Dean Johnson et al v. Select Portfolio Servicing, Inc. et al
Filing
34
MINUTES (IN CHAMBERS): ORDER DENYING PLAINTIFFS Motion to Remand 27 ; and ORDER GRANTING Defendants Motion for Judgment on the Pleadings 28 by Judge John F. Walter: Plaintiffs sixth cause of action for violation of Section 17200 is dismissed, and because amendment is futile, it is dismissed without leave to amend. For all the foregoing reasons, Plaintiffs Motion to Remand is DENIED, and Defendants' Motion for Judgment on the Pleadings is GRANTED. Plaintiffs' Complaint is hereby DISMISSED with prejudice. (MD JS-6. Case Terminated.) (jp)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
JS-6
CIVIL MINUTES -- GENERAL
Case No.
CV 15-9231-JFW (ASx)
Title:
Dean Johnson, et al. -v- Select Portfolio Servicing, Inc. et al.
Date: March 3, 2016
PRESENT:
HONORABLE JOHN F. WALTER, UNITED STATES DISTRICT JUDGE
Shannon Reilly
Courtroom Deputy
None Present
Court Reporter
ATTORNEYS PRESENT FOR PLAINTIFFS:
None
PROCEEDINGS (IN CHAMBERS):
ATTORNEYS PRESENT FOR DEFENDANTS:
None
ORDER DENYING PLAINTIFFS’ MOTION TO REMAND
[filed 2/5/16; Docket No. 27]; and
ORDER GRANTING DEFENDANTS SELECT
PORTFOLIO SERVICING, INC., HSBC BANK USA
NATIONAL ASSOCIATION, AS TRUSTEE, AND
MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS, INC.’S MOTION FOR JUDGMENT ON THE
PLEADINGS [filed 2/8/16; Docket No. 28]
On February 5, 2016, Plaintiffs Dean Johnson and Anja Johnson (collectively, “Plaintiffs”)
filed a Motion to Remand. On February 11, 2016, Defendants Select Portfolio Servicing, Inc.
(“Select”), HSBC Bank USA National Association, as Trustee on Behalf of The Certificate Holders
of Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-OA3 (“HSBC”), and Mortgage
Electronic Registration Systems, Inc. (“MERS”) (collectively, “Defendants”) filed their Opposition.
On February 18, 2016, Plaintiffs filed a Reply. On February 8, 2016, Defendants filed a Motion for
Judgment on the Pleadings. On February 15, 2016, Plaintiffs filed their Opposition. On February
22, 2016, Defendants filed a Reply. Pursuant to Rule 78 of the Federal Rules of Civil Procedure
and Local Rule 7-15, the Court finds that these matters are appropriate for decision without oral
argument. The hearing calendared for March 7, 2016 is hereby vacated and the matters taken off
calendar. After considering the moving, opposing, and reply papers, and the arguments therein,
the Court rules as follows:
I.
Factual and Procedural Background
On March 1, 2007, Plaintiffs obtained a mortgage loan (the “Loan”) from American’s
Wholesale Lender (“AWL”) in the original principal sum of $520,000, which was evidenced by a
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promissory note (the “Note”) and secured by a deed of trust (the “Deed of Trust”) encumbering the
property located at 493 Sicily Street, Morro Bay, California 93442-2941 (the “Property”). The Deed
of Trust named MERS as the original beneficiary, as nominee for AWL. The beneficial interest
under the Deed of Trust was assigned to HSBC by a Corporation of Assignment of Deed of Trust
recorded in November 2009. Select is the current servicer of the Loan.
As a result of Plaintiffs’ default under the Loan, on October 30, 2009, a Notice of Default
and Election to Sell Under Deed of Trust was recorded against the Property. On June 9, 2010, a
Notice of Rescission of Declaration of Default and Demand for Sale and of Notice of Default was
recorded against the Property.
On October 23, 2015, Plaintiffs filed their Complaint against Defendants in San Luis Obispo
Superior Court. In their Complaint, Plaintiffs allege causes of action for: (1) violation of California
Civil Code § 2923.7; (2) violation of California Civil Code § 2924.10; (3) violation of California Civil
Code § 2924.17; (4) fraud – intentional misrepresentation; (5) cancellation of a written instrument,
California Civil Code § 3412; and (6) violation of California Business & Professions Code §§
17200, et seq. On November 30, 2015, Defendants removed this action to this Court, alleging that
this Court has diversity jurisdiction under 28 U.S.C. § 1332(a).
II.
Legal Standard
A.
Motion to Remand
A motion to remand is the proper procedure for challenging removal. See N. Cal. Dist.
Council of Laborers v. Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1038 (9th Cir.1995). The
removal statute is strictly construed, and any doubt about the right of removal is resolved in favor of
remand. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992); see also Prize Frize, Inc. v.
Matrix, Inc., 167 F.3d 1261, 1265 (9th Cir.1999). Consequently, if a plaintiff challenges the
defendant’s removal of a case, the defendant bears the burden of establishing the propriety of the
removal. See Gaus, 980 F.2d at 566; see also Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th
Cir.1996) (citations and quotations omitted) (“Because of the Congressional purpose to restrict the
jurisdiction of the federal courts on removal, the statute is strictly construed, and federal jurisdiction
must be rejected if there is any doubt as to the right of removal in the first instance.”).
B.
Motion for Judgment on the Pleadings
Federal Rule of Civil Procedure 12(c) governs motions for judgment on the pleadings. See
Fed. R. Civ. P. 12(c). “A Rule 12(c) motion is functionally identical to a motion pursuant to Fed. R.
Civ. P. 12(b)(6).” Lonberg v. City of Riverside, 300 F. Supp. 2d 942, 945 (C.D. Cal. 2004) (citing
Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)). “A judgment on the
pleadings is properly granted when, taking all the allegations in the pleading as true, the moving
party is entitled to judgment as a matter of law.” Heliotrope General, Inc. v. Ford Motor Co., 189
F.3d 971, 979 (9th Cir. 1999) (quoting Nelson v. City of Irvine, 143 F.3d 1196, 1200 (9th Cir.
1998)). As with motions brought pursuant to Rule 12(b)(6), in addition to assuming the truth of the
facts plead, the court must construe all reasonable inferences drawn from those facts in the
nonmoving party’s favor. See Lonberg, 300 F. Supp. 2d at 945; see also Wyler Summit
Partnership v. Turner Broadcasting System, Inc., 135 F.3d 658, 661 (9th Cir. 1998). “However,
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judgment on the pleadings is improper when the district court goes beyond the pleadings to resolve
an issue; such a proceeding must properly be treated as a motion for summary judgment.” Hal
Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir. 1990) (internal
citations omitted).
III.
Discussion
A.
Motion to Remand
Diversity jurisdiction founded under 28 U.S.C. § 1332(a) requires that (1) all plaintiffs be of
different citizenship than all defendants, and (2) the amount in controversy exceed $75,000. See 28
U.S.C. § 1332(a). Plaintiffs do not dispute that there is complete diversity of citizenship, but instead
argue that Defendants have failed to prove that the amount in controversy exceeds $75,000.
“[W]hen a defendant seeks federal-court adjudication, the defendant’s amount-in-controversy
allegation should be accepted when not contested by the plaintiff or questioned by the court.” Dart
Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547, 553 (2014). However, if the plaintiff
contests the defendant’s allegation, the defendant must establish, by a preponderance of the
evidence, that the amount in controversy exceeds $75,000. See id. at 553-54; 28 U.S.C. §
1446(c)(2)(B).
In light of the relief requested, including compensatory, special and general damages, civil
penalties pursuant to California Civil Code § 2924.12(b) for the greater of treble damages or
$50,000, restitution and the disgorgement of profits, and attorneys’ fees, and Plaintiffs’ allegation in
the Complaint that “the amount of controversy is approximately $75,000,” the Court finds that
Defendants have established, by a preponderance of the evidence, that the amount in controversy
exceeds $75,000. See Complaint, ¶ 10. Accordingly, the Court concludes that it has subject
matter jurisdiction under 28 U.S.C. § 1332(a).
B.
Motion for Judgment on the Pleadings
1.
Plaintiffs Failed to State Claims for Violations of the California
Homeowner’s Bill of Rights (California Civil Code §§ 2923.7, 2924.10, and
2924.17).
In their Complaint, Plaintiffs allege that Defendants violated the California Homeowner’s Bill
of Rights, specifically California Civil Code §§ 2923.7, 2924.10, and 2924.17.
Section 2923.7 of the California Civil Code provides that, “[u]pon request from a borrower
who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a
single point of contact.” Cal. Civ. Code § 2923.7(a). The single point of contact is generally
responsible for communicating with the borrower, coordinating receipt of any documents needed to
consider the borrower for a foreclosure alternative, and ensuring that the borrower is considered
for all foreclosure prevention alternatives. See Cal. Civ. Code §§ 2923.7(b)(1) – (5). A single point
of contact may be comprised of a team of personnel. See Cal. Civ. Code § 2923.7(e).
In their Complaint, Plaintiffs fail to allege that they requested a single point of contact as
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required by Section 2923.7, and, thus, they cannot maintain their Section 2923.7 claim. Williams v.
Wells Fargo Bank, N.A., 2014 WL 1568857, * 8 (Jan. 27, 2014) (finding that the plaintiffs failed to
state a Section 2923.7 claim where they failed to allege they requested a single point of contact);
Diamos v. Specialized Loan Servicing LLC, 2014 WL 5810453, * 4 (Nov. 7, 2014) (granting motion
to dismiss Section 2923.7 claim where plaintiff failed to allege that she requested a single point of
contact). Accordingly, Plaintiffs’ first cause of action for violation of Section 2923.7 is dismissed,
and because amendment would be futile, it is dismissed without leave to amend.1
Under Section 2924.10, when a borrower submits a loan modification application, the
mortgage servicer must provide written acknowledgment of receipt within five business days. See
Cal. Civ. Code § 2924.10. However, in this case, Plaintiffs are not entitled to money damages
because the only alleged violation of Section 2924.10 is a pre-foreclosure sale violation of the
statute. See Cal. Civ. Code § 2924.12(b) (limiting damages to post-foreclosure actions). In
addition, Plaintiffs are not entitled to injunctive relief pursuant to Section 2924.10 because no
foreclosure proceedings are pending. See Cal. Civ. Code § 2924.12(a). Therefore, Plaintiffs’
Section 2924.10 claim fails as a matter of law. Moreover, Plaintiffs have alleged only conclusory
facts with respect to Defendants’ alleged violation of Section 2924.10. Accordingly, Plaintiffs’
second cause of action for violation of Section 2923.10 is dismissed, and because amendment
would be futile, it is dismissed without leave to amend.
Finally, in their Opposition, Plaintiffs fail to address Defendants’ arguments with respect to
their claim for violation of Section 2924.17. Therefore, Plaintiffs have conceded that Defendants
are entitled judgment on the pleadings with respect to their Section 2924.17 claim. Accordingly,
Plaintiffs’ third cause of action for violation of Section 2924.17 is dismissed, and because
amendment is futile, it is dismissed without leave to amend.
2.
Plaintiffs Failed to State a Claim for Fraud – Intentional
Misrepresentation.
Under California law, the elements for a cause of action for intentional misrepresentation,
are: “(1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge
of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5)
resulting damage.” Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979, 990 (2004)
(internal quotation omitted). When fraud is alleged, Rule 9(b) demands that the circumstances
constituting the purported fraud be specific enough to give defendants notice of the particular
misconduct so that they can defend against the charge and not just deny that they have done
anything wrong. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (citation
and internal quotations omitted). To meet this standard, “[a]verments of fraud must be
accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” Id. (citation
omitted).
In their Opposition, Plaintiffs fail to address Defendants’ arguments with respect to their
claim for fraud – intentional misrepresentation. Therefore, Plaintiffs have conceded that
1
In their Opposition, Plaintiffs fail to argue that such a request was made. Instead,
Plaintiffs merely argue that they were not required to make such a request.
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Defendants are entitled to judgment on the pleadings with respect to their fraud – intentional
misrepresentation claim. Accordingly, Plaintiffs’ fourth cause of action for fraud – intentional
misrepresentation is dismissed, and because amendment is futile, it is dismissed without leave to
amend.
3.
Plaintiffs Failed to State a Claim Cancellation of a Written Instrument
under California Civil Code § 3412.
Under California law, “[a] written instrument, in respect to which there is a reasonable
apprehension that if left outstanding it may cause serious injury to a person against whom it is void
or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or
canceled.” Cal. Civ. Code § 3412. “[T]o state a claim pursuant to Civil Code § 3412, [a] plaintiff
must allege that he has restored everything of value received from the loan transaction.” Sanchez
v. MortgageIt, Inc., 2011 WL 588178, at *2 (N.D.Cal. 2011) (citing Star Pac. Investments, Inc. v.
Oro Hills Ranch, Inc., 121 Cal. App. 3d 447, 457 (1981)).
In their Opposition, Plaintiffs fail to address Defendants’ arguments with respect to their
claim for cancellation of a written instrument under Section 3412. Therefore, Plaintiffs have
conceded that Defendants are entitled to judgment on the pleadings with respect to their
cancellation of a written instrument claim. Accordingly, Plaintiffs’ fifth cause of action for
cancellation of a written instrument under Section 3412 is dismissed, and because amendment is
futile, it is dismissed without leave to amend.
4.
Plaintiffs Failed to State a Claim for Violation of California Business &
Professions Code, §§ 17200, et seq.
California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 prohibits “any
unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. “As to the
unlawful prong, the UCL incorporates other laws and treats violations of those laws as unlawful
business practices independently actionable under state law.” See Clark v. Countrywide Home
Loans, Inc., 732 F. Supp. 2d 1038, 1049 (E.D. Cal. 2010) (citing Chabner v. United Omaha Life
Ins. Co., 225 F.3d 1042, 1048 (9th Cir.2000)). A business practice is “unfair” when that practice
“either offends an established public policy or is immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers.” McDonald v. Coldwell Banker, 543 F.3d 498, 506 (9th Cir.
2008) (quotations and citations omitted). “The unfairness prong of the UCL ‘does not give the
courts a general license to review the fairness of contracts.’” Flores v. EMC Mortg. Co., __ F.
Supp. 2d __, 2014 WL 641097, at * 22 (E.D. Cal. Feb. 18, 2014). A business practice is
“fraudulent” if members of the public are likely to be deceived. Prata v. Superior Court, 91 Cal.
App. 4th 1128, 1146 (2001). If the claim is grounded in fraud, the pleading of that claim must
satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). See, e.g.,
Ward v. Wells Fargo Home Mortgage, Inc., 2015 WL 1744235, at *9 (N.D. Cal. Apr. 13, 2015).
Regardless of whether Plaintiff brings his claim under the unlawful, unfair, or fraudulent prong of
the UCL, Plaintiff must allege that he suffered an injury in fact and lost money or property as a
result of defendants’ unfair competition. See Cal. Bus. & Prof. Code § 17204.
Plaintiffs’ claim for violation of the UCL fails because Plaintiffs have failed to allege facts
demonstrating that they suffered an injury in fact and lost money or property as a result of
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Defendants’ unfair competition. In addition, to the extent Plaintiffs’ UCL claim is based on the
“unlawful” prong, Plaintiffs have failed to allege sufficient facts demonstrating that another law has
been violated. Moreover, to the extent Plaintiffs’ UCL claim is based on the unfairness prong,
Plaintiffs have failed to allege sufficient facts plausibly demonstrating that Defendants’ conduct
either offends an established public policy or is immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers. Finally, to the extent Plaintiffs’ UCL claim is based on the
“fraudulent” prong, Plaintiffs have failed to meet Federal Rule of Civil Procedure 9(b)’s pleading
requirements. Accordingly, Plaintiffs’ sixth cause of action for violation of Section 17200 is
dismissed, and because amendment is futile, it is dismissed without leave to amend.
IV.
Conclusion
For all the foregoing reasons, Plaintiffs’ Motion to Remand is DENIED, and Defendants’
Motion for Judgment on the Pleadings is GRANTED. Plaintiffs’ Complaint is hereby DISMISSED
with prejudice.
IT IS SO ORDERED.
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