Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Penaloza v. Select Portfolio Servicing Inc.

United States District Court, C.D. California

December 8, 2014

Noemi Penaloza
Select Portfolio Servicing Inc.; JPMorgan Chase Bank N.A



Proceedings: [In Chambers]- COURT ORDER

Pending before the Court are Motions to Dismiss Plaintiff's Second Amended Complaint (" SAC") filed by Defendant Select Portfolio Servicing, Inc. (" SPS"), and Defendant JPMorgan Chase Bank, N.A. (" Chase") (collectively " Defendants"). (Dkt. Nos. 29, 32.) Plaintiff Noemi Penaloza filed its Opposition to the Motions to Dismiss. (Dkt. Nos. 35, 36.) SPS and Chase filed their replies on October 10, 2014. (Dkt. Nos. 38, 39.) The Court took this matter under submission on November 6, 2014. (Dkt. No. 43.) Based on the foregoing, the Court GRANTS in Part and DENIES in Part the Motions to Dismiss.


This action arises from the pending foreclosure of the real property located at 11332 Youngworth Street, Culver City, CA 90230 (" Property"). (Dkt. No. 1.) Chase was Plaintiff's loan servicer until August 1, 2013, when SPS began servicing the loan. (Id.) On April 4, 2014, this case was removed based on federal question and diversity jurisdictional grounds. (Id.) On May 5, 2014, Plaintiff filed her First Amended Complaint (" FAC"). (Dkt. No. 14.) After Plaintiff filed her FAC, this Court granted in part and denied in part Defendants' Motions to Dismiss the FAC. (Dkt. No. 24.) The Court granted Plaintiff leave to amend certain claims. (Id.)

On August 25, 2014, Plaintiff filed her SAC. (Dkt. No. 26.) The Second Amended Complaint (" SAC") asserts nine (9) causes of action. (Id.) Plaintiff's causes of action are as follows:

(1) Predatory Lending Violations;
(2) Violation of California Code § 2924(f);
(3) Violation of California Civil Code § 2924(a)(5);
(4) Unfair, Fraudulent Business Practice;
(5) Breach of Contract;
(6) Quiet Title;
(7) Violation of RESPA;
(8) Violation of California Civil Code § 2923.6(c);
(9) Violation of California Civil Code § 2924.10(a).


All of the claims are brought against both Defendants except for Plaintiff's Predatory Lending Violations and § 2924(f) claims, which are against Chase. Plaintiff's § 2923.6(c) and § 2924.10(a) claims are against SPS.[1] (Id.)

On September 10, 2014, Chase filed its Motion to Dismiss, and on September 15, 2014, SPS filed its Motion to Dismiss. (Dkt. Nos. 29, 32.) Both Motions challenge the sufficiency of the factual allegations asserted in Plaintiff's SAC. (Id.) Plaintiff filed her Opposition to the Motions on October 6, 2014. (Dkt. Nos. 35, 36.) Defendants filed their reply briefs on October 10, 2014. (Dkt. Nos. 38, 39.)


A complaint survives a motion to dismiss under Rule 12(b)(6) if it contains a " short and plain statement of the claim showing that the pleader is entitled to relief, " which does not require " detailed factual allegations, " but it " demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 677-78, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). A claim must be " plausible on its face, " which means that the Court can " draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.; see Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In other words, " a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal quotations and alterations omitted). Allegations of fact are taken as true and construed in the light most favorable to the nonmoving party. See Newdow v. Lefevre, 598 F.3d 638, 642 (9th Cir. 2010), cert. denied, 131 S.Ct. 1612, 179 L.Ed.2d 501 (2011).

In analyzing the sufficiency of the complaint, the Court must first look at the requirements of the causes of action alleged. See Iqbal, 556 U.S. at 675. The Court may then identify and disregard any legal conclusions, which are not subject to the requirement that the Court must accept as true all of the allegations contained in the complaint. Id. at 678. The Court must then decide whether well-pleaded factual allegations, when assumed true, " plausibly give rise to an entitlement to relief." Id. at 679. In doing so, the Court may not consider material beyond the pleadings, but may consider judicially noticeable documents, documents attached to the complaint, or documents to which the complaint refers extensively or which form the basis of the plaintiff's claims in the complaint. See United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). To the extent attached documents contradict factual allegations in the body of the complaint, the documents control. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).


The Court now examines Defendants' arguments in their Motions to Dismiss. (Dkt. Nos. 29, 32.)

1. Plaintiff's First Cause of Action for Predatory Lending and Other Lending Violations Against Chase

Plaintiff's first cause of alleges Predatory Lending and other Lending violations against Chase. ( See Dkt. No. 26.) The SAC details American Mortgage Network (" AMN") as the perpetrator of the violations. (Id. at pp. 10-11.) Plaintiff claims that AMN misrepresented Plaintiff's income, AMN misrepresented signatures, and AMN falsely inflated the Property's value. (Id.) Although AMN committed these violations, Plaintiff asserts that Chase is " liable as the successor in interest to AMN." (Id.)

Plaintiff still has not provided a basis for holding Chase liable for AMN's actions, outside of the statement that Chase is " the successor in interest to AMN." (Id.) Plaintiff has not identified the capacity of Chase's interest in AMN, if any. The allegations only give raise to the misconduct of AMN, not Chase. As Chase noted in its Motion to Dismiss, AMN should be liable for the misrepresentation. (Dkt. No. 29, p. 4 ¶ 2.) Chase should not be held liable because Plaintiff's SAC only supplements additional facts regarding AMN's conduct. (Id.)

The Court reminds Plaintiff that complaints and pleadings must consist of more than " labels and conclusions." See Twombly, 550 U.S. at 555, 127 S.Ct. at 1964-65. The SAC does not provide facts supporting the allegation that Chase is liable for AMN's misconduct.

Accordingly, Plaintiff's first cause of action is dismissed WITH PREJUDICE.

2. Plaintiff's Second and Ninth Causes of Action for Violation of California Civil Code § 2924f Against Chase and § 2924(a)(5) Against All Defendants (Notice Defects)

In her SAC, Plaintiff asserts violations of § 2924f and § 2924(a)(5). Because both of these statutes are notice defect statutes, the Court discusses the causes of action collectively.

a. § 2924f Provides for a Right of Action

§ 2924f requires that " [a] copy of the notice of sale posted in a conspicuous place on the property to be sold at least 20 days before the date of sale, where possible and where not restricted for any reason." Cal. Civ. Code § 2924f(b)(3).

In her SAC, Plaintiff alleges that in 2012 an individual named Michael Wallace Johnson sent a letter to Chase stating " [Plaintiff] was not served properly with trustee sales information 20 days prior to the foreclosure sale/auction date. Therefore the sale is out of compliance with California law. We need full cooperation to our request or a civil suit and complaint may ensue." (Dkt. No. 26, Ex. 6.) Plaintiff continues to allege that the notice of trustee sale was recorded on November 16, 2012 for a sale scheduled for December 7, 2012, and the notice of sale was posted on Plaintiff's door on December 7, 2012. (Id. at p. 12.) The dates alleged are in violation of the notice of sale provision in § 2924f.

Chase relies on a decision in Rockridge Trust v. Wells Fargo, N.A., 985 F.Supp.2d 1110, 1149 (N.D. Cal. 2013), in proclaiming 2924f as a statute that lacks a private right of action. (Dkt. No. 29, p. 18.) Without a private right of action, Chase emphasizes that Plaintiff's SAC falls short in asserting her claim. To counter, Plaintiff emphasizes the statutory implication of § 2924f that provides for a cause of action. (Dkt. No. 35, p. 14 ¶ 3); Mabry v. Superior Court, 185 Cal.App.4th 208, 110 Cal.Rptr.3d 201 (Cal.App. 2010). Regardless if a cause of action is explicitly provided for, Plaintiff takes the position that 2924f would be " meaningless if an individual was not permitted to enforce [2924f]." (Dkt. No. 35, p. 15 ¶ 1.)

The Court differs with Chase in its declaration that § 2924f does not provide a private right of action. Parties and courts have litigated under this provision, and to omit a cause of action under § 2924f would be incorrect. Hester v. PHH Mortg., No. 2:10-CV-01931-GEB (DAD), 2010 WL 2923495, at *2 (E.D. Cal. 2010) (analyzing a claim of personal service under the notice defects provision of 2924f); Falcocchia v. Saxon Mortg. Inc., 709 F.Supp.2d 873, 886 (E.D. Cal. 2010) (concluding that a 2924f claim could stand under an inference of preventing the short sale based on an earlier receipt of notice); Villarreal v. Onewest Bank, FSB, No. 10-CV-00781-GEB (KJM), 2010 WL 1416760, at *3-4 (E.D. Cal. 2010) (determining that the 2924f claim demonstrated that the trustee lacked the authority to proceed with the sale currently scheduled).

Having validated 2924f as a valid cause of action, the Court analyzes the strength of Plaintiff's claims under both statutes, § 2924f and § 2924(a)(5).

b. § § 2924f Against Chase and 2924(a)(5) Against All Defendants

In her opposition, Plaintiff has dismissed her § 2924(a)(5) claim against Chase. (Dkt. No. 35, p. 14.) Accordingly, this Court dismisses the § 2924(a)(5) claim against Chase WITH PREJUDICE.

§ 2924(a)(5) provides that " whenever a sale is postponed for a period of at least 10 business days pursuant to Section 2924g, a mortgagee, beneficiary, or authorized agent shall provide written notice to a borrower regarding the new sale date and time, within five business days following the postponement." Cal. Civ. Code § 2924(a)(5); see also Cal. Civ. Code § 2924g(c) (describing procedures for postponement of sales).

To challenge a foreclosure sale that has occurred, which is not the case here, a " plaintiff must provide evidence of failure to comply with the procedural requirements for the foreclosure sale that cause prejudice to the person attacking the sale." Rubio v. U.S. Bank N.A., No. C 13-05752 LB, 2014 WL 1318631, at *7 (N.D. Cal. Apr. 1, 2014); see also Flores v. EMC Mortgage Company, 997 F.Supp.2d 1088, 1110 (E.D. Cal. Feb. 18, 2014). To establish prejudice, a plaintiff must show that the foreclosure would not have occurred but for the alleged irregularities. See Natividad v. Wells Fargo Bank, N.A., No. 3:12-cv-03646 JSC, 2013 WL 2299601, at *16 (N.D. Cal. May 24, 2013) (citation omitted); see also Rubio, 2014 WL 1318631, at *7 (" Prejudice is not presumed from 'mere irregularities' in the foreclosure process." (citation omitted)).

Here, SPS acknowledges that a foreclosure sale has not occurred in this matter because of the pending loan modification application. (Dkt. No. 32, p. 9.) Without the foreclosure sale occurring, Plaintiff could not have suffered an injury. (Id.) Similarly, Chase points to the fact Plaintiff has not suffered an injury because the foreclosure sale has not taken place. (Dkt. No. 29, p. 18 fn. 5.)

In responding to Chase, Plaintiff relies on the reasoning in Mabry v. Superior Court, 185 Cal.App.4th 208, 110 Cal.Rptr.3d 201 (Cal.App. 2010). In responding to SPS, Plaintiff focuses on the fact that SPS did not provide notice as required under 2924(a)(5) and that harm was suffered in not complying with the statute. (Dkt. No. 36, pp. 13-14.)

In Mabry, the Court articulated that " [under] section 2923.5, read in conjunction with section 2924g, [the] only remedy provided [for] is a postponement of the sale before it happens." Mabry, 185 Cal.App.4th at 222, 110 Cal.Rptr.3d at 211. Moreover, nonconformance of this notice requirement provides little for this Court to remedy outside of setting aside the foreclosure proceedings. Gonzalez v. Wells Fargo Bank, No. C09-03444-MHP, 2009 WL 3572118, at *6 (N.D. Cal. 2009) (" Failure to comply with either provision would require this court to set aside the non-conforming portion of the foreclosure proceedings and force defendants to provide [plaintiff] with proper notice.").

Considering Plaintiff's arguments regarding Defendants' notice procedures as true, the Court is hard-pressed to allow this claim to proceed if the foreclosure of this property has come to a halt. Given that date of the foreclosure sale has not be determined, Defendants' acts have not caused any harm to the Plaintiff as of yet. With the foreclosure sale pending, an assertion that Plaintiff does not allege otherwise, the Court considers this claim moot. Consequently, the Court dismisses the § 2924f claim against Chase WITHOUT PREJUDICE. Likewise, the Court dismisses this § 2924(a)(5) claim against SPS WITHOUT PREJUDICE.

3. Plaintiff's Third Cause of Action for Unfair, Fraudulent Business Practices Against All Defendants

Plaintiff's third cause of action for violation of California Business and Professions Code Section 17200 (" UCL") is based on allegations of statutory, intentional and negligent misrepresentation. (Dkt. No. 26, pp. 12-15.) Plaintiff alleges that Chase provided false information as to Plaintiff's loan modification application being complete and under review when in fact the application was incomplete. (Id. at p.13, ¶ 91.)

Plaintiff's SAC alleges Northeast Financial, drafters of the mortgage loan in question, misrepresented Plaintiff's income, which affected her annual interest rate. (Id. at pp. 14-15.) Plaintiff holds SPS accountable for this interest rate misrepresentation under a vicarious liability theory. (Dkt. No. 35, pp. 7-8.)

Section 17200 prohibits " any unlawful, unfair or fraudulent business act or practice, " and because the statute is written in the disjunctive, three varieties of unfair competition exist. Davis v. HSBC Bank Nev., N.A., 691 F.3d 1152, 1168 (9th Cir. 2012). The statute is violated where a defendant's acts violates any of the three prongs. Id. An act is " unlawful" if it violates an underlying state or federal statute or common law. Id. An act is " fraudulent" if members of the public are likely to be deceived. Id. at 1169. The test for an " unfair" act is unsettled, but it either requires balancing the utility of the conduct against the gravity of the alleged harm, or determining whether the act " 'threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition.'" Id. at 1169-70 (citation omitted). " A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation." Khoury v. Maly's of Cal., Inc., 14 Cal.App.4th 612, 619, 17 Cal.Rptr.2d 708 (1993).

California courts have repeatedly held that defendants cannot be found liable for committing " unlawful business practices" under Section 17200 without having violated another law. See, e.g., Ingels v. Westwood One Broad. Serv., Inc., 129 Cal.App.4th 1050, 1060, 28 Cal.Rptr.3d 933 (2005).

To the extent that Plaintiff's UCL claim is tied to its already dismissed negligence claim, it is preempted from this order. Taguinod v. World Sav. Bank, FSB, 755 F.Supp.2d 1064, 1075 (C.D. Cal. 2010) (" [B]ecause there are no remaining causes of action, derivative liability under the UCL would be impossible.").

Chase challenges Plaintiff's standing. (Dkt. No. 29, pp. 5-9.) Chase contends that Plaintiff's alleged injury of emotional and mental distress in conjunction with Chase's conduct of alleged misrepresentation does not have a causal connection. Plaintiff's standing argument relies on injuries of threats to lose her home, attorney fees, and negative reports on her credit. (Dkt. No. 26, pp. 12-13 ¶ ¶ 85-88.) Plaintiff claims that her injuries were caused by alleged phone conversations Plaintiff had with Chase representatives. (Id.) Although there are " innumerable ways" one can show UCL standing, the Court does not find the alleged telephone conversations with Chase representatives discussing loan modifications as injuries to the Plaintiff. (Id. at p. 13); Hinojos v, Kohl's Corp., 718 F.3d 1098, 1104 (9th Cir. 2013) (" '[P]reserved standing for those who had had business dealings with a defendant and had lost money or property as a result of the defendant's unfair business practices....'" (citing Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 120 Cal.Rptr.3d 741, 246 P.3d 877 (Ca. 2011)).

SPS argues that Plaintiff's vicarious liability theory is not a basis for a UCL claim. (Dkt. No. 32, p. 3.) SPS contends that the conduct alleged is not directly derivative of SPS. (Id.) The holding in Emery v. Visa Internat. Service Ass'n, 95 Cal.App.4th 952, 116 Cal.Rptr.2d 25 (Cal.App. 2002), supports SPS' contentions. The Court in Emery states that " [t]he concept of vicarious liability has no application to actions brought under the unfair business practices act." Id. at 960. Moreover, if agency principles were applicable, Plaintiff has not provided the Court with enough facts as to the agency relationship involving SPS. Without more substance, the Court cannot allow these assertions to move forward on a vicarious liability theory.

In addition to the reasons discussed above, Plaintiff has not adequately alleged any fraudulent or unfair conduct that violated § 17200. Accordingly, Plaintiff's UCL cause of action is dismissed WITH PREJUDICE.

4. Plaintiff's Fourth Cause of Action for Breach of Contract Against All Defendants

To state a breach of contract claim, a plaintiff must allege (1) a valid contract, (2) performance by the plaintiff or excuse for nonperformance, (3) defendant's breach, and (4) damages. Reichert v. Gen. Ins. Co. of Am., 68 Cal.2d 822, 830, 69 Cal.Rptr. 321, 442 P.2d 377 (1968).

The thrust of Plaintiff's contract claim rests on her allegations that she performed her contractual obligation under the Deed of Trust (" DOT") to make loan payments, and the rest of her obligations were excused by AMN and AMN's successors' failure to perform. (Dkt. No. 26 at ¶ 110.) She also alleges that Defendants breached the DOT in three (3) ways.

First, Plaintiff claims that Defendants failed to provide written notice that Plaintiff's loan servicer had changed prior to Plaintiff's last payment. (Id. at ¶ ¶ 103-106.) Second, Plaintiff points to the breach of DOT's clause which states that a " [l]ender shall give notice to [the] Borrower prior acceleration following [the] Borrower's breach of any covenant or agreement...." (Id. at ¶ 107.) Third, Plaintiff alleges that the Notice of Default (" NOD") did not inform Plaintiff that she had a right to bring a court action to challenge her purported default as required under the DOT. (Id. at ¶ ¶ 107-108.) As for damages, these breaches caused Plaintiff to suffer from the threat of losing her home and to continue to incur legal expenses. (Id. at ¶ 111.)

Defendants mirror each other's arguments. (Dkt. Nos. 29, 32.) Defendants argue that the alleged breach is a derivative from Plaintiff's failure to perform under the DOT. According to Defendants, the NOD was issued as a result of Plaintiff not keeping up with her payments as stated under the Note and the DOT. (Dkt. No. 29, p. 10 ¶ 2.) Defendants claim that Plaintiff's breach is what caused these allegations to arise. (Dkt. No. 32, p. 5 ¶ 2.) Since Plaintiff was in breach, Plaintiff's future performance is not excused if the allegations derive from Plaintiff's misconduct. (Id.) Furthermore, Defendants note that the damages alleged are not damages that can be proximately attributable to Defendants. (Id.) The allegations of failure to notify of change in servicers and failure to notify of the right to bring forth a court action are not allegations to which injury can be derived from. (Dkt. No. 29, p. 11.) Rather, Plaintiff's failure to make timely monthly payments is the cause of these allegations. (Id.)

As noted in the Court's previous order, " [c]ausation of damages in contract cases requires that the damage be proximately caused by the defendant's breach." (Dkt. No. 24, p. 13 ¶ 2 (citing Troyk v. Farmers Grp., Inc., 171 Cal.App.4th 1305, 1354, 90 Cal.Rptr.3d 589, 628-29 (2009) (citations omitted)). Considering the SAC, the Court has not waivered on its position. The fact that the NOD was issued is because Plaintiff was not making timely payments. Not making timely payments is a breach of the Note and the DOT, which Plaintiff does not allege otherwise. Plaintiff cannot claim to be excused from performance if it is her breach of performance that brought forth the NOD. A party in breach cannot enforce a contract. Scott v. Bank of America, No. 12-12864, 2013 WL 5353231, at *3 (E.D. Mich. 2013) (The Court concluded that the breach of contract claim under the foreclosure complaint could not stand if Plaintiffs breached the mortgage agreement by failing to make the required loan payments.).

a. Breach of Implied Covenant of Good Faith and Fair Dealing

Plaintiff's SAC also alleges an implied covenant of Good Faith and Fair Dealing, obstruction of ability to receive value of agreement, and tortious breach of contract. (Dkt. No. 26, pp. 17-18 ¶ ¶ 112-119.) The allegations stem from Chase's lack of review of Plaintiff's loan modification request. (Id.) Without the review of her loan modification application, Plaintiff claims she hasn't been given the opportunity to maintain possession of her home; although, the foreclosure sale has not occurred yet. (Id.)

" Generally, every contract . . . imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement." McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784, 798, 71 Cal.Rptr.3d 885 (2008). " [T]he implied covenant is a supplement to an existing contract, and thus it does not require parties to negotiate in good faith prior to any agreement." Id. at 799. To make out a claim for breach of the implied covenant of good faith and fair dealing, " a plaintiff must establish the existence of a contractual obligation, along with conduct that frustrates the other party's rights to benefit from the contract." Rosal v. First Fed. Bank of Cal., 671 F.Supp.2d 1111, 1129 (N.D. Cal. 2009).

Plaintiff fails to state a claim for breach of implied good faith and fair dealing. Plaintiff does not sufficiently plead the express terms of the contract that Chase breached. Plaintiff does not cite to a contractual provision requiring Chase to modify Plaintiff's loan. In any event, Chase has no statutory obligation to do so. See Mabry, 185 Cal.App.4th at 231. Because there is no express term in the contract alleged to which Plaintiff relies for its cause of action, any amendment would be futile.

Thus, the Court grants Defendants' Motion to Dismiss as to the Breach of Contract claim WITH PREJUDICE.

5. Plaintiff's Fifth Cause of Action for Quiet Title Against All Defendants

Plaintiff alleges a claim for quiet title for the Property. As the Court previously explained, under California Civil Code section 760.020(a), a party may seek to establish title in a property as against adverse claims, so long as the Complaint is verified and sets out certain information required by statute. See § 761.020. However, in order for a mortgagor to quiet title against a mortgagee, the mortgagor must pay the amount he or she owes on the debt. See Hamilton v. Bank of Blue Valley, 746 F.Supp.2d 1160, 1170 (E.D. Cal. 2010). There are four exceptions to this " tender" requirement: (1) the action attacks the validity of the underlying debt; (2) the mortgagor has a counter-claim or setoff against the mortgagee; (3) requiring tender would be inequitable; and (4) the trustee's deed is void on its face. Lona v. Citibank, N.A., 202 Cal.App.4th 89, 112-13, 134 Cal.Rptr.3d 622 (2011).

Plaintiff's SAC has not amended its FAC as the Court recommended. (Dkt. Nos. 14, 26.) Similarly, Defendants have not altered their arguments. (Dkt. Nos. 29, 32.) The Court has already concluded that Plaintiff lacks authority to pursue this claim. As the Court articulated in its previous order, Plaintiff cannot move forward with this claim based on the conclusory statements pertaining to the lack of interest Defendants have in the Property. (Dkt. No. 24, p. 15.) Plaintiff has not cited an exception to the tender requirement for quiet title. " Allowing plaintiffs to recoup the property without full tender would give them an inequitable windfall, allowing them to evade their lawful debt." Stebley v. Litton Loan Servicing, LLP, 202 Cal.App.4th 522, 526, 134 Cal.Rptr.3d 604 (2011); see also Shuster v. BAC Home Loans Servicing, LP, 211 Cal.App.4th 505, 149 Cal.Rptr.3d 749, 751, 2012 WL 5984222, at *4-5 (Cal.Ct.App. 2012). Absent an exception to the tender requirement, Plaintiff has not alleged or argued that she could tender the full amount owing on his mortgage in order to challenge the foreclosure sale, whenever such an event occurs. Thus, the Court dismisses this claim WITH PREJUDICE.

6. Plaintiff's Sixth Cause of Action for Violation of Real Estate Settlement Procedures Act (" RESPA") Against All Defendants

Plaintiff alleges that Defendants failed to properly respond to her Qualified Written Requests (" QWR"), in violation of 12 U.S.C. § 2605. (Dkt. No. 26, pp. 20-25.) Under RESPA, borrowers may obtain information related to the servicing of their loan by submitting a QWR to their loan servicer. See 12 U.S.C. § 2605(e). After receiving a QWR, a loan servicer must provide written notice to a borrower acknowledging receipt within five days, excluding weekends and holidays. 12 U.S.C. § 2605(e)(1)(A). Within thirty days of receiving a QWR, excluding weekends and holidays, a loan servicer must either (1) make any appropriate corrections to the borrower's account; (2) after conducting an investigation, provide a written explanation or clarification to the borrower regarding why the loan servicer believes the account is correct; or (3) after conducting an investigation, provide a written explanation or clarification to the borrower regarding why the requested information is unavailable or the servicer cannot obtain the information. 12 U.S.C. § 2605(e)(2).

According to her SAC, on November 15, 2012, Plaintiff sent Chase a QWR. (Dkt. No. 26, p. 20 ¶ 130.) On February 3, 2014, Plaintiff sent a QWR to SPS. (Id. at p. 20, ¶ 131.) Defendants allegedly responded with receipt to the QWRs beyond the five (5) day statutory requirement, which Plaintiffs claim is a breach of RESPA. (Id. at p. 20, ¶ ¶ 130-131.)

Taking the allegations as true, the Court analyzes the damages Plaintiff alleges. Damages must be pled under a RESPA claim. See Allen v. United Fin. Mortg. Corp., 660 F.Supp.2d 1089, 1097 (N.D. Cal. 2009). A common theme throughout Plaintiff's SAC is the damages and injuries of legal expenses, emotional distress, and negative credit reporting. (Dkt. No. 26, at p. 24.) However, the conclusory fashion to which Plaintiff alleges these damages do not sufficiently provide a causal connection between Defendants and the breach at hand. Although damages are alleged, the causal connection or even an inference of a connection between Plaintiff's damages and Defendants' conduct is not alleged. A claim must be " plausible on its face, " which means that the Court can " draw the reasonable inference that the defendant is liable for the misconduct alleged." See Twombly, 550 U.S. at 570. Without that substantive allegation, the Court cannot allow this cause of action to move forward. Accordingly, the Court dismisses this cause of action WITH PREJUDICE.

7. Plaintiff's Seventh Cause of Action for Violation of California Civil Code § 2923.6(c)-Anti-Dual Tracking Against SPS

California Civil Code Section 2923.6 provides:

(c) If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower's mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee's sale, while the complete first lien loan modification application is pending. A mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale or conduct a trustee's sale until any of the following occurs:
(1) The mortgage servicer makes a written determination that the borrower is not eligible for a first lien loan modification, and any appeal period pursuant to subdivision (d) has expired.
. . .
(d) If the borrower's application for a first lien loan modification is denied, the borrower shall have at least 30 days from the date of the written denial to appeal the denial and to provide evidence that the mortgage servicer's determination was in error.
(e) If the borrower's application for a first lien loan modification is denied, the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or, if a notice of default has already been recorded, record a notice of sale or conduct a trustee's sale until the later of:
(1) Thirty-one days after the borrower is notified in writing of the denial.
(2) If the borrower appeals the denial pursuant to subdivision (d), the later of 15 days after the denial of the appeal. . . .
(g) In order to minimize the risk of borrowers submitting multiple applications for first lien loan modifications for the purpose of delay, the mortgage servicer shall not be obligated to evaluate applications from borrowers who have already been evaluated or afforded a fair opportunity to be evaluated for a first lien loan modification prior to January 1, 2013, or who have been evaluated or afforded a fair opportunity to be evaluated consistent with the requirements of this section, unless there has been a material change in the borrower's financial circumstances since the date of the borrower's previous application and that change is documented by the borrower and submitted to the mortgage servicer.

Cal. Civ. Code § 2923.6.

Reviewing the history of allegations under § 2923.6, Plaintiff's claims clearly state that she has previously applied for and been denied a loan modification application. (Dkt. No. 26, pp. 25-26.) Thus, under § 2923.6, SPS is not obliged to evaluate Plaintiff's later loan modification applications unless Plaintiff had shown there was a material change to her financial situation since the date of her previous applications. See Rockridge Trust v. Wells Fargo, N.A., 985 F.Supp.2d 1110, 1136 (N.D. Cal. 2013).

Addressing the need for a material change, Plaintiff claims that her monthly expenses increased over $3500.00 between 2012 and 2013, and then decreased over $1500.00. (Dkt. No. 26, p. 26.) Plaintiff's income also increased over $5, 500.00. (Id.) The Court specifically allowed Plaintiff to make the amendments with regard to the material change exception because if such material changes were included in her loan modification application, as Plaintiff alleges, SPS is obligated to evaluate the application before issuing a NOTS. (Dkt. No. 24, p. 18 ¶ 2.) Therefore, in taking the allegations as true, the Court DENIES SPS' Motion to Dismiss as to this claim.


For the foregoing reasons, the Court GRANTS in part and DENIES in part Chase and SPS' Motions to Dismiss Plaintiff's SAC. As to Chase's Motion to Dismiss, the Court dismisses all the remaining claims. With respect to SPS' Motion to Dismiss, the Court dismisses all the claims except for Plaintiff's claim seventh claim of § 2923.6(c).

Therefore, the only remaining claims moving forward is Plaintiff's seventh claim under § 2923.6(c) and Plaintiff's Eighth Claim under § 2924.10(a). All of which are against SPS. In addition, the Court denies Plaintiff's request for leave to amend to add claims against Chase or SPS.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.