Shields v. Wilmington Trust, National Association, a Delaware banking corporation et al

Filing 34

ORDER RE: MOTION TO DISMISS. The Motion to Dismiss (ECF No. 6 ) is GRANTED only as to the FDCPA claim against Defendant Wilmington Trust, N.A., and is OTHERWISE DENIED for the reasons set forth herein. The court granted Plaintiff's leave to file an Amended Complaint within 14 days of the date of this Order. Signed by Senior Judge Justin L. Quackenbush. (TR, Case Administrator)

FILED IN THE
U.S. DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON

1

Aug 26, 2016

2

SEAN F. MCAVOY, CLERK

3

UNITED STATES DISTRICT COURT

4

EASTERN DISTRICT OF WASHINGTON

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

PAUL SHIELDS,

)
)
) No. CV-16-0192-JLQ
Plaintiff,
)
) ORDER RE: MOTION
vs.
) TO DISMISS
)
WILMINGTON TRUST, N.A.,
)
OCWEN LOAN SERVICING, and
)
NORTH CASCADE TRUSTEE
)
SERVICES,
)
)
Defendants.
)
___________________________________ )
BEFORE THE COURT is Defendant Ocwen’s Motion to Dismiss (ECF No. 6).
Defendant North Cascade joins in the Motion (ECF No. 16). Plaintiff has filed responses
to both the Motion and the Notice of Joinder. (ECF No. 14 & 24). No reply briefs were
filed. The court heard telephonic argument on August 11, 2016. Andrew Biviano
appeared for Plaintiff. Renee Parker argued the Motion for Ocwen. Gregory Morphew
appeared on behalf of North Cascade. At the conclusion of the hearing, Plaintiff sought
leave to file a supplemental brief. The court has considered the supplemental briefs
submitted by Ocwen and Plaintiff. (ECF No. 32 & 33).
I. Introduction and Procedural History
This action was filed in state court on May 20, 2016, and removed to this court on
June 3, 2016. The Complaint names three Defendants: 1) Wilmington Trust, N.A., 2)
Ocwen Loan Servicing, and 3) North Cascade Trustee Services. No Defendant has
answered the Complaint. The Notice of Removal, filed by Ocwen “and U.S. Bank Trust,
N.A.” states that Wilmington Trust, N.A. was a misnomer, and the proper Defendant

27
28

ORDER - 1

1

should have been U.S. Bank Trust. (ECF No. 1, p. 1-2).

2

Ocwen filed the Motion to Dismiss on behalf of itself and U.S. Bank. Therein,

3

Ocwen stated that it “services the Loan on behalf of U.S. Bank Trust, N.A.”. (ECF No.

4

6, p. 3). The Motion also stated the Loan at issue was transferred to Wilmington Trust

5

by Assignment dated March 10, 2015. (Id. at 3). The Motion does not state when the

6

Loan was allegedly transferred from Wilmington Trust to U.S. Bank. A Notice of

7

Default, prepared by North Cascade on November 9, 2015, and attached to Plaintiff’s

8

Complaint at Exhibit P, lists Wilmington Trust, N.A., as Trustee of ARLP Securitization

9

Trust, Series 2014-2, as the Note Owner. (ECF No. 1-1, Ex P). Two weeks after filing

10

the Motion to Dismiss, Ocwen filed a Supplement (ECF No. 12), in which it seeks to

11

correct the Motion by eliminating the contention that it is the current servicer of the Loan,

12

and instead states “Caliber Home Loans, Inc.” is the servicer.

13

Plaintiff filed a Response (ECF No. 14) to the Motion on July 1, 2016, and therein

14

argues that U.S. Bank should not be heard on the Motion as it has “not established that

15

it has any interest in the loan”. (Id. at 6). Concerning the proper holder of the note,

16

Plaintiff’s Response states: “as of June 27, 2016, the Spokane County Auditor’s records

17

show no assignment from Wilmington Trust to U.S. Bank.” (Id. at 7).

18

Just hours after Plaintiff’s Response was filed, Defendant North Cascade filed a

19

Notice of Joinder (ECF No. 16) in Ocwen’s Motion. North Cascade also filed over 100

20

pages of additional exhibits. On July 22, 2016, Plaintiff filed a Response to the Notice

21

of Joinder. (ECF No. 24). This Response raises additional issues about the uncertainty

22

of the proper parties: “Adding to the already unclear interests of the parties that have

23

appeared, North Cascade now states in its brief that the loan in question is owned by

24

Deutsche Bank.” (ECF No. 24, p. 2). Plaintiff further contends that Wilmington Trust,

25

N.A., has failed to appear and is in default.

26

Neither Ocwen or North Cascade filed a reply brief, and thus neither Defendant

27

responded to Plaintiff’s claims that U.S. Bank lacks standing and that Deutsche Bank’s

28

ORDER - 2

1

interest is unsubstantiated. After the conclusion of the hearing, at which North Cascade

2

could not at that time provide an answer the court’s inquiry as to why Deutsche Bank was

3

named in its brief, counsel filed a Declaration (ECF No. 28) stating that the reference to

4

Deutsche Bank was in error. It appears from Plaintiff’s Response (ECF No. 24), that

5

Plaintiff may seek to file an Amended Complaint to add or remove parties.

6

II. Discussion

7

The uncertainty of the record, specifically concerning the proper parties, and the

8

procedural irregularities with the filing of the Motion preclude the court from issuing a

9

dispositive ruling. Both Ocwen and North Cascade supplemented the record after the

10

Motion was filed with new information concerning factual allegations, and neither Ocwen

11

or North Cascade filed a reply brief addressing Plaintiff’s contention that U.S. Bank is

12

not a party and therefore cannot advance a motion. “The art of advocacy is not one of

13

mystery. Our adversarial system relies on the advocates to inform the discussion and

14

raise the issues to the court.” Independent Towers of Washington v. Washington, 350 F.3d

15

925, 929 (9th Cir. 2003). The parties’ briefing to date has not presented a cogent picture

16

of the entities involved in this dispute.

17

The three attorneys who appeared at the hearing in this matter should be able to

18

confer and determine the current holder of the note and the current loan servicer. Plaintiff

19

has stated documentary evidence of such has not been forthcoming. As Ocwen contends

20

Wilmington Trust, N.A., is no longer the holder of the note and that Ocwen is no longer

21

the servicer, replaced by Caliber Home Loans, the court expects that counsel for Ocwen

22

has conducted an adequate factual investigation to support those contentions.

23

Documentary evidence supporting those contentions should have been provided as part

24

of the Rule 26(a)(1) initial disclosures. Pursuant to the court’s Scheduling Order, initial

25

disclosures were to have been made by July 11, 2016. Plaintiff has stated that he has not

26

received any documentation confirming that U.S. Bank is the holder of the note, and the

27

letter he received “ostensibly” confirming Caliber Home Loans is not the servicer

28

ORDER - 3

1

actually referenced “an unknown borrower not involved in this action.” (ECF No. 32, p.

2

2). As outlined above, the uncertainty as to the proper parties, incomplete briefing, and

3

untimely factual supplementation of the Motion to Dismiss, do not make a dispositive

4

ruling appropriate at this time. The court will not discuss the merits of the Motion as to

5

the state law claims, but will briefly address the only federal claim, the Fair Debt

6

Collection Practices Act claim.

7

A. Failure to State a Claim under Fair Debt Collection Practices Act

8

Defendant Ocwen argues that non-judicial foreclosure proceedings are not attempts

9

to collect a debt under the FDCPA, 15 U.S.C. § 1692 et seq. The court indicated at oral

10

argument that there was potential merit to Defendants’ argument. The FDCPA claim is

11

the only federal claim, and if dismissed, the court would likely decline supplemental

12

jurisdiction over the remaining state law claims. Ocwen relies on Mansour v. Cal-

13

Western Reconveyance, 618 F.Supp.2d 1178 (D.Arizona 2009). Plaintiff argues that this

14

is not controlling authority, and the Mansour opinion acknowledged the Ninth Circuit had

15

not resolved the issue. The Mansour opinion relies on Fifth Circuit authority, Perry v.

16

Stewart Title, 756 F.2d 1197, 1208 (5th Cir. 1985)(“The legislative history of 1692a(6)

17

indicates conclusively that a debt collector does not include the consumer’s creditors, a

18

mortgage servicing company, or an assignee of a debt, as long as the debt was not in

19

default at the time it was assigned”). Other courts have agreed with the Fifth Circuit. See

20

for example Fenello v. Bank of America, 577 Fed.Appx. 899 (11th Cir. 2014)(loan

21

servicer, Bank of America, was not a “debt collector” under 1692g because its debt

22

collection activity involved a debt that was not in default at the time Bank of America

23

became the servicer).

24

Mansour was decided in 2009, and at oral argument the court raised the Ninth

25

Circuit’s opinion in Schlegel v. Wells Fargo Bank, 720 F.3d 1204 (9th Cir. 2013), which

26

had not been addressed in the briefing. Plaintiff asked to submit supplemental briefing,

27

and the court allowed both sides to submit additional briefs. (ECF No. 31). In Schlegel

28

ORDER - 4

1

the Ninth Circuit found the Plaintiff had failed to make sufficient allegations that Wells

2

Fargo was a debt collector to state a claim under the FDCPA. The court stated: “The

3

complaint’s factual matter, viewed in the light most favorable to the [Plaintiffs],

4

establishes only that the debt collection is some part of Wells Fargo’s business, which is

5

insufficient to state a claim under the FDCPA.” Id. at 1208.

6

Plaintiff now concedes that it cannot state an FDCPA claim against the note holder.

7

(Plaintiff’s Supp. Brief, ECF No. 32 at p. 3)(“Plaintiff’s FDCPA claims against banks

8

that hold or have held the note on the home should, therefore be dismissed.”). However,

9

Plaintiff maintains that its FDCPA claim against Ocwen and North Cascade is properly

10

stated. The issue of the viability of FDCPA claims in the context of mortgage foreclosure

11

is not settled. See for example Glazer v. Chase Home Fin. LLC, 704 F.3d 646 (6th Cir.

12

2013)(“we hold that mortgage foreclosure is debt collection under the Act.”).

13

Additionally, there are cases where FDCPA claims have been allowed to go forward

14

against loan servicers. See for example Lang v. Ocwen Fin.Serv.Inc., 2011 WL 1303749

15

at *8 (D.Mont. 2011)(“The Court concludes that these allegations are sufficient to state

16

a plausible claim under the FDCPA. Whether Ocwen is a debt collector or instituted debt

17

collection activities raises legal and factual questions not properly determined on a

18

motion to dismiss.”).

19

Ocwen’s Supplemental Brief (ECF No. 33) requests the court to dismiss the

20

FDCPA claims with prejudice. However, even if the court were to agree the Complaint

21

should be dismissed as to Ocwen and North Cascade, it would dismiss with leave to

22

amend. It is not clear given the authorities cited, that amendment would be futile.

23

Further, it is not clear, given the lack of clarity in the instant record, whether the proper

24

parties are before the court, or whether Ocwen’s argument as to FDCPA claim is

25

meritorious. Plaintiff has conceded the issue as to Wilmington Trust, N.A., and therefore

26

the court will dismiss that claim.

27
28

ORDER - 5

1

IT IS HEREBY ORDERED:

2

1. The Motion to Dismiss (ECF No. 6) is GRANTED only as to the FDCPA claim

3

against Defendant Wilmington Trust, N.A., and is OTHERWISE DENIED for the

4

reasons set forth herein.

5
6

2. The court hereby grants Plaintiff leave to file an Amended Complaint. Any
such Amended Complaint shall be filed within 14 days of the date of this Order.

7

3. The parties are directed to meet and confer within 7 days of the date of this

8

Order in an effort to identify the proper parties to this action. Such meeting may be

9

telephonic. The parties are also directed, in accord with Rule 26 Initial Disclosure

10

requirements, to exchange any non-privileged documentation supporting their contentions

11

as to the proper parties.

12
13
14

IT IS SO ORDERED. The Clerk shall enter this Order and furnish copies to
counsel.
Dated this 26th day of August, 2016.
s/ Justin L. Quackenbush
JUSTIN L. QUACKENBUSH
SENIOR UNITED STATES DISTRICT JUDGE

15
16
17
18
19
20
21
22
23
24
25
26
27
28

ORDER - 6