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Lovegrove v. Brock & Scott, PLLC

United States District Court, E.D. Virginia, Norfolk Division

January 17, 2017

THOMAS W. LOVEGROVE, Plaintiff,
v.
BROCK & SCOTT, PLLC, Defendant.

          OPINION & ORDER

          HENRY COKE MORGAN, JR. SENIOR UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Defendant Brock & Scott, PLLC's ("Defendant") three (3) pending motions: a Motion to Dismiss the Class Action Complaint, Doc. 13, a Motion to Strike the Complaint's demand for punitive damages, Doc. 11, and a Motion to Stay Discovery, Doc. 22, pending the resolution of the Motion to Dismiss. Plaintiff Thomas W. Lovegrove ("Plaintiff') opposes each. Docs. 16, 17, 24. For the reasons set forth herein, the Court GRANTS the Motion to Dismiss, DENIES the Motion to Strike as MOOT, and DENIES the Motion to Stay Discovery as MOOT.

         I. BACKGROUND

         A. Facts

         Plaintiff, a Virginia citizen, is the owner of the property at 70 Homeplace Circle, Moneta, Virginia. Compl., Ex. B. Defendant is a law firm organized under the laws of North Carolina and maintains an office at 484 Viking Drive, Suite 203, Virginia Beach, Virginia. Id. ¶ 4. "The principal purpose of [Defendant's business is the collection of debts for its clients, creditors to whom debts are allegedly owed by consumers." Id. ¶ 5. Defendant also owns and operates Trustee Services of Virginia, L.L.C., which performs foreclosures in Virginia. Id. ¶ 22.

         On May 10, 2016, Defendant sent Plaintiff a referral for foreclosure letter ("Foreclosure Letter"). Id. ¶ 14 & Ex. A. Defendant alleged that Plaintiff owed $1, 798, 636.56 to Bank of America, N.A for the Moneta property. Id. Ex. A. The letter provided Plaintiff with steps to dispute the debt. Id. Defendant stated that if Plaintiff notified Defendant that he disputed the debt in writing within thirty (30) days of receipt of the letter, Defendant's "office will obtain a verification of the debt or a copy of a judgment against you and mail it to you." Id. At the bottom of each page of the letter, Defendant included this paragraph in bold italicized font:

***THIS COMMUNICATION IS FROM A DEBT COLLECTOR. THIS IS AN ATTEMPT TO COLLECT A DEBT, AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. IF YOU HAVE RECEIVED A DISCHARGE IN A CHAPTER 7 BANKRUPTCY, WE ARE AWARE YOU ARE NOT PERSONALLY OBLIGATED FOR THIS DEBT. PLEASE BE ADVISED THAT THIS NOTICE IS REQUIRED FOR FORECLOSURE IN THIS STA TE. ***

Id. The letter also contained a paragraph stating, "If your personal liability for this debt has been discharged in a bankruptcy proceeding and you have not reaffirmed the debt, this communication is for notice purposes only in connection with the foreclosure of the referenced property, and we are not attempting to collect the debt from you personally." Id.

         Plaintiff alleges that he "had a reasonable basis for disputing that he owed the debt" and through counsel sent Defendant letters on May 17, 2016 and May 20, 2016 disputing the validity of the debt and requesting verification of it. Id. ¶¶ 15-16 & Ex. B. Plaintiff wrote that Bank of America transferred or sold the Note to "CIG-RESI HFI 1ST LIEN MORT, " and Bank of America notified Equifax, a credit reporting agency, that it no longer held the Note. id., Ex. B.

         On June 3, 2016, Defendant replied with a copy of the Foreclosure Letter and a statement that no foreclosure sale was scheduled at that time. id., Ex. C. On June 21, 2016, Defendant sent Plaintiff a letter stating its understanding that Plaintiff had "an interest in the [Moneta] property, " enclosing copies of a Notice of Trustee's Sale and a Substitution of Trustee, and informing Plaintiff that the property would be sold at public auction on July 5, 2016. Id., Ex. D. Plaintiff alleges that Defendant failed to verify the alleged debt and continued to collect it by scheduling the foreclosure sale. Id. ¶ 19.

         On June 27, 2016, Plaintiff filed an action in the Franklin County Circuit Court for an injunction enjoining Trustee Services of Virginia from foreclosing on Plaintiffs property. Id. ¶ 22. On June 30, 2016, a Franklin County Circuit Court judge "orally indicated that he would grant the motion for a temporary injunction." Id. ¶ 25. Plaintiff alleges that at the hearing, Defendant's counsel assured him that the July 5, 2016 foreclosure sale would be canceled. WL As of the filing of the Complaint in this case, a foreclosure sale was scheduled for July 27, 2016. Id. ¶28.

         On July 7, 2016, Plaintiff filed the three-count Class Action Complaint. See generally Id. The Complaint alleges violation of Sections 1692g(b) and 1692e(10) of the Fair Debt Collection Practices Act ("FDCPA") (Counts One and Two) and fraud (Count Three), ]d Plaintiff included the description of three (3) classes in the Complaint: (1) the "Main Class" eligible for relief under Count Three consisting of all persons nationwide who received foreclosure letters with identical debt dispute language from Defendant, attempted to dispute the debt, but did not receive mailed verification of the debt from Defendant; (2) the "First Subclass" eligible for relief under Count Two consisting of members of the Main Class to whom Defendant sent the same Foreclosure Letter in the year preceding the filing of the Complaint; and (3) the "Second Subclass" eligible for relief under Count One consisting of members of the Main Class to whom Defendant sent the same Foreclosure Letter in the year preceding the filing of the Complaint and against whom Defendant pursued collection prior to verifying the debt. Id. ¶ 31.

         Plaintiff alleges upon his "experience, information, and belief that Defendant "regularly and systematically fails to provide meaningful verification of debts required by the FDCPA... even after Brock & Scott has received written request[s] from consumers." Id. ¶ 12. Plaintiff also alleges that Defendant regularly continues to collect debts despite receiving debtors' timely written dispute notices. Id. ¶ 13. Plaintiff requests judgment in favor of the class members, an injunction permanently enjoining Defendant from violating the FDCPA, actual damages, statutory damages of $1, 000 per class member, reasonable attorney fees and costs, and $350, 000 in punitive damages. Id. ¶¶ 40, 43, 51.

         B. ...


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