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Sean M. Park, et al v. Green Tree Servicing

March 1, 2011


The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge


This case is the latest in a multitude of cases arising out of the housing crisis that is currently gripping this country. The facts are familiar: Plaintiffs received a loan to purchase real property. Plaintiffs fell behind on the loan payments, and attempted to obtain a modification of their loan through the loan servicer. Plaintiffs believed they had obtained a modification of their loan, and made several payments according to the terms of the modification. At the same time, Plaintiffs were attempting to sell the property. Meanwhile, and unbeknownst to Plaintiffs, Defendants had not agreed to modify the loan, and had not applied any of Plaintiffs' "modified" payments to the loan balance. Defendants also declined to proceed with the sale. Accordingly, the loan fell into default, and Defendants initiated non-judicial foreclosure proceedings on the property. In an attempt to avoid the sale of their property, Plaintiffs filed the present case.

As in many, if not most, of these cases, the Plaintiffs are proceeding pro se. They have named as Defendants a number of corporate entities involved in the origination and servicing of their loan, and the attempted foreclosure proceedings. Plaintiffs have also named individual employees of those corporate entities as Defendants in this case. Faced with the loss of their property, Plaintiffs allege numerous claims for relief under both federal and state statutes and common law.

Defendants Green Tree Servicing, LLC, Marylou Jauregui, Jeremiah Pickett and Jason Pratt now move to dismiss Plaintiffs' First Amended Complaint ("FAC") in its entirety. Plaintiffs filed an opposition to the motion, and Defendants filed a reply. For the reasons discussed below, the Court grants in part and denies in part Defendants' motion.



Plaintiffs allege they are the owners of real property located at 2011-2017 W. Island Avenue, San Diego, California. On August 3, 2005, Plaintiffs obtained a loan from Defendant National City Bank of Indiana to purchase the property. (Req. for Judicial Notice in Supp. of Mot. ("RJN"), Ex. A.) On March 22, 2010, National City Bank assigned its interest in the property to Defendant Green Tree Servicing LLC. (Id.) On July 29, 2010, Defendant Green Tree, through Defendant Quality Loan Service Corporation, filed a Notice of Default on Plaintiffs' property. (RJN, Ex. B.) On September 10, 2010, Defendant Green Tree filed a Substitution of Trustee for Plaintiffs' property substituting Defendant Quality Loan as trustee. (RJN, Ex. C.) On November 2, 2010, Defendant Quality Loan filed a Notice of Trustee's Sale on Plaintiffs' property, scheduling the sale for November 23, 2010. (RJN, Ex. D.) The sale has since been postponed.

Plaintiffs allege that in March 2010 they entered into a contract with Defendant Green Tree to modify the loan on their property. Plaintiffs believed this was a permanent loan modification, (FAC at 2), and they made the first three payments as required. (Id. at 2-3.) Thereafter, Plaintiffs learned that their request for a loan modification had been denied. Plaintiffs sent a qualified written request ("QWR") to Defendants in which they disputed the debt and requested an accounting. (Id. ¶ 96.) Plaintiffs allege Defendants have not responded to Plaintiffs' QWR. (Id.) Plaintiffs also allege that they arranged for a sale of the property, but Defendants refused to proceed with that sale, instead opting to foreclose on the property. (Id. at 2.)

The First Amended Complaint alleges the following claims for relief: (1) violation of the Truth in Lending Act ("TILA"), (2) violation of California's Fair Debt Collection Practices Act ("the Rosenthal Act"), (3) violation of the federal Fair Debt Collection Practices Act ("the FDCPA"), (4) wrongful foreclosure, (5) violation of the Real Estate Settlement Procedures Act ("RESPA"), (6) breach of fiduciary duty, (7) intentional misrepresentation, (8) negligent misrepresentation, (9) violation of California Business and Professions Code § 17200, (10) breach of contract, (11) breach of the implied covenant of good faith and fair dealing, (12) quiet title, (13) injunctive relief, (14) rescission and (15) accounting.


DISCUSSION Defendants move to dismiss the First Amended Complaint in its entirety. They argue each of Plaintiffs' claims fails to state a claim for relief. Plaintiffs dispute Defendants' arguments and oppose dismissal of their First Amended Complaint.

A. Standard of Review

In two recent opinions, the Supreme Court established a more stringent standard of review for 12(b)(6) motions. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this new standard, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570). "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." Id. (citing Twombly, 550 U.S. at 556).

"Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)). In Iqbal, the Court began this task "by identifying the allegations in the complaint that are not entitled to the assumption of truth." Id. at 1951.

It then considered "the factual allegations in respondent's complaint to determine if they plausibly suggest an ...

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