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Diamos v. Specialized Loan Servicing LLC

United States District Court, N.D. California, San Francisco Division

November 7, 2014

TINA DIAMOS, Plaintiff,
SPECIALIZED LOAN SERVICING LLC, and others, Defendants. Re: Dkt. No. 38


NATHANAEL M. COUSINS, Magistrate Judge.

Plaintiff Tina Diamos brings this action as a borrower under California's Homeowner Bill of Rights, alleging violations by defendant Specialized Loan Servicing in processing her application for a loan modification. Specifically, Diamos first claims that SLS failed to provide her with a single point of contact regarding the status of her property; instead, Diamos alleges that SLS directed her over a period of time to multiple representatives, each of whom gave her conflicting information regarding what it would take to avoid foreclosure. Secondly, Diamos brings a claim for attorneys' fees as a remedy for SLS's alleged violation of another provision of the California homeowner's rights statute. SLS now moves to dismiss Diamos' claims for lack of subject matter jurisdiction and for failure to state a claim.

Because Diamos failed to properly allege complete diversity between the parties, the Court dismisses her Second Amended Complaint with leave to amend due to lack of subject matter jurisdiction. To prevent a fourth deficient complaint, the Court also addresses the merits of SLS's motion to dismiss Diamos' two claims under the state Homeowner Bill of Rights.


In March 2007, Diamos took out a loan secured by her home property in Woodside, CA. Dkt. No. 27-2, Ex. 1. On August 20, 2012, Diamos submitted a complete loan modification application to SLS. Dkt. No. 37 at ¶ 3. A month later, she spoke with an SLS agent who informed her that the application had not been recorded in SLS's system. Id. Given this information, Diamos then completed and submitted a second application to SLS, which SLS confirmed it received. Id.

While awaiting the results from this application, Diamos received a letter from SLS informing her that her property was being referred for foreclosure. Id. at ¶ 5. When she attempted to clarify the situation, Diamos received conflicting information from multiple SLS employees. Id. at ¶¶ 5-6. Confused as to the real status of her application, Diamos finally spoke with a SLS supervisor on March 14. Id. at ¶ 6. The supervisor told her that certain documents essential to her previous application had "expired"; she therefore needed to complete a third application. Id. at ¶ 7. While this third completed application was still pending, SLS recorded a notice of default on September 12, 2013. Id. at ¶ 9.

After receiving notification of this default notice, Diamos contacted SLS, which informed her that her application was still under review. Id. Supposedly, no foreclosure procedures were pending against her property. Id. Still, SLS asked her to submit a new- her fourth-application for a loan modification. Id. at ¶ 10. Diamos then filed her original complaint in this action on October 24, 2013. Id. SLS subsequently rescinded the notice of default. Id. at ¶ 17.

SLS moved to dismiss Diamos' original complaint for failure to state a claim. Dkt. No. 9. But before addressing the merits of SLS's motion, this Court determined it lacked subject matter jurisdiction and dismissed the original complaint with leave to amend. Dkt. No. 27. Diamos filed a First Amended Complaint on February 13, 2014. Dkt. No. 26. The Court granted SLS's motion to dismiss that complaint as well, again for lack of subject matter jurisdiction. Dkt. No. 36.


As an initial matter, both parties have consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636(c). Dkt. No. 17.

A. Diversity Jurisdiction

Federal courts are courts of limited jurisdiction and are presumptively without jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Federal courts have original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States, " and over "all civil actions where the matter in controversy exceeds the sum or value of $75, 000... and is between citizens of different states." 28 U.S.C. § 1331; 28 U.S.C. § 1332(a). Thus, for this Court to maintain jurisdiction, Diamos' complaint must involve either a federal question or establish complete diversity between the parties. Here, Diamos seeks to establish diversity jurisdiction.

The Court previously dismissed the injunctive relief claims in Diamos' First Amended Complaint on jurisdictional grounds for two reasons: first, because she failed to allege that the amount in controversy requirement exceeded $75, 000; and second, because she had failed to plead complete diversity of citizenship. See Dkt. No. 36. Although her Second Amended Complaint now includes a claim that ...

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