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    1) Selena Scott opened a credit card account with Bank of America in 2005. Bank of America later securitized the receivables from Scott's and other accounts, selling them to a trust. 2) When Scott's account became delinquent in 2009, Bank of America charged off the debt and sold Scott's debt to Cavalry SPV I, LLC for collection. 3) Scott sued, arguing that by securitizing the receivables, Bank of America no longer had an interest in her account to transfer. The District Court dismissed, finding that securitization does not divest the issuer of its ownership interest in the underlying credit card account.

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    1) Selena Scott opened a credit card account with Bank of America in 2005. Bank of America later securitized the receivables from Scott's and other accounts, selling them to a trust. 2) When Scott's account became delinquent in 2009, Bank of America charged off the debt and sold Scott's debt to Cavalry SPV I, LLC for collection. 3) Scott sued, arguing that by securitizing the receivables, Bank of America no longer had an interest in her account to transfer. The District Court dismissed, finding that securitization does not divest the issuer of its ownership interest in the underlying credit card account.

    Original Description:

    Filed: 2014-11-03 Precedential Status: Non-Precedential Docket: 13-4689

    Original Title

    Selena Scott v. Bank of America, 3rd Cir. (2014)

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    1) Selena Scott opened a credit card account with Bank of America in 2005. Bank of America later securitized the receivables from Scott's and other accounts, selling them to a trust. 2) When Scott's account became delinquent in 2009, Bank of America charged off the debt and sold Scott's debt to Cavalry SPV I, LLC for collection. 3) Scott sued, arguing that by securitizing the receivables, Bank of America no longer had an interest in her account to transfer. The District Court dismissed, finding that securitization does not divest the issuer of its ownership interest in the underlying credit card account.

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    1) Selena Scott opened a credit card account with Bank of America in 2005. Bank of America later securitized the receivables from Scott's and other accounts, selling them to a trust. 2) When Scott's account became delinquent in 2009, Bank of America charged off the debt and sold Scott's debt to Cavalry SPV I, LLC for collection. 3) Scott sued, arguing that by securitizing the receivables, Bank of America no longer had an interest in her account to transfer. The District Court dismissed, finding that securitization does not divest the issuer of its ownership interest in the underlying credit card account.

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    of 4

    NOT PRECEDENTIAL

    UNITED STATES COURT OF APPEALS


    FOR THE THIRD CIRCUIT
    ________________
    No. 13-4689
    ________________
    SELENA A. SCOTT,
    Appellant
    v.
    BANK OF AMERICA; BANK OF AMERICA CONSUMER CREDIT;
    BANK OF AMERICA FUNDING, LLC; CAVALRY SPV I, LLC;
    JOHN DOES 1-100
    ________________
    On Appeal from the United States District Court

    for the Eastern District of Pennsylvania


    (D.C. Civil Action No. 2:13-cv-00987)
    District Judge: Honorable Gene E.K. Pratter
    ________________
    Submitted Under Third Circuit LAR 34.1(a)
    October 20, 2014
    Before: AMBRO, FUENTES, and NYGAARD, Circuit Judges
    (Opinion filed: November 3, 2014)
    ________________
    OPINION *
    ________________
    AMBRO, Circuit Judge
    I.
    *

    This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
    constitute binding precedent.

    Selena A. Scott opened a credit card account with Bank of America/FIA Card
    Services, N.A. (Bank of America) in 2005. It securitized the receivables from
    Scotts and other credit card accounts, and sold them to a trust under a so-called Pooling
    and Servicing Agreement. This movea typical one by credit card issuersprovides
    steady liquidity for card issuers and transfer[s] most downside credit risk on the
    card[.] Adam J. Levitin, Skin-in-the-Game: Risk Retention Lessons from Credit Card
    Securitization, 81 GEO.WASH. L. REV. 813 (2013).
    Scotts account became delinquent on June 30, 2009. After the default, Bank of
    America charged-off her account (i.e., wrote the debt off as uncollectable). It then
    sold Scotts debt to Cavalry SPV I, LLC (Cavalry), and Cavalry in turn filed a
    collection action against Scott seeking $3,936.54 (the amount Scott owed) plus interest.
    Scotts counsel notified Cavalry of its belief that Bank of America did not have an
    interest in Scotts account to transfer, and Cavalry promptly withdrew its suit.
    Motivated by her apparent victory, Scott filed a class-action complaint against,
    among others, Bank of America and Cavalry alleging violations of the Fair Debt
    Collection Practices Act, 15 U.S.C. 1692 et seq., and the Pennsylvania Fair Credit
    Extension Uniformity Act, 73 PA. CONS. STAT. 2270.1 et seq. In an amendment to that
    complaint, she further alleged violations of the federal RICO statute, 18 U.S.C. 1961, et
    seq., and Pennsylvanias Unfair Trade Practices and Consumer Protection Law, 73 PA.
    CONS. STAT. 201.1 et seq. Underlying all of Scotts allegations was her belief that
    Bank of America had nothing to transfer to Cavalry once it securitized the receivables
    2

    from Scotts account. Thus, Cavalrys attempt to collect the amount Scott owed was
    unlawful.
    Bank of America and Cavalry moved to dismiss Scotts Amended Complaint,
    arguing that the critical premise on which Scotts claims relythat once a credit card
    company securitizes the receivables of a credit card account, it no longer retains an
    ownership interest in the accountis incorrect. The District Court granted the motion to
    dismiss with prejudice. Scott appeals that dismissal. We affirm in all respects. 1
    II.
    Scott renews the argument she advanced before the District Court: because Bank
    of America lost any interest in Scotts credit card account once it securitized and sold the
    receivables, it had nothing to transfer to Cavalry. Thus, Cavalrys attempt to collect on
    the amount she owed was unlawful.
    Scott misapprehends the effect of securitizing a credit card receivable. Credit
    card securitization involves the securitization solely of the receivables, not of the
    accounts themselves. Levitin, supra at 826; see also J.A. 15455 (Pooling & Servicing
    Agr. 2.01) (providing that Bank of America was selling only the receivables associated
    with the credit card accounts, not ownership of the accounts). Thus, even after
    securitization the card issuer retains an ownership interest in the account.
    The courts that have considered the effect of securitizing credit card receivables
    are all in agreement that it does not divest the issuer of its ownership interest in the credit

    The District Court had jurisdiction under 28 U.S.C. 1331 and 1332. We have
    jurisdiction under 28 U.S.C. 1291.
    3

    card accounts. See, e.g., Tostado v. Citibank (South Dakota), N.A., No. 09-CV-549, 2010
    WL 55976, at *3 (W.D. Tex. Jan. 4, 2010) (assignment of receivables does not prevent a
    credit card issuer from recovering past-due credit card charges because, as the real party
    in interest, the issuer retains the right to enforce its interest on [its] accounts and
    loans); Shade v. Bank of America, No. 2:08-cv-1069, 2009 WL 5198176, at *4 (E.D.
    Cal. Dec. 23, 2009) (plaintiff has provided no binding legal authority for his theory that
    because Bank of America securitized the account balances, it was no longer the real party
    in interest and could not assign the debt for collection to the other defendants).
    In addition, once Scotts account fell into default, the Pooling and Servicing
    Agreement provides that ownership of these Ineligible Receivables automatically
    reverts to Bank of America. See J.A. 160-61 (Pooling & Servicing Agr. 2.04(d)(ii)
    (iii)). At that pointand regardless whether as a general matter ownership of a credit
    card account can be divorced from ownership of the accounts receivablesthe Pooling
    and Servicing Agreement placed ownership of the receivables squarely back in Bank of
    Americas hands.
    For these reasons, we affirm.

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