Gross v. Loancare LLC

Background

Christopher Gross brought the action individually and on behalf of others similarly situated against LoanCare LLC and CIT Bank N.A., doing business as OneWest Bank FSB. He asserted claims under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and New York General Business Law § 349.

Gross obtained a $100,000 home-equity line of credit from IndyMac Bank, FSB in 2007. The opinion states that the Federal Deposit Insurance Corporation later sold IndyMac’s assets to OneWest, a division of CIT, and that the assignment of the home-equity line was recorded. LoanCare later became the sub-servicer. Gross sent requests for account and debt information to CIT and LoanCare, including requests under the FDCPA and federal mortgage-servicing regulations.

The complaint focused on two communications within the FDCPA’s one-year limitations period: LoanCare’s June 29, 2020 response to Gross’s inquiry and LoanCare’s February 19, 2021 letter requesting additional time to respond. Gross alleged that defendants demanded money even though, he claimed, the chain of title had not been established. He also alleged that the home-equity line was invalid because of securitization and inadequate transfer of title.

FDCPA Claims Against CIT

The court dismissed the FDCPA claims against CIT. It held that CIT was a creditor rather than a debt collector under the statute. The debt was allegedly owed to CIT itself, and the complaint did not support Gross’s alternative theory that debt collection was CIT’s principal purpose. The court noted that CIT provided other financial services and that Gross merely recited the statutory definition of “debt collector” without alleging supporting facts.

FDCPA Claims Against LoanCare

The court held that LoanCare’s February 19, 2021 letter was not a communication made in connection with debt collection. The letter merely stated that LoanCare needed additional time to respond to Gross’s inquiry and did not mention debt collection, payment collection, a delinquent account, or similar matters.

The court declined at the motion-to-dismiss stage to decide that the June 29, 2020 letter was outside the FDCPA’s debt-collection provisions. That letter stated that LoanCare collected payments and that payments were due, so a least sophisticated consumer could reasonably understand it as connected to debt collection. The court therefore analyzed the LoanCare claims based only on that letter.

The court nevertheless dismissed each FDCPA theory against LoanCare. The claim under 15 U.S.C. § 1692c(a)(2), which restricts communications with a consumer known to be represented by an attorney, failed because the June 29, 2020 letter was sent before Gross retained counsel. The claim under § 1692d, which prohibits harassment, oppression, or abuse in debt collection, failed because the letter did not contain the types of conduct identified by the statute and Gross alleged no facts showing harassment. The claims under §§ 1692e and 1692f, concerning false, deceptive, misleading, unfair, or unconscionable representations, failed because Gross relied on conclusory assertions about the validity and transfer of the home-equity line rather than factual allegations supporting liability.

New York General Business Law Claim

The court also dismissed the claim under New York General Business Law § 349. That statute requires allegations of a consumer-oriented deceptive act or practice and resulting injury. Because Gross’s allegations involved consumer fraud, Federal Rule of Civil Procedure 9(b) also required him to plead the circumstances of the alleged fraud with particularity, including the statements, speaker, location and timing, and why the statements were fraudulent.

The court found that Gross did not identify specific deceptive conduct by defendants. Instead, he alleged that the securitization of loans was fraudulent and that defendants lacked authority to collect because the home-equity line was invalid. The court held that these allegations did not satisfy Rule 9(b) or state a claim under § 349.

Disposition

Judge Andrew L. Carter, Jr. granted LoanCare’s and CIT’s motions to dismiss. The court dismissed Gross’s complaint, directed the clerk to terminate the motions at ECF Nos. 24 and 25, and closed the case. The opinion does not state that the dismissal was with or without prejudice.