Massey v. Select Portfolio Servicing, Inc.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE re 6 MOTION to Dismiss filed by Select Portfolio Servicing, Inc.., ORDER re 6 MOTION to Dismiss filed by Select Portfolio Servicing, Inc.. Signed by Magistrate Judge Don D. Bush on 4/28/15. (cm, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SELECT PORTFOLIO SERVICING, INC.
Case No. 4:14CV814
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Now before the Court is Defendant’s Motion to Dismiss (Dkt. 6). As set forth below, the
Court finds that the motion should be GRANTED.
Plaintiff’s Original Verified Petition – which has not been amended since removal – asserts
a claim under the Fair Debt Collection Practices Act, 15 U.S.C. §1692g, regarding the real property
located at 5976 Temple Drive, Plano, Texas 75093 (“the Property”). See Dkt. 4. According to
Plaintiff’s petition, Defendant claims to be the servicer of the debt with the rights to foreclose on the
Property.1 Plaintiff also pleads in the alternative that he believes that Defendant is not vested with
any ownership interest in the note and deed of trust pertaining to the Property, making the deed of
trust void and unenforceable. Plaintiff also seeks a restraining order stopping foreclosure on the
The Court notes that it has previously recommended dismissal without prejudice of
Plaintiff’s claims against Defendant Select Portfolio, as well as Wells Fargo Bank, N.A., in cause
number 4:14cv552, RAS-DDB. That recommendation is currently pending before the District
Judge. Since it was a recommendation of dismissal without prejudice, and, since this suit was
filed after the recommendation was entered, the Court proceeds herein.
In its motion, Defendant Select Portfolio Servicing, Inc. argues that Plaintiff has not asserted
any facts to support a claim under the Federal Fair Debt Collection Practices Act (“FDCPA”)
because it is not a “debt collector.” In addition, SPS asserts that Plaintiff has not alleged sufficient
facts to support a claim for injunctive relief.
Plaintiff has filed a response in opposition to the motion to dismiss, and Defendant has
When reviewing a case under Rule 12(b)(6) of the Federal Rules of Civil Procedure to
determine whether a plaintiff has stated a claim, the Court must accept as true all well-pleaded facts
contained in the plaintiff’s complaint and view them in the light most favorable to the plaintiff.
Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). A claim will survive an attack under Rule
12(b)(6) if it “may be supported by showing any set of facts consistent with the allegations in the
complaint.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563, 127 S. Ct. 1955, 1969, 167 L. Ed.2d
929 (2007). In other words, a claim may not be dismissed based solely on a court’s supposition that
the pleader is unlikely “to find evidentiary support for his allegations or prove his claim to the
satisfaction of the factfinder.” Id. at 563 n.8.
Although detailed factual allegations are not required, a plaintiff must provide the grounds
of her entitlement to relief beyond mere “labels and conclusions,” and “a formulaic recitation of the
elements of a cause of action will not do.” Id. at 555. The complaint must be factually suggestive,
so as to “raise a right to relief above the speculative level” and into the “realm of plausible liability.”
Id. at 555, 557 n.5. “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, 129 S. Ct. 1937, 1949, 173 L. Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570,
127 S. Ct. 1955)). For a claim to have facial plausibility, a plaintiff must plead facts that allow the
court to draw the reasonable inference that the defendant is liable for the alleged misconduct.
Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009). Therefore, “where the well-pleaded facts do
not permit the court to infer more than the mere possibility of misconduct, the complaint has
alleged – but it has not shown – that the pleader is entitled to relief.” Id. (internal quotations
omitted). Fraud claims must also meet the heightened pleading standard of Rule 9(b), under which
“a party must state with particularity the circumstances constituting fraud.” FED. R. CIV. P. 9(b).
The Court first addresses whether a claim under FDCPA has been stated. Generally,
“mortgage lenders are not ‘debt collectors’ within the meaning of the FDCPA.” Montgomery v.
Wells Fargo Bank, N.A., 459 Fed. App’x 424, 428, (5th Cir. 2012) (citing Williams v. Countrywide
Home Loans, Inc., 504 F. Supp.2d 176, 190 (S.D. Tex. 2007) aff’d, 269 Fed. App’x 523 (5th Cir.
2008)). The same is true for mortgage servicing companies. See Perry v. Stewart Title Co., 756 F.2d
1197, 1208 (5th Cir. 1985) (“The legislative history of section 1692a(6) indicates conclusively that
a debt collector does not include the consumer’s creditors, a mortgage servicing company, or an
assignee of a debt, as long as the debt was not in default at the time it was assigned.”); Ayers v.
Aurora Loan Servs., LLC, 787 F. Supp.2d 451, 456 (E.D. Tex. 2011). In fact, the FDCPA expressly
excludes from its definition of debt collector: “any person collecting or attempting to collect any debt
owed or due or asserted to be owed or due another to the extent such activity ... concerns a debt
which was not in default at the time it was obtained by such person.” 15 U.S.C. § 1692a(6)(F)(iii).
As noted by the Fifth Circuit, “this FDCPA exclusion encompasses mortgage servicing companies
and debt assignees as long as the mortgage was not in default at the time it was assigned by the
originator.” Miller v. BAC Home Loans Serv., L.P., 726 F.3d 717, 723 (5th Cir. 2013) (alterations,
citations and quotations omitted).
Here, Plaintiff’s petition alleges that “Defendant and its foreclosure agents, the law firm of
Shapiro Schwartz, LLP, are each ‘debt collectors’ as that term is defined under federal law.” Dkt.
4 at ¶9. No further facts are stated as to how Defendant qualifies as a debt collector.
Defendant argues that it cannot be a debt collector under the FDCPA because Plaintiff has
not alleged any facts to suggest that the loan was in default at the time it was assigned or at the time
Defendant obtained servicing rights to the loan. The Court agrees.
The Court notes that Plaintiff’s response to the motion to dismiss argues that Defendant did
not “come to service Plaintiff’s loan until after it had gone into default.” Dkt. 9 at 2. This, however,
is not alleged in Plaintiff’s petition. The Court gave Plaintiff leave to amend his complaint prior to
addressing the arguments in the motion to dismiss. See Dkt. 14. No amended pleading was filed.
Plaintiff’s claim that Defendant is a “debt collector” does not go beyond mere “labels and
conclusions,” or “a formulaic recitation of the elements of a cause of action will not do” and is
simply not enough to state a plausible claim. Twombly, 550 U.S. at 555. Therefore, the Court finds
that Plaintiff’s live complaint fails to state a claim upon which relief can be granted.
Moreover, Defendant argues that, even if Defendant could be treated as a debt collector based
on the allegations in his petition, the only alleged violations of the FDCPA made in the complaint
are against Shapiro Schwartz, LLP, Defendant’s attorney, and no such claims of vicarious liability
are recognized under the FDCPA. See Williams v. Countrywide Home Loans, Inc., 504 F. Supp. 2d
176, 190 (S.D. Tex. 2007) aff’d, 269 Fed. Appx. 523 (5th Cir. 2008). Plaintiff has not replied to this
argument, distinguished the cited authority, or otherwise shown how his original petition states an
FDCPA violation by Defendant.
The Court agrees that Plaintiff’s petition fails to state sufficient facts that would show that
Plaintiff’s mortgage was assigned to Defendant after Defendant was in default, nor does Plaintiff
allege facts that would sufficiently show an FDCPA violation by Defendant. Precedent is clear that
this is the narrow circumstance under which the FDCPA applies to mortgage loans. As such, the
FDCPA claim should be dismissed.
As to any challenges by Plaintiff to Defendant’s authority to foreclose, it is also well-settled
that a party need not prove ownership in the note to foreclose. Martins v. BAC Home Loans,
Servicing, LP, 722 F.3d 249, 254-255 (5th Cir. 2013). Plaintiff has not cited any authority or made
any additional or specific argument in his response regarding Defendant’s authority to foreclose.
Any claims based on Plaintiff’s argument that “the note secured by the deed of trust has been
discharged” should also be dismissed.
Finally, because Plaintiff has not shown a likelihood of success on the merits of his FDCPA
claims, there is no basis for injunctive relief regarding Plaintiff’s request to stop any foreclosure on
For these reasons, the Court recommends that Defendant’s Motion to Dismiss (Dkt. 6)
should be GRANTED and that Plaintiff’s claims should be dismissed for failure to state a claim.
Within fourteen (14) days after service of the magistrate judge’s report, any party may serve
and file written objections to the findings and recommendations of the magistrate judge. 28
U.S.C.A. § 636(b)(1)(C).
A party is entitled to a de novo review by the district court of the findings and conclusions
contained in this report only if specific objections are made, and failure to timely file written
objections to any proposed findings, conclusions, and recommendations contained in this report shall
bar an aggrieved party from appellate review of those factual findings and legal conclusions accepted
by the district court, except on grounds of plain error, provided that the party has been served with
notice that such consequences will result from a failure to object. Id.; Thomas v. Arn, 474 U.S. 140,
148 (1985); Douglass v. United Servs. Auto Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996) (en banc),
superseded by statute on other grounds, 28 U.S.C. § 636(b)(1) (extending the time to file objections
from ten to fourteen days).
SIGNED this 28th day of April, 2015.
DON D. BUSH
UNITED STATES MAGISTRATE JUDGE
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