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Cecilia E. Gonzalez v. Heritage Pacific Financial

February 29, 2012

CECILIA E. GONZALEZ, PLAINTIFF,
v.
HERITAGE PACIFIC FINANCIAL, LLC; ET AL., DEFENDANTS.



ORDER

This matter arises out of plaintiff's allegations that defendants, in attempting to collect a debt plaintiff allegedly owes defendant Heritage Financial Pacific, LLC ("Heritage"), violated the Fair Debt Collection Practices Act ("FDCPA"), the Rosenthal Fair Debt Collection Practices Act ("RFDCPA"), and California Business and Professions Code § 17200. Through this motion, defendants seek dismissal of plaintiff's complaint in accordance with Federal Rule of Civil Procedure 12(b)(3); alternatively, they seek an order transferring this case under 28 U.S.C. § 1404(a) to the Central District of California. Plaintiff opposes the motion. For the reasons set forth below, defendants' motion is granted in part and denied in part.*fn1

I. FACTS

In October 2006, plaintiff and her daughter financed property located at 16775 Forty Niner Trail, Lathrop, California in San Joaquin County*fn2 by obtaining two purchase money loans from WMC Mortgage Corporation. (Pl.'s Compl., filed May 20, 2011 [ECF 1] ¶ 31.) Each note was secured by a separate deed of trust recorded against the property at the time of purchase. (Id.) Plaintiff incurred the second junior note, the note relevant to this motion, for personal, family and household purposes. (Id.)

Plaintiff defaulted on both notes on an undisclosed date. (Id. ¶ 33.) The holder of the first note conducted a non-judicial foreclosure of the first deed of trust. (Id.) According to the complaint, plaintiff, now a New Orleans resident, vacated the property months before the foreclosure took place. (Id. ¶¶ 8, 33.)

Plaintiff alleges that defendant Heritage, a limited liability company with its principal place of business in Texas, purchased the second note. (Id. ¶¶ 34-35; Declaration of Brad A. Mokri ["Mokri Decl."], filed July 07, 2011 [ECF 13-2] ¶ 3.) Plaintiff further alleges that, at the time of the purchase, Heritage "had actual knowledge that collection on the debt was prohibited by California's anti-deficiency law, including California Financial Code § 7460, and that their conduct in attempting to collect the debt violated various provisions of the FDCPA and the RFDCPA." (Id. ¶ 37.)

In 2010, Heritage retained defendants Brad Mokri and Jennifer Hupe of the Law Offices of Brad Mokri, attorneys based out of Santa Ana, California, to facilitate collection of the principal amount of the debt owed under the second note. (Mokri Decl. ¶ 3; Pl.'s Compl. ¶ 38.) As part of its collection efforts, Mokri's law firm filed a lawsuit against plaintiff in the Superior Court of California for San Joaquin County ("San Joaquin action"). (Pl.'s Compl. ¶ 39.) Defendants' complaint in the San Joaquin action alleged, in pertinent part, that plaintiff and her daughter, who cosigned on the notes, fraudulently misrepresented their annual income for purposes of obtaining loans they knew they could not afford. (See generally Pl.'s Req. for Judicial Notice ["RJN"], filed Aug. 12, 2011 [ECF 18, Ex. A].) Plaintiff alleges that defendants Mokri and Hupe "had actual knowledge that collection on the debt was prohibited by California's anti-deficiency laws," and thus, filing the lawsuit violated the FDCPA and RFDCPA. (Pl.'s Compl. ¶ 40.) According to defendants, various employees at the Law Offices of Mokri & Associates in Santa Ana, California, researched and analyzed the law and facts applicable to this lawsuit and concluded that California law permitted actions against purchase-money debtors who fraudulently obtained loans by misrepresenting their income. (Mokri Decl. ¶¶ 4-5.)

II. ANALYSIS

A. Improper Venue

Defendants seek to dismiss plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(3), arguing that venue is improper in the Eastern District because a substantial portion of the events giving rise to plaintiff's FDCPA claim did not occur in this district. Defendants maintain that, although they filed the San Joaquin action in this district, the actual conduct plaintiff alleges was improper, and that gave rise to plaintiff's claim, occurred in the Central District of California. (Def.'s Mot., filed July 07, 2011 [ECF 13-1] at 5:20-6:6.) Specifically, defendants argue that the events giving rise to plaintiff's FDCPA claim arose from defendants' knowledge that California law allegedly precludes collection of the debt. Id. That knowledge, defendants aver, would have been acquired in Santa Ana, California, where defendants researched the facts and analysis applicable to the San Joaquin action. Id. at 6:2.

Plaintiff counters that, even if defendants' conduct at the Santa Ana law office establishes that venue is proper in the Central District of California, it does not therefore follow that venue is improper in the Eastern District of California. Plaintiff points to the fact that not only did the specific, and most obvious, collection effort - filing of the lawsuit - occur in the Eastern District, but the transaction by which plaintiff incurred the underlying debt also occurred in the Eastern District. (Pl.'s Opp'n, filed Aug. 12, 2011 [ECF 17] at 2:23-3:5.) The crux of plaintiff's FDCPA claims, plaintiff maintains, was the improper filing of the San Joaquin action, and thus, a substantial portion of the events that gave rise to this claim clearly occurred in the Eastern District.

Federal Rule of Civil Procedure 12(b)(3) permits a defendant to move for dismissal when venue is improper. 28 U.S.C. § 1391(b) provides that, in "[a] civil action wherein jurisdiction is not founded solely on diversity of citizenship," venue is proper "only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought." 28 U.S.C. § 1391(b) accounts for the possibility that venue may be proper in more than one judicial district. Kelly v. Qualitest Pharm. Inc., 2006 WL 2536627, at *8 (E.D. Cal. Aug. 31, 2006) (citing Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir. 2004)). Indeed, the word "substantial" is by no means synonymous with "majority": "it is not necessary that a majority of the events occurred in the district where suit is filed, that the events in that district predominate, or that the chosen district is the 'best venue.'" Id. Rather, plaintiff must simply "show that a 'substantial part' of the events giving rise to [her] claims occurred" in the Eastern District of California. Id. However, "[s]ince the events or omissions giving rise to the plaintiff's claim must be substantial, events or omissions that might only have some tangential connection with the dispute in litigation are not enough." Trico Bancshares & Subsidiaries v. Rothgerber Johnson & Lyons LLP, 2009 WL 3365855, at *6 (E.D.Cal. Oct. 15, 2009) (quoting Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 294 (3d Cir. 1994)).

The appropriate inquiry under Rule 12(b)(3) is not whether venue is more appropriate in a different judicial district, but rather whether venue is appropriate in the particular district in which plaintiff filed her claim. Rule 12(b)(3) places the burden upon plaintiff to show that venue is proper in this district. Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir.1979); Hope v. Otis Elevator Co., 389 F.Supp.2d 1235, 1243 (E.D. Cal. 2005). Unlike a motion to dismiss for failure to state a viable claim under Rule 12(b)(6), on a motion for improper venue under Rule 12(b)(3), "the pleadings need not be accepted as true and the court may consider supplemental written materials and consider facts outside the pleadings" in its adjudication. Kelly v. Qualitest Pharm, Inc., 2006 WL 2536627, at *7 (E.D. Cal. 2006) (citing Murphy v. Scheider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004). The decision to dismiss for improper venue is a matter within the sound discretion of the district court. Cook v. Fox, 537 F.2d 370, 371 (9th Cir. 1976).

Plaintiff's contention, that the filing of the San Joaquin action for purposes of collecting the debt constituted a substantial portion of the of the events giving rise to plaintiff's FDCPA claim, is well-taken. Plaintiff's claims allege that defendants improperly attempted to collect a debt. Plaintiff alleges that the last improper act in attempting to collect that debt was filing a lawsuit plaintiff maintains defendants knew was improper. The filing of the lawsuit in San Joaquin County was a substantial event that gave rise to plaintiff's claim. Indeed, but for filing of that allegedly improper suit, it is reasonable to ...


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