PHILADELPHIA – A federal appeals court has ruled that a lower court was correct when it dismissed with prejudice an action brought by a Philadelphia man against a home ownership counseling group, when the plaintiff failed to take timely action to amend his claims.
A per curiam panel of judges for the U.S. Court of Appeals for the Third Circuit issued a decision upholding the dismissal of plaintiff Jonathan Valentin’s case versus Esperanza Housing Counseling.
Beginning in 2008, plaintiff Valentin worked with EHC to avoid foreclosure on his home in Philadelphia. Specifically, EHC helped Valentin with obtaining a “mortgage modification, a pilot mortgage home equity loan and a PHFA mortgage grant.”
“The relationship soured in 2014, when EHC allegedly subjected Valentin to ‘harassment, hazing, denial of services and legal representation.’ And it ended in 2016, when EHC closed Valentin’s ‘credit case file.’ The case-file closure was rooted in a variety of seemingly uncontroversial factors, including Valentin’s employment and overall financial status,” per the appellate court.
“Valentin believed, however, that unlawful phenotypical bias was one of the factors in the mix. As proof, he alleged that EHC employees referred to him using a racial epithet, criticized his lack of Spanish literacy, and made ‘comments such as…you don’t want to help out your own race.”
In response to the alleged mistreatment, Valentin filed suit against EHC in the U.S. District Court for the Eastern District of Pennsylvania in May 2018. He raised the following claims in his complaint: Harassment under the Fair Debt Collection Practices Act, hazing as defined in the laws governing the conduct of midshipmen in the United States Naval Academy and racial discrimination under Title VI of the Civil Rights Act of 1964.
EHC motioned to dismiss the case, and Valentin did not respond to the motion.
The District Court determined that Valentin failed to adequately plead an FDCPA claim, as the complaint lacked allegations that EHC (1) is a debt collector, (2) attempted to collect a debt, or (3) violated a particular provision of the FDCPA, and further determined that Valentin’s ‘hazing’ claim is not cognizable under any available body of law.
“The District Court also determined that the complaint lacked allegations showing that EHC receives federal financial assistance, as required by Title VI. The District Court determined in the alternative that Valentin failed to adequately plead a prima facie case of discrimination by EHC,” the Third Circuit stated.
“Finally, the District Court liberally construed the complaint as raising a claim under 42 U.S.C. Section 1981 – which prohibits discrimination in the making and enforcement of contracts on the basis of race – and determined that such a claim was inadequately pleaded for essentially the reasons that stymied the Title VI claim.”
The District Court granted EHC’s motion, dismissing the FDCPA and hazing claims with prejudice. Since Valentin could cure the pleading defects of his Title VI and Section 1981 claims, the District Court dismissed those claims without prejudice, to the filing of a fourth amended complaint within three weeks of its relevant order.
However, the District Court warned Valentin that, if he did not timely amend, the whole case would be dismissed with prejudice. That is precisely what happened next, as the District Court entered judgment as promised and Valentin then appealed.
“After careful consideration of the arguments raised in Valentin’s brief, we discern no error by the District Court. The complaint, which Valentin declined to further amend despite the District Court’s invitation, failed to state a viable claim for relief,” the Third Circuit said.
“Specifically, the District Court properly dismissed Valentin’s Section 1981 claim because, among its deficiencies, the complaint lacked allegations plausibly demonstrating that race was a but-for cause of the Valentin-EHC relationship’s end. Indeed, Valentin made clear in his complaint that his race was, at most, one of several factors that led EHC to close his case file.”
The Third Circuit added that the District Court also properly dismissed the FDCPA claim.
“Valentin’s argument that EHC served as an FDCPA-covered debt collector on behalf of his mortgagee is simply implausible in light of the factual narrative set forth in the complaint. Lastly, the District Court properly dismissed the Title VI claim for lack of allegations that EHC is the recipient of federal financial assistance. Perhaps Valentin could have fixed that pleading defect but, as noted above, he chose not to. Accordingly, we will affirm the judgment of the District Court,” the Third Circuit concluded.
U.S. Court of Appeals for the Third Circuit case 19-3648
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com