# Bridge v. Ocwen Federal Bank, FSB

> Court of Appeals for the Sixth Circuit · April 30, 2012 · 681 F.3d 355

URL: https://www.frixlaw.com/law-library/cases/9752952

## Case

- **Full name:** Lisa BRIDGE; William W. Bridge, III, Plaintiffs-Appellants, v. OCWEN FEDERAL BANK, FSB; Ocwen Financial Corporation; Ocwen Loan Servicing, LLC; Aames Capital Corporation; Firstar Bank, Nka U.S. Bancorp; Ocwen Federal Loan Servicing Company; Deutsche Bank National Trust Co., Fka Bankers Trust Company of California, Defendants-Appellees
- **Court:** Court of Appeals for the Sixth Circuit
- **Decided:** April 30, 2012
- **Citations:** 681 F.3d 355; 2012 U.S. App. LEXIS 8671; 2012 WL 1470146
- **Precedential status:** Published
- **Opinion:** Concurrence by Clay
- **Judges:** Clay, Stranch, Barrett
- **Cited by:** 105 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9752952

## How later opinions describe it (automated extraction)

- stating that the legislative history of the FDCPA demonstrates Congress intended to “eliminate the recurring problem of debt collectors dunning the wrong person or attempting to collect debts which the consumer has already paid” (quoting S. Rep. No. 95-382, at 4 (1977), reprin…
- explaining that “an entity that did not originate the debt in question but acquired it and attempts to collect on it . . . is either a creditor or a debt collector depending on the default status of the debt at the time it was acquired”
- holding that “the definition of debt collector pursuant to § 1692a(6)(F)(iii) includes any non-originating debt holder that either acquired a debt in default or has treated the debt as if it were in default at the time of acquisition”
- holding that “the definition of debt collector ... includes any non-originating debt holder that either acquired a debt in default or has treated the debt as if it were in default at the time of acquisition”
- holding that the definition of debt collector under the FDCPA includes those that have treated a debt as though it was in default at the time of acquisition, even if it was not in fact in default

## Opinion text

CLAY, Circuit Judge,
concurring in part.
Because the district court dismissed this action at the pleadings stage, the issue before our Court is straightforward: whether a complaint adequately pleaded facts to state a claim under a federal statute. The resolution of this appeal requires only that we look to the statute under which the action is brought, in this case the Fair Debt Collection Practices Act (the FDCPA), 15 U.S.C. §§ 1692 -1692p, to determine the elements of a cause of action; we then consider whether pro se Plaintiffs’ second amended complaint properly asserted those elements, supported by sufficient factual allegations. Fed.R.Civ.P. 8(a)(2); Ashcroft v. Iqbal, 556 U.S. 662 , 129 S.Ct. 1937, 1949 , 173 L.Ed.2d 868 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 , 127 S.Ct. 1955 , 167 L.Ed.2d 929 (2007). Contrary to the majority opinion, it is unnecessary to indulge in a lengthy discussion of statutory construction or legislative history or to consider the policies and purposes that Congress sought to promote when passing the FDCPA. I turn now to the resolution of the issue presented to us.
A. FDCPA Civil Actions
Under the FDCPA, a plaintiff may bring a civil action against a debt collector who engages in “abusive debt collection practices.” 15 U.S.C. §§ 1692 (e), 1692k. Relevant to Plaintiffs’ claims, the statute provides that a “debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e; see also Barany-Snyder v. Weiner, 539 F.3d 327, 332-33 (6th Cir.2008). As is plain from the statutory text, liability under the FDCPA attaches only to a defendant that qualifies as a “debt collector,” which is a statutorily defined term. See Kistner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433, 435-36 (6th Cir.2008). The FDCPA definition of “debt collector” provides, in relevant part:
any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.... [T]he term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.
15 U.S.C. § 1692a(6). The definition of debt collector “does not include ... any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity ... concerns a debt which was not in default at the time it was obtained by such person.” 15 U.S.C. § 1692a(6)(F)(iii); Montgomery v. Huntington Bank, 346 F.3d 693, 698 (6th Cir.2003) (stating that the statutory definition of debt collector “does not include the consumer’s creditors” (internal quotation marks omitted)); see also 15 U.S.C. § 1692a(4) (defining a “creditor” as “any person who offers or extends credit creating a debt or to whom a debt is owed”).
*365 B. Plaintiffs’ Second Amended Complaint
Count One of Plaintiffs’ second amended complaint alleged that Defendants violated the FDCPA. Defendants successfully sought dismissal of this count on the basis that Plaintiffs did not adequately plead an element of a FDCPA claim, namely, that Defendants were “debt collectors” within the meaning of the statute. The only issue to be decided on appeal is whether Plaintiffs adequately pleaded that Defendant Ocwen Federal Bank (“Ocwen FB”), Defendant Ocwen Loan Servicing (“Ocwen LS”), and Defendant Deutsche Bank are “debt collectors.” 1
1. Defendant Deutsche Bank
The second amended complaint fails to adequately plead that Defendant Deutsche Bank is a “debt collector” within the meaning of the FDCPA. The complaint does not allege, even in conclusory fashion, that Deutsche Bank is a “debt collector” within the meaning of the FDCPA. The pleadings aver that the entity is “a federally chartered savings bank engaged in discount loan origination and acquisition of residential and commercial lending” and that the Ocwen Defendants are a division of the bank. Deutsche Bank is further alleged to be “a trustee for Aames Mortgage Trust 2002-1 Mortgage Pass-Through Certificates,” which we may presume is a special purpose vehicle created by Aames to securitize the mortgage backed bond in which the Plaintiffs’ debt had been placed. None of these allegations, if true, would subject Deutsche Bank to liability as a “debt collector.” This is because Plaintiffs make no plausible factual allegation that Deutsche Bank “principally” or “regularly” collects debts, that it attempts to collect debts under an unknown name, or that it principally enforces security interests. See 15 U.S.C. § 1692a(6). Rather, the complaint alleges Deutsche Bank to be a bank engaged in loan origination and acquisition, and, in this case, the trustee to a trust in which the mortgage is contained. Accordingly, the district court did not err in dismissing the FDCPA claim as to Defendant Deutsche Bank pursuant to Rule 12(b)(6).
2. Ocwen Defendants
In contrast to the allegations with respect to Defendant Deutsche Bank, the second amended complaint does label Ocwen FB and Ocwen LS as “debt collectors” under the FDCPA. Ocwen FB is alleged to be “a federally chartered savings bank engaged in discount loan acquisitions and residential and commercial lending.” Ocwen LS is alleged to “ ‘service’ residential mortgage loans acquired by Ocwen Bank by assignment or transfer from other mortgage companies.” (Sec. Am.ComplA 4.) Ocwen LS is alleged, alternatively, to be “a federally chartered savings bank engaged in discount loan acquisitions and residential and commercial lending,” as a division of Defendant Deutsche Bank.
As an initial matter, although the second amended complaint labels the Ocwen De *366 fendants as debt collectors, that allegation is plainly a legal conclusion that is not entitled to be credited as true on a motion to dismiss. See Iqbal, 129 S.Ct. at 1949 (“A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.” (internal quotation marks, citations, and alterations omitted)). The operative question is therefore whether “the [remaining] factual allegations” in the pleading “plausibly suggest an entitlement to relief’ by demonstrating that the Ocwen Defendants are debt collectors. Id. at 1951; 15 U.S.C. § 1692a(6).
For the most part, Plaintiffs, the district court, and the majority consider the actions and business of Ocwen LS and Ocwen FB collectively, which ignores an important distinction in the context of the FDCPA. I therefore consider the allegations against them separately.
a. Defendant Ocwen Loan Servicing
In the second amended complaint, Defendant Ocwen LS is alleged to conduct “substantial business” in Ohio and to constitute a special purpose entity “established to ‘service’ residential mortgage loans acquired by Ocwen Bank.” The complaint does not define what activities constitute the “ ‘service’ [of] residential mortgage loans,” nor does the complaint make any allegation that Ocwen LS regularly or principally collects debts. However, reading the complaint liberally, one may plausibly infer that Ocwen LS is a debt collector. According to Plaintiffs’ allegations, Aames notified Plaintiffs that they were in default of their mortgage by letter of April 20, 2002 due to the untimely April payment, and the mortgage transfer from Aames to Ocwen LS was effective on April 30, 2002, after the mortgage was already in default. Ocwen LS thus attempted to collect on the mortgage and treated it as if it was in default from the time that the servicer acquired it; Ocwen LS then continued to treat the loan as defaulted when it also failed to credit Plaintiffs for the May bill following their double April payment. See 15 U.S.C. § 1692a(6)(F)(iii).
A definition of a “loan servicer” is available under the related federal Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617 , which defines “loan servicing” as “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan.” 12 U.S.C. § 2605 (i)(3). Based on this definition, and in light of its corporate name, principal business, the timing of the transfer, Ocwen LS’s treatment of the loan as in default, and Ocwen LS’s debt collection activities against Plaintiffs, we may plausibly infer that Plaintiffs alleged that Ocwen LS is a debt collector within the meaning of the FDCPA. See Oppong v. First Union Mortg. Corp., 215 Fed.Appx. 114, 118-19 (3d Cir.2007); Shugart v. Ocwen Loan Servicing, 747 F.Supp.2d 938, 942-43 (S.D.Ohio 2010) (addressing a claim against Ocwen Loan Servicing); Llewellyn v. Shearson Fin. Network, Inc., 622 F.Supp.2d 1062, 1073 (D.Colo.2009) (also against Ocwen Loan Servicing).
Therefore, because Plaintiffs have offered sufficient factual allegations to demonstrate that Ocwen LS is a debt collector within the meaning of the FDCPA, I agree that the dismissal of Count One of Plaintiffs’ complaint should be reversed with respect to Defendant Ocwen LS.
b. Defendant Ocwen Federal Bank
However, I find that Plaintiffs have failed to adequately plead that Defendant Ocwen FB is a “debt collector.” Neither the legal conclusion as to the bank’s status, nor the description of the bank as “a feder *367 ally chartered savings bank engaged in discount loan acquisitions and residential and commercial lending,” plausibly suggest that the bank regularly or principally collects debts within the meaning of 15 U.S.C. § 1692a(6). I also find no authority that suggests that a bank holding company of a loan servicer may also be held liable for the servicer s actions. Because Plaintiffs have failed to distinguish between the parties, it is difficult for this Court to parse the particular factual allegations made against Ocwen FB from those made against Ocwen LS. To the extent that Plaintiffs’ claim against Ocwen FB is based merely on the fact that Ocwen FB is the holding company of Ocwen LS, I would find that Plaintiffs have failed to properly plead that Ocwen FB is a debt collector under the FDCPA.
In conclusion, Plaintiffs failed to adequately plead that Deutsche Bank and Ocwen FB are “debt collectors” because Plaintiffs did not assert that those Defendants are principally or regularly engaged jn the collection of debts. However, I find that Plaintiffs adequately alleged that 0cwen LS is a debt collector. I therefore concur in the judgment only with respect the reversal of the district court’s dismissal of Plaintiffs> FDCPA claim against Defendant Ocwen Loan Servicing,
. Plaintiffs’ allegations pertaining to the actions of the law firm of Moss Codilis Staw-iarski Morris Schneider & Prior LLP are immaterial to the present issue. Plaintiffs’ pleadings conflate the law firm with Defendants Deutsche Bank and Ocwen FB/LS without factually supporting that conflation. Viewing the facts in the light most favorable to Plaintiffs, Plaintiffs may in fact have a cognizable claim against Moss Codilis under the FDCPA. But Moss Codilis is not a Defendant in this action, and there is nothing in the pleadings to support agency liability, to suggest that Moss Codilis is not an independent firm hired by Aames or Defendants to collect debt, or to demonstrate that Defendants were acting under the name of Moss Codilis.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9752952. Public record. Not legal advice.