Keeton v. Countrywide Home Loans, Inc.
217 F. Supp. 3d 177
| D.D.C. | 2016Background
- Barbara and Wilbert Keeton own a D.C. home; financial distress beginning in 2006 led to a 2007 Countrywide mortgage and HELOC, which plaintiffs allege were executed while Barbara was incapacitated in the hospital.
- Bank of America later held the loan; plaintiffs sought loan modifications in subsequent years and retained counsel in 2012 after discovering potential defects in Barbara's execution of loan documents.
- In 2014 Bank of America transferred servicing to Specialized Loan Servicing, LLC (SLS); SLS then contacted the Keetons about the loan and attempted a modification that failed.
- Plaintiffs amended their Superior Court complaint to add SLS and asserted one FDCPA count (communications and collection practices); SLS removed to federal court and moved to dismiss.
- The court treated pleadings as true for a 12(b)(6) review and found defects in the FDCPA count but allowed leave to amend rather than dismissal with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Available relief under FDCPA | Keetons seek actual damages (and also sought injunction, punitive, treble) | SLS: equitable relief and punitive/treble unavailable under FDCPA | Court: equitable, punitive, treble unavailable; actual damages claim survives pleadings stage |
| Whether SLS is a "debt collector" under FDCPA | Keetons: SLS regularly collected the debt after servicing transfer, so FDCPA applies | SLS: servicer exempt as fiduciary or because loan was not in default when obtained | Court: allegations suffice to invoke "regularly collects" prong but plaintiffs failed to allege facts showing loan was in default when SLS obtained it; bona-fide-fiduciary exemption not resolved as a matter of law here |
| Timeliness (one-year statute) | Keetons: some alleged misconduct occurred after transfer in 2014 | SLS: many challenged acts occurred over a year before plaintiffs sued SLS | Court: several transfer-related allegations likely time-barred; statute of limitations problem may bar some claims |
| Sufficiency of allegations & prejudice from late joinder | Keetons: alleged communications and bureau reports; seek to proceed | SLS: allegations are conclusory, lack dates/details, and joinder was late causing prejudice | Court: many claims are pleaded in conclusory fashion without dates or statutory citations and thus insufficient; delay prejudice could be cured by limited reopening of discovery; allowed leave to amend |
Key Cases Cited
- Sparrow v. United Air Lines, 216 F.3d 1111 (D.C. Cir. 2000) (pleading-stage standard to accept factual allegations as true)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (labels and conclusions insufficient; plausibility standard)
- Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (2010) (FDCPA regulates consumer-debt interactions)
- Harris v. Liberty Community Management, Inc., 702 F.3d 1298 (11th Cir. 2012) (incidental- fiduciary exemption does not apply where collection is central to fiduciary duties)
- Nool v. HomeQ Servicing, 653 F. Supp. 2d 1047 (E.D. Cal. 2009) (mortgage servicer not a debt collector under FDCPA if debt was not in default when assigned)
- Bridge v. Ocwen Federal Bank, FSB, 681 F.3d 355 (6th Cir. 2012) (discussing limits on FDCPA applicability to mortgage servicers)
- Casault v. Federal National Mortgage Ass'n, 915 F. Supp. 2d 1113 (C.D. Cal. 2012) (dismissing FDCPA claim where plaintiffs failed to allege loan was in default at transfer)