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Steinberg v. Provident Funding Associates, L.P.

United States District Court, N.D. California

June 17, 2016

ROBERT L. STEINBERG, et al., Plaintiffs,


          JON S. TIGAR United States District Judge.

         This is 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.

         I. BACKGROUND

         A. The First Amended Complaint ("FAC")

         Plaintiffs 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.

         On 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.

         The FAC 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." Id.

         Second, 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 Provident." Id.

         B. Procedural History

         Mr. 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.

         On 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.

         C. Jurisdiction

         This Court has jurisdiction pursuant to 28 U.S.C. § 1332(d)(2).

         II. ...

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