Sexton v. Bank of N.Y. Mellon, Civil Action No. 5: 15-329-DCR

CourtUnited States District Courts. 6th Circuit. United States District Court of Eastern District of Kentucky
PartiesTHOMAS SEXTON and CHARLOTTE SEXTON, Plaintiffs, v. BANK OF NEW YORK MELLON, f/k/a Successor in interest to JP Morgan Chase Bank, NA as Trustee for IXIS Real Estate Capital Trust 2005-HE2, et al., Defendants.
Docket NumberCivil Action No. 5: 15-329-DCR
Decision Date28 July 2016

BANK OF NEW YORK MELLON, f/k/a Successor in interest to JP Morgan Chase Bank,
NA as Trustee for IXIS Real Estate Capital Trust 2005-HE2, et al., Defendants.

Civil Action No. 5: 15-329-DCR


July 28, 2016


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This matter is pending for consideration of the motion for judgment on the pleadings filed by Defendants Bank of New York Mellon ("BONY") and Select Portfolio Servicing ("SPS"). [Record No. 30] The defendants argue that Plaintiffs Thomas and Charlotte Sexton's claims against them should be dismissed for the same reasons that the Court dismissed the claims against Defendant Reisenfeld and Associates ("RA"). [Record No. 31, p. 1, referring to Record No. 23] For the reasons outlined below, the Court will grant the defendants' motion for judgment on the pleadings with respect to all claims except the claim premised on 15 U.S.C. § 1692c as it concerns Bank of New York Mellon.


The plaintiffs allege that the defendants violated several provisions of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., and that they invaded the plaintiffs' privacy by directing RA to send a "dunning" letter to the plaintiffs while the

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plaintiffs were represented by counsel in a pending foreclosure action. [Record No. 1] A more detailed summary of the facts appears in the Court's May 4, 2016 Memorandum Opinion and Order. [Record No. 23, pp. 1-3]

On March 31, 2009, Bank of New York Mellon, as successor to JPMorgan Chase Bank, N.A., filed a foreclosure action against the Sextons in Bourbon Circuit Court, attempting to collect $99.668.30, as well as accrued interest and costs. The action was filed following an alleged default on a loan secured by property conveyed to the Sextons. [Record Nos. 1, ¶¶ 8, 34; 1-3] Sixteen days later, Mortgage Electronic Registration Systems, Inc. ("MERS") assigned the loan to Mortgage Pass-Through Certificates, Series 2002-HE2. [Record Nos. 1, ¶ 33; 1-4] On May 11, 2009, the Sextons, represented by attorney Brian T. Canupp, filed their answer in the Bourbon Circuit Court. [Record No. 1, ¶ 10]

On September 15, 2011, MERS assigned the loan to IXIS Capital Trust 2005-HE2. [Id., ¶ 32; Record No. 1-3] In January 2014, Select Portfolio Servicing ("SPS") became the servicer of the loan. [Record No. 1, ¶ 31] The foreclosure case was dismissed for lack of prosecution on May 5, 2015. [Id., ¶ 24; Record No. 1-2] On October 31, 2014, while the foreclosure action was still pending, law firm RA, retained by SPS to act on BONY's behalf, sent a debt validation notice to the plaintiffs. [Record No. 1, ¶¶ 12, 18] The notice claimed that RA was a debt collector representing the interests of BONY. It stated, in relevant part:

[t]he Creditor has represented to us that the Loan is in default because of non-payment of the Debt. We have been asked by the Creditor to bring a foreclosure on the real estate which secures the repayment of the Debt. This Notice is required to be sent to advise you of certain rights provided to you by Law.
Record No. 1-1, p. 1] The notice identified the "Original Amount Financed" as $104,500.00. [Id.] It also explained that "[t]he Creditor has represented that as of the date of this letter the

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total balance of your loan is $167,145.93. Because of interest, late charges, and other charges . . . the amount due on the day you pay may be greater." [Id., p. 2] The notice went on to advise:

[u]nless you notify this office within thirty (30) days after receiving this Notice that you dispute the validity of this Debt . . . this office will assume that the Debt is valid. If you notify this office in writing within thirty (30) days from receiving this Notice, this office must obtain verification of the Debt . . . .

[Id.] The plaintiffs received the letter on or about November 5, 2014. They do not claim to have responded to the letter. [Record No. 1, ¶ 13] The Sextons assert that the amount identified in the letter was not the amount sought by BONY in Bourbon Circuit Court, and they deny the alleged debt. [Id., ¶¶ 27, 29

This action was initiated on November 2, 2015. [Record No. 1] On May 4, 2016, the Court dismissed the plaintiffs' claims against RA because they failed to properly plead the FDCPA elements and/or allege facts supporting the different theories of recovery. [Record No. 23] The present motion for judgment on the pleadings was filed on June 13, 2016. [Record No. 30] The plaintiffs did not file a response in opposition to the motion, so it now stands ripe for review.1


The standard of review for motions for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure is the same as that for motions to dismiss under Rule 12(b)(6). See Roth v. Guzman, 650 F.3d 603, 605 (6th Cir. 2011); Horen v. Bd. of Educ. of

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Toledo City School Dist., 594 F. Supp. 2d 833, 841 (N.D. Ohio 2009). Under that rule, the Court must determine whether the Complaint alleges "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, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). Although the Complaint need not contain "detailed factual allegations" to survive a motion for judgment on the pleadings, the "plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal quotation marks and citation omitted).

In considering a motion under the Rule 12(b)(6) standard, the Court must "accept all of plaintiff's factual allegations as true and determine whether any set of facts consistent with the allegations would entitle the plaintiff to relief." G.M. Eng'rs & Assoc., Inc. v. W. Bloomfield Twp., 922 F.2d 328, 330 (6th Cir. 1990) (citation omitted). However, the Court need not accept as true legal conclusions cast in the form of factual allegations if those conclusions cannot be plausibly drawn from the facts, as alleged. See Iqbal, 556 U.S. at 678 ("[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions."); see also Papasan v. Allain, 478 U.S. 265, 286 (1986). Thus, Rule 12(b)(6) essentially "allows the Court to dismiss, on the basis of a dispositive issue of law, meritless cases which would otherwise waste judicial resources and result in unnecessary discovery." Glassman, Edwards, Wade & Wyatt, P.C. v. Wolf Haldenstein Adler Freeman & Herz, LLP, 601 F. Supp. 2d 991, 997 (W.D. Tenn. 2009).

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Although the defendants suggest that the Court evaluate the motion for judgment on the pleadings under the Rule 56 summary judgment standard, it is not necessary to do so here. [Record No. 31, p. 2] In particular, the defendants argue that the plaintiffs have "admitted" certain facts by failing to respond to their interrogatories and requests for admissions. [Id., p. 5] Although the Court will deem certain facts admitted,2 the Court need not address the deemed facts to dismiss most of the claims against the remaining defendants. Further, the deemed facts do not affect the claim that will not be dismissed as to BONY. As a result, the Court declines to utilize the Rule 56 standard.


A. FDCPA Claims

The Sextons argue that BONY and SPS violated several provisions of the FDCPA by directing RA to send them the October 31, 2014 letter, specifically: 15 U.S.C. §§ 1692c; 1692c(a)(2); 1692d; 1692e; 1692e(2); 1692e(5); 1692e(10); 1692f; 1692g; and 1692(j). [Record No. 1, ¶¶ 27, 35] The FDCPA prohibits the use of "false, deceptive, or misleading representation or means in connection with the collection of any debt" and the "collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or

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permitted by law." 15 U.S.C. §§ 1692e, 1692f(1). Where a plaintiff brings claims under the FDCPA, the claims are tested under the "least sophisticated consumer" standard; that is, "whether the least sophisticated consumer would be misled by [the] defendant's actions." Wallace v. Wash. Mut. Bank, F.A., 683 F.3d 323, 326 (6th Cir. 2012) (internal quotation marks omitted). The purpose of the FDCPA is to protect consumers from abusive, deceptive, and unfair debt collection practices. 15 U.S.C. § 1692, et seq. It should be construed broadly to accomplish this purpose. Stratton v. Portfolio Recovery Assoc., LLC, 770 F.3d 443, 448 (6th Cir. 2014).

For the purposes of analyzing the arguments in the present motion for judgment on the pleadings, the Court has presumed that BONY is a "debt collector" and that the Sextons are "consumers" within the meaning of the FDCPA, 15 U.S.C. §§ 1692a(3), (6) and 1692c(d), based on the Sextons' allegations. [Record No. 1, ¶¶ 4, 5] However, SPS claims that the plaintiffs have not alleged that it is a "debt collector," meaning the plaintiffs fail to state any claims under the FDCPA against it. [Record No. 31, p. 8] The Court will address that issue before addressing the Sextons' individual claims.

The plaintiffs need not use the exact term "debt collector" regarding SPS to successfully allege that SPS is a debt collector. Instead, their allegations must "address[] all elements of the statutory definition of debt collector." Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 360 (6th Cir. 2012). Although there is an exemption for loan servicers, a "loan servicer will become a debt collector" under the...

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