Response of WMI Liquidating Trust with Respect to Motion of

Transcription

Case 08-12229-MFW
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
---------------------------------------------------------------x
:
In re
:
:
WASHINGTON MUTUAL, INC., et al., 1
:
:
Debtors.
:
:
:
---------------------------------------------------------------x
Chapter 11
Case No. 08-12229 (MFW)
(Jointly Administered)
Re: D.I. 11978
RESPONSE OF WMI LIQUIDATING TRUST WITH RESPECT TO MOTION
OF HUSSAIN KAREEM FOR SETTLEMENT CONFERENCE
WMI Liquidating Trust (“WMILT”), as successor in interest to Washington
Mutual, Inc. (“WMI”) and WMI Investment Corp., formerly debtors and debtors in possession
(collectively, the “Debtors”), in response to the motion, filed March 16, 2015 (the “Motion”), of
Hussain L. Kareem (“Kareem”) to convene a settlement conference in an effort to resolve his
disputed claims, respectfully represents:
BACKGROUND
1.
On September 25, 2008, the Office of Thrift Supervision, by order number 2008-
36, closed Washington Mutual Bank (“WMB”), appointed the Federal Deposit Insurance
Corporation (the “FDIC”) as receiver for WMB (the “FDIC Receiver”) and advised that the
FDIC Receiver was immediately taking possession of WMB’s assets. On or about September
25, 2008, the FDIC Receiver, the FDIC, in its corporate capacity, and JPMorgan Chase Bank,
N.A. (“JPMC”) entered into that certain Purchase and Assumption Agreement, Whole Bank,
dated September 25, 2008, as amended, modified or supplemented prior to the date hereof.
1
The Debtors in these chapter 11 cases along with the last four digits of each Debtor’s federal tax identification
number are: (i) Washington Mutual, Inc. (3725); and (ii) WMI Investment Corp. (5395). The principal offices of
WMILT, as defined herein, are located at 1201 Third Avenue, Suite 3000, Seattle, Washington 98101.
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2.
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On September 26, 2008 (the “Petition Date”), each of the Debtors commenced
with the Court a voluntary case pursuant to chapter 11 of title 11 of the United States Code (the
“Bankruptcy Code”).
3.
On December 2, 2011, the Debtors filed their Seventh Amended Joint Plan of
Affiliated Debtors Pursuant to Chapter 11 of the United State Bankruptcy Code [D.I. 9178] (as
modified, the “Plan”). By order, dated February 23, 2012 [D.I. 9759], this Court confirmed the
Plan (the “Confirmation Order”) and, upon satisfaction or waiver of the conditions described in
the Plan, the transactions contemplated by the Plan were consummated on March 19, 2012 (the
“Effective Date”).
4.
On the Effective Date, WMILT filed that certain Notice of (a) Entry of Order
Confirming the Seventh Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the
United States Bankruptcy Court and (b) Occurrences of the Effective Date [D.I. 9933] (the
“Notice of Effective Date”). The Notice of Effective Date was served in accordance with the
provisions of the Confirmation Order and applicable Federal Rules of Bankruptcy Procedure and
Local Rules for the United States District Court for the District of Delaware.
5.
Pursuant to the Notice of Effective Date, and in accordance with Article III of the
Plan and paragraph 47 of the Confirmation Order, the Court established June 17, 2012 as the
deadline for filing administrative expense requests (the “Administrative Bar Date”).
6.
On or about June 19, 2012, two (2) days following the Administrative Bar Date,
Kareem filed two proofs of claim, Claim Nos. 4095 and 4096 (collectively, the “Claims”), each
asserting a priority claim in the amount of $188,000.00 for damages allegedly associated with a
mortgage which, according to Kareem, had been executed by Kareem in favor of WMB prior to
the Petition Date.
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Pursuant to the Seventy-Eighth Omnibus Objection, dated July 31, 2012
[D.I. 10472], WMILT objected to the Claims and stated as follows:
16. Finally, the remaining two expense requests, which are
duplicative of each other, filed as administrative expense claims,
listed on Exhibit D, should be also disallowed. The “expense
requests” appear to be claims arising from allegedly wrongful
foreclosures and Truth-In-Lending-Act violations, relating to a
mortgage entered into in August 2007 between the claimant and
Washington Mutual Bank, FA (“WMB”). All of the attached
supporting documentation clearly references WMB as the
contracting party. There is no subsection of section 503 of the
Bankruptcy Code under which the request would qualify as a
valid administrative expense.
Seventy-Eighth Omnibus Objection, ¶ 16.
8.
On August 16, 2012, Kareem opposed the relief requested in the Seventy-Eighth
Omnibus Objection [D.I. 10514]. As a result, pursuant to this Court’s order, dated August 27,
2012 [D.I. 10533], (a) the Seventy-Eighth Omnibus Objection was granted with respect to all
other proofs of claim objected to therein and (b) a hearing with respect to the Claims was
scheduled.
9.
Thereafter, Kareem served a discovery request upon WMILT. Based upon the
pendency of the employee claims litigation, such discovery request and a hearing to consider the
validity of the Claims have been continued to a date to be determined.
The Motion
10. Pursuant to the Motion, Kareem requests a settlement conference in an effort to
reach an amicable resolution of the Claims. In support thereof, Kareem asserts that he has tried
to reach counsel for WMILT and that, despite his efforts, all attempts for a dialogue have been
unsuccessful.
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11. Such statement is inaccurate. Specifically, by email correspondence, dated
February 24, 2015 and March 2, 2015, Kareem suggested having a settlement discussion. On
March 3, 2015, WMILT responded and informed Kareem that (a) neither the Debtors nor
WMILT were in the business of issuing or servicing mortgages, (b) the Court had made such a
determination throughout the Debtors’ chapter 11 cases and (c) WMILT had informed JPMC, the
purchaser of WMB’s assets, of Kareem’s interest and was awaiting a response. A copy of such
email correspondence is annexed hereto as Exhibit A.
12. WMILT has been informed that JPMC and Kareem are engaged in litigation
concerning these issues in the United States District Court for the Southern District of Ohio.
Therein, Kareem’s complaint, once dismissed, but permitted to be amended, is the subject of a
pending motion to dismiss. A copy of the amended complaint and the pending motion to dismiss
are annexed hereto as Exhibits B and C, respectively.
WITHOUT JPMC, A CONFERENCE WILL NOT YIELD A RESOLUTION
13. The Claims, acknowledged to have been filed beyond the Administrative Bar
Date and years after the applicable claims bar date for general unsecured claims, are “wrong
party” claims and have nothing to do with the Debtors or WMILT. Rather, they relate to the
business formerly undertaken by WMB, not the Debtors, and are one of many independent steps
undertaken by Kareem as a result of his home, according to the pending litigation, having being
foreclosed upon.
14. While WMILT appreciates Kareem’s unfortunate circumstances, as it has told
Kareem on several occasions, WMILT is not in a position to settle the Claims, like so many
others which have been expunged by the Court, for which the Debtors have no liability or
responsibility. Thus, although WMILT is prepared to discuss the Claims with Kareem, it is not
prepared to provide any recovery on account thereof.
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15. Conversely, JPMC is a party to pending litigation with Kareem. As purchaser of
WMB’s assets, JPMC has knowledge of the facts and circumstances attendant to the foreclosure.
If Kareem is desirous of reaching an amicable resolution as suggested, any dialogue needs to be
with or include JPMC.
WHEREFORE WMILT respectfully suggests that the Motion be denied in its
entirety and that WMILT be granted such other and further relief as is just.
Dated: April 15, 2015
Wilmington, Delaware
/s/ Amanda R. Steele
Mark D. Collins (No. 2981)
Paul N. Heath (No. 3704)
Amanda R. Steele (No. 5530)
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 North King Street
Wilmington, Delaware 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
– and –
Brian S. Rosen, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsímile: (212) 310-8007
Attorneys to the WMI Liquidating Trust
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Exhibit A
Email Correspondence
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Georgallas, Andriana
From:
Sent:
To:
Subject:
[email protected]
Tuesday, February 24, 2015 12:28 PM
[email protected]; Georgallas, Andriana
Early Settlement Talks on WaMu Trust Claims # 4095 & 4096
Ms. Andriana Georgallas,
Good Afternoon Counsel:
My name is Hussain Kareem and I have pending claims in the current WaMu Liquidating Ztrust Case No. 0812229. I am interested in pursuing an early Settlement Discussion. I contacted the Court and it was suggested by
the Bankruptcy Court that I get in contact with you about opening the initial dialogue.
Background:
My Claim involves a Truth-In-Lending Rescission Violation that occurred prior to the FDIC takeover of the
Bank Division. Not withstanding all of the background issues, it would be prudent to discuss resolving the
matter in an efficient manner. I am seeking a written declaration from the Plan Trustee that WaMu express no
interests in the underlying mortgage recorded against my property. That declaration would allow me to clear
title conflicts and other related damages. Neither FDIC nor Wamu has made an assignment of interest to any
other entities, So my land records shows that WaMu holds interest in the mortgage. Therefore, by removing
WaMu's claim on the mortgage, this should resolve my concerns. This lien has been unresolved in over 7 years.
It is preventing me from gaining any type of refinance.
For my part, I would consider dropping all claims, monetarily or otherwise.
Please indicate a time when we might be able to discuss in details.
I can be reached at the following:
Hussain Kareem
Phone: 678-308-0935
Email: [email protected]
Please advise.
Hussain Kareem
Claimant
____________________________________________________________
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From:
Sent:
To:
Cc:
Subject:
Rosen, Brian
Tuesday, March 03, 2015 11:49 AM
[email protected]
RE: Potenitial Settlement Discussion Outside of the Court
Mr. Kareem, Your email correspondence has been forwarded to my attention. As you are well aware, Washington Mutual, Inc. and its successor WMI Liquidating Trust cannot address your issue. Neither was or is in the business of issuing or servicing mortgages. The Bankruptcy Court has found this to be true several times already and expunged proofs of claim filed in connection with such allegations. To assist you, we have referred the matter to counsel for JPMorgan Chase Bank, the purchaser of the assets of Washington Mutual Bank. If and to the extent that we receive a response, we will forward that information to you. Brian Rosen Brian S. Rosen
Partner
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
[email protected]
+1 212 310 8602 Direct
+1 914 393 3040 Mobile
+1 212 310 8007 Fax From: "[email protected]" <[email protected]>
Date: March 2, 2015 at 7:37:22 PM EST
To: <[email protected]>
Subject: Potenitial Settlement Discussion Outside of the Court
Andriana:
I have left messages in an effort to resolve my claim in the WaMu Liquidation Trust case. Please
let me know if there is any interests to discuss and resolve outside of the court. I promise you
that I shall give you simple and straight forward considerations for the mutual benefit.
Please confirm receipt and advise accordingly.
Hussain Kareem
Claim No. 4095 & 4096
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Exhibit B
Amended Complaint
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Exhibit C
Motion to Dismiss
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
HUSSAIN KAREEM,
:
:
Plaintiff,
:
:
vs.
:
:
JPMORGAN CHASE BANK, N.A., :
:
Defendant.
:
CASE NO. 2:14-cv-252
Judge George C. Smith
Magistrate Judge Terence P.
Kemp
DEFENDANT JPMORGAN CHASE BANK, N.A.’S MOTION TO
DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT
Now comes Defendant JPMorgan Chase Bank, N.A. (“Chase”), by and
through counsel, and hereby moves the Court for an Order dismissing the
First Amended Complaint (the “Complaint”) filed by Plaintiff Hussain
Kareem (“Kareem”). Specifically, Chase requests that the Court dismiss the
Complaint pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim
upon which relief can be granted. A Memorandum in Support of this Motion
follows.
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Respectfully submitted,
s/ Daniel C. Gibson
(0080129)
Daniel C. Gibson (0080129)
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215
Telephone: (614) 227-2300
Facsimile: (614) 227-2390
Trial Attorney for Defendant
JPMorgan Chase Bank, N.A.
OF COUNSEL:
Nelson M. Reid
(0068434)
Columbus, Ohio 43215-4291
Telephone: (614) 227-2300
Facsimile: (614) 227-2390
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MEMORANDUM IN SUPPORT
I.
INTRODUCTION
Plaintiff Hussain Kareem (“Kareem”) filed a complaint against
JPMorgan Chase Bank, N.A. (“Chase”), on or about March 17, 2014,
purporting to allege against Chase three claims for relief. On January 28,
2015, the Court granted Chase’s Motion to Dismiss and dismissed all three of
Kareem’s original claims, but also granted Kareem leave to file an amended
complaint as to certain claims. See, Decision, Doc. #41. The Court’s Decision
specifically limited Kareem’s right to amend to include “causes of action
against Chase for violating the Fair Credit Reporting Act, engaging in
deceptive business practices under the Georgia Fair Business Practices Act,
trespassing, and declaratory judgment.” Id. at 22. The Court indicated that
it “will consider only these claims going forward.” Id.
On February 20, 2015, Kareem filed his First Amended Complaint (the
“Complaint”), purporting to allege causes of action against Chase for (1)
“encroachment for conversion and trover for purposes of unjust enrichment,”
(which Chase construes to be the claim for trespass permitted by the Court);
(2) violations of the Georgia Fair Business Practices Act (“GFBPA”) [OCGA
§ 10-1-391 et seq.]; (3) violations of the Fair Credit Reporting Act (“FCRA”)
[15 U.S.C. § 1681, et seq.]; and (4) declaratory judgment.
The Amended
Complaint fails to state a claim upon which relief could be granted, and as a
result should be dismissed.
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Specifically, the trespass claim fails because Kareem does not allege a
valid property interest nor does he allege unlawful entry. The GFBPA claim
fails because Kareem has not alleged a qualifying consumer transaction, nor
has he alleged the breach of a duty owed by Chase to the consuming public in
general. The FCRA claim fails because the statute does not provide a right of
action for alleged wrongful credit reporting, and Kareem has failed to allege
the elements of an action for violating duties arising after notice of dispute.
And Kareem’s claim for declaratory judgment should be dismissed, because it
fails to satisfy the Grand Trunk factors.
Because each of the claims alleged in Kareem’s Complaint fails as a
matter of law such that Kareem would not be entitled to any relief even if he
proved his allegations, the Complaint should be dismissed in its entirety,
with prejudice, for failure to state a claim for relief pursuant to Civ. R.
12(b)(6).
II.
STANDARD OF REVIEW
A complaint cannot survive a Rule 12(b)(6) motion to dismiss unless
there are allegations of fact that, when taken as true, “state a claim for relief
that is plausible on its face.” Bell Atlantic v. Twombly, 550 U.S. 544, 570
(2007).
This “entitlement to relief” requires “more than labels and
conclusions, and a formulaic recitation of a cause of action’s elements will not
do.”
Twombly, 550 U.S. at 554-55.
Hence, the complaint must contain
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sufficient factual allegations to raise a right to relief above a speculative
level. Id.
In Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), the U.S. Supreme Court
reaffirmed the requirement that a complaint contain allegations of fact to
support the elements of a claim:
To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to “state a
claim to relief that is plausible on its face.”…A claim has
facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.
…Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.
Iqbal at 678.
A court should not accept the “bare assertion of legal
conclusions,” Columbia Nat. Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir.
1995), nor make “unwarranted factual inferences.” Morgan v. Church’s Fried
Chicken, 829 F.2d 10, 12 (6th Cir. 1987).
III.
ARGUMENT
A.
First Cause of Action: Kareem fails to state a claim for
trespass under Georgia law 1
In order to state a claim for trespass under Georgia law, a plaintiff
must allege that he was the true owner of the property or that he was in
lawful possession at the time of the trespass. Duncan v. CitiMortgage, Inc.,
To the extent Kareem is purporting to allege anything other than a claim for
trespass, (e.g., unjust enrichment, conversion, etc.), Chase hereby moves to strike
such allegations as contrary to the Court’s Order declaring that it “will consider only
[the four claims identified herein] going forward.” Decision, Doc. #41, p. 22.
1
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No. 1:13-cv-01493, 2013 U.S. Dist. LEXIS 183623, *21 (N.D. Ga., Dec. 20,
2013). In addition, a trespass will only occur when a person “knowingly and
without authority enters upon the land of another after having received prior
notice that such entry is forbidden.” Pope v. Pulte Home Corp., 246 Ga. App.
120, 120, 539 S.E.2d 842 (Ct. App. Ga., 2000). Kareem has failed to allege a
trespass.
1. Kareem’s own allegations reveal that he has no
standing to assert a trespass
Kareem has acknowledged that the property in question was already
sold at foreclosure sale by the time of the alleged trespass, and he alleges
throughout his Complaint that Chase’s purported trespass is entirely the
product of its alleged lack of legal rights to enter on the property, all
resulting from the failure of the FDIC and/or Washington Mutual to assign to
Chase the rights in his mortgage/the property. See, e.g., Original Complaint,
Doc. #1-2, ¶ 11; Proposed Amended Complaint, Doc. #34-1, ¶ 26; Complaint,
Doc. #44, ¶¶ 25-27, 35, 40.
Georgia law is clear not only that ownership or lawful possession is a
prerequisite to a claim for trespass, but also that the foreclosure sale of
property divested Kareem of any ownership interest unless and until such
sale is set aside. Duncan at *22-23. While Kareem collaterally challenges
the foreclosure as improper and even suggests that he is (improperly) seeking
relief from the state foreclosure judgment, he never alleges that the
foreclosure sale has, in fact, ever been set aside. See, e.g., Complaint, p. 1.
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As a result, Kareem’s own allegations show that he is not and could not have
been the owner or in lawful possession of the property at the time of the
alleged trespass.
Kareem’s trespass claim is not based on an allegation that he still
legally owns the property, but rather only that Chase does not own it due to
lack of proper assignment of rights, and thus had no authority to enter. But,
that will not sustain a claim for trespass under Georgia law.
2. Kareem fails to allege unlawful entry in any event
Even if Kareem had plausibly alleged that he was the legal owner of
the property at the time of the alleged trespass, which he has not, he has
nonetheless failed to allege facts giving rise to a trespass. Specifically, he
fails to allege that Chase or its agents entered onto the property “without
authority,” let alone that they did so after having received “prior notice that
such entry is forbidden.” Pope at 120.
According to Kareem, the acts of trespass were: (1) an alleged August
23, 2011 visit to the property by a realtor to offer cash-for-keys to the
“dwellers”; (2) alleged written letters and statements in court by Chase that
it had WaMu’s enforcement rights under the PAA, including the filing of two
dispossessory actions; and (3) an alleged February 6, 2014 notice of intent to
evict. Complaint, ¶¶ 36-39.
Not one of these allegations could plausibly support a claim for
trespass.
First, Kareem makes no allegation that prior notice forbidding
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entry was ever conveyed to Chase or its alleged agents. That alone defeats
the claim. Second, none of the alleged trespasses could plausibly amount to
an unlawful entry, particularly since written letters, statements in court, and
notices are not, themselves, even entry upon the property. Moreover, the sole
alleged “entry” is described by Kareem himself as objectionable solely because
he believes that Chase lacked the legal authority to offer cash-for-keys, not
because Chase’s alleged agents were actually breaking the law by being
physically present on the property to make the alleged offer.
See, e.g.,
Complaint, ¶¶ 36-37, 40.
Kareem implicitly acknowledges that he was not the owner or lawful
possessor of the property at the time of the alleged trespass and fails to allege
that Chase was ever given notice that it was forbidden to enter or otherwise
acted unlawfully. The trespass claim should be dismissed.
B.
Second Cause of Action: Kareem fails to state a claim for
violation of Georgia’s Fair Business Practices Act
The GFBPA prohibits “[u]nfair or deceptive acts or practices in the
conduct of consumer transactions and consumer acts or practices in trade or
commerce….” O.C.G.A. § 10-1-393(a). A “consumer transaction” is “the sale,
purchase, lease, or rental of goods, services, or property, real or personal,
primarily for personal, family, or household purposes.”
392(a)(10).
O.C.G.A. § 10-1-
And “consumer acts or practices” are simply those acts or
practices “intended to encourage consumer transactions.” O.C.G.A. § 10-1-
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392(a)(7). A private action to enforce the GFBPA may be brought pursuant to
O.C.G.A. § 10-1-399.
However, “[p]rivate suits brought pursuant to O.C.G.A. § 10-1-399 of
the FBPA ‘must serve the public interest and implement the purposes of the
FBPA—to end unfair or deceptive acts or practices in the consumer
marketplace.” Gross v. Ideal Pool Corp., 181 Ga. App. 483, 484, 352 S.E.2d
806 (Ct. App. Ga., 1987). Thus, the act or practice must be one that “had or
has potential harmful effect on the general consuming public,” and “[o]ne
may bring a private suit…only if he is individually injured by the breach of a
duty owed to the consuming public in general.” Id.
1. Kareem fails to allege a “consumer transaction”
As an initial matter, Kareem has failed to alleged facts describing
anything even remotely resembling a “consumer transaction” as that term is
defined in the GFBPA. In fact, Kareem goes to great pains to claim in his
Complaint that he has no transactional relationship with Chase whatsoever,
let alone that he consummated with Chase “the sale, purchase, lease, or
rental of goods, services, or property, real or personal, primarily for personal,
family, or household purposes.” See, e.g., Complaint, ¶¶ 11, 17.
Instead, Kareem alleges that Chase violated the GFBPA by falsely
asserting that it had rights with respect to the property and misrepresented
its “status and involvement” in the foreclosure action giving rise to the sale of
that property in a March 17, 2014 letter. See, e.g., Complaint, ¶¶ 55-56, 58,
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60. Even if true, such alleged facts would not support a finding that Kareem
and Chase had engaged in a “consumer transaction” under the GFBPA.
2. Kareem fails to allege a violation of a duty owed to the
consuming public in general
Even if Kareem had properly alleged a “consumer transaction” with
Chase, “Georgia courts have routinely held that contractual relationships
between private parties are not subject to the provisions of the GFBPA.”
Saulsberry v. Morinda, Inc., 1:07-cv-1542, 2008 U.S. Dist. LEXIS 10512, *11
(N.D. Ga., Feb. 13, 2008). “The GFBPA applies solely to relationships with
the consuming public.” Id. at *9. In making that determination, Georgia
courts consider both “(a) the medium through which the act or practice is
introduced into the stream of commerce; and (b) the market on which the act
or practice is reasonably intended to impact.” Gross at 485.
Kareem fails to identify a single act or practice of Chase that concerns
its relationship with the consuming public in general as opposed to its
relationship
with
Kareem
in
particular—whatever
he
alleges
that
relationship may be. Indeed, Chase’s March 17, 2014 letter, the sole factual
basis for his claim, was never even alleged to have been “introduced into the
stream of commerce,” and even if it had been, neither the medium, (a private
letter to Kareem), nor the market for which the impact was intended (only
Kareem himself), supports a finding of a “breach of a duty owed to the
consuming public in general.” Kareem’s GFBPA claim should be dismissed.
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C.
Third Cause of Action: Kareem fails to state a claim for
violation of the FCRA
1. Kareem possesses no right of action under 15 U.S.C.
§ 1681s-2(a)
Kareem has purported to allege a claim for violation of the FCRA
based on alleged false reporting of credit information by Chase. Complaint,
¶¶ 61-62.
However, 15 U.S.C. § 1681s-2(a), which is the provision of the
FCRA governing the accuracy of credit reporting by alleged furnishers,
specifically does not allow a consumer to bring a private cause of action for
alleged violations. See, 15 U.S.C. § 1681s-2(c) (providing that the liability
provisions of the statute do not apply to “any violation of--(1) subsection (a) of
this section, including any regulations issued thereunder…”); Mattison v.
PNC Bank, N.A., No. 3:13-cv-061, 2013 U.S. Dist. LEXIS 106721, *19 (S.D.
Ohio, July 30, 2013); Ogle v. BAC Home Loans Servicing LP, 924 F.Supp. 2d
902, 912 (S.D. Ohio 2013)(Smith, J.). For this reason alone, Kareem’s FCRA
claim fails and should be dismissed.
2. Kareem fails to allege the elements of a claim under 15
U.S.C. § 1681s-2(b)
While the FCRA does provide for a private cause of action for
violations of 15 U.S.C. § 1681s-2(b), Kareem has failed to plead facts that
could plausibly support such a claim.
Specifically, Kareem has failed to
allege that Chase ever had any duties under subsection (b), let alone that it
willfully failed to comply with them.
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In order to survive dismissal of a claim under § 1681s-2(b), a plaintiff
must allege that the furnisher (Chase) received a notice “from a consumer
reporting agency [a “CRA”], not the plaintiff, that the credit information is
disputed,” and that upon receipt the furnisher acted with “reckless disregard”
in performing the duties listed in § 1681s-2(b). Ogle at 912 (quoting Downs v.
Clayton Homes, Inc., 88 Fed App’x 851, 853-54 (6th Cir. 2004)).
The
statutory duties do not even arise until “after [a furnisher] receives notice of a
dispute from a credit reporting agency,” and a “failure to allege that the
credit reporting agency notified [the furnisher] of the disputed information is
fatal to [a plaintiff’s] FCRA claim.” Id.
Kareem alleges that Chase made false credit reports “as though it
serviced and foreclosed on Mr. Kareem’s property,” that as a result he was
“coerced to file challenge letters” to a number of consumer reporting agencies,
and that Chase has not corrected the derogatory credit bureau reports.”
Complaint, ¶¶ 61-62. Nowhere does Kareem allege that Chase received a
notice of dispute, let alone that Chase received such notice from a CRA.
Nowhere does Kareem allege that Chase failed to conduct an investigation, to
review all relevant information, or to otherwise act in accordance with
§ 1681s-2(b).
In fact, Kareem’s allegations don’t even support the inference that his
credit was falsely reported—only that he doesn’t believe Chase was the
proper entity to furnish the reports. But that is neither here nor there—
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§ 1681s-2(b) is about duties of furnishers “upon notice of dispute,” and
Kareem has not alleged the requisite notice, let alone a breach of the duties
that would arise thereafter. The FCRA claim should be dismissed.
D.
Fourth Cause of Action: The Court should dismiss
Kareem’s request for declaratory judgment
Kareem’s final purported cause of action seeks a declaratory judgment
pursuant to 28 U.S.C. § 2201.2 The Court should exercise its substantial
discretion and decline to declare the rights of the litigants in this case,
because to do so would be inappropriate and useless.
The Declaratory Judgment Act “vests federal courts with ‘unique and
substantial discretion in deciding whether to declare the rights of litigants.’”
Liberty Mutual Fire Ins. Co. v. Bohms, No. 11-2083, 2012 U.S. App. LEXIS
15599, **8 (6th Cir. 2012). Five factors are relevant in the exercise of that
discretion:
(1) whether the declaratory action would settle the controversy;
(2) whether the declaratory action would serve a useful purpose in
clarifying the legal relations in issue;
(3) whether the declaratory remedy is being used merely for the
purpose of “procedural fencing” or “to provide an arena for res
judicata;”
(4) whether the use of a declaratory action would increase friction
between our federal and state courts and improperly encroach upon
state jurisdiction; and
(5) whether there is an alternative remedy which is better or more
effective.
2
Kareem mistakenly refers to 28 U.S.C. § 2001. See, Complaint, ¶ 68
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Bohms at **8-9 (citing Grand Trunk W. R.R. Co. v. Consol. Rail Co., 746 F.2d
323, 326 (6th Cir. 1984).
Kareem seeks declaratory judgment on a host of issues, none of which
comes close to satisfying one, let alone all, of the foregoing Grand Trunk
factors.
Specifically, Kareem seeks a declaration concerning: (i) whether
Chase is liable for false statements, including (ii) false statements made in
the use of the U.S. mail; (iii) whether Chase is prohibited by Georgia’s twodismissal rule from bringing another dispossessory action in Georgia state
court; (iv) whether Chase breached its National Mortgage Settlement and
Independent Foreclosure Review obligations constituting negligence per se
under Georgia law; (v) whether Chase is “liable the purchaser [sic] under the
PAA of Mr. Kareem’s loan”; (vi) whether Kareem has injured Chase in any
capacity; and (vii) a judgment for unjust enrichment against Chase.
A declaration by this Court would not settle the controversy between
the parties, nor would it serve a useful, clarifying purpose.
None of the
questions presented actually resolves the underlying dispute over Mr.
Kareem’s property in Georgia and whether or not Chase is the lawful, postforeclosure owner of that property. Any future dispossessory proceedings will
be resolved by the Georgia courts according to Georgia law.
More
importantly, Kareem’s request is transparently an attempt to secure res
judicata on certain issues without having to litigate actual claims, as
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evidenced by Kareem’s own language seeking declarations of “liability.” See,
e.g., Complaint, ¶ 69 (i), (ii), (iv), and (vii).
In addition, resolving some of the issues raised would create friction
with the Georgia state courts and encroach on their jurisdiction. See, e.g.,
Complaint, ¶ 69 (iii) (asking the Court to apply Georgia’s two-dismissal rule
in order to bar any further state court dispossessory actions) and (iv) (asking
the Court to determine whether Chase’s actions are negligence per se under
Georgia law). As in Grand Trunk, the state court proceedings will continue
regardless of what this Court does, and any effect of this Court’s ruling on a
matter involved in that proceeding would be “unclear.” Grand Trunk at 326.
But perhaps most importantly, all of Kareem’s requests could have
been pursued via an “alternative remedy which is better or more effective.”
“Courts deny declaratory relief if an alternative remedy is better or more
effective.” Grand Trunk at 326. All of Kareem’s requests concerning liability
for alleged false statements, negligence per se, and/or unjust enrichment
could have been pursued via causes of action for damages if Kareem had pled
them properly. His failure to do so is not a justification for asking this Court
to render a declaratory judgment that serves as a backdoor means of pleading
those claims without having to allege the elements. Indeed, if taken as pled
in the Complaint, they would be dismissed summarily for failure to state a
claim.
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And the remaining requests are, on their face, not even ripe for
review, even if they were otherwise susceptible to declaratory judgment
review.
Whether Georgia’s two-dismissal rule bars another dispossessory
action in state court can and will be litigated if and when such action arises
and Kareem makes his argument in defense. Chase’s rights and obligations
under the PAA will only be at issue if and when Chase actually asserts a
right under the PAA or is alleged to have breached a duty owed under it by a
party with standing to claim a breach. And a determination as to whether
Kareem has injured Chase in any capacity is not ripe for adjudication unless
and until Chase asserts a claim against Kareem seeking to recover for any
alleged injury he has caused.
There simply is no legal basis, let alone practical justification, for this
Court to exercise its discretion in favor of rendering a declaratory judgment
in this case.
Especially because all of Kareem’s other claims are legally
deficient as a matter of law and should be dismissed as well, there is no
reason to permit the declaratory judgment claim to proceed.
IV.
CONCLUSION
For the foregoing reasons, Chase respectfully requests that the Court
dismiss with prejudice Kareem’s Complaint in its entirety, for failure to state
a claim pursuant to Fed. R. Civ. P. 12(b)(6).
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Respectfully submitted,
s/ Daniel C. Gibson
(0080129)
Columbus, Ohio 43215
Telephone: (614) 227-2300
Facsimile: (614) 227-2390
Trial Attorney for Defendant JPMorgan Chase
Bank, N.A.
OF COUNSEL:
Nelson M. Reid
(0068434)
Columbus, Ohio 43215-4291
Telephone: (614) 227-2300
Facsimile: (614) 227-2390
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CERTIFICATE OF SERVICE
I hereby certify that on the 18th day of March, 2015, I electronically
filed the foregoing with the Clerk of the Court using the CM/ECF electronic
system. Parties were served electronically by the Court's CM/ECF electronic
system. In addition, a copy of the foregoing was served via first class mail on
the following:
Hussain Kareem
2197 Carlysle Creek Drive
Lawrenceville, GA 30044
s/ Daniel C. Gibson
8655043v1
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Response of WMI Liquidating Trust with Respect to Motion of

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