Fevinger v. Bank of America , N.A.

Filing 84

ORDER GRANTING-IN-PART NATIONSTAR'S MOTION TO DISMISS by Judge Paul S. Grewal granting-in-part 73 (psglc2, COURT STAFF) (Filed on 8/22/2014)

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UNITED STATES DISTRICT COURT

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United States District Court
For the Northern District of California

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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RACHEL FEVINGER,

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Plaintiff,
v.

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BANK OF AMERICA, N.A., et al.,
Defendants.

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Case No. 5:13-cv-04839-PSG
ORDER GRANTING-IN-PART
NATIONSTAR’S MOTION TO
DISMISS
(Re: Docket No. 73)

Before the court is Defendant Nationstar Mortgage LLC’s motion to dismiss. 1 Plaintiff
Rachel Fevinger opposes. The court finds the motion suitable for disposition on the papers as
provided for by the local rules. 2 Having considered the arguments, the court GRANTS

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Nationstar’s motion, but only IN-PART, as explained below.

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Because the court and the parties are well-versed in the facts of this particular foreclosure

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dispute, the court dispenses with preliminaries and addresses the single issue in dispute: whether

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See Docket No. 73.

See Civil L.R. 7-1(b) (“Motions must be directed to the Judge to whom the action is assigned,
except as that Judge may otherwise order.”); see also Fed. R. Civ. P. 78(b) (“By rule or order, the
court may provide for submitting and determining motions on briefs, without oral hearings.”).
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Case No. 5:13-cv-04839-PSG
ORDER GRANTING-IN-PART NATIONSTAR’S MOTION TO DISMISS

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Nationstar must remain in the case as a necessary party even though Fevinger has no live,
actionable claim against Nationstar. 3
I. LEGAL STANDARDS

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A.

Fed. R. Civ. P. 19(a)
Fed. R. Civ. P. 19(a) provides:

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A person who is subject to service of process and whose joinder will not deprive the court of
subject-matter jurisdiction must be joined as a party if:

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(A) in that person’s absence, the court cannot accord complete relief among existing
parties; or

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(B) that person claims an interest relating to the subject of the action and is so situated that
disposing of the action in the person’s absence may:

United States District Court
For the Northern District of California

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(i) as a practical matter impair or impede the person’s ability to protect the interest;
or

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(ii) leave an existing party subject to a substantial risk of incurring double, multiple,
or otherwise inconsistent obligations because of the interest.

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II. DISCUSSION
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Fevinger urges that Nationstar is a necessary party under Fed. R. Civ. P. 19(a) because

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Nationstar is the current loan servicer. The theory goes like this: because Nationstar could

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participate in future foreclosure proceedings, Nationstar should participate in this litigation.

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For support, Fevinger leans heavily on Adams v. Nationscredit Fin. Services Corp. 4 Adams holds

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that a current servicer should be considered a necessary party in a suit for loan rescission, because

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the servicer “could attempt to foreclose on the loan.” 5

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Adams, however, is not persuasive.
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First, as an opinion from another federal district, Adams is not binding on this court.

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Unfamiliar readers are directed to the court’s order granting-in-part some of the other defendants
motion to dismiss. See Docket No. 75.

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351 F. Supp. 2d 829 (N.D. Ill. 2004).

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Id. at 835.

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Case No. 5:13-cv-04839-PSG
ORDER GRANTING-IN-PART NATIONSTAR’S MOTION TO DISMISS

Second, that other district itself has taken issue with Adams’ reasoning – albeit in an earlier

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case. 6 Loan servicers do not hold a sufficient “interest” in this case to justify their inclusion as a

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necessary party. As Walker v. Gateway Fin. Corp. put it, an argument that a servicer should be

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part of a case simply because it may engage in improper actions “is totally speculative (really not a

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current case or controversy) and does not warrant its retention as a defendant.” 7 Even those cases

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that have followed Adams have focused on claims for rescission asserted by the plaintiff under the
Truth in Lending Act (“TILA”). 8 Fevinger’s operative complaint does not seek rescission or bring
any claims under TILA.
Third, this court also has not extended Adams’ reasoning beyond suits for rescission. In

United States District Court
For the Northern District of California

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Madrigal v. OneWest Bank, Judge Chesney held that a servicer was not a necessary party where the

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particular actions of the servicer were not at issue. 9 Claims based upon another defendant’s

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See Walker v. Gateway Fin. Corp., 286 F. Supp. 2d 965, 969 (N.D. Ill. 2003).
All that is asserted against Homecomings in the AC is that it services the mortgage loans.
According to plaintiffs’ counsel, that justifies its inclusion as a defendant under
Fed.R.Civ.P. (“Rule”) 19(a). But although some of this Court’s colleagues have found that
to be an appropriate basis for retaining Homecomings as a defendant, this Court finds it an
undue stretch to say that Homecomings “claims an interest relating to the subject of a
litigation” (the language of Rule 19(a)) such as to support its having to employ counsel and
incur expenses here.
When the matter is looked at realistically, if any loan is indeed rescinded Homecomings
will automatically cease to have any collection or other function in connection with that
loan. Any concern that it may thereafter engage in improper reporting to credit agencies is
totally speculative (really not a current case or controversy) and does not warrant its
retention as a defendant. Homecomings claims no independent stake in the matter, and its
presence in the litigation is really unnecessary. It too is dismissed as a defendant.
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Walker, 286 F. Supp. 2d at 969.
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See Bills v. BNC Mortgage, Inc., 502 F. Supp. 2d 773, 775 (N.D. Ill. 2007).
At least three courts in this district have held that a current servicer should not be dismissed
from a suit for rescission because the servicer is a necessary defendant under
Fed. R. Civ. P. 19(a). See Miranda v. Universal Fin. Group, Inc., 459 F.Supp.2d 760,
765-66 (N.D. Ill. 2006) (and cases cited therein); Adams, 351 F. Supp. 2d at 835. Those
cases suggest that “[d]ismissing the servicer could impair the borrower's ability to fully
protect his or her interest in rescinding the loan because the servicer could improperly
report to credit bureaus or foreclose on the loan.” Miranda, 459 F. Supp. 2d at 766.
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See Madrigal v. OneWest Bank, Case No. 3:09-cv-3436-MMC, 2010 WL 519828, at *2
(N.D. Cal. Feb. 9, 2010).
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Case No. 5:13-cv-04839-PSG
ORDER GRANTING-IN-PART NATIONSTAR’S MOTION TO DISMISS

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actions, which were alleged to have occurred prior to the servicer’s involvement, were insufficient
to bind the servicer to litigation as a necessary party. 10

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In sum, each of Fevinger’s claims are based exclusively on the prior acts of Bank of

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America. No allegations are directed at Nationstar. Because threadbare “recitals of elements of a

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cause of action, supported by mere conclusory statements, do not” suffice, dismissal of Fevinger’s

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UCL claim is warranted. 11 Fevinger’s additional argument for keeping Nationstar in this case –

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that Nationstar could participate in future foreclosure proceedings – remains too speculative.

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United States District Court
For the Northern District of California

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The Madrigals’ second argument likewise is unavailing. Relying on Hashop v. Federal
Home Loan Mortgage Corp., 171 F.R.D. 208 (N.D. Ill.1997), the Madrigals argue that
OWB, in its capacity as the servicer, is a necessary party. In Hashop, the obligors therein
had sued the owner of their respective obligations under the theory that the owner, through
mortgage servicers, was breaching the terms of the obligations by incorrectly calculating
the amount of escrow payments due. See id. at 210–11. Under those circumstances, the
district court, observing that it was the servicers who actually determined the amounts due
and would be required to “change their escrowing practices” if liability on the part of the
owner was established, found the servicers were necessary parties. See id. at 211–12. Here,
by contrast, the Madrigals do not allege that OWB has in any way failed to properly service
the obligation. Rather, the only violation alleged is a violation of TILA occurring at the
time the Madrigals entered into the transaction with IndyMac. In short, unlike in Hashop,
the actions of the servicer are not at issue herein.
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See id. at 2.
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Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)).
Two working principles underlie our decision in Twombly. First, the tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice. Twombly, 550 U.S. at 555 (Although for the
purposes of a motion to dismiss we must take all of the factual allegations in the complaint
as true, we “are not bound to accept as true a legal conclusion couched as a factual
allegation” (internal quotation marks omitted)). Rule 8 marks a notable and generous
departure from the hyper-technical, code-pleading regime of a prior era, but it does not
unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.
Second, only a complaint that states a plausible claim for relief survives a motion to
dismiss. Id., at 556. Determining whether a complaint states a plausible claim for relief
will, as the Court of Appeals observed, be a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense. 490 F.3d, at
157-158. But where the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged—but it has not “show[n]”—“that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
In keeping with these principles a court considering a motion to dismiss can choose to
begin by identifying pleadings that, because they are no more than conclusions, are not
entitled to the assumption of truth. While legal conclusions can provide the framework of a
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Case No. 5:13-cv-04839-PSG
ORDER GRANTING-IN-PART NATIONSTAR’S MOTION TO DISMISS