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Financial Services Law Insights and Observations

Ohio Federal Court Indicates Intent to Certify Question to Ohio Supreme Court to Resolve Applicability of Ohio Consumer Sales Practices Act to Servicers

State Issues

On June 18, the U.S. District Court for the Northern District of Ohio stated its intent to certify to the Ohio Supreme Court the question of whether the Ohio Consumer Sales Practices Act (OCSPA) applies to mortgage loan servicers. Anderson v. Barclays Capital Real Estate, Inc., No. 3:09-cv-2335 (N.D. Ohio June 18, 2010). In Anderson, the plaintiff borrower asserted that the defendant, a mortgage servicer, violated the Real Estate Settlement Procedures Act (RESPA) and the OCSPA by allegedly misapplying the borrower’s mortgage loan payments and by allegedly failing to adequately respond to her qualified written request (QWR). The borrower also asserted common law claims for unjust enrichment and conversion. The servicer moved to dismiss all claims, challenging the sufficiency of the pleadings and specifically arguing that the OCSPA does not apply to mortgage servicers because they are not “suppliers,” nor were the servicer’s dealings with the borrower “consumer transactions” within the meaning of the OCSPA. With respect to the OCSPA claim, the court noted that there was no binding Ohio authority regarding whether the OCSPA applies to mortgage servicers and stated its intent to certify the question to the Ohio Supreme Court. With regard to the RESPA claim, the court found that the complaint sufficiently pled a breach of RESPA duties to survive a motion to dismiss by alleging a failure to adequately respond to a QWR. The court also ruled, however, that the borrower failed to adequately plead damages to state a RESPA claim, and therefore held its decision on the servicer’s motion to dismiss in abeyance to allow the borrower an opportunity to amend the complaint. The court also ruled that the borrower had sufficiently pled her common law claims to state plausible claims for relief to survive the motion to dismiss.

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