Lewallen v. Green Tree Servicing, L.L.C.,

[David A. Szwak]

Lewallen v. Green Tree Servicing, L.L.C.,
343 B.R. 225, W.D.Mo., March 22, 2006 (NO. 05-6095-CV-SJ-FJG)

ORDER


GAITAN, District Judge.


I. BACKGROUND

Plaintiff Rhonda Lewallen brought an adversary proceeding against defendant-appellants, Green Tree Servicing, L.L.C. and U.S. Bank Trust National Association to object to a secured claim filed by Green Tree in the underlying bankruptcy action and to assert affirmative claims against the defendants for violations of the Real Estate Settlement Procedures Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act and the Missouri Merchandising Practices Act. Plaintiffs alleges that this is a core proceeding under 28 U.S.C. § 157(b)(2)(B),(C) and (K).

On May 25, 2000, Rhonda Lewallen entered into a consumer credit transaction with Conseco Finance Servicing Corporation. She executed a promissory note agreeing to pay $50,300 to Conseco which note was secured by a Deed of Trust on her home. The promissory note which plaintiff signed contained a binding arbitration clause. The loan was for personal, family or household purposes. After the loan was originated, Conseco pooled Ms. Lewallen's loan and deed of trust with other consumer loans and transferred its interests to a securitization trust. U.S. Bank took legal title to the pooled loans as trustee pursuant to a pooling and servicing agreement entered into between U.S. Bank and Conseco. Conseco retained servicing rights with respect to said loans. In December 2002, Conseco filed a Chapter 11 bankruptcy and on or about June 23, 2003, under the bankruptcy approved asset sale, Green Tree purchased the servicing rights to the Loan from the bankruptcy estate. The loan was in default at the time of the purchase of the servicing rights by Green Tree. From 2001 until 2004, plaintiff attempted to contact Conseco and Green Tree in an attempt to reach a resolution as to what was owed on her account. On February 23, 2004, Ms. Lewallen filed bankruptcy seeking relief under Chapter 13 to stop the foreclosure sale of her home. Green Tree filed Proof of Claim No. 2 in her bankruptcy case on March 16, 2004, representing that it was the creditor with respect to this debt. On July 28, 2004, Green Tree filed an Amended Proof of Claim, representing that Green Tree Financial Servicing L.L.C., not Green Tree Servicing L.L.C. was the creditor. On May 24, 2005, Lewallen filed an adversary complaint in her bankruptcy against Green Tree Servicing L.L.C. and U.S. Bank Trust National Association, alleging that they violated the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act and the Missouri Merchandising Practices Act by sending inaccurate, inconsistent and confusing demand letters and billing statements, failing to respond to written requests and other matters relating to the promissory note. In her Amended Complaint, plaintiff asserts that Green Tree was acting as the agent of U.S. Bank and that Green Tree's actions and omissions committed in connection with her loan account and bankruptcy case were within the course and scope of its agency and in furtherance of the business interests of U.S. Bank. In response to plaintiff's Complaint defendants filed a Motion to Dismiss or in the Alternative to Compel Arbitration. On August 23, 2005, the Bankruptcy Court conducted a non evidentiary telephonic hearing on the Motion to Dismiss. During the hearing the Court denied defendants' motion and stayed all proceedings. Defendants then filed the instant appeal.



II. STANDARD

[1] [2] Defendants state that a trial court's denial of a motion to compel arbitration*228 is reviewed de novo by an appellate court. Plaintiff disagrees and states that “[a]n appellate court reviews the bankruptcy court's conclusions of law de novo and its findings of fact for clear error.â€