United States District Court, C.D. California
MARY LOU VEGA, individually and on behalf of other members of the public similarly situated, Plaintiff,
OCWEN FINANCIAL CORPORATION; OCWEN LOAN SERVICING, LLC, Defendants
For Mary Lou Vega, individually, and on behalf of other members of the public similarly situated, Plaintiff: Daniel Alberstone, Michael I Miller, Roland K Tellis, LEAD ATTORNEYS, Mark P Pifko, Baron and Budd PC, Encino, CA; Andrew J Cvitanovic, David A Parsiola, Philip F Cossich, Jr, PRO HAC VICE, Cossich Sumich Parsiola and Taylor LLC, Belle Chasse, LA.
For Ocwen Financial Corporation, a Florida corporation, Defendant: Catalina J Vergara, LEAD ATTORNEY, O'Melveny & Myers, Los Angeles, CA.
For Ocwen Loan Servicing, LLC, a Delaware limited liability company, Defendant: Catalina J Vergara, LEAD ATTORNEY, O'Melveny & Myers, Los Angeles, CA; Elizabeth Lemond McKeen, LEAD ATTORNEY, OMelveny and Myers LLP, Newport Beach, CA.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS 
OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE.
Plaintiff Mary Lou Vega brings this class action against Defendants Ocwen Financial Corporation (" OFC") and Ocwen Loan Servicing, LLC (" OLC"). Vega's allegations question the propriety of property-inspection fees levied against her and the purported class made up of borrowers in default on their home loans. Before the Court is Defendants' Motion to Dismiss. (ECF No. 29.) In the kitchen-sink Motion, Defendants seek dismissal of all six of Vega's claims on several grounds. For the reasons discussed below, the Court GRANTS IN PART and DENIES IN PART Defendants' Motion to Dismiss. (ECF No. 29.)
II. FACTUAL BACKGROUND
Defendants are residential mortgage servicers that, according to Vega, focus their business on non-prime, credit-impaired borrowers. (Compl. ¶ 28.) In the Complaint, Vega challenges regular property-inspection fees levied by Defendants against Vega and a purported class defined as " [a]ll residents of the United States of America who had a loan serviced by [Defendants], and whose accounts were assessed fees for property inspections at any time, continuing through the date of final disposition of this action." (Id. ¶ 81.) Vega also defines a subclass made up of California residents. (Id.)
At the time a home loan is issued, borrowers are informed in the promissory note and security instrument (a mortgage or deed of trust) that a loan servicer will pay for " whatever is reasonable or appropriate" to protect the note holder's interest in the property. (Id. ¶ ¶ 52-53.) The costs of these " default-related services" --including property inspections--are added to the borrower's debt. (Id. ¶ ¶ 54-55.) But Vega alleges that property-inspection fees are regularly charged to borrowers in default, regardless of whether a property inspection is reasonable or necessary. (Id. ¶ ¶ 58-61.) In her case, Vega alleges that from November 2012 until October 2013, Defendants assessed fees for a total of 12 property inspections on her property, despite the fact that she maintained regular contact with Defendants and occupied the property throughout that time period. (Id. ¶ 71.)
According to Vega, Defendants utilize an automated system to order property inspections and assess fees to borrowers in default, and that no meaningful review of the necessity of these property inspections occurs. (Id. ¶ ¶ 60-62.) Vega alleges that this practice does not comport with the Fannie Mae Single Family Servicing Guide, which interprets Fannie Mae's mortgage notes. (Id. ¶ ¶ 56, 118-19.) The guide states that " charging a delinquent borrower's account for monthly property inspections generally would not be a permissible practice." (Id.) But Vega alleges that Defendants' automated system orders property inspections based solely on a borrower's delinquency. (Id. ¶ ¶ 2, 49, 58-59, 61.) The result of these " indiscriminate" property inspections is that borrowers already in default sink deeper into debt as the fees stack up. (Id. ¶ ¶ 64-67.)
On June 6, 2014, Vega filed the class-action Complaint against Defendants, bringing a total of six claims for (1) violations of California's Unfair Competition Law (" UCL"), Cal. Bus. & Prof. Code § § 17200 et seq .; (2) violations of the Racketeer Influenced and Corrupt Organizations Act (" RICO"), 18 U.S.C. § 1962(c); (3) RICO conspiracy, 18 U.S.C. § 1962(d); (4) violations of the Rosenthal Fair Debt Collections Practices Act (" RFDCPA"), Cal. Civ. Code § § 1788 et seq .; (5) unjust enrichment; and (6) fraud. (ECF No. 1.) Defendants filed the instant Motion to Dismiss on September 29, 2014. (ECF No. 29.) A timely Opposition and Reply were filed. (ECF Nos. 38, 42.) The Motion is now before the Court for decision.
III. LEGAL STANDARD
A. Rule 12(b)(6)
A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). To survive a dismissal motion, a complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)--a short and plain statement of the claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual " allegations must be enough to raise a right to relief above the speculative level." Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). That is, the 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).
The determination whether a complaint satisfies the plausibility standard is a " context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. A court is generally limited to the pleadings and must construe all " factual allegations set forth in the complaint . . . as true and . . . in the light most favorable" to the plaintiff. Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). But a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
Fraud pleadings are subject to an elevated standard, requiring a party to " state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). " Particularity" means that fraud allegations must be accompanied by " the who, what, when, where, and how" of the misconduct charged. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-06 (9th Cir. 2003). Allegations under Rule 9(b) must be stated with " specificity including an account of 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). Accordingly, when suing more than one defendant, a plaintiff cannot " merely lump multiple defendants together" but rather must differentiate the allegations and " inform each defendant separately of the allegations surrounding his alleged participation in the fraud." Id. at 764-65.
Defendants move to dismiss all of Vega's claims on several grounds. The Court first addresses Defendants' arguments applicable to all of the claims and then turns to the sufficiency of the allegations with respect to each of Vega's claims.
A. Arguments Applicable to All Claims
Defendants characterize Vega's allegations as being premised on a theory of nondisclosure. According to Defendants, Vega's claims are based on Defendants' alleged concealment or failure to disclose the frequency of the property inspections. But Defendants argue that all of Vega's claims fail because the property-inspection fees were disclosed in her monthly statements. Vega was apprised of the frequency of the fees because she was being assessed the fees every month. (Mot. 5-8.) Thus, Defendants argue that Vega's ...