United States District Court, E.D. California
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT
SELECT PORTFOLIO SERVICING'S MOTION TO DISMISS
A. MENDEZ, UNITED STATES DISTRICT JUDGE
Gordon McMahon (“McMahon”) sued Defendant Select
Portfolio Servicing (“SPS”) and other defendants
seeking to save his home from foreclosure. ECF No. 1. SPS
moves to dismiss McMahon's First Amendment Complaint
(“FAC”), ECF No. 26, with prejudice. ECF No. 30.
McMahon opposes the motion. ECF No. 36.
FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
Court takes the facts alleged by McMahon as true for purposes
of this motion.
obtained a mortgage loan in 2005. FAC ¶ 1. The interest
rate and monthly payment increased about two years later, and
by the end of 2007, McMahon could not make his mortgage
began servicing McMahon's loan in June 2013. FAC ¶
49. McMahon submitted his first Request for Mortgage
Assistance (“RMA”) to SPS two months later. FAC
¶ 52. SPS offered McMahon a Trial Period Plan
(“TPP”), but calculated that plan using an
incorrect amount for McMahon's monthly income. FAC ¶
57. McMahon informed SPS of this inaccuracy, and SPS revoked
the TPP. FAC ¶ 60. In revoking the TPP, SPS used another
inaccurate monthly income. Id. McMahon appealed
SPS's denial of his RMA, but SPS never responded to the
appeal. FAC ¶ 61.
2015, Keep Your Home California approved McMahon for up to
$100, 000 in Principal Reduction Program funds. FAC ¶
84. McMahon submitted an RMA notifying SPS of his change in
circumstances. Id. SPS denied the RMA, stating that
McMahon's “account would not qualify for another
government program such as HAMP.” FAC ¶¶ 86,
submitted another application in June 2016, which SPS did not
respond to. FAC ¶¶ 96-97. McMahon then filed this
suit against SPS, seeking a temporary restraining order
(“TRO”) and preliminary injunction. FAC ¶
Court granted McMahon's application for TRO on June 29,
2016, enjoining SPS from foreclosing on McMahon's
property. ECF No. 7. On July 11, the Court stayed the case
pending the outcome of McMahon's pending RMA. ECF No. 10.
SPS denied the application nine days later. FAC ¶ 99.
McMahon appealed SPS's denial, and SPS denied the appeal.
FAC ¶¶ 100, 101. On August 23, 2016 the Court
granted McMahon's motion for preliminary injunction. ECF
No. 17 McMahon filed another RMA in November 2016. FAC ¶
102. SPS denied the application and the appeal. FAC
¶¶ 103, 107. McMahon alleges that over the past
four years, SPS has failed to appropriately consider his loan
modification applications and otherwise comply with the law.
FAC ¶ 108.
brings six causes of action against SPS in his FAC: (1)
violation of the Homeowners Bill of Rights
(“HBOR”) at California Civil Code § 2924.12,
(2) violation of the Equal Credit Opportunity Act
(“ECOA”) at 15 U.S.C. § 1691(d)(1), (3)
violation of the Real Estate Settlement Procedures Act
(“RESPA”), Regulation X at 12 C.F.R. §
1024.41, (4) violation of Regulation X at 12 C.F.R.
§§ 1024.35, 1024.36, (5) negligence, and (6)
violation of California Business and Professions Code §
Request for Judicial Notice
asks the Court to take judicial notice of eight documents
submitted with its motion to dismiss. ECF No. 31. The first
seven documents concern the real property at issue and are
recorded with the Solano County Recorder's Office.
Request for Judicial Notice (“RJN”) at 2-3. The
Court may take judicial notice of publically recorded
documents. Sullivan v. JP Morgan Chase Bank, N.A.,
725 F.Supp.2d 1087, 1091 (E.D. Cal. 2010). The eighth
document is McMahon's First Amended Complaint in the case
he filed in superior court in December 2014. RJN at 3. A
district court may take judicial notice of records in a state
court case. Simpson v. Best W. Int'l, Inc., 2012
WL 5499928, at *1 (N.D. Cal. Nov. 13, 2012). The Court
therefore grants SPS's request for judicial notice in
First Cause of Action
Civil Code § 2924.12 permits a borrower to bring a
lawsuit based upon a violation of the HBOR “[a]fter a
trustee's deed upon sale has been recorded” if
“actual economic damages . . . result[ed] from a
material violation of [s]ection[s] . . . 2923.55, 2923.6 . .
. or 2924.17.” Cal. Civ. Code § 2924.12(b). Under
his first cause of action, McMahon alleges SPS has violated
§§ 2923.55, 2923.6, and 2924.17.
California Civil Code § 2923.55
2923.55 states that a servicer may not record a notice of
default until after the servicer sends the borrower a
statement notifying the borrower that he may request a copy
of the promissory note, deed of trust, any assignment, and
payment history. Cal. Civ. Code § 2923.55(b)(1)(B).
argues McMahon has not plead a § 2923.55 claim because
he has not alleged that a material violation
occurred. Mot. at 4. McMahon does not point to any allegation
in the FAC indicating how any alleged violation of §
2923.55 was material.
the need to plead materiality is evident from the face of
statute, McMahon has already amended his complaint once, and
McMahon brought similar claims in his state court case, the
Court finds that granting leave to further amend the
complaint would be futile. Centeno v. Wilson, 2010
WL 1980157, at *1 (E.D. Cal. May 17, 2010) (“[L]eave to
amend may be denied if it appears to be futile.”). The
Court therefore dismisses McMahon's § 2923.55 claim
California Civil Code § 2923.6
2923.6(c) states that a servicer cannot record a notice of
default or a notice of trustee's sale while a complete
first lien loan modification is pending. Cal. Civ. Code
§ 2923.6(c). Section 2923.6(f)(2) states that
“[f]ollowing the denial of a first lien loan
modification application, the mortgage servicer shall send a
written notice to the borrower identifying the reasons for
the denial, including . . . [i]f the denial was ...