Malifrando v. Real Time Resolutions, Inc. et al.
Filing
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ORDER AND FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Gregory G. Hollows on 11/26/16 ORDERING that Defendant Real Time Resolution Inc.'s 22 Request for Judicial Notice is GRANTED. It is RECOMMENDED that Defendant Real Time Resol ution Inc.'s 20 motion to dismiss the first amended complaint be granted in part and denied in part; the fraud and misrepresentation claims be dismissed; within 30 days of an order adopting these findings and recommendations, defendant Real Time be directed to file an answer to the RESPA claim as narrowly defined in these findings and recommendations; and Defendant Long Beach Mortgage Company be dismissed. Matter referred to District Judge Troy L. Nunley. Within 20 days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. (Kastilahn, A)
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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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FRANK MALIFRANDO,
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Plaintiff,
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v.
Defendants.
INTRODUCTION
Plaintiff is proceeding in this action pro se and has paid the filing fee. This proceeding
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ORDER AND FINDINGS AND
RECOMMENDATIONS
REAL TIME RESOLUTIONS, INC., et
al.,
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No. 2:16-cv-0223 TLN GGH PS
was referred to this court by Local Rule 302(21), pursuant to 28 U.S.C. § 636(b)(1).
Presently before the court is defendant Real Time Resolutions, Inc.’s (“Real Time”)
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second motion to dismiss the first amended complaint (“FAC”), filed September 6, 2016. (ECF
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No. 20, 21.) Plaintiff has filed an opposition, to which Real Time has filed a reply.1 (ECF Nos.
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24, 27.) Also before the court is Real Time’s Notice of Deficiencies in Plaintiff’s Service of
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Complaint on Long Beach Mortgage, filed October 18, 2016, and plaintiff’s response. (ECF Nos.
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31, 32.) Having reviewed these filings, the court now issues the following findings and
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recommendations.
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The hearing on the motion was vacated on September 27, 2016, and the matter was taken under
submission on the papers. (ECF No. 26.)
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FACTUAL AND PROCEDURAL BACKGROUND
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After the undersigned granted Real Time’s initial motion to dismiss in part, and dismissed
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the complaint with leave to amend, plaintiff filed an amended complaint on August 9, 2016. It
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alleges that on October 11, 2004, plaintiff obtained a mortgage loan from Long Beach Mortgage
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Company2 (“Long Beach”), which was secured by real property located at 842 Georgia Street,
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Vallejo, California.3 (FAC, ECF No. 18 at ¶¶ 3, 13.) According to the FAC, although approving
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the loan, Long Beach determined that a second mortgage was required in the amount of $67,000
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by fraudulently falsifying plaintiff’s loan application and income, falsely listing his employer as
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MEGALYNX, a company he did not work for, falsely stating plaintiff had an account with Bank
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of America, falsely stating that plaintiff owned other real estate worth $834,000, and forging
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plaintiff’s signature on the loan application. (Id. at ¶¶ 15- 21.) The FAC further alleges that
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Long Beach inflated the value of the subject property without conducting a proper audit. (Id. at ¶
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22.) Plaintiff alleges that Long Beach “subsequently went out of business” and GMAC thereafter
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serviced both loans. (Id. at ¶¶ 24-25.) Plaintiff claims he was unaware of the second loan until
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sometime after April, 2015 when he submitted a Qualified Written Request (“QWR”) to Real
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Time and received a copy of his original loan application. (Id. at ¶ 32.) The FAC states that
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defendant Real Time serviced the loan subsequent to Long Beach,4 and plaintiff eventually could
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not pay the loan and fell into default, and was forced to file for bankruptcy protection. (Id. at ¶¶
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26-28.)
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Plaintiff alleges that he has sent QWRs to Real Time but that Real Time failed to respond
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in a satisfactory manner, including failing to provide updated assignments of ownership, proof of
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its custodial servicing obligations, “proof of purchase, affidavit of sale, and proper documentation
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Long Beach has purportedly been served with process but has not appeared in the action. (ECF
No. 4.)
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Real Time’s RJN, which has not been disputed by plaintiff, indicates that that the subject
property securing the loans at issue was plaintiff’s “investment property” at 515 Alabama Street,
not the Georgia Street property. Plaintiff submitted these schedules under oath in conjunction
with his bankruptcy petition. (RJN Ex. C, ECF No. 22 at 17-18.)
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Real Time may have serviced the loans subsequent to GMAC, as alleged in the original
complaint. See ECF No. 1 at ¶¶ 5-6.
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detailing restructure of assignments to deed of trust,” as well as payment history indicating
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plaintiff’s actual balance. (Id. at ¶ 29.)
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The FAC contains claims of fraud and misrepresentation against Real Time and Long
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Beach, and a claim against Real Time for violations of the Real Estate Settlement Procedures Act
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(“RESPA”). The FAC alleges diversity jurisdiction, and seeks injunctive relief to prevent
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foreclosure on the subject property, an order modifying the terms of the loan to an affordable
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amount that reflects plaintiff’s true income, damages for emotional distress, punitive damages,
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and attorneys’ fees and costs.
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DISCUSSION
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A. Rule 12(b)(6) - Failure to State a Claim
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A motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6)
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challenges the sufficiency of the pleadings set forth in the complaint. Vega v. JPMorgan Chase
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Bank, N.A., 654 F. Supp. 2d 1104, 1109 (E.D. Cal. 2009). Under the “notice pleading” standard
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of the Federal Rules of Civil Procedure, a plaintiff’s complaint must provide, in part, a “short and
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plain statement” of plaintiff’s claims showing entitlement to relief. Fed. R. Civ. P. 8(a)(2); see
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also Paulsen v. CNF, Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). “To survive a motion to dismiss,
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a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that
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is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v.
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Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads
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factual content that allows the court to draw the reasonable inference that the defendant is liable
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for the misconduct alleged.” Id.
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In considering a motion to dismiss for failure to state a claim, the court accepts all of the
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facts alleged in the complaint as true and construes them in the light most favorable to the
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plaintiff. Corrie v. Caterpillar, Inc., 503 F.3d 974, 977 (9th Cir. 2007). The court is “not,
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however, required to accept as true conclusory allegations that are contradicted by documents
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referred to in the complaint, and [the court does] not necessarily assume the truth of legal
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conclusions merely because they are cast in the form of factual allegations.” Paulsen, 559 F.3d at
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1071. The court must construe a pro se pleading liberally to determine if it states a claim and,
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prior to dismissal, tell a plaintiff of deficiencies in his complaint and give plaintiff an opportunity
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to cure them if it appears at all possible that the plaintiff can correct the defect. See Lopez v.
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Smith, 203 F.3d 1122, 1130-31 (9th Cir. 2000) (en banc); accord Balistreri v. Pacifica Police
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Dep’t, 901 F.2d 696, 699 (9th Cir. 1990) (stating that “pro se pleadings are liberally construed,
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particularly where civil rights claims are involved”); see also Hebbe v. Pliler, 627 F.3d 338, 342
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& n.7 (9th Cir. 2010) (stating that courts continue to construe pro se filings liberally even when
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evaluating them under the standard announced in Iqbal).
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In ruling on a motion to dismiss filed pursuant to Rule 12(b)(6), the court “may generally
consider only allegations contained in the pleadings, exhibits attached to the complaint, and
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matters properly subject to judicial notice.” Outdoor Media Group, Inc. v. City of Beaumont, 506
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F.3d 895, 899 (9th Cir. 2007) (citation and quotation marks omitted). Although the court may not
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consider a memorandum in opposition to a defendant’s motion to dismiss to determine the
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propriety of a Rule 12(b)(6) motion, see Schneider v. Cal. Dep’t of Corrections, 151 F.3d 1194,
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1197 n.1 (9th Cir. 1998), it may consider allegations raised in opposition papers in deciding
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whether to grant leave to amend, see, e.g., Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir.
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2003).
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B. REAL TIME’S REQUEST FOR JUDICIAL NOTICE
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Defendant Real Time has filed a request for judicial notice. (ECF. no. 22.) Real Time
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requests judicial notice of its Exhibits A, B, and C, which are, respectively, plaintiff’s loan
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application, dated October 11, 2004, plaintiff’s correspondence to Real Time, dated April 14,
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2015, and plaintiff’s Voluntary Chapter 7 Bankruptcy Petition and accompanying Schedule D
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(Creditors holding secured claims). Plaintiff has not opposed the request.
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A court may take judicial notice of court records. See MGIC Indem. Co. v. Weisman, 803
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F.2d 500, 505 (9th Cir. 1986); United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980).
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However, not all court records are equal with respect to the ability to take judicial notice. The
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sine qua non for any judicial notice request is that the information sought to be noticed is of a
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character that is generally known, or cannot reasonably be disputed. Fed. R. Ev. 210(b). Thus,
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for example, the facts contained in a declaration opposing a summary judgment found in another
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case file could not normally be judicially noticed because those facts, with infrequent exception,
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would not be generally known, nor would they be facts which could not be reasonably disputed.
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However, the fact that a declarant uttered such facts (whether true or not) in a declaration which
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was filed could not be reasonably disputed assuming that proper authentication was performed.
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Judicial notice could be taken of the declaration in this latter example.
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As a general rule, “a district court may not consider any material
beyond the pleadings in ruling on a Rule 12(b)(6) motion.” Branch,
14 F.3d at 453 (citation omitted). Rule 12(b)(6) expressly provides
that when:
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matters outside the pleading are presented to and not
excluded by the court, the motion shall be treated as one for
summary judgment and disposed of as provided in Rule 56,
and all parties shall be given reasonable opportunity to
present all material made pertinent to such a motion by Rule
56.
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Fed.R.Civ.P. 12(b)(6) (emphasis added). There are, however, two
exceptions to the requirement that consideration of extrinsic
evidence converts a 12(b)(6) motion to a summary judgment
motion. First, a court may consider “material which is properly
submitted as part of the complaint” on a motion to dismiss without
converting the motion to dismiss into a motion for summary
judgment. Branch, 14 F.3d at 453 (citation omitted). If the
documents are not physically attached to the complaint, they may
be considered if the documents' “authenticity ... is not contested”
and “the plaintiff's complaint necessarily relies” on them. Parrino v.
FHP, Inc., 146 F.3d 699, 705–06 (9th Cir.1998). Second, under
Fed.R.Evid. 201, a court may take judicial notice of “matters of
public record.” Mack v. South Bay Beer Distrib., 798 F.2d 1279,
1282 (9th Cir.1986).
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Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir. 2001).
Exhibit C, documents filed in support of plaintiff’s bankruptcy petition, will be judicially
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noticed as court records that are not subject to dispute, especially in light of plaintiff’s declaration
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under penalty of perjury as to the accuracy of the summary and schedules. (ECF No. 22 at 19.)
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Exhibits A and B are a different matter because they are not court records which are
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usually not subject to dispute. Exhibit A is purportedly plaintiff’s loan application, dated October
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11, 2004.
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A court may consider evidence on which the complaint “necessarily
relies” if: (1) the complaint refers to the document; (2) the
document is central to the plaintiff's claim; and (3) no party
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questions the authenticity of the copy attached to the 12(b)(6)
motion. See Branch v. Tunnell, 14 F.3d 449, 453-54 (9th
Cir.1994), overruled on other grounds by Galbraith v. County of
Santa Clara, 307 F.3d 1119 (9th Cir.2002); see also Warren, 328
F.3d at 1141 n. 5, Chambers v. Time Warner, Inc., 282 F.3d 147,
153 n. 3 (2d Cir.2002). The court may treat such a document as
“part of the complaint, and thus may assume that its contents are
true for purposes of a motion to dismiss under Rule 12(b)(6).”
United States v. Ritchie, 342 F.3d 903, 908 (9th Cir.2003).
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Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006).
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As pointed out by Real Time, Exhibit A is referred to in the FAC. In fact it is central to
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plaintiff’s claims. Both the FAC and Exhibit A contain the following information: On October
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11, 2004, plaintiff purportedly signed a loan application, as did Charlotte Macasarte, which stated
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that he worked for Megalynx, that he earned $10,988 per month, that he had an account at Bank
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of America, that he owned two pieces of real estate valued at a total of $834,000, and received
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rental income in the amount of $7, 200 from these properties. (ECF No. 18 at ¶¶ 15-20; ECF No.
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22 at 4-7.)
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The question whether the application contains false information is the issue in the case,
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but the document itself may be judicially noticed because its authenticity as the document
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referenced by plaintiff in his complaint is not questioned, and because it forms the basis of
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plaintiff’s complaint.
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Exhibit B is a letter entitled “Qualified Written Request,” sent by plaintiff to Real Time,
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and dated April 14, 2015. It also forms the basis of the claims in the FAC, which alleges that on
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April 14, 2015, plaintiff sent correspondence to Real Time which qualified as a QWR,
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“requesting pertinent documents pertaining to the Loan and requesting documentation detailing
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updated assignments of ownership or necessary proof of Real Time’s custodial servicing
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obligations to GMAC.” (ECF No. 18 at 7.) The FAC alleges that Real Time only responded with
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partial information, and to date has failed to provide certain information. (Id. at 7-8.) Exhibit B
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also makes certain requests pertaining to the loan at issue as asserted in the FAC, and is the
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document referenced in the FAC. (ECF No. 22 at 10-11.) The authenticity of the correspondence
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in Exhibit B is not questioned, and is central to plaintiff’s claim. Therefore, the court takes
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judicial notice of Exhibit B.
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C. RESPA Claim
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The FAC continues to make a RESPA claim against Real Time. The Real Estate
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Settlement Procedures Act (“RESPA”) imposes certain disclosure obligations on loan servicers
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who transfer or assume the servicing of a federally-related mortgage loan. 12 U.S.C. § 2605(b).
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A borrower may obtain such information by submitting a qualified written request or “QWR,”
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which is statutorily defined as:
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a written correspondence, other than notice on a payment coupon or
other payment medium supplied by the servicer, that—(i) includes,
or otherwise enables the servicer to identify, the name and account
of the borrower; and (ii) includes a statement of the reasons for the
belief of the borrower, to the extent applicable, that the account is
in error or provides sufficient detail to the servicer regarding other
information sought by the borrower.
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12 U.S.C. § 2605(e)(1)(B); see also 24 C.F.R. § 1024.31(definition of QWR in part “provides
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sufficient detail to the servicer regarding information relating to the servicing of the mortgage
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loan sought by the borrower”).
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Section 2605(e)(1) requires the servicer to provide information relating to the servicing of
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the loan upon a qualified written request (“QWR”) by the borrower. The definition of servicing is
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“receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan ...
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and making the payments of principal and interest and such other payments with respect to the
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amounts received from the borrower.” 12 U.S.C. § 2605(i)(3).
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On January 10, 2014, new regulations were enacted in the form of the Dodd-Frank Wall
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Street Reform and Consumer Protection Act of 2010, Pub.L. No. 111–203, 124 Stat. 1376 (July
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21, 2010), which became known as Regulation X of RESPA. The regulations were codified at 12
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C.F.R. § 1024, and increase a loan servicer’s duty to respond to qualified written requests (still
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only including the processing of a loan and not the loan validity). Guccione v. JPMorgan Chase
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Bank, N.A., 2015 WL 1968114, at *8 (N.D. Cal. May 1, 2015). If a mortgage loan servicer
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receives a QWR from a borrower, the servicer shall provide a written response acknowledging
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receipt within five days, 12 U.S.C. § 2605(e)(1); 12 C.F.R. § 1024.36(c), and respond to the
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inquiry not later than thirty days. 12 U.S.C. § 2605(e)(2); 12 C.F.R. § 1024.36(d). The servicer
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must respond to a request for the identity of and address or other relevant contact information for
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the owner or assignee of mortgage loan within 10 days. 12 C.F.R. § 1024.36(d)(2)(A); 12 U.S.C.
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§ 2605(k)(1)(D).
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Servicing, as defined under RESPA, “does not include the
transactions and circumstances surrounding a loan's origination –
facts that would be relevant to a challenge to the validity of an
underlying debt or the terms of a loan agreement. Such events
precede the servicer's role in receiving the borrower's payments and
making payments to the borrower's creditors.” Medrano v. Flagstar
Bank, FSB, 704 F.3d 661, 666-67 (9th Cir. 2012). In Medrano, the
Ninth Circuit affirmed the district court's dismissal of the RESPA
claim concluding that letters from borrowers to servicer that
challenged terms of the loan and mortgage documents, that loan
documents did not “accurately reflect the proper payment schedule
represented by the loan broker”, and demanding monthly payment
be reduced because borrowers were told, when they purchased their
home, that those payments would not exceed $1,900 did not give
rise to duty to respond. Id. at 667. Therefore, requests for
documents and information “relating to the original loan transaction
and its subsequent history” do not qualify as QWRs. Junod v.
Dream House Mortg. Co., No. CV 11-7035-ODW(VBKx), 2012
WL 94355, at *4 (C.D. Cal. Jan. 5, 2012); see also Consumer
Solutions REO, LLC v. Hillery, 658 F. Supp. 2d 1002, 1014 (N.D.
Cal. 2009) (dismissing plaintiff's RESPA claim with prejudice after
observing that the requirement “[t]hat a QWR must address the
servicing of the loan, and not its validity, is borne out by the fact
that § 2605(e) expressly imposes a duty upon the loan servicer, and
not the owner of the loan.”). In addition, requests relating to loan
modification are not related to “servicing” of the loan. Smallwood
v. Bank of America, N.A., Case No. 15cv336, 2015 WL 7736876,
at *6 (S.D. Ohio, Dec. 1, 2015) (citing “Mbakpuo v. Civil Wells
Fargo Bank, N.A., No. 13-2213, 2015 WL 4485504, at *8 (D. Md.
July 21, 2015) (request for a loan modification did not relate to
servicing of a loan); Mayer v. EMC Morg. Corp., No 2:11-cv-147,
2014 WL 1607443, at *5-6 (N.D. Ind. April 22, 2014) (same); Van
Egmond v. Wells Fargo Home Mortg., No. 12-0112, 2012 WL
1033281, at *4 (C.D. Cal. Mar. 21, 2012) (RESPA only obligates
loan services to respond to borrowers' requests for information
relating to servicing of their loans, which does not include loan
modification information)”).
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Once a servicer receives a proper QWR, it must make corrections in
the borrower's account, or conduct an investigation, provide the
borrower with a written explanation and provide the contact
information of someone who can assist the borrower. 12 U.S.C. §
2605(e)(2)(A)-(C).
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Watson v. Bank of Am., N.A., No. 16CV513-GPC(MDD), 2016 WL 3552061, at *5–6 (S.D. Cal.
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June 30, 2016). Although this court previously cited MorEquity, Inc. v. Naeem, 118 F.Supp.2d
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885, 901 (N.D.Ill.2000), for the proposition that requests for information about loan origination
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and transfer of the loan do not trigger the protections afforded the borrower under § 2605, that
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case was discredited by Cocroft v. HSBC Bank USA, N.A., 2012 WL 1378645 (N.D. Ill. Apr. 20,
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2012), which relied on Catalan v. GMAC Mortg. Corp., 629 F.3d 676 (7th Cir.2011). Catalan
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defined a QWR more broadly as “written correspondence ... from the borrower or her agent that
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requests information or states reasons for the borrower's belief that the account is in error.” Id. at
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680. The Seventh Circuit clarified:
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RESPA does not require any magic language before a servicer must
construe a written communication from a borrower as a qualified
written request and respond accordingly. The language of the
provision is broad and clear. To be a qualified written request, a
written correspondence must reasonably identify the borrower and
account and must “include a statement of the reasons for the belief
of the borrower, to the extent applicable, that the account is in error
or provides sufficient detail to the servicer regarding other
information sought by the borrower.” 12 U.S.C. § 2605(e)(1)(B)
(emphasis added). Any reasonably stated written request for
account information can be a qualified written request. To the
extent that a borrower is able to provide reasons for a belief that the
account is in error, the borrower should provide them, but any
request for information made with sufficient detail is enough under
RESPA to be a qualified written request and thus to trigger the
servicer's obligations to respond.
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Id. at 687.
The findings and recommendations issued July 14, 2016, which permitted amendment of
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the RESPA claim, directed plaintiff to submit the April 14, 2015 letter which he claims was a
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QWR, and directed him to properly plead the actual pecuniary damages he suffered, as well as
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how Real Time caused those damages. (ECF No. 17 at 6-8.)
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Although plaintiff’s FAC does nothing to cure the defects of the original complaint, but is
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in fact almost a duplicate of the original complaint, based on the aforementioned authority,
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plaintiff must be permitted to proceed as a very limited portion of his correspondence to Real
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Time meets the definition of a QWR.
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Plaintiff asserts that he made a QWR to Real Time on April 14, 2015, and that Real Time
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“failed to respond in a proper and timely way.” (FAC ¶ 52, ECF No. 18 at 17.) Specifically,
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plaintiff alleges that he requested “pertinent documents pertaining to the Loan and requesting
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documentation detailing updated assignments of ownership or necessary proof of Real Time’s
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custodial servicing obligations to GMAC.” (FAC ¶ 51, ECF No. 18 at 17.) According to the
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FAC, not only did Real Time fail to respond to this request for information, but “also failed to
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provide evidence of documentation, detailing updated assignments of ownership or necessary
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proof of their custodial servicing obligations to GMAC per RESPA and FDCPA guidelines
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surrounding mortgage debt validation.” The FAC also claims that Real Time failed to provide
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“proof of purchase, affidavit of sale, and proper documentation detailing restructure of
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assignments to deed of trust. Furthermore, Plaintiff has received no payment history that would
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accurately reflect his actual balance.” (Id.)
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Plaintiff was ordered to amend his complaint to properly plead that his correspondence to
Real Time qualified as a QWR, but in spite of that directive, plaintiff has failed to more
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specifically plead this claim in his FAC. As pointed out above, plaintiff’s third claim for relief
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under RESPA is virtually identical to the same claim in his original complaint. Plaintiff has also
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failed to file the document he claims is his QWR, as ordered by the court; however, Real Time
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has filed this April 14, 2015 letter and plaintiff does not dispute it. See RJN Ex. B, ECF No. 22 at
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10-11.
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Real Time previously argued in conjunction with its first motion to dismiss, that requests
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for documents proving the bank’s authority to service the loan or those pertaining to the servicer’s
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compensation are not properly the subject of a QWR. According to Real Time’s cited case,
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Sheely v. Bank of America, N.A., 36 F.Supp.3d 1364, 1369 (N.D. Ga. 2014), citing §
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2605(e)(1)(A), the QWR must seek “information related to the servicing of the loan.”
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And servicing is defined narrowly: “receiving any scheduled
periodic payments from a borrower pursuant to the terms of any
loan ... and making the payments of principal and interest and such
other payments with respect to the amounts received from the
borrower as may be required pursuant to the terms of the loan.” §
2605(i)(3); see also 12 C.F.R. § 1024.2.
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Id.
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However, as cited in the authority set forth above, both the controlling statute and
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regulatory definitions include “information relating to the servicing of the mortgage” within the
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ambit of a QWR. See §2605 (e)(1)B) (request contains sufficient details for “other information
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sought by the borrower”); 12 CFR § 1024-31 (information relating to the servicing of the loan”).
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While this “relationship” must have some direct nexus with loan servicing, and cannot be
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construed as having everything and anything to do with a mortgage, the general nature of these
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words connote something more than an accounting statement.
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Plaintiff’s allegations concerning the contents of this letter and how it qualified as a QWR
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are too vague; however, the undersigned has reviewed the letter itself. It requests the following
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information: “original 1003 loan application, good faith estimate, HUD-1 settlements statement,
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“current promissory note,” the letter evidencing transfer of debt, with any addendums to the
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promissory note, and an “affidavit of debt.” Most of these items pertain to the origination of the
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loan and therefore do not qualify as the subject of a QWR. Furthermore, whether plaintiff agrees
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that his payment history is accurate or not, is not relevant to a QWR under the RESPA.5 The
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letter also fails to include a statement of the reasons for the belief of the borrower that the account
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is in error. 12 U.S.C. § 2605(e)(1)(B). Nevertheless, requests for information about Real Time’s
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acquisition of the right to service plaintiff’s loan as well as how the mortgage terms permitted
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Real Time to assume the servicing duties appear to be permitted by § 2605(e)(1)(B) and 12
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C.F.R. § 1024.31. Therefore, the only request which might be liberally interpreted to constitute a
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QWR is the request for a letter evidencing transfer of debt.
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Therefore, Real Time’s motion to dismiss on the basis that plaintiff’s correspondence was
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not a QWR, will be denied only to the extent that the letter requests information on the transfer of
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the debt. It will be granted in respect to the other information sought by the April 14, 2015 letter.
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Real Time also moves to dismiss the RESPA claim on the basis that plaintiff has failed to
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plead actual damages. As in the complaint, the FAC alleges only that plaintiff “suffered damages
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as a result of Real Time’s failure to respond to Plaintiff’s qualified written requests for
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information,” and seeks “actual, statutory, treble and/or punitive damages….” (FAC ¶¶ 53, 54
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ECF No. 18 at 17.) Plaintiff’s opposition adds no elucidating information, other than referencing
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paragraphs 1 to 47 of the FAC, and claiming he “was damaged as a result of making numerous
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Furthermore, there is no right to a loan modification in the first instance. Cal. Civ. Code §
2923.4; see Mabry v. Sup. Ct., 185 Cal. App. 4th 208 (2010).
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1
payments towards a fraudulent loan, while unjustly enriching Defendant in the process.” (Opp’n,
2
ECF No. 24 at 7.)
3
Paragraphs 41 and 49, which contain damage allegations pertaining to the first and second
4
claims for fraud and misrepresentation, state that plaintiff was damaged making mortgage
5
payments on his first loan which were inappropriately applied to the second loan, of which he was
6
not aware and which was fraudulently procured. Plaintiff alleges that defendants were benefitted
7
financially from the misapplication of his payments which caused him to fall further into
8
foreclosure proceedings. Other damages alleged are court fees, slander to his reputation, damage
9
to his credit, and his bankruptcy filing, which further injured his reputation. (FAC ¶¶ 41, 49.)
10
According to Watson, “courts have ‘liberally’ interpreted the requirement to plead actual
11
damages.” 2016 WL 3552061, at *12, citing Yulaeva v. Greenpoint Mortg. Funding, Inc., No.
12
09-1504 LKK KJM, 2009 WL 2880393, at *15 (E.D. Cal. Sept. 9, 2009). Watson also states that
13
actual damages may include overpayment of interest, costs of repairing plaintiff’s credit,
14
reduction in plaintiff’s credit limit, attorney’s fees and costs, and possibly emotional distress and
15
mental anguish. Id.
16
Although the FAC does not clarify or explain the damage allegations, they are sufficient
17
under Watson as currently pled, at least adequate enough to survive a motion to dismiss. See 12
18
U.S.C. § 2605(f) (actual damages must have been suffered as a result of the failure).
19
Nevertheless, whether these damage allegations are sufficient to impose liability on Real
20
Time in the long run is another question. Plaintiff does not allege what damage he suffered as a
21
result of Real Time’s alleged failure to properly and timely respond to his QWR in 2015. In fact,
22
as Real Time points out, plaintiff does not allege that he made any payments to Real Time after
23
he submitted a QWR in April, 2015. Moreover, plaintiff concedes he was in default on his loan,
24
and that he eventually stopped making payments because he could no longer afford it.6 (FAC ¶¶
25
27, 28, ECF No. 18 at 6.)
26
6
27
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Plaintiff filed for bankruptcy protection in 2012, and that action was closed the same year. See
https://ecf.caeb.uscourts.gov. Judicial notice may be taken of court records. Valerio v. Boise
Cascade Corp., 80 F.R.D. 626, 635 n. 1 (N.D.Cal.1978), aff'd, 645 F.2d 699 (9th Cir.), cert.
denied, 454 U.S. 1126, 102 S.Ct. 976 (1981).
12
1
Furthermore, Real Time accurately points out that plaintiff’s bankruptcy was filed in
2
2012, and therefore any failure or inadequate response by Real Time to his QWR in 2015, years
3
later, could not have caused his bankruptcy. See RJN Ex. C, ECF No. 22 at 13-19. Additionally,
4
the bankruptcy documents indicate that plaintiff was aware of the second loan in 2012, when he
5
filed the bankruptcy documents under penalty of perjury, refuting his statement that “he was not
6
aware of the Second Loan until he consulted knowledgeable third parties and submitted a
7
qualified written request on April 14, 2015.” (RJN Ex. C, ECF No. 22 at 17-19; Opp’n, ECF No.
8
24 at 4:10-12.) See Lal v. Am. Home Servicing, Inc., 680 F.Supp.2d 1218, 1223 (E.D. Cal. 2010)
9
(to comply with RESPA, plaintiff must plead actual damages incurred as a result of the failure)
10
11
(emphasis in original).
In spite of the conclusory manner in which damages are alleged in the FAC, and the
12
undersigned’s doubts as to Real Time’s failure to respond to a QWR being the cause of these
13
alleged damages, Watson permits the case to proceed on the FAC as the damages are currently
14
pled. Therefore, Real Time’s motion to dismiss will be denied on this basis until the issue of
15
damages can be further fleshed out.
16
D. FRAUD AND MISREPRESENTATION CLAIMS
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Real Time alleges that plaintiff’s fraud claim is time barred, that he has not alleged facts
18
of wrongdoing by Real Time, that any damages were not caused by Real Time, and that plaintiff
19
has failed to plead fraud with particularity as required by Fed. R. Civ. P. 9(b).
20
The elements of a fraud claim under California law are: “(1) a misrepresentation, (2) with
21
knowledge of its falsity, (3) with the intent to induce another's reliance on the misrepresentation,
22
(4) justifiable reliance, and (5) resulting damage.” Conroy v. Regents of Univ. of Cal., 45 Cal.4th
23
1244, 1255, 91 Cal.Rptr.3d 532, 203 P.3d 1127, 1135 (2009); accord Lazar v. Superior Court, 12
24
Cal.4th 631, 638, 49 Cal.Rptr.2d 377, 909 P.2d 981, 984 (1996). In addition, as stated above, a
25
claim for fraud must be pled with particularity, see Fed.R.Civ.P. 9(b). At the very least, a
26
plaintiff alleging fraud must plead evidentiary facts such as the “‘time, place, and specific content
27
of the false representations as well as the identities of the parties to the misrepresentations.’ ”
28
Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (per curiam) (quoting Edwards v. Marin
13
1
Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)). The Ninth Circuit has “interpreted Rule 9(b) to
2
mean that the pleader must state the time, place and specific content of the false representations as
3
well as the identities of the parties to the misrepresentation.” Alan Neuman Prods., Inc. v.
4
Albright, 862 F.2d 1388, 1393 (9th Cir.1988). See also Cooper v. Pickett, 137 F.3d 616, 627 (9th
5
Cir.1997) (“fraud allegations must be accompanied by ‘the who, what, when, where, and how’ of
6
the misconduct alleged”). When asserting a fraud claim against a corporation, “the plaintiff's
7
burden ... is even greater.... The plaintiff must ‘allege the names of the persons who made the
8
allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said
9
or wrote, and when it was said or written.’” Lazar, 12 Cal.4th at 645, 49 Cal.Rptr.2d 377, 909
10
P.2d 981 (quoting Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal.App.4th 153, 157, 2
11
Cal.Rptr.2d 861 (1991)). See also Spencer v. DHI Mortgage Co., No. CV F 09–0925 LJO DLB,
12
2009 WL 1930161, at *6 (E.D.Cal. June 30, 2009).
13
The merits of plaintiff’s fraud and misrepresentation claims will not be reached as they are
14
barred by the statute of limitations. A claim for fraud must be brought within three years of the
15
“discovery, by the aggrieved party, of the facts constituting the fraud….” Cal. Code Civ. P. §
16
338(d). See also Harrell v. 20th Century Ins. Co., 934 F.2d 203, 206 (9th Cir.1991) (noting that
17
“under the California statute of limitations for fraud, the three-year period does not begin to run
18
until the plaintiff has actual or constructive notice of the facts constituting the fraud.”). “Plaintiffs
19
are charged with presumptive knowledge of an injury if they have information of circumstances
20
to put them on inquiry or if they have the opportunity to obtain knowledge from sources open to
21
their investigation.” Rosal v. First Federal Bank of California, 671 F.Supp.2d 1111, 1131 (N.D.
22
Cal. 2009) (citing Fox v. Ethicon Endo–Surgery, Inc., 35 Cal.4th 797, 807–08, 27 Cal.Rptr.3d
23
661, 110 P.3d 914 (2005)). The statute of limitations for negligent misrepresentation is two
24
years. Cal. Code Civ. P. § 335.1.
25
The bankruptcy records indicate that plaintiff was aware of the existence of the second
26
deed of trust on the Alabama Street rental property on July 24, 2012 at the very latest. RJN Ex.
27
C, ECF No. 22 at 17-19. He filed the instant action on February 4, 2016, more than three years
28
after he discovered the alleged fraud. Although plaintiff claims that these records only indicated
14
1
his awareness of the Alabama Street property and that he was not aware of the second loan until
2
he consulted with knowledgeable third parties in April, 2015, the records themselves do reflect
3
the second deed of trust. Plaintiff signed these bankruptcy schedules under penalty of perjury.
4
Id. Furthermore, as pointed out by Real Time, the bankruptcy records indicate that two servicers,
5
Chase and GMAC, were collecting payments on the two loans and therefore plaintiff would have
6
to have been aware that he was paying two servicers and consequently paying off two loans. Id.
7
at 18. Therefore, any claims predicated on allegedly false representations made at the time of the
8
origination of the loan are barred by the statute of limitations, and must be dismissed.
9
E. DEFENDANT LONG BEACH MORTGAGE COMPANY
10
According to the court record, defendant Long Beach was served with summons on
11
February 9, 2016, but has not responded to the complaint. (ECF No. 4.) See Fed. R. Civ. P.
12
12(a) (responsive pleading due within twenty-one (21) days). The complaint concedes that Long
13
Beach had legal troubles, and the FAC states that Long Beach “subsequently went out of business
14
due to governmental prosecutions for fraudulent activity.” (FAC ¶ 24, ECF No. 18 at 6.) Despite
15
plaintiff’s knowledge of this information, he proceeded to file a request for entry of default
16
pursuant to the court’s order. See ECF Nos. 26, 30.
17
On October 18, 2016, Real Time filed a notice of deficiencies in plaintiff’s service of
18
complaint on Long Beach, in order to inform the court that according to the California Secretary
19
of State website, Long Beach surrendered its corporate status in California which acted to revoke
20
its agent for service of process. (ECF No. 31-1 at 4.) Based on this official record, of which the
21
court takes judicial notice, as well as plaintiff’s concession that Long Beach “went out of
22
business,” and “is no longer operating,” (ECF No. 32 at 2), Long Beach is not a viable defendant
23
for purposes of service.7 Should plaintiff attempt to file a motion for default judgment as the
24
court previously ordered, it will be denied.
25
26
Moreover, Long Beach must be dismissed on the merits in any event. “A District Court
may properly on its own motion dismiss an action as to defendants who have not moved to
27
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7
Pursuant to www.publicintegrity.org, Long Beach was closed by Washington Mutual in 2007.
15
1
dismiss where such defendants are in a position similar to that of moving defendants or where
2
claims against such defendants are integrally related.” Silverton v. Dep’t of Treasury, 644 F.2d
3
1341, 1345 (9th Cir. 1981). “Such a dismissal may be made without notice where the [plaintiff]
4
cannot possibly win relief.” Omar v. Sea-Land Serv., Inc., 813 F.2d 986, 991 (9th Cir. 1987).
5
The court’s authority in this regard includes sua sponte dismissal as to defendants who have not
6
been served and defendants who have not yet answered or appeared. Columbia Steel Fabricators,
7
Inc. v. Ahlstrom Recovery, 44 F.3d 800, 802 (9th Cir. 1995) (“We have upheld dismissal with
8
prejudice in favor of a party which had not yet appeared, on the basis of facts presented by other
9
defendants which had appeared.”); see also Bach v. Mason, 190 F.R.D. 567, 571 (D. Idaho 1999);
10
11
Ricotta v. California, 4 F. Supp. 2d 961, 978-79 (S.D. Cal. 1998).
The only claims against defendant Long Beach are for fraud and misrepresentation.
12
Based on the discussion above, these claims against Long Beach or its successors in interest are
13
barred by the statute of limitations. This defendant should therefore be dismissed.
14
CONCLUSION
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Accordingly, IT IS ORDERED that: Defendant Real Time Resolution Inc.’s Request
16
for Judicial Notice, filed September 6, 2016, (ECF No. 22), is granted.
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IT IS HEREBY RECOMMENDED that:
18
1.
Defendant Real Time Resolution Inc.’s motion to dismiss the first amended
19
complaint, filed September 6, 2016, (ECF No. 20), be granted in part and denied in
20
part;
21
2. The fraud and misrepresentation claims be dismissed;
22
3. Within thirty days of an order adopting these findings and recommendations,
23
defendant Real Time be directed to file an answer to the RESPA claim as narrowly
24
defined in these findings and recommendations; and
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4. Defendant Long Beach Mortgage Company be dismissed.
26
These findings and recommendations are submitted to the United States District Judge
27
assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within twenty days
28
after being served with these findings and recommendations, any party may file written
16
1
objections with the court and serve a copy on all parties. Such a document should be captioned
2
“Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections
3
shall be served and filed within ten days after service of the objections. The parties are advised
4
that failure to file objections within the specified time may waive the right to appeal the District
5
Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).
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Dated: November 26, 2016
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/s/ Gregory G. Hollows
UNITED STATES MAGISTRATE JUDGE
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