Mancheno v. Servis One, Inc.

Filing 22

ORDER ON MOTION TO DISMISS by Hon. William H. Orrick denying 19 Motion to Dismiss. (jmdS, COURT STAFF) (Filed on 12/30/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JORGE MANCHENO,

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Case No. 15-cv-04901-WHO

Plaintiff,
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v.

ORDER ON MOTION TO DISMISS

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Re: Dkt. No. 19

SERVIS ONE, INC.,

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Defendant.

United States District Court
Northern District of California

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BACKGROUND

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Plaintiff Jorge Mancheno alleges that defendant Servis One, Inc., in attempting to foreclose

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on his home, violated various provisions of the California Homeowners Bill of Rights (Cal. Civil

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Code §§ 2923.6 & 2923.7) and the Real Estate Settlement Procedures Act (12 U.S.C. § 2605(f),

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12 C.F.R. § 1024.41(c)(iii)). Complaint (Dkt. No. 1). Servis One moves to dismiss the Second,

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Third, Fourth, and Fifth causes of action of the Complaint, which are based on alleged violations

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of California Civil Code § 2923.7. It argues that Mancheno fails to state a claim under section

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2923.7 because he fails to plead that he requested Servis One to appoint a Single Point of Contact

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(SPOC), a predicate for relief under that section.
Contrary to defendant’s argument, section 2923.7 does not require a borrower to

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affirmatively request a SPOC. Instead, its protections apply once a borrower requests foreclosure

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alternatives, which Mancheno indisputedly did. Servis One’s motion to dismiss is DENIED.1
LEGAL STANDARD

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Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint

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if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to

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Under Civil Local Rule 7-1(b), I find this matter appropriate for resolution without oral argument
and VACATE the January 6, 2016 hearing.

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dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its

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face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). A claim is facially plausible when

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the plaintiff pleads facts that “allow the court to draw the reasonable inference that the defendant

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is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation

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omitted). There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id.

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While courts do not require “heightened fact pleading of specifics,” a plaintiff must allege facts

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sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 570.

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In deciding whether the plaintiff has stated a claim upon which relief can be granted, the
Court accepts the plaintiff’s allegations as true and draws all reasonable inferences in favor of the

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plaintiff. Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is

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United States District Court
Northern District of California

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not required to accept as true “allegations that are merely conclusory, unwarranted deductions of

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fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir.

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2008).

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DISCUSSION
Civil Code section 2923.7 provides:
(a) Upon request from a borrower who requests a foreclosure
prevention alternative, the mortgage servicer shall promptly
establish a single point of contact and provide to the borrower one or
more direct means of communication with the single point of
contact.
(b) The single point of contact shall be responsible for doing all of
the following:
(1) Communicating the process by which a borrower may apply for
an available foreclosure prevention alternative and the deadline for
any required submissions to be considered for these options.
(2) Coordinating receipt of all documents associated with available
foreclosure prevention alternatives and notifying the borrower of
any missing documents necessary to complete the application.
(3) Having access to current information and personnel sufficient to
timely, accurately, and adequately inform the borrower of the
current status of the foreclosure prevention alternative.
(4) Ensuring that a borrower is considered for all foreclosure
prevention alternatives offered by, or through, the mortgage
servicer, if any.
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(5) Having access to individuals with the ability and authority to
stop foreclosure proceedings when necessary.
(c) The single point of contact shall remain assigned to the
borrower’s account until the mortgage servicer determines that all
loss mitigation options offered by, or through, the mortgage servicer
have been exhausted or the borrower’s account becomes current.
(d) The mortgage servicer shall ensure that a single point of contact
refers and transfers a borrower to an appropriate supervisor upon
request of the borrower, if the single point of contact has a
supervisor.
(e) For purposes of this section, “single point of contact” means an
individual or team of personnel each of whom has the ability and
authority to perform the responsibilities described in subdivisions
(b) to (d), inclusive. The mortgage servicer shall ensure that each
member of the team is knowledgeable about the borrower’s situation
and current status in the alternatives to foreclosure process.
Cal. Civ. Code § 2923.7.

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United States District Court
Northern District of California

Mancheno alleges that he pursued a loan modification agreement with Servis One through
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his single point of contact, Matthew Stewart. He contends that Servis One violated: (i) section
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2923.7(b)(3), by failing to inform him that a sale date for his property had been set and by
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providing incorrect contact information for a lending agent defendant intended Mancheno to
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contact, Complaint, ¶¶ 52-57; (ii) section 2923.7(b)(1), by failing to inform Mancheno of the
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status of his loan modification application, id. ¶¶ 58-63; (iii) section 2923.7(b)(5), by failing to
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provide plaintiff access to a SPOC with the ability and authority to stop the foreclosure
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proceedings while Mancheno was seeking a mortgage modification, and because his assigned
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SPOC was inadequate in failing to stop the foreclosure proceedings, id. ¶¶ 64-69; and (iv) section
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2923.7(b)(4), when Mancheno’s SPOC failed to consider him for all foreclosure prevention
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alternatives offered by Servis One. Id. ¶¶ 70-73.
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Servis One argues that Mancheno’s section 2923.7 claims are deficient because section
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2923.7(a) requires a borrower to “request” assignment of a SPOC as a predicate to a mortgage

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servicer becoming liable under the requirements of section 2923.7(b) and Mancheno does not
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allege he made that request. Motion (Dkt. No. 19-1) at 3-4. Mancheno responds that it is
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undisputed that defendant provided a SPOC – Matthew Stewart – and that his allegations focus

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instead on how Mr. Stewart failed to meet the requirements of the statute. Opposition (Dkt. No.
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20) at 6; Complaint ¶ 21. Mancheno also relies on cases where courts have rejected Servis One’s

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argument and concluded the statute does not require an express request for a SPOC by a borrower,

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but instead imposes a duty to appoint a SPOC when a borrower requests foreclosure alternatives.

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See Hild v. Bank of Am., N.A., No. EDCV 14-2126-JGB (SPx), 2015 U.S. Dist. LEXIS 13419, at

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*19 (C.D. Cal. Jan. 29, 2015) (“California Civil Code § 2923.7(a) does not condition the

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appointment of a SPOC on a borrower’s specific request for such a contact; instead the statutory

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provision requires a SPOC to be appointed when a borrower “requests a foreclosure prevention

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alternative,” such as a loan modification.”); Penermon v. Wells Fargo Bank, N.A., 47 F. Supp. 3d

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982, 1000 (N.D. Cal. 2014) (“A plain reading of the statute requires Wells Fargo to assign a SPOC
when a borrower requests a foreclosure prevention alternative. It does not require a borrower to

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United States District Court
Northern District of California

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specifically request a SPOC.”); see also Hixson v. Wells Fargo Bank NA, No. C 14-285 SI, 2014

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U.S. Dist. LEXIS 108617, at *16 n.4 (N.D. Cal. Aug. 6, 2014) (“Defendant argues that the

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language of § 2923.7 requires borrowers to affirmatively request a single point of contact and that

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the FAC does not allege that plaintiff ever requested one. However, defendant does not dispute

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that plaintiff was provided with multiple single points of contact, and thus defendant’s argument is

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moot and the Court need not address it here.”).
I recognize that there is a split among federal district courts in the Ninth Circuit on this

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issue. See Green v. Cent. Mortg. Co., No. 3:14-cv-04281-LB, 2015 U.S. Dist. LEXIS 161847, at

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*44 (N.D. Cal. Dec. 1, 2015) (collecting cases). However, I agree with the courts that have

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concluded that a borrower need not specifically request a SPOC, but instead must seek foreclosure

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alternatives to trigger a loan servicer’s duty to appoint a SPOC. That interpretation is supported

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by the plain meaning of the statute2 and is also consistent with the purpose of the statute.3 Since

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Mungai v. Wells Fargo Bank, No. C-14-00289 DMR, 2014 U.S. Dist. LEXIS 77407, at *31-32
(N.D. Cal. June 3, 2014) (“The phrase ‘upon request’ simply indicates when the SPOC must be
assigned (i.e., upon the borrower’s request for a foreclosure prevention alternative, as opposed to
the borrower’s selection of a foreclosure prevention alternative).”).
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See, e.g., Mora v. US Bank, No. CV 15-02436 DDP (AJWx), 2015 U.S. Dist. LEXIS 97731, at
*14-15 n.1 (C.D. Cal. July 27, 2015) (“Defendant’s reading also runs against the general canon
that a statute should not be read to defeat itself. To read the statute as requiring an explicit request
would at best place an unnecessary technical burden on borrowers and at worst defeat the intent of
the statute altogether.”).
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Mancheno clearly requested foreclosure alternatives, Servis One’s motion to dismiss the second

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through fifth causes of action is DENIED.
CONCLUSION

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Servis One’s motion to dismiss is DENIED. It shall answer the Complaint within 20 days.

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IT IS SO ORDERED.

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Dated: December 30, 2015
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WILLIAM H. ORRICK
United States District Judge

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United States District Court
Northern District of California

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