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Bustamante v. J.P. Morgan Chase N.A

United States District Court, S.D. California

March 5, 2014

CESAR BUSTAMANTE and CYNTHIA BUSTAMANTE, Plaintiffs,
v.
J.P. MORGAN CHASE N.A., as successor in interest to EMC MORTGAGE CORPORATION; NATIONAL DEFAULT SERVICING CORPORATION; WELLS FARGO BANK, N.A., AS TRUSTEE FOR THE CERTIFICATE HOLDERS OF CARRINGTON MORTGAGE LOAN TRUST, SERIES 2007-FRE1 ASSET BACKED PASS-THROUGH CERTIFICATES; and DOES 1 through 50, inclusive, Defendants.

ORDER DISMISSING FAIR DEBT COLLECTION PRACTICES ACT CLAIM; AND ORDER OF REMAND

LARRY ALAN BURNS, District Judge.

I. Background.

Plaintiffs Cesar Bustamante and Cynthia Bustamante filed this action in the Superior Court of California for the County of San Diego on August 28, 2012. The Bustamantes initially named as defendants Fremont Investment and Loan, Fremont Credit Corporation, Wells Fargo Bank, N.A., EMC Mortgage Corporation, and 50 unnamed defendants. The Bustamantes amended their complaint on November 21, 2012, naming the current defendant, J.P. Morgan Chase, N.A. (Chase), which is the successor in interest to some of the originally named Defendants, along with Wells Fargo Bank, N.A. The Bustamantes filed their second amended complaint (SAC) on February 8, 2013, this time adding a claim under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p.[1] Chase removed the action to federal court under 28 U.S.C. § 1441, [2] and has moved to dismiss for failure to state a claim.

Neither party's pleadings or briefing is as clear or accurate as it might be, but it appears to be clear enough that additional briefing or clarification is unnecessary.

II. Discussion

A. Overview of Claims

This dispute arises from a home loan that is now in default.[3] (SAC, Dkt. No. 1-6 at ¶ 14.) EMC Mortgage Corporation originated the loan on December 22, 2006. Id. at ¶ 2. Chase is its successor. Id. The $420, 750 loan was for a property located at 14211 Halper Road, Poway, California 92064 (Poway Property). Id. at ¶ 7-8. Mortgage payments began at $1, 947.66. Id. at ¶ 8. The Bustamantes owned two other properties, from which they collected rental income, id. at ¶ 9, though the Poway Property was their home. Id. at ¶ 13. Together, the Bustamantes earned about $14, 300 per month. Id. at ¶ 21. Around the time when the Bustamantes took out the home loan, Cesar Bustamante's mother became sick, and required treatment in the Philippines.[4] Id. at ¶ 10. The Bustamantes paid about $2, 000 to $3, 000 per month for the treatment, id. at ¶ 22, and eventually began missing mortgage payments. Id. at ¶ 10-11. The cost of medical care for the mother combined with at least three mortgage payments prompted the Bustamantes to tap into their savings. Id. at ¶ 12. The Bustamantes were also paying between $4, 000 and $4, 900 per month to maintain a different property that was not generating income.[5] Id. at ¶ 23. In February 2012, the Bustamantes' mortgage payments on the Poway Property increased to $2, 921.46. Id. at ¶ 15. That same month, the Bustamantes attempted to get a loan modification. Id. at ¶ 16. Because they found the paperwork confusing, they did not list certain expenses, which they believe led to denial of the loan modification. Id. at ¶ 17-18. The Bustamantes again applied for a loan modification in April 2012 and were denied. Id. at ¶ 19-20. Meanwhile, they were being saddled with fees, arrears, and growing interest. Id. at ¶ 20. Sometime later in 2012, Cesar Bustamante's sister had triple bypass surgery, which the Bustamantes helped pay for.[6] Id. at ¶ 27. Amid this financial stress, exacerbated by frequent phone calls from Chase, Cesar Bustamante began having panic attacks, memory loss, palpitations, body shakes, and bouts of hyperventilation, and had difficulty concentrating. Id. at ¶ 26.

A notice of sale on the Poway Property was recorded on June 29, 2012. Around the same time, the Bustamantes were "bombarded with calls and notices from Chase and EMC." Id. at ¶ 30. Cesar Bustamante received some of these calls at work, and was nearly disciplined by his employer. Id. at ¶ 30. The Poway Property was put up for sale on December 31, 2012. Id. at ¶ 31. In early 2013, Cesar Bustamante's panic attacks and health problems grew to the point that he left his employment on disability and sought medical and psychiatric care, and now requires prescription drugs. Id. at ¶ 32.

The Bustamantes are bringing three claims, for: (1) negligence; (2) violations of California's Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200 et seq.; and (3) violations of the FDCPA. The Court has original jurisdiction over the FDCPA claim under 28 U.S.C. § 1331, and supplemental jurisdiction over the state law negligence and UCL claims under 28 U.S.C. § 1367, because the state law claims arise from the same nucleus of operative facts as the FDCPA claim. See Bahrampour v. R.O. Lampert, 356 F.3d 969, 978 (9th Cir. 2004).

B. Legal Standards

A 12(b)(6) motion to dismiss for failure to state a claim challenges the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Federal Rule of Civil Procedure 8 governs the pleading standards for a complaint, and requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Requiring only a short and plain statement does not mean that a complaint may be bereft of specific facts; rather, it must contain enough detail to state a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). For the purpose of a motion to dismiss, facts pled in a complaint are taken as true. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007). However, conclusions, labels, or "naked assertion[s] devoid of further factual enhancement'" are not taken as true. Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). Similarly, merely reciting the elements of a claim is not enough to avoid dismissal, because the court does not accept the truth of "threadbare recitals of a cause of action's elements, supported by mere conclusory statements." Iqbal at 663; Twombly at 555. Altogether, a complaint must include facts that, taken as true, plausibly entitle a party to relief. Iqbal at 663; Twombly at 570. Plausibility means that it is not merely possible that the facts alleged in the complaint amount to a claim for which relief can be granted, but that, based on the reviewing court's experience and common sense, the pleaded facts cross the line from a possible violation of the law to a plausible one. Iqbal, 556 U.S. 663-64.

In their Opposition, (Dkt. No. 5 at 6), the Bustamantes cite the standard for dismissal iterated in Conley v. Gibson, that a complaint should only be dismissed if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." 355 U.S. 41, 45-46 (1957). But Twombly makes clear that this standard no longer governs. 550 U.S. at 563.

Because jurisdiction over the state law claims is predicated on the FDCPA claim, the Court will consider that claim first. Under 28 U.S.C. § 1367(c), if the one federal claim is dismissed, the Court has discretion to remand state claims. And in fact, federal courts are ordinarily expected to decline to exercise supplemental jurisdiction over state law claims under these circumstances. United Mine Workers v. ...


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