United States District Court, S.D. California
STEVEN H. LUCORE, SR., JUDY L. LUCORE, Plaintiffs,
MICHAEL D. ZEFF, an individual, ROSENTHAL, WITHEM & ZEFF, AND NATIONSTAR MORTGAGE LLC, Defendants.
(1) GRANTING THE ZEFF DEFENDANTS' MOTION TO DISMISS; (2)
GRANTING DEFENDANT NATIONSTAR'S MOTION TO DISMISS; (3)
DISMISSING WITH PREJUDICE PLAINTIFFS' THIRD AMENDED
COMPLAINT; (4) DENYING AS MOOT ZEFF DEFENDANTS' REQUEST
FOR JUDICIAL NOTICE; (5) DENYING AS MOOT PLAINTIFFS'
REQUEST FOR JUDICIAL NOTICE; AND (6) DENYING PLAINTIFFS'
MOTION TO AMEND COMPLAINT (ECF NOS. 73, 75, 76)
Janis L. Sammartino, United States District Judge
before the Court are Defendants Michael D. Zeff and
Rosenthal, Withem & Zeff's (“Zeff
Defendants”) Motion to Dismiss Plaintiffs' Third
Amended Complaint, (“Zeff MTD, ” ECF No. 76), and
Defendant Nationstar Mortgage LLC's Motion to Dismiss
Plaintiffs' Third Amended Complaint, (“Nationstar
MTD, ” ECF No. 75). Also before the Court are
Plaintiffs Steven H. Lucore and Judy L. Lucore's
Opposition to (“Lucore Opp'n, ” ECF
No. 86), and Defendants Replies in Support of, (ECF Nos. 82,
87), the respective Motions to Dismiss. Additionally, the
Zeff Defendants filed a Request for Judicial Notice, (ECF
Nos. 76-1, 76-2); Plaintiffs also filed a Request for
Judicial Notice, (ECF No. 85). Finally, Plaintiffs filed a
Motion to Amend Complaint to Add a Cause of Action,
(“MTN, ” ECF No. 73). Defendants filed
Oppositions to, (ECF Nos. 77, 78), and Plaintiffs filed a
Reply in Support of, (ECF No. 80) the Motion to Amend.
Court vacated hearings for the two Motions to Dismiss and
Plaintiff's Motion to Amend and took these matters under
submission without oral argument pursuant to Civil Local Rule
7.1(d)(1). (ECF Nos. 83, 88.) Having considered the
parties' arguments and the law, the Court
GRANTS the Zeff Defendants' MTD (ECF No.
76), GRANTS Defendant Nationstar's MTD
(ECF No. 75), DISMISSES WITH PREJUDICE
Plaintiffs' TAC, (ECF No. 71), DENIES AS
MOOT the Zeff Defendants' RJN (ECF Nos. 76-1,
76-2) and DENIES AS MOOT Plaintiffs'
RJN, (ECF No. 85). Additionally, the Court
DENIES Plaintiffs' Motion to Amend, (ECF
January 6, 2009, “Plaintiffs rescinded a mortgage
loan” encumbering a residential property located at
11132 Summit Avenue, Santee, CA 92071 (the
“Property”). (TAC ¶ 8.) BAC Home Loans
Servicing, LLC was the original lender-creditor.
(Id. ¶ 10.) U.S. Bank claimed to have been
assigned the debt on September 14, 2010, (id. ¶
11). U.S. Bank is not a party to this action. Plaintiff
alleges that U.S. Bank purchased the Property at a
trustee's sale on August 18, 2011, (id. ¶
11), and U.S. Bank pursued two post-foreclosure evictions in
state court against Plaintiffs, which resulted in dismissal
both times because the trial court allegedly found that U.S.
Bank lacked standing to pursue its claim, (id.
¶ 12). On or about April 3, 2015, the Zeff Defendants,
who are counsel representing U.S. Bank, sent a letter to
Plaintiffs threatening to take further legal action against
Plaintiffs' property. (Id.) The Zeff Defendants
then filed an unlawful detainer action in state court, which
was subsequently dismissed because U.S. Bank allegedly lacked
duly perfected title to the Property. (Id. ¶
16.) Meanwhile, since August 21, 2015, Defendant Nationstar
has threatened to sell the Property because the property in
question is on the website www.homesearch.com and
Nationstar is listed as the seller of the property.
(Id. ¶ 18.)
filed a complaint in federal court against the Zeff
Defendants on April 24, 2015, alleging various violations of
the Fair Debt Collection Practices Act (“FDCPA”).
(See generally ECF No. 1.) After the Zeff Defendants
filed a motion to dismiss, (ECF No. 5), Plaintiffs moved to
amend their complaint to add Defendant Nationstar, (ECF No.
11). Plaintiffs filed their First Amended Complaint
(“FAC”) on November 24, 2015, alleging three
causes of action under the FDCPA against both Nationstar and
Zeff Defendants. (See generally FAC, ECF No. 19.)
The Court dismissed without prejudice Plaintiffs' FAC on
June 3, 2016, and Plaintiffs filed their Second Amended
Complaint (“SAC”) on June 16, 2016. The Court
again dismissed without prejudice Plaintiffs' SAC,
(“Prior Order, ” ECF No. 70). Plaintiffs filed
their TAC on March 14, 2017, which resulted in the present
Rule of Civil Procedure 12(b)(6) permits a party to raise by
motion the defense that the complaint “fail[s] to state
a claim upon which relief can be granted, ” generally
referred to as a motion to dismiss. The Court evaluates
whether a complaint states a cognizable legal theory and
sufficient facts in light of Federal Rule of Civil Procedure
8(a), which requires a “short and plain statement of
the claim showing that the pleader is entitled to
relief.” Although Rule 8 “does not require
‘detailed factual allegations, ' . . . it demands
more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007)). In other words, “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 a cause
of action's elements will not do.”
Twombly, 550 U.S. at 555 (alteration in original).
“Nor does a complaint suffice if it tenders
‘naked assertion[s]' devoid of ‘further
factual enhancement.'” Iqbal, 556 U.S. at
678 (alteration in original) (quoting Twombly, 550
U.S. at 557).
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.'”
Id. (quoting Twombly, 550 U.S. at 570);
see also Fed. R. Civ. P. 12(b)(6). A claim is
facially plausible when the facts pled “allow the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556). That is not to
say that the claim must be probable, but there must be
“more than a sheer possibility that a defendant has
acted unlawfully.” Id. (citing
Twombly, 550 U.S. at 556). “[F]acts that are
‘merely consistent with' a defendant's
liability” fall short of a plausible entitlement to
relief. Id. (quoting Twombly, 550 U.S. at
557). Further, the Court need not accept as true “legal
conclusions” contained in the complaint. Id.
at 678-79 (citing Twombly, 550 U.S. at 555). This
review requires “context-specific” analysis
involving the Court's “judicial experience and
common sense.” Id. at 679. “[W]here the
well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has
alleged- but it has not ‘show[n]'-‘that the
pleader is entitled to relief.'” Id.
(quoting Fed.R.Civ.P. 8(a)(2)).
Court will grant leave to amend unless it determines that no
modified contention “consistent with the challenged
pleading . . . [will] cure the deficiency.” DeSoto
v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th
Cir. 1992) (quoting Schriber Distrib. Co. v. Serv-
Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir.
assert three causes of action against Defendants: (1)
violation of 15 U.S.C. §§ 1692e(5) & 1692e(10),
(2) violation of 15 U.S.C. § 1692e(2)(A), and (3)
violation of 15 U.S.C. § 1692f(1). (See
generally TAC.) Defendants argue that Plaintiffs fail to
allege that Defendants are debt collectors under the FDCPA,
(see Zeff MTD 9-12; Nationstar MTD 13-14), which
would preclude any recovery under FDCPA. See 15
U.S.C. § 1692(e). Plaintiffs disagree. (See
Lucore Opp'n 9-12.) Defendants also argue Plaintiffs'
claims are barred by res judicata. In its Prior Order, the
Court found Defendants were not debt collectors and
admonished Plaintiffs to allege facts to support its
contention that Defendants were debt collectors under FDCPA.
(Prior Order 8.) It is to this discussion that the Court now
Definition of Debt Collector Under FDCPA
FDCPA was enacted “to eliminate abusive debt collection
practices by debt collectors, to insure that those debt
collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to promote
consistent State action to protect consumers against debt
collection abuses.” 15 U.S.C. § 1692(e). As
relevant to the statute, “[t]he term ‘debt
collector' means any person who . . . [is] in any
business the principal purpose of which is the collection of
any debts, or who regularly collects or attempts to collect,
directly or indirectly, debts owed or due or asserted to be
owed or due another.” § 1692a(6). The statute also
provides a narrower definition of debt collector: “For
the purpose of section 1692f(6) of this title, [debt
collector] includes any person who uses any instrumentality
of interstate commerce or the mails in any business the
principal purpose of which is the enforcement of security
interests.” Id. (emphasis added).
Plaintiffs allege that both Nationstar and the Zeff
Defendants are debt collectors for purposes of the FDCPA,
(see TAC ¶¶ 21-23), but do not allege a
violation of § 1692f(6).
Prior Order the Court noted that the Ninth Circuit had yet to
address whether foreclosure proceedings constitute
“debt collection” within the ambit of the FDCPA.
(Prior Order 5-6 (quoting Cruz v. Nationwide
Reconveyance, LLC, No. 15-CV-2082-GPC-NLS, 2016 WL
127585, at *4 & n.3 (S.D. Cal. Jan. 11, 2016); and
O'Connor v. Nationstar Mortg., LLC, No.
13-CV-05874 NC, 2014 WL 1779338, at *5 (N.D. Cal. May 5,
2014).) The Ninth Circuit has since answered that question.
In Vien-Phuong Thi Ho v. ReconTrust Co., 858 F.3d
568, 570 (9th Cir.), cert. denied, ___ S.Ct. ___,
2017 WL 3621103 (2017), the issue before the Ninth Circuit
was whether the trustee of a California deed of trust is a
debt collector under the FDCPA. There, the plaintiff bought a
house with a loan secured by a deed of trust. Id.
After the plaintiff missed several loan payments, the
defendant initiated a non-judicial foreclosure by recording a
notice of default and sent the notice to the plaintiff along
with warnings to pay the outstanding balance on the loan or
face non-judicial foreclosure and auctioning of the property.
Ninth Circuit affirmed the holding of Hulse v. Ocwen
Federal Bank, 195 F.Supp.2d 1188, 1204 (D. Or. 2002),
which held that “foreclosing on a trust deed is an
entirely different path than collecting funds from a
debtor.” Vien-Phuong Thi Ho, 858 F.3d at 572
(quotation marks omitted). The court distinguished between a
person attempting to enforce his or her rights through a
non-judicial foreclosure and attempting to collect money.
Id. at 571. In support of this conclusion, the court
reasoned that the definition of debt collector in section
1692a(6) distinguishes between entities that collect debts
owed and a narrower definition of debt collector, which
“also includes” entities whose principal business
purpose is “the enforcement of security
interests.” See Id. at 572-73 (citing
§§ 1692a(6), 1692f(6)). Thus, “an entity does
not become a general ‘debt collector' if its
‘only role in the debt collection process is the
enforcement of a security interest.'” Id.
at 573 (citing Wilson v. Draper & Goldberg,
P.L.L.C., 443 F.3d 373, 378 (4th Cir. 2006); and
Glazer v. Chase Home Fin. LLC, 704 F.3d 453, 464
(6th Cir. 2013)). In applying its holding, the court decided
that a non-judicial foreclosure was the enforcement of a
security interest and not the collection of a monetary debt.
Therefore, the “right to ‘enforce' the
security interest necessarily implies the right to send the
required notices; to hold otherwise would divorce the notices
from their context.” Id. This Court's
legal standard in its prior order is in accord with
Vien-Phuong Thi Ho. (See, e.g., Prior Order
6 (quoting Hulse, 195 F.Supp.2d at 1204).)
Plaintiffs allege violations of sections 1692e(5), 1692e(10),
1692e(2)(A), and 1692f(1), but not section 1692f(6).
Therefore, the broader definition of debt collector applies.
See 15 U.S.C. § 1692a(6). In determining the
definition of debt collector, the relevant inquiry is whether
the actions by Defendants are enforcing a security interest
or collecting a monetary debt. The Court embarked on this
inquiry in both its prior orders. (See ECF Nos. 38,
70.) As before, Plaintiffs allege that the Zeff Defendants
sent a letter threatening eviction proceedings, (TAC ¶
14), and filed an unlawful detainer action against
Plaintiffs, (id. ¶ 16). Plaintiffs also claim
“Defendant Nationstar has misrepresented the character
and status of the debt and threatened to take action it had
no legal right ...