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Walker v. Fabrizio & Brook, P.C.

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

November 2, 2017

MATTHEW WALKER, Plaintiffs,
v.
FABRIZIO & BROOK, P.C., et al, Defendants.

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS [DOC. 18]

          Honorable Victoria A. Roberts United States District Judge.

         Matthew and Stephanie Walker (“the Walkers”) filed an amended complaint (“Amended Complaint”) against the law firm of Fabrizio & Brook, P.C. (“Fabrizio”) and Detroit Legal News Publishing, LLC (“Detroit Legal News”). The Walkers allege efforts to collect their mortgage debt by Fabrizio, and a notice of foreclosure sale posted and published by Fabrizio and Detroit Legal News, violated their rights under the Fair Debt Collection Practices Act (“FDCPA”) and Michigan's Regulation of Collection Practices Act (“RCPA”).

         Fabrizio filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(c). That motion is DENIED.

         I. Background

         The Walkers purchased a home and executed a mortgage that was assigned to The Note Authority, LLC (“The Note Authority”). The Walkers defaulted on their mortgage payments, and The Note Authority hired Fabrizio to foreclose on the Walkers' mortgage. As part of the foreclosure process, Fabrizio sent the Walkers a letter on March 14, 2017 stating that Fabrizio represented The Note Authority in the collection of the delinquent mortgage payments. The letter stated that the Walkers needed to pay $37, 222.78 directly to The Note Authority to reinstate their account through March 1, 2017. The letter was written on Fabrizio's letterhead and stated on the bottom in bold letters that Fabrizio: IS THE CREDITOR'S ATTORNEY AND IS ATTEMPTING TO COLLECT A DEBT ON ITS BEHALF. The letter was signed: Diane L. Derenge, Real Estate Default Team, Fabrizio & Brook, P.C.

         On March 21, 2017, the Walkers sent a letter to Fabrizio asking it to verify why they owed $37, 222.78. In response, Fabrizio sent a letter on April 13, 2017, signed again by Diane L. Derenge, and stating that the Walkers owed $52, 000 on the original mortgage from January 12, 2014. The letter also included a copy of the assignment, payment history, and reinstatement and payoff figures. The Walkers allege that their debt was discharged in bankruptcy in 2008, and that the assignment enclosed in Fabrizio's April 13 letter showed a false explanation of how The Note Authority obtained the debt. Amended Complaint, Par. 60, 83, 84. They also allege that Fabrizio's April 13 letter failed to say anything about why they owed $37, 222.78, as required by 15 U.S.C. § 1692g(a)(4). Amended Complaint, Par. 58, 87.

         On April 26, 2017, Fabrizio sent the Walkers another letter signed by Diane L. Derenge. It stated that their mortgage is being foreclosed and a foreclosure sale is scheduled for June 1, 2017. The letter was written on Fabrizio's letterhead and stated on the bottom in bold letters that Fabrizio: IS THE CREDITOR'S ATTORNEY AND IS ATTEMPTING TO COLLECT A DEBT ON ITS BEHALF.

         On May 4, 2017, Fabrizio posted a public notice of an impending sheriff sale of the property for June 1, 2017 in the Detroit Legal News. The public notice stated that the debt and the Walkers were being pursued by debt collectors, that the mortgage debt is in default, and the amount owed was $56, 825.94. The notice was also posted on the Walkers' door. The Walkers allege that the information in the foreclosure notice went beyond the requirements of the Michigan Foreclosure Statute, in violation of the FDCPA and the RCPA. Amended Complaint, Par. 67, 78, 80. They allege harassment and abuse (15 U.S.C. § 1692d), unlawful communication to third parties and the world (15 U.S.C. § 1692c(b)), false representation or implication (15 U.S.C. § 1692e(6)), and publication of their mortgage debt to the world and the State of Michigan (15 U.S.C. § 1692d(4)). Amended Complaint, Par. 125b-e.

         The Walkers understood the letters as coming from a law firm. They allege that Fabrizio's letters were misleading and caused much confusion, as they were computer generated, mass produced, and sent on Fabrizio letterhead but signed by a non-attorney. The legal confusion the letters caused, clearly written without any meaningful attorney involvement, the Walkers say, violates the FDCPA, 15 U.S.C. §§ 1692e(3), (10). Amended Complaint, Par. 71-74, 89, 125a, g. Additionally, the Walkers allege that by allowing a non-attorney to sign and send out letters on law firm letterhead, threatening to foreclose on behalf of a creditor bank, Fabrizio violated the RCPA, Mich. Comp. Laws § 445.252(a). Amended Complaint, Par. 82, 124. As a result, the Walkers say they suffered statutory and actual damages under the FDCPA and the RCPA, and the publication of their debt information violated their right to privacy. Amended Complaint, Par. 93, 94.

         In their motion to dismiss, Fabrizio claims: 1) the Walkers lack Article III standing to bring suit; 2) the FDCPA does not preempt the Michigan Foreclosure Statute; 3) the Walkers consented to the publication of the foreclosure notice; 4) the notice was not a communication made in connection with the collection of a debt; and 5) the letters that were plainly from a non-attorney were not misleading. Fabrizio also filed a Notice of Supplemental Authority in support of its motion to dismiss [Doc. # 20], asking the Court to consider Wood v. Midland Funding, LLC, 2017 U.S. App. LEXIS 11469 * (6th Cir. Jun. 22, 2017) in deciding the motion.

         II. Legal Standard

         A. Motion to Dismiss

         A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) tests the legal sufficiency of a plaintiff's complaint. The Court reviews such a motion under the same standard as a motion to dismiss under Rule 12(b)(6). Sensations, Inc. v. City of Grand Rapids, 526 F.3d, 291, 295-96 (6th Cir. 2008). As such, it must accept as true all well-pled material allegations in the complaint and “determine whether they plausibly give rise to an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The Court may grant a motion for judgment on the pleadings only where the movants clearly establish that no material issue of fact remains unresolved and that they are entitled to judgment as a matter of law. Poplar Creek Dev. Co. v. Chesapeake Appalachia, LLC, 636 F.3d 235, 240 (6th Cir. 2011); Drew v. Kemp-Brooks, 802 F.Supp.2d 889, 892 (E.D. Mich. 2011).

         To withstand a Rule 12(c) motion, “a complaint must contain direct or inferential allegations respecting all the material elements under some viable legal theory.” Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007).

         III. ...


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