Amelina v. Manufacturers and Traders Trust Co.

          ORDER

          WILLIAM Q. HAYES, Judge.

         The matters before the Court are (1) the Motion to Dismiss Plaintiffs Third Amended Complaint (ECF No. 66) filed by Defendant The Wolf Law Firm ("Wolf), (2) the Motion to Dismiss Plaintiff s Third Amended Complaint (ECF No. 67) filed by Defendant Safeguard Properties, LLC ("Safeguard"), and (3) the Motion to Dismiss Plaintiff s Third Amended Complaint (ECF No. 68) filed by Defendant Manufacturers and Traders Trust Company aka M&T Bank ("M&T").

         I. Background

         On August 13, 2014, Plaintiff Victoria Amelina and Plaintiffs A.A., D.S., and B. S., each minors by and through their Guardian Ad Litem, Victoria Amelina, initiated this action by filing a Complaint in this Court. (ECF No. 1). On October 30, 2014, the Court issued an Order granting the joint motion for leave to file a First Amended Complaint, and the proposed First Amended Complaint ("F AC") (ECF No. 12) became the operative pleading. (ECF No. 13).

         On March 12, 2015, the Court granted Defendants' motions to dismiss (ECF Nos. 18, 20, 28). (ECF No. 35). The Court concluded that Plaintiffs FAC failed to allege sufficient facts to state a claim under the Fair Debt Collection Practices Act ("FDCPA") against any of the Defendants.

         On June 30, 2015, the Court issued an Order granting Plaintiffs' Motion for Leave to File a Second Amended Complaint. (ECF No. 46). On June 30, 2015, Plaintiffs filed a Second Amended Complaint ("SAC"). (ECF No. 47).

         On November 17, 2015, the Court granted Defendants' motions to dismiss (ECF Nos. 48, 49, 50). (ECF No. 57). The Court concluded that Plaintiffs failed to allege facts to show that the activities of Defendant Wolf or Defendant Safeguard constituted debt collection under the FDCPA and therefore failed to state a federal claim against Defendant Wolf or Defendant Safeguard. The Court concluded that the SAC did not allege sufficient facts to establish that Defendant M&T's principal business purpose was debt collection or that M&T regularly collects debts owed to another entity and therefore failed to state a federal claim against M&T. The Court declined to exercise supplemental jurisdiction over Plaintiffs' state law claims.

         On February 3, 2016, the Court issued an Order granting Plaintiffs' Motion for Leave to File a Third Amended Complaint. (ECF No. 64). On February 3, 2016, Plaintiffs filed the Third Amended Complaint ("TAC"), which is the operative pleading in this case. (ECF No. 65).

         On February 17, 2016, Defendant Wolf filed a motion to dismiss the TAC. (ECF No. 66). On February 22, 2016, Defendant Safeguard filed a motion to dismiss the TAC. (ECF No. 67). On February 22, 2016, Defendant M&T filed a motion to dismiss the TAC (ECF No. 68). On March 7, 2016, Plaintiffs filed an opposition to Defendant Wolfs motion. (ECF No. 70). On March 14, 2016, Plaintiffs filed an opposition to Defendant Safeguard's motion. (ECF No. 72). On March 14, 2016, Plaintiffs also filed an opposition to Defendant M&T's motion. (ECF No. 73). On March 14, 2016, Defendant Wolf filed a reply. (ECF No. 71). On March 18, 2016, Defendant Safeguard filed a reply. (ECF no. 74). On March 21, 2016, Defendant M&T filed a reply. (ECF No. 75).

         II. Allegations of the Complaint

         "Plaintiff Victoria Amelina entered into an Adjustable Rate Note ("Note") and Deed of Trust to purchase a home on April 23, 2010 with RPM Mortgage Company for Bank of America." Id. ¶ 66. "[O]n or about February 1, 2013, Victoria defaulted on the Note by failing to make payments ... and continued to remain in default...." Id. ¶ 71. On April 19, 2013 (77 days after the loan went into default), Bank of America sent a Notice of Intent to Accelerate and Foreclose to Plaintiff Victoria...." Id. ¶ 73. [O]n July 5, 2013 ... Bank of America informed Plaintiff Victoria that her loan was in default, stating, 'The loan is in serious default because the required payments have not been made.'" Id. ¶ 75.

On July 31, 2013 ... the alleged debt was assigned, placed, or otherwise transferred, to Lakeview Loan Servicing who subsequently assigned, placed, or otherwise transferred the debt to M&T Bank for collection. Victoria's Note was transferred . . . along with approximately 24, 000 other defaulted loans in the last few days of July 2013.

Id. ¶76.

On or about July 25, 2013, M&T Bank mailed a letter to Victoria The letter expressed that "Bank of America will stop accepting payments on August 1, 2013'; and '[M&T Bank] will begin accepting payments from [Plaintiff] effective August 2, 2013. Please send all payments on or after that date to [M&T Bank]."

Id. ¶¶ 78-79. "On August 2, 2013, Defendant M&T Bank acquired Plaintiff Victoria's defaulted loan ...." Id. ¶77.

         "M&T Bank took on this defaulted residential mortgage in order to make a profit This loan was one of the thousands of loans that M&T Bank has acquired over the years." Id. ¶22. "In the recent past, Defendant M&T Bank has collected thousands, and perhaps hundreds of thousands, of these defaulted consumer loans." Id. ¶ 25. "The volume of consumer loans collected by M&T Bank is enormous, with more than 24, 000 defaulted consumer loans originating in late July of 2013 alone from such banks as Bank of America." Id. ¶26. "Defendant M&T Bank maintains an active collections department that routinely collects on defaulted mortgage accounts." Id.¶ 27.

Once defaulted loans are acquired . . . M&T Bank begins its efforts to collect on the defaulted loan by sending letters and initiating telephone calls on a monthly basis, if not daily. In nearly all correspondence from M&T Bank to Plaintiff Victoria, M&T Bank refers to itself as a debt collector and/or its efforts as an effort to collect on a debt....

Id. ¶ 28. "Defendant M&T Bank accepted for service Plaintiffs defaulted loan after it was 182 days in default as defined by the mortgage note" Id.¶ 29. "M&T Bank . . .regularly and directly collects] or attempt[s] to collect debts asserted to be owed or due to another by purchasing and or accepting for collection defaulted residential loans in bulk and subsequently collecting on those loans in their effort to collect from their collection practices." Id.¶31. "[I]n its effort to collect from Plaintiff this defaulted personal loan for this California residential property, M&T Bank hired ... Defendant Wolf Law Firm, because it specializes in such defaulted debts." Id. ¶ 36. "Subsequently . . . Wolf hired another Company that specializes in assisting debt collection law firms like Wolf in the collection of these types of defaulted residential loans. This company is Defendant Safeguard Properties, LLC." Id. ¶ 46.

         "Plaintiff began receiving collection letters from M&T Bank." Id.¶80. An "August 14, 2013 letter, stated, in part: 1) M&T Bank was now servicing Victoria's mortgage; 2) The amount of debt in connection with the mortgage was '$236, 704.14'; 3) Pursuant to the FDCPA, Victoria had thirty days to dispute the amount of debt and request a verification of the alleged debt; and 4) The name of the creditor to whom the debt was owed to was a company called 'Lakeview Loan Servicing.' .. .." Id. ¶ 82.

         "Twenty-three days later, on September 9, 2013, Victoria disputed the debt, in writing, with M&T Bank . . . ." Id.¶ 88. "M&T Bank was now required to cease collection of the debt until it obtained verification of the debt and produced that verification to Victoria, in writing." Id. ¶ 89. "Notwithstanding this fact, M&T Bank thereafter continued to collect on the alleged debt without verification." Id. ¶90. "[F]rom September 17, 2013 through February 5, 2014, M&T Bank sent multiple collection letters to Victoria, each time demanding payment...." Id. ¶ 91. "Some of these letters were dated the same date as each other and were delivered to Victoria all at once, the natural consequence of which was to harass, oppress, or abuse ...." Id. ¶ 93. "M&T Bank never provided Victoria with the notice required by Cal. Civ. Code § 1812.700 ...." Id. ¶ 94. "[E]ach of these collection letters demanded an amount in excess of what Plaintiff owed; set conflicting deadlines for payment; and threatened imminent foreclosure." Id. ¶ 95. "M&T Bank initiated this onslaught of letters as to Plaintiff Victoria in an effort to abusively mislead and coerce her into paying more than was actually owed to M&T Bank." Id. ¶ 97. "M&T refused to provide validation or fully explain who 'Lakeview Loan Servicing' was . ..." Id. ¶ 98.

         "Subsequently, at the instruction of M&T Bank, Safeguard Properties, LLC sent Victoria a pink postcard . . . ." Id. ¶ 99. "The purpose of this communication with Victoria was to convey information regarding a debt directly or indirectly to Victoria, specifically, the name and telephone number of M&T Bank to encourage Victoria to contact M&T Bank so that M&T Bank could collect the debt alleged to be owed ... ." Id. ¶ 103. "Victoria was startled, confused, and embarrassed by this postcard." Id. ¶ 111. "[I]nviting a mortgager to contact M&T Bank has nothing to do with securing the property. This is Safeguard's attempt to facilitate communication between Victoria and M&T Bank to aid M&T Bank in collection of an alleged debt." Id. ¶ 114.

         "Safeguard advertises field services that it provides to its clients, and among these services are communicating with delinquent borrowers on behalf of mortgage companies, contacting mortgagors to request they call mortgage companies, and reporting back to mortgage companies whether it has made contact with mortgagers and regarding the condition of the mortgaged properties." Id.¶54. "Defendant Safeguard offers such services to its mortgage companies clients for the purpose of facilitating debt collection, directly and indirectly." Id. ¶ 55. "Defendant Safeguard ... advertises to its customers that it has been involved in lobbying efforts in Congress to exempt companies like Safeguard from being regulated by the FDCPA, thereby acknowledging that it is a debt collector under the FDCPA." Id.¶ 56. "Defendant Safeguard, on its website, also offers its services to assist creditor and collectors such as M&T Bank to make personal visits in an attempt to facilitate the consumer to contact the creditor in an effort to get the consumer to pay on the alleged debt, " Id. ¶57. "Defendant Safeguard instructs its employees to not use language such as 'debt' and 'collection, ' in order to evade being characterized as a debt collector, despite facilitating and aiding its client with debt collection being the main objection of its operation." Id. ¶ 58. "Defendant Safeguard routinely takes the actions alleged herein to collect alleged debt and enforce security interest from consumers across the United States." Id. ¶ 62. "Defendant Safeguard, in its regular practice, intimidated and invaded Plaintiffs' privacy in an attempt to secure property from Plaintiffs or in the alternative aid M&T Bank to collect money and property from Plaintiffs by facilitating communications between Plaintiffs and M&T Bank." Id. ¶ 63.

         "On January 4, 2014, Safeguard, at the instruction of M&T Bank, sent an agent to Plaintiffs' home (hereinafter, 'the intruder')." Id. ¶ 115. "At the instruction of Safeguard and M&T Bank, the intruder attempted to physically enter the home of Victoria and her minor children." Id. ¶116. "Victoria was not home... however, her children, A.A.; D.S.; and B.S., who were nine, twelve, and seventeen years of age, respectively, were at home." Id.¶117. "Because the intruder attempted to enter the home . .. without the authorization or permission of any occupants . . . attempting to forcibly enter the home through a locked door, A.A., Victoria's nine year-old daughter became terrified." Id. ¶ 119. "A.A., a child, refused to open the door to M&T Bank's agent." Id.¶121. "The intruder then continued to batter on the door with more force and eventually told A.A. that if she did not open the door immediately, her parents would 'be in big trouble.'" Id. ¶122. "B.S., who has a deep voice that people expect a very large imposing adult to possess, inquired as to the identity of the intruder." Id. ¶ 125. "If not for B.S. the intruder would not have been deterred from his objective of entering the property and frightening the family." Id. ¶126. "Victoria returned home shortly thereafter and found that the children were in shock due to the intruder's actions." Id. ¶127. "A.A. was particularly traumatized by this incident, and unable to speak." Id. ¶128. "A.A. was also having difficulty breathing due to the anxiety and stress caused by the intruder." Id. ¶129. "A.A. stated to Victoria that she feared for her safety, and the safety of her parents . ..." Id. ¶130.

         "Defendant Safeguard routinely takes actions above and beyond what would be reasonable behavior to secure property, by abusing and harassing alleged debtors like Plaintiffs in an effort to intimidate them into paying their debts." Id. ¶134. "Through these actions, Defendant Safeguard at the instruction and assistance of M&T Bank, intended and took efforts to effect dispossession and disablement of Plaintiffs' property ...." Id.¶135.

         "[O]n January 28, 2014, M&T Bank sent another letter to Victoria, in an attempt to collect a debt, still without verifying the alleged debt." Id. ¶136. "Through this conduct, M&T Bank engaged in conduct the natural consequence of which was to harass, oppress, or abuse .. .." Id.¶137. "This letter stated, in part, that Victoria's 'mortgage documents have been forwarded to our attorney's office for foreclosure proceedings' and that '[a]ll communications concerning the mortgage must now be directed to:' Wolf Law Firm . ..." Id. ¶138.

         "Wolf identifies itself as a debt collector in correspondence to consumers." Id. ¶ 41. "Defendant Wolf advertises itself on its website as a collection firm and even maintains a separate contact fax and email address for the Collections Department." Id. ¶42. "Wolf advertises itself as being a law firm that has, for over twenty-five years, regularly 'provided . . . cradle-to-grave services' that include 'Collection, Replevin/Claim and Delivery, ' all regulated debt collection practices under the FDCPA and California's Rosenthal Act." Id. ¶ 43. "Defendant Wolf is a law firm who sought the collection of money and property from Plaintiffs . ..." Id. 45.

         "[O]n January 30, 2014, M&T Bank sent two more letters to Victoria, stating that the foreclosure process has begun but Victoria still had alternatives if she contacted M&T Bank, even though Victoria had previously been told not to contact M&T Bank but contact only Wolf Law Firm." Id.¶142. "In reality, M&T Bank had not begun foreclosure proceedings, and was using this false, deceptive, or misleading representations or means in connection with the collection of a debt to coerce payment from Victoria ... ." Id. ¶ 143.

         "On April 28, 2014, the Wolf Law Firm sent Victoria ten (10) identical packets, five (5) by certified mail, and five (5) by regular mail, each addressed to Plaintiff Victoria at her residential address. Victoria received all of these packets at once a few days later." Id.¶ 145. "Each of these packets included the following enclosures: 1) 'NOTICE UNDER THE FAIR DEBT COLLECTION PRACTICES ACT, ' 2) a letter explaining that the non-judicial foreclosure process had begun, and 3) recorded Notice of Default and election to sell under deed of trust." Id. ¶146. "The Notice under the FDCPA provided all of the required notices under the FDCPA for an initial communication and explained that a foreclosure could be stopped if the default has been cured." Id. ¶147. "While the recorded documents were required to be sent as the trustee under California Foreclosure laws, the other two letters included in each of the ten (10) packets, were solely for the purpose of encouraging Plaintiff Victoria to pay the defaulted debt and outside the scope of a protected foreclosure trustee activities." Id. ¶148. "In response, Victoria sent the Wolf Law Firm a request for validation within 30 days of receiving Wolfs April 28, 2014 letters, just as she had previously done with M&T Bank." Id. ¶152.

         "[O]n or about July of 2014 Wolf... sent ten (10) more copies of another letter dated July 22, 2014 .. . ." Id. ¶ 153. "These letters failed to provide Victoria with validation of the debt in violation of the FDCPA and California's Rosenthal Act." Id. ¶156. "[O]nce Wolf recorded a Notice of Trustee Sale, Wolf mailed an additional twenty-two (22) copies to Plaintiff of the Notice... each addressed to Plaintiff Victoria at her residential address." Id. ¶158. Each of the letters sent by Defendant Wolf "urged Plaintiff Victoria Amelina to pay the alleged debt or suffer the consequences of foreclosure." Id.¶ 161. "The purpose of sending all of these letters from a law firm was to intimidate and embarrass Victoria and her family and to alert third parties that Victoria had legal problems." Id. ¶157.

         "On at least two other occasions, Plaintiffs and Plaintiffs' family noticed strangers conducting surveillance on Plaintiffs home, which included again trying to open Plaintiffs entrance door, looking through windows, and taking pictures of the outside and inside of Plaintiffs home (through the windows)." Id. ¶164. "[T]hese visits by Safeguard, at the instruction of M&T Bank, were intimidation attempts which Safeguard and M&T Bank try to justify by stating that the intrusions are simply efforts to secure the property." Id. ¶ 166.

         "Shortly thereafter, Victoria began noticing that M&T Bank was charging her for 'Home Inspections' on her monthly mortgage statements. The dates referenced for the 'Home Inspection' entries ... were consistent with the dates when Plaintiffs and Plaintiffs' family noticed strangers conducting surveillance . . . ." Id.¶ 167. "By demanding payment for 'Home Inspections, ' M&T Bank was collecting an amount. .. when such amount was not expressly authorized by the agreement creating the debt or permitted by law." Id. ¶170.

         "As a result of M&T Bank and Safeguard's illegal behavior, Plaintiffs and Plaintiffs' family have not felt safe in their home for months, and are in constant fear for their physical safety as well as having to endure the mental anguish that such conduct brings." Id. ¶171. "Victoria is experiencing intense anxiety, and has difficulty sleeping at night, causing her to be drowsy and lethargic." Id.¶ 174."As a result of M&T Bank and Safeguard's relentless collection tactics Victoria has been diagnosed with severe depression an anxiety and has been prescribed anti-depressant medication." Id. ¶ 176. "Moreover, Defendants have continued sending collection letters to Victoria, which aggravates Victoria's stress, anxiety, and depression. To mitigate these feelings, Victoria only checks her mail once a week, so as not to deal with Defendants' harassing letters on a daily basis." Id. ¶ 178.

         Plaintiffs assert five claims, including (1) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq. against all Defendants; (2) violation of the Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code §§ 1788-1788.32 against ail Defendants; (3) negligent infliction of emotional distress against Defendants M&T and Safeguard; (4) intentional infliction of emotional distress ...