Trembath v Wells Fargo Bank, N.A., et al

Filing 40

ORDER granting 14 Motion to Dismiss. The IDCSA count against Wells Fargo is DISMISSED WITHOUT PREJUDICE. Signed by Judge Rudy Lozano on 2/16/18. (nal)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
LAFAYETTE DIVISION
AARON M. TREMBATH,
Plaintiff,
vs.
WELLS FARGO BANK NA, et al.,
Defendants.

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)
)
)
) No. 4:17-cv-72
)
)
)
)

OPINION AND ORDER
This matter is before the Court on Wells Fargo Bank, N.A.’s
Motion to Dismiss Plaintiff’s Complaint, filed by Defendant, Wells
Fargo, on June 19, 2017 (DE #14).

For the reasons set forth below,

the Motion to Dismiss (DE #14) is GRANTED. The IDCSA count against
Wells Fargo is DISMISSED WITHOUT PREJUDICE on the condition that
Wells

Fargo

may

submit

a

request

for

reimbursement

and

documentation of its attorney fees for any unnecessary briefing
that

will

have

no

usefulness

in

any

subsequent

state-court

litigation.

BACKGROUND
This case arises out of a related state court foreclosure
action currently pending in the Circuit Court of Tippecanoe County
(DE #15-1, Case No. 79C01-1611-MF-000254).

The underlying state

proceeding was filed by Wells Fargo about 5 months earlier than

this case, in November 2016.

(DE #1-2.)

Wells Fargo filed suit

against Aaron and Felicia Trembath to foreclose real property
located at 1212 Logan Avenue, Lafayette, Indiana.

The Trembaths

moved to dismiss the foreclosure action, but the state court denied
that motion.

The Trembaths filed an answer on April 24, 2017, and

as an affirmative defense, they alleged that “Plaintiff’s request
for an in personam judgment against Aaron M. Trembath is barred by
the Statute of Limitations.”

(DE #15-3 at 3.)

Aaron Trembath filed the complaint in this case in the
Southern District of Indiana on April 24, 2017, the same day the
borrowers filed an answer in the underlying foreclosure case.

The

complaint alleges that jurisdiction arises under “15 U.S.C. §
1692k(d) [sic.] [Fair Debt Collection Practices Act], 28 U.S.C. §
1331, 1337 and 1367.”

(DE #1 at 1.)

Trembath does not allege

diversity jurisdiction under 28 U.S.C. § 1332.
The

instant

complaint

states

a

claim

against

Defendants

Unterberg & Associates, P.C. and Codilis Law (collectively “Codilis
Law”), for violation of the Fair Debt Collection Practices Act
(“FDCPA”).

(DE #1 at 2.)

Specifically, Plaintiff alleges that

Codilis Law filed a lawsuit against him in state court and sought
an in personam judgment on a time-barred debt, in violation of 15
U.S.C. § 1692e and f.

Id.

There is another claim against

Defendant, Wells Fargo Bank, N.A. (“Wells Fargo”), for violation of
the Indiana Deceptive Consumer Sales Act (“IDCSA”).
2

(DE #1 at 3.)

Trembath alleges that Wells Fargo violated the IDCSA because it
filed a state court foreclosure complaint based on a time-barred
debt and an “unaccelerated debt” and that Wells Fargo deceptively
tried to induce him to make a payment on the loan to extend the
“almost-expired”

statute

underlying mortgage debt.

of

limitations

for

enforcing

the

(DE #1 at 3.)

On February 2, 2018, the parties notified this Court that
Plaintiff and Defendants Unterberg & Associates and Codilis Law
reached a settlement and would dismiss those Defendants “as soon as
reasonably practicable following the execution of documents and
consummation of the settlement” in this case.

(DE #38 at 1.)

The

Court set February 26, 2018, as a deadline for the dismissal
papers. (DE #39.)

The settlement does not involve Wells Fargo.

Id.
Defendant, Wells Fargo, filed this motion to dismiss, arguing
that Plaintiff’s only claim against Wells Fargo for violation of
the

IDCSA,

Procedure

should

be

12(b)(1)

dismissed

because

this

under

Federal

Court

lacks

Rule

of

Civil

subject-matter

jurisdiction under the Colorado River abstention doctrine, and any
exercise of supplemental jurisdiction over the IDCSA claim would be
improper pursuant to principles of judicial economy, convenience,
fairness, and comity.

(DE #15 at 1-2.)

Wells Fargo also argued

that dismissal was appropriate under Rule 12(b)(6) because: (1) the
IDCSA claim was a compulsory counterclaim, (2) the IDCSA does not
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afford a private right of action for claims related to consumer
transaction in real property, (3) Wells Fargo is not a “supplier”
as defined by the IDCSA, and (4) the complaint fails to allege that
prior notice was provided to Wells Fargo, which is a condition
precedent to bringing an IDCSA claim based upon an “uncured”
deceptive act.
In

(DE #15 at 2.)

response,

Plaintiff

“concedes

there

is

a

significant

possibility this Court would determine that Plaintiff’s claims made
in this lawsuit against Wells Fargo were compulsory counterclaims
and should have been brought in state court.” (DE #35 at 1.)
Plaintiff does not address the merits of Wells Fargo’s arguments
about why the IDCSA claim allegedly fails as a matter of law, but
rather

“requests that his claims against Wells Fargo be dismissed

without prejudice so that he can move to amend his answer and
assert them in the pending state court lawsuit.”

(Id.)

Wells Fargo filed a reply on January 5, 2008 (DE #37),
reiterating that the claim should be dismissed with prejudice
because it fails to state a claim upon which relief may be granted,
and if this Court chooses to dismiss it without prejudice, Wells
Fargo should be granted reasonable attorney fees incurred in
defending this lawsuit, which should have been asserted as a
compulsory counterclaim in the state court foreclosure action.

DISCUSSION
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In response to Wells Fargo’s motion to dismiss, Plaintiff does
not address the merits of Wells Fargo’s motion, but instead
“respectfully requests that his claims against Wells Fargo be
dismissed without prejudice so that he can move to amend his answer
and assert them in the pending state court lawsuit.”
1.)

(DE #35 at

Wells Fargo contends that if the Court allows Trembath to

voluntarily dismiss the IDCSA claim, Wells Fargo should be awarded
its costs and attorney fees related to “time unnecessarily spent
briefing issues related to whether the Southern District of Indiana
was an improper venue, whether abstention under the Colorado River
doctrine

was

appropriate,

whether

the

Court

should

exercise

supplemental jurisdiction, and whether Plaintiff’s complaint was a
compulsory counterclaim.”

(DE #37 at 5.)

Federal Rule of Civil Procedure 41(a)(2) provides that “an
action may be dismissed at the plaintiff’s request only by court
order, on terms that the court considers proper.”

Fed. R. Civ. P.

41(a)(2). This case is similar to Wells Fargo Bank, N.A. v. Younan
Properties, Inc., 737 F.3d 465, 467 (7th Cir. 2013), where the
Seventh

Circuit

voluntary

upheld

dismissal

the

should

district
be

judge’s

conditioned

on

holding

that

reimbursing

a

the

opposing party for legal expenses it incurred in seeking dismissal.
As Judge Posner noted in that case, “[a] consequence of a voluntary
dismissal on such a ground [without prejudice] would be that the
defendant’s expenditures on contesting the existence of federal
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jurisdiction had been wasted, or largely so, because he had not
killed the suit but had merely shifted it to another court.”
at 468.

Id.

The same circumstances are true here, where Plaintiff

admits that he plans to petition the state court to add the
counterclaim.

Judge Posner went on:

A judge who reasonably believed that the plaintiff
had imposed a gratuitous expense on the defendant
by filing in the wrong court and now wanted to
dismiss without prejudice in the expectation of
refiling in the right court would therefore be
justified in conditioning voluntary dismissal on
the plaintiff’s reimbursing some or all of the
defendant’s
expenditures
in
litigating
the
jurisdictional issue. . . . if as in this case the
case is dismissed without prejudice the fee award
should reimburse the defendant for expenses
incurred in preparing work product that will not be
useful in subsequent litigation of the same claim.
Id. (quotation and citations omitted).
Here, this Court believes that Plaintiff imposed a gratuitous
expense on Wells Fargo by filing the IDCSA claim (which he now
concedes

is

a

compulsory

counterclaim

that

should

have

been

asserted in the state foreclosure action), in federal court. The
original complaint was filed in the Southern District of Indiana on
April 24, 2017, and Wells Fargo filed its motion to dismiss on June
19, 2017, which included the argument that the IDCSA claim was a
compulsory counterclaim.

(DE #15 at 2, 11-13.) The parties then

had to brief the issue of venue only in front of the Southern
District of Indiana, and the transfer was vigorously opposed by
Plaintiff.

It was not until after Wells Fargo filed its lengthy
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memorandum in support of the motion to dismiss (DE #15) on June 19,
2017, and after it briefed the issue of venue, that Plaintiff
recently conceded on December 15, 2017, that his IDCSA claim is
probably a compulsory counterclaim that should have been brought in
state court, asking the court to dismiss it without prejudice so he
could amend his answer and assert it in the pending state court
lawsuit.

(DE #35 at 1.) Given this turn of events, this Court

concurs with Younan, that “[w]ith the plaintiff asking the court
for a chance to bring the same suit against the same defendants in
a different court, it is reasonable to require the plaintiff to
compensate the defendants for any wasted motion forced upon them by
the plaintiff’s having chosen the wrong court.”

Younan, 737 F.3d

at 469.
Consequently, this Court will dismiss the IDCSA count against
Wells Fargo without prejudice on the condition that Wells Fargo may
submit

a

request

for

reimbursement

and

documentation

of

its

attorney fees for any unnecessary briefing that will have no
usefulness in any subsequent state-court litigation on or before
March 13, 2018.

Plaintiff may file a response on or before March

27, 2018.

CONCLUSION
For the reasons set forth below,
#14) is GRANTED.

the Motion to Dismiss (DE

The IDCSA count against Wells Fargo is DISMISSED
7

WITHOUT PREJUDICE on the condition that Wells Fargo may submit a
request for reimbursement and documentation of its attorney fees
for any unnecessary briefing that will have no usefulness in any
subsequent state-court litigation on or before March 13, 2018.
Plaintiff may file a response on or before March 27, 2018.

DATED: February 16, 2018

/s/ RUDY LOZANO, Judge
United States District Court

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