United States District Court, S.D. New York
December 3, 2004.
JOSEPH MAZZEI, on behalf of himself and all others similarly situated Plaintiff(s),
THE MONEY STORE and TMS MORTGAGE, INC., Defendant(s).
The opinion of the court was delivered by: JOHN SPRIZZO, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Joseph Mazzei brings the above-captioned action on
behalf of himself and all others similarly situated against
defendants The Money Store and TMS Mortgage, Inc.*fn1
(collectively "The Money Store") alleging violations of the Fair
Debt Collection Practices Act ("FDCPA"), the Truth In Lending Act
("TILA"), the Real Estate Settlement Procedures Act ("RESPA"),
and various pendent state law claims in conjunction with
defendants' alleged debt collection practices. Defendants move
for summary judgment pursuant to Fed.R.Civ.P. 56(a). For the
reasons that follow, defendants' motion for summary judgment is
granted in part and denied in part. BACKGROUND
Unless otherwise noted, the following facts are uncontested. In
November 1994, plaintiff took out a mortgage loan from The Money
Store on a property in Sacramento, California. See Second
Amended Complaint ("Compl.") ¶ 13. Beginning in the winter of
1998 plaintiff was periodically delinquent on his loan, and
defaulted in or about December 1999. See Compl. ¶ 20;
Plaintiff's 56.1 Statement in Opposition to Defendants' Motion
for Summary Judgment ("Pl.'s St.") ¶ 2. On or about February 25,
2000, plaintiff received a standardized debt collection letter on
the letterhead of law firm Moss, Codilis, Stawiarski, Morris,
Schneider & Prior LLP ("Moss Codilis") complete with their
Colorado office address, phone and fax numbers on the
bottom.*fn2 See Plaintiff's Declaration in Opposition to
Defendants' Motion for Summary Judgment, dated June 9, 2003
("Pl.'s Declar."), Declaration of Mark S. Kaufman, dated June 9,
2003 ("Kaufman Declar.") ¶ 5; Pl.'s Declar., Exhibit ("Ex.") A;
Compl. ¶ 21. Moss Codilis is a self proclaimed "debt collector."
Defendants' 56.1 Statement in Support of Its Motion for Summary
Judgment ("Defs.' St.") ¶ 10. The pertinent portions of the
February 23, 2000 letter read as follows: Dear Joseph Mazzei:
This firm has been retained by the Servicer, (TMS
Mortgage Inc.) and authorized by the Creditor of the
above-referenced home loan (hereinafter referred to
as "the Debt") to contact you regarding the status of
your account. . . . You are hereby provided formal
notice that you are in default . . . for failure to
pay the required installments when due. This letter
serves as further notice that TMS Mortgage Inc.
intends to enforce the provisions of the Note and
Security Instrument. You must pay the full amount of
the default on this loan by the thirtieth (30th)
day from the date of this letter. . . . This law firm
is attempting to collect a debt for our client, and
any information obtained will be used for that
purpose. . . . All communication about this matter
must be made through TMS Mortgage Inc. except those
specified in this letter. TMS Mortgage Inc.'s phone
number is (800) 795-5125. TMS Mortgage Inc. requires
that all payments must be . . . mailed to TMS
Mortgage Inc. at Post Office Box 96053, Charlotte, NC
28296-0053. . . .
Very truly yours, MOSS, CODILIS, STAWIARSKI, MORRIS,
SCHNEIDER & PRIOR, LLP
See Pl.'s Declar., Ex. A. Plaintiff claims that, through this
breach letter, "the Money Store Defendants sought to convey the
false impression that independent debt collectors were attempting
to collect on its behalf, when in reality it was attempting to
collect its own debts." Compl. ¶ 26.
The breach letter was sent pursuant to an agreement between
Moss Codilis and defendants (the "Letter of Agreement") whereby
Moss Codilis issued thirty day breach letters after receiving a
spreadsheet from defendants detailing the various loans in
default. See Pl.'s St. ¶ 4, Defs.' St. ¶ 14. Moss Codilis acted only in the pre-acceleration
phase of the collection effort. See Pl.'s Declar., Kaufman
Declar. ¶ 11; Defs.' St. ¶ 12. The specific relevant provisions
of the Letter of Agreement are as follows:
1. TMS Mortgage Inc. desires to have Moss, et al
facilitate the issuance of thirty (30) day breach
letters by periodically taking delivery of an ACCESS
spreadsheet. . . . Moss, et al will generate the
thirty (30) day breach letters based on information
provided within the ACCESS spreadsheet. . . . Moss,
et al will perform the necessary duties to prepare
for attorney signature and send via certified and
first class US Mail the aforementioned letters within
a twenty-four (24) hour period of time upon receipt
of accurate and complete data from TMS Mortgage Inc.
essential to the breach letter program. TMS Mortgage
Inc. reserves the right to initially and from time to
time review and approve sample forms of the breach
letters as forwarded to the borrowers. Review and
approval of the breach letters by TMS Mortgage Inc.
shall be based on the format of the breach letter
2. Moss, et al will charge fifty dollars ($50.00) for
each breach letter generated. . . .
4. TMS Mortgage Inc. agrees to provide Moss, et al
with access to books, records, databases, investor
guidelines, and files necessary for the completion of
the contract duties. . . .
10. Notifications will be addressed as follows: In
the case of Moss, et al: Moss, et al . . . Englewood,
CO 80112. . . . In the case of TMS Mortgage Inc: The
Money Store . . . Sacramento, CA 95821. . . .
Pl.'s Declar., Ex. C, Letter of Agreement. The Moss Codilis
employee who oversaw the Breach Letter program, Christina Nash,*fn3
estimated that she received
around a hundred phone calls from borrowers during the Breach
Letter program and probably 400 pieces of correspondence at her
Moss Codilis location during her time supervising. See
Plaintiff's Memorandum of Law in Opposition to Defendants' Motion
for Summary Judgment, dated June 9, 2003 ("Pl.'s Mem."), at 15;
Pl.'s Declar., Ex. G, Deposition of Christina Nash ("Nash Dep.")
at 186-87. Nash also testified to
`instances' during 3½ years of the Breach Letter
program when Moss Codilis decided not to send out a
breach letter despite Money Store's request to send
the letter. (See Kaufman Ex. G., at 87-88.)
However, Nash also admitted that she had `absolutely
no recollection as to how many times' this occurred
(Kaufman Ex. G, at 89, 241), and neither Moss Codilis
nor Money Store produced any documents confirming a
single such instance.
Pl.'s St. ¶ 20; see also Defs.' St. ¶ 15.
In October 2000, approximately eight months after receiving the
aforementioned breach letter, plaintiff sold his house and used
the proceeds to pay off in full the then-posted balance on his
loan. Compl. ¶ 30; Defs.' St. ¶ 24; see Pl.'s Declar., Ex. U.
Defendants contend that plaintiff's defaults caused him to incur additional charges that
had not yet been posted to his account at the time of this
pay-off, "resulting in a continuing debit balance" even after
plaintiff's pay-off. Defs.' St. ¶ 25.
In order to receive a loan from The Money Store plaintiff
executed certain loan documents. Pl.'s St. ¶ 62. These documents
permitted a ten dollar fee to be charged against the borrower for
any payment that was subsequently dishonored by the borrower's
bank. Pl.'s St. ¶ 63. When plaintiff bounced a check, however,
The Money Store imposed a fifteen dollar fee instead of the ten
dollar amount permitted. See Pl.'s St. ¶ 65. In a letter to
plaintiff dated February 27, 2001, The Money Store admitted that
the fee should have been ten dollars and promised to refund the
overpayment of five dollars. Pl.'s St. ¶ 71; Defs.' St. 29.
Plaintiff claims the five dollars was never refunded. Pl.'s St. ¶
72. Defendants disagree, claiming that the overpayment was
applied to plaintiff's unpaid corporate advances. Defs.' St. ¶
57; Pl.'s St. ¶ 73.
Plaintiff also claims that there was not a legitimate debit
balance in his account because The Money Store debited his
account for "Attorney Outsourcing Fees" and "Unpaid Other Fees"
which it had no right to collect. Pl.'s Mem. at 21. Specifically
plaintiff claims defendants improperly charged him $140.00 in
attorney's fees for the four breach letters, $133.55 for five months of late charges,
$50.00 for the preparation of the payoff quote, $125.00 in
attorneys fees for a bankruptcy proof of claim, $190.00 to post
the notice of sale on Mazzei's door, $100.00 for a broker price
opinion, $17.00 for property inspections and $13.00 for a
substitution of trustee. Pl.'s St. ¶¶ 75, 76.
Defendants, on the other hand, contend that plaintiff's account
never had a credit balance in excess of $1 as required by TILA.
Defs.' St. ¶ 57. Even after plaintiff sold his house in October
2000 and used the proceeds to pay off the then-posted balance of
his loan, defendants contend that plaintiff had incurred
additional charges that had not yet been posted to his account,
and that he therefore had "a continuing debit balance in his
account." Defs.' St. ¶¶ 24-25. Defendants also contend that in a
February 27, 2001 letter to plaintiff, The Money Store explained
that, even after plaintiff had paid off his loan, his account had
a deficit debit balance of $39.26, which was written off. Defs.'
St. ¶ 30.
Three months after plaintiff paid off his loan, he wrote a
letter to defendants, dated January 16, 2001, in which he
requested certain information. The pertinent portions of
plaintiff's letter read as follows:
Dear Sirs: In connection with the above-referenced loan, under
which I was the borrower, I request the following
information from The Money Store:
1. A copy of any documents distributed to or signed
by me relating to the Automatic Payment Plan. . . .
2. An explaination [sic] for the $15.00 NSF charge on
the October 2, 2000 payoff statement. (My original
note limits such fees to $10.00);
3. An explaination [sic] of your right to collect
(and itemized breakdown of) "the expenses of
collection and attorney's fees and cost" referred to
in the February 23, 2000 letter providing me with
formal notice of default.
4. An explaination [sic] of your right to collect
(and an itemized breakdown of? the "Attorney
Outsourcing Fees" and "Unpaid Other Fees" referred to
in the October 2, 2000 Payoff Letter.
Please send such information to me. . . .
Defendants' Notice of Motion for Summary Judgment ("Defs.' Notice
of Motion"), Ex. P. The Money Store sent a letter in reply dated
February 2, 2001 acknowledging plaintiff's "recent inquiry."
Defs.' Notice of Motion, Ex. Q.
In a follow-up letter dated February 27, 2001, The Money Store
provided plaintiff with another more detailed response, which
largely addressed plaintiff's earlier requests:
Dear Mr. Mazzei:
Thank you for your recent inquiry. . . . Please refer
to the enclosed copy of your correspondence regarding
the information provided below:
1. Per your request, enclosed is a copy of your
signed agreement with The Money Store relating to the
Automatic Payment Plan (APP).
2. The returned-draft fee to which your
correspondence refers originated with your APP payment dated September 6, 1999, in the amount of
$535.16. Please note, having reviewed your signed
Note, we concur that the returned-draft fee should
have been assessed at $10.00. Consequently your
overpayment of $5.00 will be refunded to you. Please
allow 7-10 business days to receive it.
3. Having completed the research associated with your
inquiry, we have confirmed that the Corporate
Advances on your loan, in the amount of $2,458.07,
are valid. The following is a summary of the items
paid on your behalf due to the status of your loan.
4 Breach/Notice of Default Letters
(3/98,5/98, 11/98,2/00) $140.00
3 Broker Price Opinions (12/98,2/00,6/00)
5 Property Inspections
Delinquent Property Taxes 1999-2000 (3/00)
Bankruptcy Attorney/Court Costs
Foreclosure Attorney/Court Costs (12/00)
To date, a total of $2,418.81 has been paid toward
Corporate Advances. The remaining balance of $39.26
has been written-off as uncollectible. Regarding the
right of The Money Store to assess, and collect
Corporate Advances, we refer you to section 4,
paragraph D, of your signed Note entitled Payment of
Note Holder's Costs and Expenses.
4. The "other fees" listed on your Payoff Statement
originated with the following:
Demand Fee (10/00) $50.00
Loan Cancellation Fee (10/00) $55.00
Please note, Section 2943 of the Civil Code of
California provides for the assessment of demand
fees associated with the cost of furnishing a
statement of obligation or Payoff Statement.
Additionally, it provides for the assessment of
recording and cancellation fees associated with the
processing of lien release documents at a loan's
payoff. Mr. Mazzei, we trust this addresses your concerns.
Should you have any questions, please contact our
Customer Service Department at (877) 867-7378. . . .
Defs.' Notice of Motion, Ex. R. Defendants claim they credited
plaintiff's account for the $5.00 overcharge the next day, while
plaintiff says a refund was never made. See The Money Store's
Memorandum in Support of Motion for Summary Judgment ("Defs.'
Mem.") at 21; Pl.'s Mem. at 21.
A court may grant summary judgment only if it determines that
there are no genuine issues of material fact based on a review of
the pleadings, depositions, answers to interrogatories,
admissions on file and affidavits. See Fed.R.Civ.P. 56(c).
The moving party bears the burden of demonstrating the absence of
a genuine issue of material fact. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). If the moving party meets
this burden, the nonmoving party then must come forward with
specific facts showing that there is a genuine issue of material
fact. Fed.R.Civ.P. 56(e). In doing so the nonmoving party "may
not rely simply on conclusory statements or on contentions that
the affidavits supporting the motion are not credible," Ying
Jing Gan v. City of New York, 996 F.2d 522, 532 (2d Cir. 1993). When ruling on a summary judgment motion, a court must construe
the facts in the light most favorable to the nonmoving party and
must resolve all ambiguities and draw all reasonable inferences
against the moving party. See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986). If no genuine issue as to any
material fact exists, the nonmoving party is entitled to summary
judgment as a matter of law. See Celotex, 477 U.S. at 323.
A. FDCPA Claim
Congress enacted the FDCPA in 1977 to "eliminate abusive debt
collection practices by debt collectors, [and] to insure that
those debt collectors who refrain from using abusive debt
collection practices are not competitively disadvantaged. . . ."
15 U.S.C. § 1692(e). The FDCPA distinguishes between creditors
and debt collectors, making clear that creditors are generally
not considered to be debt collectors unless the debt collector is
in reality the creditor's alter ego. See 15 U.S.C. § 1692a(6);
15 U.S.C. § 1692a(6)(F).
Plaintiff specifically alleges that the February 23, 2000 debt
collection letter violated FDCPA § 1692f(1), § 1692e(2), §
1692e(5) and § 1692e(3). See Compl. ¶¶ 38, 39. Plaintiff's
claims are premised on the assumption that defendants qualify as
a debt collector under the FDCPA. Plaintiff argues that law firm
and debt collector Moss Codilis exercised no legal judgment in
generating the breach letters sent to plaintiff as well as to thousands of
others, thereby rendering creditor The Money Store the true debt
collector under the false name exception contained in the FDCPA.
See Pl.'s Mem. at 4-5.
Defendants contend that Moss Codilis attorney Christina Nash
made legal determinations on The Money Store's behalf before
sending any breach letter, but that, regardless, The Money Store
is not a debt collector within the meaning of the FDCPA. See
Defs.' Mem. at 6-8. Because the Court finds that The Money Store
is not a debt collector within the meaning of the FDCPA, the
Court grants defendants' motion for summary judgment on this
1. The FDCPA False Name Exception
The FDCPA's definition of "debt collector" is found at
15 U.S.C. § 1692a(6):
The term `debt collector' means 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.
The Money Store's principal purpose is undisputedly not to
collect debts; rather, The Money Store is a creditor, fitting
well within the FDCPA definition of the term as an entity that
"extends credit creating a debt or to whom a debt is owed. . . ."
15 U.S.C. § 1692a(4). Moss Codilis, a nonparty in this case, on
the other hand, is a self-espoused debt collector. See Defs.' Notice of Motion, Ex. C, Nash Dep.
at 84-85, 172-73.*fn4
Creditors are generally not considered debt collectors under
the FDCPA. See 15 U.S.C. § 1692a(6)(F). Such a rule makes sense
given that creditors already have a strong incentive to refrain
from badgering their customers about overdue debts. See S. REP.
NO. 95-382, at 2 (1977), reprinted in 1977 U.S.C.C.A.N. 1695,
1696. Nonetheless, plaintiff contends that The Money Store is a
debt collector within an exception embodied at
15 U.S.C. § 1692a(6):
[T]he term [debt collector] includes any creditor
who, in the process of collecting his own debts, uses
any name other than his own which would indicate that
a third person is collecting or attempting to collect
This false name exception aims to prevent deceit as to who is
actually collecting the debt. See Maguire v. Citicorp Retail
Services, Inc., 147 F.3d 232
, 236 (2d Cir. 1998).
The leading Second Circuit authority on the false name
exception is found in Maguire v. Citicorp Retail Services,
Inc.. The plaintiff in Maguire sued his creditor, Citicorp,
arguing Citicorp should be considered a debt collector under the
false name exception. See id. at 236. The facts revealed that
Citicorp had a unit of its own company send out breach letters
under the name Debtor Assistance to plaintiff and other customers in default. See id.
at 234-35. Creditor Citicorp bore all the cost of transmitting
the breach letters and the phone number referred to in the breach
letter was one issued to and paid for by Citicorp. See id. at
235. The Second Circuit wrote,
[a]s a general matter, creditors are not subject to
the FDCPA. However, a creditor becomes subject to the
FDCPA if the creditor `in the process of collecting
his own debts, uses any name other than his own which
would indicate that a third person is collecting or
attempting to collect such debts.'
15 U.S.C. § 1692a(6). A creditor uses a name other than its own
when it uses a name that implies that a third party
is involved in collecting its debts, `pretends to be
someone else' or `uses a pseudonym or alias.'
Id. (quoting Villarreal v. Snow, No. 95-2484, 1996 WL 473386,
at *3 (N.D. Ill. Aug. 19, 1996).
The Court then focused on the question whether, "under the
least sophisticated consumer standard, a consumer would be
deceived into believing that the letter at issue was not from
Citicorp, but was from an unrelated third party, Debtor
Assistance" given the relationship between Debtor Assistance and
Citicorp. Id. at 236. The Court concluded that there was
"considerable evidentiary support for the . . . view that a
`least sophisticated consumer' could be misled into believing
that the letter had been written by a third party attempting to
collect debt and that Citicorp had used a name other than its own
toward that end," and that, therefore, it was error for the district court to have
granted summary judgment to Citicorp. Id. at 237-38.*fn5
The primary question before this Court is whether The Money
Store fits within the false name exception as set forth in the
FDCPA and construed by Maguire. A creditor may be deemed a debt
collector under the false name exception if, "in the process of
collecting his own debts, [the creditor] uses any name other than
his own which would indicate that a third person is collecting or
attempting to collect such debts," 15 U.S.C. § 1692a(6), if it
"pretends to be someone else" or uses "a pseudonym or alias,"
Maguire, 147 F.3d at 235 (quoting Villarreal v. Snow, No. 95-2484, 1996 WL 473386, at *3 (N.D. Ill. Aug. 19, 1996), or if
it owns and controls the debt collector, rendering it the
creditor's alter ego. See Maguire, 147 F.3d at 234-35,
236.*fn6 "The triggering of the FDCPA does not depend on
whether a third party is in fact involved in the collection of a
debt, but rather whether a least sophisticated consumer would
have the false impression that a third party was collecting the
debt." Maguire, 147 F.3d at 236. Affording the plaintiff the benefit of all reasonable inferences
in his favor, it is clear that the impression that a third party
was the debt collector was clearly not false.
First, The Money Store has not used a name other than its own.
Rather, The Money Store hired Moss Codilis to send out debt
collection letters, which Moss Codilis did under its own name.
Pl.'s St. ¶¶ 2, 3, 4; Defs.' St. ¶¶ 9, 17, 21.
Nor did The Money Store pretend to be Moss Codilis, or use an
alias to that effect. It is undisputed that Moss Codilis is a
real entity that existed and performed work for The Money Store.
See Pl.'s St. ¶¶ 4, 5, 8, 9. More specifically, it is not
disputed that Moss Codilis received an ACCESS spreadsheet of
information from defendants about the borrowers and debts owed,
which its employees used to generate form breach letters that The
Money Store and Moss Codilis had jointly drafted; then, within
twenty four hours of receiving the spreadsheet, Moss Codilis sent
out the letters. See Pl.'s St. ¶¶ 19, 49; Pl.'s Mem. at 8, 14.
While plaintiff alleges that Moss Codilis failed to act as a law
firm should, he does not contest that Moss Codilis was a
"pre-acceleration" servicing facility that generated breach
letters for The Money Store. See Pl.'s St. ¶¶ 4, 5, 8. Additionally, the relationship between The Money Store and Moss
Codilis is not comparable to that found in Maguire. Moss
Codilis is not "related" to The Money Store as the debt
collector, Debtor Assistance, was to creditor Citicorp in
Maguire. Debtor Assistance was part of the same economic entity
as Citicorp, under its ownership and control. See Maguire,
147 F.3d at 234-36. Moss Codilis, on the other hand, is neither
owned nor controlled by The Money Store. Moss Codilis is located
in a different state than The Money Store, and has its own
employees and facility with separate phone and fax numbers in
stark contrast to Debtor Assistance. See Pl.'s Declar., Ex. C,
Letter of Agreement at 1, 2, 4; Compl. ¶¶ 6, 22; see also
Maguire, 147 F.3d at 236.
Plaintiff does not dispute that, in the letters sent by Moss
Codilis, plaintiff was told to contact defendants with questions,
except those relating to issues specified in the debt collection
letter, in which case Moss Codilis should be contacted, again
demonstrating the separate nature of these two entities. See
Pl.'s Mem. at 15. Moss Codilis employee Christina Nash estimated
that she received around a hundred phone calls from borrowers
during the Breach Letter program and probably 400 pieces of
correspondence at her Moss Codilis location. Pl.'s Mem. at 15;
Pl.'s Declar., Ex. G, Nash Dep. at 186-87. Moss Codilis also had
other clients in addition to The Money Store for whom it did collection work. See Pl.'s Declar., Ex.
G, Nash Dep. at 121-26; Defs.' Mem. at 2. In short, defendants
and Moss Codilis are separate businesses, operating in their own
independent financial interests, as exemplified by the Letter of
Agreement into which the two separate entities entered. See
generally Pl.'s Declar., Ex. C, Letter of Agreement.
Plaintiff's arguments that Moss Codilis attorney Christina Nash
was not authorized to practice law, that the breach letters were
not really from Moss Codilis in any meaningful sense, that Moss
Codilis did not verify the validity of the debt or exercise any
professional judgment in doing its work, played little role in
handling responses to the breach letters, and did not take legal
action to pursue The Money Store's debts, are not relevant to the
question of whether The Money Store should be considered a debt
collector under the false name exception of the FDCPA because
they fail to demonstrate that Moss Codilis was The Money Store's
alter ego. Pl.'s Mem. at 6-7, 8-13, 15-16; see Maguire,
147 F.3d at 234-35, 236. There is no requirement in the FDCPA that
debt collectors be attorneys and therefore, even if Moss Codilis
failed to meet the relevant standard of attorney involvement, an
issue not presented by the case before this Court, Moss Codilis
would still be considered a debt collector under the FDCPA. At
best plaintiff's arguments suggest Moss Codilis may have made a false misrepresentation that the breach letters were from
an attorney, a claim plaintiff could and should have pursued
against debt collector Moss Codilis directly, but which are not
In sum, plaintiff does not sufficiently allege that The Money
Store used Moss Codilis' name to collect its debts, pretended to
be Moss Codilis or used an alias to that effect, or that The
Money Store "controlled almost every aspect" of Moss Codilis'
debt collection practice, rendering Moss Codilis defendants'
alter ego. See Harrison v. NBD Inc., 990 F. Supp. 179, 183
(E.D.N.Y. 1998); see also Maguire, 147 F.3d at 234-36. For
the aforementioned reasons, the Court concludes as a matter of
law that The Money Store is not a debt collector and therefore
grants defendants' motion for summary judgment on plaintiff's
B. TILA and RESPA Claims
Plaintiff additionally asserts a claim under TILA,
15 U.S.C. § 1666d and 12 C.F.R. § 226.21, based on defendants' collection of
a returned check fee in excess of that permitted by plaintiff's
loan documents, and on defendants' charging for "Attorney
Outsourcing Fees" and "Unpaid Other Fees," fees plaintiff says
defendants had no right to collect, resulting in an alleged
"credit balance" which defendants failed to refund. See Compl. ¶ 44; Pl.'s Mem. at 21.
TILA § 1666d states:
Whenever a credit balance in excess of $1 is created
in connection with a consumer credit transaction
through (1) transmittal of funds to a creditor in
excess of the total balance due on an account, (2)
rebates of unearned finance charges or insurance
premiums, or (3) amounts otherwise owed to or held
for the benefit of an obligor, the creditor shall
(A) credit the amount of the credit balance to the
(B) refund any part of the amount of the remaining
credit balance, upon request of the consumer; and
(C) make a good faith effort to refund to the
consumer . . . the amount of the credit balance
remaining in the account for more than six
months. . . .
Reg. 226.31 contains almost identical language.
Defendants argue that these provisions only apply to situations
where there is a credit balance in excess of $1 in the debtor's
account, and since there was never any credit balance in
plaintiff's account at any time defendants' motion for summary
judgment on this claim should be granted. However, defendants
fail to calculate plaintiff's purported debit balance or provide
materials from which this can be derived.*fn7
Furthermore, defendants do not dispute that they collected a
returned check fee from plaintiff in the amount of $15.00 when,
pursuant to his loan documents, they were only allowed to collect
$10.00. See Defs.' St. ¶ 29. Defendants claim that they
subsequently refunded the $5.00 difference, while plaintiff says
such a refund for that alleged "credit" was never provided. See
Defs.' St. ¶ 57; Pl.'s St. ¶¶ 72, 73.
Discovery on the TILA claim has not yet occurred. Therefore the
Court finds defendants' motion for summary judgment on
plaintiff's TILA claim to be premature and denies it without
prejudice subject to renewal upon completion of discovery.
Plaintiff also contends that The Money Store violated RESPA,
12 U.S.C. § 2605(e), by failing to respond to plaintiff's January
16, 2001 inquiry letter timely and properly. See Compl. ¶¶ 48,
49. Section 2605(e) requires a covered mortgagor in receipt of a
qualified written request from its borrower for information on
the servicing of its loan to send a written response
acknowledging receipt of the correspondence within twenty days
unless the mortgagor acts in accordance with the borrower's
request within that time period. See 12 U.S.C. § 2605(e)(1)(A).
Additionally, the mortgagor must, within sixty days, make the
appropriate corrections in the borrower's account, or, after investigating,
provide the borrower with a written response explaining why the
account is correct or why the mortgagor cannot respond. See
12 U.S.C. § 2605(e)(2).
In his January 16, 2001 inquiry letter plaintiff requested an
"explaination [sic] for the $15.00 NSF charge on the October 2,
2000 payoff statement." See Defs.' Notice of Motion, Ex. P.
While defendants, in their February 27, 2001 response, admit they
overcharged plaintiff by $5.00, the parties dispute whether or
not a refund was subsequently made. See Defs.' St. ¶ 57; Pl.'s
St. ¶¶ 72, 73.
Plaintiff also requested an explanation of The Money Store's
right to collect and an itemized breakdown of the "Attorney
Outsourcing Fees" and "Unpaid Other Fees" in his inquiry letter,
fees also relevant to plaintiff's TILA claim. See Defs.' Notice
of Motion, Ex. P.
Considering there is potential factual overlap between
plaintiff's TILA and RESPA claims, at minimum with respect to
whether defendants refunded the admitted $5.00 overcharge in
compliance with RESPA, 12 U.S.C. § 2605(e)(2)(A), and possibly
also with respect to the aforementioned "Attorney Outsourcing
Fees" and "Unpaid Other Fees" defendants charged plaintiffs, the
Court denies defendants' motion for summary judgment on plaintiff's RESPA
claim, as well as plaintiff's state law claims, without prejudice
subject to being renewed upon completion of discovery.
For all of the aforementioned reasons, the Court grants
defendants' Motion for Summary Judgment in part and denies it in
part. The Court further finds that certification under Rule 54(b)
of the Federal Rules of Civil Procedure is warranted. The only
issue raised by an appeal pursuant to Rule 54(b) involves the
Court's determination that The Money Store is not a debt
collector within the meaning of the FDCPA, an issue unrelated to
plaintiff's remaining claims. Since the Court finds that there is
no just reason for delay in the appeal of this issue, the Court
directs the Clerk of the Court to enter judgment dismissing
plaintiff's FDCPA claim against defendants pursuant to
With respect to plaintiff's remaining claims, discovery pertaining to plaintiff's TILA and RESPA claims shall
be completed no later than ninety (90) days from the entry of
this Opinion and Order. Discovery on plaintiff's remaining state
law claims shall be and hereby is stayed. A Pre-Trial Conference
in this action shall occur on March 28, 2005 at 3:00 p.m. in
Courtroom 705, 40 Centre Street.
It is SO ORDERED.