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Scott v. Bank of America

United States District Court, Third Circuit

November 21, 2013

SELENA A. SCOTT, Plaintiff,
BANK OF AMERICA, et al., Defendants.


GENE E.K. PRATTER, United States District Judge

In her Amended Complaint, Selena Scott brings several claims against Bank of America, Bank of America Consumer Credit, Bank of America Funding, and Cavalry SPV based on attempts to collect on her defaulted credit card account after the receivables of that account had been securitized. Defendants have moved to dismiss each of her claims. For the following reasons, the Court will grant Defendants’ motions and dismiss Ms. Scott’s Amended Complaint.


On October 4, 2005, Ms. Scott opened a Bank of America credit card account for “personal and household purposes.” At various times she had a debit balance on the account. Ms. Scott asserts that when Bank of America securitized its credit card receivables by selling them to a trust in 2006, it relinquished ownership of her account. Therefore, she alleges, Bank of America was neither entitled to continue to accept payments on the account, nor was it entitled, once her account was in default, to sell her account to Defendant Cavalry.

In 2011, after Ms. Scott had defaulted on her account, Bank of America allegedly sold the account to Cavalry. Cavalry then filed a collection action against Ms. Scott in an attempt to collect the defaulted credit card debt.[1] After Ms. Scott’s attorney called Cavalry’s counsel and informed him that Bank of America “was not the real party in interest, ” Cavalry withdrew that case. See Am. Compl. ¶¶ 34-35.

In her initial Complaint, Ms. Scott, on behalf of herself and ostensibly on behalf of others similarly situated, filed suit against Cavalry, Bank of America, Bank of America Consumer Credit, and Bank of America Funding, alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p, and the Pennsylvania Fair Credit Extension Uniformity Act (“FCEUA”), 73 P.S. §§ 2270.1-2270.6, as well as state law claims for unjust enrichment and intentional infliction of emotional distress. After Defendants filed motions to dismiss that Complaint, Ms. Scott filed an Amended Complaint asserting violations of the FDCPA, the FCEUA, the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968, and the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 P.S. §§ 201-1 thru 201-9.3, as well as state law unjust enrichment and negligent infliction of emotional distress claims. Defendants again moved to dismiss.

Legal Standard

A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint. Although Rule 8 of the Federal Rules of Civil Procedure requires only “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed. R. Civ. P. 8(a)(2), in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests, ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and quotations omitted) (alteration in original), the plaintiff must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. (citation omitted).

To survive a motion to dismiss, the plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Specifically, “[f]actual allegations must be enough to raise a right to relief above the speculative level . . . .” Twombly, 550 U.S. at 555 (citations omitted). The question is not whether the claimant will ultimately prevail but whether the complaint is “sufficient to cross the federal court’s threshold.” Skinner v. Switzer, 131 S.Ct. 1289, 1296 (2011) (citation omitted). An assessment of the sufficiency of a complaint is thus “a context-dependent exercise” because “[s]ome claims require more factual explication than others to state a plausible claim for relief.” W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir. 2010) (citations omitted).

In evaluating the sufficiency of a complaint, the Court adheres to certain well-recognized parameters. For one, the Court “must only consider those facts alleged in the complaint and accept all of the allegations as true.” ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994) (citing Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)); see also Twombly, 550 U.S. at 555 (stating that courts must assume that “all the allegations in the complaint are true (even if doubtful in fact)”); Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010) (“[A] court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant’s claims are based upon these documents.”). The Court also must accept as true all reasonable inferences that may be drawn from the allegations, and view those facts and inferences in the light most favorable to the non-moving party. See Rocks v. City of Phila., 868 F.2d 644, 645 (3d Cir. 1989); see also Revell v. Port Auth. of N.Y. & N.J., 598 F.3d 128, 134 (3d Cir. 2010). That admonition does not demand the Court turn its back on reality. The Court need not accept as true “unsupported conclusions and unwarranted inferences, ” Doug Grant, Inc. v. Greate Bay Casino Corp., 232 F.3d 173, 183– 84 (3d Cir. 2000) (citations and quotations omitted), or a plaintiff's “bald assertions” or “legal conclusions, ” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (citations and quotations omitted).


Defendants move to dismiss each of Ms. Scott’s claims, advancing multiple arguments for dismissal for each individual cause of action. Ms. Scott, rather than addressing many of the Defendants’ legal arguments directly, spends several pages of her opposition explaining the securitization process and, without any legal citations, explaining why she believes that securitizing credit card receivables necessarily divests the issuing company of any ownership interest in the account. Because each of Ms. Scott’s claims depends on the validity of her securitization theory, the Court will focus on that issue.[2]

Defendants[3] argue that courts across the country, in both mortgage and credit card cases, have rejected unequivocally the idea that securitizing receivables changes the relationship between a debtor and a creditor. See, e.g., Batchelor v. Wells Fargo Bank, N.A., No. 12-14835, 2013 WL 1499583, at *3 (E.D. Mich. Mar. 15, 2013) (“Plaintiff’s argument – that Defendant’s securitization of his loan relieved him of his obligation to pay on the note – has been consistently rejected by judges in this district and nationwide.”); Bhatti v. Guild Mortgage Co., No. 11-0480, 2011 WL 6300229, at *5 (W.D. Wash. Dec. 16, 2011) (“Securitization merely creates a separate contract, distinct from Plaintiffs’ debt obligations under the Note, and does not change the relationship of the parties in any way.”); Tostado v. Citibank (South Dakota), N.A., No. 09-549XR, 2010 WL 55976, at *3 (W.D. Tex. Jan. 4, 2010) (finding that the language in Citibank’s pooling and servicing agreement made clear that Citibank only securitized the receivables to plaintiff’s account and that therefore Citibank retained ownership of the accounts themselves and could collect on those accounts once they were in default); Shade v. Bank of America, No. 08-1069, 2009 WL 5198176, at *3-4 (E.D. Cal. Dec. 23, 2009) (“Plaintiff has also failed to demonstrate how defendants’ efforts to collect on an overdue credit card account constitutes fraud, even where the account may have been securitized . . . [P]laintiff has provided no binding legal authority for his theory that because Bank of America securitized the account balances, it was no longer the real party in interest and could not assign the debt for collection to other defendants”).[4]

More specifically, the Bank Defendants point to the Pooling and Servicing Agreement attached to Plaintiff’s Complaint and referenced in her Amended Complaint, [5] which, like the agreement discussed in Tostado, 2010 WL 55976, makes clear that only receivables, not entire accounts, are sold in the securitization process. See Compl., Ex. B, at § 2.01 “Conveyance of Receivables.” Even if, somehow, ownership of the account without the receivable was not enough, the Pooling and Servicing Agreement provides that if an account falls into default and has all its receivables charged off as uncollectible, those ...

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