United States District Court, N.D. California
ROBERT L. STEINBERG, et al., Plaintiffs,
PROVIDENT FUNDING ASSOCIATES, L.P., Defendant.
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS FIRST AMENDED COMPLAINT RE:
ECF NO. 28
TIGAR United States District Judge.
a putative class action brought by Plaintiffs Robert L.
Steinberg and Sonia Steinberg against Defendant Provident
Funding Associates, L.P. ("Provident"), alleging
claims for breach of contract, conversion, unjust enrichment,
and violation of the Florida Deceptive and Unfair Trade
Practices Act (the "FDUTPA"). Before the Court is
Provident's Motion to Dismiss Plaintiffs' First
Amended Class Action Complaint. ECF No. 28. The motion will
be granted in part and denied in part.
The First Amended Complaint ("FAC")
allege they entered into a written contract with Provident
"whereby Provident agreed to fund and service mortgage
loans" for Plaintiffs. ECF No. 23 ¶ 38. Under the
loan agreement, payments are due to Provident on the 1st of
each month. Id. ¶ 15. If payment is not
received by the 16th of the month, Provident assesses a late
fee. Id. According to Plaintiffs, "[e]ven when
customers making their monthly mortgage payment by check or
money order submit payment on time, Provident assesses a late
fee." Id. ¶ 17.
February 7, 2015, Mrs. Steinberg, who is also a signatory to
the loan agreement, mailed the Steinberg's February
mortgage payment check to Provident via first-class mail with
the United States Postal Service ("USPS").
Id. ¶ 18. On February 18, 2015, Mrs. Steinberg
received a telephone call from Provident informing her that
Provident had not received the mortgage payment for February.
Id. ¶ 21. After speaking with a Provident
representative that same day, Mrs. Steinberg completed the
February mortgage payment online. Id. ¶ 22-23.
On February 19, 2015, Provident sent a letter to Plaintiffs
stating that Provident had received Plaintiffs' February
mortgage check but it was "unable to apply the funds to
[Plaintiffs'] account due to the following reason:
Payment stop on check." Id. ¶ 24. Neither
Mr. Steinberg nor Mrs. Steinberg ever placed a stop payment
order on the February mortgage check. Id. ¶ 24.
Provident subsequently assessed a late fee of approximately
$200 on Plaintiffs' account. Id. ¶ 25.
Plaintiffs allege that at no point did Provident present
Plaintiffs with any documentation, or any evidence of any
kind, supporting its claim that the payment was not timely
received. Id. Plaintiffs also allege, "upon
information and belief, " that Provident shreds or
otherwise disposes of the envelopes in which mortgage
payments are mailed shortly after receipt. Id.
bolsters Plaintiffs' allegations regarding the allegedly
fraudulent late fees in two ways. First, Plaintiffs quote
numerous online consumer complaints. Id. ¶ 17.
For instance, one of the online complaints claimed that
Provident "sent me a late notice when they had check in
hand." Id. Another complaint stated:
"Provident has ‘lost' my mailed payments and
charged me late fees when the payment was mailed with a week
to spare." Id. Still another complaint stated:
"Late fee is incurred if received after the 16th of the
month. I mailed payment on the 9th. Provident said they
didn't receive it until the 17th which is BS because I
mailed an insurance payment to a company in [California] the
same day . . . and they received it on the 13th."
Id. A fourth complaint "wonder[ed] if
[Provident was] just holding onto the checks to purposely
make them late so they can charge a late fee."
Plaintiffs allege that according to the USPS website,
domestic first-class mail is delivered in "1-3 business
days, " and that the USPS Service Standards Map confirms
that a first-class letter sent from South Florida-the
location from which Plaintiffs sent their February 2015
payment-to Provident's mailing address in Los Angeles,
California is expected to arrive in three days. Id.
¶ 19. Plaintiffs also allege that, according to a 2015
report prepared for the USPS by the International Business
Machines Corporation, approximately 94% of first-class mail
delivered within Los Angeles arrives on time or within one
day of the Service Standard (in this case, within 2-4
business days), and approximately 98% of such mail arrives
within two days of the Service Standard (in this case, within
3-5 business days). Id. "Therefore, on
information and belief, " Plaintiffs allege that
"Provident received Plaintiffs' payment prior to the
expiration of the applicable 15-day grace period."
Id. ¶ 20. Finally, Plaintiffs note that further
evidence regarding the date and time of receipt of
Plaintiffs' February 2015 payment is "within the
exclusive possession, custody, and control of
Steinberg filed the initial Class Action Compliant on August
17, 2015. ECF No. 1. On October 9, 2015, Provident moved the
Court to dismiss Mr. Steinberg's class action complaint
pursuant to Federal Rules of Civil Procedure 12(b)(6). ECF
No. 16. The Court granted Provident's motion to dismiss
on December 22, 2015. ECF No. 22. Noting that the
parties' loan agreement provides that Provident is
entitled to a late fee from the Steinberg's if Provident
has not received the full amount of any monthly
payment by the end of 15 calendar days after the date it is
due, the Court held that Mr. Steinberg's claims failed
because he had not alleged when Provident received his
February payment, just that it had been sent on February 7,
2015. Id. at 5. The Court thus dismissed Mr.
Steinberg's breach of contract, conversion, unjust
enrichment, and FDUTPA claims with leave to amend.
Id. at 11. The Court also dismissed with leave to
amend Mr. Steinberg's prayer for injunctive relief,
finding that Mr. Steinberg lacked standing to seek such
relief. Id. Finally, the Court dismissed Mr.
Steinberg's unconscionability claim with prejudice and
ordered Mr. Steinberg to join Mrs. Steinberg as a plaintiff
in the event he elected to file an amended complaint.
Id. at 11-12.
January 21, 2016, Plaintiffs filed the FAC. ECF No. 23. On
February 19, 2016, Provident filed a motion to dismiss the
FAC, ECF No. 28, which motion the Court now considers.
Court has jurisdiction pursuant to 28 U.S.C. Â§ 1332(d)(2).