Spencer v. Hughes Watters Askanase, et al

Filing 19

ORDER - the Court instructs Plaintiff to file a second amended complaint against HWA that incorporates the arguments and facts articulated in his response (docket no. 17) by July 13, 2015. Signed by Judge Xavier Rodriguez. (rg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
ODIS SPENCER,
Plaintiff,
v.
HUGHES WATTERS ASKANASE, LLP,
ET AL.,
Defendants.

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Civil Action No. 5:15-cv-00233

ORDER
On this day the court considered the status of this case. On June 11, 2015, the Court
issued an Amended Order (docket no. 15) dismissing three defendants and requiring (1) Plaintiff
Odis Spencer to show cause why his Federal Debt Collection Practices Act (FDCPA) claim
should not be dismissed; and (2) Defendant Hughes Watters Askanase, LLP (HWA), to show
cause why the Court should continue to exercise supplemental jurisdiction under 28 U.S.C. §
1367(c) and the case should not be remanded if the only federal claim is dismissed. HWA
(docket no. 16) and Spencer (docket no. 17) responded to the Court’s Order on June 18, 2015.
After careful consideration, the Court instructs Spencer to amend his complaint to incorporate
the specific facts and allegations in his response to the Court’s Order.
I.

BACKGROUND

Plaintiff Odis Spencer filed a state court petition with an application for damages in the
225th Judicial District Court of Bexar County, Texas, on February 2, 2015. (Docket no. 1-4).
By his lawsuit, Spencer seeks to recover damages for a foreclosure and eviction upon the
property at 7403 Cinnabar Trail, San Antonio, Texas 78244 (the “Property”). On September 4,
2012, Everhome Mortgage Company, LLC (“EMC”) purchased the Property at a non-judicial
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foreclosure sale that was held pursuant to the terms of a note and deed of trust executed by
Spencer on January 29, 1987. (Docket no. 1, Ex. B). On September 4, 2012, Spencer was
granted a Temporary Restraining Order (“TRO”) against EMC and HWA, as substitute trustee,
which went into effect September 4, 2012, and extended until September 28, 2012, to stop a
foreclosure sale. (Docket no. 1, Ex. A). Despite the TRO, a foreclosure and sale of the Property
took place on September 4, 2012.1 (Docket no. 1, Ex. B). The Property was eventually sold on
April 10, 2013 to REOCO, Inc. (Docket no. 1-4, Ex. D).
On August 4, 2014, Spencer filed a petition in Bexar County District Court against the
three previous defendants in this case, Robert D. Valdespino, Jack O’Boyle, and Christopher S.
Ferguson, lawyers at Jack O'Boyle and Associates, but not HWA, for alleged actions arising
from the eviction as a result of the foreclosure and sale of the Property. (Docket no. 7, Ex. 6).
The petition was non-suited with prejudice on December 30, 2014. (Docket no. 7, Ex. 6).
Spencer filed a second state petition against the previous defendants and HWA on
February 2, 2015. (Docket no. 1-4). Spencer alleged four causes of action against all the
defendants in his state court petition: (1) violation of the FDCPA; (2) fraud and
misrepresentation under Texas Unfair Trade Practices; (3) violation of the Texas Civil Practice
and Remedies Code § 12; and (4) an “intentional tort” alleging “emotional distress” caused by
the Defendants’ intentional acts, which the Court construes as an intentional infliction of
emotional distress (“IIED”) claim. (Docket no. 1-4). HWA removed the case to federal court
asserting federal question jurisdiction based on the FDCPA claim on March 26, 2015. Docket
no. 1.

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It is unclear from the record how the foreclosure and sale occurred the same day the TRO issued, i.e. whether the
substitute trustee was served with the TRO.

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The previous defendants moved to dismiss the claims against them, arguing attorney
immunity and res judicata on May 1, 2015. (Docket no. 7). The Court granted that motion to
dismiss in the Amended Order and dismissed the previous defendants on June 11, 2015. (Docket
no. 15). Only HWA remains as a defendant in this case.
II.

ANALYSIS

In its Amended Order, the Court stated:
The FDCPA prohibits a debt collector from using “any false, deceptive, or
misleading representation or means in connection with the collection of any debt”
and from using “unfair or unconscionable means to collect or attempt to collect
any debt.” 15 U.S.C. §§ 1692(e) and (f). Spencer fails to allege sufficient facts
demonstrating that HWA is a “debt collector” within the meaning of the FDCPA
or how HWA’s status as a substitute trustee makes it a debt collector. 15 U.S.C. §
1692(a); see Riley v. Wells Fargo Bank, N.A., No. CIV.A. H-13-0608, 2014 WL
129397, at *5 (S.D. Tex. Jan. 8, 2014).”
(Docket no. 15. at 12). The Court ordered Spencer to show cause why his FDCPA claim should
not be dismissed, and HWA to show cause why, if the FDCPA claim is dismissed, the Court
should continue to exercise supplemental jurisdiction over the state claims in the complaint. Id.
at 13. The Court also granted Spencer leave to file an amended complaint. (Docket no. 11).
In his response, Spencer specifically argues HWA is a “third party debt collector” as
defined by 15 U.S.C. § 162(6) of the FDCPA. Docket no. 17 at 1. He argues, and attaches
evidence, that HWA sent him a letter on January 18, 2011, where HWA admitted it was a debt
collector, which stated:
In compliance with the requirements of the Fair Debt Collection Practices Act, 15
U.S.C. §16921, and the Texas Debt Collection Practices Act, Tex. Fin. Code
§392.001 and in response to your letter dated December 6, 2010 . . . THIS
LETTER IS FROM A DEBT COLLECTOR. THIS IS AN ATTEMPT TO
COLLECT A DEBT AND INFORMATION OBTAINED WILL BE USED FOR
THAT PURPOSE." (all caps and bolding is the way these sentences are typed
within the letter).

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(Docket no. 17-1).

Further, Spencer asserts “HWA knowing that it is a ‘third party debt

collector’ as defined by both State and Federal Statute filed its ‘third party debt collector’ bond
number RSB542246 issued by RLI Insurance Company with the Secretary of State as required
by Texas State Law, which complies with both 15 U.S.C.A. §1692, et seq. and Chapter 392 of
the Texas Finance Code, announcing to the Plaintiff and general public that HWA is a ‘third
party debt collector.’” (Docket no. 17 at ¶ 6). Lastly, Spencer argues that, as a third party debt
collector, HWA violated the FDCPA in multiple ways, including falsely representing “the
Character, Amount and Legal Status of Plaintiffs’ alleged debt in violation of 15 U.S.C.A. §
1692e(2)(A)” and violating 15 U.S.C. § 1692f(6) “when it threatened foreclosure when
Plaintiffs’ real property was not subject to foreclosure as represented by HWA.”
Given the opportunity, HWA did not offer any arguments or reasons the Court should
dismiss Spencer’s FDCPA claim against it. See docket no. 16. HWA only stated, “The Court
indicated it intended to sua sponte rule on [Spencer’s] FDCPA claims against HWA. HWA
agrees that the FDCPA claims should be dismissed.” (Docket no. 16 at ¶ 2).
In its Order, the Court wrote “the Court raises sua sponte that Spencer does not appear to
allege any facts against HWA to support a cause of action under the FDCPA beyond mere legal
conclusions.” (Docket no. 15 at 11). The amended complaint still likely lacks factual allegations
sufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also FED. R. CIV.
P. 8(a). The live complaint does not allege HWA is a debt collector or any specific facts to
support that HWA is a debt collector; focusing instead on HWA’s status as the substitute trustee
at the foreclosure sale.

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However, Spencer has listed several specific facts that might to properly state an FDCPA
claim against HWA in his response to the Court’s Order to show cause. Therefore, the Court
instructs Plaintiff to file a second amended complaint against HWA that incorporates the
arguments and facts articulated in his response (docket no. 17) by July 13, 2015. The Court
continues to exercise its supplemental jurisdiction over the state law claims against HWA for the
time being.2
It is so ORDERED.
SIGNED this 30th day of June, 2015.

XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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In a footnote in its response, HWA says “The Amended Order mistakenly states that HWA did not assert immunity
or preclusion. HWA’s Amended Answer asserted attorney immunity and the bars of res judicata, collateral estoppel,
and judicial estoppel.” Docket no. 16 at 2 n.1. The Court did state, “The claims against the substitute trustee HWA
remain pending, as HWA is not party to the motion to dismiss and has not asserted immunity or preclusion.” The
Court was not “mistaken.” It was simply explaining to the pro se Plaintiff why HWA was not also dismissed given
the Court’s analysis for the other defendants in this case. The Court is aware of HWA’s affirmative defenses. To
date, HWA has not moved for summary judgment on those defenses or offered otherwise evidence or argument for
attorney immunity or preclusion, so the Court has not had the opportunity to rule on those issues as they relate to
HWA.

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