Schuller et al v. Ocwen Loan Servicing, LLC

Filing 4

ORDER adopting the 2 Report and Recommendation. The 1 Motion to Withdraw Reference is granted with respect to Count One and denied as to Counts Two and Three. Counts Two & Three shall be litigated in and before the Bankruptcy Court. Count One is STAYED pending final judgment as to Counts Two & Three. The Clerk is directed to open a separate civil case for this action. Within 14 days after the civil case is opened, plaintiffs must file copies of pleadings, as set out. The Schullers are ordered to file a status report re: bankruptcy proceedings by 3/26/2014 and on or before the fourth Wednesday of each month. (CIVIL CASE NO. 14-89-WS-M). Signed by Chief Judge William H. Steele on 2/26/2014. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
SCOTT DOUGLAS SCHULLER, et al.,

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Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC,
Defendant.

MISC. ACTION 14-0005-WS-M

ORDER
This matter comes before the Court on plaintiffs’ Motion for Withdrawal of Reference
(doc. 1) and the Bankruptcy Court’s Report and Recommendation to the District Court (doc. 2).
The Motion is ripe and the time fixed by this Court for objections to the Report and
Recommendation has expired, with no party lodging any such objections.
This case is postured as an Adversary Proceeding pending in the U.S. Bankruptcy Court
for the Southern District of Alabama. Count One of the Complaint filed by plaintiffs, Scott D.
Schuller and Cynthia M. Schuller, alleges that defendant, Ocwen Loan Servicing, LLC, violated
the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA”), in multiple
specified ways. Meanwhile, Counts Two and Three allege that Ocwen violated the discharge
injunction entered by the Bankruptcy Court, as well as the automatic stay prescribed by 11
U.S.C. § 362. In their Motion for Withdrawal of Reference, the Schullers express concern that
the Bankruptcy Court lacks jurisdiction over their FDCPA claims, and maintain that withdrawal
of the reference is appropriate under both the mandatory withdrawal and the discretionary
withdrawal provisions of 28 U.S.C. § 157(d).
In the Report and Recommendation, Bankruptcy Judge Shulman recommended as
follows: (i) that this Court find the Bankruptcy Court lacks subject-matter jurisdiction over the
Schullers’ FDCPA claim pursuant to 28 U.S.C. § 1334(b); (ii) that this Court grant mandatory
withdrawal or, alternatively, permissive withdrawal of the reference as to Count One of the
Adversary Proceeding pursuant to § 157(d); and (iii) that this Court stay Count One while the

Bankruptcy Court proceeds to trial on Counts Two and Three, inasmuch as the Bankruptcy
Court’s familiarity with the issues renders it the most efficient forum for those counts and
resolution of those claims may benefit the parties by streamlining the triable issues remaining as
to Count One in this District Court.
After careful review of the file, including de novo review of the legal issues presented,
and in the absence of objection by any party, the undersigned adopts the Report and
Recommendation in its entirety. It is therefore ordered as follows:
1.

The Motion for Withdrawal of Reference is granted with respect to Count One of
the subject Adversary Proceeding, and that cause of action shall henceforth be
litigated in this District Court;

2.

The Motion for Withdrawal of Reference is denied as to Counts Two and Three
of the Adversary Proceeding. The reference will remain in place as to those
causes of action, which shall be litigated in and before the Bankruptcy Court;

3.

The Clerk of Court is directed to open a separate civil case file for this action;

4.

Within 14 days after the civil case file is opened in this District Court, plaintiffs
must file in that civil action copies of all pleadings (including the Complaint and
the Answer to Complaint) from the Adversary Proceeding in the Bankruptcy
Court file, so that the District Court file will contain a full record of the claims
and defenses joined herein;

5.

The civil action in this District Court concerning Count One is stayed pending
final judgment as to Counts Two and Three in the Bankruptcy Court; and

6.

To keep the Court apprised of developments in the Bankruptcy Court, and to
ensure that the stay in this case does not remain in place any longer than
necessary, the Schullers are ordered to file, on or before the fourth Wednesday
of each month, a written report reflecting the status of the bankruptcy
proceedings. The first such report is due on or before March 26, 2014.

DONE and ORDERED this 26th day of February, 2014.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

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