Complaint Against Law Firm for Initiating Foreclosure Proceedings Dismissed by Federal Court
Recently, a federal court dismissed a case against a law firm that initiated foreclosure proceedings on the plaintiff’s property, applying Florida’s litigation privilege and because the complaint failed to adequately allege causes of action for malicious prosecution and violations of the FDCPA.
A foreclosure action was initiated against the plaintiff by their reverse mortgage servicer, by and through a retained firm, based on the incorrect belief that the plaintiff was no longer living on the property. Despite the plaintiff’s notice to the foreclosure firm that she had continuously occupied the subject property, the firm filed a motion to commence foreclosure proceedings. The plaintiff then retained counsel and filed a motion to dismiss the foreclosure on the grounds that she had not ceased occupying the property. The servicer, through the firm, then filed a notice of voluntary dismissal. Following the dismissal, the plaintiff filed a motion for attorneys’ fees and costs, over the opposition and threats of sanctions from the servicer, through the foreclosure firm. While the request for fees and costs was still pending, the plaintiff brought this action against the law firm, claiming violations of the FDCPA, intentional infliction of emotional distress, malicious prosecution, and a violation of Florida’s Consumer Collection Practices Act (FCCPA).
Moving to dismiss the complaint, the firm argued that the alleged violations of the FCCPA and the claim of intentional infliction of emotional distress were both barred by Florida’s litigation privilege. This litigation privilege provides absolute immunity to any act occurring during the course of a judicial proceeding, regardless of whether the act involves a defamatory statement or other tortious behavior, so long as the act has some relation to the proceeding. The federal court held in favor of the law firm on both counts. The complained of conduct that allegedly resulted in intentional infliction of emotional distress occurred during the course of a judicial proceeding and had a substantial relation to that proceeding. Similarly, the FCCPA claim was barred by the litigation privilege as the plaintiff did not plead any conduct outside of the foreclosure proceedings that would constitute a violation of the FCCPA.
Finally, the court dismissed both the malicious prosecution claim and the alleged violation of the FDCPA as the plaintiff failed to state a claim for relief on either count. The plaintiff failed to meet the heightened standard under Florida law when bringing a malicious prosecution claim against an attorney, which requires allegations that an attorney has initiated legal proceedings with the reasonable and honest belief that its clients’ claim was not tenable or was brought with malice.
The FDCPA claim failed because a foreclosure action on a Home Equity Conversion Mortgage does not constitute a debt collection activity when payment of the underlying note is not sought. Although a foreclosure seeking payment on a promissory note is typically a debt collection activity under the FDCPA, when the plain language of the foreclosure complaint seeks neither payment of the underlying note nor personal liability for payment of the debt, it is not considered a debt collection activity for purposes of the FDCPA.
The name of the case is Hassan v. Liberty Home Equity Solutions, Inc., et al., Case No. 1:17-cv-22435, United States District Court for the Southern District of Florida.
