Clark v. Lender Processing Services, Inc.
949 F. Supp. 2d 763
N.D. Ohio2013Background
- Plaintiffs filed a putative class action alleging FDCPA and OCSPA violations based on foreclosures where assignments and related documents were allegedly fabricated.
- Defendants moved to dismiss the SAC under Fed. R. Civ. P. 12(b)(6) for failure to state claims; MDK, LPS, and LSR filed motions with some joint defences.
- The SAC asserts a nationwide scheme involving LPS (loan processing) and law firms (MDK and LSR) to manufacture standing for securitized trusts.
- Plaintiffs seek class relief against Ohio homeowners whose foreclosures were prosecuted by trusts alleged to lack standing due to flawed PSAs and forged documents.
- The court analyzes standing to challenge assignments, collateral attacks on foreclosures, res judicata, and the viability of FDCPA and OCSPA claims; ultimately dismisses the SAC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge assignments | Plaintiffs may raise defenses against defective assignments. | Borrowers lack standing to challenge transfers into PSAs. | Plaintiffs lack standing; SAC dismissed. |
| Collateral attack on foreclosure judgments | Whiteman and Rysh raised similar issues in state court foreclosures. | Collateral attacks barred; claims precluded. | Collateral attack and res judicata preclude claims. |
| FDCPA viability against LPS defendants | LPS defendants are debt collectors and violated FDCPA. | LPS not debt collectors; no FDCPA violation. | FDCPA claim fails; LPS not liable. |
| OCSPA viability | OCSPA applies to suppliers in consumer transactions with lenders. | Transactions are exempt financial-institution dealings; not consumer transactions. | OCSPA claim fails as matter of law. |
Key Cases Cited
- Anderson v. Barclays Capital Real Estate, Inc., 136 Ohio St.3d 31 (Ohio 2013) (foreclosure-related service transactions not consumer transactions; OCSPA not applicable)
- Alfes v. Educ. Credit Mgmt. Corp., 709 F.3d 631 (6th Cir.2013) (res judicata and final-judgment on merits preclude relitigation)
- Davet v. Fed. Nat’l Mortg. Assoc., 2012-Ohio-3575 (Ohio Ct.App. 8th Dist. 2012) (collateral attack principles limit attacking foreclosures in federal court)
- Ohio Pyro, Inc. v. Ohio Dep’t of Commerce, 115 Ohio St.3d 375 (Ohio 2007) (collateral attacks discouraged; exceptions for jurisdiction or fraud)