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Hayter v. PHH Mortgage Corp.

United States District Court, N.D. California, San Francisco Division

July 19, 2016

JONATHAN HAYTER, et al., Plaintiffs,




         This dispute concerns the modification of a residential-mortgage loan. Plaintiffs Jonathan and Sandryna Hayter sought that modification from their mortgage lender, defendant PHH Mortgage Corporation, in 2012. Over the next year, PHH sent the Hayters letters related to that modification. These letters told the plaintiffs that, until modification was complete, their house might still be foreclosed upon. The plaintiffs now claim that, among other things, these letters constitute an actionable ''intrusion upon seclusion." The defendant moves to dismiss that claim under Federal Rule of Civil Procedure 12(b)(6). (ECF No. 44.)[1]

         The parties have consented to magistrate jurisdiction. (ECF Nos. 4, 9.) This motion can be decided without oral argument. See Civil L.R. 7-1(b). The defendant‘s analysis throughout is accurate and persuasive and the court mostly agrees with it. The court grants the defendant‘s motion and dismisses the intrusion claim with leave to amend.


         The plaintiffs own residential property in Brentwood, California.[2] Their mortgage loan on that property is held by defendant PHH Mortgage Corporation.[3] In 2012, facing financial hardship, the plaintiffs applied to PHH for a loan modification.[4] The plaintiffs claim that, in processing that request, PHH acted in ways that constitute the tort of ''invasion of privacy by intrusion upon seclusion."[5]

         The plaintiffs focus mainly on letters that PHH sent them in processing their modification request. They argue that these letters were actionably intrusive mostly because they ''repeatedly and unlawfully threatened to foreclose" on the plaintiffs‘ home unless the plaintiffs accepted and began paying under a modified loan.[6] For example, the plaintiffs allege that in one such letter PHH wrote: ''Please understand that all collection/foreclosure activity initiated will continue until the holder of your mortgage approves your request for a . . . [modification] and may require the first payment be received."[7] Another letter allegedly told the plaintiffs that, ''to suspend foreclosure proceeding[s], " they had to accept and start paying under the modified loan‘s ''trial period plan."[8]With this same letter, the plaintiffs say, ''PHH misrepresented that'suspension of foreclosure proceedings is not guaranteed . . . .‘"[9] The plaintiffs do not allege that, apart from repeatedly ''threaten[ing] foreclosure, " the letters were in any other way obnoxious. They do not allege that the defendant called them or visited their home. They do not allege that the defendant contacted third parties regarding their loan.[10]

         Both in the intrusion-upon-seclusion claim, and in other independent claims (not involved in this analysis), the plaintiffs contend that, in handling their modification request, PHH violated provisions of California‘s Homeowner Bill of Rights (''HBOR").[11]


         1. Rule 12(b)(6)

         A court may dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) when it does not contain enough facts to state a claim to relief that is plausible on its face. See 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 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'entitle[ment] to relief‘ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555 (internal citations and parentheticals omitted).

         In considering a motion to dismiss, a court must accept all of the plaintiff's allegations as true and construe them in the light most favorable to the plaintiff. See id. at 550; Erickson v. Pardus, 551 U.S. 89, 93-94 (2007); Vasquez v. Los Angeles County, 487 F.3d 1246, 1249 (9th Cir. 2007).

         2. Invasion of Privacy by Intrusion Upon Seclusion

         In California law, the claim for intrusion upon seclusion ''has two elements: (1) intrusion into a private place, conversation or matter, (2) in a manner highly offensive to a reasonable person." Shulman v. Group W. Prods., Inc. 18 Cal.4th 200, 232 (1998). The first question is thus ''whether defendants intentionally intruded, physically or otherwise, upon the seclusion of another." See Id. (quotation omitted). ''[T]o prove actionable intrusion, the plaintiff must show the defendant penetrated some zone of physical or sensory privacy surrounding, or obtained unwanted access to data about, the plaintiff." Id. The intrusion must be intentional. E.g., Varnado v. Midland Funding, LLC, 43 F.Supp.3d 985, 992 (N.D. Cal. 2014). In determining the ''offensiveness" of a challenged intrusion, courts consider, among other things, ''the degree of the intrusion, the context, conduct and circumstances surrounding the intrusion as well as the intruder‘s motives and objectives, the setting into which he intrudes, and the expectations of those whose privacy is invaded." Deteresa v. Am. Broad. Cos., 121 F.3d 460, 465 (9th Cir. 1997) (quoting Hill v. Nat’l Collegiate Athletic Ass’n, 7 Cal.4th 1, 26 (1994). ''The tort is proven only if the plaintiff had an objectively reasonable expectation of seclusion or solitude in the place, conversation or data source." Shulman, 18 Cal.4th at 232; accord, e.g., Taus v. Loftus, 40 Cal.4th 683, 730 (2007), overruled on other grounds by Oasis W. Realty, LLC v. Goldman, 51 Cal.4th 811 (2011).


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