United States District Court, S.D. California
For Sandra Turner, Kim Turner, Plaintiffs: Alysson Russell Snow, LEAD ATTORNEY, Legal Aid Society of San Diego Inc, San Diego, CA; Laurel Carnes, LEAD ATTORNEY, Legal Aid Society of San Diego, San Diego, CA.
For Ocwen Loan Servicing, LLC, Defendant: Gabriel Ozel, LEAD ATTORNEY, Houser & Allison, APC, Carlsbad, CA.
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS [DOC. 8]
M. James Lorenz, United States District Judge.
Pending before the Court is Defendant Ocwen Loan Servicing, LLC's (" Ocwen") Motion to Dismiss Plaintiffs Sandra and Kim Turner's (the " Turners") First Amended Complaint (" FAC"). Def.'s Mot. Dismiss, ECF No. 8. The motion is fully briefed. Pls.' Opp'n, ECF No. 9; Def.'s Reply, ECF No. 10. The Court decides the matter on the parties' briefs and the record without oral argument. CivLR 7.1(d.1). For the reasons discussed below, the Court GRANTS IN PART and DENIES IN PART Ocwen's motion.
According to the FAC, the Turners reside at their home, located at 4617 Del Monte Avenue, San Diego, California, 92107 (the " Property"). First Am. Compl. ¶ 12, ECF No. 5. The Turners purchased the Property in 1997, and refinanced their home loan in 2003 with a loan (the " Loan") from Option One Mortgage Corporation (" Option One"). Id. ¶ 13. In January 2013, the Turners entered into a forbearance agreement with Homeward Residential, Inc. (" Homeward"), the company which was servicing the Loan at the time. Id. ¶ 15. Under the terms of the forbearance agreement, the Turners agreed to make a down payment of $3, 500.00 and monthly payments in the amount of $2, 265.45 for the following year thereafter. Id. On January 11, 2013, pursuant to the forbearance agreement, the Turners made a payment of $3, 500.00. Id. ¶ 16. On February 5, 2013, as agreed upon, the Turners made a monthly payment for $2, 265.45. Id.
On February 19, 2013, Defendant Ocwen began servicing the Loan, and continued to do so until December 31, 2013. Id. ¶ 19. On February 22, 2013, the Turners received their first billing statement from Ocwen, which erroneously stated that a forbearance payment of $2, 076.67 was past due and that there had been no transactions since the January statement. Id. ¶ 20. This billing statement also inaccurately listed Plaintiffs' monthly payment amount. Id.
As a result of Ocwen's inaccurate billing, the Turners were assessed $102.33 in late fees for February 2013. Id. ¶ 22. When the Turners were unable to pay the combined amount Ocwen claimed they owed in February and March of 2013, the Turners defaulted on their loan. Id. ¶ 23. At the time of the alleged default, they held equity in their home. Id. ¶ 24. The Turners disputed the amounts owed in multiple phone calls with Ocwen. Id. ¶ 25.
On August 16, 2013, the Turners sent Ocwen a Qualified Written Request (" QWR") via certified mail pursuant to the Real Estate Settlement Procedures Act (" RESPA"). Id. ¶ 26. The QWR " included the names of the borrowers, the loan account number,  the address of the property . . .a statement of the reasons for the belief of the borrowers that the account was in error . . . [and] sufficient detail to [Ocwen] regarding the information sought by the borrowers." Id. ¶ 27. Specifically, the QWR disputed the amount owed as of the most recent Ocwen billing statement (April 24, 2013), indicated that Ocwen did not properly credit the February 2013 payment, and requested addition information regarding the servicing of the Loan. Id. ¶ ¶ 28, 29, 30.
On August 23 and August 27, 2013, Ocwen responded to the QWR, but did not correct the Turners' account or provide them with a written explanation as to why Ocwen believed the account was correct. Id. ¶ ¶ 31, 32. Moreover, Ocwen's response did not provide the Turners all the information they requested. Id. ¶ 33.
On October 21, 2013, the Turners sent Ocwen another QWR, including " a statement of the reasons for the belief of the borrowers that the account was in error and provided sufficient detail to Defendants regarding information sought by the borrowers." Id. ¶ ¶ 35, 36. On October 30, 2013, Ocwen sent the Turners a response to the second QWR, which the Turners again found insufficient. Id. ¶ ¶ 38-41.
On December 31, 2013, the Turners entered into a " Home Equity Conversion Mortgage (HECM)" secured by the Property. Id. ¶ 42. Under the HECM, " funds were disbursed to [Ocwen] to fully discharge [the Turners'] obligations under" the Loan. Id. Included in this disbursement was $5, 765.45 in payments and $102.33 in late fees which the Turners contend were improper, and thus never owed. Id. ¶ ¶ 43, 72-74.
On February 19, 2014, the Turners filed the instant action in California state court. Compl., ECF No. 1-2. On March 21, 2014, the matter was removed to this Court. Notice of Removal, ECF. No. 1. On March 28, 2014, Ocwen filed a motion to dismiss. Def.'s First Mot. Dismiss, ECF. No. 4. On April 18, 2014, the Turners filed their First Amended Complaint (" FAC"), rendering the pending motion to dismiss moot. First Am. Compl., ECF No. 5.; Order Dismissing Motion As Moot, ECF No. 11.
The FAC includes four causes of action for: (1) violations of the Real Estate Settlement Procedures Act (" RESPA"), 12 U.S.C. 2601, et seq .; (2) violations of the California Rosenthal Fair Debt Collection Practices Act (" RFDCPA"), Cal. Civ. Code. § § 1788, et seq .; (3) conversion; and (4) violations of the Business and Professions Code § 17200, et seq . First Am. Compl., 7, 8, 10. On May 2, 2014, Ocwen filed the instant motion to dismiss, arguing that all of the Turners' claims are insufficiently plead. Def.'s Mot. Dismiss, ECF No. 8-1; Def.'s Reply, ECF No. 10. The Turners oppose. Pls.' Opp'n, ECF No. 9.
II. Legal Standard
Courts must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). In ruling on the motion, a court must " accept all material allegations of fact ...