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Chen v. Deutsche Bank Nat'l Trust Co.

United States District Court, N.D. California

November 24, 2014

NAN HUI CHEN, Plaintiff,

For Nan Hui Chen, Plaintiff: Joseph Lynn DeClue, Law Office of Joseph L. De Clue, Santa Ana, CA United State.

For Deutsche Bank National Trust Company, Trustee of Securitized Asset Backed Receivables, LLC Trust 2007-BRI Mortgage Pass Through Certificates, Series 2007-BR1, Western Progressive LLC, Mortgage Electronic Systems Inc., Ocwen Loan Servicing LLC, Defendants: Lauren Elizabeth Misajon, LEAD ATTORNEY, Houser and Allison, Long Beach, CA.



Plaintiff Nan Hui Chen (" plaintiff") brings this civil action against defendants Deutsche Bank National Trust Company, Western Progressive, Mortgage Electronic Registration Systems, Inc., and Ocwen Loan Servicing LLC (collectively " defendants") for actions relating to the management of her home mortgage loan.[1] The Court previously granted defendants' Motion to Dismiss with leave to amend. (Dkt. No. 55 (" Order").) Plaintiff now brings the instant Motion for Leave to Amend, attached to which is her Proposed First Amended Complaint (" PFAC").[2] (Dkt. No. 63.) Having carefully considered the papers submitted, the pleadings in this action, and for the reasons set forth below and in the Court's prior Order, the Court hereby Denies plaintiff's Motion for Leave to Amend.

I. Background

On November 1, 2006, plaintiff entered into a $206, 310.00 loan with New Century Mortgage Corporation to finance the purchase of property at 4121 Shelter Creek Lane, in San Bruno, California. (PFAC ¶ 18.) Plaintiff signed a Deed of Trust (" DOT"), which named Mortgage Electronic Registration Systems, Inc. (" MERS") as beneficiary and nominee for the lender. (Id. ¶ 19.) New Century Mortgage Corporation (" NCMC") was the lender. (Id.) First American Title Company was the trustee. (Id.) Since that time, the interest in plaintiff's loan and deed of trust has transferred ownership and plaintiff has defaulted on her mortgage payments.

On July 18, 2013, plaintiff filed the instant action to stop the trustee sale of her home, alleging that defendants are not the true interested parties in her mortgage loan. (Dkt. No. 1.) Defendants subsequently filed a Motion to Dismiss. (Dkt. No. 33.) On June 9, 2014, having considered the parties' arguments and relevant case law, the Court granted defendants' motion and provided plaintiff an opportunity to move for leave to amend. (Dkt. No. 55.) The Court's Order outlined specific steps plaintiff should take when filing a motion for leave to amend and drafting an amended complaint. ( See, id . at 19.)

After two court-granted extensions, on July 14, 2014, plaintiff filed the instant Motion for Leave to Amend and attached a PFAC. (Dkt. No. 63.)[3] The PFAC is not a model of clarity. In her PFAC, plaintiff alleges that defendants fraudulently concealed and misrepresented their true roles in servicing her loan. (PFAC ¶ 1.) Plaintiff alleges that Defendants are " third-party strangers" to her mortgage loan and have no ownership interest entitling them to collect payments or declare a default. (Id.) She contends that defendants have " hid[den] behind the complexities of the mortgage finance system" to " deceive Plaintiff into believing they have the right to collect" on her loan. (Id.) The gravamen of plaintiff's theory of her case is set forth in her PFAC as follows:

In an attempt to further their fraudulent scheme and create a patina of validity to their debt collection efforts, Defendants have created a series of documents that contain materially false representations in violation of Federal and State law, and Internal Revenue Codes; by employing individuals who have no personal knowledge of the facts they attest, and falsely represent to Plaintiff, the public and this court that they have the right to take Plaintiff's property away. Not only is Defendant's conduct a criminal violation of California's Mortgage Fraud Statute, California Penal Code § 532f(a)(4), and an affront to long standing property law, but their reliance on fabricated and forged documents undermine the integrity of the judicial system. Through this action Plaintiff seeks to stop Defendant's fraudulent practices.

(Id. (emphasis in original).)

To support her theory that defendants have perpetrated said fraud, plaintiff alleges that the originating loan documents were fraudulent. Specifically, she contends that " on or about November 1, 2006 NCMC concealed from Plaintiff that NC Capital paid NCMC an undisclosed yield spread premium of approximately $3, 502.00." (Id. ¶ 90.)

Plaintiff further alleges that " Western, on behalf of Ocwen, concealed from Plaintiff that the debt was not owed to Ocwen with the knowledge that Plaintiff would rely on Western as an 'agent of the beneficiary' to be truthful in its representation of the ownership of the debt." (Id. ¶ 96.) Plaintiff also contends that because defendants did not validly transfer (or validly possess) rights to the loan, they do not now have legally cognizable interests in her loan or her property. Plaintiff alleges " Deutsche Bank as Trustee of the REMIC Trust did not acquire any legal or valid interest in the disputed DOT on the basis the [Assignment of the Deed of Trust] is void and violates the governing law of the REMIC Trust" because " NCMC had no assets to transfer as said assets had been transferred to the Liquidating Trustee and MERS failed to get authorization from the Liquidating Trustee to transfer assets in the Liquidating Trust of NCMC." (Id. ¶ ¶ 69, 72.) Accordingly, plaintiff alleges that all instruments recorded pertaining to plaintiff's default on her mortgage, the assignments in interests, and even the deed of trust itself, are void.

In her PFAC, plaintiff alleges eight causes of action: (1) fraud and deceit, (2) cancellation of instruments, (3) unjust enrichment, (4) accounting, (5) slander of title, (6) violations of California Business & Professional Code § 17200 et seq . (" Unfair Competition Law" or " UCL"), (7) violations of the Federal Debt Collection Practices Act (" FDCPA"), and (8) violations of the Real Estate Settlement Procedures Act (" RESPA"). She seeks cancellation of the subject note and Deed of Trust, reformation of a note and deed of trust between plaintiff and the true creditor(s), accounting, disgorgement of mistaken payments, damages no less than $600, 000, punitive damages, and attorneys' fees and costs.

II. Legal Standards

A. Motion for Leave to Amend

The Court generally has the sound discretion to grant or deny leave to amend. Swanson v. United States Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996). Leave to amend should be freely granted " unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1401 (9th Cir. 1986). The Court " may exercise its discretion to deny leave to amend due to 'undue delay, bad faith or dilatory motive on part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party . .., [and] futility of the amendment.'" Carvalho v. Equifax Info Servs., LLC, 629 F.3d 876, 892-93 (9th Cir. 2010) (alterations in the original) (quoting Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)). A proposed amendment is futile if no set of facts can be proven under the amended pleading that would constitute a valid and sufficient claim. Miller v. Rykoff--Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988) (the proper test in determining legal sufficiency of a proposed amendment is identical to that used under Rule 12(b)(6)).

Under Federal Rule of Civil Procedure 12(b)(6), " 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). This " facially plausible" standard requires the plaintiff to allege facts that add up to " more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678. Although courts do not require " heightened fact pleading of specifics, " a plaintiff must sufficiently allege facts to " raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Merely reciting the elements of a cause of action and stating conclusory allegations are insufficient. Id.; see also In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (the court is not required to accept as true " allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences").

B. Rule 9(b)

Under Federal Rule of Civil Procedure 9(b), claims sounding in fraud are subject to a heightened pleading requirement. Rule 9 provides that " [i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed.R.Civ.P. 9(b). Such circumstances include the " time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quoting Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)). " In the context of a fraud suit involving multiple defendants, a plaintiff must, at a minimum, 'identif[y] the role of [each] defendant[ ] in the alleged fraudulent scheme.'" Swartz, 476 F.3d at 765 (alterations in the original) (quoting Moore v. Kayport Package Express, 885 F.2d 531, 541 (9th Cir. 1989)).

Claims subject to Rule 9(b) pleading requirements must also satisfy the ordinary pleading requirements of Rule 8, which states:

" A pleading that states a claim for relief must contain: (1) a short and plain statement of the grounds for the court's jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the relief sought, which may include relief in the alternative or different types of relief."

Fed. R. Civ. P. 8(a). In general, plaintiffs can have inconsistent alternative claims, but " each allegation must be simple, concise, and direct." Fed.R.Civ.P. 8(d).

III. Discussion

The Court explained in its prior Order that when filing a Motion for Leave to Amend and PFAC, plaintiff must (1) identify the specific claims and the statutory basis for each claim, (2) identify the elements of each asserted claim, (3) provide authorities for the elements of each asserted claim, and (4) present a chart identifying which paragraphs of the PFAC relate to each required element. (Order at 19.)

Having reviewed plaintiff's motion and her PFAC, the Court finds that plaintiff has failed again to state plausibly a claim for relief as to each of the claims in the PFAC. Accordingly, the PFAC would be immediately subject to dismissal such that amendment to the complaint would be futile. Foman, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222. Plaintiff lacks standing to assert six of her eight total claims (Causes of Action 1-6). Plaintiff's claim for violation of RESPA (Cause of Action 8) is time barred and also fails to allege harm causally linked to defendants. Finally, plaintiff's FDCPA claim (Cause of Action 7) fails to allege defendants were " debt collectors" within the meaning of the FDCPA.

For purposes of efficiency and clarity, the Court first addresses the six claims that lack standing, and then addresses the reasons the remaining two claims fail.

A. Claims for Which Plaintiff Lacks Standing

Article III section 2 of the Constitution limits the federal courts' judicial power to deciding actual " cases" or " controversies." U.S. Const. art. III § 2. " One essential aspect of this requirement is that any person invoking the power of a federal court must demonstrate standing to do so." Hollingsworth v. Perry, U.S., 133 S.Ct. 2652, 2661, 186 L.Ed.2d 768 (2013). If a case is brought without Article III standing, the court lacks subject matter jurisdiction over the suit because there is no " case" or " controversy." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 102, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

To properly establish Article III standing, " a plaintiff must show (1) it has suffered an 'injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). " [T]he 'injury in fact' test requires more than an injury to a cognizable interest. It requires that the party seeking review be himself among the injured." Sierra Club v. Morton, 405 U.S. 727, 734-35, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972).

Here, six of plaintiff's claims are predicated on her allegations that defendants failed to transfer ownership of her loan properly, such that the " true" holders of interest have been prevented from exercising their rights. These causes of actions are: (1) fraud and deceit, (2) cancellation of instruments, (3) unjust enrichment, (4) accounting, (5) slander of title, and (6) violations of UCL. ( See generally, PFAC at 12-24.) Plaintiff, a third-party to the allegedly improper transfers at issue, alleges that she has been harmed by loss of property, interruption in enjoyment of the property, increased loan amount, wrongfully paid mortgage payments, and damaged credit. (Id. ¶ ¶ 97, 102, 112, 133, 150, 162, 179.) Because these claims all stem from the same factual theory and fail for the same reasons, the Court consolidates these issues into a single discussion.

1. Lack of Injury for Defective Assignment

As a borrower, plaintiff lacks standing to challenge the transfers of interest in her loan between a transferor and transferee. " Third-party borrowers lack standing to assert problems in the assignment of the loan" because the borrowers have not suffered an injury in fact. Flores v. GMAC Mortg., LLC, Case No. 12-cv-00794 SI, 2013 WL 2049388, at *3 (N.D. Cal. May 14, 2013); see also, Jenkins v. JP Morgan Bank, N.A., 216 Cal.App.4th 497, 513-14, 156 Cal.Rptr.3d 912 (2013); Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 272, 129 Cal.Rptr.3d 467 (2011). Essentially, " an impropriety in the transfer of a promissory note would [] affect only the parties to the transaction, not the borrower." Yvanova v. New Century Mortg. Corp., 226 Cal.App.4th 495, 172 Cal.Rptr.3d 104, 109 (2014) ( cert. granted ).[4] " [T]he relevant parties to such a transaction were the holders (transferors) of the promissory note [or other interest] and the third party acquirers (transferees) of the note [or other interest], " not borrowers such as plaintiff. Id. (citing Jenkins, 216 Cal.App.4th at 515.)

The widely accepted rule that borrowers cannot challenge assignments or transfers in the interests of their loans makes logical sense. Defects in transfers do not injure the borrower because " [e]ven if there were some defect in the [subsequent] assignment of the deed of trust, that assignment would not [] change[] plaintiff's payment obligations." See Simmons v. Aurora Bank, FSB, Case No. 13-cv-00482 HRL, 2013 WL 5508136, at *2 (N.D. Cal. Sept. 30, 2013); see also, Apostol v. CitiMortgage, Inc., Case No. 13-cv-01983 WHO, 2013 WL 6328256, at *7-8 (N.D. Cal. Nov. 21, 2013); Siliga v. Mortg. Elec. Registration Sys., Inc., 219 Cal.App.4th 75, 85, 161 Cal.Rptr.3d 500 (2013) (" The assignment of the deed of trust and the note did not change [plaintiffs'] obligations under the note, and there is no reason to believe that . . . the original lender would have refrained from foreclosure in these circumstances").

Here, plaintiff complains of the following harms: loss of her property through the nonjudicial foreclosure process, interruption of her enjoyment of the property, and damaged credit. A fair reading of her PFAC suggests that these harms stem from plaintiff's failure to make monthly mortgage payments. Although plaintiff alleges that the Notice of Default was faulty for failure to properly identify the parties in interest, nowhere does she contest that she had actually paid her loan payments; she does not deny that she was in default. ( See PFAC ¶ 41, 155, 158.)

Under controlling law, even if there were irregularities in the interest transfer and assignment processes, plaintiff does not allege facts that, if proven, would establish that she was " among the injured." Sierra Club, 405 U.S. at 735. Said differently, plaintiff does not allege any injury " fairly traceable to the challenged action, " namely the allegedly invalid transfers in interest. Friends of the Earth, 528 U.S. at 180. " The true victim [of the scheme plaintiff alleges] was not plaintiff but the original lender, which would have suffered the unauthorized loss" of being deprived its rightful interest in her mortgage loan. See Fontenot, 198 Cal.App.4th at 272. Plaintiff " may not assume the theoretical claims of hypothetical transferors and transferees" to assert causes of action relating to allegedly improper assignments of interests in her mortgage loan. Jenkins, 216 Cal.App.4th at 515. Plaintiff would not be the victim of such invalid transfers because her obligations to make mortgage payments remained unchanged.

Finally, plaintiff has failed to plead allegations that, if true, establish actual prejudice resulting from the improper assignments or transfers in interest. As in the instant case, plaintiffs in Dick v. Am. Home Mortg. Servicing, Inc., Case No. 13-cv-00201 WBS CKD, 2013 WL 5299180 at *4-5 (E.D. Cal. Sept. 18, 2013) attempted to challenge a deed of trust assignment as void. Acknowledging that a majority of California courts have held that " borrowers do not have standing to challenge the assignment of a loan because borrowers are not party to the assignment agreement, " the court noted it did not even need to reach that issue because the plaintiff could not establish prejudice. See Dick, 2013 WL 5299180 at *3; In re Sandri, 501 B.R. 369, 376-77 (N.D. Cal. 2013) (citing Dick, supra ). The court further noted that " California courts find a lack of prejudice when a borrower is in default and cannot show that the allegedly improper assignment interfered with the borrower's ability to pay or that the original lender would not have foreclosed under the circumstances." Dick, 2013 WL 5299180 at *3. Plaintiff's proposed amended complaint fails to allege facts sufficient to meet this standard.

2. Glaski is the Minority Rule and Does Not Control

Plaintiff's PFAC relies almost exclusively on the minority legal theory expressed in Glaski v. Bank of America Nat'l Ass'n, 218 Cal.App.4th 1079, 160 Cal.Rptr.3d 449 (2013), which the Court has already stated will not be accorded persuasive weight. ( See Order at 12-13.) There, the California Court of Appeals held that a borrower had standing to challenge the assignment of his note. See id . at 1096. The Glaski defendants organized the loan at issue into a trust formed under New York law, but failed to assign the trust before the operative closing date, thus resulting in a technical deficiency. Id. The Glaski court recognized " that some federal district courts sitting in California have rejected the post-closing date theory of invalidity on the grounds that the borrower does not have standing to challenge an assignment between two other parties." Id. at 1098 (citations omitted). Nonetheless, the court found the trust void under New York law, and held the plaintiff could challenge the assignment despite being a third-party borrower. Id. at 1095-97.

Multiple state court of appeals decisions conflict with Glaski, holding instead that a third-party mortgage borrower does not have a cause of action stemming from irregularities in the chain of transfer. See, e.g., Jenkins, 216 Cal.App.4th at 515 (" As an unrelated third party to the alleged securitization, and any other subsequent transfers of the beneficial interest under the promissory note, [plaintiff] lacks standing to enforce any agreements, including the investment trust's pooling and servicing agreement, relating to such transactions"); Fontenot, 198 Cal.App.4th at 272-73 (finding plaintiff had no cause of action for merely alleging irregularities in the assignment process). Even when a trust was created under New York law, numerous other courts have declined to follow Glaski. See, e.g., Yvanova, 172 Cal.Rptr.3d at 110 (declining to follow Glaski ); Sporn v. JP Morgan Chase Bank N.A., Case No. G047501, 2014 WL 280627, at *5 (Cal.Ct.App. 4th Jan. 27, 2014) (finding the Glaski holding a minority view and declining to follow it).

Indeed, " [c]ourts in this District have expressly rejected Glaski and adhered to the majority view that individuals who are not parties to a PSA [Pooling and Servicing Agreement] cannot base wrongful foreclosure claims on alleged deficiencies in the PSA/securitization process." Apostol, 2013 WL 6328256, at *6-7. No court in this District has followed the minority rule articulated in Glaski. See Gieseke v. Bank of America, N.A., Case No. 13-cv-4772 JST, 2014 WL 718463, at *3 (N.D. Cal. Feb. 23, 2014). To the contrary, " many have pointedly declined to." Id.; see, e.g., Moran v. GMAC Mortg., LLC, Case No. 13-cv-4981 LHK, 2014 WL 3853833, at *5 (N.D. Cal Jun. 18, 2014) (" Plaintiff's reliance on Glaski is misplaced because Glaski does not state the majority rule and its reasoning is unpersuasive"); Banares v. Wells Fargo Bank, N.A., Case No. 13-cv-4896 EMC, 2014 WL 985532, at *4-5 (N.D. Cal. March 7, 2014) (considering and rejecting Glaski on the merits of its analysis of New York trust law, and listing cases in this District that " have since rejected Glaski "); Zapata v. Wells Fargo Bank, N.A., Case No. 13-cv-4288 WHA, 2013 WL 6491377 (N.D. Cal. Dec. 10, 2013) (" Every court in this district that has evaluated Glaski has found it is unpersuasive and not binding authority"); Apostol, 2013 WL 6328256; Dahnken v. Wells Fargo Bank, N.A., Case No. 13-cv-2838 PJH, 2013 WL 5979356, *2 (N.D. Cal. Nov. 8, 2013) (" [t]he court adopts the 'majority position' of courts within this district, which is that 'plaintiffs lack standing to challenge noncompliance with a PSA in securitization unless they are parties to the PSA or third party beneficiaries of the PSA'"); Subramani v. Wells Fargo Bank, N.A., Case No. 13-cv-1605 SC, 2013 WL 5913789 (N.D. Cal. Oct. 31, 2013) (citations omitted); In re Sandri, 501 B.R. at 374-75 (noting that " the weight of authority is against Glaski "; citing California state and federal cases).

Plaintiff's attempt to save Glaski does not persuade. Plaintiff argues Glaski stands for two holdings: " a) a borrower may challenge a void assignment regardless of whether they are a party to the contract, and b) that an assignment into a closed New York Trust was a void act pursuant to the trust's governing law." (Dkt. 71 at 8 (" Reply").) Plaintiff concedes that there is significant disagreement with Glaski's second holding, but states the first holding " has not been challenged by any Court." (Id.) In support thereof, plaintiff relies on three cases, none of which support her position. (Id. at 8-9.) Two cases plaintiff cites directly contradict Glaski, finding Glaski unpersuasive and confirming that third-party borrowers lack standing. See In re Sandri, 501 B.R. at 378; Yvanova, 172 Cal.Rptr.3d at 110. The only case plaintiff cites that could possibly support her position is Johnson v. HSBC Bank USA, Nat. Ass'n, Case No. 11-cv-2091 JM WVG, 2012 WL 928433 (S.D. Cal. March 19, 2012). That decision, however, provides no reasoned analysis on the issue before this Court. Indeed, the Johnson order does not discuss Glaski at all. Moreover, plaintiff's contention that the first purported holding " has not been challenged by any court" is untrue as a factual matter. As stated above, the weight of authority holds that Glaski's reasoning is unpersuasive, and the criticism of Glaski has not been limited to simply Glaski's questionable treatment of New York law. See, e.g., Moran, 2014 WL 3853833 at *5 (" [I]t is already well established that a third party should not be permitted to enforce covenants made for the benefit of others").

Accordingly, as six of plaintiff's eight causes of action -- fraud, cancellation of instruments, unjust enrichment, accounting, slander of title, and UCL violations -- arise from alleged assignment defects, the Court finds that plaintiff lacks standing to assert claims based on defects in the assignment process. Plaintiff has suffered no injury as a result of these defects; her payment obligations remained unchanged. Moreover, there is no causal link between the harm plaintiff alleges and defendants' alleged acts. Given that each of these six claims would be immediately subject to dismissal, amendment would be futile. Foman, 371 U.S. at 182. Plaintiff's motion for leave to amend these six claims (Causes of Action 1-6) is therefore Denied.[5]

B. Plaintiff's Remaining Claims

1. RESPA Claim

The Court next addresses plaintiff's claim for violations of RESPA (Cause of Action 8). Plaintiff alleges two violations of the RESPA statute: 12 U.S.C. section 2605 (" Section 2605") and 12 U.S.C. section 2607 (" Section 2607"). (PFAC at 25-28.)

First, plaintiff alleges Ocwen violated Section 2605 " by failing to provide a detailed accounting of the alleged past due payments due to the creditor as requested by Plaintiff." (Id. ¶ 197.) Section 2605 governs the duty of loan servicers to respond to borrowers' inquiries. " If any servicer of a federally related mortgage loan receives a qualified written request from the borrower . . . for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 5 days." 12 U.S.C. § 2605(e)(1)(A). A qualified written request (" QWR") is " a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer" that includes " the name and account of the borrower" and " a statement of the reasons for the belief of the borrower . . . that the account is in error or provides sufficient detail to the servicer regarding other information sought by borrower." 12 U.S.C. § 2605(e)(1)(B). No later than 30 days after the receipt of the QWR, the servicer shall " provide the borrower with a written explanation or clarification that includes: (i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and (ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower." 12 U.S.C. § 2605(e)(2)(B).

Here, plaintiff alleges she sent a series of QWRs to Ocwen stating on December 9, 2010 seeking confirmation of the creditor's identity because she was concerned with who owned her loan. (PFAC ¶ ¶ 191-92.) Plaintiff also alleges Ocwen sent two debt validation letters in early 2011 with conflicting statements of who owned the loan.[6] (Id. ¶ 193.) Because of this conflicting information, plaintiff specifically emphasizes in the QWRs her concerns about the payments being made to the true creditor. (Id. ¶ 194.) In September 2011, Ocwen replied to plaintiff's QWRs with an acknowledgment letter and only a partial reply. (Id. ¶ 195.) Plaintiff alleges " Ocwen provided only the payment history made by Plaintiff but refused to acknowledge the principal balance of the loan with the creditor." (Id.) Thus, plaintiff alleges that Ocwen violated 2605 RESPA by " failing to provide a detailed accounting of the alleged past due payments due to the creditor." (Id. ¶ 197.)

Second, plaintiff alleges NCMC and NC Capital violated Section 2607 with the alleged table-funding scheme. Section 2607 states " [n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding" involving a federally related mortgage. 12 U.S.C. § 2607(a). Additionally, " [n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed." 12 U.S.C. § 2607(b). Thus, plaintiff alleges the " illegal yield spread premium [table-funding scheme] between NCMC and NC Capital" and NCMC's " failure to disclose the yield spread premium to Plaintiff" violated Section 2607. (Id. ¶ 204; see also, ¶ ¶ 49-51.)

Plaintiff's RESPA claim fail for two separate reasons: (1) the statutes of limitations have run as to plaintiff's Section 2607 claim and plaintiff has insufficiently alleged a basis for equitable tolling, and (2) plaintiff has not actually stated a claim for either her Section 2605 and 2607 claims. Accordingly, for purposes of clarity, the Court will divide its discussion into two sections.

a. Statutes of Limitations as to Plaintiffs' Section 2607 Claim

Claims under Section 2607, which prohibits kickbacks and unearned fees, must be brought within one year of the alleged violation. See 12 U.S.C. § 2614. The parties do not dispute that the one-year statute applies to her Section 2607 claim. Rather, the issue is one of tolling.

Plaintiff alleges defendants' " table-funding" scheme violated Section 2607. (Id. ¶ 204.) This claim became time-barred on November 1, 2007, one year after the alleged table funding took place. (Id. at ¶ 90.) Plaintiff argues the statutes of limitations should be tolled because " Plaintiff was kept ignorant of critical information required for prosecution of her claims, without any fault or lack of diligence on her part." (Reply at 6.) In their Opposition, defendants argue plaintiff's attempt to plead around the RESPA statutes of limitations, by alleging " it was not until July of 2013 that plaintiff became aware of the table funding arrangement" (PFAC at ¶ 206), is insufficient and the statutes of limitations have run. (Dkt. 68 at 14.)

While a statute of limitations typically begins to run from the time the plaintiff is injured, the " discovery rule" tolls a statute of limitations until the plaintiff discovers, or has reason to discover, the cause of action. Harper v. Lugbauer, Case No. 11-cv-1306, 2011 WL 6329870, at *2 (N.D. Cal. Nov. 29, 2011) (citing Pooshs v. Philip Morris USA, Inc., 51 Cal.4th 788, 797-98, 123 Cal.Rptr.3d 578, 250 P.3d 181 (2011)). " Rather than examining whether the plaintiffs suspect facts supporting each specific legal element of a particular cause of action, [courts should] look to whether the plaintiffs have reason to at least suspect that a type of wrongdoing has injured them." Engineering v. City and County of San Francisco, Case No. 08-cv-4022 SI, 2010 WL 816831, at *2 (N.D. Cal. Mar. 9, 2010) (quoting Fox v. Ethicon Endo-Surgery, Inc., 35 Cal.4th 797, 807, 27 Cal.Rptr.3d 661, 110 P.3d 914 (2005)). A plaintiff has reason to discover a cause of action when she " has reason at least to suspect a factual basis for its elements." Norgart v. Upjohn Co., 21 Cal.4th 383, 398, 87 Cal.Rptr.2d 453, 981 P.2d 79 (1999). To properly invoke the discovery rule, plaintiff must plead sufficient facts showing: " (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence." McKelvey v. Boeing N. Am., Inc., 74 Cal.App.4th 151, 160, 86 Cal.Rptr.2d 645 (1999) (emphasis in original) ( superseded by statute on another point as stated in Grisham v. Philip Morris U.S.A., Inc., 40 Cal.4th 623, 637 n. 8, 54 Cal.Rptr.3d 735, 151 P.3d 1151 (2007)). " The burden is on the plaintiff to show diligence, " and " conclusory allegations" will not suffice. Harper, 2011 WL 6329870, at *2 (citing McKelvey, 74 Cal.App.4th at 160).

The Court finds that plaintiff has failed to plead sufficient facts to demonstrate either her diligence or her inability to have made earlier discovery of the alleged table funding scheme. First, the allegations in the PFAC reveal that plaintiff had ample reason to discover her Section 2607 cause of action before the date she claims. According to her PFAC, plaintiff first began to question the ownership of her loan in 2010. (PFAC ¶ ¶ 191-94.) Taking that as true, as is required, plaintiff admits that as of 2010 she had cause to become suspicious about the origins of her loan and the processing of her loan. However, Plaintiff pleads no facts sufficient to show her diligence in discovering this alleged scheme. Plaintiff merely alleges the statutes of limitations should be tolled until 2013 for all causes of action because defendants were concealing information. (PFAC ¶ ¶ 83, 206.) Plaintiff alleges she is an " unsophisticated consumer" lacking the ability to discover this type of information, even with due diligence. (Id. ¶ 205; see also, Reply at 4.) However, plaintiff has pleaded no facts to demonstrate what diligence she ultimately undertook to discover the defendants' concealment, other than her QWR request submitted in 2010, and why her ultimate discovery occurred as quickly as was possible.

Finally, plaintiff's allegations concerning the nature of defendants' efforts to conceal their fraudulent scheme lack the requisite degree of specificity to allow the Court to conclude reasonably that plaintiff was actually unable to discover this information until 2013. The gravamen of plaintiff's RESPA claim is that defendants actively concealed information to perpetrate a fraud. (PFAC ¶ ¶ 49, 204-05.) Accordingly, as plaintiff was previously advised, she is obligated to " state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). Her allegations must include the " time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz, 476 F.3d at 764 (citations omitted). She fails to do so. Thus, plaintiff's RESPA allegations sounding in fraud fail to meet the level of specificity that Rule 9(b) requires.

b. Lack of Causal Harm

In addition to the statute of limitations issue, plaintiff also fails to allege harm caused by defendants' conduct relative to both her RESPA claims.

The RESPA statute states that anyone who violates RESPA shall be liable for damages. 12 U.S.C. § 2605(f). While the statute does not create a pleading standard, courts have read the statute to require a showing of pecuniary damages. Hutchinson v. Del. Sav. Bank FSB, 410 F.Supp.2d 374, 383 (D.N.J. 2006) (" alleging a breach of RESPA duties alone does not state a claim under RESPA. Plaintiff must, at a minimum, also allege that the breach resulted in actual damages"). Plaintiffs must also show a causal link between RESPA breach and the actual harm. Allen v. United Fin. Mortg. Corp., 660 F.Supp.2d 1089, 1097 (N.D. Cal. 2009) (citing Singh v. Wash. Mut. Bank, Case No. 09-cv-2771 MMC, 2009 WL 2588885, at *5 (N.D. Cal. Aug. 19, 2009) (dismissing RESPA claim because " [i]n particular, plaintiffs have failed to allege any facts in support of their conclusory allegation that as a result of defendants' failure to respond, defendants are liable for actual damages, costs, and attorney fees") (quotation marks and citations omitted)).

Here, when construed liberally in her favor, plaintiff's RESPA allegations do not establish that she experienced actual harm. Plaintiff alleges no facts beyond the speculative and conclusory to show that defendants' participation in a table-funding scheme or failure to respond properly to her QWRs were the causes for the harms of which she complains. For example, Plaintiff does not claim she would have continued to make payments if there was no table-funding scheme or if Ocwen had properly responded to her QWRs. Rather, as stated above in Section III.A.1, supra, the harm about which plaintiff complains, fairly construed, stems from her failure to make timely mortgage payments. ( See PFAC ¶ ¶ 126, 129, 132 (" Plaintiff alleges said payments were mistaken payments intended for the true creditor").)

For the reasons stated above, plaintiff has not pleaded a basis for tolling the statutes of limitation for her RESPA claim and has failed to allege harm causally linked to defendants' alleged RESPA violations. For these reasons, amendment would be futile. Foman, 371 U.S. at 182. Accordingly, ...

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