Kirsten v Ocwen Loan Servicing, LLC

Filing 12

ORDER signed by Judge John A. Mendez on 9/20/2013 ORDERING that Defendant's 5 Motion to Dismiss is GRANTED WITH LEAVE TO AMEND. Plaintiff must file hi Amended Complaint or notice of dismissal within twenty (20) days from the date of this Order. Defendant shall file its responsive pleading within twenty (20) days thereafter. (Zignago, K.)

1
2
3
4
5
6
7

UNITED STATES DISTRICT COURT

8

EASTERN DISTRICT OF CALIFORNIA

9
10

DAVID KIRSTEN,

11

14

2:13-cv-01215 JAM-KJN

Plaintiff,

12
13

No.

v.

ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS

OCWEN LOAN SERVICING, LLC, a
Delaware limited liability
company, and DOES 1 through
20, Inclusive,

15
Defendants.
16
17

This matter is before the Court on Defendant Ocwen Loan

18

Servicing, LLC’s (“Defendant”) Motion to Dismiss Plaintiff’s

19

complaint (Doc. #5).

20

opposes the motion (Doc. #7) and Defendant replied (Doc. #10). 1

21

For the reasons set forth below, Defendant’s motion is GRANTED.

Plaintiff David Kirsten (“Plaintiff”)

22
I.

23

FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

24

Plaintiff originally filed this action on May 6, 2013, in

25

San Joaquin County Superior Court against Defendant (Doc. #1).

26
27
28

1

This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled
for August 21, 2013.
1

1

Defendant removed this action to this Court on June 17, 2013 and

2

filed its motion to dismiss on July 1, 2013 (Doc. #5).

3

complaint, Plaintiff alleges three causes of action against

4

Defendant: (1) slander of title;

5

(2) defamation; and (3) unfair credit reporting.

6

In the

Id. ¶¶ 36-51.

In or about December 2007, Plaintiff obtained a mortgage

7

loan from Taylor, Bean & Whitaker Mortgage Corp. (“TBW”) to

8

purchase a property in Lodi, California (“Property”).

9

Plaintiff alleges that he timely made all payments on his loan.

Id. ¶ 5.

10

Id. ¶ 6.

11

bankruptcy, which disrupted TBW’s processing of customer’s loan

12

payments.

13

his payments, TBW failed to timely receive and post his payments

14

for August 2009 and September 2009.

15

In 2009, Plaintiff alleges that TBW filed for

Id. ¶ 7.

Even though Plaintiff allegedly made all

Id.

In 2009, Cenlar Agency, Inc. (“Cenlar”) allegedly began

16

servicing Plaintiff’s loan.

17

2009, Cenlar allegedly sent a Notice of Default to Plaintiff and

18

his tenant at the Property.

19

Cenlar and provided documentation to show that the payments were

20

made.

21

Plaintiff made the payments.

22

Notice of Default on or about July 6, 2010, which Plaintiff

23

disputed and Cenlar again acknowledged that Plaintiff made the

24

payments.

25

Id. ¶ 10.

Id. ¶ 8.

Id. ¶ 9.

On or about December 8,

Plaintiff responded to

Cenlar allegedly acknowledged in a letter that
Id.

Cenlar allegedly sent another

Id. ¶¶ 11-12.

In or about 2010, Defendant allegedly became the loan

26

servicer.

Id. ¶ 13.

Defendant allegedly asserted that

27

Plaintiff was in default on the loan because it did not have a

28

record of his August and September 2009 payments.
2

Id. ¶ 15.

1

Plaintiff allegedly responded and provided documentation again.

2

Id.

3

letter acknowledging the payments.

On February 23, 2011, Defendant allegedly sent Plaintiff a
Id. ¶ 19.

4

One month later, Defendant allegedly reported the loan

5

“past due” because it did not have record of the August and

6

September 2009 payments.

7

declared Plaintiff delinquent on the loan, improperly assessed

8

late fees and other charges, recorded one or more Notice of

9

Default, and falsely reported negative information about him to

Id. ¶¶ 20-21.

As a result, Defendant

10

credit reporting agencies.

11

resolve this problem but Defendant allegedly did not cooperate.

12

Id. ¶¶ 25-26.

13

Id. ¶ 23.

Plaintiff attempted to

Plaintiff allegedly paid the delinquent amount.

Id. ¶ 26.

14

On or about April 16, 2012, Defendant recorded a “Rescission of

15

Notice of Default and Election to Sell under Deed of Trust,”

16

which stopped the foreclosure.

Id.

17
18

II.

OPINION

19

A.

Legal Standard

20

A party may move to dismiss an action for failure to state a

21

claim upon which relief can be granted pursuant to Federal Rule

22

of Civil Procedure 12(b)(6).

23

plaintiff must plead “enough facts to state a claim to relief

24

that is plausible on its face.”

25

556 U.S. 662, 570 (2007).

26

district court must accept all the allegations in the complaint

27

as true and draw all reasonable inferences in favor of the

28

plaintiff.

To survive a motion to dismiss a

Bell Atlantic Corp. v. Twombly,

In considering a motion to dismiss, a

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974),
3

1

overruled on other grounds by Davis v. Scherer, 468 U.S. 183

2

(1984); Cruz v. Beto, 405 U.S. 319, 322 (1972).

3

entitled to the presumption of truth, allegations in a complaint

4

or counterclaim may not simply recite the elements of a cause of

5

action, but must sufficiently allege underlying facts to give

6

fair notice and enable the opposing party to defend itself

7

effectively.”

8

2011), cert. denied, 132 S. Ct. 2101, 182 L. Ed. 2d 882 (U.S.

9

2012).

“First, to be

Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir.

“Second, the factual allegations that are taken as true

10

must plausibly suggest an entitlement to relief, such that it is

11

not unfair to require the opposing party to be subjected to the

12

expense of discovery and continued litigation.”

13

that are mere “legal conclusions” are therefore not entitled to

14

the presumption of truth.

15

(2009) (citing Twombly, 550 U.S. at 555).

16

appropriate when a plaintiff fails to state a claim supportable

17

by a cognizable legal theory.

18

Department, 901 F.2d 696, 699 (9th Cir. 1990).

19

Id.

Assertions

Ashcroft v. Iqbal, 556 U.S. 662, 678
Dismissal is

Balistreri v. Pacifica Police

Upon granting a motion to dismiss for failure to state a

20

claim, a court has discretion to allow leave to amend the

21

complaint pursuant to Federal Rule of Civil Procedure 15(a).

22

“Dismissal with prejudice and without leave to amend is not

23

appropriate unless it is clear . . . that the complaint could not

24

be saved by amendment.”

25

Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

Eminence Capital, L.L.C. v. Aspeon,

26

B.

27

Defendant requests judicial notice of the deed of trust,

28

Judicial Notice

notice of default, assignment of the deed of trust, substitution
4

1

of trustee, and rescission of notice of default.

2

Judicial Notice (“RJN”), Doc. #6, at 2.

3

appropriate for judicial notice because they are public records

4

and are “not subject to reasonable dispute.”

5

201(b).

6

C.

7
8
9

Request for

These documents are

Fed. R. Evid.

Discussion
1.

Unfair Credit Reporting Claim

Defendant argues that Plaintiff’s unfair credit reporting
claim is in essence a claim under the Fair Credit Reporting Act

10

(“FCRA”) and moves to dismiss Plaintiff’s claim because he

11

failed to adequately allege the claim, there is no private cause

12

of action, and the claim is time barred.

13

his claim for unfair reporting arises under the FCRA and

14

California Civil Code Section 1785.25(a) (“Section 1785.25(a)”).

15

Plaintiff also argues that both claims are adequately alleged

16

and not time barred.

17
18

a.

Plaintiff argues that

Failure to State a Claim under the FCRA

Defendant argues that the FCRA claim fails because

19

Plaintiff failed to allege that he first gave written notice of

20

a dispute to the credit reporting agencies (“CRAs”) and that he

21

failed to allege that Defendant knew or should have known that

22

the information was false.

23

with which a plaintiff must plead notification to state a claim

24

under FRCA varies and he requests the Court to either leave this

25

issue to be determined by discovery or allow him leave to amend.

26

Title 15 U.S.C. § 1681s–2(b) outlines the duties of a

Plaintiff argues that the degree

27

furnisher of information after receiving notice of a dispute.

28

While a private right of action is permitted for a violation of
5

1

the § 1681s–2(b) duties, those duties “arise only after the

2

furnisher receives notice of dispute from a CRA; notice of a

3

dispute received directly from the consumer does not trigger

4

furnishers’ duties under subsection (b).”

5

Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009) (citing Nelson

6

v. Chase Manhattan Mortgage Corp., 282 F.3d 1057, 1059 (9th Cir.

7

2002)).

8
9

Gorman v. Wolpoff &

Here, Plaintiff has alleged that he, “through his attorney,
demanded that [Defendant] notify each of the credit reporting

10

agencies . . . that the negative information . . . is false and

11

request that they withdraw such information from his credit

12

report.”

13

informed Defendant that the information was false and demanded

14

Defendant retract the information.

15

allegations, Plaintiff alleges that he notified Defendant, the

16

furnisher of the credit information, of his dispute directly, but

17

does not allege that he reported his dispute to a CRA.

18

Therefore, Plaintiff has failed to allege the requisite

19

notification to state a claim under the FCRA.

20

Compl. ¶ 28.

He also alleges that he repeatedly

Id. ¶ 49.

Based on these

Accordingly, the Court dismisses Plaintiff’s FCRA claim.

21

The Court addresses Defendant’s other two arguments to determine

22

whether leave to amend should be granted.

23

b.

Private Right of Action

24

Defendant contends that Plaintiff’s FCRA claims must be

25

dismissed without leave to amend because there is no private

26

right of action under 15 U.S.C. § 1682s-2(a).

27

sets forth the duty for furnishers of information to provide

28

accurate information to a CRA.

Section 1681s–2(a)

15 U.S.C. § 1681s–2(a).
6

In his

1

complaint, Plaintiff does not specify which provision of the FCRA

2

governs his allegations, but clarifies in his opposition that his

3

claims are limited to § 1681s–2(b).

4

above, a private right action exists under § 1681s–2(b).

5

Therefore, because Plaintiff’s claim is under § 1681s–2(b) and

6

not § 1681s–2(a), the Court finds that Plaintiff may bring his

7

FCRA claim.

8
9

c.

Opp. at 14.

As mentioned

Statute of Limitations FCRA

Defendant also argues that Plaintiff’s FCRA claim must be

10

dismissed without leave to amend because Plaintiff discovered the

11

purported violation in or about 2010 and filed this action in

12

2013 more than 3 years after the discovery of the purported

13

violation.

14

dismissed because dismissal can be granted “only if the assertion

15

of the complaint, read with the required liberality, would not

16

permit the plaintiff to prove the statute had been tolled.”

17

at 14 (citing Cervantes v. City of San Diego, 5 F.3d 1273, 1275

18

(9th Cir. 1993)).

19

Plaintiff argues that the claim should not be

Opp.

A claim under FCRA may be brought “no[] later than the

20

earlier of (1) 2 years after the date of discovery by the

21

plaintiff of the violation that is the basis for such liability;

22

or (2) 5 years after the date on which the violation that is the

23

basis for such liability occurs.”

24

on which liability arises depends on which provision was

25

allegedly violated.”

26

Assistance Agency, SACV 09-0930DOCRNBX, 2009 WL 3710517, at *3

27

(C.D. Cal. Oct. 30, 2009) (quoting Acton v. Bank One Corp., 293

28

F. Supp. 2d 1092, 1097 (D. Ariz. 2003)).

15 U.S.C. § 1681p.

“The date

Forester v. Pennsylvania Higher Educ.

7

A § 1681s-2(b)

1

violation “is triggered only after the consumer notifies the CRA,

2

and the CRA then notifies the furnisher of credit.”

3

Nelson v. Equifax Information Services, LLC, 522 F. Supp. 2d

4

1222, 1231 (C.D. Cal. 2007)).

5

that he notified a CRA or when the notification occurred, the

6

Court cannot determine at this time whether the claim is time

7

barred.

Id. (citing

Because Plaintiff has not alleged

8

Accordingly, for the reasons mentioned above, the Court

9

grants Defendant’s motion to dismiss Plaintiff’s FCRA claim.

10

However, because Plaintiff may be able to allege that he notified

11

a CRA pursuant to § 1681s–2(b) within the statute of limitations,

12

the Court grants Plaintiff leave to amend.

13
14

d.

California Civil Code § 1785.25(a)

Plaintiff argues that his unfair credit reporting claim is

15

also under the California Consumer Credit Reporting Act (“CCRA”),

16

specifically Section 1785.25(a).

17

the complaint that his claim is under the CCRA.

18

Defendant argues that this claim is untimely.

19

Plaintiff does not specify in
Nevertheless,

Section 1785.25(a) provides that “[a] person shall not

20

furnish information on a specific transaction or experience to

21

any consumer credit reporting agency if the person knows or

22

should know the information is incomplete or inaccurate.”

23

Civ. Code § 1785.25(a).

24

limitations for claims under Section 1785.25(a) is three years

25

pursuant to California Civil Procedure Code Section 338(a).

26

at 13.

27

Civil Code Section 1785, which provides that a claim brought

28

under the CCRA must be filed within two years after a plaintiff

Cal.

Plaintiff states that the statute of

Opp.

However, claims under the CCRA are governed by California

8

1

knows or should have known of the violation but no more than

2

seven years after the earliest violation.

3

§ 1785.33.

4

willfully misrepresented any information required under this

5

chapter to be disclosed to a consumer, . . . the action may be

6

brought at any time within two years after the discovery by the

7

consumer of the misrepresentation.”

Cal. Civ. Code

In addition, when “a defendant has materially and

Id.

8

Plaintiff alleges that at “various times in 2010, 2011,

9

2012, and 2013, [Defendant] reported to the credit reporting

10

agencies . . . negative credit information about plaintiff.”

11

Compl. ¶ 47.

12

this claim in 2012, or at the latest February 23, 2013, two years

13

after the latest letter Plaintiff purportedly received from

14

Defendant acknowledging that Plaintiff made all of his payments,

15

but Plaintiff filed passed the statute of limitations.

16

9.

17

information to CRAs several times with the earliest alleged

18

violation being in 2010 and the latest in 2013.

19

Plaintiff filed his claim on May 6, 2013, only transmissions of

20

information before May 6, 2011, are time barred.

21

Defendant argues that Plaintiff should have filed

Reply at

However, according to the allegations, Defendant furnished

Because

Therefore, the Court finds that the alleged violations that

22

occurred in 2010 are time barred, but the alleged violations in

23

2012 and 2013 are not.

24

violations occurred in 2011, the Court cannot determine whether

25

they are time barred at this time.

26

Defendant’s motion to dismiss Plaintiff’s Section 1785.25(a).

27

The Court grants Plaintiff leave to amend to clarify his Section

28

1785.25(a) claim and to specify when in 2011 Defendant furnished

Because it is unclear when the alleged

9

Therefore, the Court grants

1
2

the information to CRAs.
2.

Slander of Title

3

Defendant argues that Plaintiff’s claim for slander of title

4

fails because the recorded documents are privileged publications,

5

and because Plaintiff has failed to alleged facts that he

6

suffered pecuniary damages.

7

For a slander of title claim, Plaintiff must allege the

8

following four elements: (1) a publication, (2) which is without

9

privilege or justification, (3) which is false, and (4) which

10

causes direct and immediate pecuniary loss.

11

v. Mercury Liquors, Inc., 173 Cal.App.4th 1040, 1051 (2009)

12

(citing Howard v. Schaniel, 113 Cal.App.3d 256, 263–264 (1980)).

13
14

a.

Manhattan Loft, LLC

Privilege

Defendant argues that Plaintiff has not sufficiently pled

15

the second element, that is, that the publication was done

16

“without privilege or justification.”

17

Code Section 2924(d), privilege extends to the “mailing,

18

publication, and delivery of notices as required by this section”

19

and to the “[p]erformance of the procedures set forth in this

20

article.” Cal. Civ. Code § 2924(d).

21

of default in a nonjudicial foreclosure is privileged, except

22

when published with malice.

23

C-12-0572 EMC, 2013 WL 4103606, at *5 (N.D. Cal. Aug. 12, 2013).

24

Malice requires “that the publication was motivated by hatred or

25

ill will towards the plaintiff or by a showing that the defendant

26

lacked reasonable grounds for belief in the truth of the

27

publication and therefore acted in reckless disregard of the

28

plaintiff’s rights.”

Under California Civil

Thus, the filing of a notice

Barrionuevo v. Chase Bank, N.A.,

Kachlon v. Markowitz, 168 Cal.App.4th 316,
10

1
2

336 (2008) (citations and internal quotations omitted).
Because Plaintiff premises his claim on the recording of the

3

notice of default (Compl. ¶ 31), which is a privileged

4

publication under Section 2924, Plaintiff must allege that the

5

recording was made with malice. In his opposition, Plaintiff

6

relies on two cases: Sumner Hill Homeowners’ Assn., Inc. v. Rio

7

Mesa Holdings, LLC, 205 Cal.App.4th 999, 1030 (2012), review

8

denied (July 18, 2012), as modified on denial of reh’g (May 30,

9

2012), and Gudger v. Manton, 21 Cal. 2d at 545 (1943).

In Sumner

10

Hill, the Court noted that “slander or disparagement of title

11

occurs when a person, without a privilege to do so, publishes a

12

false statement that disparages title to property and causes the

13

owner thereof some special pecuniary loss or damage.”

14

Cal.App.4th 999, 1030 (citation and internal quotation marks

15

omitted).

16

that an “express finding of lack of good faith, or of actual

17

malice. . . would destroy the privilege or justification here

18

discussed.”

19

Gudger, Plaintiff argues that he can overcome the privilege by

20

alleging lack of good faith or actual malice.

205

Plaintiff also relies on Gudger, for the proposition

Gudger, 21 Cal. 2d at 546.

Based on Sumner Hill and

21

Plaintiff alleges that Defendant’s conduct “was intentional,

22

wrongful, malicious and despicable and carried out with a willful

23

and conscious disregard for plaintiff’s rights.”

24

In addition, throughout the complaint, Plaintiff alleges that

25

Defendant failed to investigate or view the file and documents

26

relating to Plaintiff’s loan from the previous servicers prior to

27

recording the notice of default and that Defendant knew Plaintiff

28

was not in default because Plaintiff received a letter
11

Compl. ¶ 35.

1

acknowledging that Plaintiff’s payments were received and applied

2

to his loan.

3

See Compl. ¶¶ 17, 19.

Defendant argues that Plaintiff failed to provide the

4

correspondence as evidence and even if these allegations are

5

true, it shows mere negligence and it is insufficient to

6

establish the malice requirement.

7

Plaintiff did not provide copies of the correspondence, he is not

8

required to provide evidence to oppose a motion to dismiss

9

because generally, the Court may not consider any material beyond

Reply at 4.

Although

10

the pleadings in ruling on a motion to dismiss under Federal

11

Rules of Civil Procedure without converting it to a motion for

12

summary judgment.

13

under Rule 12(b)(6) or 12(c), matters outside the pleadings are

14

presented to and not excluded by the court, the motion must be

15

treated as one for summary judgment under Rule 56.”)

16

See Fed. R. Civ. P. 12(d) (“If, on a motion

Therefore, accepting Plaintiff’s allegations as true for the

17

purposes of this motion, Plaintiff has alleged that Defendant

18

filed a notice of default even though it knew Plaintiff was not

19

in default.

20

malice.

21

2013 WL 4029274, at *6 (N.D. Cal. Aug. 6, 2013)(holding that the

22

plaintiff’s allegation that defendant knew that it did not have

23

the requisite interest to initiate foreclosure amounted to

24

reckless disregard of the truth); Albano v. Cal-W. Reconveyance

25

Corp., 4:12-CV-4018 KAW, 2012 WL 5389922, at *9 (N.D. Cal. Nov.

26

5, 2012) (holding that plaintiff’s allegation that defendant knew

27

that a third party was not the beneficiary for the deed trust was

28

sufficient to defeat a motion to dismiss).

These allegations are sufficient to establish

See e.g., Cerezo v. Wells Fargo Bank, N.A., 13-1540 PSG,

12

1
2
3

b.

Damages

Defendant argues that Plaintiff has also failed to allege

4

that he suffered pecuniary damages as a result of the publication

5

of these documents—the fourth element of a slander of title

6

claim.

7

damages.

8
9

Plaintiff argues that the false publication caused him

“‘Pecuniary loss’ is an essential element of a slander of
title cause of action.”

Manhattan Loft, LLC v. Mercury Liquors,

10

Inc., 173 Cal.App.4th 1040, 1057 (2009).

Pecuniary loss is

11

restricted to “(a) the pecuniary loss that results directly and

12

immediately from the effect of the conduct of third persons,

13

including impairment of vendibility or value caused by

14

disparagement, and (b) the expense of measures reasonably

15

necessary to counteract the publication, including litigation to

16

remove the doubt cast upon vendibility or value by

17

disparagement.”

18

AWI, 2013 WL 552097, at *4 (E.D. Cal. Feb. 13, 2013) (emphasis

19

omitted)(quoting Restatement (Second) of Torts § 633 (1977)).

20

Here, Plaintiff has alleged that “all of this had a

Ghuman v. Wells Fargo Bank, N.A., 1:12-CV-00902-

21

significant adverse [effect] on Mr. Kirsten’s credit and caused

22

him substantial damage.”

23

is conclusory.

24

to show he suffered a monetary loss because of the publication of

25

the notice of default, such as a reduction of the value of the

26

property.

27
28

Compl. ¶ 23.

However, this allegation

Plaintiff has failed to allege sufficient facts

Accordingly, the Court dismisses Plaintiff’s slander of
title cause of action.

The Court grants Plaintiff leave to amend
13

1

because Plaintiff may be able to allege a pecuniary loss.

2
3

3.

Defamation

Defendant moves to dismiss Plaintiff’s defamation claim

4

because federal law preempts this claim and because it is time

5

barred.

6

is not preempted or time barred because the claim is brought

7

under California Civil Code Section 1785.25(a).

8
9

Plaintiff disagrees, arguing that his defamation claim

Opp. at 12-13.

In the complaint, Plaintiff does not specify that he brings
his defamation claim under Section 1785.25(a).

However, in his

10

opposition, Plaintiff requests leave to amend to refer to the

11

statute to avoid preemption of this claim.

12

Plaintiff’s claim is a Section 1785.25(a) claim, then it is

13

duplicative of Plaintiff’s unfair credit reporting claim

14

discussed above and would be unnecessary.

15

grants Defendant’s motion to dismiss Plaintiff’s defamation

16

claim. The Court will, however grant Plaintiff leave to amend in

17

order to try to properly plead this cause of action.

18

need not address Defendant’s arguments that Plaintiff’s

19

defamation claim is time barred and preempted at this time.

Opp. at 12.

If

Accordingly, the Court

The Court

20

III. ORDER

21

For the reasons set forth above, Defendant’s Motion to

22

Dismiss is GRANTED WITH LEAVE TO AMEND.

23

Amended Complaint or notice of dismissal within twenty (20) days

24

from the date of this Order.

25

responsive pleading within twenty (20) days thereafter.

26
27
28

Plaintiff must file his

Defendant shall file its

IT IS SO ORDERED.
Dated: September 20, 2013

____________________________
JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE
14