Trokie v. U.S. Bank Trust Nat'l Ass'n (In re Trokie), Case Number: 1:15-bk-05003-RNO

• Decision Date: 05 October 2018
• Docket Number: Adversary Number: 1:18-ap-00018-RNO,Case Number: 1:15-bk-05003-RNO
• Citation: 590 B.R. 663
• Parties: IN RE: Kelli S. TROKIE, Debtor(s) Kelli S. Trokie Plaintiff(s) v. U.S. Bank Trust National Association, as Trustee of the IGSC Series II Trust, SN Servicing Corporation, Tucker Arensberg, PC, Brett A. Solomon, Michael C. Mazack, Kevin L. Hall, and Kenneth J. McDermott., Defendant(s)
• Court: U.S. Bankruptcy Court — Middle District of Pennsylvania

590 B.R. 663

IN RE: Kelli S. TROKIE, Debtor(s)Kelli S. Trokie Plaintiff(s)

v.U.S. Bank Trust National Association, as Trustee of the IGSC Series II Trust, SN Servicing Corporation, Tucker Arensberg, PC, Brett A. Solomon, Michael C. Mazack, Kevin L. Hall, and Kenneth J. McDermott., Defendant(s)

Case Number: 1:15-bk-05003-RNO

Adversary Number: 1:18-ap-00018-RNO

United States Bankruptcy Court, M.D. Pennsylvania.

Signed October 5, 2018

Lisa A. Rynard, Purcell Krug and Haller, Harrisburg, PA, for Plaintiff.

William Edward Miller, Stern & Eisenberg, P.C., Warrington, PA, Edwin Allen Dawes Schwartz, Marshall Dennehey Warner Coleman Goggin, Camp Hill, PA, for Defendants.

SN Servicing Corporation, pro se.

Nature of Proceeding: Motions to Dismiss Adversary Proceeding

OPINION ¹

Robert N. Opel, II, Chief Bankruptcy Judge (BI)

Chapter 13 Debtor filed a three-count adversary Complaint claiming a creditor, creditor's servicing agent, and creditor's counsel violated the automatic stay, Debtor's confirmed Chapter 13 Plan, and the Fair Debt Collection Practices Act. In separate motions, all of the Defendants moved to dismiss the adversary Complaint. For the reasons stated below, the US Bank and SN Servicing Defendants' Motion to Dismiss is granted in part and denied in part, and the TAPC Defendants' Motion to Dismiss is granted in full.

I. JURISDICTION

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. Counts I and II of the Complaint are core proceedings under 28 U.S.C. § 157(b)(2)(G) & (O ). Count III of the Complaint is a non-core proceeding under 28 U.S.C. § 157(c)(1).

II. FACTS AND PROCEDURAL HISTORY

Kelli S. Trokie ("Debtor" or "Plaintiff") filed a voluntary petition under Chapter 13 of the Bankruptcy Code on November 23, 2015. This adversary proceeding was commenced by a Complaint ("Complaint") filed on March 6, 2018. Debtor filed this Complaint against U.S. Bank Trust National Association ("US Bank"), SN Servicing Corporation ("SN Servicing"), Tucker Arensberg PC, Brett A. Solomon, Michael C. Mazack, Kevin L. Hall, and Kenneth J. McDermott (collectively, "Defendants").

The Complaint provides that US Bank holds a mortgage loan secured by Debtor's principal residence located at 5906 Shope Place, Harrisburg, Pennsylvania and that SN Servicing handles the servicing of that loan. The Complaint also alleges that, on October 2, 2017, counsel for US Bank and SN Servicing filed a Motion for Relief from the Automatic Stay ("Motion for Relief") regarding an alleged delinquency on Debtor's loan payments. Motion for Relief, 1:15-bk-05003-RNO, ECF No. 46. Furthermore, the Complaint alleges that, before and after the filing of the Motion for Relief, Debtor's counsel communicated with Defendants multiple times where she expressed concerns regarding the accuracy of Debtor's payment history account held by Defendants.

In sum, the Complaint alleges that Defendants filed and pursued the Motion for Relief under knowingly faulty and false payment history records of Debtor's loan account, and in turn violated the automatic stay imposed by 11 U.S.C. § 362(a)² , violated the terms of Debtor's confirmed Chapter 13 Plan under § 1327(a), and violated the Fair Debt Collection Practices Act ("FDCPA") under 15 U.S.C. § 1692e.

On April 6, 2018, US Bank and SN Servicing (collectively, "US Bank and SN Servicing Defendants") filed a Motion to Dismiss ("US Bank and SN Servicing Defendants' Motion to Dismiss") at docket number 8. On the same day, Tucker Arensberg PC, Kevin L. Hall, Michael C. Mazack, Kenneth J. McDermott, and Brett A. Solomon (collectively, "TAPC Defendants"), as counsel for US Bank and SN Servicing, filed a Motion to Dismiss ("TAPC Defendants' Motion to Dismiss") (collectively, "Motions to Dismiss") at docket number 7. Both Motions to Dismiss seek dismissal of the Complaint, with prejudice. A hearing on the Motions to Dismiss was held on July 26, 2018. The Motions to Dismiss have been briefed and are now ripe for decision.

III. DISCUSSION

A. Standard of Review for a Motion to Dismiss Pursuant to Federal Rule of Bankruptcy Procedure 7012(b)(6)

Federal Rule of Bankruptcy Procedure ("FRBP") 7012(b) makes Federal Rule of Civil Procedure ("FRCP") 12(b)–(i) applicable to bankruptcy adversary proceedings. FRCP 12(b)(6) requires dismissal of a complaint which fails to state a claim upon which relief can be granted. Generally, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). However, the Supreme Court heightened this pleading standard by holding that for a complaint to withstand a motion to dismiss, a claim must be more than possible, it must be plausible. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 1973, 167 L.Ed.2d 929 (2007). Additionally, Twombly advises that while detailed factual allegations are not required in a complaint, "a 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." Id. at 555, 127 S.Ct. 1955. Two years later, the Supreme Court went further to define "facial plausibility":

A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.

Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal citations and quotations omitted).

At the motion to dismiss stage, only well pled facts are viewed in the light most favorable to the non-moving party, in this case, the Debtor. Alternatively, legal conclusions are not assumed to be correct at the motion to dismiss stage. In Iqbal , Justice Kennedy wrote:

While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.

Iqbal , 556 U.S. at 679, 129 S.Ct. 1937. The Third Circuit has also provided guidance on the differing standards regarding a complaint's alleged facts and legal conclusions at the motion to dismiss stage:

The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a plausible claim for relief. In other words, a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to "show" such entitlement with its facts.

Fowler v. UPMC Shadyside , 578 F.3d 203, 210–11 (3d Cir. 2009) (internal citations omitted).

When deciding a motion to dismiss, the court may consider the complaint as well as attached exhibits and matters of public record. Pension Ben. Guar. Corp. v. White Consol. Industries, Inc. , 998 F.2d 1192, 1196 (3d Cir. 1993) ; Taylor v. Henderson , 2015 WL 452405, *1 (D. Del., Jan. 30, 2015). Additionally, the court may consider an indisputably authentic document which a defendant attaches as an exhibit to a motion to dismiss, if the plaintiff's claims are based on the document. Pension Ben. Guar. Corp. , 998 F.2d at 1196 ; see also , Miller v. Clinton County , 544 F.3d 542, 550 (3d Cir. 2008).

Furthermore, the Federal Rules of Evidence ("FRE") apply to proceedings before United States Bankruptcy Judges. Fed. R. Evid. 1101(a) ; In re Barnes , 266 B.R. 397, 403 (8th Cir. BAP 2001). FRE 201 allows a federal court to take judicial notice of facts that are not subject to reasonable dispute. A bankruptcy court may take judicial notice of the docket events in a case, contents of the bankruptcy schedules to determine the timing and status of case events, as well as other facts not reasonably in dispute. In re Harmony Holdings, LLC , 393 B.R. 409, 413 (Bankr. D.S.C. 2008) ; In re Paolino , 1991 WL 284107, *12 n. 19 (Bankr. E.D. Pa., Jan. 11, 1991).

B. Count I – Violation of the Automatic Stay Pursuant to 11 U.S.C. § 362(k)(1)

Count I of Debtor's Complaint alleges Defendants willfully violated the automatic stay pursuant to § 362(a) when Defendants sought relief from the stay and continued to pursue such relief upon knowingly faulty and false payment history records of Debtor's loan account. Compl. 11–13, ECF No. 1. As such, Debtor seeks a damage award under § 362(k) for Defendants' willful violation. Id.

One of the hallmarks of bankruptcy protection is the automatic stay. In re Thomas , 529 B.R. 628, 635 (Bankr. W.D. Pa. 2015). Generally, § 362(a) of the Bankruptcy Code protects a debtor from creditors' actions, including:

the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title.

If a creditor violates the automatic stay, § 362(k)(1) provides that an individual debtor who is "injured by any willful violation of [the automatic stay] ... shall recover actual damages, including costs and attorneys' fees and, in appropriate circumstances, may recover punitive damages." A "willful" violation of the automatic stay occurs when a creditor violates the stay with knowledge that a bankruptcy petition has been filed. In re Iskric , 496 B.R. 355, 360 (Bankr. M.D. Pa. 2013) (citing In re Lansdale Family Rests., Inc. , 977...