Barksdale et al v. Green Tree Servicing LLC

Filing 17

OPINION and ORDER Granting Defendant's 11 Amended MOTION to Dismiss - Signed by District Judge Judith E. Levy. (FMos)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Cheryl M. Barksdale and Allen W.
Barksdale,
Plaintiffs,

Case No. 14-cv-10403
Hon. Judith E. Levy
Mag. Judge Michael J. Hluchaniuk

v.
Green Tree Servicing LLC,
Defendant.
_______________________________/
OPINION AND ORDER GRANTING DEFENDANT’S
AMENDED MOTION TO DISMISS [11]
This case arises out of plaintiffs Cheryl and Allen Barksdale’s
(“plaintiffs”) claim that defendant Green Tree Servicing LLC violated
the Fair Debt Collection Practice Act (“FDCPA”), the Michigan
Collection Practices Act (“MCPA”), and committed fraud by carrying out
certain prohibited debt collection practices.

Before the Court is

defendant Green Tree’s amended motion to dismiss for failure to state a
claim under Fed. R. Civ. P. 12(b)(6), or in the alternative, for summary
judgment pursuant to Fed. R. Civ. P. 56(a). (Dkt. 11).

Oral argument was held on November 3, 2014. For the reasons
set forth on the record, Count III was dismissed and the motion with
respect to Counts I and II were taken under advisement.
For the reasons set forth below, the Court finds that plaintiffs’
complaint fails to allege a claim for relief under the FDCPA or MCPA
and therefore GRANTS Green Tree's motion to dismiss.
I.

Background
On November 2, 2007, plaintiffs Cheryl and Allen Barksdale

(“plaintiffs” or “the Barksdales”) executed a mortgage with Quicken
Loans as lender, and Mortgage Electronic Registration Systems, Inc.
(“MERS”) as nominee for lender and mortgagee, to secure property at
19486 Santa Barbara Drive, Detroit, Michigan (the “property”). (Dkt.
10 at 7).

Bank of America transferred servicing of the mortgage to

Green Tree on September 1, 2011. (Dkt. 10-1).
On December 13, 2012, Green Tree sent a notice of default to
plaintiffs, alleging failure to submit payments for November and
December 2012. (Dkt. 10-2). Following a default by reason of nonpayment, plaintiffs began negotiations with defendant to mitigate their

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loss by way of a short sale. (Dkt. 10 at 7). On January 29, 2013, Green
Tree sent notice to plaintiffs that their accounts had been forwarded to
an attorney to begin foreclosure proceedings.

(Dkt. 10 at 8).

The

mortgage was assigned by Quicken Loans to Green Tree on February 7,
2013. (Dkt. 10 at 8).
On June 4, 2013, defendant’s attorney notified plaintiffs that
Green Tree would be proceeding with a foreclosure sale on July 11,
2013. (Dkt. 10 at 9). Green Tree purchased the property at the sheriff’s
sale on July 11, 2013, for $43,425.55, and subsequently recorded the
deed with the Wayne County Register of Deeds on July 22, 2013. (Dkt.
11 at 8). Green Tree quit claimed the property to Fannie Mae on July
16, 2013. (Dkt. 10-12). On January 22, 2014, Green Tree recorded the
deed with the Wayne County Register of Deeds. (Dkt. 10-12).
After the sheriff’s sale, plaintiffs provided Green Tree with
“borrower

response

package”

documents

regarding

foreclosure

prevention alternatives. (Dkt. 10 at 9). Green Tree responded with
notice of receipt of plaintiffs’ responsive documents on November 18,
2013, and on December 16, 2013. (Dkt. 10-13, 14). In the latter notice,

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Green Tree indicated that it needed additional time to review the
records and determine its response to plaintiffs’ request for loss
mitigation assistance.

(Dkt. 10-14).

Plaintiffs’ attorney contacted

defendant’s counsel again days before filing suit to see if defendant
would “get something indicating that [the company would] go through
with the short sale even after the redemption period [ran]” to avoid
litigation. (Dkt. 10-11).
On or around January 10, 2014,1 plaintiffs filed suit in Wayne
County Circuit Court, where a temporary restraining order was issued
on January 17, 2014.

The case was removed to federal court on

January 28, 2014. (Dkt. 1).
II.

Standard of Review
When deciding a motion to dismiss pursuant to Fed. R. Civ. P.

12(b)(6), the court must “construe the complaint in the light most
favorable to the plaintiff, accept all factual allegations as true, and
determine whether the plaintiff undoubtedly can prove no set of facts in
support of his claims that would entitle him to relief.” In re DeLorean
Some documents state that the complaint was filed on January 10,
2014, while other documents state that the complaint was filed on
January 15, 2014.
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Motor Co., 991 F.2d 1236, 1240 (6th Cir. 1993). “To survive a motion to
dismiss, 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). A plausible claim need not contain
“detailed factual allegations,” but it must contain more than “labels and
conclusions” or “a formulaic recitation of the elements of a cause of
action[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
III.

Analysis

A. Defendant’s Motion Will Be Construed as a Motion to Dismiss
for Failure to State a Claim on Which Relief Can Be Granted.
“When reviewing a motion to dismiss, the district court may not
consider matters beyond the complaint.” Hensley Mfg. v. ProPride, Inc.,
579 F.3d 603, 613 (6th Cir. 2009) (analyzing a motion under Rule
12(b)(6)) (citing Winget v. JP Morgan Chase Bank, N.A., 537 F.3d 565,
576 (6th Cir.2008)).

Considering evidence outside the complaint

“effectively converts the motion to dismiss to a motion for summary
judgment.” Winget, 537 F.3d at 576. This rule is not ironclad, however.
The Court may consider documents either referenced in the plaintiff's
complaint or central to plaintiff's claims in a motion to dismiss without
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converting the motion into one for summary judgment. Tellabs, Inc. v.
Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); see also
Greenberg v. Life Ins. Co. of Virginia, 177 F.3d 507, 514 (6th Cir. 1999).
On review of the record, nonetheless, the Court need not rely on
the documents attached to defendant’s motion. Accordingly, the Court
will treat defendant’s motion as one to dismiss under Rule 12(b)(6).
B. Failure to State a Claim
The FDCPA’s purpose is to “eliminate abusive debt collection
practices by debt collectors, to insure that those debt collectors who
refrain

from

using

abusive

debt

collection

practices

are

not

competitively disadvantaged, and to promote consistent State action to
protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e).
“Because the FDCPA is a remedial statute, [the Court must] construe
its language broadly, so as to effect its purpose.” Stratton v. Portfolio
Recovery Assocs., LLC, 770 F.3d 443 (6th Cir. 2014) (quoting Brown v.
Card Serv. Ctr., 464 F.3d 450, 453 (3d Cir. 2006)).
Liability under the FDCPA is limited to debt collectors. A “debt
collector” is defined as:

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any person who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose
of which is the collection of any debts, or who regularly
collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another . . . the
term includes any creditor who, in the process of collecting
his own debts, uses any name other than his own which
would indicate that a third person is collecting or attempting
to collect such debts.
15 U.S.C. 1692a(6). Section 1692a(6)(F)(iii) provides an exception for
mortgage service companies that service outstanding debts for others,
so long as the debts were not in default at the time servicing was
assigned. Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 359 (6th Cir.
2012) (emphasis added); see also De Dios v. Int'l Realty & RC Invs., 641
F.3d 1071, 1075 n.3 (9th Cir. 2011) (detailing the legislative history of
the FDCPA). Accordingly, a “debt collector” is not one who attempts to
collect his or her own debt. See Montgomery v. Huntington Bank, 346
F.3d 693, 698–99 (6th Cir. 2003) (“[A] creditor is not a debt collector for
purposes of the FDCPA and creditors are not subject to the FDCPA
when collecting their accounts.”); see also Wadlington v. Credit
Acceptance Corp., 76 F.3d 103, 104 (6th Cir.1996) (“A debt collector does
not include the consumer's creditors.”). A loan servicer may qualify as
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an exempt creditor or may “become a debt collector,” depending on
whether default occurred before or after the debt was assigned for
servicing. Bridge, 681 F.3d at 359.
Plaintiffs assert that defendant is a debt collector under the
FDCPA and MCPA because “at the time the debt was transferred to it
from MERS it was in default.” (Dkt. 10 at 3). This is a misapplication
of the law. Generally speaking, “an entity that did not originate the
debt in question but acquired it and attempts to collect on it [] is either
a creditor or a debt collector depending on the default status of the debt
at the time it was acquired.” Bridge, 681 F.3d at 359 The Sixth Circuit
clarified this approach with respect to loan servicers, explaining, as
previously noted, that whether a loan servicer is a debt collecter
depends on whether the debt was in default or treated as if it were in
default when it was assigned for servicing. Id.; see also Glazer v. Chase
Home Fin. LLC, 704 F.3d 453, 457 (6th Cir.). “Where the debt was
assigned for servicing before default of the loan, the assignee is exempt
from the [FDCPA] because the assignee becomes a creditor and is
collecting its own debt.”

Martin v. Select Portfolio Serving Holding

8

Corp., 2008 WL 618788 at *4 (S.D. Ohio 2008)). Bank of America
transferred mortgage servicing to Green Tree more than a year before
Green Tree notified the plaintiffs of their default.

(Dkt. 10 at 7).

Accordingly, when Green Tree acquired the debt after it went into
default, it was still acting as a creditor collecting its own debt. To hold
otherwise would defy logic and require the Court to consider Green
Tree, for purposes of the FDCPA, a creditor when it acquired loan
servicing rights and a debt collector when it acquired the debt (even
after it subsequently transferred the debt to Fannie Mae).

This

approach would contravene the Sixth Circuit’s ruling in Bridge.
The Court, thus, finds that defendant was not a debt collector ad
defined by the FCPA and the MCPA.
IV.

Conclusion

Accordingly, IT IS HEREBY ORDERED that:
Defendant Green Tree Servicing LLC’s amended motion to dismiss
for failure to state a claim (Dkt. 11) is GRANTED.
Plaintiff Cheryl Barksdale’s complaint is DISMISSED with
prejudice.

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IT IS SO ORDERED.

Dated: December 17, 2014
Ann Arbor, Michigan

s/Judith E. Levy
JUDITH E. LEVY
United States District Judge

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on December 17, 2014.

s/Felicia M. Moses
FELICIA M. MOSES
Case Manager

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