Alphonse v. Arch Bay Holdings, LLC et al
ORDER AND REASONS granting in part and denying in part 10 Motion to Dismiss and 15 Motion to Dismiss without prejudice. Pla is given until 8/13/2012 to amend his complaint. Signed by Judge Helen G. Berrigan on 07/30/2012. (kac, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GLENN E. ALPHONSE, JR.
ARCH BAY HOLDINGS, LLC,
DEUTSCHE BANK NATIONAL
TRUST COMPANY, AS INDENTURE
TRUSTEE OF THE ARCH BAY
TRUST 2010-2, and SPECIALIZED
LOAN SERVICING, LLC
CIVIL ACTION NO.: 12-330
JUDGE: HELEN G. BERRIGAN
MAG. KAREN WELLS ROBY
ORDER AND REASONS1
Before this Court are Motions to Dismiss by Defendants Arch Bay Holdings, LLC and
Specialized Loan Servicings, LLC. Having considered the record, applicable law, and memoranda
of counsel, defendants’ motions are GRANTED in part and DENIED in part.
This case concerns the foreclosure of plaintiff’s home in St. Tammany Parish, Louisiana.
In December of 2006, plaintiff Glenn E. Alphonse, Jr. (“Plaintiff”), financed a mortgage (“the
Note”) for his home in Slidell through lender WMC Mortgage Corporation. Rec.Doc.15-3 at 2. On
October 29, 2010, defendant Arch Bay Holdings, LLC- Series 2010B (“Arch Bay”) filed a Petition
to Enforce Security Interest in the 22nd Judicial Court of Louisiana in St. Tammany Parish.
Rebekka Veith, a second-year student at Tulane University Law School, contributed to the research and preparation of this order and reasons.
Rec.Doc.1 at 3. In the petition, Arch Bay alleged that plaintiff breached the Note by failing to pay
the monthly installment in April of 2009, and by subsequently failing to pay in full “all successive
monthly installments.” Rec.Doc.15-3 at 35. The District Court for the Parish of St. Tammany
granted Arch-Bay’s petition, and issued an order commanding the St. Tammany Parish Sheriff to
seize and sell the property. Rec.Doc.1 at 4. Ultimately, Arch-Bay purchased the property on
March 23, 2012. Rec.Doc.20 at 5.
On February 2, 2012, plaintiff filed this action, asserting various causes of action against
Arch-Bay, Deutsche Bank, and Specialized Loan Servicings, LLC (“SLS”). Rec.Doc.1.
Specifically, plaintiff asserts that Arch Bay engaged in unfair trade practices under Louisiana
Revised Statute §51:1401 et seq (Louisiana Unfair Trade Practices Act, or LUTPA). Rec.Doc.1 at
¶¶ 17-28, 22. Plaintiff also alleges that Arch Bay violated the Federal Debt Collection Practices
Act (FDCPA), 15 U.S.C. §1692(a). Id. at ¶ 27. Plaintiff alleges that Deutsche Bank also engaged
in unfair trade practices in violation of LUTPA and that SLS engaged in unfair trade practices,
although on that claim plaintiff does not cite any specific law which would provide relief for his
claim. Id. at ¶¶ 31-32, 38. Finally, plaintiff makes a claim for a declaratory judgment that
“executory process . . . was inappropriate in this case.” Id. at ¶ 44. Arch Bay and SLS now each
move to dismiss claims against them, and their motions present the same issues: that plaintiff has
not stated a cause of action against Arch Bay or SLS upon which relief can be granted, that
plaintiff’s claims are barred by res judicata, and that the Rooker-Feldman doctrine bars this court
from reviewing the state court foreclosure proceeding. Rec.Doc.15 at 1.
Law and Analysis
When considering a Rule 12(b)(6) motion to dismiss, this Court must “accept as true the
well-pleaded factual allegations in the complaint.” Causey v. Sewell Cadillac-Chevrolet, Inc., 394
F.3d 285, 288 (5th Cir. 2004). For a claim to survive a Rule 12(b)(6) motion, a complaint must
include allegations that show that a plaintiff has “a right to relief above the speculative level.”
Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly 550
U.S. 544 (2007). Thus, a plaintiff must “plead specific facts not mere conclusory allegations” in
order to survive a motion to dismiss for failure to state a claim. Guidry v. Bank of Laplace, 954
F.2d 278, 281 (5th Cir. 1992).
A. Rooker-Feldman Doctrine
The Rooker-Feldman doctrine bars United States District Courts from “modify[ing] or
revers[ing] state court judgments.” Union Planters Bank Nat’l Assoc. v. Salih 369 F.3d 457, 463
(5th Cir. 2004). Thus, a federal district court may not review final state court judgments that were
rendered “before the district court proceedings commenced.” Exxon Mobil Corp. v. Saudi Basic
Indus. Corp., 544 U.S. 280, 284 (2005). Additionally, if a party brings claims to a federal court
that are “inextricably intertwined” with a state court’s prior decision, those claims will be barred
because their consideration requires the District Court to “in essence” review the state court’s
decision. District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 486-87 (1963). Any
claims that would require a United States District Court to review a state court judgment ordering a
writ of seizure and sale of property are thus barred by this doctrine. Brooks v. Flagstar Bank, 2011
WL 2710026 at *4 (E.D.La. 2011).
Plaintiff brings some claims against Arch Bay and SLS that are so “inextricably
intertwined” with the state court foreclosure proceeding that this Court cannot exercise jurisdiction
over them. For example, plaintiff alleges wrongful foreclosure because Arch Bay did not have
“standing” to foreclose on plaintiff’s property. (Rec.Doc.1 at 6). Additionally, plaintiff alleges that
SLS employee Darren Bronaugh was not entitled to assign the Note to Arch Bay, and that Arch
Bay subsequently was not entitled to assign the Note to Deutsche Bank. (Rec.Doc.1 at 10-11).
Thus, plaintiff claims, the assignment of the Note was null. Id. Plaintiff also claims that because
some documents were “robo-signed,” the Order of Seizure and Sale was improperly procured.
(Rec.Doc.1 at 6-7). Plaintiff asserts that these “robo-signed” documents did not “transfer
ownership of anything, much less standing to take [plaintiff’s] home.” (Rec.Doc.1 at 11).
Essentially, plaintiff makes a variety of claims that amount to an assertion of wrongful foreclosure.
(Rec.Doc.1 at 7). Moreover, plaintiff makes a claim praying for a declaratory judgment that will
assert that executory process, the procedure through which plaintiff’s property was sold to satisfy
his mortgage, was inappropriate. (Rec.Doc.1 at 11-12). In order for this Court to consider these
allegations, a “thorough review of the state court foreclosure proceedings” would be required,
because they question the legitimacy of the foreclosure, and this Court does not have the
jurisdiction to do this. See Brooks, 2011 WL 2710026 at *4. Accordingly, these claims are
subject to dismissal.
However, plaintiff makes other claims for unfair trade practices against both defendants
and unfair debt collection against Arch Bay under the Fair Debt Collection Practices Act (FDCPA),
15 USC §1692. These are not barred by the Rooker-Feldman doctrine. Unfair trade practice
claims do not challenge the foreclosure order itself, and claims involving collection practices under
FDCPA represent a separate claim over which a federal court has subject matter jurisdiction. see
Easley v. New Century Mortg. Corp., 394 Fed.Appx. 946, 948 (3d Cir. 2010); see also Todd v.
Weltman, Weinberg & Reis Co., L.P.A, 434 F.3d 432, 437 (6th Cir. 2006). Therefore, this Court
must determine whether plaintiff has properly stated these claims under Federal Rule of Civil
B. Fair Debt Collection Practices Act
If a plaintiff alleges that a defendant violated the FDCPA and does not challenge the
“validity of the debt, but rather the collection practices of the creditor,” federal district courts will
have subject matter jurisdiction over the claim because it is distinct from a claim attacking the
validity of a state court action. Brooks, 2011 WL 2710026 at *4 (citing Naranjo v. Universal Sur.
Of America, 679 F.Supp.2d 787, 794 (S.D.Tex. 2010)). Plaintiff asserts in his complaint that Arch
violated FDCPA in one or more of the following ways: a) making
false or misleading representations; b) communicating credit
information knew to be false or should have known to be false; c)
failing to disclose in the initial written communication that the debt
collector is attempting to collect a debt and that any information
obtained will be used for that purpose; d) failing to send Plaintiff the
information required by 1692g(a); e) continuing activities after
receipt of Plaintiff’s dispute without sending validation of the debt;
and/or f) representing that Plaintiff owed amounts that he did not
owe. Rec.Doc.1 at ¶ 27.
Plaintiff makes only one allegation that a specific subsection of the FDCPA was violated
(that Arch Bay did not send information required by §1692g(a)), and in fact, just one of his other
claims falls expressly under a subsection of the law. Id. Plaintiff’s first claim, that defendant
made false and misleading representations, falls under §1692e (“a debt collector may not use any
false, deception or misleading representation in connection with the collection of any debt”). 15
U.S.C. §1692e. However, plaintiff does not offer any allegations about false or misleading
actions on the part of Arch-Bay that “rise above a speculative level,” and thus this claim is subject
to dismissal. see Twombly, 550 U.S. at 555 (2007). As for plaintiff’s claim that defendant failed
to send plaintiff the information required by §1692g(a), plaintiff again does not show in his
pleadings that defendant failed to do this. See Rec.Doc.1. Plaintiff’s other claims are bare
allegations of misconduct that do not meet a specific provision of the FDCPA and also do not rise
to the level required by Twombly to overcome a Rule 12(b)(6) motion for dismissal. For these
reasons, this Court finds that the plaintiff has not pled sufficient facts in its complaint to survive a
motion for dismissal at this time, and will grant plaintiff ten days to amend his complaint.
C. Unfair Trade Practices
A plaintiff may not bring a claim under LUTPA unless they are a “consumer or business
competitor of the defendant.” Hamilton v. Business Partners, Inc., 938 F.Supp. 370, 374 (E.D.La.
1996). In this case, plaintiff is a “consumer” under LUTPA because he is a “person who uses,
purchases, or leases goods or services” La.Rev.Stat. §51:1402(1). LUTPA is “deliberately broad
and does not specify particular violations,” but “some element of fraud . . . or other unethical
conduct” must be shown in order to properly demonstrate harm under LUTPA. Omnitech Intern.,
Inc. v. Clorox Co., 11 F.3d 1316, 1332 (5th Cir. 1994); Dufau v. Creole Engineering, Inc., 465
So.2d. 752, 758 (La.Ct.App.), writ denied, 468 So.2d 1207 (La.1985).
Plaintiff alleges that Arch Bay engaged in unfair trade practices by filing the Petition to
Enforce Security Interest in the name of Arch Bay Holdings-Series 2010B or “the Bond.”
(Rec.Doc.1 at 7). Plaintiff asserts both that because the Bond is a financial instrument, it cannot
sue a human being, and that a financial instrument suing a person is an unfair trade practice
(Rec.Doc.1 at 4, 7). Plaintiff also claims that an SLS employee’s assignment of the Note to Arch
Bay was a “deceptive sleight of hand [which] constitutes unfair trade practices.” (Rec.Doc.1 at
10). Plaintiff’s claims against SLS do not specifically cite to any portion of LUTPA or the
Louisiana Revised Statutes. (Rec.Doc.1 at 10-11). Instead, plaintiff generally alleges that SLS
violated “Louisiana law.” Id. Moreover, none of the parties address in their briefs the effect of the
exemption in LUTPA for “[a]ny federally insured financial instutition, its subsidiaries, and
affiliates . . . or actions or transactions subject to the jurisdiction of . . . federal banking regulators
who possess authority to regulate unfair or deceptive trade practices.” La.Rev.Stat.§51:1406(1).
Here again, the Court will allow the plaintiff an additional opportunity for amendment to cure any
deficiencies in the complaint.
Ultimately, these are state law claims, and this Court will need to revisit the issue of
subject matter jurisdiction in the event that plaintiff’s claims under the FDCPA are dismissed. If
that need arises, this Court will need the citizenship of the defendants specified in accordance with
the rule set forth in Harvey v. Grey Wolf Drilling Co.,542 F.3d 1077, 1080 (5th. Cir. 2008). Facts
relevant to citizenship should be specifically pled in any amendment.
IT IS ORDERED that the Motions to Dismiss filed by Arch Bay Holdings, LLC,
Rec.Doc.15, and Specialized Loan Servicings, LLC, Rec.Doc. 10, are PARTIALLY GRANTED
and PARTIALLY DENIED without prejudice.
IT IS FURTHER ORDERED that plaintiff is given until August 13, 2012, to amend his
New Orleans, Louisiana, this 30th day of July, 2012.
HELEN G. BERRIGAN
UNITED STATES DISTRICT JUDGE