Benjamin v. Rosenberg & Associates, LLC

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
MELISSA AKAR BENJAMIN,
Plaintiff,
Civil Action No. 19-3012 (RDM)
v.
ROSENBERG & ASSOCIATES, LLC,
Defendant.
MEMORANDUM OPINION AND ORDER
This case presents a fact pattern that has become a familiar one in federal courts: Plaintiff
Melissa Akar Benjamin—a defendant in a foreclosure action—has sued the loan servicer,
financial services provider, and debt collection law firm that pursued the foreclosure action
against her. She claims that these entities made repeated misrepresentations in an attempt to
collect on her debt or obtain a foreclosure and, in so doing, violated multiple federal and District
of Columbia laws.
Benjamin initially alleged violations of the Fair Debt Collection Practices Act (FDCPA),
15 U.S.C. § 1692 et seq.; the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601et seq.; the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq.; the Truth in Lending Act, 15
U.S.C. § 1601 et seq.; the Mortgage Lender and Broker Act, D.C. Code § 26-1101 et seq.; and
the District of Columbia Consumer Protection Procedures Act, D.C. Code § 28-3901 et seq. Dkt.
1 (Compl.); Dkt. 23 (Am. Compl.). As the litigation proceeded, however, she voluntarily
dismissed her claims against the loan servicer and financial services provider, Dkt. 29; Dkt. 33,
leaving only her FDCPA claims against the law firm, Rosenberg & Associates (“R&A”), to be
resolved. Meanwhile, in the underlying foreclosure action, the parties have stipulated to a
voluntary dismissal. Praecipe of Dismissal, Wilmington Sav. Fund Soc’y, FSB v. Benjamin, 2016
CA 008365 R(RP) (D.C. Super. Ct. Sept. 16, 2020).
This matter is before the Court on R&A’s motion to dismiss for failure to state a claim,
Dkt. 25, which Benjamin opposes, Dkt. 32. Although only one count of the complaint is directed
at R&A, that count includes several distinct claims under the FDCPA. For the reasons explained
below, the Court concludes that Benjamin lacks standing to pursue some of those claims, that
others fail as a matter of law, but that two claims may proceed beyond the pleadings. The Court
will, accordingly, GRANT in part and DENY in part R&A’s motion to dismiss.
I. BACKGROUND
A. Factual Background
The following facts derive from Benjamin’s complaint, documents incorporated into the
complaint, and matters of which the Court may take judicial notice.1 See Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); Trudeau v. FTC, 456 F.3d 178, 183 (D.C. Cir.
2006); EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997); Savignac
v. Jones Day, 486 F. Supp. 3d 14, 24 (D.D.C. 2020).
Benjamin owns a property in northeastern Washington, D.C., and has lived there for
more than 30 years. Dkt. 23 at 2 (Am. Compl. ¶ 6). In September 2009, she refinanced her
property and signed a promissory note (“note”) and deed of trust (“deed”) in exchange for a loan
of $226,597.00 from the lender Village Capital & Investment. Id.; Dkt. 32-4; Dkt. 32-5. Several
different entities claimed an interest in the loan in the ensuing years and played a role in the
1
Because the referenced court filings are public records the authenticity of which is not
disputed, the Court may take judicial notice of these records to reconstruct the course of the
litigation. Mushala v. US Bank, Nat’l Ass’n, No. 18-cv-1680, 2019 WL 1429523, at *3 n.3
(D.D.C. Mar. 29, 2019). The Court does not, however, rely on factual representations in these
filings for the truth of the matters asserted.
2
foreclosure action that followed. In 2011, Wells Fargo, claiming to have acquired both servicing
rights and ownership of the loan, declared the loan in default. Dkt. 23 at 2 (Am. Compl. ¶ 7).
Three years later, in 2014, Selene Finance LP (“Selene”), a subsidiary of Selene Holdings LLC,
acquired the right to service the loan. Id. (Am. Compl. ¶¶ 4, 8).
In November 2016, R&A filed a foreclosure action on behalf of Christiana Trust—a
division of Wilmington Savings Fund Society, FSB (“WSFS”)—as trustee for Sunset Mortgage
Loan Trust, Series 2014-2. Dkt. 32-1 (Compl. for Judicial Foreclosure); Dkt. 23 at 3 (Am.
Compl. ¶ 9). The foreclosure complaint, which was verified by a corporate representative,
represented that the named plaintiff was “the beneficiary of [the] Note secured by [Benjamin’s]
property.” Dkt. 32-1 at 2. Subsequently, R&A filed a motion to substitute, which affirmed that
“[a]t the time the . . . [foreclosure action] was filed, Christiana Trust was the proper [p]laintiff”
but that, “[through a series of assignments, Christiana Trust [had] transferred its rights and
interest in the Note and Deed of Trust . . . to Wilmington Savings Fund Society, FSB, d/b/a
Christiana Trust, as trustee for Normandy Loan Trust, Series 2017-2.” Dkt. 32-2 at 1. R&A,
accordingly, asked to substitute Wilmington Savings Fund Society at the named plaintiff, “in lieu
of Christiana Trust,” id. at 2; see also Dkt. 23 at 4 (Am. Compl. ¶ 14), and the Superior Court
granted that motion on May 25, 2018, Dkt. 26-1 at 4.
In the early stages of the foreclosure lawsuit, a foreclosure sale seemed likely. WSFS
filed a verified complaint at the beginning of the foreclosure action, representing that it held the
note to Benjamin’s loan and, as beneficiary of the deed, had the right to foreclose. Dkt. 32-1 at
2; Dkt. 23 at 3 (Am. Compl. ¶ 10). After WSFS filed the foreclosure action, Benjamin sought to
conduct a short sale on the property. Dkt. 23 at 3 (Am. Compl. ¶ 12). These attempts failed. Id.According to Benjamin, she “abided by all of Defendants’ requirements and found several
3
buyers who submitted contract[s], but Defendants caused the contracts . . . to fall through by,
among other things, not acting on the contracts and not communicating with” Benjamin to
explain why. Id. Benjamin also attempted to modify the terms of her mortgage payment plan by
submitting a loss mitigation application to the loan servicer, Selene, on October 29, 2018. Id. at
5 (Am. Compl. ¶ 19). It is unclear when Selene received this application.
In July 2018, R&A filed a motion for summary judgment in the foreclosure action, and
on October 31, 2019, the Superior Court granted summary judgment in favor of Wilmington
Savings Fund Society, FSB, d/b/a Christiana Trust, as trustee for Normandy Mortgage Loan
Trust, Series 2017-2, and entered a decree for the sale of the property. Dkt. 26-1 at 4–5; Dkt. 26-
2 (order granting summary judgment). Progress toward the foreclosure sale slackened, however,
when, less than a month later, Benjamin obtained counsel and moved to alter or amend the
Superior Court’s order for summary judgment. Dkt. 23 at 4 (Am. Compl. ¶ 15); Dkt. 26-1 at 5.
Benjamin argued that the order should be vacated because (a) R&A and WSFS “acted in bad
faith with respect to . . . Benjamin’s efforts to short-[sell] the property;” (b) R&A and WSFS
“did not hold a face-to-face meeting prior to filing the foreclosure action;” and (c) R&A and
WSFS “did not prove they were in possession of the [n]ote at the start of the foreclosure, or . . .
at any point during the foreclosure.” Dkt. 23 at 4 (Am. Compl. ¶ 15).
In December 2018, while Benjamin’s motion to amend was pending, Benjamin’s counsel
sent the loan servicer, Selene, a letter claiming “that there were errors on [Benjamin’s] account
and request[ing] information on the account.” Dkt. 23 at 4 (Am. Compl. ¶ 17). According to
Benjamin, Selene did not respond adequately to this letter. “Selene did not conduct a reasonable
investigation of [the] letter[,] . . . failed to make required corrections[,] and failed to provide all
of the information that [Benjamin’s counsel] requested.” Id. Benjamin contends that “Selene
4
did not provide th[is] information because . . . the information . . . would establish that Selene
had no right to collect the debt, Selene had no right to foreclose, and Selene had assessed
amounts on the account that were illegitimate.” Id. at 4–5 (Am. Compl. ¶ 17). Benjamin avers
that, as a result, she “was charged with interests, fees, costs[,] and other charges that should not
have been applied to the account.” Id. at 4 (Am. Compl. ¶ 17). In the same month, Benjamin’s
counsel also requested a copy of the note from Selene. Id. at 5 (Compl. ¶ 20). Selene provided
the note, but it was endorsed to the United States Department of Housing and Urban
Development (“HUD”), rather than any of the foreclosing entities. Id. Moreover, in January
2019, Selene allegedly advised Benjamin that Normandy Mortgage “had [held] no rights in [her]
debt [since] July 2018.” Id. (Compl. ¶ 18).
On February 22, 2019—while Benjamin’s motion to alter or amend the Superior Court’s
judgment and decree was still pending—“R&A, at the behest of Selene,” sent notice of a
scheduled foreclosure sale to Benjamin. Id. (Am. Compl. ¶ 19). Benjamin’s attorney responded
by warning Selene that the foreclosure sale was illegal because (1) Benjamin’s loss mitigation
application had not been processed, as required by RESPA; (2) the note that Selene had provided
to Benjamin’s counsel was endorsed to HUD, not any of the foreclosing entities; and (3) Selene
had represented that the trust for which WSFS was acting as trustee, Normandy Mortgage, no
longer had any interest in Benjamin’s debt. Id. (Am. Compl. ¶ 20). When contacted by
Benjamin’s counsel, Selene confirmed that it had received the letter, as well as Benjamin’s loss
mitigation request in October 2018, despite not responding to the latter, but it “would not agree
to cancel the foreclosure sale.” Id. (Am. Compl. ¶ 21).
After the parties finished briefing the motion to alter or amend, the Superior Court
granted Benjamin’s motion on March 19, 2019, and vacated the foreclosure order to “allow[] the
5
issues presented in [Benjamin’s] [m]otion to be more thoroughly explored.” Dkt. 26-3 at 2; Dkt.
23 at 6 (Am. Compl. ¶ 22); Dkt. 26-1 at 5. 2 Benjamin subsequently filed a motion to dismiss
based on the same arguments she had raised with WSFS and Selene: “(a) Defendants were not in
possession of the [n]ote at the commencement of the foreclosure action[;] (b) the copy of the
[n]ote that Defendants were currently trying to enforce was endorsed to HUD and could not be
enforced by Defendants[;] (c) Defendants failed to establish they were currently in possession of
the original [n]ote[;] and (d) Selene admitted that Normandy Mortgage . . . ha[d] no current
interest in the debt.” Dkt. 23 at 6 (Am. Compl. ¶ 23) (emphasis omitted); Dkt. 26-1 at 6–7.
WSFS opposed the motion to dismiss. Dkt. 32-3; Dkt. 23 at 6 (Am. Compl. ¶ 24). Although
Benjamin’s complaint in the present action does not describe the outcome of that motion, the
Superior Court docket shows that the court denied Benjamin’s motion to dismiss in an oral ruling
on July 19, 2019, after which the parties entered mediation. Dkt. 26-1 at 7.
Benjamin’s complaint in this action offers only a few further details as to how the
foreclosure proceedings unfurled while the parties were in mediation. Evidently, the parties
continued to debate which entity held the note to Benjamin’s loan. In a letter dated August 25,
2019, Benjamin’s attorney informed Selene that an entity identified as SC Park Lane II claimed
to have acquired the loan. Dkt. 23 at 7 (Am. Compl. ¶ 25). On October 16, 2019, shortly after
Benjamin filed her initial complaint in this case, Selene sent a letter to Benjamin’s attorney that
2
Benjamin alleges that the Superior Court found that “the Defendants acted in bad faith.” Dkt.
23 at 6 (Am. Compl. ¶ 22). That allegation grossly misstates what the Superior Court actually
held; it merely concluded that “the facts of this case reflect diligent efforts on the part of the
[Benjamin] to resolve this matter” and that the motion to alter or amend should be granted to
permit “the issues presented in [Benjamin]’s Motion to be more thoroughly explored.” Dkt. 26-3
at 2. At the end of the day, the Superior Court took no action to sanction R&A for any bad-faith
conduct, and in an oral ruling the court denied Benjamin’s motion to dismiss the foreclosure
action for lack of standing. See Dkt. 26-1 at 7.
6
included a copy of the note in its possession endorsed to the Secretary of HUD. Dkt. 23 at 7
(Am. Compl. ¶ 26). In response, Benjamin’s attorney requested that “Selene confirm that the
copy of the [n]ote it provided with its October 16th letter was accurate[] and also requested the
identity of the owner of the loan and the master servicer of the loan.” Id. (Am. Compl. ¶ 28). On
January 2, 2020, Selene responded by identifying a trust called Aero Mortgage Loan Trust 2017-
1 as the owner of the note (rather than SC Park Lane II). Id. (Am. Compl. ¶ 29). Selene did not
confirm whether the copy of the note it provided was accurate. Id.B. Procedural Background
After Benjamin filed this action on October 8, 2019, R&A, Selene, and WSFS moved to
dismiss for failure to state a claim. Dkt. 20; Dkt. 22. Benjamin amended her complaint in
February 2020, adding further factual allegations but maintaining the same causes of action.
Dkt. 23; Dkt. 23-1. In her amended complaint, Benjamin alleged that R&A and Selene violated
the FDCPA (Count One), Dkt. 23 at 7–9 (Am. Compl. ¶¶ 30–40); that Selene violated RESPA
(Count Two), id. at 9–13 (Am. Compl. ¶¶ 41–73); and that Selene and WSFS violated the Equal
Credit Opportunity Act (Count Three), the Truth in Lending Act (Count Four), the Mortgage
Lender and Broker Act (Count Five), and the District of Columbia Consumer Protection
Procedures Act (Count Six), id. at 13–18 (Am. Compl. ¶¶ 74–110). The Court need not consider
most of these claims, however, because Benjamin voluntarily dismissed her claims against
Selene, Dkt. 29, and WSFS, Dkt. 33, in the summer of 2020. Thus, only the claims against R&A
remain, and all of those claims are found in Count One of the amended complaint.3
In Count One, Benjamin alleges that R&A violated the FDCPA in seven different
respects. First, Benjamin alleges that Selene and WSFS are in fact the same entity, Dkt. 23 at 3
3
The Court will, accordingly, dismiss Counts Two through Six.
7
(Am. Compl. ¶ 9), and that R&A violated the FDCPA by bringing the foreclosure action in the
name of WSFS, Sunset Mortgage Loan Trust, and Normandy Mortgage Loan Trust, “instead of
using [R&A’s and Selene’s] own names in their collection of and/or attempts to collect on the
debt,” id. at 7 (Am. Compl. ¶ 32) (citing 15 U.S.C. § 1692e(14)). Second, Benjamin claims that
R&A unlawfully notified her directly of the foreclosure sale in February 2019, instead of through
her lawyer, even though R&A “knew she [had been] represented by an attorney since November
28, 2018.” Id. at 7–8 (Am. Compl. ¶ 33) (citing 15 U.S.C. § 1692c(a)(2)). Third, she alleges
that R&A “violated [the FDCPA] by threatening to sell [Benjamin’s] property at a foreclosure
sale when [the law firm] knew [it] had no right to conduct the sale.” Id. at 8 (Am. Compl. ¶ 34)
(citing 15 U.S.C. § 1692e(5)). Fourth, she avers that R&A made misrepresentations to the
Superior Court regarding Benjamin’s attempted short-sale “so that [R&A and Selene] could
foreclose on the [Benjamin’s] [p]roperty and obtain a deficiency judgment against” her. Id.
(Am. Compl. ¶ 35) (citing 15 U.S.C. § 1692e(10)). Fifth, she alleges that R&A violated the
FDCPA “by misrepresenting the legal status of the debt with respect to [the deed], HUD
regulation, [and] RESPA loss mitigation requirements and the District of Columbia’s
requirement that Defendants have clean hands and act in good faith in the loss mitigation
process.” Id. (Am. Compl. ¶ 36) (citing 15 U.S.C. § 1692e(2)). Sixth, Benjamin claims that
R&A collected or attempted to collect amounts on the debt “that were illegal or unreasonable
(i.e., foreclosure related costs and fees, etc. under the terms of the debt or District of Columbia
law).” Id. (Am. Compl. ¶ 37) (citing 15 U.S.C. §§ 1692e(2), f(1)). Finally, she alleges, with no
explanation, that both Sunset Mortgage and Normandy Mortgage are “sham entit[ies]” that have
either never existed or are defunct, id. at 3–4 (Am. Compl. ¶¶ 9, 14), and that R&A violated the
FDCPA by “falsely representing that [Sunset Mortgage and Normandy Mortgage] were real
8
entities that ever had any rights in the debt, by falsely representing that there were valid allonges
and endorsements on the [n]ote that authorized Defendants to foreclose, and [by] falsely
representing a right to maintain the foreclosure action under the entity Normandy Mortgage . . .
when Selene has openly acknowledged that Normandy Mortgage . . . has no present rights in the
debt,” id. at 8–9 (Am. Compl. ¶ 38) (citing 15 U.S.C. §§ 1692e(2), (10)).
Benjamin seeks several forms of relief. She asks that the Court award $100,000 in actual
damages (although that plea includes damages alleged not only in Count One, but in Counts Two
through Six). Id. at 18 (Am. Compl. Prayer for Relief). She also seeks statutory damages under
the FDCPA, attorneys’ fees and costs, and any such other legal and equitable relief as the Court
deems equitable and just. Id.; see 15 U.S.C. § 1692k(a).
R&A moved to dismiss on March 6, 2020, Dkt. 25, and Benjamin opposed that motion
on July 7, 2020, Dkt. 32. Then, on July 27, 2020, Benjamin filed a motion for partial summary
judgment, Dkt. 34, which the Court denied for failure to comply with the Court’s standing order
requirement that parties participate in a pre-motion conference, Minute Order (Aug. 5, 2020).
On August 19, 2020, the Court held a status conference, at which the parties explained that “the
Superior Court case[,] for the most part[,] ha[d] been resolved in a settlement” and that Benjamin
would “pay the underlying loan on that case.” Hrg. Tr. (Rough at 3). At that hearing, the Court
stayed the case while Benjamin and R&A attempted to resolve their disputes. Minute Entry
(Aug. 19, 2020). After those discussions and subsequent discussions did not resolve the parties’
remaining dispute, Dkt. 36; Oct. 15, 2020 Hrg. Tr. (Rough at 11); Minute Entry (Oct. 15, 2020),
the parties informed the Court that they wished to proceed with litigation, Dkt. 39. The Court,
accordingly, ordered that R&A file its reply, if any, on or before December 18, 2020. Minute
9
Order (Dec. 11, 2020). To date, R&A has failed to reply, leaving unaddressed those arguments
raised for the first time in Benjamin’s opposition.
II. ANALYSIS
A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the complaint. When
ruling on such a motion, the Court “must accept the complaint’s allegations as true and draw all
reasonable inferences in favor of the non-moving party.” Gordon v. United States Capitol
Police, 778 F.3d 158, 163–64 (D.C. Cir. 2015); see also Erickson v. Pardus, 551 U.S. 89, 94
(2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56 (2007)). “To survive a motion
to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’ A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550
U.S. at 570) (citation omitted).
A. Standing
Before turning to R&A’s motion to dismiss, the Court must determine whether Benjamin
has standing to bring her remaining claims, all of which arise from alleged violations of the
FDCPA. “To state a case or controversy under Article III, a plaintiff must establish standing.”
Ariz. Christian Sch. Tuition Org. v. Winn, 563 U.S. 125, 133 (2011). Demonstrating standing, in
turn, requires that a plaintiff show that she has “(1) suffered an injury in fact, (2) that is fairly
traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a
favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). “The
plaintiff, as the party invoking federal jurisdiction, bears the burden of establishing these
elements,” id. (citing FW/PBS, Inc. v. Dallas, 493 U.S. 215 (1990)), and “the manner and degree
10
of evidence required” to support each element depends on the stage of litigation, Lujan v. Defs.
of Wildlife, 504 U.S. 555, 561 (1992). At the pleading stage, “general factual allegations of
injury resulting from the defendant’s conduct may suffice.” Id. But because “standing is not
dispensed in gross,” Town of Chester v. Laroe Estates, Inc., 137 S. Ct. 1645, 1650 (2017)
(quotation marks and citation omitted), a plaintiff must “demonstrate standing for each claim
[s]he seeks to press,” DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 335 (2006), and “for each
form of relief sought,” Friends of the Earth, Inc. v. Laidlaw Env’t Servs., Inc., 528 U.S. 167, 185
(2000).
“It is settled that Congress cannot erase Article III’s standing requirements by statutorily
granting the rights to sue to a plaintiff who would not otherwise have standing.” Raines v. Byrd,
521 U.S. 811, 820 n.3 (1997). Thus, to establish standing, a plaintiff must show “a concrete
injury even in the context of a statutory violation.” Spokeo, 136 S. Ct. at 1549. “[C]ertain harms
readily qualify as concrete injuries under Article III. The most obvious are traditional tangible
harms, such as physical harms and monetary harms.” TransUnion LLC v. Ramirez, 141 S. Ct.
2190, 2204 (2021). But “[v]arious intangible harms can also be concrete. Chief among them are
injuries with a close relationship to harms traditionally recognized as providing a basis for
lawsuits in American courts,” including but not limited to “reputational harms, disclosure of
private information, and intrusion upon seclusion.” Id.Here, Benjamin argues that R&A’s alleged violations of the FDCPA caused her “to
endure damages including out-of-pocket costs, legal fees defending the illegal foreclosure, fear
of losing the [p]roperty, worry about where her loved ones will live, anxiety about being kicked
out and becoming homeless, very heavy stress, severe headaches and stomach aches, sleepless
nights, eating disorders, excessive worry, and other mental and emotional distress.” Dkt. 23 at 9
11
(Am. Compl. ¶ 39). R&A has not challenged Benjamin’s standing, but because standing is
rooted in Article III’s requirements, the Court must “satisfy itself of its authority to hear the
case.” Prakash v. Am. Univ., 727 F.2d 1174, 1179 (D.C. Cir. 1984). At this stage in the
litigation, “the Court must assume that [Benjamin] will prevail on the merits” for the purpose of
evaluating standing. Env’t Integrity Project v. McCarthy, 139 F. Supp. 3d 25, 37 (D.D.C. 2015);
see TransUnion, 141 S. Ct. at 2208 (“[a]ssuming that the plaintiffs [were] correct” on the merits
for purposes of standing analysis).
This Court recently addressed standing to sue under the FDCPA in Magruder v. Capital
One, National Association. In that case, the plaintiff alleged, among other things, that the
defendant violated the FDCPA by “falsely representing that a debt was owed” and that, as a
result, he sustained “economic damages and emotional/mental distress damages, including . . .
out-of-pocket expenses, fear, embarrassment, humiliation, frustration, anger, headaches,
sleeplessness, [and] severe emotional and mental distress.” 2021 WL 1999544, at *2, *4
(D.D.C. May 19, 2021). As the Court explained, “[i]n assessing whether an emotional harm can
satisfy the Article III injury-in-fact requirement, the Court must . . . consider both ‘history and
the judgment of Congress.’” Id. at *5 (quoting Spokeo, 136 S. Ct. at 1549). The Court observed:
As to history, “it is instructive to consider whether an alleged intangible harm
has [a] close relationship to a harm that has traditionally been regarded as
providing a basis for a lawsuit in English or American courts.” And as to
Congress, the Court must consider whether Congress has permissibly sought to
“elevate to the status of legally cognizable injuries concrete de facto injuries that
were previously inadequate in law,” . . . or, instead, has impermissibly sought to
“dispense with the constitutional baseline of a concrete injury in fact.”
Id. at *3 (first quoting Spokeo, 136 S. Ct. at 1549, and then quoting Hancock v. Urb. Outfitters,
Inc., 830 F.3d 511, 514 (D.C. Cir. 2016)). The Court then noted that Congress enacted the
FDCPA, in part, to remedy “the suffering and anguish” that “unscrupulous debt collectors”
12
cause. Id. at *7 (quoting S. Rep. 95-382, at 2 (1977)). And the Court further explained that the
“intangible harm” of “being subjected to attempts to collect debts not owed” “has a close
relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in
English or American courts[:] . . . common-law unjustifiable-litigation torts.” Id. at *8 (quoting
Demarais v. Gurstel Chargo, P.A., 869 F.3d 685, 691–92 (8th Cir. 2017)).
Here, as in Magruder, many of R&A’s alleged violations of the FDCPA implicate the
core kinds of harm that the Act sought to remedy. Benjamin avers that R&A “threaten[ed] to sell
[her] property at a foreclosure sale when [it] knew [that it] had no right to conduct the sale,” Dkt.
23 at 8 (Am. Compl. ¶ 34); misrepresented its actions with respect to the short sale to obtain
summary judgment and a decree for the sale of the property, id. (Am. Compl. ¶ 35);
“misrepresent[ed] the legal status of the debt” despite failure to comply with its legal obligations
in the loss mitigation process; id. (Am. Compl. ¶ 36); attempted “to collect amounts on the debt
that were illegal or unreasonable,” id. (Am. Compl. ¶ 37); and falsely represented that Sunset
Mortgage and Normandy Mortgage “were real entities that ever had any rights in the debt,” id.(Am. Compl. ¶ 38). These actions, according to Benjamin, all violate the FDCPA’s prohibition
against using “false, deceptive, or misleading representation or means in connection with the
collection of any debt.” 15 U.S.C. § 1692e; see Dkt. 23 at 8 (Am. Compl. ¶¶ 34–38). Because
this provision of the FDCPA seeks to remedy a harm closely related to one recognized at
common-law (i.e., wrongful-litigation torts); because “mental distress” falls squarely within the
type of harm Congress sought to redress; and because she also alleges tangible harms (i.e.,
interests, fees, and costs), her asserted injuries are sufficiently concrete to pass Article III
scrutiny.
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Benjamin’s allegations stumble, however, with respect to two of her remaining FDCPA
claims. First, Benjamin avers that “by using the names WSFS, Sunset Mortgage . . . and
Normandy Mortgage . . . instead of using [R&A’s and Selene’s] names in [the] collection of
and/or attempts to collect on the debt,” Dkt. 23 at 7 (Am. Compl. ¶ 32), R&A violated 15 U.S.C.
§ 1692e(14), which prohibits debt collectors from using “any business, company, or organization
name other than the true name of the debt collector’s business, company, or organization” in the
course of debt collection. But Benjamin offers no explanation as to how R&A’s unremarkable
decision to bring suit in the name of its client, rather than itself, caused her harm. Even
assuming (solely for the sake of argument) that R&A violated FDCPA procedure by bringing
suit in the name of its client, Benjamin’s complaint does not allege any facts that plausibly show
that the failure to add R&A as a plaintiff in the foreclosure action caused her some tangible
harm, such as “out-of-pocket costs [and] legal fees,” or any intangible harm, such as emotional
distress. Id. at 8 (Am. Compl. ¶ 39). Moreover, applying the Spokeo framework, the Court is
unaware of any common law analog for the “injury” Benjamin alleges—that is, the failure to join
a law firm representing an opposing party, even a “debt collection law firm,” Dkt. 23 at 2 (Am.
Compl. ¶ 3), as a plaintiff.
Read liberally, Benjamin’s complaint might fault R&A, not only for failing to bring the
foreclosure action in its own name, but also for failing to bring the action in Selene’s name.
Such an allegation would presumably rest on Benjamin’s contention that “Selene is operating
under the name WSFS to foreclose on the [p]roperty,” id. at 3 (Am. Compl. ¶ 9), and that the
trusts on behalf of whom WSFS brought suit are “sham entit[ies] that either do[] not exist or
[are] defunct,” id. at 3–4 (Am. Compl. ¶¶ 9, 14). But even this generous reading of the
complaint does not rescue her claim. Setting aside the wholly conclusory nature of Benjamin’s
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allegations, the Court cannot discern how omitting Selene from the caption of its complaint
caused her any cognizable harm. To be sure, bringing suit on behalf of a “sham entit[ies]” or,
more precisely, on behalf of entities that do not own the loan at issue, could cause a cognizable
injury, such as unnecessary litigation expenses or even emotional distress. And, indeed,
Benjamin alleges separate claims that assert just that injury, averring, for example, that R&A
“falsely represent[ed] that Sunset Mortgage Loan Trust, Series 2014-2 was in possession and/or
the holder of the Note at the time the foreclosure action was filed.” Id. at 8 (Am. Compl. ¶ 38).
Benjamin’s complaint, however, fails to allege any factual basis that would support a plausible
inference that R&A’s failure to add Selene, the loan servicer, as a foreclosure plaintiff caused her
to suffer a cognizable harm. Such an injury might exist (at least in theory), but “[t]he plaintiff, as
the party invoking federal jurisdiction, bears the burden of establishing the[] elements” of
standing, Spokeo, 136 S. Ct. at 1547, and Benjamin’s complaint says nothing about any such
injury.
Second, Benjamin alleges that R&A impermissibly communicated with her directly to
notify her of the scheduled foreclosure sale. According to Benjamin, R&A’s action violated the
FDCPA provision that “a debt collector may not communicate with a consumer in connection
with the collection of any debt . . . if the debt collector knows the consumer is represented by an
attorney with respect to such debt.” 15 U.S.C. § 1692c(a)(2); Dkt. 23 at 7–8 (Am. Compl. ¶ 33).
This claims is of dubious merit: R&A sent notice to Benjamin in compliance with the Superior
Court’s order—of which this Court takes judicial notice—directing that “[t]he Trustees
[including the “Substitute Trustees”] mail notice of the time, place, and terms of the auction to
all . . . owners of record[] and occupants[] by certified mail, return receipt requested and by first
class main, no more than 30 days and not less than 10 days[] before the auction date.” Dkt. 26-2
15
at 5. As a result, it is difficult to reconcile Benjamin’s claim with the FDCPA’s exception to the
ban on direct communications where the communication is made with “the express permission of
a court of competent jurisdiction.” 15 U.S.C. § 1692c(a).
But even assuming for standing purposes that R&A’s court-compelled notice constituted
a violation of the FDCPA, Benjamin fails to allege any harm—tangible or intangible—that she
suffered as a result of the alleged violation and fails to identify any redress the Court might grant.
Receiving direct notice of a foreclosure sale from a debt collector in compliance with a court
order, moreover, does not implicate the kind of abusive and deceptive debt collection practices
that Congress targeted in the FDCPA, and it does not resemble any injury traditionally
recognized at common law, such as invasion of privacy. See, e.g., Hunstein v. Preferred
Collection & Mgmt. Servs., Inc., 994 F.3d 1341, 1347 (11th Cir. 2021). As a result, Benjamin
has failed to allege facts sufficient to supporting her standing to pursue this claim.
* * *
The Court will, accordingly, dismiss Benjamin’s FDCPA claims relating to R&A’s
failure to bring the foreclosure action in its own name, or in Selene’s name, and R&A’s direct
communication with Benjamin regarding the scheduled foreclosure for lack of Article III
standing.
B. Failure to State a Claim
Each of Benjamin’s remaining FDCPA claims derives from 15 U.S.C. § 1692e, which
includes three elements. To recover, “[a] private plaintiff . . . must establish that: (1) the
defendant is a ‘debt collector[;’] (2) who took an action ‘in connection with the collection of a[]
debt[;’] and (3) the action violated the substantive proscriptions in [Section 1692e’s] provisions.”
16
Mohamed v. Select Portfolio Servicing, Inc., 215 F. Supp. 3d 85, 95 (D.D.C. 2016) (quoting
Lipscomb v. The Raddatz Law Firm, PLLC, 109 F. Supp. 3d 251, 256 (D.D.C. 2015)).
R&A first argues that Benjamin’s complaint fails to state a claim because it ignores the
first of these elements—i.e., it contains “no factual allegations that Rosenberg is a debt collector
under the FDCPA.” Dkt. 26 at 4. Although it is true that the complaint fails to use those precise
words—it does not allege that R&A is a “debt collector under the FDCPA”—it does allege that
“R&A is a debt collection law firm . . . that specializes in the collection of mortgage debts for
loan service[r]s and mortgage lenders.” Dkt. 23 at 2 (Am. Compl. ¶ 3). For purposes of the
FDCPA, a “debt collector” is
any person who uses any instrumentality of interstate commerce or the mails in
any business the principal purpose of which is the collection of any debts, or
who regularly collects or attempts to collect, directly or indirectly, debts owed
or due or asserted to be owed or due another.
15 U.S.C. § 1692a(6). Reasonably construed, Benjamin’s complaint easily meets that standard.
The complaint alleges that R&A is engaged in the business of the collection of mortgage debts
owed or due to loan services and mortgage lenders. That conclusion, moreover, is consistent
with Supreme Court precedent, which recognizes that the FDCPA applies to lawyers who
regularly engage in debt collection, including through litigation. Heintz v. Jenkins, 514 U.S. 291,
294 (1995).
R&A does not dispute that Benjamin has alleged facts sufficient to satisfy the second
element of a Section 1692e claim—i.e., that it took actions in connection with the collection of a
debt. This, then, leaves the third element: whether Benjamin has plausibly alleged that R&A
“violated the substantive proscriptions” of Section 1692e. In addressing this question, the Court
will consider each of Benjamin’s remaining claims in turn.
17
1. Allegation that R&A Misrepresented Who Held the Note
Benjamin claims that R&A falsely represented that Sunset Mortgage, and later Normandy
Mortgage, “were real entities that . . . had . . . rights in the debt” in violation of 15 U.S.C.
§§ 1692e(2) & 1692e(10). Dkt. 23 at 8–9 (Am. Compl. ¶ 38). R&A responds that (1) Benjamin
“did not include any evidence to support her allegation that [R&A] misrepresented the identity of
the noteholder;” (2) Benjamin “did not provide a copy of the allonges that she alleges are invalid
or the documents that she contends do not contain valid endorsements;” and (3) Benjamin raised
the issue in the underlying foreclosure case, and so the issue would more properly be decided by
the Superior Court. Dkt. 26 at 8.
Although Benjamin’s pleadings are not the picture of clarity, she has alleged enough to
survive a motion to dismiss as to this claim. She alleges that R&A brought suit using a
complaint verified by someone who “had no personal knowledge” of whether WSFS’s associated
trust held the note and who falsely represented that the trust Sunset Mortgage held the note. Dkt.
23 at 3 (Am. Compl. ¶ 10). On Benjamin’s telling, neither Sunset Mortgage nor Normandy
Mortgage (which was added to the foreclosure action in May 2018) held any rights in the note
that was secured by her property. Of course, merely alleging that a foreclosure plaintiff did not
have standing to initiate a foreclosure action is not enough to state a claim under Section 1692e.
Several courts have held that a failure to “produce adequate proof” of the foreclosing entity’s
ownership of a debt does “not suffice to state a claim for deceptive conduct under the FDCPA.”
Mushala, 2019 WL 1429523, at *7 n.9 (emphasis added) (quotation marks and citation omitted);
accord Cooke v. Carrington Mortg. Servs., No. 18-cv-205, 2018 WL 6323116, at *5 (D. Md.
Dec. 3, 2018) (citing cases).
18
But Benjamin has done more than allege a mere failure to prove the foreclosure
plaintiffs’ entitlement to foreclose: she also alleges that, at various points during the pendency of
the foreclosure action, “Selene and WSFS could not enforce the Note because it was endorsed”
to another entity, id. at 7 (Am. Compl. ¶ 27); see id. (Am. Compl. ¶ 25), and that R&A continued
to pursue the foreclosure action even after it was put on notice that they “had no right to
foreclose on the [p]roperty,” id. at 4 (Am. Compl. ¶ 16). That is sufficient to state a claim under
Section 1692e. R&A’s response that Benjamin failed to attach any supporting evidence is a
matter for another time; at least at this stage of the proceeding, Benjamin had no obligation to
proffer the evidence that she contends will eventually support these factual allegations.
Finally, the Court is unpersuaded that Benjamin’s claim fails because she raised the same
contentions in the foreclosure proceeding. Dkt. 26 at 8. To be sure, the Superior Court’s
consideration of the same contention in a prior proceeding might, under other circumstances,
raise the specter of res judicata or collateral estoppel barring Benjamin’s claims: this Court must
“extend to [Superior Court] judgments the same preclusive effect those judgments would receive
in the [District of Columbia],” Bode & Grenier, LLP v. Knight, 808 F.3d 852, 857 (D.C. Cir.
2015), and, under D.C. law, “a final judgment on the merits bars relitigation in a subsequent
proceeding of the same claim between the same parties or their privies,” as well as issues that
were not actually litigated in the first action but that “ar[ose] out of the same cause of action” and
“could have been litigated,” EDCare Mgmt., Inc. v. DeLisi, 50 A.3d 448, 451 (D.C. 2012)
(quotation marks and citations omitted). An action “arise[s] out of the same cause of action” if it
stems from “a common nucleus of operative facts,” Patton v. Klein, 746 A.2d 866, 870 (D.C.
1999) (quotation marks and citation omitted), and, here, Benjamin’s FDCPA claim—premised
on the foreclosure plaintiffs’ purported lack of standing and R&A’s alleged misrepresentations to
19
the Superior Court—undoubtedly shares a common nucleus of operative facts with the claims
and defenses litigated during the foreclosure action. Indeed, by denying Benjamin’s motion to
dismiss, the Superior Court (at least arguably) rejected many of the same contentions Benjamin
raises now in support of her FDCPA claims. But any effort to invoke res judicata in this context
faces an insurmountable obstacle: the foreclosure action in the Superior Court ended pursuant to
a voluntary dismissal without prejudice, Praecipe of Dismissal, Wilmington Sav. Fund Soc’y,
FSB v. Benjamin, 2016 CA 008365 R(RP) (D.C. Super. Ct. Sept. 16, 2020). Under D.C. law,
“[t]he crucial element of res judicata is a final judgment on the merits . . . and it is beyond
dispute that a dismissal without prejudice does not determine the merits.” Interdonato v.
Interdonato, 521 A.2d 1124, 1131 n.11 (D.C. 1987).
The Court will, accordingly, deny R&A’s motion to dismiss Benjamin’s FDCPA claim
relating to R&A’s allegedly false representations regarding the proper parties to the foreclosure
action.
2. Allegation that R&A Misrepresented Aspects of the Short-Sale
Benjamin also contends that R&A misrepresented events relating to her attempted short-
sale, in violation of 15 U.S.C. § 1692e(10)’s prohibition against “[t]he use of any false
representation or deceptive means to collect or attempt to collect any debt.” Dkt. 23 at 8 (Am.
Compl. ¶ 35). R&A responds that this claim should be dismissed because the complaint (1)
“does not provide any facts or supporting documentation concerning [Benjamin’s] attempt to
complete a short sale;” (2) “does not allege that [the offered contracts she received] were for an
amount acceptable to the noteholder, or that the noteholder ever agreed to a short-sale in the first
place;” and (3) “does not include any factual allegations regarding what [R&A] allegedly
misrepresented about the short-sale effort.” Dkt. 26 at 6–7.
20
Although her allegations are thin, the Court again concludes that Benjamin has pled
sufficient facts to survive a motion to dismiss. Benjamin alleges that “Defendants agreed to
allow [her] to [conduct] a short-sale of the [p]roperty;” that she “abided by all of Defendants’
requirements and found several buyers who submitted contract[s];” and that “Defendants caused
the contracts . . . to fall through by, among other things, not acting on the contracts and not
communicating with [Benjamin] [as to] the reason why.” Dkt. 23 at 3 (Am. Compl. ¶ 12). Then,
Benjamin alleges, “[a]fter sabotaging . . . Benjamin’s efforts . . . R&A misrepresented to the
Superior Court that it was . . . Benjamin’s fault that the short-sale was not completed.” Id. at 4
(Am. Compl. ¶ 13). According to Benjamin, these misrepresentations allowed “Defendants [to]
obtain[] summary judgment on the false basis that the Defendants operated in good faith to
process the short-sale and that Plaintiff failed to find an acceptable buyer.” Id.
The Court concludes that Benjamin has plausibly alleged a “false representation or
deceptive means to collect or attempt to collect any debt,” 15 U.S.C. § 1692e(10)—i.e., that
R&A misrepresented the short-sale process to the Superior Court in order to speed along the
foreclosure proceedings. Benjamin will have to provide far more detail to support her
allegations in future phases of the litigation. And her claim may face other obstacles as well.
For example, although the FDCPA applies to lawyers who regularly engage in debt-collection
litigation, Heintz, 514 U.S. at 299, it is far from clear whether the Act dictates what a lawyer or
party may, may not, or must say to a court in a foreclosure proceeding. That question was not
addressed in Heintz, which involved a letter that was sent to the plaintiff by litigation counsel for
a bank, which allegedly included a false representation about the amount due on the debt. Id. at
293. Nor is the Court prepared to address that question in the present context, absent briefing
21
and argument from the parties. For now, the Court merely rejects the arguments that R&A raised
in its motion to dismiss.
The Court will, accordingly, deny R&A’s motion to dismiss Benjamin’s FDCPA claim
relating to R&A’s purported misstatements and omissions about her efforts to consummate a
short sale.
3. Allegation that R&A Misrepresented the Debt by Collecting Illegal Fees
Benjamin further alleges that R&A collected or attempted “to collect amounts on the debt
that were illegal or unreasonable (i.e.[,] foreclosure[-]related costs and fees),” Dkt. 23 at 8 (Am.
Compl. ¶ 37). In doing so, she claims that R&A ran afoul of two provisions in the FDCPA:
(1) Section 1692e’s prohibition against making false representations as to the “character, amount,
or legal status of any debt” or “compensation which may be lawfully received,” 15 U.S.C.
§ 1692e(2), and (2) Section 1692f’s prohibition against collecting “any amount (including any
interest, fee, charge, or expense incidental to the principal obligation) unless such amount is
expressly authorized by the agreement creating the debt or permitted by law,” id. § 1692f(1).
R&A, for its part, argues that the complaint includes “no allegations that [it] . . . was actively
attempting to collect on any foreclosure[-]related costs and fees.” Dkt. 26 at 7. To the extent the
allegation refers to the 2016 filing of the foreclosure action, R&A further argues, this claim is
time barred, and, to the extent it refers to the scheduled foreclosure sale, R&A was acting
pursuant to a valid court order. Id. at 8.
The Court agrees that Benjamin has not pled sufficient facts to support this claim.
Although Benjamin alleges that “Selene . . . failed to make required corrections” to her account
and that, as a result, she “was charged with interest, fees, costs and other charges that should not
have been applied to the account,” Dkt. 23 at 4 (Am. Compl. ¶ 17), she does not allege that R&A
22
played any role in that alleged misconduct. Moreover, to the extent that Benjamin intends to
allege that R&A brought suit on behalf of the incorrect entities and thereby sought amounts not
authorized by any valid note, that claim merely repeats the claim (which the Court has already
permitted to proceed) that R&A misrepresented that its clients held the note to her debt. Finally,
to the extent Benjamin intends to allege that R&A sought to recover amounts such as interest or
attorneys’ fees that were unreasonable or beyond the scope of relief authorized by the loan
documents, that claim cannot go forward because she has failed to allege any non-conclusory
facts in support of that allegation. As a result, her complaint does not “possess enough heft to
show that [she] is entitled to relief,” Twombly, 550 U.S. at 557 (quotation marks and alterations
omitted).
Accordingly, the Court will dismiss Benjamin’s FDCPA claim relating to R&A’s alleged
attempts to collect “illegal or unreasonable” fees or costs, id. at 8 (Am. Compl. ¶ 37).
4. Allegation that R&A Misrepresented Compliance with Loss Mitigation
Benjamin claims that R&A misrepresented the status of her debt in another way as well:
by failing to comply with requirements set forth in the deed to her loan, regulations, RESPA, and
other D.C. law, Dkt. 23 at 8 (Am. Compl. ¶ 36), including loss mitigation requirements.
Benjamin does not claim that these shortcomings themselves violated the FDCPA; rather, she
contends that R&A misrepresented its clients’ non-compliance, and this misrepresentation
constituted an FDCPA violation. R&A argues in response that Benjamin “fails to provide any
evidence or any specific allegations of how [R&A] allegedly misrepresented the legal status of
the debt.” Dkt. 26 at 7.
Although Benjamin was not required to marshal her evidence at the pleading stage, the
Court agrees that her complaint is deficient. Notably, beyond the alleged misrepresentations that
23
the Court has already concluded survive R&A’s motion to dismiss, the complaint provides no
factual allegations elucidating this claim. It does not identify what specific misrepresentations
R&A allegedly made, when and to whom it made those misrepresentations, or how they caused
Benjamin compensable injury. And this section of Benjamin’s complaint is not only conclusory,
it is too vague to permit R&A to offer a considered response. One is simply left to guess what
“HUD regulations” or D.C. law requirements for “clean hands” or “good faith” Benjamin has in
mind. More is required to state a claim in federal court. See Iqbal, 556 U.S. at 678.
The Court will, accordingly, dismiss Benjamin’s FDCPA claim relating to R&A’s
alleged misrepresentations concerning “compliance with DOT, HUD regulations, RESPA loss
mitigation requirements[,] and District of Columbia’s requirement that Defendants have clean
hands and act in good faith in the loss litigation process,” Dkt. 23 at 8 (Am. Compl. ¶ 36).
5. Allegation that R&A Threatened to Take Action that Could Not Legally Be Taken
Finally, Benjamin alleges that R&A’s notification of the foreclosure sale violated 15
U.S.C. § 1692e(5), which prohibits debt collectors from threatening “to take any action that
cannot legally be taken.” Dkt. 23 at 8 (Am. Compl. ¶ 34). In particular, she contends that R&A
“threaten[ed] to sell [her] property at a foreclosure sale when [it] knew [that it] had no right to
conduct the sale.” Id. R&A responds that because it “was operating pursuant to a court order
that specifically granted judgment,” its actions with respect to the foreclosure sale could not have
contravened the FDCPA. Dkt. 26 at 6.
The Court agrees with R&A. As the complaint acknowledges, R&A notified Benjamin
of the scheduled foreclosure sale only after obtaining the Superior Court’s order and before that
order was vacated. Dkt. 23 at 5 (Am. Compl. ¶ 19). To be sure, the complaint contends that
R&A “obtained summary judgment [based] on misrepresentations to the Superior Court.” Id.
24
But on that theory, it is R&A’s underlying misrepresentations that violated the FDCPA, not the
actions that followed in compliance with the court order. Section 1692e(5) precludes actions
“that cannot legally be taken.” But an action taken in compliance with an order issued by a court
of competent jurisdiction is lawful unless and until the order is modified or set aside. And, once
again, to the extent Benjamin’s claim is premised on R&A’s alleged misrepresentations
regarding the lawful note holder and her efforts to effect a short sale, her claim merely repeats
the two claims that the Court has already declined to dismiss.
The Court will therefore dismiss Benjamin’s FDCPA claim based on R&A’s “threat[]” to
sell her property pursuant to the Superior Court’s foreclosure decree, Dkt. 23 at 8 (Am. Compl.
¶ 34).
CONCLUSION
The Court, accordingly, will GRANT in part and DENY in part R&A’s motion to
dismiss, Dkt. 25.
It is hereby ORDERED that R&A’s motion to dismiss Benjamin’s claims (1) that R&A
misrepresented the status of the debt by pursing foreclosure on behalf of entities that allegedly
were not holders of the note and lacked standing to foreclose, and (2) that R&A misrepresented
aspects of the attempted short-sale is DENIED; it is further
ORDERED that R&A’s motion to dismiss Benjamin’s claims (1) that R&A attempted to
collect “illegal or unreasonable” fees or costs; that (2) R&A misrepresented its clients’
compliance with the deed to the loan, regulations, RESPA, and other D.C. law; and that (3) R&A
threatened to sell Benjamin’s property even though R&A could not legally take that action is
GRANTED and that those claims are hereby DISMISSED for failure to state a claim upon
which relief can be granted; and it is further
25
ORDERED that Benjamin’s claims (1) that R&A failed to bring the foreclosure action in
its own name, or in Selene’s name, and (2) that R&A unlawfully communicated directly with
Benjamin regarding the scheduled foreclosure are hereby DISMISSED for lack of subject matter
jurisdiction.
SO ORDERED.
/s/ Randolph D. Moss
RANDOLPH D. MOSS
United States District Judge
Date: August 26, 2021
26