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Anokhin v. BAC Home Loan Servicing


August 20, 2010


The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge


This action arises from a mortgage loan transaction in which Irene Anokhin ("Plaintiff") purchased a home in 2006. Presently before the Court is a Motion by BAC Home Loan Servicing, LP and Mortgage Electronic Registration System, Inc. ("Defendants") to Dismiss Plaintiff's First Amended Complaint ("Complaint") for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn1

For the reasons set forth below, Defendants' Motion to Dismiss is granted.


Through a mortgage transaction executed on April 10, 2006, Plaintiff purchased a home in Sacramento, California. After failing to make several payments pursuant to the terms of the mortgage, Plaintiff alleges she executed a Deed in Lieu, "granting, assigning and transferring" all of her rights and interest in the subject property on October 22, 2007. Not receiving any further correspondence from the lender, Plaintiff believed the issue was resolved.

Plaintiff defaulted on the mortgage in 2007. Defendant, BAC Home Loan Servicing, LP ("BAC"), the current servicer of Plaintiff's mortgage, commenced foreclosure proceedings. A Notice of Default was filed on November 9, 2007 indicating that the amount due under the mortgage was $14,329.56. On March 5, 2008, a Notice of Trustee's Sale was filed. A second Notice of Default was filed on May 15, 2009 which stated that the amount due under the mortgage was $64,735.08.

On July 20, 2009, Plaintiff sent to BAC what she describes as a "Qualified Written Request" ("QWR") seeking information regarding her current ownership and a detailed accounting of the amounts allegedly due under the loan. BAC has yet to respond to the QWR, which it received on July 24, 2009.

Plaintiff filed her Complaint on February 16, 2010 alleging violations of numerous state and federal claims including:

(1) Wrongful Foreclosure; (2) Quiet Title; (3) Real Estate Settlement Procedures Act, 12 U.S.C. § 2605; (4) California Business and Processional Code § 17200, et seq.; (5) Intentional Infliction of Emotional Distress; (6) Void Contract; (7) To Void and Cancel Deed of Trust; (8) California Civil Code § 2923.5; and

(9) Unfair Debt Collection Practices under the Federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq.

On March 15, 2010, Plaintiff filed a voluntary petition under Chapter 7 of the federal bankruptcy laws. (Pl.'s Mot. to Stay 2.) On July 19, 2010, this Court directed the parties to provide simultaneous briefing on the status of "Plaintiff's Chapter 7 Bankruptcy Proceedings, any pending or forthcoming stays, and how such matters apply in this case." (ECF No. 16.) As indicated in parties' supplemental briefing, on June 9, 2010, the trustee in Plaintiff's bankruptcy action filed a Report of Abandonment of Real Property, including the subject property in this civil suit. (Defs.' Supplemental Br. Exh. 1.) The Bankruptcy Court subsequently entered an order approving the report filed by the trustee and terminated the bankruptcy case on July 6, 2010.


On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to "give the defendant fair notice of what the...claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed. 2d 80 (1957). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the "grounds" of his "entitlement to relief" requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Bell Atl. Corp. v. Twombly, 2007 U.S. LEXIS 5901, 20-22 (U.S. 2007) (internal citations and quotations omitted). Factual allegations must be enough to raise a right to relief above the speculative level. Id. at 21 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004) ("The pleading must contain something more...than...a statement of facts that merely creates a suspicion [of] a legally cognizable right of action").

If the court grants a motion to dismiss a complaint, it must then decide whether to grant leave to amend. The court should "freely give[]" leave to amend when there is no "undue delay, bad faith[,] dilatory motive on the part of the movant,...undue prejudice to the opposing party by virtue of...the amendment, [or] futility of the amendment...." Fed. R. Civ. P. 15(a); Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is only denied when it is clear that the deficiencies of the complaint cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).


A. Standing

The commencement of a bankruptcy case creates an estate consisting of the debtor's property, which includes legal causes of action. Cusano v. Klein, 264 F.3d 936 (9th Cir. 2001); see also Smith v. Arthur Anderson LLP, 421 F.3d 989 (9th Cir. 2005). A trustee administers the estate and is vested with title to "all of the bankrupt's property at the time the bankruptcy petition is filed." Stein v. United Artists Corp., 691 F.2d 885, 891 (9th Cir. 1982). In such a capacity, the trustee has the ability to sue and be sued. 11 U.S.C. § 323. If property is not exempt from the estate, then it remains with the estate unless the trustee "abandons" it. 11 U.S.C. § 722. Abandonment requires an affirmative action or some other evidence of intent by the trustee. Stein, 691 F.2d at 890.

The moment Plaintiff declared bankruptcy, her civil suit against Defendants became the property of the estate. Turner v. Cook, 362 F.3d 1219, 1225-1226 (9th Cir. 2004). However, on June 9, 2010, the trustee administering Plaintiff's estate filed a Report of Abandonment of Real Property, which included the subject property in this civil suit. (Defs. Supplemental Br. Exh. 1.) The Bankruptcy Court entered an Order Approving the Trustee's Report of No Distribution and Closing Case, and the bankruptcy proceeding was terminated on July 6, 2010.

The record clearly establishes that the trustee took an affirmative action to abandon the estate's interest in the property. The bankruptcy proceeding having terminated, Plaintiff may proceed as the "real party in interest" in the instant civil litigation. See Catalano v. C.I.R., 279 F.3d 682 (9th Cir. 2002).

B. RESPA Claims

Plaintiff alleges that BAC violated RESPA by failing to respond to the QWR sent on July 20, 2009. (Complaint ¶ 35.) Plaintiff asserts that, as a result, she is unable to allege the "exact nature of the fees that were charged to her account" after having executed the Deed in Lieu and cannot "confirm the name of the current beneficiary under her Note." (Complaint ¶ 36.) Defendants' main contention is that the July 20, 2009 correspondence does not constitute a QWR. (Defs.' Mot. to Dismiss 12.)

A plaintiff alleging violation of RESPA section 2605 must show: (i) that the servicer failed to adhere to the rules governing a QWR; and (ii) that the plaintiff incurred "actual damages" as a consequence of the servicer's failure. See 12 U.S.C. § 2605. For the purposes of RESPA, a QWR is defined as "a written correspondence [] that... includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower."

12 U.S.C. § 2605(e)(1)(B). A loan servicer has the duty to act when it receives a QWR "for information relating to the servicing of the loan." 12 U.S.C. § 2605(e)(1)(A).

Based on Plaintiff's allegations, the letter submitted to Defendants constitutes a QWR as it requests information regarding fees charged to her account. See id. However, critical to any action brought alleging a violation of § 2605 is the ability of the plaintiff to show damages. 12 U.S.C. § 2605(f)(1)(A). These damages must flow from the failure of the servicer to provide the information sought by the plaintiff through the QWR. Id. Section 2605 permits an aggrieved plaintiff to recover two types of damages: statutory and actual. Here, Plaintiff has shown neither.

Courts may issue statutory damages not to exceed $1,000 in cases where there is a "pattern or practice of noncompliance" with § 2605. 12 U.S.C. § 2605(f)(1). Plaintiff has only provided evidence to show that Defendants failed to respond to a qualified written response on one occasion. This is not a sufficient showing to establish statutory damages. E.g, McLean v. GMAC Mortgage Corp., 595 F. Supp. 2d 1360 (S.D. Fla. 2009).

As regards to actual damages, Plaintiff makes the statement that she has suffered damages due to negative reporting to a credit rating agency. (Complaint ¶ 69.) This also falls short of the showing requirement. To constitute actual damages, the negative credit rating must itself cause damage to the plaintiff as evidenced by, for example, failing to qualify for a home mortgage. McLean, 595 F. Supp. 2d at 1373. Plaintiff's conclusory statement that she suffered negative credit ratings does not itself establish actual damages.

Plaintiff's Complaint fails to allege any damages, pecuniary or otherwise, that she has suffered due to BAC's failure to respond to the QWR within the required time frame. As a consequence, she has failed to state a claim upon which relief can be granted.

Plaintiff additionally argues that "[e]ven if no damages are alleged or warranted, Plaintiff can seek declaratory relief and request that this Court orders compliance with the RESPA requirements." (Pl.'s Opp'n 11:7) However Plaintiff has not pointed to any authority which might suggest that this Court may mandate statutory compliance by Defendants. Nothing in the statute or case law suggests that the Court may provide such a remedy.

Accordingly, Defendants' Motion to Dismiss Plaintiff's RESPA claim is granted.

C. FDCPA Claims

Plaintiff argues that Defendants violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq., by filing negative credit reports that damaged her credit history, continuing to contact her through computerized and other debt collection calls, and by "falsely stating the amounts of a debt by including the amounts that are not permitted by law or contract." (Complaint ¶¶ 69, 71, 71.)

The FDCPA regulates only "debt collectors." 15 U.S.C. §§ 1692(e)-(f). FDCPA's definition of "debt collector" excludes any person who collects debt "to the extent such activity...(i) concerns a debt which was originated by such person; or (ii) concerns a debt which was not in default at the time it was obtained by such person. 15 U.S.C. § 1692(a)(6)(f). As a result, the FDCPA does not extend to cover the "consumer's creditors, a mortgage servicing company, or any asignee of the debt, so long as the debt was not in default at the time it was assigned." Nool v. HomeQ Servicing, 653 F. Supp. 2d 1047 (E.D.Cal. 2009) (quoting Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985)).

It is well established in the Eastern District of California that a mortgage servicer is not considered a "debt collector" under the FDCPA. See Angulo v. Countrywide Home Loans, Inc., 2009 WL 3427179 at *5 (E.D.Cal. Oct. 26, 2009). Therefore, as a loan servicer, BAC cannot be held liable.

Accordingly, Defendants' Motion to Dismiss Plaintiff's FDCPA claim is granted.

D. Plaintiff's Remaining Causes of Action

Having failed to allege a viable federal claim, with only Plaintiff's state law claims remaining, this Court ceases to have subject matter jurisdiction over the suit. The Court declines to exercise its supplemental jurisdiction over the remaining state causes of action and they are dismissed without prejudice. The Court need not address the merits of Defendants' Motion to Dismiss with respect to the remaining state law causes of action as those issues are now moot.


For the reasons set forth above, Defendants' Motion to Dismiss Plaintiff's First Amended Complaint (Docket No. 6) is GRANTED with leave to amend.

Plaintiff may file an amended complaint not later than twenty (20) days after the date this Memorandum and Order is filed electronically. If no amended complaint is filed within said twenty (20)-day period, without further notice, Plaintiff's claims against Defendants will be dismissed without leave to amend.


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