Arreola et al v. Greenlight Financial Services et al

Filing 13

ORDER Granting (Doc. 9 ) Defendant Specialized Loan Servicing's Motion to Dismiss Without Prejudice. Should Plaintiffs choose to file a Second Amended Complaint, they must do so on or before June 11, 2010. Signed by Judge Thomas J. Whelan on 5/24/20100. (cap) (jrl).

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 CUITLAHUAC ARREOLA and GUADALUPE ARREOLA, vs. Plaintiffs, CASE NO. 09-CV-1536 W (POR) ORDER GRANTING DEFENDANT'S MOTION TO DISMISS (Doc. No. 9.) UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

GREENLIGHT FINANCIAL SERVICES; MIDLAND MORTGAGE COMPANY; SPECIALIZED LOAN SERVICING, LLC; DOES 1­20, Defendants. On July 15, 2009, Plaintiffs Cuitlahuac Arreola and Guadalupe Arreola

21 ("Plaintiffs") filed this lawsuit against Defendants Greenlight Financial Services 22 ("Greenlight"), Midland Mortgage Company ("Midland"), and Specialized Loan 23 Servicing ("SLS"). On April 8, 2010, SLS moved to dismiss the complaint pursuant to 24 Federal Rule of Civil Procedure 12(b)(6). Plaintiffs have opposed the motion. 25 The Court decides the matter on the papers submitted and without oral argument 26 pursuant to Civil Local Rule 7.1(d)(1). For the following reasons, the Court GRANTS 27 SLS's motion to dismiss. 28 -109-cv-1536 W

1 I. 2

BACKGROUND Plaintiffs are the current title holders of a home located at 1700 Canon Drive,

3 Imperial, CA 92251. (the "Property") Defendants Greenlight, Midland, and SLS are 4 institutions that have been, or are currently, involved with the mortgage on the 5 Property. 6 Plaintiffs purchased the Property on December 11, 2006. The loan secured by the 7 First Deed of Trust totaled $278,990. The second mortgage, secured by the Second 8 Deed of Trust, totaled $55,700.00. Both loans had adjustable interest rates. At some 9 point, Plaintiffs began having difficulty paying their mortgage. 10 12 13 II. 14 LEGAL STANDARD The court must dismiss a cause of action for failure to state a claim upon which On March 25, 2010, Plaintiffs filed their First Amended Complaint ("FAC"). On 11 April 8, 2010, SLS moved to dismiss the lawsuit.

15 relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) 16 tests the complaint's sufficiency. See North Star Int'l. v. Arizona Corp. Comm'n., 720 17 F.2d 578, 581 (9th Cir. 1983). All material allegations in the complaint, "even if 18 doubtful in fact," are assumed to be true. Id. The court must assume the truth of all 19 factual allegations and must "construe them in the light most favorable to the 20 nonmoving party." Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir. 2002); see also 21 Walleri v. Fed. Home Loan Bank of Seattle, 83 F.3d 1575, 1580 (9th Cir. 1996). 22 As the Supreme Court recently explained, "[w]hile a complaint attacked by a 23 Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's 24 obligation to provide the `grounds' of his `entitlement to relief' requires more than labels 25 and conclusions, and a formulaic recitation of the elements of a cause of action will not 26 do." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007). Instead, the 27 allegations in the complaint "must be enough to raise a right to relief above the 28 speculative level." Id. at 1964­65. A complaint may be dismissed as a matter of law -209-cv-1536 W

1 either for lack of a cognizable legal theory or for insufficient facts under a cognizable 2 theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). 3 Generally, the court may not consider material outside the complaint when ruling 4 on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 5 1542, 1555 n.19 (9th Cir. 1990). However, the court may consider any documents 6 specifically identified in the complaint whose authenticity is not questioned by the 7 parties. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superceded by 8 statute on other grounds). Moreover, the court may consider the full text of those 9 documents, even when the complaint quotes only selected portions. Id. The court may 10 also consider material properly subject to judicial notice without converting the motion 11 into a motion for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 12 1994) (citing Mack v. South Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 13 1986) abrogated on other grounds by Astoria Federal Savings and Loan Ass'n v. Solimino, 14 501 U.S. 104 (1991)). 15 16 III. 17 DISCUSSION The FAC contains four causes of action: (1) intentional misrepresentation; (2)

18 fraudulent concealment; (3) quiet title; and (4) a violation of 12 U.S.C. § 2605(e) and 19 24 C.F.R. § 3500. Plaintiffs are only asserting the third and fourth causes of action 20 against Defendant SLS. SLS has moved to dismiss both claims. The Court will address 21 each in turn. 22 23 A. 24 Plaintiffs' Action Against SLS To Quiet Title Is Dismissed In California, an action to quiet title may be brought "to establish title against

25 adverse claims to real or personal property or any interest therein." Cal. Code Civ. Pro. 26 § 760.020. Plaintiffs' have asserted a quiet title cause of action against "all Defendants." 27 (Doc. No. 8 at 8.) SLS asserts that the action to quiet title must fail because Plaintiffs 28 have not tendered ­ or offered to tender ­ the balance remaining on the loan. (Doc. No. -309-cv-1536 W

1 9 at 5.) 2 In opposition, Plaintiffs do not refute the insufficiency of their pleadings. In fact, 3 they concede that the SLS is "likely just the mortgage servicing company" and that the 4 third cause of action is not being brought against them. (Doc. No. 11 at 3.) 5 7 8 B. 9 10 Plaintiffs' RESPA Claim For A Failure To Respond to Qualified Written Request Against SLS is Dismissed Section 2605 of the Real Estate Settlement Procedures Act ("RESPA") imposes Accordingly, the Court DISMISSES the third cause of action against SLS 6 WITHOUT PREJUDICE.

11 on loan servicers the duty to timely respond to inquiries concerning a consumer's 12 mortgage loan whenever the loan servicer "receives a qualified written request from the 13 borrower (or an agent of the borrower)." 12 U.S.C. § 2605(e)(1)(A). If a loan servicer 14 fails to comply with the provisions of Section 2605, a borrower shall be entitled to "any 15 actual damages to the borrower as a result of the failure" and "any additional damages, 16 as the court may allow, in the case of a pattern or practice of noncompliance with the 17 requirements of [§ 2605]." 12 U.S.C. § 2605(f)(1). 18 Plaintiffs' fourth cause of action alleges a Section 2605 violation against 19 Defendants Midland and SLS for their failure to respond to a Qualified Written Request 20 ("QWR"). SLS argues that the RESPA claim is insufficiently pled because: (1) it does 21 not identify the legal basis for the requested accounting, (2) it does not establish that 22 the letter sent to SLS would qualify as a QWR, and (3) it does not allege a pecuniary 23 loss. (Doc. No. 9 at 6­7.) 24 In opposition, Plaintiffs claim the letter they sent was sufficient. But they do not 25 address whether or not the FAC must allege actual damages in order to adequately state 26 a RESPA cause of action. Nor do Plaintiffs directly address the sufficiency of their claim 27 for statutory damages under RESPA. 12 U.S.C. § 2605(f)(1)(B). Plaintiffs' silence on 28 these issues is significant. -409-cv-1536 W

1

Numerous courts, including several from this very district, have read Section 2605

2 as requiring a showing of pecuniary damages in order to sufficiently state a claim. See 3 e.g. Garibay v. Am. Home Mortg. Corp., No. 09cv1460, 2010 U.S. Dist. LEXIS 29071, 4 at *5­9 (S.D. Cal. Mar. 26, 2010)(where Judge William Q. Hayes dismissed a similar 5 claim asserted by Plaintiffs' counsel in another lawsuit because actual damages had been 6 insufficiently pled); citing Molina v. Wash. Mut. Bank, No. 09cv894, 2010 U.S. Dist. 7 LEXIS 8056, at *20-21 (S.D. Cal. Jan. 29, 2010). In this case, Plaintiffs have similarly 8 failed to plead factual allegations indicating how they were damaged by SLS' failure to 9 respond to the QWR. As such, the Court finds the RESPA claim for actual damages 10 is insufficient. 11 The same courts have also dismissed claims for statutory damages because they 12 do not contain factual allegations supporting the alleged "pattern and practice" of 13 RESPA violations by the defendants. See Garibay v. Am. Home Mortg. Corp., No. 14 09cv1460, 2010 U.S. Dist. LEXIS 29071, at *8­9 (S.D. Cal. Mar. 26, 2010). Having 15 reviewed the FAC, the Court finds that Plaintiffs' RESPA claim for statutory damages 16 suffers from the same defect. 17 19 20 IV. 21 CONCLUSION For the foregoing reasons, the Court GRANTS Defendant SLS's motion to Accordingly, the Court DISMISSES the fourth cause of action against SLS 18 WITHOUT PREJUDICE.

22 dismiss WITH LEAVE TO AMEND. (Doc. No. 9.) Should Plaintiffs choose to file 23 a Second Amended Complaint, they must do so on or before June 11, 2010. 24 IT IS SO ORDERED. 25 26 DATED: May 24, 2010 27 28 -5Hon. Thomas J. Whelan United States District Judge
09-cv-1536 W