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Monday v. Saxon Mortgage Services

June 25, 2010



Plaintiff Henrietta J. Monday brought this action against defendants Saxon Mortgage Services, Inc. ("Saxon"), Ocwen Loan Servicing, LLC ("Ocwen"), and U.S. Bank N.A. ("U.S. Bank") arising out defendants' allegedly wrongful foreclosure on plaintiff's home. Presently before the court is defendants Ocwen and U.S. Bank's motion to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

I. Factual and Procedural Background

In November of 2007 plaintiff entered into a mortgage transaction to refinance her property located at 1780 Edwin Drive in Yuba City, California. (Compl. ¶¶ 1, 7.) Under the terms of the refinance, plaintiff borrowed $255,000.00, making her monthly $1,814.31 payment of principal and interest. (Id. ¶ 7.) In February 2008, Saxon allegedly made an accounting error and falsely informed plaintiff that she failed to maintain homeowners' insurance on her home, even though plaintiff had a valid homeowners' insurance policy at the time. (Id. ¶¶ 8, 10.) As a result of the alleged error, Saxon increased plaintiff's monthly mortgage payment by $523.00 per month to pay for a Saxon-instituted homeowners' insurance policy. (Id. ¶ 8.)

Plaintiff received a monthly mortgage statement from Saxon that reflected this increase in March of 2008. (Id. ¶ 9.) Plaintiff allegedly made numerous calls to Saxon to reverse the monthly payment increase, but could not get any of Saxon's customer service agents to admit Saxon was in error. (Id.) Plaintiff was not able to afford the $523.00 increase in her monthly mortgage payment and instead made her previous regular payment of $1,814.31 to Saxon for her March bill. (Id.) Plaintiff allegedly attempted to get Saxon to clear the error on her account by contacting customer service agents and writing letters to Saxon for nine months. (Id. ¶ 11.) During this time, plaintiff regularly sent in her previous monthly payment amount before Saxon's additional insurance charge. (Id.)

In November 2008, plaintiff allegedly received a notice of intent to foreclose from Saxon. (Id. ¶ 12.) Upon receiving the notice plaintiff contacted Saxon again and was able to speak to a Saxon manager who confirmed that Saxon had made a mistake and that plaintiff's homeowners' insurance had not lapsed. (Id.) The manager allegedly assured plaintiff that the mistake would be corrected and that Saxon would not foreclose on her home. (Id.) On November 18, 2008, plaintiff allegedly received a letter from Saxon that stated that the insurance issue with her account had been resolved, the insurance purchased on her house by Saxon had been canceled, and that a refund of $3,679.00 had been credited to her loan. (Id. ¶ 13.) However, Saxon allegedly applied the credit to plaintiff's principal balance and not the reported delinquency on her loan, which caused plaintiff's account to appear as if it was still in default. (Id.)

In December 2008, plaintiff mailed in her typical $1,814.31 monthly payment to Saxon, believing that any account errors were corrected. (Id. ¶ 14.) Saxon immediately returned plaintiff's payment and stated that it would not accept the payment because she was in default. (Id.) On January 15, 2009, Saxon sent plaintiff a Notice of Default, which it recorded in the Sutter County Recorder's Office. (Id. ¶ 15.)

In March 2009, plaintiff hired an attorney to induce Saxon to correct their alleged accounting errors. (Id. ¶ 16.) Saxon refused to correct the alleged errors and instead offered plaintiff a loan modification. (Id.) On April 13, 2009, Saxon sent plaintiff a Notice of Trustee's Sale. (Id. ¶ 17.) Fearing she would lose her home, plaintiff allegedly accepted and signed Saxon's proposed loan modification, which required monthly payments of $1,428.95 each month from June 2009 to August 2009.

(Id. ¶ 18.) Despite allegedly making her monthly payments on time, plaintiff avers that Saxon insisted plaintiff was not making timely payments, that her loan modification was never approved, and that she never signed the trial modification. (Id. ¶¶ 19-20.) At the end of the trial modification period, Saxon claimed plaintiff did not make payments under the trial plan and refused to accept her payments for July and August of 2009. (Id. ¶ 21.) At the end of August 2009, Saxon allegedly offered plaintiff a second trial loan modification plan for September 2009 through November 2009, which plaintiff accepted. (Id. ¶ 22.) Plaintiff allegedly sent her payments in on time during the trial period in accordance with the modification agreement. (Id. ¶¶ 23-24.)

On November 13, 2009, Saxon allegedly told plaintiff's attorney by telephone that plaintiff's loan had been sold to Ocwen. (Id. ¶ 25.) Plaintiff subsequently mailed her December 2009 mortgage payment to Ocwen. (Id.) On December 16, 2009, a foreclosure sale was conducted and plaintiff's property was sold to U.S. Bank. (Id. ¶¶ 26-27.) Plaintiff was sent a Notice to Quit from an attorney for U.S. Bank on January 28, 2010. (Id. ¶ 27.) When plaintiff refused to leave her home, U.S. Bank commenced an unlawful detainer action against plaintiff in Sutter County Superior Court on February 18, 2010. (Id. ¶ 29.)

Plaintiff filed this action against defendants on March 19, 2010 in Sutter County Superior Court, alleging causes of action for negligence, negligent misrepresentation, fraud, cancellation of instrument, imposition of constructive trust, quiet title, and violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200-17210. Defendants subsequently removed the action to this court on April 23, 2010 on the basis of diversity of citizenship pursuant to 28 U.S.C. § 1332. (Docket No. 1.) Defendants Ocwen and U.S. Bank now move to dismiss those claims against them in the Complaint.*fn1

II. Discussion

On a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a motion to dismiss, a plaintiff needs to plead "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," and where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 556-57).

In general a court may not consider items outside the pleadings upon deciding a motion to dismiss, but may consider items of which it can take judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). A court may take judicial notice of facts "not subject to reasonable dispute" because they are either "(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201. Ocwen and U.S. Bank submitted a request for judicial notice, asking the court to take judicial notice of several publically recorded documents related to plaintiff's mortgage. (Docket No. 7.) The court ...

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