Opinion ID: 1037562
Heading Depth: 2
Heading Rank: 1

Heading: TDCA Claims Against BAC

Text: We acknowledge at the outset that the Millers do not appeal the district court’s dismissal of their FDCPA claims. With respect to those claims, the magistrate judge rightly explained that the FDCPA distinguishes between “creditors” and “debt collectors.” Compare 15 U.S.C. § 1692a(4) (creditors), with 15 U.S.C. § 1692a(6) (debt collectors). She then observed that the FDCPA generally applies to debt collectors, but not to creditors, except “to the extent that [a creditor] receives an assignment or transfer of a debt in default solely for 5 Case: 12-41273 Document: 00512339912 Page: 6 Date Filed: 08/13/2013 No. 12-41273 the purpose of facilitating collection of such debt for another.” 15 U.S.C. § 1692a(4).5 The magistrate judge finally noted that we previously have held that “mortgage servicing companies” and “debt assignees” are not debt collectors, and therefore are not regulated by the FDCPA, “as long as the [mortgage] was not in default at the time it was assigned” by the originator. Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (citations omitted). Applying these principles, the magistrate judge concluded that BAC was not a debt collector, and thus was not subject to the FDCPA because, on the Millers’ pleadings, BAC already had acquired the mortgage when the Millers defaulted on it.6 We recount the magistrate judge’s FDCPA analysis because, immediately thereafter, the magistrate judge analyzed the Millers’ comparable claims under the TDCA. The TDCA similarly distinguishes between creditors and debt collectors. Compare Tex. Fin. Code § 392.001(3) (creditors), with Tex. Fin. Code § 392.001(6) (debt collectors). Its prohibitions apply only to debt collectors. See Catherman v. First State Bank of Smithville, 796 S.W.2d 299, 302 (Tex. App. 1990). The TDCA, however, also breaks out a third class of lien-holders, which it calls “third-party debt collectors.” See Tex. Fin. Code § 392.001(7). It defines third-party debt collectors by expressly referencing the FDCPA definition of debt collectors found in 15 U.S.C. § 1692a(6). In light of this reference, the magistrate judge concluded that the Millers’ TDCA claims must fail for the same reasons that their FDCPA claims do. We 5 The magistrate judge relied on Pollice v. National Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000) (citations omitted), in making this observation. We expressly adopt this precedent from the Third Circuit. 6 As discussed supra, in note 1, this is not apparent from the Millers’ pleadings. See Am. Compl. ¶¶ 6, 9. However, the Millers have not challenged the district court’s dismissal of their FDCPA claims on appeal. Accordingly, the district court’s disposition of those claims remains undisturbed and any challenge to that disposition is waived. See Swindle v. Livingston Parish Sch. Bd., 655 F.3d 386, 392 & n.6 (5th Cir. 2011) (citations omitted). 6 Case: 12-41273 Document: 00512339912 Page: 7 Date Filed: 08/13/2013 No. 12-41273 reject this conclusion, which erroneously affords the lone third-party debt collectors reference talismanic significance despite the fact that the FDCPA is a “distinguishable, federal statute.” See Monroe v. Frank, 936 S.W.2d 654, 660 (Tex. App. 1996) (citation and footnote omitted) (listing differences between the two statutes). The TDCA’s definition of debt collector is broader than the FDCPA’s definition. See Perry, 756 F.2d at 1208 (citation omitted). Unlike the TDCA, the FDCPA expressly excludes from its definition of debt collector: “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). As noted above, we held in Perry that this FDCPA exclusion encompasses mortgage servicing companies and debt assignees “as long as the [mortgage] was not in default at the time it was assigned” by the originator. 756 F.2d at 1208 (citations omitted). However, we also held in Perry that servicers and assignees are debt collectors, and therefore are covered, under the TDCA. See id. (citation omitted). In light of Perry, we conclude that BAC qualifies as a debt collector under the broader TDCA, irrespective of whether the Millers’ mortgage was already in default at the time of its assignment. The Millers’ TDCA claims allege violations of Tex. Fin. Code §§ 392.304(a)(8), (14), (18), and (19). Those provisions prohibit the following: (8) misrepresenting the character, extent, or amount of a consumer debt, or misrepresenting the consumer debt’s status in a judicial or governmental proceeding; . . . (14) representing falsely the status or nature of the services rendered by the debt collector or the debt collector’s business; . . . 7 Case: 12-41273 Document: 00512339912 Page: 8 Date Filed: 08/13/2013 No. 12-41273 (18) representing that a consumer debt is being collected by an independent, bona fide organization engaged in the business of collecting past due accounts when the debt is being collected by a subterfuge organization under the control and direction of the person who is owed the debt; or (19) using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer. The Millers allege that BAC repeatedly promised to send them a loan modification application and to delay foreclosure. They further allege that, notwithstanding its promises, BAC never responded to their submitted application once it arrived and proceeded to foreclose upon their property. Accepting these allegations as true at the Rule 12(b)(6) stage, we conclude that the Millers have stated a claim upon which relief may be granted under § 392.304(a)(14).
The Millers’ allegations do not demonstrate that BAC misrepresented the character, extent, or amount of the Millers’ debt in violation of § 392.304(a)(8). This is because the Millers always were aware (i) that they had a mortgage debt; (ii) of the specific amount that they owed; (iii) and that they had defaulted. Nothing in the Millers’ allegations suggests the BAC led them to think differently with respect to the character, extent, amount, or status of their debt—only that BAC promised to send them a loan modification application and to delay foreclosure. Accordingly, the Millers have not stated a claim upon which relief may be granted under § 392.304(a)(8).
As for § 392.304(a)(14), however, the Millers’ allegations demonstrate that BAC may have misrepresented the status or nature of the services it rendered. 8 Case: 12-41273 Document: 00512339912 Page: 9 Date Filed: 08/13/2013 No. 12-41273 The Millers allege that BAC “informed [Mr. Miller] that the terms of his loan could be modified to cure the default and avoid foreclosure if he qualified for the available options.” They further allege that BAC agents repeatedly promised to send them an application for a loan modification, but never did until May 18, 2010. On the one hand, these allegations, at most, show that BAC promised to send the Millers an application, which BAC ultimately did. The Millers do not allege that BAC promised to grant the application. Notwithstanding the above, the Millers also allege that BAC “informed Mr. Miller that he did not need to make payments on the loan because delinquent payments would be subsumed into the modified loan when it was concluded.” Moreover, the Millers allege “[t]hey were informed that the completed application must be submitted by June 17, 2010.” Finally, the Millers allege that Ms. Masters “informed Mr. Miller that she had obtained approval to postpone the [June 1] foreclosure sale.” These allegations, at the least, show that BAC promised to consider the application before foreclosing on June 1, which the Millers allege that BAC did not do. In light of this showing, we conclude that BAC may have harmed the Millers by causing them, for example, to decline to liquidate property or seek alternative financing before the June 1 foreclosure date—pending BAC’s disposition of their application. Accordingly, the Millers have alleged sufficient facts to state a claim against BAC, pursuant to § 392.304(a)(14), for misrepresenting the status or nature of the services that it rendered. We reverse the district court’s dismissal of the Millers’ TDCA claims as to that basis, and remand for further proceedings consistent with this opinion.
With respect to § 392.304(a)(18), the Millers contended before the district court that BAC had misrepresented it was an independent organization responsible for collecting the Millers’ debt when, in fact, Bank of America, N.A. 9 Case: 12-41273 Document: 00512339912 Page: 10 Date Filed: 08/13/2013 No. 12-41273 owned the Millers’ mortgage by assignment, and BAC was merely Bank of America’s servicer. Irrespective of this contention’s possible validity, the Millers’ amended complaint contained no allegation about any representation by BAC that it was an independent debt collector. Because the Millers have not alleged any facts stating that BAC was a subterfuge organization for Bank of America, they have not stated a claim upon which relief may be granted under § 392.304(a)(18).
Finally, even though § 392.304(a)(19) appears to be a catch-all, or residual, provision for proceeding under the TDCA, the Millers did not allege any specific deceptive acts or practices by BAC that could constitute a violation of the provision. Instead, their amended complaint refers vaguely to BAC “using a false representation or deceptive means to collect a debt.” See Am. Compl. ¶ 41(d). Such a pleading is not sufficient to overcome dismissal under Rule 12(b)(6). See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007) (citations omitted). The Millers, thus, have not stated a claim upon which relief may be granted under § 392.304(a)(19).