In Elbert v. RoundPoint Mortg. Servicing Corp., No. 20-cv-00250-MMC, 2020 U.S. Dist. LEXIS 221611 (N.D. Cal. Nov. 25, 2020), Judge Chesney allowed a Rosenthal Act claim to proceed against a mortgage servicer based on charges assessed when the consumer made payments by telephone.
As noted, a violation of the FDCPA constitutes a violation of the Rosenthal Act as well. See Cal. Civ. Code § 1788.17. In this instance, Elbert, as also noted, bases her Rosenthal Act claim in part on a provision of the FDCPA that prohibits the “collection of 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.” See 15 U.S.C. § 1692f(1). RoundPoint, relying on Turner v. Ocwen Loan Servicing, LLC, 467 F. Supp. 3d 1244, 2020 WL 2517927 (M.D. Fla. 2020), argues “fees paid in connection with a phone payment do not constitute consumer debts under the FDCPA and similar statutes.” (See Def.’s Mot. [*6] at 7:14-15.) As Elbert points out, however, Turner is distinguishable on its facts. In particular, the plaintiff in Turner claimed the fee she was charged to make a mortgage payment by phone was itself a “debt” for purposes of the FDCPA, and the district court, in finding the plaintiff failed to state a claim, noted that the fee was owed to the mortgage servicer, not the creditor, and, in any event, that the plaintiff was not in default on her obligation to pay the fee at the time she paid it. See Turner, 467 F. Supp. 3d at 1247-48 (holding “a person or business is not a ‘debt collector’ if the debt sought to be collected is not due or owed to another (i.e., it originated with the person or business collecting it) or if the debt[or] was not in default”). Here, by contrast, to the extent Count II is based on a violation of the FDCPA, such claim is not brought under the theory that the fee itself constitutes a debt, but, rather, that RoundPoint, in collecting an overdue mortgage payment, charged a fee that was incidental to said debt. (See FAC ¶ 57, Ex. B ¶¶ 3(A), 6(B).) In its reply, RoundPoint argues, for the first time, the fees it allegedly charged Elbert were not “incidental to the principal obligation” within the [*7] meaning of § 1692f(1).3 Although there exists a split of authority among district courts as to whether such fees can be deemed incidental to a late mortgage payment, the Court, having reviewed those cases, finds more persuasive the reasoning of the decisions in which such fees were deemed incidental. See, e.g., Lembeck v. Arvest Central Mortgage Co., 2020 U.S. Dist. LEXIS 205511, 2020 WL 6440502, at *1 (N.D. Cal. November 3, 2020) (finding “there would be no reason to pay the fee but for the need to pay the principal obligation”; further finding “[t]he fact that there are other payment methods not involving a fee or the fact that it’s a method the borrower has selected does nothing to take the fee outside the plain language of the statute”); Fusco v. Ocwen Loan Servicing, LLC, 2020 U.S. Dist. LEXIS 38606, 2020 WL 2519978, at *2 (S.D. Fla. March 2, 2020) (citing Black’s Law Dictionary definition of “incident” as “a dependent, subordinate, or consequential part”; finding “Speedpay fees” charged when borrower paid mortgage by phone “fit[ ] within” definition; noting such fees “are dependent on the payment of [the plaintiff’s] debt [and] there could be no Speedpay fee without a payment to make more ‘speedy'”). Accordingly, to the extent Count II is based on an alleged violation of § 1788.17 and on fees charged on dates other than November 1, 2018, Count II is not subject to dismissal.