22

- 1042

- cv Joseph v. Ocwen Financial Corporation


### UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT


## SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT ’ S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WI TH THE NOTATION “ SUMMARY ORDER ” ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second 1 Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley 2 Square, in the City of New York, on the 25 th da y of May , two thousand twenty

3 three

. 4 5 PRESENT: 6 AMALYA L. KEARSE , 7 DENNIS JACOBS , 8 STEVEN J. MENASHI , 9 Circuit Judges. 10

_____________________________________ 11 12 Phenide Joseph, George Joseph , 13 14 Plaintiff s - Appellant s , 15 16

v. 22

- 1042 17 18 Ocwen Financial Corporation, Ocwen 19 Loan Servicing, LLC , 20 21 Defendants

- Appellees , 221 John Doe 1 through John Doe 10, 2 representing any and all owners, trustees, 3 officers , affiliates, individuals 4 supervising agencies, and corporations, 5 having or claiming an interest in this 6 present controversy , 7 8 Defendant s . 9 10

_____________________________________ 11 12 13 FO R PLAINTIFF S

- APPELLANT S : Phenide Joseph, George 14 Joseph , pro se, 15 Patchogue , NY

. 16 17 FOR DEFENDANT S

- APPELLEE S : Ryan Sirian n i, 18 Greenberg Traurig, LLP, 19 Garden City , NY

. 20 21
Appeal from a judgment of the United States District Court for the Eastern 22
District of New York ( DeArcy Hall , J .). 23

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, 24
ADJUDGED, AND DECREED that the judgment of the district court is 25

AFFIRMED

. 26
Appellant s Phenide and George Joseph, pro se, appeal the dismissal of 27

their Second Amended Complaint for failure to state a claim pursuant to Federal 283 Rule of Civil Procedure 12(b)(6). The Josephs sued their mortgage loan servicer, 1

Ocwen Loan Servic ing, LLC (“ Ocwen ”), and its parent company under the Real 2
Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601

– 17, and the Fair 3
Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § § 1692

– 1692p

. We assume 4
the parties ’ familiarity with the underlying facts, the procedural history of the 5
case, and the issues on appeal. 6

“ We review de novo the district court ’ s dismissal for failure to state a claim, 7
accepting all well

- pleaded factual allegations as true and drawing all inferences 8

in favor of the non

- moving party.” 74 Pinehur st LLC v. New York , 59 F.4th 557, 9
562 (2d Cir. 2023). To avoid dismissal, “ a complaint must contain sufficient 10
factual matter, accepted as true, to state a claim to relief that is plausible on its 11

face.” Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (inter nal quotation marks and 12

citation omitted). “We liberally construe pleadings and briefs submitted by pro 13
se litigants, reading such submissions to raise the strongest arguments they 14
suggest.” Publicola v. Lomenzo , 54 F.4th 108, 111 (2d Cir. 2022) (interna l 15
quotation marks and citation omitted). 164 I 1

Count One of the Second Amended Complaint asserted a violation of 2
RESPA’s requirement s regarding how mortgage loan servicers must respon d to 3
“qualified written requests” (“QWRs”) from borrowers. See generally 12 U.S.C. 4

§ 2605(e)

. A QWR is “ correspondence that identifies a borrower’s account and 5

‘includes a statement of the reasons for the belief of the borrower, to the extent 6
applicable, that the account is in error or provides sufficient detail to the servicer 7
regarding other information sought by the borrower.’” Roth v. CitiMortgage Inc. , 8
756 F.3d 178, 181 (2d Cir. 2014) (quoting 12 U.S.C. § 2605(e)(1)(B)(ii)). RESPA 9
requires that, w ithin 30 days of receiving a QWR , the servicer must ( A ) “make 10
appropriate corrections” in the borrower’s account , 12 U.S.C. § 2605(e)(2)(A) ; 11
( B ) provide , a fter investigation, a written statement containing “to the extent 12
applicable

. . . the reasons for which the servicer believes the acco unt of the 13

borrower is correct ” and a phone number for additional assistance , i d. 14

§ 2605(e)(2)(B) ; or ( C ) provide, after investigation, a written statement that 15

includ es “information requested by the borrower or an explanation of why the 16
information requested is unavailable or cannot be obtained by the servicer” and 175 a phone number for additional assistance , i d . § 2605(e)(2)(C). 1
The Josephs sent Ocwen a QWR in April 2018. 1 They concede that Ocwen 2
provided a timely explanation for why it believed the ir account to be correct

. 3

instead, but they argue that Ocwen did not conduct a reasonable investigation in 4
response to the ir QWR . H ad Ocwen conducted such an investigat ion, the 5
Josephs contend, it would have discovered (and then corrected) the error s in the 6

account statement the Josephs had identified

. The district court determined that 7
the reasonableness of a servicer’s investigation is not actionable under RESPA. 8
Joseph v. Ocwen Fin. Corp. , No. 18

- cv
- 4971, 2022 WL 1085296, at *3 (E.D.N.Y. Apr. 9
11, 2022). But even a ssuming arguendo that RESPA does impose a substantive 10
obligation to conduct a “reasonable” investigation, see Wirtz v. Spe cialized Loan 11
Servicing, LLC , 886 F.3d 713, 717 (8th Cir. 2018) ( holding that RESPA requires 12

1 We decline to consider the Josephs’ argument that there is more than one QWR at issue in this case, because they argued in the district court that their second amended complaint was premised on the April 2018 QWR only. “[I]t is a well

- established general rule that an appellate court will not consider an issue raised for the first time on appeal.” Greene v. United States , 13 F.3d 577, 586 (2d Cir. 1994). Therefore, when a party changes its position “ and advances arguments available but not pressed below ,” we ordinarily will not consider those arguments on appeal. Wal

- Mart Stores, Inc. v. Visa U.S.A., Inc. , 396 F.3d 96, 124 n.29 (2d Cir. 2005) (internal citation omitted)

.6 servicers to conduct “a reasonably thorough examination before responding” to 1
a QWR) , we conclude that plaintiffs’ Second Amended Complaint failed to 2
plausibly allege that Ocwen ’s investigation was inadequate. See Wells Fargo 3
Advisors, LLC v. Sappington , 884 F.3d 392, 396 n.2 (2d Cir. 2018) ( “[ W ]e are free to 4
affirm on any ground that finds support in the record, even if it was not the 5
ground upon which the trial court relied.” (citation omitted) )

. 6

The Josephs’ argument, as we understand it, is that a forbearance 7
agreement executed in 2005 effectively rescinded a 1997 Modification Agreement 8
between the Josephs and their lender . The Modification A greement had 9
extended the loan maturity date eight years beyond its original term , but because 10
(per the Josephs) that agreement is no longer in effect, the loan should have 11
reverted to its pre

- 1997 terms (including the earlier maturity date) once they had 12

satisfied the terms of the forbearance agreements. And the Josephs contend 13

that , since that happened in 2017 , they are not obligated to make payments o n 14
the mortgage for the eight additional years contemplated by the 1997 15
Modification Agreement. 16

But the Second Amended Complaint , read as a whole and with its attached 177 documents , does not support this theory

. W e see no reason to conclude that the 1

1997 M odification A greement is not binding, even if the Josephs are now 2

dissatisfied with its terms. Neither t he 2005 Forbearance Agreement nor a 3
similar agreement executed the next year can reasonably be read to have 4

terminated the 1997 Modification A greement . O n the contrary, Phenide Joseph 5
acknowledged in the 2005 Forbearance Agreement that she had executed a new 6

note in 1 997 secured with a mortgage and that it was the default on that note that 7
necessitated the execution of the forbearance agreement. The premise on which 8

the Josephs’ RESPA claim rests

— that the forbearance agreements voided the 9

1997 Modification Agreement and revived their original loan terms

— is 10

un supported by the Second Am ended Complaint and attached documents

. 11
Accordingly, Count One was properly dismissed. 2 12

2 We have considered the Josephs’ other objections to the district court’s or der with respect to their RESPA claim and find them to be without merit.8 II 1

Counts Two and Three of the Second Amended Complaint assert claims 2

under two provisions of the FDCPA, 15 U.S.C. §§ 1692e and 1692g. 3 Those 3
provisions apply only to “debt collectors,” a category which excludes “any 4
person collecti ng or attempting to collect any debt

. . . to the extent such 5
activity

. . . concerns a debt whic h was not in default at the time it was obtained 6
by such person.” Id. § 1692a(6)(F)(iii). T he focus is on the status of the debt at 7

the time the purported “debt collector” obtain ed an interest in the loan : was it 8
already in default? Accordingly, a complaint that “does not allege that [a 9
servicer] acquired [the plaintiff’s] debt after it was in defaul t

. . . fails to 10
plausibly allege that [the servicer] qualifies as a debt collector under the 11

FDCPA.” Roth , 756 F.3d at 183. 12

The distr ict court reasoned that the Second Amended Complaint failed to 13
allege that the defendants were debt collectors because Ocwen began servicing 14

3 The Josephs characterized these claims in their complaint as arising under RESPA rather than the FDCPA, which would account for their (mistaken) contention on appeal that the distri ct court failed to address those claims in its decision.9 the loan before the Josephs’ most recent ( 2018 ) default. Joseph , 2022 WL 1085296, 1

at *3. But construing the Second Amended Complaint liberally and in 2
conjunction with its attached documents complicate s matters somewhat. The 3
Josephs alleged that (1) they had a dispute with their former loan servicer 4
beginning in 2001 ; (2) the dispute was resolved in April 2005 b y the 2005 5
Forbearance Agreement with th at prior servicer , which stipulated that any 6
pending foreclosure would be put on hold if Ms. Joseph made specified monthly 7

payments to bring the loan current by a specified date ; and (3) Ocwen became 8

the loan service r in June 2005, after the 2005 Forbearance Agreement was 9

executed

. 4 I t is therefore arguable that the Josephs’ loan had been in default

— 10
which is why it was subject to a forbearance agreement

— when Ocwen became 11

the servicer. 12

“ Unfortunately, the FDCPA does not define so key a term as ‘ default .’” 13

Alibrandi v. Fin. Outsourcing Servs., Inc. , 333 F.3d 82, 86 (2d Cir. 2003) (per 14

4 In a letter attached as an exhibit to the Josephs’ complaint, Ocwen states that it acquired the servicing rights to the account in 1997

. But the letter likely refer s to the previous servicer , Ocwen Federal Bank, FSB, which is not a party to this action

. W e will credit the allegations of the complaint.10 curiam)

. But there is no allegation that the Josephs were in default on the 2005 1

Forbearance Agreement , which specified their payment obligations at the time 2

Ocwen obtained an interest in their loan . At oral argument, Mr

. Joseph 3

confirmed that the Josephs had no t default ed with respect to the 2005 4
Forbearance Agreement : 5
MR. JOSEPH: They took over the loan

. . . after we

. . . signed the 6 [forbearance] agreement

. . . . 7 JUDGE JACOBS: And in that time, were you in default under the 8 forbearance agreement or were you making the payments that the 9 forbearance agreement required[?] 10 MR. JOSEPH: We were making the payments. The record will 11 show that the payments were made

. . . . 12

Tr

. at 7. 13

In such a situation, w e do not understand the debt as being in default for 14
purposes of the FDCPA’s definition of a “debt collector. ” T he FDCPA was 15
enacted “to eliminate abusive debt collection practices by debt collectors, to 16
[e]nsure that those debt collectors who refrain from using abusive debt collection 17
practices are not competitively disadvantaged, and to promote consistent State 18

ac tion to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). 1911 In view of th o se purposes, and a s other courts have explained, “ [c]ommon sense 1
and the plain meaning of the statute require that we distinguish between an 2

individual who come s collecting on a defaulted debt and one who seeks 3

collection on a debt owed under a

. . . forbearance agreement that is current

. ” 4
Bailey v. Sec. Nat. Servicing Corp. , 154 F.3d 384, 387 (7th Cir. 1998)

. Accordingly, 5

Ocwen is not a “debt collector” subject to the FDCPA , and the Josephs’ two 6
claims under that statute do not state a claim upon which relief can be granted

. 7

We have considered the Josephs’ remaining arguments and find them to 8
be without merit. Accordingly, we AFFIRM the judgment of the district court. 5 9

10 FOR THE COURT: 11 Catherine O ’ Hagan Wolfe, Clerk of Court 12

5 The Clerk of Court is further directed to seal the appellants’ appendix, 2d Cir. 22

- 1042, doc. 45, because we have determined, sua sponte, that it contains unredacted , sensitive personal information. See Fed. R. App. P. 25(a)(5); Fed. R. Civ. P. 5.2(a).