Tuesday, June 26, 2012

WALLACE v. WASHINGTON MUTUAL BANK, FA; WELLS FARGO BANK NA


The single issue before us is whether the filing of foreclosure action by 
the law firm claiming ownership of the mortgage by
its client Washington Mutual constitutes a “false, deceptive or misleading 
representation” under the Fair Debt Collection Practices Act when the 
bank has not received a transfer of the ownership documents. We hold 
that the complaint states a valid claim and reverse the dismissal of the 
case.
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No. 10-3694                Wallace v. Washington Mutual, et al.                       Page 5

Mutual. The district court found that plaintiff failed to state a claim under the Fair Debt
Collection Practices Act because the failure to record an Assignment of Mortgage before filing
a foreclosure action is not a deceptive practice under the Act. The single issue before us is
whether the filing of foreclosure action by the law firm claiming ownership of the mortgage 
by its client Washington Mutual constitutes a “false, deceptive or misleading 
representation” under the Fair Debt Collection Practices Act when the bank has not 
received a transfer of the ownership documents. We hold that the complaint states a valid 
claim and reverse the dismissal of the case.

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No. 10-3694              Wallace v. Washington Mutual, et al.                            Page 7
Given these allegations, plaintiff has sufficiently alleged a
material misrepresentation that would confuse or mislead an unsophisticated consumer. By
reversing the district court on the Rule 12(b)(6) motion, we, of course, do not make any
findings about the merits of plaintiff’s claim under the Act or any defenses that may be raised
by Lerner, Sampson. We hold only that plaintiff has alleged sufficient facts to survive a 
motion for dismissal on the pleadings.
For the foregoing reasons, we reverse the judgment of the district court and remand for
proceedings consistent with this opinion.

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