Among other debt collection claims the district court in Whittiker et al., v. Deutsche Bank Nat. Trust Co., 1:08 CV 300. — F.Supp.2d —-, (N.D.Ohio, March 17, 2009) was asked to assess whether the plaintiff stated a claim under the Fair Debt Collection Practices Act because the defendant in state court foreclosure proceedings misrepresented who owned the mortgage and notes and thus allegedly concealed the fact that it lacked capacity to bring the actions. In two of the foreclosures, the debt was assigned to the defendant and recorded prior to the final adjudication; in the other one the loan was assigned and recorded prior to or at the same time the foreclosure was filed. The court observed that the simple inability to prove present debt ownership at the time a collection action is filed does not constitute a FDCPA violation. However, a cause of action exists where the plaintiff in the underlying collection action asserted it was the owner of the debt all the while knowing that they did not have means of proving the debt, that FDCPA complaint will survive a motion to dismiss for failure to state a claim. The court distinguished the allegations in this case because the plaintiffs did not claim that defendant filed the underlying foreclosure actions with the knowledge that it did not have the means to prove ownership of the debts. In fact, the defendant, as trustee, was the holder of the loans of each of the plaintiffs at the time the state foreclosure actions were filed. The fact that it may have filed the foreclosure actions before assignment of the debt was completed is not deceptive or misleading to the least sophisticated debtor as to the defendant’s ability to prove ownership of the debts, the existence or amount of the debts, the plaintiffs’ obligations to pay the debts, or the ability of defendant to legally prevail in the foreclosure actions. The filing of a foreclosure action by a plaintiff in the process of obtaining an assignment not yet fully documented is not a deceptive, misleading, or abusive tactic and does not violate the FDCPA.
Author
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Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.
