Alphonse v. Arch Bay Holdings, LLC et al
ORDER AND REASONS granting 38 Motion to Dismiss. Signed by Judge Helen G. Berrigan on 01/02/2013. (kac, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GLENN E. ALPHONSE, JR.
CIVIL ACTION NO.: 12-330
SECTION: "C" 4
JUDGE: HELEN G. BERRIGAN
ARCH BAY HOLDINGS, LLC and
SPECIALIZED LOAN SERVICING
LOAN SERVICING, LLC
ORDER AND REASONS1
Before this Court is a Motion to Dismiss all claims asserted by plaintiff Glenn Alphonse
in his Amended Complaint, by defendants Arch Bay Holdings, LLC and Specialized Loan
Servicing, LLC (“SLS”). Having considered the record, applicable law, and memoranda of
counsel, defendants’ motion is GRANTED.
This case arose from the foreclosure of plaintiff’s home in St. Tammany Parish,
Louisiana. According to the Amended Complaint, plaintiff Glenn E. Alphonse, Jr. (“Alphonse”)
financed a mortgage for his home in Slidell through lender WMC Mortgage Corporation
(“WMC”). Rec. Doc. 33. At some point, WMC wrote “Pay to the order of ______ without
recourse” on the mortgage note (“Note”) and a WMC representative signed below this mark.
Katharine Williams, a third-year student at Tulane University Law School, contributed to the research and
preparation of this order.
On October 21, 2010 the mortgage was assigned to Arch Bay Holdings, LLC -Series 2010B
(“AB-Series 2010B”). On October 29, 2010, AB-Series 2010B filed a Petition to Enforce
Security Interest in the 22nd Judicial Court of Louisiana in St. Tammany Parish. In the state
court petition, AB-Series 2010B alleged that Alphonse breached the Note and mortgage 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. 38-4 at 3). On November 5, 2011, the District
Court for the Parish of St. Tammany granted AB-Series 2010B’s petition, and issued an order
commanding the St. Tammany Parish Sheriff to seize and sell the property. On January 27,
2011, AB-Series 2010B assigned the Note to former defendant Deutsche Bank National Trust
Company (Deutsche Bank).2 The property was sold in March 2012.
On February 1, 2012, plaintiff filed his initial complaint, asserting various causes of
action against Arch Bay Holdings, LLC, as well as defendants Deutsche Bank and SLS.
(Rec.Doc.1). Specifically, Alphonse asserted that Arch Bay Holdings, LLC, Deutsche Bank and
SLS engaged in unfair trade practices, in violation of the Louisiana Unfair Trade Practices Act
(“LUTPA”), La.R.S. § 1401, et seq. (Rec. Doc.1 at 6-11). Plaintiff also alleged that Arch Bay
Holdings, LLC violated the Federal Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§1692(a). Id. at 8.
Arch Bay Holdings, LLC and SLS filed Motions to Dismiss on March 19 and 20, 2012,
respectively. (Rec.Docs. 10 and 15). Determining that the Rooker-Feldman doctrine barred it
from reviewing the state court judgment ordering a writ of seizure and sale of property, on July
30, 2012, this Court granted those Motions to Dismiss. In addition, this Court determined that
The claims against Deutsche Bank were dismissed on August 22, 2012, without prejudice for plaintiff’s
failure to prosecute. (Rec.Doc. 36).
some of the claims against Arch Bay Holdings, LLC and SLS were so inextricably intertwined
with the state court foreclosure proceeding that it could not exercise jurisdiction over them,
because to do so would require a review of the state foreclosure proceedings. (Rec.Doc. 31 at 34).
However, this Court stated that Alphonse’s other claims under the FDCPA and LUTPA
were not barred by Rooker-Feldman; specifically, that unfair trade practice claims do not
challenge the foreclosure order itself, and claims involving collection practices under the
FDCPA represent a separate claim over which federal courts have subject matter jurisdiction.
(Rec.Doc. 31 at 4). Though dismissing the original complaint, this Court allowed Alphonse to
file amended claims under the LUTPA and the FDCPA. (Rec.Docs. 31, 33).3 Alphonse filed an
Amended and Supplemental Complaint on August 13, 2012. (Rec.Doc. 33). In the Amended
Complaint, he alleges six violations of the FDCPA and LUTPA. Id. Defendants Arch Bay
Holdings, LLC and SLS have filed another Motion to Dismiss, claiming that Alphonse failed to
allege facts in the Amended Complaint to support a valid claim or cause of action against SLS or
Arch Bay Holdings, LLC, and requesting that this Court dismiss the Amended Complaint with
prejudice. Taking each of plaintiff’s amended claims for relief in turn, this Court GRANTS
defendants’ Motion to Dismiss.
Law and Analysis
Federal Rule of Civil Procedure 12(b)(6) allows dismissal if a plaintiff fails “to state a
claim upon which relief can be granted.” FED.R.CIV.P.12(b)(6). As the Supreme Court held in
The Court also ordered that, for diversity purposes, the plaintiff allege the citizenship of the parties in
accordance with Harvey v. Grey Wolf Drilling Co., 542 F.2d 1077, 1080 (5th Cir. 2008).
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2009), the
pleading standard Rule 8 announces does not require “detailed factual allegations,” but it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. Id., at 555
(citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).
Plaintiff argues that this motion to dismiss must be converted into a motion for summary
judgment under Rule 56 because documents not attached to the Amended Complaint are
referenced, relying on Kennedy v. Chase Manhattan Bank USA, 369 F.3d 833, 839 (5th Cir.
2004). (Rec.Doc. 42 at 9). In Kennedy, the Fifth Circuit stated that, “in considering a motion to
dismiss...[i]f the district court considers information outside of the pleadings, the court must treat
the motion as a motion for summary judgment. Although the court may not go outside the
complaint, the court may consider documents attached to the complaint.” The Kennedy court
cited to Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-499 (5th Cir. 2000), where
the Fifth Circuit “noted approvingly, however, that various other circuits have specifically
allowed that ‘documents that a defendant attaches to a motion to dismiss are considered part of
the pleadings if they are referred to in the plaintiff’s complaint and are central to her claim... In
so attaching, the defendant merely assists the plaintiff in establishing the basis of the suit, and the
court in making the elementary determination of whether a claim has been stated.” Id. Here,
Plaintiff’s reliance on Kennedy for the proposition that this Motion to Dismiss must be converted
to a Motion for Summary Judgment is not warranted; all of the documents included in this
Court’s consideration of these claims were attached to the Motion to Dismiss, and were
specifically referred to in the plaintiff’s Amended Complaint.
To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient
factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Twombly,
550 U.S. at 570. The face of the complaint must contain enough factual matter to raise a
reasonable expectation that discovery will reveal evidence of each element of the plaintiff’s
claim. Lormand, 565 F.3d at 255-257. If there are insufficient factual allegations to raise a right
to relief above the speculative level, Twombly, 550 U.S. at 555, or if it is apparent from the face
of the complaint that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215
(2007); Carbe v. Lappin, 492 F.3d 325, 328 & n.9 (5th Cir. 2007), the claim must be dismissed.
In deciding a motion to dismiss for failure to state a claim, a court may consider the
contents of the pleadings, including attachments thereto4, as well as the documents attached to
the motion to dismiss that are referred to in plaintiff’s complaint and are central to their claim.
Collins, 224 F.3d at 498-99; see also Brooks v. Flagstar Bank, 2011 WL 2710026 at *2 (E.D.La.
When considering a Rule 12(b)(6) motion, a court must accept all reasonable inferences
in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232-33 (5th cir. 2009).
However, threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d
868 (2009), citing Twombly, 550 U.S. 544. Although for the purposes of a motion to dismiss a
court must take all of the factual allegations in the complaint as true, it is “not bound to accept as
true a legal conclusion couched as a factual allegation.” Id.
The Court notes that plaintiff did not attach any documents to his Amended Complaint. (Rec.Doc.33).
A. LUTPA claim against Arch Bay Holdings, LLC
1. Rooker-Feldman Doctrine
In his first claim for relief against Arch Bay Holdings, LLC, plaintiff claims actual
damages as a result of unfair trade practices employed by Arch Bay Holdings, LLC, specifically
that Arch Bay Holdings, LLC wrongfully seized and possessed plaintiff’s home through flawed
executory proceedings. (Rec.Doc. 33 at ¶22). This is the same claim that was dismissed in
plaintiff’s original complaint. (Rec. Doc. 31 at 4). This Court reiterates that this claim is barred
by the Rooker-Feldman doctrine, and this claim for relief is dismissed for lack of subject matter
jurisdiction. FED.R.CIV.PRO 12(b)(1).
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 commenced5.” Exxon Mobil Corp. v. Saudi Basic
Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (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 a 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, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1963). The Fifth Circuit has held that federal
district courts lack jurisdiction over collateral attacks on the validity of state-court judicial
foreclosures and writs of execution. Flores v. Citizens State Bank of Roma, Texas, 132 F.3d 1457
(5th Cir. 1997)(per curiam); see also United States v. Shepherd, 23 F.3d 923, 924 (5th Cir.
An order of seizure and sale, unless there is opposition, is a final order. Boatmen’s Savings Bank v.
Wagenspack, 12 F. 66 (Circuit Court, E.D. La. 1882).
1994)(declining to review state court judgment confirming validity of allegedly fraudulent
foreclosure sale under Rooker-Feldman). 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 , 2011 WL 2710026 at *4.
Plaintiff’s first claim alleging unfair trade practices is based on the assertion that
wrongful seizure and wrongful possession are unfair trade practices. (Rec.Doc. 33 at 7-8).
Specifically, plaintiff alleges that the executory proceedings which resulted in the foreclosure of
his home were flawed by certain procedural defects6. Id. In order for this Court to consider these
allegations, it would have to perform a thorough review of the state court foreclosure
proceedings, which is prohibited by Rooker-Feldman. (Rec.Doc. 31 at 4).
2. Res Judicata
Even if Rooker-Feldman did not prevent this Court from entertaining these claims for
relief, the doctrine of res judicata would. The doctrine of res judicata, or claim preclusion, bars
repetitious suits involving the same cause of action once a court of competent jurisdiction has
entered a final judgment on the merits. United States v. Tohono O’Odham Nation, 131 S.Ct.
1723, 179 L.Ed.2d 723 (2011), citing Commissioner v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715,
92 L.Ed. 898 (1948). Records and judicial proceedings of any state court are afforded the same
full faith and credit in every court within the United States, and have the same preclusive effect
in federal court as they would have in state court. 28 U.S.C. §1738.
In his First Claim for Relief, Alphonse alleges that Arch Bay Holdings, LLC obtained the Note improperly
because it was improperly assigned and that Arch Bay Holdings, LLC filed the Petition to Enforce Security Interest
under an improper name . (Rec.Doc. 33 at ¶ 22-23). In his memorandum in opposition to defendant’s Motion to
Dismiss, plaintiff further alleges that defendant committed extrinsic fraud. (Rec.Doc. 42 at 7).
According to Louisiana law, once a creditor has properly complied with the requirements
of executory process, a debtor is limited in the ways in which he can proceed in defense. Citizens
Bank & Trust Co. v. Little Ford, Inc., 522 So.2d 1124, 1133-1134 (La. App. 1 Cir. 1988). The
Louisiana Code of Civil Procedure provides only two avenues for defending against an order
issuing a writ of seizure and sale in an executory proceeding: (1) an injunction proceeding to
arrest the seizure and sale; and/or (2) a suspensive appeal from the order directing the issuance of
the writ of seizure and sale. LA. CODE CIV. PRO. ART. 2642. An injunction action must be filed
prior to the sale of the subject property. Dryades Sav. and Loan Ass’n v. Givens, 602 So.2d 325,
327 (La. App. 4 Cir. 1992). All defenses and procedural objections to an executory process
proceeding are waived if the debtor permits the seizure and sale to proceed without raising any
objection by either a suit for injunction or a suspensive appeal. Citizens Bank & Trust Co. v.
Little Ford, Inc., 522 So.2d 1124, 1133-1134 (La. App. 1 Cir. 1988); see also Knox v. West
Baton Rouge Credit, Inc., 9 So.3d 1020 (La. App. 1 Cir. 2009). Plaintiff could not bring this
claim in state court, and cannot litigate it in this Court either.
3. Arch Bay Holdings, LLC
Plaintiff filed this complaint against Arch Bay Holdings, LLC. (Rec.Doc.1). However,
AB-Series 2010B held the Note in question and initiated the action to collect the debt at issue in
this case. (Rec.Docs. 20-4 at 11 and 38-4 at 2), see also Amended Complaint (Rec.Doc 33 at ¶8).
Plaintiff claims that AB-Series 2010B is a financial instrument and not a separate juridical entity
from Arch Bay Holdings, LLC. (Rec.Doc. 33 at ¶23). This is a legal conclusion that is couched
as a factual allegation, and this Court is not required to accept it as true. Iqbal, 556 U.S. at 678.
Arch Bay Holdings, LLC never seized or possessed the plaintiff’s property. In the
Petition to Enforce Security Interest by Executory Process, the petition was filed by “Arch Bay
Holdings, LLC - Series 2010B, a corporation authorized to do business in St. Tammany Parish,
Louisiana...” (Rec.Doc. 38-4 at 2). Based on the evidence provided to the 22nd District Court,
Parish of St. Tammany, AB-Series 2010B was the holder of the Note in question. (Rec.Doc. 384). Though plaintiff has not attached any documents to his Amended Complaint, the Amended
Complaint does state that a Notarial Endorsement, dated October 21, 2010 purported to assign
the Note to Arch Bay Holdings, LLC-Series 2010B by Mortgage Electronic Registration
Systems (MERS). (Rec.Doc. 33 at ¶ 9). Taking all of plaintiff’s factual claims as true, Arch Bay
Holdings, LLC-Series 2010B is a separate entity from Arch Bay Holdings, LLC.7
Chapter 12 of the Louisiana Revised Statutes governs corporations and associations
doing business within the state. La. R.S. §12:1, et seq. This chapter specifically provides that
“the laws of the state or other jurisdiction under which a foreign limited liability company is
Plaintiff argues that Arch Bay Holdings, LLC controls and owns a number series of trusts, including Series
2010B. (Rec.Doc. 42 at 9). A series of trusts is distinct from a series corporation. Further, Alphonse claims that the
cut-off date for AB-Series 2010B was October 31, 2010, but that his loan was not assigned to AB Series-2010B until
January 27, 2011. Id. However, AB-Series 2010B was assigned the Note on October 21, 2010. (Rec.Doc. 33 at ¶ 9).
Deutsche Bank was assigned the Note on January 27, 2011, when it became an “indentured trustee” for AB-Series
69 Am. Jur. 2d Securities Regulation—Federal § 805 provides that: a trust indenture is a contract, entered
into between a corporation issuing bonds or debentures and a trustee for the holders of the bonds or debentures,
which delineates the rights of the holders and the issuer. Upic & Co. v. Kinder-Care Learning Centers, Inc., 793
F.Supp. 448 (S.D.N.Y. 1992). The Trust Indenture Act of 1939 defines “indenture” as any mortgage, deed of trust,
trust or other indenture, or similar instrument or agreement (including any supplement or amendment to any of the
foregoing), under which securities are outstanding or are to be issued, whether or not any property, real or personal,
is, or is to be, pledged, mortgaged, assigned, or conveyed thereunder.15 U.S.C.A §77aaa-77ccc. An indenture
trustee's responsibilities and powers are strictly limited by the terms of the governing indenture, and,
generally, an indenture trustee has an obligation to take no action until there is a trust indenture default; that
is, until default occurs, a trustee's duties are merely ministerial. Elliott Associates v. J. Henry Schroder Bank &
Trust Co., 838 F.2d 66 (2d Cir. 1988) (emphasis added).
organized shall govern its organization, its internal affairs, and the liability of its managers and
members that arise solely out of their positions as managers and members.” La. R.S. §12:1342.
AB-Series 2010B is the correct party defendant in this claim, not Arch Bay Holdings
LLC. The Corporate Code of Delaware provides that a limited liability company agreement may
establish one or more designated series of members, managers, limited liability company
interests or assets. 6 DEL.C. §18-215(a). Any such series may have separate rights, powers or
duties with respect to specified property or obligations of the limited liability company, and any
such series may have a separate business purpose or investment objective. Id. If a limited
liability company establishes one or more series according to certain formalities,8 then the
liabilities of a particular series are enforceable against that series alone, and not against the assets
of the limited liability company generally, or any other series thereof. 6 DEL.C.§18-215(b).
Assets associated with a series may be held directly or indirectly, including in the name of such
Finally, “a series established in accordance with subsection (b) may carry on any lawful
business, and unless otherwise provided by the company agreement, such a series has the power
and capacity to, in its own name, contract, hold title to assets (including real, personal and
intangible property), grant liens and security interests, and sue and be sued. 6 DEL.C.§18-215(c).
If AB-Series 2010B is a separate juridical entity from Arch Bay Holdings, LLC itself, it is
responsible for the trade practices at issue in the complaint, and the claims for relief against
Arch Bay Holdings, LLC must be dismissed.
“[I]f the records maintained for any such series account for the assets associated with such series
separately from the other assets of the limited liability company, or any other series thereof, and if the limited
liability company agreement so provides, and if notice of the limitation on liabilities of a series as referenced in this
subsection is set forth in the certificate of formation of the limited liability company...” 6 DEL.C.§18-215(b)
B. FDCPA Claims against Arch Bay Holdings, LLC
Plaintiff makes other claims for unfair trade practices against both defendants and unfair
debt collection against Arch Bay Holdings, LLC under the FDCPA. Unfair trade practice claims
that 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 those allegations state a claim upon which relief can be granted under Rule
Plaintiff’s FDCPA claim against Arch Bay Holdings, LLC in the Amended Complaint
Arch Bay violated the FDCPA in one or more of the following ways:
a) Arch Bay violated § 1692e(2)(A) by misrepresenting the character and legal status of
the debt it was attempting to collect because Arch Bay knew, or should have known that
it lacked proof of ownership of the debt and therefore was not entitled to collect it;
b) Arch Bay violated § 1692c(a)(2) by communicating directly with Alphonse when it
knew Alphonse was represented by counsel;
c) Arch Bay violated § 1692e(8) by communicating credit information which it knew to
be disputed, or should have known to be false, to one or more credit reporting agencies;
d) Arch Bay violated § 1692e(11) by failing to disclose in the initial written
communication that it was attempting to collect a debt and that any information obtained
would be used for that purpose;
e) Arch Bay violated § 1692e(14) by using a business, company or organization name
other than its true name in the collection of the debt;
f) Arch Bay violated § 1692f(1) by collecting a debt that was not expressly authorized by
Alphonse’s mortgage; and/or
g) Arch Bay violated § 1692f by representing that Alphonse owed amounts that he did
(Rec.Doc. 33 at 9).
1. FDCPA Claims against Arch Bay Holdings, LLC
Again, AB Series-2010 held plaintiff’s mortgage note, and it initiated debt collection and
foreclosure processes against plaintiff. This claim for relief is incorrectly addressed against Arch
Bay Holdings, LLC, and must be dismissed. See A.3, supra.
2. FDCPA Claims “b)", “c)”, “e)”, and “g)”
Even if the claim was addressed to the correct defendant, none of these allegations can
withstand defendants’ motion to dismiss. The claims set forth in subsections “b)”, “c)”, “e)”,
and “g)” are bare recitations of the elements of the offense, and are not supported by any
evidence- they are merely unadorned, “the defendant unlawfully harmed me accusations”.
Twombly, 550 U.S. 544 (2009). They fail to state a claim for which relief can be granted and are
dismissed. Subsection “d)” is incorrect based on the record as presented. From the record as
presented, the initial communication from Dean Morris, L.L.P., on behalf of AB-Series 2010B,
is a letter dated September 3, 2010. (Rec.Doc. 38-8). That letter states: “This is an attempt to
collect a debt, and any information obtained will be used for that purpose.” Id.
Subsections “a)” and “f)” both attack the validity of the debt, by claiming alternately that
Arch Bay Holdings, LLC knew or should have known that it lacked proof of ownership of the
debt and was not entitled to collect it, and by representing that Alphonse owed amounts that he
did not owe. (Rec.Doc. 33 at ¶28). Leaving aside the fact that Arch Bay Holdings, LLC itself did
not attempt to collect any debt from Alphonse, the Court notes that the debt in question was in
the form of a negotiable instrument, and these two claims fail as a matter of law.
3. FDCPA Claims “c)” and “f)”
Under Louisiana commercial law, a “negotiable instrument” means an unconditional
promise or order to pay a fixed amount of money that is payable to bearer or to order, payable on
demand or at a definite time and does not state any other undertaking or instruction by the person
promising or ordering payment to do any act in addition to the payment of money. LA. REV. STAT.
ANN. §10:3-104(a). An instrument is a note if it is a promise and is a draft if it is an order. LA.
REV. STAT. ANN. §10:3-104(e). “Order” means a written instruction to pay money signed by the
person giving the instruction. LA. REV. STAT. ANN. §10:3-103(6). “Promise” means a written
undertaking to pay money signed by the person undertaking to pay. LA. REV. STAT. ANN. §10:3103(9). A promise is payable to bearer if it states that it is payable to bearer or to the order of
bearer or otherwise indicates that the person in possession is entitled to payment, or if it does not
state a payee or otherwise indicates that it is not payable to an identified person. LA. REV. STAT.
ANN. §10:3-109(a)(1)-(3). If an indorsement is made by the holder of an instrument and it is not a
special indorsement9, it is a blank indorsement. LA. REV. STAT. ANN. §10:3-205(b). When
indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of
possession alone until specially indorsed. Id.
Alphonse’s mortgage note was a promise, and was indorsed in blank- it was a negotiable
instrument and the debt it represented was payable to bearer. (Rec.Doc. 38-3). The holder of a
note does not violate the FDCPA or Louisiana law simply by bringing foreclosure proceedings
before the note was formally assigned. Castrillo v. American Home Mortgage Servicing, Inc., 670
F.Supp.2d 516, 525 (E.D. La. 2009). When endorsed in blank, a promissory note is payable to
If an indorsement is made by the holder of an instrument, and the indorsement identifies a person to whom
it makes the instrument payable, it is a special indorsement. When specially indorsed, an instrument becomes
payable to the identified person and may be negotiated only by the indorsement of that person. LA. REV. STAT. ANN.
bearer and may be negotiated by transfer of possession alone until specially indorsed. La. R.S.
§10:3-205(b), see also Paciera v. Augustine, 518 So.2d 1164, 1168 (La. App. 5 Cir. 1988), Gulf
Nat. Bank at Lake Charles v. Dupuis, 402 So.2d 789, 793 (La.Ct.App. 1981) (“A promissory note
payable to the order of bearer and secured by a mortgage may be transferred by mere delivery.
Authentic evidence of the transfer of the note is not necessary to enable the holder to foreclose by
executory process.”). The holder of a promissory note may enforce the mortgage privilege
securing such instrument without authentic evidence of the signatures, assignment, pledge,
negotiation or transfer thereof. La. R.S. §9:4422(3). AB-Series 2010B was the holder of the note
at the time of the foreclosure, and was therefore entitled to collect on the debt it secured. No
further proof of ownership of the debt was required - the claim under “a)” is dismissed.
Further, the claim under “f)” must be dismissed because the Note expressly authorized its
Bearer to collect the debt the note secured. As stated on the Note itself: “[t]his Note or a partial
interest in the Note...can be sold one or more times without prior notice to Borrower.” (Rec.Doc.
38-3 at 14, ¶20). “As used in this Security Instrument, ‘Lender’ additionally includes any
successors and assigns of the Lender first named above, as well as any subsequent holder or
holders of the Note, or of any indebtedness secured by this Security Instrument.” (Id. at 16, ¶32)).
C. LUTPA and FDCPA Claims against Deutsche Bank
Plaintiff filed his Amended Complaint on August 13, 2012 and included two claims
against Deutsche Bank. However, these claims against Deutsche Bank were dismissed without
prejudice on August 22, 2012. (Rec.Doc. 36). In addition, plaintiff did not have leave to include
any claims against this party in his amendment. Rec. Doc. 31.
E. LUTPA Claim against SLS
Plaintiff’s fifth claim for relief alleges that SLS engaged in unfair trade practices by
wrongfully seizing and possession his property. (Rec.Doc. 33 at ¶43). This is the same claim as
levied against Arch Bay Holdings, LLC, A., supra, and is also dismissed for the same reasons
under Rooker-Feldman and res judicata.
F. FDCPA Claims against SLS
In the Amended Complaint, plaintiff alleges:
SLS violated the FDCPA in one or more of the following ways:
a) SLS violated § 1692e(2)(A) by misrepresenting the character and legal status of the
debt it was attempting to collect because upon information and belief, it manufactured the
very documents Arch Bay required in order to collect it;
b) SLS violated § 1692c(a)(2) by communicating directly with Alphonse when it knew
Alphonse was represented by counsel;
c) SLS violated § 1692e(11) by failing to disclose in its April 3, 2012 written
communication that it was attempting to collect a debt and that any information obtained
would be used for that purpose;
d) SLS violated § 1692f by using unfair and unconscionable means to collect a debt when
it attempted to induce Alphonse to release some or all of his claims in exchange for a
“Cash Incentive” payment; and/or
e) SLS violated § 1692f by representing that Alphonse owed amounts that he did not owe.
(Rec.Doc. 33 at 14-15).
In “a)”, plaintiff alleges that SLS manufactured the documents used in the foreclosure
proceedings. (Rec.Doc. 33 at ¶¶15 and 49(a)). Investigating this allegation would require this
Court to review the finalized state foreclosure proceeding, and is barred under the RookerFeldman Doctrine. See A.1., supra. Therefore, this aspect of the complaint must be dismissed.
In “b)”, plaintiff accuses SLS of violating § 1692c(a)(2) by communicating directly with
him when it knew he was represented by counsel. The FDCPA defines “communication” as “the
conveying of information regarding a debt directly or indirectly to any person through any
medium.” 15 U.S.C. § 1692a(2) (emphasis added). Without the prior consent of the consumer or
the express permission of a court of competent jurisdiction, a debt collector may not communicate
with a consumer in connection with the collection of any debt if the debt collector knows the
consumer is represented by an attorney with respect to such debt and has knowledge of, or can
readily ascertain, such attorney's name and address, unless the attorney fails to respond within a
reasonable period of time to a communication from the debt collector or unless the attorney
consents to direct communication with the consumer. 15 U.S.C. §1692c(a)(2).
On February 2, 2012, plaintiff filed his original complaint. (Rec.Doc. 33 at ¶16). SLS
received the Summons and Complaint on February 7, 2012. Id. SLS sent a letter to Alphonse on
February 13, 2012 (Rec.Doc. 38-9). The FDCPA is a strict liability statute. In re Eastman, 419
B.R. 711 (Bkrtcy.W.D.Tex. 1009), citing Pittman v. J.J. Mac Intyre Co., 969 F.Supp. 609, 613
(D.Nev.1997). A single violation of the FDCPA is sufficient to establish civil liability.” Id., citing
Gibson v. Grupo de Ariel, LLC, 2006 WL 42369, *1 n. 2, 2006 U.S. Dist. LEXIS 539, at *3 n. 2
(N.D.Tex.2006) (citing Taylor v. Perrin, Landry, deLaunay & Durand, 103 F.3d 1232, 1238 (5th
Cir.1997)). However, while no actual injury is necessary to sustain a claim under the FDCPA,
there must still be an attempt to collect a debt from the plaintiff. David v. FMS Services, 475
F.Supp.2d 447, 449 (S.D.N.Y. 2007), see also Mabe v. G.C. Services Ltp. Partnership, 32 F.3d
86, 87-88 (4th Cir. 1994), (“Congress enacted the FDCPA to protect consumers from unfair debt
collection practices. Consequently, a threshold requirement for application of the FDCPA is that
the prohibited practices are used in an attempt to collect a ‘debt.’”) (internal citations omitted).
The letter of which plaintiff complains in subsection “b)” was indeed sent after the filing
of his complaint, and SLS knew or should have known that he was represented by counsel.
However, the plaintiff can not show that this letter is actually an attempt to collect a debt. The
heading on the February 13, 2012 letter does clearly note that the letter is from a debt collector
and for the purposes of collecting a debt. (Rec.Doc. 38-9). However, this appears to be boilerplate
copy, and the body of the letter does not reference any debt, nor threaten any action to collect a
debt. It is a request for more information from Alphonse to complete a loan modification
application. This Court finds that this letter does not meet the qualifications of a “communication
,” under §1692a, because it does not convey any information regarding a debt. U.S.C. §1692a(2).
The letter regards an application that Alphonse submitted to SLS. Alphonse submitted a
request for assistance to SLS requesting a loan modification. (Rec.Doc. 38-9). To process this
request, SLS required certain documents which Alphonse had not supplied. The letter at issue
sought this information, and this information only. (Rec.Doc. 38-9). Other circuits have held that
a consumer can waive the protections of the cease-communications provisions of the FDCPA.
Clark v. Capital Credit & Collection Services, Inc., 460 F.3d 1162, 1172 (9th Cir. 2006)(“[I]t is
obvious that even the least sophisticated debtor would recognize that Mrs. Clark’s request for
information constituted consent for...Capital’s attorney to return Mrs. Clark’s telephone call in
order to provide the specific information she requested.”). This Court finds that reasoning
persuasive, and holds that if, for the sake of argument, the February 12 letter was a
communication under §1692a, it was response to a request from Alphonse, and therefore the
prohibitions of 15 U.S.C.§1692c(a)(2) should not apply.
In “c)”, plaintiff alleges that SLS violated 15 U.S.C. §1692e(11) by failing to disclose in
its April 3, 2012 written communication that it was attempting to collect a debt. (Rec.Doc. 33 at
¶49). That section of the FDCPA provides that a:
debt collector may not use any false, deceptive, or misleading representation or means in
connection with the collection of any debt. Without limiting the general application of the
foregoing, the following conduct is a violation of this section... (11) “The failure to
disclose in the initial written communication with the consumer and, in addition, if the
initial communication with the consumer is oral, in that initial oral communication, that
the debt collector is attempting to collect a debt and that any information obtained will be
used for that purpose, and the failure to disclose in subsequent communications that the
communication is from a debt collector, except that this paragraph shall not apply to a
formal pleading made in connection with a legal action.
15 U.S.C. §1692e. The letter at issue was an offer of relocation assistance from Specialized Asset
Management, LLC, on behalf of the title holder of record. (Rec.Doc. 38-10 at 2). The letter does
not attempt to collect any debt, does not reference any debt, or generally constitute a
communication, conveying information regarding a debt directly or indirectly to any person
through any medium. 15 U.S.C. § 1692a(2).This letter was an attempt to enforce a possessory
right, not to collect any kind of debt. Therefore, this claim is dismissed.
In “d)”, plaintiff alleges that SLS violated §1692f by offering a cash incentive payment to
vacate the property and release the new owners from certain liability. (Rec.Doc. 33 at ¶49). The
FDCPA forbids a debt collector from using unfair or unconscionable means to collect or attempt
to collect any debt. 15 U.S.C. §1692f. A complaint will be deemed deficient under § 1692f if it
“does not identify any misconduct beyond that which Plaintiff asserts violates other provisions of
the FDCPA.” Barlow v. Safety Nat. Cas. Corp., 2012 WL 1965417 at 6 (M.D.La. 2012), citing
See Taylor v. Heath W. Williams, L.L.C., 510 F.Supp.2d 1206, 1217 (N.D.Ga. 2007).10 In Barlow,
the Court found the plaintiff’s failure to specifically identify how the defendants' conduct was
also unfair or unconscionable under this section warranted dismissal of the claim. Id. In this case
as well, Alphonse has not stated any reason that the offer of relocation assistance should be
considered unfair or unconscionable.
Further, this Court finds the reasoning employed in Gass v. CitiMortgage, Inc., 012 WL
3201400(N.D.Ga. 2012),to be particularly applicable to this claim. In that case, the court found
that offers of payment of relocation funds were not oppressive or outrageous, and did not
plausibly suggest a FDCPA violation. Id. at 15-16 (“Offers of monetary aid or relocation
assistance are not harassing or abusive, and do not offend the conscience or common notions of
fairness. Likewise, a statement explaining a creditor's right to possess a property after a
foreclosure sale by noting that Plaintiff would be evicted...is not deceiving, offensive, or unfair.”)
Adopting this reasoning, this Court finds that plaintiff has failed to state a claim for which relief
can be granted, and (d) is dismissed.
Finally, in “e)”, plaintiff alleges that SLS violated § 1692f by representing that Alphonse
owed amounts that he did not owe. There are no factual statements supporting this allegation, and
this allegation fails to state a claim for which relief can be granted.
“Section 1692f...includes eight subsections providing specific conduct that violates this section... Plaintiff
does not identify which, if any, of these eight provisions the Defendants violated through these actions. This alone is
not fatal to her claims since this section may provide a cause of action for conduct that is not specifically listed in
that section or any other provision of FDCPA. Foti v. NCO Financial Sys., Inc., 424 F.Supp.2d 643, 667
(S.D.N.Y.2006); see also McGrady v. Nissan Motor Acceptance Corp., 40 F.Supp.2d 1323, 1337 (M.D.Ala.1998). A
complaint will be deemed deficient under this provision, however, if it “does not identify any misconduct beyond
that which Plaintiffs assert violate other provisions of the FDCPA.” Foti, 424 F.Supp.2d at 667; see also Tsenes v.
Trans-Continental Credit and Collection Corp., 892 F.Supp. 461, 466 (E.D.N.Y.1995). Here, as discussed above, the
Complaint alleges that the garnishment proceeding, Defendant Smart's letter, and the Suit on Account violated other
provisions of the FDCPA. Her failure to specifically identify how this conduct was also unfair or unconscionable
under section 1692f warrants dismissal of this claim.”
IT IS ORDERED that the Motion to Dismiss filed by Arch Bay Holdings, LLC and
Specialized Loan Servicing, LLC is GRANTED. (Rec.Doc. 38).
New Orleans, Louisiana, this 2nd day of January, 2013.
HELEN G. BERRIGAN
UNITED STATES DISTRICT JUDGE