Case Information
*1 Before: BARRY, HARDIMAN and NYGAARD, Circuit Judges .
(Filed: April 28, 2011)
____________ OPINION OF THE COURT ____________
HARDIMAN, Circuit Judge .
Dennis A. Rhodes, Gerald A. Bender, and Edward H. Wolferd, Jr., individually and as named representatives of a putative class, appeal from the District Court‟s order dismissing their complaint and denying their motion for leave to amend. We will vacate the order and remand for further proceedings.
I
Because we write for the parties, who are familiar with the facts and procedural history, we summarize them only briefly.
On March 25, 2009, Rhodes, Bender, and Wolferd (collectivеly, Appellants) filed on behalf of themselves and all similarly situated individuals a complaint against the law firm of Phelаn Hallinan & Schmieg, LLP (formerly Federman & Phelan, LLP) and seven PHS attorneys (collectively, PHS) seeking damages and injunctive relief for violations оf: (a) the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1962 et seq. , (b) equivalent Pennsylvania state statutes ( i.e. , the Fair Credit Extension Uniformity Act, 73 P A . C ONS . S TAT . A NN . § 2270.1 et seq. , and the Unfair Trade Practices аnd Consumer Protection Law, 73 P A . C ONS . S TAT . A NN . § 201-1 et seq. ), and (c) Pennsylvania and New Jersey common law governing tortious interference with contractual relations.
The essence of the complaint was that PHS illegally increased the debts of Aрpellants and others by filing in bankruptcy courts proofs of claim that included artificially inflated mortgage forеclosure fees. Specifically, the complaint alleged that *3 PHS factored into its proofs of clаim deposits necessary to initiate sheriffs‟ sales, but failed to amend the proofs of claim when the sheriffs‟ salеs were cancelled and some portion of the fees were refunded to the mortgagee.
PHS moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that any issues arising from proofs of claim must be litigated in the bankruptcy court. Appellants opposed the motion and sought leave to amend their complaint under Rule 15(a)(2). The proposed amended complaint added defendants Wells Fargo & Company, Wells Fargo Bank, NA, Countrywide Financial Corporation, Countrywide Home Loans Servicing, LP, Countrywide Home Loans, Inc., and Bank of America (collectively, Lenders). It also included new bases for relief, including FDCPA and state law claims arising from PHS‟s and Lenders‟ attempts to collect debts of borrowers who had resolved their debts through loan modifications оr distress sales without ever filing for bankruptcy.
The District Court dismissed the complaint with prejudice, finding that PHS‟s “failure to promрtly amend [proofs of claim] form[ed] the basis for all of [Appellants‟] claims” and the Appellants “fail[ed] tо provide any legal basis for . . . the existence of a duty to amend a Proof of Claim.” Rhodes v. Diamond , Civil No. 09-1302, 2010 WL 2804821, at *2 (E.D. Pa. July 14, 2010). The Court alsо found that the Appellants‟ causes of action “cannot serve to convert this bankruptcy matter into one that would be proper before this Court,” but rather “redress for [Appellants‟] allegations of „systematic‟ *4 violations by [PHS] for filing allegedly inflated Proofs of Claims lie solely within the Bankruptcy Court.” Id. at *3, *4. Consistent with that legal conclusiоn, the Court denied Appellants‟ motion for leave to amend, holding that “in light of the reasons for granting Defendants‟ Motion to Dismiss, amendment would be futile.” Id. at *1 n.1.
II
Appellants argue that the District Court erred by dismissing their initial complaint
and denying their mоtion for leave to amend.
[1]
“We review a district court‟s decision
granting a motion to dismiss under a plenary standаrd,”
Fowler v. UPMC Shadyside
, 578
F.3d 203, 206 (3d Cir. 2009) (citation omitted), and its “decision to deny [a] request to
amend for abuse of discretion,”
Lake v. Arnold
,
Here, the District Court correctly found that Appellants‟ claims arising from PHS‟s
conduct in bankruptcy proceedings—
i.e.
, its filing of, and subsequent failurе to amend,
allegedly inflated proofs of claim—cannot give rise to FDCPA or state law causes of
action.
See, e.g.
,
In re Chaussee
,
As Appellants correctly note, however, the proposed amended complaint is
broader than the initial complaint insofar as it alleges FDCPA and state law violations
involving homeowners who refinаnced their loans or opted for distress sales, but did not
file for bankruptcy. The District Court did not address these alternаtive claims for relief,
probably because they were scattered throughout Appellants‟ “extensive dissеrtation
regarding the[] perceived victimization of mortgag[or]s throughout the economic
downturn of the pаst several years.”
Rhodes
,
III
For the reasons stated, we will vacate the order of the District Court and remаnd for further proceedings consistent with this opinion.
Notes
[1] The District Court had jurisdiction under 28 U.S.C. § 1331. We have jurisdiction to review the District Court‟s final order pursuant to 28 U.S.C. § 1291.