Jacksonville-based Lender Processing Services, Inc. (LPS), a company that provides mortgage servicing technology, publicly posted protest letters against Reuters and The Florida Times-Union Friday. They were in relation to a Reuters investigation into the company’s legal woes. In particular, Reuters claimed that a Chapter 13 bankruptcy trustee in Mississippi joined a consumer lawsuit against the firm. The Times-Union ran its own story, which basically summarized the December 6 Reuters special report.

On this blog, we have commented twice on the allegations against LPS, although our two posts cited stories from the Wall Street Journal. In our October 20 post, we reported that Locke Barkley, in her capacity as the standing Chapter 13 bankruptcy trustee for the Northern District of Mississippi, had joined a homeowners’ lawsuit.

In our post on October 29, we reported that the U.S. Trustee Program has begun using its authority in bankruptcy cases to pursue mortgage servicers for improper foreclosure filings as part of what has become known as “foreclosure-gate.” The Wall Street Journal article we cited quotes Clifford White III, director of the U.S. Trustee Program.

Although LPS has apparently not challenged the accuracy of these Wall Street Journal articles, they contain the same basic information LPS is objecting to in its letters to Reuters and the Times-Union. We therefore thought it would be useful to examine LPS’s complaint that the Reuters and Times-Union articles contained “baseless allegations aimed at sensationalizing a story.”

LPS Denies Bankruptcy Trustee Is a Plaintiff in Case Against It

The December 6 Reuters report reads, “Meanwhile, the threats from four class action lawsuits filed in federal courts appear to be greater than the company has indicated, especially one filed in Mississippi. In a highly unusual move, a unit of the U.S. Justice Department has joined that suit as a plaintiff.”

In its protest letter, LPS says, “The statement is false. No unit of the U.S. Justice Department has joined the suit as a plaintiff. The Chapter 13 Trustee is named in the caption of the complaint as a matter of course. A bankruptcy trustee is appointed under the Bankruptcy Code in all Chapter 7 and 13 cases … The U.S. Bankruptcy Trustee, who is not listed as a party to the complaint, merely receives notices of all filings in the case, as is typical in adversary proceedings in bankruptcy court, but is not a plaintiff in this case, has not moved to intervene as a party and has made no claims or allegations in the matter.”

The Reuters article does not list the name of the case, but the case referred to in our previous posts was Jonathan R. Thorne, et al, v. Promise Solutions Holding Corporation, et al, an adversary proceeding filed in conjunction with a Chapter 13 bankruptcy in the U.S. Bankruptcy Court for the Northern District of Mississippi.

In the Second Amended Class Action Complaint filed by the plaintiffs on October 11, 2010, in that case, we found this statement:

“The additional plaintiff added by this amendment is Locke Barkley, the standing Chapter 13 Trustee for the Northern District of Mississippi who is joined as an additional plaintiff and who sues on behalf of herself and a class of persons defined as all Chapter 13 Trustees in the United States of America.”

The U.S. Trustee Program is a unit of the Justice Department.

Reuters told HousingWire in a statement that it stands behind its story, and the Florida Times-Union reporter who summarized the Reuters report says he did nothing wrong.

Sources:

  • HousingWire, “LPS claims stories by Reuters and Florida Times-Union inaccurate, sensational,” Christine Ricciardi, December 10, 2010
  • Plaintiffs’ Second Amended Class Action Complaint, Jonathan R. Thorne, et al, v. Promise Solutions Holding Corporation, et al, U.S. Bankruptcy Court for the Northern District of Mississippi, Case 10-01172-DWH, October 11, 2010