UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Wesley C. Fletcher
v. Civil No. 13-cv-504-JD Opinion No. 2014 DNH 121 Seterus, Inc.
O R D E R
Wesley Fletcher, proceeding pro se, brought suit in state
court against Seterus, Inc., alleging claims for violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601, et seq.
(“RESPA”) and the Fair Credit Reporting Act, 15 U.S.C. § 1681, et
seq. Seterus removed the case to this court and moved to dismiss
the complaint. While the motion to dismiss was pending, Fletcher
filed an amended complaint, which asserted only the RESPA claim.
Seterus moves to dismiss the amended complaint. Fletcher
objects.
Background
Sometime prior to July of 2010, Wesley Fletcher entered into
a loan which was secured by a mortgage on property located at 434
Bahia Beach Boulevard in Ruskin, Florida (“Florida property”).
On July 10, 2010, Seterus assumed the servicing rights on the
loan.1
On October 4, 2010, Fletcher called Seterus because his
monthly escrow bill for his property taxes had increased even
1 Fletcher does not allege who held the servicing rights on the loan prior to July 1, 2010. though the actual property taxes had decreased. Fletcher alleges
that a representative from Seterus informed him that he could pay
the original monthly escrow payment.
On October 28, 2010, after noticing that the additional
charges for the escrow payment had not been corrected and that he
had been charged a late fee, Fletcher called Seterus again. A
representative told him that the monthly escrow payment could not
be corrected unless Seterus received a written letter from
Fletcher, and that Fletcher should pay the increased amount until the issue was corrected.
On November 4, 2010, Fletcher faxed a letter to Seterus
regarding the issue concerning his escrow payment. Fletcher
included with the letter his current tax bill, and he confirmed
receipt by telephone.
Fletcher received a written response from Seterus on
February 9, 2011. The letter informed Fletcher that his monthly
escrow bill had been corrected to the original amount, and that
he could begin to pay the original amount in his upcoming March
1, 2011, payment. The letter also stated that Fletcher’s unpaid
late fees were not credited, and that Fletcher’s account had been
reported as delinquent to credit agencies.
Standard of Review
Federal Rule of Civil Procedure 12(b)(6) allows a defendant
to move to dismiss on the ground that the plaintiff’s complaint
fails to state a claim on which relief can be granted. In
2 assessing a complaint for purposes of a motion to dismiss, the
court “separate[s] the factual allegations from the conclusory
statements in order to analyze whether the former, if taken as
true, set forth a plausible, not merely conceivable, case for
relief.” Juarez v. Select Portfolio Servicing, Inc., 708 F.3d
269, 276 (1st Cir. 2013) (internal quotation marks omitted). “If
the facts alleged in [the complaint] allow the court to draw the
reasonable inference that the defendants are liable for the
misconduct alleged, the claim has facial plausibility.” Id. (internal quotation marks omitted).
With its motion to dismiss, Seterus included several
document as exhibits, including Fletcher’s mortgage on the
Florida property and a judgment Fletcher obtained in a landlord-
tenant action involving the property. In his objection, Fletcher
included his loan application for the Florida property. When the
moving party presents matters outside the pleadings to support a
motion to dismiss, the court must either exclude those matters or
convert the motion to one for summary judgment. Fed. R. Civ. P.
12(d). An exception to Rule 12(d) exists “for documents the
authenticity of which [is] not disputed by the parties; for
official public records; for documents central to the plaintiffs’
claim; or for documents sufficiently referred to in the
complaint.” Rivera v. Centro Medico de Turabo, Inc., 575 F.3d
10, 15 (1st Cir. 2009) (internal quotation marks omitted). In
addition, the court may consider documents that are susceptible
to judicial notice. Jorge v. Rumsfeld, 404 F.3d 556, 559 (1st
3 Cir. 2005). Fletcher does not dispute the authenticity of the
documents included with Seterus’s motion to dismiss. Fletcher’s
loan application is integral to his claim in this case.
Therefore, these additional documents submitted by the parties
may be considered without converting the motion to one for
summary judgment.2
Discussion
Fletcher alleges that Seterus violated RESPA by (i) exceeding the sixty day time period to respond to his “qualified
written request”; (ii) failing to credit late fees; and (iii)
reporting delinquencies to consumer reporting agencies during the
sixty day time period. Seterus moves to dismiss, arguing that
Fletcher fails to allege that RESPA applies to his loan. Seterus
further argues that the property for which Fletcher obtained the
loan was used primarily for business or commercial purposes, to
which RESPA does not apply.
RESPA does not “apply to credit transactions involving
extensions of credit . . . primarily for a business, commercial,
or agricultural purpose.” 12 U.S.C. § 2606(a). Such credit
transactions “includ[e] mortgage loans on non-owner-occupied
rental properties.” Edwards v. Ocwen Loan Servicing, LLC, --- F.
Supp. 2d ---, 2014 WL 861996, at *3 (D.D.C. Mar. 5, 2014); see
2 Fletcher also included as exhibits to his objection an affidavit and a “Uniformed Final Judgment of Foreclosure.” The court did not consider either document when ruling on Seterus’s motion to dismiss.
4 also Johnson v. Wells Fargo Home Mortg., Inc., 635 F.3d 401, 417
(9th Cir. 2011).
“Whether an investment loan is for a personal or a business
purpose requires a case by case analysis.” Thorns v. Sundance
Props., 726 F.2d 1417, 1419 (9th Cir. 1984). The “inquiry is
largely fact-based.” Daniels v. SCME Mort. Bankers, Inc., 680 F.
Supp. 2d 1126, 1129 (C.D. Cal. 2010). The analysis requires an
examination of several factors, including “the relationship of
the borrower’s primary occupation to the acquisition,” “the degree to which the borrower will personally manage the
acquisition,” “the ratio of income from the acquisition to the
total income of the borrower,” “the size of the transaction,” and
the “borrower’s statement of purpose for the loan.” Martin v.
Litton Loan Servicing LP, 2014 WL 977507, at *8 (E.D. Cal. Mar.
12, 2014) (quoting Thorn, 726 F.2d at 1419).
Seterus includes two documents with its motion to dismiss,
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Wesley C. Fletcher
v. Civil No. 13-cv-504-JD Opinion No. 2014 DNH 121 Seterus, Inc.
O R D E R
Wesley Fletcher, proceeding pro se, brought suit in state
court against Seterus, Inc., alleging claims for violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601, et seq.
(“RESPA”) and the Fair Credit Reporting Act, 15 U.S.C. § 1681, et
seq. Seterus removed the case to this court and moved to dismiss
the complaint. While the motion to dismiss was pending, Fletcher
filed an amended complaint, which asserted only the RESPA claim.
Seterus moves to dismiss the amended complaint. Fletcher
objects.
Background
Sometime prior to July of 2010, Wesley Fletcher entered into
a loan which was secured by a mortgage on property located at 434
Bahia Beach Boulevard in Ruskin, Florida (“Florida property”).
On July 10, 2010, Seterus assumed the servicing rights on the
loan.1
On October 4, 2010, Fletcher called Seterus because his
monthly escrow bill for his property taxes had increased even
1 Fletcher does not allege who held the servicing rights on the loan prior to July 1, 2010. though the actual property taxes had decreased. Fletcher alleges
that a representative from Seterus informed him that he could pay
the original monthly escrow payment.
On October 28, 2010, after noticing that the additional
charges for the escrow payment had not been corrected and that he
had been charged a late fee, Fletcher called Seterus again. A
representative told him that the monthly escrow payment could not
be corrected unless Seterus received a written letter from
Fletcher, and that Fletcher should pay the increased amount until the issue was corrected.
On November 4, 2010, Fletcher faxed a letter to Seterus
regarding the issue concerning his escrow payment. Fletcher
included with the letter his current tax bill, and he confirmed
receipt by telephone.
Fletcher received a written response from Seterus on
February 9, 2011. The letter informed Fletcher that his monthly
escrow bill had been corrected to the original amount, and that
he could begin to pay the original amount in his upcoming March
1, 2011, payment. The letter also stated that Fletcher’s unpaid
late fees were not credited, and that Fletcher’s account had been
reported as delinquent to credit agencies.
Standard of Review
Federal Rule of Civil Procedure 12(b)(6) allows a defendant
to move to dismiss on the ground that the plaintiff’s complaint
fails to state a claim on which relief can be granted. In
2 assessing a complaint for purposes of a motion to dismiss, the
court “separate[s] the factual allegations from the conclusory
statements in order to analyze whether the former, if taken as
true, set forth a plausible, not merely conceivable, case for
relief.” Juarez v. Select Portfolio Servicing, Inc., 708 F.3d
269, 276 (1st Cir. 2013) (internal quotation marks omitted). “If
the facts alleged in [the complaint] allow the court to draw the
reasonable inference that the defendants are liable for the
misconduct alleged, the claim has facial plausibility.” Id. (internal quotation marks omitted).
With its motion to dismiss, Seterus included several
document as exhibits, including Fletcher’s mortgage on the
Florida property and a judgment Fletcher obtained in a landlord-
tenant action involving the property. In his objection, Fletcher
included his loan application for the Florida property. When the
moving party presents matters outside the pleadings to support a
motion to dismiss, the court must either exclude those matters or
convert the motion to one for summary judgment. Fed. R. Civ. P.
12(d). An exception to Rule 12(d) exists “for documents the
authenticity of which [is] not disputed by the parties; for
official public records; for documents central to the plaintiffs’
claim; or for documents sufficiently referred to in the
complaint.” Rivera v. Centro Medico de Turabo, Inc., 575 F.3d
10, 15 (1st Cir. 2009) (internal quotation marks omitted). In
addition, the court may consider documents that are susceptible
to judicial notice. Jorge v. Rumsfeld, 404 F.3d 556, 559 (1st
3 Cir. 2005). Fletcher does not dispute the authenticity of the
documents included with Seterus’s motion to dismiss. Fletcher’s
loan application is integral to his claim in this case.
Therefore, these additional documents submitted by the parties
may be considered without converting the motion to one for
summary judgment.2
Discussion
Fletcher alleges that Seterus violated RESPA by (i) exceeding the sixty day time period to respond to his “qualified
written request”; (ii) failing to credit late fees; and (iii)
reporting delinquencies to consumer reporting agencies during the
sixty day time period. Seterus moves to dismiss, arguing that
Fletcher fails to allege that RESPA applies to his loan. Seterus
further argues that the property for which Fletcher obtained the
loan was used primarily for business or commercial purposes, to
which RESPA does not apply.
RESPA does not “apply to credit transactions involving
extensions of credit . . . primarily for a business, commercial,
or agricultural purpose.” 12 U.S.C. § 2606(a). Such credit
transactions “includ[e] mortgage loans on non-owner-occupied
rental properties.” Edwards v. Ocwen Loan Servicing, LLC, --- F.
Supp. 2d ---, 2014 WL 861996, at *3 (D.D.C. Mar. 5, 2014); see
2 Fletcher also included as exhibits to his objection an affidavit and a “Uniformed Final Judgment of Foreclosure.” The court did not consider either document when ruling on Seterus’s motion to dismiss.
4 also Johnson v. Wells Fargo Home Mortg., Inc., 635 F.3d 401, 417
(9th Cir. 2011).
“Whether an investment loan is for a personal or a business
purpose requires a case by case analysis.” Thorns v. Sundance
Props., 726 F.2d 1417, 1419 (9th Cir. 1984). The “inquiry is
largely fact-based.” Daniels v. SCME Mort. Bankers, Inc., 680 F.
Supp. 2d 1126, 1129 (C.D. Cal. 2010). The analysis requires an
examination of several factors, including “the relationship of
the borrower’s primary occupation to the acquisition,” “the degree to which the borrower will personally manage the
acquisition,” “the ratio of income from the acquisition to the
total income of the borrower,” “the size of the transaction,” and
the “borrower’s statement of purpose for the loan.” Martin v.
Litton Loan Servicing LP, 2014 WL 977507, at *8 (E.D. Cal. Mar.
12, 2014) (quoting Thorn, 726 F.2d at 1419).
Seterus includes two documents with its motion to dismiss,
which it contends, taken together, conclusively demonstrate that
Fletcher’s loan was for a business purpose. The first document
is the mortgage for the Florida property, in which Fletcher
listed his “post-office address” as 251 Gilman Hill Road in
Mason, New Hampshire. The second document is a judgment for
possession of the Florida property obtained by Fletcher in 2012
against a tenant. Seterus contends that these two documents
taken together show that Fletcher resided in New Hampshire at the
time he obtained the loan to purchase the Florida property, and
that Fletcher rented out the property to tenants. Seterus argues
5 that, therefore, Fletcher obtained his loan for the Florida
property for a business purpose and RESPA does not apply to the
loan.
Fletcher objects to the motion, arguing that RESPA does
apply to the loan. Fletcher contends that he “purchased [the
Florida] property with the intent of personal use,” and that “due
to extreme situations in the real estate market and pay
reductions at work [he] has not yet been able to use the property
as intended . . . .” In addition, Fletcher includes as an
exhibit to his objection the loan application for the Florida
property, in which he states that the Florida property will be
his “secondary residence.”
The allegations in the complaint, along with Fletcher’s loan
application, indicate that Fletcher bought the Florida property
as a second home. Seterus suggests that Fletcher later rented
the property. At this stage, the court is unable to determine
whether Fletcher’s mortgage was primarily for a business or
commercial purpose. Cf. Schwartz v. World Savings Bank, 2012 WL
993295, at *4 (W.D. Wash. Mar. 23, 2012) (granting summary
judgment for defendant on RESPA claim because “Plaintiffs’ loan
application [stated] that their loan was for ‘investment’
purposes, rather than for a ‘primary residence’ or ‘secondary
residence’”). Therefore, the court cannot resolve the issue of
6 whether RESPA applies to Fletcher’s loan for the Florida property
in the context of a motion to dismiss.3
Conclusion
For the foregoing reasons, the defendant’s motion to dismiss
(document no. 12) is denied.
SO ORDERED.
____________________________ Joseph A. DiClerico, Jr. United States District Judge
May 29, 2014
cc: Wesley C. Fletcher, pro se Richard C. Demerle, Esq.
3 Seterus also argues that Fletcher’s complaint should be dismissed because it does not specifically allege that the loan was made for a personal purpose. Even if such a deficiency could be grounds for dismissal, in view of Fletcher’s pro se status, the court will construe the complaint to allege that the loan was for a second home. See Ayala Serrano v. Lebron Gonzalez, 909 F.2d 8, 15 (1st Cir. 1990); Eveland v. Dir. of C.I.A., 843 F.2d 46, 49 (1st Cir. 1988).