Thompson v. Ocwen Financial Corporation et al

Filing 86

RULING GRANTING MOTIONS TO DISMISS. For the reasons stated in the attached ruling, defendants' motions to dismiss (Docs. # 47 , # 49 , # 51 , # 53 , and # 58 ) are GRANTED. The motions to dismiss by defendants Michael T. Rozea and Leopold & Asso ciates (Docs. # 55 and # 57 ) are DENIED as moot in light of plaintiff's voluntary dismissal of these defendants from this action (Doc. # 82 ). Plaintiff's motion for hearing (Doc. # 66 ) is DENIED as moot in light of the Court's hear ing on the pending motions to dismiss (Doc. # 79 ). Plaintiff's motion for default judgment (Doc. # 85 ) against the remaining defendants who have not entered appearances in this action is DENIED for the same reasons set forth in the attached ru ling that show that plaintiff has no standing or plausible claim against any of the remaining non-appearing defendants. The claims against the non-appearing defendants are DISMISSED pursuant to 28 U.S.C. § 1915(e)(2)(B). The Clerk of Court shall close this case. It is so ordered. Signed by Judge Jeffrey A. Meyer on 1/23/2018. (Black, R.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

MEL THOMPSON,
Plaintiff,
v.

No. 3:16-cv-01606 (JAM)

OCWEN FINANCIAL CORPORATION, et
al.,
Defendants.

RULING GRANTING MOTIONS TO DISMISS
Plaintiff Mel Thompson believes his 2003 mortgage was fraudulent, and he has spent
many years seeking relief in federal court. In this latest round of litigation, he asserts a variety of
fraud-related claims against many defendants whom he has sued before, as well as against a law
firm and one of its lawyers. Because plaintiff lacks standing for most of his claims and because
his remaining claims fail as a matter of law, I will grant defendants’ motions to dismiss.
BACKGROUND
Plaintiff has filed an amended complaint (Doc. #44) that names the following defendants:
Ocwen Financial Corporation and two of its officers (William Erbey and Ronald Faris); New
Century Mortgage and one of its agents (Karen Smith); Deutsche Bank National Trust Company;
Morgan Stanley Abs Capital I Inc.; the law firm of Bendett & McHugh as well as one of its
attorneys (Alex Ricciardone); and Accent Capital and its owner (Terrence Riordan).1 This case is
the most recent of many federal lawsuits that plaintiff has filed stemming from what he claims
was an allegedly fraudulent mortgage loan transaction for his home in 2003 and from the later

1

Four of the named defendants have yet to appear in this action despite docket entries reflecting that they
have been served: Accent Capital, New Century Mortgage, Terrence Riordan, and Karen Smith. The amended
complaint also named two more defendants—Leopold & Associates PLLC and Michael T. Rozea—as to whom
plaintiff later filed a stipulation of dismissal. Doc. #82.

1

unlawful efforts of defendants to collect or enforce the debt against plaintiff.2 The first four
counts of the amended complaint allege violations of different provisions of the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. The remaining non-dismissed
counts of the complaint allege violations of state law: the Connecticut Unfair Trade Practices Act
(“CUTPA”), Conn. Gen. Stat. § 42-110a et seq. (Count 5); fraud (Count 6); negligence (Count
7); and slander of title (Count 8).
Significantly for the disposition of this case, plaintiff filed a Chapter 7 bankruptcy
petition on November 21, 2011. See In re Melvin Thompson, No. 3:11-bk-32924-LMW. Plaintiff
listed on his bankruptcy schedules the various suits in which he was a party at the time he filed
his petition, see Doc. #24 to id., which included two of his prior federal cases concerning this
mortgage that were before Judge Thompson. See Thompson v. Barclays Capital Real Estate,
Inc., d/b/a Barclays Homeq Servicing, No. 3:10-cv-317 (D. Conn. 2010); Thompson v. Accent
Capital, No. 3:11-cv-69 (AWT), 2011 WL 3651848 (D. Conn. 2011), aff’d, 491 F. App’x 264
(2d Cir. 2012).
On March 19, 2012, the trustee of plaintiff’s bankruptcy estate, Barbara Katz, issued a
report of no distribution. That same day she also filed a report of abandonment, in which she
abandoned “all litigation in which the Debtor is a Plaintiff or Counter Plaintiff pending in the
Connecticut Superior Court and in Federal Court, both District Court and the Court of Appeals.”
Doc. #60 to In re Melvin Thompson, No. 3:11-bk-32924-LMW.

2

See Thompson v. Wachovia Corp., No. 3:06-cv-595 (SRU); Thompson v. Barclays Capital Real Estate,
Inc., d/b/a Barclays Homeq Servicing, No. 3:10-cv-317 (AWT); Thompson v. Accent Capital, No. 3:11-cv-69
(AWT), 2011 WL 3651848 (D. Conn. 2011), aff’d, 491 F. App’x 264 (2d Cir. 2012); Thompson v. Ocwen Financial
Corp., No. 3:13-cv-386 (JCH), 2013 WL 4522504 (D. Conn. 2013). Plaintiff also filed an action against all of the
current defendants other than the Bendett defendants on February 12, 2016, but filed a voluntary dismissal of the
entire case on August 17, 2016, after a dispute over service of process. See Thompson v. Ocwen Financial
Corporation et al., No. 3:16-cv-231 (AWT).

2

Plaintiff eventually received his final discharge from bankruptcy on April 24, 2014, and
the bankruptcy case was closed on October 8, 2015. At the time of plaintiff’s discharge, he
received a discharge injunction pursuant to 11 U.S.C. § 524(a)(2), which prohibits a creditor
from attempting to collect on a personal liability which has been discharged in bankruptcy. All
properly scheduled property of the bankruptcy estate that had not been discharged reverted to
plaintiff’s possession.
DISCUSSION
Defendants have moved to dismiss the complaint on a variety of grounds under Fed. R.
Civ. P. 12(b)(1) for lack of subject matter jurisdiction and under Fed. R. Civ. P. 12(b)(6) for
failure to state a claim. It is well established that federal courts should ordinarily resolve any
doubts about the existence of federal subject matter jurisdiction prior to considering the merits of
a complaint. See, e.g., Rhulen Agency, Inc. v. Alabama Ins. Guar. Ass’n, 896 F.2d 674, 678 (2d
Cir. 1990).
For purposes of a Rule 12(b)(1) or Rule 12(b)(6) motion to dismiss, the Court must
accept as true all factual matters alleged in a complaint, although a complaint may not survive
unless its factual recitations state a claim to relief that is plausible on its face. See, e.g., Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009); Mastafa v. Chevron Corp., 770 F.3d 170, 177 (2d Cir. 2014);
Lapaglia v. Transamerica Cas. Ins. Co., 155 F. Supp. 3d 153, 155–56 (D. Conn. 2016). The
Supreme Court has elaborated as follows on the “plausibility” standard for evaluating a motion
to dismiss:
A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.... The plausibility standard is not akin to a probability
requirement, but it asks for more than a sheer possibility that a defendant has
acted unlawfully.... Where a complaint pleads facts that are merely consistent

3

with a defendant’s liability, it stops short of the line between possibility and
plausibility of entitlement to relief.
Iqbal, 556 U.S. at 678. Naturally enough, because the focus of “plausibility” review is on
what facts a complaint alleges, a court is “not bound to accept as true a legal conclusion couched
as a factual allegation” nor “to accept as true allegations that are wholly conclusory.” Krys v.
Pigott, 749 F.3d 117, 128 (2d Cir. 2014).
Standing as to Claims of Bankruptcy Estate
Defendants move to dismiss on grounds that plaintiff lacks standing to pursue claims that
were the property of the bankruptcy estate. I agree for substantially the same reasons stated by
Judge Hall in previously dismissing one of plaintiff’s prior lawsuits against many of the same
defendants now named in this action. See Thompson v. Ocwen Financial Corp. et al., 2013 WL
4522504, at *3–5 (D. Conn. 2013). As explained in Judge Hall’s opinion, all causes of action
possessed by a debtor when the debtor’s bankruptcy petition is filed no longer belong to the
debtor but to the bankruptcy estate. So too do causes of action that arise after filing but before
the bankruptcy case is closed, at least if they are “sufficiently rooted in the pre-bankruptcy past.”
See id. at *3 (explaining the different approaches different courts have taken as to this issue).
Once a claim becomes part of the bankruptcy estate, it is only the trustee who has standing to
pursue that claim until it has been validly abandoned. And while “properly scheduled estate
property that has not been administered by the trustee normally returns to the debtor when the
bankruptcy court closes the case, undisclosed assets automatically remain property of the estate
after the case is closed.” Id. at *4 (quoting Chartschlaa v. Nationwide Mut. Ins. Co., 538 F.3d
116, 122 (2d Cir. 2008)).
Here, plaintiff did not disclose in his bankruptcy papers any causes of action pertaining to
the allegedly invalid mortgage at issue here other than the two cases before Judge Thompson.
4

See Doc. #24 to No. 11-bk-32924. As a result, the trustee’s abandonment of “all litigation in
which the Debtor is a Plaintiff or Counter Plaintiff pending in the Connecticut Superior Court
and in Federal Court, both District Court and the Court of Appeals,” Doc. #60 to No. 11-bk32924, encompassed only these two cases before Judge Thompson, not any causes of action
plaintiff had yet to pursue in any court and that were not listed in his bankruptcy schedules.
Compare Taylor v. Fin. Recov. Servs., 252 F. Supp. 3d 344, 350 (S.D.N.Y. 2017) (FDCPA claim
that was actually disclosed in bankruptcy petition reverted to debtor upon closing of bankruptcy
estate).
Plaintiff alleges that there was an assignment of his debt from New Century to Ocwen
that occurred on July 31, 2015, and that this assignment was illegal because no valid debt existed
to be assigned. Doc. #44 at 21, 24 (¶¶ 68, 77). Because the allegation of illegality is rooted in the
alleged fraud in 2003 of the pre-bankruptcy past, plaintiff lacks standing to pursue his claim that
the assignment of the debt in 2015 was unlawful. Compare In re Rhinesmith, 450 B.R. 630
(W.D. Tex. 2011) (FDCPA claims of Chapter 7 petitioner that were grounded entirely in postpetition conduct and that had no roots in pre-petition conduct were not property of the
bankruptcy estate).
Plaintiff otherwise lacks standing to pursue any of his non-disclosed federal or state law
claims that are predicated on fraud or other illegality that occurred during his pre-bankruptcy
past. With the exception of two post-bankruptcy claims discussed below as against Ocwen and
against the Bendett law firm defendants, I conclude that plaintiff has no standing to pursue any
of his other claims against any of the defendants in this case.3

Insofar as any of plaintiff’s claims were or could have been presented in the two cases before Judge
Thompson, they are either time-barred for the reasons stated by defendants Deutsche Bank and Ocwen in their
motion to dismiss, Doc. #49-1 at 32, or they are barred by res judicata. See Channer v. Dep’t of Homeland Sec., 527
F.3d 275, 279 (2d Cir. 2008).
3

5

Claim against Ocwen re “Statement” of August 16, 2016
One of plaintiff’s claims arguably relates to post-petition conduct and involves a claim of
illegality under the FDCPA that does not necessarily depend on the illegality of acts that
occurred prior to plaintiff’s bankruptcy. Although I conclude that plaintiff has standing to
maintain this claim, plaintiff has not alleged plausible grounds for relief.
Plaintiff alleges that defendant Ocwen violated the FDCPA when it sent a certain
“statement” to him on August 16, 2016. Doc. #44 at 50 (¶ 212). In order to show that sending
this “statement” was a violation of the FDCPA, plaintiff must show that it constituted an attempt
to collect the mortgage debt from plaintiff.4 If it were such an attempt and if the debt had been
discharged in the bankruptcy, then the statement also may have violated the discharge injunction
of plaintiff’s bankruptcy case. See 11 U.S.C. § 524(a)(2); Garfield v. Ocwen Loan Servicing,
LLC, 811 F.3d 86, 88–91, 92 n.7 (2d Cir. 2016) (discussing rights of action for violations of
FDCPA that occur in violation of discharge injunction).
But a discharge injunction under 11 U.S.C. § 524 “only prevents enforcement of personal
liability,” and “it does not prevent foreclosure of a mortgage that remains in default after a
discharge is issued and a chapter 7 case is closed.” In re Wilson, 492 B.R. 691, 696 (Bankr.
S.D.N.Y. 2013). Moreover, at least where the underlying personal debt has been discharged
through bankruptcy, “an action seeking foreclosure under Connecticut law should be considered

The most relevant sections of the FDCPA are 15 U.S.C. § 1692e(2)(A), which prohibits “the false
representation of the character, amount, or legal status of any debt,” and § 1692f(1), which prohibits “the collection
of any amount . . . unless such amount is expressly authorized by the agreement creating the debt or permitted by
law.” Under the former, Ocwen would only be liable for misrepresenting the status of plaintiff’s discharged debts,
i.e., suggesting that Ocwen was still entitled to recover personally on those debts despite the discharge. Under the
latter, Ocwen would only be liable for “the collection of” the debt. Similarly, § 1692d prohibits “any conduct” by a
debt collector “the natural consequence of which is to harass, oppress, or abuse any person in connection with the
collection of a debt.” And § 1692g(b) prohibits debt collection attempts after a debtor has given written notice that it
disputes the debt or some portion thereof. If the statement was not a debt collection attempt, none of these sections
would apply.
4

6

the enforcement of a security interest as opposed to an action to collect a debt” under the
FDCPA. Derisme v. Hunt Leibert Jacobson P.C., 880 F. Supp. 2d 339, 363 (D. Conn. 2012)
(citing cases).
Judge Bryant’s ruling in Derisme concludes that one who seeks to enforce or foreclose
upon a mortgage is not a “debt collector” subject to the entire FDCPA, at least where no
additional deficiency judgment is sought. To reach this conclusion, Derisme and like-minded
rulings have relied on a provision of the FDCPA, 15 U.S.C. § 1692a(6), which expressly defines
the term “debt collector” and makes clear that the term applies to an enforcer of security interests
only for purposes of one type of “unfair practice” provision of the FDCPA, 16 U.S.C. §
1692f(6). These courts have reasoned that the purposeful inclusion of security interests for one
section of the FDCPA implies that the term “debt collector” should not include an enforcer of
security interests for purposes of any other sections of the FDCPA. See 880 F. Supp. 2d at 362–
64.
More recently, Judge Underhill has raised doubt about whether this interpretation is
correct. See Cicalo v. McCalla Raymer Leibert Pierce, 2017 WL 3444675, at *3–5 (D. Conn.
2017). He notes that the FDCPA otherwise excludes certain groups from the general definition of
debt collectors, see 15 U.S.C. § 1692a(6)(A)–(F), but that enforcers of security interests are not
among those who are expressly excluded from the definition of a debt collector. Accordingly, in
Judge Underhill’s view, the FDCPA should not be interpreted to create a categorical “identitybased exemption” for security-enforcers when no such exemption was expressly given in the text
of the FDCPA, such that “enforcers of security interests are not per se excluded from the
definition of debt collector under the FDCPA.” See Cicalo, 2017 WL 3444675, at *4.

7

I do not need to choose between Derisme and Cicalo to decide this case and to decide if
enforcers of security interests are per se exempt from the definition of a “debt collector” under
the FDCPA. That is because neither decision involved application of the FDCPA in the
bankruptcy context where a personal debt that underlies a secured mortgage interest had already
been discharged. I need only conclude that the act of enforcing a security interest alone when the
underlying debt has already been discharged through bankruptcy is not an act of “debt
collection” that is subject to the FDCPA.
The parties have provided the Court with a “Mortgage Account Statement” sent by
Ocwen to plaintiff on August 16, 2016, and it is clear that it was not an attempt to collect a debt
within the scope of the FDCPA. The first page of the statement describes the amount of
principal, interest, and total unpaid amount that is due, and it further states in boldface: “This
statement is for informational purposes only.” Doc. #80 at 3. On its reverse the statement
includes the following language:
This communication is from a debt collector attempting to collect a debt; any
information obtained will be used for that purpose. However, if the debt is in
active bankruptcy or has been discharged through bankruptcy, this
communication is purely provided to you for informational purposes only with
regard to our secured lien on the above referenced property. It is not intended as
an attempt to collect a debt from you personally.
Doc. #80 at 4, 6 (emphasis added).
Essentially the same language has been litigated under the FDCPA in other cases
involving defendant Ocwen, and other courts considering this language has held that, in
circumstances like plaintiff’s, this type of communication does not constitute an attempt to
collect a debt in contravention of the discharge injunction and the FDCPA. See, e.g., Lovegrove
v. Ocwen Home Loans Servicing, L.C.C., 666 F. App’x 308, 311–12 (4th Cir. 2016); LaCourse v.
Ocwen Loan Servicing, LLC, 2015 WL 1565250, at *9–12 (D.N.H. 2015); cf. Goodson v. Bank
8

of America, N.A., 600 F. App’x 422, 430-32 (6th Cir. 2015); compare Hart v. FCI Lender Servs.,
Inc., 797 F.3d 219, 226 (2d Cir. 2015) (letter announcing intent to collect debt and lacking
explicit “for informational purposes” bankruptcy disclaimer was an attempt to collect a debt
within scope of FDCPA). I agree with these cases, and I therefore conclude that plaintiff does not
have a cause of action against defendant Ocwen under the FDCPA for the statement of August
16, 2016.
Claim against Bendett Defendants re Letter of August 23, 2016
For the same reasons, I conclude that the Bendett law firm defendants may not be held
liable to plaintiff on the basis of a letter they sent on August 23, 2016. This letter contains
language almost identical to that in the statement sent by Ocwen. See Doc. #81 at 17 (“If you
have previously received a discharge in bankruptcy which discharged this debt, this
correspondence is not and should not be construed to be an attempt to collect a debt, but only
information relative to enforcement of a lien against the above referenced property.”).
Moreover, the letter also begins by stating that Bendett & McHugh had been retained “to
commence a foreclosure on the above referenced property.” Id. at 16. For reasons set forth at
length by Judge Bryant, the FDCPA does not properly apply to statements by law firms in the
context of foreclosure proceedings. See Derisme, 880 F. Supp. 2d at 365-67. Accordingly, I
conclude that this letter was not a debt collection attempt, and therefore that plaintiff’s FDCPA
claims against the Bendett defendants must be dismissed.
CONCLUSION
For the foregoing reasons, defendants’ motions to dismiss (Docs. #47, #49, #51, #53, and
#58) are GRANTED. The motions to dismiss by defendants Michael T. Rozea and Leopold &
Associates (Docs. #55, #57) are DENIED as moot in light of plaintiff’s voluntary dismissal of

9

these defendants from this action (Doc. #82). Plaintiff’s motion for hearing (Doc. #66) is
DENIED as moot in light of the Court’s hearing on the pending motions to dismiss (Doc. #79).
Plaintiff’s motion for default judgment (Doc. #85) against the remaining defendants who have
not entered appearances in this action is DENIED for the same reasons set forth above that show
that plaintiff has no standing or plausible claim remaining against any of the non-appearing
defendants. The claims against the non-appearing defendants are DISMISSED pursuant to 28
U.S.C. § 1915(e)(2)(B). The Clerk of Court shall close this case.
It is so ordered.
Dated at New Haven this 23rd day of January 2018.
/s/ Jeffrey Alker Meyer
Jeffrey Alker Meyer
United States District Judge

10