United States District Court, E.D. California
MEMORANDUM DECISION AND ORDER RE: DEFENDANT CHASE BANK'S MOTION TO DISMISS (Doc. 9)
LAWRENCE J. O'NEILL, District Judge.
I. PRELIMINARY STATEMENT TO PARTIES AND COUNSEL
Judges in the Eastern District of California carry the heaviest caseloads in the nation, and this Court is unable to devote inordinate time and resources to individual cases and matters. Given the shortage of district judges and staff, this Court addresses only the arguments, evidence, and matters necessary to reach the decision in this order. The parties and counsel are encouraged to contact the offices of United States Senators Feinstein and Boxer to address this Court's inability to accommodate the parties and this action. The parties are required to reconsider consent to conduct all further proceedings before a Magistrate Judge, whose schedules are far more realistic and accommodating to parties than that of U.S. District Judge Lawrence J. O'Neill, who must prioritize criminal and older civil cases.
Civil trials set before Judge O'Neill trail until he becomes available and are subject to suspension mid-trial to accommodate criminal matters. Civil trials are no longer reset to a later date if Judge O'Neill is unavailable on the original date set for trial. Moreover, this Court's Fresno Division randomly and without advance notice reassigns civil actions to U.S. District Judges throughout the nation to serve as visiting judges. In the absence of Magistrate Judge consent, this action is subject to reassignment to a U.S. District Judge from outside the Eastern District of California.
Plaintiff Judy Burden alleges that Defendants have unlawfully sold her mortgage interest in real property located in Fresno, California.
III. PROCEDURAL HISTORY
Plaintiff filed a cause of action against Defendants in state court on December 29, 2014. Complaint, Notice of Removal Ex. A, Doc. 1. Plaintiff brings causes of action under the Truth in Lending Act (TILA), the Real Estate Settlement Procedure Act (RESPA), Fair Debt Collections Practice Act (FDCPA), California Civil Code § 2923, as well as claims based on theories of fraud, intentional infliction of emotional distress (IIED), and slander.
Defendant JP Morgan Chase Bank (Chase) removed the case to this Court on February 26, 2015, as a successor by merger to Defendants Chase Home Finance and California Reconveyance Company (CRC). Id. On March 4, 2015, Chase moved to dismiss the entire Complaint. Mem. of P. &A. in Support of Mot. to Dismiss Compl. (MTD), Doc. 9. On March 11, 2015, Defendant ALAW joined Chase's arguments as to claims that applied to it. Doc. 13. Plaintiff did not file any opposition to these motions.
IV. FACTUAL BACKGROUND
Plaintiff Judy Burden obtained a $275, 750 mortgage from New Century Mortgage Corporation (New Century) on January 18, 2006. Compl. ¶ 15. The mortgage was secured by a deed of trust for the real property located at 2926 E. Willis Avenue in Fresno, California (The Property). Id.
Plaintiff alleges that Defendant Chase Home Finance somehow came into possession of this note and assigned it to U.S. Bank National Association on July 26, 2010. Id. at ¶¶ 16, 20. Plaintiff also alleges that CRC, along with Defendants ALAW, Chase and U.S. Bank National Association attempted to collect on the Note, though they did not have perfected securities interests in it. Id. at ¶ 17.
On February 6, 2013, CRC recorded a notice of default against the property. Id. at ¶ 21. On January 14, 2014, CRC substituted Defendant ALAW as trustee of the Note. Id. at ¶ 24. On July 18, 2014, ALAW noticed the sale of the Property. Id. at ¶ 25.
V. STANDARD OF DECISION
A motion to dismiss pursuant to Fed R. Civ. P. 12(b)(6) is a challenge to the sufficiency of the allegations set forth in the complaint. A 12(b)(6) dismissal is proper where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). In considering a motion to dismiss for failure to state a claim, the court generally accepts as true the allegations in the complaint, construes the pleading in the light most favorable to the party opposing the motion, and resolves all doubts in the pleader's favor. Lazy Y. Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).
To survive a 12(b)(6) motion to dismiss, the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "The plausibility standard is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556). "Where a complaint pleads facts that are merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility for entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 557).
"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, 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 citations omitted). Thus, "bare assertions... amount[ing] to nothing more than a formulaic recitation of the elements'... are not entitled to be assumed true." Iqbal, 556 U.S. at 681. In practice, "a complaint... must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Twombly, 550 U.S. at 562. In other words, the Complaint must describe the alleged misconduct in enough detail to lay the foundation for an identified legal claim.
To the extent that the pleadings can be cured by the allegation of additional facts, the plaintiff should be afforded leave to amend. Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted).
A. Plaintiff's TILA Claim
Plaintiff alleges that Defendants are liable for TILA violations. Compl. ¶ 14. Defendant argues that any claims Plaintiff may have under TILA are time-barred. MTD at 5. Under TILA, actions must be brought "within one year from the date of the occurrence of the violation." 15 U.S.C.A. § 1640(e). The limitations periods began to run when Plaintiff executed her loan documents, because she could have discovered any alleged disclosure violation at that time. Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1045 (9th Cir. 2011). Here, Plaintiff alleges that her loan was obtained on January 18, 2006. Compl. ¶ 15. Thus, the limitations period expired several years before Plaintiff filed the Complaint in 2014. For this reason, the Court GRANTS Defendant's motion to dismiss Plaintiff's TILA claims.
B. Plaintiff's RESPA Claims
Plaintiff alleges that "Defendants conduct in trying to collect debt from Plaintiff which they have no legal right to collect... violates [RESPA]." Compl. ¶ 17. Defendant argues that Plaintiff fails to state a claim under RESPA because she does not identify which provision of RESPA was violated and fails to set forth facts that could support a violation under any RESPA provision with a private right of action. MTD at 7. In the alternative, Defendant claims that Plaintiff's RESPA claim is time barred. Id.
This Court agrees that Plaintiff's RESPA claim is vague and fails to give fair notice as to the basis of her legal argument. Further, RESPA claims are subject to one or three year statutes of limitation, depending on which section is invoked. 12 U.S.C. § 2614. "The primary ill' which RESPA seeks to remedy is the potential for unnecessarily high settlement charges' caused by kickbacks, fee-splitting, and other practices that suppress price competition for settlement services. This ill occurs, if at all, when the plaintiff pays for the service, typically at the closing." Heflebower v. U.S. Bank Nat. Ass'n, No. CV F 13-1121 LJO MJS, 2013 WL 3864214, at *15 (E.D. Cal. July 23, 2013), appeal dismissed (Dec. 10, 2013), reconsideration denied sub nom. Heflebower v. U.S. Bank Nat. Ass'n, No. CV F 13-1121 LJO MJS, 2013 WL 4647963 (E.D. Cal. Aug. 29, 2013). Here, Plaintiff alleges that her loan was obtained on January 18, 2006. Compl. ¶ 15. Thus, the limitations period expired several years before Plaintiff filed the Complaint in 2014.
To the extent that Plaintiff seeks to enforce a disclosure-based violation, such a claim is subject to dismissal because there is not private right of action. Heflebower, 2013 WL 3864214, at *15. RESPA's purpose is to "curb abusive settlement practices in the real estate industry. Such amorphous goals, however, do not translate into a legislative intent to create a private right of action." Id . (quoting Bloom v. Martin, 865 F.Supp. 1377, 1385 (N.D. Cal.1994), aff'd, 77 F.3d 318 (1996). "The structure of RESPA's various statutory provisions indicates that Congress did not intend to create a private right of action for disclosure violations under 12 U.S.C. § 2603... Congress did not intend to provide a private remedy..." Id. The absence of a private right of action dooms a purported RESPA claim based on disclosure violations.
For these reasons, the Court GRANTS Defendant's motion to dismiss Plaintiff's RESPA claims.
C. Plaintiff's FDCPA Claims
Plaintiff alleges that Defendants are liable for FDCPA violations. Compl. ¶¶ 17, 55. Defendant argues that Plaintiff's FDCPA claims fails because she does not identify which FDCPA provisions were violated and because none of the Defendants are "debt collectors" as that term is used in the FDCPA. MTD at 8.
The FDCPA defines a debt collector as (1) "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, " and (2) any person "who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). The term "debt collector" does not include a person who collects or attempts to collect a debt "to the extent such activity... concerns a debt which was not in default at the time it was obtained by such person." 15 U.S.C. § 1692a(6)(F). Creditors and mortgage services, such as Defendants, are typically not liable under the FDCPA so long as the debt is not in default at the time of servicing. Bridge v. Ocwen Fed. Bank, FSB, 681 F.3d 355, 359 (6th Cir. 2012) ("For an entity that did not originate the debt in question but acquired it and attempts to collect on it, that entity is either a creditor or a debt collector depending on the default status of the debt at the time it was acquired."); see also Pineda v. Saxon Mortgage Servs., Inc., No. SACV08-1187 JVSANX, 2008 WL 5187813, at *3 (C.D. Cal. Dec. 10, 2008); Ines v. Countrywide Home Loans, Inc., 2008 WL 2795875, at *3 (S.D.Cal. Jul.18, 2008); Tina v. Countrywide Home Loans, Inc., 2008 WL 4790906 at *7 (S.D.Cal. Oct.30, 2008).
Plaintiff alleges that CRC "claims to be a debt collector" who recorded a notice of default against her in February of 2013. Compl. ¶¶ 5, 21. In this notice, CRC states that it is "a debt collector attempting to collect a debt." Request for Judicial Notice, Ex. 6, Doc. 9-2 at 11. Thus, Defendant's argument that ...