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Thomas v. Select Portfolio Servicing, Inc.

United States District Court, E.D. California

May 24, 2018





         Judges in the Eastern District of California carry the heaviest caseloads in the nation, and this Court is unable to devote inordinate time and resources to individual cases and matters. Given the shortage of district judges and staff, this Court addresses only the arguments, evidence, and matters necessary to reach the decision in this order. The parties and counsel are encouraged to contact the offices of United States Senators Feinstein and Harris to address this Court's inability to accommodate the parties and this action. The parties are required to reconsider consent to conduct all further proceedings before a Magistrate Judge, whose schedules are far more realistic and accommodating to parties than that of U.S. Chief District Judge Lawrence J. O'Neill, who must prioritize criminal and older civil cases.

         Civil trials set before Chief Judge O'Neill trail until he becomes available and are subject to suspension mid-trial to accommodate criminal matters. Civil trials are no longer reset to a later date if Chief Judge O'Neill is unavailable on the original date set for trial. Moreover, this Court's Fresno Division randomly and without advance notice reassigns civil actions to U.S. District Judges throughout the Nation to serve as visiting judges. In the absence of Magistrate Judge consent, this action is subject to reassignment to a U.S. District Judge from inside or outside the Eastern District of California.


         On January 9, 2018, Plaintiff Narcissa Thomas (“Plaintiff” or “Thomas”) filed suit against Defendants Select Portfolio Servicing, Inc. (“SPS”) and Citibank, N.A. (“Citibank”)[1](collectively “Defendants”) in the Superior Court of California, County of Stanislaus. ECF No. 1. On February 9, 2018, Defendants removed the action to the Eastern District of California. On February 16, 2018, Defendants moved to dismiss the complaint and Plaintiff responded by filing a first amended complaint (“FAC”) on March 2, 2018. ECF Nos. 4-5. Plaintiff's FAC alleges three causes of action: (1) violation of the Fair Debt Collection Practices Act (“FDCPA”), specifically 15 U.S.C. § 1692e; (2) violation of California Civil Code § 2966 (“CCP § 2966”); and (3) violation of California Business and Professions Code §10241.4 (“CBPC §10241.4”). ECF No. 5.

         Defendants again moved to dismiss all claims in the FAC on March 16, 2018. ECF No. 7. On April 16, 2018, Plaintiff filed an opposition, ECF No. 12, and Defendants replied on April 23, 2018. ECF No. 13. The matter was taken under submission on the papers pursuant to Local Rule 230(g). For reasons set forth below, Defendants' motion to dismiss is GRANTED WITH LEAVE TO AMEND.


         In November 2001, Thomas purchased a property located at 4725 E. Via Fiori, Modesto, California and obtained a loan to finance the purchase. FAC ¶¶ 8-9. On or around February 16, 2007, Plaintiff refinanced the loan on the property and obtained a 30-year fixed rate loan from Washington Mutual Bank for $340, 000. FAC ¶ 10.[3] In or around May 2009, Washington Mutual assigned the beneficial interest in the deed of trust and the promissory note to Defendant Citibank and Chase Home Finance, LLC began servicing the loan at that time. FAC ¶ 12. On or around April 2010, Plaintiff entered into a loan modification agreement with Chase Home Finance, LLC. FAC ¶ 13. The modification provided a new principal balance of $380, 329.65, deferred a portion of the principal balance as non-interest bearing, varied the interest rate and payments, waived unpaid late charges, and suspended foreclosure activities. Id.; ECF No. 1-1 at 18-22. The maturity date under the loan modification is March 1, 2037. ECF No. 1-1 at 18. Additionally, the loan modification agreement states the following:

If the Loan Documents currently provide for a balloon, the Balloon Amount resulting from this modification may be different. The balloon payment of $206, 381.36 will be due on the maturity date unless due earlier in accordance with Section 2.D.

ECF No. 1-1 at 19-20. Plaintiff alleges that the modification “did not include any clear and conspicious [sic] language informing Plaintiff that there would be an additional balloon payment of $206, 381.36 due on the maturity” and did not provide Plaintiff with an amortization schedule. FAC ¶ 14. Furthermore, Plaintiff alleges “since Plaintiff's Loan Documents did not provide for a Balloon Payment, Plaintiff did not believe that this [balloon payment] provision applied to her” and that she “accepted the modification agreement because she was unaware of the Balloon Payment.” Id.

         In approximately 2015, the servicing of Plaintiff's loan transferred to Defendant SPS and SPS allegedly assumed all the liabilities of the prior servicer, Chase Home Finance. FAC ¶ 15. Plaintiff alleges that both Defendants SPS and Citibank are “diversified financial marketing . . . corporation[s] engaged primarily in residential mortgage banking and/or related business[es], ” and that SPS is currently the servicer of Plaintiff's loan and Citibank is the beneficiary of the loan. FAC ¶¶ 5-6.

         Plaintiff claims that Defendants “are attempting to enforce a balloon payment provision in a Note that was never disclosed to Plaintiff, ” that the loan modification was misleading and deceptive in that it changed a key term - the time period of amortization for her loan, and that Defendants failed to provide Plaintiff with statutorily required disclosure language of the balloon payment. FAC ¶ 1. Plaintiff further alleges that she did not learn of the allegedly deceptive balloon payment provision until November 2017 when she sought the assistance of an attorney to review Plaintiff's loan and that she could not have discovered the provision sooner because the loan documents were unclear. FAC ¶ 16.[4]

         IV. L ...

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