UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

JACKERLY MCFADDEN, et al.,

Plaintiffs,

v. Civ. Action No. 20-166 (EGS)

NATIONSTAR MORTGAGE LLC d/b/a MR. COOPER,

Defendant.

MEMORANDUM OPINION

On January 22, 2020, Plaintiffs Jackerly McFadden and

Cassandra Wilson, acting on behalf of themselves and putative

class members, brought this action raising several claims

related to mortgage lender services provided by Defendant

Nationstar Mortgage LLC, d/b/a Mr. Cooper (“Mr. Cooper”). See

Compl., ECF No. 1. 1 Magistrate Judge Zia M. Faruqui, having been

referred the case, issued a Report and Recommendation

recommending that this Court deny Mr. Cooper’s pending motion to

dismiss in its entirety. See McFadden v. Nationstar Mortgage

LLC, No. 20-166,

, at *1 (D.D.C. July 30, 2021).

Pending before the Court are Mr. Cooper’s objections to the

Report and Recommendation (“R. & R.”). See Def.’s Objections

1 When citing electronic filings throughout this Opinion, the Court cites to the ECF page number, not the page number of the filed document. 1 (“Objections”), ECF No. 44. Upon careful consideration of the R.

& R., the objections of both parties and opposition thereto, the

applicable law, and the entire record herein, the Court hereby

ADOPTS Magistrate Judge Faruqui’s R. & R., see ECF No. 42, and

DENIES Defendant Mr. Cooper’s motion to dismiss, see ECF No. 13.

I. Background

Because a detailed factual background of the case is set

out in Magistrate Judge Faruqui’s R. & R., the Court will not

reiterate it in full here. See McFadden,

, at *1.

In brief, Plaintiffs allege that Mr. Cooper, in its role as a

national mortgage-loan servicer, created an illegal profit

center by collecting fees of between $14 and $19 (“Pay-to-Pay

Fees”) each time a borrower made a mortgage payment over the

phone (“Pay-to-Pay Transactions”). See

Meanwhile, a third-

party service operated by Western Union processed those payments

for an estimated $0.50. See

On January 22, 2020, Plaintiffs filed suit against Mr.

Cooper, alleging seven claims related to the Pay-to-Pay Fees:

(1) violation of the Federal Fair Debt Collection Practices Act

(“FDCPA”); (2) violation of the Florida Consumer Collection

Practices Act (“FCCPA”); (3) violation of the Florida Deceptive

and Unfair Trade Practices Act (“FDUTPA”); (4) breach of

contract claims under Florida and D.C. common law; (5) violation

of the District of Columbia Mortgage Lender and Broker Act

2 (“MLBA”); (6) violation of the District of Columbia Consumer

Protection Procedures Act (“DCCPPA”); and (7) unjust enrichment

under Florida and D.C. common law. See Compl., ECF No. 1. Mr.

Cooper filed a motion to dismiss for failure to state a claim on

March 30, 2020. See Def.’s Mot. Dismiss, ECF No. 13. Pursuant to

Local Civil Rule 72, this Court referred the case to a

magistrate judge for full case management on October 13, 2020,

see Min. Order (Oct. 13, 2020), and Magistrate Judge Faruqui

issued his R. & R. on July 30, 2021, see McFadden,

. Mr. Cooper timely filed his objections to the R. & R.

on August 13, 2021. See Objections, ECF No. 44.

II. Legal Standards

A. Objections to a Magistrate Judge’s Report and Recommendation

Pursuant to Federal Rule of Civil Procedure 72(b), a party

may file specific written objections once a magistrate judge has

entered a recommended disposition. Fed. R. Civ. P. 72(b)(1)-(2).

Objections must “specifically identify the portions of the

proposed findings and recommendations to which objection is made

and the basis for objection.” LCvR 72.3(b). A district court

“may accept, reject or modify the recommended disposition.” Fed.

R. Civ. P. 72(b)(3); see also

(b)(1) (“A judge of

the court may accept, reject, or modify, in whole or in part,

the findings or recommendations made by the magistrate judge.”).

3 A district court “must determine de novo any part of the

magistrate judge’s disposition that has been properly objected

to.” Fed. R. Civ. P. 72(b)(3). “If, however, the party makes

only conclusory or general objections, or simply reiterates his

original arguments, the Court reviews the [R. & R.] only for

clear error.” Houlahan v. Brown,

(D.D.C.

2013) (citation omitted); see also Shurtleff v. EPA,

(D.D.C. 2013) (“[O]bjections which merely rehash

an argument presented to and considered by the magistrate judge

are not ‘properly objected to’ and are therefore not entitled to

de novo review.” (quoting Morgan v. Astrue, No. 08-2133,

, at *3 (E.D. Pa. Oct. 30, 2009)). “Under the clearly

erroneous standard, the magistrate judge’s decision is entitled

to great deference” and “is clearly erroneous only if on the

entire evidence the court is left with the definite and firm

conviction that a mistake has been committed.” Buie v. District

of Columbia, No. 16-cv-1920 (CKK),

, at *3

(D.D.C. Sept. 12, 2019) (citing Graham v. Mukasey,

(D.D.C. 2009)) (internal quotation marks omitted).

B. Motion to Dismiss

A motion to dismiss pursuant to Federal Rule of Civil

Procedure 12(b)(6) tests the legal sufficiency of a complaint.

Browning v. Clinton,

(D.C. Cir. 2002). A

complaint must contain “a short and plain statement of the claim

4 showing that the pleader is entitled to relief, in order to give

the defendant fair notice of what the . . . claim is and the

grounds upon which it rests.” Bell Atl. Corp. v. Twombly,

, (2007) (internal quotation marks omitted).

Despite this liberal pleading standard, 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.” Ashcroft v. Iqbal,

, (2009)

(internal quotation marks omitted). “In determining whether a

complaint fails to state a claim, [the Court] may consider only

the facts alleged in the complaint, any documents either

attached to or incorporated in the complaint and matters of

which [the Court] may take judicial notice.” EEOC v. St. Francis

Xavier Parochial Sch.,

(D.C. Cir. 1997). A

claim is facially plausible when the facts pled in the complaint

allow the court to “draw the reasonable inference that the

defendant is liable for the misconduct alleged.”

The

standard does not amount to a “probability requirement,” but it

does require more than a “sheer possibility that a defendant has

acted unlawfully.”

“[W]hen ruling on a defendant’s motion to dismiss [pursuant

to Rule 12(b)(6)], a judge must accept as true all of the

factual allegations contained in the complaint.” Atherton v.

D.C. Office of the Mayor,

(D.C. Cir. 2009)

5 (internal quotation marks omitted). In addition, the court must

give the plaintiff the “benefit of all inferences that can be

derived from the facts alleged.” Kowal v. MCI Commc’ns Corp.,

(D.C. Cir. 1994).

III. Analysis

A. FDCPA

1. The Court Reviews the R. & R.’s FDCPA Findings De Novo and for Clear Error

Mr. Cooper objects to Magistrate Judge Faruqui’s findings

that Plaintiffs have adequately alleged FDCPA violations.

Objections, ECF No. 44 at 11.

First, Mr. Cooper argues that, contrary to Magistrate Judge

Faruqui’s conclusion, Plaintiff McFadden did not adequately

allege that Mr. Cooper is a debt collector. Objections, ECF No.

44 at 11-12. Specifically, it contends that the allegation in

the Complaint that “[a]t the time Cooper acquired the servicing

rights, Ms. McFadden’s mortgage was in default,” does not

satisfy the pleading requirements under Iqbal.

(quoting

Compl., ECF No. 1 ¶ 67). Mr. Cooper makes no new arguments not

presented in its motion to dismiss, other than to make the

conclusory assertion that the magistrate judge “ignore[d]” a

citation to Iqbal in distinguishing the case Oya v. Wells Fargo

Bank, No. 3:18-cv-01999,

, at *3 (S.D. Cal. Jan.

9, 2019), against its favor. Id.; see Def.’s Mot. Dismiss, ECF

6 No. 13-1 at 27-28. Accordingly, this objection is reviewed for

clear error, except to the extent that Mr. Cooper objects to the

magistrate judge’s interpretation of Oya. See Houlahan,

.

Second, Mr. Cooper objects to Magistrate Judge Faruqui’s

finding that the Pay-to-Pay Fees are “incidental” to the

Plaintiffs’ mortgage agreements because the Pay-to-Pay Fees

“arise out of a separate agreement between the parties.”

Objections, ECF No. 44 at 12. The Court reviews this objection

de novo.

Third, Mr. Cooper objects to the finding that the Pay-to-

Pay Fees were not “expressly authorized by the agreement

creating the debt.” Id. at 14. It argues that two clauses in the

mortgage agreement “expressly authorize” the fees at issue. Id.

at 14-15. This argument is duplicative of its arguments in its

motion to dismiss, see Def.’s Mot. Dismiss, ECF No. 13-1 at 28-

29, and the Court shall review them under the clear error

standard. Mr. Cooper also argues that the R. & R.’s “suggestion

that each fee must be specifically listed to be permissible is

counter to the plain language of the FDCPA” and that the R. & R.

improperly places the burden to adequately plead an FDCPA claim

on defendants. Id. at 15-16. These objections are properly

before the Court and shall be reviewed de novo. See Local R.

Civ. P. 72.3(b).

7 Fourth and finally, Mr. Cooper objects to the magistrate’s

finding that the Pay-to-Pay Fees are not permitted by law.

Objections, ECF No. 44 at 16. Mr. Cooper notes that Plaintiffs

have not identified any law that would prohibit the Pay-to-Pay

Fees, and cites to Johnson v. Riddle,

, 1117–18

(10th Cir. 2002), for the principle that an “FDCPA violation

cannot lie unless a specific legal prohibition exists for a

particular practice.”

Mr. Cooper further argues that

“several courts” have held that “a plaintiff may not ‘opt in’ to

an FDCPA claim by paying fees that were voluntarily paid and

reasonably avoidable,” and claims that “the practice of offering

additional fee-based payment services is commonplace in many

facets of consumer banking and payments.” Objections, ECF No. 44

at 16-17. However, these arguments merely reiterate what Mr.

Cooper claimed in its motion to dismiss. See Def.’s Mot.

Dismiss, ECF No. 13-1 at 29; Def.’s Reply, ECF No. 18 at 24.

2. The Court Overrules Mr. Cooper’s FDCPA Objections

Pursuant to the FDCPA, it is unlawful for a debt collector

to collect “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.” 15 U.S.C. § 1692f(1). For the reasons

stated below, the Court overrules Mr. Cooper’s objections.

8 a. “Debt Collector”

For purposes of the FDCPA, the term “debt collector” means

“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).

Mortgage-loan servicers are exempted from the FDCPA’s definition

of a “debt collector” when they acquire a loan that is not

already in default. 15 U.S.C. § 1692a(6)(F)(iii). Magistrate

Judge Faruqui found that Plaintiffs’ allegation that “[a]t the

time Cooper acquired the servicing rights, Ms. McFadden’s

mortgage was in default” provided the “requisite ‘fair notice of

what the plaintiff’s claim is and the grounds upon which it

rests.’” McFadden,

, at *2 (quoting Neild v.

Wolpoff & Abramson, L.L.P.,

(E.D. Va.

2006)). The magistrate judge disagreed with Mr. Cooper’s

argument that additional facts were needed in order to meet the

pleading standard, explaining that “courts, including in this

District, only dismiss similar complaints if a ‘Plaintiff does

not allege that his account was in default.’”

(citing

cases).

The Court does not find that Magistrate Judge Faruqui

clearly erred in his determination. Despite Mr. Cooper’s

9 arguments to the contrary, “the Twombly–Iqbal duo have not

inaugurated an era of evidentiary pleading.” Hassan v. City of

New York,

(3d Cir. 2015) (quoting Santana v.

Cook Cnty. Bd. of Review,

(N.D. Ill. 2010)).

“Nor do ‘factual allegations . . . become impermissible labels

and conclusions simply because the additional factual

allegations explaining and supporting the articulated factual

allegations are not also included.’”

(citing In re Niaspan

Antitrust Litig.,

(E.D. Pa. 2014)

(internal quotation marks omitted)). “[T]he collection of

evidence is the object of discovery,”

particularly where,

as here, Plaintiffs claim the details regarding Mr. Cooper’s

acquisition of the debt in question are in Mr. Cooper’s control,

Pls.’ Response, ECF No. 45 at 14. And as Magistrate Judge

Faruqui noted, it is not unusual for courts to consider the debt

collector question at the summary judgment stage. McFadden,

, at *2 n.1.

Moreover, while Mr. Cooper’s argument relies almost

exclusively on Oya,

, at *3, this case is not

binding on this Court. The Court agrees with Magistrate Judge

Faruqui’s conclusion that the Oya court’s requirement that a

plaintiff include additional “factual allegations”—beyond a

statement that an account was acquired while in default—“would

run contrary to the liberal notice pleadings requirements.”

10 McFadden,

, at *2 n.1. The Court therefore

overrules Mr. Cooper’s objection. See, e.g., Moses v. The Law

Off. Of Harrison Ross Byck,

, *3 (M.D. Pa. Aug.

4, 2009) (finding allegations that defendant “was engaged in the

business of debt collection, acquired the purported debt after

it was in default, and enlisted DBG and the Law Office to

collect the debt” sufficient at motion to dismiss stage).

b. Fees Incidental to the Mortgage Agreements

The Court next reviews Magistrate Judge Faruqui’s R. & R.

with regard to Mr. Cooper’s objection that the Fees “are

incidental to Plaintiffs’ mortgage agreements.” Objections, ECF

No. 44 at 4.

As the R. & R. explained, “[t]o establish a § 1692f(1)

violation, a plaintiff ‘must show that the money demanded of her

was incidental to a claimed debt.’” McFadden,

,

at *3 (quoting Longo v. L. Offs. of Gerald E. Moore & Assocs.,

P.C., No. 04-cv-5759,

, at *3 (N.D. Ill. Feb. 3,

2005)). Magistrate Judge Faruqui noted that case law was split

on the question of whether pay-to-pay fees are “incidental” to

the debt when borrowers are given other, fee-free options.

However, the magistrate judge was persuaded by the position

taken by the “majority of courts” that “convenience fees derived

from debt-payment methods are ‘incidental’ to the debt being

11 paid.”

(quoting Caldwell v. Freedom Mortg. Corp., No. 19-cv-

2193,

, at *3 (N.D. Tex. Aug. 14, 2020)).

Ultimately, Mr. Cooper’s objection amounts to disagreement

with Magistrate Judge Faruqui’s decision to find that the

“majority” position was more persuasive than the minority

position. See Objections, ECF No. 44 at 14. But in view of the

overwhelming amount of well-articulated case law agreeing with

the R. & R.’s analysis, the Court also “finds that the pay-to-

pay fees in this case are ‘incidental’ to the underlying debt.”

Dees v. Nationstar Mortg., LLC,

, 1047 (S.D.

Tex. 2020) (collecting cases); see, e.g., Lembeck v. Arvest

Cent. Mortg. Co.,

, 1136 (N.D. Cal. Nov. 3,

2020) (denying motion to dismiss and rejecting argument that

pay-to-pay fee was not incidental to principal obligation);

Wittman v. CB1, Inc., No. 15-cv-105,

, at *1, 5

(D. Mont. 2016) (following “the majority of courts [that] have

found that similar transaction fees are incidental”); Weast v.

Rockport Fin.,

(E.D. Mo. 2015)

(“Offering a payment option that does not violate the statute

does not save offering a payment option that would violate the

statute, as the latter is still an attempt to collect a fee

which is prohibited.”); Quinteros v. MBI Assocs., Inc.,

, 437–39 (E.D.N.Y. 2014) (“What matters is §

1692(f)(1)’s plain instruction that the collection of any amount

12 incidental to the principal obligation . . . violates the

FDCPA.”); Shami v. Nat’l Enter. Sys., No. 09-cv-722,

, at *3-4 (E.D.N.Y. Sept. 23, 2010) (holding pay-to-pay

fees were “incidental to Plaintiff’s purported actual debt”

prohibited by § 1692f(1)). As Judge Faruqui noted, “[i]t is

immaterial that the fee was optional and fully disclosed if the

fee is impermissible altogether.” McFadden,

, at

*3 (citations omitted).

c. Fees Expressly Authorized by Agreement

Having decided that the Pay-to-Pay Fees are incidental to

the underlying debt, the Court next turns to whether the fees

were authorized by agreement because “[i]t is unlawful for a

debt collector to collect a fee incidental to the principal

obligation ‘unless such amount is expressly authorized by the

agreement creating the debt or permitted by law.’” McFadden,

, at *3-4 (quoting 15 U.S.C. § 1692f(1)).

Two clauses in the parties’ mortgage agreements are at

issue regarding whether the agreements authorized the Pay-to-Pay

Fees. The provision in a paragraph titled “Loan Charges”

provided:

Lender may charge Borrower fees for services performed in connection with Borrower's default, for the purpose of protecting Lender's interest in the Property and rights under this Security Instrument, including, but not limited to, attorneys’ fees, property inspection and valuation fees. In regard to

13 any other fees, the absence of express authority in this Security Instrument to charge a specific fee to Borrower shall not be construed as a prohibition on the charging of such fee. Lender may not charge fees that are expressly prohibited by this Security Instrument or by Applicable Law.

Id. at *4 (emphasis added).

In finding that the above language did not “expressly”

authorize the fees in question, the magistrate judge noted that

Black’s Law Dictionary defines “express” to mean “clear;

definite; explicit; plain . . . [m]ade known distinctly and

explicitly, and not left to inference.” Id. (quoting Johnson v.

Ashcroft,

(3d Cir. 2002)). Magistrate Faruqui

concluded that the above provision created an “inference as to

the specific fees that it authorizes” but it did not “explicitly

name third-party payment processor fees or even a larger

umbrella under which such fees would fall.”

In addition,

“[a]lthough there is a dearth of case law, at least one court

has found that a complaint plausibly alleged a FDCPA violation

when ‘the underlying contract [did] not authorize the [phone

payment convenience] fee and the debt collector receive[d] all

or some of the fee.’”

(quoting McWhorter v. Ocwen Loan

Serv., LLC, No. 2:15-cv-1831,

, at *7 (N.D. Ala.

Aug. 3, 2017)).

The Court agrees with the reasoning in the R. & R.,

particularly in view of the fact that the above provision in the

14 mortgage agreement indeed “explicitly” authorizes other fees by

name, including “attorneys’ fees, property inspection and

valuation fees.”

Other than repeating the words of the

statute, Mr. Cooper cites no authority in support of his

argument that a finding that “each fee must be specifically

listed to be permissible is counter to the plain language of the

FDCPA.” Objections, ECF No. 44 at 15. Rather, as Magistrate

Faruqui pointed out, “[a]s remedial legislation, the FDCPA must

be broadly construed in order to give full effect” to Congress’s

intent to “eliminat[e] abusive practices in the debt collection

industry, and also . . . to ensure that ‘those debt collectors

who refrain from using abusive debt collection practices are not

competitively disadvantaged.’”

(citing Jacobson v.

Healthcare Fin. Servs., Inc.,

(2d Cir. 2008);

Douglass v. Convergent Outsourcing,

(3d Cir.

2014)). Allowing a catch-all provision as the one above to

permit convenience fees would run afoul of this intent. See

McWhorter,

, at *7 (“Ocwen has presented, and the

Court has found, no controlling case law holding that an

additional fee does not violate the FDCPA when, as here, the

underlying contract does not authorize the fee and the debt

collector receives all or some of the fee.”).

Mr. Cooper argues, however, that the case Beer v.

Nationstar Mortg. Holdings, Inc., No. 14-cv-13365,

13037309, at *3 (E.D. Mich. July 15, 2015), supports his

argument. In Beer, the district court held that the plaintiff

had not adequately alleged a breach of contract claim because

the plaintiff had “fail[ed] to identify a contractual provision

prohibiting the alleged ‘unnecessary fees and costs’” and the

mortgage agreement had provided that “the absence of express

authority in this Security Instrument to charge a specific fee

to Borrower shall not be construed as a prohibition on the

charging of such fee.”

, at *3. Here, however,

unlike in Beer, “[t]he FDCPA . . . does not require Plaintiffs

to identify any provision at all (let alone specific

prohibitions); rather, all that is needed is the absence of a

provision expressly authorizing a fee.” McFadden,

, at *5. Although Mr. Cooper argues that such a reading

“attempts to flip Plaintiffs’ burden to adequately plead that

the Fees are not expressly authorized onto Mr. Cooper by holding

that Mr. Cooper did not specifically identify such an

authorizing provision,” Mr. Cooper is mistaken. Objections, ECF

No. 44 at 16. Instead, it is a mere acknowledgement of the plain

terms of the statute: while the Beer court required a successful

breach of contract claim to identify a provision prohibiting the

alleged fees, the FDCPA requires a provision “expressly

authoriz[ing]” the fees in order to find the fees lawful. See §

1692f(1) (also allowing incidental fees “permitted by law”).

16 Thus, under the FDCPA, if the plaintiff plausibly alleges an

absence of a provision, then the claim may proceed.

In view of the clear language of the statute, the Court

therefore overrules Mr. Cooper’s objections with respect to the

provisions in the mortgage agreement.

d. Fees Permitted by Law

Finally, Mr. Cooper objects to the R. & R.’s finding that

the Pay-to-Pay Fees are not permitted by law. Objections, ECF

No. 44 at 16-17.

Under the second exception to Section 1692f(1), Mr. Cooper

may only collect fees if they are “permitted by law.” 15 U.S.C.

§ 1692f(1). The R. & R. found that the fees were not permitted

by law, stating the following:

“If state law expressly permits service charges, a service charge may be imposed even if the contract is silent on the matter; [i]f state law expressly prohibits service charges, a service charge cannot be imposed even if the contract allows it; [but if] state law neither affirmatively permits nor expressly prohibits service charges, a service charge can be imposed only if the customer expressly agrees to it in the contract.” Tuttle v. Equifax Check,

(2d Cir. 1999). “[T]he word ‘permitted’ requires that [Cooper] identify some state statute which ‘permits,’ i.e. authorizes or allows, in however general a fashion, the fees or charges in question.” McWhorter,

, at *7 (quoting Newman v. Checkrite California, Inc.,

(E.D. Cal. 1995)). Cooper fails to do so, likely because Pay-to-Pay fees are not expressly permitted by relevant state

17 law, let alone the FDCPA. See generally Def.’s MTD.

McFadden,

, at *5.

In explaining that “[i]f state law neither affirmatively

permits nor expressly prohibits service charges, a service

charge can be imposed only if the customer expressly agrees to

it in the contract,” the United States Court of Appeals for the

Second Circuit in Tuttle relied on the language of § 1692f(1)

and the Staff Commentary on the Fair Debt Collection Practices

Act,

, 50,108 (Fed. Trade Comm’n 1988). See

Tuttle,

. And here, the mortgage agreements do not

expressly authorize the Pay-to-Pay Fees and Mr. Cooper has not

persuasively shown that such fees are permitted under state law.

Accordingly, the Court finds no clear error in the R. & R. See

Quinteros,

(holding that Quinteros could

make out a claim under § 1692f(1) by establishing that the

processing fee was not expressly authorized by the contract

underlying the debt or otherwise permitted by New York law);

Shami,

, at *2 (noting that the defendant did not

“assert that the transaction fees described in the Collection

Letter were expressly authorized by the underlying agreement

creating the debt” or that the fees were “otherwise permitted by

New York law,” and concluding that the plaintiff had stated a

claim under § 1692f(1)); see also McCollough v. Johnson,

18 Rodenburg & Lauinger, LLC,

(9th Cir. 2011)

(upholding district court’s grant of summary judgment on a

section 1691f claim in favor of the plaintiff where defendant

failed to introduce evidence the contract explicitly authorized

the fee); Lindblom,

, at *6 (holding that the

“only inquiry” is “whether the amount collected was expressly

authorized”); Schwarm v. Craighead,

(E.D. Cal. 2008) (holding that “to establish that a particular

fee does not violate § 1692f(1), the debt collector must

identify a state law that authorizes the fee”).

In view of the above, the Court overrules Mr. Cooper’s

objections regarding Plaintiffs’ FDCPA claim.

B. FCCPA

1. The Court Review the R. & R.’s FCCPA Findings De Novo

Mr. Cooper also objects to the magistrate’s finding that

Plaintiffs adequately alleged that Mr. Cooper had “actual

knowledge” that it did not have a right to collect the Pay-to-

Pay Fees. Objections, ECF No. 44 at 17. Mr. Cooper’s arguments

are mostly a rehashing of its arguments presented in the motion

to dismiss. It reiterates its arguments that the circumstantial

evidence presented in the Complaint is insufficient to show

actual knowledge, that alleging that a creditor should have

known a debt was illegitimate is also insufficient, and that

Florida courts have routinely granted motions to dismiss on

19 these grounds. Compare id., with Def.’s Mot. Dismiss, ECF No.

13-1 at 31-32, and Def.’s Reply Supp. Mot. Dismiss, ECF No. 18

at 25-26. However, because Mr. Cooper also takes issue with

Magistrate Judge Faruqui’s reliance on the case Blake v.

Seterus, Inc., No. 16-21225-CIV-JLK,

at *3 (S.D.

Fla. Feb. 9, 2017), and the magistrate judge’s finding that Mr.

Cooper’s role as a “large mortgage servicer” provided support

for Plaintiffs’ claim, the Court shall review these objections

de novo.

2. The Court Overrules Mr. Cooper’s FCCPA Objections

The FCCPA forbids a party from claiming or threatening “to

enforce a debt when such person knows that the debt is not

legitimate, or assert[ing] the existence of some other legal

right when such person knows that the right does not exist.”

(9). The use of the word “knows” requires

actual knowledge of the impropriety or overreach of a claim.

Magistrate Judge Faruqui found that whether a defendant

possessed “actual knowledge” that it did not have a legal right

to charge Pay-to-Pay Fees “is a factual question that typically

should not be addressed in a 12(b)(6) motion to dismiss.”

McFadden,

, at *5. Rather, a plaintiff need only

allege circumstantial facts to demonstrate an FCCPA violation at

this stage, and here, “[t]here are sufficient circumstantial

facts that [Mr.] Cooper had actual knowledge that it did not

20 have a right to charge Pay-to-Pay fees.” Id. at *6. Mr. Cooper

objects to both conclusions. See Objections, ECF No. 44 at 17-

18.

First, the Court agrees that, “at the dismissal stage[,] .

. . Plaintiff [need] only allege circumstantial facts to

demonstrate Defendant’s actual knowledge of an FCCPA violation.”

McFadden,

, at *5 (quoting Blake v. Seterus,

Inc., No. 16-cv-21225,

, at *3 (S.D. Fla. Feb. 9,

2017)); see also Blake,

, at *3; Williams v. Educ.

Credit Mgmt. Corp.,

(M.D. Fla.

2015); Kaplan v. Assetcare, Inc.,

(S.D. Fla. 2000). Mr. Cooper cites to two cases in support of

his argument that “Florida courts have routinely granted motions

to dismiss based on a failure to plead actual knowledge.”

Objections, ECF No. 44 at 18 (citing Bentley v. Bank of Am.,

N.A.,

(S.D. Fla. 2011); In re Lamb,

(Bankr. N.D. Fla. 2009)). However, these

cases ultimately do not support his position. In In re Lamb, the

plaintiff had merely alleged that “[defendants] knew that they

did not have a right to garnish [Plaintiff’s] wages.”

. And in Bentley, the plaintiff had “simply [made] the

conclusory allegation that Defendants (again improperly lumping

them together) ‘knew they did not have a legal right to use such

collection techniques,’ without any specific factual allegations

21 as to each Defendants’ knowledge, much less what legal right was

asserted and how that legal right somehow did not exist.”

. Even at the standard articulated by Magistrate

Judge Faruqui, such statements would be insufficient to

adequately allege an FCCPA claim.

Second, the Court finds that Plaintiffs have alleged

sufficient facts to state a FCCPA claim at this stage of

litigation. Magistrate Judge Faruqui found that Plaintiffs had

alleged sufficient facts in the Complaint that Mr. Cooper had

actual knowledge that it did not have a right to charge Pay-to-

Pay Fees. McFadden,

, at *6. Specifically, he

noted that: (1) “[a]s one of the nation’s largest mortgage-loan

servicers, which includes thousands of Florida mortgages, Cooper

should be aware of the requirements of Florida debt collection

laws,”

(citing Compl., ECF No. 1 ¶ 2; Alhassid v. Nationstar

Mortg. LLC,

, 969 (11th Cir. 2019)); (2) Mr.

Cooper had serviced loans subject to the uniform terms of

borrowers’ mortgages, which did not include pay-to-pay fees, and

the mortgage agreement did not permit such fees,

(citing

Compl., ECF No. 1 ¶ 2); and (3) Mr. Cooper had “repeatedly”

collected such fees from thousands of borrowers nationwide,

(quoting Compl., ECF No. 1 ¶ 1; Dees v. Nationstar Mortg., LLC,

, 1051 (S.D. Tex. 2020)).

22 Mr. Cooper argues that Plaintiffs simply “track[ed] the

language of the FCCPA” in alleging that it “‘attempted to

enforce, claimed, and asserted a known non-extent legal right to

a debt’ in violation of the FCCPA.” Objections, ECF No. 44 at 17

(quoting Compl., ECF No. 1 ¶ 121). Though this is indeed an

allegation Plaintiffs included in its FCCPA-specific section

regarding the claimed violation, Plaintiffs expressly

“incorporated by reference” all of the preceding paragraphs of

the Complaint as well. See Compl., ECF No. 1 ¶¶ 117-123. Thus,

Plaintiffs allege more than just the one sentence Mr. Cooper

points out. Moreover, as explained above, at a motion to dismiss

stage, the evidentiary threshold is lower because the parties

have not yet conducted discovery in the case. Viewing the facts

in the light most favorable to the Plaintiffs at this early

stage, particularly the allegations noted by Magistrate Judge

Faruqui, the Court concludes that Plaintiffs adequately pled

that Defendant knowingly violated the FCCPA. See, e.g., Blake,

, at *3 (finding sufficient evidence at motion to

dismiss stage where plaintiff had alleged that “it was

Defendant’s regular practice to include unincurred, estimated

costs in the reinstatement amount, despite that the Mortgage

Agreement and Servicing Guidelines prohibit the such conduct”).

And although Mr. Cooper argues that “[m]erely alleging that a

creditor should have known a debt was illegitimate is

23 insufficient,” Objections, ECF No. 44 at 17, the case he relies

upon was decided under a motion for summary judgment standard,

not a motion to dismiss standard, Cornette v. I.C. System, Inc.,

(S.D. Fla. 2017).

In view of the above, the Court overrules Mr. Cooper’s

objections.

C. FDUTPA

1. The Court Reviews the R. & R.’s FDUTPA Findings De Novo and for Clear Error

Mr. Cooper makes three objections to the R. & R.’s findings

that Plaintiffs adequately pled FDUTPA violations. Objections,

ECF No. 44 at 18. First, Mr. Cooper argues that “Plaintiffs

failed to adequately allege violations of the FCCPA, and

therefore Mr. Cooper objects to the Report’s findings that such

allegations can serve as a predicate for per se violations of

the FDUTPA.”

Mr. Cooper cites back to his arguments in his

motion to dismiss briefing to support this argument, and

therefore the Court reviews this objection for clear error

because it “simply reiterates his original arguments.” Houlahan,

. Second, Mr. Cooper argues that Plaintiffs

failed to adequately allege any plausible facts supporting their

claim that Mr. Cooper engaged in unfair or deceptive practices

regarding the Pay-to-Pay Fees. Objections, ECF No. 44 at 19.

Third, it disputes the R. & R.’s finding that whether a charge

24 is unfair or deceptive is a question of fact for the jury. Id.

at 21. The Court shall review the second and third objections de

novo. See Means v. District of Columbia,

(D.D.C. 2013).

2. The Court Overrules Mr. Cooper’s FDUTPA Objections

Mr. Cooper first asserts that “Plaintiffs failed to

adequately allege violations of the FCCPA, and therefore Mr.

Cooper objects to the Report’s findings that such allegations

can serve as a predicate for per se violations of the FDUTPA.”

Objections, ECF No. 44 at 18. As stated in Section III.B.2, the

Court has concluded that Magistrate Judge Faruqui did not err in

finding that Plaintiffs’ FCCPA allegations sufficiently

established Mr. Cooper’s actual knowledge at this stage of the

litigation. Because the Court finds that the FCCPA claim has not

failed, there is therefore no clear error in the R. & R.

regarding this issue.

With respect to the traditional FDUTPA violation based on a

deceptive act or unfair practice, such a violation involves

“unfair or deceptive acts or practices in the conduct of any

trade or commerce.”

(1). “A deceptive

practice is one that is ‘likely to mislead’ consumers.” Rollins,

Inc. v. Butland,

(Fla. 2d Dist. Ct. App.

2006) (quoting Davis v. Powertel, Inc.,

(Fla. 1st Dist. Ct. App. 2000)). Likelihood to mislead is based

25 on how a “consumer acting reasonably in the circumstances” would

respond. Maor v. Dollar Thrifty Auto. Grp., Inc., No. 15-cv-

22959,

, at *6 (S.D. Fla. Sept. 30, 2018)

(quoting Carriuolo v. General Motors Co.,

, 983–84

(11th Cir. 2016)). “An unfair practice is one that offends

established public policy and one that is immoral, unethical,

oppressive, unscrupulous or substantially injurious to

consumers.” Rollins,

(quoting Samuels v. King

Motor Co. of Fort Lauderdale,

(Fla. 4th

Dist. Ct. App. 2001)) (cleaned up).

With the above standard in mind, the magistrate judge

concluded that “[a] mortgage-loan servicer ‘[s]ecretly retaining

money from every ‘processing fee’ [the defendant] charges

consumers instead of passing the entire fee to a third-party

payment processor,’” as is the case alleged here, “constitutes

an unfair and deceptive practice.” McFadden,

, at

*6 (quoting Alvarez,

, at *4, *6). Because

Plaintiffs’ Complaint included an allegation describing such a

scheme, it was sufficient to meet the pleading burden on a

motion to dismiss.

“Moreover, it is ‘a question of fact for

a jury’ whether the ‘pass-through charge,’ leaving $0.50 with

the third-party processor and $13.50 surreptitiously with

Cooper, is a deceptive practice.”

(quoting Coleman v.

CubeSmart,

(S.D. Fla. 2018)).

26 Mr. Cooper objects to both findings. As Mr. Cooper notes,

the courts are divided on this issue. Def.’s Reply, ECF No. 46

at 15. On the one hand, Mr. Cooper cites to Waddell v. U.S. Bank

National Association,

, 685 (E.D.N.C. 2019),

and Brown v. Loancare, LLC, No. 3:20-cv-00280-FDW-DSC,

, at *5 (W.D.N.C. Dec. 16, 2020), in support of his

argument that convenience fees that are disclosed to the

consumer are not considered a “deceptive act or unfair practice”

under the FDUTPA. See Objections, ECF No. 44 at 19; Def.’s

Reply, ECF No. 46 at 15. In Waddell, the court found in the

alternative that the “practice of charging customers a fee for

paying by phone is not unfair or deceptive under” a statute

substantially similar to the FDUTPA. 395 F. Supp. 3d at 685. And

in Brown, another North Carolina district court case, the court

relied on Waddell in similarly holding that the plaintiff did

not state a claim because she had “exercised her option to pay

her mortgage either by phone or online. It is not plausible that

charging a fee for an optional service, particularly when

[p]laintiff had alternative means of payment, is unfair or

deceptive.”

, at *5.

On the other hand, however, are a line of cases standing

for the principle that failure to disclose who is getting the

majority of a fee can constitute deception. See, e.g.,

Quinteros,

(finding the “‘least

27 sophisticated consumer’ would likely be deceived by the

Processing Fee Statement into believing that Defendant was

legally entitled to collect the five-dollar fee. Indeed, even a

shrewd consumer would be unlikely to question the legality of a

seemingly reasonable five-dollar processing fee, much less turn

to the statute books”); Shami,

, at *4 (finding

that because plaintiff stated a claim for unconscionable means,

she also stated a claim for false representation because the

letter represented the transaction fees were permissible).

This is a close question, but ultimately the Court is more

persuaded by the line of cases cited by Plaintiffs. Although Mr.

Cooper argues that both Waddell and Brown are directly on point

and should control the case here, neither addresses the question

of whether an entity’s “concealment that it keeps the vast

majority of each fee,” even if the fee is voluntary, is “unfair”

or “deceptive” under the FDUPTA. Pls.’ Response, ECF No. 45 at

24; see also McFadden,

, at *7 (“Plaintiffs are

not arguing that they were unaware that they were paying a fee.

Rather, they plausibly argued deception by Cooper in concealing

who was getting the vast majority of the Pay-to-Pay fee.”).

Here, even if the Court accepts that voluntary convenience fees

in general are not unfair or oppressive, the fact that Mr.

Cooper kept over 90 percent of the fees at issue is a

significant factor in the analysis. Cf. Latman v. Costa Cruise

28 Lines, N.V.,

(Fla. 3d Dist. Ct. App. 2000) (“We

therefore conclude that where the cruise line bills the

passenger for port charges but keeps part of the money for

itself, that is a deceptive practice under FDUTPA. Reliance and

damages are sufficiently shown by the fact that the passenger

parted with money for what should have been a ‘pass-through’

port charge, but the cruise line kept the money.”); Coleman, 382

F. Supp. 3d at 1365 (“Here, Coleman adequately states a

deceptive representation sufficient to satisfy the first element

of a FDUTPA claim. A consumer could reasonably conclude, based

on both the express representations and what was not said, that

CubeSmart would retain only the portion for its expenses, a

conclusion that is factually incorrect under the allegations of

the Complaint.”). Moreover, even if the issue of whether a

practice is unfair or deceptive is a question of law, rather

than a question of fact, the Court finds that a “‘pass-through

charge,’ leaving $0.50 with the third-party processor and $13.50

surreptitiously with Cooper” is likely to mislead. See

(stating that FDUPPTA should be “construed

liberally to promote” its purposes, which includes “[t]o protect

the consuming public”).

Accordingly, the Court overrules Mr. Cooper’s objections

with respect to FDUTPA.

29 D. Breach of Contract Under Florida and D.C. Law

1. The Court Reviews the R. & R.’s Breach of Contract Findings De Novo and for Clear Error

Mr. Cooper makes multiple objections to the R. & R.’s

finding that Plaintiffs adequately pled state law breach of

contract claims. Objections, ECF No. 44 at 21.

Mr. Cooper first objects that both Plaintiffs’ mortgages

“expressly permit” it to charge the Pay-to-Pay Fees.

This

objection is reviewed for clear error because it is duplicative

of Mr. Cooper’s arguments in its motion to dismiss briefing. See

Def.’s Mot. Dismiss, ECF No. 13-1 at 14.

Mr. Cooper also objects to the finding in the R. & R. that

Ms. Wilson adequately pled breach of her mortgage agreement due

to alleged violations of the FDCPA and guidelines issued by the

Fair Housing Administration and the Department of Housing and

Urban Development. Objections, ECF No. 44 at 22. It argues that

(1) “Plaintiff Wilson’s mortgage expressly permits Mr. Cooper to

charge fees in connection with Plaintiff’s default ‘for the

purpose of protecting [its] interest in the Property and rights

under this Security Instrument,’ including the Pay-to-Pay Fees”;

(2) “the [R. & R.] incorrectly posits that ‘HUD’s fee lists are

exclusive and preclude a lender from charging unauthorized

fees’”; and (3) “Plaintiff Wilson has no independent standing to

enforce the FHA/HUD guidelines.”

Each of these arguments

30 were raised in its motion to dismiss and are thus reviewed for

clear error. See Def.’s Mot. Dismiss, ECF No. 13-1 at 14-19;

Def.’s Reply, ECF No. 18 at 9-16.

Next, Mr. Cooper objects to the magistrate judge’s findings

that “the voluntary payment doctrine is not a proper basis for

dismissal, and that plaintiffs did not have full knowledge of

the facts when using Mr. Cooper’s pay-by-phone service to make

their mortgage payments.” Objections, ECF No. 44 at 23-24.

Again, this objection “simply reiterates [its] original

arguments,” Houlahan,

, and the Court

therefore reviews this for clear error.

Finally, Mr. Cooper objects to the finding in the R. & R

that “Plaintiffs’ oral agreements with Mr. Cooper to pay the

Fees did not form a separate contract.” Objections, ECF No. 44

at 26. The Court reviews de novo Mr. Cooper’s objection that the

magistrate judge misread a case he relied upon in his ruling,

Techreations, Inc. v. National Safety Council, No. 86-C-1399,

, at *5 (N.D. Ill. Dec. 24, 1986). Mr. Cooper’s

general arguments that the parties’ agreement constitutes a

separate oral agreement and that the payment terms included in

the mortgage agreement are evidence of that separate agreement

are reviewed for clear error because they are the same arguments

Mr. Cooper included in its motion to dismiss. See Def.’s Mot.

Dismiss, ECF No. 13-1 at 20-22.

31 1. The Court Overrules Mr. Cooper’s Objections Regarding the Breach of Contract Findings in the R. & R.

a. Provisions of the Mortgage Agreement

First, because Ms. McFadden’s Florida mortgage agreement

provides that the “[l]ender may not charge fees that are

expressly prohibited by this Security Instrument or Applicable

Law,” Magistrate Judge Faruqui found that Plaintiffs had

demonstrated a plausible breach of contract claim because their

FDCPA and FCCPA claims were viable. McFadden,

,

at *7. The Court finds no clear error in the magistrate judge’s

reasoning, and Mr. Cooper’s conclusory objection provides no

specific reason to do so. As described in Section III.A.2, the

mortgage agreement did not “expressly” permit Mr. Cooper to

charge Pay-to-Pay Fees.

Next, regarding Ms. Wilson’s D.C. mortgage agreement,

Magistrate Judge Faruqui determined that Plaintiff had

adequately pled a breach of her mortgage agreement because she

alleged that Mr. Cooper violated the FDCPA and guidelines issued

by the Fair Housing Administration (“FHA”) and the Department of

Housing and Urban Development (“HUD”), which were incorporated

by reference in paragraph 13 of the agreement. McFadden,

, at *7-8. The magistrate judge noted that the HUD

Handbook establishes which fees are authorized, and that the fee

lists “are exclusive and preclude a lender from charging

32 unauthorized fees.” Id. at *8. Moreover, the HUD Handbook

permitted the collection of fees if they are “reasonable and

customary for the local jurisdiction” and “based on actual cost

of the work performed or actual out-of-pocket expenses.” Id. The

only way a lender can collect any fee “not specifically

mentioned in” the HUD regulations or HUD Handbook is to

affirmatively seek approval from the Secretary. Id. Magistrate

Faruqui found that, because Pay-to-Pay Fees were not authorized

in the HUD Handbook or separately approved by the Secretary, and

because Ms. Wilson had plausibly alleged that the fees did not

represent actual costs, her breach of contract claim was viable.

Id.

Mr. Cooper objects to this finding because (1) “Plaintiff

Wilson’s mortgage expressly permits Mr. Cooper to charge fees in

connection with Plaintiff’s default ‘for the purpose of

protecting [its] interest in the Property and rights under this

Security Instrument,’ including the Pay-to-Pay Fees”; (2) “the

[R. & R.] incorrectly posits that ‘HUD’s fee lists are exclusive

and preclude a lender from charging unauthorized fees’”; and (3)

“Plaintiff Wilson has no independent standing to enforce the

FHA/HUD guidelines.” Objections, ECF No. 44 at 22.

Regarding the first objection, again, this Court explained

in Section III.A.2 that the mortgage agreement did not

33 “expressly” permit Mr. Cooper to charge Pay-to-Pay Fees. This

objection is therefore overruled.

Regarding the second objection, the Court agrees with Mr.

Cooper that the language in the HUD Handbook and in

(a) may lead to the conclusion that the HUD Handbook and

regulations list both permissive fees that a mortgagee “may

collect” and fees that are expressly prohibited. See

(a) (“The mortgagee may collect reasonable and customary

fees and charges from the mortgagor after insurance endorsement

only as provided below.” (emphasis added)); U.S. Dep’t of Hous.

and Urban Dev., HUD Handbook 4000.1: Single-Family Housing

Policy, Section III(A)(1)(f)(C) at 560,

https://www.hud.gov/sites/documents/40001HSGH.PDF (listing

expressly prohibited fees, not including Pay-to-Pay Fees). Yet

at the same time, the HUD Handbook states that “[a]ll fees must

be: reasonable and customary for the local jurisdiction; [and]

based on actual cost of the work performed or actual out-of-

pocket expenses and not a percentage of either the face amount

or the unpaid principal balance of the Mortgage.” HUD Handbook §

III.A.1.f.ii(A) (emphasis added). Because “[t]here is no dispute

that the ‘Pay-to-Pay fees . . . exceed [Mr. Cooper’s] out-of-

pocket costs by several hundred percent,” and Plaintiff Wilson

has alleged that the Pay-to-Pay Fees do not “represent actual

costs,” McFadden,

, at *8 (Phillips v. Caliber

34 Home Loans, Inc., No. 19-cv-2711,

, at *4 (D.

Minn. Sept. 15, 2020)), the Court finds no reason to reject

Magistrate Faruqui’s conclusion.

Regarding Mr. Cooper’s third objection, the Court finds no

clear error in the R. & R.’s conclusion that Ms. Wilson has

standing. “[T]he majority rule [is] that breach of contract

claims based on a failure to comply with HUD regulations are

viable where the mortgage instrument expressly incorporates HUD

regulations.” Dorado v. Bank of Am., N.A., No. 16-cv-21147,

, at *5 (S.D. Fla. July 21, 2016) (quotation omitted)

(collecting cases); see also Phillips,

, at *4

(allowing breach of contract claim to proceed where plaintiff

alleged pay-to-pay fee violated FHA/HUD regulations incorporated

by reference in the contract). Here, the mortgage agreement

incorporated the FHA/HUD guidelines, and the Complaint includes

the allegation that the Pay-to-Pay Fees violated those

guidelines and regulations. See Compl., ECF No. 1 ¶ 57; Ex. B at

8, ¶ 13; Ex. C at 8, ¶ 13.

Moreover, the Court agrees with the manner in which the

magistrate judge distinguished Waddell. McFadden,

, at *8 (noting that Waddell was non-binding authority

and that the plaintiff in that case, unlike here, had not

“plausibly alleged that her deed of trust contain[ed] any

express or implied terms that prohibit[ed] [the defendant] from

35 charging a service fee authorized by federal law for an optional

payment method”).

b. Voluntary Payment Doctrine

The Court next turns to the magistrate judge’s conclusions

regarding the voluntary payment doctrine. Under the doctrine,

“voluntary payment may potentially bar a claim to recoup

payments that are made with full knowledge.” Falconi-Sachs v.

LPF Sen. Square, LLC,

(D.C. 2016) (cleaned

up). This doctrine applies even when the claim thus paid was

illegal. See Sanchez v. Time Warner, Inc., No. 98–211–CV–T–26A,

, at *1-2 (M.D. Fla. Nov. 4, 1998). Magistrate

Judge Faruqui declined to dismiss Plaintiffs’ claim under this

doctrine for two primary reasons. First, the magistrate judge

noted that courts have generally found that the doctrine is an

affirmative defense that should not be decided on a motion to

dismiss. McFadden,

, at *9. And though there is

an exception that, “[i]f the allegations of the complaint

demonstrate the existence of an affirmative defense, such

defense may be considered on a motion to dismiss,” Ruiz v.

Brink’s Home Sec., Inc.,

(Fla. 2d Dist.

Ct. App. 2001), the magistrate judge concluded that was not the

case here. Instead, Magistrate Faruqui found that Plaintiffs

“alleged facts suggesting that, in addition to being ignorant of

the pay-to-pay fee’s illegality, they were unaware Cooper

36 largely was pocketing these fees as profit.” McFadden,

, at *9 (cleaned up). Moreover, according to the

magistrate judge, “courts have regularly rejected application of

this doctrine in Pay-to-Pay fees cases because a plaintiff’s

payments could not be voluntary where they did not know the fees

grossly exceeded the mortgage loan servicer’s actual costs.”

(cleaned up).

Mr. Cooper objects, arguing that the voluntary payment

doctrine is a proper basis for dismissal, and that plaintiffs

had full knowledge of the facts when using Mr. Cooper’s pay-by-

phone service to make their mortgage payments. Objections, ECF

No. 44 at 23-26. But the Court does not find clear error in the

magistrate judge’s analysis. Phillips is instructive. In the

case, defendant had argued that plaintiffs’ claims were barred

by the voluntary payment doctrine “because [p]laintiffs

voluntarily paid the cost for the convenience of making mortgage

payments online or over the phone” and plaintiffs had conceded

that they “were aware of the fees” charged.

, at

*2. However, plaintiffs had “maintain[ed] that the nature of the

fees was not fully apparent as [p]laintiffs did not know that

the ‘fees Caliber charged exceed[ed] Caliber’s out-of-pocket

costs by several hundred percent.”

In finding for

plaintiffs, the district court noted that although such fees

could have been charged if they were “based on actual cost of

37 the work performed or actual out-of-pocket expenses,” “when, as

here, [p]laintiffs did not know that the fees grossly exceeded

Caliber’s actual costs, the voluntary-payment doctrine is

inapposite.”

Similarly, here, Plaintiffs have not conceded

that they were aware that an overwhelming proportion of the Pay-

to-Pay Fees were being pocketed by Mr. Cooper. McFadden,

, at *9. In view of the above, the Court therefore finds

that dismissal based upon an affirmative defense is not

appropriate at this stage of the litigation. See, e.g.,

McDermott v. L.A. Fitness Int’l, LLC, No. 11-cv-192,

, at *5 (M.D. Fla. Mar. 21, 2012) (“The voluntary

payment doctrine is an affirmative defense that should not be

decided on a motion to dismiss.”).

c. Separate Agreement

Finally, the Court addresses the portion of the R. & R.

regarding whether the Pay-to-Pay Fees formed a separate contract

not incidental to the underlying mortgage agreement. In the R. &

R., Magistrate Judge Faruqui determined that the Plaintiffs and

Mr. Cooper did not create and execute a separate oral agreement

regarding the Pay-to-Pay Fees because “Plaintiffs paid the fees

in question solely in relation to their mortgage,” and the fees

therefore were “incidental” to payment in the underlying

mortgage agreement. McFadden,

, at *10.

“Moreover, Cooper’s payment processing business is part and

38 parcel of its servicing of the underlying loan. As such,

Plaintiffs plausibly asserted that ‘the oral agreement here does

not rise to the level of a separate contract.’”

(quoting

Techreations,

, at *5). As a policy matter,

Magistrate Judge Faruqui also observed that “[p]ermitting an

entity to claim the existence of a separate contract any time it

charged a new, related fee would effectively gut the fee

protections provided by the mortgage agreement and consumer

protection laws, like the FDCPA/FCCPA, and related FHA/HUD

protections (discussed above) that are incorporated into

mortgage agreements.”

at *10 n.10. The magistrate court thus

declined to “draw[] on facts outside of the complaint” to find

that a separate contract existed. Id. at *10.

Mr. Cooper objects, arguing that “Plaintiffs’ agreement to

pay the Fees at the stated amount, in exchange for Mr. Cooper

accepting that phone payment, constitutes a separate oral

agreement under the common laws of Florida and the District.”

Objections, ECF No. 44 at 26 (citing cases). It argues that a

proper reading of Techreations does not lead to the conclusion

that the agreement here is not a separate contract. Id. at 27.

According to Mr. Cooper, “Techreations held that a contract was

not formed because it lacked ‘the necessary detail,

completeness, and coverage to stand on its own as an enforceable

contract,’” and here, “Plaintiffs orally agreed to Mr. Cooper’s

39 offer to process their mortgage payments over the phone in

exchange for adequate consideration, the Fees.” Id. Finally, Mr.

Cooper argues that the parties were acting under a separate

agreement because the mortgage agreement only allowed payments

to be in the form of cash, check, or money order—not by phone.

Id.

The Court is not persuaded by Mr. Cooper’s objections. This

Court agrees with Plaintiffs that these objections are “simply a

repackaging of the ‘not incidental’ argument” this Court

addressed in Section III.A.2. See Pls.’ Response, ECF No. 45 at

32; see also Lembeck v. Arvest Central Mortgage Co., No. 20-cv-

03277-VC,

, at *2 (N.D. Cal. 2020) (rejecting

“separate agreement” argument and determining pay-to-pay fees

were incidental to underlying debt). The Court thus overrules

Mr. Cooper’s objection for the same reasons discussed in Section

III.A.2 and in McFadden,

, at *3, *10.

E. D.C. MLBA

1. The Court Reviews the R. & R.’s MLBA Findings De Novo and for Clear Error

Mr. Cooper makes three objections related to Magistrate

Judge Faruqui’s conclusion that Ms. Wilson adequately pled

violations of the D.C. MBLA. Objections, ECF No. 44 at 27-28.

First, Mr. Cooper argues that Ms. Wilson failed to provide

pre-suit notice of her MBLA claim, although she was required to.

40 Id. at 28. Second, Mr. Cooper argues that “Plaintiff Wilson only

provides a threadbare recital of the MLBA’s requirements and

does not allege how she was misled by Mr. Cooper.” Id. And

third, Mr. Cooper argues that “Plaintiff Wilson’s MLBA claims

are predicated on the same facts as Plaintiffs’ defective FDCPA

claims, as discussed above, and therefore similarly fail.” Id.

The first and third arguments are both one-sentence general

contentions that merely reiterate positions Mr. Cooper took in

its motion to dismiss, and they shall be reviewed for clear

error. See Def.’s Mot. Dismiss, ECF No. 13-1 at 25-26. The Court

shall review the second argument—that Ms. Wilson did not provide

allegations regarding how she was misled by Mr. Cooper—de novo.

2. The Court Overrules Mr. Cooper’s MLBA Objections

The MLBA applies to both lenders and servicers.

(11)(ii), (iii) (2001). Under the MLBA, lenders and

servicers are prohibited from “engag[ing] in any unfair or

deceptive practice toward any person.”

-

1114(d)(2).

In the R. & R., Magistrate Judge Faruqui first found that

Plaintiff Wilson made out a claim by alleging Mr. Cooper

violated the MLBA by: (1) “assessing fees not authorized under

the terms of the mortgage agreement, see Compl. ¶ 163”; and (2)

“using a scheme to mislead borrowers and engage in a deceptive

practice by failing to disclose the costs to process third-party

41 transactions, see Compl. ¶ 164.” McFadden,

, at

*10. Moreover, the magistrate judge found that “Plaintiffs

plausibly alleged that Cooper charged fees under the guise that

such payments were third-party processing costs, but in fact

over 90% was kept by Cooper as profit. See Compl. ¶¶ 6, 92, 164–

65.”

Mr. Cooper objects, arguing that “[t]he simple fact that

Mr. Cooper profited from the Fees does not make them misleading

or indicate how Plaintiff Wilson would have acted differently

had she been aware of Mr. Cooper’s profits on the Fees.”

Objections, ECF No. 44 at 28. He further objects that “[a]

reasonable consumer would surely opt to pay a nominal telephone

payment fee rather than incur higher late fees or enter default,

regardless of how that nominal fee was internalized by her loan

servicer.”

The Court concludes that Ms. Wilson has provided more than

a “threadbare recital” of the MLBA. “In evaluating a motion to

dismiss for failure to state a claim upon which relief can be

granted, the Court is mindful that a complaint need only contain

‘a short and plain statement of the claim showing that the

pleader is entitled to relief,’ Twombly,

, and

that the notice pleading rules are ‘not meant to impose a great

burden on a plaintiff.’” Lawrence v. District of Columbia, No.

18-595,

, at *6 (D.D.C. Mar. 8, 2019) (quoting

42 Dura Pharm., Inc. v. Broudo,

(2005)). Indeed,

in the case Magistrate Judge Faruqui relied upon, Logan v.

Lasalle Bank National Association,

(D.C. 2013), the

District of Columbia Court of Appeals (D.C. Court of Appeals”)

reversed the lower court’s dismissal of an MLBA claim because

the lower court had found it was “a mere recitation of the very

barest elements of the claim.”

. The court of

appeals explained that the lower court had ignored “allegations

regarding repeated assessment of improper fees and failure to

provide information on indebtedness” and that these facts made

out a claim under the statute.

. Similarly here,

Magistrate Judge Faruqui pointed out specific allegations Ms.

Wilson made throughout the Complaint that regarded “repeated

assessment of improper fees” and the “failure to disclose costs

to process third-party transactions.” McFadden,

,

at *10. The Court does not require more at the motion to dismiss

stage.

The magistrate judge next found that a failed FDCPA claim

did not “automatically” doom an MLBA claim, as Mr. Cooper had

argued.

The Court agrees. The sole case Mr. Cooper relies

upon in support of his argument is Mushala v. U.S. Bank National

Association, No. 18-cv-1680 (JDB),

, at *9

(D.D.C. Mar. 29, 2019). But in Mushala, the district court held

that an MLBA claim was barred by res judicata because the claim

43 was based on the same factual nucleus as a previously decided

FDCPA claim.

, at *9. Here, as Magistrate Judge

Faruqui correctly noted, there is no prior action that would bar

Plaintiff’s claim. Moreover, the Court agrees that “[e]ven if

the statutes were coupled, Plaintiff’s FDCPA claim’s survival

here breathes life into the MLBA claim.” McFadden,

, at *10.

Finally, the Court also finds no clear error in Magistrate

Judge Faruqui’s finding that Plaintiff provided MLBA pre-suit

notice for the same reasons the Court provided in Section

III.G.2 regarding pre-suit notice of an unjust enrichment claim.

Accordingly, Mr. Cooper’s objections are overruled.

F. DCCPPA

1. The Court Reviews the R. & R.’s DCCPPA Findings De Novo and for Clear Error

Mr. Cooper objects to the finding in the R. & R. that it is

a “merchant” under the DCCPA. It argues that the D.C. Court of

Appeals has “expressly refused” to hold that the DCCPPA applies

to mortgage loan servicers, and that the allegations in the

Complaint that Magistrate Faruqui cites do not convert Mr.

Cooper into a “merchant.” Objections, ECF No. 44 at 29. The

Court reviews these objections de novo.

Mr. Cooper also objects to the finding that Plaintiffs have

plausibly alleged that the Pay-to-Pay Fees were misleading

44 because (1) “Plaintiffs incorrectly argue that Mr. Cooper did

not have the right to collect the Fees despite the fact that, as

described above and in Mr. Cooper’s Motion, the Fees violate

neither Plaintiffs’ mortgage agreements nor the FDCPA”; and (2)

“Plaintiffs fail to allege how they were misled or, in other

words, how they would have acted differently if they knew Mr.

Cooper received a profit.” Objections, ECF No. 44 at 30. These

objections are reviewed under the clear error standard because

they restate arguments Mr. Cooper presented in its motion to

dismiss briefing. See Def.’s Reply, ECF No. 18 at 29-31.

2. The Court Overrules Mr. Cooper’s Arguments Regarding the DCCPPA Findings

a. Mortgage Servicers as “Merchants”

Under the DCCPPA, “merchants” are defined as persons who

“sell, lease . . . , or transfer, either directly or indirectly,

consumer goods or services.”

(a)(3). “Goods

and services,” are “any and all parts of the economic output of

society, at any stage or related or necessary point in the

economic process, and includes consumer credit . . . real estate

transactions, and consumer services of all types.”

(a)(7). Magistrate Judge Faruqui found that this broad

definition encompasses Mr. Cooper’s business and conduct alleged

in this case. McFadden,

, at *11-12.

45 Mr. Cooper objects to the magistrate judge’s finding that

it is a “merchant” under the DCCPPA, primarily relying on the

D.C. Court of Appeals decision Busby v. Capital One, N.A.,

(D.D.C. 2011). In Busby, the court held that the

DCCPA did not apply to mortgage loan servicers.

. Here, however, Ms. Wilson has alleged in the Complaint

that Mr. Cooper was both the mortgage servicer and her mortgage

lender. Compl., ECF No. 1 ¶ 82. And the DCCPPA applies to

mortgage lenders. See DeBerry v. First Gov’t Mortg. & Invs.

Corp.,

(D.C. 1999). Moreover, in Logan v.

LaSalle Bank Nat’l Ass’n,

(D.C. 2013), the

D.C. Court of Appeals held that the DCCPPA applied to “real

estate mortgage transactions,” “mortgage refinancing,” and

“deceptive billing practices related to a contract for consumer

goods and services.”

. And here, unlike in Busby,

“Ms. Wilson supplied multiple examples of how Cooper ‘would

supply, any goods or services to [Ms. Wilson] in connection with

[the] ownership or sale of [her] house,’” including “paying

taxes and insurance from escrow accounts, modifying mortgages,

and property preservation.” McFadden,

, at *12

(quoting Ali v. Tolbert,

(D.C. Cir. 2011))

(citing Compl., ECF No. 1 ¶ 4; Ex. B ¶¶ 3, 5, 7, 19). Therefore,

because the DCCPPA applies to “any action normally considered

46 only incidental to the supply of goods and services to

consumers,” the services Ms. Wilson alleged fall into its scope.

b. Adequacy of Allegations

Regarding whether the Pay-to-Pay Fees were sufficiently

alleged as misleading, Magistrate Judge Faruqui explained that

“it is a violation of the [DC]CPPA if the merchant

misrepresented’ or ‘failed to state’ a material fact.” Frankeny

v. District Hospital Partners, LP,

, 1005 (D.C.

2020). Based on this standard, the magistrate court found that

the Complaint plausibly alleged that the fees were misleading

because: (1) Plaintiffs alleged that Mr. Cooper represented to

borrowers that it had the right to collect such fees, even

though the fees were allegedly prohibited by the mortgage and by

the HUD rules and FDCPA; and (2) Plaintiffs alleged that Mr.

Cooper never disclosed to borrowers that it was collecting more

than it cost to process the Pay-to-Pay Fees and that Mr. Cooper

had created an unfair profit center for itself. McFadden,

, at *12-13.

Mr. Cooper objects to the finding that Plaintiffs have

plausibly alleged that the Pay-to-Pay Fees were misleading.

Objections, ECF No. 44 at 30. First, it argues that “Plaintiffs

incorrectly argue that Mr. Cooper did not have the right to

collect the Fees despite the fact that, as described above and

in Mr. Cooper’s Motion, the Fees violate neither Plaintiffs’

47 mortgage agreements nor the FDCPA.”

Second, it objects to

the finding that Plaintiffs adequately alleged that Mr. Cooper’s

failure to disclose its profit on the Pay-to-Pay Fees was

“material” because “Plaintiffs fail to allege how they were

misled or, in other words, how they would have acted differently

if they knew Mr. Cooper received a profit.”

First, as described in Memorandum Opinion, the Court has

found that the mortgage agreements do not expressly authorize

the Pay-to-Pay Fees and that Plaintiffs have established viable

claims under breach of contract and the FDCPA. Mr. Cooper’s

objection is therefore overruled in this respect. And with

regard to Mr. Cooper’s second objection, “intent or knowledge is

not required” to plausibly allege a claim of misrepresentation

under the DCCPPA. Frankeny, 225 A.3d at 1005. In addition, the

statute does not require that any consumer be actually misled.

Instead, the DCCPPA makes it illegal to “engage in an unfair or

deceptive trade practice, whether or not any consumer is in fact

misled, deceived, or damaged thereby.”

.

Therefore, Plaintiffs did not have to allege “how they would

have acted differently if they knew Mr. Cooper received a

profit.” Objections, ECF No. 44 at 30; see Frankeny, 225 A.3d at

1004 (noting that the D.C. Court of Appeals has held that “in

light of the plain language and the legislative intent of the

CPPA, a consumer need not allege intentional misrepresentation

48 of a material fact or an intentional failure to disclose a

material fact under

(e) and (f)”).

The objections are accordingly overruled.

G. Unjust Enrichment

1. The Court Reviews the R. & R.’s Unjust Enrichment Findings De Novo and for Clear Error

Mr. Cooper objects to Magistrate Judge Faruqui’s

determination that Plaintiffs may maintain their unjust

enrichment claims as an alternative theory of liability.

Objections, ECF No. 44 at 31.

Mr. Cooper argues that, contrary to Magistrate Judge

Faruqui’s findings, unjust enrichment claims must be dismissed

when such claims arise out of a contractual relationship, which

is the case here.

Mr. Cooper, however, duplicates arguments

included in its motion to dismiss. See Def.’s Mot. Dismiss, ECF

No. 13-1 at 22-25. Because Mr. Cooper presents no new argument,

its objection is reviewed for clear error. See Houlahan,

.

Mr. Cooper also contends that Plaintiffs failed to

adequately allege pre-suit notice of their unjust enrichment

claims, as required by Plaintiffs’ mortgage agreements, and

objects to Magistrate Judge Faruqui’s findings to the contrary.

Id. at 32-33. While this objection also largely mirrors

arguments in its motion to dismiss, the Court shall review this

49 objection de novo to the extent that Mr. Cooper newly quarrels

with the magistrate judge’s “reliance” on the case Henok v.

Chase Home Fin., LLC,

(D.D.C. 2013).

Id.

2. The Court Overrules Mr. Cooper’s Unjust Enrichment Objections

First, the Court finds no clear error in Magistrate Judge

Faruqui’s analysis regarding the appropriateness of Plaintiffs’

unjust enrichment claim in the alternative.

Mr. Cooper argues that “[t]he conduct comprising

Plaintiffs’ alleged unjust enrichment claims arises entirely out

of the parties’ contractual borrower-servicer relationship,” and

that it is well-established that such claims must fail as a

matter of law when the subject matter is governed by an express

contract. Objections, ECF No. 44 at 31-32 (citing cases). It

contends that because the “gravamen” of the unjust enrichment

claim is governed by contract, the claim must be dismissed. Id.

at 32.

This Court agrees with Mr. Cooper’s general principle that

“a plaintiff cannot maintain an unjust enrichment claim

concerning an aspect of the parties’ relationship that was

governed by a contract.” Id. at 31 (quoting Smith v. Rubicon

Advisors, LLC,

(D.D.C. 2017)). Indeed,

Magistrate Judge Faruqui agreed, too. See McFadden,

3284794, at *13 (“As Cooper notes, ‘In general, a plaintiff

cannot maintain an unjust enrichment claim concerning an aspect

of the parties’ relationship that was governed by a

contract.’”). However, as explained in the R. & R., courts in

this District and Florida have also held that “a plaintiff may

pursue an unjust enrichment claim as an ‘alternative theory of

liability’ even though the plaintiff ‘ultimately cannot recover

under both a breach of contract claim and an unjust enrichment

claim pertaining to the subject matter of that contract.’”

(quoting Smith,

) (citing JI-EE Indus. Co.

v. Paragon Metals, Inc., No. 09-cv-81590,

, at *1

(S.D. Fla. Mar. 23, 2010)); see also Fed. R. Civ. P. 8(d)(3) (“A

party may state as many separate claims or defenses it has,

regardless of consistency.”). Without this rule, a plaintiff

could be left “without any remedy should the fact-finder

determine at a later stage that there was no express agreement

between the parties.” Scowcroft Grp., Inc. v. Toreador Res.

Corp.,

(D.D.C. 2009). Further, as courts

in this District have noted, “[t]his exception is especially

necessary where, as here, the defendant casts doubt on the . . .

contract.” Smith,

; see

(“Even if the

opposing party does not seek to discredit the contract,

dismissing unjust enrichment claims in conjunction with contract

claims may be premature where the parties have not yet had the

51 benefit of discovery and the Court has not yet interpreted the

scope of the contract.”); see also McFadden,

, at

*14 (noting that Mr. Cooper “asserts that the uniform mortgage

agreements do not govern Pay-to-Pay fees”). Accordingly, Mr.

Cooper’s objection regarding the appropriateness of Plaintiff’s

pleading of unjust enrichment in the alternative is overruled.

Second, the Court also overrules Mr. Cooper’s objection to

Magistrate Judge Faruqui’s finding that Plaintiffs adequately

alleged pre-suit notice. Mr. Cooper argues that Plaintiffs did

not provide adequate pre-suit notice of their unjust enrichment

claim, as required by the mortgage agreements. Objections, ECF

No. 44 at 32. The mortgage agreements provide that:

Neither Borrower nor Lender may commence, join, or be joined to any judicial action (as either an individual litigant or the member of a class) that arises from the other party’s actions pursuant to this Security Instrument or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Security Instrument, until such Borrower or Lender has notified the other party (with such notice given in compliance with the requirements of Section [15/14]) of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action.

See Objections, ECF No. 44 at 32 (quoting Compl., Ex. A at 10 ¶

20, Ex. C at 10 ¶ 19). Mr. Cooper claims that Plaintiffs’ notice

was defective because it “fail[ed] to include any reference to

Plaintiffs’ unjust enrichment claims, only seeking ‘restitution’

52 of the Fees in relation to their other claims.” Id. at 33

(noting that, “[i]n contrast, Plaintiffs deliberately referenced

their FCCPA, FDUTPA, and DCCPPA claims in their pre-suit

demands”).

However, the Court does not read the language of the

mortgage agreement to require a party to give notice of a

specific legal claim prior to any judicial action. Rather,

notice is required only for claims “aris[ing] from the other

party’s actions pursuant to this Security Instrument or . . .

alleg[ing] that the other party has breached any provision of,

or any duty owed by reason of, this Security Instrument.” See

Objections, ECF No. 44 at 32 (quoting Compl., Ex. A at 10 ¶ 20,

Ex. C at 10 ¶ 19). Pursuant to this unambiguous language,

although Plaintiffs would be required to note any alleged

“breach,” they would not be required to note the specific cause

of action they intended to bring in court. See Key v. Allstate

Ins.,

(11th Cir. 1996) (“[I]f the terms of

a[] . . . contract are clear and unambiguous, a court must

interpret the contract in accordance with its plain meaning . .

. .”).

Moreover, assuming that the provision applies, Plaintiffs’

Complaint indeed alleges that they gave pre-suit notice to Mr.

Cooper prior to suit. See Compl., ECF No. 1 ¶¶ 79, 93. As stated

above, Plaintiffs were not required to provide the specific

53 information Mr. Cooper argues in favor of, and therefore such

allegations in the Complaint are sufficiently detailed to meet

the pleading requirements. Cf. Trevathan v. Select Portfolio

Servicing, Inc.,

(S.D. Fla. 2015)

(dismissing unjust enrichment claim where plaintiff failed to

allege compliance with notice and cure provision in agreement).

And though Mr. Cooper argues that the R. & R.’s “reliance

on [Henok v. Chase Home Fin., LLC,

(D.D.C.

2013)] is misplaced as the Plaintiffs there were provided notice

of the core issue of the complaint, foreclosure,” Objections,

ECF No. 44 at 33, this Court disagrees. In Henok, the plaintiff

had argued that a notice of foreclosure sent to him was invalid

because it did not include his “full correct address” and did

not “include the precise amount to cure the default.”

. The court dismissed the argument and held that

the plaintiff “had a viable opportunity to cure his default and

take action to protect his interests,” noting that plaintiff had

“provide[d] no authority” supporting his argument that excluding

a portion of his full address rendered the notice defective.

. Here, Plaintiffs’ pre-suit demand requested

“restitution of such fees paid to Mr. Cooper.” 2 McFadden,

The Court may consider Plaintiffs’ pre-suit demand letters because they are integral to and referenced in the Complaint. See Ward v. D.C. Dep’t of Youth Rehab. Servs.,

, 119–20 (D.D.C. 2011) (“[A] court does not consider matters 54 3284794, at *14. Mr. Cooper was similarly thus on notice of

Plaintiffs’ requested remedy and how it could “take action to

cure” any alleged breach. Henok,

. The

Court therefore agrees with the magistrate judge’s

recommendation that the alleged pre-suit notice was not

defective. See McFadden,

, at *14.

Accordingly, Mr. Cooper’s objections are overruled.

IV. Conclusion

For the reasons stated above, Magistrate Judge Faruqui’s R.

& R., see ECF No. 42, is ADOPTED. Defendant Mr. Cooper’s motion

to dismiss, see ECF No. 13, is DENIED. The parties shall submit

a joint status report with a recommendation for further

proceedings by no later than April 15, 2022.

An appropriate Order accompanying this Memorandum Opinion

was issued on March 31, 2022.

SO ORDERED.

Signed: Emmet G. Sullivan United States District Judge April 4, 2022

outside the pleadings, but a court may consider on a motion to dismiss to include ‘the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint . . . .’”). 55