Federal Court

         On February 20, 2018, Plaintiffs initiated the present action by filing a three-count Complaint against AM Solutions and DWaldmanLaw. (Doc. No. 1.) In the Complaint, Plaintiffs alleged that the Validation Notice, the Notice of Intent to Foreclose, the Act 91 Notice, and the mortgage foreclosure suit violated the FDCPA. Plaintiffs also sought to quiet title on their home. (Id.)

         On June 18, 2018, Plaintiffs filed the Amended Complaint, which added the Law Offices of Damian G. Waldman (“LODGW”) as a Defendant. LODGW is a Florida corporation with offices at 10333 Seminole Boulevard, Units 1 and 2, Seminole Florida - the address listed on the civil cover sheet of the state foreclosure complaint. (Doc. No. 13.) In the Amended Complaint, Plaintiffs allege DWaldmanLaw and LODGW work in concert to collect consumer debts by filing foreclosure actions in Pennsylvania. (Id.) Also added to the Amended Complaint was a fourth Count, alleging that AM Solutions violated the Pennsylvania Loan Interest and Protection Law (“Act 6”). (Id.) Defendants responded to the Amended Complaint with the instant Motion to Dismiss. (Doc. No. 20).

         III. STANDARD OF REVIEW

         The motion to dismiss standard under Federal Rule of Civil Procedure 12(b)(6) is set forth in Ashcroft v. Iqbal, 556 U.S. 662 (2009). After Iqbal it is clear that “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to defeat a Rule 12(b)(6) motion to dismiss. Id. at 678; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). “To survive dismissal, ‘a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” Tatis v. Allied Interstate, LLC, 882 F.3d 422, 426 (3d Cir. 2018) (quoting Iqbal, 556 U.S. at 678). Facial plausibility is “more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Iqbal, 556 U.S. at 678). Instead, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (quoting Iqbal, 556 U.S. at 678).

         Applying the principles of Iqbal and Twombly, the Third Circuit in Santiago v. Warminster Township, 629 F.3d 121 (3d Cir. 2010), set forth a three-part analysis that a district court in this Circuit must conduct in evaluating ...


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