Thomas v. Deutsche Bank National Trust Company et al

Filing 28

ORDER granting in part and denying in part 11 Motion to Dismiss. Thomas must file her amended complaint by July 23, 2012. Signed by Judge D. P. Marshall Jr. on 7/10/12. (kpr)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION

PLAINTIFF

ROSIE M. THOMAS

v.

No. 4:11-cv-775-DPM

DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee for IXIS
Real Estate Capital Trust; SAXON
MORTGAGE SERVICES, INC.; and
OCWEN LOAN SERVICING, LLC

DEFENDANTS

ORDER
Thomas modified the terms of her mortgage-related debt to Deutsche
Bank through the Home Affordable Modification Program. Deutsche and its
loan servicer, Saxon Mortgage Services, eventually began contacting Thomas
about an alleged arrearage. Ocwen Loan Servicing took over servicing the
debt and tried to collect the alleged arrearage. Thomas has sued Deutsche,
Ocwen, and Saxon, alleging breach of contract and violation of the Fair Debt
Collection Practices Act. Deutsche and Ocwen move to dismiss. Thomas's
complaint will stand if it alleges" enough facts to state a claim to relief that is
plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Has Thomas stated a solid breach-of-contract claim against Deutsche, Ocwen,
or both for applying her payments incorrectly? Has she stated a Fair Debt

Collection Practices Act claim against either or both of the companies?
Thomas's complaint does not allege sufficient facts to maintain a
contract claim against Ocwen or Deutsche.

Twombly, 550 U.S. at 570.

Nevertheless, her response to the motion, Document No. 20, outlines facts that
support a plausible breach-of-contract claim. She says that Ocwen and
Deutsche incorrectly applied payments and assessed fees and penalties
against her. The Court is therefore convinced that the ends of justice would
be best served by allowing Thomas to amend her complaint. FED. R. CIV. P.
15(a)(2). Ocwen and Deutsche's motion is granted on Thomas's contract
claim, with leave to file an amended complaint alleging the particulars.
Deutsche's motion to dismiss Thomas's Fair Debt Collection Practices
Act claim is granted. Deutsche is a creditor: it extended the credit that created
Thomas's debt, 15 U.S.C. § 1692a(4); so it is not a debt collector and is not
bound by the Act. 15 U.S.C. § 1692a(6)(A); Schmitt v. FMA Alliance, 398 F.3d
995, 998 (8th Cir. 2005) (the Act does not regulate creditors' activities).
Ocwen' s motion to dismiss Thomas's Fair Debt Collection Practices Act
claim is denied. Ocwen' s first argument- Thomas alleges she is current, so
the Act cannot apply-is unconvincing. The Act applies to Ocwen's efforts

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to collect the debt that it began servicing with the (perhaps mistaken) belief
that it was in default. This is the answer given by every Court of Appeals that
has considered the issue. Bridge v. Ocwen Federal Bank, FSB,681 F.3d 355,362
(6th Cir. 2012); F.T.C. v. Check Investors, Inc., 502 F.3d 159 171-73 (3rd Cir.
2007); Schlosser v. Fairbanks Capital Corporation, 323 F.3d 534, 53-38 (7th Cir.
2003). While the Eighth Circuit has not spoken directly on this point, the
Court adopted analogous reasoning in Dunham v. Portfolio Recovery Associates,
LLC, 663 F.3d 997,1002 (8th Cir. 2011). There an entity could not avoid being

bound by the Act because it mistakenly attempted to collect from the wrong
person. This construction is the best one; Ocwen should not be allowed to
engage in conduct that offends the Act, and then say "King's X" when it turns
out that the consumer was not in default.
Ocwen' s argument that Thomas's complaint did not allege violations
of 15 U.S.C. §§ 1692d & 1692e also lacks merit. Her complaint alleges enough
facts to challenge Ocwen' s practices under these code provisions.

For

example, she alleges that Ocwen engaged in "intimidating telephone calls,
correspondence[,] and threats of foreclosure." Document No. 1, at 4. Thomas
did not specifically mention these two Code sections. But she said enough by

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citing"§ 1692 et seq." and alleging Ocwen' s "violation of multiple provisions
... including but not limited to, 15 U.S. § 1692f(1) and 15 U.S.C. § 1692c(5)."
Document No. 1, at 1 & 4 (emphasis added).

* * *
Motion, Document No. 11, granted in part and denied in part. Thomas
must file her amended complaint by 23 July 2012.
So Ordered.

D.P. Marshall Jr. f
United States District Judge

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