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Charles Demoss and Gara Strot v. Peterson

May 6, 2013


The opinion of the court was delivered by: David S. Doty, Judge United States District Court 9


This matter is before the court upon the amended motion to dismiss and the motion for sanctions by defendant Peterson, Fram & Bergman (PFB). Based on a review of the file, record and proceedings herein, and for the following reasons, the court grants the motion to dismiss and denies the motion for sanctions.


This Fair Debt Collection Practices Act (FDCPA) dispute arises out of foreclosure-related communications between PFB and plaintiffs Charles DeMoss and Gara Strot. On November 7, 2011, PFB sent a cover letter and "preforeclosure notice" to plaintiffs regarding a debt secured by a mortgage on their residence. Am. Compl. ¶¶ 6-7. The subject line of the cover letter reads "Mortgage Foreclosure on 14324 Brunsvold Rd. Minnetonka, MN 55345." Id. Ex. 1. The cover letter states:

Principal balance of mortgage as of November 7, 2011, is [redacted]. Reinstatement and payoff figures available upon request. *** Necessary documents have been forwarded to our office to initiate foreclosure due to the default in your mortgage held or serviced by Bank of America, N.A.

Mortgage Electronic Registration Systems, Inc. as nominee for E*Trade Bank is the original creditor for this debt. You have thirty (30) days to dispute the validity of the debt. If you notify me within thirty (30) days that the debt is wholly or partially disputed, I will provide you with verification of the debt. During the verification period, foreclosure proceedings will continue. Unless you dispute the validity of the debt, or any portion thereof, within thirty (30) days after receipt of the notice, the debt will be assumed to be valid. ***

Unless you have been discharged from the debt pursuant to a bankruptcy, this is an attempt to collect a debt and any information obtained will be used for that purpose. Be advised that the undersigned is a debt collector.*fn1

Id. In addition to the cover letter, a preforeclosure notice was attached to the mailing and provided information regarding foreclosure prevention counseling.*fn2

On November 6, 2012, plaintiffs filed an amended putative class action complaint, alleging that the cover letter and preforeclosure notice violate the FDCPA. PFB filed an amended motion to dismiss on November 20, 2012. Thereafter, on December 21, 2012, PFB moved for sanctions.



To survive a motion to dismiss for failure to state a claim, "'a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)). "A claim has facial plausibility when the plaintiff [has pleaded] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). Although a complaint need not contain detailed factual allegations, it must raise a right to relief above the speculative level. See Twombly, 550 U.S. at 555. "[L]abels and conclusions or a formulaic recitation of the elements of a cause of action" are not sufficient to state a claim. Iqbal, 129 S. Ct. at 1949 (citation and internal quotation marks omitted). Plaintiffs argue that the cover letter violated the FDCPA because it (1) provided the principal balance of the mortgage rather than the total amount owed and (2) contained false, deceptive and misleading statements. See 15 U.S.C. §§ 1692g(a)(1), 1692e, 1692e(5). PFB responds that no violation occurred because the correspondence is not subject to the FDCPA.

A. Foreclosure Activity

The FDCPA applies to activity by debt collectors*fn3 that is done "in connection with the collection of any debt." See, e.g., 15 U.S.C. §§ 1692e, 1692g. The statute does not define "the collection of any debt." Elsewhere, however, the FDCPA draws a distinction between "the collection of any debts" and "the enforcement of security interests." See 15 U.S.C. § 1692a(6) ("The term 'debt collector' means any person who uses any instrumentality of interstate commerce ... in any business the principal purpose of which is the collection of any debts .... For the purposes of section 1692(f) ..., such term also ...

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