457 B.R. 790
Bankr. E.D. Cal.2011Background
- Downey Savings loan to debtor on Feb 25, 2005; Downey Note purportedly assigned to MERS with later assignment to Central Mortgage Company.
- Debtor filed Chapter 13 on Aug 20, 2010 and proposed plan including Class 1 treatment for Central Mortgage Company.
- Central Mortgage filed a proof of claim for about $469,000 and a post-petition payment change notice increased payments to $2,566.11.
- Debtor filed adversary complaint Jan 21, 2011 alleging declaratory relief, automatic stay violations, RESPA violations, and civil conspiracy.
- Court granted in part and denied in part the Defendants’ Rule 12(b)(6) motion, dismissing several causes of action against non-Central Mortgage Defendants.
- Court set briefing and amendment deadlines, noting that only Central Mortgage Company asserted rights in the note in the bankruptcy case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether non-Central Mortgage Defendants can be held liable. | Plaintiff alleges unnamed Defendants participated in improper conduct. | Only Central Mortgage Company engaged in the disputed conduct. | Claims against MERS and Malcolm dismissed. |
| Whether declaratory relief against Central Mortgage survives. | There is an ongoing dispute about post-petition payments and escrow amounts. | No need for declaratory relief beyond plan and payment disputes. | Declaratory relief denied for Central Mortgage except as to the specific issue of the correct post-petition amount; other relief denied; leave to amend. |
| Whether automatic stay was violated (12 U.S.C. § 362(a) and § 362(k)). | Defendant communications and increased payments violated the stay. | No stay violation; notices were permissible under RESPA and practice. | Second and Third Causes of Action dismissed against all Defendants; no willful stay violation found on these pleadings. |
| Whether RESPA private right of action exists for alleged notice issues. | Defendants failed to provide servicing transfer notices and improper escrow disclosures. | No viable private right of action for certain RESPA aspects; disclosures or notices not properly pled as damages. | Fourth Cause of Action dismissed as to all Defendants without prejudice; leave to amend. |
| Whether civil conspiracy claim is viable. | Unnamed Defendants conspired to recoup pre-petition arrearage. | California law bars conspiracies absent an underlying tort and duties; no identifiable duties alleged. | Fifth Cause of Action dismissed without prejudice; leave to amend. |
Key Cases Cited
- Campbell v. Countrywide Home Loans, Inc., 545 F.3d 348 (5th Cir. 2008) (pre-petition arrearage issues governed by Bankruptcy Code; filing a claim or notice alone not a stay violation)
- In re Rodriguez, 629 F.3d 136 (3d Cir. 2010) (pre-petition arrearage part of pre-petition claim; post-petition efforts to collect outside plan can violate stay)
- In re Zotow, 432 B.R. 252 (9th Cir. BAP 2010) (single post-petition notice may be permissible; harassment/coercion determine stay violation)
- Morgan Guaranty Trust Co. v. American Savings & Loan Ass'n, 804 F.2d 1487 (9th Cir. 1986) (presentment of a note generally not a stay violation absent coercion or harassment)
- American States Ins. Co. v. Kearns, 15 F.3d 142 (9th Cir. 1994) (jurisdictional/declaratory relief standards and necessity of actual controversy)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim, not mere conclusory allegations)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleading; factual content required)