In re Jacques

• Decision Date: 04 September 2009
• Docket Number: Bankruptcy No. 08-42279-ess.,Adversary No. 09-1018-ess.
• Citation: 416 B.R. 63
• Parties: In re Jude JACQUES, Debtor. Jude Jacques, Plaintiff, v. U.S. Bank N.A. in its capacity as Trustee for the Registered Holders of the MASTR Asset Backed Securities Series 2005-NC2 and Ocwen Loan Servicing, Defendants.
• Court: U.S. Bankruptcy Court — Eastern District of New York

416 B.R. 63

In re Jude JACQUES, Debtor Jude Jacques, Plaintiff, v. U.S. Bank N.A. in its capacity as Trustee for the Registered Holders of the MASTR Asset Backed Securities Series 2005-NC2 and Ocwen Loan Servicing, Defendants.

Bankruptcy No. 08-42279-ess.

Adversary No. 09-1018-ess.

United States Bankruptcy Court, E.D. New York.

September 4, 2009.

COPYRIGHT MATERIAL OMITTED

Joshua N. Bleichman, Esq., Spring Valley, NY, for Plaintiff.

Saul O. Leopold, Esq., Peter T. Roach & Associates, P.C., Syosset, NY, for Defendants.

MEMORANDUM DECISION ON DEFENDANTS' MOTION TO DISMISS THE COMPLAINT

ELIZABETH S. STONG, Bankruptcy Judge.

This adversary proceeding was commenced by the filing of a complaint by Jude Jacques, the debtor in this Chapter 13 case (the "Plaintiff"), against defendants U.S. Bank N.A. in its capacity as Trustee for the Registered Holders of the MASTR Asset Backed Securities Series 2005-NC2 ("U.S.Bank") and Ocwen Loan Servicing ("Ocwen") (the "Defendants"). The Plaintiff alleges that the Defendants filed an untimely and wrongful proof of claim, and that the filing of the proof of claim violated the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617 ("RESPA") and the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692(p) ("FDCPA"), and was negligent and caused emotional distress. The Plaintiff seeks actual, statutory, and punitive damages, and his legal fees and expenses, and also asks that his debt to the Defendants be canceled, released, and discharged.

Before the Court is the Defendants' motion to dismiss all of the claims asserted in the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), made applicable to this adversary proceeding by Federal Rule of Bankruptcy Procedure 7012(b).

The Motion to Dismiss implicates the pleading standards announced by the Supreme Court in Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) and Bell Atlantic v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and raises the question of whether claims under two broad remedial statutes, RESPA and the FDCPA, may be asserted by a debtor in the context of a bankruptcy case. Some courts find that these statutes may "coexist peaceably," while others conclude that the Bankruptcy Code precludes some claims that arise under these statutes. The Motion to Dismiss also raises the question of whether the Plaintiff states a claim upon which relief can be granted.

The Court concludes that the second question should be answered before the first—that is, the Court should determine whether the Plaintiff states a claim for relief under RESPA or the FDCPA before it can determine whether the Bankruptcy Code precludes the claim. If the alleged claim is inadequate on its face, then it is not necessary to address the question of whether preclusion should apply.

Here, the Plaintiff does not allege facts sufficient to state claims under theories of RESPA, the FDCPA, negligence, or infliction of emotional distress. As a result, it is not necessary to reach the question of whether any claim is precluded by the Bankruptcy Code. For these reasons, the Motion to Dismiss is granted.

Jurisdiction

The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334(b) and 157(b)(2)(A).

Procedural History

On January 23, 2009, the Plaintiff commenced this Adversary Proceeding by filing the Complaint. Docket No. 1.

On March 2, 2009, the Defendants filed the Motion to Dismiss, a Memorandum of Law in Support of Defendants' Motion to Dismiss (the "Defts' Mem."), and the Affirmation of Saul O. Leopold in Support of Defendants' Motion to Dismiss (the "Leopold Affirm."). Docket No. 3. The Defendants argue that the Complaint should be dismissed because the Plaintiff's RESPA and FDCPA claims are preempted by the Bankruptcy Code, and separately, that the Plaintiff does not adequately allege the elements of any of his claims.

On March 27, 2009, the Plaintiff filed the affirmation of Joshua N. Bleichman in Opposition to Motion to Dismiss (the "Bleichman Affirm.") and a Memorandum of Law with Points and Authorities in Opposition to Motion to Dismiss (the "Pltf's Mem."). Docket No. 6. On April 1, 2009, the Defendants filed a Memorandum of Law in Support of Defendants' Reply to Opposition to Motion to Dismiss (the "Defts' Reply"). Docket No. 7. On April 29, 2009, the Plaintiff filed a supplement to his Opposition to Motion to Dismiss (the "Pltf's Supp"). Docket No. 8. A hearing on the Motion to Dismiss was held on May 14, 2009, at which counsel for the Plaintiff and counsel for the Defendants appeared and were heard and the matter was submitted for decision.

Background

On April 17, 2008, the Plaintiff filed a petition for relief under Chapter 13 of the Bankruptcy Code. Case No. 08-42279, Docket No. 1. The Debtor's Schedule A— Real Property lists his fee simple interest in 969 East 103rd Street, Brooklyn, New York (the "Premises"), with a value of $450,000 and secured claims of $505,215. Id. The Debtor's Schedule D—Creditors Holding Secured Claims, lists Ocwen as the holder of a secured claim in the amount of $366,680, secured by the Premises. Id. The Plaintiff also filed a Chapter 13 plan. Case No. 08-42279, Docket No. 4. The Chapter 13 plan requires the Trustee to make disbursements to, among others, an unidentified "Mortgage holder" for unspecified "pre-petition arrears ... over the life of the plan." Id.

On April 20, 2008, the Bankruptcy Court served a Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors, & Deadlines (the "Bankruptcy Court Notice") upon the Plaintiff's creditors, including Ocwen. Case No. 08-42279, Docket No. 8. The Bankruptcy Court Notice provides notice of the dates scheduled for the Section 341 meeting of creditors, the hearing on confirmation of the Chapter 13 plan, and the deadlines to file a proof of claim, file a complaint to determine dischargeability of certain debts, and object to exemptions. Case No. 08-42279, Docket No. 6. The Bankruptcy Court Notice also provides that for all creditors, other than governmental units, the deadline to file a proof of claim was August 12, 2008. Id.

The Proof of Claim

On May 1, 2008, Ocwen filed a secured proof of claim relating to its interest in the Premises (the "Proof of Claim"). Case No. 08-42279, Claim No. 2-1; Leopold Affirm. Exh. 3 (Proof of Claim). The Proof of Claim states that the total amount of Ocwen's secured claim is $374,718.05, and the amount of arrearage and other charges as of the petition date is $8,147.35. The Proof of Claim includes an itemization of the arrearage amount which lists "Monthly Payments" of $7,331.40,¹ "Late Charges" of $293.28, "Escrow Advances" of $319.94, "Fees, Costs & Property Preservation Expenses" of $129.13,² "POC Fee" of $150.00 and "Pre-Pet Suspense" credit of $76.40. It also includes a schedule of "Payoff Information" which identifies "Unpaid Principal Balance" of $366,570.70, "Interest From: 01/01/2008 to 04/30/2008" of $7,331.40, "Late Charges" of $293.28, "Escrow Advances" of $319.94, "Fees, Costs & Property Preservation Expenses" of $129.13, "POC Fee" of $150.00, "Pre-Pet Suspense" credit of $76.40, "Payoff as of: 04/17/2008" of $374,718.05, and "Per Diem Amount" of $61.10. Case No. 08-42279, Claim No. 2-1; Leopold Affirm. Exh. 3 (Proof of Claim—Schedule B).

The Proof of Claim includes a copy of a mortgage signed by the Plaintiff on July 26, 2005, which names First Rate Capital Corp. as "Lender" and Mortgage Electronic Registration Systems, Inc. ("MERS") as "a nominee for Lender and Lender's successors and assigns." Case No. 08-42279, Claim No. 2-1. Ocwen also attaches copies of a Note for $91,670, and an Interest Only Adjustable Rate Note for $366,680, each signed by the Plaintiff on July 26, 2005, and each naming First Rate Capital Corp. as the Lender. Id.

The Proof of Claim does not include documents showing an assignment of the mortgage from First Rate Capital Corp. or MERS to U.S. Bank. Id. Ocwen states that "[t]he beneficial interest under the mortgage was subsequently assigned to U.S. Bank N.A. in its capacity as Trustee for the Registered Holders of the MASTR Asset Backed Securities Series 2005-NC2," and that "Ocwen is the loan servicer for U.S. Bank N.A. as Trustee." Defts' Mem. at 2.

The Plaintiff has not objected to the Proof of Claim in the bankruptcy case.

The Complaint

The Plaintiff alleges that "[o]n or about July 26, 2005, [he] borrowed the sum of $366,680.00 from First Rate Capital Corp." Complaint ¶ 13. He states that his Chapter 13 plan "included a debt to U.S. Bank N.A., which was scheduled as a debt secured by a mortgage on the residential real estate [of the Plaintiff] with an estimated value of $370,000," and that his Chapter 13 plan "provided for the cure of the pre-petition arrears to U.S. Bank N.A." Complaint ¶ 15.

As to the Proof of Claim, the Plaintiff alleges:

The Defendant filed a sworn proof of claim ... dated April 17, 2008 stating mortgage arrears in the amount of $8,147.35 and the total claim amounting to $374,718.05.

The proof of claim alleges $7,331.40 in Interest owed from 1/01/08-4/30/08 however, the amount is unsubstantiated and ... unearned.

The proof of claim alleges $129.13 in Fees, Costs & Property Preservation Expenses, but fails to specify who the payee was.

The proof of claim alleges $319.94 in escrow advances, but fails to specify who the payee was.

...

The amounts [described above] are what are known by the consumer bar as "junk fees".

The plaintiff[] believe[s] that [he] is being charged unauthorized late fees, that [his] payments are being misapplied and that the mortgage account is not being properly credited for payments of interest, principal, and escrow charges.

Complaint ¶¶ 18-21, 23-24.

The Complaint sets forth four claims for relief.³ The Plaintiff's first claim is for violation of RESPA (the "RESPA Claim"). The Plaintiff alleges that the Defendants violated RESPA by failing to...