Ohai v. Delta Cmty. Credit Union (In re Ohai)

1

IN RE: EMMANUEL OHAI, Debtor.

EMMANUEL OHAI, Plaintiff, v. DELTA COMMUNITY CREDIT UNION, PNC BANK NATIONAL ASSOCIATION, INC., DEAN ENGLE & PARK TREE INVESTMENTS, LLC, PARK TREE 20 INVESTMENTS, LLC, FCI LENDER SERVICES, INC., DANIEL I. SINGER & SINGER LAW GROUP, PHILLIP L. JAUREGUI D/B/A JAUREGUI & LINDSAY LLC, MICHAEL W. LINDSEY D/B/A, JAUREGUI & LINDSEY, LLC, MICROBILT CORPORATION, Defendants.

No. 12-65475-WLH

Adversary Proceeding No. 23-5041-WLH

United States Bankruptcy Court, N.D. Georgia, Atlanta Division

August 23, 2023

CHAPTER 7

ORDER ON DANIEL I. SINGER DBA SINGER LAW GROUP'S MOTION TO DISMISS

Wendy L. Hagenau U.S. Bankruptcy Court Judge

THIS MATTER is before the Court on the Motion to Dismiss Complaint filed by Daniel I. Singer dba Singer Law Group ("Singer") (Doc. No. 26), and Plaintiff's Response (Doc. No. 29).

The Court has subject matter jurisdiction over Plaintiff's claims pursuant to 28 U.S.C. § 1334(b) and 28 U.S.C. § 157(a), and the claim of violating the discharge injunction is a core proceeding under 28 U.S.C § 157(b)(2)(A) & (O). See In re Golden, 630 B.R. 896, 920 (Bankr. E.D.N.Y. 2021) (it is axiomatic that this Court has subject matter jurisdiction to consider such core matters); In re Harlan, 402 B.R. 703, 710 (Bankr. W.D. Va. 2009).

I. FACTS

Plaintiff and his now ex-wife purchased their primary residence at 2715 Tradd Court, Snellville, Georgia (the "Tradd Property") in April 2006 and executed a note and security deed in favor of Delta Community Credit Union ("Delta") (the "Tradd Mortgage Loan"). In March 2008, Plaintiff and his now ex-wife obtained a home equity loan in the amount of $46,000 from Delta, secured by a second security deed (the "Tradd HELOC"). Plaintiff and his now ex-wife defaulted on the Tradd HELOC in 2010.

In the meantime, on June 20, 2012, Plaintiff and his now ex-wife filed a petition under Chapter 7 of the Bankruptcy Code. On Schedule D, Delta was listed as holding two secured claims one for $98,352.00 and another for $39,615.00, both secured by the Tradd Property. The Chapter 7 Trustee, Janet G. Watts, conducted the 341 meeting of creditors on July 17, 2012, and filed a Report of No Distribution on August 16, 2012. The bankruptcy case was closed and discharged on October 5, 2012 (Bankr. Doc. No. 14).^[1]

Plaintiff continued to live in the Tradd Property. Delta allegedly first sold the Tradd HELOC in February 2012 (pre-petition). The Tradd HELOC was then sold to Park Tree Investments 20, LLC ("PTI20") by May 23, 2017. PTI20 transferred servicing of the Tradd HELOC in May 2018 to FCI Lender Services ("FCI"). Upon receipt of the notice that FCI was the servicer, Plaintiff sent a letter to FCI pursuant to 15 U.S.C. § 1692(f) demanding validation and verification of the debt. FCI and PTI20 engaged Singer to respond to the inquiry and in connection with foreclosure proceedings against the Tradd Property.

Singer sent Plaintiff a responsive letter on July 11, 2018 stating:

Please be advised that this office was asked by FCI Lender Services and Park Tree Investments 20, LLC (the noteholder) to respond to your correspondence dated June 8, 2018 regarding the above-referenced loan account. Although you do not appear to be disputing the validity of the debt, your letter demands verification of the subject debt pursuant to 15 U.S.C. Section 1692(f).

Accordingly, enclosed herein please find the following documents:

Copy of the subject original Note;

Copy of' the subject recorded Mortgage; and

Reinstatement quote and payoff quote evidence the balances owed under your owed (sic) and a description of how our client's servicer arrived at the current payoff and reinstatement amounts.

I believe the enclosed sufficient (sic) responds to inquiry. If not, please let me know. Also, should you wish to learn more about the home retention options available to you, please contact Jennifer Zartman at 866.290.8795.

The second page of the letter included a "NOTICE PURSUANT TO THE FAIR DEBT COLLECTION PRACTICES ACT." The notice stated, "if you have received a discharge of this debt in bankruptcy or are currently in a bankruptcy case, this notice is not intended as an attempt to collect a debt, and however we have a security interest in the property and will only exercise our rights as against the property."

Then, on July 16, 2018, Singer sent Plaintiff a letter stating, "You are receiving this notice because your second mortgage is in default, and your property is in jeopardy of being referred to foreclosure." The letter identified Park Tree Investments 20, LLC as the noteholder. The letter provided Plaintiff an itemized account summary as of August 17, 2018, stating the amount needed to reinstate or bring the account current was $36,740.07. The letter explained, "[i]f the default is not cured on or before August 17, 2018 the mortgage payments will be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure will be initiated at that time. The failure to cure the default may result in the foreclosure and sale of your property." The letter did not include on its face a statement stating it was not an attempt to collect personally, but there is nothing in the letter stating or indicating that Plaintiff was personally liable.^[2]

Later, on January 7, 2020, Plaintiff's counsel (Leon Van Gelderen) sent a letter to Singer stating,

I represent Mr. Ohai who made a demand for verification of the debt owed on his second mortgage in 2018. The information supplied by your firm is inadequate to establish Park Tree's Rights in the note and security deed. Please provide documentation showing transfer and assignment of the security deed by the grantor, Delta Community Credit Union, and allonges to the promissory note showing your client as transferee.

Singer sent a responsive email to Plaintiff's attorney on February 5, 2020.

District Court Litigation

On May 26, 2020, Plaintiff filed a complaint in the United States District Court for the Northern District of Georgia, Ohai v. Delta Community Credit Union et al Civil Action No. 1:20-cv-02220-SCJ-JEM against Singer and others. Plaintiff alleged violations of several consumer protection statutes (the Fair Credit Reporting Act ("FCRA"), Equal Credit Opportunity Act ("ECOA"), Fair Debt Collection Practices Act ("FDCPA"), Georgia Fair Business Practices Act ("GFBPA")), invasion of privacy, and "defamation-libel". The original complaint did not allege a violation of the discharge injunction. Plaintiff filed an amended complaint (District Court Doc. No. 11) on June 15, 2020. It included claims that Singer violated the FDCPA, the GFBPA, and the discharge injunction, and engaged in "defamation-libel."

Plaintiff sought to further amend his complaint and filed a Motion for Leave to File the Second Amended Complaint (District Court Doc. No. 108). The court ultimately denied Plaintiff's request to amend the complaint (District Court Doc. No. 149), but the court granted the motion "to the extent that Plaintiff seeks to dismiss his claim for a bankruptcy discharge injunction." Accordingly, the court ruled the First Amended Complaint (District Court Doc. No. 11)-without claim XI regarding the discharge injunction-was the operative complaint (District Court Doc. No. 149 at 45-46.) At this point, then, the discharge injunction was not at issue in the District Court.

Singer filed a motion to dismiss the operative complaint (District Court Doc. No. 50). The District Court found Plaintiff's FDCPA claim, based on the July 11 and July 16 letters, was time-barred under the FDCPA's one-year statute of limitations, and dismissed all counts against Singer (District Court Doc. No. 236).

Adversary Proceeding

On March 29, 2023, Plaintiff filed the complaint against Singer, certain mortgage holders, certain other debt collectors, and a consumer reporting agency. The complaint relates to two separate properties, but the actions of Singer only relate to the Tradd Property. Plaintiff asserts Singer violated the discharge injunction by attempting to collect discharged debt, particularly by sending the July 11, 2018 and July 16, 2018 letters. Singer filed the Motion alleging the complaint is time barred, the communications complied with the FDCPA, and the communications were responsive and sent in connection with the proper institution of foreclosure proceedings.

II. LAW

A. Motion to Dismiss for Failure to State a Claim

Singer seeks dismissal of the complaint pursuant to Federal Rule of Bankruptcy Procedure 12(b)(6), made applicable by Federal Rule of Bankruptcy Procedure 7012, for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007)). A complaint is plausible on its face when the plaintiff pleads factual content necessary for the court to draw the reasonable inference that the defendant is liable for the conduct alleged. Id.

While the plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully," Iqbal, 556 U.S. at 678, the purpose of a motion to dismiss is not to resolve disputed facts or decide the merits of a case. Rather, the purpose of a motion to dismiss is to ensure that the plaintiff has provided notice of the grounds which entitle him to relief. Twombly, 550 U.S. at 561. The facts alleged must be taken as true, and dismissal is inappropriate merely because it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits. Official Comm. of Unsecured Creditors of Tousa, Inc. v....