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Arbib v. Nationstar Mortgage LLC

United States District Court, S.D. California

November 19, 2014

NATIONSTAR MORTGAGE LLC, a Delaware Company and DOES 1-10, Defendants.


WILLIAM Q. HAYES, District Judge.

The matter before the Court is the Motion to Dismiss filed by Defendant Nationstar Mortgage LLC. (ECF No. 4).

I. Background

On May 12, 2014, Plaintiffs Nisim Nezi Arbib and Michal Florence Arbib commenced this action by filing the Complaint in San Diego County Superior Court. (ECF No. 1-2 at 7). On June 13, 2014, Defendant Nationstar Mortgage LLC removed the action to this Court pursuant to 28 U.S.C. section 1441 on the basis of diversity of citizenship. (ECF No. 1).

On June 20, 2014, Defendant filed the Motion to Dismiss, accompanied by a request for judicial notice. (ECF No. 4). On July 2, 2014, Plaintiffs filed an opposition to the motion to dismiss (ECF No. 5) and an opposition to the request for judicial notice. (ECF No. 6). On July 14, 2014, Defendant filed a reply. (ECF No. 7).

II. Allegations of the Complaint

On or about September 12, 2005, Plaintiffs borrowed $1, 200, 000 from American Mortgage Express Financial to buy "real property located at 2815 Santa Fe Vista Court, Encinitas, CA 92024." (ECF No. 1-2 at 7-8). "In consideration for the Loan, plaintiffs executed a promissory note (the Note') in favor of American Mortgage, secured by a deed of trust." Id. at 8. "On information and belief, shortly after making the Loan to plaintiffs in 2005, American Mortgage sold the Loan on the secondary mortgage market." Id. Bank of America Home Loan Servicing LP ("BAHL"), now merged with Bank of America ("B of A"), was the loan servicer of the Note when it was sold on the secondary market.

In 2012, Plaintiffs sued BAHL related to its attempt to foreclose on the property. "During the course of the litigation, B of A agreed to consider loan modification, but declined to modify the loan." Id. In June 2013, Plaintiffs and B of A entered into a "litigation stay agreement." Id. Under the agreement, "plaintiffs agreed to dismiss their suit without prejudice and B of A agreed to review another loan modification application to be submitted by plaintiffs." Id. "The agreement stated that, if the parties reached an agreement on the loan modification, plaintiffs would enter into a settlement and release any claims against B of A." Id. "In June 2013, B of A transferred the servicing rights to defendant Nationstar. Plaintiffs submitted their loan modification application to Nationstar, which refused plaintiffs' Request for Assistance by a letter dated February 19, 2014." Id.

On February 27, 2014, Plaintiffs sent Defendant a letter to appeal the denial of their loan modification, stating that "their financial situation had improved and that they wanted to submit updated financial information to Nationstar." Id. at 8-9. "They also asked how and to whom they could submit their updated documents, and asked about Nationstar's criteria for evaluating their application." Id. at 9. In a March 31, 2014 letter, Defendant denied Plaintiff's appeal, "without ever reviewing plaintiffs' new financial information." Id. In the same letter, Defendant "named Christine Elder as plaintiffs' Single Point of Contact, ' a requirement under California's Homeowner's Bill of Rights." Id. "Ms. Elder has refused to respond to any of plaintiffs' phone messages left for her or to a fax sent to her on May 6, 2014, requesting that she contact plaintiffs regarding their loan." Id.

Defendant "notified plaintiffs by letter on April 1, 2014, that the Property was subject to foreclosure due to arrears on the loan." Id.

Plaintiffs sent a second letter to Nationstar dated April 8, 2014, in which they restated that the denial of the appeal was based on outdated financial information, that their financial situation had improved, and that they wanted to submit updated financial information to Nationstar. For a second time, plaintiffs asked how and to whom they could submit their new information. Nationstar did not respond to plaintiffs' letter.

Id. "On April 14, 2014, Nationstar notified Michal Arbib by letter that the loan had been referred to foreclosure. On April 22, 2014, Nisim Arbib was sent a similar letter from a law firm representing Nationstar, notifying him that foreclosure was imminent." Id. "[T]hese notices are a precursor to the Notice of Default[, ]" which, if recorded, would violate the Homeowner Bill of Rights "because Nationstar acted in bad faith in rejecting plaintiffs' appeal without considering all of their documents." Id. at 9-10.

"On April 24, 2014, plaintiffs' attorney sent a Qualified Written Request to Nationstar seeking documents related to plaintiffs' Loan. As of the date of the filing of this complaint, no documents have been produced." Id. at 10.

The Complaint asserts two claims for relief: (1) violation of the California Homeowner Bill of Rights, California Civil Code section 2923.7(b); and (2) injunctive relief under the California Homeowner Bill of Rights, California Civil Code section 2924.12(a). The Complaint requests "an order restraining Nationstar or anyone acting on its behalf from initiating foreclosure against plaintiffs' property until such time, if ever, that defendants are statutorily entitled to foreclosure after fulfilling all of their obligations under the Homeowner Bill of Rights and all other applicable statutes." Id. at 12. The Complaint also requests an unspecified amount of actual damages, "treble damages or up to $50, 000, whichever is greater, as allowed by statute, " and reasonable attorneys' fees. Id.

III. Motion to Dismiss (ECF No. 4)

Defendant moves to dismiss both of Plaintiffs' claims without leave to amend. Plaintiffs oppose the motion and request leave to amend should the Court grant the motion.

A. 12(b)(6) Standard

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides that "[a] pleading that states a claim for relief must contain... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

"[A] plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed.R.Civ.P. 8(a)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citation omitted). "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citation omitted). "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 679. "In ...

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