FORDHAM v. SETERUS, INC.
3:18-cv-13808
D.N.J.Jul 31, 2019Background
- Plaintiff Judith Fordham owns a home serviced by Seterus; she was more than 45 days delinquent and received one or more "New Jersey Final Letters" from Seterus.
- Fordham alleges the letters falsely and misleadingly threatened acceleration and foreclosure unless full payment was received, contrary to Seterus’s asserted policy of not accelerating or foreclosing if a payment brought the loan to under 45 days delinquent.
- The Amended Complaint did not attach or quote any of the actual New Jersey letters Fordham received, did not state dates or amounts, and instead attached a materially similar letter sent to a North Carolina borrower in 2012.
- Fordham asserted claims under the FDCPA (15 U.S.C. § 1692e(5), 1692e(10), 1692f) and the New Jersey Consumer Fraud Act (NJCFA).
- Seterus moved to dismiss under Rules 12(b)(6) and 12(b)(1), arguing insufficient pleading, failure to satisfy Rule 9(b) (for NJCFA), lack of ascertainable loss, and lack of Article III standing.
- The District Court granted the motion: FDCPA and NJCFA claims dismissed for inadequate factual allegations (and NJCFA also abandoned by plaintiff); court found plaintiff lacked standing to bring the FDCPA claim as pleaded, but allowed leave to amend within 30 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Seterus violated FDCPA §§1692e(5), 1692e(10), 1692f by threatening acceleration/foreclosure | Fordham: letters (like the NC exemplar) falsely threatened acceleration/foreclosure unless full payment, so they were deceptive/unfair | Seterus: Complaint fails Rule 8 — plaintiff did not attach or quote the actual NJ letters, give dates or amounts; court cannot assess the letters' language | Dismissed for failure to plead factual content necessary to plausibly show an FDCPA violation; plaintiff may amend |
| Whether Fordham stated a NJCFA claim | Fordham alleged consumer fraud based on the same letters | Seterus: claim fails Rule 9(b), lacks ascertainable loss, and fails to allege unlawful conduct | Dismissed; Fordham expressly abandoned NJCFA claim in her opposition, so court dismissed without merits analysis |
| Whether Fordham has Article III standing | Fordham: statutory FDCPA violation suffices to confer standing; asserted harms from defendant’s communications | Seterus: no concrete, particularized injury because Complaint relies on third-party letter and lacks facts about letters actually received | No standing as pleaded; injury-in-fact not established because allegations relied on unrelated third-party letter and lacked particularized facts |
| Whether leave to amend should be permitted | Fordham implicitly sought to proceed (and court routinely grants leave where deficiencies are curable) | Seterus did not argue prejudice; sought dismissal | Court granted dismissal with leave to amend within 30 days to cure deficiencies |
Key Cases Cited
- Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir.) (pleading-stage factual-allegation standards)
- In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410 (3d Cir.) (documents integral to the complaint may be considered on motion to dismiss)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 8)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must contain factual enhancements to be plausible)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (statutory violations must still produce concrete and particularized injury for Article III standing)
- Brown v. Card Service Center, 464 F.3d 450 (3d Cir.) (FDCPA communications judged from perspective of least sophisticated consumer)
- Lesher v. Law Offices of Mitchell N. Kay, P.C., 650 F.3d 993 (3d Cir.) (FDCPA remedial purpose; broad construction)
- Kaymark v. Bank of America, N.A., 783 F.3d 168 (3d Cir.) (purpose of FDCPA and its protective role)