Dale Wayne Curten v. Quality Loan Service Corporation
2:14-cv-07934
C.D. Cal.Jul 21, 2015Background
- Plaintiff Dale Wayne Curten received a notice of default on his 2007 mortgage and sent debt-validation letters to Quality Loan Service Corp. (Quality) and Select Portfolio Servicing, Inc. (SPS).
- Quality provided loan documents and a substitution of trustee; Curten alleged the response did not validate the debt.
- Curten alleged Quality’s counsel threatened foreclosure; he then sent letters asserting FDCPA violations.
- Curten alleges SPS received an assignment or transfer of the mortgage while the debt was in default and did not respond to a validation request.
- Curten sued under the FDCPA and for state-law claims (invasion of privacy, negligent hiring). Defendants moved to dismiss; the court previously dismissed an earlier FDCPA pleading and denied injunctive relief.
- The court took judicial notice of recorded public foreclosure-related documents and evaluated the second amended complaint under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants are "debt collectors" under the FDCPA | Curten alleges defendants became debt collectors because they received assignment/transfer of the mortgage after default and thus sought to collect his debt | Defendants argue Curten has not pled facts showing their business principal purpose is debt collection or that they regularly collect debts for others; public records show normal servicing/foreclosure activity | Dismissed: Curten failed to plausibly plead that defendants are "debt collectors" under the FDCPA; mere labels/conclusory allegations insufficient |
| Whether judicial notice of recorded foreclosure documents is proper | N/A (plaintiff did not dispute authenticity) | Defendants requested judicial notice of deed of trust, assignments, notices of default/trustee’s sale | Granted: court took judicial notice of public recorder filings and may consider them on 12(b)(6) review |
| Whether court should retain supplemental jurisdiction over state claims after dismissal of FDCPA claim | Curten asserts federal question jurisdiction via FDCPA and concurrent jurisdiction over state claims | Defendants: once federal claim dismissed, state claims should be dismissed for lack of original jurisdiction | Declined: court dismissed federal claim and declined to exercise supplemental jurisdiction over state-law claims; state claims dismissed without prejudice |
| Whether leave to amend should be denied with prejudice | Curten previously amended; he did correct some defects but not all | Defendants asked dismissal with prejudice | Court granted leave to amend (limited): allowed one more amendment because cure might be possible; warned further futile amendments could be dismissed with prejudice |
Key Cases Cited
- Heintz v. Jenkins, 514 U.S. 291 (1995) (FDCPA applies to any person who meets statutory definition of debt collector)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requires plausible factual allegations; conclusory labels insufficient)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must cross plausibility threshold)
- Schlegel v. Wells Fargo Bank, N.A., 720 F.3d 1204 (9th Cir. 2013) (allegation that debt collection is only part of defendant’s business insufficient to plead FDCPA status)
- Perry v. Stewart Title Co., 756 F.2d 1197 (5th Cir. 1985) (assignor/assignee rule: entity that acquires debt before default typically not a debt collector)
- United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966) (principles supporting dismissal of state claims when federal claims are dismissed)
- Lee v. City of Los Angeles, 250 F.3d 668 (9th Cir. 2001) (courts may consider documents incorporated into complaint and matters subject to judicial notice on 12(b)(6) review)
- In re American Continental Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524 (9th Cir. 1996) (Rule 12(b)(6) review generally confined to the complaint)