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Lohse v. Nationstar Mortgage

United States District Court, N.D. California

October 20, 2014

GARY LOHSE, et al., Plaintiffs,


JOSEPH C. SPERO, Magistrate Judge.


Plaintiffs Gary and Hanneke Lohse assert claims against Defendant Nationstar Mortgage ("Nationstar") under the federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq., and the Rosenthal Fair Debt Collection Practices Act ("RFDCPA"), California Civil Code §§ 1788 et seq. [1] Nationstar brings a Motion to Dismiss First Amended Complaint on in the Alternative, for a More Definite Statement ("Motion"). A hearing on the Motion was held on Friday, October 10, 2014 at 9:30 a.m. For the reasons stated below, the Motion is DENIED.[2]


A. The First Amended Complaint

In their First Amended Complaint ("FAC"), Plaintiffs allege that they are "consumers, natural persons allegedly obligated to pay any debt, residing in Vacaville, Solano County, California 95125." FAC, ¶ 3. They allege that Nationstar is "a foreign corporation engaged in the business of collecting debt in this state" and that its corporate office is in Lewisville, Texas. Id., ¶ 4. According to Plaintiffs, Nationstar "regularly attempts to collect consumer debts alleged to be due to another" and "is a debt collector' as defined by the FDCPA, 15 U.S.C. § 1692a(6), and the [RFDCPA], Cal. Civ. Code § 1788.2." Id., ¶ 5.

Plaintiffs allege that in 2006, they "incurred a financial obligation in the form of a mortgage/note (hereinafter "the loan"), bearing No.: XXXXXXXXXX, executed by Plaintiffs Hanneke & Gary Lohse." Id., ¶ 7. They allege on information and belief that the loan was presented to Homecomings Financial Network, Inc. Id. According to Plaintiffs, the loan "was primarily for personal, family or household purposes and is therefore a debt' as that term is defined by 15 U.S.C. §1692a(5) and §1788.2(f)." Id.

Plaintiffs allege that they received a letter, dated March 16, 2012, from Aurora Loan Services, LLC advising them that the loan was in default. Id., ¶ 8. They allege that "the loan was being serviced by Aurora Loan Services, LLC at all relevant times prior to July of 2012, and the loan has been in default' status, from at least March 16, 2012, possibly earlier, to the date" on which the FAC was filed. Id., ¶ 9.

In July of 2012, Plaintiffs received two letters from Nationstar that were dated July 15, 2012. Id., ¶¶ 2, 3 & Exs. A, B. The first letter advised Plaintiffs that the servicing of their "mortgage loan, that is, the right to collect payments from [them], [was] being reassigned, sold or transferred from AURORA LOAN SERVICES LLC to Nationstar Mortgage LLC." Id., ¶ 10 & Ex. A ("Transfer Letter"). The second letter "welcome[ed]" Plaintiffs to Nationstar Mortgage and stated that Nationstar "looked forward to servicing [Plaintiffs'] loan on behalf of Deutsche Bank." Id., ¶ 11 & Ex. B ("Welcome Letter"). The footer of this letter stated as follows: "Nationstar is a debt collector. This is an attempt to collect a debt and any information obtained will be used for that purpose."

On August 16, 2013, Plaintiffs' attorney sent a letter to Nationstar on Plaintiffs' behalf notifying Nationstar that Plaintiffs disputed the validity of the debt serviced by Nationstar. Id., ¶ 12 & Ex. C. The letter stated that there was "a current lawsuit regarding this debt pending before The United States Court, Eastern District of California case number 2:12-cv-00223-KJM-EFB, which states the basis for the Lohse's dispute." Id., Ex. C.

Plaintiffs allege that on October 30, 2013, they obtained their credit report and that "Nationstar failed to accurately mark Plaintiffs[] credit report by reporting the Plaintiffs had disputed the debt." Id., ¶ 13.

According to Plaintiffs, Nationstar "sent Plaintiffs[] account to Defendant Aztec for collection on the loan" and Aztec, in turn, sent a letter dated January 9, 2014 to Plaintiffs advising them that it had been "retained to foreclose on Plaintiffs." Id., ¶ 15.

Plaintiffs allege that their attorney, Law Offices of Michael Lupolover, P.C., sent Nationstar a letter in October 2013 stating that he was representing Plaintiffs in connection with their claims against Nationstar based on alleged unlawful collection practices. Id., ¶ 16 & Ex. D. As Plaintiffs were represented by counsel, they allege, Aztec "should have never contacted Plaintiff directly" and in doing so, it violated the RFDCPA and the FDCPA. Id., ¶ 16.

Plaintiffs assert two claims in the FAC. First, Plaintiffs allege that "Defendant violated the FDCPA" and list the following provisions that were allegedly violated: i) 15 U.S.C. §1692c(a)(2); ii) 15 U.S.C. §1692e(2)(A); iii) 15 U.S.C. §1692e(8); iv) 15 U.S.C. §1692e(10); and v) 15 U.S.C. §1692f. Plaintiffs do not differentiate between the two defendants named in the FAC, Nationstar and Aztec Foreclosure Corporation; nor do they identify specific facts in support of the alleged violations. Second, Plaintiffs allege that "Defendant" violated the following provisions of the RFDCPA: i) Cal. Civ. Code § 1788.13(f); ii) Cal. Civ. Code § 1788.17; and iii) Cal. Civ. Code § 1788.20(b). Again, Plaintiffs do not differentiate between the two named defendants and do not identify the specific facts that allegedly support these violations.

In their Prayer for Relief, Plaintiffs seek statutory and actual damages as well as attorneys' fees and costs of litigation.

B. The Motion

In the Motion, Nationstar argues that Plaintiffs' claims under the RFDCPA and FDCPA fail to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure for three reasons. First, it asserts that Plaintiffs' claims fail because the RFDCPA and FDCPA do not apply to property-secured loans. Motion at 3-4. According to Nationstar, the loan that is the subject of Plaintiffs' claims is a residential mortgage loan and as such, is not "debt" under the RFDCPA. Id. (citing Morgera v. Countrywide Home Loans, Inc., 2010 WL 160348, at *3 (E.D. Cal. Jan. 11, 2010); Castaneda v. Saxon Mortg. Servs., Inc., 687 F.Supp.2d 1191, 1197 (E.D. Cal. Dec. 3, 2009)). Nationstar further asserts that Plaintiffs' claims amount to a challenge to foreclosure proceedings, which are not considered "debt collection" under either the RFDCPA or the FDCPA. Id. at 4 (citing Masson v. Selene Fin. LP, 2013 WL 271256 (N.D. Cal. 2013); Tina v. Countrywide Home Loans, Inc., 2008 WL 4790906, at *6 (S.D. Cal. 2008); Putkkuri v. ReconTrust Co., 2009 WL 32567, at *2 (S.D. Cal. 2009); Izenberg v. ETS Servs., LLC, 589 F.Supp.2d 1193, 1199 (C.D. Cal. 2008); San Diego Home Solutions, Inc. v. ReconTrust Co., 2008 WL 5209972, at *1 (S.D. Cal. 2008); Gamboa v. Trustee Corps, 2009 WL 656285, at *4 (N.D. Cal. 2009)).

Second, Nationstar argues that even if the FDCPA applied, Plaintiffs' claim under the FDCPA fails because they have not alleged facts to show: 1) that Nationstar violated 15 U.S.C. § 1692c(a)(2) by communicating directly with Plaintiffs when it knew that they were represented by counsel; 2) that Nationstar attempted to collect a debt using any "unfair or unconscionable means" in violation of 15 U.S.C. § 1692f; or 3) that Nationstar violated 15 U.S.C. § 1692e(2)(a) and/or e(10) by making false representations as to the character, amount or legal status of a debt. Motion at 4-5.

With respect to the first theory, Nationstar points out that Plaintiffs have not alleged that it communicated with them directly and indeed, the two letters from Nationstar that are attached to the FAC as exhibits list the address of Plaintiffs' counsel. Motion at 5 (citing FAC, Exs. A & B). Nationstar also asserts that "to the extent this purported violation is directed to Aztec, Plaintiffs' claim still fails ...

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