Masson v. Selene Finance, LP et al

Filing 25

Order by Hon. Samuel Conti granting 11 Motion to Dismiss.(sclc1, COURT STAFF) (Filed on 1/24/2013)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 United States District Court For the Northern District of California 9 THERESE C. MASSON, 10 Plaintiff, 11 v. 12 SELENE FINANCE LP, et al., 13 Defendants. 14 15 I. ) Case No. 12-05335 SC ) ) ORDER GRANTING MOTION TO ) DISMISS ) ) ) ) ) ) INTRODUCTION Plaintiff Therese C. Masson ("Plaintiff") brings this action 16 17 in connection with the foreclosure and sale of her property. Now 18 before the Court is a Rule 12(b)(6) motion to dismiss the action 19 brought by Defendants Selene Finance, LP ("Selene"), SRMOF 2009-1 20 Trust; Selene RMOF REO Acquisition LLC, U.S. Bank Trust National 21 Association, and Selene RMOF LLC (collectively, "Defendants"). 22 No. 11 ("Mot."). 23 ("Opp'n"), 18 ("Reply"), and appropriate for determination without 24 oral argument. 25 GRANTED and Plaintiff is granted leave to amend. 26 /// 27 /// 28 /// ECF The Motion is fully briefed, ECF Nos. 17 For the reasons set forth below, the Motion is 1 II. BACKGROUND 2 Plaintiff alleges that she is the owner of real property 3 located on Oakland Avenue in Oakland, California ("the Property"). 4 ECF No. 1 (Notice of Removal ("NOR")) Ex. 1 ("Compl."). 5 trust recorded in Alameda County indicates that Plaintiff obtained 6 an $875,000 loan from Option One Mortgage Corporation in 2006 that 7 was secured by a deed of trust on the Property. 8 (Request for Judicial Notice ("RJN")) Ex. 1.1 9 that she borrowed money from Defendants' predecessor-in-interest in A deed of ECF No. 12 Plaintiff alleges United States District Court For the Northern District of California 10 order to use the Property, a duplex, "as a live-work property for 11 retirement, or as an investment rental property to support 12 Plaintiff's retirement." 13 of default was recorded against the Property, and on August 31, 14 2012, a notice of trustee's sale was recorded. 15 The trustee's sale was initially set for September 26, 2012, but 16 was later postponed to October 30, 2012 and then postponed again to 17 November 30, 2012. Compl. ¶ 12. On April 22, 2010, a notice RJN Exs. 8, 10. See Opp'n at 2. 18 Plaintiff filed the instant action in state court on September 19 25, 2012 -- one day before the originally scheduled trustee's sale. 20 The Complaint asserts two causes of action: (1) violation of 21 California Civil Code section 2923.5 and (2) violation of the Fair 22 Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692g. 23 1 24 25 26 27 28 Compl. Plaintiff's objections to Defendants' RJN are OVERRULED and the Court takes judicial notice of the deed of trust and the other publicly filed documents attached to the RJN, but not the truth of the matters asserted by those documents. Pursuant to Federal Rule of Evidence 201, the Court may take judicial notice of "a fact that is not subject to reasonable dispute" because, among other things, it "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Accordingly, the Court "may properly take notice of public facts and public documents." Cactus Corner, LLC v. U.S. Dept. of Agric., 346 F. Supp. 2d 1075, 1098 (E.D. Cal. 2004). 2 1 ¶¶ 1-16. Plaintiff alleges that Defendants failed to comply with 2 the notice requirements of section 2923.5, which allegedly requires 3 that "lenders and/or servicers actively seek to help prevent 4 foreclosures of residential properties by aiding homeowners with a 5 review of their financial situations . . . ." 6 further alleges that Defendants "engaged in unfair debt collection 7 practices by scheduling a trustee sale on September 26, 2012, which 8 it refused to postpone." 9 alleges that Defendants breached their obligations under 15 U.S.C. Id. ¶ 9. Id. ¶ 6. Plaintiff As to the FDCPA, Plaintiff United States District Court For the Northern District of California 10 § 1692g by failing to provide Plaintiff with a "Debt Validation 11 Notice" and by taking action contrary to Plaintiffs' rights under 12 California Civil Code sections 2923.5 and 2923.6. 13 Plaintiff prays for an injunction staying the trustee sale and 14 damages, among other things. Id. ¶ 15. The day after Plaintiff filed her complaint in state court, 15 16 she moved for a temporary restraining order ("TRO"). 17 state court granted the TRO, setting a hearing on a preliminary 18 injunction for October 18, 2012. 19 Defendants removed to federal court. 20 hours before the last scheduled trustee's sale -- Plaintiff filed 21 an ex parte application for a TRO. 22 was denied by this Court. 23 trustee's sale then went forward as scheduled on November 30. 24 Opp'n at 3. Id. ¶ 2. NOR ¶ 1. The On October 16, 2012, On November 30, 2012 -- a few ECF No. 15. ECF No. 16. The application Plaintiff avers that the See On November 16, 2012, two weeks prior to the trustee sale, 25 26 Defendants moved to dismiss Plaintiff's complaint pursuant to 27 Federal Rule of Civil Procedure 12(b)(6). 28 /// 3 1 III. LEGAL STANDARD A motion to dismiss under Federal Rule of Civil Procedure 2 3 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. 4 Block, 250 F.3d 729, 732 (9th Cir. 2001). 5 on the lack of a cognizable legal theory or the absence of 6 sufficient facts alleged under a cognizable legal theory." 7 Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 8 1988). 9 should assume their veracity and then determine whether they "Dismissal can be based "When there are well-pleaded factual allegations, a court United States District Court For the Northern District of California 10 plausibly give rise to an entitlement to relief." Ashcroft v. 11 Iqbal, 556 U.S. 662, 664 (2009). 12 must accept as true all of the allegations contained in a complaint 13 is inapplicable to legal conclusions. 14 elements of a cause of action, supported by mere conclusory 15 statements, do not suffice." 16 v. Twombly, 550 U.S. 544, 555 (2007)). 17 complaint must be both "sufficiently detailed to give fair notice 18 to the opposing party of the nature of the claim so that the party 19 may effectively defend against it" and "sufficiently plausible" 20 such that "it is not unfair to require the opposing party to be 21 subjected to the expense of discovery." 22 1191, 1204 (9th Cir. 2011). However, "the tenet that a court Threadbare recitals of the Id. at 663. (citing Bell Atl. Corp. The allegations made in a Starr v. Baca, 633 F.3d 23 24 25 IV. DISCUSSION Defendants move to dismiss on the grounds that (1) Plaintiff's 26 claims are barred by the doctrine of tender; (2) California Civil 27 Code section 2923.5 is inapplicable; and (3) foreclosing on a 28 property pursuant to a deed of trust is not a debt collection 4 1 within the meaning of the FDCPA. 2 The Court addresses each of these arguments below. 3 A. Tender 4 Defendants first argue that the Complaint cannot state a claim 5 because Plaintiff has not alleged that she is willing or able to 6 tender a sum sufficient to cure her default. 7 Defendants' argument is misplaced. 8 states, an allegation of tender is generally only required where a 9 plaintiff seeks to cancel a voidable trustee sale. Mot. at 3. As Defendants' own authority See FPCI RE-HAB United States District Court For the Northern District of California 10 01 v. E & G Invs., Ltd., 207 Cal. App. 3d 1018, 1021 (Cal. Ct. App. 11 1989). 12 their motion to dismiss prior to the trustee's sale, i.e., before 13 there was a voidable sale to cancel. 14 formally request a cancellation of the trustee's sale. 15 Complaint merely seeks a stay of the trustee's sale (which has 16 since occurred) and damages. 17 bar Plaintiff's claims as pled. Here, Plaintiff filed the Complaint and Defendants filed Indeed, Plaintiff has yet to The Accordingly, the tender rule does not 18 B. Civil Code Section 2923.5 19 Defendants also argue that Plaintiff's claim under California 20 Civil Code section 2923.5 fails because the Property is not 21 Plaintiff's principal residence. 22 Code section 2924.15(a), section 2923.5 only applies to "deeds of 23 trust that are secured by owner-occupied residential real property 24 containing no more than four dwelling units."2 25 section 2923.5, "'owner-occupied' means that the property is the 26 principal residence of the borrower and is security for a loan made 27 2 28 Mot. at 4. Pursuant to Civil For the purposes of Defendants mistakenly cite to Civil Code section 2923.5(h)(3)(i) for the proposition that section 2923.5 only applies to owneroccupied property. Mot. at 4. That subsection has been repealed. 5 1 for personal, family, or household purposes." 2 Cal Civ. Code § 2924.15(a). 3 The Court concludes that section 2923.5 does not apply here 4 because, by Plaintiff's own admission, the Property is no longer 5 owner occupied. 6 use the Property "as a live-work property for retirement, or as an 7 investment rental property to support . . . retirement." 8 12. 9 but the Property clearly would not be owner-occupied if it was According to the Complaint, Plaintiff intended to Compl. ¶ It is unclear what Plaintiff means by "live-work property," United States District Court For the Northern District of California 10 rented to another. In her opposition brief, Plaintiff confirms 11 that she does not currently live at the Property. 12 However, she contends that it continues to serve as her "principal 13 residence" because she "lived in the property for a considerable 14 amount of time and has retained it as a primary residence for mail 15 contact and office residence, to date." 16 could hardly be considered owner-occupied or a principal residence 17 if it is used only for business and mail-forwarding purposes. Id. Opp'n at 3. But the Property Even if the Property were owner occupied, Plaintiff's claims 18 19 under section 2923.5 are now moot. The only remedy available under 20 section 2923.5 is the postponement of a foreclosure sale until the 21 requirements of the statute have been met. 22 Fargo Bank, N.A., 829 F. Supp. 2d 873, 886 (N.D. Cal. 2011) 23 (citing Mabry v. Super. Ct., 185 Cal. App. 4th 208, 213 (Cal. Ct. 24 App. 2010)). 25 place. Shaterian v. Wells In this case, the foreclosure sale has already taken Accordingly, Plaintiff's claim for violation of Civil Code 26 27 section 2923.5 is DISMISSED WITH PREJUDICE. 28 /// 6 1 C. FDCPA 2 Finally, Defendants argue that Plaintiff's FDCPA claim fails 3 because foreclosing on a deed of trust does not qualify as debt 4 collection under the Act. 5 FDCPA, a plaintiff must allege, among other things, "that the 6 defendant is a debt collector within the meaning of 15 U.S.C. § 7 1692a(6)." 8 at *2 (N.D. Cal. Oct. 19, 2010). 9 term 'debt collector' means any person who uses any instrumentality Mot. at 6. To state a claim under the Geist v. OneWest Bank, C 10-1879 SI, 2010 WL 4117504, Under 15 U.S.C. § 1692a(6), "the United States District Court For the Northern District of California 10 of interstate commerce or the mails in any business the principal 11 purpose of which is the collection of any debts, or who regularly 12 collects or attempts to collect, directly or indirectly, debts . . 13 . ." 14 property pursuant to a deed of trust is not a debt collection 15 within the meaning of the . . . FDCPA." 16 0007 SC, 2009 WL 656285, at *4 (N.D. Cal. Mar. 12, 2009). This Court has previously held that "foreclosing on a Gamboa v. Tr. Corps, 09- Plaintiff argues that the Court should defer to the Consumer 17 18 Financial Protection Bureau's (the "Bureau") position on the matter 19 since that agency is charged with enforcement of the FDCA. 20 at 8. 21 the Bureau in the Eleventh Circuit in 2011, in which the agency 22 argued that an entity meeting the general definition of "debt 23 collector" under the FDCPA qualifies as a debt collector for the 24 purposes of the Act, even if its principal purpose is enforcing a 25 security interest. 26 will defer to a federal agency's interpretation of its own 27 regulations, advanced in a legal brief, unless that interpretation 28 is "plainly erroneous or inconsistent with the regulation." Opp'n Specifically, Plaintiff points to an amicus brief filed by See ECF No. 17-7 ("Amicus Br.") at 14. 7 Courts Chase 1 Bank USA, N.A. v. McCoy, 131 S. Ct. 871, 880 (2011). 2 "considerable respect is due the interpretation given [a] statute 3 by the officers or agency charged with its administration." 4 Motor Credit Co. v. Milhollin, 444 U.S. 555, 566 (1980) (quotations 5 omitted). 6 Further, Ford Nevertheless, nothing in the Bureau's amicus brief suggests 7 that the FDCPA is applicable here. That brief concerned a case in 8 which the defendant, a loan servicer, allegedly called the 9 plaintiffs multiple times on a daily basis in an effort to collect United States District Court For the Northern District of California 10 on the plaintiff's mortgage payments. 11 Servicing, Inc., 481 F. App'x 579, 580-81 (11th Cir. 2012). 12 defendant also sent the plaintiffs correspondence expressly stating 13 "THIS IS AN ATTEMPT TO COLLECT A DEBT." 14 there are no plausible allegations of debt collection here. 15 Plaintiff cryptically alleges that one of the defendants, Selene 16 Finance, "used the US Mail to solicit money from Plaintiff after 17 the default . . . ." 18 solicitation is not alleged. 19 Compl. ¶ 14. Birster v. Am. Home Mortg. Id. at 580. The In contrast, But the content of this In its amicus brief, the Bureau argued that a defendant that 20 engages in debt collection should not be exempt from the provisions 21 of the FDCPA merely because that defendant is also involved in a 22 foreclosure. 23 argue that foreclosure, by itself, constitutes a debt collection 24 activity. 25 issue: See Amicus Br. at 8-10. However, the Bureau did not In fact, the Bureau expressly declined to address that 26 27 28 Although the district court suggested that pursuing foreclosure, by itself, cannot constitute debt collection covered by the [FDCPA], the Court need not reach that question here. At a minimum, seeking 8 payment from a debtor unquestionably qualifies as debt collection, even if it occurs in the context of foreclosure proceedings. The [plaintiffs] allege that [the defendant] repeatedly attempted to induce them to pay amounts owed on their mortgage. That was debt collection even thought it occurred in the context of foreclosure proceedings. 1 2 3 4 5 Id. at 12. 6 Defendants engaged in foreclosure proceedings. 7 Plaintiff cannot state a claim under the FDCPA. Without more, Accordingly, the Court DISMISSES Plaintiff's FDCPA claim with 8 9 In this case, Plaintiff has merely alleged that leave to amend. Plaintiff's amended complaint should specifically United States District Court For the Northern District of California 10 allege how Defendants engaged in debt collection activities and 11 clearly distinguish between the actions of each Defendant. 12 13 14 V. CONCLUSION For the foregoing reasons, the Court GRANTS Defendants' motion 15 to dismiss. Plaintiff Therese C. Masson's first cause of action 16 for violation of California Civil Code section 2923.5 is DISMISSED 17 WITH PREJUDICE and her second cause of action for violation of the 18 FDCPA is DISMISSED WITH LEAVE TO AMEND. 19 Complaint within thirty (30) days of the signature date of this 20 Order. 21 with prejudice. Plaintiff shall amend her Failure to do so may result in dismissal of this action 22 23 IT IS SO ORDERED. 24 25 26 Dated: January 24, 2013 UNITED STATES DISTRICT JUDGE 27 28 9

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