Case Information
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA PARVEEN A. LAL and JODI L. WRIGHT, No. 2:09-cv-01585-MCE-DAD
Plaintiffs, v. MEMORANDUM AND ORDER AMERICAN HOME SERVICING, INC. and LENDER DOE,
Defendants.
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Presently before the Court is a Motion by Defendant American Home Mortgage Servicing, Inc. (“Defendant”) to Dismiss portions of the First Amended Complaint of Plaintiffs Parveen A. Lal and Jodi L. Wright (“Plaintiffs”) for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, [1]
Defendant’s Motion to Dismiss is granted.
BACKGROUND [2]
Around June 28, 2006, Plaintiffs entered into a mortgage loan for $821,750 with Paramount Equity Mortgage (“Paramount”). The loan was initially serviced by Paramount, but was later serviced by Defendant American Home Mortgage Servicing, Inc. The mortgage note has since allegedly been sold to an unknown holder. On March 10, 2009, Plaintiffs sent a letter to Defendant stating that they were not provided notice of the right to cancel under TILA, and that pursuant to TILA they were rescinding their loan. Plaintiffs additionally requested that the Defendant indicate its relationship to the loan and identify the true owner of the mortgage note. Plaintiffs also directed Defendant to stop trying to collect on the loan and to cease all future collection communications. According to Plaintiffs, Defendant has failed to respond to the letter or comply with its terms.
Plaintiffs now allege a litany of state and federal law violations in connection with the foreclosure. This is the second motion to dismiss between these parties. The first was denied in part and granted in part with leave to amend. Plaintiffs thereafter filed a First Amended Complaint.
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STANDARD
A. Motion to Dismiss
On a motion to dismiss for failure to state a claim under
Rule 12(b)(6), all allegations of material fact must be accepted
as true and construed in the light most favorable to the
nonmoving party. Cahill v. Liberty Mut. Ins. Co.,
337-38 (9th Cir. 1996). Rule 8(a)(2) requires only “a short and
plain statement of the claim showing that the pleader is entitled
to relief” in order to “give the defendant fair notice of what
the...claim is and the grounds upon which it rests.” Bell Atl.
Corp. v. Twombly,
Nevertheless, “[a] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’” Id. at 556.
When a claim for fraud is raised, Federal Rule of Civil
Procedure 9(b) provides that “a party must state with
particularity the circumstances constituting fraud.” “A pleading
is sufficient under Rule 9(b) if it identifies the circumstances
constituting fraud so that the defendant can prepare an adequate
answer from the allegations.” Neubronner v. Milken,
A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. A court should “freely give” leave to amend when there is no “undue delay, bad faith[,] dilatory motive on the part of the movant,...undue prejudice to the opposing party by virtue of...the amendment, [or] futility of the amendment....” Fed. R. Civ. P. 15(a); Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is denied only when it is clear the deficiencies of the complaint cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).
ANALYSIS
A. Rescission under TILA
Under TILA, a plaintiff must allege ability to tender the amount owed on the loan as a prerequisite to rescission. This Court granted Defendant’s prior motion to dismiss Plaintiffs’ rescission claim on the grounds that Plaintiffs failed to allege tender. Having filed an amended complaint, Plaintiffs now assert that they are “prepared to tender from a refinance, funds from savings, and assistance by family members once the amount to tender is known, considering damages, and after [Defendant] stops reporting the loan negatively.”
/// Defendant argues that this offer of tender is insufficient in that it is conditionally premised on securing refinancing, and also does not offer the entire amount but only the amount “offset” by damages. Plaintiffs retort that Defendant has impeded on their ability to fully refinance at this time due to their continued negative reporting on their credit.
The Ninth Circuit has not provided a clear rule on the
tender requirement. The purpose of rescission under TILA is to
return both parties to the
status quo ante
. Yamamoto v. Bank of
New York,
In Yamamoto it was evident that the borrower would not be
able to repay the funds. Therefore, the court refused to require
parties to go through the rescission process when it was clear
that the borrower would not be able to fulfill her requirements
at the end. The Ninth Circuit held that “a court may impose
conditions on rescission that assure the borrower meets her
obligations once the creditor has performed its obligations.”
Yamamoto,
Therefore Defendant’s Motion to Dismiss Plaintiffs’ rescission claim is granted.
B. Real Estate Settlement Procedures Act (“RESPA”) RESPA, 12 U.S.C. § 2605(e), requires that loan servicers timely respond to qualified written requests (“QWR”s) from borrowers.
Defendant did not respond to Plaintiffs’ QWR and, as a result, Plaintiffs claim they are entitled to both statutory and actual damages. Plaintiffs allege they were harmed by not “[being] unable to name the real party in interest to this suit.” Plaintiffs also incorporate all preceding sections of their Complaint into their RESPA claim, including the allegation that Plaintiffs were harmed by having to bring suit at all.
In regards to actual damages, this Court previously held that the “incorporated damage” of having to file suit was sufficient actual damage for a RESPA claim. Since the initial order in this case, the Court has revised its position and agrees with Defendant’s contention that the loss alleged must be related to the RESPA violation itself. RESPA, as codified at 12 U.S.C. § 2605(f)(1)(A), authorizes “actual damages to the borrower as a result of the failure [to comply with RESPA requirements].” (emphasis added). Therefore, allegations made under a separate cause of action are insufficient to sustain a RESPA claim for actual damages as they are not a direct result of the failure to comply. Nor does simply having to file suit suffice as a harm warranting actual damages. If such were the case, every RESPA suit would inherently have a claim for damages built in.
Additionally, the Court rejects, as a matter of law,
Plaintiffs’ argument that they were harmed by not being able to
name the real party of interest in this suit. Under RESPA, a
borrower may not recover actual damages for nonpecuniary losses.
See Allen v. United Fin. Mortg. Corp., No. 09-2507, 2009 WL
2984170, at *5 (N.D.Cal. Sept. 15, 2009); Shepard v. Am. Home
Mortg. Corp., No. 2:09-1916,
To recover statutory damages, Plaintiffs must plead some pattern or practice of noncompliance with RESPA. 12 U.S.C. § 2605(f)(1)(b). Here, Plaintiffs flatly claim a pattern of noncompliance but state no facts other than the assurance that at trial they will present other customers who also did not receive QWR responses from Defendant.
However, simply stating a legal conclusion with the promise
to later produce facts is tantamount to simply stating a bare
legal conclusion. This is insufficient under the Rule 12(b)(6)
pleading standard. A plaintiff cannot rely simply on stock legal
conclusions, but must allege facts that are sufficient to “raise
a right to relief above the speculative level.” See Bell Atl.
Corp. v. Twombly,
Therefore, Defendant’s Motion to Dismiss Plaintiffs’ RESPA claim is granted as to both actual and statutory damages.
C. Rosenthal Fair Debt Collection Practices Act Plaintiffs’ Complaint alleges that Defendants engaged in abusive debt collection practices in violation of California’s Rosenthal Fair Debt Collection Procedures Act (“RFDCPA”). In its previous Motion to Dismiss Order, this Court held that while loan servicers cannot be held liable under the federal Fair Debt Collection Practices Act (“FDCPA”), they can be held liable under California’s RFDCPA. However, the Court has reconsidered its position. This Court finds that the RFDCPA does in fact mirror in the FDCPA, their intentions were the same and exclusive, and, as such, a loan servicer is not a debt collector under these acts. [3]
The law is well settled that FDCPA's definition of debt
collector “does not include the consumer's creditors, a mortgage
servicing company, or any assignee of the debt.” Perry v. Stewart
Title Co.,
Defendant’s Motion to Dismiss Plaintiffs’ RFDCPA claim is therefore granted.
D. Slander [Libel] of Credit
Plaintiffs contend that Defendant caused false information to be published with various credit agencies regarding the Plaintiffs’ creditworthiness, without informing those agencies that the claims were disputed. Defendant argues that Plaintiffs did default on their loan payments, therefore any communication by Defendant regrading that fact would be true.
Regardless of the disputed “truth” of Defendant’s credit
reporting, Plaintiffs’ complaint fails to do much more than state
the elements of slander. It does not identify the parties to
whom the statements were made, or what damage to Plaintiffs’
credit directly resulted from Defendant’s statement. While
detailed factual allegations are not necessary, Plaintiffs’
Complaint must provide more than labels and conclusions.
Twombly,
Therefore Defendant’s Motion to Dismiss Plaintiffs’ slander of credit claim is granted.
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CONCLUSION
For the reasons set forth above, Defendant’s Motion to Dismiss (Docket No. 19) is GRANTED.
Leave to amend is granted only as to the claims for slander of credit, violation of RFDCPA, and actual damages under RESPA.
This is the second time a Motion to Dismiss has been granted as to the remaining claims. Thus amendment will not cure the defects noted by the Court.
Plaintiffs may file an amended complaint as to the claims for slander of credit, violation of RFDCPA, and actual damages under RESPA not later than twenty (20) days after the date this Memorandum and Order is filed electronically. If no amended complaint is filed within said twenty (20)-day period, without further notice, Plaintiffs’ remaining claims for slander of credit, RFDCPA, and actual damages under RESPA will also be dismissed without leave to amend.
IT IS SO ORDERED.
Dated: January 15, 2010
_____________________________ MORRISON C. ENGLAND, JR. UNITED STATES DISTRICT JUDGE
Notes
[1] Because oral argument will not be of material assistance, the Court orders this matter submitted on the briefs. E.D. Cal. Local Rule 78-230(h).
[2] The factual assertions in this section are based on the 28 allegations in Plaintiffs’ Complaint unless otherwise specified.
[3] See also Nool v. Homeq Servicing, No. 1:09-CV-0885 OWW
26
DLB,