Federal National Mortgage Association et al. v. Cawood

Filing 24

MEMORANDUM.The Court will ACCEPT the Bankruptcy Courts proposed findings of fact and conclusions of law,4 DENY Seteruss motion to dismiss, GRANT IN PART and DENY IN PART FNMAs motion to dismiss, DISMISS Count Six of Plaintiffs Amend ed Complaint against FNMA, and REMAND the case to the Bankruptcy Court for further proceedings consistent with this opinion.An appropriate order will enter.Signed by District Judge Curtis L Collier on September 30, 2019. (SAC)Memorandum emailed to the US Bankruptcy Court Clerk.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT CHATTANOOGA
FEDERAL NATIONAL MORTGAGE
ASSOCIATION and SETERUS, INC.,
Defendants/Appellants,
v.
JOSEPH C. CAWOOD,
Plaintiff/Appellee.

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Case No. 1:17-cv-357
Judge Curtis L. Collier

MEMORANDUM
This matter comes before the Court from the Bankruptcy Court. Defendants/Appellants,
Federal National Mortgage Association (“FNMA”) and Seterus, Inc. (“Seterus”; collectively with
FNMA, “Defendants”), object to the Bankruptcy Court’s proposed findings of fact and conclusions
of law on their motions to dismiss the adversary proceeding filed against them by
Plaintiff/Appellee, Joseph C. Cawood. For the reasons stated herein, the Court will ACCEPT the
Bankruptcy Court’s proposed findings of fact and conclusions of law, DENY Seterus’s motion to
dismiss, GRANT IN PART and DENY IN PART FNMA’s motion to dismiss, DISMISS Count
Six of Plaintiff’s Amended Complaint against FNMA, and REMAND the case to the Bankruptcy
Court for further proceedings consistent with this opinion.

I.

BACKGROUND
Defendants do not object to the Bankruptcy Court’s explanation of Plaintiff’s factual

allegations for the purposes of Defendants’ motion to dismiss. The Court accordingly adopts

Section One of the Bankruptcy Court’s Memorandum Opinion by reference and provides only a
brief summary of the background here.
A.

Factual Background

Plaintiff bought a house in Cleveland, Tennessee, in 2004, obtaining a loan from SunTrust
Mortgage, Inc. (“SunTrust”). The loan was secured by a deed of trust.
Plaintiff moved to Texas. He fell behind on his loan payments in 2008, and SunTrust
instituted foreclosure proceedings. Plaintiff filed a voluntary Chapter 13 bankruptcy petition (the
“Texas Case”) in the Bankruptcy Court for the Southern District of Texas (the “Texas Court”) on
May 12, 2008, to stop the foreclosure. The Texas Case was completed on May 31, 2013. The
Texas Court granted the trustee’s June 2013 motion deeming the mortgage current and directing
Plaintiff to make future loan payments directly to SunTrust. Plaintiff received a discharge from
the Texas Court on July 8, 2013.
Plaintiff made loan payments to SunTrust for June, July, August, and September 2013. In
October 2013, Seterus sent Plaintiff a letter informing him that Seterus had become the servicer of
the loan on behalf of FNMA. The letter stated that there was unpaid interest of $2,591.62 and an
escrow overdraft of $745.33 on the loan. Seterus also returned Plaintiff’s September payment.
Plaintiff made his October 2013 payment to Seterus as instructed. He also retained counsel, who
wrote to Seterus in November 2013, resubmitting Plaintiff’s September 2013 payment and
enclosing a copy of the order from the Texas Case deeming the loan current.
Between October 2013 and August 2014, certain patterns repeated. Plaintiff submitted all
of his payments to Seterus, Seterus returned certain payments, and Plaintiff resubmitted them.
Seterus sent multiple letters to Plaintiff claiming the loan was in default and discussing new
2

payment amounts, a possible loan modification, and the institution of foreclosure proceedings.
Plaintiff’s counsel sent multiple letters telling Seterus to check the records from the Texas Case,
asserting that Plaintiff had made all of his payments since the Texas Case on time, and asserting
that foreclosure would violate the orders of the Texas Court. Seterus responded with letters saying
the matter was under investigation.
Foreclosure was scheduled and advertised for August 14, 2014. In order to stop the sale,
Plaintiff filed a Chapter 13 petition on August 12, 2014, in the Bankruptcy Court for the Eastern
District of Tennessee, to which Petitioner had returned. Seterus filed an objection to confirmation
on the grounds that Plaintiff’s plan did not account for arrearages to Seterus of more than $7,000.
B.

Procedural History

Plaintiff filed this adversary proceeding on August 11, 2015, against FNMA, Seterus,
SunTrust, and other entities allegedly involved in the planned foreclosure. His First Amended
Complaint (the “Complaint”) seeks individual and class-action relief. He asserts causes of action
for (1) an objection to Seterus’s claim; (2) breach of contract; (3) intentional or negligent
misrepresentation; (4) negligence; (5) failure to credit payments in violation of 15 U.S.C. § 1639f;
and (6) violation of the Fair Debt Collection Practices Act (the “FDCPA”).
Seterus and FNMA each filed a motion to dismiss on July 8, 2016. Seterus argued the
Bankruptcy Court lacks subject matter jurisdiction over all of Plaintiff’s claims for individual relief
because they are attempts to enforce the discharge injunction from the Texas Case, and a contempt
action for violation of a discharge injunction can only be heard in the court that issued the
injunction. Similarly, Seterus argued for dismissal of the class-action claims as attempts to enforce
discharge injunctions of other courts. In the alternative, it argued the Complaint fails to state valid
3

claims for relief under Rule 12(b)(6) of the Federal Rules of Civil Procedure. FNMA’s motion
sought dismissal on the grounds that the Complaint does not contain any factual allegations of
misconduct by FNMA. In the alternative, FNMA adopted Seterus’s arguments for dismissal. The
Bankruptcy Court heard oral argument on the motions to dismiss on September 20, 2016.
The Bankruptcy Court issued a Memorandum Opinion and Order on September 29, 2017,
which constitute the Bankruptcy Court’s proposed findings of fact and conclusions of law for this
Court’s review.1 See Fed. R. Bankr. P. 7012(b); 28 U.S.C. § 157(c)(1). The Bankruptcy Court
first addressed Defendants’ challenge to subject-matter jurisdiction based on the discharge
injunction in the Texas Case.

(Op. at 10–14.)

The Bankruptcy Court acknowledged the

correctness of Defendants’ position that only a court that issues a discharge injunction may punish
a violation of that injunction. (Id. at 10.) It concluded, however, that a discharge injunction was
not at issue in Plaintiff’s Complaint, because Plaintiff’s debt to SunTrust was not discharged in the
Texas Case. (Id. at 11–14 (quoting Perry v. EMC Mortgage Corp., 388 B.R. 330 (Bankr. E.D.
Tenn. 2008) (long-term mortgage was excepted from discharge under 11 U.S.C. § 1328, so postdischarge collection actions by mortgage holder did not violate discharge injunction); also quoting
Rodriguez v. Countrywide Home Loans, Inc., 421 B.R. 356, 365 (Bankr. S.D. Tex. 2008)).) The

1

Defendants failed to state in their responsive pleading before the Bankruptcy Court
whether they consented to the entry of final orders by the Bankruptcy Court. See Fed. R. Civ. P.
7012(b) (in adversary proceeding, “[a] responsive pleading shall include a statement that the party
does or does not consent to entry of final orders or judgment by the bankruptcy court”). The
Bankruptcy Court accordingly granted Defendants additional time to make their required
statement, and explained that its Memorandum Opinion and Order would become final if
Defendants consented and no party timely appealed, but would be treated as proposed findings of
fact and conclusions of law under 28 U.S.C. § 157(c)(1) if Defendants did not consent. Defendants
filed statements that they did not consent on October 13, 2017. (See Doc. 3-2 at 218–21.)
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Bankruptcy Court noted that its conclusion was also based on the fact that Defendants had not
made an argument under 11 U.S.C. § 524(i):
Nor has Seterus or FNMA argued that 11 U.S.C. § 524(i) is applicable to this case.
Section 524(i) provides that an act of a creditor to collect a debt remaining after a
discharge because of a failure to credit payments as provided for in a plan is deemed
to be a violation of the discharge injunction. Courts construing this section have
applied it in situations where a debtor successfully completed a chapter 13 case, but
a long-term home mortgage creditor refused to acknowledge that the loan was
current and continued to pursue the claim. See, e.g., Ridley v. M&T Bank (In re
Ridley), [572 B.R. 352 (Bankr. E.D. Okla. 2017)] . . . . Section 524(i) contains a
number of factual predicates that must be shown before the court can determine
whether it applies and the creditor’s action is deemed to be a violation. The court
presumes that the parties did not raise this section because either they do not have
sufficient information to know whether it is applicable or they have the information
and have decided for either factual or strategic reasons not to raise it.
(Id. at 14 n.4.)
The Bankruptcy Court went on to conclude that Count One of Plaintiff’s Complaint, the
objection to Seterus’s claim, is a core proceeding, created by federal bankruptcy law, which the
Bankruptcy Court may hear and determine. (Id. at 15–16.) It concluded that Counts Two through
Six, while non-core claims, are nevertheless “related to” Plaintiff’s bankruptcy case, such that the
Bankruptcy Court has subject-matter jurisdiction to hear them. (Id. at 15–17.) It then analyzed
Defendants’ motions to dismiss for failure to state claims on which relief may be granted,
concluding that the motions should be denied except as to Count Six, under the FDCPA, against
FNMA. (Id. at 21–30.) It also concluded that Plaintiff should be given fourteen days to amend
his Complaint to indicate whether he intends to assert that cause of action against FNMA. (Id. at
28–29.) Finally, the Bankruptcy Court addressed Defendants’ motions to dismiss the class-action
claims on the dual grounds that Plaintiff had not stated claims on his own behalf and the
Bankruptcy Court would not have subject-matter jurisdiction over a nationwide class to enforce
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discharge injunctions issued by other courts. (Id. at 31.) The Bankruptcy Court concluded the
class-action claims should not be dismissed based, in part, on its previously stated reasoning
regarding the discharge injunction. (Id. at 30–34.)
Defendants objected to the Bankruptcy Court’s proposed findings of fact and conclusions
of law on October 27, 2017. (See Doc. 3-2 at 240.) Defendants objected only as to the Bankruptcy
Court’s proposed conclusion that it has subject-matter jurisdiction over Counts Two through Six
and the class-action allegations. (Id. at 230 & n.3.) They do not object to the Bankruptcy Court’s
proposed conclusions as to subject-matter jurisdiction over the core claim in Count One or as to
whether Plaintiff’s various counts state claims on which relief may be granted. (See id.)
The case was transferred to this Court on December 19, 2017. (Doc. 1.) Defendants filed
their joint brief on January 29, 2018. (Doc. 6.) Plaintiff responded on February 2, 2018. (Doc.
8.) Defendants replied on March 13, 2018. (Doc. 11.) The Court heard oral arguments on July
18, 2018. (Doc. 18.)

II.

STANDARD OF REVIEW
A bankruptcy judge may hear a matter and submit proposed findings of fact and

conclusions of law to the district court if the proceeding “is not a core proceeding but . . . is
otherwise related to a case under title 11.” 28 U.S.C. § 157(c)(1). The district court may enter a
final order or judgment “after considering the bankruptcy judge’s proposed findings and
conclusions and after reviewing de novo those matters to which any party has timely and
specifically objected.” Id.

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Defendants have timely and specifically objected to the Bankruptcy Court’s proposed
conclusions on their motions to dismiss for lack of subject-matter jurisdiction under Rule 12(b)(1)
of the Federal Rules of Civil Procedure. (See Doc. 6 at 7.) When a defendant moves to dismiss
for lack of subject-matter jurisdiction under Rule 12(b)(1), the plaintiff has the burden of proving
jurisdiction. Davis v. United States, 499 F.3d 590, 593–94 (6th Cir. 2007). A Rule 12(b)(1) motion
may present either a facial attack, which questions the sufficiency of the pleadings, or a factual
attack, which challenges the factual existence of subject-matter jurisdiction. United States v.
Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). Defendants characterize their attack on jurisdiction as
a factual one (Doc. 6 at 8), and Plaintiff does not disagree. In assessing a factual challenge, the
court must “weigh the evidence concerning jurisdiction presented by the parties and decide the
jurisdictional facts.” RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1135 (6th Cir.
1996). The parties here have not pointed the Court to any evidence other than the allegations in
the current pleadings and the filings in the Texas Case.

III.

DISCUSSION
Defendants’ position is that the causes of action in Plaintiff’s Complaint seek to punish

them for violating the Texas Court’s discharge injunction, and therefore only the Texas Court has
subject-matter jurisdiction. This Court has performed a de novo review of Plaintiff’s Complaint
and the parties’ briefing regarding what it alleges. The Court has also reviewed de novo the
Bankruptcy Court’s analysis and the parties’ arguments as to whether the loan was discharged for
purposes of bringing a contempt action for violation of the discharge injunction.

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A.

The Allegations in Plaintiff’s Complaint

Each count of Plaintiff’s Complaint incorporates by reference the previous allegations and
briefly describes the specific claim. Defendants acknowledge that the counts themselves do not
refer to a breach of the discharge injunction. (Doc. 6 at 14.) But they argue the incorporated
allegations on which each count is based “are all grounded in the Texas bankruptcy court’s orders.”
(Id. at 14–15.)
Defendants point first to the Complaint’s allegation that one of Seterus’s letters to Plainitff
said “Plaintiff owed $3,000 in arrears not paid in his prior Chapter 13 case.” (Id. at 14 (quoting
Compl. ¶ 20).) Defendants cite no legal authority binding a plaintiff to a factual assertion in a
letter from a defendant, merely because the plaintiff describes that letter in the complaint.
Defendants also point to the Complaint’s multiple allegations about letters Plaintiff’s
counsel sent to Seterus claiming “that the foreclosure action is in direct violation of the Bankruptcy
Order.” (Id. (quoting Compl. ¶¶ 36, 61, 63, 67, 74, 76, 84).) These were statements Plaintiff’s
own counsel allegedly made before the Complaint was filed, when trying to persuade Defendants
that they should not foreclose on Plaintiff’s deed of trust. Similarly to the preceding argument,
Defendants cite no legal authority binding Plaintiff to legal theories he advanced before the
litigation was filed. On the contrary, even in pleadings, “[a] party may set out 2 or more statements
of a claim or defense alternatively or hypothetically.” Fed. R. Civ. P. 8(d)(2). As Plaintiff argues,
these are “seven paragraphs spread throughout the . . . Complaint,” and multiple causes of action
may be brought under a single set of facts. (Doc. 8 at 10.) Defendants have not shown Plaintiff is
bound to the positions his counsel asserted in his letters to Defendants for purposes of the causes
of action he may allege, no matter how many such letters there were.
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Defendants next point to the allegations in Paragraphs 109 and 110 of the Complaint: that
“[t]he actions of [Seterus] in failing to comply with the Order Confirming Debtor’s Chapter 13
Plan entered in his Texas case no. 08-80227 are in grievous and flagrant disregard of the provisions
of 11 U.S.C. § 1327(a),” and that Plaintiff “has not been able to begin his ‘fresh start’ upon
completion of his Plan on May 31, 2013, due to the actions of the Defendants in failing to comply
with the Order Confirming the Debtor’s Chapter 13 Plan and properly crediting the Trustee’s and
Mr. Cawood’s payments.” (Doc. 6 at 14 (quoting Compl. ¶¶ 109, 110) (Defs.’ emphasis omitted).)
Neither of these paragraphs expressly alleges a violation of the discharge injunction.2 They could,
however, form part of the foundation for such a cause of action. Paragraph 110, for example,
refers both to the Trustee’s payments, which necessarily took place before the discharge, and
Plaintiff’s payments, which took place both one or two times before the discharge and for more
than a year after the discharge. The Court accordingly considers Plaintiff’s individual causes of
action next.3
Count Two, for breach of contract, “alleges the Defendants breached the contract created
between the parties by the loan documents, Deed of Trust, and subsequent assignments by
commencing a foreclosure proceeding.” (Compl. ¶ 117.) Defendants argue this must be a claim
for violation of the discharge injunction and not for breach of contract, because Plaintiff did not

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Nor does the referenced section of 11 U.S.C. § 1327(a) expressly refer to the discharge
injunction: “The provisions of a confirmed plan bind the debtor and each creditor, whether or not
the claim of such creditor is provided for by the plan, and whether or not such creditor has objected
to, has accepted, or has rejected the plan.” 11 U.S.C. § 1327(a).
3

In the Bankruptcy Court, Defendants argued a lack of subject matter over Count One,
Plaintiff’s objection to Seterus’s claim in this bankruptcy case, on the same grounds. Defendants
have withdrawn from that position before this Court. (See Doc. 6 at 7–8 n.1.)
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attach copies of the loan documents to the Complaint, and because Plaintiff did not identify specific
sections of the loan documents Defendants violated. (Doc. 6 at 15; Doc. 11 at 6.) The Court
disagrees. A pleading “must contain . . . a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a). Plaintiff has done that here. In the incorporated
allegations, he has alleged that his loan was current as of May 2013 and that he made all of his
subsequent payments, but that Defendants claimed he was in default and instituted foreclosure
proceedings anyway. This is sufficient as “a short and plain statement” of facts showing Plaintiff
is entitled to relief for breach of contract.
It is true that an order of the Texas Court forms the starting point of Plaintiff’s allegation
that he was current on the loan and had given no reason for Defendants to determine he was in
default. But that does not stop Plaintiff’s claim from being one for breach of contract. Rather, it
is a way of explaining that Defendant’s actions, declaring the loan to be in default and instituting
the foreclosure process, were not justified by anything Plaintiff had done or failed to do. A debtor
might, for example, allege he had made all loan payments on time since the beginning of the loan
term, or had been behind, caught up, and then made all payments on time. Plaintiff here cannot
allege he made all of his payments on time and therefore is not in breach, but he can and does
allege he has made all of his payments on time since the Texas Case was completed and therefore
is not in breach. Count Two asserts a cause of action for breach of contract, Plaintiff has included
factual allegations that support such a cause of action, and Defendants’ arguments that it is a
disguised contempt action are not persuasive.
Count Three, for intentional or negligent misrepresentation, alleges Defendants made false
representations by telling Plaintiff his loan was in default, publishing the foreclosure sale,
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objecting to confirmation of Plaintiff’s plan by alleging he was in default, and ignoring requests
for an accounting. (Compl. ¶¶ 119–22.) Defendants argue “[e]very alleged misrepresentation is
grounded in the default that [Plaintiff] alleges resulted from the failure to reflect his loan as current
as required by the Texas bankruptcy court.” (Doc. 6 at 15.) This argument fails for the same
reasons the Court explained as to Count Two.
Count Four, for negligence, alleges “Defendants negligently failed to properly correct its
(sic) accounting records to reflect that the Plaintiff was current on his mortgage upon the
completion of [the Texas Case].” (Compl. ¶ 125.) Defendants argue that Count Four “facially ties
to the orders of the Texas Bankruptcy Court,” and is “premised on the idea that Seterus was
obligated to correct its record based on the Texas Bankruptcy Court proceeding.” (Doc. 11 at 8.)
In his response, Plaintiff argues Defendants’ negligent handling of his account is clear from
Defendants’ months of statements that it was investigating Plaintiff’s account and would explain
the results, which it never did. (Doc. 8 at 12.) This does not, however, explain how the description
of Defendants’ negligence in Count Four is for something other than the failure to obey the Texas
Court’s orders. Plaintiff also argues it is clear Defendants “hatched a scheme” to target individuals
recently released from Chapter 13 bankruptcies for foreclosure. (Id.) As Defendants point out,
“schemes” involve intentional actions, not negligent ones. (Doc. 11 at 8.) This argument also
does nothing to separate Plaintiff’s allegation of wrongdoing from the Texas Court’s orders. Last,
Plaintiff argues that Defendants did not become interested parties in Plaintiff’s mortgage until after
the Texas Case was complete, so their alleged negligence could not have had anything to do with
the Texas Court’s orders. (Doc. 8 at 12.) Defendants are correct, however, that they may be held
liable for contempt even though they were not interested parties while the Texas Case was going
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on. (See Doc. 11 at 5 (citing In re Stubbs, 565 B.R. 115, 125 (B.A.P. 6th Cir. 2017).) Count Four
could be read to allege a violation of the discharge order. The Court will therefore consider it
further in the following section, regarding whether Plaintiff’s loan was included in the discharge
injunction.
Count Five, for failure to credit payments on receipt in violation of 15 U.S.C. § 1639f,
alleges on information and belief that “SunTrust and Seterus failed to credit payments to Plaintiff’s
account as of the date of receipt for the purpose of assessing late charges to the account.” (Compl.
¶ 130.) Count Six, for violation of the FDCPA, alleges Defendants “demanded an amount from
Plaintiff which is inaccurate and inflated, and in violation of any contract between the parties.”
(Id. ¶ 138.) Count Six also lists specific actions that allegedly violated specific provisions of the
FDCPA. (Id. ¶ 139–40.) Defendants allege these counts “also arise out of [Defendants’] alleged
failure to credit [Plaintiff] in accordance with the Texas bankruptcy court’s order.” (Doc. 6 at 15.)
This argument fails for the same reasons the Court explained as to Count Two.
B.

Whether the Loan Was Included in the Discharge Injunction

The Bankruptcy Court reasoned that Plaintiff’s Complaint cannot be for violation of the
discharge injunction because the loan at issue was not discharged, relying on Perry and Rodriguez.
(Op. at 11–14.) In Perry, a discharged bankruptcy debtor brought an adversary proceeding against
her mortgage creditor for violations of the discharge injunction, alleging that the creditor had been
refusing her maintenance payments. 388 B.R. at 334. The Perry court explained that “a debtor’s
discharge triggers the ‘discharge injunction’ which ‘operates as an injunction against the
commencement or continuation of . . . an act[] to collect, recover or offset any . . . debt as a
personal liability of the debtor . . . .” Id. at 335 (quoting 11 U.S.C. § 524(a)).
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The discharge

injunction thus prevents a creditor with a prepetition claim from trying to hold the debtor
personally liable for the debt. Id. at 335–365. The Perry court further explained that “[t]he
discharge injunction is limited . . . to debts that are actually discharged,” but the statute governing
a Chapter 13 discharge “except[s] any debt” as to a “secured claim on which the last payment is
due after the date on which the final payment under the plan is due.” Id. at 336 (quoting 11 U.S.C.
§§ 1328(a)(1) & 1322(b)(5)).

This exclusion from discharge applies to ongoing mortgage

obligations. Id. (citing In re Chess, 268 B.R. 150, 153 (Bankr. W.D. Tenn. 2001)). The Perry
court accordingly concluded that it did “not have subject matter jurisdiction over any postdischarge dispute over the Debtor’s mortgage obligation.” Id. at 337.
Defendants attempt to distinguish Perry because it involved a post-discharge dispute,
rather than a pre-discharge dispute. (Doc. 6 at 13, 19–20.) There are two problems with
Defendants’ argument. First, as discussed in the preceding section, Plaintiff has sufficiently
alleged multiple causes of action regarding a post-discharge dispute regarding Plaintiff’s loan
payments. Second, as the Bankruptcy Court noted, “Defendants do not address Perry’s holding
that a debt that was not discharged does not give rise to a discharge injunction violation.” (Op. at
12.) Defendants still do not address that holding, other than to say they disagree with the
Bankruptcy Court’s characterization of it. (Doc. 6 at 20 n.4.)

Instead, they point to other cases

that appear to reach a different conclusion.
Those cases, however, are not applicable here. In Beiter v. Chase Home Finance, LLC,
554 B.R. 433 (Bankr. S.D. Ohio 2016), for example, the court discussed the discharge injunction
in the context of a mortgage loan, but never analyzed whether the mortgage debt was discharged.
See id. at 437. In Helman v. Udren Law Offices, P.C., 85 F. Supp. 3d 1319 (S.D. Fla. 2014) the
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plaintiff’s “personal liability for her home mortgage loan was discharged” during the bankruptcy
case, distinguishing the case from the factual situation here. Id. at 1329 n.7. Other cases on which
Defendants rely were decided under 11 U.S.C. § 524(i). (See, e.g., Doc. 6 at 16 (citing Ridley v.
M&T Bank, 572 B.R. 352, 360–61 (Bankr. E.D. Okla. 2017).) Defendants correctly quote Ridley
as stating that “if a creditor fails to properly credit payments made under a confirmed plan, § 524(i)
treats such conduct as a violation of the discharge injunction even if the underlying debt is not
discharged.” 572 B.R. at 360–61. Ridley goes on to discuss the factual predicates of § 524(i),
which Defendants do not address. Nor have Defendants themselves made any argument under
§ 524(i), despite the Bankruptcy Court’s explanation that it presumed Defendants had not argued
under § 524(i) either because they do not know “whether it is applicable or they . . . have decided
for either factual or strategic reasons not to raise it.” (Op. at 14 n.4.) This Court is in the same
position as the Bankruptcy Court; it cannot assess factual predicates Defendants have failed to
bring before it.
The Rodriguez court, the same district as the Texas Court, followed reasoning similar to
the Perry court’s in holding that a debtor could not pursue a cause of action for violation of the
discharge injunction because the debtor’s mortgage loan was not discharged. 421 B.R. at 365–66.
Defendants’ attempt to distinguish Rodriguez is even less persuasive than its attempt to distinguish
Perry. Defendants merely point out that the Rodriguez “court expressly recognized the debtors’
rights to pursue claims that a mortgagee/servicer violated their bankruptcy plans and the orders
confirming their plans.” (Doc. 6 at 21 (citing Rodriguez, 421 B.R. at 369).) The language
Defendants quote, however, appears in the Rodriguez court’s assessment of a different cause of
action, after the court dismissed the plaintiff’s cause of action for violation of the discharge
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injunction based on an analysis similar to Perry’s. See Rodriguez, 421 B.R. at 365–66, 369. The
Court accordingly concludes that Plaintiff’s case does not involve a discharge injunction, and
Plaintiff’s causes of action, including Count Four, are not disguised attempts to punish Defendants
for violations of the discharge injunction.

IV.

CONCLUSION
The Court will ACCEPT the Bankruptcy Court’s proposed findings of fact and

conclusions of law,4 DENY Seterus’s motion to dismiss, GRANT IN PART and DENY IN
PART FNMA’s motion to dismiss, DISMISS Count Six of Plaintiff’s Amended Complaint
against FNMA, and REMAND the case to the Bankruptcy Court for further proceedings consistent
with this opinion.

An appropriate order will enter.

/s/____________________________
CURTIS L. COLLIER
UNITED STATES DISTRICT JUDGE

4

For the avoidance of doubt, this includes the Bankruptcy Court’s conclusion that Plaintiff
should be given fourteen days to amend his Complaint to indicate whether he intends to state a
claim against FNMA in Count Five.
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