United States District Court, D. Nebraska
SHELLY DONNELLY-TOVAR, on behalf of herself and all others similarly situated; Plaintiff,
SELECT PORTFOLIO SERVICING, INC., Defendant
[Copyrighted Material Omitted]
For Shelly Donnelly-Tovar, On behalf of herself and all others similarly situated, Plaintiff: O. Randolph Bragg, HORWITZ, HORWITZ LAW FIRM - CHICAGO, Chicago, IL; Pamela A. Car, William L. Reinbrecht, CAR, REINBRECHT LAW FIRM, Omaha, NE.
For Select Portfolio Servicing, Inc., Defendant: Elizabeth A. Culhane, Joseph E. Jones, FRASER, STRYKER LAW FIRM, Omaha, NE; Thomas M. Hefferon, PRO HAC VICE, GOODWIN, PROCTER LAW FIRM, Washington, DC.
MEMORANDUM AND ORDER
Joseph F. Bataillon, United States District Judge.
This matter is before the court on a motion to dismiss filed by the defendant, Select Portfolio Servicing, Inc. (" SPS" ), Filing No. 6. This is a purported class action for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (" FDCPA" ). The court has jurisdiction under 15 U.S.C. § § 1692k(d), 1331, and 1337.
In her complaint, the plaintiff, on behalf of herself and others similarly situated, seeks actual and statutory damages against the defendant, an alleged debt collector, " arising from the routine practice of sending collection letters to consumers, like the those sent to Ms. Donnelly-Tovar which inter alia failed to provide the validation notice pursuant to 15 U.S.C. § 1692g(a), the debt collection warning pursuant to 15 U.S.C. § 1692e(11), misrepresented the character, amount, or status of the debt in violation of 15 U.S.C. § 1692e(2)(A) and e(10), and attempted to collect amounts not authorized by contract or law which had been discharged in bankruptcy in violation of 15 U.S.C. § 1692f(1)." Filing No. 1, Complaint at 1. Ms. Donnelly-Tovar alleges she incurred a mortgage obligation with First Franklin Loan Services (" First Franklin" ) for the purchase of real property. Id. at 2. She later came into financial difficulty, falling into arrears on the mortgage. Id. She alleges she filed a Chapter 7 bankruptcy allegedly listing First Franklin as a secured creditor and First Franklin was notified of the bankruptcy filing. Id. at 2-3. She further alleges her obligations were discharged in bankruptcy court on May 10, 2020 and she abandoned her interest in the property. Id. at 3; see also In re Donnelly-Tovar, No. 10-80219 (Bankr. D. Neb. May 10, 2010). She also alleges she has not reaffirmed or renewed the discharged mortgage obligation with First Franklin or any other entity. Id. Further, she alleges that the defendant obtained her obligation to First Franklin after the debt had fallen into default. Id. at 3. 
She later received correspondence from the defendant offering to release a secured lien on the property at issue for payment in the amount of $23,891.72, which was less than the total amount of $59,729.31 secured by the lien. Id. at 3; Ex. A, Letter dated December 28, 2011. She alleges the December 28, 2011, letter was the initial communication from SPS. Id. at 4. She further alleges that it is a routine practice of SPS to send such letters. Id.
In the letter quoted in and attached to the complaint, SPS proposes that the payment will effect " a full and complete satisfaction of the lien on the property," noting that the " total amount secured by the lien is $59,729.31." Id. at 3-4; Ex. A, Letter at 1. Further, the letter sets out detailed payment instructions stating that " [p]ayment must be in the form of certified funds according to the attached instructions page for certified funds remittance" and that " [c]ertified funds may be sent in the form of a bank wire, cashier's bank check, attorney trust account check, title or escrow company check, or Western Union Quick Collect." Id. at 1-2. The letter states " [t]his information is for informational purposes only and is not considered an attempt to collect a debt." Id. at 1. The letter identifies SPS, however, as a collection agency licensed in Minnesota, North Carolina, and Tennessee. Id.
SPS moves to dismiss under Fed.R.Civ.P. 12(b)(6). It argues that the plaintiff's complaint does not state a claim for relief because the FDCPA does not apply " to a secured creditor's enforcement of its lien on real property when the underlying debt was extinguished and the creditor does not simultaneously attempt to collect that debt." Filing No. 7, Brief at 1. It argues that SPS had the right to enforce the lien and contends that the letter accurately explained to the plaintiff that although her " personal liability on the note may be discharged, dismissed, or subject to an automatic stay, the terms of the mortgage remain in effect. The owner of the mortgage, as lien holder, continues to have an enforceable lien on the real property.'" Id. at 2. It cites SPS's " repeated assurances in the Letter that it was not demanding payment, that it was not attempting to collect a debt, and that Donnelly-Tovar no longer had personal liability for the mortgage obligation," as support for its position that it " was not attempting to collect on an 'obligation or alleged obligation of a consumer to pay money,' but was instead offering options for the settlement of an in rem right to enforce a security interest." Id. at 3-4. SPS argues that " security interest enforcement activities do not constitute attempts to collect a 'debt' as defined by the FDCPA." Id. at 4. The defendant argues that the FDCPA is " simply not implicated" because " there was no simultaneous demand for payment, no suggestion that payment was mandatory, and no implication that Donnelly-Tovar had personal financial responsibility." Filing No. 18, Reply Brief at 6. It states that the letter " does not so much as hint that Donnelly-Tovar was obligated to pay anyone," adding that she " was free to act, or not act, as she desired." Reply Brief at 10.
A. Fed.R.Civ.P. 12(b)(6) ...