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Scott v. Trott Law, P.C.

United States District Court, E.D. Michigan, Southern Division

June 22, 2017

KEVIN SCOTT, Plaintiff,
TROTT LAW, P.C., Defendant.


          Denise Page Hood Chief Judge, United States District

         I. BACKGROUND

         A. Procedural Background

         On October 20, 2016, Plaintiff Kevin Scott (“Scott”) filed a pro se Complaint against Defendant Trott Law, P.C. (“Trott”) alleging Violation of the Fair Debt Collection Practices Act (Count 1), Violation of the Real Estate Settlement Procedures Act (Count 2), Unreasonable Collection Efforts under M.C.L. § 339.918(e)(2) (Count 3), Fraud and Misrepresentation (Count 4), Intentional Infliction of Emotional Distress (Count 5), and Violation of Civil Rights under 42 U.S.C. § 1981 (Count 6).[1] (Doc # 1)

         On October 25, 2016, Scott filed a Motion for Temporary Injunction. (Doc # 4) On November 4, 2016, Trott filed a Response. (Doc # 9) The Court held a hearing on the Motion on November 7, 2016 during which both Scott and Trott indicated that Scott had filed for bankruptcy, yet no notice of a bankruptcy had been filed on this Court's docket. At the hearing, Trott also acknowledged that it had not yet received validation of Scott's debt from its client, Bank of America, N.A. (“BANA”), in response to Scott's dispute. The Court entered an Order Staying Hearing on Plaintiff's Motion for Temporary Injunction. (Doc # 10)

         On January 26, 2017, Trott filed the instant Motion for Summary Judgment / Dismissal. (Doc # 18) On March 6, 2017, Scott filed a Response. (Doc # 33) The Court held a motion hearing on April 19, 2017. Additionally, the parties have filed a number of discovery-related motions: Motion to Quash Subpoena by Scott (Doc # 34, filed March 7, 2017); Second Motion to Compel Discovery / Enforce Order and for Sanctions by Trott (Doc # 35, filed March 13, 2017); Motion to Extend Discovery by Scott (Doc # 36, filed March 13, 2017); Motion to Compel by Scott (Doc # 42, filed March 27, 2017); Motion for Failure to Cooperate and Answer Subpoena by Scott (Doc # 45, filed March 27, 207); Motion for Permission of Joiner of Parties by Scott (Doc # 46, filed March 27, 2017); and Motion to Strike Plaintiff's Motion for Joiner [sic] of Parties by Trott (Doc # 51, filed April 10, 2017).

         B. Factual Background

         Scott filed this action arising from ongoing proceedings to foreclose the Mortgage, dated April 26, 2004, on his residence in Farmington Hills, Michigan. On September 27, 2016, Trott initiated a foreclosure by advertisement by sending a Fair Debt Letter to Scott stating the amount of the Debt. The letter indicates that Trott is a debt collector attempting to collect a debt, that Trott represents BANA, and that this matter was referred to Trott to foreclose Scott's Mortgage. (Doc # 1, Pg ID 30) The letter identifies Fannie Mae as the owner of the debt and BANA as the servicer of the debt. Id. The letter indicates that BANA has elected to accelerate the total indebtedness due and owing under the Mortgage, $180, 131.05. Id. The letter breaks down the total amount due and owing, indicating amounts owed for principal balance, unpaid interest, late charges, allowable advances, less escrow balance, escrow advance, and NSF fees. Id. The letter further states:

Unless you notify this office within thirty (30) days after receiving this notice that you dispute the validity of this debt, or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within thirty (30) days after receiving this notice that you dispute the validity of this debt, this office will obtain verification of the debt or a copy of the judgment, if applicable, and mail a copy of such verification or judgment to you. If you request, in writing, within thirty (30) days after receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor. Id.

         Trott sent another letter to Scott on October 7, 2016. Id. at 32. This letter notifies Scott that, under the power of sale contained in the Mortgage, the Mortgage will be foreclosed by a sale of the mortgaged premises on November 8, 2016. Id. The letter also states that the redemption period shall be 12 months from the date of the sale, unless determined abandoned, in which case the redemption period shall be 30 days from the date of the sale. Id.

         On October 8, 2016, Scott sent a certified letter to Trott disputing the validity of the debt and claiming that he provided certain checks, each in the amount of $2, 888.98, to attorneys at Maddin Hauser representing BANA in his previous action, Case No. 12-12864. Id. at 34. An Affidavit of Scott also indicates that these attorneys were given checks to be given to BANA in the amount of $2, 888.98, and that “all of the missing checks were given to the Attorneys.” The Affidavit does not specify how many alleged missing checks there are. Id. at 40-41. Scott asserts that despite his notice of dispute, Trott has failed to verify the debt. Id. at 10.

         According to the Complaint, BANA misrepresented the total amount due as $115, 946.31 in September 2016. Id. at 10. Scott asserts that he only owes approximately $65, 995.52. Id. The Complaint alleges that Scott is “current” because all checks were given to attorneys at Maddin Hauser, and that Trott refused to verify the debt. The Complaint further alleges that Trott fraudulently initiated the foreclosure process.

         On October 5, 2016, Maddin Hauser sent a letter to Scott in response to various e-mails from Scott. Id. at 36. Maddin Hauser's letter indicates that Maddin Hauser is no longer involved in this matter and that “[a]ny and all checks that my office received from you were either returned to you or forwarded on to our client.” Id. Maddin Hauser sent a second letter to Scott on October 6, 2016 indicating that they did not represent him and that they have no additional personal knowledge regarding the location of his checks. Id. at 38.

         After commencement of this action, the foreclosure sale of the mortgaged premises scheduled for November 8, 2016 was canceled. Trott asserts that it ceased collection activities upon receipt of Scott's dispute letter on or about October 11, 2016.


         A. Standard of Review

         1. Motion to Dismiss

         Rule 12(b)(6) of the Federal Rules of Civil Procedures provides for a motion to dismiss for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). This type of motion tests the legal sufficiency of the plaintiff's complaint. Davey v. Tomlinson, 627 F.Supp. 1458, 1463 (E.D. Mich. 1986). When reviewing a motion to dismiss under Rule 12(b)(6), a court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Directv Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). A court, however, need not accept as true legal conclusions or unwarranted factual inferences.” Id. (quoting Gregory v. Shelby Cnty., 220 F.3d 443, 446 (6th Cir. 2000)). “[L]egal conclusions masquerading as factual allegations will not suffice.” Edison v. State of Tenn. Dep't of Children's Servs., 510 F.3d 631, 634 (6th Cir. 2007).

         As the Supreme Court has explained, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level… .” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted); see LULAC v. Bresdesen, 500 F.3d 523, 527 (6th Cir. 2007). To survive dismissal, the plaintiff must offer sufficient factual allegations to make the asserted claim plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). “A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         2. Motion for Summary Judgment

         The Court will grant summary judgment if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-57 (1986). A fact is material if it could affect the outcome of the case based on the governing substantive law. Id. at 248. A dispute about a material fact is genuine if, on review of the evidence, a reasonable jury could find in favor of the nonmoving party. Id.

         The moving party bears the initial burden to demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets this burden, the nonmoving party must “go beyond the pleadings and … designate specific facts showing that there is a genuine issue for trial.” Id. at 324. The Court may grant a motion for summary judgment if the nonmoving party who has the burden of proof at trial fails to make a showing sufficient to establish the existence of an element that is essential to that party's case. See Muncie Power Prods., Inc. v. United Tech. Auto., Inc., 328 F.3d 870, 873 (6th Cir. 2003). “The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252. “Conclusory allegations do not create a genuine issue of material fact which precludes summary judgment.” Johari v. Big Easy Restaurants, Inc., 78 F. App'x 546, 548 (6th Cir. 2003).

         When reviewing a summary judgment motion, the Court must view the evidence and all inferences drawn from it in the light most favorable to the nonmoving party. Kochins v. Linden-Alimak, Inc., 799 F.2d 1128, 1133 (6th Cir. 1986). The Court “need consider only the cited materials, but it may consider other materials in the record.” Fed.R.Civ.P. 56(c)(3). The Court's function at the summary judgment stage “is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249.

         3. Pro Se Litigants

         Federal courts hold pro se complaints to “less stringent standards” than those drafted by attorneys. Haines v. Kerner, 404 U.S. 519, 520 (1972). However, pro se litigants are not excused from failing to follow basic procedural requirements. Jourdan v. Jabe, 951 F.2d 108, 110 (6th Cir. 1991); Brock v. Hendershott, 840 F.2d 339, 343 (6th Cir. 1988). A pro se litigant “must conduct enough investigation to draft pleadings that meet the requirements of the federal rules.” Burnett v. Grattan, 468 U.S. 42, 50 (1984).

         B. Violation of the Fair Debt Collection Practices Act (Count 1)

         Scott first alleges that Trott violated the Fair Debt Collection Practices Act (“FDCPA”) in misrepresenting the amount of the debt and failing to validate the debt after he notified Trott of the dispute. Scott argues that Trott was required to verify the debt because Trott did not cease its collection activities after receiving Scott's dispute letter, listing Scott's home in the newspaper on October 14, 21, and 28, 2016.

         Trott argues that the FDCPA claim should be dismissed because Trott ceased all collection activities and was thereafter not required to verify the debt. Trott further argues that it ordered the publication of Scott's home prior to its receipt of Scott's dispute letter, and Trott was not required to take any positive step with respect to any action by third-parties, which are not considered collection activities under the FDCPA. Trott argues that it was not required to independently investigate the merit of the debt either.

         The FDCPA, 15 U.S.C. § 1601 et seq., governs debt collectors' actions. The purpose of the FDCPA is to eliminate abusive debt collection practices by debt collectors and to promote actions to protect consumers against debt collection abuses. Id. at § 1692(e); Grden v. Leikin Inger & Winters, PC, 643 F.3d 169, 172 (6th Cir. 2011). Violators of the FDCPA are subject to actual damages, statutory damages and attorneys' fees. 15 U.S.C. § 1692k.

         A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt, and may not falsely represent “the character, amount, or legal status of any debt.” 15 U.S.C. § 1692e. Section 1692g of the FDCPA provides as follows.

If the consumer notifies the debt collector in writing within the thirty-day period . . . that the debt, or any portion thereof, is disputed . . . the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment . . . and a copy of such verification or judgment . . . is mailed to the consumer by the debt collector.

Id. at § 1692g(b). A debt collector does not violate the FDCPA by failing to verify the debt where the debt collector ceases collection activities after the receipt of a consumer's dispute letter. Smith v. Transworld Sys., Inc., 953 F.2d 1025, 1032 (6th Cir. 1992); see also Stephens v. Troy Capital, LLC, No. 3:14-CV-1972, 2015 WL 2078895, at *4 (M.D. Tenn. May 4, 2015) (‚ÄúSection 1692g(b) does not require a debt collector to respond to a request for verification, ...

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