Reyes-Colon v. Banco Popular de Puerto Rico

Filing 48

OPINION AND ORDER granted 25 Motion for Summary Judgment. Signed by Judge Carmen C. Cerezo on 9/30/2015. (mld)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
EDGAR REYES-COLON
Plaintiff
vs
BANCO POPULAR DE PUERTO
RICO
Defendant

CIVIL 14-1128CCC

OPINION AND ORDER
The action before us, filed by plaintiff Edgar Reyes-Colón pursuant to the
Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et. seq., the
Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et. seq., and
Article 1802 of the Puerto Rico Civil Code, 31 L.P.R.A. § 5141, seeks “redress
for defendant’s [Banco Popular de Puerto Rico, “Banco Popular” or “the bank”]
allegedly] willful and malicious actions against plaintiff’s protected rights.”
Complaint (D.E. 1, ¶ 1). We now address the bank’s Motion for Summary
Judgment and Incorporated Memorandum of Law (D.E. 25) which plaintiff
opposed (D.E. 27) and to which Defendant replied (D.E. 31).
Because the ruling on this motion rides on an issue of law, and is more
in the nature of a motion to dismiss, we begin with a brief history of the
undisputed facts and proceed to a direct analysis pursuant to the laws and
jurisprudence applicable to the case.
Plaintiff Reyes maintained a line of credit with Westernbank, a banking
institution with its principal place of business in Puerto Rico. Complaint
(D.E. 1, ¶ 8). In 2010, Westernbank was taken over by the Federal Deposit
Insurance Corporation. Id., at ¶ 9. Pursuant to the Purchase and Assumption
Agreement (“the Agreement”) between the Federal Deposit Insurance
Corporation as Receiver of Westernbank Puerto Rico, Mayagüez, Puerto Rico;
Federal Deposit Insurance Corporation (“the Receiver”); Banco Popular de

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Puerto Rico (“the Assuming Institution”); and FDIC acting in its corporative
capacity, entered into on April 30, 2010 (“the P&A Agreement”) (Civ. 10-2131,
D.E. 1, Ex. 4), Banco Popular purchased certain assets and assumed certain
liabilities of the failed bank.1
Three years later, on July 6, 2013, Banco Popular cancelled Reyes’ line
of credit which, pursuant to the P&A Agreement, it had assumed. Reyes
alleges in the complaint that:
After the ‘FDIC’s taking, Banco Popular became the collector for
the FDIC regarding Westernbank’s accounts, including Reyes
accounts that used to belong and were in agreement with
Westernbank.
(¶ 9)
Banco Popular is neither the creditor nor owner of Reyes’
accounts, but the facilitator or collector of the debt for the FDIC.
(¶ 10)
Banco Popular is a collector, as defined by law, as it is seeking the
collection of accounts taken over by the FDIC from Westernbank.
(¶ 20)
He claims as a first cause of action, “[d]efendant’s conduct against
Dr. Reyes constitutes a violation of the Fair Debt Collection Practices Act,
15 U.S.C. § 1692 et seq.” (¶ 23). He also includes as a second cause of
action that “[d]efendant’s conduct against Dr. Reyes is prohibited by the Equal
Credit Opportunity Act, 15 U.S.C. § 1691 et seq.” (¶ 29). His third and last
claim is a supplemental jurisdictional claim under Article 1802 of the Civil Code
of Puerto Rico for damages on account of negligence.

1

Articles II and III of the P&A Agreement.

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CLAIM UNDER THE FDCPA
A review of the FDCPA, the P&A Agreement and applicable
jurisprudence demonstrate the error of the plaintiff’s characterization of
defendant as a debt collector under the cited law. The FDCPA is a consumer
protection statute that prohibits certain abusive, deceptive and unfair debt
collection practices by many debt collectors. See 15 U.S.C. § 1692. Marx v.
Gen Revenue Corp., 133 S.Ct. 1166, 1171 n.1 (2013); 15 U.S.C. § 1692a(6)
defines “debt collector” as:
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 that
his own which would indicate a third person is collecting or
attempting to collect such debts . . . .
That is, creditors collecting on their own accounts are generally excluded from
the statutes reach.

Id. Chiang v. Verizon New England, 595 F.3d 2641

(1st Cir. 2010).
As stated in the P&A Agreement at Article III -- Purchase of Assets,
Section 3.1, Assets Purchased by the Assuming Institution; that is, Banco
Popular:
With the exception of certain assets expressly excluded in
Sections 3.5 and 3.6, The Assuming Institution hereby purchases
from the Receiver [FDIC], and the Receiver hereby sells,
assigns, transfers, conveys and delivers to the Assuming
Institution , all right, title, and interest of the Receiver in and to
all of the assets . . . of the Failed Bank [Westernbank], whether
or not reflected on the books of the Failed Bank as of Bank Closing.
...
(Our emphasis).
Moreover, for purposes of applying the FDCPA to a particular debt, the
two categories -- debt collectors and creditors -- are mutually exclusive.
Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003). If the

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one who acquired the debt continues to service it, it is acting much like the
original creditor that created the debt. Id. That is, the FDCPA treats assignees
as debt collectors if the debt sought to be collected was in default when
acquired by the assignee, and as creditors if it was not.” Schlosser v. Fairbanks
Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003). It is undisputed that Banco
Popular is not a debt collector within the statutory definition.
In sum, the P&A Agreement clearly and unequivocally contradicts the
allegations of plaintiff’s complaint. Further, Reyes, in his opposition to the
Motion for Summary Judgment, fails to identify any provision in the agreement
that would support his contention that Banco Popular did not assume his line
of credit and that it is acting as an agent for the FDIC. That the line of credit
endured for more than three years after the P&A Agreement was signed, further
supports Banco Popular’s role as creditor, not as a debt collector for the FDIC.
Reyes has failed to state a claim under the FDCPA.
CLAIM UNDER THE EQUAL CREDIT OPPORTUNITY ACT
ECOA prohibits discrimination “with respect to any aspect of a credit
transaction[,] on the basis of race, color, religion, national origin, sex, or marital
status, or age.” 15 U.S.C. § 1691(a). Rosa v. Park West Bank & Trust Co.,
214 F.3d 213, 215 (1st Cir. 2000). Reyes has failed to allege any facts that
would state a cause of action under this statute. Accordingly, absent federal
allegation or evidence that would support such discrimination, this claim also
fails.

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CLAIM UNDER ARTICLE 1802
The Court having dismissed Reyes’ federal claims, it declines the
exercise of jurisdiction over the state claim (where a federal court has
dismissed the anchoring federal claims over which it has original jurisdiction,
the Court “may decline to exercise supplemental jurisdiction” over the remaining
state law claims).

See 28 U.S.C. § 1367(c)(3); Desjardins v. Willard,

777 F.3d 43, 45 (1st Cir. 2015); see also Van Wagner Boston, LLC v. Davey,
770 F.3d 33 (1st Cir. 2014).
ATTORNEY’S FEES AND COSTS
Defendant has requested an award of attorney’s fees. The FDCPA,
15 U.S.C. § 1692k(a)(3) provides that, “‘[o]n a finding by the court that an action
under this section was brought in bad faith and for the purpose of harassment,
the court may award to the defendant attorney’s fees reasonable in relation to
the work expended and costs.”
A review of the law and the P&A Agreement reflects that the attempt to
create claims under federal laws, where clearly none existed, was a frivolous
effort that resulted in harassment against the defendant bank. For this reason,
Banco Popular’s request is GRANTED.
For the above stated reasons, Banco Popular’s Motion for Summary
Judgment (D.E. 25) is GRANTED and this action is DISMISSED, with prejudice.
Judgment to be entered accordingly.
SO ORDERED.
At San Juan, Puerto Rico, on September 30, 2015.

S/CARMEN CONSUELO CEREZO
United States District Judge