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Day v. American Home Mortgage Servicing

March 25, 2010

CHARLES DAY, PLAINTIFF,
v.
AMERICAN HOME MORTGAGE SERVICING, INC., AND DOES 1-50, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. United States District Judge

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS*fn1

Defendant American Home Mortgage Servicing, Inc. ("AHMSI") filed a motion to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state claim upon which relief can be granted; and a motion for a more definite statement under Federal Rule of Civil Procedure 12(e). For the following reasons, AHMSI's motion to dismiss is granted and AHMSI's motion for a more definite statement is dismissed as moot.

Plaintiff alleges five claims in his complaint against AHMSI, all of which concern a mortgage loan Plaintiff obtained: (1) violation of the California Rosenthal Act; (2) breach of the covenant of good faith and fair dealing; (3) breach of fiduciary duty; (4) violation of California Business and Professions Code section 17200; and (5) breach of statutory duties.

I. Legal Standard

A Rule 12(b)(6) motion "challenges a complaint's compliance with... pleading requirements." Champlaie v. BAC Home Loans Servicing, LP, No. S-09-1316 LKK-DAD, 2009 WL 3429622, at *1 (E.D. Cal. Oct. 22, 2009). A pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief...." Fed. R. Civ. P. 8(a)(2). The complaint must "give the defendant fair notice of what the [plaintiff's] claim is and the grounds upon which relief rests...." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Further, "[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).

To avoid dismissal, the plaintiff must allege "only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 547. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. Plausibility, however, requires more than "a sheer possibility that a defendant has acted unlawfully." Id. "When a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (quotations and citation omitted).

In evaluating a dismissal motion under Rule 12(b)(6), the court "accept[s] as true all facts alleged in the complaint, and draw[s] all reasonable inferences in favor of the plaintiff." Al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, neither conclusory statements nor legal conclusions are entitled to a presumption of truth. See Iqbal, 129 S.Ct. at 1949-50.

II. Analysis

A. Rosenthal Act Claim

AHMSI seeks dismissal of Plaintiff's first claim for violation of the Rosenthal Act, arguing Plaintiff "makes conclusory allegations" without alleging any "specific acts or omissions of any of the Defendants." (Mot. 3:17, 23.) Plaintiff responds, arguing he has satisfied the requirements of Federal Rule of Civil Procedure 8. (Opp'n 3:10-25.)

California's Rosenthal Act "serves to 'prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and to require debtors to act fairly in entering into and honoring such debts.'" Arikat v. JP Morgan Chase & Co., 430 F. Supp. 2d 1013, 1026 (N.D. Cal. 2006) (citing Cal. Civ. Code § 1788.1) (emphasis omitted). However, the Act only governs the conduct of a "debt collector," which under the statute is defined as "any person who, in the ordinary course of business, regularly, and on behalf of himself or herself... engages in debt collection." Cal Civ. Code. § 1788.2.

Plaintiff alleges in his complaint: Defendants' actions constitute a violation of the Rosenthal Act in that they threatened to take actions not permitted by law, including...: foreclosing upon a void security interest; foreclosing upon a note of which they were not in possession nor otherwise entitled to payment; falsely stating the amount of a debt; increasing the amount of a debt by including amounts that are not permitted by law or contract; and using unfair and unconscionable means in an attempt to collect a debt. (Compl. ¶ 9.) Plaintiff's allegations fail to "give [AHMSI] fair notice of what the [Plaintiff's] claim is and the grounds upon which relief rests...." Twombly, 550 U.S. at 555. Plaintiff has not alleged that AHMSI is a "debt collector" subject to the statute; nor has Plaintiff identified which provision of the Rosenthal Act was allegedly violated or on which loan AHMSI allegedly attempted to collect from Plaintiff. See Molina v. Washington Mutual Bank, No. 09-cv-0094-IEG-AJB, 2010 WL 431439, at *6 (S.D. Cal. Jan. 29, 2010) (dismissing Rosenthal Act claim for failure to identify the provisions allegedly violated and for failure to allege that Defendants were debt collectors). Moreover, Plaintiff's allegations do not show that "foreclosing on a property pursuant to a deed of trust is... collection of a debt within the meaning of the [Rosenthal Act]." Benham v. Aurora Loan Servs., 2009 WL 2880232, at *2 (N.D. Cal. Sept. 1, 2009). Therefore, Plaintiff's first claim is dismissed.

B. Breach of the Implied Covenant of Good Faith and Fair Dealing Claim

AHMSI also seeks dismissal of Plaintiff's second claim for breach of the implied covenant of good faith and fair dealing, arguing "no contract between Plaintiff and AHMSI has been identified or exists since AHMSI is just the loan servicer on this loan." (Mot. 5:1-2.) Plaintiff responds, arguing "while Plaintiff admits that this cause of action probably does ...


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