Owl Creek I, L.P. v. Ocwen Financial Corporation (9:18-cv-80506)
District Court, S.D. Florida
Original Complaint by Owl Creek
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS (DE 43)
Currently before the Court is Defendants’ Motion to Dismiss certain factual allegations from the Complaint based on Rule 12(b)(6) and the heightened pleading standards of Rule 9(b) and the Private Securities Litigation Reform Act of 1995 (PSLRA). DE 43. This motion was referred to the undersigned for final disposition by the presiding District Judge, following the parties’ consent to have the undersigned Magistrate Judge decide the instant motion. DE 61, 64, 65.
The undersigned has reviewed the Complaint (DE 1), the Motion to Dismiss (DE 43), Plaintiffs’ response to the motion (DE 46), and Defendants’ reply. DE 47. The Court heard oral argument of the motion on August 29, 2018 (DE 62), and this matter is now ripe for decision.
For the reasons that follow, Defendants’ Motion to Dismiss certain allegations from the Complaint (DE 43) is GRANTED IN PART AND DENIED IN PART.
ALLEGATIONS IN THE COMPLAINT
The following constitute the material facts alleged in the Complaint.1 All paragraph citations (noted as “¶” or “¶¶”) are references to the numbered paragraphs in the Complaint:
Plaintiffs are investment funds that purchased the common stock of Defendant Ocwen Financial Corporation (Ocwen) beginning in February 2014 and throughout that year. ¶¶1, 3, 188, 190.
Ocwen is a mortgage servicing company founded by Defendant Erbey. ¶2.
He ran the company until he was “forced to resign,” at which time his “right-hand man” and “long time compatriot,” Defendant Faris, took over. Id.2
According to the Complaint, Defendants sought to induce Plaintiffs to invest “tens of millions of dollars” in Ocwen by “making false and materially misleading statements concerning the accuracy of Ocwen’s financial statements, its purported regulatory compliance, and the effectiveness of its internal controls and disclosure procedures.”
As a mortgage servicer, Ocwen was “required to service mortgage loans in compliance with a number of overlapping servicing standards set forth in a 2011 agreement with the New York State Department of Financial Services (NYDFS 2011 Agreement) and in the National Mortgage Settlement (NMS).” ¶7.3
These servicing standards govern, among other things, the timing of Ocwen’s communications with borrowers. Id. Particularly relevant here is NMS’s