Schneider v. Bank of America N.A et al

Filing 132

ORDER signed by Judge Lawrence K. Karlton on 5/21/14 GRANTING IN PART and DENYING IN PART 93 Motion to Dismiss and 96 Motion to Dismiss ; REMANDING 123 Finding and Recommendations to the Magistrate Judge for further proceedings. (Meuleman, A) Modified on 5/21/2014 (Meuleman, A). Modified on 5/21/2014 (Meuleman, A).

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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CHRISTOPHER D. SCHNEIDER,

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No. CIV. S-11-2953 LKK/DAD PS

Plaintiff,
v.

ORDER

BANK OF AMERICA N.A., BANK OF
AMERICA MORTGAGE, BANK OF
AMERICA HOME LOANS SERVICING
LP, BALBOA INSURANCE CO.,
HOME RETENTION GROUP, QUALITY
LOAN SERVICE CORP., CLIFF
COLER, DOES 1-40,
Defendants.

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This is a mortgage foreclosure case.

Plaintiff, proceeding

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pro se, alleges fifteen (15) federal and state causes of action

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relating to the foreclosure of his home.

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dismiss were heard by a United States Magistrate Judge pursuant

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to E.D. Cal. R. (“Local Rule”) 302(c)(21).

Defendants’ motions to

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On March 26, 2013, the Magistrate Judge filed extensive

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Findings and Recommendations herein which were served on all

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parties and which contained notice to all parties that any

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objections to the Findings and Recommendations were to be filed
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within fourteen days.

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the Findings and Recommendations, and defendants have timely

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filed a response to plaintiff’s objections.

Plaintiff timely has filed objections to

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In accordance with the provisions of 28 U.S.C. 636(b)(1)(c)

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and Local Rule 304, this court has conducted a de novo review of

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this case.

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finds the Findings and Recommendations to be supported by the

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record and by the Magistrate Judge’s analysis, except as set

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forth below.

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Having carefully reviewed the entire file, this court

Defendants Bank of American, NA (“BANA”), BAC Home Loans

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Servicing LP (“BAC Home Loans”) and Balboa Insurance Co.

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(“Balboa”), assert that the 45-page complaint “should be

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dismissed in its entirety, with prejudice,” because it is not a

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“short and plain” statement of the claims, and is confusing as to

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which claims are asserted against which defendants.1

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at 14-15.

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incomprehensible or over-long complaint which no reasonable

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defendant could comprehend or know how to respond to.

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McHenry v. Renne, 84 F.3d 1172, 1179 (9th Cir. 1996).

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ECF No. 96

It is within this court’s discretion to dismiss an

See, e.g.,

It is true that plaintiff’s pro se Complaint is a bit of a
mess.2

However, the Complaint does not deserve a Rule 8

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The motions to dismiss were filed by defendants BANA, BAC Home
Loans and Balboa, in one motion, and by Quality Loan Service
Corp. (“QLS”), in another. No dismissal motions were filed by
defendants Bank of America Mortgage (“BAC Mortgage”), Home
Retention Group (“HRG”) or “FHLMC LBAC 173 a.k.a. Federal Home
Loan Mortgage Corp.” (“FLHMC”).
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For example, the Complaint has an unfortunate tendency to lump
all defendants together. However, it is possible to disentangle
even these allegations, in most cases. For example, plaintiff
typically alleges that Defendant A engaged in unlawful conduct,
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dismissal, as the court is able to disentangle much of what

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plaintiff is alleging.

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plaintiff here is essentially caught in the legal vise created by

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the defendants’ complaining that the Complaint is at once too

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specific for Rule 8, while also being not specific enough for

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Rules 9(b) and 12(b)(6).

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I.

The court also notes that pro se

CLAIM ONE - RESPA

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A.

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Plaintiff alleges that defendants BANA and BAC Home Loans

12 U.S.C. § 2605(e) and 24 C.F.R. § 3500.21.

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violated the Real Estate Settlement Procedures Act (“RESPA”), 12

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U.S.C. § 2605(e), and 24 C.F.R. § 3500.21, by failing to respond

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to his Qualified Written Requests (“QWR”), that is, letters he

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wrote to defendant loan servicers regarding the servicing of his

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loan.3

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Specifically, (1) plaintiff alleges that on August 17, 2010,

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he sent a QWR to defendant BAC Home Loans Servicing LP (“BAC Home

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Loans”), the loan servicer at the time.

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Exhibit C to the Complaint.

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No. 91) (“Complaint”) ¶ 27; Exhibit C to the Complaint (ECF

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No. 91-1) at 31.4

The QWR is attached as

See Second Amended Complaint (ECF

BAC Home Loans “willfully ignored” the QWR and

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and then alleges that Defendants A, B, C and D are liable without
any allegation that would make Defendants B, C and D liable for
A’s violation. In that case, the court considers plaintiff to be
alleging a claim only against Defendant A.

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Defendants BANA and BAC Home Loans assert that on July 1, 2011,
BAC Home Loans merged into and became a part of BANA. ECF No. 96
at 1 n.1.
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The document is attached to the Complaint as Exhibit C, and
therefore is a part of the Complaint for all purposes. See Fed.
R. Civ. P. 10(c).
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“did not respond.”5

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on April 15, 2011, he sent another QWR to BAC Home Loans.

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QWR is attached as Exhibit D to the Complaint.

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respond to this QWR in a timely manner.6

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(3) Plaintiff alleges that on July 24, 2011, he sent a third QWR,

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this time to Bank of America, N.A. (“BANA”), who had become the

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servicer on the loan.

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Complaint.

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No. 91-1) at 33.

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Complaint ¶ 43.7

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Complaint ¶ 28.

(2) Plaintiff alleges that
The

Defendant did not

See Complaint ¶ 46.

This QWR is attached as Exhibit Q to the

Complaint ¶¶ 43 & 46; Exhibit Q to the Complaint (ECF
BANA did not timely respond to this QWR.

The Complaint goes on to allege that defendants’ conduct

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“caused plaintiff actual damages and injuries … including in part

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a detriment to plaintiff’s ability to sell or refinance his

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home.”

Complaint ¶ 46 (emphasis in text).8

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Plaintiff alleges that several other defendants also did not
respond. However, plaintiff does not allege that he sent a QWR
to them, nor does he allege any basis that would impose an obligation for
those defendants to respond to a QWR that was not sent to them.

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The Complaint alleges that defendants failed to respond timely
to any of the QWR’s plaintiff sent between August 2010 and
October 2011. Complaint ¶ 46.
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Plaintiff further alleges that between August 2010 and October
2011, he sent BAC Home Loans and BANA “over 10 specific QWR’s,”
none of which were responded to in a timely manner. Complaint
¶ 46. Plaintiff did not attach any of these other QWRs to the
Complaint, nor does he allege when he sent them, nor to which
defendants, nor anything about the substance of the
communications, other than that they were QWRs.
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Plaintiff also alleged that defendants’ conduct caused him to
suffer “extreme emotional and physical stress and anxiety.”
Complaint ¶ 44.

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Defendants BANA and BAC Home Loans move to dismiss.9

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assert that, “save for one letter,” plaintiff “has not alleged

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the dates on which he sent each of his alleged QWR’s.”

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Motion To Dismiss (“BANA Motion”) (ECF No. 96) at 17.

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two problems with this assertion.

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They

BANA
There are

First, defendant does not address even that “one letter” –

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the July 24, 2011 letter.

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alleges the date of only one such alleged letter, July 24, 2011,

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that he claims constitutes a QWR to the bank”).

See BANA Motion at 17 (“Plaintiff now

RESPA does not

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require that a loan servicer fail to respond to a slew of QWRs

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before it will be found to have violated the law.

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if one is sent, the loan servicer must respond to that one.

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12 U.S.C. §§ 2605(e)(1)(A) (if a loan servicer “receives a

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qualified written request from the borrower … the servicer shall”

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acknowledge the letter within 5 days) (emphasis added),

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2605(e)(2) (servicer must substantively respond to “any qualified

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written request” within 30 days) (emphasis added).

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seems to argue that because plaintiff failed to allege the date

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of each one of the QWR’s (even assuming this is a fatal pleading

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error), the claim must be dismissed even as to those QWR’s where

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the dates are alleged.

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such an argument, nor has defendant provided any.

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It states that
See

Defendant

This court knows of no legal basis for

Second, plaintiff has specifically identified three

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The Magistrate Judge indicates that FHLMC also moved to
dismiss. ECF No. 123 at 10. However, as best this court can
tell, FHLMC, which is apparently represented by counsel, has not
answered, moved to dismiss, or otherwise responded to the
Complaint, although it has responded to plaintiff’s Objections to
the Findings and Recommendations.

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communications he says are QWRs.

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were sent and to whom they were sent.

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above, the August 17, 2010 letter, the April 15, 2011 letter, and

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the July 24, 2011 letter, and all three are attached as exhibits

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to the Complaint.

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He specifies the dates they
They are, as described

See Exhibits C, D & Q to the Complaint.10

Defendants also move to dismiss on the ground that plaintiff

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“has failed to plead facts that establish actual damages as

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required by the statute,” citing 12 U.S.C. § 2605(f)(1)(A).

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Specifically, defendants argue for dismissal because plaintiff

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“fails to provide any detail as to how the alleged QWR violation

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has damaged him.”

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Defendants assert that:

Plaintiff only makes the general allegation
that that “[BANA’S] conduct has caused
plaintiff
countless
unnecessary
and
substantial actual costs, damages, fees and
injuries in fact …
Plaintiff has been and
continues to be subject to extreme and
physical stress and anxiety over all of the
events that occurred after the July 24, 2011
QWR.”

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BANA Motion at 17.

BANA Motion at 17 (citing Complaint ¶ 45).

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This supposedly complete recitation of plaintiff’s alleged

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damages ignores the very next paragraph of the complaint, which

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alleges that plaintiff’s damages include “a detriment to

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plaintiff’s ability to sell or refinance his home.”

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Complaint ¶ 46.

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allegation is not specific enough, or lacks causality, and the

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court will not make those arguments on defendants’ behalf.11

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See

Defendant nowhere asserts that this damage

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As for the remaining, unidentified letters, defendant can
simply ask for them, or ask about them, in discovery.
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The court is aware of the district court cases which seem to
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In addition, plaintiff has specifically alleged three

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clearly identified instances where he sent a QWR to the loan

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servicer, and got no timely response to any of them.

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Accordingly, the Complaint alleges a “pattern or practice of

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noncompliance” sufficient to state a claim for statutory damages

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under RESPA.

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are available “in the case of a pattern or practice of

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noncompliance with the requirements of this section”).

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See 12 U.S.C. § 2605(f)(1)(B) (“additional damages”

In short, plaintiff alleges a violation of the Real Estate
Settlement Procedures Act (“RESPA”):

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RESPA requires the servicer of a federally
related mortgage loan to provide a timely
written response to inquiries from borrowers
regarding the servicing of their loans.
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U.S.C. § 2605(e)(1)(A), (e)(2).
If the
servicer fails to respond properly to such a
request, the statute entitles the borrower to
recover actual damages and, if there is a
“pattern
or
practice
of
noncompliance,”
statutory damages of up to $1,000.
Id.
§ 2605(f).

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Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 665 (9th Cir. 2012),

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cert. denied, 133 S. Ct. 2880 (2013).

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Defendant also asserts that the Complaint’s allegation of

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damages resulting from stress and anxiety are “conclusory,” and

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lacking in detail.

The court does not find the allegations to be

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hold that the complaint must demonstrate a causal relationship
between the alleged damages and the RESPA violation (at least one
of which relies upon the Magistrate Judge’s decision in this
case). See, e.g., Guidi v. Paul Financial LLC, 2014 WL 60253 at
*4 (N.D. Cal. 2014). It is not necessary to address the issue
here, since plaintiff here does allege a causal relationship to a
specific harm. Moreover, plaintiff adequately alleges statutory
damages, as discussed below.

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conclusory.

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picture.

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America, and BAC Home Loans, the originator and servicers of his

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home mortgage, a dispute which he must have known could lead to

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him losing his home.

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information, and received no response, even though the bank was

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legally required to give him an acknowledgement and then a

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substantive response.

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“extreme emotional and physical stress and anxiety.”

To the contrary, plaintiff paints quite a clear

Plaintiff found himself in a dispute with the Bank of

He wrote to the bank requesting

This failure to respond caused him
There is

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nothing “conclusory” about those allegations.

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entirely plausible, factual sequence of events – with clear

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causality between the violation and the damages – to which

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defendant must now respond.12

They set forth an

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B.

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The court adopts the findings and recommendation of the

12 U.S.C. § 2609 and 24 C.F.R. § 3500.17.

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Magistrate Judge that this portion of the first claim be

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dismissed as to BANA, BAC Home Loans and Balboa, for lack of a

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private right of action.

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////

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////

See ECF No. 123 at 18.

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Plaintiff also alleges that defendants’ conduct violates 12
U.S.C. § 2605(k), which requires, among things, that a servicer
timely “respond to a borrower's requests to correct errors
relating to allocation of payments, final balances for purposes
of paying off the loan, or avoiding foreclosure, or other
standard servicer's duties.” 12 U.S.C. § 2605(k)(1)(C).
Defendants, all of whom are represented by counsel, have not
briefed or moved to dismiss this claim. Accordingly, the court
will not adopt the Magistrate Judge’s recommendation that it be
dismissed.

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II.

CLAIM TWO – TRUTH IN LENDING ACT (“TILA”)13

Plaintiff alleges that on November 9, 2011, he called BANA,

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BAC Home Loans and Quality Loan Service Corp. (“QLS”), requesting

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the exact amount his mortgage was in arrears, and the payoff

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balance.

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defendants never responded, in violation of banking regulations

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providing that “no servicer shall … [f]ail to provide, within a

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reasonable time after receiving a request from the consumer … an

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accurate statement of the total outstanding balance that would be

Complaint ¶ 60.

Plaintiff alleges that these

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required to satisfy the consumer’s obligation in full as of a

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specified date.”14

12 C.F.R. § 226.36(c)(1)(iii).15

Plaintiff also alleges that BAC Home Loans delayed posting

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plaintiff’s December 13, 2010 mortgage payment for eight days.

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Complaint ¶ 61.

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shall … [f]ail to credit a payment to the consumer’s loan account

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See 12 C.F.R. § 226.36(c)(1)(i) (“no servicer

See 15 U.S.C. § 1601, et seq., and 12 C.F.R. § 226.36(c)(1).

The court notes that 15 U.S.C. § 1639g provides that “A
creditor or servicer of a home loan shall send an accurate payoff
balance within a reasonable time, but in no case more than 7
business days, after the receipt of a written request for such
balance from or on behalf of the borrower”).

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The cited regulation is a part of “Regulation Z,” Subpart E,
originally promulgated by the Board of Governors of the Federal
Reserve System “to implement the federal Truth in Lending Act.”
See 12 C.F.R. § 226.1 (Regulation Z: authority, purpose and
coverage); Home Funds Direct v. Monroy (In re Monroy), 650 F.3d
1300, 1301 (9th Cir. 2011) (“As authorized by TILA, on October 1,
2009, new 12 C.F.R. § 226.36(c)(1)(iii) went into effect (also
known as part of ‘Regulation Z’),” and “The Federal Reserve Board
of Governors was authorized to promulgate Regulation Z under 15
U.S.C. § 1604(a)”). It appears that responsibility for enforcing
Regulation Z now lies with the U.S. Consumer Financial Protection
Bureau (“CFPB”). See 76 Fed. Reg. 79,768 (December 22, 2011)
(effective December 31, 2011).

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as of the date of receipt”).16

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posting delay caused him to be liable for a late fee of $48.43.

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Complaint ¶ 61.

Plaintiff alleges that this

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A.

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Defendants BANA and BAC Home Loans move to dismiss both

“Vague,” “Incomplete” and “Generic” Allegations.

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parts of this claim because the allegations “are vague and

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incomplete,” ECF No. 96 at 20, and because the Complaint contains

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only “generic allegations of a statutory violation, unsupported

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by facts,” ECF No. 96 at 19.

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In fact, plaintiff’s allegations of

defendants’ Regulation Z violations are clear and very specific.

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Plaintiff alleges that on a specified date, November 9,

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2011, he called specified defendants, “both QLS and [BANA],” and

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requested a specified piece of information, namely “the payoff

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amount necessary to redeem his home, i.e. ‘an accurate statement

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of the total outstanding balance.’”

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failure to respond is alleged to violate Regulation Z, which

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makes it unlawful for those defendants to fail to provide the

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above-specified information in a timely manner, once requested.

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See 12 C.F.R. § 226.36(c)(1)(iii).

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Complaint ¶ 60.

This

Plaintiff further alleges that on a specified date, December

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13, 2010, “defendant [BAC Home Loans] received plaintiff’s

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payment” of a specified amount, namely $968.57.

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Plaintiff further alleges that the payment “was for the full

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monthly amount due on the loan.”

Id.

Complaint ¶ 61.

Plaintiff goes on to

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The court notes that 15 U.S.C. § 1639f provides that “no
servicer shall fail to credit a payment to the consumer's loan
account as of the date of receipt.”

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allege that BAC Home Loans delayed posting that payment until a

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specified date, namely, December 21, 2010, eight days later.17

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Id.

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conduct violates, namely, 12 C.F.R. § 226.36(c)(i), which makes

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it unlawful for a servicer to “[f]ail to credit a payment to the

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consumer’s loan account as of the date of receipt.”

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The Complaint specifies the legal provision that this

Defendants do not explain what is “vague,” “incomplete” or

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“generic” about these allegations, or what additional information

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they would need in order to understand and respond to the claim.

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This court finds that there is nothing vague, incomplete or

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generic about these allegations.

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B.

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Failure To Provide Pay-Off Balance.
1.

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Defendant QLS.

The court adopts the recommendation of the Magistrate Judge

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that the TILA/Regulation Z claim against QLS be dismissed, but

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will do so without leave to amend.

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to set out its reasoning.

This court writes separately

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Defendant QLS asserts that it cannot be liable for the

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failure to provide a payoff balance because it is not a “lender,”

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citing Chow v. Aegis Mortg. Corp., 286 F. Supp. 2d 956 (N.D.

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Ill. 2003) (“The only parties who can be liable for Truth in

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Lending Act (“TILA”) violations are the original creditor, 15

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U.S.C. § 1640, and assignees of that creditor, 15 U.S.C. §

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1641”).

QLS does not mention 12 C.F.R. § 226.36(c)(1), upon

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The Complaint contains an error that has the delay extending to
“December 21, 2012.” Defendants’ brief makes clear that they
understand that this was just an error, and that the payment was
allegedly delayed 8 days.

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which plaintiff’s claim rests, which specifically addresses

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“[s]ervicing practices,” and which specifically prohibits the

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“servicer” from failing to provide the payoff balance to the

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borrower within a reasonable time after being asked for it.

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12 C.F.R. § 226.36(c)(1)(iii).

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See

QLS does not explain why it is exempted from liability for

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violations of Regulation Z that are specifically addressed to it

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as a servicer.18

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of the Complaint’s allegations, leaving it to the Magistrate

Rather, it has simply ignored the plain language

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Judge and this court to figure out, without any input from the

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parties, whether plaintiff may have a claim against a servicer

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under the plain language of Regulation Z.

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Nevertheless, as QLS does argue, the governing statute here,

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TILA, provides for civil liability only against the creditor and

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its assignee.

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to comply with any requirement imposed under this part … is

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liable”) (emphasis added) & 1641 (liability of assignees of

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creditors).19

See 15 U.S.C. §§ 1640(a) (“any creditor who fails

This court knows of no principle that would permit

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The court notes that the district courts are divided over
whether there is an independent private right of action under
Regulation Z. See New Mexico ex rel. King v. Capital One Bank
(USA) N.A., ___ F. Supp. 2d ___, 2013 WL 5944087 at *7
(D.N.M. 2013) (finds private right of action); Purcell v.
Universal Bank, N.A., 2003 WL 1962376 at *3 n.2 (E.D. Pa. 2003)
(same); Runkle v. Federal Nat. Mortg. Ass'n, 905 F. Supp. 2d
1326, 1332 (S.D. Fla. 2012) (same). Contra, Kievman v. Federal
Nat. Mortg. Ass'n., 901 F. Supp. 2d 1348, 1353 (S.D. Fla. 2012)
(no private right of action).
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At least one court has resolved the apparent dilemma created by
a regulation that imposes an obligation on the servicer, under a
statute that imposes a liability only against the creditor, by
saying that the creditor is liable for the servicer’s violation.
See Runkle, 905 F. Supp. 2d at 1332-33 (creditor’s assignee may
12

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an implementing regulation to create a liability that is broader

2

than, or not even contemplated by, the governing statute.

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contrary,

To the

The
rulemaking
power
granted
to
an
administrative
agency
charged
with
the
administration of a federal statute is not
the power to make law.
Rather, it is “‘the
power to adopt regulations to carry into
effect the will of Congress as expressed by
the statute.’”

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7
8
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Ernst & Ernst v. Hochfelder, 425 U.S. 185, 212-214 (1976)

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(quoting Dixon v. United States, 381 U.S. 68, 74 (1965)).

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Therefore, even if the regulation creates a private right of

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action, “its scope cannot exceed the power” granted to the Board

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of Governors (or the CFPB), by the governing statute.

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U.S. at 214.

Ernst, 525

Accordingly, this claim will not lie against QLS, which is

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16

alleged to be a loan servicer, not a creditor or lender.20

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Complaint ¶ 10 (QLS “is in the business of acting as a debt

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collector, loan servicer, and foreclosure trustee”).

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2.

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See

Defendants BANA and BAC Home Loans.

Defendants BANA and BAC Home Loans argues that the claim is

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vague, incomplete and generic.

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discussed above, the allegations are sufficiently specific.

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also argue that the claim is barred by the statute of limitations

See ECF No. 96 at 19-20.

As
They

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be held liable for the loan servicer’s RESPA violation, otherwise
the loan servicer could violate Regulation Z with impunity,
leaving both it and the creditor immune from liability).
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Since the claim must be dismissed, there is no need for the
court to address QLS’s statute of limitations argument.

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since the loan documents were signed in 2001.

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is based upon conduct alleged to have occurred in 2010 and 2011.

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The limitations argument fails.

However, the claim

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C.

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Defendant BAC Home Loans asserts that it is not liable for

Failure To Credit Payment – BAC Home Loans.

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the alleged failure to post plaintiff’s December 13, 2010

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mortgage payment in a timely manner, because the claim is “time

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barred after December 2011.”

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arguments.

Defendant makes two limitations

First, it asserts that the TILA and Regulation Z

10

claim is time-barred because the claim is based upon loan

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documents that were signed in 2001.

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Magistrate Judge’s findings and recommendation that the Complaint

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not be dismissed on this basis.

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The court adopts the

See ECF No. 123 at 23-24.

Second, defendant asserts that the Second Amended Complaint,

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which first explicitly asserted a claim under TILA and

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Regulation Z, was filed in 2012, more than one year after the

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delayed posting.21

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filed on November 7, 2011, within the one-year limitations

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period.

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he [plaintiff] made on December 10, 2010, was received” by BAC

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Home Loans, but that defendants “specifically held the December

Plaintiff’s original complaint, however, was

See ECF No. 1.

That complaint alleges that “the payment

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BANA and BAC Home Loans also assert that the claim is
conclusory and internally inconsistent. There is no real
explanation of this argument and frankly, the court does not
understand it. Plaintiff clearly alleges that defendants did not
post his December 2010 payment for eight days, rather than
posting it immediately as required by Regulation Z. As a result
of their own delay, defendants charged plaintiff a late fee. The
court does not view these allegations as being conclusory,
unclear or internally consistent.

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10 payment and did not credit it until December 21, 2010.”

2

No. 1 ¶ 67 (emphasis in text).

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was intentionally done … to produce a knowingly false and

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inflated picture of Plaintiff’s timely payment under the

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contract.”

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by stating that Defendants’ actions “violated Federal and State

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debt collection laws ….”

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November 2011 expressly sets out the transactions and conduct

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that give rise to plaintiff’s TILA and Regulation Z claim.

10

It goes on to allege that “this

Id. (emphases in text).

Id.

ECF

It concludes this allegation

Thus, the original complaint of

Under these circumstances, the “relation back” doctrine

11

applies.

12

pleading relates back to the date of the original pleading when …

13

the amendment asserts a claim or defense that arose out of the

14

conduct, transaction, or occurrence set out – or attempted to be

15

set out – in the original pleading”).22

16

failure to explicitly mention the statute or regulation does not

17

prevent him from taking advantage of the relation back doctrine.

Fed. R. Civ. P. 15(c)(1)(B) (“An amendment to a

The pro se plaintiff’s

The claim is not time-barred.23

18
19

III. CLAIM THREE – FDCPA & ROSENTHAL ACT

20

A.

21

Plaintiff alleges that BANA, BAC Home Loans and QLS violated

Fair Debt Collection Practices Act (“FDCPA”)

22
23

22

Accordingly, the court does not adopt the Magistrate Judge’s
findings or recommendation on this point.

24
23

25
26
27

Defendants also assert that the claim based upon their alleged
failure to provide a payoff statement pursuant to plaintiff’s
November 9, 2011 request, is barred by plaintiff’s “failure to
allege tender.” The “tender” defense is frivolous, as it has
nothing to do with this case, inasmuch as the TILA claim does not
seek rescission.

28
15

1

the federal Fair Debt Collection Practices Act (“FDCPA”), 15

2

U.S.C. §§ 1692e and 1692g.

3

Section 1692e prohibits “debt collectors” from using any

4

“false, deceptive, or misleading representation or means in

5

connection with the collection of any debt.”

6

1692e(1).

7

represent or imply “that any individual is an attorney or that

8

any communication is from an attorney.”

9

They also may not falsely represent “the character, amount, or

10
11

15 U.S.C. §

Among other things, debt collectors may not falsely

legal status of any debt.”

15 U.S.C. § 1692e(3).

Id., § 1692e(2)(A).

Section 1692g requires a debt collector to provide, upon

12

request, “the name and address of the original creditor, if

13

different from the current creditor.”

14
15

1.

15 U.S.C. § 1692g.

BANA and BAC Home Loans.

Defendants BANA and BAC Home Loans assert that they are

16

categorically exempt from the FDCPA because they are not “debt

17

collectors.”

18

“originator” of a debt the person is trying to collect.

19

U.S.C. § 1692a(6)(F)(ii); De Dios v. International Realty &

20

Investments, 641 F.3d 1071, 1074 (9th Cir. 2011) (“the person who

21

originated the debt, such as a creditor to whom the debt was

22

originally owed, is not considered a debt collector”).

23

Complaint alleges that BANA is the originator of the mortgage at

24

issue here.

25

the Magistrate Judge’s finding and recommendation that BANA be

26

dismissed from the FDCPA claims because it is categorically

27

exempt as a “creditor.”

The FDCPA exempts from its provisions the

See Complaint ¶ 16.

28
16

15

The

Accordingly, the court adopts

1

The court adopts the Magistrate Judge’s recommendation that

2

BAC Home Loans also be dismissed from the FDCPA claim, but not

3

because BAC Home Loans is categorically exempt from the FDCPA

4

based upon its status as a mortgage loan servicer.

5

the Ninth Circuit, the legislative history shows that “mortgage

6

service companies” are only exempt “‘so long as the debts were

7

not in default when taken for servicing.’”

8

1075 n.3.

9

According to

De Dios, 641 F.3d at

In fact, the FDCPA specifically exempts a person collecting

10

a debt “which was not in default at the time it was obtained by

11

such person.”

12

1076 (“International Realty is exempt from the definition of a

13

‘debt collector’ under § 1692a(6)(F)(iii) because it obtained the

14

right to collect De Dios's rent before the debt was contractually

15

overdue”).

16

servicer of the mortgage “in November 2009,” before any alleged

17

arrearage occurred.

18

Loans, whether or not it is a “debt collector,” is exempt from

19

plaintiff’s FDCPA claims.24

20

15 U.S.C. § 1692a(6)(F)(iii); De Dios, 641 F.3d at

The Complaint alleges that BAC Home Loans became the

2.

Complaint ¶ 21.

Accordingly, BAC Home

QLS.

21

QLS asserts that “Plaintiff fails to support his conclusory

22

statement that Quality is a debt collector within the meaning of

23

the FDCPA.”

24

collector to be:

25

24

26
27

QLS Motion at 13.

The FDCPA defines a “debt

The court notes, however, that BAC Home Loans’ correspondence,
attached as exhibits to the Complaint, states that “BAC Home
Loans Service, LP is required by law to inform you that this
communication is from a debt collector.” See Exh. H (ECF
No. 91-1) at 41.

28
17

1

any person who uses any instrumentality of
interstate commerce or the mails in any
business the principal purpose of which is
the collection of any debts, or who regularly
collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to
be owed or due another.

2
3
4
5
6

15 U.S.C. § 1692a(6).

The Complaint alleges that QLS “is in the

7

business of acting as a debt collector.”

8

Complaint also alleges that QLS is a “‘debt collector’” as

9

defined by 15 U.S.C. § 1692A(6), and that it is “not exempt from

Complaint ¶ 10.

Complaint ¶ 64.

The

10

the requirements of the FDCPA.”

In addition,

11

the Complaint alleges that QLS was “trying to collect a debt,”

12

namely, the mortgage at issue here, and that some of the

13

communications with QLS took place over the telephone, an

14

instrument of interstate commerce.

15

to QLS), 67 (QLS is trying to collect a debt).

Complaint ¶¶ 60 (phone call

These allegations, standing alone, are sufficient to allege

16
17

that QLS is a debt collector within the meaning of the FDCPA, for

18

purposes of this dismissal motion.25

19

however, by attaching a communication from QLS to plaintiff.

The Complaint goes further,
See

20
21
22
23
24
25
26
27

25

There are 9 separate exceptions to the definition of “debt
collector” set forth at 15 U.S.C. § 1692a(6)(A)-(E) and
F(i)-(iv). Plaintiff need not set forth facts showing that QLS
is not exempt pursuant to each and every one of these exceptions,
as they are in the nature of affirmative defenses. Accord, Scott
v. Jones, 964 F.2d 314, 316 (4th Cir. 1992) (“Jones asserted the
affirmative defense that he was not a “debt collector” as defined
in the FDCPA, and therefore was not in violation of that
statute”); Murphy v. Stephens & Michaels Associates, Inc. 2011
WL 1465761 at *1 (S.D. Cal. 2011) (“whether Defendant falls
within an exception to the ‘debt collector’ definition under 15
U.S.C. Section 1692a is an affirmative defense”).

28
18

1

Exhibit P (“Notice of Trustee’s Sale”).

2

states, in bold, capital letters:

3

THIS NOTICE IS SENT FOR THE PURPOSE OF
COLLECTING A DEBT.
THIS FIRM IS ATTEMPTING
TO COLLECT A DEBT ON BEHALF OF THE HOLDER AND
OWNER OF THE NOTE. ANY INFORMATION OBTAINED
BY OR PROVIDED TO THIS FIRM OR THE CREDITOR
WILL BE USED FOR THAT PURPOSE.

4
5
6
7

Exhibit P (ECF No. 91-1) at 66.26
QLS goes on to argue that the Complaint fails to allege that

8
9

The communication

it engaged in any “unfair practices.”

QLS Motion at 13.

The

10

Complaint, in fact, alleges that QLS made a false, deceptive, or

11

misleading representation in connection with its efforts to

12

collect a debt, in violation of 15 U.S.C. § 1692e.

13

the Complaint alleges that QLS falsely denied that it could give

14

plaintiff information about the debt, and also, that “‘only the

15

lender could postpone the sale.’”

16

text).

17

lender’s employee told plaintiff that he had to get the

18

information from QLS, and that “‘only the trustee [QLS] could

19

postpone the sale.’”

20

is nothing conclusory or vague about these allegations, which

21

plainly point to an unfair credit collection practice.27

Specifically,

Complaint ¶ 36 (emphasis in

Yet, when plaintiff called the lender that same day, the

Complaint ¶ 37 (emphasis in text).

There

22
23
24
25
26
27

26

The court is not ruling on whether this admission is
conclusive. However, the admission is certainly sufficient to
put the burden on QLS to establish why it is not a debt
collector.
27

The court does not adopt the Magistrate Judge’s findings and
recommendation that FHLMC be dismissed from the FDCPA claim,
because FHLMC, which is represented by counsel, has not moved to
dismiss the claim.

28
19

1
2

Accordingly, the claim alleging that QLS violated 15 U.S.C.
§ 1692e(2)(A) & (3) will not be dismissed.

3

B.

4

Plaintiff alleges that BANA violated the Rosenthal Fair Debt

Rosenthal Fair Debt Collection Practices Act.

5

Collection Practices Act (“Rosenthal Act”), Cal. Civ. Code

6

§§ 1788, et seq., by falsely referring to QLS, the entity it was

7

referring plaintiff to in order to resolve the foreclosure, as

8

“the attorneys.”

9

Complaint ¶ 68.

BANA moves to dismiss solely on the grounds that it is

10

exempt from the Rosenthal Act because it is a mortgage “lender[]

11

and/or servicer[].”

12

incorrectly relies on the federal statute to argue that it is

13

exempt under the state law.

14

Rosenthal Act where this asserted exemption can be found, and

15

cites no cases decided under the Act that stand for this

16

proposition.28

17

the Rosenthal Act.

18

As the Magistrate Judge points out, BANA

BANA cites no provision of the

BANA has failed to show that it is exempt under

Plaintiff alleges that BANA is a “debt collector” pursuant

19

to Cal. Civ. Code 1788.2 of the Rosenthal Act.

20

defines “debt collector” broader than the FDCPA does, by

21

including persons collecting their own debts, whereas such

22

persons are expressly exempted under the FDCPA.

That provision

Compare Cal.

23
24
25
26
27

28

BANA cites Caballero v. Ocwen Loan Serv., 2009 WL 1528128 at *1
(N.D. Cal. 2009) and Scott v. Wells Fargo Home Mortg. Inc., 326
F. Supp. 2d 709, 718 (E.D. Va.), aff’d mem., 67 Fed. Appx. 238
(4th Cir. 2003), both of which are about the FDCPA, not the
Rosenthal Act. It also cites Ines v. Countrywide Home Loans,
Inc., 2008 WL 2795875 *3 (S.D. Cal. 2008) which defines “debt
collectors” in the context of the FDCPA, not the Rosenthal Act.

28
20

1

Civ. Code § 1788.2(c) (“The term “debt collector” means any

2

person who, in the ordinary course of business, regularly, on

3

behalf of himself or herself or others, engages in debt

4

collection”) (emphasis added), with 15 U.S.C. § 1692a(6) (“The

5

term ‘debt collector’ means any person who … regularly collects

6

or attempts to collect … debts owed or due or asserted to be owed

7

or due another”) (emphasis added).

8
9

Accordingly, the court adopts the Magistrate Judge’s finding
that BANA is not exempt under the Rosenthal Act.

See ECF No. 123

10

at 31.

11

the claim be dismissed for lack of specificity.

12

the Complaint specifically alleges that BANA falsely referred to

13

QLS as “the attorneys,” conduct that is expressly made unlawful

14

by the Rosenthal Act.

15

(prohibiting a debt collector from making “[a]ny false

16

representation that any person is an attorney or counselor at

17

law”).

18

IV.

19
20

However, the court does not adopt the recommendation that
As noted above,

See Cal. Civ. Code § 1788.13(b)

CLAIM 4 – CAL. CIV. CODE § 2954(a)(1)

Plaintiff alleges that BAC Home set up an illegal escrow
account against his mortgage.29

21

California law provides that:

[n]o … account for payment of … insurance
premiums or other purposes relating to the
property shall be required as a condition of
a … loan secured by a deed of trust or
mortgage
on
real
property
[except
in
specified situations].

22
23
24
25
26
27

29

The Complaint is clear that BAC Home is responsible for this
alleged conduct, but it is unclear whether any of the other
defendants mentioned there are responsible. The court interprets
the claim to be against BAC Home only.

28
21

1

Cal. Civ. Code § 2954(a)(1).

2

account “established in violation” of Section 2954(a)(1) “is

3

voidable, at the option of the purchaser or borrower.”

4

Id.

5

It further provides that any such

The court adopts the Magistrate Judge’s findings and

6

recommendation that Claim 4 not be dismissed, and it will proceed

7

against BAC Home only.

8

V. CLAIM 5 – FRAUD, NEGLIGENT MISREPRESENTATION & CONSPIRACY

9

A.

10

Fraud at the closing.
“The elements of fraud, which give rise to
the
tort
action
for
deceit,
are
(a) misrepresentation (false representation,
concealment, or nondisclosure); (b) knowledge
of falsity (or ‘scienter’); (c) intent to
defraud,
i.e.,
to
induce
reliance;
(d) justifiable reliance; and (e) resulting
damage.” (5 Witkin, Summary of Cal.Law (9th
ed. 1988) Torts.

11
12
13
14
15
16

See ECF No. 123 at 32-34.

Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996).

17

Plaintiff alleges that BANA and BAC Mortgage committed fraud

18

in connection with the creation of his mortgage, at the end of

19

January 2001.30

20

with the closing unless BANA agreed that no “escrow account”

21

would ever be placed against the property (other than the initial

22

escrow required by law since his down-payment was under 20% of

23

the purchase price).31

Plaintiff alleges that he refused to go forward

Complaint ¶¶ 73 & 81 (“Plaintiff stopped

24
30

25
26
27
28

This claim is alleged only against BANA and BAC Mortgage, as
they are the only defendants alleged to have “tricked” plaintiff
into signing the modified documents “knowing full well that they
were not going to honor the modified terms regarding any future
escrow account.” Complaint ¶ 86.
31

The initial escrow account was closed after the home was re22

1

the entire purchase of the property at his final closing

2

paperwork signing on January 30, 2001 and was ready and willing

3

to cancel it had [BANA], BAC Mortgage authorized employees, not

4

agreed to his demand of ‘absolutely no escrow accounts ever for

5

hazard insurance or property taxes’”).

6

that this was an oral agreement that was reduced to a “written

7

mutual agreement” at the closing.

8
9

The Complaint alleges

Complaint ¶ 73.

The Complaint further alleges that BANA (through its agent,
Susan Birge), had plaintiff make changes to the “closing

10

paperwork” before signing, specifically, “forms BA 174 and

11

BA084,” assuring him that the changes to those documents would

12

have the effect that he wanted, namely, it would prevent any

13

future escrow account from being placed against the mortgage.

14

Complaint ¶¶ 82-83.

15

BANA’s representations, he went forward with the closing, even

16

though he “could easily have gone to another lender” if BANA had

17

not agreed to the modifications prohibiting future escrow

18

accounts.

19

Plaintiff alleges that in reliance upon

Complaint ¶ 83.

The Complaint further alleges that BANA’s statements were

20

misrepresentations, because it “had no intention” of abiding by

21

the representations it had made regarding the promise of “no

22

escrow account ever for the remainder of the loan.”

23

¶ 82.

24

misrepresentation until July 2010, when he discovered that BANA

25

and others had “created an escrow account on Plaintiff’s loan”

26

the month before.

Plaintiff alleges that he did not discover the

Complaint ¶¶ 84 & 86.

27
28

Complaint

appraised.

See Complaint ¶¶ 20 & 21.
23

Finally, plaintiff

1

alleges that the creation of this escrow account was the start of

2

all the harm that he complains of now.

3

BANA moves to dismiss this claim because (1) it is barred by

4

the three-year statute of limitations, and (2) it is not specific

5

enough.

6

1.

7

Limitations.

Fraud claims under California law are subject to a three-

8

year statute of limitations.

9

However, the fraud claim “is not deemed to have accrued until the

Cal. Code Civ. P. § 338(d).

10

discovery, by the aggrieved party, of the facts constituting the

11

fraud or mistake.”

12

did not discover BANA’s deceit until July 2010, when the escrow

13

account – which BANA promised in 2001 would never be created –

14

was created.

15

court should reject plaintiff’s assertion that the limitations

16

period is tolled until he discovers the fraud, and the court

17

knows of none.

18

2.

19

Id.

Plaintiff specifically alleges that he

Complaint ¶ 84.

Defendant offers no reason the

Specificity.

As recounted above, the complaint sets forth with

20

particularity exactly what misrepresentations plaintiff is

21

challenging, namely, that no escrow account (other than the

22

initial PMI escrow account) would ever be placed against

23

plaintiff’s mortgage account.

24

forth all of the elements of a fraud claim.

25
26

Moreover, those allegations set

The fraud claim is not subject to dismissal, and will
proceed against BANA and BANA Mortgage.32

27
32

28

Accordingly, the court does not adopt the Magistrate Judge’s
findings or recommendations on this issue. See ECF No. 123
24

1

B.

Fraud, Negligent Representation and Deceit in Loan
Modification Activities.

2
3

Plaintiff alleges that in 2010 and 2011, defendant BANA and

4

BAC Home Loans, and others, acting through their agent, defendant

5

Home Retention Group (“HRG”), created a false paper trail

6

relating to his supposed request for a loan modification through

7

the federal Home Affordable Mortgage Program (“HAMP”) program.

8

Plaintiff denies that he ever applied for loan modification.

9

Specifically, in April or May 2011, HRG sent plaintiff a

10

letter falsely stating that plaintiff “had sent in their loan

11

modification package for the ‘HAMP,’ that he was seeking a home

12

loan modification and was asking for assistance.”

13

¶ 91.

14

falsely stating that it had reviewed plaintiff’s “request for a

15

loan modification” under HAMP, even though plaintiff had never

16

sent in such a request.

17

that plaintiff’s supposed request “was denied because he had not

18

sent in the requested documents.”

19

sent plaintiff a letter falsely stating that it had received

20

plaintiff’s “request for workout assistance,” even though

21

plaintiff had never requested assistance.

22

Plaintiff alleges that defendants sent similar false letters to

23

the HAMP administrator.33

Complaint

On June 28, 2011, BAC Home Loans sent plaintiff a letter

Complaint ¶ 94.

Id.

That letter also stated

On July 1, 2011, BANA

Complaint ¶ 97.

Complaint ¶ 95.

24

According to plaintiff, defendants did all this to collect

25

money from plaintiff that he did not owe, and to create a false

26
27
28

at 36-37.
33
This would serve as the predicate offenses for plaintiff’s RICO
claims, since if true, this conduct violates 18 U.S.C. § 1001
(false statements).
25

1

impression that they had complied with all guidelines permitting

2

them to foreclose.

3

alleges, plaintiff is now disqualified from applying for a loan

4

modification through HAMP.

5

Complaint ¶ 89-97.

As a result, plaintiff

Complaint ¶ 96.

Defendants move to dismiss based on the statute of

6

limitations, since the loan was issued in 2001.

7

for dismissal, as the basis of the alleged fraud claim is conduct

8

that took place in 2010 and 2011.

9

This is no basis

Defendants also move to dismiss asserting that the Complaint

10

is not “specific enough” under Fed. R. Civ. P. 9(b), governing

11

fraud allegations.

12

sufficiently specific to allow defendants to defend themselves.

13

This court finds that the allegations are

However, the Complaint on its fact does not state a claim

14

for fraud or misrepresentation.

15

claim is “deceit,” that is, the victim of the fraud must be

16

deceived, and take action (justifiable reliance) based upon that

17

deceit.

18

were false, thus he was never deceived.

19

allege that he justifiably relied upon the supposed truth of the

20

communications.

21

requires allegations that the victim was deceived and justifiably

22

relied on the deception.

23
24

An essential element of this

Here, plaintiff alleges that he knew that these letters
Moreover, he does not

The claim for negligent misrepresentation also

This portion of the fraud claim will be dismissed for
failure to state a claim.

25

C.

26

Plaintiff alleges that BANA, BAC Home Loans and FHLMC

27

Conspiracy – The HAMP Program.

conspired in the creation of the false paper trail relating to

28
26

1

the HAMP program, discussed above.

2

that there was no viable claim for fraud or misrepresentation

3

against BANA, the only defendant charged with fraud.

4

there can be no claim for civil conspiracy against anyone who

5

allegedly conspired with BANA to inflict a tort that never

6

occurred.

7

This court has already found

Therefore,

There
is
no
separate
tort
of
civil
conspiracy.
The
significance
of
the
allegation is to hold each member of the
conspiracy liable as a joint tortfeasor.
This joint liability does not accrue unless a
wrongful act is carried out and damage
results.

8
9
10
11
12

Robert H. Jacobs, Inc. v. Westoaks Realtors, Inc., 159 Cal.

13

App. 3d 637, 645 (2nd Dist. 1984) (emphasis added).
The claim for conspiracy will therefore be dismissed in its

14
15

entirety, for failure to state a claim.

16

VI.

CLAIM 6 – BREACH OF CONTRACT

20

[T]he elements of a cause of action for
breach of contract are (1) the existence of
the contract, (2) plaintiff's performance or
excuse for nonperformance, (3) defendant's
breach, and (4) the resulting damages to the
plaintiff.

21

Oasis West Realty, LLC v. Goldman, 51 Cal. 4th 811, 821

17
18
19

22

(2011).

Plaintiff alleges that BANA breached the contract (the

23

Deed of Trust) by (1) creating an “unlawful escrow account on

24

Plaintiff’s Mortgage loan,” and (2) failing to credit his

25

payments in a timely manner.

26

////

27

////

28

////
27

1

A.

2

Defendants seek dismissal, asserting that plaintiff failed

BANA and BAC Home Loans.

3

to allege his own performance (and indeed, that he alleged his

4

own non-performance), and failed to allege defendant’s breach.

5

As for plaintiff’s own performance, it appears that

6

plaintiff’s obligation to have a homeowner’s insurance policy

7

arose in May 2001, when plaintiff took out a second mortgage on

8

his home.

9

(9) years, May 2001 until May 2010, BANA acquiesced in

See Complaint ¶ 23.

It further appears that for nine

10

plaintiff’s failure to obtain insurance – or at least, his

11

failure to produce it – finally demanding it in May 2010.

12

Plaintiff accordingly alleges that defendant has waived this

13

provision of the Deed of Trust.

14

alleged complete performance, he has alleged an excuse for non-

15

performance or waiver of performance.

16

the allegation of waiver, and the court will not reject it on its

17

own initiative.

Id.

Thus, while plaintiff has not

Defendant does not address

Defendants assert that plaintiff failed to allege breach.

18
19

That is not so.

20

the Deed of Trust – which he has not attached to the complaint –

21

contains an agreement that BANA would never create an escrow

22

account against his mortgage, other than the initial PMI escrow

23

account.

24

agreement, defendant created an escrow account against his

25

mortgage.34

26

34

27
28

Plaintiff alleges that a written modification to

He further alleges that in breach of that written

The court therefore does not adopt the Magistrate’s finding
that plaintiff is alleging the breach of an oral contract. The
modified contract is allegedly written, although apparently, it
has yet to be produced.
28

1

It does seem that plaintiff’s allegation brushes right up

2

against the “plausibility” standard of Iqbal.

3

believe that a lender would ever agree to such a thing, and it is

4

suspicious that plaintiff has never produced this written

5

modification.35

6

allegations are merely improbable, rather than implausible, and

7

therefore they will survive dismissal.

8

However, it seems to the court that plaintiff’s

[s]ome improbable allegations might properly
be disposed of on summary judgment, but to
dismiss them as frivolous without any factual
development is to disregard the age-old
insight that many allegations might be
“strange, but true; for truth is always
strange, Stranger than fiction.” Lord Byron,
Don Juan, canto XIV, stanza 101 (T. Steffan,
E. Steffan & W. Pratt eds. 1977)).

9
10
11
12
13
14

It is hard to

Denton v. Hernandez, 504 U.S. 25, 33 (1992).

15

B.

16

QLS and Balboa move to dismiss because plaintiff has not

17

QLS and Balboa.

alleged that they were party to any contract with plaintiff.

18
19
20
21
22
23
24
25
26
27

35

Defendant notes that plaintiff has not attached the modified
documents to the complaint. If this matter were being litigated
in a California state court, the failure to set forth the exact
language of the breached contract, or otherwise attached the
contract, might be fatal. See Harris v. Rudin, Richman & Appel,
74 Cal. App. 4th 299, 307 (2nd Dist. 1999) (“If the action is
based on alleged breach of a written contract, the terms must be
set out verbatim in the body of the complaint or a copy of the
written agreement must be attached and incorporated by
reference”). However, this matter is in federal court, where
notice pleading rules govern. See Boland, Inc. v. Rolf C. Hagen
(USA) Corp., 685 F. Supp. 2d 1094, 1102 (E.D. Cal. 2010)
(Karlton, J.) (addressing pleading requirements for breach of
contract claim: “California pleading requirements do not apply in
federal court”).

28
29

1

That is correct, and the court accordingly adopts the Magistrate

2

Judge’s findings and recommendations that the claim be dismissed

3

against QLS and Balboa.

4
5
6
7
8
9

See ECF No. 123 at 39.

VII. DECLARATORY RELIEF
“To qualify for declaratory relief, [a party]
would
have
to
demonstrate
its
action
presented two essential elements: ‘(1) a
proper subject of declaratory relief, and
(2) an
actual
controversy
involving
justiciable
questions
relating
to
[the
party's] rights or obligations.’”

10

Jolley v. Chase Home Finance, LLC, 213 Cal. App. 4th 872, 909

11

(1st Dist. 2013) (quoting Wilson & Wilson v. City Council of

12

Redwood City, 191 Cal. App. 4th 1559, 1582 (2011)).

13

Plaintiff seeks a declaration determining the respective

14

rights of the parties.

15

grounds that it is duplicative of the relief he seeks from the

16

lawsuit as a whole.

17

redundant of [plaintiff’s] other claims,” and will be dismissed

18

for that reason.

19

request for declaratory relief remains in the Complaint as one of

20

the requested elements of relief.

It does appear that “this cause of action is

Jolley, 213 Cal. App. 4th at 909.

21
22
23
24
25
26
27

Defendant seeks to dismiss solely on the

VIII.

However, the

See Complaint page 47.

ACCOUNTING

Plaintiff seeks an accounting of moneys paid and due on the
mortgage transaction.
A cause of action for an accounting requires
a showing that a relationship exists between
the plaintiff and defendant that requires an
accounting, and that some balance is due the
plaintiff that can only be ascertained by an
accounting.

28
30

1

Teselle v. McLoughlin, 173 Cal. App. 4th 156, 179 (3rd

2

Dist. 2009).

3

Defendants seek dismissal solely on the grounds that

4

plaintiff has not alleged that any sums are due to him that would

5

be the subject of an accounting.

6

not so.

7

[defendants] and is entitled to a refund on his mortgage

8

account.”

9

determine the amount of his overpayment.

That is

Plaintiff alleges that “he has actually overpaid

Complaint ¶ 134.

10
11

ECF No. 69 at 28-29.

IX.

Plaintiff seeks an accounting to

CONVERSION

Plaintiff alleges that defendants collected from him “escrow

12

funds” which were to be credited to his mortgage payments

13

(interest and principal) and, to the degree they were surplus,

14

were to be returned to plaintiff.

15

of doing either, plaintiff alleges, defendants wrongfully kept

16

the funds.

17
18
19
20
21
22
23
24

Complaint ¶¶ 136-37.

Instead

Id.
“‘Conversion is the wrongful exercise of
dominion over the property of another.’”
The elements of a claim for conversion are
(1) “the plaintiff's ownership or right to
possession of the property at the time of the
conversion,” (2) “the defendant's conversion
by a wrongful act or disposition of property
rights,”
and
(3) damages.
“It
is
not
necessary that there be a manual taking of
the property,” only “an assumption of control
or ownership over the property, or that the
alleged converter has applied the property to
his [or her] own use.”

25

Prakashpalan v. Engstrom, Lipscomb and Lack, 223 Cal. App. 4th

26

1105, 1135 (2nd Dist. 2014) (citations omitted).

27
28

A cause of action for conversion of money can
be stated only where defendant interferes
31

1

with plaintiff's possessory interest in a
specific, identifiable sum, such as when a
trustee or agent misappropriates the money
entrusted to him. “‘Money cannot be the
subject of a cause of action for conversion
unless there is a specific, identifiable sum
involved, such as where an agent accepts a
sum of money to be paid to another and fails
to make the payment.

2
3
4
5
6
7

Kim v. Westmoore Partners, Inc., 201 Cal. App. 4th 267, 284 (4th

8

Dist. 2011) (citations omitted).

9

Defendant moves to dismiss on the grounds that plaintiff’s

10

right to payment is a “mere contractual one.”

11

This misconceives the claim plaintiff is making.

12

not simply assert that defendants owe him money under the

13

contract.

14

entrusted specific sums of money to defendants, which defendants

15

were to use for a specific purpose – to credit plaintiff’s

16

mortgage account, and return the surplus.

17

asserts that defendants instead took the money entrusted to them,

18

used it to pay fees plaintiff did not owe, and are refusing to

19

return it, or even any surplus after the fees are paid.

20

states a claim for conversion.

Plaintiff does

Rather, he asserts that pursuant to the contract, he

21
22

ECF No. 96 at 29.

X.

Plaintiff further

This

WRONGFUL FORECLOSURE

Plaintiff asserts a claim for wrongful foreclosure, alleging

23

numerous errors and points of unfairness, and also alleging that

24

he has made “full and timely tender of all amounts owed to

25

defendants.”

26
27
28

See Complaint ¶ 147.

Defendant

To obtain the equitable set aside of a
trustee's
sale
or
maintain
a
wrongful
foreclosure claim, a plaintiff must allege
that (1) defendants caused an illegal,
32

1

fraudulent, or willfully oppressive sale of
the property pursuant to a power of sale in a
mortgage or deed of trust; (2) plaintiff
suffered prejudice or harm; and (3) plaintiff
tendered
the
amount
of
the
secured
indebtedness or were excused from tendering.
Recognized exceptions to the tender rule
include when: (1) the underlying debt is
void, (2) the foreclosure sale or trustee's
deed is void on its face, (3) a counterclaim
offsets
the
amount
due,
(4)
specific
circumstances make it inequitable to enforce
the debt against the party challenging the
sale, or (5) the foreclosure sale has not yet
occurred.

2
3
4
5
6
7
8
9
10

Chavez v. Indymac Mortgage Services, 219 Cal. App. 4th 1052, 1062

11

(4th Dist. 2013) (emphasis added) (citations omitted).
Defendant BANA moves to dismiss on the ground that plaintiff

12
13

has not alleged “tender.”

14

plaintiff has alleged “tender.”

15

tender is not required where the claim is for “wrongful

16

foreclosure” where, as here, “the foreclosure sale has not yet

17

occurred.”

18

asserts that plaintiff has not performed under the Deed of Trust

19

by failing to obtain insurance on the property.

20

36

21
22
23
24
25
26
27

This has two problems.

First,

See Complaint ¶ 147.

Chavez, 219 Cal. App. 4th at 1062.36

Second,

BANA also

As discussed

As QLS points out, and as the Magistrate Judge found, a
wrongful foreclosure claim seeking to set aside a foreclosure
sale would be premature where no foreclosure sale had yet
occurred. To the degree federal magistrate judges and district
courts have held that all wrongful foreclosure claims are
premature unless a sale has occurred, this court respectfully
disagrees. The California courts acknowledge the validity of
claims for wrongful foreclosure prior to the foreclosure sale
where, as here, defendants are alleged to have violated laws
intended to avoid foreclosure. See Pfeifer v. Countrywide Home
Loans, Inc., 211 Cal. App. 4th 1250, 1280 (1st Dist. 2012)
(“[c]ourts, however, have not required tender when the lender has
not yet foreclosed and has allegedly violated laws related to
avoiding the necessity for a foreclosure”).

28
33

1

above, plaintiff has credibly alleged that BANA has waived

2

plaintiff’s performance.

3

Defendant QLS moves to dismiss because plaintiff has not

4

alleged it did anything unlawful, and because it acted in good

5

faith.

6

the things he says went wrong with the Notice of Trustee’s Sale,

7

and why he thinks they violate specified sections of California

8

law.

9

forth which allegations are not legally sufficient, and why.

However, plaintiff has set out in excruciating detail all

If QLS wishes to get this claim dismissed, it must set

10

This court will not, on its own initiative, try to identify the

11

allegations QLS thinks are insufficient and why.37

12

XI.

BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING

13

Plaintiff asserts that all defendants breached the covenant

14

of good faith and fair dealing in relation to the Deed of Trust.

15

Broadly stated, that covenant requires that neither party do

16

anything that will deprive the other of the benefits of the

17

agreement.

18

85, 91 (1995).

19

A.

20
21

Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th

Defendants QLS and Balboa.

The court adopts the Magistrate’s findings and
recommendation that QLS and Balboa be dismissed from this claim

22
23
37

24
25
26
27

This court is aware of its obligation to treat the Complaint
with some liberality, since it is authored by a pro se plaintiff.
However, the motion to dismiss is authored by a party represented
by counsel. Defendant must, accordingly, do the work of getting
the complaint dismissed, if it is to be dismissed, rather than
simply pointing out that it does not like the Complaint, and
demand that this court or the Magistrate Judge do all the
research needed to establish whether the claim is valid or not.

28
34

1

because they are not alleged to be parties to the mortgage

2

agreement.

See ECF No. 123 at 46-47.

3

B.

4

Defendants BANA and BAC Home Loans move to dismiss this

BANA and BAC Home Loans.

5

claim because this claim “is limited to situations in which a

6

fiduciary relationship exists.”

7

the Magistrate Judge found, in California, every contract carries

8

with it an implied covenant

9

See, e.g., Wilson v. 21st Century Ins. Co., 42 Cal. 4th 713, 720

ECF No. 96 at 30.

However, as

of good faith and fair dealing.38

10

(2007) (“The law implies in every contract … a covenant of good

11

faith and fair dealing”); Freeman & Mills, Inc. v. Belcher Oil

12

Co., 11 Cal. 4th 85, 91 (1995) (“‘It is well settled that, in

13

California, the law implies in every contract a covenant of good

14

faith and fair dealing.’”) (emphasis in text); Carma Developers

15

(Cal.), Inc. v. Marathon Development California, Inc., 2 Cal. 4th

16

342, 371-72 (1992) (same).

17

BANA also asserts that the Complaint does not allege that

18

defendants have frustrated plaintiff’s ability to obtain the

19

benefits of the original loan.

20

alleges that by placing the escrow account against his mortgage,

21

BANA has prevented plaintiff from paying off his mortgage in the

22

manner he anticipated and agreed to, at the time he signed the

This is also not so.

Plaintiff

23
24
25
26
27

38

The Magistrate Judge recommended that the claim be found to be
barred by the statute of limitations. The court will not adopt
that recommendation however, as it is an affirmative defense
which neither defendant raised in their motion. In any event,
the claim arose not upon the signing of the Deed of Trust in
2001, but upon the alleged breach of the covenant in 2010 or
2011.

28
35

1

modified mortgage agreement.

2

This claim will not be dismissed against BANA.39

3

XII. NEGLIGENCE

4

The court adopts the Magistrate Judge’s findings and

5

recommendation that the negligence claim be dismissed as to BANA,

6

BAC Home Loans and Balboa, except that the claim will be

7

dismissed with prejudice.40

8

XIII.

9

See ECF No. 123 at 48-49.

INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

The court adopts the Magistrate Judge’s findings and

10

recommendation that the claim for intentional infliction of

11

emotional distress be dismissed as to BANA, BAC Home Loans,

12

Balboa and QLS, except that the claim will be dismissed with

13

prejudice.

14

See ECF No. 123 at 49-50.
XIV. CALIFORNIA’S FAIR BUSINESS LAW

15

Defendants move to dismiss the claim under Cal. Bus. & Prof.

16

Code § 17200 on the ground that the court should dismiss all the

17

underlying claims of unfair or unlawful practices.

18

those claims have survived dismissal, this claim will not be

19

dismissed, to the degree it is predicated on a surviving claim.

20

XV.

21

Since some of

CIVIL RICO

The court adopts the Magistrate Judge’s findings and

22

recommendation that the civil claim under the Racketeer

23

Influenced and Corrupt Organizations Act (“RICO”), be dismissed

24

as to BANA, BAC Home Loans, Balboa and QLS, except that the claim

25
26

39

BAC Home Loans is not alleged to have been a party to the
contract, so it will also be dismissed.

27
40

Defendant QLS did not move to dismiss this claim.

28
36

1

will be dismissed with prejudice.41

2

See ECF No. 123 at 28-29.

CONCLUSION

3

For the reasons set forth above:

4

1.

The motion of BANA, BAC Home Loans, Balboa and QLS to

5

dismiss the complaint in its entirety for failure to comply with

6

Rule 8 is DENIED;

7

2.

The motion of BANA and BAC Home Loans, to dismiss the

8

RESPA claim (Claim One), under 12 U.S.C. § 2605(e) and 24 C.F.R.

9

§ 3500.21, is DENIED, as plaintiff has properly alleged that

10

defendants failed to respond to three QWRs in a timely manner;

11

3.

The motion of BANA and BAC Home Loans, to dismiss the

12

RESPA claim (also Claim One), under 12 U.S.C. § 2609 AND 24

13

C.F.R. § 3500.17, is GRANTED without leave to amend, as there is

14

no private right of action.

15
16

Accordingly, this portion of Claim One is DISMISSED in its
entirety, with prejudice;

17

4.

The motion of QLS, to dismiss the TILA and Regulation Z

18

claim (Claim Two), is GRANTED without leave to amend, as the

19

claim only lies against a creditor or lender.

20
21

Accordingly, this portion of Claim Two (against QLS) is
DISMISSED, with prejudice;

22

5.

The motion of BANA and BAC Home Loans to dismiss the

23

TILA and Regulation Z claim (also Claim Two), is DENIED, as the

24

allegations that defendants failed to provide a pay-off balance,

25

and failed to credit plaintiff’s payment in a timely manner, are

26
27
41

Defendant HRG did not move to dismiss this claim.

28
37

1

sufficiently pled, and the claim is not barred by the statute of

2

limitations;

3

7.

The motion of BANA and BAC Home Loans to dismiss the

4

FDCPA claim (Claim Three), is GRANTED without leave to amend, as

5

BANA is categorically exempt as a “creditor,” and BAC Home Loans

6

is exempt because under the facts alleged in the Complaint, it is

7

not a “debt collector.”

8
9
10

Accordingly, this portion of Claim Three (against BANA and
BAC Home Loans) is DISMISSED, with prejudice;
8.

The motion of QLS to dismiss the FDCPA claim (also

11

Claim Three), is DENIED, as the Complaint sufficiently alleges

12

that QLS is a “debt collector,” and sufficiently alleges conduct

13

that violates the FDCPA;

14

9.

The motion of BANA to dismiss the Rosenthal Act claim

15

(also Claim Three) is DENIED, because BANA is not exempt and the

16

Complaint sufficiently alleges that BANA falsely referred to QLS

17

as “the attorneys;”

18

10.

The motion of BANA to dismiss the claim under Cal. Civ.

19

Code § 2954(a)(1) (Claim Four), is DENIED for reasons set forth

20

by the Magistrate Judge;

21

11.

The motion of BANA to dismiss the fraud claim

22

(Claim Five), is DENIED, as it is not barred by the statute of

23

limitations and sufficiently pleads a claim for fraud;

24
25

12.

The motion of BANA, BAC Home Loans and QLS to dismiss

the Negligent Misrepresentation claim regarding loan modification

26
27
28
38

1

activities (also Claim Five) is GRANTED without leave to amend,42

2

as the allegations fail to state a claim.

3
4

Accordingly, this portion of Claim Five is DISMISSED in its
entirety, with prejudice;

5

13.

The motion of BANA and BAC Home Loans to dismiss the

6

conspiracy claim (also Claim Five), is GRANTED without leave to

7

amend, as the allegations fail to state a claim.

8
9

Accordingly, the conspiracy portion of Claim Five is
DISMISSED in its entirety, with prejudice;

10

14.

The motion of BANA to dismiss the breach of contract

11

claim (Claim Six), is DENIED, as the Complaint sufficiently

12

alleges the elements of the claim;

13

15.

The motions of and BAC Home Loans, Balboa and QLS to

14

dismiss the breach of contract claim (also Claim Six), are

15

GRANTED without leave to amend, as plaintiff does not allege any

16

contract with BAC Home Loans, Balboa or QLS.

17
18

Accordingly, this portion of Claim Six (against BAC Home
Loans, Balboa and QLS) is DISMISSED, with prejudice;

19

16.

The motions of BANA, BAC Home Loans, Balboa and QLS to

20

dismiss the claim for declaratory relief (Claim Seven), are

21

GRANTED without leave to amend, as the claim is redundant of the

22

request for relief.

23
24

Accordingly, Claim Seven is DISMISSED in its entirety, with
prejudice;

25
26
27

42

It is theoretically possible that plaintiff could amend his
complaint to state a claim. However, this is plaintiff’s third
complaint in this case, and it does not appear that the pro se
plaintiff is capable of, or willing to, correct his pleadings.

28
39

1

17.

The motion of BANA and BAC Home Loans to dismiss the

2

claim for an accounting (Claim Eight), is DENIED, as the

3

Complaint sufficiently pleads the claim;

4

18.

The motion of BANA and BAC Home Loans to dismiss the

5

conversion claim (Claim Nine), is DENIED, as the Complaint

6

sufficiently pleads the claim;

7

19.

The motions of BANA, BAC Home Loans, Balboa and QLS to

8

dismiss the claim for wrongful foreclosure (Claim Ten), is

9

DENIED, as the Complaint sufficiently pleads the claim;

10

20.

The motion of BANA and BAC Home Loans to dismiss the

11

claim for breach of the covenant of good faith and fair dealing

12

(Claim Eleven), is DENIED, as the Complaint sufficiently pleads

13

the claim;

14

21.

The motions of Balboa and QLS to dismiss the claim for

15

breach of the covenant of good faith and fair dealing (also

16

Claim Eleven), is GRANTED without leave to amend, as the

17

Complaint does not allege they are parties to the contract.

18
19
20

Accordingly, this portion of Claim Eleven (against Balboa
and QLS) is DISMISSED, with prejudice;
22.

The motion of BANA and BAC Home Loans to dismiss the

21

claim for negligence (Claim Twelve), is GRANTED without leave to

22

amend, as the Complaint fails to state a claim;

23
24
25

Accordingly, Claim Twelve is DISMISSED in its entirety, with
prejudice;
23.

The motions of BANA, BAC Home Loans, Balboa and QLS to

26

dismiss the claim for intentional infliction of emotional

27

distress (Claim Thirteen), is GRANTED without leave to amend, as

28

the Complaint fails to state a claim;
40

1
2
3

Accordingly, Claim Thirteen is DISMISSED in its entirety,
with prejudice;
24.

The motions of BANA, BAC Home Loans, Balboa and QLS to

4

dismiss the claim for violation of Cal. Bus. & Prof. Code § 17200

5

(Claim Fourteen), is DENIED to the degree the claim is predicated

6

upon any of the surviving claims discussed above;

7

25.

The motions of BANA, BAC Home Loans, Balboa and QLS to

8

dismiss the claim for civil RICO (Claim Fourteen), is GRANTED

9

without leave to amend, for failure to state a claim;

10
11
12
13

Accordingly, Claim Fifteen is DISMISSED in its entirety,
with prejudice.
This matter is remanded to the Magistrate Judge for further
proceedings.

14

IT IS SO ORDERED.

15

DATED:

May 21, 2014.

16
17
18
19
20
21
22
23
24
25
26
27
28
41