Gritters v. Ocwen Loan Servicing, LLC. et al

Filing 128

MEMORANDUM Opinion and Order. The motion of defendant Pierce & Associates, P.C. to dismiss or strike plaintiff's claims in subparts (a) and (b) of Count III of the first amended complaint 87 is denied, and the motion of defendant Ocwen Loan Se rvicing, LLC to dismiss the first amended complaint 88 is denied. A status hearing is set for November 19, 2015 at 9:30 a.m. to discuss the next steps in the case. Signed by the Honorable Jorge L. Alonso on 11/6/2015.Notice mailed by judge's staff (ntf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

DONNA M. GRITTERS,

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Plaintiff,
v.
OCWEN LOAN SERVICING, LLC;
NATIONSTAR MORTGAGE, LLC;
and PIERCE & ASSOCIATES, P.C.,
Defendants.

No. 14 C 916
Judge Jorge L. Alonso

MEMORANDUM OPINION AND ORDER
Before the Court are the motions of defendants Ocwen Loan Servicing, LLC (“Ocwen”)
and Pierce & Associates, P.C. (“Pierce”) to dismiss the first amended complaint. For the reasons
explained below, the motions are denied.
BACKGROUND
Plaintiff, Donna M. Gritters, filed this action that stems from defendants’ allegedly
wrongful servicing, debt collection, and loss-mitigation activities in relation to plaintiff’s
residential mortgage loan. The first amended complaint contains six counts: breach of contract
(Count I); violation of the Fair Debt Collection Practices Act (“FDCPA”) (Counts II and III);
violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Count IV);
violation of the Real Estate Settlement Procedures Act (“RESPA”) (Count V); and breach of
fiduciary duty (Count VI). (R. 73, First Am. Compl.)1 Count III is asserted against Pierce only
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The first amended complaint also contains a Count VII for violation of the Truth in Lending
Act, which was brought solely against defendant Federal Home Loan Mortgage Corporation
(“Freddie Mac”). Counts I, II, IV, and VI were also asserted against Freddie Mac. Freddie Mac has
since been dismissed with prejudice from this action pursuant to the parties’ stipulation.

and is the sole claim against Pierce. The remaining counts are asserted against Ocwen and
defendant Nationstar Mortgage, LLC.2
Pierce moves to dismiss portions of the amended complaint pursuant to Federal Rule of
Civil Procedure 12(b)(6) or alternatively to strike those portions. Ocwen moves to dismiss the
amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
DISCUSSION
“A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief
may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2), a
complaint must include “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2)
must “give the defendant fair notice of what the claim is and the grounds upon which it rests.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (ellipsis omitted).

Under federal

notice-pleading standards, a plaintiff’s “[f]actual allegations must be enough to raise a right to
relief above the speculative level.” Id. Stated differently, “a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “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.” Id. (citing Twombly, 550 U.S.
at 556). “In reviewing the sufficiency of a complaint under the plausibility standard, [courts
must] accept the well-pleaded facts in the complaint as true, but [they] ‘need not accept as true

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Plaintiff has voluntarily dismissed the § 2605(d) portion of her RESPA claim against
Nationstar and her request for statutory or “additional” damages against Nationstar in her RESPA
claim. (R. 122, Agreed Order.)
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legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements.’” Alam v. Miller Brewing Co., 709 F.3d 662, 665-66 (7th Cir. 2013)
(quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)).
When considering a Rule 12(b)(1) motion to dismiss for lack of subject matter
jurisdiction, a district court accepts as true all well-pleaded factual allegations and draws
reasonable inferences from the allegations in favor of the plaintiff. Kelley v. Med-1 Solutions,
LLC, 548 F.3d 600, 604 (7th Cir. 2008) (citing Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191
(7th Cir. 1993)). The court may also look beyond the allegations of the complaint and consider
affidavits and other documentary evidence to determine whether subject matter jurisdiction
exists. Capitol Leasing, 999 F.2d at 191.
A.

Pierce’s Motion
Count III is an FDCPA claim with four subparts. Plaintiff alleges that Pierce violated (a)

15 U.S.C. § 1692g(a) by failing to send a validation notice within five days of its initial
communication with plaintiff; (b) §§ 1692g(a)(2) and 1692e by failing, in its October 25, 2013
validation notice to plaintiff, to identify the true creditor to whom the alleged debt was owed and
by falsely representing that the creditor was Nationstar; (c) § 1692g(b) by failing to verify the
debt or cease all collection activities after having received a November 11, 2013 dispute letter
from plaintiff; and (d) § 1692c(a)(2) by continuing to communicate directly with the plaintiff
after having been notified that she was represented by an attorney. (First Am. Compl. at 17-18.)
The FDCPA has a one-year statute of limitations, § 1692k(d), which provides that an
action may be brought “within one year from the date on which the violation occurs.” Pierce
argues that subparts (a) and (b) of Count III must be dismissed or stricken as time-barred
because plaintiff first asserted them in the first amended complaint, which was filed on March 3,
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2015, and the conduct on which those subparts are premised occurred well before one year prior
to the filing of the amended complaint. (R. 87, Pierce’s Mot. at 3-4.) In Pierce’s view, subparts
(a) and (b) do not relate back to plaintiff’s original complaint because they are based on conduct
that is distinct from that underlying the original FDCPA claims.
In response, plaintiff contends that the claims in subparts (a) and (b) do relate back to the
original complaint and are therefore not time-barred. In support of her argument, plaintiff cites
Feltman v. Blatt, Hasenmiller, Leibsker & Moore, LLC, No. 06 C 2379, 2008 WL 5211024, at
*4 (N.D. Ill. Dec. 11, 2008) (“Feltman I”) and Feltman v. Blatt, Hasenmiller, Leibsker & Moore,
LLC, No. 06 C 2379, 2009 WL 3151878, at *3 (N.D. Ill. Sept. 25, 2009) (“Feltman II”), in
which Judge Aspen confronted a similar situation. Feltman had alleged in her original complaint
that the defendants violated the FDCPA by making misrepresentations about the alleged debt,
failing to inform consumer reporting agencies that Feltman disputed the debt, and failing to
provide Feltman with the statutorily-required notice that she could demand validation of the
debt. Feltman II, 2009 WL 3151878, at *3. In her amended complaint, Feltman sought to add
claims that defendants had violated the FDCPA by filing a state-court lawsuit against her to
collect the alleged debt, taking other action related to that suit, and filing her social security
number on exhibits in the suit without redacting it. Feltman I, 2008 WL 5211024, at *2-4. In
her second amended complaint, Feltman sought to add an additional FDCPA claim that
defendants failed to verify the alleged debt or cease all collection activities after plaintiff had
disputed the debt. Feltman II, 2009 WL 3151878, at *1-2. Judge Aspen held that all of the new
claims related back to the original complaint. Feltman I, 2008 WL 5211024, at *3-4; Feltman II,
2009 WL 3151878, at *3. He explained as follows:

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Neither the facts, nor the theory of recovery, in the Amended Complaint have to be
identical to those in the original complaint for the new claims to relate back. Although
the specific debt collection practices complained of here were separate acts from those
complained of in the original complaint, the new claims are based on Defendants’
continued debt collection practices, were mentioned in the original complaint, and arise
out of the same “conduct, transaction or occurrence” as those alleged in the original
complaint.
Feltman I, 2008 WL 5211024, at *4 (citing Bularz v. Prudential Ins. Co. of Am., 93 F.3d 372,
379 (7th Cir. 1996)).
“[A] new substantive claim that would otherwise be time-barred relates back to the date
of the original pleading, provided the new claim stems from the same ‘conduct, transaction, or
occurrence’ as was alleged in the original complaint; for relation back to apply, there is no
additional requirement that the claim be based on an identical theory of recovery.” Bularz, 93
F.3d at 379 (quoting Fed. R. Civ. P. 15(c)). Subparts (a) and (b) of Count III are premised on the
alleged untimeliness and misleading content of Pierce’s communications with plaintiff.
Although those specific alleged violations of the FDCPA were not contained in the original
complaint, the original complaint mentioned the October 2013 communication from Pierce and
complained about Pierce’s allegedly wrongful debt-collection practices. Plaintiff’s amendments
thus assert claims based on the same core of facts—Pierce’s allegedly illegal collection activities
relating to the same mortgage debt. There is no problem with notice to Pierce; it had notice from
the outset that plaintiff is complaining about Pierce’s debt-collection activities. All of plaintiff’s
claims arise from that set of facts. “Rule 15(c) permits relation back where the claims in an
amended pleading are based on the same core of facts advanced in the original.” Newell v.
Hanks, 283 F.3d 827, 834 (7th Cir. 2002).
The situation is similar to that of Feltman. In its reply brief, Pierce fails to address
plaintiff’s discussion of the Feltman decisions. The Court agrees with Judge Aspen’s analysis
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therein. The Court is also mindful that in determining whether an amendment relates back, “the
Federal Rules of Civil Procedure are to be liberally construed to effectuate the general purpose
of seeing that cases are tried on the merits and to dispense with technical procedural problems.”
Staren v. Am. Nat’l Bank & Trust Co. of Chi., 529 F.2d 1257, 1263 (7th Cir. 1976).
Plaintiff’s amendments to Count III relate back to the date of the original complaint and
are therefore not barred by the statute of limitations. Accordingly, Pierce’s motion to dismiss or
strike with prejudice plaintiff’s claims in subparts (a) and (b) of Count III is denied.
B.

Ocwen’s Motion
Ocwen moves for dismissal of the amended complaint under Rules 12(b)(1) and 12(b)(6)

on the grounds that Gritters has no standing to assert and is judicially estopped3 from pursuing
her claims against Ocwen because those claims are owned by the bankruptcy estate that was
created when Gritters filed a Chapter 7 bankruptcy petition on September 29, 2010.4
“A debtor’s filing of a bankruptcy petition transfers to the bankruptcy estate exclusive
ownership of all claims that had accrued as of the date of the filing and deprives her of standing
to pursue those claims.” Yapp v. Astellas Pharma Global Dev., Inc., No. 12 C 1095, 2015 WL

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Plaintiff maintains that under Rule 12(g), Ocwen waived its judicial-estoppel argument by
failing to raise it in Ocwen’s Rule 12(b)(6) motion to dismiss the original complaint. But plaintiff
fails to acknowledge or attempt to distinguish Ennenga v. Starns, 677 F.3d 766 (7th Cir. 2012), in
which the Seventh Circuit held that Rule 12(b)(6) arguments for failure to state a claim may be
raised in successive motions to dismiss. The Seventh Circuit reasoned that “Rule 12(g)(2) does not
prohibit a new Rule 12(b)(6) argument from being raised in a successive motion. Stated differently,
Rule 12(h)(2) specifically excepts failure-to-state-a-claim defenses from the Rule 12(g)
consolidation requirement.” Id. at 773.
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Ocwen correctly argues, and plaintiff does not dispute, that the Court can take judicial
notice of plaintiff’s bankruptcy filings because they are matters of public record. (R. 88, Ocwen’s
Mot. at 4 n.2.) See, e.g., 4901 Corp. v. Town of Cicero, 220 F.3d 522, 527 n.4 (7th Cir. 2000);
Henson v. CSC Credit Servs., 29 F.3d 280, 284 (7th Cir. 1994).
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1326371, at *3 (N.D. Ill. Mar. 20, 2015) (citing 11 U.S.C. § 541(a)(1) and Biesek v. Soo Line
R.R., 440 F.3d 410, 413 (7th Cir. 2006)); see also Google, Inc. v. Cent. Mfg. Inc., 316 F. App’x
491, 495 (7th Cir. 2008) (claims that arise before a debtor files bankruptcy are part of the estate,
and the bankruptcy trustee has the exclusive power to prosecute them, but a cause of action
arising after the bankruptcy estate is created belongs to the debtor).
Ocwen contends that all of plaintiff’s claims are property of the bankruptcy estate
“because the events giving rise to them occurred before Gritters filed her Chapter 7 Petition” and
“Gritters could have asserted each of her claims prior to her filing of the Chapter 7 Petition.” (R.
88, Ocwen’s Mot. at 6 (emphasis omitted).) The salient question, however, is when plaintiff’s
claims accrued. Ocwen presents little to no analysis on this issue and does not acknowledge that
many, and likely most, of plaintiff’s claims may have accrued not when the alleged misconduct
occurred, but when plaintiff discovered or should have discovered her injuries. Rather, Ocwen
simply assumes that at the time Gritters filed her bankruptcy petition, she knew or should have
known about all of her injuries allegedly caused by Ocwen, and it further argues that Gritters
“concealed” those claims during the bankruptcy proceeding. (Ocwen’s Mot. at 6-7.) In response
to Ocwen’s motion, plaintiff argues that she did not have knowledge of the bases for her claims
until after she filed for bankruptcy relief and the bankruptcy proceeding was concluded.5
Ocwen fails to offer any reasoned analysis, claim by claim, of why plaintiff’s claims
against Ocwen should be considered to have been property of the bankruptcy estate. Neither a
lack of standing nor judicial estoppel is apparent from the face of the complaint or the materials

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The Court also notes that plaintiff concedes, due to a previous ruling in the case, that the
actionable conduct on her FDCPA claim against Ocwen is limited to that occurring after February
10, 2013. (R. 102, Pl.’s Resp. Ocwen’s Mot. 8.)
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Ocwen has provided that relate to plaintiff’s bankruptcy. Accordingly, Ocwen’s motion to
dismiss the first amended complaint is denied.
CONCLUSION
For the reasons stated above, the motion of defendant Pierce & Associates, P.C. to
dismiss or strike plaintiff’s claims in subparts (a) and (b) of Count III of the first amended
complaint [87] is denied, and the motion of defendant Ocwen Loan Servicing, LLC to dismiss
the first amended complaint [88] is denied. A status hearing is set for November 19, 2015 at
9:30 a.m. to discuss the next steps in the case.

SO ORDERED.

ENTERED:

November 6, 2015

__________________________________
JORGE L. ALONSO
United States District Judge

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