Allegedly false statement wasn’t defamatory

Where the plaintiff asserted a claim for defamation based upon the defendants’ allegedly false statement that her house was scheduled for foreclosure, her defamation claim was dismissed because there were insufficient allegations the statement was defamatory under the law.

Background

Brenda Hammack filed a multi-count complaint against several defendants, asserting claims for defamation; violation of the Federal Fair Debt Collection Practices Act or FDCPA; violation of the Truth in Lending Act; negligence; violation of the Real Estate Settlement Procedures Act and declaratory judgment. Defendants have filed multiple partial motions to dismiss.

Defamation

Defendants contend that Hammack has not pled any facts demonstrating that she suffered reputational harm as a result of the foreclosure publication. The court agrees: Hammack has not pled sufficient factual allegations establishing an actionable statement that resulted in her reputation being tarnished.

Although the foreclosure statements were false, Hammack has not pled that the statements harmed her reputation enough so “as to lower (her] in the estimation of the community or to deter third persons from associating or dealing with [her].” Hammack does allege that the foreclosure publication caused “emotional upset and embarrassment.” but the asserted facts do not allow a plausible inference that Hammack was, in fact, defamed. This count is dismissed.

FDCPA

In Count Two, Hammack alleges that Robertson, Anschutz, Schneid, Crane & Partners, PLLC, a law firm, violated four provisions of FDCPA. In Count Three, Hammack claims that RAS Services violated FDCPA by threatening to unlawfully take nonjudicial action to foreclose on her home.

First, the RAS defendants assert that Counts Two and Three are defective because those counts do not adequately plead that the RAS defendants acted as debt collectors. However, when entities engage in more than security interest enforcement by sending consumers letters that demand payment of a debt, then those entities act as debt collectors under FDCPA.

Exhibit A is a so-called “dunning letter” that the RAS defendants sent to Hammack, which explicitly states: THIS COMMUNICATION IS FROM A DEBT COLLECTOR. THIS IS AN ATTEMPT TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. Therefore, the RAS defendants at this stage must be considered debt collectors for the purposes of FDCPA.

Second, the RAS defendants aver that Hammack has not adequately alleged that RAS Services, as the substitute trustee, engaged in debt collection activity under FDCPA. The notice here contains a literal bold warning that states: “this is an attempt to collect a debt.” Further, the notice highlights the remaining principal balance and offers the RAS defendants’ assistance “to obtain the amount necessary to cure the default or pay off the loan.” Thus the RAS defendants sent a letter containing an express “attempt to collect a debt” and the amount of the debt itself. The motion to dismiss Counts Two and Three is denied.

Negligence

PHH Mortgage Corporation asserts that Virginia’s source of duty rule precludes Count Five. The relationship between Hammack and PHH appears to be entrenched in an underlying contract between PHH and the original creditor. Therefore, Hammack’s lack of direct contract with PHH notwithstanding, her claim for negligence appears to be rooted in contractual law, and thus, it is subject to the source of duty rule. Accordingly, Count Five for negligence will be dismissed.

PHH’s partial motion to dismiss granted. RAS defendants’ motion to dismiss granted in part, denied in part.

Hammack v. PHH Mortgage Corporation, Case No. 3:22-cv-111, June 30, 2022. EDVA at Richmond (Payne). VLW 022-3-276. 14 pp.