United States District Court, N.D. Ohio, Eastern Division
RONALD J. SMITH, et al., Plaintiffs,
U.S. BANK NATIONAL A SSOCIATION, et al., Defendants.
MEMORANDUM OF OPINION AND ORDER [RESOLVING ECF NOS.
17, 24, AND 32]
Y. Pearson United States District Judge.
are Defendants' Motion to Dismiss (ECF No. 17) pursuant
to Fed.R.Civ.P. 12(b)(1) and 12(b)(6); Plaintiffs'
Request for Leave to Amend their Complaint (ECF No. 24); and
Plaintiffs' Request for Judicial Notice (ECF No. 32). For
the reasons set forth below, the Court grants Defendants'
Motion to Dismiss (ECF No. 17) and Plaintiffs' Request
for Judicial Notice (ECF No. 32) of certain documents.
Plaintiffs' Request for Leave to Amend (ECF No. 24) is
granted in part.
Ronald J. Smith and Nancy L. Smith filed suit against
Defendant U.S. Bank National Association (“U.S.
Bank”), as Trustee for Certificate Holders of Bear
Stearns Asset-Backed Securities I LLC Asset-Backed
Certificate Series 2004-HE5, and Defendant Select Portfolio
Servicing, Inc. (“SPS”), as Loan Servicer,
(collectively “Defendants”), seeking civil
penalties, a permanent injunction, restitution, disgorgement,
and other equitable relief. ECF No. 1. Plaintiffs contend
that Defendants failed to provide financial services and debt
collection practices in a manner consistent with their legal
obligations under the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C §§ 16811681x; the
Fair Credit Reporting Act (“FCRA”), 15 U.S.C.
§§ 1692 1692p; and the Federal Trade Commission Act
(“FTC”), 15 U.S.C. § 44. Id. at
PageID#: 1. A brief history of the on-going mortgage dispute
is provided below.
January 2004, Plaintiffs had several discussions with a
representative from Plaintiffs' original mortgagee,
Motion Financial, concerning a possible refinancing of the
mortgage on their home. ECF No. 1 at PageID#: 3, ¶ 11.
Plaintiffs sought to “either refinance the balance of
the loan, or, in the alternative, to extract equity from
their [home], for the purpose of paying credit cards and
other personal loans due to a deteriorating income stream as
compared to their income stream for the prior year, and
additionally to be able to fund the March 1, 2004 mortgage
payment.” Id. at ¶ 12. On March 5, 2004,
Plaintiffs entered into a mortgage loan agreement with Motion
Financial and Encore Credit Corp (“Encore”), who
was a subsequent Loan Servicer. Id. at PageID#: 4,
¶ 20. Plaintiffs executed a Note in the amount of $528,
500.00 in favor of Encore for their home, and the Note was
secured by a Mortgage encumbering their home. Id. at
PageID#: 3, ¶¶ 9 10.
allege that after the loan refinance was executed, the loan
“was sold to a securities firm” immediately after
the closing and, “ended up as collateral for Bear
Stearns Asset-Backed Securities LLC Asset-Backed Certificates
Series 2004-HE5, a securitized Trust.” Id. at
PageID#: 4, ¶ 21. On May 10, 2005, the Mortgage was
assigned to LaSalle Bank National Association
(“LaSalle”), as Trustee for certificateholders of
Bear Stearns Asset Backed Securities I LLC Asset-Backed
Certificates Series 2004-HE5. ECF Nos. 1 at PageID#: 4,
¶ 22; 17 1 at PageID#: 96.
The State-Court Foreclosure Action
defaulted on the loan, and on October 18, 2005, LaSalle filed
a foreclosure action against Plaintiffs and others in the
Court of Common Pleas for Mahoning County, Ohio, identified
as Case No. 2005-CV-3869. ECF No. 1 at PageID#: 5, ¶ 28.
After an evidentiary hearing, the state court granted
LaSalle's motion for summary and default judgment, and
entered judgment against Plaintiffs on January 12, 2007.
Id. at ¶ 32. The state court noted in its Order
that “Plaintiffs' property ‘shall be
foreclosed and . . . an order of sale may be issued to the
Mahoning County Sheriff, directing him to appraise, advertise
in a paper of general circulation within the County and sell
said premises as upon execution and according to law free and
clear of the interest of all parties to this
action.'” Id. A series of foreclosure
sales were scheduled, but were withdrawn for various reasons,
including a bankruptcy filing. Id. at PageID#: 6,
¶¶ 33 42.
The District-Court Action and Subsequent State-Court
17, 2008, Plaintiffs filed a complaint in the Northern
District of Ohio against Encore, Bear Stearns Residential
Mortgage Corporation, Option One Mortgage, Motion Financial,
and Ellyn Klein Grober, alleging several claims, including
violations of the FCRA. ECF Nos. 1 at PageID#: 7, ¶ 44;
17 3. On December 9, 2008, the district court dismissed the
federal claims, none of which alleged a FDCPA violation, with
prejudice for failure to state a claim. ECF No. 17 4. On May
1, 2009, Plaintiffs filed a state court action against
LaSalle, Encore, Bear Stearns Residential Mortgage
Corporation, Option One Mortgage, Motion Financial, Ellyn
Klein Grober, Bank of America, and JPMorgan Chase. ECF No. 17
at PageID#: 84. On May 31, 2011, the 2009 state court action
was dismissed for failure to state a claim. Id. From
2011 to present, Plaintiffs have filed several motions in
state court to vacate the foreclosure judgment but, to no
avail. Id. at PageID#: 84 85.
Present District-Court Action
2, 2017, Plaintiffs filed this action asserting several
federal claims against Defendant U.S. Bank (who alleges to be
the successor-in-interest to LaSalle) and Defendant SPS, as
loan servicer, for failure to provide financial services and
debt collection services in a manner consistent with their
legal obligations under: (1) the FCRA, 15 U.S.C. §§
16811681x; (2) the FDCPA, 15 U.S.C. §§ 1692 1692p;
and (3) the FTC Act, 15 U.S.C. § 44. ECF No. 1.
Plaintiffs' claims are premised upon several alleged
actions by Defendants to collect Plaintiffs' debt, that
is, when: (1) Defendant SPS included three new charges in
their validation of debt letter: (a) interest of $73, 955.17;
(b) escrow advance of $93, 938.24; and (c) corporate advances
of $5, 083.15, thereby, increasing the amount of debt owed,
without any explanation; and, (2) Defendant U.S. Bank falsely
misrepresented that it is the real party in interest of
Plaintiffs' mortgage upon initiating state foreclosure
filings against Plaintiffs. Id. Defendants move to
dismiss Plaintiffs' entire complaint. ECF No. 17. In
response, Plaintiffs have agreed to the dismissal of Count I,
which alleges Defendants' violation of the Fair Credit
Reporting Act (“FCRA”); Count III, which alleges
Defendants' violation of the FTC; and their allegation in
paragraph 95, under Count II of the Complaint, relating to an
alleged violation of § 1692e(8) of the
FDCPA. ECF No. 24. Defendants replied. ECF No.
Standards of Review
Motion to Dismiss
Rule of Civil Procedure 12(b)(1) allows dismissal for
“lack of jurisdiction over the subject matter” of
claims asserted in the complaint. Fed.R.Civ.P. 12(b)(1). A
motion to dismiss for lack of subject-matter jurisdiction may
involve either facial attacks or factual attacks upon a
court's jurisdiction. United States v. Ritchie,
15 F.3d 592, 598 (6th Cir. 1994). “A facial attack on
the subject-matter jurisdiction alleged in the complaint
questions merely the sufficiency of the pleading.”
Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co.,
491 F.3d 320, 330 (6th Cir. 2007). When resolving a facial
attack, the reviewing court assumes the allegations within
the complaint are true. Id.“Where, on the
other hand, there is a factual attack on the subject-matter
jurisdiction alleged in the complaint, no presumptive
truthfulness applies to the allegations.” Id.
When reviewing a factual attack, the court must weigh the
conflicting evidence to determine whether subject-matter
jurisdiction exists. Howard v. Whitbeck, 382 F.3d
633, 636 (6th Cir. 2004). Plaintiffs bear the burden of
establishing that jurisdiction exists. Madison Hughes v.
Shalala, 80 F.3d 1121, 1130 (6th Cir. 1996). Lack of
subject-matter jurisdiction is a non-waivable, fatal defect.
Von Dunser v. Aronoff, 915 F.2d 1071, 1074 (6th Cir.
survive a Fed. R. Civ. P.12(b)(6) motion to dismiss, a
plaintiff's complaint must allege enough facts to
“raise a right to relief above the speculative
level.” Ass'n of Cleveland Fire Fighters v.
City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir.
2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007)). Fed.R.Civ.P. 8(a)(2) requires only that a
pleading contain “a short and plain statement of the
claim showing that the pleader is entitled to relief.”
However, “a plaintiff's obligation to provide the
‘grounds' of his ‘entitle[ment] 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 (citing
Papasan v. Allain, 478 U.S. 265, 286 (1986)). A
complaint requires “further factual enhancement,
” which “state[s] a claim to relief that is
plausible on its face.” Id. at 557, 570. A
claim has facial plausibility when there is enough factual
content present to allow “the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). When a claim lacks “plausibility
in th[e] complaint, ” that cause of action fails to
state a claim upon which relief can be granted.
Twombly, U.S. 550 at 564.
Consideration of Matters Outside of the Pleadings
Civ. P. 12(d) provides that if, on a motion pursuant to Rule
12(b)(6), matters outside the pleadings are considered, the
motion must be treated as one for summary judgment under Rule
56. In ruling on a motion to dismiss, the Court may only
consider documents attached to, incorporated by, or referred
to in the pleadings. Whittiker v. Deutsche Bank Nat.
Trust Co., 605 F.Supp.2d 914, 924 (N.D. Ohio 2009).
Documents attached to a motion to dismiss are considered part
of the pleadings if they are referred to in the complaint and
are central to the claims, and therefore may be considered
without converting a Rule 12(b)(6) motion to dismiss to a
Rule 56 motion. Id ...