Petrovich v. OCWEN Loan Servicing, LLC et al

Filing 59

ORDER by Judge Edward M. Chen Granting 45 Defendants' Motion to Dismiss First Amended Complaint. (emcsec, COURT STAFF) (Filed on 2/12/2016)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6

AL DAVIS PETROVICH,

7

Plaintiff,

8

ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS FIRST
AMENDED COMPLAINT

v.

9
10

OCWEN LOAN SERVICING, LLC, et al.,

Docket No. 45

Defendants.

11
12
For the Northern District of California

United States District Court

Case No. 15-cv-00033-EMC

Plaintiff Al Davis Petrovich, a pro se litigant, has filed suit against Ocwen Loan Servicing

13
14

and Western Progressive (collectively “Defendants”). Docket No. 44, First Amended Complaint

15

(“FAC”). Mr. Petrovich has asserted claims for, inter alia, wrongful foreclosure, slander of title,

16

and violation of California Business & Professions Code § 17200. Currently pending before the

17

Court is Defendants‟ motion to dismiss. For the reasons stated below, the Court GRANTS

18

Defendants‟ motion to dismiss. The dismissal is with prejudice.
I.

19

FACTUAL & PROCEDURAL BACKGROUND

20

In his first amended complaint, Mr. Petrovich alleges as follows.

21

Mr. Petrovich owns certain real property located in Rio Dell, California. FAC ¶ 5. On

22

November 14, 2004, Mr. Petrovich obtained a $180,000 mortgage loan from Option One

23

Mortgage Corporation. Docket No. 46-1, Defendants‟ Request for Judicial Notice (“D‟s RJN”),

24

Ex. 1.
The loan was secured with real property, as reflected in the deed of trust.1 See id. at 1.

25
26
1

27
28

The financing or refinancing of real property in California is generally accomplished by the use
of a deed of trust. Calvo v. HSBC Bank USA, N.A., 199 Cal. App. 4th 118, 125 (2011). A deed of
trust surpassed the common-law mortgage as the “generally accepted and preferred security device
in California” during the 19th and early 20th centuries, before the California Legislature

1

(deed of trust). The deed of trust reflects on its face that Mr. Petrovich is the borrower and Option

2

One Corporation is the lender. Id. The deed of trust also provides that the trustee for the deed of

3

trust is Premier Trust Deed Services. Id. The closing date of the trust agreement is May 12, 2006.

4

FAC ¶ 21.

5

On November 7, 2011, Sand Canyon Corporation (formerly known as Option One

6

Mortgage Corporation), assigned the deed of trust to Deutsche Bank National Trust Company as

7

trustee for Soundview Home Loan Trust. D‟s RJN, Ex. 2.
On June 2, 2014, Leticia N. Arlas, the Assistant Secretary of Sand Canyon Corporation,

8
9

recorded a “Corrective Assignment of Deed of Trust” to correct “the instrument no. on the

original assignment did not contain the recorded instrument number. D‟s RJN, Ex. 3. Ocwen

12
For the Northern District of California

assignment recorded on November 07, 2011 as instrument number 2011-22980-1” because the

11

United States District Court

10

Loan Servicing, servicing agent for Deutsche Bank National Trust Company requested the

13

recording. Id.; FAC ¶ 24.
On June 7, 2014, Western Progressive was substituted as a trustee under a deed of trust.

14
15

D‟s RJN, Ex. 4. After Mr. Petrovich defaulted on his loan, notice of default was recorded on June

16

24, 2014, followed by a notice of trustee‟s sale on December 5, 2014. D‟s RJN, Ex. 5, Ex. 6.

17

There was no foreclosure sale.
Plaintiff alleges that his promissory note and deed of trust “were not properly assigned to

18
19

the Trust on or before the “Closing Date” of May 12, 2006” in violation of the Pooling and

20

Service Agreement and New York Trust Law. FAC ¶¶ 20-21. Thus, due to the improper

21

securitization2 of the note and the deed of trust on Mr. Petrovich‟s property, “Defendants are

22
23
24
25
26
27
28

eliminated most of the legal and economic distinctions between a mortgage that contains a power
of sale and a deed of trust. 4 Miller & Starr, Cal. Real Estate § 10:1 p. 13 (3d ed. 2011). “[I]n
California there is little practical difference between mortgages and deeds of trust; they perform
the same basic function, and . . . a deed of trust is „practically and substantially only a mortgage
with power of sale.‟ . . . [A]lthough „there are no statutory provisions dictating the form or stating
the effect of deeds of trust‟, deeds of trust are analogized to mortgages[,] and the same rules are
generally applied to deeds of trust that are applied to mortgages.” Domarad v. Fisher & Burke,
Inc., 270 Cal. App. 2d 543, 553 (1969).
2

In simplified terms, “securitization” is the process where (1) many loans are bundled together
and transferred to a passive entity, such as a trust, and (2) the trust holds the loans and issues
investment securities that are repaid from the mortgage payments made on the loans. (Oppenheim
2

1

without any right to demand payment, declare default, negotiate or foreclose on Plaintiff‟s home.”

2

FAC ¶ 17. Plaintiff also alleges that Defendants “execut[ed] and fil[ed] a fabricated corrective

3

assignment of deed of trust” to “facilitate a non-judicial foreclosure.” FAC ¶ 22. Based on

4

foregoing, Plaintiff asserts the following causes of action: (1) declaratory relief; (2) violation of 15

5

U.S.C. § 1692; (3) slander of title; (4) wrongful foreclosure; (5) violation of 12 U.S.C. § 2605; and

6

(6) violation of California Business and Professions Code § 17200.
Pending before the Court is Defendants‟ motion to dismiss Mr. Petrovich‟s complaint on

7
8

the ground that Mr. Petrovich is not a party to the trust, thus he cannot state a claim based on a

9

supposedly defective transfer of his loan to a closed investment trust. Docket No. 53 at 4

10

(“Reply”).
II.

12
For the Northern District of California

United States District Court

11

A.

REQUESTS FOR JUDICIAL NOTICE

Legal Standard

13

On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), evidence beyond

14

the pleading should not be considered unless: (1) the document is attached to or incorporated by

15

reference into the complaint; or (2) the fact is subject to judicial notice pursuant to Federal Rule of

16

Evidence 201. United States v. Corinthian Colleges, 655 F.3d 984, 999 (9th Cir. 2011).

17

Under Federal Rule of Evidence 201, “[a] judicially noticed fact must be one not subject to

18

reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the

19

trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy

20

cannot reasonably be questioned.” Fed. R. Evid. 201. Courts may take judicial notice of

21

“undisputed matters of public record,” but generally may not take judicial notice of “disputed facts

22

stated in public records.” Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001) (emphasis

23

in original). Facts subject to judicial notice may be considered on a motion to dismiss. Mullis v.

24

U.S. Bankr. Ct., 828 F.2d 1385, 1388 (9th Cir. 1987).

25

The doctrine of incorporation by reference is distinct from judicial notice. The doctrine

26
27
28

& Trask-Rahn, Deconstructing the Black Magic of Securitized Trusts: How the Mortgage-Backed
Securitization Process is Hurting the Banking Industry’s Ability to Foreclose and Proving the Best
Offense for a Foreclosure Defense, 41 Stetson L. Rev. 745, 753-54 (2012).
3

1

“permits a district court to consider documents „whose contents are alleged in a complaint and

2

whose authenticity no party questions, but which are not physically attached to the . . .

3

pleadings.‟” In re Silicon Graphics Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999) (quoting Branch

4

v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994)).
A court “may consider evidence on which the complaint „necessarily relies‟ if: (1) the

5

party questions the authenticity of the copy attached to the 12(b)(6) motion. The court may treat

8

such a document as „part of the complaint, and thus may assume that its contents are true for

9

purposes of a motion to dismiss under Rule 12(b)(6).‟” Marder v. Lopez, 450 F.3d 445, 448 (9th

10

Cir. 2006) (internal citations omitted). Such documents do not convert the motion to dismiss into

11

a motion for summary judgment. Id. The Ninth Circuit states that “judicial notice is inappropriate

12
For the Northern District of California

complaint refers to the document; (2) the document is central to the plaintiff‟s claim; and (3) no

7

United States District Court

6

where the facts to be noticed are irrelevant.” Meador v. Pleasant Valley State Prison, 312 F.

13

App‟x 954, 956 (9th Cir. 2009).

14

B.

15

Defendants‟ Request
Defendants request judicial notice over six exhibits: (1) A deed of trust recorded on

16

December 16, 2005, in the official records of the Humboldt County Recorder‟s Office as

17

Document Number 2005-43149-12; (2) Assignment recorded on November 7, 2011, in the official

18

records of the Humboldt County Recorder‟s Office as Document Number 2011-22980-1; (3)

19

Corrective Assignment recorded on June 2, 2014, in the official records of the Humboldt County

20

Recorder‟s Office as Document Number 2014-009566-2; (4) a Substitution of Trustee recorded on

21

June 17, 2004, in the official records of the Humboldt County Recorder‟s Office as Document

22

Number 2014-011191-4; (5) a Notice of Default recorded on June 26, 2014, in the official records

23

of the Humboldt County Recorder‟s Office as Document Number 2014-011191-4; (6) a Notice of

24

Trustee‟s sale recorded on December 15, 2014, in the Official Records of the Humboldt County

25

Recorder‟s Office as Document Number 2014-021257-2. Defendants‟ Request For Judicial

26

Notice (“D‟s RJN”), Docket No. 46. The Court GRANTS Defendants‟ request for judicial notice

27

of the Exhibits 1-6. In this case, Exhibits 1-6 are judicially noticeable because these documents

28

are matters of public record. See Valasquez v. Mortgage Elec. Registration Sys., Inc., No. C 084

1

3818 PJH, 2008 WL 4938162, at *2 (N.D. Cal. Nov. 17, 2008) (taking judicial notice of a deed of

2

trust, assignment of deed of trust, notice of default, substitution of trustee, rescission of notice of

3

default and election to sell under deed of trust); Grant v. Aurora Loan Services, Inc., 736

4

F.Supp.2d 1257, 1264 (C.D. Cal. 2010) (noting that a “[party] provided a reference number for the

5

document, showing that it was in fact recorded; this demonstrates that it is a public record”);

6

Fimbres v. Chapel Mortgage Corp., No. 09-CV-0886-IEG, 2009 WL 4163332, *3 (S.D. Cal. Nov.

7

20, 2009) (taking judicial notice of a deed of trust, notice of default, notice of trustee‟s sale,

8

assignment of deed of trust, and substitution of trustee as each was a public record); Angulo v.

9

Countrywide Home Loans, Inc., No. 1:09-CV-877-AWI-SMS, 2009 WL 3427179, *3 n. 3 (E.D.

such, this court may consider these foreclosure documents”); Distor v. U.S. Bank NA, No. C 09-

12
For the Northern District of California

Cal. Oct.26, 2009) (“The Deed of Trust and Notice of Default are matters of public record. As

11

United States District Court

10

02086 SI, 2009 WL 3429700, *2 (N.D. Cal. Oct. 22, 2009) (finding that a deed of trust, notice of

13

default and election to sell under deed of trust, and notice of trustee‟s sale were matters of public

14

record and thus proper subjects of judicial notice). I recommend that the Court take judicial notice

15

of the existence of the assignment of deed of trust, but not the veracity of the facts recited therein.

16

See Lee, 250 F.3d at 690 (judicial notice of public records is limited to the existence of the

17

documents, not the truth of the matters stated in them). Mr. Petrovich objected to Defendants‟

18

Request for Judicial Notice on numerous grounds that don‟t have any legal support. Docket No.

19

52, Plaintiff‟s Opposition to Defendants‟ Request for Judicial Notice. For the reasons stated

20

above, Plaintiff‟s objections are denied.

21

C.

22

Plaintiff‟s Request
Without opposition from Defendants, Plaintiff filed with the Court three exhibits

23

referenced in the FAC: (1) Exhibit C: Declaration of Dale M. Sugimoto, filed in In re Wilson, 413

24

B.R. 330, 331-32 (Bankr. E.D. La. 2009); (2) Exhibit D: Plaintiff‟s July 17, 2014, letter to Ocwen-

25

Ronald M. Faris, President and CEO; (3) Exhibit E: Plaintiff‟s December 12, 2014 letter to Ocwen

26

Loan Servicing, LLC. Docket No. 44. The Court GRANTS Plaintiffs‟ request for judicial notice

27

of the Exhibits C-E. In this case, Exhibit C is judicially noticeable because a court may take

28

judicial notice of court records in another case. See e.g., United States v. Wilson, 631 F.2d 118
5

1

(9th Cir. 1980) (stating that a court may take judicial notice of court records in another case).

2

Notice can be taken, however, not for the truth of the matters asserted in the litigation, but rather

3

to establish the fact of such litigation and related filings. San Luis v. Badgley, 136 F.Supp.2d

4

1136, 1146 (E.D. Cal. 2000). As for exhibits D and E, Mr. Petrovich makes reference to these

5

letters in Paragraph 26 of the FAC. “A district court may consider material that is „properly

6

submitted as part of the complaint‟; or, if the documents are not physically attached to the

7

complaint, they may be considered if the documents‟ „authenticity is not contested and the

8

plaintiff‟s complaint necessarily relies on them.‟” Helm v. Alderwoods Group, Inc., 696

9

F.Supp.2d 1057, 1072 (N.D. Cal. 2009) (quoting Lee, 250 F.3d at 688 (9th Cir. 2001)). Thus, it is
appropriate to take judicial notice of Plaintiff‟s July 17 and December 12, 2014 letters. Foster

11

Poultry Farms v. Alkar-Rapidpak-MP Equip., Inc., 868 F. Supp. 2d 983, 990 (E.D. Cal. 2012).
III.

12
For the Northern District of California

United States District Court

10

13

A.

Legal Standard
Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss for

14
15

DISCUSSION

failure to state a claim for relief.

16

“To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to „state a claim to relief that is
plausible on its face.‟” A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct
alleged.” The plausibility standard requires more than the sheer
possibility or conceivability that a defendant has acted unlawfully.
“Where a complaint pleads facts that are merely consistent with a
defendant‟s liability, it stops short of the line between possibility
and plausibility of entitlement to relief.” Dismissal under Rule
12(b)(6) is proper only when the complaint either (1) lacks a
cognizable legal theory or (2) fails to allege sufficient facts to
support a cognizable legal theory.

17
18
19
20
21

22
23
24

Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678-79

25

(2009)); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).

26

B.

Wrongful Foreclosure

27

Mr. Petrovich contends that because the corrective assignment of deed of trust was

28

recorded in 2014 after the closing date of May 12, 2006, Defendants are in violation of the pooling
6

1

and servicing agreement (“PSA”) applicable to the trust. FAC ¶ 65. When a borrower asserts an

2

assignment was ineffective, a question often arises about the borrower‟s standing to challenge the

3

assignment of the loan (note and the deed of trust) – an assignment to which the borrower is not a

4

party. Glaski v. Bank of America, Nat’l Ass’n, 218 Cal. App. 4th 1079 (2013). Defendants

5

challenge Mr. Petrovich‟s argument on the ground that Mr. Petrovich has no standing to challenge

6

any noncompliance with the PSA. See Docket No. 45 at 3-7 (“MTD”).

7

There is a split of authority on the issue as to whether a borrower may challenge the

8

securitized trust‟s chain of ownership by alleging that attempts to transfer the deed of trust to the

9

securitized trust occurred after the trust‟s closing date. Compare Glaski, 218 Cal. App. 4th at

that the deed of trust was transferred to a securitized trust after the pool‟s closing date) with

12
For the Northern District of California

1097-98 (finding that plaintiff had sufficiently stated a claim for wrongful foreclosure by alleging

11

United States District Court

10

Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 515 (2013) (finding that the

13

plaintiff lacked standing to enforce the investment trust‟s pooling and servicing agreement because

14

she was an unrelated third party to the alleged securitization whose obligations under the

15

promissory note remained unchanged).

16

Mr. Petrovich points out that the California Supreme Court granted review on the issue of

17

whether, in a wrongful foreclosure case, a borrower has standing to challenge a defective

18

assignment of a note and deed of trust that allegedly rendered the assignment void. Docket No. 51

19

at 4-5 (“Opp‟n”); Yvanova v. New Century Mortg.Corp., 331 P.3d 1275 (Cal. 2014). This Court

20

need not resolve the issue of standing because Yvanova is a post-foreclosure case. By contrast,

21

this case is a pre-foreclosure case.

22

In Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149 (2011), the California

23

Court of Appeal held that because of the expeditious nature of California‟s non-judicial

24

foreclosure process, there is generally no preemptive right of action to determine standing to

25

foreclose, or claim for damages for wrongful initiation of foreclosure proceedings absent a

26

completed sale. Id. at 1154. See Gieseke v. Bank of Am., N.A., No. 13-CV-04772-JST, 2014 WL

27

718463, at *3 (N.D. Cal. Feb. 23, 2014); Tamburri v. Suntrust Mortgage, Inc., No. 11-CV-02899-

28

JST, 2013 WL 4528447, at *5 (N.D. Cal. Aug. 26, 2013) aff'd sub nom. Tamburri v. SunTrust
7

1

Mortgage, Inc., 623 F. App‟x 878 (9th Cir. 2015). As this Court recently held in Hills v.

2

Mortgage Electronic Registration System, Inc. et al., No 15-cv-05108-EMC:

3
4
5
6
7
8
9
10

12
For the Northern District of California

United States District Court

11

13
14

Here, regardless of the debtor‟s standing to challenge an assignment,
courts are generally not authorized to intervene in the nonjudicial
foreclosure process established by California law. As explained in
Gomes, “the policy behind nonjudicial foreclosure [is] providing a
quick, inexpensive and efficient remedy.” Id. If the Court were to
allow [the borrower] to proceed with her PSA challenge, it would
likely get embroiled in complex trust issues (in deciding the validity
of the assignment which was made after the PSA closing date, a
matter which may turn on, e.g., an interpretation of another state‟s
law on trusts (see, e.g., Glaski, 218 Cal. App. 4th at 1096-97)
(interpreting New York law in finding that transfer to the trust postclosing date was void); this would go against the speedy resolution
intended by the nonjudicial foreclosure process.
Second, although Gomes carved out an exception and indicated that
a plaintiff could bring a preemptive wrongful foreclosure action in
court (i.e., go outside of the nonjudicial foreclosure process) so long
as he or she had a “specific factual basis for alleging that the
foreclosure was not initiated by the correct party,” id. at 1156
(emphasis in original), [the borrower] has not pled sufficient factual
allegations to place his case within that exception.

15

Hills v. Mortgage Electronic Registration System, Inc. et al., No 15-cv-05108-EMC, at * 10 (N.D.

16

Cal. Feb. 5, 2016).

17

As in Hills, Mr. Petrovich “simply pled a „technicality‟ which [he] contends nullifies the

18

intended assignment – i.e., that the transfer of the note and/or deed of trust was not timely made.

19

The contention stands in contrast to situations in which the exception to the Gomes bar could

20

apply – situations where there were specific facts indicating that the foreclosing party was not the

21

real owner of the note.” Id. Compare Frazier, 2011 WL 6303391, at *5 (“Even if Plaintiffs were

22

right that their loan was not timely transferred to the trust, that does not mean that the owner of the

23

note and deed of trust could not therefore foreclose. That would simply mean that the loan was

24

not put into the trust (i.e., the investment vehicle).”) with Tamburri, 2011 WL 6294472, at *10

25

(stating that Gomes is inapposite because the plaintiff‟s complaint identified a specific factual

26

basis that the foreclosing parties had no actual authority to foreclose); Gates v. LLP Mortg., Inc.,

27

No. CV 13-8737 DSF (PLAx), 2013 U.S. Dist. LEXIS 183638, at *6 (C.D. Cal. Dec. 30, 2013)

28

(recognizing the exception in Gomes and indicating that a forged assignment could potentially
8

1

meet that exception but plaintiff‟s “bald assertion that the assignment was forged, absent other

2

supporting allegations, is not a specific factual basis”); Bergman v. Bank of Am., N.A., No. C-13-

3

00741 JCS, 2013 U.S. Dist. LEXIS 153173, at *15, 76 (N.D. Cal. Oct. 23, 2013) (concluding that

4

plaintiffs met the Gomes exception because they alleged that the bank had sold the deed of trust

5

and therefore a substitution of trustee executed by the bank thereafter was void); Barrionuevo v.

6

Chase Bank, N.A., 885 F. Supp. 2d 964, 966-67, 974 (N.D. Cal. 2012) (holding that a claim for

7

wrongful foreclosure was adequately pled where the allegation was that Chase could not have

8

obtained the deed of trust through a WaMu asset sale because the deed of trust had previously

9

been sold by WaMu through a securitization). The kind of technicality alleged here is not
sufficient to justify an exemption from the otherwise applicable bar on judicial intervention into

11

the nonjudicial foreclosure process.
Petrovich also asserts as another basis for his claim that “defendants rely on falsified

12
For the Northern District of California

United States District Court

10

13

documents” to foreclose and he wants to find “who the true and current creditor/holder in due

14

course is of his „Note‟ and „Deed of Trust‟ and what rights, if any, the Defendants have regarding

15

Plaintiff‟s „Note‟ and „Deed of Trust.‟” FAC ¶ 52. To support his fraud theory, Mr. Petrovich

16

asserts that “Defendants attempted to cover up the lack of proper assignment, transfer, or grant of

17

Plaintiff‟s „Deed of Trust‟ by executing and filing a fabricated Corrective Assignment of Deed of

18

Trust.” FAC ¶ 22. As explained above, Ocwen requested the recording of the corrective

19

assignment because the original assignment did not contain the recorded instrument number.3 D‟s

20

RJN, Ex. 3; FAC ¶ 24. Again, Mr. Petrovich alleges a mere technicality; he does not allege a

21

fraudulent scheme to foreclose by a party with no financial right or interest. This is insufficient

22

“specific factual basis” to warrant an exception to Gomes.
Accordingly, the Court concludes that Mr. Petrovich has failed to allege any cognizable

23
24

claim based on the chain of title. His complaint, therefore, must be dismissed with prejudice.

25
26
27
28

3

“The purpose of this corrective assignment is to correct the instrument no. on the assignment
recorded on November 07, 2011 as instrument number 2011-22980-1.” Corrective Assignment of
Deed of Trust, D‟s RJN, Ex. 3.
9

1

C.

Declaratory Relief
Based on the above allegations, Mr. Petrovich requests a court order “stating that none of

2

authorizes them to collect Plaintiff‟s payments or enforce the “Note” or “Deed of Trust.” FAC ¶

5

33. Mr. Petrovich acknowledges in both his FAC and opposition to Defendants‟ motion to dismiss

6

that he executed both a promissory note in the amount of $180,000, and a deed of trust securing

7

his debt on November 14, 2005. D‟s RJN, Ex. 1. Consequently, there is no dispute between the

8

parties as to the existence of the secured home loan debt. There is also no dispute that the deed of

9

trust contains: (1) an explicit power of sale clause in favor of the beneficiary-creditor; (2)

10

provisions setting forth Mr. Petrovich‟s obligations with regard to repaying the loan and

11

maintaining the property; and (3) provisions stating the beneficiary-creditor may transfer the

12
For the Northern District of California

the Defendants have any right or interest in Plaintiff‟s “Note,” “Deed of Trust” or Property which

4

United States District Court

3

promissory note at any time without providing notice of the transfer to Mr. Petrovich. D‟s RJN,

13

Ex. 1 ¶¶6, 19.
Mr. Petrovich‟s default on the secured debt triggered the beneficiary-creditor‟s option

14
15

under the deed of trust‟s power of sale clause, and section 2924 of the California Civil Code

16

allows the “trustee, mortgagee, or beneficiary, or any of their authorized agents” to record a notice

17

of default and election to sell the real property security, thus initiating the nonjudicial foreclosure

18

process. Cal. Civ. Code § 2924 (a)(1). Because of the reasons stated above, Mr. Petrovich cannot

19

challenge Defendants‟ authority to initiate nonjudicial foreclosure, the Court DISMISSES

20

Plaintiff‟s cause of action for declaratory relief without leave to amend.

21

D.

22

Violation of 15 U.S.C. § 1692
Plaintiff alleges that Defendants violated 15 U.S.C. §1692a(6) by “attempting to collect on

23

Plaintiff‟s purported obligation” and thus are debt collectors within the meaning of the Fair Debt

24

Collection Practices Act. (“FDCPA”). FAC ¶ 39.

25

Title 15, United States Code, §1692a(6) in pertinent part provides:

26
27
28

The term “debt collector” means any person who uses any
instrumentality of interstate commerce or the mails in any business
the principal purpose of which is the collection of any debts, or who
10

regularly collects or attempts to collect, directly or indirectly, debts
owed or due or asserted to be owed or due another.

1
2

15 U.S.C.A. § 1692a(6).
Mr. Petrovich failed to state a FDCPA claim because he cannot sufficiently allege that

3
4

Ocwen Loan Servicing and Western Progressive are “debt collectors.” To be held liable for

5

violation of the FDCPA, a defendant must fall within the FDCPA‟s definition of “debt collector.”

6

See Heintz v. Jenkins, 514 U.S. 291, 294 (1995). The term does not include, however, any person

7

collecting or attempting to collect any debt owed or due or asserted to be owed or due another to

8

the extent such activity . . . concerns a debt which was originated by such person [or] . . . concerns

9

a debt which was not in default at the time it was obtained by such person.” 15 U.S.C. §

conclusively that a debt collector does not include the consumer‟s creditors, a mortgage servicing

12
For the Northern District of California

1692a(6)(F)(iii) & (iii). Indeed, “[t]he legislative history of section 1692a(6) indicates

11

United States District Court

10

company, or an assignee of a debt, as long as the debt was not in default at the time it was

13

assigned.” Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (citing S.Rep. No. 95-

14

382, 95th Cong., 1st Sess. 3, reprinted in 1977 U.S. Code Cong. & Ad. News 1695, 1698). Here,

15

Defendant Ocwen Loan Servicing was the loan servicer before the mortgage went into default, and

16

the FDCPA excludes persons attempting to collect a debt that was not in default at the time it was

17

obtained. Id.
Moreover, “the law is clear that foreclosing on a property pursuant to a deed of trust is not

18
19

a debt collection within the meaning of . . . the FDCA. Gamboa v. Tr. Corps, No. 09-0007 SC,

20

2009 WL 656285, at *4 (N.D. Cal. Mar. 12, 2009). Therefore, as the trustee under the deed of

21

trust with the power to sell the foreclosed property, Western Progressive cannot have violated the

22

FDCA. D‟s RJN, Ex. 4. Accordingly, the Court DISMISSES Mr. Petrovich‟s FDCPA claim with

23

prejudice.

24

E.

25

Slander of Title
A claim for slander of title arises when a false statement – “which disparages title to

26

property and causes pecuniary loss” – is published in an unprivileged publication. Stalberg v. W.

27

Title Ins. Co., 27 Cal.App. 4th 925, 929 (1994). Section 47(c)(1) provides a privilege for

28

publications that serve as communications between interested parties. Kachlon v. Markowitz, 168
11

communications are not malicious – i.e. neither “motivated by hatred or ill will” nor without

3

reasonable basis in fact. Id. (citations omitted). The Section 47(c)(1) privilege applies to

4

nonjudicial foreclosure notices. Id. at 339. Mr. Petrovich alleges slander of title based on the

5

publication of a notice of default and a notice of sale, both of which are nonjudicial foreclosure

6

notices under Section 2924. See Cal. Civ. Code § 2924(a)(1); 2924(a)(4). Such publications are

7

privileged absent a showing of malice. Kachlon, 168 Cal. App. 4th at 339. For this purpose,

8

malice is defined as actual malice, meaning “„that the publication was motivated by hatred or ill

9

will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief

10

in the truth of the publication and therefore acted in reckless disregard of the plaintiff‟s rights.‟”

11

Id. at 336. Here, Plaintiff alleges that Defendants fabricated the mortgage documents and

12
For the Northern District of California

Cal.App. 4th 316, 336 (2008). That privilege is qualified by the requirement that the

2

United States District Court

1

recorded the “Notice of Trustee‟s Sale” knowing that they “were not acting on behalf of the

13

current and true beneficiary.” FAC ¶¶ 56, 58. For the reasons stated above, Mr. Petrovich‟s

14

current pleading fails to allege specific facts establishing a plausible claim of malice, and therefore

15

fails to establish that the publications were not privileged; rather, his claims are based on

16

technicalities the legal effect of which is in dispute. Furthermore, Mr. Petrovich has not alleged

17

sufficient and plausible facts indicating falsity, disparagement of title, or pecuniary loss. Thus, the

18

Court DISMISSES this cause of action without leave to amend.

19

F.

20

Violation of 12 U.S.C. § 2605
“RESPA [as 12 U.S.C. § 2605 is referred to] requires the servicer of a federally related

21

mortgage loan to provide a timely written response to inquiries from borrowers regarding the

22

servicing of their loans.” Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 665 (9th Cir. 2012)

23

(citing 12 U.S.C. § 2605(e)(1)(A), (e)(2)). “If the servicer fails to respond properly to such a

24

request, the statute entitles the borrower to recover actual damages and, if there is a „pattern or

25

practice of noncompliance,‟ statutory damages of up to $1,000.” Id. (citing 12 U.S.C. § 2605(f)).

26

To state a claim under RESPA, a plaintiff must allege that (1) a defendant violated RESPA; and

27

(2) that defendant‟s violation caused the plaintiff monetary damages. Hutchinson v. Del. Sav.

28

Bank FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006) (“alleging a breach of RESPA duties alone
12

1

does not state a claim under RESPA. Plaintiff must, at a minimum, also allege that the breach

2

resulted in actual damages”).
Mr. Petrovich sent two letters to Defendants asking for loan origination documents and

3

because Mr. Petrovich‟s letters do not qualify as Qualified Written Requests (QWS) under

6

RESPA. Reply at 17. Defendants are correct. In his letters, Mr. Petrovich was not asking for

7

information relating to the servicing of his loan.4 A QWR must seek information relating to the

8

servicing of the loan; a request for loan origination documents is not a QWR. Patacsil v. Wilshire

9

Credit Corp., No. 2:09-cv-01660-MCE-KJM, 2010 WL 500466 at *5 (E.D. Cal. Feb.8, 2010)

10

(finding that request for information “simply relat[ing] to the origination of the loan, not any

11

servicing errors” was not a QWR); Lima v. Am. Home Mortg. Servicing, No. C 09-3561 CW, 2010

12
For the Northern District of California

inquiring about the ownership of the loan. Exs. D, E. Defendants argue that Plaintiff‟s claim fails

5

United States District Court

4

WL 144810 at *3 (N.D. Cal. Jan.11, 2010) (holding that a request for “documents associated with

13

the loan‟s origination” is not a QWR under RESPA). Because a request for loan origination

14

documents does not, as a matter of law, constitute a QWR, Plaintiff has failed to state a claim for a

15

RESPA violation. Therefore, the Court DISMISSES this cause of action without leave to amend.

16

G.

Violation of the UCL
In his sixth cause of action, Mr. Petrovich alleges that “Defendants have committed and

17
18

continue to commit unlawful, unfair and fraudulent acts in direct violation of Cal. Bus. And Prof.

19

Code section 17200, et seq.” FAC ¶ 83.
California‟s Unfair Competition Law prohibits any “unlawful, unfair or fraudulent

20
21

business act or practice.” Cal. Bus. & Prof. Code § 17200. “Each of these three adjectives

22

[unlawful, unfair or fraudulent] captures a separate and distinct theory of liability.” Rubio v.

23

Capital One Bank, 613 F.3d 1195, 1203 (9th Cir.2010) (quotation marks omitted).
Here, Mr. Petrovich did not allege an “unfair” claim. Mr. Petrovich stated in his FAC that

24
25

“described unlawful and fraudulent acts and practices gave Defendants an unfair advantage over

26
4

27
28

See e.g., Ex. D: “I request the name and address of the original creditor. [] This request includes
a viewing of the original Trust Deed and Promissory Note.”; Ex. E: “Please provide the belowrequested information and any additional information or documents you think establishes your
right to make the demands or to carry out the threats of the Notice.”
13

1

their competitors. Defendants‟ well coordinated scheme of deception has unjustly enriched them

2

at the expense of unknowing Californians.” FAC ¶ 89. His fraud claim is based on “recordation

3

of false documents;” it fails because there is nothing fraudulent in the “Corrective Assignment of

4

Deed of Trust.” FAC ¶ 86.

5

Under the “unlawful” prong, the UCL incorporates other laws and treats violations of those

6

laws as unlawful business practices independently actionable under state law. Chabner v. United

7

Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000) (citing Cel-Tech Comms., Inc. v. Los

8

Angeles Cellular Co., 20 Cal.4th 163, 180 (1999)). “To state a cause of action based on an

9

unlawful business act or practice under the UCL, a plaintiff must allege facts sufficient to show a

Cal.App.4th 1105, 1133 (Cal. Ct. App. 2014) (“unlawful practices are practices „forbidden by law,

12
For the Northern District of California

violation of some underlying law.” Prakashpalan v. Engstrom, Lipscomb and Lack, 223

11

United States District Court

10

be it civil or criminal, federal, state, or municipal, statutory, regulatory or court-made.‟”).

13

Here, Plaintiff alleges that “Defendants‟ Ocwen and Western unlawful conduct violated 15

14

U.S.C. § 1692, 12 U.S.C. § 2605 and several other California and federal laws.” FAC ¶ 85.

15

Because the Court dismissed all Mr. Petrovich‟s legal claims, Mr. Petrovich cannot state a claim

16

for unlawful conduct under the UCL. Thus, the Court DISMISSES this cause of action without

17

leave to amend.]
IV. CONCLUSION

18
19

For the foregoing reasons, the motion to dismiss is GRANTED with prejudice.

20

This order disposes of Docket No. 45. The Clerk shall enter judgment and close the file in

21

this case.

22
23

IT IS SO ORDERED.

24
25
26
27

Dated: February 12, 2016
______________________________________
EDWARD M. CHEN
United States District Judge

28

14