McFadden v. Nationstar Mortgage LLC ( 2022 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JACKERLY MCFADDEN, et al.,
Plaintiffs,
v. Civ. Action No. 20-166 (EGS)
NATIONSTAR MORTGAGE LLC d/b/a
MR. COOPER,
Defendant.
MEMORANDUM OPINION
On January 22, 2020, Plaintiffs Jackerly McFadden and
Cassandra Wilson, acting on behalf of themselves and putative
class members, brought this action raising several claims
related to mortgage lender services provided by Defendant
Nationstar Mortgage LLC, d/b/a Mr. Cooper (“Mr. Cooper”). See
Compl., ECF No. 1. 1 Magistrate Judge Zia M. Faruqui, having been
referred the case, issued a Report and Recommendation
recommending that this Court deny Mr. Cooper’s pending motion to
dismiss in its entirety. See McFadden v. Nationstar Mortgage
LLC, No. 20-166, 2021 WL 3284794, at *1 (D.D.C. July 30, 2021).
Pending before the Court are Mr. Cooper’s objections to the
Report and Recommendation (“R. & R.”). See Def.’s Objections
1 When citing electronic filings throughout this Opinion, the
Court cites to the ECF page number, not the page number of the
filed document.
1
(“Objections”), ECF No. 44. Upon careful consideration of the R.
& R., the objections of both parties and opposition thereto, the
applicable law, and the entire record herein, the Court hereby
ADOPTS Magistrate Judge Faruqui’s R. & R., see ECF No. 42, and
DENIES Defendant Mr. Cooper’s motion to dismiss, see ECF No. 13.
I. Background
Because a detailed factual background of the case is set
out in Magistrate Judge Faruqui’s R. & R., the Court will not
reiterate it in full here. See McFadden, 2021 WL 3284794, at *1.
In brief, Plaintiffs allege that Mr. Cooper, in its role as a
national mortgage-loan servicer, created an illegal profit
center by collecting fees of between $14 and $19 (“Pay-to-Pay
Fees”) each time a borrower made a mortgage payment over the
phone (“Pay-to-Pay Transactions”). See id. Meanwhile, a third-
party service operated by Western Union processed those payments
for an estimated $0.50. See id.On January 22, 2020, Plaintiffs filed suit against Mr.
Cooper, alleging seven claims related to the Pay-to-Pay Fees:
(1) violation of the Federal Fair Debt Collection Practices Act
(“FDCPA”); (2) violation of the Florida Consumer Collection
Practices Act (“FCCPA”); (3) violation of the Florida Deceptive
and Unfair Trade Practices Act (“FDUTPA”); (4) breach of
contract claims under Florida and D.C. common law; (5) violation
of the District of Columbia Mortgage Lender and Broker Act
2
(“MLBA”); (6) violation of the District of Columbia Consumer
Protection Procedures Act (“DCCPPA”); and (7) unjust enrichment
under Florida and D.C. common law. See Compl., ECF No. 1. Mr.
Cooper filed a motion to dismiss for failure to state a claim on
March 30, 2020. See Def.’s Mot. Dismiss, ECF No. 13. Pursuant to
Local Civil Rule 72, this Court referred the case to a
magistrate judge for full case management on October 13, 2020,
see Min. Order (Oct. 13, 2020), and Magistrate Judge Faruqui
issued his R. & R. on July 30, 2021, see McFadden, 2021 WL
3284794. Mr. Cooper timely filed his objections to the R. & R.
on August 13, 2021. See Objections, ECF No. 44.
II. Legal Standards
A. Objections to a Magistrate Judge’s Report and
Recommendation
Pursuant to Federal Rule of Civil Procedure 72(b), a party
may file specific written objections once a magistrate judge has
entered a recommended disposition. Fed. R. Civ. P. 72(b)(1)-(2).
Objections must “specifically identify the portions of the
proposed findings and recommendations to which objection is made
and the basis for objection.” LCvR 72.3(b). A district court
“may accept, reject or modify the recommended disposition.” Fed.
R. Civ. P. 72(b)(3); see also 28 U.S.C. § 636(b)(1) (“A judge of
the court may accept, reject, or modify, in whole or in part,
the findings or recommendations made by the magistrate judge.”).
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A district court “must determine de novo any part of the
magistrate judge’s disposition that has been properly objected
to.” Fed. R. Civ. P. 72(b)(3). “If, however, the party makes
only conclusory or general objections, or simply reiterates his
original arguments, the Court reviews the [R. & R.] only for
clear error.” Houlahan v. Brown, 979 F. Supp. 2d 86, 88 (D.D.C.
2013) (citation omitted); see also Shurtleff v. EPA, 991 F.
Supp. 2d 1, 8 (D.D.C. 2013) (“[O]bjections which merely rehash
an argument presented to and considered by the magistrate judge
are not ‘properly objected to’ and are therefore not entitled to
de novo review.” (quoting Morgan v. Astrue, No. 08-2133, 2009 WL
3541001, at *3 (E.D. Pa. Oct. 30, 2009)). “Under the clearly
erroneous standard, the magistrate judge’s decision is entitled
to great deference” and “is clearly erroneous only if on the
entire evidence the court is left with the definite and firm
conviction that a mistake has been committed.” Buie v. District
of Columbia, No. 16-cv-1920 (CKK), 2019 WL 4345712, at *3
(D.D.C. Sept. 12, 2019) (citing Graham v. Mukasey, 608 F. Supp.
2d 50, 52 (D.D.C. 2009)) (internal quotation marks omitted).
B. Motion to Dismiss
A motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6) tests the legal sufficiency of a complaint.
Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). A
complaint must contain “a short and plain statement of the claim
4
showing that the pleader is entitled to relief, in order to give
the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555, (2007) (internal quotation marks omitted).
Despite this liberal pleading standard, to survive a motion
to dismiss, a complaint “must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible
on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009)
(internal quotation marks omitted). “In determining whether a
complaint fails to state a claim, [the Court] may consider only
the facts alleged in the complaint, any documents either
attached to or incorporated in the complaint and matters of
which [the Court] may take judicial notice.” EEOC v. St. Francis
Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997). A
claim is facially plausible when the facts pled in the complaint
allow the court to “draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. The
standard does not amount to a “probability requirement,” but it
does require more than a “sheer possibility that a defendant has
acted unlawfully.” Id.“[W]hen ruling on a defendant’s motion to dismiss [pursuant
to Rule 12(b)(6)], a judge must accept as true all of the
factual allegations contained in the complaint.” Atherton v.
D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009)
5
(internal quotation marks omitted). In addition, the court must
give the plaintiff the “benefit of all inferences that can be
derived from the facts alleged.” Kowal v. MCI Commc’ns Corp., 16
F.3d 1271, 1276 (D.C. Cir. 1994).
III. Analysis
A. FDCPA
1. The Court Reviews the R. & R.’s FDCPA Findings De Novo
and for Clear Error
Mr. Cooper objects to Magistrate Judge Faruqui’s findings
that Plaintiffs have adequately alleged FDCPA violations.
Objections, ECF No. 44 at 11.
First, Mr. Cooper argues that, contrary to Magistrate Judge
Faruqui’s conclusion, Plaintiff McFadden did not adequately
allege that Mr. Cooper is a debt collector. Objections, ECF No.
44 at 11-12. Specifically, it contends that the allegation in
the Complaint that “[a]t the time Cooper acquired the servicing
rights, Ms. McFadden’s mortgage was in default,” does not
satisfy the pleading requirements under Iqbal. Id. (quoting
Compl., ECF No. 1 ¶ 67). Mr. Cooper makes no new arguments not
presented in its motion to dismiss, other than to make the
conclusory assertion that the magistrate judge “ignore[d]” a
citation to Iqbal in distinguishing the case Oya v. Wells Fargo
Bank, No. 3:18-cv-01999, 2019 WL 157802, at *3 (S.D. Cal. Jan.
9, 2019), against its favor. Id.; see Def.’s Mot. Dismiss, ECF
6
No. 13-1 at 27-28. Accordingly, this objection is reviewed for
clear error, except to the extent that Mr. Cooper objects to the
magistrate judge’s interpretation of Oya. See Houlahan, 979 F.
Supp. 2d at 88.
Second, Mr. Cooper objects to Magistrate Judge Faruqui’s
finding that the Pay-to-Pay Fees are “incidental” to the
Plaintiffs’ mortgage agreements because the Pay-to-Pay Fees
“arise out of a separate agreement between the parties.”
Objections, ECF No. 44 at 12. The Court reviews this objection
de novo.
Third, Mr. Cooper objects to the finding that the Pay-to-
Pay Fees were not “expressly authorized by the agreement
creating the debt.” Id. at 14. It argues that two clauses in the
mortgage agreement “expressly authorize” the fees at issue. Id.
at 14-15. This argument is duplicative of its arguments in its
motion to dismiss, see Def.’s Mot. Dismiss, ECF No. 13-1 at 28-
29, and the Court shall review them under the clear error
standard. Mr. Cooper also argues that the R. & R.’s “suggestion
that each fee must be specifically listed to be permissible is
counter to the plain language of the FDCPA” and that the R. & R.
improperly places the burden to adequately plead an FDCPA claim
on defendants. Id. at 15-16. These objections are properly
before the Court and shall be reviewed de novo. See Local R.
Civ. P. 72.3(b).
7
Fourth and finally, Mr. Cooper objects to the magistrate’s
finding that the Pay-to-Pay Fees are not permitted by law.
Objections, ECF No. 44 at 16. Mr. Cooper notes that Plaintiffs
have not identified any law that would prohibit the Pay-to-Pay
Fees, and cites to Johnson v. Riddle, 305 F.3d 1107, 1117–18
(10th Cir. 2002), for the principle that an “FDCPA violation
cannot lie unless a specific legal prohibition exists for a
particular practice.” Id. Mr. Cooper further argues that
“several courts” have held that “a plaintiff may not ‘opt in’ to
an FDCPA claim by paying fees that were voluntarily paid and
reasonably avoidable,” and claims that “the practice of offering
additional fee-based payment services is commonplace in many
facets of consumer banking and payments.” Objections, ECF No. 44
at 16-17. However, these arguments merely reiterate what Mr.
Cooper claimed in its motion to dismiss. See Def.’s Mot.
Dismiss, ECF No. 13-1 at 29; Def.’s Reply, ECF No. 18 at 24.
2. The Court Overrules Mr. Cooper’s FDCPA Objections
Pursuant to the FDCPA, it is unlawful for a debt collector
to collect “any amount (including any interest, fee, charge, or
expense incidental to the principal obligation) unless such
amount is expressly authorized by the agreement creating the
debt or permitted by law.” 15 U.S.C. § 1692f(1). For the reasons
stated below, the Court overrules Mr. Cooper’s objections.
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a. “Debt Collector”
For purposes of the FDCPA, the term “debt collector” means
“any person who uses any instrumentality of interstate commerce
or the mails in any business the principal purpose of which is
the collection of any debts, or who regularly collects or
attempts to collect, directly or indirectly, debts owed or due
or asserted to be owed or due another.” 15 U.S.C. § 1692a(6).
Mortgage-loan servicers are exempted from the FDCPA’s definition
of a “debt collector” when they acquire a loan that is not
already in default. 15 U.S.C. § 1692a(6)(F)(iii). Magistrate
Judge Faruqui found that Plaintiffs’ allegation that “[a]t the
time Cooper acquired the servicing rights, Ms. McFadden’s
mortgage was in default” provided the “requisite ‘fair notice of
what the plaintiff’s claim is and the grounds upon which it
rests.’” McFadden, 2021 WL 3284794, at *2 (quoting Neild v.
Wolpoff & Abramson, L.L.P., 453 F. Supp. 2d 918, 924 (E.D. Va.
2006)). The magistrate judge disagreed with Mr. Cooper’s
argument that additional facts were needed in order to meet the
pleading standard, explaining that “courts, including in this
District, only dismiss similar complaints if a ‘Plaintiff does
not allege that his account was in default.’” Id. (citing
cases).
The Court does not find that Magistrate Judge Faruqui
clearly erred in his determination. Despite Mr. Cooper’s
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arguments to the contrary, “the Twombly–Iqbal duo have not
inaugurated an era of evidentiary pleading.” Hassan v. City of
New York, 804 F.3d 277, 295 (3d Cir. 2015) (quoting Santana v.
Cook Cnty. Bd. of Review, 270 F.R.D. 388, 390 (N.D. Ill. 2010)).
“Nor do ‘factual allegations . . . become impermissible labels
and conclusions simply because the additional factual
allegations explaining and supporting the articulated factual
allegations are not also included.’” Id. (citing In re Niaspan
Antitrust Litig., 42 F.Supp.3d 735, 753 (E.D. Pa. 2014)
(internal quotation marks omitted)). “[T]he collection of
evidence is the object of discovery,” id., particularly where,
as here, Plaintiffs claim the details regarding Mr. Cooper’s
acquisition of the debt in question are in Mr. Cooper’s control,
Pls.’ Response, ECF No. 45 at 14. And as Magistrate Judge
Faruqui noted, it is not unusual for courts to consider the debt
collector question at the summary judgment stage. McFadden, 2021
WL 3284794, at *2 n.1.
Moreover, while Mr. Cooper’s argument relies almost
exclusively on Oya, 2019 WL 157802, at *3, this case is not
binding on this Court. The Court agrees with Magistrate Judge
Faruqui’s conclusion that the Oya court’s requirement that a
plaintiff include additional “factual allegations”—beyond a
statement that an account was acquired while in default—“would
run contrary to the liberal notice pleadings requirements.”
10
McFadden, 2021 WL 3284794, at *2 n.1. The Court therefore
overrules Mr. Cooper’s objection. See, e.g., Moses v. The Law
Off. Of Harrison Ross Byck, 2009 WL 2411085, *3 (M.D. Pa. Aug.
4, 2009) (finding allegations that defendant “was engaged in the
business of debt collection, acquired the purported debt after
it was in default, and enlisted DBG and the Law Office to
collect the debt” sufficient at motion to dismiss stage).
b. Fees Incidental to the Mortgage Agreements
The Court next reviews Magistrate Judge Faruqui’s R. & R.
with regard to Mr. Cooper’s objection that the Fees “are
incidental to Plaintiffs’ mortgage agreements.” Objections, ECF
No. 44 at 4.
As the R. & R. explained, “[t]o establish a § 1692f(1)
violation, a plaintiff ‘must show that the money demanded of her
was incidental to a claimed debt.’” McFadden, 2021 WL 3284794,
at *3 (quoting Longo v. L. Offs. of Gerald E. Moore & Assocs.,
P.C., No. 04-cv-5759, 2005 WL 8153247, at *3 (N.D. Ill. Feb. 3,
2005)). Magistrate Judge Faruqui noted that case law was split
on the question of whether pay-to-pay fees are “incidental” to
the debt when borrowers are given other, fee-free options. Id.However, the magistrate judge was persuaded by the position
taken by the “majority of courts” that “convenience fees derived
from debt-payment methods are ‘incidental’ to the debt being
11
paid.” Id. (quoting Caldwell v. Freedom Mortg. Corp., No. 19-cv-
2193, 2020 WL 4747497, at *3 (N.D. Tex. Aug. 14, 2020)).
Ultimately, Mr. Cooper’s objection amounts to disagreement
with Magistrate Judge Faruqui’s decision to find that the
“majority” position was more persuasive than the minority
position. See Objections, ECF No. 44 at 14. But in view of the
overwhelming amount of well-articulated case law agreeing with
the R. & R.’s analysis, the Court also “finds that the pay-to-
pay fees in this case are ‘incidental’ to the underlying debt.”
Dees v. Nationstar Mortg., LLC, 496 F. Supp. 3d 1043, 1047 (S.D.
Tex. 2020) (collecting cases); see, e.g., Lembeck v. Arvest
Cent. Mortg. Co., 498 F. Supp. 3d 1134, 1136 (N.D. Cal. Nov. 3,
2020) (denying motion to dismiss and rejecting argument that
pay-to-pay fee was not incidental to principal obligation);
Wittman v. CB1, Inc., No. 15-cv-105, 2016 WL 1411348, at *1, 5
(D. Mont. 2016) (following “the majority of courts [that] have
found that similar transaction fees are incidental”); Weast v.
Rockport Fin., 115 F. Supp. 3d 1018, 1023 (E.D. Mo. 2015)
(“Offering a payment option that does not violate the statute
does not save offering a payment option that would violate the
statute, as the latter is still an attempt to collect a fee
which is prohibited.”); Quinteros v. MBI Assocs., Inc., 999 F.
Supp. 2d 434, 437–39 (E.D.N.Y. 2014) (“What matters is §
1692(f)(1)’s plain instruction that the collection of any amount
12
incidental to the principal obligation . . . violates the
FDCPA.”); Shami v. Nat’l Enter. Sys., No. 09-cv-722, 2010 WL
3824151, at *3-4 (E.D.N.Y. Sept. 23, 2010) (holding pay-to-pay
fees were “incidental to Plaintiff’s purported actual debt”
prohibited by § 1692f(1)). As Judge Faruqui noted, “[i]t is
immaterial that the fee was optional and fully disclosed if the
fee is impermissible altogether.” McFadden, 2021 WL 3284794, at
*3 (citations omitted).
c. Fees Expressly Authorized by Agreement
Having decided that the Pay-to-Pay Fees are incidental to
the underlying debt, the Court next turns to whether the fees
were authorized by agreement because “[i]t is unlawful for a
debt collector to collect a fee incidental to the principal
obligation ‘unless such amount is expressly authorized by the
agreement creating the debt or permitted by law.’” McFadden,
2021 WL 3284794, at *3-4 (quoting 15 U.S.C. § 1692f(1)).
Two clauses in the parties’ mortgage agreements are at
issue regarding whether the agreements authorized the Pay-to-Pay
Fees. The provision in a paragraph titled “Loan Charges”
provided:
Lender may charge Borrower fees for services
performed in connection with Borrower's
default, for the purpose of protecting
Lender's interest in the Property and rights
under this Security Instrument, including, but
not limited to, attorneys’ fees, property
inspection and valuation fees. In regard to
13
any other fees, the absence of express
authority in this Security Instrument to
charge a specific fee to Borrower shall not be
construed as a prohibition on the charging of
such fee. Lender may not charge fees that are
expressly prohibited by this Security
Instrument or by Applicable Law.
Id. at *4 (emphasis added).
In finding that the above language did not “expressly”
authorize the fees in question, the magistrate judge noted that
Black’s Law Dictionary defines “express” to mean “clear;
definite; explicit; plain . . . [m]ade known distinctly and
explicitly, and not left to inference.” Id. (quoting Johnson v.
Ashcroft, 286 F.3d 696, 702 (3d Cir. 2002)). Magistrate Faruqui
concluded that the above provision created an “inference as to
the specific fees that it authorizes” but it did not “explicitly
name third-party payment processor fees or even a larger
umbrella under which such fees would fall.” Id. In addition,
“[a]lthough there is a dearth of case law, at least one court
has found that a complaint plausibly alleged a FDCPA violation
when ‘the underlying contract [did] not authorize the [phone
payment convenience] fee and the debt collector receive[d] all
or some of the fee.’” Id. (quoting McWhorter v. Ocwen Loan
Serv., LLC, No. 2:15-cv-1831, 2017 WL 3315375, at *7 (N.D. Ala.
Aug. 3, 2017)).
The Court agrees with the reasoning in the R. & R.,
particularly in view of the fact that the above provision in the
14
mortgage agreement indeed “explicitly” authorizes other fees by
name, including “attorneys’ fees, property inspection and
valuation fees.” Id. Other than repeating the words of the
statute, Mr. Cooper cites no authority in support of his
argument that a finding that “each fee must be specifically
listed to be permissible is counter to the plain language of the
FDCPA.” Objections, ECF No. 44 at 15. Rather, as Magistrate
Faruqui pointed out, “[a]s remedial legislation, the FDCPA must
be broadly construed in order to give full effect” to Congress’s
intent to “eliminat[e] abusive practices in the debt collection
industry, and also . . . to ensure that ‘those debt collectors
who refrain from using abusive debt collection practices are not
competitively disadvantaged.’” Id. (citing Jacobson v.
Healthcare Fin. Servs., Inc., 516 F.3d 85, 89 (2d Cir. 2008);
Douglass v. Convergent Outsourcing, 765 F.3d 299, 302 (3d Cir.
2014)). Allowing a catch-all provision as the one above to
permit convenience fees would run afoul of this intent. See
McWhorter, 2017 WL 3315375, at *7 (“Ocwen has presented, and the
Court has found, no controlling case law holding that an
additional fee does not violate the FDCPA when, as here, the
underlying contract does not authorize the fee and the debt
collector receives all or some of the fee.”).
Mr. Cooper argues, however, that the case Beer v.
Nationstar Mortg. Holdings, Inc., No. 14-cv-13365, 2015 WL
1513037309, at *3 (E.D. Mich. July 15, 2015), supports his
argument. In Beer, the district court held that the plaintiff
had not adequately alleged a breach of contract claim because
the plaintiff had “fail[ed] to identify a contractual provision
prohibiting the alleged ‘unnecessary fees and costs’” and the
mortgage agreement had provided that “the absence of express
authority in this Security Instrument to charge a specific fee
to Borrower shall not be construed as a prohibition on the
charging of such fee.” 2015 WL 13037309, at *3. Here, however,
unlike in Beer, “[t]he FDCPA . . . does not require Plaintiffs
to identify any provision at all (let alone specific
prohibitions); rather, all that is needed is the absence of a
provision expressly authorizing a fee.” McFadden, 2021 WL
3284794, at *5. Although Mr. Cooper argues that such a reading
“attempts to flip Plaintiffs’ burden to adequately plead that
the Fees are not expressly authorized onto Mr. Cooper by holding
that Mr. Cooper did not specifically identify such an
authorizing provision,” Mr. Cooper is mistaken. Objections, ECF
No. 44 at 16. Instead, it is a mere acknowledgement of the plain
terms of the statute: while the Beer court required a successful
breach of contract claim to identify a provision prohibiting the
alleged fees, the FDCPA requires a provision “expressly
authoriz[ing]” the fees in order to find the fees lawful. See §
1692f(1) (also allowing incidental fees “permitted by law”).
16
Thus, under the FDCPA, if the plaintiff plausibly alleges an
absence of a provision, then the claim may proceed.
In view of the clear language of the statute, the Court
therefore overrules Mr. Cooper’s objections with respect to the
provisions in the mortgage agreement.
d. Fees Permitted by Law
Finally, Mr. Cooper objects to the R. & R.’s finding that
the Pay-to-Pay Fees are not permitted by law. Objections, ECF
No. 44 at 16-17.
Under the second exception to Section 1692f(1), Mr. Cooper
may only collect fees if they are “permitted by law.” 15 U.S.C.
§ 1692f(1). The R. & R. found that the fees were not permitted
by law, stating the following:
“If state law expressly permits service
charges, a service charge may be imposed even
if the contract is silent on the matter; [i]f
state law expressly prohibits service charges,
a service charge cannot be imposed even if the
contract allows it; [but if] state law neither
affirmatively permits nor expressly prohibits
service charges, a service charge can be
imposed only if the customer expressly agrees
to it in the contract.” Tuttle v. Equifax
Check, 190 F.3d 9, 13 (2d Cir. 1999). “[T]he
word ‘permitted’ requires that [Cooper]
identify some state statute which ‘permits,’
i.e. authorizes or allows, in however general
a fashion, the fees or charges in question.”
McWhorter, 2017 WL 3315375, at *7 (quoting
Newman v. Checkrite California, Inc., 912 F.
Supp. 1354, 1368 (E.D. Cal. 1995)). Cooper
fails to do so, likely because Pay-to-Pay fees
are not expressly permitted by relevant state
17
law, let alone the FDCPA. See generally Def.’s
MTD.
McFadden, 2021 WL 3284794, at *5.
In explaining that “[i]f state law neither affirmatively
permits nor expressly prohibits service charges, a service
charge can be imposed only if the customer expressly agrees to
it in the contract,” the United States Court of Appeals for the
Second Circuit in Tuttle relied on the language of § 1692f(1)
and the Staff Commentary on the Fair Debt Collection Practices
Act, 53 Fed. Reg. 50,097, 50,108 (Fed. Trade Comm’n 1988). See
Tuttle, 190 F.3d at 13. And here, the mortgage agreements do not
expressly authorize the Pay-to-Pay Fees and Mr. Cooper has not
persuasively shown that such fees are permitted under state law.
Accordingly, the Court finds no clear error in the R. & R. See
Quinteros, 999 F. Supp. 2d at 437 (holding that Quinteros could
make out a claim under § 1692f(1) by establishing that the
processing fee was not expressly authorized by the contract
underlying the debt or otherwise permitted by New York law);
Shami, 2010 WL 3824151, at *2 (noting that the defendant did not
“assert that the transaction fees described in the Collection
Letter were expressly authorized by the underlying agreement
creating the debt” or that the fees were “otherwise permitted by
New York law,” and concluding that the plaintiff had stated a
claim under § 1692f(1)); see also McCollough v. Johnson,
18
Rodenburg & Lauinger, LLC, 637 F.3d 939, 950 (9th Cir. 2011)
(upholding district court’s grant of summary judgment on a
section 1691f claim in favor of the plaintiff where defendant
failed to introduce evidence the contract explicitly authorized
the fee); Lindblom, 2016 WL 2841495, at *6 (holding that the
“only inquiry” is “whether the amount collected was expressly
authorized”); Schwarm v. Craighead, 552 F. Supp. 2d 1056, 1080
(E.D. Cal. 2008) (holding that “to establish that a particular
fee does not violate § 1692f(1), the debt collector must
identify a state law that authorizes the fee”).
In view of the above, the Court overrules Mr. Cooper’s
objections regarding Plaintiffs’ FDCPA claim.
B. FCCPA
1. The Court Review the R. & R.’s FCCPA Findings De Novo
Mr. Cooper also objects to the magistrate’s finding that
Plaintiffs adequately alleged that Mr. Cooper had “actual
knowledge” that it did not have a right to collect the Pay-to-
Pay Fees. Objections, ECF No. 44 at 17. Mr. Cooper’s arguments
are mostly a rehashing of its arguments presented in the motion
to dismiss. It reiterates its arguments that the circumstantial
evidence presented in the Complaint is insufficient to show
actual knowledge, that alleging that a creditor should have
known a debt was illegitimate is also insufficient, and that
Florida courts have routinely granted motions to dismiss on
19
these grounds. Compare id., with Def.’s Mot. Dismiss, ECF No.
13-1 at 31-32, and Def.’s Reply Supp. Mot. Dismiss, ECF No. 18
at 25-26. However, because Mr. Cooper also takes issue with
Magistrate Judge Faruqui’s reliance on the case Blake v.
Seterus, Inc., No. 16-21225-CIV-JLK, 2017 WL 543223 at *3 (S.D.
Fla. Feb. 9, 2017), and the magistrate judge’s finding that Mr.
Cooper’s role as a “large mortgage servicer” provided support
for Plaintiffs’ claim, the Court shall review these objections
de novo.
2. The Court Overrules Mr. Cooper’s FCCPA Objections
The FCCPA forbids a party from claiming or threatening “to
enforce a debt when such person knows that the debt is not
legitimate, or assert[ing] the existence of some other legal
right when such person knows that the right does not exist.”
Fla. Stat. § 559.72(9). The use of the word “knows” requires
actual knowledge of the impropriety or overreach of a claim.
Magistrate Judge Faruqui found that whether a defendant
possessed “actual knowledge” that it did not have a legal right
to charge Pay-to-Pay Fees “is a factual question that typically
should not be addressed in a 12(b)(6) motion to dismiss.”
McFadden, 2021 WL 3284794, at *5. Rather, a plaintiff need only
allege circumstantial facts to demonstrate an FCCPA violation at
this stage, and here, “[t]here are sufficient circumstantial
facts that [Mr.] Cooper had actual knowledge that it did not
20
have a right to charge Pay-to-Pay fees.” Id. at *6. Mr. Cooper
objects to both conclusions. See Objections, ECF No. 44 at 17-
18.
First, the Court agrees that, “at the dismissal stage[,] .
. . Plaintiff [need] only allege circumstantial facts to
demonstrate Defendant’s actual knowledge of an FCCPA violation.”
McFadden, 2021 WL 3284794, at *5 (quoting Blake v. Seterus,
Inc., No. 16-cv-21225, 2017 WL 543223, at *3 (S.D. Fla. Feb. 9,
2017)); see also Blake, 2017 WL 543223, at *3; Williams v. Educ.
Credit Mgmt. Corp., 88 F. Supp. 3d 1338, 1347-48 (M.D. Fla.
2015); Kaplan v. Assetcare, Inc., 88 F. Supp. 2d 1355, 1363
(S.D. Fla. 2000). Mr. Cooper cites to two cases in support of
his argument that “Florida courts have routinely granted motions
to dismiss based on a failure to plead actual knowledge.”
Objections, ECF No. 44 at 18 (citing Bentley v. Bank of Am.,
N.A., 773 F. Supp. 2d 1367, 1373 (S.D. Fla. 2011); In re Lamb,
409 B.R. 534, 541-42 (Bankr. N.D. Fla. 2009)). However, these
cases ultimately do not support his position. In In re Lamb, the
plaintiff had merely alleged that “[defendants] knew that they
did not have a right to garnish [Plaintiff’s] wages.” 409 B.R.
at 541. And in Bentley, the plaintiff had “simply [made] the
conclusory allegation that Defendants (again improperly lumping
them together) ‘knew they did not have a legal right to use such
collection techniques,’ without any specific factual allegations
21
as to each Defendants’ knowledge, much less what legal right was
asserted and how that legal right somehow did not exist.” 773 F.
Supp. 2d at 1373. Even at the standard articulated by Magistrate
Judge Faruqui, such statements would be insufficient to
adequately allege an FCCPA claim.
Second, the Court finds that Plaintiffs have alleged
sufficient facts to state a FCCPA claim at this stage of
litigation. Magistrate Judge Faruqui found that Plaintiffs had
alleged sufficient facts in the Complaint that Mr. Cooper had
actual knowledge that it did not have a right to charge Pay-to-
Pay Fees. McFadden, 2021 WL 3284794, at *6. Specifically, he
noted that: (1) “[a]s one of the nation’s largest mortgage-loan
servicers, which includes thousands of Florida mortgages, Cooper
should be aware of the requirements of Florida debt collection
laws,” id. (citing Compl., ECF No. 1 ¶ 2; Alhassid v. Nationstar
Mortg. LLC, 771 F. App’x 965, 969 (11th Cir. 2019)); (2) Mr.
Cooper had serviced loans subject to the uniform terms of
borrowers’ mortgages, which did not include pay-to-pay fees, and
the mortgage agreement did not permit such fees, id. (citing
Compl., ECF No. 1 ¶ 2); and (3) Mr. Cooper had “repeatedly”
collected such fees from thousands of borrowers nationwide, id.(quoting Compl., ECF No. 1 ¶ 1; Dees v. Nationstar Mortg., LLC,
496 F. Supp. 3d 1043, 1051 (S.D. Tex. 2020)).
22
Mr. Cooper argues that Plaintiffs simply “track[ed] the
language of the FCCPA” in alleging that it “‘attempted to
enforce, claimed, and asserted a known non-extent legal right to
a debt’ in violation of the FCCPA.” Objections, ECF No. 44 at 17
(quoting Compl., ECF No. 1 ¶ 121). Though this is indeed an
allegation Plaintiffs included in its FCCPA-specific section
regarding the claimed violation, Plaintiffs expressly
“incorporated by reference” all of the preceding paragraphs of
the Complaint as well. See Compl., ECF No. 1 ¶¶ 117-123. Thus,
Plaintiffs allege more than just the one sentence Mr. Cooper
points out. Moreover, as explained above, at a motion to dismiss
stage, the evidentiary threshold is lower because the parties
have not yet conducted discovery in the case. Viewing the facts
in the light most favorable to the Plaintiffs at this early
stage, particularly the allegations noted by Magistrate Judge
Faruqui, the Court concludes that Plaintiffs adequately pled
that Defendant knowingly violated the FCCPA. See, e.g., Blake,
2017 WL 543223, at *3 (finding sufficient evidence at motion to
dismiss stage where plaintiff had alleged that “it was
Defendant’s regular practice to include unincurred, estimated
costs in the reinstatement amount, despite that the Mortgage
Agreement and Servicing Guidelines prohibit the such conduct”).
And although Mr. Cooper argues that “[m]erely alleging that a
creditor should have known a debt was illegitimate is
23
insufficient,” Objections, ECF No. 44 at 17, the case he relies
upon was decided under a motion for summary judgment standard,
not a motion to dismiss standard, Cornette v. I.C. System, Inc.,
280 F. Supp. 3d 1362, 1371 (S.D. Fla. 2017).
In view of the above, the Court overrules Mr. Cooper’s
objections.
C. FDUTPA
1. The Court Reviews the R. & R.’s FDUTPA Findings De
Novo and for Clear Error
Mr. Cooper makes three objections to the R. & R.’s findings
that Plaintiffs adequately pled FDUTPA violations. Objections,
ECF No. 44 at 18. First, Mr. Cooper argues that “Plaintiffs
failed to adequately allege violations of the FCCPA, and
therefore Mr. Cooper objects to the Report’s findings that such
allegations can serve as a predicate for per se violations of
the FDUTPA.” Id. Mr. Cooper cites back to his arguments in his
motion to dismiss briefing to support this argument, and
therefore the Court reviews this objection for clear error
because it “simply reiterates his original arguments.” Houlahan,
979 F. Supp. 2d at 88. Second, Mr. Cooper argues that Plaintiffs
failed to adequately allege any plausible facts supporting their
claim that Mr. Cooper engaged in unfair or deceptive practices
regarding the Pay-to-Pay Fees. Objections, ECF No. 44 at 19.
Third, it disputes the R. & R.’s finding that whether a charge
24
is unfair or deceptive is a question of fact for the jury. Id.
at 21. The Court shall review the second and third objections de
novo. See Means v. District of Columbia, 999 F. Supp. 2d 128,
132 (D.D.C. 2013).
2. The Court Overrules Mr. Cooper’s FDUTPA Objections
Mr. Cooper first asserts that “Plaintiffs failed to
adequately allege violations of the FCCPA, and therefore Mr.
Cooper objects to the Report’s findings that such allegations
can serve as a predicate for per se violations of the FDUTPA.”
Objections, ECF No. 44 at 18. As stated in Section III.B.2, the
Court has concluded that Magistrate Judge Faruqui did not err in
finding that Plaintiffs’ FCCPA allegations sufficiently
established Mr. Cooper’s actual knowledge at this stage of the
litigation. Because the Court finds that the FCCPA claim has not
failed, there is therefore no clear error in the R. & R.
regarding this issue.
With respect to the traditional FDUTPA violation based on a
deceptive act or unfair practice, such a violation involves
“unfair or deceptive acts or practices in the conduct of any
trade or commerce.” Fla. Stat. § 501.204(1). “A deceptive
practice is one that is ‘likely to mislead’ consumers.” Rollins,
Inc. v. Butland, 951 So. 2d 860, 869 (Fla. 2d Dist. Ct. App.
2006) (quoting Davis v. Powertel, Inc., 776 So. 2d 971, 974
(Fla. 1st Dist. Ct. App. 2000)). Likelihood to mislead is based
25
on how a “consumer acting reasonably in the circumstances” would
respond. Maor v. Dollar Thrifty Auto. Grp., Inc., No. 15-cv-
22959, 2018 WL 4698512, at *6 (S.D. Fla. Sept. 30, 2018)
(quoting Carriuolo v. General Motors Co., 823 F.3d 977, 983–84
(11th Cir. 2016)). “An unfair practice is one that offends
established public policy and one that is immoral, unethical,
oppressive, unscrupulous or substantially injurious to
consumers.” Rollins, 951 So. 2d at 869 (quoting Samuels v. King
Motor Co. of Fort Lauderdale, 782 So. 2d 489, 499 (Fla. 4th
Dist. Ct. App. 2001)) (cleaned up).
With the above standard in mind, the magistrate judge
concluded that “[a] mortgage-loan servicer ‘[s]ecretly retaining
money from every ‘processing fee’ [the defendant] charges
consumers instead of passing the entire fee to a third-party
payment processor,’” as is the case alleged here, “constitutes
an unfair and deceptive practice.” McFadden, 2021 WL 3284794, at
*6 (quoting Alvarez, 2020 WL 5514410, at *4, *6). Because
Plaintiffs’ Complaint included an allegation describing such a
scheme, it was sufficient to meet the pleading burden on a
motion to dismiss. Id. “Moreover, it is ‘a question of fact for
a jury’ whether the ‘pass-through charge,’ leaving $0.50 with
the third-party processor and $13.50 surreptitiously with
Cooper, is a deceptive practice.” Id. (quoting Coleman v.
CubeSmart, 328 F. Supp. 3d 1349, 1364 (S.D. Fla. 2018)).
26
Mr. Cooper objects to both findings. As Mr. Cooper notes,
the courts are divided on this issue. Def.’s Reply, ECF No. 46
at 15. On the one hand, Mr. Cooper cites to Waddell v. U.S. Bank
National Association, 395 F. Supp. 3d 676, 685 (E.D.N.C. 2019),
and Brown v. Loancare, LLC, No. 3:20-cv-00280-FDW-DSC, 2020 WL
7389407, at *5 (W.D.N.C. Dec. 16, 2020), in support of his
argument that convenience fees that are disclosed to the
consumer are not considered a “deceptive act or unfair practice”
under the FDUTPA. See Objections, ECF No. 44 at 19; Def.’s
Reply, ECF No. 46 at 15. In Waddell, the court found in the
alternative that the “practice of charging customers a fee for
paying by phone is not unfair or deceptive under” a statute
substantially similar to the FDUTPA. 395 F. Supp. 3d at 685. And
in Brown, another North Carolina district court case, the court
relied on Waddell in similarly holding that the plaintiff did
not state a claim because she had “exercised her option to pay
her mortgage either by phone or online. It is not plausible that
charging a fee for an optional service, particularly when
[p]laintiff had alternative means of payment, is unfair or
deceptive.” 2020 WL 7389407, at *5.
On the other hand, however, are a line of cases standing
for the principle that failure to disclose who is getting the
majority of a fee can constitute deception. See, e.g.,
Quinteros, 999 F. Supp. 2d at 439 (finding the “‘least
27
sophisticated consumer’ would likely be deceived by the
Processing Fee Statement into believing that Defendant was
legally entitled to collect the five-dollar fee. Indeed, even a
shrewd consumer would be unlikely to question the legality of a
seemingly reasonable five-dollar processing fee, much less turn
to the statute books”); Shami, 2010 WL 3824151, at *4 (finding
that because plaintiff stated a claim for unconscionable means,
she also stated a claim for false representation because the
letter represented the transaction fees were permissible).
This is a close question, but ultimately the Court is more
persuaded by the line of cases cited by Plaintiffs. Although Mr.
Cooper argues that both Waddell and Brown are directly on point
and should control the case here, neither addresses the question
of whether an entity’s “concealment that it keeps the vast
majority of each fee,” even if the fee is voluntary, is “unfair”
or “deceptive” under the FDUPTA. Pls.’ Response, ECF No. 45 at
24; see also McFadden, 2021 WL 3284794, at *7 (“Plaintiffs are
not arguing that they were unaware that they were paying a fee.
Rather, they plausibly argued deception by Cooper in concealing
who was getting the vast majority of the Pay-to-Pay fee.”).
Here, even if the Court accepts that voluntary convenience fees
in general are not unfair or oppressive, the fact that Mr.
Cooper kept over 90 percent of the fees at issue is a
significant factor in the analysis. Cf. Latman v. Costa Cruise
28
Lines, N.V., 758 So. 2d 699 (Fla. 3d Dist. Ct. App. 2000) (“We
therefore conclude that where the cruise line bills the
passenger for port charges but keeps part of the money for
itself, that is a deceptive practice under FDUTPA. Reliance and
damages are sufficiently shown by the fact that the passenger
parted with money for what should have been a ‘pass-through’
port charge, but the cruise line kept the money.”); Coleman, 382
F. Supp. 3d at 1365 (“Here, Coleman adequately states a
deceptive representation sufficient to satisfy the first element
of a FDUTPA claim. A consumer could reasonably conclude, based
on both the express representations and what was not said, that
CubeSmart would retain only the portion for its expenses, a
conclusion that is factually incorrect under the allegations of
the Complaint.”). Moreover, even if the issue of whether a
practice is unfair or deceptive is a question of law, rather
than a question of fact, the Court finds that a “‘pass-through
charge,’ leaving $0.50 with the third-party processor and $13.50
surreptitiously with Cooper” is likely to mislead. See Fla.
Stat. § 501.202 (stating that FDUPPTA should be “construed
liberally to promote” its purposes, which includes “[t]o protect
the consuming public”).
Accordingly, the Court overrules Mr. Cooper’s objections
with respect to FDUTPA.
29
D. Breach of Contract Under Florida and D.C. Law
1. The Court Reviews the R. & R.’s Breach of Contract
Findings De Novo and for Clear Error
Mr. Cooper makes multiple objections to the R. & R.’s
finding that Plaintiffs adequately pled state law breach of
contract claims. Objections, ECF No. 44 at 21.
Mr. Cooper first objects that both Plaintiffs’ mortgages
“expressly permit” it to charge the Pay-to-Pay Fees. Id. This
objection is reviewed for clear error because it is duplicative
of Mr. Cooper’s arguments in its motion to dismiss briefing. See
Def.’s Mot. Dismiss, ECF No. 13-1 at 14.
Mr. Cooper also objects to the finding in the R. & R. that
Ms. Wilson adequately pled breach of her mortgage agreement due
to alleged violations of the FDCPA and guidelines issued by the
Fair Housing Administration and the Department of Housing and
Urban Development. Objections, ECF No. 44 at 22. It argues that
(1) “Plaintiff Wilson’s mortgage expressly permits Mr. Cooper to
charge fees in connection with Plaintiff’s default ‘for the
purpose of protecting [its] interest in the Property and rights
under this Security Instrument,’ including the Pay-to-Pay Fees”;
(2) “the [R. & R.] incorrectly posits that ‘HUD’s fee lists are
exclusive and preclude a lender from charging unauthorized
fees’”; and (3) “Plaintiff Wilson has no independent standing to
enforce the FHA/HUD guidelines.” Id. Each of these arguments
30
were raised in its motion to dismiss and are thus reviewed for
clear error. See Def.’s Mot. Dismiss, ECF No. 13-1 at 14-19;
Def.’s Reply, ECF No. 18 at 9-16.
Next, Mr. Cooper objects to the magistrate judge’s findings
that “the voluntary payment doctrine is not a proper basis for
dismissal, and that plaintiffs did not have full knowledge of
the facts when using Mr. Cooper’s pay-by-phone service to make
their mortgage payments.” Objections, ECF No. 44 at 23-24.
Again, this objection “simply reiterates [its] original
arguments,” Houlahan, 979 F. Supp. 2d at 88, and the Court
therefore reviews this for clear error.
Finally, Mr. Cooper objects to the finding in the R. & R
that “Plaintiffs’ oral agreements with Mr. Cooper to pay the
Fees did not form a separate contract.” Objections, ECF No. 44
at 26. The Court reviews de novo Mr. Cooper’s objection that the
magistrate judge misread a case he relied upon in his ruling,
Techreations, Inc. v. National Safety Council, No. 86-C-1399,
1986 WL 15077, at *5 (N.D. Ill. Dec. 24, 1986). Mr. Cooper’s
general arguments that the parties’ agreement constitutes a
separate oral agreement and that the payment terms included in
the mortgage agreement are evidence of that separate agreement
are reviewed for clear error because they are the same arguments
Mr. Cooper included in its motion to dismiss. See Def.’s Mot.
Dismiss, ECF No. 13-1 at 20-22.
31
1. The Court Overrules Mr. Cooper’s Objections Regarding
the Breach of Contract Findings in the R. & R.
a. Provisions of the Mortgage Agreement
First, because Ms. McFadden’s Florida mortgage agreement
provides that the “[l]ender may not charge fees that are
expressly prohibited by this Security Instrument or Applicable
Law,” Magistrate Judge Faruqui found that Plaintiffs had
demonstrated a plausible breach of contract claim because their
FDCPA and FCCPA claims were viable. McFadden, 2021 WL 3284794,
at *7. The Court finds no clear error in the magistrate judge’s
reasoning, and Mr. Cooper’s conclusory objection provides no
specific reason to do so. As described in Section III.A.2, the
mortgage agreement did not “expressly” permit Mr. Cooper to
charge Pay-to-Pay Fees.
Next, regarding Ms. Wilson’s D.C. mortgage agreement,
Magistrate Judge Faruqui determined that Plaintiff had
adequately pled a breach of her mortgage agreement because she
alleged that Mr. Cooper violated the FDCPA and guidelines issued
by the Fair Housing Administration (“FHA”) and the Department of
Housing and Urban Development (“HUD”), which were incorporated
by reference in paragraph 13 of the agreement. McFadden, 2021 WL
3284794, at *7-8. The magistrate judge noted that the HUD
Handbook establishes which fees are authorized, and that the fee
lists “are exclusive and preclude a lender from charging
32
unauthorized fees.” Id. at *8. Moreover, the HUD Handbook
permitted the collection of fees if they are “reasonable and
customary for the local jurisdiction” and “based on actual cost
of the work performed or actual out-of-pocket expenses.” Id. The
only way a lender can collect any fee “not specifically
mentioned in” the HUD regulations or HUD Handbook is to
affirmatively seek approval from the Secretary. Id. Magistrate
Faruqui found that, because Pay-to-Pay Fees were not authorized
in the HUD Handbook or separately approved by the Secretary, and
because Ms. Wilson had plausibly alleged that the fees did not
represent actual costs, her breach of contract claim was viable.
Id.
Mr. Cooper objects to this finding because (1) “Plaintiff
Wilson’s mortgage expressly permits Mr. Cooper to charge fees in
connection with Plaintiff’s default ‘for the purpose of
protecting [its] interest in the Property and rights under this
Security Instrument,’ including the Pay-to-Pay Fees”; (2) “the
[R. & R.] incorrectly posits that ‘HUD’s fee lists are exclusive
and preclude a lender from charging unauthorized fees’”; and (3)
“Plaintiff Wilson has no independent standing to enforce the
FHA/HUD guidelines.” Objections, ECF No. 44 at 22.
Regarding the first objection, again, this Court explained
in Section III.A.2 that the mortgage agreement did not
33
“expressly” permit Mr. Cooper to charge Pay-to-Pay Fees. This
objection is therefore overruled.
Regarding the second objection, the Court agrees with Mr.
Cooper that the language in the HUD Handbook and in 24 C.F.R. §
203.552(a) may lead to the conclusion that the HUD Handbook and
regulations list both permissive fees that a mortgagee “may
collect” and fees that are expressly prohibited. See 24 C.F.R. §
203.552(a) (“The mortgagee may collect reasonable and customary
fees and charges from the mortgagor after insurance endorsement
only as provided below.” (emphasis added)); U.S. Dep’t of Hous.
and Urban Dev., HUD Handbook 4000.1: Single-Family Housing
Policy, Section III(A)(1)(f)(C) at 560,
https://www.hud.gov/sites/documents/40001HSGH.PDF (listing
expressly prohibited fees, not including Pay-to-Pay Fees). Yet
at the same time, the HUD Handbook states that “[a]ll fees must
be: reasonable and customary for the local jurisdiction; [and]
based on actual cost of the work performed or actual out-of-
pocket expenses and not a percentage of either the face amount
or the unpaid principal balance of the Mortgage.” HUD Handbook §
III.A.1.f.ii(A) (emphasis added). Because “[t]here is no dispute
that the ‘Pay-to-Pay fees . . . exceed [Mr. Cooper’s] out-of-
pocket costs by several hundred percent,” and Plaintiff Wilson
has alleged that the Pay-to-Pay Fees do not “represent actual
costs,” McFadden, 2021 WL 3284794, at *8 (Phillips v. Caliber
34
Home Loans, Inc., No. 19-cv-2711, 2020 WL 5531588, at *4 (D.
Minn. Sept. 15, 2020)), the Court finds no reason to reject
Magistrate Faruqui’s conclusion.
Regarding Mr. Cooper’s third objection, the Court finds no
clear error in the R. & R.’s conclusion that Ms. Wilson has
standing. “[T]he majority rule [is] that breach of contract
claims based on a failure to comply with HUD regulations are
viable where the mortgage instrument expressly incorporates HUD
regulations.” Dorado v. Bank of Am., N.A., No. 16-cv-21147, 2016
WL 3924115, at *5 (S.D. Fla. July 21, 2016) (quotation omitted)
(collecting cases); see also Phillips, 2020 WL 5531588, at *4
(allowing breach of contract claim to proceed where plaintiff
alleged pay-to-pay fee violated FHA/HUD regulations incorporated
by reference in the contract). Here, the mortgage agreement
incorporated the FHA/HUD guidelines, and the Complaint includes
the allegation that the Pay-to-Pay Fees violated those
guidelines and regulations. See Compl., ECF No. 1 ¶ 57; Ex. B at
8, ¶ 13; Ex. C at 8, ¶ 13.
Moreover, the Court agrees with the manner in which the
magistrate judge distinguished Waddell. McFadden, 2021 WL
3284794, at *8 (noting that Waddell was non-binding authority
and that the plaintiff in that case, unlike here, had not
“plausibly alleged that her deed of trust contain[ed] any
express or implied terms that prohibit[ed] [the defendant] from
35
charging a service fee authorized by federal law for an optional
payment method”).
b. Voluntary Payment Doctrine
The Court next turns to the magistrate judge’s conclusions
regarding the voluntary payment doctrine. Under the doctrine,
“voluntary payment may potentially bar a claim to recoup
payments that are made with full knowledge.” Falconi-Sachs v.
LPF Sen. Square, LLC, 142 A.3d 550, 558 (D.C. 2016) (cleaned
up). This doctrine applies even when the claim thus paid was
illegal. See Sanchez v. Time Warner, Inc., No. 98–211–CV–T–26A,
1998 WL 834345, at *1-2 (M.D. Fla. Nov. 4, 1998). Magistrate
Judge Faruqui declined to dismiss Plaintiffs’ claim under this
doctrine for two primary reasons. First, the magistrate judge
noted that courts have generally found that the doctrine is an
affirmative defense that should not be decided on a motion to
dismiss. McFadden, 2021 WL 3284794, at *9. And though there is
an exception that, “[i]f the allegations of the complaint
demonstrate the existence of an affirmative defense, such
defense may be considered on a motion to dismiss,” Ruiz v.
Brink’s Home Sec., Inc., 777 So. 2d 1062, 1064 (Fla. 2d Dist.
Ct. App. 2001), the magistrate judge concluded that was not the
case here. Instead, Magistrate Faruqui found that Plaintiffs
“alleged facts suggesting that, in addition to being ignorant of
the pay-to-pay fee’s illegality, they were unaware Cooper
36
largely was pocketing these fees as profit.” McFadden, 2021 WL
3284794, at *9 (cleaned up). Moreover, according to the
magistrate judge, “courts have regularly rejected application of
this doctrine in Pay-to-Pay fees cases because a plaintiff’s
payments could not be voluntary where they did not know the fees
grossly exceeded the mortgage loan servicer’s actual costs.” Id.(cleaned up).
Mr. Cooper objects, arguing that the voluntary payment
doctrine is a proper basis for dismissal, and that plaintiffs
had full knowledge of the facts when using Mr. Cooper’s pay-by-
phone service to make their mortgage payments. Objections, ECF
No. 44 at 23-26. But the Court does not find clear error in the
magistrate judge’s analysis. Phillips is instructive. In the
case, defendant had argued that plaintiffs’ claims were barred
by the voluntary payment doctrine “because [p]laintiffs
voluntarily paid the cost for the convenience of making mortgage
payments online or over the phone” and plaintiffs had conceded
that they “were aware of the fees” charged. 2020 WL 5531588, at
*2. However, plaintiffs had “maintain[ed] that the nature of the
fees was not fully apparent as [p]laintiffs did not know that
the ‘fees Caliber charged exceed[ed] Caliber’s out-of-pocket
costs by several hundred percent.” Id. In finding for
plaintiffs, the district court noted that although such fees
could have been charged if they were “based on actual cost of
37
the work performed or actual out-of-pocket expenses,” “when, as
here, [p]laintiffs did not know that the fees grossly exceeded
Caliber’s actual costs, the voluntary-payment doctrine is
inapposite.” Id. Similarly, here, Plaintiffs have not conceded
that they were aware that an overwhelming proportion of the Pay-
to-Pay Fees were being pocketed by Mr. Cooper. McFadden, 2021 WL
3284794, at *9. In view of the above, the Court therefore finds
that dismissal based upon an affirmative defense is not
appropriate at this stage of the litigation. See, e.g.,
McDermott v. L.A. Fitness Int’l, LLC, No. 11-cv-192, 2012 WL
13098143, at *5 (M.D. Fla. Mar. 21, 2012) (“The voluntary
payment doctrine is an affirmative defense that should not be
decided on a motion to dismiss.”).
c. Separate Agreement
Finally, the Court addresses the portion of the R. & R.
regarding whether the Pay-to-Pay Fees formed a separate contract
not incidental to the underlying mortgage agreement. In the R. &
R., Magistrate Judge Faruqui determined that the Plaintiffs and
Mr. Cooper did not create and execute a separate oral agreement
regarding the Pay-to-Pay Fees because “Plaintiffs paid the fees
in question solely in relation to their mortgage,” and the fees
therefore were “incidental” to payment in the underlying
mortgage agreement. McFadden, 2021 WL 3284794, at *10.
“Moreover, Cooper’s payment processing business is part and
38
parcel of its servicing of the underlying loan. As such,
Plaintiffs plausibly asserted that ‘the oral agreement here does
not rise to the level of a separate contract.’” Id. (quoting
Techreations, 1986 WL 15077, at *5). As a policy matter,
Magistrate Judge Faruqui also observed that “[p]ermitting an
entity to claim the existence of a separate contract any time it
charged a new, related fee would effectively gut the fee
protections provided by the mortgage agreement and consumer
protection laws, like the FDCPA/FCCPA, and related FHA/HUD
protections (discussed above) that are incorporated into
mortgage agreements.” Id. at *10 n.10. The magistrate court thus
declined to “draw[] on facts outside of the complaint” to find
that a separate contract existed. Id. at *10.
Mr. Cooper objects, arguing that “Plaintiffs’ agreement to
pay the Fees at the stated amount, in exchange for Mr. Cooper
accepting that phone payment, constitutes a separate oral
agreement under the common laws of Florida and the District.”
Objections, ECF No. 44 at 26 (citing cases). It argues that a
proper reading of Techreations does not lead to the conclusion
that the agreement here is not a separate contract. Id. at 27.
According to Mr. Cooper, “Techreations held that a contract was
not formed because it lacked ‘the necessary detail,
completeness, and coverage to stand on its own as an enforceable
contract,’” and here, “Plaintiffs orally agreed to Mr. Cooper’s
39
offer to process their mortgage payments over the phone in
exchange for adequate consideration, the Fees.” Id. Finally, Mr.
Cooper argues that the parties were acting under a separate
agreement because the mortgage agreement only allowed payments
to be in the form of cash, check, or money order—not by phone.
Id.
The Court is not persuaded by Mr. Cooper’s objections. This
Court agrees with Plaintiffs that these objections are “simply a
repackaging of the ‘not incidental’ argument” this Court
addressed in Section III.A.2. See Pls.’ Response, ECF No. 45 at
32; see also Lembeck v. Arvest Central Mortgage Co., No. 20-cv-
03277-VC, 2020 WL 6440502, at *2 (N.D. Cal. 2020) (rejecting
“separate agreement” argument and determining pay-to-pay fees
were incidental to underlying debt). The Court thus overrules
Mr. Cooper’s objection for the same reasons discussed in Section
III.A.2 and in McFadden, 2021 WL 3284794, at *3, *10.
E. D.C. MLBA
1. The Court Reviews the R. & R.’s MLBA Findings De Novo
and for Clear Error
Mr. Cooper makes three objections related to Magistrate
Judge Faruqui’s conclusion that Ms. Wilson adequately pled
violations of the D.C. MBLA. Objections, ECF No. 44 at 27-28.
First, Mr. Cooper argues that Ms. Wilson failed to provide
pre-suit notice of her MBLA claim, although she was required to.
40
Id. at 28. Second, Mr. Cooper argues that “Plaintiff Wilson only
provides a threadbare recital of the MLBA’s requirements and
does not allege how she was misled by Mr. Cooper.” Id. And
third, Mr. Cooper argues that “Plaintiff Wilson’s MLBA claims
are predicated on the same facts as Plaintiffs’ defective FDCPA
claims, as discussed above, and therefore similarly fail.” Id.
The first and third arguments are both one-sentence general
contentions that merely reiterate positions Mr. Cooper took in
its motion to dismiss, and they shall be reviewed for clear
error. See Def.’s Mot. Dismiss, ECF No. 13-1 at 25-26. The Court
shall review the second argument—that Ms. Wilson did not provide
allegations regarding how she was misled by Mr. Cooper—de novo.
2. The Court Overrules Mr. Cooper’s MLBA Objections
The MLBA applies to both lenders and servicers. D.C. Code
§26-1101(11)(ii), (iii) (2001). Under the MLBA, lenders and
servicers are prohibited from “engag[ing] in any unfair or
deceptive practice toward any person.” D.C. Code § 26-
1114(d)(2).
In the R. & R., Magistrate Judge Faruqui first found that
Plaintiff Wilson made out a claim by alleging Mr. Cooper
violated the MLBA by: (1) “assessing fees not authorized under
the terms of the mortgage agreement, see Compl. ¶ 163”; and (2)
“using a scheme to mislead borrowers and engage in a deceptive
practice by failing to disclose the costs to process third-party
41
transactions, see Compl. ¶ 164.” McFadden, 2021 WL 3284794, at
*10. Moreover, the magistrate judge found that “Plaintiffs
plausibly alleged that Cooper charged fees under the guise that
such payments were third-party processing costs, but in fact
over 90% was kept by Cooper as profit. See Compl. ¶¶ 6, 92, 164–
65.” Id.Mr. Cooper objects, arguing that “[t]he simple fact that
Mr. Cooper profited from the Fees does not make them misleading
or indicate how Plaintiff Wilson would have acted differently
had she been aware of Mr. Cooper’s profits on the Fees.”
Objections, ECF No. 44 at 28. He further objects that “[a]
reasonable consumer would surely opt to pay a nominal telephone
payment fee rather than incur higher late fees or enter default,
regardless of how that nominal fee was internalized by her loan
servicer.” Id.The Court concludes that Ms. Wilson has provided more than
a “threadbare recital” of the MLBA. “In evaluating a motion to
dismiss for failure to state a claim upon which relief can be
granted, the Court is mindful that a complaint need only contain
‘a short and plain statement of the claim showing that the
pleader is entitled to relief,’ Twombly, 550 U.S. at 555, and
that the notice pleading rules are ‘not meant to impose a great
burden on a plaintiff.’” Lawrence v. District of Columbia, No.
18-595, 2019 WL 1101329, at *6 (D.D.C. Mar. 8, 2019) (quoting
42
Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005)). Indeed,
in the case Magistrate Judge Faruqui relied upon, Logan v.
Lasalle Bank National Association, 80 A.3d 1014 (D.C. 2013), the
District of Columbia Court of Appeals (D.C. Court of Appeals”)
reversed the lower court’s dismissal of an MLBA claim because
the lower court had found it was “a mere recitation of the very
barest elements of the claim.” 80 A.3d at 1025-26. The court of
appeals explained that the lower court had ignored “allegations
regarding repeated assessment of improper fees and failure to
provide information on indebtedness” and that these facts made
out a claim under the statute. Id. at 1026. Similarly here,
Magistrate Judge Faruqui pointed out specific allegations Ms.
Wilson made throughout the Complaint that regarded “repeated
assessment of improper fees” and the “failure to disclose costs
to process third-party transactions.” McFadden, 2021 WL 3284794,
at *10. The Court does not require more at the motion to dismiss
stage.
The magistrate judge next found that a failed FDCPA claim
did not “automatically” doom an MLBA claim, as Mr. Cooper had
argued. Id. The Court agrees. The sole case Mr. Cooper relies
upon in support of his argument is Mushala v. U.S. Bank National
Association, No. 18-cv-1680 (JDB), 2019 WL 1429523, at *9
(D.D.C. Mar. 29, 2019). But in Mushala, the district court held
that an MLBA claim was barred by res judicata because the claim
43
was based on the same factual nucleus as a previously decided
FDCPA claim. 2019 WL 1429523, at *9. Here, as Magistrate Judge
Faruqui correctly noted, there is no prior action that would bar
Plaintiff’s claim. Moreover, the Court agrees that “[e]ven if
the statutes were coupled, Plaintiff’s FDCPA claim’s survival
here breathes life into the MLBA claim.” McFadden, 2021 WL
3284794, at *10.
Finally, the Court also finds no clear error in Magistrate
Judge Faruqui’s finding that Plaintiff provided MLBA pre-suit
notice for the same reasons the Court provided in Section
III.G.2 regarding pre-suit notice of an unjust enrichment claim.
Accordingly, Mr. Cooper’s objections are overruled.
F. DCCPPA
1. The Court Reviews the R. & R.’s DCCPPA Findings De
Novo and for Clear Error
Mr. Cooper objects to the finding in the R. & R. that it is
a “merchant” under the DCCPA. It argues that the D.C. Court of
Appeals has “expressly refused” to hold that the DCCPPA applies
to mortgage loan servicers, and that the allegations in the
Complaint that Magistrate Faruqui cites do not convert Mr.
Cooper into a “merchant.” Objections, ECF No. 44 at 29. The
Court reviews these objections de novo.
Mr. Cooper also objects to the finding that Plaintiffs have
plausibly alleged that the Pay-to-Pay Fees were misleading
44
because (1) “Plaintiffs incorrectly argue that Mr. Cooper did
not have the right to collect the Fees despite the fact that, as
described above and in Mr. Cooper’s Motion, the Fees violate
neither Plaintiffs’ mortgage agreements nor the FDCPA”; and (2)
“Plaintiffs fail to allege how they were misled or, in other
words, how they would have acted differently if they knew Mr.
Cooper received a profit.” Objections, ECF No. 44 at 30. These
objections are reviewed under the clear error standard because
they restate arguments Mr. Cooper presented in its motion to
dismiss briefing. See Def.’s Reply, ECF No. 18 at 29-31.
2. The Court Overrules Mr. Cooper’s Arguments Regarding
the DCCPPA Findings
a. Mortgage Servicers as “Merchants”
Under the DCCPPA, “merchants” are defined as persons who
“sell, lease . . . , or transfer, either directly or indirectly,
consumer goods or services.” D.C. Code § 28-3901(a)(3). “Goods
and services,” are “any and all parts of the economic output of
society, at any stage or related or necessary point in the
economic process, and includes consumer credit . . . real estate
transactions, and consumer services of all types.” D.C. Code §
28-3901(a)(7). Magistrate Judge Faruqui found that this broad
definition encompasses Mr. Cooper’s business and conduct alleged
in this case. McFadden, 2021 WL 3284794, at *11-12.
45
Mr. Cooper objects to the magistrate judge’s finding that
it is a “merchant” under the DCCPPA, primarily relying on the
D.C. Court of Appeals decision Busby v. Capital One, N.A., 772
F. Supp. 2d 268 (D.D.C. 2011). In Busby, the court held that the
DCCPA did not apply to mortgage loan servicers. 772 F. Supp. 2d
at 280. Here, however, Ms. Wilson has alleged in the Complaint
that Mr. Cooper was both the mortgage servicer and her mortgage
lender. Compl., ECF No. 1 ¶ 82. And the DCCPPA applies to
mortgage lenders. See DeBerry v. First Gov’t Mortg. & Invs.
Corp., 743 A.2d 699, 702 (D.C. 1999). Moreover, in Logan v.
LaSalle Bank Nat’l Ass’n, 80 A.3d 1014, 1027 (D.C. 2013), the
D.C. Court of Appeals held that the DCCPPA applied to “real
estate mortgage transactions,” “mortgage refinancing,” and
“deceptive billing practices related to a contract for consumer
goods and services.” 80 A.3d at 1027. And here, unlike in Busby,
“Ms. Wilson supplied multiple examples of how Cooper ‘would
supply, any goods or services to [Ms. Wilson] in connection with
[the] ownership or sale of [her] house,’” including “paying
taxes and insurance from escrow accounts, modifying mortgages,
and property preservation.” McFadden, 2021 WL 3284794, at *12
(quoting Ali v. Tolbert, 636 F.3d 622, 628 (D.C. Cir. 2011))
(citing Compl., ECF No. 1 ¶ 4; Ex. B ¶¶ 3, 5, 7, 19). Therefore,
because the DCCPPA applies to “any action normally considered
46
only incidental to the supply of goods and services to
consumers,” the services Ms. Wilson alleged fall into its scope.
b. Adequacy of Allegations
Regarding whether the Pay-to-Pay Fees were sufficiently
alleged as misleading, Magistrate Judge Faruqui explained that
“it is a violation of the [DC]CPPA if the merchant
misrepresented’ or ‘failed to state’ a material fact.” Frankeny
v. District Hospital Partners, LP, 225 A.3d 999, 1005 (D.C.
2020). Based on this standard, the magistrate court found that
the Complaint plausibly alleged that the fees were misleading
because: (1) Plaintiffs alleged that Mr. Cooper represented to
borrowers that it had the right to collect such fees, even
though the fees were allegedly prohibited by the mortgage and by
the HUD rules and FDCPA; and (2) Plaintiffs alleged that Mr.
Cooper never disclosed to borrowers that it was collecting more
than it cost to process the Pay-to-Pay Fees and that Mr. Cooper
had created an unfair profit center for itself. McFadden, 2021
WL 3284794, at *12-13.
Mr. Cooper objects to the finding that Plaintiffs have
plausibly alleged that the Pay-to-Pay Fees were misleading.
Objections, ECF No. 44 at 30. First, it argues that “Plaintiffs
incorrectly argue that Mr. Cooper did not have the right to
collect the Fees despite the fact that, as described above and
in Mr. Cooper’s Motion, the Fees violate neither Plaintiffs’
47
mortgage agreements nor the FDCPA.” Id. Second, it objects to
the finding that Plaintiffs adequately alleged that Mr. Cooper’s
failure to disclose its profit on the Pay-to-Pay Fees was
“material” because “Plaintiffs fail to allege how they were
misled or, in other words, how they would have acted differently
if they knew Mr. Cooper received a profit.” Id.First, as described in Memorandum Opinion, the Court has
found that the mortgage agreements do not expressly authorize
the Pay-to-Pay Fees and that Plaintiffs have established viable
claims under breach of contract and the FDCPA. Mr. Cooper’s
objection is therefore overruled in this respect. And with
regard to Mr. Cooper’s second objection, “intent or knowledge is
not required” to plausibly allege a claim of misrepresentation
under the DCCPPA. Frankeny, 225 A.3d at 1005. In addition, the
statute does not require that any consumer be actually misled.
Instead, the DCCPPA makes it illegal to “engage in an unfair or
deceptive trade practice, whether or not any consumer is in fact
misled, deceived, or damaged thereby.” D.C. Code § 28-3904.
Therefore, Plaintiffs did not have to allege “how they would
have acted differently if they knew Mr. Cooper received a
profit.” Objections, ECF No. 44 at 30; see Frankeny, 225 A.3d at
1004 (noting that the D.C. Court of Appeals has held that “in
light of the plain language and the legislative intent of the
CPPA, a consumer need not allege intentional misrepresentation
48
of a material fact or an intentional failure to disclose a
material fact under D.C. Code § 28-3904(e) and (f)”).
The objections are accordingly overruled.
G. Unjust Enrichment
1. The Court Reviews the R. & R.’s Unjust Enrichment
Findings De Novo and for Clear Error
Mr. Cooper objects to Magistrate Judge Faruqui’s
determination that Plaintiffs may maintain their unjust
enrichment claims as an alternative theory of liability.
Objections, ECF No. 44 at 31.
Mr. Cooper argues that, contrary to Magistrate Judge
Faruqui’s findings, unjust enrichment claims must be dismissed
when such claims arise out of a contractual relationship, which
is the case here. Id. Mr. Cooper, however, duplicates arguments
included in its motion to dismiss. See Def.’s Mot. Dismiss, ECF
No. 13-1 at 22-25. Because Mr. Cooper presents no new argument,
its objection is reviewed for clear error. See Houlahan, 979 F.
Supp. 2d at 88.
Mr. Cooper also contends that Plaintiffs failed to
adequately allege pre-suit notice of their unjust enrichment
claims, as required by Plaintiffs’ mortgage agreements, and
objects to Magistrate Judge Faruqui’s findings to the contrary.
Id. at 32-33. While this objection also largely mirrors
arguments in its motion to dismiss, the Court shall review this
49
objection de novo to the extent that Mr. Cooper newly quarrels
with the magistrate judge’s “reliance” on the case Henok v.
Chase Home Fin., LLC, 922 F. Supp. 2d 110, 118-19 (D.D.C. 2013).
Id.
2. The Court Overrules Mr. Cooper’s Unjust Enrichment
Objections
First, the Court finds no clear error in Magistrate Judge
Faruqui’s analysis regarding the appropriateness of Plaintiffs’
unjust enrichment claim in the alternative.
Mr. Cooper argues that “[t]he conduct comprising
Plaintiffs’ alleged unjust enrichment claims arises entirely out
of the parties’ contractual borrower-servicer relationship,” and
that it is well-established that such claims must fail as a
matter of law when the subject matter is governed by an express
contract. Objections, ECF No. 44 at 31-32 (citing cases). It
contends that because the “gravamen” of the unjust enrichment
claim is governed by contract, the claim must be dismissed. Id.
at 32.
This Court agrees with Mr. Cooper’s general principle that
“a plaintiff cannot maintain an unjust enrichment claim
concerning an aspect of the parties’ relationship that was
governed by a contract.” Id. at 31 (quoting Smith v. Rubicon
Advisors, LLC, 254 F. Supp. 3d 245, 249 (D.D.C. 2017)). Indeed,
Magistrate Judge Faruqui agreed, too. See McFadden, 2021 WL
503284794, at *13 (“As Cooper notes, ‘In general, a plaintiff
cannot maintain an unjust enrichment claim concerning an aspect
of the parties’ relationship that was governed by a
contract.’”). However, as explained in the R. & R., courts in
this District and Florida have also held that “a plaintiff may
pursue an unjust enrichment claim as an ‘alternative theory of
liability’ even though the plaintiff ‘ultimately cannot recover
under both a breach of contract claim and an unjust enrichment
claim pertaining to the subject matter of that contract.’” Id.(quoting Smith, 254 F. Supp. 3d at 250) (citing JI-EE Indus. Co.
v. Paragon Metals, Inc., No. 09-cv-81590, 2010 WL 1141103, at *1
(S.D. Fla. Mar. 23, 2010)); see also Fed. R. Civ. P. 8(d)(3) (“A
party may state as many separate claims or defenses it has,
regardless of consistency.”). Without this rule, a plaintiff
could be left “without any remedy should the fact-finder
determine at a later stage that there was no express agreement
between the parties.” Scowcroft Grp., Inc. v. Toreador Res.
Corp., 666 F. Supp. 2d 39, 44 (D.D.C. 2009). Further, as courts
in this District have noted, “[t]his exception is especially
necessary where, as here, the defendant casts doubt on the . . .
contract.” Smith, 254 F. Supp. 3d at 250; see id. (“Even if the
opposing party does not seek to discredit the contract,
dismissing unjust enrichment claims in conjunction with contract
claims may be premature where the parties have not yet had the
51
benefit of discovery and the Court has not yet interpreted the
scope of the contract.”); see also McFadden, 2021 WL 3284794, at
*14 (noting that Mr. Cooper “asserts that the uniform mortgage
agreements do not govern Pay-to-Pay fees”). Accordingly, Mr.
Cooper’s objection regarding the appropriateness of Plaintiff’s
pleading of unjust enrichment in the alternative is overruled.
Second, the Court also overrules Mr. Cooper’s objection to
Magistrate Judge Faruqui’s finding that Plaintiffs adequately
alleged pre-suit notice. Mr. Cooper argues that Plaintiffs did
not provide adequate pre-suit notice of their unjust enrichment
claim, as required by the mortgage agreements. Objections, ECF
No. 44 at 32. The mortgage agreements provide that:
Neither Borrower nor Lender may commence,
join, or be joined to any judicial action (as
either an individual litigant or the member of
a class) that arises from the other party’s
actions pursuant to this Security Instrument
or that alleges that the other party has
breached any provision of, or any duty owed by
reason of, this Security Instrument, until
such Borrower or Lender has notified the other
party (with such notice given in compliance
with the requirements of Section [15/14]) of
such alleged breach and afforded the other
party hereto a reasonable period after the
giving of such notice to take corrective
action.
See Objections, ECF No. 44 at 32 (quoting Compl., Ex. A at 10 ¶
20, Ex. C at 10 ¶ 19). Mr. Cooper claims that Plaintiffs’ notice
was defective because it “fail[ed] to include any reference to
Plaintiffs’ unjust enrichment claims, only seeking ‘restitution’
52
of the Fees in relation to their other claims.” Id. at 33
(noting that, “[i]n contrast, Plaintiffs deliberately referenced
their FCCPA, FDUTPA, and DCCPPA claims in their pre-suit
demands”).
However, the Court does not read the language of the
mortgage agreement to require a party to give notice of a
specific legal claim prior to any judicial action. Rather,
notice is required only for claims “aris[ing] from the other
party’s actions pursuant to this Security Instrument or . . .
alleg[ing] that the other party has breached any provision of,
or any duty owed by reason of, this Security Instrument.” See
Objections, ECF No. 44 at 32 (quoting Compl., Ex. A at 10 ¶ 20,
Ex. C at 10 ¶ 19). Pursuant to this unambiguous language,
although Plaintiffs would be required to note any alleged
“breach,” they would not be required to note the specific cause
of action they intended to bring in court. See Key v. Allstate
Ins., 90 F.3d 1546, 1549 (11th Cir. 1996) (“[I]f the terms of
a[] . . . contract are clear and unambiguous, a court must
interpret the contract in accordance with its plain meaning . .
. .”).
Moreover, assuming that the provision applies, Plaintiffs’
Complaint indeed alleges that they gave pre-suit notice to Mr.
Cooper prior to suit. See Compl., ECF No. 1 ¶¶ 79, 93. As stated
above, Plaintiffs were not required to provide the specific
53
information Mr. Cooper argues in favor of, and therefore such
allegations in the Complaint are sufficiently detailed to meet
the pleading requirements. Cf. Trevathan v. Select Portfolio
Servicing, Inc., 142 F. Supp. 3d 1283, 1290 (S.D. Fla. 2015)
(dismissing unjust enrichment claim where plaintiff failed to
allege compliance with notice and cure provision in agreement).
And though Mr. Cooper argues that the R. & R.’s “reliance
on [Henok v. Chase Home Fin., LLC, 922 F. Supp. 2d 110 (D.D.C.
2013)] is misplaced as the Plaintiffs there were provided notice
of the core issue of the complaint, foreclosure,” Objections,
ECF No. 44 at 33, this Court disagrees. In Henok, the plaintiff
had argued that a notice of foreclosure sent to him was invalid
because it did not include his “full correct address” and did
not “include the precise amount to cure the default.” 922 F.
Supp. 2d at 118. The court dismissed the argument and held that
the plaintiff “had a viable opportunity to cure his default and
take action to protect his interests,” noting that plaintiff had
“provide[d] no authority” supporting his argument that excluding
a portion of his full address rendered the notice defective. Id.
at 118-19. Here, Plaintiffs’ pre-suit demand requested
“restitution of such fees paid to Mr. Cooper.” 2 McFadden, 2021 WL
2 The Court may consider Plaintiffs’ pre-suit demand letters
because they are integral to and referenced in the Complaint.
See Ward v. D.C. Dep’t of Youth Rehab. Servs., 768 F. Supp. 2d
117, 119–20 (D.D.C. 2011) (“[A] court does not consider matters
54
3284794, at *14. Mr. Cooper was similarly thus on notice of
Plaintiffs’ requested remedy and how it could “take action to
cure” any alleged breach. Henok, 922 F. Supp. 2d at 118-19. The
Court therefore agrees with the magistrate judge’s
recommendation that the alleged pre-suit notice was not
defective. See McFadden, 2021 WL 3284794, at *14.
Accordingly, Mr. Cooper’s objections are overruled.
IV. Conclusion
For the reasons stated above, Magistrate Judge Faruqui’s R.
& R., see ECF No. 42, is ADOPTED. Defendant Mr. Cooper’s motion
to dismiss, see ECF No. 13, is DENIED. The parties shall submit
a joint status report with a recommendation for further
proceedings by no later than April 15, 2022.
An appropriate Order accompanying this Memorandum Opinion
was issued on March 31, 2022.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
April 4, 2022
outside the pleadings, but a court may consider on a motion to
dismiss to include ‘the facts alleged in the complaint,
documents attached as exhibits or incorporated by reference in
the complaint . . . .’”).
55