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Title: Noel G. Lesley Sr., et al v. Ocwen Fin. Corp.

March 13, 2013


The opinion of the court was delivered by: Honorable David O. Carter, Judge



Julie Barrera N/A Courtroom Clerk Court Reporter


None Present None Present



Before the Court is a Motion to Dismiss ("Motion") filed by Defendants Ocwen Financial Co. and Litton Loan Servicing, LP ("Defendants") on December 7, 2012. Mot. (Dkt. 15). After considering the moving papers and the opposing papers, the Court GRANTS the Defendants' Motion and DISMISSES Plaintiffs' Complaint.*fn1


All of the facts that follow are those alleged by Plaintiffs and are interpreted in the light most favorable to them.

On July 6, 2006, Noel Lesley Sr. and Debra L. Lesley ("Plaintiffs") executed a deed of trust in favor of Countrywide Home Loans, Inc. ("Countrywide") for $301,500.00. Notice of Removal ("Removal") (Dkt. 1) Ex. C. This deed was secured by Plaintiffs' property, located at 12419 9th Avenue, Victorville, CA 92395-9532 ("the property"). Id.

On December 13, 2008, Noel Lesley Sr. and Debra L. Lesley filed an action in Orange County Superior Court against Countrywide and Litton Loan Servicing, LLC ("Litton"). First Amended Complaint ("FAC") (Dkt. 11) ¶ 5; Lesley v. Countrywide Home Loans, Inc., No. 30-2008-00116811-CU-BT-CJC (Orange County Sup. Ct. July 29, 2010). That complaint alleged causes of action for breach of contract, breach of implied covenant of good faith and fair dealing, and violation of Cal. Bus. & Prof. Code § 17200. FAC ¶ 5. This complaint was later amended to include claims of negligent and intentional infliction of emotional distress. Id. On August 24, 2009, Plaintiffs' complaint was consolidated with another action, which was based on common allegations concerning the origination of mortgage promissory notes and deeds of trust. FAC¶ 8. On May 1, 2009, the parties agreed to a stipulated stay in order to attempt to settle their disputes. FAC ¶ 9. At the time, counsel for Litton stated that the case was being stayed in order to finalize loan modifications, since all plaintiffs qualified. Id. During the stay, each of the plaintiffs (other than those herein) were provided with loan modifications of 203%. Id. On June 11, 2009, Defendant Litton notified Plaintiffs that they would not be receiving a loan modification because the death of their son and the attendant medical expenses did not qualify as a hardship. Id. ¶ 10. Ultimately that case was voluntarily dismissed, for reasons not in the record, on July 29, 2010, on motion by Plaintiffs. Id. ¶ 9.

Eventually, Litton sent Plaintiffs a letter on February 12, 2011, outlining the terms of a potential loan modification agreement. FAC ¶ 13, Ex. A. The record does not reveal why Defendants decided, more than six months after the conclusion of litigation, to consider offering a loan modification to Plaintiffs. According to the letter's terms the modification could be finalized after Plaintiffs completed a trial period plan ("TPP") in which Plaintiffs were expected to pay three payments of $1,900.37 on April 1, May 1, and June 1, 2011. Id. Ex. A. The letter stated in relevant part that the "terms of the proposed modification are . . . subject to final approval" and that "Mr. And Mrs. Lesley agree that nothing in the trial period plan shall be understood or construed to be a satisfaction or release in whole or in part of the obligations contained in the loan documents." Id. Moreover, according to the letter, the details of the loan modification could be negotiated only after Plaintiffs signed a release agreement concerning their claims against Defendants. Id. Plaintiffs made all three payments to Litton on time (a fact uncontested by Defendants) along with an additional payment on July 1, 2011. Id. ¶ 14. On February 2, 2012, counsel for Litton wrote Plaintiffs to inform them that Litton had been acquired by OCWEN and that Litton was working with OCWEN to finalize the modification. Id. ¶ 17. However, on March 24, 2012, OCWEN wrote Plaintiffs informing them that they were not eligible for a home loan modification because they did not make all of the required Trial Period Plan payments on time. Id. ¶ 18.

Plaintiffs then filed the instant case in Orange County Superior Court on April 10, 2012, against Ocwen Financial Corp., Ocwen Loan Servicing LLC (collectively "Ocwen"), Litton, and Bank of America, N.A. (collectively "Defendants"). Removal at 7. On October 9, 2012, the case was removed to this Court from Orange County Superior Court by Litton and Ocwen. Removal (Dkt. 1). Litton and Ocwen then filed a Motion to Dismiss the case on October 16, 2012, followed by Plaintiffs' FAC on November 9, 2012. Mot. (Dkt. 4); FAC (Dkt. 11). The FAC contained five claims based in part on the letter from Litton to Plaintiffs proposing a TPP, which Plaintiffs allege constitutes a contract that Defendants breached by refusing to modify their home loan. FAC ¶¶ 26, 31-32. The FAC further alleged that Litton's 2009 letter informing them that they would not be receiving a loan modification because the death of their son did not qualify as a hardship sufficient to merit loan modification negligently and intentionally caused them severe emotional distress. Id. ¶¶ 51, 65-67. Litton and Ocwen Loan Servicing LLC then filed their Motion to Dismiss Plaintiffs' FAC on December 7, 2012, followed by Plaintiffs' Opposition on January 7, 2013. Mot. (Dkt. 15); Opp'n. (Dkt. 17).

II.Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to set forth a set of facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (holding that a claim must be facially plausible in order to survive a motion to dismiss). The pleadings must raise the right to relief beyond the speculative level; a plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555(citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). On a motion to dismiss, this court accepts as true a plaintiff's well-pled factual allegations and construes all factual inferences in the light most favorable to the plaintiff. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The court is not required to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.

Dismissal without leave to amend is appropriate only when the court is satisfied that the deficiencies in the complaint could not possibly be cured by amendment. Jackson v. Carey, 353 F.3d 750, 758 (9th Cir. 2003); Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (holding that dismissal with leave to amend should be granted even if no request to amend was made). Rule 15(a)(2) of the Federal Rules of Civil Procedure states that leave to amend should be freely given "when justice so requires." This policy is applied with "extreme liberality." Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990).


Defendants' Motion maintains that Plaintiffs have not alleged facts that, if true, would establish that a contract was formed between the parties. Mot. at 3. In the alternative, Defendants argue that they have not breached their contract because they performed their obligations. Id. at 4. Consequently, Defendants maintain that Plaintiffs' breach of contract and breach of covenant of good faith and fair dealing claims should be dismissed. Id. at 4-5. Defendants also argue that Plaintiffs' claim that Defendants have violated Cal. Bus. & Prof. Code § 17200 should be dismissed because Plaintiffs have not alleged that Defendants committed any underlying statutory violations. Id. at 6. Moreover, the Motion argues that Plaintiffs' negligent infliction of emotional distress ("NIED") claim should be dismissed because Defendants never possessed a duty of care towards Plaintiffs. Id. at 10-12. Defendants also allege that Plaintiffs have not successfully pled their claim of intentional infliction of emotional distress ("IIED") because they have not alleged that Defendants engaged in conduct that could be considered outrageous. Id. at 12-14. Finally, Defendants also claim that Plaintiffs' claims for NIED and IIED are barred by the statute of limitations. Id. at 12, 13.

A. Plaintiffs' Breach of Contract Claim Fails Because They Do Not Allege Facts Sufficient to Show a Meeting of the Minds on All Material Points.

"[T]o state a claim for breach of contract, the plaintiff must plead: 1) the existence of the contract; 2) plaintiff's performance or excuse for nonperformance of the contract;

3) defendant's breach of the contract; and 4) resulting damages." Armstrong Petrol. Corp. v. Tri Valley Oil & Gas Co., 11 Cal. Rptr. 3d 412, 424 n.6 (2004). Further, in California "there is no contract until there has been a meeting of the minds on all material points." Banner Entm't, Inc. v. Super. Ct. (Alchemy Filmworks, Inc.), 62 Cal. App. 4th 348, 357-- 58 (1998) (emphasis removed). Whether lenders and borrowers who enter into a loan modification TPP have contracted to finalize a loan modification is a fact sensitive question that often turns on the language of the alleged contract. See, e.g., Nungaray v. Litton Loan ...

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