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Galindo v. BSI Financial Services, Inc.

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

May 26, 2017

CESAR GALINDO, ET AL., Plaintiffs,


          LUCY H. KOH United States District Judge

         Plaintiffs Cesar Galindo (“Galindo”) and Maria Rivera (“Rivera”) (collectively, “Plaintiffs”), bring suit against Defendant BSI Financial Services, Inc. (“BSI”) for negligence, violation of the implied covenant of good faith and fair dealing, violation of California Civil Code § 2923.6(c), and violation of California's Unfair Competition Law (“UCL”). Currently before the Court is Plaintiffs' motion for leave to file a First Amended Complaint (“FAC”), which seeks leave to add Ocwen Loan Servicing LLC (“Ocwen”) as a defendant. ECF No. 26 (“Mot.”). BSI does not oppose the motion. ECF No. 28. The Court finds this matter suitable for resolution without oral argument and accordingly VACATES the motion hearing set for June 1, 2017, at 1:30 p.m. See Civil L.R. 7-1(b). Having considered the parties' submissions, the relevant law, and the record in this case, the Court hereby GRANTS Plaintiffs' motion for leave to amend.

         I. BACKGROUND

         A. Factual Background

         On September 26, 2006, Galindo borrowed $436, 000 from Bank of America, N.A. (“BOA”), secured by a deed of trust encumbering property located at 3146 Barletta Lane in San Jose, CA (hereinafter, “the Property”). ECF No. 1 (“Compl.”), Ex. 1. Plaintiffs defaulted on the loan on March 1, 2009.

         On September 1, 2012, Ocwen acquired from BOA the servicing rights for Plaintiffs' loan. Compl., Ex. 2. On January 23, 2014, Ocwen recorded a Notice of Default and Election to Sell under Deed of Trust against the Property. Plaintiffs “began applying for a [Home Affordable Modification Program (“HAMP”)] loan modification.” Id. ¶ 14. In 2015, “after years of applications [for home loan modifications] that resulted in bad faith denials, Plaintiffs' filed an administrative complaint” with Ocwen. Compl. ¶ 14-15.

         On May 29, 2015, Plaintiffs received a letter from Ocwen in response to Plaintiffs' administrative complaint. Id. Ex. 2. Ocwen informed Plaintiffs that Plaintiffs had been approved for a Trial Period Plan (“TPP”) Offer on September 14, 2012, but Ocwen ultimately denied Plaintiffs a loan modification on December 13, 2012 because Plaintiffs failed to make the TPP payments. See Id. Further, Ocwen had approved Plaintiffs “for a Proprietary Modification” on December 14, 2014, but Plaintiff failed to make the initial payments by the due date and accordingly Ocwen denied Plaintiff a Proprietary Modification on February 11, 2015. See Id. Ocwen's May 29, 2015 letter to Plaintiffs also informed Plaintiffs that Ocwen received “[a] second HAMP request” from Plaintiffs on April 8, 2015.” Id. However, Ocwen again denied Plaintiffs a HAMP modification “because the owner of the account either does not allow principal reduction or does not participate in the HAMP” program. Id.

         In or about September 2015, BSI acquired from Ocwen the servicing rights to Plaintiffs' loan. Thereafter, Plaintiffs sent a loan modification request to BSI. Id. ¶ 18. On September 22, 2015, Galindo emailed documents to Daniel McAteer (“McAteer”), senior loss mitigation specialist for BSI. Id. Ex. 3. On September 23, 2015, McAteer replied to Galindo and told Galindo that he would “forward these [documents to] our Loan Processor to review to determine if any additional documentation is needed.” Id.

         On September 28, 2015, BSI filed a Notice of Trustee's Sale (hereinafter, “Notice of Sale”) with the Santa Clara County Recorder's Office. Compl. ¶ 20. The Notice of Sale scheduled sale for October 30, 2015. Id. Plaintiff alleges that at the time that BSI recorded the Notice of Sale on September 28, 2015, “[n]o decision had been made on Plaintiffs' loan modification application.” Id.

         Galindo emailed McAteer again on October 6, 2017 and told McAteer that Galindo was “re sending the Email” that Galindo originally sent to McAteer on September 22, 2015. Id., Ex. 3. On October 7, 2015, McAteer emailed Galindo and informed Galindo that “[p]er the letter provided out to you via FedEx (tracking#774579202934) and delivered [September 24, 2015] the following items are still needed: [1] July to August Bank Statements” and “[2] 2013 & 2014 Tax Returns (signed).” Id. McAteer informed Galindo that he had “re-reviewed the items provided” by Galindo and that the documents did “NOT include[]” Galindo's July to August bank statements or signed 2013 and 2014 tax returns. Id.

         B. Procedural History

         On January 4, 2017, Plaintiffs filed suit against BSI in this Court. ECF No. 1. Plaintiffs alleged four causes of action against BSI: (1) negligence; (2) breach of the implied covenant of good faith and fair dealing; (3) violation of California Civil Code Section 2923.6(c); and (4) violation of the UCL. See id.

         On January 26, 2017, BSI moved to dismiss all four causes of action. See Def. Mot. On February 2, 2017, Plaintiffs opposed BSI's motion to dismiss. ECF No. 14 (“Pl. Opp.”). On February 9, 2017, BSI filed a Reply. ECF No. 15 (“Reply”).

         On March 17, 2017, the Court granted BSI's motion to dismiss. ECF No. 23. As relevant here, the Court held that Plaintiffs had failed to state a claim for negligence against BSI because Plaintiffs based their negligence claim, in part, on conduct that was committed by Ocwen, not BSI. Id. at 10-11. The Court held that Plaintiff had failed to allege that BSI had assumed Ocwen's liabilities, and thus BSI could not be held liable for Ocwen's alleged misconduct. Id. at 10-11. For similar reasons, the Court held that Plaintiffs could not state a claim for implied covenant of good faith and fair dealing against BSI for Ocwen's conduct. Id. at 14. The Court granted Plaintiffs leave to amend the complaint within thirty days, ...

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