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Beck v. Ocwen Loan Services, LLC

United States District Court, C.D. California

February 6, 2015

JAYSON BECK and NANCY BECK, on behalf of themselves and all others similarly situated, Plaintiffs,


DEAN D. PREGERSON, District Judge.

Presently before the court is Defendant Ocwen Loan Services, LLC ("Ocwen")'s Motion to Dismiss. Having considered the submissions of the parties, the court grants the motion in part, denies the motion in part, and adopts the following order.

I. Background

In 2004, Plaintiffs Jayson and Nancy Beck ("the Becks") obtained a home mortgage, which was serviced by Defendant. (First Amended Complaint ("FAC") ¶ 6. Plaintiffs Reynaldo and Nerissa Alcalde ("the Alcaldes") obtained a home mortgage, also serviced by Ocwen, in 2006. (FAC ¶ 7.) The Becks requested a loan modification in 2012, and received a trial plan modification offer on January 11, 2013. (Id. ¶ 44.) The Becks allege that they accepted the offer on January 14 by returning a signed copy to Defendant, along with proof of insurance coverage, and by making the required initial payment on February 1. (Id. ¶ 45.) The Becks made the second payment contemplated by the agreement on March 1, 2013. (Id. ¶ 48). Nevertheless, on March 14, 2013, the Becks received notice that Ocwen had sold the Becks' property at a trustee's sale. (Id. ¶ 50.) Ocwen continued, however, to accept trial mortgage modification payments through April 1, 2013.

The Alcaldes do not appear to be related to the Becks in any way. The Alcaldes applied for a loan modification in July 2013. (FAC ¶ 58.) The FAC alleges that Defendant's representative told the Alcaldes that late fees, presumably related to late mortgage payments, would still be charged while the Alcaldes' modification application was pending. (FAC ¶ 59.)

The First Amended Complaint alleges causes of action for (1) violation of the California Homeowner Bill of Rights' ("HBOR") dual-tracking provision, California Civil Code § 2924.11(b); (2) illegal collection of late fees in violation of HBOR, California Civil Code § 2924.11(f); (3) breach of contract; and (4) unfair competition in violation of California Business & Professions Code § 17200. Defendant now moves to dismiss.

II. Legal Standard

A complaint will survive a motion to dismiss when it contains "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 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations, " it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 679. In other words, a pleading that merely offers "labels and conclusions, " a "formulaic recitation of the elements, " or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and internal quotation marks 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 of relief." Id. at 679. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555. "Determining whether a complaint states a plausible claim for relief" is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

III. Discussion

A. Dual Tracking

California Civil Code § 2924.11 forbids a mortgage servicer from recording a notice of default under certain circumstances. If a foreclosure prevention alternative has been approved in writing after the recordation of a notice of default, a mortgage servicer may not then record a notice of trustee's sale or conduct a trustee's sale if "(1) the borrower is in compliance with the terms of a written trial or permanent loan modification, forbearance or repayment plan[, ]" [or] (2) [a] foreclosure prevention alternative has been approved in writing by all parties...." Cal. Civil Code § 2924.11(b).

The FAC does not allege that a notice of default was recorded on the Alcaldes' home, nor that Defendant conducted a trustee's sale. The First Cause of Action is therefore dismissed as to them. As for the Becks, the FAC alleges that they accepted Defendant's loan modification offer on January 14, 2013, but that Defendant nevertheless conducted a trustee's sale in March, in violation of Section 2924.11(b).

Section 2924.11(b) only applies where "a foreclosure prevention alternative is approved in writing...." Cal. Civil Code § 2924.11(b). Defendant contends that, even accepting the allegations of the FAC as true, the Becks' loan modification was never approved. (Reply at 4.) The Becks argue that the agreement was approved in writing because it states "Ocwen... is offering you this Loan Modification Agreement...." (Opposition at 9; FAC EX. A at 2.) The offer also states, however, "If ALL of the items above are not completed by the Due Date, which includes the receipt of an executed counterpart to the Agreement signed by all parties, the Agreement will have no force or effect and the original terms of your note will ...

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