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Keith O. Hedman and Adrialyn V. Hedman v. Aurora Loan Services

March 7, 2011

KEITH O. HEDMAN AND ADRIALYN V. HEDMAN, PLAINTIFFS,
v.
AURORA LOAN SERVICES, ET AL., DEFENDANTS.



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

MEMORANDUM AND ORDER

Plaintiffs Keith and Adrialyn Hedman ("Plaintiffs") seek redress from Defendants Aurora Loan Services, Quality Loan Service, and CMG Mortgage, Inc. ("Defendants") based on alleged violations of the Real Estate Settlement Procedures Act ("RESPA"), the Fair Credit Reporting Act ("FCRA"), and the Fair Debt Collection Practices Act (the "FDCPA"), among other state causes of action.

Presently before the Court are two separate Motions by Defendants Aurora Loan Services ("Aurora") and CMG Mortgage, Inc. ("CMG") to Dismiss Plaintiffs' Second Amended Complaint for failure to state a claim upon which relief may be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn1 For the reasons set forth below, Defendants' Motions to Dismiss are both granted.

BACKGROUND*fn2

This action stems from a residential mortgage loan on Plaintiffs' property located in the city of Mountain House, San Joaquin County, California. In 2004, Plaintiffs entered into a mortgage loan for the home with Defendant CMG. At some point after Plaintiffs financed their mortgage, CMG assigned this loan to Aurora.*fn3 Plaintiffs made timely payments to Aurora for several years.

Beginning in March 2008, Plaintiffs attempted to modify the terms of their loan with Aurora. Aurora initially denied their application and request to modify the loan, though later approved a trial loan modification, whereupon Plaintiffs made timely payments according to the terms of the trial modification.

Despite adhering to the trial loan modification payment schedule, and before the trial period was over, Aurora sent a letter to Plaintiffs explaining that they did not qualify for a permanent mortgage modification because Plaintiffs had failed to verify their income. During this time, Aurora also made several harassing phone calls to Plaintiffs and placed notices on their front door demanding payment. Despite their attempts to cooperate with Aurora, Notices of Default were recorded against Plaintiffs' property on March 11 and March 30, 2010. Plaintiffs do not assert the property was ever foreclosed upon, as the default notices were later rescinded.

In addition, Defendants reported negative information to credit reporting agencies regarding Plaintiffs' supposedly delinquent payments. Plaintiffs complained their credit report was negatively impacted by Defendants' false claims. Plaintiffs received a letter from Defendant Aurora admitting that information reported to the credit agencies was false, and that they were attempting to rectify the problem. However, to date, Plaintiffs' credit is still negatively impacted. Defendant CMG contends that they sold Plaintiffs' loan to Aurora in 2004, and had no further relationship with the loan or Plaintiffs.*fn4 (CMG Mot. To Dismiss, ECF No. 25, at 3.)

STANDARD

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). Rule 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," to "give the defendant fair notice of what the...claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and quotations omitted). Though "a complaint attacked by a Rule 12(b)(6) motion" need not contain "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." Id. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 2869 (1986)). A plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Id. (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) ("[T]he pleading must contain something more...than...a statement of facts that merely creates a suspicion [of] a legally cognizable right of action.")).

Further, "Rule 8(a)(2)...requires a 'showing,' rather than a blanket assertion, of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirements of providing...grounds on which the claim rests."

Twombly, 550 U.S. at 555 n.3 (internal citations omitted). A pleading must then contain "only enough facts to state a claim to relief that is plausible on its face." Id. at 570. If the "plaintiffs...have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed." Id.

Once the court grants a motion to dismiss, they must then decide whether to grant a plaintiff leave to amend. Rule 15(a) authorizes the court to freely grant leave to amend when there is no "undue delay, bad faith, or dilatory motive on the part of the movant." Foman v. Davis, 371 U.S. 178, 182 (1962). In fact, leave to amend is generally only denied when it is clear that the deficiencies of the complaint cannot possibly be cured by an amended version. See DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992); Balistieri v. Pacifica Police Dept., 901 F. 2d 696, 699 (9th Cir. 1990) ("A complaint should not be dismissed under Rule 12(b)(6) ...


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