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Don’t Blame Him, It Was People Madness

As William Erbey’s $3 billion dollar admonished Ocwen prey on the American Homeowner after the 2008 Financial Crisis, the executioners, the Judiciary praises Erbey and his criminal organization.

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on

No. 17-2471

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

City of Cambridge Ret. Sys. v. Altisource Asset Mgmt. Corp

 908 F.3d 872 (3d Cir. 2018)

The Third Circuits’ Admiring Tale About William Erbey’s Criminal Organization

Decided Nov 14, 2018

CITY OF CAMBRIDGE RETIREMENT SYSTEM, On behalf of itself and all others similarly situated, et al. v. ALTISOURCE ASSET MANAGEMENT CORP; William C. Erbey; Kenneth Najour; Ashish Pandey; Robin Lowe, Denver Employee Retirement Plan, Appellant

Steve W. Berman, Esq., Hagens Berman Sobol Shapiro, 1301 2nd Avenue, Suite 2000, Seattle, WA 98101, Vincent A. Colianni, II, Esq., Colianni & Colianni, 1138 King Street, Christiansted, VI 00820, Kevin K. Green, Esq. [ARGUED], Hagens Berman Sobol Shapiro, 533 F Street, Suite 207, San Diego, CA 92101, Counsel for Appellant Walter C. Carlson, Esq. [ARGUED], Sidley Austin, One South Dearborn Street, Chicago, IL 60603, Chad C. Messier, Esq., Dudley Topper & Feuerzeig, 1000 Frederiksberg Gade, P.O. Box 756, St. Thomas, VI 00804, David S. Petron, Esq., Sidley Austin, 1501 K Street, N.W., Washington, DC 20005, Counsel for Appellee Altisource Asset Management Corp John L. Hardiman, Esq., Julia A. Malkina, Esq., Sullivan & Cromwell, 125 Broad Street, New York, NY 10004, Counsel for Appellee William C. Erbey

FISHER, Circuit Judge.

Steve W. Berman, Esq., Hagens Berman Sobol Shapiro, 1301 2nd Avenue, Suite 2000, Seattle, WA 98101, Vincent A. Colianni, II, Esq., Colianni & Colianni, 1138 King Street, Christiansted, VI 00820, Kevin K. Green, Esq. [ARGUED], Hagens Berman Sobol Shapiro, 533 F Street, Suite 207, San Diego, CA 92101, Counsel for Appellant

Walter C. Carlson, Esq. [ARGUED], Sidley Austin, One South Dearborn Street, Chicago, IL 60603, Chad C. Messier, Esq., Dudley Topper & Feuerzeig, 1000 Frederiksberg Gade, P.O. Box 756, St. Thomas, VI 00804, David S. Petron, Esq., Sidley Austin, 1501 K Street, N.W., Washington, DC 20005, Counsel for Appellee Altisource Asset Management Corp

John L. Hardiman, Esq., Julia A. Malkina, Esq., Sullivan & Cromwell, 125 Broad Street, New York, NY 10004, Counsel for Appellee William C. Erbey

Before: KRAUSE, ROTH and FISHER, Circuit Judges. OPINION OF THE COURT

FISHER, Circuit Judge.

Commenting on the economic calamity that was the South Sea Bubble—in which he lost a considerable fortune

—Sir Isaac Newton is said to have remarked, “I can calculate the motions of the heavenly bodies, but not the madness of the people.”1 Throughout its history, the trade of public securities has proven to be both a powerful engine of economic growth and an occasionally harsh reminder that what goes up must come down.

In this securities fraud class action, former shareholders allege that Altisource Asset Management Corporation and several of its officers (collectively AAMC) inflated the price of its stock through false and misleading statements. When these mistruths were revealed to the market, the allegation goes, the price of AAMC’s stock plummeted, costing shareholders billions of dollars. The District Court dismissed the complaint for failure to state a claim, concluding that Plaintiffs failed to satisfy the requirements of the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u–4. We agree and affirm.

Factual Background2

1 Edward Chancellor, Devil Take the Hindmost 69 (1999). The earliest accounts of Newton’s comment vary slightly. See Joseph Spence, Anecdotes, Observations, and Characters 368 (Samuel Singer, ed., 1820).

2 This factual background, unless otherwise indicated, is taken from the operative complaint and accepted as true. Krieger v. Bank of Am., N.A. , 890 F.3d 429, 434 (3d Cir. 2018).

William Erbey and Ocwen Financial

AAMC is one of several independent, but affiliated, companies founded by William Erbey. The first company, Ocwen Financial, was created in 1988 and became the country’s largest purchaser of non-performing mortgage loans in the 1990s. Companies earn profit from non-performing mortgages by either efficiently foreclosing on the underlying properties or by bringing the loans to current status. Once current, the mortgages can either provide a reliable stream of income or be resold at a premium.

Ocwen came to specialize in the servicing of non-performing loans.

Mortgage servicing is essentially a specialized form of debt collection, but in the context of non-performing mortgages it is a notoriously difficult and labor-intensive task.

Ocwen gradually transitioned from primarily servicing its own loans to acquiring mortgage servicing rights from others. Large mortgage holders sometimes contract with third parties for loan servicing, typically paying the servicer a fee based on the unpaid principal balance of the serviced properties.

Business was thin for Ocwen during the housing boom of the late 1990s and early 2000s because rising property values limited the number of non- performing mortgages. The large banks, which owned a majority of U.S. mortgages, were generally able to manage their own (comparatively few) non-performing loans.

The 2008 housing crisis changed this picture.

As droves of borrowers fell behind on their mortgages, the largest mortgage holders found themselves ill-equipped to service the ballooning number of delinquent, non- performing loans. This led to widespread corner-cutting—e.g., robo-signing of foreclosure documents, fraudulent affidavits, and other abusive servicing practices—which culminated in the 2012 National Mortgage Settlement. Under this agreement, the nation’s five largest mortgage holders, all banks, agreed to provide more than $50 billion worth of relief to mistreated homeowners. What was the National Mortgage Settlement? , Consumer Fin. Prot. Bureau (updated May 10, 2018), perma.cc/CA8Z-E8HC.

In this environment, Ocwen’s experience in servicing non-performing mortgages proved exceptionally advantageous—and profitable. As banks sought to avoid the financial hazards and regulatory scrutiny of servicing non-performing and sub-prime loans, Ocwen was there to buy up staggering quantities of mortgage servicing rights.

From 2009 to 2013, Ocwen’s servicing portfolio grew from approximately 350,000 properties to more than 2.8 million.

Consent Order Pursuant to New York Banking Law § 44 at 2, In the Matter of Ocwen Fin. Corp. , N.Y. Dep’t Fin. Servs. (Dec. 22, 2014), perma.cc/26XF-VMM2 (hereinafter the 2014 DFS Consent Order).

The aggregate unpaid principal balance of the properties Ocwen serviced correspondingly grew from $50 billion to more than $464 billion.

Id.

By the end of 2013, Ocwen had become the fourth largest mortgage servicer in the U.S., and the largest servicer of sub-prime loans. Id. at 1. In addition to efficiently servicing and foreclosing on distressed properties, Ocwen also led the industry with programs designed to help underwater borrowers stay in their homes. See Patricia A. McCoy, Barriers to Foreclosure Prevention During the Financial Crisis , 55 Ariz. L. Rev. 723, 763–64 (2013). Ocwen’s willingness to expand its role in the mortgage industry made it attractive to investors looking for opportunities to re-enter the market following the 2008 crisis.

Ocwen’s growth and success did not pass without notice, however.

When Ocwen sought to acquire yet another large portfolio of mortgage servicing rights in 2011, the New York Department of Financial Services (DFS) raised concerns about Ocwen’s growth and scalability. As a condition of DFS approval for the acquisition, Ocwen agreed to abide by a detailed set of servicing and staffing standards. Agreement on Mortgage Servicing Practices , N.Y. Dep’t Fin. Servs. (Sep. 1, 2011), perma.cc/M6JW-XEET (hereinafter the 2011 DFS Agreement).

The following year, DFS conducted “a targeted examination” of Ocwen, which “identified gaps in the servicing records of certain loans that … indicate[d] noncompliance” with the 2011 agreement. Consent Order Pursuant to New York Banking Law § 44 at 2–3, In the Matter of Ocwen Loan Serv., LLC , N.Y. Dep’t Servs. (Dec. 5, 2012), perma.cc/5FA8-7SCG  (hereinafter the 2012 DFS Consent Order).

As a result, DFS and Ocwen entered into the 2012 consent order, which required Ocwen to install an independent, on-site monitor to ensure compliance with the 2011 agreement. Id. at 4. These regulatory actions did not appear to hinder Ocwen’s financial health, however, as the company’s stock nearly doubled in the six months following the 2012 order.

3 AAMC and RESI were not spun-off from Ocwen directly. ASPS was spun-off from Ocwen in 2009, and in 2012 AAMC and RESI were both spun-off from ASPS.

The Ocwen Spin-offs

Also in December 2012—and directly relevant to this case—Ocwen completed the spin-off of several independent companies related to its core mortgage servicing business. Those companies were Altisource Portfolio Solutions (ASPS), Altisource Residential Corporation (RESI), and the appellee, Altisource Asset Management Corporation (AAMC).3 As explained and depicted below, each of these spin-offs—in conjunction with Ocwen—would work together to profit from various opportunities within the broader real estate market.

3 AAMC and RESI were not spun-off from Ocwen directly. ASPS was spun-off from Ocwen in 2009, and in 2012 AAMC and RESI were both spun-off from ASPS.

Organizational Chart as of December 31, 2012 [The Sham Entities]

RESI was created to capitalize on the nationwide decline in home ownership and the consequent increase in demand for rental properties.

RESI would acquire non-performing loans, with Ocwen providing the loan servicing. If the mortgage could be brought current, RESI would sell the loan for a profit. If not, RESI would foreclose on the home, take title, and maintain it as a rental property, with property management services provided by ASPS. This strategy for converting non-performing loans into rental properties—if performed efficiently—offered significant financial savings over the conventional approach of purchasing such properties at foreclosure auctions.

RESI had no employees, and received asset management and corporate governance services from AAMC, which itself had only seven RESI—AAMC’s only client—paid AAMC a management fee based on RESI’s available assets. Overall, the Ocwen-affiliated companies were highly interrelated and shared a significant number of corporate officers. For each company, William Erbey was the largest individual shareholder and served as Chairman of the Board.

At first, it appeared as if Erbey and his passel of affiliated companies could do no wrong, and the stock price of each company enjoyed a meteoric rise. AAMC, in particular, began 2013 trading at around $75 per share, but by January 2014 had risen as high as $1,196 per share. Only one year later, however, AAMC had fallen to $160 a share. Each of the other Ocwen companies suffered a similar fate. The claims period in this case—April 19, 2013 through January 12, 2015—includes the bulk of this precipitous rise and fall, which resulted, at least in part, from the persistent regulatory actions taken against Ocwen during the same time period.

Regulatory Pressure

By December 2013, Ocwen was the largest non-bank mortgage servicer in the U.S. On December 19, 2013, Ocwen entered into a consent order with the Consumer Financial Protection Bureau (CFPB) and authorities in 49 states and the District of Columbia. Consent Judgment, Consumer Fin. Prot. Bureau v. Ocwen Fin. Corp. , No. 13-cv-2025 (D.D.C. Dec. 19, 2013), perma.cc/5KZP-MW6R (hereinafter the 2013 CFPB Consent Order).

A CFPB investigation of Ocwen had uncovered systemic consumer protection violations, largely attributed to Ocwen’s breakneck acquisition of mortgage servicing rights in the preceding years. Pursuant to the 2013 CFPB consent order, Ocwen agreed to refund over $125 million to borrowers who had been wrongfully foreclosed upon and to provide $2 billion in principal reduction to underwater homeowners. Id. at 9–10.

Ocwen also agreed to abide by the standards outlined in the National Mortgage Settlement, id. at 9, becoming the first non- bank to do so.

Throughout 2014, Ocwen and its affiliates also attracted more scrutiny from DFS and other government actors. In February, DFS halted a proposed $2.7 billion sale of mortgage servicing rights to Ocwen from Wells Fargo. Second Amended Complaint (SAC) ¶ 164. DFS also sent a public letter to Ocwen voicing its concern with “potential conflicts of interest” between the Ocwen-related companies. Letter from Benjamin M. Lawsky, Superintendent, N.Y. Dept. of Fin. Servs., to Timothy Hayes, General Counsel, Ocwen Fin. Corp. (Feb. 26, 2014), perma.cc/5C52-ZPJ9 (hereinafter the 2014 DFS Letter). And later in the year, the Department of Housing and Urban Development (HUD) shut RESI out of a government-sponsored auction of distressed properties. SAC ¶ 166.

In December 2014, Ocwen entered into yet another consent order with DFS, precipitated by the findings of the compliance monitor installed under the 2012 consent order. 2014 DFS Consent Order at 2. The monitor identified several significant servicing violations by Ocwen, including

(1) failing to confirm that it had the right to foreclose before initiating foreclosure proceedings,

(2) failing to ensure that its representations during foreclosure proceedings were correct,

(3) pursuing foreclosure while loan modification applications were pending, and

(4) failing to ensure that no foreclosure actions were pursued against active duty servicemembers. Id. at 5–6.

As had the CFPB, the DFS compliance monitor traced many of these problems to widespread technological deficiencies in Ocwen’s servicing platform.

As Ocwen acquired companies and loan portfolios, it also inherited the myriad proprietary computer systems used to service those loans.  at 6–7.  Ocwen’s efforts to combine these legacy systems had resulted in a number of incompatibilities that produced incorrect or outdated loan information. Id. The monitor also identified several conflicts of interest among the Ocwen- affiliated companies, specifically finding that Erbey had not recused himself from several transactions between Ocwen and ASPS, resulting in higher costs for Ocwen. Id. at 9. Pursuant to the 2014 DFS consent order, Ocwen agreed to pay $150 million in relief to New York homeowners, and Erbey agreed to resign his positions at Ocwen, ASPS, RESI, and AAMC. Id. at 10, 17–18.

None of the above-mentioned regulatory actions were brought against AAMC, nor did any action identify improper conduct by Erbey relative to his role at AAMC.

Procedural History

The initial complaint in this class action was filed on January 16, 2015 by City of Cambridge Retirement System. After being appointed as lead plaintiff, Denver Employees Retirement Plan filed a significantly revised amended complaint, which it captioned its “Consolidated Complaint.”4 AAMC filed a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), which the District Court granted. Roughly three weeks later, Plaintiffs sought leave to reopen the case and further amend the complaint, attaching a proposed second amended complaint to its motion.

After considering the proposed complaint, the District Court denied leave to amend as futile. Plaintiffs then filed this timely appeal.

II

The District Court had jurisdiction under 28 U.S.C. § 1331 and 15 U.S.C. § 78aa. We have jurisdiction under 28 U.S.C. § 1291. Generally, a district court’s denial of leave to amend is reviewed for abuse of discretion. United States ex rel. Customs Fraud Investigations, LLC v. Victaulic Co. , 839 F.3d 242, 248–49 (3d Cir. 2016). Leave to amend is properly denied if amendment would be futile, i.e., if the proposed complaint could not “withstand a renewed motion to dismiss.” Jablonski v. Pan Am. World Airways, Inc. , 863 F.2d 289, 292 (3d Cir. 1988). “In assessing ‘futility,’ the district court applies the same standard of legal sufficiency as applies under Rule 12(b)(6).” In re Burlington Coat Factory Sec. Litig. , 114 F.3d 1410, 1434 (3d Cir. 1997). And as to this legal determination, our review is plenary. Morrow v. Balaski , 719 F.3d 160, 165 (3d Cir. 2013).

In determining whether Plaintiffs’ proposed second amended complaint states a claim under Rule 12(b)(6), we accept all well-pleaded allegations as true and draw all reasonable inferences in favor of the plaintiff. Id. However, “we disregard threadbare recitals of the elements of a cause of action, legal conclusions, and conclusory ” *879 James v. City of Wilkes-Barre , 700 F.3d 675, 681 (3d Cir. 2012).

4 Plaintiffs continue to contend that the District Court should not have counted the “Consolidated Complaint” as an amended complaint.

This contention is both wrong and irrelevant. There were not—as is frequently the case—multiple complaints in need of consolidation, so the only purpose of the revised complaint was to make substantive amendments.

In any event, because the District Court dismissed due to futility, the number of prior opportunities Plaintiffs had to amend is immaterial.

See In re Adams Golf, Inc. Sec. Litig. , 381 F.3d 267, 280 & n.12 (3d Cir. 2004) (affirming denial of leave to amend because proposed second amended complaint was futile); United States ex rel. Customs Fraud Investigations, LLC v. Victaulic Co. , 839 F.3d 242, 252 (3d Cir. 2016) (suggesting that denial of leave to amend the initial complaint would have been justified if the proposed amendment would have been futile).

III

The Elements of a Rule 10b–5 Claim

The proposed complaint charges AAMC with securities fraud in violation of § 10(b) of the Securities Exchange Act of 1934, 48 Stat. 881, 15 U.S.C. § 78j, and Securities and Exchange Commission (SEC) Rule 10b–5, 17 C.F.R. § 240.10b–5.5

The 1934 Act prohibits the use of “any manipulative or deceptive device” in connection with “the purchase or sale of any security registered on a national securities exchange.” 15 U.S.C. § 78j(b). More specifically, Rule 10b–5 makes it unlawful for any person—in connection with the sale of any security —”[t]o make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.” 17

C.F.R. § 240.10b–5(b). To state a claim under Rule 10b–5, a plaintiff must allege:

a material misrepresentation (or omission);

scienter, e., a wrongful state of mind;

a connection with the purchase or sale of a security;

reliance;

economic loss; and

loss…

Dura Pharm., Inc. v. Broudo , 544 U.S. 336, 341–42, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005) (internal quotation marks, citations, and emphasis omitted). In this case—and as is typical—the principal contentions relate to only three elements: a material misrepresentation (or omission), scienter, and loss causation. See Cal. Pub. Emps. Ret. Sys. v. Chubb Corp. , 394 F.3d 126, 143 (3d Cir. 2004).

In addition to Rule 12(b)(6), pleadings in Rule 10b–5 actions must also satisfy the particularity requirements of both Rule 9(b) and the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u–4. Id. Rule 9(b) provides that any fraud allegation “must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). The PSLRA prescribes yet greater particularity relative to the elements of material misrepresentation and scienter.

With respect to material misrepresentation, the PSLRA requires that a complaint “specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation … is made on information and belief,……all facts on which that belief is formed.” 15 U.S.C. § 78u–4(b)(1). With respect to scienter, complaints must “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” Id. § 78u–4(b)(2) (A).6

Far from mere technicalities, enforcement of such pleading requirements helps avoid the “abusive” practice of plaintiffs with “largely groundless claim[s]…. simply tak[ing] up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value.”  Dura , 544 U.S. at 347, 125 Ct. 1627 (first quoting H.R. Rep. No. 104–369, at 31 (1995) (Conf. Rep.); then quoting Blue Chip Stamps v. Manor Drug Stores , 421 U.S. 723, 741, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975) ).

To that end, the PSLRA seeks “to curb frivolous, lawyer-driven litigation, while preserving investors’ ability to recover on meritorious claims.” Tellabs, Inc. v. Makor Issues & Rights, Ltd. , 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). Allowing claims only in cases of true fraud avoids converting private securities actions into “a partial downside insurance policy” against the vicissitudes of the market. Dura , 544 U.S. at 347–48, 125 S.Ct. 1627.

Plaintiffs’ Claims

Plaintiffs base their fraud claims on two principal classes of statements made by AAMC. First, Plaintiffs argue that AAMC misrepresented the benefits attributable to its relationship with Ocwen. For example, in its 2012 Annual Report filed with the SEC, AAMC stated:

[W]e believe that [RESI’s] access to Ocwen’s servicing expertise helps it to maximize the value of its loan portfolios and provides it with a competitive advantage over other companies with a similar focus. J.A. 275.

Plaintiffs allege that this statement was “materially false and misleading because [it] portrayed Ocwen as a benefit and a ‘competitive advantage’ to RESI, when Ocwen was neither,” SAC ¶ 138, because of its outdated servicing platform and regulatory violations.

The second category of alleged misrepresentations concerns AAMC’s stated policy of requiring its officers— Erbey in particular—to recuse themselves from any transactions involving other Ocwen-affiliated companies. In its 2013 Annual Report, AAMC stated:

Each of our executive officers is also an executive officer of [RESI] and has interests in our relationship with [RESI] that may be different than the interests of our stockholders……….. We follow policies, procedures and practices to avoid potential conflicts with respect to our dealings with [ASPS], Ocwen and [RESI], including our Chairman [Erbey] recusing himself from negotiations regarding, and approvals of, transactions with these entities…. J.A. 324.

Plaintiffs allege that this disclosure was “false and misleading because it omits to disclose that the Related-Party Transaction Policy was widely disregarded by Defendant Erbey and others.” SAC ¶ 144.

The District Court concluded that Plaintiffs’ allegations failed to plausibly allege either a material false statement or loss causation.

It did not reach the question of scienter, but on appeal AAMC has renewed its argument that the complaint should fail on that basis as well. The following sections will analyze whether either class of alleged misrepresentations by AAMC is sufficient to survive a challenge under Rule 12(b)(6) and the PSLRA.7 With regard to the statements concerning AAMC’s relationship with Ocwen, we conclude that Plaintiffs have not plausibly alleged that the statements were false, and, therefore, we need not determine whether Plaintiffs sufficiently pled scienter or loss causation.

With regard to AAMC’s recusal policy, we conclude that Plaintiffs’ failure to identify a single AAMC transaction in which Erbey—or some other officer— improperly participated renders its allegations too speculative to meet the PSLRA’s strict requirements.

5 Plaintiffs’ proposed complaint also alleges that AAMC violated § 20(a) of the Securities Exchange Act of 1934. They do not discuss this allegation on appeal, and we do not consider it in reaching our conclusion.

6 Because the District Court ruled on futility grounds alone, remand would be appropriate if we were to determine that the complaint suffered only from a lack of particularity. Burlington Coat Factory , 114 F.3d at 1435. However, because we conclude that the complaint “would not survive a Rule 12(b)(6) motion even if pled with more particularity,” no remand is necessary. Id.

7 In general, a complaint that satisfies the PSLRA’s heightened pleading standards will also satisfy Rule 9(b)’s requirements.

Falsity

The complaint contains dozens of statements from various Ocwen-affiliated companies—not only, or even primarily, AAMC—that Plaintiffs characterize as material misrepresentations. On the question of falsity, then, the first issue to address is the legal significance of statements made by companies other than AAMC. Rule 10b–5 makes it unlawful for any person to “make any untrue statement of a material fact,” 17 C.F.R. § 240.10b–5(b), and, with regard to this rule, “the maker of a statement is the person or entity with ultimate authority over the statement,” Janus Capital Grp., Inc. v. First Derivative Traders , 564 U.S. 135, 142, 131 S.Ct. 2296, 180 L.Ed.2d 166 (2011). Therefore, in considering whether AAMC made any material misrepresentations, we will consider only the statements of AAMC (and not RESI, Ocwen, or other affiliated companies).

Statements Concerning AAMC’s Relationship with Ocwen

As detailed above, Ocwen underwent significant regulatory scrutiny before, during, and after the claims period, and multiple regulatory bodies sanctioned it for improper servicing practices. In various filings and public statements, AAMC described its relationship with RESI and, in turn, RESI’s relationship with Ocwen. Plaintiffs allege that

(1) AAMC knew that Ocwen’s servicing platform was severely flawed and therefore a detriment to AAMC, and

(2) AAMC’s failure to disclose this information about Ocwen constituted a material omission.

AAMC provided a detailed explanation of its relationship with Ocwen in its 2013 Annual Report under the heading “Risks Related to Our Management and Our Relationships with [ASPS], Ocwen, and [RESI]”:

[RESI] is contractually obligated to service the residential mortgage loans that it acquires. [RESI] does not have any employees, servicing platform, licenses or technical resources necessary to service its acquired loans. Consequently, [RESI] has engaged Ocwen to service the non-performing and sub- performing … loans it acquires. If for any reason Ocwen is unable to service these loans at the level and/or the cost that [RESI] anticipates, … an alternate servicer may not be readily available on favorable terms, or at all, which could have a material adverse effect on [RESI].

J.A. 323, 324.

Thus, the annual report explained that RESI depended on Ocwen for loan servicing and would be at risk if it needed to find a different servicer. The same report also made clear that, because RESI was AAMC’s sole source of revenue, any risk to RESI applied in equal measure to AAMC.

J.A. 309–10.

Plaintiffs argue that, in order to make this report (and others like it) not misleading, AAMC was obligated to disclose its awareness of problems with Ocwen’s servicing platform. But in the context in which these statements were made, there was nothing false or misleading about AAMC’s assertions. The above-quoted report does not imply anything about the quality of Ocwen’s loan servicing, only its capacity (high) and its cost (low).

Plaintiffs have not alleged that AAMC had any reason to believe that Ocwen, whatever its flaws, would be unable to service all of the loans RESI sent its way. Nor is there any allegation that Ocwen ever did fail to meet its servicing obligation to RESI. Given that context, there was nothing misleading about AAMC’s disclosed reliance on Ocwen.

By contrast, suppose AAMC knew at the time of this report that Ocwen would soon be unable to take on any additional mortgage servicing rights obligations. In that case, AAMC’s statement would be misleading because what it identified as a possible risk, was, in truth, known to be 8

In effect, Plaintiffs suggest that AAMC’s reference to Ocwen carried some form of implied warranty. Plaintiffs exhaustively catalogue Ocwen’s regulatory violations, but cite no authority to support the conclusion that AAMC was obligated to disclose the flaws of a separate entity in its own filings. Even assuming that such an obligation could arise in some cases, it would make no sense to impose such a requirement where, as here, the allegedly “concealed” information—Ocwen’s regulatory failures—was not only well-known, but typical of most mortgage servicers at the time. McCoy, supra , 55 Ariz. L. Rev. at 748 (noting a 2011 Treasury Department investigation, which concluded that each of the ten largest servicers in the Home Affordable Modification Program was deficient);

Vincent Di Lorenzo, Corporate Wrongdoing: Interactions of Legal Mandates and Corporate Culture , 36 Rev. Banking & Fin. L. 207, 226 (2016) (describing mortgage servicing as a “distinct industry-wide example of improper conduct,” and discussing a 2015 Comptroller of the Currency investigation, which found repeated noncompliance with servicing standards by several parties to the 2012 National Mortgage Settlement); see generally Matthew Goldstein, Rachel Adams, & Ben Protess, How Housing’s New Players Spiraled Into Banks’ Old Mistakes , N.Y. Times, June 26, 2016, goo.gl/GoYTqv.

Under Rule 10b–5, the misleading nature of a statement is evaluated “in the light of the circumstances under which” it is made. 17 C.F.R. § 240.10b–5(b). As was clear under these circumstances, AAMC’s statements about Ocwen were relevant only insofar as RESI—and, by extension, AAMC—depended on Ocwen to service the mortgages it acquired. AAMC had no reason to believe that Ocwen would be unable to fill this role, so its statements to this effect were not misleading.

8 The complaint highlights other AAMC statements praising Ocwen,

e.g., “We intend to capitalize on the servicing capabilities of Ocwen, which we view as superior relative to other servicers in terms of cost, management experience, technology infrastructure and platform scalability.” SAC ¶ 136.

Such statements are not false because they clearly convey a subjective opinion.

Moreover, we have consistently held that such “vague and general statements of optimism” are non-actionable precisely because they are not material, i.e., a reasonable investor would not base decisions on such statements.

See In re Advanta Corp. Sec. Litig. , 180 F.3d 525, 538–39 (3d Cir. 1999), abrogated on other grounds as recognized by Inst. Inv’rs Grp. v. Avaya, Inc. , 564 F.3d 242, 276 (3d Cir. 2009).

Statements Concerning AAMC’s Recusal Policy

AAMC claimed in various disclosures that it had “policies, procedures and practices” to avoid potential conflicts with respect to the other Ocwen-affiliated companies. J.A. 324.

In particular, these policies required Erbey to “recus[e] himself from negotiations regarding, and approvals of, transactions with” those companies. Id.

Plaintiffs allege that these statements were false and misleading because, in reality, Erbey had not recused himself from decisions concerning several related-party transactions. To support this allegation, the complaint primarily relies on a 2015 cease-and-desist order issued by the SEC, which concluded that Erbey had failed to recuse himself from certain transactions between Ocwen and another affiliated company, HLSS.

According to Plaintiffs, this finding “raises a strong inference that [the defendants] acted in a similar manner with respect to ” SAC ¶ 145; see id. at ¶ 107 (quoting *883 In the Matter of Home Loan Serv. Sols., Ltd. , SEC Release No. 3713, 2015 WL 5782427, at *1–2 (Oct. 5, 2015) ).

By their own admission, Plaintiffs’ allegation regarding AAMC’s recusal policy relies on an inference from Erbey’s conduct with regard to two separate companies. Even accepting that the stringent pleading requirements applicable to Rule 10b–5 actions should be “relaxed somewhat where the factual information is peculiarly within the defendant’s knowledge or control,” Burlington CoatFactory , 114 F.3d at 1418, we cannot credit factual allegations, such as this, which do not rise “above the speculative level,” Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

By not identifying a single AAMC transaction in which Erbey improperly participated, the complaint attempts to establish falsity through the very sort of “speculative fraud by hindsight that the [PSLRA] was intended to eliminate.”

In re Rockefeller Ctr. Properties, Inc. Sec. Litig. , 311 F.3d 198, 225 (3d Cir. 2002).

*

Plaintiffs allege that AAMC misrepresented both the benefits of its relationship with Ocwen and its adherence to a recusal policy designed to protect against conflicts of interest.

However, Plaintiffs have failed to sufficiently plead falsity as to either category.

The statements concerning AAMC’s relationship with Ocwen were not misleading in the context in which they were made because AAMC’s reliance on Ocwen only extended to its ability to service the loans acquired by AAMC. Likewise, the complaint does not plausibly allege that AAMC’s statements about its recusal policy were false or misleading.

Instead, it simply speculates that Erbey must have violated the AAMC recusal policy because he is suspected to have done so with other companies.

Neither allegation satisfies the PSLRA’s strict standards for stating a claim.

Scienter and Loss Causation

Even if Plaintiffs had sufficiently alleged that AAMC made false or misleading statements, this alone would not be enough to survive a motion to dismiss. Plaintiffs must also plead facts sufficient to create a “strong inference” that AAMC intended to defraud shareholders (scienter), 15 U.S.C. § 78u–4(b)(2)(A), and adequately allege that, when the truth was revealed about those fraudulent statements, Plaintiffs suffered an economic harm as a result (loss causation), Dura , 544 U.S. at 341-42, 125 S.Ct. 1627.

Both factors are predicated upon a sufficient pleading of false or misleading statements.

Because we hold that Plaintiffs failed to satisfy this first requirement, we decline to go so far as to postulate whether AAMC may have intended to defraud shareholders with non-fraudulent statements. Nor do we speculate whether statements made—that do not correct or contradict misleading statements by AAMC—could reasonably have caused economic harm to Plaintiffs.

Instead, we conclude our analysis at our finding of no falsity and hold that Plaintiffs have not stated a claim upon which relief can be granted.

IV

The economic harm suffered by AAMC’s investors is certainly regrettable, but Plaintiffs fail to plausibly allege that this harm arose from fraud.

When a stock experiences the rapid rise and fall that occurred here, it will not usually prove difficult to mine from the economic wreckage a few discrepancies in the now-deflated company’s records. See H.R. Rep. No. 104–369, at 31 (1995) (Conf. Rep.). Hindsight, however, is not a cause of action. In passing the PSLRA, Congress concluded that the *884 very stability of our capital markets depends on forestalling meritless suits while preserving for “defrauded investors” the “indispensable tool” of private Id.

Because Plaintiffs’ complaint falls on the wrong side of this carefully-struck balance, we will affirm the decision of the District Court.

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Appellate Circuit

Constance Daniels, Student of Hard Knocks, Admonished Florida Lawyer and Friend of The Eleventh Circuit

LIF cannot comprehend how the People of Florida and the United States of America are so accepting of Brazen Corruption.

Published

on

LIF COMMENTARY

The article below starts with Constance Daniels failure to pay for her law school tuition loan issued in 2003. She defaulted in 2005 per the complaint. The USA won a judgment of $164k+ in 2011.

In 2010, Wells Fargo commenced foreclosure proceedings in state court, Hillsborough County.

While all this was going on, Ms Daniels, a Republican, was attempting to become a State judge in 2014, which failed.

In late November of 2017 a settlement was reached, dismissing the Wells Fargo foreclosure complaint.

In 2017-2018, lawyer Daniels was failing to look after her client(s). Many moons later, in 2021, that would result in a slap on the wrist by the referee, Hon. Daniel D. Diskey for Fl. Bar.

Then we move onto the June 2018 complaint, filed by Daniels against the mortgage servicer. It was removed to the lower court in Middle District  of Florida Federal Court.

The court, via one of the Moody clan of judges, sided with Select Portfolio Servicing, LLC and this formed the appeal which was decided this week by the 11th Circuit.

In Nov. 2020, Wells Fargo filed a renewed foreclosure complaint against Daniels and her homestead in State court. In Sept 2021, Wells Fargo voluntarily dismissed the case and terminated the lis pendens ‘due to loan modification’.

The issue for LIF in this case is quite clear. Who the 11th Circuit has chosen to upend it’s prior stance that mortgage servicers can do no wrong under the FDCPA, despite irrefutable facts confirming otherwise.

For example, LIF refers to the case we highlighted regarding a deficiency judgment (State case, March 2022):

Florida Lawyer Stephanie Schneider Appeals a Mortgage Foreclosure Deficiency Judgment

In that case, LIF investigated beyond the court opinions to discover the wife is a Florida Lawyer and her husband, Laurence Schneider is owner of S&A Capital, Inc., a mortgage investment company, has built a national portfolio of performing mortgages that have been written off by other financial institutions.

Our angst is clear. Lawyers are being treated preferentially by the courts over regular citizens and homeowners.

In the case of Daniels, whilst she may have legitimate arguments, there have been many citizens who have failed before her by the wordsmithing by the Federal and Appellate Court(s), which has refused to apply the correct legal interpretation of the FDCPA, or clarify the question(s) with the federal consumer agency, the CFPB.

Whilst LIF is unhappy with the anti-consumer watchdog, the Consumer Financial Protection Bureau (CFPB) which is a revolving door for staff to leave the Bureau and go work for a creditor rights law firm without any restriction or time limit (non-compete), the Daniels case should have been referred to the CFPB for interpretation about the matters of ‘first impression’.

The Second Circuit recently did so for a RESPA question in Naimoli v Ocwen and we highlighted the case on our sister website, LawsInTexas.com (Laws In Texas). Instead of doing so in Daniels, there is a dissenting opinion by Judge Lagoa, who’s father in law is a  senior judge in SD Florida (Paul C. Huck) and her hubby is a Jones Day Partner and apparently the leader of the Miami Chapter of the Federalist Society. Lagoa herself is a former Florida Supreme Court justice appointed by Gov DeSantis who ‘ensured he puts conservatives on the bench so that anyone coming to court knows how the court will rule’.

LIF anticipates the Daniels case will be subject to a rehearing petition and presented to the full en banc court for reconsideration. The opinion here is similar to the recent Newsom FDCPA opinion, which was too negative towards Wall St and the financial banking services community. As such, it was vacated by the en banc panel while they reconsider. The courts’ decision is currently pending.

In this case, there is still time for the 11th Circuit to correctly ask the CFPB to provide its opinion on the underlying facts raised on appeal and decided by the 3-panel.

However, what the judiciary won’t do is apply this retroactively to the thousands of cases which have been incorrectly tossed in the last 14 years, resulting in homeowners losing their homes to wrongful foreclosures.

United States v. Daniels (2011)

(8:11-cv-01058)

District Court, M.D. Florida

MAY 13, 2011 | REPUBLISHED BY LIT: MAY 26, 2022

USA Motion for Summary Judgment with Exhibits, Doc. 13, Aug 17, 2011

ORDER granting  Motion for summary judgment in favor of the Plaintiff and against the defendant in the amount of $109,813.74,

together with accrued interest in the amount of $54,097.10 as of February 28, 2011,

plus interested at the rate of 8.25 percent per annum and a daily rate of $24.80, until the date of judgment;

for post-judgment interest, at the legal rate, from the entry of final judgment until the date of payment;

and for such other costs of litigation otherwise allowed by law.

The Clerk of Court is directed to close the case.

Signed by Judge Elizabeth A. Kovachevich on 9/22/2011.

(SN) (Entered: 09/22/2011)

U.S. District Court
Middle District of Florida (Tampa)
CIVIL DOCKET FOR CASE #: 8:11-cv-01058-EAK-AEP

USA v. Daniels
Assigned to: Judge Elizabeth A. Kovachevich
Referred to: Magistrate Judge Anthony E. Porcelli
Demand: $164,000
Cause: 28:1345 Default of Student Loan
Date Filed: 05/13/2011
Date Terminated: 09/22/2011
Jury Demand: None
Nature of Suit: 152 Contract: Recovery Student Loan
Jurisdiction: U.S. Government Plaintiff
Plaintiff
USA represented by I. Randall Gold
US Attorney’s Office – FLM
Suite 3200
400 N Tampa St
Tampa, FL 33602-4798
813/274-6026
Fax: 813/274-6247
Email: FLUDocket.Mailbox@usdoj.gov
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
V.
Defendant
Constance Daniels represented by Constance Daniels
PO Box 6219
Brandon, FL 33608
PRO SE

 

Date Filed # Docket Text
05/13/2011 1 COMPLAINT against Constance Daniels filed by USA. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Civil Cover Sheet)(MRH) (Entered: 05/13/2011)
05/13/2011 2 Summons issued as to Constance Daniels. (MRH) (Entered: 05/13/2011)
05/13/2011 3 ORDER regulating the processing of civil recovery actions. Service must be perfected by 09/10/2011. Signed by Deputy Clerk on 5/13/2011. (MRH) (Entered: 05/13/2011)
05/13/2011 4 STANDING ORDER: Filing of documents that exceed twenty-five pages. Signed by Judge Elizabeth A. Kovachevich on 7/15/08. (MRH) (Entered: 05/13/2011)
05/19/2011 5 NOTICE of designation under Local Rule 3.05 – track 1 (CLM) (Entered: 05/19/2011)
05/20/2011 6 CERTIFICATE OF SERVICE re 3 ORDER regulating the processing of civil recovery actions by USA (Gold, I.) Modified on 5/20/2011 (MRH). (Entered: 05/20/2011)
05/25/2011 7 CERTIFICATE OF SERVICE by USA (Notice of Designation Under Local Rule 3.05) (Gold, I.) (Entered: 05/25/2011)
07/06/2011 8 RETURN of service executed on 7/5/11 (Marshal 285) by USA as to Constance Daniels. (MRH) (Entered: 07/06/2011)
07/27/2011 9 MOTION for default judgment against Constance Daniels by USA. (Gold, I.) Modified on 7/27/2011 (MRH). NOTE: TERMINATED. INCORRECT MOTION RELIEF. ATTORNEY NOTIFIED. ATTORNEY TO REFILE. (Entered: 07/27/2011)
07/27/2011 10 MOTION for entry of clerk’s default against Constance Daniels by USA. (Gold, I.) Motions referred to Magistrate Judge Anthony E. Porcelli. (Entered: 07/27/2011)
07/28/2011 11 CLERK’S ENTRY OF DEFAULT as to Constance Daniels. (MRH) (Entered: 07/28/2011)
07/29/2011 12 ANSWER to 1 Complaint by Constance Daniels.(BES) (Entered: 07/29/2011)
08/17/2011 13 MOTION for summary judgment by USA. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Gold, I.) (Entered: 08/17/2011)
09/09/2011 14 ENDORSED ORDER TO SHOW CAUSE as to Constance Daniels.. The plaintiff filed a motion for summary judgment on 8/17/11. The defendant had up to and including 9/3/11 to respond to the motion. To date no response has been filed. Therefore, it is ORDERED that the defendant has up to and including 9/19/11 in which to show cause why the pending motion should not be granted. Signed by Judge Elizabeth A. Kovachevich on 9/9/2011. (SN) (Entered: 09/09/2011)
09/22/2011 15 ORDER granting 13 Motion for summary judgment in favor of the Plaintiff and against the defendant in the amount of $109,813.74, together with accrued interest in the amount of $54,097.10 as of February 28, 2011, plus interested at the rate of 8.25 percent per annum and a daily rate of $24.80, until the date of judgment; for post-judgment interest, at the legal rate, from the entry of final judgment until the date of payment; and for such other costs of litigation otherwise allowed by law. The Clerk of Court is directed to close the case.. Signed by Judge Elizabeth A. Kovachevich on 9/22/2011. (SN) (Entered: 09/22/2011)
10/12/2011 16 ABSTRACT of judgment as to Constance Daniels. (DMS) (Entered: 10/12/2011)

Order GRANTING Summary Judgment for $164k Student Loan Debt, Doc. 15, Sep 22, 2011

Daniels v. Select Portfolio Servicing, Inc.

(2018-Present)

(8:18-cv-01652)

District Court, M.D. Florida

ORDER

THIS CAUSE comes before the Court upon Defendant’s Motion to Dismiss Plaintiff’s Second Amended Complaint (Dkt. 24) and Plaintiff’s Response in Opposition (Dkt. 27).

The Court, having reviewed the motion, response, and being otherwise advised in the premises, concludes that Defendant’s motion should be granted.

Specifically, Plaintiff’s second amended complaint will be dismissed with prejudice because any further amendment is futile.

BACKGROUND

As the Court explained in its prior Order granting Defendant’s motion to dismiss, (see Dkt. 22), Plaintiff Constance Daniels initially filed suit in Florida state court against Defendant Select Portfolio Servicing, Inc. (“SPS”) alleging three Florida claims, which included a claim under Florida’s civil Racketeer Influenced and Corrupt Organizations (“RICO”) Act.

On July 10, 2018, SPS removed the case to this Court based on diversity jurisdiction.

On August 6, 2018, SPS moved to dismiss the entire complaint.

In relevant part, SPS argued that the complaint failed to allege any of the elements of a RICO claim.

On August 27, 2018, Daniels filed an amended complaint, which mooted SPS’s motion to dismiss.

Daniels’ amended complaint alleged two claims: a claim under the Fair Debt Collection Practices Act (“FDCPA”) and a claim under the Florida Consumer Collections Practices Act (“FCCPA”).

Both claims relied on the same allegations.

To summarize, Daniels alleged that SPS had “improperly servic[ed]” her mortgage loan “in reckless disregard” of her consumer rights. (Dkt. 12).

The amended complaint did not attach any mortgage statements.

SPS moved to dismiss Daniels’ amended complaint based on her failure to allege that SPS ever attempted to collect the mortgage balance.

The Court granted SPS’s motion.

The Court noted that the amended complaint did not identify or attach any communication from SPS to Daniels.

The Court also surmised that the dispute was more akin to a dispute about an improper accounting of Daniels’ mortgage.

The Court dismissed the FDCPA and FCCPA claims and provided Daniels a final opportunity to amend her complaint.

Daniels filed a second amended complaint.

The allegations are largely unchanged.

But, significantly, Daniels attaches multiple monthly mortgage statements that SPS sent to her.

She now claims that these mortgage statements constitute debt collection activity under the FDCPA and FCCPA.

SPS’s motion to dismiss argues that the monthly mortgage statements comply with Regulation Z of the Truth in Lending Act (the “TILA”)—they were not communications in connection with the collection of a debt—and therefore do not constitute debt collection activity under the FDCPA and FCCPA.

As explained further below, the Court agrees with SPS’s position based on the Court’s detailed review of the monthly mortgage statements.

Therefore, the second amended complaint will be dismissed with prejudice.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss a complaint when it fails to state a claim upon which relief can be granted.

When reviewing a motion to dismiss, a court must accept all factual allegations contained in the complaint as true.

Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal citation omitted).

It must also construe those factual allegations in the light most favorable to the plaintiff.

Hunt v. Aimco Properties, L.P., 814 F.3d 1213, 1221 (11th Cir. 2016) (internal citation omitted).

To withstand a motion to dismiss, the complaint must include “enough facts to state a claim to relief that is plausible on its face.”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

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.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Pleadings that offer only “labels and conclusions,” or a “formulaic recitation of the elements of a cause of action,” will not do.

Twombly, 550 U.S. at 555.

DISCUSSION

The FDCPA and FCCPA prohibit debt collectors from using a “false, deceptive, or misleading representation or means in connection with the collection of any debt.”

See e.g. 15 U.S.C. § 1692e (emphasis added);

Fla. Stat. § 559.72 (“In collecting debts, no person shall . . .”) (emphasis added).

It is axiomatic then that the “challenged conduct is related to debt collection” to state a claim under either statute.

Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1216 (11th Cir. 2012);

see also Garrison v. Caliber Home Loans, Inc., 233 F. Supp. 3d 1282, 1286 (M.D. Fla. 2017) (“the FCCPA is a Florida state analogue to the federal FDCPA.”) (internal citations omitted).

“[T]he Eleventh Circuit has not established a bright-line rule” as to what qualifies as “in connection with the collection of any debt.”

Dyer v. Select Portfolio Servicing, Inc., 108 F. Supp. 3d 1278, 1280 (M.D. Fla. 2015).

“As a general principle, the absence of a demand for payment is not dispositive,” and courts should “instead consider whether the overall communication was intended to induce the debtor to settle the debt.”

Wood v. Citibank, N.A., No. 8:14-cv-2819-T-27EAJ, 2015 WL 3561494, at *3 (M.D. Fla. June 5, 2015) (citations omitted).

The second amended complaint attaches multiple monthly mortgage statements.1

Because the communications at issue here are all monthly mortgage statements, a discussion of the TILA is necessary.

The TILA requires SPS, a servicer, to send monthly mortgage statements.

12 C.F.R. § 1026.41. Specifically, 12 C.F.R. § 1026.41(d) requires that servicers provide debtors with detailed monthly mortgage statements containing, among other things: the “amounts due;” the “payment due date;” “the amount of any late payment fee, and the date that fee will be imposed if payment has not been received;” “an explanation of amount due, including a breakdown showing how much, if any, will be applied to principal, interest, and escrow and, if a mortgage loan has multiple payment options, a breakdown of each of the payment options;” “any payment amount past due;” a breakdown of “the total of all payments received since the last statement” and “since the beginning of the current calendar year;” “a list of all transaction activity that occurred since the last statement;” “partial payment information;” “contact information;” and detailed “account information” and “delinquency information.”

The Consumer Financial Protection Bureau (the “CFPB”) has issued a bulletin providing that a

“servicer acting as a debt collector would not be liable under the FDCPA for complying with [monthly mortgage statement] requirements.”

Implementation Guidance for Certain Mortgage Servicing Rules, 10152013 CFPB GUIDANCE, 2013 WL 9001249 (C.F.P.B. Oct. 15, 2013).

Courts have largely followed this guidance.

See, e.g., Jones v. Select Portfolio Servicing, Inc., No. 18-cv-20389, 2018 WL 2316636, at *3 (S.D. Fla. May 2, 2018) (citing 12 C.F.R. § 1026.41(d));

Brown v. Select Portfolio Servicing, Inc., No. 16-62999-CIV, 2017 WL 1157253 (S.D. Fla. Mar. 24, 2017) (noting the guidance and finding that monthly mortgage statements in compliance with the TILA were not debt collection).

The monthly mortgage statements at issue here were in conformity with the TILA requirements.

Moreover, the subject statements were substantially similar to model form H-30(B) provided by Appendix X to Part 1026 of TILA Regulation Z.

See also Jones, 2018 WL 2316636, at *4 (noting the similarities between a monthly mortgage statement and the model form in concluding no debt collection).

Although the monthly mortgage statements may not be identical to model form H-30(B), the differences are not significant deviations.

Notably, the plaintiff in Brown brought a nearly identical lawsuit against SPS.

The court explained in detail why the plaintiff was unable to state a claim under the FDCPA and FCCPA because the monthly mortgage statement was required to be sent pursuant to the TILA.

The complaint in Brown was dismissed with prejudice because “amendment would be futile” given that the basis for the claims was a monthly mortgage statement that was not actionable as a matter of law.

See 2017 WL 1157253, at *2-*4.

Also, the Jones court discussed in detail the numerous prior decisions addressing this issue, including multiple cases from this district that have held that monthly mortgage statements

“are almost categorically not debt collection communications under the FDCPA.”

2018 WL 2316636, at *5 (citing cases).

The particular monthly mortgage statements before the court in Jones were also sent by SPS and were substantively identical to the statements at issue in this case and in Brown.

Most recently, in Mills v. Select Portfolio Servicing, Inc., No. 18-cv-61012- BLOOM/Valle, 2018 WL 5113001 (S.D. Fla. Oct. 19, 2018), the court “agree[d] with the reasoning in Jones and [concluded] that the Mortgage Statements at issue [were] not communications in connection with a collection of a debt.” Id. at *2.

In conclusion, the substance of the monthly mortgage statements at issue in this case is substantially similar to model form H-30(B).

Any minor discrepancies in the language—when taken in the context of the document as an otherwise carbon copy of form H-30(B)—do not take the statements out of the realm of a monthly mortgage statement and into the realm of debt collection communications.

It is therefore ORDERED AND ADJUDGED that:

1. Defendant’s Motion to Dismiss Plaintiff’s Second Amended Complaint (Dkt.

24) is granted.

2. Plaintiff’s Second Amended Complaint is dismissed with prejudice.

3. The Clerk of Court is directed to close this case and terminate any pending motions as moot.

DONE and ORDERED in Tampa, Florida on December 18, 2018.

 

 

 

 

Copies furnished to: Counsel/Parties of Record

Judge Bert Jordan’s “Reputation” Warning to New Florida Lawyers

Constance Daniels Admonished by the Florida Bar (2021)

Constance Daniels, P.O. Box 6219, Brandon, admonishment in writing and directed to attend Ethics School effective immediately following a November 24 court order.

(Admitted to practice: 1995)

Daniels failed to act with reasonable diligence and failed to communicate with her client in connection with a dissolution of marriage action.

Daniels also failed to timely respond to the Bar’s formal complaint.

(Case No: SC21-683)

Constance Daniels v. Select Portfolio Servicing, Inc. (2022)

11th Cir., Published Opinion

(19-10204, May 24, 2022)

“A matter of first impression” 14 Years after the great recession and greatest theft of citizens homes in the history of the United States.

It’s quite incredulous how the 11th Circuit selects a Sanctioned Fl. Republican Lawyer, a failed judicial candidate and one who is facing foreclosure, for this ‘landmark’ published opinion in 2022.

Panel Author, Judge Bert Jordan, joined by Judge Brasher with a dissenting opinion by Judge Babs Lagoa

11th Circuit revives FDCPA lawsuit over mortgage statement language

How Westlaw is Summarizing the Latest Eleventh Circuit Opinion

(May 26, 2022)

Resolving an issue of first impression, a divided federal appeals panel has held that mortgage servicers can be liable under the Fair Debt Collection Practices Act for inaccuracies in monthly mortgage statements that contain additional debt-collection language.

Daniels v. Select Portfolio Servicing Inc., No. 19-10204, (11th Cir. May 24, 2022).

In a 2-1 decision, the 11th U.S. Circuit Court of Appeals on May 24 reinstated Constance Daniels’ lawsuit against Select Portfolio Servicing Inc., in which she alleges the company used faulty mortgage statements to try to collect payments she did not owe.

Writing for the panel majority, U.S. Circuit Judge Adalberto J. Jordan acknowledged that Select Portfolio was required to issue the mortgage statements under the Truth in Lending Act, 15 U.S.C.A. § 1638.

However, the mortgage statements fell within the scope of the FDCPA’s prohibition on false or misleading representations, 15 U.S.C.A. § 1692e, because they included additional debt-collection language — “this is an attempt to collect a debt” — the opinion said.

Judge Jordan reasoned that “in determining whether a communication is in connection with the collection of a debt, what could be more relevant than a statement in the communication than ‘this is an attempt to collect a debt’?”

U.S. Circuit Judge Barbara Lagao dissented, saying the majority treated the language like “magic words” that could convert an otherwise routine mortgage statement into a communication covered by the FDCPA.

Judge Lagoa also argued that the decision created a circuit split, although the panel majority insisted that the facts of Daniels’ case distinguished it from others in which federal circuit courts seemed to reach a contrary result.

District Court tosses FDCPA claims

Daniels sued Select Portfolio in the U.S. District Court for the Middle District of Florida in July 2018.

According to the suit, Daniels had prevailed in a state court foreclosure action brought by lender Wells Fargo in 2015, with the judge sanctioning Wells Fargo and enforcing an earlier loan modification agreement between the parties.

But Daniels’ mortgage servicer, Select Portfolio, later issued several monthly mortgage statements misstating the principal balance and amount due, and falsely claiming that her loan was in arrears, the suit says.

At least three of the mortgage statements included the sentence, “This is an attempt to collect a debt,” according to the suit.
Daniels accuses Select Portfolio of using false or misleading representations in connection with the collection of a debt, in violation of the FDCA and the Florida Consumer Collection Practices Act, Fla. Stat. Ann. § 559.72.

Select Portfolio moved to dismiss, saying Daniels was attempting hold it liable for issuing mortgage statements that are required under the Truth in Lending Act.

U.S. District Judge James S. Moody Jr. agreed and dismissed the suit in December 2018. Daniels v. Select Portfolio Servs. Inc., No. 18-cv-1652, (M.D. Fla. Dec. 18, 2018).

Judge Moody said that any discrepancies in language between Select Portfolio’s monthly statements and what is required under TILA “do not take the statements out of the realm of a monthly mortgage statement and into the realm of debt collection communications.”

On appeal, Daniels argued that compliance with TILA does not make a mortgage servicer immune from suit under the FDCPA and, even if it did, the monthly statements at issue included language beyond what is necessary under TILA.

Kaelyn S. Diamond and Michael A. Ziegler of the Law Office of Michael A. Ziegler represented Daniels.

Benjamin B. Brown and Joseph T. Kohn of Quarles & Brady LLP represented Select Portfolio.

By Dave Embree

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Thank you for your trust, belief and support in our conviction to help Floridian residents and citizens nationwide take back their freedom. Your Donations and your Voice are so important.



Continue Reading

Appellate Circuit

Deutsche Bank and Nationstar Watch as 11th Circuit Discharge the Shotgun Despite Hunt’s Pleadings

There can be no doubt that this is a frivolous appeal and we would not hesitate to order sanctions if appellant had been represented by counsel.

Published

on

Hunt v. Nationstar Mortg., No. 21-10398

(11th Cir. May 27, 2022)

MAY 27, 2022 | REPUBLISHED BY LIT: MAY 30, 2022

Before ROSENBAUM, GRANT, and MARCUS, Circuit Judges. PER CURIAM:

Christopher M. Hunt, Sr., proceeding pro se, appeals following the district court’s dismissal of his civil complaint arising out of his 2006 purchase of residential property located in Atlanta, Georgia (the “Property”).

Hunt purchased the Property using proceeds from a loan that he eventually defaulted on, which prompted Nationstar Mortgage, LLC (“Nationstar”), then servicer of the loan, to seek a non-judicial foreclosure on the Property.

After filing or being named in a variety of related lawsuits,1 Hunt filed the instant pro se complaint in Georgia state court in June 2020 and named as defendants Nationstar, the Deutsche Bank National Trust

1 See, g., Hunt v. Nationstar Mortg., LLC, 684 F. App’x 938 (11th Cir. 2017) (unpublished) (“Hunt I”);

[MARCUS, ROSENBAUM AND ANDERSON]

Hunt v. Nationstar Mortg., LLC, 779 F. App’x 669 (11th Cir. 2019) (unpublished);

[PRYOR,W., GRANT AND ANDERSON]

Hunt v. Nationstar Mortg., LLC, 782 F. App’x 762 (11th Cir. 2019) (unpublished);

[PRYOR,W., GRANT AND ANDERSON]

Deutsche Bank Tr. Co. Am., as Tr. for Fifteen Piedmont Ctr. v. Hunt, 783 F. App’x 998 (11th Cir. 2019) (unpublished).

[TJOFLAT, JORDAN AND NEWSOM]

Companies (“Deutsche Bank”), and Jay Bray, the CEO of Nationstar.

He alleged that they had committed, inter alia, mortgage fraud and wrongful foreclosure in violation of federal laws, including the Sarbanes-Oxley Act and the Dodd-Frank Act.2

The district court denied a variety of preliminary motions filed by Hunt;

dismissed, without prejudice, the complaint as to defendant Bray for failure to effect proper service;

and

dismissed, with prejudice, the complaint as to Deutsche Bank and Nationstar, because it was a “shotgun” pleading, was barred by res judicata, and failed to state a claim upon which relief could be granted.3

After thorough review, we affirm.

I.

Whether a court has subject-matter jurisdiction, including removal jurisdiction, is a question of law that we review de novo.

See McGee v. Sentinel Offender Servs., LLC, 719 F.3d 1236, 1241 (11th Cir. 2013).

We also review de novo a denial of a motion to

2 Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 (hereinafter “Sarbanes-Oxley Act”), and the Dodd-Frank Wall Street Reform and Con- sumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010) (hereinafter “Dodd-Frank Act”).

3 Hunt also named Christian Sewing, the Chief Executive Officer (“CEO”) of Deutsche Bank, as a defendant, but he later voluntarily dismissed him.

And after filing the complaint, Hunt sought to add yet another defendant, the Albertelli Law Firm (“Albertelli Law”).

Bray, Sewing and Albertelli Law have not filed any briefs on appeal.

remand to state court. Conn.

State Dental Ass’n v. Anthem Health Plans, 591 F.3d 1337, 1343 (11th Cir. 2009).

A district court’s decision regarding the indispensability of a party is reviewed for abuse of discretion.

United States v. Rigel Ships Agencies, Inc., 432 F.3d 1282, 1291 (11th Cir. 2005).

We will disturb a district court’s refusal to change venue only for a clear abuse of discretion.

Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 255 (11th Cir. 1996).

We also review the district court’s denial of a motion for recusal for abuse of discretion.

Jenkins v. Anton, 922 F.3d 1257, 1271 (11th Cir. 2019).

We review a district court’s grant of a motion to dismiss for insufficient service of process, under Rule 12(b)(5), by applying a de novo standard to questions of law, and a clear error standard to the court’s findings of fact.

Albra v. Advan, Inc., 490 F.3d 826, 829 (11th Cir. 2007).

But when a party fails to object to a magistrate judge’s findings or recommendations in a report and recommendation, he “waives the right to challenge on appeal the district court’s order based on unobjected-to factual and legal conclusions.” 11th Cir. R. 3-1.

Under the circumstances, we review a claim on appeal only “for plain error,” if “necessary in the interests of justice.” Id.

We review the dismissal of a “shotgun” pleading under Rule 8 for abuse of discretion.

Vibe Micro, Inc. v. Shabanets, 878 F.3d 1291, 1294 (11th Cir. 2018).

When appropriate, we will review a district court’s dismissal for failure to state a claim under Rule 12(b)(6) de novo.

Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1056–57 (11th Cir. 2007).

We will also review a dismissal

based on res judicata de novo.

Jang v. United Techs. Corp., 206 F.3d 1147, 1149 (11th Cir. 2000).

We review de novo a district court’s conclusions on collateral estoppel, but review its legal conclusion that an issue was actually litigated in a prior action for clear error.

Richardson v. Miller, 101 F.3d 665, 667–68 (11th Cir. 1996).

While pro se pleadings are liberally construed, issues not briefed on appeal are normally forfeited and we will generally not consider them.

Timson v. Sampson, 518 F.3d 870, 874 (11th Cir. 2008).

An appellant can abandon a claim by:

(1) making only passing reference to it;

(2) raising it in a perfunctory manner without supporting arguments and authority;

(3) referring to it only in the “statement of the case” or “summary of the argument”;

or

(4) referring to the issue as mere background to the appellant’s main arguments.

Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678, 681– 82 (11th Cir. 2014).

In addition, if a district court’s order rested on two or more independent, alternative grounds, the appellant must challenge all of the grounds to succeed on appeal.

See id. at 680.

When an appellant fails to challenge on appeal one of the grounds on which the district court based its judgment, he is deemed to have abandoned any challenge of that ground, and it follows that the judgment is due to be affirmed.

See id.

II.

Liberally construed, Hunt’s brief on appeal seeks to challenge the district court’s decisions:

(1) denying remand of his case to state court

and

denying his request to file an amended complaint adding another defendant, Albertelli Law;

(2) denying his request

to transfer the case;

(3) denying his request to disqualify the judge;

(4) dismissing, without prejudice, his complaint as to defendant Bray for failure to effect proper service;

and

(5) dismissing his complaint, with prejudice, as to Deutsche Bank and Nationstar.

To be sure, Hunt’s arguments about these decisions by the district court are not clearly stated.

But even if we were to assume that he has preserved his arguments on appeal, they fail on the merits.

First, we are unpersuaded by Hunt’s arguments that the district court should have allowed him to file an amended complaint to add another party to the suit, which would have deprived the federal court of jurisdiction, and should have remanded the case to state court.

Federal courts have diversity-of-citizenship jurisdiction when the parties are citizens of different states and the amount in controversy exceeds $75,000.

28 U.S.C. § 1332(a)(1).

A corporation is a citizen of every state where it was incorporated and the one state in which it has its principal place of business.

Daimler AG v. Bauman, 571 U.S. 117, 133, 137 (2014); 28 U.S.C. § 1332(c)(1).

A defendant may remove any civil action brought in a state court to a federal district court that has original jurisdiction over the action.

28 U.S.C. § 1441(a).

The removing party bears the burden of proving that removal jurisdiction exists.

McGee, 719 F.3d at 1241.

Here, the district court did not err in denying Hunt’s motion to remand. As we’ve held in a previous appeal, his motion was based on his belated and fraudulent attempts to join Albertelli Law, in an effort to defeat the district court’s diversity jurisdiction.

See Hunt I, 684 F. App’x. at 942-44.

However, Hunt asserted federal

claims in his complaint, so the district court had jurisdiction in any event.

28 U.S.C. § 1441(a).

Accordingly, the district court correctly denied Hunt’s requests to remand the case and acted within its discretion to deny joinder.

Rigel Ships Agencies, Inc., 432 F.3d at 1291.

We also find no merit to Hunt’s claims that the district court should have transferred venue of his lawsuit.

A district court may transfer a civil action to any other district or division where it may have been brought “for the convenience of the parties and witnesses, and in the interest of justice.”

Robinson, 74 F.3d at 260 (quoting 28 U.S.C. § 1404(a)).

But in this case, the district court did not err because Hunt did not provide any cognizable reason for a transfer.

It appears that Hunt’s transfer request was based on his belief that case law in the United States District Court for the Middle District of Georgia would be more favorable to him – which is not a legitimate reason for transfer.

See 28 U.S.C. § 1404(a).

Similarly, we reject Hunt’s argument that the district court judge should have recused himself.

A judge must sua sponte recuse himself “in any proceeding in which his impartiality might reasonably be questioned” or “

[w]here he has a personal bias or prejudice concerning a party.”

28 U.S.C. § 455(a), (b)(1).

“The test is whether an objective, disinterested, lay observer fully informed of the facts underlying the grounds on which recusal was sought would entertain a significant doubt about the judge’s impartiality.”

Parker v. Connors Steel Co., 855 F.2d 1510, 1524 (11th Cir. 1988).

“Ordinarily, a judge’s rulings in the same or a related case may not serve as

the basis for a recusal motion.”

McWhorter v. City of Birmingham, 906 F.2d 674, 678 (11th Cir. 1990).

“The judge’s bias must be personal and extrajudicial; it must derive from something other than that which the judge learned by participating in the case.”

Id.

“The exception to this rule is when a judge’s remarks in a judicial context demonstrate such pervasive bias and prejudice that it constitutes bias against a party. Mere friction . . . however, is not enough to demonstrate pervasive bias.”

Thomas v. Tenneco Packaging Co., 293 F.3d 1306, 1329 (11th Cir. 2002) (quotation marks omitted).

As the record before us makes clear, no “objective, disinterested, lay observer fully informed of the facts underlying” these circumstances “would entertain a significant doubt about the judge’s impartiality.”

Parker, 855 F.2d at 1524.

Accordingly, the district court did not abuse its discretion in denying Hunt’s request for recusal or disqualification.

Nor do we find any merit to Hunt’s argument that the district court erred in dismissing the complaint against defendant Bray for lack of proper service.

When a federal court is considering the sufficiency of process after removal, it does so by looking to the state law governing process.

See Usatorres v. Marina Mercante Nicaraguenses, S.A., 768 F.2d 1285, 1286 n.1 (11th Cir. 1985).

Georgia law provides that service made “outside the state” of Georgia is to be done “in the same manner as service is made within the state.”

O.C.G.A. § 9-10-94.

Under Georgia law, service on natural persons is to be made “personally, or by leaving copies thereof at the defendant’s dwelling house or usual place of abode with some

person of suitable age and discretion then residing therein, or by delivering a copy of the summons and complaint to an agent authorized . . . to receive service of process.”

O.C.G.A. § 9-11-4(e)(7).

Notably, Hunt does not dispute these proposed findings set forth by the magistrate judge’s Report and Recommendation (“R&R”), that Hunt:

(1) mailed service to Bray;

and

(2) completed “corporate service” on Deutsche Bank, which Hunt asserted was also effective to serve Bray.

11th Cir. R. 3-1.

But, as the district court determined, Georgia law applied here and required personal service in these circumstances.

Albra, 490 F.3d at 829; O.C.G.A. § 9-11-4(e)(7).

Bray therefore was not properly served under Georgia law, and, for that reason, the district court did not err in dis- missing Hunt’s suit without prejudice as to Bray.

Finally, we find no error in the district court’s denial of injunctive relief and its dismissal of Hunt’s complaint against the two remaining defendants, Nationstar and Deutsche Bank.

A district court has the inherent authority to control its docket and ensure the prompt resolution of lawsuits, which includes the ability to dismiss a complaint on “shotgun” pleading grounds.

Shabanets, 878 F.3d at 1295.

We have described four types of “shotgun” com- plaints:

(1) those containing multiple counts where each count adopts all allegations of all preceding counts;

(2) those replete with conclusory, vague, and immaterial facts not obviously connected to any particular cause of action;

(3) those that do not separate each cause of action or claim for relief into different counts;

and

(4) those asserting multiple claims against multiple defendants without

specifying which of the defendants are responsible for which acts or omissions, or which of the defendants the claim is brought against.

Weiland v. Palm Beach Cnty. Sheriff’s Off., 792 F.3d 1313, 1321–23 (11th Cir. 2015).

“Shotgun” pleadings violate Rule 8, which requires “a short and plain statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), by failing to, in one degree or another, give the defendants adequate notice of the claims against them and the grounds upon which each claim rests.

Shabanets, 878 F.3d at 1294–96.

We generally require district courts to allow a litigant at least one chance to remedy any deficiencies before dismissing the complaint with prejudice, where a more carefully drafted complaint might state a claim.

See id.; Silberman v. Miami Dade Transit, 927 F.3d 1123, 1132 (11th Cir. 2019).

But it need not grant leave to amend the complaint when further amendment would be futile.

Silberman, 927 F.3d at 1133.

Under federal law, res judicata, or claim preclusion, bars a subsequent action if

“(1) the prior decision was rendered by a court of competent jurisdiction;

(2) there was a final judgment on the merits;

(3) the parties were identical in both suits;

and

(4) the prior and present causes of action are the same.”

Jang, 206 F.3d at 1148– 49 & n.1 (quotation marks omitted).

We have held that “if a case arises out of the same nucleus of operative facts, or is based upon the same factual predicate, as a former action, the two cases are really the same ‘claim’ or ‘cause of action’ for purposes of res judicata.”

Baloco v. Drummond Co., Inc., 767 F.3d 1229, 1247 (11th

Cir. 2014) (quotation marks omitted and alterations adopted).

“In addition, res judicata applies not only to the precise legal theory presented in the prior case, but to all legal theories and claims arising out of the nucleus of operative fact” that could have been raised in the prior case.

Id. (quotation marks omitted and alterations adopted).

Collateral estoppel, or issue preclusion, “refers to the effect of a judgment in foreclosing relitigation of a matter that has been litigated and decided.”

Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1 (1984).

Thus, “collateral estoppel is appropriate only when the identical issue has been fully litigated in a prior case.”

In re McWhorter, 887 F.2d 1564, 1567 (11th Cir. 1989) (quotation marks omitted).

“The party seeking to invoke collateral estoppel bears the burden of proving that the necessary elements have been satisfied.”

Id. at 1566.

“[C]hanges in the law after a final judgment [generally] do not prevent the application of res judicata and collateral estoppel, even though the grounds on which the decision was based [may be] subsequently overruled.”

Precision Air Parts, Inc. v. Avco Corp., 736 F.2d 1499, 1503 (11th Cir. 1984).

To safeguard investors in public companies and restore trust in the financial markets, Congress enacted the Sarbanes-Oxley Act of 2002, 116 Stat. 745.

See S. Rep. No. 107-146, pp. 2–11 (2002).

The Act contains several provisions, including a whistleblower protection provision which prohibits a publicly traded company or its officers from discharging an “employee” for providing information to a supervisory authority about conduct that the employee

“reasonably believes” constitutes a violation of federal laws against mail fraud, wire fraud, bank fraud, securities fraud, any SEC rule or regulation, or any provision of federal law relating to fraud against shareholders.

See 18 U.S.C. § 1514A(a)(1).

The Dodd-Frank Act whistleblower provision provides protection to individuals who provide “information relating to a violation of the securities laws to the” Securities and Exchange Commission (“SEC”).

15 U.S.C. § 78u-6(a)(6).

Thus, “[t]o sue under Dodd-Frank’s anti-retaliation provision, a person must first provide information relating to a violation of the securities laws to the [SEC].”

Dig. Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 772–73 (2018) (quotation marks omitted and alterations adopted).

In his brief on appeal, Hunt does not expressly address the lower court’s “shotgun” pleading determination, and, as a result, the district court’s dismissal of the complaint is due to be affirmed.

Sapuppo, 739 F.3d at 681–82.

But in any event, the district court did not err in finding that his complaint was a “shotgun” pleading.

As the record reflects, the complaint consisted of three numbered paragraphs that spanned paragraphs and pages; failed to isolate claims by defendants;

and largely failed to discuss any facts — thereby falling into several of our identified categories of prohibited “shotgun” pleadings.

Weiland, 792 F.3d at 1321-23.

The district court also was correct that amendment would have been futile.

For one, res judicata and collateral estoppel barred Hunt’s claims for breach of contract and fraud, since Hunt sued the same parties for the same alleged breach of contract and fraud in several prior cases.

See, e.g., Hunt I, 684 F. App’x at 944.4

These decisions were final judgments and were “rendered by a court of competent jurisdiction,” “on the merits,” against the same parties, and “the prior and present causes of action [were] the same.”

Jang, 206 F.3d at 1149.

Moreover, even if some of Hunt’s claims had not been explicitly presented in any of his prior cases, they would still be barred by res judicata because every claim arose from the same facts as each of his prior cases, and he could have raised them in any of the prior proceedings.

Baloco, 767 F.3d at 1247.

Also, despite Hunt’s arguments, there have been no “changes in the law” that would “prevent the application of res judicata and collateral estoppel” in this case.

Precision Air Parts, 736 F.2d at 1503.

In addition, Hunt’s claims under the Sarbanes-Oxley Act and Dodd-Frank Act were futile because they fail to state a claim upon which relief could be granted.

As the record reflects, Hunt did not allege that he was an “employee” under the Sarbanes-Oxley Act, nor that he “provide[d] information relating to a violation of the securities laws to the [SEC]” as required under the Dodd-Frank Act.

4 To the extent that Hunt challenges the district court’s decisions under Fed. R. Civ. P. 60(b), we conclude that he has not identified any “extraordinary circumstances” entitling him to relief, and the district court did not abuse its discretion in this respect.

Toole v. Baxter Healthcare Corp., 235 F.3d 1307, 1316 (11th Cir. 2000) (quotation marks omitted).

Somers, 138 S. Ct. at 772–74.

Accordingly, Hunt did not state a cause of action under these statutes, and we affirm.

AFFIRMED.5

5 All of Hunt’s pending motions, which he filed after we imposed a filing restriction on him, are DENIED to the extent they request any relief.

For their part, Nationstar and Deutsche Bank have filed renewed motions for sanctions, requesting monetary sanctions against Hunt for his numerous motions before this Court under 11th Cir. R. 27-4.

Hunt is pro se and we DENY the motions for sanctions at this time.

See Woods v. I.R.S., 3 F.3d 403, 404 (11th Cir. 1993)

(“There can be no doubt that this is a frivolous appeal and we would not hesitate to order sanctions if appellant had been represented by counsel. However, since this suit was filed pro se, we conclude that sanctions would be inappropriate.”).

Although we are reluctant to impose sanctions on pro se appellants, we warn Hunt that our Court has imposed sanctions in circumstances like these, even for pro se litigants, and he is strongly cautioned against bringing any further frivolous motions or claims.

See Ricket v. United States, 773 F.2d 1214, 1216 (11th Cir. 1985)

(imposing sanctions on a pro se appellant who had been warned by the district court that the issues on appeal were frivolous).

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When the World’s Bankers and Governments Are Behavin’ Like Thieves and Criminals, It Really Is Time to Object, Vociferously

The appalling greed and corruption is playing out live since 2008 and without any accountability to the people. One Percenters are completely immune and laughing At You.

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Ukrainian who made appearance in Trump impeachment saga accused by U.S. of stealing, laundering billions

AUG 6, 2020 | REPUBLISHED BY LIT: MAY 17, 2022

The Justice Department on Thursday accused a Ukrainian oligarch who has been considered an ally of Ukraine’s president of stealing billions of dollars from a bank he once owned, then using a vast array of companies to launder that money in the United States and all over the world.

In a civil forfeiture complaint seeking to seize commercial properties in Kentucky and Texas, the Justice Department alleged that Ihor Kolomoisky and his business partner, Gennadiy Boholiubov, stole so much from PrivatBank that Ukraine’s national bank had to give the institution a $5.5 billion bailout “to stave off economic crisis for the whole country.”

Kolomoisky, one of Ukraine’s richest men, has ties to Ukrainian President Volodymyr Zelensky, and he played a role in the events that led to President Trump’s impeachment last year. He made a fortune in the rough-and-tumble capitalism that swept Ukraine after the Soviet Union’s collapse, amassing assets including airlines and financial institutions, and created a larger-than-life image for himself, going by the nickname “Benya,” and keeping a shark aquarium in his office.

Kolomoisky and Boholiubov were the two major owners of PrivatBank before it was nationalized in response to the fraud, the Justice Department said, and the men basically used it as a personal account to build a business empire in the United States. They requested money from PrivatBank — which they always received because they were owners — then moved the funds through a network of companies to “thoroughly disguise their nature, source, ownership, and control,” the Justice Department alleged.

Experts have expressed increasing concern that U.S. real estate — including factories and facilities important to American industry — has become a magnet for foreign money, including proceeds of criminal activities abroad. Among Kolomoisky’s and Boholiubov’s purchases were more than 5 million square feet of commercial real estate in Ohio; steel plants in Kentucky, West Virginia and Michigan; a cellphone manufacturing plant in Illinois; and commercial real estate in Texas, the Justice Department alleged. The forfeiture complaints sought to seize a roughly 19.5-acre office park in Dallas and the PNC Plaza building in Louisville.

Michael J. Sullivan, a lawyer for Kolomoisky, said in an email: “Mr. Kolomoisky emphatically denies the allegations in the complaints filed by the Department of Justice.” The allegations, which are not criminal charges, are similar to those in a lawsuit filed by the bank in a Delaware court. A lawyer for Boholiubov did not reply to an email seeking comment.

In a statement written in Russian, Kolomoisky said all the money used to purchase the U.S. properties was his own, received through a deal made with a mining company in 2007 and 2008 and from other businesses that banked with Privatbank.

Kolomoisky also has long been facing a criminal probe by the U.S. attorney’s office in Cleveland for possible money laundering. As a part of that case, the FBI raided the office of Optima Management Group in downtown Cleveland on Tuesday, as well as an Optima office in the Southeast Financial Center building in Miami.

In court documents, the Justice Department alleged Thursday that two Miami-based business associates of Kolomoisky and Boholiubov’s — Mordechai Korf and Uriel Laber — helped acquire and manage the oligarchs’ holdings in the United States, which often bear some version of the name “Optima.” Optima Ventures at one point became the “largest holder of commercial real estate in Cleveland,” using stolen funds to buy major downtown office buildings and a hotel, the Justice Department alleged.

Last year, Marc Kasowitz, a New York lawyer who also represents Trump, signed on to represent Kolomoisky and Boholiubov in the Delaware case. He did not immediately respond to a request for comment Thursday.

Under Ukraine’s last president, Petro Poroshenko, the government nationalized Privatbank, alleging that Kolomoisky and one of his business partners had defrauded the bank of billions of dollars. Kolomoisky denied those charges but decamped from Kyiv to Israel, where he also holds citizenship. He retained political power in Ukraine through his business holdings, which include a major Ukrainian television station.

Kolomoisky is seen as an ally to Zelensky, who was an actor before his election, starring in a comedy show that aired on Kolomoisky’s network. Zelensky’s election was widely seen as a boon for Kolomoisky, particularly after the new president made Kolomoisky’s personal lawyer the head of his administration. Some in the United States were suspicious of Zelensky’s ties to the mogul, thinking the connection ran counter to Zelensky’s promises to pursue an anti-corruption and reformist agenda.

Since then, however, Zelensky has not supported returning control of Privatbank to the oligarch, and he fired that top aide. Still, Kolomoisky has been comfortable enough with Ukraine’s current leadership that he returned from a self-imposed exile in Tel Aviv and is again based in Kyiv, where he maintains connections to members of the presidential administration.

In spring 2019, when Trump’s personal attorney Rudolph W. Giuliani embarked on a mission to press Zelensky to assist Trump by opening politically charged investigations into former vice president Joe Biden and his son, Giuliani’s associates met with Kolomoisky to request that Giuliani get a sit-down with the rising Ukrainian politician.

Giuliani associates Lev Parnas and Igor Fruman met with Kolomoisky in April 2019 in Tel Aviv, and, by all accounts, the meeting did not go well.

Giuliani associates claimed to have sway with both foreign billionaires and Trump administration officials

After the meeting, the two ­Florida-based business executives accused Kolomoisky of physically threatening them and filed a lawsuit against him in Ukraine. Parnas and Fruman, who assisted Giuliani in his Ukraine project, were charged in the United States with campaign finance violations last year. They have denied any wrongdoing.

Giuliani has said he provided legal advice to Parnas and Fruman in their fight against Kolomoisky. He also tweeted repeatedly about his displeasure with Kolomoisky in May 2019 just as he was pressuring Zelensky to assist Trump with a Biden investigation. At one point, Giuliani complained that Zelensky was being advised by “Kolomoisky’s representatives and enemies of President Trump.”

Meanwhile, a lawyer for Kolomoisky has told The Post that during the Tel Aviv meeting, Parnas and Fruman claimed that they could get top U.S. officials, including Vice President Pence and then-Energy Secretary Rick Perry, to travel to Ukraine around the time of Zelensky’s May 2019 inauguration — if Kolomoisky paid them several hundred thousand dollars. Kolomoisky did not pay the money, instead throwing the two men out of his office, his lawyer has said.

The attorney, Bruce Marks, told The Post that Kolomoisky had predicted to friends at the time: “This is going to end up in a bad scandal.”

Ukraine arrests ex-PrivatBank official as U.S. prioritizes criminal probe of former owners

FEB 26, 2021 | REPUBLISHED BY LIT: MAY 17, 2022

The National Anticorruption Bureau of Ukraine (NABU) has arrested the former deputy chairman of a Ukrainian bank at the heart of an FBI criminal investigation as he attempted to fly abroad in the latest sign Kyiv is taking steps to tackle corruption and lawlessness.

Volodymyr Yatsenko was detained at Boryspil Airport in Kyiv on February 22 after investigators forced the pilot of the private jet he was traveling on to land, the bureau announced in a tweet.

Mr. Yatsenko, who was on his way to Vienna after reportedly being tipped off about his arrest, was charged with the embezzlement of funds at PrivatBank, once the nation’s largest lender.

More arrests of management could follow, the Kyiv Post reported.

The FBI is investigating the two owners of PrivatBank – Ihor Kolomoisky and Gennadiy Boholiubov – in connection with accusations that more than $5 billion was stolen from the lender through fraudulent loans and that the money was then laundered.

In a move that made international headlines, Ukraine was forced to nationalize PrivatBank in 2016 and pump more than $5 billion into the lender in order to stave off its bankruptcy.

The U.S. accuses Messrs. Kolomoisky and Boholiubov of using some of the laundered proceeds to buy assets in the U. S., ranging from metals companies to commercial properties, with the help of two American associates based in Miami.

The Justice Department last year filed three civil forfeiture lawsuits in a Florida court against a U.S. real estate holding controlled by the two tycoons and run by the associates.

However, a judge agreed last week with a Justice Department request to temporarily suspend the civil forfeiture proceedings amid concerns it could harm the criminal investigation against the Ukrainian businessmen and their two American partners.

“Allowing [the tycoons] to conduct discovery would expose the identities of witnesses who have provided and will provide information and testimony in both the civil forfeiture actions and the criminal investigation,” the Justice Department said in its February 19 filing.

“If that occurs, the confidential informants may cease providing information, and, to the extent they are not reachable through process in the United States, they may make themselves unavailable for future testimony. Potential sources of information who have not yet been interviewed by the government would likely be deterred from coming forward” the Justice Department said in its filing.

The tycoons deny the accusations and neither Ukraine nor the United States has filed criminal charges against them.

Mr. Kolomoisky is one of the most influential tycoons in Ukraine and the U.S. government’s investigation into his activities is being closely followed.

The billionaire owns key media, energy, and metals assets and is believed to have outsized influence over the administration of President Volodymyr Zelenskyy.

Mr. Kolomoisky’s TV stations backed Mr. Zelenskyy’s successful presidential bid.

The U.S., one of Ukraine’s biggest backers financially and militarily, has repeatedly expressed concern about oligarchic influence over the nation’s government and economy.

Washington has also complained about the lack of investigations into corrupt tycoons and officials and has tied some aid to improvements in judicial reform.

The arrest of Mr. Yatsenko, who was flying on a private plane owned by Mr. Kolomoisky, is the latest in a series of moves by Kyiv to tackle cases that resonate with the U.S.

Mr. Zelenskyy last week approved sanctions on Viktor Medvedchuk, a tycoon and lawmaker with close ties to Russian President Vladimir Putin. Mr. Medvedchuk was sanctioned by the U.S. in 2014 for undermining democracy in Ukraine.

On February 2, Mr. Zelenskyy sanctioned three television stations believed to be owned by Mr. Medvedchuk. In late January he announced an investigation into Ukrainian individuals accused of interfering in the 2020 U.S. presidential elections.

The moves come after President Joe Biden was inaugurated on January 20. Mr. Biden knows Ukraine well, having served as the point man to Kyiv while serving as vice president from 2009 to 2017.

Political analysts say Mr. Zelenskyy is seeking to win over the Biden administration after a difficult relationship with the Trump administration caused by the 2019 impeachment investigation.

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