1) DISMISSING PLAINTIFFS’ THIRD CAUSE OF ACTION FOR VIOLATIONS OF THE EQUAL CREDIT OPPORTUNITY ACT AND PLAINTIFFS’ FOURTH CAUSE OF ACTION FOR VIOLATIONS OF THE FAIR DEBT COLLECTION PRACTICES ACT;
-AND-
2) DENYING THE REMAINDER OF DEFENDANTS’ MOTIONS TO DISMISS
The matter is before the court on two motions for partial dismissal filed by Defendants Ocwen Loan Servicing, LLC (“Ocwen”) and U.S. Bank National Association, as Trustee for the registered holders of GSRPM 2004-1, Mortgage Pass-Through Certificates (“the Trust”) [Adv. Docs. 11 and 14]. A response was filed by Plaintiff-Debtors Harold and Durinda Simmerman (“the Simmermans”) [Adv. Doc. 23]; and Defendants Ocwen and the Trust filed a joint reply [Adv. Doc. 28].
Defendants Ocwen and the Trust (collectively “Defendants”) assert that the court should dismiss all but one
After careful research and review of the parties’ memoranda, the court concludes that two of the Simmermans’ causes of action must be dismissed. First, the Sim-mermans fail to state an ECOA claim against the Defendants because there are no allegations that Defendants were involved in the decision to extend credit to the Simmermans or in establishing the terms of that credit. Consequently, Defendants are not “creditors” to whom the ECOA notice requirements apply. The court further dismisses the Simmermans’ fourth cause of action under the FDCPA because the statute of limitations has expired. Defendants’ other arguments for dismissal either lack merit or rely on facts outside the complaint. Consequently, in all other respects, the motions to dismiss are denied.
FACTUAL AND PROCEDURAL BACKGROUND
The Simmermans filed their most recent Chapter 13 bankruptcy petition on September 30, 2008. On February 6, 2011, they filed an adversary complaint against Defendants regarding the loan and mortgage on the Simmermans’ residential prop
A. The Simmermans’ Mortgage Loan Refinancing with Bank One
On August 31, 2000, prior to filing any bankruptcy proceeding, the Simmermans entered into a loan agreement with Bank One, N.A. to refinance their variable rate mortgage [Adv. Doc. 1, ¶¶ 7-8]. To apply for the loan, the Simmermans believe they submitted a Uniform Residential Loan Application in which they specifically requested a 30 year fixed rate loan [Id., ¶ 18]. At the time of the loan origination, the Sim-mermans were told by a loan officer, Michael Scott, that the refinanced loan would be a 30 year loan and that the payment would include escrow fees for insurance and property taxes [Id., ¶¶ 11-13].
The Simmermans were not provided an opportunity to review the loan documents and were simply asked to sign and initial the paperwork at the twenty-minute closing. [Id., ¶¶ 16-17], At no time during the process or at the closing did Bank One, Michael Scott, or anyone else inform them that their loan application for the 30 year fixed mortgage had been rejected [Id., ¶ 19]. In addition, the Simmermans did not receive any documentation or disclosure of the rejection or why the loan had not been processed [Id., ¶ 20].
The loan the Simmermans actually closed on was a 15 year term note that required a balloon payment of $114,833.02 at the end of the 15 year period [Id., ¶ 15].
B. The Simmermans’ 2002 Bankruptcy Filing and the Purported Assignment of the Mortgage
On July 29, 2002, the Simmermans filed their first of two Chapter 13 bankruptcy petitions in Dayton, Ohio. [Id., ¶¶ 28-29]. The first case, Case No. 02-35519 (“the 2002 bankruptcy case”), was filed to resolve various debts incurred in the Sim-mermans’ business [7d]. The Simmermans were never told when filing their 2002 bankruptcy case that the Bank One loan would require a balloon payment [Id., ¶ 30].
Sometime in 2004, while the 2002 bankruptcy case remained active and the mortgage loan was in default, the Trust allegedly became the assignee of the mortgage deed and owner of the Simmermans’ note [Id., ¶¶ 25-26]. The Simmermans believe that the Trust is a private trust established by Goldman Sachs in 2004 to reprocess delinquent mortgage loans in a Goldman Sachs Re-Performing Mortgage (“GSRPM”) privately funded securities package [Id., ¶ 43]. Ocwen, a corporation that provides financial services and loan servicing for commercial and residential property loans, serviced the Simmermans’ mortgage loan for collection upon the loan being acquired by the Trust [Id., ¶¶ 2, 27].
By the end of the 2002 bankruptcy case, the Simmermans paid over $70,000 on the mortgage claims to Ocwen, Bank One, and/or the Trust even though the Trust and Ocwen could not substantiate that the Trust actually owned the note or had been assigned the mortgage deed [Id., ¶ 31].
On January 24, 2008, the Simmermans received a discharge in the 2002 bankruptcy case [Id., ¶ 32]. The court also entered an order that the Simmermans’ real estate mortgage was current effective December 1, 2007 [Id., ¶ 33]. The Simmermans believe that they continued to make all loan payments owed on the mortgage until the date of their second bankruptcy filing [Id., ¶ 34],
C.The Simmermans’ 2008 Bankruptcy Filing
On November 18, 2008, the Simmermans filed their second bankruptcy petition initi
To date, neither the Trust nor Ocwen has provided the Simmermans with documentation that can establish Trust ownership of the Note or the Mortgage [Id., ¶ 47]. Furthermore, neither the Trust nor Ocwen has provided evidence of any endorsement of the Note that would entitle the Defendants to payment on the claim [Id., ¶¶ 55-57],
In addition, the Simmermans believe that neither the Trust nor Ocwen can demonstrate compliance with the Trust terms for acquiring the note or mortgage deed at the time they filed claims in the Simmer-mans bankruptcy cases [Id. ¶¶ 36, 46-50, 56-59]. Trust provisions, more specifically the Pooling and Servicing Agreement (“PSA”), require that the note transfer or endorsement and mortgage assignment occur before a “cut-off date” that is 180 days or less from the date the Trust is established [/&]. The Simmermans do not believe that the Trust or Ocwen can demonstrate compliance with these requirements [M],
The Simmermans also take issue with aspects of the Defendants’ claim filed in the current bankruptcy case which the Simmermans believe was based on incorrect information about the amounts owed on the loan [Id., ¶ 35]. The claim includes a fee for $1,300.42 for fees or other charges that were effectively paid through the first bankruptcy case [Id., ¶¶ 37-41].
STANDARD FOR DISMISSAL
Defendants request partial dismissal of the Simmermans’ complaint under Fed. R.Civ.P. 12(b)(6), incorporated in bankruptcy adversary proceedings by Fed. R. Bankr.P. 7012 for failure of the Simmer-mans to state claims upon which relief can be granted. To survive a 12(b)(6) attack, the Simmermans’ complaint “must contain sufficient factual matter, accepted [by the court] as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal,
The factual allegations provided in the complaint need not be detailed. Id.; Bell Atlantic Corp. v. Twombly,
In assessing the complaint, the court must keep in mind that the purpose of a Rule 12(b)(6) motion to dismiss is to test the legal sufficiency of the plaintiffs claims for relief and not to weigh the evidence. Perry v. United Parcel Service,
LEGAL ANALYSIS
Defendants attack the Simmermans’ adversary complaint- based on a variety of theories including, but not limited to, judicial estoppel, lack of standing, and the failure of the Simmermans to demonstrate that the Defendants can be held liable under the statutory causes of action in the complaint. The court will initially deal with what it considers the preliminary issues involving judicial estoppel and the Simmermans’ standing to bring causes of action that belong to this bankruptcy estate or a prior one and then proceed with the Defendants’ other bases for dismissal.
A. Judicial Estoppel/Standing
Defendants urge this court to conclude that the Simmermans are judicially es-topped from pursuing, or lack standing to pursue, the various causes of action in the complaint because they are estate property. To add more complexity to the argument, some of the causes of action may have arisen before or during a prior bankruptcy case. Consequently, the Defendants’ motions to dismiss raise the following questions: 1) should the Simmermans have raised any of the causes of action in their prior bankruptcy case and, if so, are they judicially estopped from raising them in the current one; and 2) do the Simmer-mans have standing to pursue causes of action that belong to the current bankruptcy estate?
1. Causes of Action as Part of Prior (2002) or Current (2008) Bankruptcy Estate
The court begins the inquiry with some of the basic tenants of bankruptcy law. When a debtor files a bankruptcy petition, an estate is created that includes, with limited exceptions, “all legal or equitable interests of the debtor in property as of the commencement of the bankruptcy case.” 11 U.S.C. § 541(a). Property of the estate encompasses a broad range of assets including a debtor’s lawsuits and causes of action that arose prior to the petition filing date. In re Bailey,
Upon review of the complaint, it becomes clear that the Simmermans’ third cause of action, for violation of the Equal Credit Opportunity Act (“ECOA”), arose prior to the Simmermans’ 2002 bankruptcy case and consequently, should have been scheduled as part of the 2002 bankruptcy estate. The Simmermans assert that Bank One and its representatives violated the ECOA by failing to provide written notification to the Simmermans that their loan application had been rejected and supplanted with a loan offer including materially different terms [Adv. Doc. 1,¶¶ 85-86]. The critical events creating the potential liability on the part of Bank One, or its assignees, occurred in conjunction with an August 2000 loan closing prior to the Simmermans’ first Chapter 13 bankruptcy filing in 2002. [Id., ¶¶ 7-24]. Consequently, the ECOA cause of action is an asset of the Simmermans’ 2002 bankruptcy estate.
Furthermore, aspects of the Sim-mermans’ fourth cause of action against Defendant Ocwen, for violations of the Fair Debt Collections Practices Act (“FDCPA”), may constitute property of the Simmermans’ 2002 bankruptcy estate. The Simmermans claim that Ocwen violated the FDCPA by unlawfully collecting funds from the Simmermans on the mortgage loan without the legal authority to do so [Id., ¶¶ 93-95]. To the extent that the Simmermans attempt to recoup or base liability on money collected by Ocwen during the 2002 bankruptcy case [Id., ¶ 31], that claim would also be property of the Simmermans’ 2002 bankruptcy estate pursuant to 11 U.S.C. § 1306.
The remaining causes of action in the complaint include: 1) a violation of 11 U.S.C. § 524(i) for including fees in the Defendants’ current proof of claim that were actually paid or discharged in the prior case
2. Insufficient Facts to Determine Whether the Simmermans Are Judicially Estopped from Pursuing Causes of Action Undisclosed in the 2002 Bankruptcy Case
Because the Simmermans’ third cause of action and aspects of the Simmer-mans’ fourth cause of action constitute property of the Simmermans’ 2002 bankruptcy estate, the court must determine whether the Simmermans may litigate these actions in this adversary proceeding. Defendants assert that the doctrine of judicial estoppel bars the Simmermans from pursuing these causes of action because
Judicial estoppel is an equitable doctrine which “bars a party from asserting a position that is contrary to one the party has asserted under oath in a prior proceeding, where the prior court adopted the contrary position ‘either as a preliminary matter or as part of a final disposition.’ ” Eubanks v. CBSK Financial Group, Inc.,
The Sixth Circuit has concluded that judicial estoppel may apply in bankruptcy to bar a debtor from pursuing a cause of action for his own benefit after the debtor intentionally failed to disclose the cause of action, which was properly part of the bankruptcy estate, in his bankruptcy schedules sworn to under oath. Id. at 898. However, the Sixth Circuit has also made clear that judicial estoppel is inappropriate if the failure to disclose the cause of action was inadvertent, such as when a debtor lacks knowledge of the factual basis for the undisclosed claim, or the debtor had no motive to conceal the potential claim. Id. at 898-99; Browning v. Levy,
In the case at hand, application of judicial estoppel is premature. Because this matter is before the court on a motion to dismiss, there are no facts before the court from which to determine what was disclosed in the prior Chapter 13 case. Furthermore, the court cannot determine, based solely on allegations in the complaint, whether any failure to disclose in the prior case was inadvertent or without motive. Consequently, Defendants’ argument for dismissal lacks merit.
3. The Simmermans Have Standing to Pursue Causes of Action Belonging to the Current (2008) Bankruptcy Estate
Even if the Simmermans’ are not judicially estopped from pursuing causes of action from the prior bankruptcy case, those causes of action, along with all of the others, became property of the 2008 bankruptcy estate upon the second bankruptcy filing. The question becomes whether it is the Simmermans or the Chapter 13 Trustee who has standing to pursue causes of action belonging to the current Chapter 13 estate.
Although a debtor’s causes of action become estate property upon filing a Chapter 13 bankruptcy petition, it is less clear who has the power to pursue them. The lack of clarity stems from the fact that the Bankruptcy Code vests the Chapter 13 debtor with some but not all of the powers of a trustee. See Smith v. Rockett,
The Sixth Circuit is not one of the circuit courts that has addressed whether a Chapter 13 debtor has standing to pursue causes of action belonging to the bankruptcy estate. Nonetheless, a district court facing the issue concluded that the Sixth Circuit would follow the other circuits and hold that a Chapter 13 debtor has standing to bring such lawsuits. Johnson v. Interstate Brands Corp.,
This court agrees with these assessments of the Sixth Circuit’s likely determination of the issue. Consequently, the court concludes that the Simmermans have standing to pursue the causes of action in the complaint on behalf of the current bankruptcy estate and the Defendants’ motion to dismiss the Simmermans’ claims based on a lack of standing is denied.
B. “Defective Legal Theories”
The court now turns to the Defendants’ remaining arguments for dismissal including their general assertion that the Sim-mermans’ causes of action are based on “defective legal theories.” According to Defendants, the complaint inappropriately focuses on the Simmermans’ mortgage closing with Bank One and the allegation that the Simmermans were “rushed” or “duped” into signing a mortgage refinancing agreement that had different terms than what they had originally requested in their application. Defendants argue that the Simmermans cannot claim that they were misled during the closing when they could have read the documents and chosen not to sign them citing, among other cases, Sheet Metal Workers Int’l Ass’n, Local No. 33 v. Tate,
While the Defendants’ arguments and ease citations might be relevant if the Sim-mermans claimed common law fraud or misrepresentation, the Simmermans’ complaint is bereft of such claims. These defensive arguments simply do not engage the specific causes of action that actually appear in the complaint such as the Defendants’ alleged violations of federal statutory provisions or their failure to prove they own or hold the Simmermans’ note and mortgage. Because Defendants’ argu
C. Second Cause of Action: Disal-lowance of Claim
Next, the Defendants attack the complaint’s second cause of action for dis-allowance of Defendants’ proof of claim. In the complaint, the Simmermans object to the Defendants’ proof of claim asserting it should be disallowed because Defendants have failed to establish that they own or hold the Simmermans’ note and mortgage [Adv. Doc. 1, ¶¶ 68-83]. Certainly it is true that a debtor may object to a proof of claim when the debtor has a valid basis for questioning the creditor’s alleged ownership of the claim or the enforceability of the claim against the debtor outside of bankruptcy. See 11 U.S.C. § 502. See also Veal v. American Home Mortgage Servicing, Inc. (In re Veal),
Nonetheless, Defendants raise two arguments in support of the dismissal of the Simmermans’ claim objection. First, the Defendants again raise the doctrine of judicial estoppel asserting that it bars the Simmermans from challenging the Defendants’ standing to file the proof of claim. Second, the Defendants argue that the Simmermans lack standing to object to the proof of claim based on deficiencies in the assignment to the Defendants. For the reasons cited below, the court concludes that both arguments lack merit as a basis for dismissal.
1. Judicial Estoppel Does Not Bar the Simmermans from Objecting to Defendants’ Proof of Claim
Defendants raise the judicial es-toppel doctrine for the second time but in a slightly different manner. Defendants argue that the Simmermans should be “judicially estopped” from challenging the Defendants’ lack of documentation to support their ownership of the proof of claim because the Simmermans failed to raise the issue in the prior 2002 bankruptcy case. Defendants assert that the Simmer-mans received a notice of a change in servicer in 2004 while the 2002 bankruptcy case remained active. Instead of challenging Defendants’ documentation at that time, the Simmermans continued to pay on their mortgage loan to the new servicer. According to Defendants, this inaction coupled with continued payments amounts to an acceptance of Defendants’ proof of claim in the prior case and, consequently, the Simmermans are “judicially estopped” from contesting the proof of claim in the current case.
In order to make this argument, Defendants rely on factual assertions that do not appear in the Simmermans’ complaint including that the Simmermans received a notice of a change of mortgage servicer in 2004 that should have prompted them to take action in the first bankruptcy case. Neither these facts nor the specific details of the alleged notice are part of the complaint and are, consequently, not an appropriate basis for dismissal. However, even assuming that such facts were found in the complaint, the Defendants fail to meet the requirements for the application of judicial estoppel.
As noted previously, judicial estoppel is an equitable doctrine intended to prevent a “party from abusing the judicial process through cynical gamesmanship, achieving success on one position,
To support the applicability of judicial estoppel, Defendants rely on the Simmer-mans’ inaction upon receiving notice of a change in servicer rather than any unequivocal and intentional position taken under oath. Furthermore, the Defendants do not explain how the Simmermans’ inaction in the prior bankruptcy case amounts to an intentional attempt to gain an unfair advantage. Indeed, the Simmermans’ inaction, if the complaint’s allegations are true, seems to have resulted in a serious disadvantage to the Simmermans in the form of continued payments on the mortgage claim to the wrong party during the first bankruptcy case.
Defendants point to no facts in the complaint to support the type of “gamesmanship” to which judicial estoppel would apply. Consequently, Defendants’ argument is without merit.
2. The Simmermans Have Standing to Challenge the Defendants’ Right to Enforce the Mortgage and Note
Although not fully developed in the motion to dismiss, the Defendants further assert that the Simmermans “lack standing” to challenge the Defendants’ proof of claim to the extent that the challenge is based on deficiencies in the assignment of the note and mortgage from Bank One to Defendants. To make the argument, Defendants rely on the Sixth Circuit decision of Rogan v. Bank One, N.A. (In re Cook),
The court begins by noting that only a real party in interest may file a proof of claim in a debtor’s bankruptcy case which, pursuant to Fed. R. Bankr.P. 3001(b), is the creditor entitled to payment on a claim or the creditor’s authorized agent at the time the bankruptcy petition is filed. See In re Smoak,
In Smoak, Judge Humphrey describes how an entity becomes entitled to enforce a promissory note as a “holder” under the Uniform Commercial Code (UCC) as adopted in Ohio:
*60 Under Ohio law, the holder of a negotiable instrument, including a promissory note, has the right to enforce it. Ohio Revised Code § 1303.31(A)(1) [UCC 3-301]; In re Foreclosure Cases,521 F.Supp.2d 650 , 653 (S.D.Ohio 2007); Nat’l City Mtge. Co. v. Piccirilli,2011 WL 3819795 (Ohio Ct.App. Aug. 24, 2011).... Ohio Revised Code § 1301.01(T)(1) [now § 1301.201(B)(21) ] [UCC 1-201] defined “holder” with respect to a negotiable instrument as either: a) a person in possession of the instrument if the instrument is payable to bearer; or b) the person identified in the instrument when that person is in possession of the instrument if the instrument is payable to an identified person.
Smoak,
Significantly, the holder of the note may differ from the owner of the note. Id. at 522-23 (noting that while Article 3 of the UCC establishes the person entitled to enforce a promissory note and receive payment, Article 9 addresses who has property interests in a negotiable instrument). See also Veal,
Turning to the arguments, Defendants assert that the Simmermans’ second cause of action for disallowance of the claim must be dismissed because these debtors “lack standing to challenge transfers of the note and mortgage or to challenge any entity’s compliance with the pooling and servicing agreement.” [Adv. Docs. 11 and 14, p. 6]. Defendants are correct, in part. In Smoak, the court held that debtors lack standing to challenge whether the transfer of a note and mortgage was invalid for failure to comply with the terms of a pooling and servicing agreement (“PSA”). Smoak,
A somewhat similar conclusion was reached by the Sixth Circuit in Cook when it concluded that a bankruptcy trustee lacked standing to avoid a mortgage based on the failure of the assignee to follow a trust agreement’s requirement that the mortgage assignment be recorded. Cook,
While Cook and Smoak demonstrate the limits on a debtor’s ability to challenge third party agreements affecting ownership of a note and mortgage, these eases differ from the present dispute in one significant way. In both Cook and Smoak, the entity who filed the mortgage proof of claim was undisputedly the holder of the promissory note, or an agent thereof, with the right to enforce the note against the debtors. See Cook,
The same cannot be said for the Defendants in this case. In the complaint, the Simmermans assert that the Defendants have failed to demonstrate standing to file their proof of claim because the documentation attached to the proof of claim does not bear Ocwen or the Trust’s name nor any endorsement. [Adv. Doc. 1, ¶¶ 73-77 and Exs. A-B]. With this cause of action, the Simmermans legitimately question whether Defendants are the real parties in interest to file a proof of claim.
D. Third Cause of Action: Violations of the Equal Credit Opportunity Act
Next, the Defendants take issue with the Simmermans’ third cause of action for alleged violations of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq. According to the complaint, the violations occurred in connection with the refinancing of the Sim-mermans’ loan in August of 2000 [Adv. Doc. 1, ¶¶ 7-8]. The complaint includes no allegations that Defendants were in any way parties to or involved in extending the loan. Nonetheless, the Simmermans assert that Defendants can be held liable as assignees because they “regularly extend consumer credit” and knew or should have known of the violation through Bank One’s loan files in Defendants’ possession [IcL, ¶¶ 24, 86-88].
Defendants urge dismissal arguing that the ECOA does not apply to them because they are only assignees who were not involved in the original loan closing and, consequently, are not “creditors” as that term is used in the ECOA. The Defendants further assert that the statute of limitations for an ECOA cause of action has expired and that the res judicata effect of the confirmed plan would prevent the Simmermans from pursuing the claim. After careful analysis discussed in more detail below, the court concludes that Defendants are not “creditors” to whom the ECOA applies and, consequently, the claim is dismissed without the need to reach the other issues.
Before turning to why assignees like the Defendants are not “creditors” under the ECOA, the court believes it is helpful to provide some background on the relevant provisions of the Act. The ECOA makes it unlawful for creditors to discriminate against applicants for credit based on race, color, religion, national original, sex, marital status or age. 15 U.S.C. § 1691(a). More relevant to this case, the ECOA also requires that creditors notify applicants of “adverse action” within thirty days of such action. 15 U.S.C. § 1691(d). “Adverse action” means “a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested.” 15 U.S.C. § 1691(d)(6). The notification of adverse action must be in writing. 15 U.S.C. § 1691(d)(2). The Simmermans allege that the ECOA’s notice requirements were violated when neither Bank One nor its agents notified the Simmermans that their original application for a mortgage loan had been denied and was replaced by a mortgage offer with terms quite different from the original application. [Adv. Doc. 1, ¶¶ 11-21].
Significantly, these requirements of the ECOA only apply to “creditors.” The ECOA defines a “creditor” as “any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew or continue credit.” 15 U.S.C. § 1691a(e). This statutory provision clearly covers some assignees but only those who “participate[ ] in the decision to extend, renew or continue credit.” Id. Consequently, a reasonable interpretation of the statutory provision would be that an assignee who does not participate in the decision to extend credit to a borrower, but, instead, only obtains the loan through an assignment after the origination, is not a “creditor” subject to liability under the ECOA.
Creditor means a person who, in the ordinary course of business, regularly participates in a credit decision, including setting the terms of the credit. The term includes a creditor’s assignee ... who so participates.... A person is not a creditor regarding any violation of the Act or this regulation committed by another creditor unless the person knew or had reasonable notice of the act, policy, or practice that constituted the violation, before becoming involved in the credit transaction.
12 C.F.R. § 202.20) (2011). Even more helpful is the official staff interpretation of Regulation B that notes the following:
The term creditor includes all persons participating in the credit decision. This may include an assignee or potential purchaser of the obligation who influences the credit decision by indicating whether or not it will purchase the obligation if the transaction is consummated.
12 C.F.R. § 202.2(l) (Supp. I). Regulation B and the official staff interpretation make clear that an assignee must somehow participate in or at least influence the “credit decision” to be held liable as a creditor. Further support for this interpretation is given by the comments of the Board of Governors of the Federal Reserve System in relation to a 2003 amendment of § 202.2(1)
... commenters asked the Board to clarify that a potential assignee that establishes terms of general applicability for credit extensions that it may acquire, but does not otherwise participate in setting the terms of individual loans, is not a creditor for purposes of the regulation. The [amendment] clarifies that the definition of creditor includes those who make the decision to deny or extend credit, as well as those who negotiate and set the terms of the credit with the consumer. But a potential assignee who establishes underwriting guidelines for its purchases but does not influence individual credit decisions is not a creditor.
68 FR 1314401,
The statutory language together with the implementing regulation and the comments thereto support that an assignee may only be held liable as a “creditor” when the assignee influences the credit decision by, for example, participating in the decision to extend credit or by negotiating the terms of the credit. Without being involved in or influencing the credit decision, the assignee will not be held liable as a creditor under the ECOA. See, e.g., Wright v. Castle Point Mortgage,
Turning to this case, the complaint is bereft of any allegations that the Defen
E. Fourth Cause of Action (Against Ocwen): Violations of the Fair Debt Collection Practices Act
The Simmermans’ final cause of action is for violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq., an act designed to “eliminate abusive debt collection practices by debt collectors.” 15 U.S.C. § 1692(e). The cause of action is directed solely at Defendant Ocwen. The Simmermans assert that certain FDCPA provisions were violated by Ocwen when it attempted to collect on the mortgage debt without authorization as the holder or owner of the note and when it attempted to collect amounts already paid [Adv. Doc. 1, ¶ 94], Ocwen asserts that the claim must be dismissed because: 1) the statute of limitations has expired; 2) Ocwen, a loan servi-cer, is not a “debt collector” to whom the FDCPA applies; and 3) the res judicata effect of the confirmed plan prevents the Simmermans from pursuing the FDCPA claim. The court agrees with Ocwen that the FDCPA’s one year statute of limitations expired before the Simmermans filed their complaint. As such the Simmer-mans’ fourth cause of action is dismissed without the need to reach the issue of whether Ocwen is a “debt collector” or the other issues presented in the motion to dismiss.
The FDCPA’s statute of limitations is contained in 15 U.S.C. § 1692k(d) which states that “[a]n action to enforce any liability created by this subchapter may be brought ... within one year from the date on which the violation occurs.” Courts in the Sixth Circuit have concluded that an FDCPA action is time-barred when based on the debt collector’s filing of a proof of claim that occurred more than one year before the FDCPA lawsuit was filed unless additional violating conduct occurred after the proof of claim filing. See Kline v. Mortgage Electronic Security Systems,
In the Simmermans’ complaint, the most recent act alleged to violate the FDCPA is the filing of an amended proof of claim in the current bankruptcy case, an act which occurred on October 22, 2008 [Adv. Doc. 1, ¶¶ 37, 41, 69, 94]. The Simmermans did not file their adversary complaint until February 6, 2011, long after the one year statute of limitations expired. Nonetheless, in response to Oewen’s motion to dismiss, the Simmermans argue that “Oewen’s unlawful attempts to collect on [the Simmermans’] mortgage are ongoing and continuing.” [Adv. Doc. 23, p. 13]. However, in making the argument, the Simmermans do not point to a single offending act by Ocwen that occurred after the filing of the proof of claim nor did the court find any allegations of subsequent violating acts in its review of the Simmer-mans’ complaint.
Because the allegations in the Simmer-mans’ complaint do not demonstrate that Ocwen engaged in improper conduct within the one year window of the FDCPA’s statute of limitations, the court concludes that the FDCPA cause of action is time-barred and, therefore, dismissed.
CONCLUSION
For the foregoing reasons, the court DISMISSES the following causes of action in the Simmermans’ complaint [Adv. Doc. 1]: a) the third cause of action for violations of the Equal Credit Opportunity Act; and b) the fourth cause of action for violations of the Fair Debt Collection Practices Act.
In all other respects, the Defendants’ partial motions to dismiss [Adv. Docs. 11 & 14] are DENIED.
SO ORDERED.
Notes
. Defendants' motions to dismiss do not address the first count in the Simmermans’ complaint for violation of the discharge order pursuant to 11 U.S.C. § 524(i). Instead, Defendants filed answers with respect to that count [Adv. Docs. 13 and 16].
. Defendants filed separate motions to dismiss, but they contain very similar arguments except with respect to the fourth count in the Simmermans’ complaint which is directed only at Ocwen. Consequently, the court will treat the two motions collectively except where noted.
. The Defendants do not attempt to dismiss the Simmermans’ first cause of action for violations of § 524(i). Consequently, the cause of action will not be further addressed in this decision.
. Defendants also urge the court to determine that the Simmermans' causes of action "were discharged” in the prior case. However, the causes of action are assets and not debts. Consequently, they are not discharged.
. Article 3 of the UCC provides other methods of becoming entitled to enforce the note without being a holder or without having physical possession. See Ohio Rev.Code § 1303.31; Veal,
. Kentucky law was the applicable state law examined in Cook,
. The Simmermans further allege that the transfer of the note and mortgage to the Trust failed to comply with the terms of a pooling and servicing agreement (PSA) [Adv. Doc. 1, ¶¶ 46-50], As recognized in Smoak, debtors lack standing to challenge the ownership of the note and mortgage based on the failure to comply with the terms of a third party PSA nor is this a basis for objecting to a proof of claim.
. The wording of § 202.2(1) was changed effective April 15, 2003 to clarify the definition of creditor. 68 FR 1314401,
. The Simmermans attempt to cast ECOA liability on Defendants by asserting that Defendants "regularly extend ... credit” which is part of the definition of "creditor” found in 15 U.S.C. § 1691a(e) [Adv. Doc. 1, ¶ 24], However, the remainder of the statutory definition, coupled with Regulation B and the comments thereto, make clear that to be held liable as an assignee, the assignee must, in some manner, influence the decision to extend credit to the consumer at issue. Furthermore, the Simmermans' bald assertion that Defendants regularly extend credit without further factual support would not pass muster under Twombly,
. It should be noted that Rice-Etherly was criticized by the District Court for the Southern District of Ohio in the Kline decision with respect to a separate issue concerning the FDCPA. In Rice-Etherly, the bankruptcy court determined that an FDCPA cause of action is unavailable in bankruptcy if premised on conduct that occurred within the bankruptcy case like the filing of a proof of claim. See Rice-Etherly,
. The only act mentioned in the complaint that occurred after the filing of the proof of claim is Oewen’s issuing of an account statement dated November 17, 2008 [Adv. Doc. 1, ¶ 40 and Ex. C]. However, the Simmermans do not allege that the issuing of this statement violated the FDCPA. Even if it were so alleged, the lawsuit was still initiated more than two years later, long after the one year statute of limitations expired with respect to that act.