Class Action Complaint - AMERICAN LEGAL CLAIMS SERVICES

*«• •
UNITED STATES DISTRICT COURT
FOR THE EASTEItN DISTRICT OF VIRGINIA
Richmond Division
MICA M. MORGAN,
84
and
GERALD VAIDEN, JR.,
Plaintiffs,
.. 3.HQJ/h9S
V.
Case No.
MCCABE WEISBERG & CONWAY, LLC
Defendant.
CLASS ACTION COMPLAINT
COME NOW the Plaintiffs, MICA M. MORGAN and GERALD M. VAIDEN, JR.,
individually and on behalf of all others similarly situated, by counsel, pursuant to this Court's
Order dated October 7, 2014 in a now separate action, Morgan v. Lakeview Loan Servicing, LLC,
Civil Action No. 3:14cv444 (REP) (Dkt. No. 44), who allege the following facts that entitle them
to relief, both as a class and individually:
1.
Plaintiff Morgan, on behalf of herself and all other similarly situated, alleges that
Defendant MCCABE WEISBERG & CONWAY, LLC ("McCabe Weisberg" or "Defendant") and
its fraudulent alter ego, Surety Trustees, LLC, engaged in a systemic practice of law-skirting and
deception designed for the dual purposes of speeding up consumer foreclosures and ensuring that
their business model had the lowest cost structure that they could construct. To accomplish these
ends, McCabe Weisberg created the shell entity, Surety Trustees, LLC which falsely claimed to
serve as a neutral trustee and who ignored federal and state laws designed to protect consumers.
In reality. Surety Trustees is nothing more than a sham company designed so that McCabe
1
Weisberg could be appointed as substitute trustees under the subject deeds of trust and remain in
sole control of the foreclosure process. In conducting this operation, McCabe Weisberg, through
its fraudulent alter ego, breached its fiduciary duty owed to Ms. Morgan and other Virginia
consumers with FHA loans by conducting the foreclosure of their homes even though McCabe
Weisberg knew or should have known that Lakeview Loan Servicing, LLC, did not satisfy the
conditions precedent to foreclosure in Plaintiff and the class members' Deeds of Trust; and, by
failing to act impartially towards the Plaintiff and putative class members due to, among other
things, pricing incentives which caused McCabe Weisberg to rapidly conduct foreclosures in
violation of federal and state laws.
2.
Furthermore, Plaintiffs Morgan and Vaidcn, on behalf of themselves and all others
similarly situated, further allege that McCabe Weisberg violated the Fair Debt Collection Practices
Act, 15 U.S.C. §§1692 et seq. ("FDCPA") by sending Plaintiffs the same form letters containing
language that overshadowed and contradicted the § I692g disclosures, threatening to take action
that was not intended to be taken, and attempting to collect a debt without providing the mandatory
disclosure required by § 1692e(l 1) that the communications were from "a debt collector." Plaintiff
Morgan fiirther alleges that McCabe Weisberg violated § 1692c by communicating with Ms.
Morgan on multiple occasions when McCabe Weisberg knew she was represented by counsel.
JURISDICTION AND VENUE
3.
This Court has jurisdiction under 28 U.S.C. § 1331 and 15 U.S.C. §1692k(d).
Moreover, this Court also has jurisdiction over the state law claims by supplemental jurisdiction
under 28 U.S.C. § 1367.
4.
Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b) inasmuch as the
Defendant maintains its registered offices within the boundaries of the Eastern District of Virginia,
Plaintiff Mica Morgan resides in this District and Division and significant part of the Plaintiffs'
claims occurred in Virginia.
PARTIES
5.
Plaintiff Mica M. Morgan ("Ms. Morgan") is a natural person who resides in
Virginia and in this District and Division. Ms. Morgan is a "consumer" as within the meaning of
the FDCPA, as defined at 15 U.S.C. § 1692a(3).
6.
Plaintiff Gerald M. Vaiden, Jr. ("Mr. Vaiden") is a natural person and "consumer"
as within the meaning of the FDCPA, as defined at 15 U.S.C. § 1692a(3).
7.
Defendant MCCABE WEISBERG & CONWAY, LLC, (hereafter "McCabe
Weisberg") is a law firm, the principal purposeof whosebusiness was the collection of debts, and
is located at 312 Marshall Avenue, Laurel, Maryland, 20707. McCabe Weisberg regularly uses the
mails and telephone in a business the principal purpose of which is the collection ofdebts. McCabe
Weisberg regularly collects or attempts to collect, directly or indirectly, debts owe or due or
asserted to be owed or due for other parties and is a "debt collector" within the meaning of the
FDCPA, as defined by 15 U.S.C. §1692a(6).
FACTUAL ALLEGATIONS
Ms. Morgan Obtains a Mortgage Loan
8.
Ms. Morgan borrowed $150,684.00 in order to finance her mortgage through NVR
Mortgage Finance, Inc., as evidence by a promissory note ("Note") dated October 7, 2009.
9.
The alleged debt was for a home loan, incurred primarily for personal, family, or
household purposes, bringing McCabe Wcisberg's collection activities within the purview of the
FDCPA, 15 U.S.C. § 1692a(5).
10.
The Note was secured by a Deed of Trust dated October 7, 2009, and recorded in
the Circuit Court Clerk's office.
11.
After the loan was originated with NVR Mortgage Finance, Inc., the loan was
subsequently assigned-giftd transferred to Lakeview Loan Servicing, I.LC ("Lakeview").
12.
After Ms. Morgan's home loan account went into default, the account was referred
to McCabe Weisbergto initiate collection and foreclosure proceedings.
13.
McCabe Weisberg prepared a Deed of Appointment of Substitute Trustee in order
to appoint Surety Trustees as substitute trustee in order to foreclose on Ms. Morgan's home.
14.
McCabe Weisberg sentcorrespondences to Ms. Morgan indicating they were acting
on behalfof Surety Trustees, however the two entities appear to have the sameemployees and are
acting on behalf of Lakeview Loan Servicing, LLC.
Lakeview Forecloses on Ms. Morgan's Home
Without Complying With The Condition Precedent to Foreclose
15.
The Federal Housing Administration ("FHA") was created by Congress as part of
the National Housing Act of 1934 The FHA insures loans made by lenders to qualifying
homebuyers. The FHA is part of the Department of Housing and Urban Development ("HUD").
16.
In the case of a default, HUD insures the full valueof qualified mortgages making
such loans risk-free for lenders. Because of this, HUD has identified servicing practices that it
considers acceptable for mortgages it insures. It is the intent of HUD that "no mortgagee shall
commence foreclosure or acquire title to a property until [its servicing] responsibilities... have
been followed." 24 C.F.R. § 203.500.
17.
HUD's Handbook on Administration of Insured Home Mortgages describes the
Mortgagee Collection Attitude "...when acquiring the servicing of a mortgage from another
mortgagee, at that time it committed itself to assume the added costs and effort required to service
those
mortgages
in
accordance
with
HUD
guidelines
should
they
become
delinquent.http://portal.hud.uov/hudportal/llUD?src=/proa-am officcs/administration/hudclips/ti
andbooks/l-isgh/4330.1 (p. 89, last viewed May 4, 2012).
18.
All Virginia Deeds of Trusts (including Ms. Morgan's) insured by FHA and HUD
state that "Lender may, except as limited by regulations issued by the Secretary [of Housing and
Urban Development], in the case of payment defaults, require immediate payment in full of all
sums secured by this Security Instrument if...."
19.
All Virginia Deeds of Trust (including Ms. Morgan's) further provide that "[i]n
many circumstances regulations issued by the Secretary will limit [the] [l]ender's rights, in the
case of payment defaults, to require immediate payment in full and foreclose if not paid. This
Security Instrument does not authorize acceleration or foreclosure if not permitted by the
regulations ofthe Secretary." (emphasis added).
20.
The regulations, among other things, require a "face-to-face meeting with the
mortgagor, or make a reasonable attempt to arrange such a meeting within 30 days after such
default and at least 30 days before foreclosure is commenced..." 24 C.F.R. § 203.604.
21.
To that end, the regulations provide that "[sjuch a reasonable effort to arrange a
face-to-face meeting shall also include at least one trip to see the mortgagor at the mortgaged
property, unless the mortgaged property is more than 200 miles from the mortgagee, its servicer,
or a branch office of either, or it is knows that the mortgagor is not residing in the mortgaged
property." 24 C.F.R. § 203.604(d) (emphasis added).
22.
In Matthews v. PHH Mortgage Corp., the Virginia Supreme Court held that the
requirements of 24 C.F.R. § 203.604 are incorporated as conditions precedent to a foreclosure sale
under the Deed of Trust. (April 20, 2012).
23.
As a matterof policyand common practice, Lakevicw made absolutely no effort to
arrange a face-to-face meeting with Ms. Morgan prior to her foreclosure or after her default.
24.
Moreover, consistent with its policy not to conduct face-to-face interviews,
Lakeview never made a trip to Ms. Morgan's Property where its intent was to provide loss
mitigation services.
25.
Ms. Morgan's property is within 200 miles from a branch office of her servicer,
M&T Bank; therefore, she was entitled to a face-to-face interview.
26.
Instead of arranging a face-to-face interview, as a matter of common practice,
Lakeview merely has itsservicer send correspondence to Virginia consumers instructing them that
they may be entitled to a face to face meeting with their servicer.
27.
This uniform policy does not comply with the FHA face-to-face meeting
requirements in 24 C.F.R. § 203.604 and ultimately resulted in the foreclosure of Ms. Morgan's
home.
28.
Because the conditions precedent of FHA face-to-face meetings have not been
attempted, let alone accomplished, the Plaintiffs Deed of Trust docs not authorize foreclosure and
doesnot authorize McCabe Weisberg to proceed with an attempt to foreclose andrecord a Trustees
Deed.
29.
Even though McCabe Weisberg and Surety Trustees had knowledge that the
conditions precedent to foreclosure had not been attempted, let alone accomplished, McCabe
Weisberg andSurety Trustees still conducted these FHA foreclosures in violation of theirfiduciary
duty to Ms. Morgan and the putative class members.
30.
The foreclosure of Ms. Morgan's home was conductcd by McCabe Weisberg under
the guise of Surety Trustees after McCabe Weisberg sent her several communications that violated
the FDCPA.
31.
As a result of McCabe Wcisberg's conduct, Ms. Morgan suffered damages far in
excess of $75,000, including but not limited to; (1) her equity in the property; (2) the future value
and equity in the property; (3) damage to her credit; (4) moving expenses; (5) future rent; (6)
payments made by Plaintiff to a seam foreclosure rescue company; and (7) emotional distress,
embarrassment, anxiety, and humiliation from the foreclosure.
32.
At the time of the foreclosure, the value of Ms. Morgan's property and the balance
of her loan exceeded $75,000.00.
McCabe Weisberg was acting as a Trustee through its shell entity. Surety Trustees
33.
McCabe Weisberg and its members are not simply a parent holding company of
Surety Trustees. Instead, McCabe Weisberg and Surety Trustees operate as part of a single
business operation.
34.
Upon information and belief, Terrence J. McCabe, Marc S. Weisberg, and Edward
D. Conway are attorneys and principals of McCabe Weisberg who also created the sham company,
Surety Trustees, so that they and their attorneys could be appointed as substitute trustees under the
subject deeds of trust in order to have the foreclosure process remain under their sole control.
35.
This business model was developed so that McCabe Weisberg could conduct
foreclosures in Virginia as quickly and as cheaply as possible while creating the appearance that
the foreclosurewas conductcd by a neutral trustee, and not by a law firm, who also had an attorneyclient relationship with the lender conducting the foreclosure.
36.
McCabe Weisberg, acting through its principals and attorneys, provided
management and decision-making and operated asthe front for contact with the target consumers,
loan servicers, lenders, such as Lakeview in this case, and third-party vendors such as LPS.
Meanwhile, upon information and belief, Defendant Surety existed as an employee-less paper
entity that acted only on paper as the "substitute trustee" under the deeds of trust.
37.
Surety Trustees does not operate independent of McCabe Weisberg. It does not
have separate management or a separate business or income. It docs not have separate assets. It
does not have separate employees. Instead, the two companies were interrelated and inseparably
operated as a single business operation.
38.
Additionally, upon information and belief, the majority of the "officers" of Surety
Trustees were also employees and/or principals of McCabe Weisberg.
39.
Surety Trustees has little or no income that was not directly derived from McCabe
Weisberg, and, upon information and belief, does not have any employees other than those who
work at McCabe Weisberg. Surety Trustees was merely created as a shell entity whose sole
purpose was to act as the "substitute trustee" for the mortgage loans that were referred to McCabe
Weisberg for the purpose of collecting delinquent debts and/or conducting foreclosure sales.
40.
Upon information and belief, Surety Trustees does not act as a "substitute trustee"
for any deeds ot trusts except for those referred to McCabe Weisberg for debt collection and
foreclosure proceedings. In fact, upon infonnation and belief, Surety Trustees will not, as a matter
of common practice, agree to serve as trustee for any deeds of trust except those where McCabe
Weisberg has been retained for debt collection and foreclosure proceedings.
41.
Upon information and belief, Surety Trustees does not have a separate or
independent contractual; relationship or income stream from Lakeview orother mortgage servicers
8
or note-holders. Instead, it is allocated an amount ofmoney by McCabe Weisberg from the money
the servicer ornoteholder contractually pays McCabe Weisberg.
42.
[n all regards in which Surety Trustees is technically involved in a foreclosure
process, it is operating as the controlled agent and alter ego ofMcCabe Weisberg.
43.
McCabe Weisberg, on the other hand, serves as the frontline company name that is
used by McCabe Weisberg to deal directly with consumers. McCabe Weisberg directs the actions
ofthe personnel who interact with the consumers, loan servicers, and lenders whose mortgage
loans were referred to McCabe Weisberg for debt collection or foreclosure proceedings.
44.
Consumers, loan servicers, and lenders never directly interact with Surety Trustees,
but instead arc directed to contact McCabe Weisberg.
45.
The personnel and resources used to accomplish and transact foreclosure are nearly
all those maintained in the name ofMcCabe Weisberg. For example, McCabe Weisberg mailed
the correspondence regarding the alleged foreclosure sale to consumers, purchased newspaper
space for the advertisements of the foreclosure sales, and interacted with the loan servicers and
lenders, such as Lakeview.
46.
In addition, all letters mailed to consumers were printed on McCabe Weisberg's
letterhead, regardless ofwhether the alleged substitute trustees purportedly sent or signed the letter,
and the documents submitted to the various Circuit Courts purportedly by Surety, the "substitute
trustee," were prepared by and had a return address for McCabe Weisberg.
McCabe Weisberg's Foreclosure Operation Breaches Its Fiduciary Duties to Consumers
47.
McCabe Weisberg and Surety Trustees operate as a debt collection and foreclosure
business. Ihey work together with other entities as described herein to systemically perpetrate
fraud on consumers that ultimately resulted in the loss ofhundreds ofVirginia residents' homes.
48.
Upon information and belief, McCabc Weisberg is the law firm retained by
Lakeview to conduct all ofLakeview's foreclosure related work in Virginia. For example, a review
ofthe Substitution ofTrustee's Deeds filed by Lakeview reveals that it retains McCabe Weisberg
for most (if notall) of its foreclosure related work in Virginia.
49.
Upon information and belief, there is no agreement with Lakeview and Defendant
Surety Trustees because it is under the complete control and alter ego of McCabe Weisberg as
discussed above.
50.
Under the guise of Surety Trustees, McCabe Weisberg purports to act as a neutral
and impartial trustee under thousands of deeds of trust, including the Plaintiffs Deed of Trust.
However, as more ftilly described below, McCabe Weisberg engages inasystemic practice oflawskirting and deception in violation of its duty to act as a neutral and impartial trustee in order to
increase the compensation it received from beneficiaries, and to ensure that McCabe Weisberg
would continue to receive referrals from Lakeview Loan Servicing and other beneficiaries. These
incentives caused McCabc Weisberg to develop a foreclosure system in conflict with its duty to
act with perfect fairness and impartiality to the named Plaintiff and the putative class members.
51.
Upon information and belief, Lakeview requires that each of its foreclosure
attorneys, such as McCabe Weisberg, execute an engagement letter, which documents the
existence of an attorney-client relationship between Lakeview and McCabe Weisberg. Lakeview
also acknowledges that, in most eases, their attorneys will also represent the lender and may have
signed aseparate engagement letter with the lender. Therefore, McCabe Weisberg cannot possibly
act as a neutral or impartial trustee for Lakeview, its scrvicer, and consumers such as Plaintiff
52.
Upon information and belief, Lakeview demands that foreclosures be processed in
a flat-fee structure and with a volume-based approach. To that end, Lakeview also provides certain
10
add-on compensations when foreclosures are completed, such as an additional amounts if the
property is sold to a third party other than Lakeview at the foreclosure sale and title is transferred
and a $150.00 notary fee for completed foreclosures.
53.
This pricing structure requires that itsretained attorneys chum through foreclosures
at a rate and with enough volume to ensure that they make a profit.
54.
This strict timeframe all but ensures that foreclosures are conducted in violation of
state and federal laws. This is especially true in light of Virginia Code § 55-59.1(8)
55.
Specifically, the Virginia Code provides;
If a note or otherevidence of indebtedness secured by a deed of trust is lost
or for any reason cannot be produced and the beneficiary submits to the
trustee an affidavit to that effect, the trustee may nonetheless proceed to
sale, provided the beneficiary has given written notice tothe person required
to pay the instrument that the instrument is unavailable and a request for
sale will be made of the trustee upon expiration of 14days from the dateof
mailing of the notice.
Va. Code § 55-59.1(8) (emphasis added).
56.
In practice, the McCabe Weisberg falsely represents to consumers that their notes
are "unavailable." It did so as to the Plaintiff in this case.
57.
Plaintiff alleges on information and belief as to each Plaintiff and putative class
member, McCabe Weisberg never requested or sought custody of the note before the date of a
foreclosure sale. Moreover, upon information and belief, McCabe Weisberg repeatedly conducted
foreclosure sales without ever receiving a lost note affidavit from Lakeview before or after the
date of the foreclosure sale. Itdid so as to Plaintiff Morgan in this case.
58.
Moreover, upon information and belief, McCabe Weisberg repeatedly and
knowingly conducted foreclosure sales even though McCabe Weisberg knew that Lakeview did
not comply with the requirements of 24 C.K.R.. § 203.604(d).
11
59.
[n particular, upon information and belief, each time McCabe Weisberg received a
foreclosure file from Lakeview, the file contained a standard letter that clearly does not comply
with the requirements of 24 C.F.R. § 203.604.
60.
Specifically, the standard letter indicates "This letter is to advise that you may be
entitled to a face to face meeting with M&T Bank regarding your loan delinquency. If you are
interested, please contact M&T Bank at 1-800-724-1633 to discuss the availability and locations
for a face to face meeting."
61.
This letter is contrary to 24 C.F.R. § 203.604 because the face to face interview is
phrased in terms of a mere possibility and does not explain the purposeof the meeting.
62.
Moreover, as recognized by the SupremeCourt of Virginia, the purpose of the face
to face interview is not limited to a discussion regarding the"loan delinquency," but rather purpose
of the face-to-face meeting is to "reduc[e] the incidence of foreclosure" by providing an
environment in which the "mortgagee employee can often determine the cause of the default,
obtain financial information[,] establish a repayment schedule[,] and prevent foreclosure by
influencing the payment habits of mortgagors."Squire v. Virginia Hous. Dev. Auth^, 287 Va. 507,
516-17, 758 S.E.2d 55,60 (2014).
63.
McCabe Weisberg was aware of the additional obligations for loss mitigation that
are required for FHA loans.
64.
McCabe Weisberg knew or should have known that the correspondence did not
meet the requirements to proceed to a foreclosure saleunder the Deed of Trustor its interpretation
from the Supreme Court of Virginia.
65.
McCabe Weisberg had the duty to follow the Deed of Trust.
12
66.
As mentioned previously, neither Lakeview, Plaintiffs servicers, McCabe
Weisberg, Surety Trustees, nor any other person or entity has complied with the above-alleged
regulatory requirements. No facc-to-face meeting has been attempted.
67.
Because the FIIA facc-to-face meeting condition precedents have not been
attempted, let alone accomplished, the Plaintiffs' Deeds of Trust do not authorize foreclosure, nor
did they authorize McCabe Weisberg, through its alter ego Surety Trustees, to proceed with a
foreclose attempt, foreclosure sale or recordation of a Deed of Foreclosure.
68.
McCabe Weisberg was aware that the FHA imposes these additional requirements
and that the Plaintiffs and putative class members' loans were FHA insured. Further, McCabe
Weisberg knew, orat least should have known had it been a neutral or impartial substitute trustee
under the Deeds of Trust, that its mortgage company clients do not comply with this FHA
requirement.
69.
However, McCabe Weisberg either failed to inquire about the satisfactory
completion of such a meeting, or simply purposefully ignored its requirement under Plaintiffs
Deeds ofTrust in the attempt to conduct foreclosures ata cheaper cost and with greater speed.
70.
Despite the additional duty imposed on McCabe Weisberg and its alter ego Surety
Trustees by these FHA insured Deeds of Trust, McCabe Weisberg systematically breached its
fiduciary duty to the Plaintiffs and the putative class members by proceeding with foreclosure
when it is not so authorized.
71.
In doing so, McCabe Weisberg breached its fiduciary duty to the Plaintiff and the
putative class members by conducting the foreclosure sale of their homes when the conditions
precedent to foreclosure were not satisfied.
13
72.
McCabe Wcisberg chosc todisregard tbie law and follow Lakeview's guidelines for
its own pecuniary gain at the expense of its fiduciary duties of perfect fairness and impartiality.
McCabe Weisberg Further Breach Their Duties to Maintain
a Positive Rating with Lender Processing Services, Inc.
73.
Lender Processing Services, Inc. ("LPS") is a company that assembles the
information used to foreclose on consumers' properties.' LPS's default services revenue, the
portion of LPS that includes foreclosure services, quadrupled in annual revenue from $277.8
million in 2006 to more than $1 billion in both 2009 and 2010.^Since news about foreclosure fraud
was brought tothe forefront ofthe mortgage industry and new regulations and programs have been
put in place, such as MAMP, LPS has identified an impact in its revenue.^
74.
IvPS provides customized technology platforms to mortgage loan servicers
depending on the status ofthe consumers' loan. The first such platform is the Mortgage Servicing
Package ("MSP") which assists servicers in administering all aspects of loan servicing, such as
payment processing, customer service, investor reporting, etc.
75.
The second technology platform, a wcb-based platform called LPS Desktop
("Desktop"), is designed to aid mortgage serviccrs service mortgage loans that are in default.
Desktop automates and monitors all tasks involved in the foreclosure process, including
monitoring deadlines or LPS-imposed timeframes for foreclosure events and tracking and
recording all events and communications taken with respect to the foreclosure of the mortgage
1Most of the following facts are taken from the Nevada Attorney General's complaint in Nevada
V. Lender Processing Servs., Inc., etai. No. A-11 -653289-B (Clark Cnty. Dist. Ct. Dec. 15,2011),
which was filed after an extensive investigation into LPS's business practices.
2 Mark Basch, The LPSSolutions, Fla. 'Hmes-UNION (Mar. 3, 2011).
3 Lrnder Prockssing Servs. Inc., Annual Report (Form 10-k) 20 (Feb. 29,2012).
14
loan. In addition. Desktop organizes and stores foreclosure related documents such as notices of
default and substitution of trustee documents.
76.
Additionally, Desktop generates and manages invoices sent by its network of
foreclosure attorney firms to servicers.
77.
LPS provides its Desktop platform to the vast majority of national mortgage
servicers and in exchange the servicers each have agreements with LPS, referred to as a "Default
Services Agreement", to manage all bankruptcy and default related loans for those servicers.
78.
Using LPS's MSP and Desktop platform, LPS is able to manage the core aspects
of the foreclosure process on behalf of servicers.
79.
When a loan goes into default, it is coded for foreclosure in the serviccr's system,
at which time Desktop automatically refers the loan for foreclosure to a law firm or trustee
company within LPS's network of firms (a "Network Firm").
80.
Upon information and belief, McCabe Weisberg was one of LPS's "Network
Firms" and utilized its technology to accept referrals and then proceed to foreclosure.
81.
In order to become a "Network Firm", the firm must enter into a "Network
Agreement".
82.
Upon information and belief, a substantially similar agreement was in effect in
when Ms. Morgan's loan was referred from LPS to McCabe Weisberg.
83.
Upon acceptance of the referral, f^PS charges the Network Firm a referral fee,
which LPS labels an "admin fee". I^PS requires that this fee be paid regardless of whether a loan
isactually foreclosed or which stage the loan isremoved from the foreclosure pipeline. Therefore,
the admin fee docs not depend on any administrative work actually completed, but is assessed
solely on the fact that LPS referred a loan to the Network Firm.
15
84.
For example, the "admin Fee" for referrals ofall loan types, including FHA and VA
loans, was $125.00 as of2007. Immediately upon referral ofacase to a Network Firm, LPS charges
this $125.00 fee.
85.
This "admin fee" amounts to a referral fee or, often, an illegal kickback. These fees
are then passed on to the consumer, to be paid at the foreclosure sale, as well as, in certain cases,
to government entities such as the Federal Housing Administration or the Department of Veteran's
Affairs. At the very least, these referral fees violate state laws orprofessional rules governing feesplitting and impermissible referral fees.
86.
Desktop then automatically transmits a "referral package", which contains the
servicer's information pertaining to the loan, such as copies ofthe note, screenshots ofthe unpaid
balance, and other details.
87.
LPS constructed its business model so that it became the exclusive means for
foreclosure firms to access the millions of dollars in foreclosure related fees held by LPS's
servicer-clients. LPS used this powerful position to not only require referral fees orkickbacks from
the Network Firms, but also to set its own arbitrary timeline for how long the foreclosure process
should take from referral date to sale date.
88.
The Network Firms, like McCabe Weisberg are thus required to comply with LPS's
arbitrary deadlines, sacrificing quality for quantity, or else risk being removed from accessing the
majority of the country's top twenty servicers—LPS's servicer-clients.
89.
LPS claims that it acts only as a middleman, providing technology and data
processing software during the foreclosure referral process. In actuality, LPS handles core
responsibilities which were traditionally the responsibility of loan scrvicers, including, without
16
limitation, providing direction to foreclosure attorneys about how and when to proceed with
foreclosure sales orwhen to take other actions during the foreclosure process.
90.
Therefore, LPS has assigned itself the responsibility of approving or rejecting
requests by Network Firms for extending foreclosure sale dates or other deadlines, as well as
responding to a variety of other requests orquestions submitted by the Network Firms. Therefore,
the Network Firms, including McCabe Weisberg, actually have very little, if any, contact with
their servicer"clients" despite their representation otherwise.
91.
In addition to conducting the serviccrs' core functions and responsibilities, from at
least 2006 through 2010, LPS also executed various foreclosure and mortgage related documents
on behalfofits servicer-clients, including, but not limited to, assignments ofmortgage, substitution
oftrustee, lien releases, and other documents needed to establish standing to foreclose.
92.
In fact, LPS has faced numerous lawsuits, as well as investigations, by the U.S.
Attorney General and other states' Attorneys General with respect to the mass robo-signing
scheme in which it participated.
93.
Additionally, in November 2012, a former LPS executive, Lorraine Brown, pleaded
guilty to conspiracy to commit mail and wire fraud for her role in LPS's scheme that saw over a
million mortgage-related documents created with false signatures and notarizations.4
94.
LPS not only obstructs the line of communication between the servicers and
foreclosure firms, but LPS also misrepresents its own role in the foreclosure process by claiming
to only provide data and software products when itactually directs the Network Firms through the
foreclosure process.
4Office of Public Affairs, Dcp't ofJusticc, http://www.justice.gov/opa/pr/2012/Novembcr/12crm-1400.html (Nov. 20, 2012).
17
95.
Perhaps LPS's role in directing the Network Firms is best illustrated by the manner
in which it rates its Network Firms' pcrlbrmance. LPS's software carefully tracks the speed in
which the Network Firm meets LPS's imposed timelines in its system, which isoften shorter than
investor or Lender imposed timelines. Based on whether the firms complied with LPS timelines,
the Network Firms arc given an "Attorney Performance Rating" of green, yellow or red. If a
Network Finn, including Defendant, remains in the "red" for too long, LPS will cease to refer
cases to that Network Firm, instead referring the cases to Network Firms who are ableto conduct
the foreclosures faster.
96.
rime is the only metric of the Attorney Performance Rating. The rating does not
take into accountthe quality with which the foreclosures are conducted.
97.
Upon information and belief, Lakeview used one of more of LPS's software
platforms, including, without limitation, MPS and/or Desktop.
98.
Upon information and belief, Lakeview used one or more of these software
platforms to service Plaintiffs mortgage loan.
99.
Additionally, upon information and belief, McCabe Weisberg is one of LPS's
Network Firms and utilizes LPS technology, namely Desktop, during its foreclosures.
100.
Upon information and belief. Plaintiffs' servicer used LPS technology to refer
PlaintitPs mortgage loan to McCabe Weisberg for foreclosure.
101.
Additionally, Plainti ffs allege that LPS, Lakeview, and McCabe Weisberg engaged
in all ofthe above stated conduct with respect to their loans, and thus they were rushed through
the foreclosure process without respect to the validity of the documents needed to conduct a
foreclosure sale in Virginia and McCabe Weisberg's duties ofperfect fairness and impartiality.
Mr. Vaiden Obtains a Mortgage Loan
18
102.
Mr. Vaidcn borrowed $264,000.00 in order to finance his mortgage through
American Home Mortgage Acceptance hic., as evidence by a promissory note ("Note") dated May
11,2005.
103.
The alleged debt was for a home loan, incurred primarily for personal, family, or
household purposes, bringing McCabe Weisberg's collection activities within the purview of the
FDCPA, 15 U.S.C. § I692a(5).
104.
After Mr. Vaidcn went into default, the account was referred to McCabe Weisberg
to initiate collection and foreclosure proceedings.
Defendant McCabe Weisberg is a Debt Collector
105.
McCabe Weisberg is a law firm whose practice is focused on the collection ofdebts.
106.
McCabe Weisberg regularly collect home loan debts.
107.
McCabe Weisberg regularly demands payment from consumers of claimed
arrearages and provides consumers reinstatement quotes and itemizations of amounts that
Defendant is attempting to collect. McCabe Weisberg did so as to the Plaintiffs.
108.
McCabe Weisberg regularly tells consumers in correspondence that "this is an
attempt to collect a debt and any information obtained will be used for that purpose" and/or that
the communication is from a debt collector, the disclosures that the FDCPA, at 15 U.S.C. §
1692e(l 1), requires thatdebtcollectors provide in all written communications (other than a formal
pleading) sent "in connection with the collection ofany debt" ("the § 1692c(l 1) disclosure"). They
did so as some communications with the Plaintiffs. McCabe Weisberg regularly attempts to
provide the disclosures mandated by 15 U.S.C. § 1692g. They did so as to the Plaintiffs.
McCabe Weisberg Attempts to Collect a Debtfrom Plaintiffs
19
109.
On or around January 8, 2014, McCabe Wcisbcrg mailed correspondence to Mr.
Vaiden attempting to make the debt validation disclosures required by the FDCPA at 15 U.S.C. §
1692g.
110.
Upon information and belief, this is a fonn notice mailed to all consumers in
Virginia when McCabe Weisbcrg attempts to make thedebt validation disclosure for a delinquent
mortgage debt.
111.
Exhibit A is a true copy of the letter mailed to Mr. Vaiden, which states in relevant
part as follows:
NOTICE REQUIRED BY THE FAIR DEBT COLLECTION PRACTICES ACT
1.
The total amount of the debt is $263,034.61 as of January 7,2014.
Because interest, late charges, and other fees and charges may vary from day to
day, if you wish to pay off this debt the amount due on the day you pay the debt
may be greater. Therefore, if you paytheamount shown above, an adjustment may
be necessary after your payment is received.
2.
The name of the creditor to whom your debt is owed is Dcutsche
Bank National Trust Company, formerly known as Bankers Trust Company
of California, N.A., as Trustee for American Home Mortgage Investment
Trust 2005-2.
3.
UNLESS YOU DISPUTE THE DEBT, OR ANY PORTION OF
THE DEBT, WITHIN (30) DAYS OF THE DATE YOU RECEIVE THIS
LETTER, WE WILL ASSUME THAT THE DEBT IS VALID.
4.
IF YOU NOTIFY US IN WRITING, WITHIN THIRTY (30)
DAYS OF THE DATE YOU RECEIVE THIS LETTER, THAT YOU DISPUTE
THE DEBT, OR ANY PORTION OF THE DEBT, THEN WE WILL OBTAIN
VERIFICATION OF THE DEBT, OR A COPY OF A JUDGMENT AGAINST
YOU, AND MAIL SUCH VERIFICATION OR JUDGMENT TO YOU.
5.
If the creditor named in paragraph 2 above is not the original
creditor, then, IF YOU SEND A WRI'FTEN INQUIRY TO US WITHIN fHIRTY
(30) DAYS OF THE DATE YOU RECEIVE THIS LETTER, WE WILL
PROVIDE YOU WITH THE NAMIi AND ADDRESS OF THE ORIGINAL
CREDITOR.
20
6.
All correspondence to us should beaddressed as follows: McCABE,
WEISBERG & CONWAY, 312 MARSHALL AVENUE, SUITE 800,
LAUREL, MD 20707.
7.
The Fair Debt Collection practices Act does not require that we wait
for thirty (30) days after the date you receive this letter before instituting foreclosure
proceedings. IN THE EVENT THAT WE DO FILE FORECLOSURE
PROCEEDINGS WITHIN THE THIRTY (30) DAYS AFTER YOU RECEIVE
THIS LETPER, YOU STILL RETAIN THE RIGHTS DESCRIBED IN THIS
LETTER INCLUDING THE RIGHT TO DISPUTE ALL OR PART OF THE
DEBT OR THE RIGHT TO REQUEST THE NAME AND ADDRESS OF
ORIGINAL CREDITOR.
8.
THIS IS AN A'lTEMPT TO COLLECT A DEBT, AND ANY
INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.
9.
UNDER STATE OR OTHER APPLICABLE LAW, YOU MAY
HAVE DIFFERENT OR GREATER RIGHTS CONCERNING THIS DEBT
OR FORECLOSURE OF THE PROPERTY SECURING IT, AND
NOTHING IN THIS NOTICE LIMITS OR OTHERWISE AFFECTS
THOSE SEPARATE RIGHTS.
(emphasis in original).
112.
Exhibit Adoes not comply with the FDCPA inseveral respects.
113.
For example, and without limitation, the validation notice is overshadowed and
ineffective because itcreates the false impression and emphasizes that McCabe Weisberg intends
orwould "FILE FORECLOSURE PROCEEDINGS" within 30 days after receipt ofthe letter in
violation of §§ 1692gand 1692e.
114.
This is a misrepresentation because Virginia is a nonjudicial foreclosure state. As
such, McCabe Weisberg would not be required to "file foreclosure proceedings."
115.
McCabe Weisberg never intended to file foreclosure proceedings and this
implausible indication that a foreclosure lawsuit will or could be Filed is deceptive, threatens to
take action that is not intended to be taken, and overshadows the validation notice.
21
116.
Moreover, the validation language in McCabe Weisberg's noticc is also
overshadowed and contradicted by Paragraph 9 of the letter, which is the only paragraph in the
entire notice that is both capitalized and in bold.
117.
McCabc Weisberg's font selection for this ambiguous sentence creates the
appearance that it is the most important of the notices required by the FDCPA, even though it is
not part of the five enumerated disclosures required by § 1692g.
118.
Moreover,
McCabc
Weisberg's
instruction
that
consumers
may
have
"DIFFERENT [) RIGHTS CONCERNING THIS DEBT" could lead the least sophisticated
consumer to believe that the previous rights provided in the letter were meaningless or did not
exist as stated.
119.
The inclusion ofthis language, as well as other information purported to be required
by the FDCPA overshadows and confuses the validation notice.
120.
The same form letter was mailed to Ms. Morgan on or around February 25, 2014,
which is attached as Exhibit B.
Defendant Communicates with Plaintiffs Without Properly Providing the § 1692e(II) Disclosure
121.
On or around April
22, 2014, McCabc Weisberg mailed Ms. Morgan
correspondence in connection with the collection of their debt.
122.
The April 22, 2014 correspondence specifically states that "[a]t the request of the
Lender, you are hereby notified as follows: (a) that the Note is in default because of failure to pay
according to the terms; (b) that the entire outstanding principal balance and all accrued interest
under the Note have been and hereby are declared immediately due and payable (accelerated)... If
you intend to payoff your loan you must contact the undersigned at 1-301-490-1196 to obtain the
most current payoff figures. Any such payment must be made by certified or cashier's check or a
wire transfer as stated above. Only the full amount due will be accepted."
22
123.
In the April 22, 2014 correspondence, Delbndant failed to disclosc "that the
communication is from a debt collector" as required by 15 U.S.C. § 1692c(l 1). Warren v. Sessom
& Rogers, P.A., 676 F.3d 365 (4th Cir. 2012) (emphasis in original).
124.
As recognized by the Fourth Circuit, the FDCPA "expressly prohibits this
exact omission by requiring debt collectors to disclose their status in every communication with a
consumer." Id.
125.
Instead of dearly providing the disclosure in its communication to Ms. Morgan, the
disclosure is hidden in an advertisement that was enclosed in the letter, which was being published
in the Washington Post by Surety Trustees.
126.
McCabe Weisberg sent a virtually identical notice to Mr. Vaiden on or around April
24, 2014.
127.
Exhibits C & D are true copies of the respective letters sent to Ms. Morgan and Mr.
Vaiden.
128.
The April 24, 2014 correspondence to Mr. Vaiden contained the same exact
provisions quoted in Paragraph 122 above without notating anywhere in the communication the
required § 1692e(l 1) disclosure.
129.
Upon information and belief, this is a form notice mailed to all consumers in
Virginia and all such communications omitted the § I692e(l 1) disclosure.
130.
The omission of the § 1692c(l 1) disclosure is a violation of the FDCPA.
McCabe Weisberg's Letter to Ms. Morgan Violates § I692f
131.
Moreover, Defendant's April 22, 2014 letter to Ms. Morgan also violated § 1692f
because it threatens to take nonjudical action to effect the dispossession of Ms. Morgan's property
when there was no present right to possession of the property because McCabe Weisberg's failure
23
to comply with the requirements of 24 C.F.R. § 203.604. Moreover, to the extent a foreclosure
oceurrcd, which it did for Ms. Morgan, McCabe Weisbcrg further violated § 1692f by talcing
nonjudicial action to effect the dispossession of PlaintitTs and the class members' properties when
there was no present right to possession.
132.
Upon information and belief, this was a form noticc mailed to all consumers in
Virginia who had a FHA loan with Lakeview; therefore, violated § 1692f as to the Plaintiff and
the putative class members.
McCahe fVeisherg Communicates Directly With Ms. Morgan
133.
On or around September 1, 2014, McCabe Weisberg served Plaintiff at her
residence with an unlawful detainer summons with a first return set for October 6,2014.
134.
At the time McCabc Weisberg sent this communication to the Plaintiff, it knew
Plaintiff was represented by counsel—as this lawsuit had been pending since June 2014.
135.
After McCabe Weisberg communicated directly with Ms. Morgan, Plaintiffs
counsel e-mailed McCabe Weisberg's counsel a reminder that all communications from McCabc
Weisberg should go through Plaintiff's counscl.
136.
Nevertheless, McCabc Weisberg still directly communicated with Plaintiff in
violation of § 1692c, which prohibits debt collectors from communicating with a consumer who
is represented by counsel.
COUNT ONE:
BREACH OF FIDUCIARY DUTIES
CLASS CLAIM
137.
Plaintiff restates each of the allegations in the preceding paragraphs as if set forth
at length herein.
24
138.
This matter is also brought as a class action for a "1-iduciary Duty" class, initially
defined as follows:
All natural persons (a.) located in the United States District Court
Rastcm District of Virginia (b.) who had a mortgage loan on or after
June 20, 2010, which was insured by the Federal Housing
Administration; (e.) and who suffered a foreclosure conducted by
McCabc Weisberg and its alter ego, Surety Trustees (d.) when
Lakeview was the bcncficiary of the Deed of Trust.
Ms. Morgan is a member of the proposed Fiduciary Class.
139.
According to [vakcvicw's records, there arc at least 59 members in the
Commonwealth of Virginia, most of whom are likely in the Eastern District of Virginia, and,
therefore, the class is so numerous that joinder of all members is impractical.
140.
There are questions of law and fact common to the class, which common issues
predominate over any issues involving only individual class members. For example, and without
limitation: (a.) whether Lakeview provided written notice to Virginia consumers as required by 24
C.F.R. § 203.604; (b) whether the written noticc provided by Lakeview complied with 24 C.F.R.
§ 203.604; (c.) whether Lakeview attempted to make a visit to class members' properties prior to
foreclosure; (d.) whether McCabe Weisberg knew or should have known that Lakeview failed to
comply with 24 C.F.R. § 203.604; (e.) whether McCabe Weisberg breached its fiduciary duties to
the Plaintiff and class members by knowingly conducting the foreclosure sale when it was aware
that no face to face interview occurred; (f.) whether Lakeview and LPS's referral incentives and
forced timelines caused McCabe Weisberg to violate their duty of impartiality; (g.) whether
McCabe Wei.sbcrg acted impartially by failing to obtain the original note or a lost note affidavit
prior to commencing foreclosure proceedings; (h.) whether LPS's referral incentives and forced
timelines caused McCabe Weisberg to act impartially against the consumers; (i.) whether the
misrepresentations in McCabe Weisbcrg's communications during the foreclosure process were
25
contrary to its duty to act with perfect fairness and impartiality; (j.) whether these actions
constituted McCabe Weisbcrg's breach of fiduciary duties; and (h.) what remedies are available
for such a breach of fiduciary duty.
141.
Plaintiffs claims are typical of those of the class members. All are based on the
same facts and legal theories. The letters, deed of appointment of substitute trustee, and trustees
deeds are standardized and used across all Virginia jurisdictions and the full class period. The
violations alleged arc the same and the class claims will rise and fall entirely based upon whether
or not Plaintiff's claims rise or fall.
142.
The Plaintiff will fairly and adequately protect the interests of the class. Plaintiff
has retained counsel experienced in handling actions involving unlawful practices against
consumers and class actions. Neither Plaintiff nor his counsel has any interests that miglit cause
them not to vigorously pursue this action. Plaintiff is aware ofhis responsibilities to the putative
classes and has accepted such responsibilities.
143.
Certification of a class under Rule 23(b)(1) of the Federal Rules of Civil Procedure
is proper. Prosecuting separate actions by or again.st individual class members would create a risk
of adjudications with respect to individual class members that, as a practical matter, would be
dispositive ofthe interests ofthe other members not parties to the individual adjudications orwould
substantially impair or impede their ability to protect their interests.
144.
Certification of a class under Rule23(b)(2) of the Federal Rules of Civil Procedure
is appropriate in that McCabe Wcisberg have acted on grounds generally applicable to the class
thereby making appropriate declaratory relief with respect to the class as a whole.
145.
Certification of the class under Rule 23(b)(3) of the Federal Rules of Civil
Procedure is also appropriate in that:
26
a. As alleged above, the questions ot law or fact common to the members of the
classes predominate over any questions affecting an individual member. Each of the common
facts and legal questions in the case overwhelm the more modest individual damages issues.
Further, those individual issues that do exist can be ctYectively streamlined and resolved in a
manner that minimizes the individual complexities and differences in proof in the case.
b. A class action is superior to other available methods for the fair and etTicicnt
adjudication ofthe controversy. Consumer claims generally are ideal for class treatment as they
involve many, if not most, consumers who arc otherwise disempowered and unable to afford and
bring such claims individually. Further, most consumers whom suffered a foreclosure at thehands
of McCabe Weisberg would likely be unaware oftheir rights under the law, or who they could
tlnd to represent them in federal litigation. Additionally, individual litigation ofthe uniform issues
in this case would bea waste ofjudicial resources. The issues at thecoreof this case are classwidc
and should be resolved at one time. One win for one consumer would set the law as for every
similarly situated consumer.
146.
Plaintiff and the putative class allege a cause of action for McCabe Wcisberg's
brcach ot fiduciary duties under the subject Deed of Trust. To the extent that they were properly
appointed as trustees, McCabe Weisberg through its alter ego. Surety Trustees, were the fiduciaries
for both the Plaintiffand the putative class and the noteholder, creditor, beneficiary and/or investor,
thus owing fiduciary duties to both parties.
147.
McCabe Weisberg breached their fiduciary duties by failing to act impartially
towards the Plaintiffs and putative class members due to pricing incentives and forced compliance
with unreasonable timelines. Based on the pricing incentives and forccd timelines, McCabc
Weisberg acted for their own pecuniary gain .so that they remained in LPS's referral network.
27
including iVfcCabe Wcisberg's policy of conducting foreclosures of FHA loans without the
consumer receiving any face to face interview. Further, they breached their duty ofindependence
through the dishonest structure created to disguise that Surety Trustees was wholly controlled and
not independent ofits principal, McCabe Weisberg, the attorney for the opposite party conducting
the foreclosure, and otlen purchasing at the foreclosure sale.
148.
As a result, Plaintiffand the putative class suffered injury and are entitled torecover
actual damages and costs against McCabe Weisberg.
COUNT TWO:
VIOLATION OF IS U.S.C. § 1692g
CLASS CLAIM
149.
Plaintiffs repeat and re-allege every allegation above as if set forth herein in full.
150.
Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs bring this
claim for themselves and on behalf of a class initially defined as follows:
All natural persons residing in the United States District Court Eastern District of
Virginia at the time that they received correspondence from the Defendant: (i) in the form
of Exhibits A&B(ii) in an attempt to collect a debt serviced by the Defendant, (iii) that
was incurred primarily for personal, household or family purposes (iv) at a time that
Defendant's records stated that the subject debt was in default, (v) during the one year
period prior to the tiling of the Complaint in this matter.
Plaintiffs Morgan and Vaiden are members of this class.
151.
Niimerositv. Fed. R. Civ. P 23(a)(1). Upon information and belief. Plaintiffs
allege that the class members are so numerous that joinder of all is impractical. The names and
addresses of the class members are identifiable through the internal business records maintained
by Defendant and the class members may be notified ofthe pendency ofthis action by published
and/or mailed notice.
28
•52.
Predominance of Common Questions of Law and Fact. Fkp. R. Civ. P. 2iraim.
Common questions of law and fact exist as to all members of the putative class, and there arc no
factual or legal issues that differ between the putative class members. These questions
predominate over the questions affecting only individual class members. The principal issues are:
a. Whether McCabe Weisberg is a debt collector.
b. Whether Defendant's correspondence in the foriTi of Exhibit B violated §
I692g by adding language that overshadowed and contradicted the
mandatory disclosures?
c. If McCabe Weisberg violated the FDCPA, what is the appropriate amount
of damages?
153.
Typicality. Fkd. R. Civ. P. 23(a)(3) Plaintiffs' claims are typical of the claims of
each putative class member. In addition. Plaintiffs are entitled to relief under the same causes of
action as the other members ofthe putative class. All are based on the same facts and legal theories.
154.
Adequacy of Representation. Fed. R. Civ. P. 23(a)(4) Plaintiffs are adequate
representatives ofthe putative class, because their interests coincide with, and are not antagonistic
to, the interests of the members of the Class they seek to represent; they have retained counsel
competent and experienced in such litigation; and they have and intend to continue to prosccutc
the action vigorously. Plaintiffs and their counsel will fairly and adequately protect the interests of
the members ofthe Class. Neither Plaintiffs nor their counscl have any interests which might cause
him not to vigorously pursue this action.
155.
Superiority. Fkd. R. Civ. P. 23(b)(3) Questions of law and fact common to the
Class members predominate over questions affecting only individual members, and a class action
is superior to other available methods for fair and efficient adjudication of the controversy. The
29
damages sought by each member are such that individual prosecution would prove burdensome
and expensive. It would be virtually impossible for members of the Class individually to
etfectivcly redress the wrongs done to them, liven if the members of the Class themselves could
afford such individual litigation, it would be an unnecessary burden on the Courts. Furthermore,
individualized litigation presents a potential for inconsistent or contradictory judgments and
increases the delay and expense to all parties and to the court system presented by the legal and
factual issues raised by Defendant's conduct. By contrast, the class action device will result in
substantial benefits to the litigants and the Court by allowing the Court to resolve numerous
individual claims based upon a singleset of proofin a case.
156.
Issue-Only Certification. Plaintiffmay seek issue-only certification on 2 discrete
issues relating to liability and statutory damages—that is, (A) whether the additional language and
font used by McCabe Weisberg violated § 1692g; and then (B) what is the appropriate amount of
statutory damages to award per class member. Adjudication of these issues will significantly
advance the resolution of the underlying case, thus promoting judicial economy and efficiency.
157.
By misrepresenting and emphasizing in its validation correspondence, inter alia,
that Defendant may "file foreclosure proceedings" and consumers may have "different [| rights
concerning" their debts, McCabe Weisberg overshadowed, confused, contradicted, and failed to
effectively communicate the mandatory disclosures in § 1692g, and in doing so violated the
FDCPA.
158.
As a result ot the violation, Plaintiffand the putative class members are therefore
entitled to statutory damages against Defendant, as well as their reasonable attorneys' fees and
costs, pursuant to 15 U.S.C. § 1692k.
COUNT THRKK;
VIOLATION OF 15 U.S.C. §§ 1692e(5) & I692e(10)
30
CLASS CLAIM
159. Plaintiffs repeat and re-allege every allegation above as ifset forth herein in full.
160. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs bring this
claim for themselves and on behalfofaclass initially defined as follows:
All natural persons residing in the United States District Court Eastern District of
nfIT-vf
receivedtocorrespondence
from thebyDefendant(i) in the
fonn
of
Exhibits A&B(n in an attempt
collect adebt serviced
the Defendant
nUUhat
DefonTr srecords stated that
personal,
household
or family
purposes
(iv) atthea time
that
Defendant
the subject
debt was
in default,
(v) during
one year
penod pnor to the filing ofthe Complaint in this matter.
^
Plaintiffs Morgan and Vaiden arc members ofthis class.
161. Numcrosity. Fed. R. Civ. P23(a)(1). Upon information and belief, Plaintiffs
allege that the class members are so numerous that joinder of all is impractical. The names and
addresses of the class membcts are identifiable through the internal business records maintained
by Defendant and the elass members may bo notified of the pendency ofthis action by published
and/or mailed notice.
^ Predominance ofCommon Questions ofLaw and Farf Fkd. R. ClV. P. 23(a)(2).
Common questions of law and fact exi.st as to all members of the puuitive class, and there are no
lactual or legal issues that differ between the putative class members. These questions
predominate over the questions affecting only individual class members. 11,0 principal issues arc:
a. Whether McCabc Wcisberg is a debt collector.
b. Whether Defendant's correspondence in the form of Exhibit Bviolated §
1692e(5) or § I692e(10) by threatening to "tile foreclosure proceedings"
when such action was not intended to be taken?
c. If McCabe Weisbcrg violated the FDCPA, what is the appropriate amount
31
of damages?
163. TypicalitY- Fkd. R. Civ. P. 23(a)(3) Plaintiffs' claims are typical of the claims of
each putative class member. In addition, Plaintiffs are entitled to relief under the same causes of
action as the other members ofthe putative class. All are based on the same tacts and legal theories.
'64. Adequacy of Representation. Fed. R. Civ. P. 23(a)(4) Plaintiffs are adequate
representatives ofthe putative class, because their interests coincide with, and are not antagonistic
to, the interests of the members of the Class they seek to represent; they have retained counsel
competent and experienced in such litigation; and they have and intend to continue to prosecute
the action vigorously. Plaintiffs and their counsel will fairly and adequately protect the interests of
the members of the Class. Neither Plaintiffs nor their counsel have any interests which might cause
him not to vigorously pursue this action.
165. SuperioritY. Fed. R. Civ. P. 23(b)(3) Questions of law and fact common to the
Class members predominate over questions affecting only individual members, and aclass action
is superior to other available methods for fair and efficient adjudication of the controversy. The
damages sought by each member are such that individual prosecution would prove burdensome
and expensive. It would be virtually impossible for members of the Class individually to
effectively redress the wrongs done to them. Even if the members of the Class themselves could
afford such individual litigation, it would be an unnecessary burden on the Courts. Furthermore,
individualized litigation presents a potential for inconsistent or contradictory judgments and
increases the delay and expense to all parties and to the court system presented by the legal and
fiictual issues raised by Defendant's conduct. By contrast, the class action device will result in
substantial benefits to the litigants and the Court by allowing the Court to resolve numerous
individual claims based upon a single set ofproof in a case.
32
tssue-Only Certification. Plaintiff may seek issue-only certification on 2 discrete
issues relating to liability and statutory damages—that is, (A) whether the false and misleading
"hie foreclosure proceedings" language violated on or both of§I692e(5) and/or §I692e(l0); and
then (B) what is the appropriate amount of statutory damages to award per class member.
Adjudication of these issues will significantly advance the resolution of the underlying case, thus
promoting judicial economy and efficiency.
167. I3y threatening that Defendant may "file foreclosure proceedings" in connection
with the collection of delinquent home loan debt when it had no intention of filing acivil action,
Defendant made athreat to take action that was not intended to be taken, and in doing so violated
15 U.S.C. § I692e(5).
168. In addition and in the alternative, Defendant's use of the language "file foreclosure
proceedings" is deceptive and misleading in violation of§1692e(10) bccausc this language would
lead the least sophisticated consumer to believe that Defendant was filing alawsuit to commence
a foreclosure.
169.
As a result ofthe violation, Plaintiff and the putative class members arc therefore
entitled to statutory damages against Defendant, as well as their reasonable attorneys' fees and
costs, pursuant to 15 U.S.C. § 1692k.
COUNT FOCJR:
VIOLATION OF 15 U.S.C. § 1692e(U)
CLASS CLAIM
170.
Plaintiffs repeat and re-allege every allegation above as ifset forth herein in full.
171. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs brings this
claim for themselves and on behalfofa class initially defined as follows:
All natural persons residing in the United States District Court Bastem District of
33
rcccived correspondence from the Defendant: (i) in the form
ot Exhibits Cand D(ii) in an attempt to collect adebt serviced by the Defendant (iii) that
was incurred primarily for personal, household or family purposes (iv) at a time that
Defendant s records stated that the subject debt was in default, (v) during the one year
penod prior to the filing of the Complaint in this matter.
Plaintiffs Morgan and Vaiden arc members of this class.
172. Numerosity. Fed. R. Civ. P 23(a)(1). Upon information and belief. Plaintiffs
allege that the class members are so numerous that joinder of all is impractical. The names and
addresses of the class members arc identifiable through the internal business records maintained
by Defendant and the class members may be notified of the pendency of this action by published
and/or mailed notice.
Predominance ofCommon Questions ofLaw and Fact. Fed. R. Civ. P. 23(a)(2).
Common questions of law and fact exist as to all members of the putative class, and there are no
tactual or legal issues that differ between the putative class members. These questions
predominate over the questions affecting only individual class members. The principal issues are:
a. Whether McCabe Weisberg is a debt collector.
b. Whether Defendant's correspondence in the form of Exhibit Cviolated the
FDCPA by omitting the § 1692e(l 1) disclosure.
e. If McCabc Weisberg violated the FDCPA, what is the appropriate amount
of damages?
174. Typicality. Fkd. R. Civ. P. 23(a)(3) Plaintiffs' claims arc typical of the claims of
each putative class member. In addition. Plaintiffs arc entitled to relief under the same causes of
action as the other members ofthe putative class. All arc based on the same facts and legal theories.
Adequacy of Representation. Fkd. R. CiV. P. 23(a)(4) Plaintiffs arc adequate
representatives ofthe putative class, because their interests coincide with, and are not antagonistic
34
to, the interests ot the members ot the Class they seek to represent; they have retained counsel
competent and experienced in such litigation; and they have and intend to continue to prosecute
the action vigorously. Plamtiffs and their counsel will fairly and adequately protect the interests of
the members of the Class. Neither PlaintifTs nor their counsel have any interests which might cause
him not to vigorously pursue this action.
176.
Siipcriority. Fkd. R. Civ. P. 23(b)(3) Questions of law and fact common to the
Class members predommate over questions affecting only individual members, and aclass action
is superior to other available methods for fair and efficient adjudication of the controversy. The
damages sought by each member are such that individual prosecution would prove burdensome
and expensive. It would be virtually impossible for members of the Class individually to
effectively redress the wrongs done to them. Even ifthe members ofthe Class themselves could
afford such individual litigation, it would be an unnecessary burden on the Courts. Furthermore,
individualized litigation presents a potential for inconsistent or contradictory judgments and
increases the delay and expense to all parties and to the court system presented by the legal and
factual issues raised by Defendant's conduct. By contrast, the class action device will result in
substantial benefits to the litigants and the Court by allowing the Court to resolve numerous
individual claims based upon a single set ofproof in a case.
Issue-Only Certification. Plaintiff may seek issue-only certification on 2 discrete
issues relating to liability and statutory damages -that is, (A) whether Defendant's letter clearly
provided consumers with the §1692e(l 1) disclosure; and then (B) what is the appropriate amount
ot statutory damages to award per class member. Adjudication of these issues will significantly
advance the resolution of the underlying case, thus promoting judicial economy and efficiency.
35
178. Dcfcndanl violated § I692c(n) by failing lo clearly oonvcy the § l692o(ll)
disclosure to consumers.
179. Plamtiffand the putative class members are therefore entitled to statutory damages
agamst McCabe Weisberg, as well as their reasonable attorney's fees and costs, pursuant to 15
U.S.C. § 1692k.
COUNT FIVE:
VIOLATION OF 15 U.S.C. § 1692f
CLASS CLAIM
180. Plaintiff Morgan repeats and re-alleges every allegation above as ifset forth herein
in full.
181. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiff Morgan
brings this action for herselfand on behalfofaclass initially defined as follows:
f
persons residing in the United States District Court Rastem District of
irgmia (t) who had a mortgage loan which was insured by the Federal Housine
Administration (n) when Lakeview was the beneficiary of the Deed of Trust; (iii) at the
time that they received correspondence in the form of Exhibit C and/or suffered a
^mpt tohousehold
collect aordebt
serviced
by (iv)
the
Defendant (v) thatIwas incurred primarily for att'
personal,
family
purposes
at atime that Detendant's records stated that the subject debt was in defeult, (v) during the
one year period prior to the filing ofthe Complaint in this matter.
Plaintiff Morgan is a member of this class.
182. Numcrosity. Fed. R. Civ. P 23(a)(1). Upon information and belief. Plaintiff
alleges that the class members are so numerous that joinder ofall is impractical. The names and
addresses of the class members are identifiable through the internal business records maintained
by Defendant and the class members may be notified ofthe pendency ofthis action by published
and/or mailed noticc.
36
CommonOi,o,tionsofl.aw.ndt-.., r.,.. n
p
Common questions oflaw and fac. cxis, as .o all members of.he pu.aHve class, and .here are no
facual or legal issues ,ha, ditTer beiween .he pu.a.ive class members, mese ques.ions
prcdomina.c over .he questions affecting only individual class members. The principal issues are:
a. Whether McCabe Weisbcrg is adebt collector.
b. Whether Lakevicw had apresent right to possession of Plaintiff and the
class members' properties even though the requirements of 24 C.F.R. §
203.604 were not satisfied?
c. Whether Defendant's correspondence in the form of Exhibit Cviolated the
FDCPA by threatening to take nonjudicial action even though the
requirements of24 C.F.R. §203.604 were not satisfied?
d. Whether the Defendant's foreclosure of Plaintiff and the class members'
properties constitutes taking nonjudicial action when there is no present
right to possession?
e. If MeCabe Weisbcrg violated .he KDCPA. what is the appropriate amount
ofactual and statutory damages?
184. BaicaHa. VKO. R. CIV. P. 23(a)(3) I'laintiffs' claims at^ typical of the claims of
each putative class member. In addition, PlaintitTs are entitled to relief under the same causes of
action as the other members ofthe putativeclass. All are based on .hesame facts and legal theoric-s.
"f R'^pro'iontaHon. Fed. R. Civ. P. 23(a)(4) Plaintiffs arc adequate
representatives ofthe putative class, because their interests coincide with, and arc no. an.agonistic
to, the interests of the member, of the Class they seek to represent; they have retained counsel
competent and experienced in such litigation; and they have and intend to con.inue .o prosceu.e
37
the action vigorously. Plaintiffs and their counsel will fairly and adequately protect the interests of
the members ot the Class. Neither Plaintiffs nor their counsel have any interests which might cause
him not to vigorously pursue this action.
186. SupcrioritY. Fku- R. Civ. P. 23(b)(3) Questions oflaw and fact common to the
Class members predominate over questions affecting only individual members, and aclass action
is superior to other available methods for fair and efficient adjudication of the controversy. The
damages sought by each member are such that individual prosecution would prove burdensome
and expensive. It would be virtually impossible for members of the Class individually to
effectively redress the wrongs done to them. Even ifthe members of the Class themselves could
afford such individual litigation, it would be an unnecessary burden on the Courts. Furthermore,
individualized litigation presents a potential for inconsistent or contradictory judgments and
increases the delay and expense to all parties and to the court system presented by the legal and
factual issues raised by Defendant's conduct. By contrast, the class action device will result in
substantial benefits to the litigants and the Court by allowing the Court to resolve numerous
individual claims based upon a single set ofproof in a case.
tssuc-Only Certification. Plaintiff may seek issue-only certification on 3 discrete
issues relating to liability and statutory damages -^that is, (A) whether McCabe Weisberg's letter
violated §1692f(6) by threatening to take nonjudicial action to effcct the dispossession ofPlaintiff
Morgan and the class members' properties when McCabe Weisberg and Lakeview had no present
right to possession; (B) whether McCabe Weisberg violated §1692f(6) by foreclosing on Plaintiff
Morgan and the class members' properties when l.akeview had no present right to possession; and
(C) what is the appropriate amount ofstatutory damages to award per class member. Adjudication
38
of these issues will significantly advance the resolution of the underlying case, thus promoting
judicial economy and efficiency.
188. Defendant violated § 1692f(6) by threatening, and ultimately taking, nonjudicial
action to effect the disposition of property when there was no present right to possession.
189. Plaintiff and the putative class members arc therefore entitled to actual damages,
statutory damages against McCabe Weisberg, as well as their reasonable attorney's fees and costs,
pursuant to 15 U.S.C. § 1692k.
COUNT SIX:
VIOLATION OF 15 U.S.C. § 1692c
INDIVIDUAL CLAIM
190.
Plaintiff Morgan repeats and re-alleges every allegation above as ifset forth herein
in full.
191. McCabe Weisberg violated § 1692c by communicating with Ms. Morgan in
connection with the collection of a debt when McCabe Weisberg knew Ms. Morgan was
represented by counsel and had knowledge ofMs. Morgan's counsel's name and address.
192. As aresult, Ms. Morgan is entitled to recover actual damages, statutory damages,
reasonable attorneys fees, and costs against McCabe Weisberg pursuant to 15 U.S.C. §1692k
WHEREFORE, Plaintiffs move for class certification and for judgment against the
McCabe Weisberg, as alleged for actual and statutory damages, for injunctive and declaratory
relief, and for attorney's fees and costs, and such other specific or general relief the Court does
find just and appropriate.
A TRIAL BY JURY IS DEMANDED.
Respectfully submitted,
MICA M. MORGAN &
GERALD M. VAIDEN, JR.,
39
on behalfofthemselves and
all others similarly situated.
By Counsel
James XV. Spc^VSB# 23fc)
Virgin^ Pmyally Law CeiiSier
919 E.WmStrect, Suite610
Richmond, VA 23219
(804) 782-9430
Fax: (804) 649-0974
Email: [email protected];
Kristi Cahoon Kelly, Esq. (VSB //72791)
Andrew J. Guzzo, Esq. (VSB #82170)
Kelly & Crandall PLC
4084 University Drive, Suite 202A
Fairfax, VA 22030
703-424-7572
Fax: 703-591-0167
Emai1: kkel1y@kel lyandcrandal1.com
Email: [email protected]
Leonard Anthony Bennett, Esq. (VSB #37523)
Susan Mary Rotkis, Esq. (VSB #40693)
Consumer Litigation Associates
763 J Clyde Morris Boulevard, Suite lA
Newport News, VA 23601
757-930-3660
Fax: 757-930-3662
Email: [email protected]
Email: [email protected]
Counselfor Plaintiffs
CERTIFICATK OF SERVfCF
John M. Robb, III
Riverfront Plaza, East Tower
951 East Byrd Street, Eighth Floor
40
Richmond, Virginia 23219
(804) 915-4138 Dircct
(804) 916-7238 Fax
[email protected]
CounselforMcCabe Weisberg &Conway, LLC
23046)
<^erty Law Center
919 E. Main Street, Suite 610
Richmond, VA 23219
(804) 782-9430
Fax; (804) 649-0974
Email: [email protected]
41