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Elizabeth Thomas v. Jp Morgan Chase

July 11, 2012


The opinion of the court was delivered by: John Gleeson, United States District Judge:


Elizabeth Thomas commenced this pro se action on July 27, 2011, asserting claims arising from an alleged scheme by the Defendants to generate false loan documents that they use to extort money and property from homeowners such as Thomas. Defendant Barrett Daffin Frappier Turner & Engel, LLP ("Barrett")*fn1 has moved to dismiss the claims against it for lack of personal jurisdiction. Defendants The Dolan Company, American Processing Company, LLC and NDeX West, LLC (collectively, the "Dolan Defendants"),*fn2 have moved to dismiss on a variety of procedural and substantive grounds, including that the claims are barred by the doctrine of judicial estoppel. For the reasons set forth below, the motions to dismiss are granted.


A. Factual Background

On October 28, 2010, the Defendants sent Thomas a notice of default, a notice of substitute trustee and a notice of sale in connection with a mortgage loan she had obtained when purchasing a home in Texas. See Second Am. Compl. ¶ 21, ECF No. 53-1.*fn3 These documents were fraudulent in several respects. The notice of default falsely stated that Chase Home Finance LLC was Thomas's mortgagee and the holder of her note and deed of trust and that it had elected to accelerate the maturity of her debt. Id. ¶¶ 24--25, 29--30. It also falsely stated the amount of her indebtedness. Id. ¶ 26. The notice of sale falsely stated that Mortgage Electronic Registration System Inc. ("MERS") was the original mortgagee. See id. ¶¶ 27--28. The notice also confused Thomas regarding her rights and threatened action that could not lawfully be taken. See id. ¶¶ 41--42.

On November 5 and 10, 2010, and several times thereafter, Thomas and her prior attorney sent letters to Barrett disputing the debt and requesting verification. See, e.g., id. ¶¶ 31-- 34. Thomas never received any response. See id. ¶ 33. On December 15, 2010, and again on January 15, 2011, J.P. Morgan Chase N.A. reported the debt to a credit bureau but failed to state that the debt was in dispute. See id. ¶¶ 57--58.

On November 8, 2010, the Defendants wired and filed a notice of default, a notice of substitute trustee, an affidavit of default and a notice of sale. See id. ¶¶ 89--92. These documents contained the same kind of false information as that in the documents sent to Thomas on October 28, 2010. See id.

The Defendants acted in order to "extort" money from Thomas by forcing her to pay a debt or lose her home when, in fact, no debt was due. See, e.g., id. ¶ 91. As a result of the Defendants' actions, Thomas was forced to file for bankruptcy. See id. ¶ 44.

According to Thomas, these actions were part of a much broader scheme to defraud. This scheme involves the Defendants' use of a software program to generate fraudulent mortgage documents, which are then used in an attempt to extort money or property from thousands of homeowners. See, e.g., id. ¶ 73.

In this action, Thomas claims violations of the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act. She also asserts several common law claims sounding in fraud as well as a claim for intrusion upon seclusion.

B. Procedural Background

1. Prior Litigation

Thomas filed a lawsuit in the United States District Court for the Southern District of Texas against MERS and various banks on October 21, 2010. See Compl., Thomas v. Mortg. Elec. Registration Sys., Inc., No. 10-4320 (S.D. Tex. Oct. 21, 2010).*fn4 She purported to assert claims on behalf various counties in Texas, alleging that the named defendants had deprived the counties of recording fees. They allegedly did so by falsely designating MERS as a mortgagee, beneficiary or nominee of the lender on various mortgage documents in order to transfer interests in mortgage loans without recording the assignment of the underlying notes or deeds of trust and paying the accompanying fees. See, e.g., id. ¶¶ 15--16, 33--34, 37, 41, 43. On January 3, 2011, Thomas filed an amended complaint in the Texas lawsuit, naming Barrett and "NDex W INC" as defendants and asserting claims, now on her own behalf, similar to those in the present action. They included a claim that Barrett sent her fraudulent mortgage documents on October 28, 2010. See, e.g., Am. Compl. ¶ 57, Thomas v. Mortg. Elec. Registration Sys., Inc., No. 10-4320 (S.D. Tex. Jan. 3, 2011).

While her lawsuit was pending, Thomas petitioned for bankruptcy relief pursuant to Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas on December 3, 2010. See Pet., In re Thomas, No. 10-40785 (Bankr. S.D. Tex. Dec. 3, 2010). She identified her bankruptcy case as a "no asset" case, meaning that she had no nonexempt assets that could be used to repay her debts. See id. She also filed a schedule of her assets, which listed her residence, clothing and other items, but not any legal claims. On January 25, 2011, Thomas filed an amended schedule of assets, which again did not include any legal claims. On March 1, 2011, the bankruptcy court granted Thomas a discharge and closed the case.

On February 24 and 25, 2011 -- a few days before the discharge -- Thomas commenced two adversary proceedings in the bankruptcy court, the subject matter of which was somewhat related to that in her lawsuit in Texas district court. In the first, Thomas sought a declaration that a lien on her property claimed by Chase Home Finance LLC was void, asserting that any assignment of her mortgage loan to it had been improper. In the second, she purported to bring a class action alleging that Barrett and the Dolan Defendants were engaged in unlawful fee-splitting and had defrauded the bankruptcy courts. On April 28, 2011, the bankruptcy court dismissed both adversary proceedings for lack of subject matter jurisdiction, noting that the case was closed.

That same month, the Defendants had moved to dismiss Thomas's claims in her lawsuit in Texas district court. The Defendants argued, inter alia, that Thomas's claims were barred by the doctrine of judicial estoppel because she had not disclosed any legal claims among her assets during the bankruptcy proceeding. After ...

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