Kimberly Layne et al v. Nationstar Mortgage LLC et al
Filing
19
MINUTES (IN CHAMBERS) ORDER by Judge David O. Carter granting in part 11 MOTION to Dismiss ; denying 12 MOTION to Remand Case to State Court. For the foregoing reasons, the Court DENIES Plaintiffs' Motion to Remand and GRANTS IN PART Nationstar's Motion to Dismiss. The Court DISMISSES WITHOUT PREJUDICE Plaintiffs' RESPA claim, California Civil Code § 2943 claim, and UCL claim. Plaintiffs may file an amended complaint, if desired, on or before March 6, 2017. (see document for details). (dro)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 16-2170-DOC (GJSx)
Date: February 24, 2017
Title: KIMBERLY LAYNE ET AL. V. NATIONSTAR MORTGAGE LLC ET AL.
PRESENT:
THE HONORABLE DAVID O. CARTER, JUDGE
Deborah Goltz
Courtroom Clerk
Not Present
Court Reporter
ATTORNEYS PRESENT FOR
PLAINTIFF:
None Present
ATTORNEYS PRESENT FOR
DEFENDANT:
None Present
PROCEEDINGS (IN CHAMBERS): ORDER GRANTING IN PART
DEFENDANT’S MOTION TO
DISMISS [11]; DENYING
PLAINTIFFS’ MOTION TO
REMAND [12]
Before the Court are Plaintiffs’ Motion to Remand (“MTR”) (Dkt. 12) and
Defendant’s Motion to Dismiss (“MTD”) (Dkt. 11). The Court finds these matters
appropriate for resolution without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15. After
reviewing the moving papers and considering the parties arguments, the Court DENIES
Plaintiffs’ Motion to Remand and GRANTS IN PART Defendant’s Motion to Dismiss.
I.
Background
A.
Facts
Because the First Amended Complaint has not been properly filed, the Court
adopts the facts as set out in Plaintiffs’ Complaint (“Complaint”) (Dkt. 1-2).
Plaintiffs Kimberly Layne and John D. Thomas (collectively, “Plaintiffs”) took out
a loan for their home located at 230 Monarch Bay Drive, Dana Point, California (the
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 16-2170-DOC (GJSx)
Date: February 24, 2017
Page 2
“Property”) from “Ocwen.” Compl. ¶ 2. The note and deed of trust were recorded on
December 14, 2005. Id. ¶ 6. Plaintiffs conveyed the Property to the Monarch Bay Drive
Trust. Id. ¶¶ 2, 6. The Monarch Bay Drive Trust then conveyed the Property to Monarch
Bay Drive, LLC (“Monarch Bay”). Id. ¶¶ 2, 6.
Defendant Nationstar Mortgage, LLC (“Nationstar”) is allegedly the successor in
interest of the note and deed of trust from Ocwen as of September 1, 2013. Id. ¶ 3.
On September 4, 2014, Nationstar sent Plaintiffs a letter stating that $571,577.17
was due under the note. Id. ¶ 8. On October 19, 2014, Nationstar sent Plaintiffs another
letter, this time claiming the amount due was $504,358.74. Id. Sometime between March
14, 2016 and March 23, 2016, Plaintiffs sent a letter to Nationstar, asking that Nationstar
provide information regarding the amount due and the amount of arrearages on the deed,
as well as the basis for the amount. Id. ¶ 9. Plaintiffs also asked Nationstar to explain why
it believed it was the servicer on the loan. Id. In response, Nationstar sent Plaintiffs a loan
modification application package, but allegedly did not respond to the requests for
information. Id.
On October 18, 2016, Nationstar sent Plaintiffs a third letter claiming that the
amount due on the note was $725,228.91, which included $17,917.29 in unidentified fees
and charges. Id. ¶ 8.
B.
Procedural History
Plaintiffs filed this suit in the California Superior Court for the County of Orange
on November 4, 2016 against Nationstar. Notice of Removal (Dkt. 1-2). Nationstar
removed the action to federal court on December 7, 2016 (Dkt. 1). Plaintiffs bring claims
for: (1) violation of the Real Estate Settlement Procedures Act (“RESPA”); (2) violation
of California Civil Code § 2943; and (3) violation of the Business and Professions Code §
17200 et seq. (“UCL”). See generally Compl.
On January 4, 2017, Nationstar filed the instant Motion to Dismiss, a notice of
lodging of the First Amended Complaint (Dkt. 11-1), and a Request for Judicial Notice
(“RJN”) (Dkt. 11-2). Plaintiffs opposed on January 23, 2017 (“MTD Opposition”) (Dkt.
15), and Nationstar replied on January 26, 2017 (Dkt. 16). On January 6, 2017, Plaintiffs
filed the instant Motion to Remand. Nationstar opposed on January 23, 2017 (“MTR
Opposition”) (Dkt. 13), and Plaintiffs replied on January 30, 2017 (Dkt. 17).
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 16-2170-DOC (GJSx)
II.
Date: February 24, 2017
Page 3
Legal Standard
Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed
when a plaintiff’s allegations fail to set forth a set of facts which, if true, would entitle the
complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v.
Iqbal, 556 U.S. 662, 679 (2009) (holding that a claim must be facially plausible in order
to survive a motion to dismiss). The pleadings must raise the right to relief beyond the
speculative level; a plaintiff must provide “more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S.
at 555 (citing Papasan v. Allain, 478 U.S. 265, 268 (1986)). On a motion to dismiss, a
court accepts as true a plaintiff’s well-pleaded factual allegations and construes all factual
inferences in the light most favorable to the plaintiff. See Manzarek v. St. Paul Fire &
Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The court is not required to accept
as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.
In evaluating a Rule 12(b)(6) motion, review is ordinarily limited to the contents
of the complaint and material properly submitted with the complaint. Van Buskirk v.
Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002); Hal Roach Studios, Inc. v.
Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). Under the
incorporation by reference doctrine, the court may also consider documents “whose
contents are alleged in a complaint and whose authenticity no party questions, but which
are not physically attached to the pleading.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.
1994), overruled on other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119,
1121 (9th Cir. 2002). The court may treat such a document as “part of the complaint, and
thus may assume that its contents are true for purposes of a motion to dismiss under Rule
12(b)(6).” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).
Additionally, the court may take judicial notice of certain items without converting
the motion to dismiss into one for summary judgment. Barron v. Reich, 13 F.3d 1370,
1377 (9th Cir. 1994). For instance, the court may take judicial notice of facts “not subject
to reasonable dispute” because they are either: “(1) [] generally known within the trial
court’s territorial jurisdiction; or (2) can be accurately and readily determined from
sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201; see also
Harris v. Cnty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (noting that the court may
take judicial notice of “undisputed matters of public record,” including “documents on
file in federal or state courts,” as well as “documents not attached to a complaint . . . if no
party questions their authenticity and the complaint relies on those documents”).
Dismissal with leave to amend should be freely given “when justice so requires.”
Fed. R. Civ. P. 15(a)(2). This policy is applied with “extreme liberality.” Morongo Band
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 16-2170-DOC (GJSx)
Date: February 24, 2017
Page 4
of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990); Lopez v. Smith, 203
F.3d 1122, 1127 (9th Cir. 2000) (holding that dismissal with leave to amend should be
granted even if no request to amend was made). Courts consider four factors in
determining whether to grant leave to amend: (1) undue delay; (2) bad faith; (3) futility of
amendment; and (4) prejudice to the opposing party. Webb, 655 F.2d at 980 (citing
Foman v. Davis, 371 U.S. 178, 182 (1962)).
III.
Request for Judicial Notice
Courts may “properly consider exhibits attached to the complaint and documents
whose contents are alleged in the complaint but not attached, if their authenticity is not
questioned.” Okla. Firefighters Pension & Ret. Sys. v. IXIA, 50 F. Supp. 3d 1328, 1348
(C.D. Cal. 2014) (citing Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001)). In
addition, under Federal Rule of Evidence 201, a court may take judicial notice of matters
of public record. Lee, 250 F.3d at 689.
Accordingly, the Court takes judicial notice of the following documents offered by
Nationstar:
Notice of Default recorded in the Official Records of Orange County on
September 11, 2014, No. 2013000368349 (RJN Ex. A);
Deed of Trust recorded in the Official Records of Orange County on
December 14, 2005, No. 2005000999987 (RJN Ex. B);
Notice of Removal, John D. Thomas, et al. v. Nationstar Mortgage, LLC, et
al., No. 8:14-cv-01799-JVS-JCG (Nov. 12, 2014) (RJN Ex. C);
Order Dismissing Action, John D. Thomas, et al. v. Nationstar Mortgage,
LLC, et al., No. 8:14-cv-01799-JVS-JCG (Mar. 11, 2015) (RJN Ex. D);
Notice of Removal, Kimberly Layne v. Nationstar Mortgage LLC, et al.,
No. 8:15-cv-00639-DOC-GJS (Apr. 22, 2015) (RJN Ex. E);
Third Amended Complaint, Kimberly Layne v. Nationstar Mortgage LLC,
et al., No. 8:15-cv-00639-DOC-GJS (Nov. 20, 2015) (RJN Ex. F);
Order Granting in Part Defendant’s Motion to Dismiss, Kimberly Layne v.
Nationstar Mortgage LLC, et al., No. 8:15-cv-00639-DOC-GJS (Jan. 11,
2016) (RJN Ex. G); and
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 16-2170-DOC (GJSx)
Date: February 24, 2017
Page 5
Order Granting Defendant’s Motion to Dismiss, Kimberly Layne v.
Nationstar Mortgage LLC, et al., No. 8:15-cv-00639-DOC-GJS (Mar. 14,
2016) (RJN Ex. H).
IV.
Discussion
Nationstar moves to dismiss Plaintiffs’ First Amended Complaint, and Plaintiffs
move to remand the fourth cause of action in their First Amended Complaint (“FAC”).
The FAC has not been filed with the Court, and instead was attached to the Motion to
Dismiss. The Court cannot make a ruling as to an FAC until an FAC has been filed—
such a ruling would amount to an improper advisory opinion. Therefore, the Court
DENIES Plaintiffs’ Motion to Remand. The Court will decide Nationstar’s Motion to
Dismiss to the extent that it affects the operative complaint—Plaintiffs’ original
Complaint.
Nationstar moves to dismiss Plaintiffs’ RESPA, California Civil Code § 2943,
UCL, and declaratory relief claims. See generally MTD. Plaintiffs’ Complaint does not
include a declaratory relief claim, so the Court declines to rule on that issue.
1.
RESPA
Plaintiffs allege Nationstar violated RESPA by failing to timely respond to
Plaintiffs’ qualified written request (“QWR”). Compl. ¶ 13. Under RESPA, loan servicers
must timely respond to inquiries concerning a consumer mortgage loan whenever the
loan servicer “receives a qualified written request from the borrower.” 12 U.S.C. §
2605(e)(1)(A). A QWR is defined as a “written correspondence . . . [that] enables the
servicer to identify the name and account of the borrower; and includes a statement of the
reasons for the belief of the borrower, to the extent applicable, that the account is in error
or provides sufficient detail to the servicer regarding other information sought by the
borrower.” 12 U.S.C. § 2605(e)(1)(B).
Nationstar moves to dismiss Plaintiffs’ RESPA claim because it fails as a matter
of law. MTD at 2. First, Nationstar argues that Plaintiffs insufficiently allege they sent a
QWR. See id. at 3–4. However, Plaintiffs plead that they sent requests for information
“regarding the amount due and the amounts of arrearages on the first trust deed,” as well
as requesting an explanation of Nationstar’s basis for claiming to be the servicer of the
loan. Compl. ¶ 8. While the request for an explanation of the servicing of the loan does
not give rise to a duty to respond because it is a challenge on the loan’s validity, see
Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 666 (9th Cir. 2012), the requests for the
amount due on the loan is sufficient to establish that Plaintiffs requested servicing-related
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 16-2170-DOC (GJSx)
Date: February 24, 2017
Page 6
information. See 12 U.S.C. § 2605(i)(3) (defining the term “servicing” to encompass only
“receiving any scheduled periodic payments from a borrower pursuant to the terms of any
loan, including amounts for escrow amounts . . . , and making the payments of principal
and interest and such other payments”). Therefore, the Court finds that Plaintiffs’ letter
qualifies as a QWR.
Second, Nationstar argues that Plaintiffs do not sufficiently plead actual damages.
MTD at 4. Many courts have held that a showing of pecuniary damages is a prerequisite
to bring a claim under RESPA. See e.g., Lane v. Vitek Real Estate Indus. Group, 713 F.
Supp. 2d 1092, 1101 (E.D. Cal. 2010). Plaintiffs claim they suffered “economic loss from
their inability to make decisions in regard to the property, and have suffered uncertainty,
fear, and anxiety.” Compl. ¶ 14. Damages can be properly alleged when a plaintiff is
denied information sought, and “the failure to receive the information caused him
economic loss.” See Johnson v. HSBC Bank USA, Nat. Ass’n, No. 3:11-cv-2091-JMWVG, 2012 WL 928433, at *6 (S.D. Cal. Mar. 19, 2012). Accordingly, Plaintiffs
allegations as to their “economic damages” are sufficient to plead actual damages.
Finally, even assuming Plaintiffs did properly plead actual damages, Nationstar
argues that Plaintiffs do not allege statutory damages. See MTD at 6. To recover statutory
damages, Plaintiffs must plead some pattern or practice of noncompliance with RESPA.
12 U.S.C. § 2605(f)(1)(B). Courts have interpreted the phrase “pattern or practice” to
mean “a standard or routine way of operating.” Ponds v. Nationstar Mortg., LLC, No. CV
15-8693-DMG (JPRx), 2016 WL 3360675, at *6 (C.D. Cal. July 3, 2016). Here,
Plaintiffs claim Nationstar has a pattern and practice of not responding to written requests
because they failed to respond to Plaintiffs’ requests multiple times. See Compl. ¶ 10.
However, the Court is unable to discern how many times Plaintiffs actually sent written
requests to Nationstar. Plaintiffs only provide one date that they sent a written request,
and then plead they “wrote again” when a “new address was provided.” See id. ¶ 10.
“[C]ourts routinely refuse to find a pattern or practice where a plaintiff alleges only a
single QWR refusal,” but accept that “as few as three refusals is sufficient.” See Lawther
v. OneWest Bank, 2010 WL 4936797, at *7 (N.D. Cal. 2010). Here, even reading the
allegations in the light most favorable to Plaintiffs, the Court can only discern two
instances of potential noncompliance. Thus, the Court does not find a pattern or practice
of noncompliance.
Plaintiffs also plead that Nationstar has a pattern or practice of not responding to
written requests because Nationstar “has been sued for RESPA violations in various
courts.” Compl. ¶ 11. Plaintiffs simply cite four cases in their Complaint, but do not
adequately explain the relevance of these cases to the instant case. See id. Plaintiffs plead
no authority or evidence “suggesting that these other lawsuits actually concerned
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 16-2170-DOC (GJSx)
Date: February 24, 2017
Page 7
[Nationstar’s] pattern of noncompliance with RESPA, and even if they did . . . , that
Plaintiff[s] can use consent judgments in other lawsuits to establish [Nationstar’s] pattern
of noncompliance with RESPA in this case.” Croskrey v. Ocwen Loan Servicing LLC,
No. SA CV 12-1318-DOC (DFMx), 2016 WL 3135643, at *12 (C.D. Cal. 2016); see also
Park v. Wachovia Mortg., FSB, No. 10cv1547 WQH (RBB), 2011 WL 4571874, at *8
(S.D. Cal. 2011) (finding that plaintiff’s allegation that defendants had numerous lawsuits
against them across the country was conclusory and did not support a pattern of
noncompliance with RESPA). The Court finds that Plaintiffs do not sufficiently plead a
pattern or practice of noncompliance, and therefore have not proved they are entitled to
statutory damages.
Accordingly, Plaintiffs’ RESPA claim fails as a matter of law, and the Court
GRANTS Nationstar’s Motion to Dismiss Plaintiffs’ RESPA claim.
2.
California Civil Code § 2943
Plaintiffs also allege Nationstar violated California Civil Code § 2943 by failing to
timely respond to the QWR. Compl. ¶ 19. Nationstar moves to dismiss this claim,
arguing that Plaintiffs are barred by the time limit under the statute. MTD at 7. Plaintiffs
do not address this argument in their Opposition, and thereby concede it.
Accordingly, the Court GRANTS Nationstar’s Motion to Dismiss Plaintiffs’
California Civil Code § 2943 claim.
3.
UCL Claim
Nationstar moves to dismiss Plaintiffs’ UCL claim, arguing (1) Plaintiffs do not
have standing to bring a UCL claim and (2) Plaintiffs’ underlying claims fail. MTD at 7–
8. To have standing to assert a UCL claim, a plaintiff must have “suffered injury in fact
and . . . lost money or property as a result of the unfair competition.” Rubio v. Capital
One Bank, 613 F.3d 1195, 1203 (9th Cir. 2010) (quoting Cal. Bus. & Prof. Code §
17204).
Plaintiffs allege only that Nationstar’s “acts and omissions . . . constitute[d] unfair
business practices.” Compl. ¶ 21. Plaintiffs do not allege that these “acts and omissions”
resulted in injury to Plaintiffs or that Plaintiffs lost money or property as a result. Perhaps
more relevantly, Plaintiffs do not address this argument in their Opposition and thereby
concede it.
Accordingly, the Court GRANTS Nationstar’s Motion to Dismiss Plaintiffs’ UCL
claim.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. SA CV 16-2170-DOC (GJSx)
V.
Date: February 24, 2017
Page 8
Disposition
For the foregoing reasons, the Court DENIES Plaintiffs’ Motion to Remand and
GRANTS IN PART Nationstar’s Motion to Dismiss. The Court DISMISSES WITHOUT
PREJUDICE Plaintiffs’ RESPA claim, California Civil Code § 2943 claim, and UCL
claim.
Plaintiffs may file an amended complaint, if desired, on or before March 6, 2017.
The Clerk shall serve this minute order on the parties.
MINUTES FORM 11
CIVIL-GEN
Initials of Deputy Clerk: djg
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