Evans v. Select Portfolio Servicing, Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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BRET A. EVANS, JUAN A. BEHER, and

JESSICA PEREZ, on behalf of themselves and

all others similarly situated,

MEMORANDUM & ORDER

Plaintiffs, 18-CV-5985 (PKC) (SMG)

- against -

SELECT PORTFOLIO SERVICING, INC.;

U.S. BANK, N.A., as trustee for the J.P Morgan

Acquisition Trust 2006-WMC4 Asset Backed

Pass-Through Certificates, Series 2006-WMC4;

BANK OF AMERICA, N.A.; and Doe

Defendants 1–25,

Defendants.

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PAMELA K. CHEN, United States District Judge:

Plaintiffs Bret A. Evans, Juan A. Beher, and Jessica Perez bring this class action against

Defendants Select Portfolio Servicing, Inc. (“SPS”), U.S. Bank, N.A. (“U.S. Bank”), Bank of

America, N.A. (“BANA”), and Doe Defendants 1–25, alleging breach of contract, violation of the

covenant of good faith and fair dealing, violation of the Fair Debt Collection Practices Act

(“FDCPA”), 15 U.S.C. §§ 1692 et seq., violation of the Real Estate Settlement Procedures Act

(“RESPA”), 12 U.S.C. §§ 2601 et seq., violation of the Truth in Lending Act (“TILA”), 15 U.S.C.

§§ 1601 et seq., and Regulation Z thereunder, 12 C.F.R. § 226, violation of the New York General

Business Law (“GBL”) § 349, N.Y. Gen. Bus. Law § 349, and violation of the California Unfair

Competition Law (“UCL”), Cal. Bus. & Prof. §§ 17200 et seq.1 Defendants SPS and U.S. Bank

1 Plaintiff Beher seeks to dismiss without prejudice all his claims against Defendant

BANA. (Pls.’ BANA Br., Dkt. 44, at 1 n.1.) Accordingly, the Court considers those claims

withdrawn.

(Dkt. 41) and BANA (Dkt. 42) each move to dismiss Plaintiff’s Amended Complaint (Dkt. 24).

For the reasons stated below, the Court grants in part and denies in part Defendants’ motions to

dismiss.

BACKGROUND

I. Factual Allegations2

A. Plaintiff Evans

On September 28, 2006, Plaintiff Evans obtained an adjustable rate residential mortgage

loan from non-party WMC Mortgage Corp., which was later transferred to Defendant U.S. Bank,

for a residential property located at 26 Cheviot Road, Southampton, NY 11968 (the “Evans

Property”). (Amended Complaint (“Am. Compl.”), Dkt. 24, ¶¶ 3, 17.) In 2009, the loan was

accelerated with all amounts owed becoming due, and a foreclosure action was commenced against

Plaintiff Evans by Defendant U.S. Bank in the New York Supreme Court, Suffolk County. (Id.)

During the foreclosure action, Evans disputed the inclusion of improper fees, which he also

challenges in this action. (Id. ¶ 3.) The state court granted U.S. Bank’s request to enter a judgment

of foreclosure and sale on November 28, 2018. (Declaration of Raymond Kim (“Kim Decl.”) Ex.

2 The facts recited in this section are based on the allegations in the Amended Complaint,

which the Court accepts as true for purposes of Defendants’ motions. See Koch v. Christie’s Int’l

PLC, 699 F.3d 141, 145 (2d Cir. 2012). “Although a court’s review on a motion to dismiss is

typically limited to the four corners of the complaint, a court may also review, among certain other

categories, documents incorporated into the complaint by reference and documents integral to the

complaint.” Harte v. Ocwen Fin. Corp. (“Hart II”), No. 13-CV-5410 (MKB) (RER), 2016 WL

3647687, at *2 n.2 (E.D.N.Y. July 1, 2016) (citations omitted). Here, Plaintiffs’ claims are

predicated on the mortgages, notes, and communications between Plaintiffs and Defendants, and

the Amended Complaint cites to those documents extensively. The Court therefore considers those

documents, which the parties have provided to the Court in connection with the Amended

Complaint and their motion briefing, incorporated into and integral to the Amended Complaint.

The Court also takes judicial notice of various state court documents filed in Plaintiff Evans’s state

foreclosure proceeding. Nath v. JP Morgan Chase Bank, No. 15-CV-3937 (KMK), 2016 WL

5791193, at *1 (S.D.N.Y. Sept. 30, 2016) (collecting cases); see id. (“The [c]ourt may . . . take

judicial notice of the state-court foreclosure proceedings.”) (citation omitted)).

B, Dkt. 41-4, at ECF3 2–6.) On June 1, 2013, while the foreclosure proceedings were pending,

Defendant SPS became the servicing agent for Plaintiff Evans’s loan. (Am. Compl., Dkt. 24, ¶¶

3, 17.)

1. Late Fees and Qualified Written Requests

On April 12, 2018, Defendant SPS mailed to Plaintiff Evans a standard form mortgage

statement stating, “[t]his account has been accelerated, which means that all outstanding amounts

are due[,]” and that, “[i]f payment is received after May 16, 2018, [a] $75.99 late fee will be

charged.”4 (Id. ¶ 20; Kim Decl. Ex. A, Dkt. 41-3, at ECF 8.) That mortgage statement indicated

that there were “unpaid late charges” of $835.89 and “other charges and fees” of $9,506. (Am.

Compl., Dkt. 24, ¶ 20; Kim Decl. Ex. A, Dkt. 41-3, at ECF 8.)

On April 30, 2018, Plaintiff Evans sent Defendant SPS a Qualified Written Request

(“QWR”), requesting, inter alia, a detailed payment history, an accounting showing the total

amount of late fees and other charges, and the default notice. (Am. Compl., Dkt. 24, ¶ 21; Kim

Decl. Ex. C, Dkt. 41-5.) Defendant SPS responded to the QWR on May 14, 2018, stating, inter

alia, that late fees were “assessed according to the requirements found in [Plaintiff Evans’s]

Adjustable Rate Note and state law.” (Am. Compl., Dkt. 24, ¶ 22; Kim Decl. Ex. D, Dkt. 41-6, at

ECF 5.)

On May 3, 2018, Defendant SPS mailed Plaintiff Evans a payoff statement representing

$835.89 in “Late Charges Outstanding.” (Am. Compl., Dkt. 24, ¶ 25.) On May 15 and June 14,

3 Citations to “ECF” refer to the pagination generated by the Court’s CM/ECF docketing

system and not the document’s internal pagination.

4 Because the foreclosure action initiated against Evans was still pending in April 2018, his

loan continued to be serviced by SPS. (See Kim Decl. Ex. B, Dkt. 41-4, at ECF 2–6 (state court

granting judgment of foreclosure and sale in November 2018).)

2018, Defendant SPS mailed similar standard form mortgage statements to Plaintiff Evans that

threatened late fees. (Id. ¶¶ 26–27; Kim Decl. Ex. A, Dkt. 41-3, at ECF 11–16.)

On July 5, 2018, Plaintiff Evans sent Defendant SPS a second QWR, contesting the late

fees. (Am. Compl., Dkt. 24, ¶ 29; Kim Decl. Ex. E, Dkt. 41-7.) On August 3, 2018, Defendant

SPS wrote to Plaintiff Evans in response to his July 5, 2018 QWR, stating that the “issues raised

have been addressed and resolved through our previous communications,” and enclosed its May

14, 2018 response to Evans’s first QWR. (Kim Decl. Ex. F, Dkt. 41-8, at ECF 4.)

2. Interest Rates

According to the standard form adjustable rate mortgage agreement, Plaintiff Evans was

“charged interest rates that [were] adjusted periodically pursuant to a formula based on the

[London Interbank Offered Rate (“LIBOR”)] index.” (Am. Compl., Dkt. 24, ¶ 36.) “In April

2018, [Defendants] U.S. Bank and/or SPS charged Plaintiff Evans an interest rate of 8.5%, but

should have charged a lower interest rate of approximately 8.03% based on LIBOR and the terms

of his standard form adjustable rate mortgage.” (Id. ¶ 38.)

3. Inspection Fees

On May 14, 2018, SPS stated to Plaintiff Evans that, “[a]s a mortgage servicer, SPS may

incur fees or costs[] that are necessary to protect the noteholder’s interests in a property and are

allowed under the terms of your Mortgage documents. These fees or servicer advances appear on

your monthly statement as ‘other Charges and Fees.’” (Am. Compl., Dkt. 24, ¶ 44.) Plaintiff

Evans’s mortgage agreement states that the lender will inspect the property “in a reasonable

manner and at a reasonable time.” (Id. ¶ 46.) “[A] standardized fee schedule for Plaintiff Evans’s

mortgage stated that a property inspection fee would be charged only[] ‘if you are in default and

we can[]not make contact with you to determine the condition of the property.’” (Id. ¶ 45.) Despite

being in contact with Plaintiff Evans between June 14, 2013 and December 19, 2017, SPS charged

him monthly inspection fees, totaling over $1,200, as reflected in some of the monthly statements

provided by Defendants. (Id. ¶ 52; see, e.g., Kim Decl. Ex. A, Dkt. 41-3, at ECF 2, 5.) These

inspection fees included twenty-nine separate charges on June 14, 2013, ranging in amounts of

$14, $56, and $60. (Am. Compl., Dkt. 24, ¶ 52.)

B. Plaintiff Beher

On December 12, 2006, Plaintiff Beher obtained an adjustable rate residential mortgage

loan from BANA for a residential property located at 18731 Barnhart Avenue, Cupertino, CA

95014 (the “Beher Property”). (Amended Complaint (“Am. Compl.”), Dkt. 24, ¶ 4.) On March

1, 2017, Defendant SPS became the servicing agent for Plaintiff Beher’s mortgage loan. (Id.)

1. Interest Rates

According to the standard form adjustable rate mortgage agreement, Plaintiff Beher was

“charged interest rates that [were] adjusted periodically pursuant to a formula based on the LIBOR

index.” (Am. Compl., Dkt. 24, ¶ 36.) “In January 2018, [BANA] and/or SPS charged Plaintiff

Beher an interest rate of 5.25%, but should have charged a lower interest rate of approximately

4.25% based on LIBOR and the terms of his standard form adjustable rate mortgage.” (Id. ¶ 37.)

C. Plaintiff Perez

On or about October 5, 2005, Plaintiff Perez’s father, Angel Flores, obtained a residential

mortgage loan from Defendant BANA for a residential property located at 135 Nassau Parkway,

Oceanside, NY 11572 (the “Perez Property”) and placed Plaintiff Perez on the deed. (Am. Compl.,

Dkt. 24, ¶ 5.) In 2013, Angel Flores passed away and Plaintiff Perez became solely responsible

for the loan. (Id.) “At some point in time, SPS became the servicer of the residential mortgage

loan for the Perez Property.” (Id.) On or about December 14, 2017, Defendant BANA assigned

its interest in the loan to Defendant U.S. Bank. (Id.)

In 2015, Plaintiff Perez missed two or three monthly mortgage payments. (Id. ¶ 32.) Once

she was able to resume making the payments, she contacted Defendant SPS. (Id.) Defendant SPS

instructed Plaintiff Perez to send a certified check for the full amount due to reinstate the loan as

current. (Id.) However, when Plaintiff Perez did so, SPS returned the check and, upon further

inquiry, informed her that it was too late to reinstate the loan because foreclosure proceedings had

commenced. (Id.) In subsequent monthly mortgage statements, Defendant SPS represented that

it had “completed the first notice or filing required to state a foreclosure.” (Id. ¶ 33.) Since then,

it has refused to accept payments from Plaintiff Perez on the mortgage. (Id. ¶ 35.)

1. Late Fees

Since 2015, SPS has represented in monthly mortgage statements sent to Plaintiff Perez

that “[i]f payment [of the total amount due] is received after [a certain date], [a] $18.05 late fee

will be charged,” and has continued to make these representations as recently as April 12, 2019.

(Id. ¶¶ 33, 34.)

2. Inspection Fees

In at least two monthly mortgage statements dated April 13, 2017 and June 14, 2017,

Defendant SPS charged Plaintiff Perez inspection fees in the amount of $15, despite being in

constant contact with her since 2015. (Id. ¶ 53.)

II. Procedural History

Plaintiff Evans filed this action on October 25, 2018. (See generally Complaint

(“Compl.”), Dkt. 1.) Defendants SPS and U.S. Bank were served on October 31, 2018. (Summons

Returns, Dkts. 8, 9.) On June 27, 2019, an Amended Complaint, inter alia, adding Plaintiffs Beher

and Perez and Defendant BANA, was filed. (Dkt. 24.) Defendant BANA waived service on July

17, 2019. (Dkt. 32.) In the Amended Complaint, Plaintiffs asserted the following claims:

(1) Violation of the FDCPA against Defendant SPS by Plaintiffs Evans and Perez for

improperly assessed late fees and inspection fees;

(2) Violation of the RESPA against Defendant SPS by Plaintiff Evans for failure to timely

and adequately respond to his second QWR;

(3) Violation of the TILA, and Regulation Z thereunder, against all Defendants by all

Plaintiffs for failure to provide Plaintiffs with accurate information concerning the amounts due

on their mortgages;

(4) Violation of the New York GBL § 349 against all Defendants by Plaintiffs Evans and

Perez for deceptive acts and practices, namely, representations that late fees could be charged post-

acceleration and that inspection fees would be charged only as necessary;

(5) Violation of the California UCL against all Defendants by Plaintiff Beher for the

imposition of unreasonable inspection and late fees;

(6) Breach of contract against all Defendants by all Plaintiffs for improperly assessed late

fees, inspection fees, and interest rates; and

(7) Breach of good faith and fair dealing against all Defendants by all Plaintiffs for

improperly assessed late fees, inspection fees, and interest rates.

(Am. Compl., Dkt. 24, ¶¶ 74–140.)

All Defendants thereafter moved to dismiss all claims in the Amended Complaint; their

motions were fully briefed on October 11, 2019. (Dkts. 41–48.)

LEGAL STANDARD

To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure (“Rule”)

12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to

relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Id. (quoting Twombly, 550 U.S. at 556). “The plausibility

standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that

a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556).

Determining whether a complaint states a plausible claim for relief is “a context-specific

task that requires the reviewing court to draw on its judicial experience and common sense.” Id.

at 679 (citation omitted). In addressing the sufficiency of a complaint, a court must accept the

well-pleaded factual allegations contained within the complaint as true, but “need not credit

conclusory statements unsupported by assertions of facts[,] or legal conclusions . . . presented as

factual allegations.” See In re Livent, Inc. Noteholders Sec. Litig., 151 F. Supp. 2d 371, 404

(S.D.N.Y. 2001) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). Additionally, “a court need

not feel constrained to accept as truth conflicting pleadings that make no sense, or that would

render a claim incoherent, or that are contradicted either by statements in the complaint itself or

by documents upon which its pleadings rely, or by facts of which the court may take judicial

notice.” Id. at 405–06 (collecting cases). At the pleadings stage, a court must limit its inquiry to

the facts alleged in the complaint, the documents attached to the complaint or incorporated therein

by reference, and “documents that, while not explicitly incorporated into the complaint, are

‘integral’ to [the] plaintiff’s claims and were relied upon in drafting the complaint.” Id. at 404

(citing Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 44 (2d Cir. 1991)).

DISCUSSION

I. Collateral Estoppel and Res Judicata

Defendants argue that all of Plaintiff Evans’s claims are barred by collateral estoppel and

res judicata because the complaint alleges that “[i]n that foreclosure action, Plaintiff Evans

disputed and continues to dispute inclusion of the improper fees challenged in this action as a part

of any obligation claimed to be owed to Defendants U.S. Bank and/or SPS.” (Defendants SPS’s

and U.S. Bank’s Motion to Dismiss the First Amended Complaint (“SPS Br.”), Dkt. 41, at 10–11

(quoting Am. Compl., Dkt. 24, ¶ 3).) The Court disagrees.

A. Collateral Estoppel

“The preclusive effect of a state court determination in a subsequent federal action is

determined by the rules of the state where the prior action occurred.” Blumatte v. Farthing, 320

F. App’x 68, 70 (2d Cir. 2009) (quoting Wight v. BankAmerica Corp., 219 F.3d 79, 87–88 (2d Cir.

2000)).

Under New York law, collateral estoppel bars relitigation of an issue when (1) the

identical issue necessarily was decided in the prior action and is decisive of the

present action, and (2) the party to be precluded from relitigating the issue had a

full and fair opportunity to litigate the issue in the prior action.

Charter Oak Fire Ins. Co. v. Electrolux Home Products, Inc., 882 F. Supp. 2d 396, 401 (E.D.N.Y.

2012) (quoting In re Hyman, 502 F.3d 61, 65 (2d Cir. 2007)). “The party seeking the benefit of

collateral estoppel bears the burden of proving the identity of the issues.” Id. (quoting Khandhar

v. Elfenbein, 943 F.2d 244, 247 (2d Cir. 1991)).

In advancing this argument, Defendants rely solely on the allegation in the complaint that

Plaintiff Evans contested the improper fees in the state court foreclosure action, and asserts that

the “same claims were litigated in New York state court and adjudicated against Evans.” (SPS

Br., Dkt. 41, at 10.) However, the foreclosure action complaint, answer, and state court5 order

provided by Defendants do not contain any reference to improper fees or rates. (See Kim Decl.

Ex. B, Dkt. 41-4.) Plaintiff Evans may well have contested the improper fees in his arguments in

the foreclosure action, but there is no indication in the record currently before the Court that the

state court reached a decision on any claims raised in, or issues relevant to, this case. Therefore,

with respect to collateral estoppel, Defendants fail to carry their burden of proving that identical

issues were decided in the state court foreclosure action. See Mercado v. Playa Realty Corp., No.

03-CV-3427 (JO), 2005 WL 1594306, at *6 (E.D.N.Y. July 7, 2005) (declining to apply collateral

estoppel where “[t]he state court never reached a decision on the issues concerning the alleged

violations of RESPA and TILA”).

B. Res Judicata

“The doctrine of claim preclusion, or res judicata, bars the subsequent litigation of any

claims that were or could have been raised in a prior action.” Citigroup, Inc. v. Abu Dhabi Inv.

Auth., 776 F.3d 126, 128 n.1 (2d Cir. 2015) (citing Federated Dep’t Stores, Inc. v. Moitie, 452

U.S. 394, 398 (1981)). The party asserting res judicata bears the burden of proving: “(1) the

previous action involved an adjudication on the merits; (2) the previous action involved the

plaintiffs or those in privity with them; [and] (3) the claims asserted in the subsequent action were,

or could have been, raised in the prior action.” Bey v. City of New York, 454 F. App’x 1, 4–5 (2d

Cir. 2011) (summary order) (quoting Monahan v. N.Y.C. Dep’t of Corr., 214 F.3d 275, 285 (2d

Cir. 2000)) (citation omitted).

5 The state court order, dated November 28, 2018, resolved various motions filed by the

parties during the foreclosure action and issued a judgment of foreclosure and sale in Defendant

U.S. Bank’s favor against Plaintiff Evans. (Kim Decl. Ex. B, Dkt. 41-4, at ECF 2–6.)

As explained supra, “[t]he preclusive effect of a state court determination in a subsequent

federal action is determined by the rules of the state where the prior action occurred.” Blumatte,

320 F. App’x at 70 (quoting Wight, 219 F.3d at 87–88). “The federal [and] New York . . . doctrines

of res judicata are virtually identical.” Greenwich Life Settlements, Inc. v. ViaSource Funding

Grp., LLC, 742 F. Supp. 2d 446, 452–53 (S.D.N.Y. 2010) (collecting cases). However, “New

York uses [a] transactional approach to res judicata, meaning parties are prevented ‘from raising

in a subsequent proceeding any claim they could have raised in the prior one, where all of the

claims arise from the same underlying transaction.’” Falardo v. N.Y.C. Police Dep’t, 566 F. Supp.

2d 283, 285–86 (S.D.N.Y. 2008) (emphasis added) (quoting Schulz v. Williams, 44 F.3d 48, 53 (2d

Cir. 1994)). “In determining whether two claims involve the same transaction, New York courts

look to whether the two claims are related in time, space, origin, or motivation.” Id. at 286 (internal

quotation and citation omitted).

“[A] party is not free to remain silent in an action in which she is the defendant and then

bring a second action seeking relief inconsistent with the judgment in the first action by asserting

what is simply a new legal theory.” Harris v. BNC Mortg., Inc., 737 F. App’x 573, 575 (2d Cir.

2018) (summary order) (alteration and quotation omitted). However, “New York’s permissive

counterclaim rule preserves the right of a party to bring a claim that it could have brought as a

counterclaim in a prior action, as long as doing so would not impair the rights or interests

established in the first action.” Guido v. Wells Fargo Bank, N.A., No. 16-CV-1568 (VSB), 2017

WL 5515859, at *3 (S.D.N.Y. Mar. 21, 2017) (internal quotation marks and citation omitted),

aff’d, 699 F. App’x 54 (2d Cir. 2017); see also N.Y. Civ. Prac. L. & R. § 3019(a). At the same

time, the mere existence of a foreclosure judgment does not preclude all possible claims a

mortgagor may raise in relation to his debt. See Utreras v. Chicago Title Ins. Co., No. 12-CV-

4766 (RRM) (LB), 2013 WL 4700564, at *4 (E.D.N.Y. Sept. 1, 2013) (“[C]ourts in this district

have found violations of federal predatory lending statutes to arise out of separate transactions than

mortgage defaults, and therefore have declined to find them barred by res judicata.” (citations

omitted)); Schuh v. Druckman & Sinel, LLP, 602 F. Supp. 2d 454, 467 (S.D.N.Y. 2009) (finding

an FDCPA claim to be independent from “the foreclosure on the mortgage and the amounts due,”

because plaintiff “accept[ed] the validity of the judgment and the underlying debt and

complain[ed] instead that the [collection] letter makes false statements about the judgment in

violation of the FDCPA” (emphasis omitted); Lopez v. Delta Funding Corp., No. 98-CV-7204

(CPS), 2000 WL 36688915, at *9 (E.D.N.Y. June 6, 2000) (“[T]his Court does have the power to

grant remedies that have no effect on the state court foreclosure judgment, such as statutory and

punitive damages under TILA.”).

Here, Defendants have failed to prove for the purposes of res judicata that the claims

asserted by Plaintiff Evans were adjudicated in the foreclosure action, as his answer in the

foreclosure action did not raise the claims asserted here at all. (See Kim Decla. Ex. B, Dkt. 41-4,

at ECF 9–13.) Nor do Defendants argue that Plaintiff Evans could have raised these claims as

counterclaims in the foreclosure action. In fact, even though Plaintiffs preemptively argue that

Plaintiff Evans was not obligated to raise these claims in the foreclosure action under New York’s

permissive counterclaim rule in their opposition brief (see Plaintiff’s Opposition to Defendants

SPS’s and U.S. Bank’s Motion to Dismiss (“Pls.’ SPS Opp.”), Dkt. 43, at 32–34), Defendants fail

to address the issue in their reply or show that Plaintiff Evans’s claims are barred by res judicata

(see Defendants SFS’s and U.S. Bank’s Reply in Support of their Motion to Dismiss (“SPS

Reply”), Dkt. 48, at 1–2). See Guido, 2017 WL 5515859, at *4 (declining to apply res judicata

where defendant “fail[ed] to address [the] argument [about the permissive counterclaim rule] or

the legal authority Plaintiffs cite,” and “offer[ed] no basis for why the claims in the [a]mended

[c]omplaint are impermissible in light of the fact that New York is a permissive counterclaim

jurisdiction”), aff’d, 699 F. App’x 54 (2d Cir. 2017).

Furthermore, based on the incomplete state court record submitted by Defendants, the

Court cannot determine whether the relief sought by Plaintiff Evans in this action would

necessarily be inconsistent with the foreclosure judgment. The state complaint and answer were

filed in 2009, predating the events that give rise to the present claims. (See Kim Decl. Ex. B, Dkt.

41-4, at ECF 6–13.) In its November 2018 order (see supra note 5), the state court declined to

consider Plaintiff Evans’s arguments for, inter alia, lack of personal jurisdiction and lack of

personal service, and granted the bank final judgment of foreclosure. (See id. at 1–5.) Because

the order does not reflect whether or not the foreclosure judgment took into account the improper

fees that arose after the state action complaint, the Court cannot determine whether granting the

relief requested here would “impair the rights or interests established in the [foreclosure] action.”

Guido, 2017 WL 5515859, at *3 (quoting Henry Modell & Co. v. Minister, Elders & Deacons of

Reformed Protestant Dutch Church of N.Y.C., 68 N.Y.2d 456, 462 n.2 (1986)); cf. Graham v.

Select Portfolio Servicing, Inc., 156 F. Supp. 3d 491, 511 (S.D.N.Y. 2016) (finding plaintiff’s

claims precluded by res judicata because plaintiff challenged the amount due in the foreclosure

judgment as improperly calculated). Therefore, because Defendants do not show or even argue

that the present action constitutes an attack on the foreclosure judgment, the Court finds that the

claims are not barred by res judicata. See Harris, 737 F. App’x at 575; Dolan v. Select Portfolio

Servicing, Inc., No. 13-CV-1552 (PKC), 2014 WL 4662247, at *4 (E.D.N.Y. Sept. 18, 2014) (“The

exception to New York’s permissive counterclaim rule bars a subsequent lawsuit that amounts to

‘an attack on a judgment’ previously issued by the state court.” (citation omitted)); cf. Lopez, 2000

WL 36688915, at *9 (“New York’s permissive counterclaim rule would [] save from the bar of res

judicata those claims for separate or different relief that could have been but were not interposed

in the parties’ prior action.” (internal quotation marks and citation omitted)).6

II. FDCPA Claims

Plaintiffs Evans and Perez assert FDCPA claims against Defendant SPS on the basis of

various statements Defendant SPS made in the mortgage statements. (Am. Compl., Dkt. 24, ¶¶ 85–

90.) In order to state an FDCPA claim, a plaintiff must plead that

(1) the plaintiff [is] a consumer who allegedly owes the debt or a person who has

been the object of efforts to collect a consumer debt, [] (2) the defendant collecting

the debt is [] a “debt collector,” and (3) the defendant has engaged in [an] act or

omission in violation of FDCPA requirements.

Zirogiannis v. Seterus, Inc., 221 F. Supp. 3d 292, 302 (E.D.N.Y. 2016) (internal quotation and

citation omitted), aff’d, 707 F. App’x 724 (2d Cir. 2017). SPS raises several arguments in support

of its motion to dismiss Plaintiffs Evans and Perez’s FDCPA claims pursuant to Rule 12(b)(6).

A. Statute of Limitations

Claims under the FDCPA must be commenced “within one year from the date on which

the violation occurs.” 15 U.S.C. § 1692k(d). “A cause of action accrues under the FDCPA when

‘injury occurs’ and ‘the injured party has the right to bring suit for all of the damages caused by

the defendant’s acts.’” Scott v. Greenberg, No. 15-CV-5527 (MKB), 2017 WL 1214441, at *5

(E.D.N.Y. Mar. 31, 2017) (ellipsis omitted) (quoting Benzemann v. Citibank N.A., 806 F.3d 98,

101 (2d Cir. 2015)). “Separate communications that violate the FDCPA can create separate causes

6 Because the Court does not find that Defendants have satisfied their burden with respect

to the third element of res judicata, the Court does not address Plaintiffs’ argument that Defendant

SPS was not involved in the foreclosure action or in privity with any party in that action.

of action.” Puglisi v. Debt Recovery Sols., LLC, No. 08-CV-5024 (JFB) (WDW), 2010 WL

376628, at *3 (E.D.N.Y. Jan. 26, 2010) (citation and alteration omitted).

1. Late Fees

Defendant SPS claims that because monthly statements containing the allegedly false

information about late fees were sent to Plaintiffs Evans and Perez as early as, respectively, 2016

and 2015, i.e., outside the FDCPA’s one-year limitations period, Plaintiffs Evans and Perez’s

FDCPA claims in this case, which are based on 2018 and 2019 monthly statements, are time-

barred. (SPS Br., Dkt. 41, at 18–19.) The Court disagrees.

Here, although Plaintiffs Evans and Perez began receiving monthly statements containing

the same allegedly false late-fee information before their respective one-year limitations periods,

Defendant SPS continued to send these statements each month thereafter to Plaintiffs Evans and

Perez until June 2018 (Evans) and April 2019 (Perez). (Am. Compl., Dkt. 24, ¶¶ 27, 33–34.) Thus,

some of the false statements were sent within the statute of limitations period while some were

sent outside of it. “In the case of multiple allegations of FDCPA violations, some occurring before

and others occurring after the statute of limitations has expired, a court must determine if the non-

time-barred allegations are new and independent FDCPA violations.” Scott, 2017 WL 1214441,

at *5 (citations omitted). “The mere fact that Defendant [SPS] may have committed multiple

offenses by frequently threatening Plaintiffs does not mean that violations that would otherwise

fall within the statute of limitations are time-barred.” Basile v. I.C. Sys., Inc., No. 08-CV-42(S)

(WMS), 2011 WL 4368510, at *4 (W.D.N.Y. Sept. 19, 2011). Similarly, “[t]he fact that

[Defendant SPS] first made similar statements before the one-year period does not bar [P]laintiffs’

claims.” Ellis v. Gen. Revenue Corp., 274 F.R.D. 53, 58 (D. Conn. 2011). Because “FDCPA

causes of action accrue with each communication in violation of the Act[,]” Ehrich v. RJM

Acquisitions LLC, No. 09-CV-2696 (BMC) (RER), 2009 WL 4545179, at *2 n.4 (E.D.N.Y. Dec.

4, 2009) (citation omitted), Plaintiffs’ FDCPA claims in relation to late fees are not time-barred.

See Puglisi, 2010 WL 376628, at *3 (allowing claims based on “separate, discrete violations” that

were within the statute of limitations period to proceed but barring those that occurred outside the

period).

Defendant SPS relies on a string of cases suggesting that FDCPA claims based on false

representations cannot be revived with each new communication. This reliance is misguided.

These cases exclusively concern plaintiffs’ attempts to restart the statute of limitations based on

false representations made later in court proceedings, where the only acts that allegedly violated

the FDCPA occurred outside of the limitations period. See, e.g., Scott, 2017 WL 1214441, at *5

(finding plaintiff cannot revive the time-barred FDCPA claim by relying on defendant’s pursuit of

a default judgment); Sierra v. Foster, 48 F. Supp. 2d 393, 395 (S.D.N.Y. 1999) (“This is not a case

where defendants have sent a series of threatening letters, each of which violate the FDCPA and

only some of which are time-barred.”); Oliver v. U.S. Bancorp, No. 14-CV-8948 (PKC), 2015 WL

4111908, at *2 (S.D.N.Y. July 8, 2015) (“The continued prosecution of a foreclosure or collection

suit is not a continuing violation under the FDCPA-if the same alleged misrepresentation is

repeated in court filings, the claim accrues on the date of the initial representation.”). Unlike these

cases, each of the late-fee threats Defendant SPS sent to Plaintiffs Evans and Perez could form the

basis of a separate FDCPA violation.

2. Inspection Fees

Defendant SPS also argues that Plaintiff Perez’s FDCPA claim on the basis of inspection

fees is time-barred. (SPS Br., Dkt. 41, at 19.) Plaintiff Evans was the only named plaintiff in the

original complaint filed on October 25, 2018, and the original complaint did not assert any claim

based on inspection fees. (See generally Compl., Dkt. 1.) Plaintiff Perez was added as a plaintiff

and brought her claims on June 27, 2019. (See generally Am. Compl., Dkt. 24.) She alleges that

Defendant SPS charged her inspections fees in two monthly mortgage statements dated April 13,

2017 and June 14, 2017, both of which were made before the one-year limitations period. (Id.

¶ 53.)7 Plaintiffs do not address this issue at all in their opposition brief. The Amended Complaint

alleges merely that “[e]quitable tolling [] applies to Plaintiffs’ claims to the extent Defendants[]

misrepresented and concealed the true nature of the fees charged to Plaintiffs’ and Class members’

mortgage accounts.” (Am. Compl., Dkt. 24, ¶ 54.) “The Second Circuit has not directly addressed

whether FDCPA claims can be equitably tolled, [though] district courts have applied the equitable

tolling doctrine in FDCPA cases.” Scott, 2017 WL 1214441, at *7 (collecting cases); see also

Benzemann v. Houslanger & Assocs., PLLC, 924 F.3d 73, 82 (2d Cir. 2019) (assuming “for the

sake of argument only” that equitable tolling applied to FDCPA claims), cert. denied, 140 S. Ct.

82 (2019). Even assuming that equitable tolling applies, the Court finds that Plaintiffs’ generalized

and conclusory allegation that Defendants “prevented them from exercising their rights” is

insufficient to toll the statute of limitations. See Singh v. Wells, 445 F. App’x 373, 378 (2d Cir.

2011) (summary order); see also id. (“Generalized or conclusory allegations of fraudulent

concealment are insufficient to toll a statute of limitations.” (citation omitted)); id. (“To allege

fraudulent concealment, a plaintiff must either plausibly allege that the defendant took affirmative

steps to prevent the plaintiff’s discovery of his claim or injury or that the wrong itself was of such

a nature as to be self-concealing.” (internal quotation and citation omitted)). Therefore, the Court

finds that Plaintiff Perez’s FDCPA claim based on inspection fees is time-barred.

7 Plaintiff Evans also asserts an FDCPA claim based on improperly imposed inspection

fees. Defendant SPS does not argue that Plaintiff Evans’s inspection fees claim is time-barred,

presumably because, unlike Plaintiff Perez, Plaintiff Evans was charged inspection fees until

December 2017. And unlike regarding the threats of late fees, Defendant SPS does not argue that

the charging of inspection fees was a single continuing violation.

B. TILA Exemption

Defendant SPS argues “that the content of a borrower’s monthly mortgage billing

statement issued pursuant to the [TILA] cannot support a[n] FDCPA claim because the statement

is not a debt collection communication.” (SPS Br., Dkt. 41, at 19.) For support, SPS cites to

several opinions, including one from the Second Circuit, finding that monthly mortgage statements

sent in compliance with the TILA are not attempts to collect a debt and are therefore not subject

to the FDCPA. See, e.g., Hill v. DLJ Mortg. Cap., Inc., No. 15-CV-3083 (SJF) (AYS), 2016 WL

5818540, at *8 (E.D.N.Y. Oct. 5, 2016), aff’d, 689 F. App’x 97 (2d Cir. 2017); Wagoner v.

EverHome Mortg. Inc., No. 17-CV-8081 (JLL), 2018 WL 2230553, at *4 (D.N.J. May 16, 2018);

Green v. Specialized Loan Servicing LLC, 766 F. App’x 777, 784 (11th Cir. 2019) (per curiam);

Brown v. Select Portfolio Servicing, Inc., No. 16-CV-62999 (WPD), 2017 WL 1157253, at *4

(S.D. Fla. Mar. 24, 2017). However, those cases did not foreclose the possibility that a monthly

statement could also be a debt collection letter. See Hill v. DLJ Mortg. Cap., Inc., 689 F. App’x

97, 98 (2d Cir. 2017) (summary order) (noting that “[n]one of the statements at issue in this case

contain any similar debt-demand language”); Brown, 2017 WL 1157253, at *3 (“[P]eriodic

statements required by TILA can constitute debt collection activity if the statement contains debt

collection language.” (internal quotation and citation omitted)); see also Green, 766 F. App’x at

784 (finding that “nothing in the language in question from the Mortgage Statement, beyond what

is required by TILA, [] rises to the level of being unlawful debt collection language”).

The mortgage statements at issue here contain explicit debt collection language. (See, e.g.,

Kim Decl. Ex. A, Dkt. 41-3, at ECF 8 (stating that “[t]his is an attempt to collect a debt. All

information obtained will be used for that purpose”).) In support of its argument, Defendant SPS

cites to two Southern District of Florida decisions, Brown, 2017 WL 1157253, and Jones v. Select

Portfolio Servicing, Inc., No. 18-CV-20389 (UU), 2018 WL 2316636 (S.D. Fla. May 2, 2018),

involving substantively similar statements to those at issue here. Both the Brown and Jones courts

found that the statements there were not debt collection letters. See Brown, 2017 WL 1157253, at

*4; Jones, 2018 WL 2316636, at *4. The court in Jones specifically noted that other district courts

have found that “language such as ‘this is an attempt to collect a debt’ could convert a monthly

statement into a debt collection communication in violation of the FDCPA,” but ultimately adopted

a different approach, requiring debt collection language that is more demanding and severe. Jones,

2018 WL 2316636, at *4. However, that approach is inconsistent with the approach in this Circuit.

For instance, the Second Circuit found in Carlin v. Davidson Fink LLP that a letter was connected

to debt collection because, “most notably, the letter states: ‘PLEASE BE ADVISED THAT

DAVIDSON FINK LLP IS A LAW FIRM ACTING AS A DEBT COLLECTOR. THIS IS AN

ATTEMPT TO COLLECT A DEBT. ANY INFORMATION OBTAINED FROM YOU WILL

BE USED FOR THAT PURPOSE.’” 852 F.3d 207, 215 (2d Cir. 2017) (record citation omitted).

Therefore, based on the precedent in this Circuit, because the monthly statements that

Defendant SPS sent to Plaintiffs contained explicit debt collection language, the Court finds that

these statements may form the basis of an FDCPA claim. See Izmirligil v. Select Portfolio

Servicing, Inc., No. 18-CV-7043 (PKC) (LB), 2020 WL 1941319, at *10 n.25 (E.D.N.Y. Apr. 22,

2020) (finding that the content of monthly mortgage statements containing language such as “this

is an attempt to collect a debt” may support an FDCPA claim); see also Nichols v. BAC Home

Loans Servicing LP, No. 13-CV-224, 2013 WL 5723072, at *8 (N.D.N.Y. Oct. 18, 2013)

(construing defendant SPS’s monthly mortgage statement as an attempt to collect a debt).

C. Debt Collector

The FDCPA defines a “debt collector” as “any person who uses any instrumentality of

interstate commerce or the mails in any business the principal purpose of which is the collection

of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or

due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). The term does not include

“any person collecting or attempting to collect any debt owed or due . . . to the extent such activity

. . . concerns a debt which was originated by such person.” Id. § 1692a(6)(F). “A mortgage

servicer is a ‘debt collector’ within the meaning of the FDCPA if the mortgage was in default at

the time the servicer began servicing the debt.” Zirogiannis, 221 F. Supp. 3d at 302 (citation

omitted). “In contrast, where a mortgage servicer obtains a loan that is not in default, it is not a

debt collector within the meaning of the FDCPA.” Id. (collecting cases).

Defendant SPS argues that Plaintiff Perez has failed to allege that her mortgage was in

default when SPS began servicing the debt and that Defendant SPS therefore was a debt collector

with respect to her claim. (SPS Br., Dkt. 41, at 20–21.) The Court agrees.

The Amended Complaint alleges in only conclusory fashion that Defendant SPS was a debt

collector, and does not present any fact that would make that allegation plausible with respect to

Plaintiff Perez’s mortgage. (Am. Compl. Dkt. 24, ¶ 86 (“SPS is a debt collector. SPS regularly

collects defaulted debts for others and the debts are in default when SPS first becomes involved

with collections.”).) To the contrary, the Amended Complaint suggests that, if anything, Plaintiff

Perez’s mortgage was not in default when SPS began servicing it. (Id. ¶ 32 (noting that when

Plaintiff Perez fell behind on the payments, she contacted SPS and later sent a certified check for

the full amount due).) “Because the Court is unable to conclude that the Amended Complaint

contains enough facts to make it plausible that [SPS] began servicing [Plaintiff Perez’s mortgage]

only after [] default,” Plaintiff Perez has failed to plead that Defendant SPS was a debt collector

with respect to her FDCPA claims. See Weir v. Cenlar FSB, No. 16-CV-8650 (CS), 2018 WL

3443173, at *8 (S.D.N.Y. July 17, 2018) (internal quotation marks, alterations, and citation

omitted) (dismissing the FDCPA claim where plaintiff made only conclusory allegations that

defendant was a debt collector); Herrera v. Navient Corps., No. 19-CV-6583 (AMD) (VMS), 2020

WL 3960507, at *4 (E.D.N.Y. July 13, 2020) (dismissing the FDCPA claim because plaintiff failed

to allege that the debt servicer acquired the loan after default and alleged only “in conclusory terms

that [defendant] [was] a debt collector because it regularly attempts to collect third-party debts and

has engaged in debt collection activities related to outstanding and delinquent student loans on

behalf of several owners of federal student loans” (internal quotations and record citation

omitted)).

Plaintiff Perez argues that the allegation that Defendant SPS was a debt collector is

sufficient to satisfy this element at the pleadings stage. (Pl.’s SPS Opp., Dkt. 43, at 21.) Her only

support for this argument is a case where the court found that such allegation was sufficient for a

motion to amend under Rule 8(a) of the Federal Rules of Civil Procedure. See McCrobie v.

Palisades Acquisition XVI, LLC, No. 15-CV-18 (LJV) (MJR), 2019 WL 4023367, at *4 (W.D.N.Y.

Aug. 23, 2019). This argument ignores the fact that the Rule 8(a) pleading requirements for a

motion to amend are more liberal than the Rule 12(b)(6) standard in connection with a motion to

dismiss. See Obot v. Sallie Mae, 602 F. App’x 844, 846 (2d Cir. 2015) (summary order).

Therefore, the Court finds that Plaintiff Perez has failed to sufficiently allege that Defendant SPS

was a debt collector as to her mortgage for purposes of her FDCPA claims.8

D. Inspection Fees

Defendant SPS asserts that “the alleged wrongful assessment of inspection fees cannot

serve as the basis for [an FDCPA] claim” against it because it was entitled “to inspect the property

and charge [] for the inspection” under the mortgage agreement, and was required under the 2015

8 Because all of Plaintiff Perez’s FDCPA claims are dismissed, the Court does not address

Defendants’ argument that Perez’s loan agreement expressly provided for the charge of inspection

fees. (See SPS Br., Dkt. 41, at 21.)

Fannie Mae Servicing Guide to inspect a property where a “Quality Right Party Contact”

(“QRPC”)9 has not been established. (SPS Br., Dkt. 41, at 11–13.) Defendant SPS argues that a

QRPC was not established between SPS and Plaintiffs, because “Plaintiffs ha[d] not made a

commitment to resolv[ing] their delinquencies,” citing generally to the Amended Complaint

without specifying any allegation therein. (Id. at 13 (citing Am. Compl., Dkt. 24).)

Contrary to Defendant SPS’s representations, Plaintiff Evans’s FDCPA claim is based on

the allegedly unreasonable manner in which SPS charged inspection fees. The mortgage

agreement permits SPS to “do and pay for whatever is reasonable or appropriate to protect [the]

Lender’s interest in the Property.” (Am. Compl., Dkt. 24, ¶ 47 (emphasis in original).) Plaintiff

Evans alleges that “SPS charged and imposed on [him] monthly inspection fees, and sometimes

charged multiple monthly inspection fees and multiple inspections on the same day, despite being

in contact with [him] and having knowledge that the property was occupied,” which he argues was

not reasonable or appropriate. (Id. ¶ 45.) Whether Defendant SPS’s imposition of inspection fees

was objectively reasonable is a question of fact best reserved for the jury. See Pettitt v. Chiari &

Ilecki, LLP, 419 F. Supp. 3d 627, 636 (W.D.N.Y. 2019) (finding reasonableness under the FDCPA

was a question of fact reserved for the jury). At the pleadings stage, Plaintiff Evans has sufficiently

stated his FDCPA claim on the basis of unreasonable inspection fees.

* * *

In sum, the Court dismisses all of Plaintiff Perez’s FDCPA claims for failure to sufficiently

allege that Defendant SPS was a debt collector with respect to her mortgage, and also her

inspection-fees claim for being time-barred. However, Plaintiff Evans’s FDCPA claims against

9 According to Defendants, a QRPC is “[a] uniform standard for communicating with the

borrower, co-borrower, or a trusted advisor . . . about resolution of the mortgage loan delinquency.”

(SPS Br., Dkt. 41, at 12 (alteration in original); Kim Decl. Ex. J, Dkt. 41-12, at ECF 25.)

Defendant SPS, based on improperly assessed late fees and inspection fees, will proceed to

discovery.

III. TILA Claims

Plaintiffs bring TILA claims against all Defendants for “charging unnecessary late fees,

inspection fees and inaccurate interest rates, and representing those false charges to Plaintiffs and

Class members in the periodic monthly mortgage statements.” (Am. Compl., Dkt. 24, ¶ 136.)

Defendants argue that these claims are time-barred. (SPS Br., Dkt. 41, at 31–32.)

“Private actions based on violations of TILA must be brought ‘within one year from the

date of the occurrence of the violation.’” Latouche v. Wells Fargo Home Mortg. Inc., 752 F. App’x

11, 12–13 (2d Cir. 2018) (summary order) (quoting 15 U.S.C. § 1640(e)). “It is well-settled law

that in ‘closed-end credit’ transactions,10 like the one[s] at issue [here], the ‘date of the occurrence

of violation’ is no later than the date the plaintiff enters the loan agreement or, possibly, when

defendant performs by transmitting the funds to plaintiffs.” Cardiello v. The Money Store, Inc.,

No. 00-CV-7332 (NRB), 2001 WL 604007, at *3 (S.D.N.Y. June 1, 2001) (footnote omitted)

(collecting cases), aff’d sub nom. Cardiello v. The Money Store, 29 F. App’x 780 (2d Cir. 2002).

“Thus, a plaintiff may not bring suit for damages under TILA, in connection with a mortgage loan,

more than one year after entering into that loan.” Latouche v. Well[s] Fargo Home Mortg. Inc.,

No. 16-CV-1175 (ERK), 2017 WL 8776975, at *6 (E.D.N.Y. Aug. 25, 2017) (citation omitted),

10 “A closed-end credit transaction is one where the finance charge is divided into the term

of the loan and incorporated into time payments, and includes a completed loan such as a mortgage

or car loan.” Grimes v. Fremont Gen. Corp., 785 F. Supp. 2d 269, 286 (S.D.N.Y. 2011) (internal

quotation and citation omitted). “By contrast, an open-end credit transaction is one in which the

creditor reasonably contemplates repeated transactions, and provides for a finance charge which

may be computed from time to time on the outstanding unpaid balance, such as a credit card.” Id.

(internal quotation, ellipses, and citation omitted).

report and recommendation adopted (Nov. 9, 2017), aff’d sub nom. Latouche v. Wells Fargo Home

Mortg. Inc., 752 F. App’x 11 (2d Cir. 2018).

“Equitable tolling applies in rare and exceptional circumstances, where extraordinary

circumstances prevented a party from timely performing a required act, and the party acted with

reasonable diligence throughout the period she sought to toll.” Latouche, 752 F. App’x at 13

(internal quotation, ellipses, alterations, and citations omitted). “To qualify for equitable tolling,

a plaintiff must show that some extraordinary circumstance, such as fraudulent concealment of the

cause of action, stood in the way of bringing suit and that she had been pursuing her rights

diligently.” Id. (citing Ellul v. Congregation of Christian Bros., 774 F.3d 791, 801 (2d Cir. 2014)).

However, “absent some affirmative concealing conduct by the defendant beyond the nondisclosure

of information required by TILA, a plaintiff’s inability to discover a nondisclosure is not enough

to toll the statute.” See McAnaney v. Astoria Fin. Corp., No. 04-CV-1101 (JFB) (WDW), 2007

WL 2702348, at *9 (E.D.N.Y. Sept. 12, 2007) (internal quotation, alteration, citation, and footnote

omitted)).

Plaintiffs commenced this action on October 25, 2018, more than ten years after they

entered into their respective mortgage agreements. (Compare Compl., Dkt. 1, with Am. Compl.,

Dkt. 24, ¶¶ 3–5.) Because the mortgages are closed-end credit transactions, the statute of

limitations has long expired for Plaintiffs’ TILA claims. Plaintiffs argue that the statute of

limitations should be measured from the date each mortgage statement was made, relying on a

case involving credit cards. (Pls.’ SPS Opp., Dkt. 43, at 25 (citing Schwartz v. HSBC Bank USA,

N.A., 160 F. Supp. 3d 666, 679–81 (S.D.N.Y. 2016)).) That case is inapposite. “It is well-settled

that, in the context of TILA claims, the ‘discovery rule’ that plaintiffs urge this Court to adopt is

applied solely to claims arising from ‘open-end’ credit transactions, rather than the ‘closed-end’

transactions at issue here.” McAnaney, 2007 WL 2702348, at *6 (citations omitted). Therefore,

the “date of the occurrence of violation” in this case was when each Plaintiff “enter[ed] the loan

agreement” and the statute of limitations for their TILA claims has thus expired. See Cardiello,

2001 WL 604007, at *3 (collecting cases); see also McAnaney, 2007 WL 2702348, at *6

(dismissing plaintiff’s TILA claims based on improper fees and finding that the statute of

limitations should be measured from when plaintiff entered into the loan agreement).

Plaintiffs also argue that the statute of limitations should be equitably tolled because of

“Defendants’ conduct in obfuscating and jumbling together various purported charges, and failing

to respond to consumers.” (Pls.’ SPS Opp., Dkt. 43, at 24.) Specifically, Plaintiffs rely on

Defendant SPS’s conduct, including (1) representing to Plaintiff Evans that they “expect[ed] to

provide a response to [him] within the next thirty (30) days” about his challenge to the threat of

late fees, but failing to do so (Am. Compl., Dkt. 24, ¶ 30), and (2) instructing Plaintiff Perez to

send a check for the full amount due, but then refusing to accept the check or any payment from

her (id. ¶ 32). (See Pls.’ SPS Opp., Dkt. 43, at 24.) The Amended Complaint also alleges broadly

that “Defendants[] misrepresented and concealed the true nature of the fees charged to Plaintiffs’

and Class members’ mortgage accounts.” (Am. Compl., Dkt. 24, ¶ 54.)

Plaintiffs’ allegations are insufficient to show fraudulent concealment. First, the “express

requests for and [] collection of the disputed fees [do] not constitute affirmative steps intended to

conceal wrongdoing.” McAnaney, 2007 WL 2702348, at *10 (emphasis omitted). Second,

Plaintiffs’ allegation that Defendants jumbled together the charges and fees (made for the first time

in their motion responses) and the Amended Complaint’s conclusory allegation that Defendants

concealed the true nature of the fees do not show an act of concealment either. See Latouche, 752

F. App’x at 14 (“[Plaintiff]’s conclusory allegations of non-disclosure, such as hidden costs in

documents concerning purchase of the premises, do not amount to the sort of extraordinary

circumstances that would warrant tolling.” (citation omitted)); Gorbaty v. Wells Fargo Bank, N.A.

(“Gorbaty II”), No. 10-CV-3291 (NGG) (SMG), 2014 WL 4742509, at *12 (E.D.N.Y. Sept. 23,

2014) (rejecting plaintiff’s allegation that defendant provided the documents in “one pile”). Lastly,

Defendant SPS’s failure to respond to inquiries and refusal to accept payments cannot be

reasonably perceived as efforts to prevent Plaintiffs from suing in time. See McAnaney, 2007 WL

2702348, at *9 (stating that plaintiff must plead “efforts by the defendant, above and beyond the

wrongdoing upon which the plaintiff’s claim is founded, to prevent, by fraud or deception, the

plaintiff from suing in time” (internal quotation and citation omitted)).

Accordingly, Plaintiffs’ TILA claims are time-barred and therefore dismissed.11

IV. RESPA Claims

Plaintiff Evans brings a RESPA claim against Defendant SPS based on its alleged failure

to provide a timely and adequate response to Evans’s second QWR.12 Defendant SPS argues that

its response was timely and adequate and that Evans failed to allege any damages. (SPS Br., Dkt.

41, at 28–29.) Assuming, without deciding, that Plaintiff Evans has adequately alleged Defendant

11 Because all of Plaintiffs’ TILA claims are dismissed, the Court does not address

Defendants’ argument that the periodic statements did not violate the TILA.

12 To the extent that Plaintiff Evans also brings a RESPA claim based on Defendant SPS’s

response to the first QWR, the Court considers that claim abandoned since Plaintiffs failed to

address in their opposition papers SPS’s arguments for dismissing it. (See SPS Br., Dkt. 41, at

26–27 (arguing that the first QWR cannot serve as a basis for a RESPA claim because it was sent

to the wrong address).) See Robinson v. Fischer, No. 09-CV-8882 (LAK) (AJP), 2010 WL

5376204, at *10 (S.D.N.Y. Dec. 29, 2010) (“Federal courts have the discretion to deem a claim

abandoned when a defendant moves to dismiss that claim and the plaintiff fails to address in their

opposition papers defendants’ arguments for dismissing such a claim.” (citation omitted)); Div.

1181 Amalgamated Transit Union v. R & C Transit, Inc., No. 16-CV-2481 (ADS) (ARL), 2018

WL 794572, at *4 (E.D.N.Y. Feb. 7, 2018) (collecting cases).

SPS’s insufficient response to his QWR, the Court nonetheless finds that his RESPA claim fails

because he has not alleged actual damages.

“To survive a motion to dismiss, a plaintiff bringing a Section 2605 [RESPA] claim must,

in addition to showing defendant’s failure to comply with the provisions of Section 2605, identify

actual damages that he or she sustained as a result of defendant’s alleged violation(s).” Castro v.

Bank of N.Y. Mellon for CWalt Inc., No. 17-CV-4375 (JS) (GRB), 2018 WL 4158344, at *5

(E.D.N.Y. Aug. 30, 2018) (internal quotation marks and citation omitted); Dolan v. Select

Portfolio Servicing, No. 03-CV-3285 (PKC) (AKT), 2016 WL 4099109, at *5–6 (E.D.N.Y. Aug.

2, 2016). “[W]hen the claim involves a failure to respond to a QWR, the complaint must offer

factual allegations linking the alleged harms to the defendant’s failure to timely respond to the

QWR.” Id. (internal quotation marks, alteration, and citation omitted). “[T]he loss alleged must

be related to the RESPA violation itself.” Gorbaty v. Wells Fargo Bank, N.A. (“Gorbaty I”), No.

10-CV-3291 (NGG) (SMG), 2012 WL 1372260, at *5 (E.D.N.Y. Apr. 18, 2012) (internal

quotation and citation omitted). “Simply saying that . . . the servicer’s failure to respond to a QWR

caused damages without specifying how those damages were caused[] is not enough to survive a

motion to dismiss.” Bonadio v. PHH Mortg. Corp., No. 12-CV-3421 (VB), 2014 WL 522784, at

*6 (S.D.N.Y. Jan. 31, 2014) (internal quotation marks, alteration, and citation omitted).

Plaintiff Evans alleges actual damages in the form of “postage and copying fees,

uncorrected late fees which have been charged to his mortgage account, incorrect interest rates,

and additional out of pocket expenses incurred in meeting with legal counsel as a result of SPS’s

failure to timely and adequately respond to his QWRs and take the requested corrective action.”

(Am. Compl., Dkt. 24, ¶ 128.) The Court first notes that the monthly mortgage statements

submitted by Defendant SPS show that SPS did not assess any late fees during the time Evans sent

his QWR and refused to pay, despite SPS’s warning in those statements that “[i]f payment [was]

received after [a certain date], $75.99 late fee [would] be charged.” (Compare Kim Decl. Ex. A,

Dkt. 41-3, at ECF 8 (April 12, 2018 statement demanding $835.89 for unpaid late charges), with

id. at ECF 11 (May 15, 2018 statement demanding the same amount for unpaid late charges), and

id. at ECF 14 (June 14, 2018 statement demanding the same amount for unpaid late charges).)

Therefore, Plaintiff Evans has not shown that he was charged any late fees as a result of SPS’s

failure to adequately respond to his QWR.13 Because Evans was not billed for more late fees, he

cannot show actual damages on this basis. As for the allegedly incorrect interest rates, Evans’s

second QWR requested information related to late fees, payoff statements, and default notice, but

did not mention interest rates. Evans has not explained, and indeed does not defend in his briefing,

how SPS’s failure to adequately respond to Evans’s second QWR proximately caused any

incorrect interest rate. (See Pls.’ SPS Opp., Dkt. 43, at 28–29.) Therefore, Plaintiff Evans has

failed to show actual damages based on any charges he suffered due to Defendant SPS’s allegedly

untimely and inadequate response to the second QWR.

Plaintiff Evans also argues that he incurred costs as a result of Defendant SPS’s deficient

August 3, 2018 response to the second QWR, presumably referring to the “postage and copying

fees” and “additional out of pocket expenses incurred in meeting with legal counsel” asserted in

the Amended Complaint (Am. Compl., Dkt. 28, ¶ 128). (Pls.’ SPS Opp., Dkt. 43, at 28.) “Costs

incurred after an incomplete or insufficient response are recoverable under RESPA, but costs

incurred before the violation occurred, such as the expenses of preparing an initial request for

13 The case Plaintiff Evans relies on is inapposite, because there the defendant misapplied

the plaintiff’s payment on the loan and the failure to correct the charges caused the plaintiff to be

billed more than he owed. See Kapsis v. Am. Home Mortg. Servicing Inc., 923 F. Supp. 2d 430,

448 (E.D.N.Y. 2013).

information, cannot serve as the basis for actual damages.” Tanasi v. CitiMortgage, Inc., 257 F.

Supp. 3d 232, 271 (D. Conn. 2017) (internal quotation marks and citation omitted). Plaintiffs

claim in their opposition brief that Evans suffered costs from “preparing and mailing a follow[-]up

letter pointing out the deficiencies of SPS’s August 3, 2018 response.” (Pls.’ SPS Opp., Dkt. 43,

at 28.) Contrary to this representation, the Amended Complaint is devoid of any allegation that

Evans prepared and mailed a follow-up letter. The two paragraphs in the Amended Complaint to

which Plaintiff Evans seemingly cites for support are, in fact, unrelated to this issue. (See Pls.’

SPS Opp., Dkt. 43, at 28 (citing Am. Compl. ¶¶ 102, 106); Am. Compl., Dkt. 24, ¶¶ 102 (asserting

actual harm resulting from GBL violation), 106 (asserting Plaintiff Beher’s class representation).)

Therefore, Plaintiff Evans has not alleged actual damages incurred after Defendant SPS’s allegedly

insufficient response to the second QWR. To the extent that Evans asserts costs arising from this

litigation, the Court notes that “[s]imply having to file suit [cannot] suffice as a harm warranting

actual damages [because] [i]f such were the case, every RESPA suit would inherently have a claim

for damages built in.” Gorbaty II, 2014 WL 4742509, at *6 (E.D.N.Y. Sept. 23, 2014) (internal

quotation, citation, and alteration omitted); see also Jackson v. Caliber Home Loans, No. 18-CV-

4282 (NG) (CLP), 2019 WL 3426240, at *8 (E.D.N.Y. July 30, 2019) (reasoning that if attorneys’

fees were considered actual damages, it would render superfluous § 2605(f)(3), a provision

granting successful litigants attorneys’ fees).

Accordingly, Plaintiff Evans has failed to show any actual damages resulting from

Defendant SPS’s untimely and inadequate response to his second QWR, and thus cannot state his

RESPA claim.14

14 Plaintiff Evans also asserts statutory damages. “Although RESPA permits recovery of

both actual and statutory damages, proof of actual damages is mandatory to recover on a § 2605(e)

violation, and a § 2605(e) claim cannot stand on statutory damages alone.” Kelmetis v. Fed. Nat’l

V. Breach of Contract

Plaintiffs assert breach of contract claims against all Defendants on the basis that

Defendants charged impermissibly high interest rates, improper late fees, and/or inspection fees.

(Am. Compl., Dkt. 24, ¶¶ 74–77.) Defendants raise several arguments in support of dismissing

these claims. (SPS Br., Dkt. 41, at 5–7.)

“To state a claim for breach of contract under New York law, a complaint must allege four

elements: ‘(1) the existence of an agreement, (2) adequate performance of the contract by plaintiff,

(3) breach of the contract by defendant, and (4) damages.’” Donnenfeld v. Petro, Inc., 333 F.

Supp. 3d 208, 218 (E.D.N.Y. 2018) (quoting Eternity Glob. Master Fund Ltd. v. Morgan Guar.

Tr. Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004)).

A. Nonperformance

“In alleging a claim for breach of contract under New York law, [a] [p]laintiff is required

to, at least, generally plead her own performance under the contract.” Harte II, 2016 WL 3647687,

at *5 (collecting cases).

Defendants argue that Plaintiffs Evans and Perez cannot state a breach of contract claim

because they failed to make mortgage payments and thus failed to perform under the mortgage

agreements. (SPS Br., Dkt. 41, at 13–14.) Plaintiffs Evans and Perez concede that they failed to

make certain payments, but argue that Defendants have waived the defense of non-performance.

(Pls.’ SPS Opp., Dkt. 43, at 5.) They rely on several out-of-circuit decisions for the proposition

that a mortgagor may still bring a breach of contract claim after breaching the mortgage agreement

if the lender elects to continue the agreement by commencing a foreclosure action. (Id. at 5–6.)

Mortg. Ass’n, No. 16-CV-246 (MAD) (CFH), 2017 WL 395120, at *8 (N.D.N.Y. Jan. 27, 2017)

(internal quotation marks, alteration, and citation omitted). Thus, any demand for statutory

damages does not save his RESPA claim.

However, this position has not been adopted by New York courts and has, in fact, been rejected in

this district. See Harte v. Ocwen Fin. Corp. (“Harte I”), No. 13-CV-5410 (MKB) (RER), 2016

WL 11120941, at *8 (E.D.N.Y. Mar. 11, 2016), report and recommendation adopted in part, No.

13-CV-5410 (MKB) (RER), 2016 WL 1275045 (E.D.N.Y. Mar. 31, 2016), and report and

recommendation adopted, No. 13-CV-5410 (MKB) (RER), 2016 WL 3647687 (E.D.N.Y. July 1,

2016); see also Harte II, 2016 WL 3647687, at *4 (“[W]ith little guiding authority, the Court relies

on the traditional contract framework to govern this dispute.” (footnote omitted)).

Additionally, as Defendants correctly point out, all of the out-of-circuit decisions on which

Plaintiffs rely involved a different scenario than the present action, and analyzed whether, by force-

placing insurance on the mortgaged property, lenders waive the right to rely on borrowers’ failure

to maintain insurance as a defense to breach of contract claims. (SPS Reply, Dkt. 48, at 3 n.1.)

The one case cited by Plaintiffs from this Circuit stands simply for the proposition that “once the

non-breaching party elects to continue the contract, he may not at a later time renounce his election

and seek to terminate based on the prior breach.” See V.S. Int’l, S.A. v. Boyden World Corp., 862

F. Supp. 1188, 1196 (S.D.N.Y. 1994) (citations and alteration omitted). That case did not involve

mortgage loans and did not hold that nonperformance may be excused when the lender commenced

a foreclosure action. See id.

Therefore, Plaintiffs Evans and Perez have failed to allege that they performed under the

agreement and cannot state a breach of contract claim. See Harte II, 2016 WL 3647687, at *5

(dismissing a borrower’s breach of contract claim for nonperformance where the lender initiated a

foreclosure action after the borrower failed to make payments); see also Nichols, 2013 WL

5723072, at *10 (dismissing a borrower’s breach of contract claim for nonperformance where the

servicer continued to impose fees after the borrower failed to make payments); Bravo v.

MERSCORP, Inc., No. 12-CV-884 (ENV) (LB), 2013 WL 1652325, at *5 (E.D.N.Y. Apr. 16,

2013) (“Not having fulfilled his obligations [by making mortgage payments] under the contract,

plaintiff cannot sustain a claim for breach of contract.”).

B. Damages

Defendants argue that Plaintiffs have failed to allege damages because they “do not allege

that they paid any of the allegedly improper fees or interest.” (SPS Br., Dkt. 41, at 14–15.)

Because the Court has found that Plaintiffs Evans and Perez cannot state their breach of contract

claims, the Court considers this argument only with respect to Plaintiff Beher’s claim.

“[A] plaintiff is not obligated to show, on a motion to dismiss, that it actually sustained

damages and need only plead allegations from which damages attributable to defendant’s breach

might be reasonably inferred[.]” Kapsis, 923 F. Supp. 2d at 450 (internal quotation, alterations,

and citation omitted).15 Unlike with respect to Plaintiffs Evans and Perez, the Amended Complaint

does not state one way or the other whether Plaintiff Beher properly made mortgage payments

pursuant to his loan agreement. Because Plaintiff Beher has pleaded that Defendants imposed

15 The parties have not given the Court any indication as to what law applies to Beher’s

state law claims. Defendants cite only to New York cases, whereas Plaintiffs cite to New Jersey,

Florida, and California cases. The Court’s discussion in this section is based on New York law,

though the Beher Property is located in California. (See Am. Compl., Dkt. 24, ¶ 4.) Plaintiff

Beher’s mortgage note, which is attached to the Amended Complaint, does not contain a choice of

law provision. (See Beher Note, Dkt. 24-2.) If California law applies, the Court would nonetheless

reach the same result. Under California law, a plaintiff must plead “appreciable and actual

damage” in relation to their breach of contract claim. Low v. LinkedIn Corp., 900 F. Supp. 2d

1010, 1028 (N.D. Cal. 2012) (citation omitted). However, at the pleadings stage, the plaintiff is

not required to plead that he has paid the amounts incorrectly charged. See Newsom v. BAC Home

Loans Servicing, LP, No. 09-CV-5288 (SBA), 2011 WL 2462315, at *2 (N.D. Cal. June 21, 2011)

(rejecting defendant’s argument that plaintiffs failed to allege damages where they “ha[d] not

alleged that they actually paid these fees or had their accounts debited in order to pay them” (record

citation omitted)); Esquivel v. Bank of Am., N.A., No. 12-CV-2502 (GEB), 2013 WL 5781679, at

*7 (E.D. Cal. Oct. 25, 2013) (finding sufficient the plaintiff’s allegation that the defendant imposed

fees not owed).

improper interest rates, he has adequately pleaded the damages prong of his breach of contract

claim. See id. (finding that plaintiff sufficiently pleaded damages where plaintiff alleged that

defendant imposed sums that were not owed); see also Mendez v. Bank of Am. Home Loans

Servicing, LP, 840 F. Supp. 2d 639, 651–53 (E.D.N.Y. 2012) (allowing a breach of contract claim

where plaintiff pleaded the assessment of late fees and improper interest).16

Accordingly, Plaintiffs Evans’s and Perez’s breach of contract claims are dismissed. Only

Plaintiff Beher’s breach of contract claim will proceed to discovery.

VI. Breach of Good Faith and Fair Dealing

Plaintiffs also assert claims of breach of good faith and fair dealing based on the same

allegations they allege in support of their breach of contract claims. (Am. Compl., Dkt. 24, ¶¶ 78–

84.)

“Under New York law, all contracts contain an implied covenant of good faith and fair

dealing.” Perks v. TD Bank, N.A., 444 F. Supp. 3d 635, 641 (S.D.N.Y. 2020) (citing Fishoff v.

Coty Inc., 634 F.3d 647, 653 (2d Cir. 2011)). “Ordinarily, the covenant of good faith and fair

dealing is breached where a party has complied with the literal terms of the contract, but has done

so in a way that undermines the purpose of the contract and deprives the other party of the benefit

of the bargain.” Bi-Econ. Mkt., Inc. v. Harleysville Ins. Co. of N.Y., 886 N.E.2d 127, 134 (N.Y.

2008) (internal citation omitted). However, “[a] claim for breach of the implied covenant will be

dismissed as redundant where the conduct allegedly violating the implied covenant is also the

16 Defendants raise for the first time on reply that Plaintiffs Evans and Beher failed to allege

why the interest rate should have been lower. (See SPS Reply, Dkt. 48, at 4–5.) “It is well-

established that ‘[a]rguments may not be made for the first time in a reply brief.’” Zirogiannis,

221 F. Supp. 3d at 298 (citation omitted), aff’d, 707 F. App’x 724 (2d Cir. 2017). In addition, it

is the same argument that Defendants made as to Plaintiff Beher’s UCL claim. Therefore, the

Court rejects the argument for the same reasons stated infra.

predicate for breach of covenant of an express provision of the underlying contract.” Perks, 444

F. Supp. 3d at 641 (internal quotation and citation omitted); see also Cruz v. FXDirectDealer, LLC,

720 F.3d 115, 125 (2d Cir. 2013) (“New York law does not recognize a separate cause of action

for breach of the implied covenant of good faith and fair dealing when a breach of contract claim,

based upon the same facts, is also pled.” (internal quotation, alterations, and citation omitted)).

“In most circumstances, claims for breach of contract and the covenant of good faith and fair

dealing are duplicative[.]” Echostar DBS Corp. v. Gemstar–TV Guide Int’l, Inc., No. 05-CV-8510

(DAB), 2007 WL 438088, at *7 (S.D.N.Y. Feb. 8, 2007).17

Defendants argue that Plaintiffs’ claims for breach of the implied covenant of good faith

and fair dealing are redundant. (See SPS Br., Dkt. 41, at 15–16.) The Court agrees. Plaintiffs’

breach of the implied covenant claim relies upon the same facts, i.e., the imposition of late fees,

inspection fees, and incorrect interest rates, as their breach of contract claim. (Compare Am.

Compl., Dkt. 24, ¶ 76 (“Defendants have breached the terms of the standard form mortgage

agreements by (i) charging interest rates higher than the rates permitted in the standard form

adjustable rate mortgage agreements; (ii) charging late fees after acceleration not permitted by the

loan agreements; and/or (iii) charging inspection fees, despite occupancy, which is prohibited by

the loan agreements and the Fannie Mae industry guidelines and regulations.”), with id. ¶ 83

17 “California law is similar.” Sullivan v. Barclays PLC, No. 13-CV-2811 (PKC), 2017

WL 685570, at *36 (S.D.N.Y. Feb. 21, 2017) (citation omitted); see Integrated Storage Consulting

Servs., Inc. v. NetApp, Inc., No. 12-CV-6209 (EJD), 2013 WL 3974537, at *7 (N.D. Cal. July 31,

2013) (“A claim alleging breach of the implied covenant of good faith and fair dealing cannot be

based on the same breach as the contract claim.” (internal quotation marks and citation omitted)).

In light of this similarity and considering that the parties’ briefs do not argue California law should

apply here, the Court does not separately analyze Plaintiff Beher’s claim.

(“Defendants breached the implied covenant of good faith and fair dealing . . . by, inter alia,18 (a)

charging . . . interest rates higher than those permitted by the standard form adjustable rate

mortgage agreements; (b) charging and/or threatening to char[g]e late fees post-acceleration; and

[(c)] charging . . . inspection fees once the loan was in default, despite their being in contact with

[] Plaintiff Evans, Plaintiff Perez, and other Class members[,] and the occupancy of the

property.”).) Moreover, “any damages resulting from a breach of the contract are necessarily the

same as any damages resulting from a breach of the implied covenant of good faith and fair

dealing,” i.e., the assessing of late fees, inspection fees, and additional charges as a result of

incorrect interest rates. Mendez, 840 F. Supp. 2d at 653; see also id. (“A cause of action to recover

damages for breach of the implied covenant of good faith and fair dealing cannot be maintained

where the alleged breach is intrinsically tied to the damages allegedly resulting from a breach of

contract.” (citation omitted)).

Plaintiffs argue that their claims for breach of the implied covenant are distinct from their

breach of contract claims because the assessment of inspection fees19 shows that Defendants

exercised the discretion afforded by the contracts in bad faith. (Pls.’ SPS Opp., Dkt. 43, at 7–8.)

However, that Plaintiffs may have sufficiently pleaded the elements of breach of the implied

covenants does not change the fact that the alleged conduct is also the basis for the breach of

contract claims. Indeed, as Plaintiffs argue in support of their inspection fees claims, the Amended

Complaint alleges that the standard form mortgage agreements have express terms that require the

lender to inspect the properties “in a reasonable manner” and to “do and pay for whatever is

18 Although this language may suggest that other acts of Defendants breached the implied

covenant, Plaintiffs do not allege other grounds for the breach.

19 Plaintiffs do not similarly assert that the imposition of late fees and incorrect interest

rates demonstrates bad faith. (See Pls.’ SPS Opp., Dkt. 43, at 7–8.)

reasonable or appropriate” to “protect[] and/or assess[] the value of the [p]roperty.” (Am. Compl.,

Dkt. 24, ¶¶ 46–47; see Pls.’ SPS Opp., Dkt. 43, at 9–10.) Plaintiffs’ claim that Defendants assessed

inspection fees in an unreasonable manner is a violation of the express terms of the contract, not

the implied covenant. None of the cases cited by Plaintiffs support their argument that their claim

for breach of good faith and fair dealing is separate and distinct from their breach of contract claim,

simply because they explicitly allege bad faith. Indeed, courts routinely dismiss claims for breach

of good faith and fair dealing as redundant, where plaintiffs have alleged bad faith. See, e.g.,

Ticheli v. Travelers Ins. Co., No. 14-CV-172 (TJM), 2014 WL 12587066, at *3 (N.D.N.Y. Dec.

23, 2014) (“New York courts do not recognize a bad faith claim for a breach of the duties of good

faith and fair dealings when such an allegation is, as here, simply duplicative of a breach of contract

claim.” (internal quotation and citations omitted)); Transcience Corp. v. Big Time Toys, LLC, 50

F. Supp. 3d 441, 452 (S.D.N.Y. 2014) (dismissing claim for breach of good faith and fair dealing

where plaintiffs alleged that defendants acted in bad faith); Doyle v. MasterCard Int’l Inc., No.

15-CV-9360 (LTS), 2016 WL 9649874, at *2 (S.D.N.Y. Dec. 15, 2016) (“The [plaintiff’s] naked

assertions of bad faith, unaccompanied by any factual predicate distinct from the breach of contract

claim, are insufficient to plead a plausible breach of the implied covenant of good faith and fair

dealing.” (citation omitted)), aff’d, 700 F. App’x 22 (2d Cir. 2017).

Accordingly, the Court dismisses Plaintiffs’ claims for breach of good faith and fair dealing

because they are redundant of their breach of contract claims.

VII. New York GBL § 349

Plaintiffs Evans and Perez assert GBL § 349 claims based on SPS’s representations that

late fees could be charged post-acceleration and that inspection fees would be charged as

necessary.20 (Am. Compl., Dkt. 24, ¶¶ 91–104.)

“To state a claim under GBL § 349, a plaintiff must prove three elements: first, that the

challenged act or practice was consumer-oriented; second, that it was misleading in a material

way; and third, that the plaintiff suffered injury as a result of the deceptive act.” Crawford v.

Franklin Credit Mgmt. Corp., 758 F.3d 473, 490 (2d Cir. 2014) (citation omitted). “Section 349

on its face applies to virtually all economic activity, and its application has been correspondingly

broad.” McCrobie, 359 F. Supp. 3d at 254 (internal quotation, alterations, and citation omitted).

“Section 349 is directed at wrongs against the consuming public.” Id. (internal quotation marks,

alteration, and citation omitted).

As an initial matter, the Court rejects SPS’s argument, citing Spagnola v. Chubb Corp.,

574 F.3d 64 (2d Cir. 2009), that the loss alleged under GBL § 349 must be independent of the loss

caused by the alleged breach of contract. (SPS Br., Dkt. 41, at 21–22.) “[I]n a recent case, Nick’s

Garage, Inc. v. Progressive Casualty Insurance Co., 875 F.3d 107 (2d Cir. 2017), the Second

Circuit emphasized that no such broad requirement [to state independent damages for a § 349

20 Even though the heading of the § 349 claims in the Amended Complaint refers to all

Defendants, Plaintiffs make allegations and seek redress only against Defendant SPS for violating

§ 349. (See, e.g., Am. Compl., Dkt. 24, ¶ 92 (“Plaintiff Evans and Plaintiff Perez bring this cause

of action . . . against SPS comprising all Class members whose properties subject to the mortgages

serviced by SPS are located within the State of New York.”); id. ¶ 98 (“SPS’s representations were

materially false and misleading . . . .”); id. ¶ 103 (“Plaintiff[s] . . . are entitled to pursue claims

against SPS for damages, statutory damages, treble damages, exemplary damages, injunctive

relief, costs and attorney’s fees pursuant to GBL §349(h) to redress SPS’s violations of GBL

§349(a).”).) Therefore, given the absence of any allegations relating to the other Defendants in

this cause of action, the Court deems Plaintiffs Evans and Perez as having asserted § 349 claims

only against Defendant SPS.

claim] exists under New York law.” Donnenfeld, 333 F. Supp. 3d at 224. Where a plaintiff alleges

that he was charged a fee that, but for the defendant’s deceptive conduct, he would not have been

charged, or that he incurred expenses that, but for the defendant’s deceptive conduct, he would not

have incurred, “[t]his is more akin to damages related to overpaying for an item as a result of a

defendant’s deceptive conduct, a type of injury that is sufficient to state a § 349 damages claim.”

Lussoro v. Ocean Fin. Fed. Credit Union, No. 18-CV-7400 (PKC) (ST), 2020 WL 1941236, at

*10 (E.D.N.Y. Apr. 22, 2020) (citing Donnenfeld, 333 F. Supp. 3d at 223). Therefore, the Court

does not find that Plaintiffs fail to sufficiently allege damages simply because the alleged damages

are the same as those sought in their breach of contract claim.

A. Late Fees

Defendant SPS argues that Plaintiffs Evans and Perez were not actually charged with any

late fees and did not suffer any kind of injury. (SPS Br., Dkt. 41, at 22–23.) In response, Plaintiffs

claim that they incurred “out of pocket expenses either in an attempt to pay for the fees, or [in]

challeng[ing] the representations that the late fees could be charged post-acceleration.” (Am.

Compl., Dkt. 24, ¶ 101; Pls.’ SPS Opp., Dkt. 43, at 14.)

“A plaintiff must prove actual injury to recover under the statute, though not necessarily

pecuniary harm.” Michelo v. Nat’l Collegiate Student Loan Tr. 2007-2, 419 F. Supp. 3d 668, 706

(S.D.N.Y. 2019) (citation and alteration omitted). “Courts have ‘recognize[d] several types of

harm which might be cognizable as a legal injury, such as physical, emotional, pecuniary or

reputational harm, or the impairment of a recognized legal right.’” Id. (citations omitted).

As discussed supra, Plaintiffs have not shown that they were actually charged with any late

fees. In addition, the Amended Complaint is devoid of any allegation that Plaintiff Perez incurred

expenses while attempting to pay the late fees or challenging SPS’s threats to impose late fees.

Nor has she alleged any other harm resulting from these efforts. Thus, the Court finds that Plaintiff

Perez has not shown that she suffered any actual injury as a result of the threats of late fees. See

Roth v. CitiMortgage Inc., No. 12-CV-2446 (SJF) (WDW), 2013 WL 5205775, at *12 (E.D.N.Y.

Sept. 11, 2013) (“Such conclusory allegations are insufficient to state a claim that plaintiff was

injured by defendant’s conduct.” (collecting cases)), aff’d, 756 F.3d 178 (2d Cir. 2014); Lane v.

Fein, Such & Crane, LLP, 767 F. Supp. 2d 382, 391 (E.D.N.Y. 2011) (“[T]he plaintiffs have

alleged no facts—aside from their conclusion that they suffered emotional distress—that show that

the alleged acts of the defendant caused any quantifiable damage.”). In contrast, Plaintiff Evans

sent written requests to Defendant SPS, attempting to challenge the representation. (Am. Compl.,

Dkt. 24, ¶¶ 21–27.) The expenses Plaintiff Evans incurred in this process are recoverable. See

McCrobie, 359 F. Supp. 3d at 256 (“Abusive debt collection is ‘a harm in itself,’ especially when

misrepresentations place a consumer in immediate fear that he or she may be about to lose his

home or her income.” (internal quotations citations omitted)).

Accordingly, the Court dismisses Plaintiff Perez’s GBL § 349 claim based on late fees, but

Plaintiff Evans’s GBL § 349 claim will proceed to discovery.

B. Inspection Fees

Defendant SPS argues that the alleged misrepresentation that inspection fees would be

charged only as necessary cannot serve as the basis for a GBL § 349 claim and that Plaintiffs Evans

and Perez have failed to allege any fact showing that the alleged misrepresentation affected

Plaintiffs’ actions and caused them injuries. (SPS Br., Dkt. 41, at 23.) Plaintiffs do not

substantively respond to this argument. (Pls.’ SPS Opp., Dkt. 43, at 15–16.)

“Federal courts have made a distinction between charges that are themselves illegal under

state or federal law and those that may be unreasonable under a contract in determining whether a

mortgage servicer’s actions were deceptive under § 349.” Weir, 2018 WL 3443173, at *14

(citations omitted). “[C]harging loan servicing fees for mortgage loan defaults are not deceptive

under [] § 349 if there is no express limitation on the appropriate amount of default-related service

fees and there is no violation of federal and state statutes.” Silvester v. Selene Fin., LP, No. 18-

CV-2425 (NSR), 2019 WL 1316475, at *10 (S.D.N.Y. Mar. 21, 2019) (collecting cases). Here,

as in Silvester, “there [is] no express limitation—other than [that] the inspections be ‘reasonable’

and [P]laintiff[s] ha[ve] not successfully pled any other violation of state or federal law.” Id.

Accordingly, Plaintiffs’ § 349 claims based on inspection fees must fail.

VIII. California UCL

Plaintiff Beher asserts a claim based on Defendant SPS’s application of incorrect interest

rates under the California UCL.21 (Am. Compl., Dkt. 24, ¶¶ 105–14.)

A. Standing

To have standing to sue under the UCL, a private plaintiff must allege he “has suffered

injury in fact and has lost money or property.” Cal. Bus. & Profs. Code § 17204. “The ‘lost money

or property’ requirement [] requires a plaintiff to demonstrate ‘some form of economic injury’ as

a result of his transactions with the defendant, although the quantum of lost money or property

necessary to show standing is only so much as would suffice to establish [Article III] injury in

fact.” Hinojos v. Kohl’s Corp., 718 F.3d 1098, 1104 (9th Cir. 2013) (internal quotations and

citation omitted), as amended on denial of reh’g and reh’g en banc (July 8, 2013).

There are innumerable ways in which economic injury from unfair competition may

be shown. For example, a plaintiff may (1) surrender in a transaction more, or

acquire in a transaction less, than he or she otherwise would have; (2) have a present

or future property interest diminished; (3) be deprived of money or property to

which he or she has a cognizable claim; or (4) be required to enter into a transaction,

21 Despite the allegation that “SPS’s practice of miscalculating interest rates and charging

unreasonable inspection and late fees and/or miscellaneous unnecessary fees, is unlawful,”

Plaintiff Beher, the only named plaintiff asserting claims under UCL, makes only allegations about

incorrect interest rates. (Compare Am. Compl., Dkt. 24, ¶ 108, with id. ¶¶ 36–37.) Therefore, the

Court deems Plaintiff Beher as bringing his UCL claim only on the basis of miscalculated interest

rates.

costing money or property, that would otherwise have been unnecessary. Further,

ineligibility for restitution is not a basis for denying standing under the UCL.

Robbins v. Hyundai Motor Am., No. 14-CV-5 (JLS), 2015 WL 304142, at *10 (C.D. Cal. Jan. 14,

2015) (internal quotations and citation omitted); see also In re NJOY, Inc. Consumer Class Action

Litig., 120 F. Supp. 3d 1050, 1085 (C.D. Cal. 2015) (“Ordinarily when we say someone has ‘lost’

money we mean that he has parted, deliberately or otherwise, with some identifiable sum formerly

belonging to him or subject to his control; it has passed out of his hands by some means, such as

being spent or mislaid.” (citation omitted)).

Here, Plaintiff Beher has sufficient standing to assert a UCL claim. Beher alleges that

Defendants charged him incorrect interest rates, but does not allege that he paid any amount. (See

Am. Compl., Dkt. 24, ¶ 37.) Nonetheless, “[a]n increase in [his] debt diminishes the equity []he

obtained in [his] home, and thus [he] is financially injured when [his] debt increases. The fact that

[he] failed to make any mortgage payments is not dispositive.” Vega v. Ocwen Fin. Corp., No.

14-CV-4408 (ODW), 2015 WL 1383241, at *8 (C.D. Cal. Mar. 24, 2015). Courts have found that

“[e]ven if a borrower has been charged but has not yet paid for the expense, the debt is an economic

injury and lien upon his property sufficient to confer standing to assert a claim under the unfair

competition law.” Lane v. Wells Fargo Bank, N.A., No. 12-CV-4026, 2013 WL 3187410, at *11

(N.D. Cal. June 21, 2013); see also Rubio v. Cap. One Bank, 613 F.3d 1195, 1204 (9th Cir. 2010)

(“If she kept her account open, she would have accepted a higher [annual percentage rate] and thus

also lost money.” (citation omitted)). Accordingly, at this stage of litigation, Plaintiff Beher has

alleged sufficient facts to confer standing in a California UCL claim based on Defendants SPS’s

alleged miscalculation of interest rates applicable to Beher’s mortgage. See Craig v. Cap. One,

N.A., No. 17-CV-3788 (DMG), 2018 WL 5857987, at *10 (C.D. Cal. Apr. 10, 2018) (“Whether

the alleged interest and fees were incurred or paid is an issue better reserved for discovery and,

perhaps, a motion for summary judgment. Taking her factual allegations as true, however, Plaintiff

has standing to bring a UCL claim.”).

B. Failure to State a Claim

Defendants also make several arguments regarding the substance of Plaintiff Beher’s UCL

claim. First, Defendants argue that Beher’s UCL claim fails to assert the predicate breach of

contract claim. (SPS Br., Dkt. 41, at 24–25.) Because, as explained above, the Court does not

find that Plaintiff Beher has failed to state damages for his breach of contract claim, his UCL claim

does not fail for this reason.

Second, Defendants argue that, despite asserting this claim against all Defendants, Plaintiff

Beher has not alleged that he suffered any injury as a result of Defendants U.S. Bank’s and

BANA’s conduct. (Id. at 25–26.) Beher does not defend this point in his response. (See Pls.’ SPS

Opp., Dkt. 43, at 18–19.) Defendants rely on cases where the UCL claim against all defendants

was dismissed on the basis that the plaintiff “lump[ed] all of the Defendants together and treat[ed]

them as one for the purposes of the UCL claim.” Okada v. Bank of Am., N.A., No. 15-CV-981

(CJC), 2015 WL 5556937, at *5 (C.D. Cal. Sept. 16, 2015) (collecting cases). Here, rather than

“lump[ing]” all of Defendants together, the Amended Complaint identifies only Defendant SPS’s

conduct as violating the UCL. (See, e.g., Am. Compl., Dkt. 24, ¶ 106 (“Plaintiff Beher brings this

cause of action . . . against SPS[.]”; id. ¶ 108 (“SPS’s practice of miscalculating interest rates and

charging unreasonable inspection and late fees and/or miscellaneous unnecessary fees, is

unlawful[.]”).) Thus, the Court deems Plaintiff Beher as having brought his UCL claim only

against Defendant SPS and, to the extent that Plaintiff Beher asserts a UCL claim against

Defendants U.S. Bank and BANA, those claims are dismissed. See Schulz v. Neovi Data Corp.,

152 Cal. App. 4th 86, 92 (2007) (dismissing UCL claim against those defendants against whom

plaintiff did not make any allegation of unfair competition).

Third, Defendants argue that Plaintiff Beher has failed to allege that SPS miscalculated

interest rates. (SPS Br., Dkt. 41, at 26.) Plaintiff Beher alleges that, according to the standard

form adjustable rate mortgage agreement, he should have been “charged interest rates that [were]

adjusted periodically pursuant to a formula based on the LIBOR index,” but that, in January 2018,

he was charged an interest rate of 5.25%, instead of 4.25% as determined by LIBOR. (Am.

Compl., Dkt. 24, ¶¶ 36–37.) Citing no case law, Defendants argue that Plaintiff Beher’s claim is

deficient because he failed to identify the provision of the mortgage contract that governs interest

rates, how LIBOR should have affected the interest rate in January 2018, and how his calculation

arrived at the rate of 4.25%. (SPS Br., Dkt. 41, at 26.) “Although relevant terms of a contract

must be adequately described in order to meet Rule 8’s pleading requirements, there is no

requirement that the contract be attached to the complaint or that the complaint quote each relevant

provision verbatim.” United Specialty Ins. Co. v. Meridian Mgmt. Grp., Inc., No. 15-CV-1039

(HSG), 2015 WL 4718998, at *2 (N.D. Cal. Aug. 7, 2015) (collecting cases); see also Taboola,

Inc. v. Ezoic Inc., No. 17-CV-9909 (OWS), 2019 WL 465003, at *9 (S.D.N.Y. Feb. 6, 2019)

(“[T]he plaintiff [] is not required to attach a copy of the contract or to plead its terms verbatim.”

(citation and alterations omitted)). “Claims involving contractual language are generally

dismissed for want of detail only where the complaint fails to identify and describe the provisions

on which the right to recovery is based.” United Specialty Ins. Co., 2015 WL 4718998, at *2

(citation omitted). Here, Plaintiff Beher has adequately described the contractual provision he

relies on and has sufficiently alleged the basis for his UCL claim. The issues Defendants contest

are better reserved for discovery.

Accordingly, the Court denies Defendants’ motion to dismiss Plaintiff Beher’s California

UCL claim based on allegedly miscalculated interest rates, and it will proceed to discovery.

CONCLUSION

For the reasons stated above, the Court grants in part and denies in part Defendants’

motions to dismiss. Plaintiffs’ claims are dismissed, except for: (1) Plaintiff Evans’s FDCPA

claims against Defendant SPS based on the imposition of late fees and inspection fees, and his

GBL § 349 claim against Defendant SPS based on the imposition of late fees; and (2) Plaintiff

Beher’s breach of contract claim and UCL claim, both based on the miscalculation of interest rates,

against Defendant SPS. Because Plaintiff Perez and Defendants U.S. Bank and BANA have no

remaining claims to which they are a party, they are terminated from this action.22 The surviving

claims shall proceed to discovery.

SO ORDERED.

/s/ Pamela K. Chen

Pamela K. Chen

United States District Judge

Dated: September 30, 2020

Brooklyn, New York

22 For this reason, the Court does not address the additional arguments in Defendant

BANA’s separate motion to dismiss. (See Dkt. 42-1.)