District Court (R.I.) Says FDCPA Plaintiff Rebutted Loan Documents Confirming “Commercial Purpose” With Evidence of “Personal Use”

In In Valdera v. PHH Mortg. Corp., No. 20-470-JJM-PAS, 2022 U.S. Dist. LEXIS 139869, at *10-12 (D.R.I. Aug. 4, 2022), Judge McConnell denied summary judgment to an FDCPA Defendant who argued that the loan documents designated the loan for investment purposes because the Plaintiffs claimed that they lived at the property.

PHH argues that the FDCPA does not protect Plaintiffs’ loan because they signed two documents indicating that the loan was for commercial purposes and so the loan could not be considered a “debt” under the FDCPA. This consumer protection statute defines a “debt” as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.” 15 U.S.C. § 1692a(5). The documents in the record show that the loan application bearing Plaintiffs’ signatures indicated by a checked box that the loan was for an investment (forgoing the boxes for “primary or secondary residences”) and the “Affidavits of Commercial Purpose” documents that each Plaintiff signed affirmed that the loan was primarily for business or commercial purposes and that they would “not use the proceeds … for personal, family, or household (consumer) purposes.” ECF No. 22 ¶ 9. In the face of these unambiguous documents, Plaintiffs argue that there are disputes in the record about whether the loan was for personal and family purposes. They filed an affidavit indicating that they bought the Central Falls property for personal purposes with the intent to live in it as their home. ECF No. 32 ¶¶ 5, 7, 9, 11, 18, 19. Mr. Boutros and Ms. Valdera moved into the first-floor rear unit, Ms. Valdera’s son and his wife moved into the first-floor front unit, Juan Valdera (Sobeida Valdera’s father) and his wife moved into the third-floor front unit, Ms. Valdera’s cousin and his girlfriend moved into the 3rd floor rear unit shortly after the August 1, 2005 closing. Id. ¶¶ 13-16. It is unclear what happened with the second floor except that Plaintiffs state that “[t]he two units on the second floor were not occupied by tenants for several months after the closing.” Id. ¶17. Plaintiffs also affirm that they did not notice that there was a reference to an investment in the loan application and they did not check any boxes on the application, nor did they sign and date the application on the date indicated on the application. Id. ¶¶ 28-32. They affirm that nothing was explained to them, and they did not understand that they were signing a document confirming that the loan was for commercial purposes. Id. ¶ 34. They affirm that the property was owner occupied. Id ¶ 47. While the Court believes that whether there is a material dispute about the loan was sought for commercial or personal purposes is marginal, it does find that Plaintiffs present a factual issue that this Court should not make on summary judgment.