Introduction

In this unpublished, per curiam summary-calendar decision, the Fifth Circuit affirmed the Rule 12(b)(6) dismissal with prejudice of a pro se borrower’s multi-statute challenge arising from a non-judicial foreclosure of a commercial property. The court held that the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), and the Fair Debt Collection Practices Act (FDCPA) do not apply to commercial loans—even where the borrower personally guaranteed the debt and operated a medical clinic on the premises. It also rejected a Racketeer Influenced and Corrupt Organizations Act (RICO) claim for failure to allege predicate acts and a pattern, and it reaffirmed longstanding circuit precedent that non-judicial foreclosure under a deed of trust does not involve the requisite state action to support a Fourteenth Amendment due process claim under 42 U.S.C. § 1983. Finally, the court found no abuse of discretion in denying leave to amend because the plaintiff had already pleaded his “best case.”

The case matters for lenders, foreclosure purchasers, and practitioners because it crisply applies the business-purpose exclusions in federal consumer-protection statutes, confirms the high pleading standards for RICO claims arising from foreclosure-related disputes, and reiterates the Fifth Circuit’s firm rule that non-judicial foreclosure is private conduct, not state action.

Background

Plaintiff-Appellant Dr. Ikechukwu H. Okorie formed Royal Oaks Rental Properties, LLC to own and manage real estate holdings, including 3700 Hardy Street in Hattiesburg, Mississippi, which housed his medical practice. In 2018, Royal Oaks executed a $1.2 million note to Citizens Bank, secured by a deed of trust on the Hardy Street property. After property transfers between Royal Oaks and Dr. Okorie and a bankruptcy filing that was converted to Chapter 7, the bankruptcy court granted Citizens Bank relief from the automatic stay and abandonment as to the property. Subsequently, Royal Oaks executed a new $1.5 million note to Citizens Bank, again secured by Hardy Street. Payments lapsed, and Citizens commenced non-judicial foreclosure in 2023. University Mall, LLC purchased the property at a March 28, 2024 foreclosure sale.

Dr. Okorie opposed foreclosure in multiple forums—bankruptcy, state, and federal courts—without success. He then sued University Mall, some of its members, and a law firm, asserting violations of TILA, RESPA, RICO, FDCPA, and the Fourteenth Amendment (via § 1983). The district court dismissed all claims with prejudice under Rule 12(b)(6). Okorie appealed.

Summary of the Opinion

• TILA/RESPA/FDCPA: The Fifth Circuit affirmed that these statutes regulate consumer, not commercial, obligations. The Hardy Street loan was commercial, and Dr. Okorie’s personal guaranty and the fact his clinic generated his household income did not alter its character. Independently, the complaint also failed to plausibly allege any statutory violation.
• RICO: The complaint failed to plead predicate racketeering acts or a pattern. Proposing a lawful tenancy after purchasing at foreclosure does not constitute racketeering.
• Due Process (§ 1983): The complaint did not plausibly allege state action. Non-judicial foreclosure is not state action; the late-raised idea that a notary’s role created state action failed factually and legally.
• Leave to Amend: No abuse of discretion. Even for a pro se litigant, leave is unnecessary where the plaintiff has pleaded his best case and offers no specifics about how amendment would cure the defects.

Result: Affirmed.

Detailed Analysis

A. Precedents and Authorities Cited and Their Influence

• Cinel v. Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994): The district court could consider matters of public record on a Rule 12(b)(6) motion. This allowed reliance on prior public filings and decisions to frame the dispute’s history and the loan’s characterization.
• First Gibraltar Bank, FSB v. Smith, 62 F.3d 133 (5th Cir. 1995) and Poe v. First Nat’l Bank of DeKalb County, 597 F.2d 895 (5th Cir. 1979): A personal guaranty does not convert a commercial loan into a consumer loan. These decisions directly defeat the argument that guaranties or personal income streams alter a loan’s fundamental business purpose for TILA/RESPA/FDCPA coverage.
• In re Booth, 858 F.2d 1051 (5th Cir. 1988): Instructs courts to assess whether the credit is profit-oriented when determining consumer versus business purpose. The loan here was “decidedly profit-driven,” reinforcing the business-purpose exclusion.
• Thorns v. Sundance Properties, 726 F.2d 1417 (9th Cir. 1984): Cited for factors used to determine whether a transaction is covered by TILA, further supporting a business-purpose classification where the primary aim is profit generation or commercial operations.
• Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Financial Acquisition Partners LP v. Blackwell, 440 F.3d 278 (5th Cir. 2006): Pleading standards—plausibility and the need for specific facts rather than conclusory assertions—grounded the dismissal of all claims that lacked concrete factual allegations.
• Barrera v. Security Building & Investment Corp., 519 F.2d 1166 (5th Cir. 1975): Longstanding circuit authority that non-judicial foreclosure is not state action. This controlled the rejection of the due process claim under § 1983 and disposed of the notary-based state-action theory.
• Cornish v. Correctional Services Corp., 402 F.3d 545 (5th Cir. 2005): Reiterates the state action requirement for § 1983 claims, used to underscore the complaint’s deficiency.
• Hernandez v. West Texas Treasures Estate Sales, L.L.C., 79 F.4th 464 (5th Cir. 2023): De novo review standard for Rule 12(b)(6) dismissals applied on appeal.
• Mendoza-Tarango v. Flores, 982 F.3d 395 (5th Cir. 2020) (quoting Brewster v. Dretke, 587 F.3d 764 (5th Cir. 2009)): Addresses when a district court may deny leave to amend; even pro se litigants are not entitled to amendment where they have pleaded their “best case” and identify no concrete curative amendments.
• Statutory exclusions: 12 U.S.C. § 2606(a)(1) (RESPA); 15 U.S.C. § 1603(1) (TILA); 15 U.S.C. § 1692a(5) (FDCPA). These provisions collectively exclude business-purpose obligations from the reach of the cited consumer-protection statutes.

B. Legal Reasoning and Application

1) Consumer-protection statutes (TILA, RESPA, FDCPA)

The court began with first principles: Congress limited TILA, RESPA, and the FDCPA to consumer obligations—debts primarily for personal, family, or household purposes. By statute, business-purpose and commercial obligations fall outside their scope. The loan here was negotiated by a real estate holding company (Royal Oaks) to finance a commercial building for a medical practice. Even after the property transfers and the borrower’s personal guaranty, the loan retained its commercial character.

On appeal, Dr. Okorie conceded the statutes’ consumer scope, but argued a “blended” personal/business character because he personally guaranteed the loan and the clinic produced his household income. The court rejected both ideas. Under Fifth Circuit authority (First Gibraltar; Poe), a personal guaranty does not alter the loan’s nature. The “profit-oriented” test in In re Booth and analogous factors from Thorns reinforced that this financing was commercial by design and use. Thus:

• Threshold: Because the obligation was commercial, TILA/RESPA/FDCPA do not apply.
• Independently: Even if they did apply, the complaint did not plausibly allege how University Mall or the other appellees violated any specific statutory provisions. Conclusory assertions fail under Iqbal and Blackwell.

2) RICO

RICO requires a plausible allegation of a cognizable enterprise, at least two predicate racketeering acts, and a pattern that is related and continuous. The complaint’s thrust—that the purchaser at foreclosure proposed a tenancy for the clinic—does not remotely amount to racketeering. Nor did the complaint identify enumerated predicate offenses (e.g., mail or wire fraud with particularity). The district court’s dismissal therefore stood: proposing a lawful lease after purchasing property at a valid foreclosure is not a RICO act, much less part of a racketeering pattern.

3) Due Process and § 1983

Section 1983 requires state action. The court reaffirmed Barrera’s rule: non-judicial foreclosure under a private deed of trust involves no significant state action; it is private conduct. The borrower’s late argument that a notary’s involvement created state action failed for multiple reasons: the complaint never alleged notary use; the argument was conclusory; and, as a matter of law, ministerial or statutory formalities do not convert private foreclosure into state action in the Fifth Circuit.

4) Leave to amend and the “best case” rule

While courts often give pro se litigants a chance to replead, amendment is not required where a plaintiff has already pleaded their “best case.” Here, the plaintiff did not request leave to amend in the district court and did not identify on appeal any concrete facts or theories that could cure the deficiencies. The court therefore found no abuse of discretion in dismissing with prejudice.

C. Practical Impact and Forward-Looking Significance

• Consumer statutes and mixed-use properties: Borrowers who operate a business from owner-occupied commercial real estate should not expect TILA, RESPA, or FDCPA protections merely because the property also supports their livelihood or because they signed a personal guaranty. In the Fifth Circuit, the primary purpose test—profit-oriented commercial use—controls.
• Foreclosure purchasers and post-sale proposals: Lawful post-foreclosure conduct (such as offering a lease to the former occupant) will not, without more, support a RICO claim. Plaintiffs must identify specific predicate acts and a true pattern of racketeering, which foreclosure-related disputes rarely present absent independent criminality.
• State action in non-judicial foreclosure: Barrera’s rule remains robust. Using statutory procedures, trustees, or notaries does not transform private foreclosure into state action for § 1983 liability. Litigants seeking constitutional claims must anchor them in actual governmental involvement.
• Pleading rigor: The opinion underscores Iqbal’s plausibility standard. Plaintiffs must connect specific, nonconclusory facts to each element of each claim. This is particularly acute for RICO (predicate acts, continuity) and FDCPA (consumer debt threshold and regulated conduct).
• Pro se amendment strategy: To secure leave to amend, a pro se litigant should request it and preview the additional facts or legal theories that would cure defects. Merely asserting that one should have been allowed to amend, without more, will not suffice.

Complex Concepts Simplified

• Consumer vs. commercial loan: A “consumer” loan is primarily for personal, family, or household purposes (e.g., buying a home to live in). A “commercial” loan is primarily for business or profit-making purposes (e.g., buying a building to run a clinic). Federal statutes like TILA, RESPA, and FDCPA generally cover only the former.
• Personal guaranty: When an individual promises to pay a business’s debt if the business cannot. In the Fifth Circuit, a guaranty does not change the loan’s fundamental character from commercial to consumer.
• Business-purpose test: Courts look at the transaction’s primary purpose—whether it is profit-oriented and tied to business operations, which places it outside the consumer statutes’ scope.
• Non-judicial foreclosure: A private sale of collateral pursuant to a deed of trust or similar instrument without court involvement. In the Fifth Circuit, this is not “state action,” so constitutional due process claims typically fail.
• RICO basics: To state a claim, a plaintiff must allege an “enterprise,” at least two “predicate acts” (like mail or wire fraud), and a “pattern” showing relatedness and continuity. Lawful business proposals or post-sale conduct do not qualify.
• § 1983 and state action: § 1983 provides a remedy for constitutional violations committed under color of state law. Private conduct, even if regulated, is not state action unless the state is significantly involved.
• Rule 12(b)(6) and plausibility: A complaint must contain enough facts to make a claim plausible, not merely possible. Conclusory statements or recitations of elements do not suffice.
• De novo review: On appeal from a Rule 12(b)(6) dismissal, the Fifth Circuit reviews legal conclusions anew, without deference to the district court’s reasoning.
• Leave to amend and “best case”: Courts may deny amendment where the plaintiff has already had a fair chance and cannot articulate additional facts that would save the claims. Pro se status does not guarantee endless amendments.
• Bankruptcy stay and abandonment (context): Relief from stay and abandonment remove estate property from bankruptcy court protection and control. Once granted, a lender may proceed to foreclose under state law, as happened here.

Conclusion

Okorie v. University Mall reinforces several settled but frequently litigated rules in the Fifth Circuit:

• TILA, RESPA, and FDCPA do not apply to commercial or business-purpose loans. A personal guaranty or the borrower’s reliance on business income for household support does not convert a commercial loan into a consumer debt.
• Foreclosure-related RICO claims must allege concrete predicate acts and continuity; lawful acts by foreclosure purchasers—such as offering a lease—will not suffice.
• Non-judicial foreclosure is not state action; constitutional due process claims under § 1983 therefore fail absent significant government involvement.
• Plaintiffs, including those proceeding pro se, must meet modern pleading standards and, to preserve amendment, must articulate how an amendment would cure defects.

Although unpublished and non-precedential under Fifth Circuit Rule 47.5, this decision is a succinct, persuasive restatement of governing principles. It will be instructive in future borrower–lender disputes involving mixed-use properties, foreclosure-purchaser conduct, and attempts to recast commercial financing as consumer credit to invoke federal consumer-protection regimes.