IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Jerry S. Estep, et al.,

Plaintiffs,

v. Case No. 2:12-cv-1127

Manley Deas Kochalski, LLC,

Defendant.

OPINION AND ORDER

This is an action brought pursuant to the Fair Debt Collection

Practices Act (“FDCPA”), by plaintiffs Jerry S. Estep and Amber

Estep against defendant Manly Deas Kochalski, LLC, an Ohio law

firm. Plaintiffs allege that on March 29, 2011, defendant filed a

complaint in foreclosure against them on behalf of Wells Fargo

Bank, N.A., in the Court of Common Pleas of Franklin County, Ohio,

styled as Case No. 11-CV-004005. Complaint, ¶ 5. Plaintiffs

further allege that on December 12, 2011, they received a form

letter from defendant, attached as Exhibit A to the complaint in

the instant case, advising them of the requirements for continued

occupancy of the property upon transfer of title to the Department

of Housing and Urban Development (“HUD”). Complaint, ¶ 6. 

Plaintiffs contend that this correspondence violated several

provisions of the FDCPA. This matter is before the court on

defendant’s motion pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss

the complaint for failure to state a claim for which relief may be

granted.

I. Rule 12(b)(6) Standards

In ruling on a motion to dismiss under Rule 12(b)(6), the

court must construe the complaint in a light most favorable to the

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plaintiffs, accept all well-pleaded allegations in the complaint as

true, and determine whether plaintiffs undoubtedly can prove no set

of facts in support of those allegations that would entitle him to

relief. Erickson v. Pardus, 551 U.S. 89, 94 (2007); Bishop v.

Lucent Technologies, Inc., 520 F.3d 516, 519 (6th Cir. 2008);

Harbin-Bey v. Rutter, 420 F.3d 571, 575 (6th Cir. 2005). To

survive a motion to dismiss, the “complaint must contain either

direct or inferential allegations with respect to all material

elements necessary to sustain a recovery under some viable legal

theory.” Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005). 

Conclusory allegations or legal conclusions masquerading as factual

allegations will not suffice. Id.

While the complaint need not contain detailed factual

allegations, the “[f]actual allegations must be enough to raise the

claimed right to relief above the speculative level,” Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 555 (2007), and must create a

reasonable expectation that discovery will reveal evidence to

support the claim. Campbell v. PMI Food Equipment Group, Inc., 509

F.3d 776, 780 (6th Cir. 2007). A complaint must contain facts

sufficient to “state a claim to relief that is plausible on its

face.” Twombly, 550 U.S. at 570. “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.” 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Where a complaint

pleads facts that are merely consistent with a defendant’s

liability, it stops short of the line between possibility and

plausibility of entitlement to relief. Id. Determining whether a

complaint states a plausible claim for relief is “a context2

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specific task that requires the reviewing court to draw on its

judicial experience and common sense.” Id. at 679. Where the

facts pleaded do not permit the court to infer more than the mere

possibility of misconduct, the complaint has not shown that the

pleader is entitled to relief as required under Fed.R.Civ.P.

8(a)(2). Id.

Plaintiffs must provide “more than labels and conclusions, and

a formulaic recitation of the elements of a cause of action will

not do.” Twombly, 550 U.S. at 555; see also Ashcroft, 129 S.Ct. at

1949 (“Threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.”);

Association of Cleveland Fire Fighters v. City of Cleveland, Ohio,

502 F.3d 545, 548 (6th Cir. 2007).

II. Plaintiffs’ Claims

Plaintiffs’ claims are based on a form letter attached as

Exhibit A to their complaint. This letter, dated December 12,

2011, is addressed to “OCCUPANT” at 388 Murray Hill Road North,

Columbus, OH 43228, which is also the address where plaintiffs

allegedly reside. See Complaint, ¶ 3. Below the address, the

letter states “Re:” followed by the case caption and number of the

foreclosure action in the common pleas court filed by Wells Fargo

against plaintiffs, the FHA case number, the loan number, and

defendant’s file number. The text of the letter states:

The mortgage for the property in which you are living is

about to be foreclosed (sometimes referred to as

repossessed). We expect that ownership of the property

will be transferred to Wells Fargo probably within the

next 60 to 90 days. Shortly thereafter, it is probable

that ownership will be transferred to the Secretary of

Housing and Urban Development (HUD).

HUD generally requires that there be no one living in

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properties for which it accepts ownership unless certain

conditions are met. We have enclosed a copy of those

conditions in Attachment 1. These conditions should be

read carefully to help you decide whether you wish to

apply to continue living in the house.

If you wish to submit a request to continue to live in

this property after HUD becomes owner, your written

request must be received by HUD within 20 days of the

date at the top of this letter. Oral requests are not

permitted. We recommend that you use the enclosed

Attachment 2, “Request for Occupied Conveyance,” in

making your request as it gives HUD information it needs

to make its decision. Also, complete boxes 1, 7 and 8 on

Attachment 3, “Request for Verification of Employment,”

and send it to HUD with your request. If you have

additional information which you wish to include with

your request you may write it on additional pages which

can be attached to the form.... If you believe that you

can meet the condition for temporary, permanent, or longterm illness or injury ... you should say so in your

request and include documentation supporting your claim.

Complaint, Ex. A. The letter goes on to advise that if “HUD

approves your request for occupancy, it will be for a temporary

period.” The letter further states that if HUD denies the request,

that denial may be appealed. The letter then states, under the

heading “IMPORTANT NOTICE,” that “YOU MUST REPLY TO THE HUD OFFICE

IN WRITING WITHIN 20 DAYS OF THE DATE ON THIS LETTER OR YOU WILL BE

REQUIRED TO MOVE FROM THE PROPERTY.” Complaint, Ex. A. Attached

to the letter are HUD forms for requesting occupancy of a conveyed

residence.

Plaintiffs allege that the HUD letter: 1) constituted a

communication with plaintiffs by defendant knowing that plaintiffs

were represented by counsel, in violation of 15 U.S.C.

§1692c(a)(2); 2) threatened to take action that cannot be legally

taken or that is not intended to be taken in connection with the

collection of any debt, in violation of 15 U.S.C. §1692e(5); 3)

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falsely represented that within 60 to 90 days, ownership of the

property would transfer to Wells Fargo, in violation of 15 U.S.C.

§1692e(10); 4) falsely represented that if plaintiffs did not send

in the enclosed documents within 20 days of the date of the letter,

they would be required to move from their home, in violation of

§1692e(10); and 5) threatened to take possession of plaintiffs’

property when there was no present right to possession of the

property, in violation of 15 U.S.C. §1692f.

III. Motion to Dismiss

A. HUD Letter Not a “Communication” Within Scope of the FDCPA

Defendant first argues that all of plaintiffs’ claims under

the FDCPA fail because the HUD occupant letter was not a

“communication” within the scope of the FDCPA. The purpose of the

FDCPA is “to eliminate abusive debt collection practices by debt

collectors[.]” 15 U.S.C. §1692(e); Gionis v. Javitch, Block,

Rathbone, LLP, 238 F.App’x 24, 27 (6th Cir. 2007). Violations

under the FDCPA are analyzed under the “least sophisticated

consumer” test. Id. at 28. This test is objective, and asks

whether there is a reasonable likelihood that an unsophisticated

consumer who is willing to consider carefully the contents of a

communication might yet be misled by them. Grden v. Leikin Ingber

& Winters PC, 643 F.3d 169, 172 (6th Cir. 2011).

“The FDCPA speaks in terms of debt collection.” Glazer v.

Chase Home Finance LLC, 704 F.3d 453, 459 (6th Cir. 2013). Thus,

to be liable under the statute’s substantive provisions, a debt

collector’s targeted conduct must have been taken “in connection

with the collection of any debt,” see §§1692c(a)(2) and 1692e, or

in order “to collect or attempt to collect any debt,” see §1692f. 

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Id. at 459-60. If a purpose of an activity taken in relation to a

debt is to obtain payment of the debt, the activity is properly

considered debt collection. Id. at 461.

The term “communication” is defined as “the conveying of

information regarding a debt directly or indirectly to any person

through any medium.” 15 U.S.C. §1692a(2). To be actionable under

the FDCPA, “a communication need not itself be a collection

attempt; it need only be ‘connect[ed]’ with one.” Grden, 643 F.3d

at 173. Thus, an explicit demand for payment is not always

necessary for the statute to apply. Id. (citing Gburek v. Litton

Loan Serv. LP, 614 F.3d 380, 385 (7th Cir. 2010)). On the other

hand, the statute does not apply to every communication between a

debt collector and a debtor. Id. Rather, “for a communication to

be in connection with the collection of a debt, an animating

purpose of the communication must be to induce payment by the

debtor.” Id. (noting that a letter that is not itself a

collection attempt but that aims to make such an attempt more

likely to succeed is one that has the requisite connection).

For example, in Grden, the debt collector sent loan balance

statements to plaintiff after plaintiff requested those statements. 

The statements showed the balance due on the loan but did not

demand payment or threaten any consequences if plaintiff did not

pay. The court held that the balance statements were not a

“communication” within the meaning of the FDCPA. Id. Rather, the

court concluded that they were merely a ministerial response to a

debtor inquiry, not part of a strategy to make payment more likely,

and that no reasonable jury could find that an animating purpose of

the balance statements was to induce payment by plaintiff. Id.;

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see also Santoro v. CTC Foreclosure Service, 12 F.App’x 476, 480

(9th Cir. 2001)(statutorily required notice of pending foreclosure

sale of property sent by debt collector did not seek to collect

debt, and was not forbidden under FDCPA); Bailey v. Security Nat’l

Servicing Corp., 154 F.3d 384, 389 (7th Cir. 1998)(letter

suggesting loan workout options is not seeking to collect a debt;

“A warning that something bad might happen if payment is not kept

current is not a dun, nor does it seek to collect any debt, but

rather the opposite because it tries to prevent the circumstances

wherein payments are missed and a real dun must be mailed.”);

Knight v. Schulman, 102 F.Supp.2d 867, 872-73 (S.D.Ohio

1999)(letter from debt collector to plaintiff acknowledging receipt

of payment in full of amount of judgment was not a communication

“made to collect a debt”).

The HUD notice letter in this case is a requirement under

HUD’s regulatory scheme governing the conveyance of occupied

property. See 24 C.F.R. §203.675. These regulations further HUD’s

“policy to reduce the inventory of acquired properties in a manner

that expands homeownership opportunities, strengthens neighborhoods

and communities, and ensures a maximum return to the mortgage

insurance fund.” 24 C.F.R. §203.670. HUD usually requires that

any property conveyed to it be conveyed vacant unless the occupant

makes a timely request for permission to continue to occupy the

property. 24 C.F.R. §203.678(a). Permission for continued

occupancy may be sought under certain circumstances, including

where: (1) the occupant has an illness or injury which would be

aggravated by moving from the property, 24 C.F.R. §203.670(b)(1);

(2) state law prohibits eviction of a tenant who is making monthly

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payments, 24 C.F.R. §203.670(b)(2); or (3) it is otherwise in the

interest of HUD to accept conveyance of occupied property. 24

C.F.R. §203.670(b)(3). It is in HUD’s interest to accept

conveyance of occupied property where occupancy of the property is

essential to protect it from vandalism, where property in the area

remains on HUD’s unsold inventory for over six months, or where the

high cost of eviction or relocation expenses makes eviction

impractical. 24 C.F.R. §203.671(a), (b) and (d).

The regulations further provide:

(a) At least 60 days, but not more than 90 days, before

the date on which the mortgagee reasonably expects to

acquire title to the property, the mortgagee shall notify

the mortgagor and each head of household who is actually

occupying a unit of the property of its potential

acquisition by HUD. The mortgagee shall send a copy of

this notification to the appropriate HUD Field Office.

(b) The notice shall provide a brief summary of the

conditions under which continued occupancy is permissible

and advise them that:

(1) Potential acquisition of the property by the

Secretary is pending;

(2) The Secretary requires that properties be vacant at

the time of conveyance to the Secretary, unless the

mortgagor or other occupant can meet the conditions for

continued occupancy in §203.670, the habitability

criteria in §203.673, and the eligibility criteria in

§203.674;

(3) An occupant may request permission to remain in

occupancy in the event of acquisition of the property by

the Secretary by notifying the HUD Field Office in

writing, with any required documentation, within 20 days

of the date of the mortgagee’s notice to the occupant[.]

24 C.F.R. §203.675(a), (b)(1)-(3). The notice must advise the

occupant of the requirements for requesting continued occupancy due

to illness or injury, and must also state that “[i]f an occupant

fails to make a timely request, the property must be vacated before

the scheduled time of acquisition.” 24 C.F.R. §203.675(b)(4)-(5). 

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The Eleventh Circuit has held that the notice letter required under

§203.675(b) is not a “communication” regarding the collection of a

debt within the scope of the FDCPA. See Clark v. Shapiro and

Pickett, LLP, 452 F.App’x 890, 895 (11th Cir. 2012). 

There is no language in the letter sent by defendant

suggesting that its purpose was to collect on the debt owed by

plaintiffs. The letter is addressed to “OCCUPANT” and makes no

reference to payment of the amount owed by plaintiffs on the loan. 

After the introductory “Re:” the letter identifies the caption of

the state court foreclosure action and provides the FHA case

number, the loan number, and defendant’s file number. However, the

text of the letter does not demand payment, and it only refers to

the foreclosure action in connection with the possible eventual

transfer of the property to HUD. This introductory information is

provided to assist the occupant in completing the HUD form for

requesting an occupied conveyance. The HUD form requires the

occupant to provide the name of the mortgage company or lender, the

mortgage loan number, and the FHA case number. Including

defendant’s file number on the letter would assist defendant in

answering inquiries concerning the letter. The case number and

caption of the foreclosure action would be helpful to an occupant

who wishes to verify that a foreclosure action is pending or to

seek additional information concerning the foreclosure action. For

example, such information would assist a tenant occupant in

deciding whether to exercise the tenant’s right of first refusal to

purchase the property from HUD under 24 C.F.R. §291.100(a)(4).

Plaintiffs argue that the HUD letter is a communication in

regard to the debt because it did not track the exact language of

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§203.675(b). In particular, plaintiffs note that the letter

contains the following notice: “YOU MUST REPLY TO THE HUD OFFICE IN

WRITING WITHIN 20 DAYS OF THE DATE ON THIS LETTER OR YOU WILL BE

REQUIRED TO MOVE FROM THE PROPERTY.” Plaintiffs contend that this

notice deviates from the language found in §203.675(b)(5). 

However, §203.675(b) does not require that the mortgagee use the

precise regulatory language in the required notice. It simply

states that the mortgagee must provide “a brief summary of the

conditions under which continued occupancy is permissible[.]” 

§203.675(b)(1).

Although the language of the above notice does not repeat the

exact language used in §203.675(b)(5), it is not inconsistent with

that section or the HUD regulations. Section 203.675(b)(5) states

that the occupant must be advised that “[i]f an occupant fails to

make a timely request, the property must be vacated before the

scheduled time of acquisition.” Under §203.676, a request for

continued occupancy must be made by notifying the HUD Field Office

in writing “within 20 days of the date of the mortgagee’s notice of

pending acquisition.” The HUD regulations further provide that

“HUD will require that the property be conveyed vacant if the

occupant fails to request permission to continue to occupy with the

time period specified in §203.676[.]” Thus, the letter was correct

when it advised that failure to contact the HUD office within 20

days of the date of the letter would result in the occupant being

required to move from the property.

Plaintiffs contend that the letter was intended to assist in

the collection of a debt by pressuring them to vacate the property,

arguing that the notice suggests that the occupant would be

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required to vacate the premises within 20 days of the date on the

letter if application to HUD is not made. Again, the notice

states, “YOU MUST REPLY TO THE HUD OFFICE IN WRITING WITHIN 20 DAYS

OF THE DATE ON THIS LETTER OR YOU WILL BE REQUIRED TO MOVE FROM THE

PROPERTY.” The notice clearly indicates that it is the reply to

the HUD office which is due within 20 days. The notice says

nothing about the occupant being required to move from the property

within 20 days, and the remainder of the letter suggests otherwise. 

The first paragraph of the letter states that ownership of the

property was expected to be transferred to Wells Fargo “within the

next 60 to 90 days” and that “[s]hortly thereafter, it is probable

that ownership will be transferred” to HUD. No date was specified

after the words “Sale Date.” The letter indicates that ownership

of the property had not yet been transferred to Wells Fargo, and

that the transfer to HUD would not occur until after the transfer

of the property to Wells Fargo. The letter also clearly states

that it is HUD (not Wells Fargo or defendant) which “generally

requires that there be no one living in properties for which it

accepts ownership” unless certain conditions are met. Even the

least sophisticated consumer would be able to glean from the letter

as a whole that because no definite date had been set for the

acquisition of the property by HUD, there was also no definite date

for vacating the property.

Plaintiffs further argue that the letter was sent “in

connection with the collection of any debt” or for the purpose of

“collect[ing] or attempt[ing] to collect any debt” because it can

be construed as an attempt on defendant’s part to convince

plaintiffs to vacate the premises voluntarily to save Wells Fargo

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the costs of an eviction. However, there is no language in the

letter which could reasonably be construed as encouraging the

occupant to leave the property, or as evidencing any intent on the

part of defendant to so influence the occupant. Rather, the text

of the letter indicates that its sole purpose is to inform the

occupant of what he or she needed to do to apply to HUD to remain

in the property. For example, the letter invites the occupant to

carefully read the conditions for continued occupancy “to help you

decide whether you wish to apply to continue living in the house.” 

The letter recommends that the occupant use the enclosed HUD forms

to make a request for continued occupancy. The letter further

states that “[i]f you believe that you can meet the condition for

a temporary, permanent, or long-term illness or injury ... you

should say so in your request and include documentation supporting

your claim.” Even the least sophisticated consumer would not

construe this letter as one encouraging the occupant to voluntarily

vacate the property; rather, the letter provides the necessary

information for applying to HUD to remain on the property.

Important policy considerations also weigh against broadly

construing the HUD notice in this case as a per se prohibited

“communication” under the FDCPA. It makes sense for a mortgagee to

assign its noticing obligation under §203.675 to the law firm

familiar with the foreclosure action to ensure compliance with

HUD’s regulations, which serve a valuable public purpose of their

own. Law firms acting as debt collectors should not be wary of

undertaking this task for fear of violating the FDCPA while

satisfying HUD’s notice requirements, which are triggered during a

foreclosure action. That is not to say that debt collectors can

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use the HUD notice letter as a vehicle for making extraneous

dunning statements clearly outside the scope of HUD’s regulations

which are intended to prompt payment of the debt. However, the

text of the letter in this case contains no such statements, and

plaintiffs have otherwise pleaded no facts sufficient to indicate

that the purpose of the letter was anything other than compliance

with the notice requirements of §203.675. 

The court concludes that plaintiffs have failed to plead the

existence of an unlawful communication “in connection with the

collection of any debt” or for the purpose of “collect[ing] or

attempt[ing] to collect any debt” as required to state a claim

under the FDCPA, and that all of plaintiffs’ claims must be

dismissed on this ground.

B. Failure to Plead a “Debt” under the FDCPA

Defendant also argues that plaintiffs have failed to plead the

existence of a “debt” as that term is defined under the FDCPA. The

term “debt” is defined as “any obligation or alleged obligation of

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

money, property, insurance, or services which are the subject of

the transaction are primarily for personal, family, or household

purposes[.]” 15 U.S.C. §1692a(5). To prove a claim under the

FDCPA, a plaintiff must show: (1) that he is a “consumer” as

defined in 15 U.S.C. §1692a(3); (2) that the “debt” arises out of

a transaction which is “primarily for personal, family or household

purposes; (3) defendant is a “debt collector” as defined in the

FDCPA; and (4) defendant has violated one of the prohibitions in

the FDCPA. See Wallace v. Washington Mutual Bank, F.A., 683 F.3d

323, 326 (6th Cir. 2012); Whittiker v. Deutsche Bank Nat’l Trust

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Co., 605 F.Supp.2d 914, 928 (N.D.Ohio 2009)(to state a claim under

the FDCPA, plaintiff must allege that the debt was created

primarily for personal, family or household purposes). Defendant

contends that the plaintiffs have failed to allege that the

property in the foreclosure action was purchased primarily for

personal, family, or household purposes.

Plaintiffs alleged in their complaint that they reside at the

premises. However, they have not alleged that they incurred the

debt to purchase the property primarily for personal, family, or

household purposes, as opposed to some other purpose, such as for

a business investment. The fact that they are currently residing

at the property is not sufficient to allege that they acquired the

property primarily for personal, family, or household purposes. 

For example, it is possible for a consumer to acquire property

primarily to generate income as rental property, but then to use it

later as a temporary residence while moving from one residence to

another or while awaiting the construction of the consumer’s

primary residence.

Plaintiffs allege that they are “consumers as defined in 15

U.S.C. §1692a(3).” Complaint, ¶ 3. However, they do not allege

that they are consumers in relation to the debt which is the

subject of the foreclosure action. “Threadbare recitals of the

elements of a cause of action, supported by mere conclusory

statements, do not suffice” to survive a motion to dismiss. 

Association of Cleveland Fire Fighters, 502 F.3d at 548. In

addition, being a “consumer” is only one element of an FDCPA claim. 

See Whittiker, 605 F.Supp.2d at 926 (noting elements of a §1692e

claim). The term “consumer” is defined as “any natural person

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obligated or allegedly obligated to pay any debt.” 15 U.S.C.

§1692a(3)(emphasis supplied). The statute then goes on in

§1692a(5) to narrow the type of debt which qualifies for protection

under the FDCPA, that being debts “primarily for personal, family,

or household purposes.” The existence of this type of a debt is a

distinct element of an FDCPA claim. See Whittiker, 605 F.Supp.2d

at 926. Thus, the fact that plaintiffs are allegedly “consumers”

does not suffice to allege the additional element that their debt

was primarily for personal, family, or household purposes.

Plaintiffs note that under §203.675, the mortgagee is required

to send the notice letter to the mortgagor and to “each head of

household who is actually occupying the unit.” §203.675(a). 

Plaintiffs note that the notice letter was addressed to “OCCUPANT,”

and that they received it because they were residing at the

property at the time. They argue that because they received the

occupant letter as a “head of household” under §203.675(a), they

also must have been occupying the property for “household purposes”

as that term is used in §1692a(5). However, the HUD regulations

have nothing to do with the FDCPA, and §203.675(a) has nothing to

do with the purposes of the debt incurred to purchase the property. 

The purpose of §203.675(a) is to ensure that occupants of a

foreclosed property are aware of their right to petition HUD for

continued occupancy after the property is transferred to HUD. 

Section §203.675(a) specifies that the notice letter be sent to

“each head of household who is actually occupying a unit,” as

distinguished from requiring that the letter be sent to every

individual occupying the premises. The fact that a mortgagor

currently occupying the property happens to receive an occupant

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letter as a “head of household” is not sufficient to allege that

the debt stemming from the purchase of the property was incurred by

the mortgagor primarily for household purposes.

The court concludes that plaintiffs have failed to allege

facts showing that the purpose of their debt was primarily for

personal, family, or household purposes, a necessary element of

their FDCPA claim. Even assuming that plaintiffs could allege

facts sufficient to plead this element, plaintiffs’ claims would

still fail because, as discussed in Section III.A., the HUD letter

was not sent “in connection with the collection of any debt” or

taken in order “to collect or attempt to collect any debt.” 

C. Failure to Plead a Claim under §1692c(a)(2)

Plaintiffs allege that defendant violated §1692c(a)(2), which

prohibits a debt collector from communicating with a consumer in

connection with the collection of any debt “if the debt collector

knows the consumer is represented by an attorney with respect to

such debt[.]” §1692c(a)(2); Complaint, ¶ 11(a). In order for a

violation to occur, §1692c(a)(2) requires that the debt collector

have actual knowledge that it was communicating with a consumer who

was represented by counsel when it sent the communication to that

consumer. See Schmitt v. FMA Alliance, 398 F.3d 995, 997 (8th Cir.

2005); Randolph v. IMBS, Inc., 368 F.3d 726, 729 (7th Cir. 2004);

Bacelli v. MFP, Inc., 729 F.Supp.2d 1328, 1334 (M.D.Fla. 2010). 

Defendant contends that plaintiffs have failed to plead sufficient

facts to show that defendant knew it was communicating with

plaintiffs in sending the HUD letter addressed to “OCCUPANT”

because plaintiffs have not alleged that defendant knew that

plaintiffs were occupying the property.

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Plaintiffs have pleaded that they reside at 388 North Murray

Hill Road, that defendant filed a complaint for foreclosure on

behalf of Wells Fargo in state court, and that plaintiffs,

represented by counsel, filed an answer in that case on September

30, 2011. Complaint, ¶¶ 3, 5. Thus, the complaint pleads

sufficient facts to indicate that defendant knew that plaintiffs

were represented by counsel in the foreclosure action. However,

plaintiffs have not pleaded facts showing that defendant knew that

plaintiffs were residing at the property which was the subject of

the foreclosure action, and would therefore receive the occupant

letter. The fact that plaintiffs allegedly reside at the property,

or that one or both of the plaintiffs had signed the mortgage and

note for the property under foreclosure, does not mean that

defendant should have known that they were actually living at the

property. It is conceivable that the property could have been

purchased by plaintiffs for use as rental property or for the use

of some other family member. The letter itself, which is addressed

to “OCCUPANT,” raises no inference that defendant knew who was

actually occupying the property.

Plaintiffs have not alleged facts sufficient to show that

defendant had actual knowledge that plaintiffs were residing at the

property being foreclosed or that the occupant letter would be

received by plaintiffs so as to state a claim under §1692c(a)(2). 

However, even if plaintiffs could plead additional facts showing

such knowledge, that would not be enough to save their §1692(a)(2)

claim. Plaintiffs would also have to allege facts showing that

defendant knew that no other head of household was occupying the

property or a portion of the property, as defendant would be

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required to send notice to any other head of household. See

§203.675 (notice must be sent to “each head of household who is

actually occupying a unit of the property”). There is no

prohibition in the HUD regulations against sending the §203.675

notice letter to an occupant known by the lender or its agent to be

represented by counsel. In any event, plaintiffs’ §1692c(a)(2)

claim would still fail because, as discussed in Section III.A.

above, the HUD letter in this case is not a communication “in

connection with the collection of any debt[.]” 

D. Alleged Violations of §1692e

Defendant further argues that the complaint fails to state

claims under §1692e, which provides that “[a] debt collector may

not use any false, deceptive, or misleading representations or

means in connection with the collection of any debt.” §1692e. 

“Whether a debt collector’s actions are false, deceptive, or

misleading under §1692e is based on whether the ‘least

sophisticated consumer’ would be misled by defendant’s actions.” 

Wallace, 683 F.3d at 326. The statement must be materially false

or misleading, that is, the statement must be technically false,

and one which would tend to mislead or confuse the reasonable

unsophisticated consumer. Id. at 326-27.

Defendant argues that plaintiffs’ complaint fails to state a

claim under §1692e(5), which prohibits conduct involving “[t]he

threat to take any action that cannot legally be taken or that is

not intended to be taken.” §1692e(5). The allegations in the

complaint, see Complaint, ¶ 11(b), simply repeat the language of

the statute and do not specify what the nature of the threatened

action was. Plaintiffs claim in their memorandum contra that the

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letter threatens to dispossess them of their property. However,

the HUD notice letter contains no statements by Wells Fargo or

defendant threatening to take any action, legal or illegal, to

evict plaintiffs. The letter simply provides notice of HUD

policies to the occupant of the property in the event that the

property is acquired by HUD, and advises the occupant about

applying to HUD to remain in the property. No claim under

§1692e(5) has been stated in the complaint.

Defendant also argues that plaintiffs have failed to allege a

violation of §1692e(10), which prohibits “[t]he use of any false

representation or deceptive means to collect or attempt to collect

any debt[.]” §1692e(10). Plaintiffs first allege that defendant

violated §1692e(10) by falsely representing that within 60 to 90

days, ownership of plaintiff’s house would transfer to Wells

Fargo.1 Complaint, ¶ 11(c). Plaintiffs allege that defendant

served discovery requests in the foreclosure action on plaintiffs

on November 22, 2011. Complaint, ¶ 5. Plaintiffs further allege

that on December 12, 2011, the date of the HUD letter, discovery

responses from Wells Fargo were still outstanding, and that

plaintiffs were awaiting a decision on their request for a loan

modification. Complaint, ¶ 7. Plaintiffs then summarily allege

that defendant had no reasonable basis to believe that a judgment

would be entered in the foreclosure action within 60 to 90 days. 

Complaint, ¶ 8.

The HUD letter itself was not phrased in definite terms. 

1

Section 203.675 requires the mortgagee to send the HUD notice at least 60

days, but not more than 90 days, “before the mortgagee reasonably expects to

acquire title to the property[.]” §203.675(a). Thus, the regulations gives some

discretion to the mortgagee in determining when to send the letter.

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Rather, the letter stated, “We expect that ownership of the

property will be transferred to Wells Fargo probably within the

next 60 to 90 days. Shortly thereafter, it is probable that

ownership will be transferred to [HUD].” Complaint, Ex. A

(emphasis supplied). These statements amount to no more than

opinions or expectations of future events. Even assuming that

plaintiffs could allege facts sufficient to show that defendant

could not have reasonably expected a foreclosure decree to be

entered within the next 60 to 90 days, their §1692e(10) claim in

that respect would still fail, as the HUD letter was not a

communication “in connection with the collection of any debt.” 

Plaintiffs also allege that the letter falsely represented

that if plaintiffs did not send in the enclosed documents within 20

days of the date of the letter, they would be required to move from

their home. Complaint, ¶ 11(d). The statements in the letter

speak for themselves and are not false. The letter accurately

reflects the pertinent regulations. The letter correctly stated

that if the occupant wished to remain in the house, a written

request had to be received by HUD within 20 days from the date of

the letter. See §203.676. The letter also correctly stated that

if the occupant did not reply to the HUD office in writing within

20 days from the date of the letter, the occupant would be required

to move from the property on some future unspecified date. See

§203.678 (“HUD will require that the property be conveyed vacant if

the occupant fails to request permission to continue to occupy

within the time period specified in §203.676[.]”).

In their memorandum, plaintiffs also argue that the letter

falsely represented that plaintiffs would be required to move from

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their home within 20 days if they failed to file a petition with

HUD. As discussed previously, the letter specified no time limit

for vacating the property, as no date had been set for the

acquisition of the property by HUD.

The complaint fails to allege facts sufficient to state a

violation of §1692e. Plaintiffs’ §1692e claims do not survive in

any event due to the fact that the HUD letter was not conduct taken

“in connection with the collection of any debt.” 

3. Alleged Violations of §1692f

Defendant argues that plaintiff has failed to allege a

violation of §1692f, which states that a “debt collector may not

use unfair or unconscionable means to collect or attempt to collect

any debt.” Complaint, ¶ 11(e). Plaintiffs allege that defendant

violated §1692f(6)(A), which prohibits “[t]aking or threatening to

take any nonjudicial action to effect dispossession or disablement

of property if– (A) there is no present right to possession of the

property claimed as collateral through an enforceable security

interest[.]” §1692f(6)(A). The complaint itself does not specify

the nature of the alleged nonjudicial action. In their memorandum,

plaintiffs contend that the nonjudicial means used by defendant was

the HUD letter.

The HUD letter, addressed to “OCCUPANT,” contains no threats

that defendant or Wells Fargo would take possession of plaintiffs’

property by nonjudicial means. The letter only referred to the

pending foreclosure action, a judicial proceeding. The letter

itself did nothing to achieve possession of the property. The

letter did not encourage or threaten the occupant to leave the

property. It simply provided notice, as required under §203.675,

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to the occupant of the property about HUD’s policies regarding the

continued occupancy of property conveyed to HUD, and provided

relevant information about how the occupant could apply to remain

in the property. In addition, as noted previously in Section

III.A., the notice does not take or threaten any action in order

“to collect or attempt to collect any debt.” See §1692f(6)(A). 

The complaint fails to state a claim under §1692f(6)(A).

IV. Conclusion

In accordance with the foregoing, defendant’s motion to

dismiss (Doc. 9) is granted, and plaintiffs’ complaint is dismissed

for failure to state a claim for which relief may be granted.

Date: April 29, 2013 s/James L. Graham 

 James L. Graham

 United States District Judge

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