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Diller v. Ditech Financial, LLC

United States District Court, N.D. California

July 13, 2017

Abigail Diller, Plaintiff,
Ditech Financial, LLC, et al., Defendants


          Yvonne Gonzalez Rogers United States District Court Judge

         Plaintiff brings this action alleging that defendants Ditech Financial, LLC and Barrett Daffin Frappier Treder & Weiss, LLP committed wrongful acts and omissions with regard to servicing her loan and loan modification application, resulting in the imminent loss of her home. (Dkt. No. 43, First Amended Complaint (“FAC”) ¶ 1.) Specifically, plaintiff raises the following causes of action: (i) Count One, failure to follow loss mitigation procedures pursuant to 12 C.F.R. section 1024.41(b); (ii) Count Two, wrongful foreclosure proceedings pursuant to California Civil Code section 2923.6(e); (iii) Count Three, violation of prohibition on foreclosure sale pursuant to 12 C.F.R. section 1024.41(g); (iv) Count Four, negligence in loan servicing; and (v) Count Five, violation of California Unfair Competition Law, Business and Professions sections 17200 et seq.

         Defendants have moved to dismiss the FAC pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (Dkt. No. 45.)[1] Having carefully considered the pleadings and the papers submitted on this motion, and for the reasons set forth below, the Court Grants in Part the motion as follows: The Court Denies defendants' motion with regard to Count One. The Court Dismisses with Prejudice Counts Two, Three, and Four, and Dismisses without Prejudice Count Five.[2]

         I. Background

         Plaintiff's claims against defendants relate to foreclosure and loan modification proceedings on plaintiff's primary property located at 2893 Regatta Drive, Oakland, California 94601 (the “Property”). (FAC ¶ 2.)

         On April 7, 2006, plaintiff executed a Deed of Trust to borrow a principal amount of $640, 800.00 for the purchase of the Property from America's Wholesale Lender. (Id. at ¶ 12; DRJN Ex. 1 at 2.) On April 29, 2011, America's Wholesale Lender assigned the Deed of Trust to the Bank of New York Mellon (DRJN Ex. 2 at 1) and defendant Barrett Daffin Frappier Treder & Weiss, LLP at some point substituted in as the trustee or agent for the trustee (DRJN Ex. 3 at 3).

         On November 11, 2015, a Notice of Default and Election to Sell Under Deed of Trust was recorded against the Property. (Id. at 1.) In or around early 2016, the servicing of plaintiff's loan was transferred to defendant Ditech. (FAC ¶ 15.) In mid-to-late March 2016, plaintiff alleges that she contacted Ditech to apply for a loan modification, during which Ditech's representative “opened a review based on the information [p]laintiff had provided and advised [p]laintiff to prepare her financial documents and send them to Ditech as part of the review.” (Id. at ¶ 17.) On July 21, 2016, defendants recorded a Notice of Trustee's sale, scheduled for August 22, 2016. (Id. at ¶ 18; see also DRJN Ex. 4 at 1.) Plaintiff alleges that she received a letter from defendants on July 22, 2016 informing her that they were closing the review of her loan modification application because she had not supplied certain unidentified application materials. (FAC ¶ 19.)

         Plaintiff subsequently filed this action against defendants on August 18, 2016, concurrently seeking a temporary restraining order against defendants to enjoin their sale of the Property. The Court granted such request on August 19, 2016 (Dkt. No. 11), and then stayed the action upon the parties' agreement until April 13, 2017 (Dkt. No. 41.) On April 17, 2017, defendants recorded a Notice of Rescission of Notice of Default. (DRJN Ex. 6 at 1.)

         II. Legal Framework

         Pursuant to Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon which relief may be granted. Dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is proper if there is a “lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (citing Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). The complaint must plead “enough facts to state a claim [for] relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face “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). If the facts alleged do not support a reasonable inference of liability, stronger than a mere possibility, the claim must be dismissed. Id. at 678-79; see also In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (stating that a court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences”).

         “Federal Rule of Civil Procedure 8(a)(2) requires only a ‘short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” Twombly, 550 U.S. at 554-55 (quoting Fed.R.Civ.P. 8(a)(2)) (alteration in original). Even under the liberal pleading standard of Rule 8(a)(2), “a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986) (internal brackets and quotation marks omitted)). The Court will not assume facts not alleged, nor will it draw unwarranted inferences. Iqbal, 556 U.S. at 679 (“Determining whether a complaint states a plausible claim for relief [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.”).

         III. Discussion

         Defendants move to dismiss each claim in plaintiff's FAC. Plaintiff provides no opposition with regard to defendants' motion to dismiss Counts Two and Three of the FAC. Thus, the Court finds that plaintiff has conceded the inapplicability of such claims to the instant action and Dismisses with Prejudice such counts. Accordingly, the Court need only address defendants' motion to dismiss the remaining counts.

         A. Count One: Violation of 12 ...

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