Quinlan et al v. CitiMortgage, Inc. et al

Filing 34

ORDER signed by Judge Morrison C. England, Jr on 6/21/2012 ORDERING that CITIBANK Defendants' Motion to Dismiss Plaintiffs' Third Amended Complaint is DENIED in its entirety. (Reader, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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KAREN QUINLAN aka KAREN
BETZLER, an individual;
BOB BETZLER, an individual,

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Plaintiffs,

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No. 2:11-cv-00986-MCE-EFB

v.

MEMORANDUM AND ORDER

CITIMORTGAGE, INC., a New York
Corporation; ALLIED
INTERNATIONAL CREDIT CORP., a
Canadian Corporation; and
NATIONWIDE CREDIT, INC., a
Georgia Corporation;
PENTAGROUP FINANCIAL LLC, a
Texas Limited Liability
Company; AMERICAN CORADIUS
INTERNATIONAL, LLC, a Delaware
Limited Liability Company;
CITIFINANCIAL, INC., a
Maryland Corporation;
CITIBANK, NATIONAL
ASSOCIATION, a federallychartered National Bank;

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Defendants.
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Presently before the Court is a Motion to Dismiss filed on

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behalf of Defendant Citimortgage, Inc. (“CMI”), CITIFINANCIAL,

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INC.(“CFI”), and CITIBANK, N.A.(“CITI”)(herein collectively

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referred to as “the CITIBANK Defendants” unless otherwise noted).

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The motion is brought on grounds that the Plaintiffs added new

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parties without proper leave of the court and that Plaintiff

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Quinlan’s claim for violation of the Rosenthal Act against

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CITIBANK Defendants is time-barred and does not provide

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sufficient facts to establish a claim against the CITIBANK

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Defendants for which relief can be granted under Rule 12(b)(6) of

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the Federal Rules of Civil Procedure.

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Defendants assert that Plaintiff Quinlan’s claim for breach of

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contract fails against Defendants CFI and CITI because she had no

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contract with them. Finally, the CITIBANK Defendants submit that

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Plaintiffs have failed to establish the required elements of the

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invasion of privacy tort they attempt to allege.

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In addition, the CITIBANK

As set forth below, the CITIBANK Defendants’ Motion will be
denied in its entirety.1

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BACKGROUND

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According to Plaintiffs’ Third Amended Complaint (“TAC”),2

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Plaintiff Karen Quinlan obtained a home mortgage loan in the

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amount of $7,152.15 on or about March 18, 1999.

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Because oral argument will not be of material assistance,
the Court ordered this matter submitted on the briefs. E.D. Cal.
Local Rule 230(g).
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All factual allegations contained within this section are
taken from Plaintiffs’ TAC unless otherwise specified.
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Under the terms of the operative promissory note, “[b]eginning on

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the tenth anniversary from the date [of the note], all principal

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and deferred interest repayment obligations shall be forgiven

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free and clear.”

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TAC, ¶ 15.

At some point before the loan’s tenth anniversary, the

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instrument was transferred to CMI.

Plaintiffs allege that in

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contravention of the terms of the note, CMI contacted them

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demanding repayment of the note after the ten-year period.

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¶ 19.

TAC,

CMI threatened to accelerate the alleged amount due and

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report the note as delinquent to national credit bureaus.

On

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April 23, 2009, however, Plaintiffs claim they spoke to a CMI

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representative, Troy Goddard, who stated that no balance was due

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and confirmed that the debt had been forgiven.

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Although Plaintiffs accordingly believed the issue had been

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resolved, only a few months later they began to receive contacts

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from debt collection agencies demanding full repayment of the

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$7,152.15 principal balance on the loan.

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they were contacted by some four different agencies between

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September 15, 2009 and August 5, 2011.

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debt collection agencies acted on behalf of the CITIBANK

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Defendants, alleging that “At all times, the collection agencies,

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including Defendants Allied International Credit Corp.,

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Nationwide Credit, Inc., Pentagroup Financial, LLC, and American

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Coradius International, LLC, have acted as the agents for

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Defendants CitiMortgage, Inc. or Citifinancial Inc. or Citibank,

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National Association for the purpose of collecting the debt

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allegedly owed by Plaintiff Karen Quinlan.”

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Plaintiffs allege that

Plaintiffs claim that the

TAC, ¶ 13.

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More specifically, Plaintiffs allege that the letters they

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received from the collection agencies represented that they were

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collecting the debt on behalf of each of the CITIBANK Defendants.

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(See TAC ¶ 26, 31, 34, 36, 41, 44.)

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Plaintiffs filed the instant action on April 13, 2011, and

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allege a variety of state and federal claims against the three

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CITIBANK Defendants, as well as against four collection agencies.

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The CITIBANK Defendants now move to dismiss the claims that

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Plaintiffs have asserted.

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STANDARD

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On a motion to dismiss for failure to state a claim under

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Federal Rule of Civil Procedure 12(b)(6),3 all allegations of

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material fact must be accepted as true and construed in the light

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most favorable to the nonmoving party.

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Ins. Co., 80 F.3d 336,337-38 (9th Cir. 1996).

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requires only “a short and plain statement of the claim showing

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that the pleader is entitled to relief” in order to “give the

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defendant fair notice of what the [. . .] claim is and the

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grounds upon which it rests.”

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550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41,

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47 (1957)).

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dismiss does not require detailed factual allegations.

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Cahill v. Liberty Mut.
Rule 8(a)(2)

Bell Atl. Corp. v. Twombly,

A complaint attacked by a Rule 12(b)(6) motion to

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All further references to “Rule” or “Rules” are to the
Federal Rules of Civil Procedure unless otherwise noted.
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However, “a plaintiff’s obligation to provide the grounds of his

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entitlement to relief requires more than labels and conclusions,

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and a formulaic recitation of the elements of a cause of action

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will not do.”

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A court is not required to accept as true a “legal conclusion

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couched as a factual allegation.”

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1937, 1950 (2009) (quoting Twombly, 550 U.S. at 555).

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allegations must be enough to raise a right to relief above the

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speculative level.”

Id. (internal citations and quotations omitted).

Ashcroft v. Iqbal, 129 S. Ct.
“Factual

Twombly, 550 U.S. at 555 (citing 5 Charles

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Alan Wright & Arthur R. Miller, Federal Practice and Procedure

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§ 1216 (3d ed. 2004) (stating that the pleading must contain

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something more than “a statement of facts that merely creates a

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suspicion [of] a legally cognizable right of action.”)).

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Furthermore, “Rule 8(a)(2). . . requires a showing, rather

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than a blanket assertion, of entitlement to relief.”

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550 U.S. at 556 n.3 (internal citations and quotations omitted).

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Thus, “[w]ithout some factual allegation in the complaint, it is

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hard to see how a claimant could satisfy the requirements of

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providing not only ‘fair notice’ of the nature of the claim, but

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also ‘grounds’ on which the claim rests.”

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Alan Wright & Arthur R. Miller, supra, at § 1202).

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must contain “only enough facts to state a claim to relief that

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is plausible on its face.”

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have not nudged their claims across the line from conceivable to

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plausible, their complaint must be dismissed.”

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Id. at 570.

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Twombly,

Id. (citing 5 Charles
A pleading

If the “plaintiffs . . .

Id.

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However, “[a] well-pleaded complaint may proceed even if it

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strikes a savvy judge that actual proof of those facts is

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improbable, and ‘that a recovery is very remote and unlikely.’”

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Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

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ANALYSIS

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A.

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Adding New Parties CFI and CITI.

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Defendants assert that the Court’s November 2, 2011 Order on

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CMI’s Motion to Dismiss granted Plaintiffs leave to amend

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existing Claims for Relief, not permission to add new parties.

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Although Defendants CFI and CITI appear to argue that they are

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new parties, examination of the Second Amended Complaint reveals

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that both were included as parties.

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has only added CFI and CITI as defendants to certain additional

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causes of action.

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leave to amend previously granted by the Court.

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motion to dismiss on that ground accordingly fails.

The Third Amended Complaint

Such additions came within the purview of the
Defendants’

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B.

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Violation of the Rosenthal Act.

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California’s Rosenthal Act regulates the collection of

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“consumer debts,” which are defined as transactions pursuant to

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which “property, services or money is acquired on credit...

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primarily for personal, family, or household purposes.”

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Cal. Civ. Code § 1788.2(e)-(f).

The limitations period for

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pursuing a claim premised on the Rosenthal Act is one year from

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the date of an alleged violation.

Id. at § 1788.30(f).

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Agency Relationship.

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CITIBANK Defendants first argue that Plaintiff Quinlan’s

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second Claim for Relief, for violation of the Rosenthal Act,

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fails because Plaintiffs have not adequately demonstrated an

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agency relationship between the collection agencies and the

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CITIBANK Defendants.

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However, the Plaintiffs have met the pleading standard

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required to demonstrate that the collection agencies were in fact

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acting as agents on behalf of each of the CITIBANK Defendants.

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As stated above, the Court must view all issues of material fact

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in the light most favorable to the nonmoving party. Cahill v.

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Liberty Mut. Ins. Co., 80 F.3d 336,337-38 (9th Cir. 1996).

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doing so, the fact that the collection agencies purportedly

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admitted they were parties working on behalf of the various

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CITIBANK Defendants, coupled with the detailed information the

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agencies had collected presumably from those Defendants, renders

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it plausible that the collection agencies were in fact acting as

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agents on behalf of the CITIBANK Defendants in violation of the

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Rosenthal Act.

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Credit Corporation, and Nationwide Credit Recovery, for example,

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all represented that they were collecting the alleged debt on

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behalf of CMI and demanded the exact original value of the loan.

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See TAC, ¶ 31, 34, 36.

In

Defendants GC Services, Allied International

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Defendant Pentagroup Financial offered a settlement to Plaintiff

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Betzler on behalf of CFI and represented that they were

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collecting the alleged debt on behalf of CFI.

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Later, Defendant Nationwide Credit Recovery indicated that they

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were representing Defendant CITI and demanded full repayment of

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the principal of Plaintiffs’ alleged debt.

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Id. at ¶ 41.

Id. at ¶ 44.

The fact that the collection agencies represented themselves

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as agents working on behalf of the CITIBANK Defendants is

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significant, since the collection agencies by law cannot make any

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“false, deceptive or misleading” statements regarding who they

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represent.

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Court must assume they followed the law and correctly represented

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by Plaintiffs who they represented as set forth in the TAC.

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15 U.S.C. § 1692e.

Given that proscription, the

The Court concludes that Plaintiffs have alleged enough

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facts, for purposes of surviving a motion to dismiss, that the

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CITIBANK defendants shared an agency relationship with the

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collection agencies.

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2.

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Statute of Limitations.

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The CITIBANK Defendants next argue that Plaintiff Quinlan’s

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Rosenthal Act claim is time-barred in any event because the TAC

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does not specifically allege conduct by the CITIBANK Defendants

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which occurred within one year before the filing of Plaintiffs’

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complaint on April 13, 2011.

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The so-called “continuing violation doctrine,” however,

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allows Plaintiffs to overcome the defendants’ statute of

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limitations defense. “The key is whether the conduct complained

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of constitutes a continuing pattern and course of conduct as

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opposed to unrelated discrete acts.

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the suit is timely if ‘the action is filed within one year of the

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most recent [violation]’ [citation], and the entire course of

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conduct is at issue.”

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175 Cal. App. 4th 324, 343, 95 Cal. Rptr. 3d 880, 894 (2009)

If there is a pattern, then

Komarova v. Nat'l Credit Acceptance, Inc.,

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citing Joseph v. J.J. MacIntyre Companies, L.L.C.,

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281 F. Supp. 2d 1156, 1161 (N.D. Cal. 2003).

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the myriad phone calls constitute a “continuing pattern” as

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opposed to unrelated acts is a fact-intensive matter not amenable

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to disposition on a motion to dismiss.

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Determining whether

In this case, a reasonable trier of fact could plausibly

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find that the pattern of calls received by the Plaintiffs

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satisfies the continuing violation doctrine.

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CITIBANK Defendants, through their alleged agents, did contact

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the Plaintiffs within one year of the filing date of the

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Plaintiffs’ complaint on April 13, 2011.

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CFI contacted the Plaintiffs through their respective alleged

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agents even after the complaint was filed, according to the TAC.4

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CMI contacted the Plaintiffs on July 15, 2010, also within the

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one year period of the filing date.

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Each of the

In fact, both CITI and

TAC, ¶ 36.

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CFI, through Defendant Pentagroup Financial, contacted
Plaintiff Betzler as recently as July 26, 2011. (TAC, ¶ 42).
CITI, through Defendant Nationwide Credit Recovery, contacted
Plaintiff Quinlan on August 3, 2011. (TAC, ¶ 44).
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A reasonable trier of fact could find that these recent contacts

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were part of a continuous pattern of contact with the Plaintiffs.

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This court cannot conclude at this juncture that Plaintiff

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Quinlan’s Rosenthal Act claim is time barred. CITIBANK

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Defendants’ Motion to Dismiss therefore fails on that ground as

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well.

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C.

Breach of Contract Claim.

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CITIBANK Defendants argue that Plaintiff Quinlan fails in

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her Opposition to sufficiently establish that CFI and CITI were

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parties to her contract. According to CITIBANK Defendants,

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Plaintiff Quinlan’s claims are merely conclusory and do not

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provide facts which would plausibly establish that CFI or CITI

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became parties to the contract through “transfer, assignment or

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some other means.”

(Opposition p. 8:7-8.)

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However, Plaintiffs do provide facts which, when viewed in

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the light most favorable to Plaintiffs, are enough to survive a

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motion to dismiss.

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working on behalf of CFI, represented that CFI had the authority

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to reconvey the lien on the home owned by Plaintiffs, which would

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have required CFI be a party to the contract. (Opposition

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p. 8:9-11.)

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contacted Plaintiffs represented both CFI and CITI as their

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clients.

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there was an assignment or transfer of the debt from CMI to CITI.

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TAC, ¶ 36.

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CFI, was made a party to the contract.

Pentagroup, a collection agency allegedly

As indicated above, collection agencies who

With respect to CITI, Plaintiffs have also alleged that

It is plausible for pleading purposes that CITI, like

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The motion to dismiss the breach of contract claim must therefore

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be denied.

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D.

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Invasion of Privacy Claim

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Because the Court has already determined that the collection

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agencies, at least for pleading purposes, were working as agents

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on behalf of the CITIBANK Defendants, Plaintiff may have

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established a viable Invasion of Privacy claim, as pled in their

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sixth claim for relief, by virtue of the agencies’ allegedly

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intrusive collection efforts both by mail and by telephone.

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To state a viable invasion of privacy claim premised on

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intrusion, Plaintiffs must show: (1) intrusion into a private

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place, conversation or matter, and (2) in a manner highly

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offensive to a reasonable person.

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Productions, Inc., 18 Cal. 4th 200, 231, 955 P.2d 469, 490

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(1998).

Shulman v. Group W

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1.

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Intrusion into a Private Place.

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Courts have held that “repeated and continuous calls in an

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attempt to collect a debt give rise to a claim for intrusion upon

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seclusion.”

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1049, 1056 (N.D. Cal. 2009) citing Panahiasl, 2007 WL 738642, at

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*3.

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the grounds that the issue of whether continuous calls

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sufficiently establish an intrusion upon seclusion claim is fact-

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intensive.

Fausto v. Credigy Services Corp., 598 F. Supp. 2d

The Fausto court dismissed a motion for summary judgment on

Id.
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A number of courts have held that phone calls into a home

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can potentially constitute an intrusion into a private place for

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purposes of the first element.

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Services Corp., 598 F. Supp. 2d 1049, 1056 (N.D. Cal. 2009)

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citing Panahiasl, 2007 WL 738642, at *3.

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MacIntyre Companies, LLC., 238 F. Supp. 2d 1158, 1169-1170 (N.D.

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Cal. 2002).

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for intrusion on the “offensive manner” element, but have implied

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that repeated phone calls to the home of the Plaintiff can

See generally Fausto v. Credigy

Joseph v. J.J.

Other cases have granted motions to dismiss claims

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constitute an intrusion into a private place.

See Marseglia v.

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JP Morgan Chase Bank, 750 F. Supp. 2d 1171 (S.D. Cal. 2010),

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Castellanos v. JPMorgan Chase & Co., 09-CV-00969-H, 2009 WL

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1833981 (S.D. Cal. June 23, 2009).

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of fact could conclude that the numerous phone calls and mailings

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to the Plaintiffs satisfy the first element of the intrusion tort

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as a continued intrusion into a private place.

Therefore, a reasonable trier

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2.

Highly Offensive to a Reasonable Person.

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Likewise, a reasonable trier of fact could find that the

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contacts were highly offensive to a reasonable person. In

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determining the “offensiveness” of an invasion of a privacy

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interest, common law courts consider, among other things: “the

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degree of the intrusion, the context, conduct and circumstances

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surrounding the intrusion as well as the intruder's motives and

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objectives, the setting into which he intrudes, and the

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expectations of those whose privacy is invaded.”

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Broad. Companies, Inc., 121 F.3d 460, 465 (9th Cir. 1997).
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Deteresa v. Am.

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Whether contacts were highly offensive should only be dismissed

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as a matter of law “... if the undisputed material facts show no

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reasonable expectation of privacy or an insubstantial impact on

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privacy interests.”

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Id.

This Court cannot find as a matter of law that numerous

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phone calls and mailings demanding collection of a non-existent

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debt, accompanied by the underlying threat of losing one’s home,

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would not be highly offensive to a reasonable person.

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recognized by the Ninth Circuit in Deteresa, whether or not the

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particular circumstances of the case are indeed highly offensive

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is a matter to be determined by the trier of fact.

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As

Both elements of the intrusion tort could reasonably be

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found to be present given the allegations present in the TAC.

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Therefore, the Defendants’ Motion to Dismiss Plaintiff’s invasion

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of privacy claim (premised on intrusion into seclusion) is

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denied.

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CONCLUSION

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For all the foregoing reasons, CITIBANK Defendants’ Motion

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to Dismiss Plaintiffs’ Third Amended Complaint (ECF No. 20) is

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denied in its entirety.

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IT IS SO ORDERED.
Dated: June 21, 2012

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_____________________________
MORRISON C. ENGLAND, JR.
UNITED STATES DISTRICT JUDGE

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