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 third
amended complaint filed by Defendant Ditech Financial, LLC.
(ECF No. 35).
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 alleged
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 others similarly situated. The second amended
complaint did not include allegations about the bankruptcy
proceedings related to the underlying debt. Id. On
November 21, 2017, the Court issued an Order granting a
motion to dismiss and dismissing the second amended complaint
without prejudice. The Court concluded that Plaintiff failed
to alleged sufficient facts to establish that he had been the
object of collection activity arising from a consumer debt
covered by the FDCPA, as required to state a claim under the
FDCPA and Rosenthal Act. (ECF No. 28).
January 3, 2018, Plaintiff filed a third amended class action
complaint for violations of the FDCPA and violations of the
Rosenthal Act on behalf of himself and others similarly
situated. (ECF No. 33). On January 17, 2018, Defendant filed
a motion to dismiss for failure to state a claim. (ECF No.
35). On February 12, 2018, Plaintiff filed a response in
opposition. (ECF No. 36). On February 16, 2018, Defendant
filed a reply. (ECF No. 37).
ALLEGATIONS OF THE COMPLAINT
Plaintiff is a natural person allegedly obligated to pay a
consumer debt to Defendants, alleged to have been due and
owing, and is therefore both a “consumer” as
that term is defined by 15 U.S.C. § 1692a(3) of the
FDCPA, and is also therefore a “debtor” as that
term is defined by California Civil Code § 1788.2(h)
of the Rosenthal Act.
(ECF No. 33 at ¶ 9). Defendant “regularly collects
or attempts to collect, directly or indirectly, debts owed or
due or asserted to be owed or due another” and is a
debt collector as that term is defined by the Rosenthal Act
and the FDCPA. Id. ¶¶ 11-13.
Defendant alleged that Plaintiff owed a debt that it was
allegedly collecting related to money arising out of a line
of credit that was issued to Plaintiff, without payment
being required at the time of the line of credit having
been rendered to Plaintiff, with an alleged agreement that
Plaintiff would pay back the line of credit over time.
Id. ¶ 15. “[T]he money alleged to have
been owed to Defendant originated from monetary credit that
was extended primarily for personal, family, or household
purposes, and Defendant alleged that the debt was due and
owing . . . .” Id. ¶16.
prior to March of 2016, Plaintiff is alleged to have incurred
certain financial obligations with HFC Company, LLC, whereby
he received a line of credit for his use within his personal
life for everyday purposes.” Id. ¶ 23.
The agreement was for Plaintiff to receive the line of
credit, for him to use within his personal life for everyday
purchases, which did not require any payment from Plaintiff
at the time, but instead was an agreement whereby Plaintiff
would repay the amount used by him over time in the future,
Id. ¶ 24. “Sometime after March 25, 2016,
Plaintiff received a collection notice, dated, March 25,
2016, from Defendant. The March 25, 2016 [collection notice]
stated that Plaintiff owed a debt in the amount of $7, ...