Opinion
CV 2012-07-4287
02-06-2014
ONEWEST BANK, FSB, Plaintiff/Counterclaim Defendant v. PAMELA RUTH, et al., Defendants v. MANLEY DEAS & KOCHALSKI, LLC, Counterclaim Defendant
ORDER
CHRISTINE CROCE, JUDGE
This matter came before the Court on three separate Motions -- Plaintiff's Motion for Summary Judgment; Plaintiff's Partial Motion to Dismiss; and Counterclaim Defendant Manley Deas Kochalski LLC's Motion for Judgment on the Pleadings. The Court has been advised, having reviewed the Motions, response and reply briefs, the pleadings, affidavits, exhibits, and applicable law. Upon due consideration, the Court finds Plaintiff's Motion for Summary Judgment not well taken, Plaintiff's Motion to Dismiss well taken in part/not well taken in part, and Counterclaim Defendant's Motion for Judgment on the Pleadings well taken in part/not well taken in part.
PROCEDURAL HISTORY -- CV 2009-09-6682
On September 9, 2009, Plaintiff Onewest Bank c/o Washington Mutual Bank (Onewest) filed its Complaint of Foreclosure against the Defendants Michael Ruth and Pamela Ruth alleging that they defaulted in their payments on a promissory note with Accubanc Mortgage Corporation. Plaintiff alleged that both the Note and Mortgage were entered into and recorded on or about December 15, 2007. In connection with the Note, Plaintiff alleged that the amount of $78, 436.52 was due and owing from February 1, 2009 to present. Defendant Pamela Ruth filed her Answer to the Complaint denying said allegations and asserting numerous affirmative defenses.
--------- Notes: Michael Ruth was deceased at that time. [2]Although the Court denied both parties Motions, it did, independent of the discovery sanction, find that Plaintiff Onewest was a " debt collector" under the FDCPA. However, the Court found that a genuine issue of material fact still remained whether Plaintiff willfully misrepresented: the conflicting default dates between the original Complaint and Amended Complaint, conflicting amounts of the debt within several affidavits, and the conflicting copies of Loan Modification Agreement. [3]The Court has not relied on the e-mails and the affidavit attached to Ms. Ruth's brief on opposition in making this ruling. The Settlement Agreement speaks for itself -- courts presume that the intent of the parties to a contract resides in the language they chose to employ in their agreement. Atkinson v. Akron Bd. of Educ ., 9th Dist. No. 22805, 2006 Ohio 1032, P15. [4]Compare Clark v. Lender Processing Servs ., 949 F.Supp.2d 763, *19 (N.D. Ohio June 6, 2013) (borrower's federal claims based on the lender's lack of standing to file the prior state court action (now resolved) are barred as a collateral attack on prior litigation and by res judicata.). Here, Ruth files her counterclaims based upon Plaintiff and MDK's new 2012 filing of the foreclosure complaint, not the prior litigation. [5]The Sixth Circuit was cognizant to the fact that the Ohio Supreme Court had not yet rendered its decision on standing in Fed. Home Loan Mort.. Corp. v. Schwartzwald , 134 Ohio St.3d 13, 2012 Ohio 5017, 979 N.E.2d 1214. [6]Plaintiff has admitted in its answer that the loan was in default at the time it acquired the debt. (See Onewest reply to counterclaim, Par. 16). [7]Although Munger was decided on a motion for judgment on the pleadings rather than a motion to dismiss, the standards for interpreting motions under Fed. Civ. R. 12(b) and Fed. Civ. R. 12(b)(6) are the same. Samples v. Midland Credit Mgmt ., *22 (M.D. Tenn. July 2, 2012). [8]The Court takes judicial notice of that fact that Onewest is a federal savings association for the purposes of this Motion. [9]Although Defendant Ruth cites to the case of Munger for the proposition that a bank's status as an exempt financial institution is a factual matter that cannot be resolved at this stage of the proceedings for an alleged violation of the OCSPA, Munger is a federal case interpreting and applying Ohio law and is not binding on this Court. Furthermore an opposite holding can be found in Clark , supra at *30 - " OCSPA does not apply to transactions between financial institutions and their customers. Such transactions are not 'consumer transactions' for purposes of the statute." ---------
After numerous procedural motions were filed and ruled upon, Plaintiff Amended its Complaint on May 24, 2010, asserting for the first time, that Washington Mutual Bank and Ms. Ruth had entered into a Loan Modification Agreement in which the principal balance of the Note had increased to $82, 098.90, that Ms. Ruth had defaulted on the payments on the Loan Modification Agreement, and that $78, 296.37 (the same amount alleged in the original Complaint) remains due, but now due and owing from March 1, 2009 to present.
Ms. Ruth filed her answer to the Amended Complaint on July 22, 2010, and for the first time, asserted counterclaims under the FDCPA, 15 USC 1692e and 1692f alleging that the Plaintiff made willful misrepresentations as to the amount and nature of the debt it claims in the Amended Complaint and to the existence, nature, and content of the Loan Modification Agreement. Ruth alleged that Plaintiff acquired the debt claimed in this case after it was already in default, and as such, the above misrepresentations fall within the FDCPA. Plaintiff filed a reply to the Counterclaim denying said allegations and asserting numerous affirmative defenses. On December 15, 2010, this Court granted Plaintiff's Motion for Civ. R. 41(A)(2) notice of dismissal of its Amended Complaint without prejudice. On February 25, 2011, this Court set a trial management order on Ms. Ruth's counterclaims. From early summer through the early fall of 2011, numerous dispositive motions and motions to compel discovery were filed. Ultimately, the Court granted Defendant's Motion to Compel and Motion for Sanctions. The Court determined, as an appropriate sanction, that the Plaintiff was a debt collector as defined in the FDCPA, 15 USC 1692. The Court thereafter ruled on the pending Motions for Summary Judgment - denying both sides Motions. On the eve of trial (January, 28, 2013), the parties settled this matter. On February 4, 2013, this Court marked the matter " settled and dismissed." On March 19, 2013, Defendant Ruth filed her notice of dismissal of her counterclaims with prejudice.
PROCEDURAL HISTORY - CV 2012-07-4287
On July 25, 2012 (while the 2009 case remained pending on Ms. Ruth's counterclaims), Plaintiff Onewest Bank c/o Washington Mutual Bank re-filed its Complaint of Foreclosure against the Defendants Pamela Ruth and unknown spouse of Pamela Ruth. In the new Complaint, Plaintiff asserts that Pamela Ruth and Michael Ruth (deceased) executed a promissory note on the subject property; that a valid Mortgage on the subject property was filed on December 15, 1997; that Plaintiff has standing to bring this foreclosure action; that the Note and Mortgage were modified; that the Note and Mortgage, as modified by the Loan Modification Agreement, are in default; and that the amount of $78, 296.37 at the rate of 8.5% per annum remains due and owing from March 1, 2009 to present, plus late charges and other expenses.
Service of the Complaint was not perfected on the Defendants until December 3, 2012. Defendant Ruth thereafter filed a notice of leave to plead and stipulated leave to plead. After the Court denied Defendant's Motion for Definite Statement, Defendant Ruth filed her answer, counterclaims, and joinder of additional counterclaimant Manley Deas & Kochalski (MDK) on April 10, 2013. Ruth asserts claims against Plaintiff and MDK under the Fair Debt Collection Practices Act (FDCPA), 15 USC 1692e and 1692f; deceptive, unfair or unconscionable acts under the Ohio Consumer Sales Practices Act (OCSPA) and RC 1345.02/1345.03; fraud; abuse of process; and civil conspiracy. Ruth has also filed for class certification. A pretrial and mediation have taken place. The Court has stayed Plaintiff's request for class certification pending ruling on the above Motions.
PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
Plaintiff has filed its Motion for Summary Judgment on all of Defendant Ruth's counterclaims on the basis of the doctrine of res judicata - that Ms. Ruth has already litigated her claims to a final judgment on the merits in the prior 2009 case. Plaintiff states that Ruth's current counterclaims arise out of the same transaction or occurrence as the previous litigation -- namely, Onewest's assertion of its rights under the Note and Mortgage through foreclosure; and that these claims were specifically litigated in the previous action and/or could have been litigated in the previous action because they are based on the same factual allegations as Ruth's previous counterclaim. As such, Plaintiff asserts that the doctrine of res judicata applies to all of Ruth's current counterclaims herein.
Ruth counters that the current counterclaims are based on actions taken by Plaintiff and MDK in the current action filed on July 25, 2012, and not actions taken by Plaintiff in the 2009 case. Ruth points to the language in the current counterclaim that specifically states:
30. Actions taken by OneWest and its agents against Ruth, that are the subject of this counterclaim, were taken after July 23, 2010
89. A prior case (Court of Common Pleas, Summit County, Ohio, Case No. 2009-09-682) filed against Ms. Ruth by OneWest is expressly excluded from the class definitions above.
Ruth argues that she could not have brought or asserted claims in the 2009 case because they had not yet occurred. Furthermore, Ruth points to the language of the settlement agreement itself, and e-mails exchanged between the parties negotiating the terms of the settlement, that show that the parties only settled issues relating to the 2009 case and nothing else.
Summary Judgment, Civ. R. 56, is a procedural device designed to terminate litigation and to avoid a formal trial where there are no genuine issues of material fact to be tried and the moving party is entitled to judgment as a matter of law. The Court must follow the standard set forth in Civ. R. 56, which specifically provides that before Summary Judgment may be granted, " it must be determined that: (1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for Summary Judgment is made, that conclusion is adverse to that party." Temple v Wean United, Inc . (1977), 50 Ohio St. 2d 317, 327, 4 O.O.3d 466, 472, 364 N.E.2d 267, 273. See also, Norris v Ohio Std. Oil Co ., (1982), 70 Ohio St. 2d 1, 24 O.O.3d 1, 433 N.E.2d 615. The moving party has the burden of showing that there is no genuine issue of material fact as to the critical issue. The opposing party has a duty to submit affidavits or other materials permitted by Civil Rule 56 to show that a genuine issue for trial exists. See Harless v Willis Day Warehousing Co . (1978), 54 Ohio St. 2d 64, 8 O.O.3d 73, 375 N.E.2d 46.
In Cook v. Criminger , 9th Dist. No. 22313, 2005 Ohio 1949, P18, the Ninth District addressed the doctrine of res judicata:
[A] valid, final judgment rendered upon the merits bars all subsequent actions based upon any claim arising out of the transaction or occurrence that was the subject matter of the previous action." Grava v. Parkman Twp . (1995), 73 Ohio St.3d 379, 1995 Ohio 331, 653 N.E.2d 226, syllabus. In addition, Ohio law has long recognized that " 'an existing final judgment or decree between the parties to litigation is conclusive as to all claims which were or might have been litigated in a first lawsuit.'" Natl. Amusements, Inc. v. Springdale (1990), 53 Ohio St.3d 60, 62, 558 N.E.2d 1178, quoting Rogers v. Whitehall (1986), 25 Ohio St.3d 67, 69, 25 Ohio B. 89, 494 N.E.2d 1387. The doctrine serves the valid policy of ultimately ending any given litigation and ensuring that no party will be " 'vexed twice for the same cause.'" Green v. Akron (Oct. 1, 1997), 9th Dist. Nos. 18284/18294, quoting La Barbera v. Batsch (1967), 10 Ohio St. 2d 106, 113, 227 N.E.2d 55.
Civ.R. 13(A) governs compulsory counterclaims. That rule provides, in pertinent part:
A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction * * * *
" The purpose of Civ.R. 13, much like the doctrine of res judicata, is to avoid multiplicity of suits by requiring in one action the litigation of all existing claims arising from a single transaction or occurrence, no matter which party initiates the action. Thus, if a party fails to assert a compulsory counterclaim she is barred from litigating the counterclaim in a separate action." Forney v. Climbing Higher Enters., Inc ., 158 Ohio App.3d 338, 344, 2004 Ohio 4444, 815 N.E.2d 722 (Ohio Ct. App., Summit County 2004) (internal citations omitted).
Plaintiff asserts that Ms. Ruth's settlement and dismissal with prejudice of her counterclaims against Onewest in the 2009 litigation bars her right to bring any new counterclaims against Onewest in the current litigation. Plaintiff argues that Ruth's current counterclaims raise claims that either were previously filed (FDCPA and common law fraud claims) or could have been litigated (OCSPA, abuse of process, and civil conspiracy claims) in the 2009 foreclosure action because they all arise from the same core factual allegations regarding Onewest's entitlement to enforce the Note and foreclose the Mortgage, including the assignments of mortgage issues. Lastly, Plaintiff argues that Ruth's current counterclaims arise out of the same transaction as the 2009 litigation, and as such, she is barred from bringing these claims in the 2012 litigation. Plaintiff states that Onewest re-filed its current foreclosure action on July 25, 2012 because Ms. Ruth had not cured the default of her obligations under the Note and Mortgage. Plaintiff also asserts that " [the] undisputable fact [remains] that, while Ruth and her counsel were accepting OneWest's payment in the 2009 Litigation, they were in bad faith already contemplating bringing their Counterclaim in the 2012 Litigation. OneWest settled the 2009 Litigation -- and paid Ruth more than enough to pay off her mortgage -- precisely to obtain finality with Ruth." (Motion for Summary Judgment, page 5).
Upon review, the Court determines twofold. First, the Settlement Agreement and Release (Agreement) clearly and unambiguously limits the settlement to Ms. Ruth's counterclaims brought forth in the 2009 foreclosure case only.
The first " WHEREAS" paragraph of the Agreement makes reference to the 2009 action filed on September 9, 2009, Case No. 2009-09-6682. (Page 1) The second " WHEREAS" paragraph of the Agreement makes reference to Ruth's Counterclaims in the 2009 action, including listing the specific allegations and violations of the FDCA, fraud, and fraudulent misrepresentation. (Pages 1 and 2)
In pertinent part, the Agreement also states:
o WHEREAS, the Parties intend to settle the Counterclaims in the Litigation, and OneWest denies liability for any claims alleged therein, and Ruth denied the allegations in the Complaint filed by OneWest in the Litigation. (Page 2)
o Dismissal of Litigation. Ruth agrees to the dismissal in the form attached as Exhibit 1. (Page 3)
o Release. Ruth, and her heirs ...do hereby release and forever discharge OneWest ... of all claims in the Counterclaim .... (Page 3)
o Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto relating to the subject matter hereof .... (Page 3)
The Agreement makes no reference to the pending 2012 foreclosure action. With respect to the Release section of the Agreement, the terms are limited to the release and discharge of Onewest's claims in the Counterclaim, not any current or future claims that she may have against Onewest.
Second, the Court finds that the 2012 counterclaims were not, and could not, be compulsory counterclaims in the 2009 foreclosure action. Civ. R. 13(A) presents a two-part test for determining whether a claim is compulsory: (1) does the claim exist at the time of serving the pleading, and (2) does the claim arise out of the transaction or occurrence that is the subject matter of the opposing claim. Geauga Truck & Implement Co. v. Juskiewicz , 9 Ohio St.3d 12, 14, 9 Ohio B. 61, 457 N.E.2d 827 (1984).
Here, the claims stated in the current counterclaim did not " exist at the time of the serving" by Ms. Ruth of her pleading in response to Onewest's Amended Complaint in the 2009 case. Ruth has specifically pled in the 2012 case that that her claims are based on Onewest and MDK filing the July 25, 2012 Complaint; and not the 2009 case. (Complaint, Par. 72-80, 30 and 89). Furthermore, Ms. Ruth's counterclaims are based upon the transactions that occurred by Onewest and MDK filing the 2012 foreclosure action. Just because Onewest and MDK filed identical transactions in two separate foreclosure actions should not limit Ms. Ruth's counterclaims to only the first action. Ruth's counterclaims in the 2012 action were not yet ripe when she filed her counterclaims in the 2009 action. And lastly, had the parties contemplated that the 2009 settlement agreement would have restricted Ms. Ruth from filing any future actions against Onewest or its attorneys, it would have stated that in the Agreement. It did not. Plaintiff's Motion for Summary Judgment is denied.
PLAINTIFF'S MOTION TO DISMISS
Plaintiff also seeks to dismiss Counts II, III, and IV of the counterclaim in their entirety, and portions of Count I on the grounds that they fail to state a claim upon which relief may be granted. Plaintiff asserts that no liability exists against it under the FDCPA for any faulty assignments; that Onewest is a financial institution exempt from the OCSPA; that no basis exists for a claim for common law fraud; and that no basis exists for a claim for abuse of process because the current legal proceeding was filed and prosecuted with probable cause.
A motion to dismiss " is procedural and tests the sufficiency of the complaint." State ex rel. Hanson v. Guernsey Cty. Bd. Of Commrs . (1992), 65 Ohio St.3d 545, 548, 1992 Ohio 73, 605 N.E.2d 378. In order for a complaint to be dismissed pursuant to Civ.R. 12(B)(6), it must appear from beyond a doubt that the plaintiff can prove no set of fact entitling him to recovery. O'Brien v. University Tenants Community Union (1975), 42 Ohio St. 2d 242, 327 N.E.2d 753; Greeley v. Miami Valley Maintenance Constr. Inc . (1990), 49 Ohio St.3d 228, 551 N.E.2d 981. When considering a Civ.R. 12(B)(6) motion, a court must presume that all the factual allegations of the complaint are true and make all reasonable inferences in favor of nonmoving party. State ex rel. Sherrills v. Cuyahoga Cty. Court of Common Pleas (1975), 72 Ohio St.3d 461, 1995 Ohio 26, 650 N.E.2d 899. A court may " take judicial notice of appropriate matters in determining a Civ.R. 12(B)(6) without converting it to a motion for summary judgment", including public records and other rulings. State ex rel. Findlay Publ. Co. v. Schroeder , 76 Ohio St.3d 580, 581, 1996 Ohio 361, 669 N.E.2d 835 (1996) and Springfield Fireworks, Inc. v. Ohio DOC , 10th Dist. No. 03AP-330, 2003 Ohio 6940, P14-15.
Plaintiff first asserts that the alleged acts of commencing and maintaining its foreclosure lawsuit against Ruth when it did not have the legal right to do so, attaching false assignments to the Complaint, and providing other false, misleading and/or unfounded representations related to the ownership of those assignments in the Complaint -- even if true, are all acts that are not subject to the FDCPA as a matter of law. Plaintiff cites to federal case law in support of its position on the matter. See, Whittiker v. Deutsche Bank Nat. Trust Co ., 605 F.Supp.2d 914, 939 (N.D. Ohio 2009); Harvey v. Great Seneca Financial Corp ., 453 F.3d 324 (6th Cir. Ohio 2006); Shivone v. Wash. Mut. Bank , 07-CV-1038 (E.D. Pa. Aug. 5, 2008); and Deere v. Javitch, Block & Rathbone, LLP , 413 F.Supp.2d 886 (S.D. Ohio 2006) -- all supporting the view that a bank's inability to prove present ownership of the debt at the time of a collection action (here a foreclosure action) do not constitute (per se) violations of the FDCPA. Plaintiff also cites to federal case law that have held that a mortgagor lacks standing to challenge the assignment of the mortgage from the original lender to a subsequent bank, the latter of which brings a foreclosure action. See Livonia Properties Holdings, LLC v. 12840-12976 Farmington Road Holdings, LLC , 399 Fed.Appx. 97 (6th Cir. 2010); Rogan v. Bank One, N.A ., 457 F.3d 561 (6th Cir. 2006); and Bridge v. Aames Capital Corp ., No. 1:09 CV 2947, (N.D. Ohio Sept. 29, 2010).
Ruth argues the opposite, that other federal case law supports her position that a bank's false representation that it is the holder of a mortgage in a foreclosure action, an issue of standing, is a " debt" under the FDCPA. See Munger v. Deutsche Bank , *18-23 (N.D. Ohio July 18, 2011) and Wallace v. Washington Mut. Bank F.A ., 683 F.3d 323 (6th Cir. June 26, 2012). Ruth also cites to other federal case law that supports the determination that a bank actions in a foreclosure action may violate the FDCPA.
Upon review, the Court finds the holdings in the following three cases on point and well reasoned.
In the case of Munger v. Deutsche Bank , *18-23 (N.D. Ohio July 18, 2011), the Federal Court from the Northern District of Ohio held with respect to the alleged FDCPA claims and violations:
Finally, the Court will consider whether the Plaintiffs adequately alleged a claim under the FDCPA against Defendant Deutsche Bank. The Court finds sufficient allegations to support Plaintiffs argument that Deutsche Bank is subject to the FDCPA. Like loan servicers, the holder of a loan or a note is not subject to the provisions of the FDCPA where the debt is their own and was acquired prior to default. 15 U.S.C. § 1692a(6)(F). The Plaintiffs executed a promissory note to Defendant Accredited and Defendant Deutsche did not originate the loan. If Plaintiffs' allegations are true, then it seems likely that Deutsche Bank purchased the note in default. The allegedly invalid assignment from Defendant Accredited to Deutsche Bank was made on April 13, 2010, and the mortgage foreclosure lawsuit was filed on April 16, 2010. The circumstances of the case -- specifically that Deutsche Bank filed for foreclosure only three days after purchasing the note -- suggest Deutsche Bank purchased a debt that was in default at the time it was purchased. 15 U.S.C. § 1692a(6)(F). Thus, the provisions of the FDCPA would apply to Deutsche Bank.
Further, aside from the fact that the debt was likely acquired when in default, the Plaintiffs also say that Deutsche Bank never validly acquired the note in question, but nonetheless filed a lawsuit to collect that debt. One decision in this district has held that this conduct alone is not sufficient to establish status as a " debt collector." In Bridge v. Ocwen Federal Bank , the plaintiff alleged that a loan subject to a foreclosure action was never properly transferred or assigned. In dismissing the FDCPA claim, the court found that although the lack of standing would be a defense to foreclosure, the lack of standing did not transform the defendant financial institution -- who normally would not be subject to the FDCPA as a creditor -- into a " debt collector" under the Act. Ocwen , 669 F.Supp.2d at 858; see also Byrd v. Law Offices of John D. Clunk Co., LPA , 2010 WL 816932, at *10 (S.D. Ohio Mar. 8, 2010); Wells Fargo Bank, N.A. v. Sessley , 188 Ohio App.3d 213, 2010 Ohio 2902, 935 N.E.2d 70, 81 (Ohio Ct. App. 2010). Significantly though, in Ocwen , at the time the bank purchased the loan the Plaintiff " was not then, nor had she ever been, in default on her mortgage loan." Ocwen , 669 F.Supp.2d at 855. Under the FDCPA, a " debt collector" is one who " regularly collects or attempts to collect . . . debts owed or due or asserted to be owed or due another, " which under a literal reading could include one who regularly files debt collection lawsuits when the debt remains owed to another party. 15 U.S.C. § 1692a. Given that the Plaintiffs allegations, when construed in their favor, suggest that Deutsche Bank has a practice of engaging in foreclosure lawsuits without proper standing, the Court finds that sufficient issues exist and that it is not appropriate to resolve at this time whether Deutsche Bank falls within the statutory definition of " debt collector."
With regard to a substantive violation of the FDCPA, the Court finds that the Plaintiffs' allegations are sufficient to state a claim against Deutsche Bank. The Plaintiffs allege that the Deutsche Bank violated the FDCPA by filing a foreclosure action, even though it lacked legal capacity to bring the suit. [Doc. 2-1 at 4-7.] Simple inability to prove present debt ownership at the time a collection action is filed is not a per se FDCPA violation. Harvey v. Great Seneca Fin. Corp ., 453 F.3d 324, 331-33 (6th Cir. 2006); Kline v. MERS , 2010 WL 1133452, at *7 (S.D. Ohio Mar. 22, 2010) (simple inability to prove ownership in a foreclosure action does not violate the FDCPA). Courts have held more generally, however, that where a " debt collector" files a lawsuit to collect in an action in which the amount of the debt or the validity of the debt collection's legal claim upon the debt is knowingly misrepresented, that a FDCPA complaint will survive a motion to dismiss. See, e.g., Kline v. MERS , 2010 WL 1133452, at *8 (S.D. Ohio Mar. 22, 2010) (holding that an inability to prove a debt at the time of filing a collection lawsuit does not violate the FDCPA, but finding that the use of a false attachments in an attempt to prove debt would violate the FDCPA); Whittiker , 605 F.Supp.2d at 929-31 (collecting cases and discussing circumstances under which the filing of foreclosure action could be actionable under the FDCPA); Williams v. Javitch, Block & Rathbone, LLP , 480 F.Supp.2d 1016, 1021-24 (S.D. Ohio 2007) (knowledge that information in affidavit is false as to specifics of debt violates FDCPA); Delawder v. Platinum Financial Services , 443 F.Supp.2d 942, 948 (S.D. Ohio 2005) (false affidavit attached to complaint would constitute a violation of Section 1692e(2)). n.1 Here, the Plaintiffs allege that Deutsche Bank filed the April 2010 foreclosure action with actual knowledge that the assignment was invalid and that it was not possible for it to prove the right to collect on the debt. The Court finds that this allegation is sufficient to survive a motion for judgment on the pleadings.
FOOTNOTES
n.1 Some courts in this Circuit, including this Court, have applied this case law to the filing of judicial foreclosure actions. See, e.g., Turner v. Lerner, Sampson & Rothfuss , 776 F.Supp.2d 498, 2011 WL 834064, at *5-6 (N.D. Ohio Mar 4, 2011); Whittiker , 605 F.Supp.2d at 931 (stating that a foreclosure action filed with knowledge that there is no legal right to collect a debt would violate Section 1692e); Kline v. MERS , 2010 W L 1133452, at *7 (S.D. Ohio Mar. 22, 2010) (same). However, in Lerner , the defendant did not dispute their status as a " debt collector" for purposes of that motion and admitted that all of the substantive provisions of the FDCPA applied to its debt collection activities. The Court's ruling on this motion does not foreclose the Defendants from later arguing, based upon the factual record, that they are not engaged in debt collection activities, or that the foreclosure action was merely a suit to enforce a security interest. Montgomery v. Huntington Bank , 346 F.3d 693, 699-701 (6th Cir. 2003); Mabry v. Ameriquest Mort. Co ., 2010 WL 1052353, at *3 (E.D . Mich. Feb. 24, 2010); Stamper v. Wilson & Associates, P.L.L.C ., 2010 WL 1408585, at *6-7 (E.D. Tenn. Mar. 31, 2010).Munger , at *18-23 (emphasis added).
Furthermore, in Wallace v. Washington Mut. Bank F.A ., 683 F.3d 323 (6th Cir. June 26, 2012), the Sixth Circuit Courts of Appeals resolved the question whether an alleged " false representation of a creditor's name on a complaint may constitute a 'false representation ... to collect or attempt to collect any debt' under Section 1692e of the FDCPA." Wallace , at 327. The Court held that such false representation does fall within the FDCPA regardless whether the issue of standing ultimately is resolved in favor of the law firm bring the foreclosure action -- the issue of standing has no bearing on whether misidentifying a creditor is materially misleading under the FDCPA. Id.
Lastly, in Glazer v. Chase Home Fin. Llc ., 704 F.3d 453 (6th Cir. Ohio 2013), the Sixth Circuit Court of Appeals recently resolved the issue whether the FDCPA applies equally to foreclosure actions seeking merely to foreclose on a mortgage (enforcement of security interests such as in rem action) and foreclosures actions where a money judgment is also sought, a question that remained unresolved in Munger . (See Munger , footnote 1 highlighted above.) The Sixth Circuit held that the FDCPA applies to both. Glazer , at 464.
Here, Defendant Ruth generally alleges in her counterclaim that Plaintiff is in the business of collecting and attempting to collect consumer debts (Counterclaim, Par. 53, 54, 68); that Plaintiff filed the instant foreclosure action falsely claiming $78, 296.37 is owed (Par. 72); and that Plaintiff falsely represented or stated:
* that it is the owner of the claimed note and mortgage (Par. 74), * that it has been assigned ownership rights to the note and mortgage (Par. 75), * that it is entitled to enforce the note (Par.76), * that it is entitled to foreclose on the mortgage (Par. 77), * that it has the right to declare the claimed debt due (Par. 78), * that it satisfied all the conditions precedent (Par. 79), and * that it has rights under the modification agreement (Par. 80).
Defendant Ruth also specifically alleges in her counterclaim with respect to the FDCPA that:
* The debt that Onewest asserts is due from Ruth was in default at the time Onewest claims to have acquired it (Par. 45), * Plaintiff has commenced and maintained collection lawsuits against Ruth and others when it did not have the legal right to do so (Par. 106 a.), and when it did not have the legal right to do so (Par. 106 b.), * Plaintiff made false misleading and/or unfounded representations as to assignment of ownership rights when this lawsuit was filed (Par. 106 c.), * Plaintiff made false misleading and/or unfounded representations as to the authority, capacity and employment relationships of entities executing documents that purported to assign rights upon which this lawsuit was filed (Par. 106 d.), and * Plaintiff attached false assignments to the Complaint (Par. 106 e).
Based upon the allegations in the counterclaim, that the Court must accept as true for purposes of the Motion to Dismiss, Defendant Ruth has alleged more than Plaintiff is mere a debt collector for purposes of violation of the FDCPA. Rather, Ms. Ruth's has alleged specific instances of misdeeds in the current foreclosure action and in other foreclosure actions (for class certification). As noted in Munger , similar allegations were sufficient to survive a motion for judgment on the pleadings.
With respect to the assignment controversy, Plaintiff argues that Federal courts have consistently held that a mortgagor lacks standing to challenge the validity or authorization of an assignment of mortgage. See Livonia Prop. Holdings, L.L.C. v. 12840- 12976 Farmington Road Holdings, L.L.C ., 399 F.Appx. 97 (6th Cir. 2010) and other case law cited in Plaintiff's briefs. However, the Livonia decision by the Sixth Circuit Court of Appeals was rendered at least in part, interpreting Michigan law. Furthermore, the Circuit Court noted that " [a]n obligor 'may assert as a defense any matter which renders the assignment absolutely invalid or ineffective, or void.' . . . Obligors have standing to raise these claims because they cannot otherwise protect themselves from having to pay the same debt twice." Livonia , at 102. Furthermore, in Ocwen , the District Court of Michigan held in that the assignment issue cannot be resolved in a Civ. R. 12(b)(6) Motion to Dismiss, at least the allegation are sufficient to suggest that the defendant was a debt collector. Ocwen , at 856.
And, in at least one recent Federal decision interpreting Ohio law and the Swartzwald case, the Judge for the District Court for the Northern District of Ohio, Western Division stated " I have been unable to identify any case in which an Ohio court ruled a mortgagor, through an affirmative defense, could or could not contest the standing of a plaintiff in a foreclosure action, and thus force the plaintiff to prove it was the actual holder of the mortgage or note, though some have implied that such a course is permissible." Alexander v. Deutsche Bank Nat'l Trust Co ., *12-13 (N.D. Ohio June 19, 2013) As such, the Judge went on to state " it does not follow that Alexander is wholly barred from challenging the assignment. The Supreme Court of Ohio acknowledged the general principle 'that standing is a 'jurisdictional requirement' that, if not present, subjects the complaint to dismissal.' Schwartzwald , 979 N.E.2d at 1219." Plaintiff's Motion to Dismiss the FDCPA counterclaim is denied.
Plaintiff next asserts that Onewest is a financial institution that is exempt from the OCSPA. Plaintiff argues that the plain language of the statute exempts banks from suits for violation of the OCSPA.
The CSPA defines a " consumer transaction" to be
a sale, lease, assignment, award by chance, or other transfer of an item of goods, a service, a franchise, or an intangible, to an individual for purposes that are primarily personal, family, or household, or solicitation to supply any of these things. " Consumer transaction" does not include transactions between persons, defined in sections 4905.03 and 5725.01 [financial institution defined] of the Revised Code, and their customers, except for transactions involving a loan made pursuant to sections 1321.35 to 1321.48 of the Revised Code and transactions in connection with residential mortgages between loan officers, mortgage brokers, or nonbank mortgage lenders and their customers ....R.C. 1345.01(A) (emphasis added).
Plaintiff states it is a financial institution as defined in RC 5725.01(A)(20 and that " financial institutions" include " a federal savings association or federal savings bank that is chartered under 12 U.S.C. 1464." Plaintiff also states that Ohio case law has interpreted the OCSPA to specifically exempt transactions between financial institutions and its customers under the definition of consumer transaction.
Although Defendant Ruth admits that Plaintiff Onewest is a financial institution, she argues that Onewest was acting in another capacity, as a " debt collector" or " supplier" when it filed the current lawsuit. As such, Defendant argues that its actions fall within the definition of a " consumer transaction."
Upon review, although the Ohio Supreme Court apparently has not decided this specific issue, it has held that a transaction between a mortgage-service provider (who contracts with a financial institution to service a loan) and homeowners are not consumer transactions within the meaning of the OCSPA. Anderson v. Barclay's Capital Real Estate, Inc ., 136 Ohio St.3d 31, 2013-Ohio-1933, P15, 989 N.E.2d 997, syllabus one and two. The Ohio Supreme Court noted that the OCSPA has no application in " pure" real estate transactions. Anderson , at P10. In support of its position, the Ohio Supreme Court referenced the commentary to the Uniform Consumer Sales Practices Act, on which the OCSPA is modeled:
'On the assumption that land transactions frequently are, and should be, regulated by specialized legislation, they are excluded altogether.' 7A, Part I, National Conference of Commissioners on Uniform State Laws, Uniform Laws Annotated, Business and Financial Laws, Uniform Consumer Sales Practices Act, Official Comment to Section 2(1), at 73 (Master Ed.2002). The transactions presented here include the acceptance and application of mortgage payments and management of loans in default. Those transactions do not cease to be part of the land transaction simply because an entity that did not originate the loan and mortgage executes them.Anderson , at P18 (emphasis added).
The Supreme Court in Anderson also noted that the Ohio General Assembly has repeatedly amended RC Chapter 1345 to reach specific transactions that take place in the mortgage industry:
[W]e recognize that the General Assembly has repeatedly amended R.C. Chapter 1345 to reach specific transactions that take place in the mortgage industry. But it has chosen not to incorporate mortgage services within the expanded definition of transactions subject to CSPA's provisions.
For example, the General Assembly, through Am.Sub.S.B. No. 185 (" S.B. 185"), amended R.C. 1345.01(A), effective in 2007, to expressly include three types of entities actively engaged in the residential mortgage market that were not previously subject to the CSPA: loan officers, mortgage brokers, and nonbank mortgage lenders. But, notably, the legislature has not expanded the application of the CSPA to include mortgage servicers.Id., at P 21-22 (emphasis added).
Lastly, in answering the question whether a mortgage servicer is a " supplier" under RC 1345.01(C), the Supreme Court held that the term " supplier" under the OCSPA does not include a mortgage servicer. Id., at P28.
As previously stated, in Anderson , the Ohio Supreme Court did not specifically address whether a transaction between a financial institution and a consumer meets the definition of either a " consumer transaction" or " supplier" under the OCSPA. However, implicit in its decision is that is does not -- the OCSPA does not carve out an exception for pure real estate/land transactions in general, or for financial institutions similar the exceptions found in the Act for " loan officers, mortgage brokers, and nonbank mortgage lenders." Furthermore, several Ohio Appellate Courts have determined that transactions between financial institutions and their customers are exempted from the definition of a " consumer transaction" subject to the OCSPA. See, ABN AMRO Mortgage Group, Inc. v. Arnold , 2d Dist. No. 20530, 2005 Ohio 925, P29 (bank foreclosure action); Ferron v. Fifth Third Bank , 10th Dist, No. 08AP-473, 2008 Ohio 6967, P8 (banking advertisement); and Reagans v. Mountainhigh Coachworks, Inc ., 117 Ohio St.3d 22, 2008 Ohio 271, P33, 881 N.E.2d 245 (bank consumer loan on a vehicle). Plaintiff's Motion to Dismiss the OCSPA counterclaim is granted.
Plaintiff next argues that Defendant Ruth's claim for common law fraud fails because she cannot claim " fraud on the court", and because she has not alleged in specific detail the elements for fraud. Plaintiff first states that Ms. Ruth may not bring a common law fraud claim on behalf of other third parties, and cites, in part, to Schiff v. Dickson , 8th Dist. Nos. 96539 and 96541, 2011-Ohio-6079, P21 (counterclaimant did not have standing in this case to assert claims on behalf of other third parties such as present and former attorneys, other attorneys, the court, and/or other third parties.). Ruth responds stating that " Onewest falsely recasts Ms. Ruth's allegations in an attempt to argue that Ms. Ruth has alleged 'fraud on the court." Upon review, the Court does not find that a cause of action for " fraud on the court" is a viable claim. See e.g. Schiff , supra, and Dejohn v. Lerner, Sampson & Rothfuss , *10 (N.D. Ohio Nov. 30, 2012). Plaintiff's Motion to Dismiss with respect to any potential counterclaim for fraud on the court is granted.
Plaintiff next asserts that Defendant Ruth has not alleged common law fraud with specificity as required by Civ.R. 9(B).
Civ.R. 9(B) provides: " In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." The elements of a fraud claim are: " (1) a representation (or concealment of a fact when there is a duty to disclose) (2) that is material to the transaction at hand, (3) made falsely, with knowledge of its falsity or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, and (4) with intent to mislead another into relying upon it, (5) justifiable reliance, and (6) resulting injury proximately caused by the reliance." Volbers-Klarich v. Middletown Mgt., Inc ., 125 Ohio St.3d 494, 2010 Ohio 2057, at ¶ 27, 929 N.E.2d 434, citing Burr v. Stark Cty. Bd. of Commrs . (1986), 23 Ohio St.3d 69, 73, 23 Ohio B. 200, 491 N.E.2d 1101.
In her fraud claim, Defendant Ruth alleges numerous allegations of misrepresentations (Counterclaim, par. 116 (a) -- (i)), and false representations (Counterclaim, par. 117, 118); that Plaintiff knew the falsity of these representations or acted in reckless disregard of their truth (Par. 120); with the purpose and intent to mislead (Par. 122); that Ruth was justified in relying on such representations and did so by engaging legal counsel and other litigation activities (Par. 123); and that she suffered damages, through a loss of resources, as a proximate result of the reliance (Par. 124).
Upon review, although Ruth has sufficiently pled elements one, three, four and six for a claim for fraud, for reasons below, Ruth has not specifically pled that the misrepresentations and false representation were " material" to the transaction at hand; and has not, and cannot, show that she justifiably relied on Plaintiff's misrepresentations and false representations. With regard to the fifth element for fraud -- justifiable reliance, as Plaintiff has argued, its act in filing of a complaint in foreclosure, does not in of itself, constitute the " transaction at hand" in order support a claim for fraud. In other words, the fraud has to predate the filing of the complaint. Schiff , supra at P20. Defendant Ruth has not and cannot allege that she justifiably relied on the misrepresentations and false representations of Onewest by the acts of engaging legal counsel and other litigation activities. Such legal activities actually are evidence of just the opposite -- that she did not rely on the misrepresentations and false representations of Onewest. See, Id., at P20 (" Dickson cannot demonstrate that he justifiably relied on Schiff's complaint to his detriment; indeed he did not -- he filed an answer with affirmative defenses and counterclaims contesting Schiff's complaint.") and DeJohn v. Lerner, Sampson & Rothfuss , (N.D. Ohio Dec. 11, 2012), *10. Plaintiff's Motion to Dismiss the fraud counterclaim is granted.
Lastly, Plaintiff asserts that Defendant's abuse of process claim fails as a matter of law. The elements for the tort of abuse of process are: " (1) that a legal proceeding has been set in motion in proper form and with probable cause; (2) that the proceeding has been perverted to attempt to accomplish an ulterior purpose for which it was not designed; and (3) that direct damage has resulted from the wrongful use of process." Yaklevich v. Kemp, Schaeffer & Rowe Co., L.P.A . (1994), 68 Ohio St.3d 294, 298, 1994 Ohio 503, 626 N.E.2d 115.
" In an abuse of process case, '[t]he improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money, by the use of the process as a threat or a club.' Prosser & Keeton on Torts (5 Ed. 1984) 898, Section 121. Simply, abuse of process occurs where someone attempts to achieve through use of the court that which the court is itself powerless to order." Robb v. Chagrin Lagoons Yacht Club, Inc . (1996), 75 Ohio St.3d 264, 271, 1996 Ohio 189, 662 N.E.2d 9.
Plaintiff asserts that the abuse of process claim should be dismissed because the counterclaim does not provide proper allegations for the first element of said claim - that the action has been set in motion in the proper form and with probable cause. Defendant Ruth responds twofold -- first, that Onewest's own pleadings and the current motion are replete with assertions that Onewest does in fact have the right to file this action; and second, that her claim should not be dismissed at this stage of the proceedings.
Upon review, the Court finds that Ruth must assert in her counterclaim that the underlying action was brought in the " proper form and with probable cause" - the first element for abuse of process. This requirement is mandatory and where a counterclaim fails to allege facts which establish all the required elements of a claim for abuse of process, the dismissal on the pleadings is proper. Gunaris v. Holiday Lakes Prop. Owners Ass'n (Feb. 2, 1999), 6th App. Dist. No. H-98-032 and Miller-Wagenknecht v. City of Munroe Falls , (Dec. 5, 2001), 9th Dist. No. CA 30324, 2001 Ohio 1877 See also e.g.; Schiff , supra at P25-26 (the mere filing of a complaint cannot form the basis for filing an abuse of process claim); and Munger , supra at *8-9 (plaintiffs allegation that the bank filed the foreclosure action without standing in hopes that it could force plaintiffs out of their home and to receive a favorable foreclosure judgment fails to meet the first and second elements for an abuse of process claim.) Plaintiff's Motion to Dismiss the abuse of process counterclaim is granted.
MDK'S MOTION FOR JUDGMENT ON THE PLEADINGS
Manley Deas Kolchalski, LLC (MDK) asserts that it did not commit any unfair or deceptive acts under either the FDCPA or the OCSPA; that MDK's actions on behalf of Onewest are exempt from the OCSPA and RC 1319.12; that MDK did not commit fraud and Ruth did not plead fraud with sufficient particularity; and MDK did not commit abuse of process or civil conspiracy when it filed the 2012 foreclosure complaint on behalf of its client Onewest.
In Ohio, Civil Rule 12(C) states that " [a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." In this regard, Civ.R.12(C) allows consideration of both the Complaint and Answer. State ex rel. Midwest Pride IV, Inc. v. Pontious (1996), 75 Ohio St.3d 565, 569, 1996 Ohio 459, 664 N.E.2d 931. However, an exception does exist to permit consideration of documents attached to and incorporated into the pleadings. See Civ. R. 10(C) and Riolo v. Oak Wood , 9th Dist. No. 04CV137738, 2005 Ohio 2150, ¶ 6. Unlike motions for dismissal pursuant to Civ. R.12(B)(6), Civ. R.12(C) motions are " specifically [designed] for resolving questions of law." Id. at 570, citing Peterson v. Teodosio (1973), 34 Ohio St.2d 161, 166, 297 N.E.2d 113. When considering a Motion for Judgment on the Pleadings pursuant to Civ. R.12(C):
[D]ismissal is appropriate where a court (1) construes the material allegations in the complaint, with all reasonable inferences to be drawn therefrom, in favor of the nonmoving party as true, and (2) finds beyond doubt, that the plaintiff could prove no set of facts in support of his claim that would entitle him to relief.State ex rel. Midwest Pride IV, Inc ., supra, 75 Ohio St.3d at 570, citing Lin v. Gatehouse Constr. Co . (1992), 84 Ohio App.3d 96, 99, 616 N.E.2d 519. Therefore, before it may grant a Motion for Judgment on the Pleadings, the Court must determine that no material factual issues exist and that the moving party is entitled to judgment as a matter of law. Id.
Under Federal law:
A motion for judgment on the pleadings under Fed.R.Civ.P. 12(c) applies the same standards as a motion to dismiss for failure to state a claim under Rule 12(b)(6). In deciding a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), the court will " construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff." The Federal Rules of Civil Procedure require that a plaintiff provide " 'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." The court must determine whether " the claimant is entitled to offer evidence to support the claims, " not whether the plaintiff can ultimately prove the facts alleged.
The complaint's allegations, however, " must be enough to raise a right to relief above the speculative level." To establish the " facial plausibility" required to " unlock the doors of discovery, " the plaintiff cannot rely on " legal conclusions" or " [threadbare] recitals of the elements of a cause of action, " but, instead, the plaintiff must plead " factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."Samples , supra at *17-19 (internal citations omitted).
MDK provides reasons why it believes this Court should rule in its favor:
o That Ruth's claims under the FDCPA and OCSPA should be dismissed because MDK had the legal right and competence to file the foreclosure action against,
o That Ruth's assertion that MDK committed the unauthorized practice of law is incorrect because MDK attorneys were admitted and in good standing with the Ohio Supreme Court at all relevant times,
o That Ruth's assertion that the current foreclosure action is barred by res judicata is incorrect because there has been no prior judgment in an action to which Ruth was a party,
o That Ruth does not allege any facts to support Ruth's claims under the FDCPA, OCSPA/RC 1319.12,
o That no consumer transaction took place under the OCSPA/RC 1319.12, and MDK's client (Onewest) is not a supplier under the Act,
o That MDK did not make any statements that were false or materially misleading to support Ruth's claim for fraud/Ruth did not plead fraud with sufficient particularity,
o That Ruth's abuse of process claim should be dismissed because MDK sought a permissible legal remedy and where Ruth did not allege MDK's actions were separate and apart from those of its client Onewest, and
o That Ruth's claim civil conspiracy claim should fail because MDK did not commit any underlying violation of law.
The Court will address the Motion as follows. The first issue is whether MDK is entitled to judgment on the pleadings under the FDCPA and OCSPA. MDK states that this is a simple case of a bank bringing a foreclosure action against a homeowner in default on her mortgage loan. MDK argues that its client Onewest has the legal right to foreclose on the subject property because it possessed Ruth's note, indorsed in blank at the time of filing. Ruth counters/alleges that Onewest has no enforceable interest in the mortgage because no valid assignment of the mortgage to Onewest exists.
With respect to the FDCA claims/violations, MDK makes numerous arguments why neither it nor Onewest made any unfair or deceptive acts. Ruth counters that she has sufficiently plead that MDK and Onewest misrepresented the Bank's creditor status and initiated the lawsuit without legal authority. As such, Ruth argues that her claim that MDK/Onewest violated the FDCPA survives MDK's Motion.
Upon review, for the same reasons that the Court ruled in favor of Ruth on Plaintiff's Motion to Dismiss above, the Court finds that she has alleged misrepresentations and false representations of sufficient particularity to survive the Motion for Judgment on the pleadings. MDK's Motion for Judgment on the Pleadings on the FDCPA counterclaim is denied.
MDK also seeks judgment on the pleadings on Ruth's OCSPA claims. MDK argues that it is not a " supplier" as defined by the OCSPA, and that the transaction between Onewest and Ruth is an exempt transaction under the OCSPA and RC 1319.12 because MDK's client is a federal savings bank. Similar to Plaintiff Onewest's Motion to Dismiss, Ruth argues that MDK is acting in another capacity, as a debt collector, when it filed the current lawsuit.
Upon review, for the same reasons the Court ruled in favor of Plaintiff Onewest above, the Court finds that MDK is not a supplier, and its actions in representing Onewest in the underlying foreclosure, is not a consumer transaction, as defined under the OCSPA. See also e.g., DeJohn v. Lerner, Sampson & Rothfuss , (N.D. Ohio Dec. 11, 2012); Lamb v. Javitch, Block & Rathbone, L.L.P ., *12 (S.D. Ohio Jan. 24, 2005); Gionis v. Javitch, Block & Rathbone , 405 F.Supp.2d 856, 869 (S.D. Ohio 2005; Glazer v. Chase Home Fin. Llc ., 704 F.3d 453 (6th Cir. Ohio 2013); and Glazer v. Chase Home Fin. Llc ., 8th Dist. Nos. 99875 & 99736, 2013-Ohio-5589, P63 -- law firm's collection efforts in connection with that debt fall outside the purview of the OCSPA. MDK's Motion for Judgment on the Pleadings on the OCSPA counterclaim is granted.
MDK next argues that Defendant Ruth's claim for common law fraud fails as a matter of law because it did not commit fraud on Ruth, she did not and cannot plead that she reasonably relied on any misrepresentations, and that she did not plead fraud with particularity. Ruth counters she specifically plead misrepresentations and concealment as a basis for her fraud claim against both Onewest and MDK.
Upon review, for the same reasons that the Court ruled in favor of Plaintiff Onewest above, the Court finds that Ruth did not specifically plead that that the misrepresentations and false representation were material to the transaction at hand (second element); and that she justifiably relied on Plaintiff's misrepresentations and false representations (fifth element). MDK's Motion for Judgment on the Pleadings on the fraud counterclaim is granted.
MDK next argues that Defendant Ruth's claim for abuse of process fails as a matter of law primarily because the counterclaim does not provide proper allegations for the first element of said claim - that the action has been set in motion in the proper form and with probable cause. Similar to her argument against Onewests' Motion, Defendant Ruth responds twofold -- first, that MDK and Onewest's own pleadings and the current motion is replete with assertions that Onewest does in fact have the right to file this action; and second, that her claim should not be dismissed at this stage of the proceedings.
Upon review, for the same reasons that the Court ruled in favor of Plaintiff Onewest above, the Court finds that Ruth did not assert in her counterclaim that the underlying action was brought in the proper form and with probable cause - the first element for abuse of process. MDK's Motion for Judgment of the Pleadings on the abuse of process counterclaim is granted.
Lastly, MDK argues that Defendant Ruth's claim for civil conspiracy fails as a matter of law because no recovery exists absent an underlying violation of law. MDK asserts that the claim for civil conspiracy must be dismissed because no other underlying counterclaims remain. In its reply brief, MDK also argues (for the first time) that Ruth does not allege in her counterclaim that MDK and Onewest took any separate action to support of her claim for civil conspiracy. Ruth counters that the underlying act is the other violations; and that " an alternative basis of civil claim exists where the plaintiff can show some 'peculiar power of coercion' possessed by the conspirator by virtue of their combination, which an individual acting alone does not possess." Girgis v. Countrywide Home Loans, Inc ., 733 F.Supp.2d 835, 856-857 (N.D. Ohio 2010). Ruth states that Onewest could not act alone to initiate this unlawful lawsuit against Ms. Ruth -- that Onewest needed MDK to initiate the lawsuit in order to coerce Ruth into paying Onewest.
" The tort of civil conspiracy is 'a malicious combination of two or more persons to injure another in person or property in a way not competent for one alone, resulting in actual damages.' Additionally, 'an underlying unlawful act is required before a civil conspiracy claim can succeed.'" Wolford v. Sanchez , 2005 Ohio 6992, P18 (Ninth Dist. C.A. No. 05CA008674) (internal citations omitted).
Upon review, the Court finds that Ruth's claim for civil conspiracy survives the pending Motion. Ruth has sufficiently pled that Onewest and MDK have created joint collection platforms and strategies, and acted in concert, under an agreement to commit the unlawful acts and to initiate lawsuits in an unlawful manner. (Par. 132). Ruth also alleges that MDK and Onewest took individual actions, separate and apart from each other, but with the common purpose, and in adding and abetting each other, as a means to collect debts. (Par. 69-71). Furthermore, as Ms. Ruth's claims for alleged violations of the FDCPA remain against both Onewest and MDK, her civil conspiracy claim so too shall remain. See e.g. Allensworth-Cannaday v. Windham Exempted Vill. Sch. Dist ., (N.D. Ohio Oct. 23, 2007), *13, citing Williams v. Aetna Fin. Co ., 83 Ohio St.3d 464, 475, 1998 Ohio 294, 700 N.E.2d 859 (Ohio 1998); and Munger , supra at *33-34. MDK's Motion for Judgment of the Pleadings on the civil conspiracy counterclaim is denied.
In conclusion, based upon all of the above, the Court finds Plaintiff's Motion for Summary Judgment not well taken; Plaintiff's Motion to Dismiss well taken in part and not well taken in part; and Counterclaim Defendant MDK's Motion for Judgment on the Pleadings well taken in part and not well taken in part. Defendant Ruth's counterclaims for violation of the OCSPA, fraud, and abuse of process are all dismissed. Defendant Ruth's counterclaims for violation of the FDCPA and civil conspiracy shall remain at this time.
The Court sets a status conference for February 27, 2014 at 8:30 a.m. The Court will set a trial management schedule and address the propriety of setting a briefing schedule on the request for class certification at that time.
So Ordered.