Lisa Bridge v. Ocwen Federal Bank, FSB

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 12a0112p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________

X
Plaintiffs-Appellants, -
LISA BRIDGE; WILLIAM W. BRIDGE, III,
-
-
-
No. 09-4220
v.
,
>
-
-
OCWEN FEDERAL BANK, FSB; OCWEN
-
FINANCIAL CORPORATION; OCWEN LOAN
-
SERVICING, LLC; AAMES CAPITAL
-
-
CORPORATION; FIRSTAR BANK, nka US

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BANCORP; OCWEN FEDERAL LOAN
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SERVICING COMPANY; DEUTSCHE BANK
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NATIONAL TRUST CO., fka BANKERS TRUST
COMPANY OF CALIFORNIA, -
Defendants-Appellees. N
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 07-02739—David D. Dowd, Jr., District Judge.
Decided and Filed: April 30, 2012
Before: CLAY and STRANCH, Circuit Judges; BARRETT, District Judge.*

_________________

COUNSEL
ON BRIEF: Charles E. Ticknor, III, Martha Van Hoy Asseff, DINSMORE & SHOHL,
LLP, Columbus, Ohio, for Appellees. Lisa Bridge, William W. Bridge, III, Novelty,
Ohio, pro se.
STRANCH, J., delivered the opinion of the court, in which BARRETT, D. J.,
joined. CLAY, J. (pp. 14–19) delivered a separate opinion concurring in part.

*
The Honorable Michael R. Barrett, United States District Judge for the Southern District of Ohio,
sitting by designation.

1
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 2

_________________

OPINION
_________________

JANE B. STRANCH, Circuit Judge. The Fair Debt Collection Practices Act was
passed to protect consumers against both abusive and mistaken collection activity. This
case reveals why. It began with seemingly innocuous accounting errors on the part of
a bank that were corrected. Despite repeated proof of that correction, unremitting
collection activity was undertaken, foreclosure proceedings were instituted, and the
credit of two consumers was seriously impaired. This litigation resulted.

Lisa Bridge and William W. Bridge, III1 sued the mortgagee and related parties
under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq.
They now appeal a district court judgment dismissing their Complaint. For the reasons
explained herein, we hold the Bridges have stated a claim under the FDCPA, we
REVERSE the dismissal of their Complaint, and we remand for further proceedings
consistent with this opinion.

I. FACTS AND PROCEEDINGS

Because this appeal arises from dismissal of the Second Amended Complaint
(“SAC”), we begin review by accepting as true the facts alleged therein by the Bridges,
as follows. Bridge’s bank, Firstar, erroneously dishonored her check for her April 2002
monthly mortgage payment to Aames Capital Corporation. Bridge then had Firstar issue
an “official check” to Aames on April 8, 2002 but Firstar also failed to honor that check.
Aames notified Bridge of the default on April 20 and assessed a late fee. Bridge had
Firstar send a second official check. Firstar ultimately honored her personal check as
well as one of the official checks, resulting in two mortgage payments received for the
month of April. As a result, Bridge did not submit a payment for May.

1
Mr. and Mrs. Bridge brought this case as collection activities were undertaken against both;
however, the mortgage debt was solely in the name of Mrs. Bridge, who will be referenced as “Bridge”
herein. References to William Bridge will be to “Mr. Bridge.”
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 3

While Aames was alleging default in the April payment due, it sent notice to
Bridge on April 15, that it had assigned her mortgage to Ocwen.2 The Bridges contend
that Ocwen is a division of Deutsche Bank National Trust Co. and that no actual
assignment of the mortgage is of record with the county. Ocwen subsequently began
dunning Bridge and her husband, who is not a co-borrower on the mortgage loan, for the
May payment claimed to be overdue, despite proof of the double payment submitted by
Bridge to Ocwen and Aames. Since then Ocwen has: made endless collection calls by
phone to Mr. and Mrs. Bridge, despite cease and desist requests and registry on the
federal “Do Not Call” directory; threatened foreclosure; assessed monthly late fees; and
reported derogatory information to the credit reporting agencies. Additionally, the law
firm of Moss, Collis, Stawiarski, Moris, Schneider and Prior, LLC, allegedly retained
by Ocwen, sent a collection letter to Bridge threatening foreclosure.

The Bridges filed suit in federal court, alleging that Defendants violated the
FDCPA, 15 U.S.C. §§ 1692c, 1692d, and 1692e, by making false representations in
connection with the debt, threatening to take impermissible actions, making false
representations that Bridge had committed a crime or other wrongful conduct, seeking
payment from Mr. Bridge, and continuing to call both after repeated requests to stop.
The Bridges further asserted that Ocwen and Deutsche violated the FDCPA by making
false representations as to their standing to foreclose, falsely representing that the
mortgage was in default, falsely representing that the debt was owed to Ocwen or
Deutsche, and threatening to take action impermissible due to Deutsche’s failure to
comply with state law as a trustee. The Bridges alleged other state and federal law
claims as well, but have not raised them on appeal.

Ocwen and Deutsche separately moved to dismiss the Complaint. Ocwen argued
that it was exempt from the FDCPA because it is not a debt collector, based on its status
as a loan servicer and, in the alternative, because the loan actually was not in default at
the time of assignment. See 15 U.S.C. § 1692a(6)(F). Deutsche argued that it was

2
Defendants filed briefs in this Court on behalf of “Ocwen Loan Servicing, LLC, successor-in-
interest to Ocwen Federal Bank, FSB (“Ocwen”).” We adopt Defendants’ designation of the LLC as the
proper defendant and its reference as “Ocwen.”
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 4

exempt from the FDCPA because, as the purchaser of the debt, it is a creditor and not
a debt collector, or it is neither. Ocwen filed a counterclaim for foreclosure as well.

For purposes of review under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, the district court assumed the truth of the allegations that Ocwen was not a
loan servicer and that Deutsche was not a creditor. Nonetheless, the district court
dismissed the Complaint, concluding that neither Defendant was covered under the Act
as neither was a debt collector as defined therein.

In their timely appeal, the Bridges argue that the district court erred by
dismissing their claims, that the district court erroneously considered facts outside of the
complaint, and that the district court applied an inappropriate, heightened pleading
standard. The Bridges state they are not reasserting claims other than those under the
FDCPA and, thus, we review the district court’s decision only to the extent it deals with
the FDCPA. See Dixon v. Ashcroft, 392 F.3d 212, 217 (6th Cir. 2004).

II. STANDARD OF REVIEW

This Court reviews de novo a district court order dismissing a complaint pursuant
to Rule 12(b)(6). Booth Family Trust v. Jeffries, 640 F.3d 134, 139 (6th Cir. 2011). In
determining whether a complaint states a claim, a court must accept as true all the factual
allegations in the complaint and determine whether the complaint contains “enough facts
to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007); see also Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir.
2009). Rule 8(a)(2) requires only a “short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); Gunasekera, 551 F.3d at 466
(quoting Erickson v. Pardus, 551 U.S. 89, 93-94 (2007)). We are ever mindful that pro
se complaints are liberally construed and are held to less stringent standards than the
formal pleadings prepared by attorneys. Williams v. Curtin, 631 F.3d 380, 383 (6th Cir.
2011).
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 5

III. ANALYSIS

A. Coverage Under the Fair Debt Collection Practices Act

“If [the Fair Debt Collection Practices Act] is not enacted, Congress will then be
classifying as ‘deadbeats’ those individuals who through no fault or action of their own
are being harassed, hounded, threatened and intimidated by debt collectors.” H.R. Rep.
No. 131, 95th Cong. 1st Sess. 9 (1977). Congress did enact the FDCPA, however,
effectuating its intention to prohibit precisely this kind of misclassification and
harassment. We conclude that the district court’s judgment must be vacated because the
Bridges have sufficiently alleged that the Defendants are debt collectors within the
coverage of the FDCPA.

Under the FDCPA, a “debt collector” is defined as:

any person who uses any instrumentality of interstate commerce or the
mails in any business the principal purpose of which is the collection of
any debts, or who regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due another.
Notwithstanding the exclusion provided by clause (F) of the last sentence
of this paragraph, the term includes any creditor who, in the process of
collecting his own debts, uses any name other than his own which would
indicate that a third person is collecting or attempting to collect such
debts. . . . The term does not include --
...
(F) 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 (i) is
incidental to a bona fide fiduciary obligation or a bona fide escrow
arrangement; . . . [or] (iii) concerns a debt which was not in default at the
time it was obtained by such person . . . .

15 U.S.C. § 1692a(6).

We note, as other circuits have, that “as to a specific debt, one cannot be both a
‘creditor’ and a ‘debt collector,’ as defined in the FDCPA, because those terms are
mutually exclusive.” FTC v. Check Investors, Inc., 502 F.3d 159, 173 (3d Cir. 2007)
(citing Schlosser v. Fairbanks Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003)); cf.
Montgomery v. Huntington Bank, 346 F.3d 693, 698 (6th Cir. 2003) (holding the
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 6

definition of debt collector “does not include the consumer’s creditors”). If an entity
which acquires a debt and seeks to collect it cannot be both a creditor and a debt
collector, can it be neither? We answer no. To allow such an entity to define itself out
of either category would mean that the intended protection of the FDCPA is unavailable.
Both the statutory language and legislative history of the FDCPA establish that such an
entity is either a creditor or a debt collector and its collection activities are covered under
the FDCPA accordingly.

The distinction between a creditor and a debt collector lies precisely in the
language of § 1692a(6)(F)(iii). For an entity that did not originate the debt in question
but acquired it and attempts to collect on it, that entity is either a creditor or a debt
collector depending on the default status of the debt at the time it was acquired.3 The
same is true of a loan servicer, which can either stand in the shoes of a creditor or
become a debt collector, depending on whether the debt was assigned for servicing
before the default or alleged default occurred. Wadlington v. Credit Acceptance Corp.,
76 F.3d 103, 106-8 (6th Cir. 1996); see also Perry v. Stewart Title Co., 756 F.2d 1197,
1208 (5th Cir. 1985). This interpretation of the Act is supported by Congress’s intent
in passing it.

This bill also protects people who do not owe money at all. In the
collector’s zeal, collection efforts are often aimed at the wrong person
either because of mistaken identity or mistaken facts. This bill will make
collectors behave responsibly towards people with whom they deal.

H.R. Rep. No. 131, at 8 (emphasis added); see also S. Rep. 95-382, 95th Cong. 1st
Session 4, reprinted in 1977 U.S.C.C.A.N. 1695, 1698 (1977) (“[T]he committee does
not intend the definition [of debt collector] to cover . . . mortgage service companies and
others who service outstanding debts for others, so long as the debts were not in default
when taken for servicing[.]”).

3
Our analysis of § 1692a(6) parallels the holdings of other circuits that have addressed the issue.
See, e.g., FTC v. Check Investors, Inc., 502 F.3d 159, 171-73 (3d Cir. 2007); Schlosser v. Fairbanks
Capital Corp., 323 F.3d 534, 536 (7th Cir. 2003) (“In other words, the Act treats assignees as debt
collectors if the debt sought to be collected was in default when acquired by the assignee, and as creditors
if it was not.”).
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 7

Thus, we do not accept Defendants’ argument that, even if they are not creditors
under the Act, neither are they debt collectors. It would thwart the purpose of the Act
to find that a non-originating debt holder is neither a creditor nor a debt collector based
on that defendant’s adoption of contradictory factual positions. Defendants may not so
easily define themselves out of FDCPA coverage. Echoing the Third Circuit’s
sentiment, “[a]lthough the argument is rather clever, it is wrong. It would elevate form
over substance and weave a technical loophole into the fabric of the FDCPA big enough
to devour all of the protections Congress intended in enacting the legislation.” Check
Investors, 502 F.3d at 172-73.4

The same is true of a creditor who uses any name other than his own which
would indicate that a third person is attempting to collect the debt. See 15 U.S.C.
§ 1692a(6) (“Notwithstanding the exclusion provided in clause (F) of the last sentence
of this paragraph, the term [debt collector] includes any creditor who, in the process of
collecting his own debts, uses any name other than his own which would indicate that
a third person is collecting or attempting to collect such debts.”). No such creditor may
escape liability by alleging that it is neither a creditor nor a debt collector and thus not
subject to the FDCPA.

As to Lisa Bridge, the SAC properly alleges that Defendants are categorized as
debt collectors under the Act. First, the Bridges have made allegations addressing all
elements of the statutory definition of debt collector under the first sentence of
§ 1692a(6). The Bridges alleged that: (1) there is no assignment of record to establish

4
This conceptual principle finds support elsewhere in the FDCPA. Although there is no statutory
definition of “loan servicer” under the Act, a loan servicer will become a debt collector under §
1692a(6)(F)(iii) if the debt was in default or treated as such when it was acquired. In fact, Ocwen Bank
is well aware of this analysis and the resulting construction of § 1692a(6):
Plaintiff is correct that the §1692a(6)(F)(iii) exception, which may operate to remove
a loan servicer from the definition of a ‘debt collector’, does not apply if the loan was
in default at the time it was acquired by the servicing company, or if the servicing
company treated it as such, regardless of the loan’s actual status. In the instant case,
Plaintiff alleges Ocwen treated Plaintiff’s loan as if it were in default from the time it
began to service the loan. Thus, taking all factual allegations in the Complaint as true,
Plaintiff’s claim does not fail pursuant to the 15 U.S.C. § 1692a(6)(F)(iii) exception.
Shugart v. Ocwen Loan Servicing, LLC, No. 2:09-cv-1123, 2010 U.S. Dist. LEXIS 103019, *10-11 (S.D.
Ohio Sept. 28, 2010) (internal citations omitted).
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 8

that Deutsche is a creditor or that Ocwen Bank is a loan servicer, thus making the alleged
debt “due another”; (2) Ocwen Bank made persistent efforts to collect a debt, i.e.,
mortgage payments; and, (3) the Defendants used the mails as well as an instrumentality
of interstate commerce, i.e., the telephone system, in the collection of debts.

Second, the Bridges have alleged that they received collection letters regarding
Lisa Bridge’s mortgage from an agent or arm of Defendants, the law firm of Moss,
Collis, Stawiarski, Morris, Schneider and Prior, LLC. For the purposes of a 12(b)(6)
motion, this allegation may also bring Defendants within the statutory definition of a
debt collector under the second sentence of § 1692a(6) (“Notwithstanding the exclusion
provided in clause (F) of the last sentence of this paragraph, the term [debt collector]
includes any creditor who, in the process of collecting his own debts, uses any name
other than his own which would indicate that a third person is collecting or attempting
to collect such debts.”).

Third, the Bridges have alleged the Defendants are debt collectors
notwithstanding the definitional exclusion contained in § 1692a(6)(F)(iii) (excluding
activity concerning a debt which was not in default at the time it was obtained) because
the Defendants sought collection of Lisa Bridge’s “debt” which they claimed was
already in default at the time they obtained it from Aames.

Therefore, we find Defendants’ argument on appeal, that even if Deutsche is not
a creditor there is no allegation that it is a debt collector, is contradicted by the
allegations of the SAC.

Further, we find disingenuous Ocwen Bank’s argument that “Ocwen also is not
a debt collector because servicing transferred to Ocwen on May 1, 2002, and Plaintiffs
themselves allege that the account was not in default at that time.” (R. 98 at 7). We note
this argument is exemplary of an unsettling trend in FDCPA claims. Defendants seek
to have it both ways: after having engaged in years of collection activity claiming a
mortgage is in default, Defendants now seek to defeat the protections of the FDCPA by
relying on Plaintiffs’ position throughout those years that the mortgage is not in default.
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 9

As noted in the analysis of the Third Circuit, FDCPA coverage is not defeated by clever
arguments for technical loopholes that seek to devour the protections Congress intended.

The legislative history of the FDCPA indicates that Congress intended to address
the very situation the Bridges allege. A Senate Report states that the purpose of the
Act’s debt verification is to “eliminate the recurring problem of debt collectors dunning
the wrong person or attempting to collect debts which the consumer has already paid.”
S. Rpt. 95-382 at 4, reprinted in 1977 U.S.C.C.A.N. 1695, 1699. A House Report noted
congressional intent to regulate collection activities based on either “mistaken identity
or mistaken facts.” H.R. Rep. No. 131, at 8. Congress recognized that computer errors
are a related problem, and that “[c]onsumers who are victims of computer error find it
extremely difficult to obtain correction of records. This may lead to collection agency
harassment.” Id.; see also Barany-Snyder v. Weiner, 539 F.3d 327, 333 (6th Cir. 2008)
(“[T]he FDCPA is extraordinarily broad, crafted in response to what Congress perceived
to be a widespread problem.”) (citations omitted). Based on the Bridges’ allegations,
computer error may be the case here. On the other hand, it may be the most benign
explanation available. Regardless, the Act was intended to protect victims of all such
errors, irrespective of the collector’s intent.

In addition, the Federal Trade Commission’s Staff Commentary on the FDCPA
is instructive. See Dunham v. Portfolio Recovery Assocs., LLC, 663 F.3d 997, 1002 (6th
Cir. 2011) (finding the same Staff Commentary persuasive in construing the FDCPA).
There, the FTC states that a “debt collector must verify a disputed debt even if he has
included proof of the debt with the first communication, because the section is intended
to assist the consumer when a debt collector inadvertently contacts the wrong consumer
at the start of his collection efforts.” FTC Staff Commentary, 53 Fed. Reg. 50097–02,
50106 (Dec. 13, 1988).

The statutory language itself confirms that Congress intended to provide
protection for those persons being dunned in error. Schroyer v. Frankel, 197 F.3d 1170,
1174 (6th Cir. 1999) (“When interpreting the FDCPA, we begin with the language of the
statute itself.”). Throughout the Act, statutory terms are defined by the satisfaction of
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 10

some condition or the alleged satisfaction of some condition. For example, a consumer
is a person obligated or allegedly obligated to pay any debt. 15 U.S.C. § 1692a(3)
(emphasis added). A debt is any obligation or alleged obligation. 15 U.S.C. § 1692a(5)
(emphasis added). A debt collector is a person who, inter alia, collects or attempts to
collect debts “owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6)
(emphasis added). Throughout the FDCPA coverage is based upon actual or merely
alleged debt. Thus, a debt holder or servicer is a debt collector when it engages in
collection activities on a debt that is not, as it turns out, actually owed.5 This stands to
reason since the pursuit of collection activities presupposes that the collector alleges or
asserts that the subject of those activities is obligated.6

Under the “consumer” definition, the Eighth Circuit has recently reinforced the
application of the FDCPA to individuals who are mistakenly dunned by debt collectors.
In Dunham v. Portfolio Recoveyr Associates, LLC, the court reversed the determination
below that the FDCPA does not provide a remedy to “non-debtors mistakenly targeted
by debt-collection efforts.” 663 F.3d at 1001. Parallel to the argument advanced here,
there it was claimed that Congress intended to exclude protection for “consumers”
mistakenly contacted by a debt collector as they would not come within the definition
of persons “obligated or allegedly obligated to pay any debt” under § 1692a(3). The
Eighth Circuit made short shrift of that argument noting:

Under PRA’s interpretation of the Act, a person who has been abused by
a debt collector’s harassing tactics, which the FDCPA generally
prohibits, could not invoke the protection of the FDCPA if the debt
collector contacted the individual by mistake. This interpretation would

5
This construction is wholly consistent with our decision in Montgomery, 346 F.3d at 697, in
which the plaintiff was not a “consumer” because he was neither obligated nor allegedly obligated to pay
any debt; plaintiff admitted that it was his mother, not him, who was obligated on the loan. Accord King
v. IB Prop. Holdings, Acquisition, 635 F. Supp. 2d 651, 658 (E.D. Mich. 2009) (where plaintiff was not
a “consumer” because his father was the only person obligated or allegedly obligated on the debt).
6
Of course, this construction of the Act should in no way be interpreted to diminish the role of
the least sophisticated consumer standard in assessing whether a particular debt collector’s actions violate
the Act. See Barany-Snyder, 539 F.3d at 333 (citing Harvey v. Great Seneca Fin. Corp., 453 F.3d 324,
329 (6th Cir. 2006)). For example, as one court in this Circuit has held, even the least sophisticated
consumer would understand that a debt collector was not attempting to collect a debt from him when the
collector admitted his previous collection calls were due to computer error and immediately corrected the
mistake. See Kaniewski v. Nat’l Action Fin. Servs., 678 F. Supp. 2d 541 (E.D. Mich. 2009).
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 11

read the phrase “allegedly obligated” to only apply to those who actually
owe or owed the specific debt at issue, despite whether a debt collector
asserted a person owes the specific debt. PRA’s position too narrowly
constricts the plain meaning of “alleged.”

Id. at 1002 (paragraph break omitted). The court then determined that a “consumer”
under the FDCPA includes those who are mistakenly alleged to have owed a debt.

As we have previously noted, “[t]he Fair Debt Collection Practices Act is an
extraordinarily broad statute. Congress addressed itself to what it considered to be a
widespread problem, and to remedy that problem it crafted a broad statute.” Frey v.
Gangwish, 970 F.2d 1516, 1521 (6th Cir. 1992). Our actions are guided by the hand of
Congress, and thus we apply the Act broadly according to its terms. Our sister circuits
have done the same. See, e.g., Bass v. Stolper, Koritzinsky, Brewster & Neider, S.C.,
111 F.3d 1322, 1325 (7th Cir. 1997) (noting that “the plain language of the Act defines
‘debt’ quite broadly”). Therefore, we hold that the definition of debt collector pursuant
to § 1692a(6)(F)(iii) includes any non-originating debt holder that either acquired a debt
in default or has treated the debt as if it were in default at the time of acquisition. It
matters not whether such treatment was due to a clerical mistake, other error, or
intention. Thus, a FDCPA defendant cannot escape coverage under the Act by asserting
to the court that the debt was not actually in default, despite having dunned plaintiffs for
months or years in the face of plaintiffs’ pleas or proof that the collector has made some
error. A defendant may not retroactively change the status of the plaintiff it has pursued
as an alleged debtor. To hold otherwise would defy the clear congressional mandate we
are charged with upholding.

As to William Bridge, Plaintiffs alleged that Defendants have been dunning him
in violation of the FDCPA as he is not obligated on Lisa Bridge’s mortgage. Defendants
have not responded to Mr. Bridge’s allegations and the district court dismissed his
claims without analysis. It appears that Deustsche is not a creditor and, similarly, that
Ocwen Bank is not a loan servicer as to Mr. Bridge. We specifically note that Congress
intended to protect people like Mr. Bridge in enacting the FDCPA. See H.R. Rep. No.
131, at 8 (“Another group of people who do not owe money, but may be deliberately
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 12

harassed are the family . . . of the consumer. These people are also protected by this .
. . bill.”). And, as alleged in the SAC, Mr. Bridge is included in the protections for such
persons in the prohibitions of 15 U.S.C. § 1692d, “A debt collector may not engage in
any conduct the natural consequence of which is to harass, oppress, or abuse any person
in connection with the collection of a debt.” (emphasis added).

B. Sufficiency of Plaintiffs’ FDCPA Allegations

The FDCPA forbids a debt collector from, inter alia: communicating with a third
party subject to limited exceptions, 15 U.S.C. § 1692c(b); continuing to communicate
with a consumer following a written request to cease communication, 15 U.S.C.
§ 1692c(c); “[c]ausing a telephone to ring or engaging any person in telephone
conversation repeatedly or continuously with intent to annoy, abuse, or harass any
person at the called number,” 15 U.S.C. § 1692d(5); and, falsely representing the amount
of a debt, 15 U.S.C. § 1692e(2)(A). The Bridges, in their SAC, alleged that Defendants
have violated each of these provisions.

The Bridges have stated a claim under the FDCPA. They allege that there is no
assignment of record to establish that Deutsche is a creditor or that Ocwen Bank is a loan
servicer; that Ocwen Bank made persistent efforts to collect a debt, i.e., mortgage
payments; and that the Defendants used the mails as well as an instrumentality of
interstate commerce, i.e., the telephone system, to do so. Thus, they have sufficiently
alleged that the Defendants are debt collectors, rather than creditors or loan servicers.
See Llewellyn v. Shearson Fin. Network, Inc., 622 F. Supp. 2d 1062, 1073 (D. Colo.
2009) (accepting for purposes of Rule 12(b)(6) an allegation that defendant was a debt
collector due to its failure to legally obtain the right to collect a debt).

They further allege that Defendants have impermissibly communicated with third
parties concerning Lisa Bridge’s asserted outstanding debt; that Defendants have ignored
their repeated requests to cease communications; that Defendants have targeted their
personal telephone lines with the intent to annoy, abuse or harass them; and that they
have falsely reported the amount of the debt the Bridges owe (or don’t owe) to the credit
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 13

reporting agencies and to other parties. These allegations, which must be taken as true,
are more than sufficient to state a plausible claim for relief based on the FDCPA.

IV. CONCLUSION

Because the Bridges’ allegations in the SAC, accepted as true, are sufficient to
state a claim for relief under the FDCPA that is plausible on its face, we hold that the
district court erred in dismissing those claims. Accordingly, we reverse the district
court’s judgment as to the Bridges’ FDCPA claims and remand the action for further
proceedings consistent with this opinion.
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 14

____________________________

CONCURRING IN PART
____________________________

CLAY, Circuit Judge, concurring in part. Because the district court dismissed
this action at the pleadings stage, the issue before our Court is straightforward: whether
a complaint adequately pleaded facts to state a claim under a federal statute. The
resolution of this appeal requires only that we look to the statute under which the action
is brought, in this case the Fair Debt Collection Practices Act (the FDCPA), 15 U.S.C.
§§ 1692–1692p, to determine the elements of a cause of action; we then consider
whether pro se Plaintiffs’ second amended complaint properly asserted those elements,
supported by sufficient factual allegations. Fed. R. Civ. P. 8(a)(2); Ashcroft v. Iqbal, 129
S. Ct. 1937, 1949 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56 (2007).
Contrary to the majority opinion, it is unnecessary to indulge in a lengthy discussion of
statutory construction or legislative history or to consider the policies and purposes that
Congress sought to promote when passing the FDCPA. I turn now to the resolution of
the issue presented to us.

A. FDCPA Civil Actions

Under the FDCPA, a plaintiff may bring a civil action against a debt collector
who engages in “abusive debt collection practices.” 15 U.S.C. §§ 1692(e), 1692k.
Relevant to Plaintiffs’ claims, the statute provides that a “debt collector may not use any
false, deceptive, or misleading representation or means in connection with the collection
of any debt.” 15 U.S.C. § 1692e; see also Barany-Snyder v. Weiner, 539 F.3d 327,
332–33 (6th Cir. 2008). As is plain from the statutory text, liability under the FDCPA
attaches only to a defendant that qualifies as a “debt collector,” which is a statutorily
defined term. See Kistner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433,
435–36 (6th Cir. 2008). The FDCPA definition of “debt collector” provides, in relevant
part:
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 15

any person who uses any instrumentality of interstate commerce or the
mails in any business the principal purpose of which is the collection of
any debts, or who regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due another. . . .
[T]he term includes any creditor who, in the process of collecting his
own debts, uses any name other than his own which would indicate that
a third person is collecting or attempting to collect such debts.

15 U.S.C. § 1692a(6). The definition of debt collector “does not include . . . 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); Montgomery v.
Huntington Bank, 346 F.3d 693, 698 (6th Cir. 2003) (stating that the statutory definition
of debt collector “does not include the consumer’s creditors” (internal quotation marks
omitted)); see also 15 U.S.C. § 1692a(4) (defining a “creditor” as “any person who
offers or extends credit creating a debt or to whom a debt is owed”).

B. Plaintiffs’ Second Amended Complaint

Count One of Plaintiffs’ second amended complaint alleged that Defendants
violated the FDCPA. Defendants successfully sought dismissal of this count on the basis
that Plaintiffs did not adequately plead an element of a FDCPA claim, namely, that
Defendants were “debt collectors” within the meaning of the statute. The only issue to
be decided on appeal is whether Plaintiffs adequately pleaded that Defendant Ocwen
Federal Bank (“Ocwen FB”), Defendant Ocwen Loan Servicing (“Ocwen LS”), and
Defendant Deutsche Bank are “debt collectors.”1

1
Plaintiffs’ allegations pertaining to the actions of the law firm of Moss Codilis Stawiarski Morris
Schneider & Prior LLP are immaterial to the present issue. Plaintiffs’ pleadings conflate the law firm with
Defendants Deutsche Bank and Ocwen FB/LS without factually supporting that conflation. Viewing the
facts in the light most favorable to Plaintiffs, Plaintiffs may in fact have a cognizable claim against Moss
Codilis under the FDCPA. But Moss Codilis is not a Defendant in this action, and there is nothing in the
pleadings to support agency liability, to suggest that Moss Codilis is not an independent firm hired by
Aames or Defendants to collect debt, or to demonstrate that Defendants were acting under the name of
Moss Codilis.
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 16

1. Defendant Deutsche Bank

The second amended complaint fails to adequately plead that Defendant
Deutsche Bank is a “debt collector” within the meaning of the FDCPA. The complaint
does not allege, even in conclusory fashion, that Deutsche Bank is a “debt collector”
within the meaning of the FDCPA. The pleadings aver that the entity is “a federally
chartered savings bank engaged in discount loan origination and acquisition of
residential and commercial lending” and that the Ocwen Defendants are a division of the
bank. Deutsche Bank is further alleged to be “a trustee for Aames Mortgage Trust
2002-1 Mortgage Pass-Through Certificates,” which we may presume is a special
purpose vehicle created by Aames to securitize the mortgage backed bond in which the
Plaintiffs’ debt had been placed. None of these allegations, if true, would subject
Deutsche Bank to liability as a “debt collector.” This is because Plaintiffs make no
plausible factual allegation that Deutsche Bank “principally” or “regularly” collects
debts, that it attempts to collect debts under an unknown name, or that it principally
enforces security interests. See 15 U.S.C. § 1692a(6). Rather, the complaint alleges
Deutsche Bank to be a bank engaged in loan origination and acquisition, and, in this
case, the trustee to a trust in which the mortgage is contained. Accordingly, the district
court did not err in dismissing the FDCPA claim as to Defendant Deutsche Bank
pursuant to Rule 12(b)(6).

2. Ocwen Defendants

In contrast to the allegations with respect to Defendant Deutsche Bank, the
second amended complaint does label Ocwen FB and Ocwen LS as “debt collectors”
under the FDCPA. Ocwen FB is alleged to be “a federally chartered savings bank
engaged in discount loan acquisitions and residential and commercial lending.” Ocwen
LS is alleged to “‘service’ residential mortgage loans acquired by Ocwen Bank by
assignment or transfer from other mortgage companies.” (Sec. Am. Compl. ¶ 4.) Ocwen
LS is alleged, alternatively, to be “a federally chartered savings bank engaged in
discount loan acquisitions and residential and commercial lending,” as a division of
Defendant Deutsche Bank.
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 17

As an initial matter, although the second amended complaint labels the Ocwen
Defendants as debt collectors, that allegation is plainly a legal conclusion that is not
entitled to be credited as true on a motion to dismiss. See Iqbal, 129 S. Ct. at 1949 (“A
pleading that offers labels and conclusions or a formulaic recitation of the elements of
a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions
devoid of further factual enhancement.” (internal quotation marks, citations, and
alterations omitted)). The operative question is therefore whether “the [remaining]
factual allegations” in the pleading “plausibly suggest an entitlement to relief” by
demonstrating that the Ocwen Defendants are debt collectors. Id. at 1951; 15 U.S.C.
§ 1692a(6).

For the most part, Plaintiffs, the district court, and the majority consider the
actions and business of Ocwen LS and Ocwen FB collectively, which ignores an
important distinction in the context of the FDCPA. I therefore consider the allegations
against them separately.

a. Defendant Ocwen Loan Servicing

In the second amended complaint, Defendant Ocwen LS is alleged to conduct
“substantial business” in Ohio and to constitute a special purpose entity “established to
‘service’ residential mortgage loans acquired by Ocwen Bank.” The complaint does not
define what activities constitute the “‘service’ [of] residential mortgage loans,” nor does
the complaint make any allegation that Ocwen LS regularly or principally collects debts.
However, reading the complaint liberally, one may plausibly infer that Ocwen LS is a
debt collector. According to Plaintiffs’ allegations, Aames notified Plaintiffs that they
were in default of their mortgage by letter of April 20, 2002 due to the untimely April
payment, and the mortgage transfer from Aames to Ocwen LS was effective on April 30,
2002, after the mortgage was already in default. Ocwen LS thus attempted to collect on
the mortgage and treated it as if it was in default from the time that the servicer acquired
it; Ocwen LS then continued to treat the loan as defaulted when it also failed to credit
Plaintiffs for the May bill following their double April payment. See 15 U.S.C.
§ 1692a(6)(F)(iii).
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 18

A definition of a “loan servicer” is available under the related federal Real Estate
Settlement Procedures Act, 12 U.S.C. §§ 2601–2617, which defines “loan servicing”
as “receiving any scheduled periodic payments from a borrower pursuant to the terms
of any loan.” 12 U.S.C. § 2605(i)(3). Based on this definition, and in light of its
corporate name, principal business, the timing of the transfer, Ocwen LS’s treatment of
the loan as in default, and Ocwen LS’s debt collection activities against Plaintiffs, we
may plausibly infer that Plaintiffs alleged that Ocwen LS is a debt collector within the
meaning of the FDCPA. See Oppong v. First Union Mortg. Corp., 215 F. App’x 114,
118–19 (3d Cir. 2007); Shugart v. Ocwen Loan Servicing, 747 F. Supp. 2d 938, 942–43
(S.D. Ohio 2010) (addressing a claim against Ocwen Loan Servicing); Llewellyn v.
Shearson Fin. Network, Inc., 622 F. Supp. 2d 1062, 1073 (D. Colo. 2009) (also against
Ocwen Loan Servicing).

Therefore, because Plaintiffs have offered sufficient factual allegations to
demonstrate that Ocwen LS is a debt collector within the meaning of the FDCPA, I agree
that the dismissal of Count One of Plaintiffs’ complaint should be reversed with respect
to Defendant Ocwen LS.

b. Defendant Ocwen Federal Bank

However, I find that Plaintiffs have failed to adequately plead that Defendant
Ocwen FB is a “debt collector.” Neither the legal conclusion as to the bank’s status, nor
the description of the bank as “a federally chartered savings bank engaged in discount
loan acquisitions and residential and commercial lending,” plausibly suggest that the
bank regularly or principally collects debts within the meaning of 15 U.S.C. § 1692a(6).
I also find no authority that suggests that a bank holding company of a loan servicer may
also be held liable for the servicer’s actions. Because Plaintiffs have failed to distinguish
between the parties, it is difficult for this Court to parse the particular factual allegations
made against Ocwen FB from those made against Ocwen LS. To the extent that
Plaintiffs’ claim against Ocwen FB is based merely on the fact that Ocwen FB is the
holding company of Ocwen LS, I would find that Plaintiffs have failed to properly plead
that Ocwen FB is a debt collector under the FDCPA.
No. 09-4220 Bridge, et al. v. Ocwen Fed. Bank, et al. Page 19

In conclusion, Plaintiffs failed to adequately plead that Deutsche Bank and
Ocwen FB are “debt collectors” because Plaintiffs did not assert that those Defendants
are principally or regularly engaged in the collection of debts. However, I find that
Plaintiffs adequately alleged that Ocwen LS is a debt collector. I therefore concur in the
judgment only with respect to the reversal of the district court’s dismissal of Plaintiffs’
FDCPA claim against Defendant Ocwen Loan Servicing.