United States District Court, S.D. California
KENDALL SCALLY, individually and on behalf of all others similarly situated, Plaintiff,
DITECH FINANCIAL, LLC, Defendant.
WILLIAM Q. HAYES UNITED STATES DISTRICT JUDGE
matter before the Court is the motion to dismiss the second
amended complaint filed by Defendant Ditech Financial, LLC.
(ECF No. 24).
August 9, 2016, Plaintiff Kendall Scally initiated this
action by filing a class action complaint against Defendant
Ditech Financial alleging causes of action under the Fair
Debt Collection Practices Act (“FDCPA”) and the
Rosenthal Fair Debt Collection Practices Act
(“Rosenthal Act”). (ECF No. 1). On September 30,
2016, Plaintiff filed a first amended complaint alleging the
same causes of action against Defendant. On January 26, 2017,
the Court issued an Order granting a motion to dismiss and
dismissing the first amended complaint without prejudice. The
Court concluded that Plaintiff's claims were precluded by
the Bankruptcy Code because they hinged on allegations that
Defendant was attempting to collect a debt previously
discharged in bankruptcy. (ECF No. 17).
30, 2017, Plaintiff filed a second amended class action
complaint against Defendant. (ECF No. 23). Plaintiff again
alleges a cause of action for violations of the FDCPA and a
cause of action for violations of the Rosenthal Act on behalf
of himself and other similarly situated. Id.
13, 2017, Defendant filed a motion to dismiss for failure to
state a claim. (ECF No. 24). On June 30, 2017, Plaintiff
filed a response in opposition. (ECF No. 25). On July 10,
2017, Defendant filed a reply. (ECF No. 26).
Allegations of the Complaint
“Plaintiff is a ‘consumer' as the term is
defined by 15 U.S.C. section 1692a(3) and a
‘debtor' as the term is defined by California Civil
Code section 1788.2(h).” (ECF No. 23 at ¶ 9).
“Plaintiff is informed and believes . . . that
Defendant is a ‘debt collector' as the term is
defined by Civil Code section 1788.2(c).” Id.
¶ 12. “Defendant attempted to collect a
‘consumer debt' as the term is defined by the FDCPA
and Rosenthal FDCPA.” Id. ¶ 13.
after March 25, 2016, Plaintiff received a collection notice
dated, March 25, 2016, from Defendant. The March 25, 2016
stated that Plaintiff owed a debt in the amount of $7, 662.12
to Defendant.” (ECF No. 23 ¶ 18). “The March
25, 2016 collection notices stated that ‘Because of
interest, late charges, and other charges that may vary from
day to day, the amount due on the day you pay may be
greater.'” Id. ¶ 19. “The March
25, 2016 collection notice was false, confusing, and
misleading, because it informs the least sophisticated debtor
that interest is accruing on the debt when in fact there was
no interest accruing.” Id. ¶ 46.
“Defendant's statement attempted to trick Plaintiff
into believing that interest, late charges, or other charges
are accruing which could force Plaintiff to pay the debt
immediately in order to avoid any further increase of the
after June 20, 2016, Plaintiff received a second collection
notice, dated June 20, 2016, from Defendant.”
Id. ¶ 21. “The June 20, 2016 collection
stated in part that ‘We are required to report any debt
forgiveness to the Internal Revenue Service.'”
Id. ¶ 22. “This statement is false and
misleading . . . because there are many exceptions to IRS
reporting requirements and not every debt forgiveness is
required to be so reported.” Id. ¶ 47.
alleges that these statements are in violation of 15 U.S.C.
§ 1692e, 15 U.S.C. 1692e(10), and California Civil Code
section 1788.17. Id. ¶¶ 45, 4754.
“As a direct result of these statements, Plaintiff
suffered bewilderment and confusion over whether he owed any
amount to Defendant, what amount in particular was owed, and
what his tax consequences may or may not be upon any amount
claimed to be owed.” Id. ¶ 23. Plaintiff
brings this action on his own behalf and on behalf of all
other similarly situated and identifies four classes in this
action. Id. ¶¶ 25-29.
Rule of Civil Procedure 12(b)(6) permits dismissal for
“failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). Federal Rule of Civil
Procedure 8(a) provides that “[a] pleading that states
a claim for relief must contain . . . a short and plain
statement of the claim showing that the pleader is entitled
to relief.” Fed.R.Civ.P. 8(a)(2). “All factual
allegations set forth in the complaint are taken as true and
construed in the light most favorable to plaintiffs.”
Lee, 250 F.3d at 679. “A district court's
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) (quoting Balistreri v. Pacifica Police
Dep't, 901 F.2d 696, 699 (9th Cir. 1990)).
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.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting
Fed.R.Civ.P. 8(a)). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Twombly, 550 U.S. at 570).
“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.” Id. (citation omitted).
“[T]he tenet that a court must accept as true all of
the allegations contained in a complaint is inapplicable to
legal conclusions. Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do
not suffice.” Id. (citation omitted).
“In sum, ...