658 F. App'x 108
3rd Cir.2016Background
- In 2004 Coles obtained a mortgage from National City (later PNC Mortgage) secured by Plainfield, NJ property; payments were timely until 2009 when National City declared default and began foreclosure proceedings in 2009.
- National City, through counsel (initially Zucker Goldberg, later Ballard Spahr), represented it was the lender and had not assigned the mortgage; Coles later discovered a 2013 Assignment to Wilmington Trust and alleged earlier, clandestine assignment (pre-2005) making the 2009 foreclosure a fraud.
- Coles (executor of the estate) sued in federal court alleging violations of the Fair Debt Collection Practices Act (FDCPA) against PNC Mortgage (successor to National City) and Ballard Spahr, among others.
- The District Court dismissed the complaint without prejudice, concluding Coles failed to plausibly plead that PNC Mortgage or Ballard Spahr were "debt collectors" under the FDCPA, a necessary element of liability.
- Coles appealed; the Third Circuit exercised plenary review of the motion-to-dismiss ruling and treated the complaint’s allegations as true for pleadings purposes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PNC Mortgage is a "debt collector" under the FDCPA | Exhibit to complaint shows PNC regularly collects debts owed to others, so it is a debt collector | PNC was the originator of the mortgage; originators collecting their own loans are exempt from the FDCPA; plaintiff did not plead debt-collector status | Court held plaintiff failed to plead PNC is a debt collector; originator exemption applies and plaintiff offered no contrary argument; dismissal affirmed |
| Whether Ballard Spahr is a "debt collector" under the FDCPA | Ballard Spahr’s foreclosure conduct amounted to debt collection and thus it is a debt collector | Plaintiff pled only legal conclusions without factual allegations showing Ballard regularly collects debts for others | Court held plaintiff’s allegations were conclusory and insufficient; dismissal affirmed |
| Whether district court erred by not considering exhibits attached to the complaint to supply missing allegations | Plaintiff argued Exhibit B shows collection activity and asked court to take judicial notice of related documents | Defendants and district court treated the complaint on its face; plaintiff had not relied on those exhibits below | Court found plaintiff waived new arguments raised for first time on appeal and courts are not required to hunt for facts buried in exhibits |
| Whether dismissal should be with prejudice | Plaintiff indicated intent to stand on the complaint rather than refile | Defendants sought dismissal for failure to state a claim | Court affirmed dismissal but without prejudice (consistent with district court’s judgment) |
Key Cases Cited
- S.B. v. KinderCare Learning Ctrs., LLC, 815 F.3d 150 (3d Cir. 2016) (explaining finality when plaintiff elects to stand on dismissed complaint)
- Connelly v. Lane Constr. Corp., 809 F.3d 780 (3d Cir. 2016) (standards for pleading and reviewing Rule 12(b)(6) dismissal)
- Pearson v. Sec’y Dep’t of Corr., 775 F.3d 598 (3d Cir. 2015) (pleading plausibility standard and treating well-pled allegations as true)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plaintiff must plead factual content to state a plausible claim; legal conclusions are insufficient)
- Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir. 2014) (elements required to prove an FDCPA claim)
- Doeblers’ Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812 (3d Cir. 2006) (courts are not required to search the record for factual support buried in exhibits)