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HENRIETTA J. MONDAY, an Individual v. STRIKE SAXON MORTGAGE SERVICES

November 29, 2010

HENRIETTA J. MONDAY, AN INDIVIDUAL, PLAINTIFF,
v.
STRIKE SAXON MORTGAGE SERVICES, INC, A TEXAS CORPORATION; OCWEN LOAN SERVICING, LLC, A DELAWARE LIMITED LIABILITY COMPANY; U.S. BANK, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF ABFC 2007-WMC1 TRUST ASSET BACKED FUNDING CORPORATION ASSET BACKED CERTIFICATED, SERIES 2007-WMC1, AN OHIO BUSINESS ENTITY; T.D. SERVICE COMPANY, A CALIFORNIA CORPORATION; AND DOES 1 THROUGH 10, INCLUSIVE, DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTIONS TO DISMISS AND TO

Plaintiff Henrietta J. Monday brought this action against defendants Saxon Mortgage Services, Inc. ("Saxon"), Ocwen Loan Servicing, LLC ("Ocwen"), U.S. Bank, N.A., as Trustee for the registered holders of ABFC 2007-WMC1 Trust Asset Backed Funding Corporation Asset Backed Certificated, Series 2007-WMC1 ("U.S. Bank"), and T.D. Service Company ("TDS"), arising out defendants' allegedly wrongful foreclosure on plaintiff's home. Presently before the court are motions to dismiss plaintiff's First Amended Complaint ("FAC") pursuant to Federal Rule of Civil Procedure 12(b)(6) brought separately by Saxon, U.S. Bank and Ocwen, and TDS, and Saxon's motion to strike portions of plaintiff's FAC pursuant to Rule 12(f).

I. Factual and Procedural Background In November of 2007, plaintiff entered into a mortgage transaction to refinance her home. (FAC ¶ 10.) Under the terms of the refinance, plaintiff borrowed $255,000.00, to be repaid with a monthly $1,814.31 payment of principal and interest. (Id. ¶ 10.) In February of 2008, Saxon allegedly 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. ¶¶ 11, 13.) 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. ¶ 11.)

Plaintiff received a monthly mortgage statement from Saxon that reflected this increase in March of 2008. (Id. ¶ 12.) 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. ¶ 14.) During this time, plaintiff regularly sent in a monthly payment in the amount agreed upon before Saxon's additional insurance charge. (Id.)

In November of 2008, plaintiff received a Notice of Intent to Foreclose from Saxon. (Id. ¶ 15.) She then 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 and that a refund of $3,679.00 had been credited to her loan. (Id. ¶ 16.) 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 of 2008, plaintiff mailed her typical $1,814.31 monthly payment to Saxon, believing that any account errors were corrected. (Id. ¶ 17.) 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 and TDS sent plaintiff a Notice of Default, which was recorded in the Sutter County Recorder's Office. (Id. ¶ 18.)

Saxon continued to refuse to correct its alleged errors and instead offered plaintiff a trial loan modification in March of 2009. (Id. ¶ 19.) On April 13, 2009, Saxon and TDS sent plaintiff a Notice of Trustee's Sale. (Id. ¶ 20.) 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. ¶ 21.) 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, that she never signed the trial modification agreement, and that she made extra payments. (Id. ¶¶ 22-23.) 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. ¶ 24.) 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. ¶ 25.) Plaintiff allegedly sent her payments in on time during the trial period in accordance with the modification agreement. (Id. ¶¶ 26-27.)

On November 13, 2009, Saxon allegedly told plaintiff's attorney by telephone that plaintiff's loan had been sold to Ocwen. (Id. ¶ 28.) Plaintiff subsequently mailed her December 2009 mortgage payment to Ocwen. (Id.) On December 16, 2009, a foreclosure sale of plaintiff's property was conducted. (Id. ¶ 29.) Plaintiff was sent a Notice to Quit from an attorney for U.S. Bank on January 28, 2010. (Id. ¶ 30.) 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. ¶ 32.) On May 28, 2010, judgment was entered in favor of Monday in that action. (Id. ¶ 35.)

Plaintiff's FAC (Docket No. 15) alleges claims against Saxon, Ocwen, and U.S. Bank for negligence, fraud and civil conspiracy to commit fraud, and violations of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200-17210, and against all defendants for negligent misrepresentation, cancellation of instrument, slander of title, and to set aside the trustee's sale. Defendants now move to dismiss the claims against them under Rule 12(b)(6) and Saxon also moves to strike portions of the FAC.

II. Discussion

A. Motion to Dismiss

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 complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1949 (2009) (quoting 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." Iqbal, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 556-57).*fn1

1. Negligence Claim against Saxon, Ocwen, and U.S. Bank

To prove a cause of action for negligence, plaintiff must show "(1) a legal duty to use reasonable care, (2) breach of that duty, and (3) proximate cause between the breach and (4) the plaintiff's injury." Mendoza v. City of L.A., 66 Cal. App. 4th 1333, 1339 (2d Dist. 1998). "The existence of a legal duty to use reasonable care in a particular factual situation is a question of law for ...


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