MILLER v. CARRINGTON MORTGAGE SERVICES LLC

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

JAMES F. MILLER, Individually )

and on Behalf of Himself and )

Others Similarly Situated, )

)

Plaintiff, )

)

v. ) 2:19-cv-00016-JDL

)

CARRINGTON MORTGAGE )

SERVICES, LLC, )

)

Defendant. )

ORDER ON CARRINGTON MORTGAGE SERVICES, LLC’S

MOTION TO DISMISS

James F. Miller brings this putative class action against Carrington Mortgage

Services, LLC (“Carrington Mortgage”), alleging that various communications he

received from Carrington Mortgage after his bankruptcy discharge violated the Fair

Debt Collection Practices Act (FDCPA), 15 U.S.C.A. § 1692 et seq. (West 2019), and

the Maine Fair Debt Collection Practices Act (MFDCPA), 32 M.R.S.A. § 11001 et seq.

(Westlaw through Ch. 313 of 1st Reg. Sess. of 129th Leg.). See ECF No. 1 ¶ 1.

Carrington Mortgage moves to dismiss the complaint (ECF No. 13). For the reasons

stated below, I grant in part and deny in part the motion to dismiss.

I. FACTUAL BACKGROUND

The complaint alleges the following facts, which I treat as true for the purpose

of evaluating the motion to dismiss.

On July 21, 2008, Miller and his then-wife executed a promissory note and

mortgage in favor of Countrywide Bank, FSB, in the amount of $64,980 to finance the

purchase of their home in Washburn, Maine. In 2010, Miller and his wife separated,

and they started to fall behind on the loan. The loan has been in arrears ever since.

In October 2011, Miller and his wife divorced, and she conveyed her interest in the

property to Miller. Miller continued living at the Washburn property for a short time,

but he was unable to keep up with the loan payments and fell further behind. Miller

then moved to Gray, Maine, in February 2012.

In November 2012, Miller filed for Chapter 7 Bankruptcy in the U.S.

Bankruptcy Court for the District of Maine. By that time, the mortgage had been

assigned to Bank of America, which had begun servicing the loan. Bank of America

received notice of the bankruptcy filing and all subsequent filings and orders in the

bankruptcy case. As part of his Chapter 7 Individual Debtor’s Statement of Intention

in the bankruptcy case, Miller stated that he would surrender the Washburn

property. Miller received his bankruptcy discharge in February 2013, which resulted

in the discharge of any personal obligation that Miller had on the mortgage loan.

Miller has not made a payment on the mortgage loan since before he filed for

bankruptcy.

Carrington Mortgage began servicing Miller’s loan in September 2016 and at

that time received from Bank of America the documentation of Miller’s bankruptcy

case and discharge. From late 2016 until early 2018, a Carrington Mortgage

representative called Miller every couple of months about resolving the amounts he

purportedly owed on the loan. Each time the representative called, Miller informed

them that he had moved out of and surrendered the Washburn property, and that he

had received a bankruptcy discharge. During the same time period, Carrington

Mortgage also mailed a notice regarding debt relief and several notices regarding the

purchase of force-placed hazard insurance for the Washburn property to Miller, but

they were sent to an incorrect address in Gray and Miller did not receive them. In

July 2017, the loan was assigned to Wilmington Savings Fund Society, FSB

(“Wilmington Savings”), as trustee for Sandwich Mortgage Loan Trust. Carrington

Mortgage continued to service the loan.

On May 9, 2018, Miller was served with a summons and foreclosure complaint

for a state foreclosure action for the Washburn property, which was brought by

Wilmington Savings. The original foreclosure complaint alleged that only Miller’s ex-

wife was in default on the note and in breach of the mortgage, but Wilmington

Savings later filed an amended complaint that sought to hold Miller liable for any

deficiency balance remaining due after the sale of the property and application of the

proceeds of the sale. With the help of an attorney, Miller alerted Wilmington Savings’

counsel to the fact that he was not personally liable for any deficiency balance on the

loan because of his bankruptcy discharge. Wilmington Savings amended the

foreclosure complaint again to remove the request for a deficiency from Miller.

While the foreclosure case was pending, Carrington Mortgage sent Miller a

series of mortgage statements, as well as letters notifying him that a hazard

insurance policy had been purchased for which Miller would be required to pay, each

of which Miller alleges violate the FDCPA and the MFDCPA. The complaint alleges

that the mortgage statements, the insurance letters, and the foreclosure complaint

seeking a deficiency judgment against Miller caused Miller “severe emotional distress

and anxiety” and led him to worry that “he would never be free from demands for

payment of the Loan and also that somehow Carrington might have found a way of

getting around the bankruptcy discharge protections.” Id. ¶ 61.

The complaint asserts violations of four provisions of the FDCPA and the

MFDCPA. Specifically, the complaint alleges that through the telephone calls,

forced-placed hazard insurance letters, foreclosure complaint, and monthly mortgage

statements, Carrington Mortgage: (1) falsely represented the character, amount, and

legal status of the loan debt; (2) used false representations and deceptive means to

collect on the loan debt; (3) engaged in conduct the natural consequence of which was

to harass, oppress, or abuse Miller in connection with the mortgage debt by

attempting to collect the debt despite knowing of the bankruptcy discharge, and (4)

used unfair or unconscionable means to collect or attempt to collect on the mortgage

loan. ECF No. 1 ¶ 82.

II. LEGAL ANALYSIS

Carrington Mortgage moves to dismiss the complaint arguing that it fails to

state a claim under either the FDCPA or the MFDCPA because the communications

that the complaint describes do not constitute “debt collection.” See ECF No. 13 at 7.

Therefore, Carrington Mortgage asserts, the communications are not subject to the

protective measures of the FDCPA or the MFDCPA. Id. at 8. In addition, Carrington

Mortgage raises two other arguments: (1) that to the extent the claims in the

complaint are based on the phone calls from Carrington Mortgage to Miller, those

claims are time-barred by the FDCPA’s and MFDCPA’s respective one-year

limitations periods, and (2) that the MFDCPA is preempted by the Bankruptcy Code

and the Real Estate Settlement Procedures Act (RESPA) and, therefore, the claims

brought under the MFDCPA must be dismissed. Id. at 13-14, 17-19.

“The sole inquiry under Rule 12(b)(6) is whether, construing the well-pleaded

facts of the complaint in the light most favorable to the plaintiff[], the complaint

states a claim for which relief can be granted.” Ocasio-Hernández v. Fortuño-Burset,

640 F.3d 1, 7 (1st Cir. 2011). When resolving a motion to dismiss, courts first identify

and disregard statements in the complaint that “merely offer legal conclusions” and

then treat the remaining non-conclusory factual allegations as true. Id. at 12

(internal quotation marks and alterations omitted). “The make-or-break standard

. . . is that the combined allegations, taken as true, must state a plausible, not a

merely conceivable, case for relief.” Id. (quoting Sepúlveda-Villarini v. Dep’t of Educ.

of P.R., 628 F.3d 25, 29 (1st Cir. 2010)). “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009).

I address each of Carrington Mortgage’s arguments in turn.

A. Whether Communications Constitute Debt Collection

“The basic premise of the statutory scheme” of the FDCPA1 “is that its

prophylaxis applies in connection with the collection of debts.” Arruda v. Sears,

Roebuck & Co., 310 F.3d 13, 23 (1st Cir. 2002) (citing 15 U.S.C.A. § 1692e). A debt is

1 “Because the MFDCPA’s language almost exactly tracks the FDCPA,” my analysis of whether communications

constitute debt collection applies equally to each statute. Kowalski v. Seterus, Inc., No. 2:16-cv-00160-JAW, 2017

WL 79949, at *8 n.3 (D. Me. Jan. 9, 2017) (citing Shapiro v. Haenn, 222 F. Supp. 2d 29, 44 (D. Me. 2002)); see also

Hamilton v. Fed. Home Loan Mortg. Corp., No. 2:13-cv-00414-JAW, 2014 WL 4594733, at *18 (D. Me. Sept. 15,

2014); In re Martel, 539 B.R. 192, 194 n.4 (Bankr. D. Me. 2015).

“any obligation or alleged obligation of a consumer to pay money arising out of a

transaction in which the money, property, insurance, or services which are the subject

of the transaction are primarily for personal, family, or household purposes[.]” 15

U.S.C.A. § 1692a(5). “At a minimum, therefore, a complaint must allege a scenario

involving the collection (or attempted collection) of a debt.” Arruda, 310 F.3d at 23.

“The issue at the pleading stage is whether the allegations, considered alongside the

letter[s],” mortgage statements, and phone calls, “plausibly state a claim that one of

the animating purposes . . . was to induce payment by the plaintiff.” Kowalski, 2017

WL 79949, at *12 (internal quotation marks omitted). “[F]or FDCPA purposes, a

collection letter is to be viewed from the perspective of the hypothetical

unsophisticated consumer.” Pollard v. Law Office of Mandy L. Spaulding, 766 F.3d

98, 103 (1st Cir. 2014). The standard is “objective” and “preserves an element of

reasonableness.” Id. at 104. Thus “[a] debt collector will not be held liable based on

an individual consumer’s chimerical or farfetched reading of a collection letter.” Id.

1. Mortgage Statements

The complaint alleges that Carrington Mortgage sent Miller four mortgage

statements between July and October of 2018, which violated the FDCPA by

attempting to collect on a debt for which Miller was not personally liable. Each of the

four mortgage statements includes a box on the front page titled “BANKRUPTCY

MESSAGE,” stating:

Our records show that either you are a debtor in bankruptcy or

you discharged personal liability for your mortgage loan in

bankruptcy.

We are sending this statement to you for information and compliance

purposes only. It is not an attempt to collect a debt against you.

If you want to stop receiving statements, call us or write to us at

the address listed above.

ECF No. 1-3 at 1 (emphasis in original); see also ECF No. 1-5 at 1; ECF No. 1-6 at 1;

ECF No. 1-8 at 1. In addition to the bankruptcy disclaimer, the first page of each

mortgage statement also includes an “Explanation of Amount Due,” “Payment

Amount,” “Payment Date,” “Regular Monthly Payment” amount, “Total Payment

Amount,” and a detachable payment coupon with instructions to “[p]lease detach and

return with your payment.” E.g., ECF No. 1-5 at 1.2

The third page of each mortgage statement is made up of three columns of

small text with bolded headings. Under the heading “Important Notices,” the

following statement appears:

Mini Miranda – This communication is from a debt collector and it is

for the purpose of collecting a debt and any information obtained will be

used for that purpose. This notice is required by the provisions of the

Fair Debt Collection Practices Act and does not imply that we are

attempting to collect money from anyone who has discharged the debt

under the bankruptcy laws of the United States.

ECF No. 1-3 at 3; see also ECF No. 1-5 at 3; ECF No. 1-6 at 3; ECF No. 1-8 at 3.

Several paragraphs later, a bolded paragraph under the heading “Important

Bankruptcy Notice” reads:

If you have been discharged from personal liability on the

mortgage because of bankruptcy proceedings and have not

reaffirmed the mortgage, or if you are the subject of a pending

bankruptcy proceeding, this letter is not an attempt to collect a

debt from you but merely provides informational notice

regarding the status of the loan. . . .

2 The instructions on the payment coupon is clearly legible on the August 2018 mortgage statement,

ECF No. 1-3 at 3; see also ECF No. 1-5 at 3; ECF No. 1-6 at 3; ECF No. 1-8 at 3.

Finally, the fourth and final page of each mortgage statement is titled “A

GUIDE TO READING YOUR Chapter 7 or 11 Bankruptcy Mortgage Statement.”

E.g., ECF No. 1-3 at 4. An image of the first page of the mortgage statement is

reproduced on the right-hand side of the page with numbers next to certain items.

On the left-hand side, the numbers appear in a list alongside explanations for each

item. The “Guide” pages of the statements Miller received on July 5 and August 18,

2018, are identical. A copy is reproduced as an Appendix to this decision. See

Appendix; ECF No. 1-5 at 4; ECF No. 1-3 at 4.

The “Guide” pages each of the statements that Miller received on September

18, 2018, and October 18, 2018, were changed to remove language from several of the

numbered explanations that implied a request for payment. ECF No. 1-6 at 4; ECF

No. 1-8 at 4. The word “due” was removed from the phrases “minimum payment due”

and “payment amount due”; the phrases “the date the payment is due” and “overdue

payments” were removed; and the explanation regarding the payment coupon was

changed from “a coupon that should be detached and returned with your payment” to

“a coupon that could be detached and returned with a payment.” Compare ECF No.

1-3 at 4 and ECF No. 1-5 at 4, with ECF No. 1-6 at 4 and ECF No. 1-8 at 4.

Carrington Mortgage argues that the mortgage statements were merely

informational and that because of their “prominent disclaimers,” the statements do

not constitute debt collection. See ECF No. 13 at 8 (citing Best, 540 B.R. 1, 11 (B.A.P.

1st Cir. 2015) (“Statements of an informational nature, even if they include a payoff

amount, are not generally actionable if they do not demand payment.”)).3 But the

analysis does not begin and end with the bankruptcy disclaimers. “In conducting the

requisite inquiry” under the FDCPA, courts “examine the entire collection letter.”

Pollard, 766 F.3d at 104. I therefore look at each mortgage statement as a whole to

determine whether the unsophisticated consumer would understand it to be a

demand for payment.

The mortgage statements that Carrington Mortgage sent to Miller are replete

with language that can be construed as a payment demand. Although the first page

of each mortgage statement contains the “Bankruptcy Message,” this disclaimer

appears directly above an “Explanation of Amount Due” box, which includes dollar

values for the “Regular Monthly Payment” and “Total Payment Amount.” E.g., ECF

No. 1-3 at 1; cf. In re McConnie Navarro, 563 B.R. 127, 146-47 (Bankr. D.P.R. 2017)

(finding that mortgage statements were not debt collection where they “did not

include the amount of payment, a due date . . . or a past due amount” and included

bold disclaimer inside “Explanation of Amount Due” box). The detachable payment

coupon also appears on the first page, along with the instruction to “detach and return

with your payment.” E.g., ECF No. 1-5 at 1. In contrast, a payment coupon that

simply included a “reminder that ‘a party in a bankruptcy . . . [has the choice] to make

3 In Best, 540 B.R. at 10, a debtor brought suit against a creditor for alleged violations of the Bankruptcy Code’s

discharge injunction, 11 U.S.C.A. § 524(a)(2) (West 2019). Miller argues that Best and other cases that concern

violations of the discharge injunction are not instructive in the FDCPA context because debtors claiming a

violation of the discharge injunction must meet a different standard: “coercion or harassment of the debtor.” ECF

No. 14 at 4. In order to demonstrate a violation of the discharge injunction, however, a debtor must make the

same preliminary showing as they must make in an FDCPA case: that the complained-of communication

constitutes debt collection. Best, 540 B.R. at 9 (“The discharge injunction . . . does not prohibit every

communication between a creditor and debtor—only those designed to collect, recover or offset any such debt as

a personal liability of the debtor.”) (internal quotation marks omitted). Thus, to the extent discharge injunction

a voluntary payment’” would be less likely to cause confusion. In re Lemieux, 520

B.R. 361, 366 (Bankr. D. Mass. 2014) (alteration in original). Finally, “the word ‘due,’

a word that indicates an attempt to collect a debt[,]” id., also appears on multiple

pages of the mortgage statements. E.g., ECF No. 1-3 at 1-2, 4.

Additionally, the “Guide” pages at the end of each mortgage statement,

especially those included in the July 5, 2018, and August 18, 2018, mortgage

statements, only create more confusion by further reinforcing the impression that the

dollar amounts on the first page are “due” to Carrington Mortgage. ECF No. 1-3 at

4; ECF No. 1-5 at 4. The “Guide” also instructs that the payment coupon “should be

detached and returned with your payment.” ECF No. 1-3 at 4; ECF No. 1-5 at 4.

Though that language was later removed from the September 18, 2018, and October

18, 2018, mortgage statements, the changes that were made do not render the

mortgage statements sufficiently clear that they would not confuse the hypothetical

unsophisticated consumer. See ECF No. 1-6 at 4; ECF No. 1-8 at 4. Furthermore,

drawing all inferences in the pleader’s favor at this stage of the litigation, it is

reasonable to infer from Carrington Mortgage’s removal of the word “due” and other

language from the “Guide” page of the mortgage statements, that Carrington

Mortgage recognized that the original language created the potential for confusion.

At the pleading stage, Carrington Mortgage has not “demonstrated, as a

matter of law, that its disclaimer language is sufficiently clear that it is implausible

that an unsophisticated debtor would believe that [the company] was attempting to

collect a debt from the debtor personally.” Gagnon v. JPMorgan Chase Bank, N.A.,

563 B.R. 835, 844 (N.D. Ill. 2017). I therefore conclude that the complaint, considered

alongside the mortgage statements, plausibly alleges that “one of the animating

purposes” of the statements “was to induce payment” by Miller. Kowalski, 2017 WL

79949, at *12.

2. Force-Placed Hazard Insurance Letters

When a loan contract for a “federally related mortgage” requires that property

insurance be maintained and the borrower does not comply with that requirement, a

servicer may obtain “force-placed hazard insurance.” 12 U.S.C.A. § 2605(k)(1)(A), (2)

(West 2019). Force-placed insurance is “hazard insurance coverage obtained by a

servicer of a federally related mortgage when the borrower has failed to maintain or

renew hazard insurance on such property as required of the borrower under the terms

of the mortgage.” § 2605(k)(2). Before purchasing such insurance, however, RESPA

requires a loan servicer to send two written notices to the borrower. § 2605(l)(1).4

Both RESPA, see 12 U.S.C.A. § 2605(l)(1), and Regulation X,5 see 12 C.F.R. §

4 Specifically, RESPA provides that a servicer may not impose upon a borrower any charges for force-placed

hazard insurance unless:

(A) the servicer has sent, by first-class mail, a written notice to the borrower containing—

(i) a reminder of the borrower’s obligation to maintain hazard insurance on the property

securing the federally related mortgage;

(ii) a statement that the servicer does not have evidence of insurance coverage of such

property;

(iii) a clear and conspicuous statement of the procedures by which the borrower may

demonstrate that the borrower already has insurance coverage; and

(iv) a statement that the servicer may obtain such coverage at the borrower’s expense if the

borrower does not provide such demonstration of the borrower’s existing coverage in a

timely manner;

(B) the servicer has sent, by first-class mail, a second written notice, at least 30 days after the

mailing of the notice under subparagraph (A) that contains all the information described in each

clause of such subparagraph; and

(C) the servicer has not received from the borrower any demonstration of hazard insurance

coverage for the property securing the mortgage by the end of the 15-day period beginning on

the date the notice under subparagraph (B) was sent by the servicer.

§ 2605(l)(1).

5 Regulation X refers to Part 1024 of Title 12 of the Code of Federal Regulations, which was issued by the Bureau

1024.37(c)(2) (West 2019), set out requirements for the contents of those written

notices.

The complaint alleges that Carrington Mortgage sent Miller two letters

regarding the purchase of force-placed hazard insurance for the mortgaged property,

and that both of those letters violated the FDCPA and MFDCPA. The first letter,

dated August 1, 2018, informs Miller that Carrington Mortgage had purchased

hazard insurance for the Washburn property and “added the cost to your mortgage

loan account.” ECF No. 1-4 at 1. The following page states: “The cost of this policy

will be charged to you and you will be responsible to pay for such amounts.” Id. at 2.

The fifth page of the letter includes the same “Important Bankruptcy Notice” and

“Mini Miranda” which appear in the mortgage statements and are quoted above. Id.

at 5. The second letter that Miller received is dated September 24, 2018. On the first

page of that letter, the following appears:

This is your final notice that our records show that your hazard

insurance policy expired and we do not have evidence that you have

obtained new coverage. Because hazard insurance is required on

your property, we bought insurance for your property. You must

pay us for any period during which the insurance we bought is in effect

but you do not have insurance.

ECF No. 1-7 at 1 (emphasis in original). Otherwise, the language of the letter is the

same as the first insurance letter in all material respects. Id. at 2, 4.

Carrington Mortgage argues that the force-placed hazard insurance letters are

not debt collection because Carrington Mortgage was required to send the letters

under RESPA and the letters that it sent were in a form approved by the Consumer

Financial Protection Bureau.6 Although RESPA and Regulation X require a loan

servicer to provide written notices containing specified information to a debtor before

purchasing force-placed hazard insurance, they do not mandate that those notices

contain specific language. See 12 U.S.C.A. § 2605(l)(1); 12 C.F.R. § 1024.37(c)(2). The

first page of each force-placed insurance letter that Carrington Mortgage sent to

Miller mirrors a model force-placed insurance notice form promulgated by the CFPB.

Compare ECF No. 1-4 at 1, with App’x MS-3 to 12 C.F.R. Part 1024, Model MS-3(D);

compare ECF No. 1-7 at 1, with App’x MS-3 to 12 C.F.R. Part 1024, Model MS-3(B).

But the fact that Carrington Mortgage followed the CFPB’s form letters in part does

not establish that the letters do not constitute debt collection under the FDCPA,

especially when viewing the letters “from the perspective of the hypothetical

unsophisticated consumer.” Pollard, 766 F.3d at 103.

The “[y]ou must pay us” language that appears in Model MS-3(B), see App’x

MS-3 to 12 C.F.R. Part 1024, Model MS-3(B), and Carrington Mortgage’s letter to

Miller dated September 24, 2018, see ECF No. 1-7 at 1, may be entirely appropriate

in the average case where a debtor has failed to maintain hazard insurance. But that

same language may nevertheless be inappropriate when a loan servicer is sending

the letter to a debtor who has been discharged in bankruptcy. It is plausible that an

unsophisticated consumer reading that language would understand the letter to be a

demand for payment. Furthermore, Carrington Mortgage did not send only the

language that appears in the form letters, but added additional pages to the letters,

6 Carrington Mortgage also argues that the MFDCPA claims in the complaint are pre-empted by RESPA to the

extent that they are based on the force-placed hazard insurance letters. However, because I ultimately conclude

that the MFDCPA claims are preempted by the Bankruptcy Code, see infra Section II(B), I do not reach the issue

including language on the second page that informs the recipient that the cost of the

policy either has or will be “charged to you” and that the person is or will be

“responsible to pay for such amounts.” ECF No. 1-4 at 2; ECF No. 1-7 at 2. That

language further reinforces the impression that the purpose of the letter was to

induce payment. It is also noteworthy that the letters do not include a bankruptcy

disclaimer on the first page; instead, a generic bankruptcy disclaimer appears several

pages into each letter. See ECF No. 1-4 at 5; ECF No. 1-7 at 4.

Finally, some courts have concluded that a force-placed hazard insurance letter

must induce payment by the debtor on the underlying mortgage debt for the letter to

constitute debt collection under the FDCPA. See, e.g., McCamis v. Servis One, Inc.,

No. 8:16-CV-1130-T-30AEP, 2016 WL 4063403, at *3 (M.D. Fla. July 29, 2016). But

under the FDCPA, a “debt” is defined as “any obligation or alleged obligation of a

consumer to pay money arising out of a transaction in which the money, property,

insurance, or services which are the subject of the transaction are primarily for

personal, family, or household purposes[.]” 15 U.S.C.A. § 1692a(5). Hazard insurance

is an obligation to pay money that arises out of the mortgage transaction between the

creditor and the debtor. Therefore, a demand for payment of hazard insurance is

fairly treated as debt collection under the FDCPA.

I therefore conclude that the Complaint plausibly alleges that the force-placed

hazard insurance letters constitute debt collection under the FDCPA.

3. Wilmington Savings Fund Society, FSB’s Foreclosure Complaint

Miller’s complaint alleges that the amended foreclosure complaint that

Wilmington Savings filed in state court, which sought “as relief that the [c]ourt [f]ind

James Miller a/k/a James F. Miller liable for any deficiency balance,” violated the

FDCPA. ECF No. 1 ¶ 43 (internal quotation mark omitted). The complaint also

alleges that “Carrington was responsible for directing and facilitating the

foreclosures on [Wilmington Savings’] behalf[,]” id. ¶ 39, and Miller argues that

because Carrington Mortgage “directed the filing[,]” Carrington Mortgage is liable for

the amended foreclosure complaint under the FDCPA. ECF No. 14 at 17-18.

Practically speaking, therefore, the Complaint seeks to impose vicarious liability on

a debt collector for an action taken by the creditor for whom it was acting as a loan

servicer. Carrington Mortgage responds that it cannot be held “liable under [the]

FDCPA or MFDCPA for ‘facilitating’ or directing” an alleged FDCPA violation by a

creditor that is not subject to the FDCPA. ECF No. 15 at 6; see also Obduskey v.

McCarthy & Holthus LLP, 139 S. Ct. 1029, 1031 (2019) (“The Fair Debt Collection

Practices Act regulates ‘debt collector[s].’”) (quoting 15 U.S.C.A. § 1692a(6)); 15

U.S.C.A. § 1692a(6) (defining “debt collector” as a person who collects or attempts to

collect debts owed to another).

Courts have imposed vicarious liability on debt collectors for the actions of an

agent that the debt collector employs to collect debts on its behalf. Oberther v.

Midland Credit Mgmt., Inc., 45 F. Supp. 3d 125, 130 (D. Mass. 2014) (“[U]nder ‘agency

principles’ a principal entity which meets the definition of a ‘debt collector’ may be

held vicariously liable for the acts of its ‘authorized or apparent agent under the

FDCPA.’”) (quoting Alger v. Ganick, O’Brien & Sarin, 35 F. Supp. 2d 148, 153 (D.

Mass. 1999)); see also Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379, 405 (3d Cir.

2000) (“[A]n entity that is itself a ‘debt collector’—and hence subject to the FDCPA—

should bear the burden of monitoring the activities of those it enlists to collect debts

on its behalf.”), abrogated on other grounds by Henson v. Santander Consumer USA

Inc., 137 S. Ct. 1718 (2017). Here, however, the complaint does not allege that

Wilmington Savings was acting as Carrington Mortgage’s agent when it filed the

amended foreclosure complaint. Furthermore, because Wilmington Savings is the

creditor and enlisted Carrington Mortgage to service the loan, it would be implausible

to infer that that was the case.

Absent any legal support for the imposition of vicarious liability on Carrington

Mortgage for the actions of Wilmington Savings, I decline to impose such liability.

4. Telephone Calls

The complaint alleges that Carrington Mortgage made phone calls to Miller

“every couple of months about resolving the amounts he allegedly owed” on the

mortgage loan, starting in 2016 and continuing until “the beginning of 2018[.]” ECF

No. 1 ¶ 31. Carrington Mortgage argues that the phone calls cannot provide a basis

for liability because (1) the complaint does not establish that any phone calls that

were made to Miller occurred within the limitations periods under the FDCPA and

MFDCPA, and (2) the complaint fails to plausibly allege that the phone calls

constitute debt collection. I address each argument in turn.

The FDCPA and MFDCPA each require that any suit for a violation be brought

within one year of the date that the violation occurred. 15 U.S.C.A. § 1692k(d); 32

M.R.S.A. § 11054(4). The complaint was filed on January 9, 2019. Therefore, for the

claims associated with the phone calls to be timely, they need to have occurred on or

after January 9, 2018. Drawing all inferences in the pleader’s favor at the motion to

dismiss stage, it is plausible to infer that any phone calls made in “the beginning of

2018,” as alleged in the complaint, occurred after the first week of January. ECF No.

1 ¶ 31. Any calls that occurred before early January 2018 are untimely.

Carrington Mortgage argues in the alternative that the phone calls do not

constitute debt collection under the FDCPA. The only allegation in the complaint

regarding the content of the phone calls is that they were “about resolving the

amounts [Miller] allegedly owed on the Loan.” Id. Carrington Mortgage argues that

“calls to discuss alternatives to ‘resolve’ the debt short of foreclosing are not debt

collection.” ECF No. 13 at 19; see, e.g., In re Brown, 481 B.R. 351, 359 (Bankr. W.D.

Pa. 2012) (finding that “offering assistance to avoid foreclosure” did not constitute a

demand for payment). The complaint does not allege that Carrington Mortgage

demanded payment, directly or indirectly, during the alleged phone calls, and it is

unclear what a call about “resolving the amounts” owed on the loan entails, without

more. Thus, even drawing all inferences in Miller’s favor, the complaint does not

plausibly allege that one of the animating purposes of the phone calls was to induce

payment on the debt. Cf. Kowalski, 2017 WL 79949 at *15 (denying motion to dismiss

FDCPA claim where, among other communications, company called debtor and

threatened to foreclose if debtor did not pay the amount due on the loan).

Because the FDCPA and MFDCPA claims alleged in the complaint are not

based solely on the phone calls, however, they are not subject to dismissal. Rather,

the complaint plausibly alleges that the mortgage statements and force-placed

hazard insurance letters that Carrington Mortgage sent to Miller constitute debt

collection under the FDCPA and, therefore, the complaint states a claim under the

FDCPA.

B. Preemption of the MFDCPA by the Bankruptcy Code

Carrington Mortgage argues that the Bankruptcy Code preempts the

MFDCPA because the Bankruptcy Code occupies the field of claims based on

attempts to collect a debt that has been discharged in bankruptcy, which implicate

the discharge injunction set out in 11 U.S.C.A. § 524(a)(2).7 Carrington Mortgage

relies on the First Circuit’s decision in Bessette v. Avco Fin. Servs., Inc., 230 F.3d 439

(1st Cir. 2000), amended on denial of reh’g (Dec. 15, 2000), arguing that the First

Circuit “confirmed the bankruptcy code ‘occupies the field’ as it relates to discharge

violation claims.” ECF No. 13 at 18 (citing Bessette, 230 F.3d at 447).

“[W]here there is no explicit statutory language preempting state law,” one of

two conditions must be present for a court to find implied preemption: (1) “the federal

statutory scheme is so pervasive that Congress clearly intended to ‘occupy the field’

to the exclusion of state law,” or (2) “a particular state law is in direct conflict with

the federal law to an extent that the statutes cannot coexist.” Bessette, 230 F.3d at

447. Carrington Mortgage argues only that the Bankruptcy Code occupies the field.

In Bessette, the First Circuit concluded that the plaintiff’s “state law claim for unjust

enrichment for collecting debt under an improper reaffirmation agreement [wa]s

7 The Bankruptcy Code provides, in relevant part:

(a) A discharge in a case under this title . . .

(2) operates as an injunction against the commencement or continuation of an action,

the employment of process, or an act, to collect, recover or offset any such debt as a

personal liability of the debtor, whether or not discharge of such debt is waived[.]

preempted” by the Bankruptcy Code based on “the existence of the first condition”—

a pervasive statutory scheme indicating Congress’s intent to “occupy the field.” Id.

The court reasoned that because “the Code authorizes federal courts to order damages

for violations of § 524 when necessary—i.e., disgorgement of unjust profit—an

alternative state court remedy for unjust enrichment in these circumstances”

conflicts with the extensive statutory scheme of the Bankruptcy Code. Id.

The court emphasized in Bessette that the state law remedy that the plaintiff

sought overlapped with a remedy which was provided for in the Bankruptcy Code,

which distinguished the facts of that case from those in Vahlsing v. Commercial

Union Insurance Co., 928 F.2d 486 (1st Cir. 1991), in which the court allowed a state

law cause of action for a violation of the automatic stay in a bankruptcy case to go

forward. Id. at 447-48. In Vahlsing, “the state law tort claims arose because the

creditor, unaware of the bankruptcy proceeding, had the debtor arrested for

contempt. There was no comparable overlap between a specific remedy available

under the Bankruptcy Code and the state law remedies for false imprisonment,

negligence, [and] abuse of process.” Id. In contrast, where a state law cause of action

targets a violation of the discharge injunction and the state law remedy overlaps with

a remedy available under the Bankruptcy Code, the Bankruptcy Code preempts the

state law cause of action. “[T]he broad enforcement power under the Bankruptcy

Code preempts virtually all alternative mechanisms for remedying violations of the

Code.” Id. at 447.

The first question, therefore, is whether the complaint targets a violation of

the discharge injunction. The statutory discharge injunction in § 524 of the

Bankruptcy Code prohibits “the commencement or continuation of an action, the

employment of process, or an act, to collect, recover or offset any such debt as a

personal liability of the debtor[.]” 11 U.S.C.A. § 524(a)(2). Carrington Mortgage’s

alleged conduct, which I have concluded plausibly constitutes debt collection,

potentially violates the Bankruptcy Code’s discharge injunction.

I next consider whether the state law remedy under the MFDCPA overlaps

with a remedy available under the Bankruptcy Code. The MFDCPA provides for civil

liability in the form of actual damages, statutory damages, and costs and attorneys’

fees.8 32 M.R.S.A. § 11054(1). The complaint seeks all three kinds of relief provided

for by the statute: (1) compensatory damages for Miller’s emotional distress; (2)

statutory damages of $1,000; and (3) the costs of the action and reasonable attorney’s

fees. ECF No. 1 at 17. Under the Bankruptcy Code, “a bankruptcy court is authorized

8 The MFDCPA states:

Except as otherwise provided by this section, any debt collector who fails to comply with any

provisions of this Act with respect to any person is liable to that person in an amount equal to

the sum of:

A. Any actual damage sustained by that person as a result of such failure;

B. In the case of any action by an individual, such additional damages as the court may

allow, but not exceeding $1,000;

C. In the case of a class action:

(1) Such amount for each named plaintiff as may be recovered under paragraph

A; and

(2) Such amount as the court may allow for all other class members, without

regard to a minimum individual recovery, not to exceed the lesser of $500,000

or 1% of the net worth of the debt collector; and

D. In the case of any successful action to enforce the liability set out in this subsection,

the costs of the action, together with a reasonable attorney’s fee as determined by the

court. On a finding by the court that an action under this section was brought in bad

faith and for the purpose of harassment, the court may award to the defendant

attorney’s fees, reasonable in relation to the work expended and costs.

32 M.R.S.A. § 11054(1).

. . . to enforce the discharge injunction imposed by § 524 and order damages,” and

“bankruptcy courts across the country have appropriately used their statutory

contempt power to order monetary relief, in the form of actual damages, attorney fees,

and punitive damages” for violations of § 524. Bessette, 230 F.3d at 445.

The only remedy provided for in the MFDCPA that does not “overlap” with a

remedy available under the Bankruptcy Code is an award of statutory damages of

$1,000. 32 M.R.S.A. § 11054(1)(B). Therefore, this is not a case where there is “no

comparable overlap between a specific remedy available under the Bankruptcy Code”

and the state law cause of action. Bessette, 230 F.3d at 447-48.9 In fact, the opposite

is true: there is a complete overlap in remedy, with the exception of the statutory

damages for which the MFDCPA provides. That difference, however, is not enough

to show that the MFDCPA is not pre-empted by the Bankruptcy Code. To the

contrary, because “Congress has plenary power to enact uniform federal bankruptcy

laws . . . ‘[s]tates may not pass or enforce laws to interfere with or complement the

Bankruptcy Act or to provide additional or auxiliary regulations.’” In re Weinstein,

164 F.3d 677, 682-83 (1st Cir. 1999) (quoting Int’l Shoe Co. v. Pinkus, 278 U.S. 261,

265 (1929)).

For the foregoing reasons, I conclude that the Bankruptcy Code impliedly

preempts the MFDCPA.10 Therefore, the MFDCPA claims asserted in the complaint

are dismissed.

9 The facts presented here are distinguishable from cases where the debtor brought state common law claims

based on conduct that was completely unrelated to the bankruptcy discharge. See, e.g., Vahlsing, 928 F.2d at 489.

10 As Carrington Mortgage notes in its motion, this Court’s decision in Lamprey v. Wells Fargo Home Mortg.,

No. 2:16-cv-00570-JDL, 2017 WL 3470570 (D. Me. Aug. 11, 2017) is distinguishable from this case. In Lamprey,

III. CONCLUSION

For the reasons stated above, it is ORDERED that Carrington Mortgage

Services, LLC’s Motion to Dismiss (ECF No. 13) is GRANTED IN PART with respect

to claims brought under the Maine Fair Debt Collection Practices Act, which are

accordingly dismissed, and is DENIED IN PART with respect to claims brought

under the Fair Debt Collection Practices Act.

SO ORDERED.

Dated this 3rd day of July, 2019.

/s/ JON D. LEVY

CHIEF U.S. DISTRICT JUDGE

the court rejected the argument that the plaintiff’s state law claims brought under the MFDCPA and the Maine

Consumer Credit Code were preempted by the Bankruptcy Code where the defendant had failed to show that the

Bankruptcy Code preempted state law governing the debtor’s property interests and the point at which those

property interests are extinguished. 2017 WL 3470570, at *6. Here, in contrast, Carrington Mortgage has

demonstrated that the Bankruptcy Code preempts state law governing the rights of a debtor who seeks to recover

APPENDIX

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