Daniels et al v. Comunity Lending, Inc et al

Filing 132

ORDER: The "Motion to Strike Defendants Documents Dispute Authenticity," the "Amended Motion to Strike Defendants Immaterial Evidence Dispute Authenticity," and the Motion to Strike Defendants Answer to Plaintiffs' Fourth Ame nded Complaint (Docs. 107 , 119 , 121 ) are denied as moot. The Motion to Dismiss Plaintiffs' Fourth Amended Complaint (Doc. 103 ) is granted. The Fourth Amended Complaint is dismissed as to all Moving Defendants. The Motion for a Preliminar y Injunction (Doc. 122 ) is denied. The Fourth Amended Complaint is dismissed without prejudice as to Defendants ComUnity Lending, Inc. and New Century Mortgage for failure to serve in accordance with Federal Rule of Civil Procedure 4. The Motion for Default Judgment (Doc. 118 ) and Amended Motion for Default Judgment (Doc. 120 ) are denied. Signed by Judge William Q. Hayes on 2/9/2015. (All non-registered users served via U.S. Mail Service.) (mdc)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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ELLINGTON DANIELS and DIANE
DANIELS,

CASE NO. 13cv488-WQH-JMA
ORDER

Plaintiffs,

vs.
COMUNITY LENDING, INC.;
BANK OF NEW YORK; BANK OF
AMERICA, N.A.; RECONTRUST
COMPANY, N.A.; GINNIE MAE;
ET. AL; NEW CENTURY
MORTGAGE; BAC HOME LOANS
SERVICING, LP; COUNTRYWIDE
HOME LOANS; MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS; CLEAR RECON CORP.;
and JOHN DOES (Investors) 1-10,000,

Defendants.
HAYES, Judge:
The matters before the Court are: (1) the Motion to Dismiss Plaintiffs’ Fourth
Amended Complaint filed by Defendants (ECF No. 103), (2) the “Motion to Strike
Defendants Documents Dispute Authenticity” filed by Plaintiffs (ECF No. 107), (3) the
“Amended Motion to Strike Defendants Immaterial Evidence Dispute Authenticity”
filed by Plaintiffs (ECF No. 121), (4) the Motion to Strike Defendants’ Answer to
Plaintiffs’ Fourth Amended Complaint filed by Plaintiffs (ECF No. 119), (5) the Motion
for Default Judgment filed by Plaintiffs (ECF No. 118), (6) the Amended Motion for
Default Judgment filed by Plaintiffs (ECF No. 120), and (7) the Motion for a Permanent
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1 Injunction filed by Plaintiffs (ECF No. 121).
2 I.

Background

3

On February 28, 2013, Plaintiffs Ellington and Diane Daniels commenced this

4 action by filing a Complaint in this Court. (ECF No. 1). The Complaint asserted claims
5 for violation of the Fair Debt Collection Practices Act (“FDCPA”), violation of the
6 Telephone Consumer Protection Act (“TCPA”), and violations of the U.S. Constitution.
7 On April 16, 2013, Defendants Bank of New York, Bank of America, N.A. (“Bank of
8 America”), ReconTrust Company, N.A. (“ReconTrust”), and Mortgage Electronic
9 Registration Systems, Inc. (“MERS”) filed a motion to dismiss the Complaint. (ECF
10 No. 10). On June 5, 2013, the Court granted the motion to dismiss and dismissed the
11 Complaint without prejudice. (ECF No. 30).
12

On July 9, 2013, Plaintiffs filed the First Amended Complaint (“FAC”). (ECF

13 No. 34). The FAC reasserted claims for violation of the FDCPA, violation of the
14 TCPA, and constitutional violations, and added a claim for violation of the Fair Credit
15 Reporting Act (“FCRA”) and various state-law claims.

On August 26, 2013,

16 Defendants The Bank of New York, Bank of America, Countrywide Home Loans, Inc.
17 (“Countrywide”), ReconTrust, and MERS filed a motion to dismiss. (ECF No. 45). On
18 January 6, 2014, the Court granted the motion to dismiss and dismissed the FAC
19 without prejudice. (ECF No. 60).
20

On May 14, 2014, Plaintiffs filed the Second Amended Complaint (“SAC”).

21 (ECF No. 79). On May 28, 2014, Defendants The Bank of New York, Bank of
22 America, Countrywide, ReconTrust, and MERS filed a motion to dismiss. (ECF No.
23 80). On July 21, 2014, the Court granted the unopposed motion to dismiss and
24 dismissed the SAC without prejudice. (ECF No. 82). On September 29, 2014,
25 Plaintiffs filed the Third Amended Complaint. (ECF No. 90).
26

On November 14, 2014, Plaintiffs filed the Fourth Amended Complaint (“Fourth

27 AC”), which is the operative pleading in this case. (ECF No. 97). The Fourth
28 Amended Complaint names ComUnity Lending, Inc., New Century Mortgage, BAC
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1 Home Loans Servicing, LP, Countrywide, Bank of America, Ginnie Mae, The Bank of
2 New York, MERS, ReconTrust, and Clear Recon Corp. as Defendants.
3

On December 3, 2014, Defendants Bank of New York Mellon (formerly known

4 as The Bank of New York), Bank of America, Countrywide, ReconTrust, and MERS
5 (collectively “Moving Defendants”) filed the Motion to Dismiss Plaintiffs’ Fourth
6 Amended Complaint, accompanied by a request for judicial notice.1 (ECF No. 103).
7 On January 5, 2015, Plaintiffs filed a document titled “Response in Accordance with
8 F.R.C.P. 15(a)(1)(B) to Defendants 12(b) Motion Amended Complaint” that included
9 a one-paragraph memorandum of points and authorities. (ECF No. 109).
10

On January 5, 2015, Plaintiffs filed a fifth amended complaint. (ECF No. 113).

11 On January 7, 2015, the Court issued an order striking the fifth amended complaint
12 because Plaintiffs did not obtain leave of Court or consent of Defendants to file it.
13 (ECF No. 114). The January 7, 2015 Order stated: “Within fifteen (15) days of this
14 Order, Plaintiffs shall file a response to Defendants’ Motion to Dismiss Fourth
15 Amended Complaint.” Id. at 2. On January 28, 2015, Plaintiffs filed an opposition to
16 the Motion to Dismiss. (ECF No. 125).
17

On January 5, 2015, Plaintiffs filed the “Motion to Strike Defendants Documents

18 Dispute Authenticity.” (ECF No. 107). On January 8, 2015, Plaintiffs filed the Motion
19 for Default Judgment. (ECF No. 118). On January 12, 2015, Plaintiffs filed the Motion
20 to Strike Defendants’ Answer to Plaintiffs’ Fourth Amended Complaint. (ECF No.
21 119). On January 12, 2015, Plaintiffs filed the Amended Motion for Default Judgment.
22 (ECF No. 120). On January 12, 2015, Plaintiffs filed the “Amended Motion to Strike
23 Defendants Immaterial Evidence Dispute Authenticity.” (ECF No. 121). On January
24 21, 2015, Plaintiffs filed the Motion for a Preliminary Injunction. (ECF No. 122). On
25 February 3, 2015, Defendant Clear Recon Corp. filed an opposition, which Bank of
26 New York Mellon, Bank of America, Countrywide, ReconTrust, and MERS joined.
27
1

On January 8, 2015, Defendant Clear Recon Corp. filed a notice of joinder to
28 the Motion to Dismiss. (ECF No. 116). “Moving Defendants” hereinafter includes
Defendant Clear Recon Corp.
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1 (ECF Nos. 126, 128).
2 II. Motions to Strike (ECF Nos. 107, 119, 121)
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A. “Motion to Strike Defendants Documents Dispute Authenticity” (ECF

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No. 107) and “Amended Motion to Strike Defendants Immaterial Evidence

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Dispute Authenticity” (ECF No. 121)

6

The document titled “Motion to Strike Defendants Documents Dispute

7 Authenticity” moves to “strike defendants [sic] extrinsic and intrinsic fraudulent
8 documentary evidence” and contends that Defendants’ evidence is not judicially
9 noticeable. (ECF No. 107 at 1). The only evidence in this case submitted by
10 Defendants is in the Request for Judicial Notice accompanying the Motion to Dismiss.
11 (ECF No. 103-2). Federal Rule of Civil Procedure 12(f) provides that “[t]he court may
12 strike from a pleading any insufficient defense or any redundant, immaterial,
13 impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f) (emphasis added). The
14 Federal Rules of Civil Procedure allow only the following pleadings: a complaint, an
15 answer to a complaint, an answer to a counterclaim, an answer to a crossclaim, a third16 party complaint, an answer to a third-party complaint, and a reply to an answer. See
17 Fed. R. Civ. P. 7(a). Requests for judicial notice are not subject to Rule 12(f) striking.
18 Plaintiffs have not identified any other authority for striking Defendants’ Request for
19 Judicial Notice.
20

Plaintiffs’ “Motion to Strike Defendants Documents Dispute Authenticity” (ECF

21 No. 107) and “Amended Motion to Strike Immaterial Evidence Dispute Authenticity”
22 (ECF No. 121) are denied. The Court construes ECF Nos. 107 and 121 as oppositions
23 to Defendants’ Request for Judicial Notice (ECF No. 103-2).
24

B. Motion to Strike Defendants Answer to Plaintiffs’ Fourth Amended

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Complaint (ECF Nos. 119)

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Plaintiffs move to strike Defendants’ answer to Plaintiffs’ Fourth Amended

27 Complaint. Plaintiffs’ motion addresses various affirmative defenses allegedly asserted
28 by Defendants, and addresses the merits of each of Plaintiffs’ claims for relief asserted
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1 in the Fourth AC.
2

Defendants have not filed an answer to the Fourth Amended Complaint. The

3 Moving Defendants filed a motion to dismiss. See Fed. R. Civ. P. 12(b). Plaintiffs’
4 Motion to Strike Defendants’ Answer to Plaintiffs Fourth Amended Complaint (ECF
5 No. 119) is denied as moot.
6 III. Motion to Dismiss (ECF No. 103)
7

Defendants Bank of New York Mellon, Bank of America, Countrywide Home

8 Loans, Inc., ReconTrust, and MERS move to dismiss all claims asserted against them
9 in the Fourth AC with prejudice.
10

A. Allegations of the Fourth AC

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Plaintiffs own equitable and legal title to the property at issue. Plaintiffs entered

12 into a contractual agreement with Defendant ComUnity Lending. “Plaintiffs have no
13 contacts with Bank of America, N.A. or any of the other defendants.” (ECF No. 97 at
14 6). Defendant Bank of America committed fraud by falsifying the deed of trust on
15 Plaintiffs’ property by stating that Plaintiff Ellington Daniels “personally appeared” in
16 San Bernardino on June 15, 2006, even though Plaintiff Ellington Daniels was never
17 present. Id. at 6-7.
18

Defendant Bank of America further committed fraud by filing an assignment of

19 the deed of trust with the county recorder. Defendant Bank of America further
20 committed fraud by falsely asserting that Plaintiffs’ property was in default, and
21 demanding payment in excess of $400,000. Defendant Bank of America further
22 committed fraud by recording another fraudulent deed of trust “illegally transferring
23 assignment to Clear Recon Trust.” Id. at 7. “Defendants used fraud to place Plaintiffs
24 [sic] property in foreclosure.” Id.
25

Because Plaintiffs “attack the validity of the underlying alleged debt, ... tender

26 is not required since it would constitute an affirmation of the unlawful debt” and the
27 “deed is void on its face.” Id. at 8.
28

Defendants are debt collectors as defined by the Fair Debt Collection Practices
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1 Act (“FDCPA”), and Plaintiffs are consumers as defined by the FDCPA. Defendants
2 violated the FDCPA, sections 1692(e) and 1692(f) by demanding “to collect in excess
3 $400,000, an illegal lump sum of money, on an alleged debt, not validated, and not
4 permitted by law, defendants had no authority to make, and threatened to unlawfully
5 begin foreclosure on Plaintiffs [sic] property.” Id. at 9. Because Defendant ReconTrust
6 was employed by the other Defendants to conduct non-judicial foreclosure, ReconTrust
7 is jointly liable for violating the FDCPA. Because Defendant ReconTrust lacks the
8 power of sale, Defendant ReconTrust’s foreclosure activity falls within the FDCPA’s
9 definition of “debt collection.” Id. at 10. Defendants Bank of America, Countrywide
10 Home Loans, Bank of America Home Loans, Bank of New York Mellon, Ginnie Mae,
11 MERS, and New Century failed to validate the alleged debt in response to Plaintiff’s
12 Qualified Written Request (“QWR”), sent on November 27, 2012, and violated the
13 FDCPA by “demanding to collect” on a illegal sum of money that was not validated.
14 Id. at 9.
15

Defendants violated the Telephone Consumer Practices Act (“TCPA”) by

16 continuing to contact Plaintiffs by telephone regarding the alleged debt, despite
17 Plaintiffs giving Defendant Bank of America written notice to validate the alleged debt
18 and to cease and desist “calling, writing, and contacting Plaintiffs.” Id. at 17.
19 “Plaintiffs were harassed by Defendant Bank of America, N.A., from January 3, 2011
20 through March 11, 2014. The frequency of calls increased, to Plaintiffs cell phones, and
21 residential phones 3-5 times per day, all hours of the day, calls were before 8AM in the
22 morning, and other calls were after 9PM, causing the phone to ring repeatedly, and
23 continuously with intent to annoy, abuse and to harass Plaintiffs.” Id. “Defendant Bank
24 of America, N.A., placed random telephone calls, using an automatic telephone dialing
25 system, and left prerecorded voice messages, to Plaintiffs cell phones, and residential
26 phones.” Id. “Prior to January 2, 2011, when Plaintiffs received calls from Bank of
27 America, N.A., human agents, Plaintiffs demanded cease and desist calling [sic],
28 Defendants Bank of America, N.A., responded with insults, and threaten [sic] to take
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1 legal action to collect the alleged debt, and calls continued with even more frequency.”
2 Id. at 18. Defendants violated the TCPA because they had no business relationship or
3 contractual agreement with Plaintiffs.
4

Defendant Bank of America violated the Fair Credit Reporting Act (“FCRA”) by

5 pulling Plaintiffs credit report “without permissible purpose” and reporting “false
6 information to all credit bureaus.” Id. at 20.
7

Defendant Bank of America violated the Truth In Lending Act (“TILA”) by

8 submitting fraudulent documents to the county recorder and seeking to collect a debt
9 they did not own. Defendant Bank of America failed to disclose the amounts paid by
10 Plaintiffs.
11

Plaintiffs assert the following claims for relief: (1) violation of the FDCPA; (2)

12 violation of the TCPA; (3) violation of the FCRA; (4) violation of TILA; (5) violation
13 of the Fifth and Fourteenth Amendments’ due process clauses; (6) violation of the Fifth
14 and Fourteenth Amendments’ equal protection clauses; (8) violation of the Racketeer
15 Influenced and Corrupt Organizations Act (“RICO”); and various state law claims.
16

B. 12(b)(6) Standard

17

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state

18 a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Federal Rule of
19 Civil Procedure 8(a) provides that “[a] pleading that states a claim for relief must
20 contain ... a short and plain statement of the claim showing that the pleader is entitled
21 to relief.” Fed. R. Civ. P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where
22 the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable
23 legal theory. See Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).
24

“[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’

25 requires more than labels and conclusions, and a formulaic recitation of the elements
26 of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
27 (quoting Fed. R. Civ. P. 8(a)). “To survive a motion to dismiss, a complaint must
28 contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
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1 plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
2 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual
3 content that allows the court to draw the reasonable inference that the defendant is liable
4 for the misconduct alleged.” Id. (citation omitted). “[T]he tenet that a court must
5 accept as true all of the allegations contained in a complaint is inapplicable to legal
6 conclusions. Threadbare recitals of the elements of a cause of action, supported by
7 mere conclusory statements, do not suffice.” Id. (citation omitted). “When there are
8 well-pleaded factual allegations, a court should assume their veracity and then
9 determine whether they plausibly give rise to an entitlement to relief.” Id. at 679. “In
10 sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content,
11 and reasonable inferences from that content, must be plausibly suggestive of a claim
12 entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.
13 2009) (quotations and citation omitted).
14

Claims sounding in fraud or mistake must additionally comply with the

15 heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which
16 requires that a complaint “must state with particularity the circumstances constituting
17 fraud or mistake.” Fed. R. Civ. P. 9(b). Rule 9(b) “requires ... an account of the time,
18 place, and specific content of the false representations as well as the identities of the
19 parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir.
20 2007) (quotation omitted); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097,
21 1106 (9th Cir. 2003) (stating that averments of fraud must be accompanied by “the who,
22 what, when, where, and how of the misconduct charged”) (quotation omitted).
23
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C. Discussion
i. FDCPA
The Moving Defendants contend that Plaintiffs have failed to state an FDCPA

26 claim because they have failed to identify which provisions of the FDCPA were
27 violated or allege facts showing how these various provisions were violated. Plaintiffs
28 contend that they have alleged that Defendants are debt collectors subject to the
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1 FDCPA. Plaintiffs contend that Defendants are debt collectors because the deed of trust
2 is a “fraud;” therefore, Defendants have no contracts with Plaintiffs. (ECF No. 125 at
3 9). Plaintiffs contend that they have adequately alleged that Defendant Bank of
4 America violated the FDCPA by continuing debt collection activities, despite Plaintiffs
5 sending Defendant Bank of America a Qualified Written Request (“QWR”) pursuant
6 to the Real Estate Settlement Procedures Act (“RESPA”). Plaintiffs contend that they
7 have adequately alleged that Defendants Bank of America and ReconTrust violated the
8 FDCPA by sending “threatening dunning letters” that “demanded from Plaintiffs to
9 collect an unlawful lump sum in excess of $400,000 on an alleged debt, not validated
10 and not permitted by law....” Id. at 9.
11

The Fourth AC alleges violations of 15 U.S.C. sections 1692(e)-(f), 1692d(4),

12 1692e(5), 1692e(13), 1692f(6), and 1692e(13). The Fourth AC alleges that Plaintiffs
13 sent all Defendants a QWR pursuant to RESPA,2 but Defendants did not validate the
14 alleged debt and instead attempted to collect on it. The Fourth AC alleges that
15 Defendants violated the FDCPA by attempting to collect an illegal and unvalidated debt
16 and unlawfully foreclosing on Plaintiffs’ property. The Fourth AC alleges that the debt
17 is illegal because the deed of trust was fraudulently recorded.
18

The FDCPA applies to debt collectors, but not to creditors. See Mansour v.

19 Cal–Western Reconveyance Corp., 618 F. Supp. 2d 1178, 1182 (D. Ariz. 2009). Under
20 the FDCPA, a “debt collector” is “any person who uses any instrumentality of interstate
21 commerce or the mails in any business the principal purpose of which is the collection
22 of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts
23 owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). Excluded
24 from the definition of debt collector is “any person collecting or attempting to collect
25 any debt owed or asserted to be owed or due another to the extent such activity ... (iii)
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Neither party construes the Fourth AC as asserting an independent claim for
27 violation of RESPA in their briefing. Although both the Fourth AC and
Plaintiffs’opposition reference RESPA, Plaintiffs discuss RESPA in both instances in
28 the context of their FDCPA claim. The Court does not construe the Fourth AC as
asserting a claim for violation of RESPA.
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1 concerns a debt which was not in default at the time it was obtained.” See 15 U.S.C. §
2 1692a(6)(F).
3

“It is ... well-established that a loan servicer is not a debt collector for those

4 purposes if it acquired the loan before the borrower was in default.” Shkolnikov v.
5 JPMorgan Chase Bank, No. 12-03996, 2012 WL 6553988, at *19 (N.D. Cal. Dec. 14,
6 2012) (citing Schlegel v. Wells Fargo Bank, N.A., 799 F. Supp. 2d 1100, 1103 (N.D.
7 Cal. 2011), affirmed in relevant part, 720 F.3d 1204 (9th Cir. 2013)); see also Satre v.
8 Wells Fargo Bank, N.A., No. C 10-01405, 2013 WL 5913752, at *3-4 (N.D. Cal. Nov.
9 1, 2013) (collecting cases). Furthermore, a complaint must “provide [a] factual basis
10 from which [the court] could plausibly infer that” a defendant falls within the FDCPA’s
11 definition of a “debt collector.” Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204,
12 1209 (9th Cir. 2013). The Fourth AC fails to allege facts to demonstrate that any
13 Defendant acquired Plaintiffs’ loan after Plaintiffs were in default. The Fourth AC fails
14 to allege any facts to permit the plausible inference that any Defendant falls under the
15 FDCPA’s definition of a “debt collector.”
16

Because the Fourth AC’s FDCPA claim suffers from the same deficiency

17 identified by the Court with respect to Plaintiffs’ Complaint and First Amended
18 Complaint (ECF Nos. 30, 60), the Court finds that further amendment would be futile.
19 The motion to dismiss Plaintiffs’ FDCPA claim is granted with prejudice.
20
21

ii. TCPA
The Moving Defendants contend that Plaintiffs have failed to state a violation of

22 the TCPA for making calls to Plaintiffs’ residential telephone lines because the Moving
23 Defendants had an established business relationship with Plaintiffs, namely, rights to
24 collect payment on Plaintiffs’ deed of trust. The Moving Defendants contend that
25 Plaintiffs’ conclusory allegation that they had no business relationship with the Moving
26 Defendants fails to state a claim. The Moving Defendants contend that Plaintiffs have
27 failed to state a violation of the TCPA for making calls to Plaintiffs’ cellular telephone
28 lines because they have failed to allege facts showing that calls placed by the Moving
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1 Defendants were random. Plaintiffs oppose dismissal of their TCPA claim and repeat
2 the TCPA allegations contained in the Fourth AC.
3

The Fourth AC alleges that Defendants violated the TCPA by making repeated

4 phone calls to Plaintiffs residential and cellular phone lines using an automated system,
5 and leaving “random and generic and impersonal texted [sic] messages” and
6 “prerecorded voice calls.” (ECF No. 97 at 17).
7

The TCPA contains separate provisions for calls made to residential telephone

8 lines and calls made to wireless telephone lines. See 47 U.S.C. § 227(b)(1)(B); 47
9 U.S.C. § 227(b)(1)(A)(iii).3
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a. Residential Telephone Lines
The prohibition relating to residential telephone lines contains express exceptions

12 for certain calls. See 47 U.S.C. § 227(b)(2)(B). “The FCC, which has the authority to
13 formulate regulations under the TCPA, has articulated the exemptions for debt
14 collection calls made to residential lines as follows: (1) calls made between parties that
15 have an established business relationship, and (2) calls made for commercial purposes
16 other than unsolicited advertisements and telephone solicitations.” Mashiri v. Ocwen
17 Loan Servicing, LLC, No. 12-cv-02838-L-MDD, 2013 WL 5797584, at *3 (S.D. Cal.
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The relevant provisions of the TCPA state:

It shall be unlawful for any person ...
(A) to make any call (other than a call made for emergency purposes or
made with the prior express consent of the called party) using any
automatic telephone dialing system or an artificial or prerecorded voice–
...
(iii) to any telephone number assigned to a paging service,
cellular telephone service, specialized mobile radio service,
or other radio common carrier service, or any service for
which the called party is charged for the call;
(B) to initiate any telephone call to any residential telephone line using an
artificial or prerecorded voice to deliver a message without the prior
express consent of the called party, unless the call is initiated for
emergency purposes or is exempted by rule or order by the [Federal
Communications] Commission....
47 U.S.C. § 227(b)(1).
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1 Oct. 28, 2013) (citing 47 C.F.R. 64.1200(a)(2)(iii-iv); In the Matter of Rules &
2 Regulations Implementing the Tel. Consumer Prot. Act of 1991, 7 F.C.C.R. 8752, 8773
3 ¶ 39 (1992)).
4

This Court has determined that, “[t]o the extent the [Fourth] Amended Complaint

5 alleges that Defendants violated the TCPA by placing calls to Plaintiffs’ residential
6 telephone number(s), the [Fourth] Amended Complaint fails to adequately allege facts
7 to support the conclusion that these calls are not exempted from the TCPA.” (ECF No.
8 60 at 8-9). The Court need not accept as true the conclusory allegation that Defendants
9 have no business relationship with Plaintiffs. Iqbal, 556 U.S. at 678. To the extent
10 Plaintiffs draw this conclusion from the allegation that Defendant Bank of America
11 forged and fraudulently recorded the deed of trust, Plaintiffs fail to allege fraud with the
12 particularity required by Rule 9(b). Swartz, 476 F.3d at 764 (stating that Rule 9(b)
13 “requires ... an account of the time, place, and specific content of the false
14 representations as well as the identities of the parties to the misrepresentations”).
15
16

b. Cellular Telephone Service
“There is no exception for debt collectors in the statute, nor does the statute

17 permit any regulatory agency to make exceptions to the sections applicable to cellular
18 numbers.” Iniguez v. The CBE Group, No. 2:13cv843, 2013 WL 4780785, at *5 (E.D.
19 Cal. Sept. 5, 2013). “Accordingly, the TCPA applies to debt collectors and they may
20 be liable for offending calls made to wireless numbers.” Mashiri, 2013 WL 5797584,
21 at *4 (quotation omitted). The elements of a claim under the TCPA for calls made to
22 a cellular phone are that (a) defendant made the call (b) to any telephone number
23 assigned to a cellular telephone service, and (c) the call was made using any automatic
24 telephone dialing system or an artificial or prerecorded voice. See 47 U.S.C. §
25 227(b)(1)(A)(iii).
26
27

I. Automatic Telephone Dialing System
The TCPA defines an automatic telephone dialing system as “equipment which

28 has the capacity ... to store or produce telephone numbers to be called, using a random
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1 or sequential number generator [and] to dial such numbers.” 47 U.S.C. § 227(a)(1).
2 This Court has determined that, “[b]ased upon the allegations of the [Fourth] Amended
3 Complaint, Bank of America, N.A.’s alleged calls to Plaintiffs do not appear to have
4 been ‘random,’ 47 U.S.C. § 227(a)(1); instead, the calls are alleged to be directed
5 specifically toward Plaintiffs. Accordingly, the [Fourth] Amended Complaint fails to
6 plausibly allege facts to support the conclusion that any Defendant made a call to
7 Plaintiffs’ cellular telephone number using an automatic telephone dialing system.”
8 (ECF No. 60 at 9) (citing Ibey v. Taco Bell Corp., 12cv583-H-WVG, 2012 WL
9 2401972, at *3 (S.D. Cal. June 18, 2012) and Freidman v. Massage Envy Franchising,
10 LLC, 12cv2962-L-RBB, 2013 WL 3026641, at *2 (S.D. Cal. June 13, 2013)).
11
12

II.

Artificial Or Prerecorded Voice

The Fourth AC alleges that calls to Plaintiffs cellular telephones included

13 prerecorded voice calls. However, the Fourth AC alleges no facts to make this
14 allegation plausible. Iqbal, 556 U.S. 678 (“Threadbare recitals of the elements of a
15 cause of action, supported by mere conclusory statements, do not suffice.” ).
16
17

c. Conclusion
Because Fourth AC suffers from the same deficiencies identified by the Court

18 with respect to the Complaint and First Amended Complaint (ECF Nos. 30, 60), the
19 Court finds that further amendment would be futile. The motion to dismiss is granted
20 with prejudice.
21
22

iii. FCRA
The Moving Defendants contend that the Fourth AC fails to allege facts showing

23 how Defendants violated the FCRA, just as the First Amended Complaint failed to do.
24 Plaintiffs oppose dismissal of their FCRA claim and repeat the allegations contained in
25 the Fourth AC. Plaintiffs contend that they have cited the provisions of the FCRA that
26 Defendants violated.
27

The Fourth AC alleges that Defendant Bank of America violated the FCRA by

28 pulling Plaintiffs credit report “without permissible purpose” and reporting “false
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1 information to all credit bureaus.” (ECF No. 97 at 20).
2

The FCRA provides:

3

A person shall not use or obtain a consumer report for any purpose
unless—

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(1) the consumer report is obtained for a purpose for which the consumer
report is authorized to be furnished under this section; and
(2) the purpose is certified in accordance with section 1681e of this title
by a prospective user of the report through a general or specific
certification.

8 15 U.S.C. § 1681b(f). Section 1681b(a) provides the circumstances under which “any
9 consumer reporting agency may furnish a consumer report.” 15 U.S.C. § 1681b(a). For
10 example, a consumer report is authorized to be furnished by a consumer reporting
11 agency to “a person which [a consumer reporting agency] has reason to believe ... (A)
12 intends to use the information in connection with a credit transaction involving the
13 consumer on whom the information is to be furnished and involving the extension of
14 credit to, or review or collection of an account of, the consumer....” 15 U.S.C. §
15 1681b(a)(3). To qualify as a permissible purpose under section 1681b(a)(3)(A), a
16 “credit transaction must both (1) be a credit transaction involving the consumer on
17 whom the information is to be furnished and (2) involve the extension of credit to, or
18 review or collection of an account of, the consumer.” Pintos v. Pac. Creditors Ass’n,
19 605 F.3d 665, 674 (9th Cir. 2010) (en banc) (quotations omitted). “[A] person is
20 ‘involved’ in a credit transaction for purposes of § 1681b(a)(3)(A) where she is
21 ‘draw[n] in as a participant’ in the transaction, but not where she is ‘oblige[d] to become
22 associated’ with the transaction.” Id. at 675 (citing Andrews v. TRW, Inc., 225 F.3d
23 1063, 1067 (9th Cir. 2000)).
24

The Court has determined that the Fourth AC “fails to provide a factual basis for

25 the claim. The FCRA allegations are insufficient to state a claim that is plausible
26 pursuant to Federal Rule of Civil Procedure 8.” (ECF No. 60 at 12); Iqbal, 556 at 678;
27 see also Pyle v. First Nat. Collection Bureau, No. 12cv288, 2012 WL 1413970, at *3-4
28 (E.D. Cal. Apr. 23, 2012) (“Plaintiff’s complaint only provides conclusory statements
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1 that Defendant violated 15 U.S.C. § 1681b by obtaining Plaintiff’s consumer report
2 without a permissible purpose. Plaintiff has not provided a factual basis to support his
3 claim.... Plaintiff’s bare assertion that Defendant violated the FCRA, without providing
4 a factual basis for those assertions, does not sufficiently state a claim.”). To the extent
5 Plaintiffs allege that Defendants were “without permissible purpose” because the deed
6 of trust is a forgery that was fraudulently recorded, Plaintiffs fail to plead this fraud with
7 the particularity required by Rule 9(b). Swartz, 476 F.3d at 764 (stating that Rule 9(b)
8 “requires ... an account of the time, place, and specific content of the false
9 representations as well as the identities of the parties to the misrepresentations”).
10 Because the Fourth AC’s FCRA claim suffers from the same deficiency identified by
11 the Court with respect to the First Amended Complaint (ECF No. 60), Court finds that
12 amendment would be futile. The motion to dismiss the FCRA claim is granted with
13 prejudice.
14
15

iv. TILA
The Moving Defendants contend that the Fourth AC fails to plead the details of

16 Plaintiffs’ loan, the disclosures accompanying it, and how the disclosures were
17 improper. The Moving Defendants contend that Plaintiffs’ TILA claim is time-barred
18 because the deed of trust was entered into in 2006. Plaintiffs oppose dismissal of their
19 TILA claim and repeat the allegations contained in the Fourth AC. Plaintiffs contend
20 the Fourth AC cites the provisions of TILA upon which they based their TILA claim.
21

The Fourth AC alleges that Defendant Bank of America violated TILA by

22 submitting fraudulent documents to the county recorder and seeking to collect a debt
23 they did not own. The Fourth AC alleges that Defendant Bank of America failed to
24 disclose the amounts paid by Plaintiffs. The Fourth AC alleges that America’s
25 Wholesale Lender (now Defendant Bank of America) improperly categorized a
26 “Courier Express Mail” charge of $256 as part of the amount financed, rather than a
27 “finance charge.” (ECF No. 97 at 29).
28

The only provision of TILA that Plaintiffs allege Defendant Bank of America
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1 violated is 12 C.F.R. § 226.4(a)(3), which includes “mortgage broker fees” as part of
2 the definition of “finance charges.” 12 C.F.R. § 226.4(a)(3). 12 C.F.R. section 226.4(a)
3 defines finance charge: “the cost of consumer credit as a dollar amount. It includes any
4 charge payable directly or indirectly by the consumer and imposed directly or indirectly
5 by the creditor as an incident to or a condition of the extension of credit. It does not
6 include any charge of a type payable in a comparable cash transaction.” Id. § 226.4(a).
7 The Fourth AC fails to identify the provision(s) of TILA allegedly violated by
8 Defendants,4 and fails to allege facts showing how any TILA provision was violated,
9 so as to put Defendant Bank of America on “fair notice” of the claim against it.
10 Swierkiewicz, 534 U.S. at 514. The motion to dismiss Plaintiffs’ TILA claim is granted.
11
12

v. RICO
The Moving Defendants contend that Plaintiffs’ conclusory allegation that

13 Defendants Bank of America and ReconTrust mailed a fraudulent letter demanding a
14 lump sum of money to Plaintiffs is insufficient to state a RICO claim. The Moving
15 Defendants contend that Plaintiffs have failed to plausibly allege that their damages
16 were proximately caused by a RICO violation. Plaintiffs oppose dismissal of their
17 RICO claim and repeat the RICO allegations contained in the Fourth AC.
18

The Fourth AC alleges that Defendants Bank of America and ReconTrust

19 “knowingly and willfully and with malice, use [sic] instrumentality of the U.S. mails,
20 in business, committing mail fraud, to attempt to extort, demanded payment of an illegal
21 lump sum of money in excess of $400,000, and threatened to unlawfully take action,
22 begin foreclosure on Plaintiffs [sic] property, to illegally collect payment from
23 Plaintiffs, on alleged debt.” (ECF No. 97 at 32). The Fourth AC alleges that Defendant
24 Bank of America “altered the deed of trust, falsified fees and extorted monies and failed
25 to apply the payments made by Plaintiffs to Plaintiff’s loan.” Id.
26

18 U.S.C. section 1962(c) prohibits “any person employed by or associated with

27
28

4

Plaintiff cannot state a claim based on 12 C.F.R. section 226.4(a)(3), which is
definitional and not prohibitory.
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1 any enterprise” from “conduct[ing] or [participating], directly or indirectly, in the
2 conduct of such enterprise’s affairs through a pattern of racketeering activity . . . .” 18
3 U.S.C. § 1962(c). “‘[P]erson’ includes any individual or entity capable of holding a
4 legal or beneficial interest in property[.]” 18 U.S.C. § 1961(3). “‘[E]nterprise’ includes
5 any individual, partnership, corporation, association, or other legal entity, and any union
6 or group of individuals associated in fact although not a legal entity.” 18 U.S.C. §
7 1961(4). Acts constituting “racketeering activity” are enumerated at 18 U.S.C. section
8 1961(1). “Although section 1961(5) requires ‘at least two acts of racketeering activity’
9 in order to establish a pattern, the Supreme Court has indicated that two acts may not
10 be sufficient.” Schreiber Distributing Co. v. Serv-Well Furniture Co., Inc., 806 F.2d
11 1393, 1398 (9th Cir. 1986) (quoting Sedima, S.P.R.L. v. Imrex Co., 105 S. Ct. 3275,
12 3285 n. 14 (1985).
13

18 U.S.C. § 1962(c) has a distinctiveness requirement, and “liability ‘depends on

14 showing that the defendants conducted or participated in the conduct of the enterprise’s
15 affairs, not just their own affairs.’” Cedric Kushner Promotions, Ltd. v. King, 533 U.S.
16 158, 162-63 (2001) (citing Reves v. Ersnt & Young, 507 U.S. 170, 185 (1993))
17 (emphasis in original). In order to allege an association-in-fact enterprise, a plaintiff
18 must allege: (1) “a group of persons associated together for a common purpose of
19 engaging in a course of conduct,” (2) “an ongoing organization, either formal or
20 informal,” and (3) “the various associates function as a continuing unit.” Odom v.
21 Microsoft Corp., 486 F.3d 541, 552-53 (9th Cir. 2007)
22

“Rule 9(b)’s requirement that ‘[i]n all averments of fraud or mistake, the

23 circumstances constituting fraud or mistake shall be stated with particularity’ applies
24 to civil RICO fraud claims.” Edwards v. Marin Park, Inc., 356 F.3d 1058, 1065-66 (9th
25 Cir. 2004).
26

The only act identified by the Fourth AC that constitutes “racketeering activity”

27
28
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1 under 18 U.S.C. section 1961(1) is “mail fraud.”5 See 18 U.S.C. section 1961(1). The
2 Fourth AC fails to plead mail fraud with the particularity required by Rule 9(b). Swartz,
3 476 F.3d at 764 (stating that Rule 9(b) “requires ... an account of the time, place, and
4 specific content of the false representations as well as the identities of the parties to the
5 misrepresentations”). In addition, the Fourth AC fails to allege a pattern of racketeering
6 activity because “section 1961(5) requires ‘at least two acts of racketeering activity’ in
7 order to establish a pattern.” Schreiber, 806 F.2d at 1398 (quoting Sedima, 105 S. Ct.
8 at 3285 n. 14). The motion to dismiss Plaintiffs’ RICO claim is granted.
9
10

vi. Constitutional Claims
The Fourth AC asserts Fifth and Fourteenth Amendment due process and equal

11 protection claims.
12

The Moving Defendants contend that Plaintiffs constitutional claims fail because

13 the Fifth and Fourteenth Amendments do not apply to contracts between private parties.
14 Plaintiffs contend that its Fifth and Fourteenth Amendment claims are viable, in the
15 absence of state action, on a theory of “judicial enforcement” of “private
16 discrimination.” (ECF No. 125 at 12). Plaintiffs contend that all private discrimination
17 is judicially enforced, such as “application of race-neutral trespass and contract law, for
18 example.” Id.
19

The Fourth AC alleges that Defendants violated the Fifth and Fourteenth

20 Amendment through illegal debt collection activity and unlawfully attempting to
21 foreclose on Plaintiffs’ property.
22

Foreclosure activity carried out by private entities pursuant to state law does not

23 implicate constitutional interests. See, e.g., Charmicor v. Deaner, 572 F.2d 694, 696
24 (9th Cir. 1978) (“Over 40 years ago, this court rejected a challenge to the
25 constitutionality of former Cal. Civil Code § 2924. The appellant there argued that he
26
5

The Fourth AC also cites 18 U.S.C. section 1001, which criminalizes perjury
27 in federal government proceedings. 18 U.S.C. § 1001. However, section 1001 is not
included in the list of crimes constituting“racketeering activity,” and the Fourth AC
28 does not allege perjury in federal government proceedings. See 18 U.S.C. § 1961(1).
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13cv488-WQH-JMA

1 had been deprived of due process by virtue of the trustee’s alleged failure to comply
2 strictly with the statutory notice provisions. This court held that there was no state
3 action, and hence no federal claim for relief.”) (citing Davidow v. Lachman Bros. Inv.
4 Co., 76 F.2d 186, 188 (9th Cir. 1935)); Apao v. Bank of New York, 324 F.3d 1091, 1095
5 (9th Cir. 2003), cert. denied, 540 U.S. 948 (2003) (“While the bar for state action is
6 low, non-judicial foreclosure procedures like Hawaii’s nevertheless slip under it for
7 want of direct state involvement.”); Garfinkle v. Super. Ct., 21 Cal. 3d 268, 281 (1978)
8 (“California’s nonjudicial foreclosure procedure does not constitute state action and is
9 therefore immune from the procedural due process requirements of the federal
10 Constitution.”).
11

The Fourth AC alleges no facts to show that Defendants’ activities involve state

12 action. The Fourth AC does not allege facts to show that Defendants’ engaged in any
13 private form of discrimination. Because this claim suffers from the same deficiency
14 identified by the Court with respect to Plaintiffs’ Complaint and First Amended
15 Complaint (ECF Nos. 30, 60), the Court concludes amendment would be futile. The
16 motion to dismiss Plaintiffs’ Fifth and Fourteenth Amendment claims is granted with
17 prejudice.
18
19

vii. State Law Claims
The remaining claims of the Fourth AC assert violations of California state laws.

20 Plaintiffs do not allege that this Court has diversity jurisdiction over this action.6
21 Plaintiffs allege that this Court has supplemental jurisdiction over the state law claims
22 pursuant to 28 U.S.C. § 1367. (ECF No. 97 at 4).
23

The federal supplemental jurisdiction statute provides: “[I]n any civil action of

24 which the district courts have original jurisdiction, the district courts shall have
25 supplemental jurisdiction over all other claims that are so related to claims in the action
26
6

The Fourth AC alleges that Plaintiffs and five Defendants reside in California.
(ECF No. 97 at 4-5). Accordingly, Plaintiffs have failed to allege complete diversity
28 exists between the parties. See 28 U.S.C. § 1332(a)(2).
27

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1 within such original jurisdiction that they form part of the same case or controversy
2 under Article III of the United States Constitution.” 28 U.S.C. § 1367(a). A district
3 court may decline to exercise supplemental jurisdiction over a state law claim if:
4

(1) the claim raises a novel or complex issue of State law,

5

(2) the claim substantially predominates over the claim or claims over
which the district court has original jurisdiction

6
7

(3) the district court has dismissed all claims over which it has original
jurisdiction, or

8

(4) in exceptional circumstances, there are other compelling reasons for
declining jurisdiction.

9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

28 U.S.C. § 1367(c). Having dismissed all federal claims asserted by Plaintiffs against
the Moving Defendants, the Court declines to exercise supplemental jurisdiction over
the state law claims against the Moving Defendants pursuant to 28 U.S.C. § 1367(c).
See San Pedro Hotel Co., Inc. v. City of Los Angeles, 159 F.3d 470, 478 (9th Cir. 1998).
viii. Conclusion
The Moving Defendants’ motion to dismiss is granted. Plaintiffs’ FDCPA,
TCPA, FCRA, and Fifth and Fourteenth Amendment equal protection and due process
claims are dismissed with prejudice as to the Moving Defendants. Plaintiffs’ TILA and
RICO claims are dismissed without prejudice as to the Moving Defendants.7
IV. Motion for Permanent Injunction (ECF No. 122)
On January 20, 2015, Plaintiffs filed a “Motion for Ex Parte Temporary
Restraining Order and Permanent Injunction.” (ECF No. 122). Plaintiffs requested that
the Court issue an injunction without providing Defendants with an opportunity to
respond. On January 21, 2015, the Court issued an order denying Plaintiffs’ motion for
a temporary restraining order, stating that “the motion for permanent injunction ...

25
7

The Court declines to take judicial notice of the documents submitted in the
Moving Defendants’ Request for Judicial Notice. (ECF No. 103-2). It was not
27 necessary to review these documents in ruling on the Moving Defendants’ Motion to
Dismiss. See, e.g., Asvesta v. Petroutsas, 580 F.3d 1000, 1010 n. 12 (9th Cir. 2009)
28 (denying request for judicial notice where judicial notice would be “unnecessary”).
26

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1 remains pending,” and setting a briefing schedule on the motion for permanent
2 injunction. (ECF No. 123 at 4).
3

Plaintiffs request a permanent injunction to enjoin a trustee’s sale of their

4 property set for February 17, 2015. Plaintiffs contend that Defendants have no legal
5 interest in the property because Defendant Clear Recon recorded a fraudulent deed of
6 trust with the county recorder and Defendant Bank of America illegally assigned the
7 deed of trust to Clear Recon. Plaintiffs contend that they are likely to succeed on the
8 merits because their property rights are “clear and unambiguous.” (ECF No. 122 at 3).
9 Plaintiffs contend that they will suffer irreparable injury in the absence of a permanent
10 injunction because their property is unique, money damages will not make Plaintiffs
11 whole, and Plaintiffs will be unable to re-purchase their property after the sale.
12 Plaintiffs contend that Defendants will not suffer any harm by the issuance of a
13 permanent injunction because they have no interest in Plaintiffs’ property. Plaintiffs
14 contend that a permanent injunction is in the public interest because “Defendants have
15 defrauded California, California taxpayers, California body politic, California citizens,
16 and California government....” Id. at 4.
17

Defendants contend that Plaintiffs have failed to demonstrate that they would

18 suffer harm in the absence of a preliminary injunction. Defendants contend that
19 Plaintiffs do not argue that they are current on their mortgage. Defendants contend that
20 all of Plaintiffs’ claims are legally deficient in that they are based on the theory that
21 Defendants lack authority to foreclose.
22

Because this case is in the pleading stage, the Court construes Plaintiffs’ motion

23 as a motion for a preliminary injunction pursuant to Federal Rule of Civil Procedure
24 65(a). “[A] preliminary injunction is an extraordinary and drastic remedy, one that
25 should not be granted unless the movant, by a clear showing, carries the burden of
26 persuasion.” Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (quotation omitted).
27

To obtain preliminary injunctive relief, a movant must show “that he is likely to

28
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1 succeed on the merits, that he is likely to suffer irreparable harm in the absence of
2 preliminary relief, that the balance of equities tips in his favor, and that an injunction
3 is in the public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20
4 (2008); see also Am. Trucking Ass’n, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052
5 (9th Cir. 2009). “‘[S]erious questions going to the merits’ and a balance of hardships
6 that tips sharply towards the plaintiff can support issuance of a preliminary injunction,
7 so long as the plaintiff also shows that there is a likelihood of irreparable injury and that
8 the injunction is in the public interest.” Alliance for the Wild Rockies v. Cottrell, 632
9 F.3d 1127, 1135 (9th Cir. 2011); see also Villegas Lopez v. Brewer, 680 F.3d 1068,
10 1072 (9th Cir. 2012). In other words, “a stronger showing of irreparable harm to
11 plaintiff might offset a lesser showing of likelihood of success on the merits.” Cottrell,
12 632 F.3d at 1131.
13

At a minimum, “the moving party must demonstrate a significant threat of

14 irreparable injury.” Arcamuzi v. Cont’l Air Lines, Inc., 819 F.2d 935, 937 (9th Cir.
15 1987) (citation omitted). “[A]n injunction cannot issue merely because it is possible
16 that there will be an irreparable injury to the plaintiff; it must be likely that there will
17 be.” Am. Trucking Ass’n, 559 F.3d at 1052. “Issuing a preliminary injunction based
18 only on a possibility of irreparable harm is inconsistent with our characterization of
19 injunctive relief as an extraordinary remedy that may only be awarded upon a clear
20 showing that the plaintiff is entitled to such relief.” Winter, 555 U.S. at 22. If the
21 moving party fails to meet the “minimum showing” of a likelihood of irreparable injury,
22 a court “need not decide whether [the movant] is likely to succeed on the merits.”
23 Oakland Tribune, Inc. v. Chronicle Pub. Co., Inc., 762 F.2d 1374, 1377 (9th Cir. 1985).
24

The Court has dismissed all claims against the Moving Defendants for failure to

25 state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons
26 stated above, the Court finds that Plaintiffs have failed to establish a likelihood of
27 success on the merits. Accordingly, the Motion for Permanent Injunction is denied. See
28
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1 Global Horizons, Inc. v. U.S. Dep’t of Labor, 510 F.3d 1054, 1058 (9th Cir. 2007)
2 (“Once a court determines a complete lack of probability of success or serious questions
3 going to the merits, its analysis may end, and no further findings are necessary.”).
4 V. Motion for Default Judgment and Amended Motion for Default Judgement
5 (ECF Nos. 118, 120)
6

Plaintiffs move for default judgment against all Defendants. Plaintiffs contend

7 that default judgment is warranted because “Defendants” have not opposed or answered
8 the “Fifth Amended Complaint” even though their deadline was January 1, 2015. (ECF
9 No. 118 at 2).
10

Rule 55(a) of the Federal Rules of Civil Procedure requires that the Clerk of the

11 Court enter default “when a party against whom a judgment for affirmative relief is
12 sought has failed to plead or otherwise defend, and that failure is shown by affidavit or
13 otherwise.” Fed. R. Civ. P. 55(a).
14

Rule 55(b)(2) of the Federal Rules of Civil Procedure provides that the court may

15 grant a default judgment after default has been entered by the Clerk of the Court. Fed.
16 R. Civ. P. 55(b)(2). “The general rule of law is that upon default the factual allegations
17 of the complaint, except those relating to the amount of damages, will be taken as true.”
18 TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (quotation
19 omitted). The Ninth Circuit has articulated the following factors for courts to consider
20 in determining whether a default judgment should be granted:
21
22
23
24
25
26
27
28

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s
substantive claim, (3) the sufficiency of the complaint, (4) the sum of
money at stake in the action; (5) the possibility of a dispute concerning
material facts; (6) whether the default was due to excusable neglect, and
(7) the strong policy underlying the Federal Rules of Civil Procedure
favoring decisions on the merits.
Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
Because the Court has dismissed the Fourth AC as to all Moving Defendants, the
Motion for Default Judgment is denied as moot to the extent it is brought against the
Moving Defendants.

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13cv488-WQH-JMA

1

The Defendants named in the Fourth AC that have not filed a responsive pleading

2 to the Fourth AC (“Non-Moving Defendants”) are ComUnity Lending, Inc., Ginnie
3 Mae, and Clear Recon Corp., and New Century Mortgage. In the Court’s January 6,
4 2014 Order dismissing the First Amended Complaint, the Court stated that Defendants
5 ComUnity Lending, Inc., New Century Mortgage, and Ginnie Mae had not entered
6 appearances, and “Plaintiffs have filed no proofs of service indicating that any non7 moving Defendant has been served with the First Amended Complaint pursuant to
8 Federal Rule of Civil Procedure 4.” (ECF No. 60 at 14). The Court stated that “[n]o
9 later than 120 days from the date this Order is filed, Plaintiffs are required to file a proof
10 of service indicating that the three non-moving Defendants have been served with the
11 First Amended Complaint pursuant to Rule 4.” Id.
12

On January 6, 2014, the Clerk of the Court issued a summons on the First

13 Amended Complaint as to Defendants ComUnity Lending, Inc., New Century
14 Mortgage, and Ginnie Mae. (ECF No. 61). On February 6, 2014, the U.S. Marshal
15 filed unexecuted returns of service indicating that Defendants ComUnity Lending, Inc.
16 and New Century Mortgage were no longer at the address provided by Plaintiffs and no
17 forwarding address was known. (ECF Nos. 67, 68). On April 18, 2014, the U.S.
18 Marshal filed an executed return of service indicating that Defendant Ginnie Mae was
19 served. (ECF No. 77). On May 14, 2014, the Court issued an Order stating: “The Court
20 will dismiss this action without prejudice as to Defendants ComUnity Lending, Inc. and
21 New Century Mortgage on June 2, 2014, unless, before that date, Plaintiffs file a
22 declaration under penalty of perjury showing good cause for failure to timely serve
23 Defendants ComUnity Lending, Inc. and New Century Mortgage, accompanied by a
24 motion for leave to serve process outside of the 120-day period.” (ECF No. 78 at 4).
25 Plaintiffs did not file a declaration under penalty of perjury before June 2, 2014. On
26 July 21, 2014, the Court issued an order stating that “pursuant to the Court’s May 14,
27 2014 Order and Federal Rule of Civil Procedure 4(m), the Second Amended Complaint
28
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13cv488-WQH-JMA

1 is DISMISSED without prejudice as to Defendants ComUnity Lending, Inc. and New
2 Century Mortgage.” (ECF No. 82 at 3).
3

To date, Plaintiffs have not filed a declaration under penalty of perjury showing

4 good cause for failure to timely serve Defendants ComUnity Lending, Inc. and New
5 Century Mortgage. Accordingly, the Fourth AC is dismissed as to Defendants
6 ComUnity Lending, Inc. and New Century Mortgage for failure to serve in accordance
7 with Federal Rule of Civil Procedure 4, and the Motion for Default judgment is denied
8 as to Defendants ComUnity Lending, Inc. and New Century Mortgage.
9

With respect to Defendant Ginnie Mae, the Court concludes that default judgment

10 is not appropriate at this stage in the proceedings. The Clerk of the Court has not
11 entered Defendant Ginnie Mae’s default, and, for the reasons previously discussed, the
12 Fourth AC fails to state a claim for relief that is plausible on its face. Eitel, 782 F.2d
13 at 1471-72 (requiring a court to consider “the merits of plaintiff’s substantive claim”
14 and “the sufficiency of the complaint” before entering default judgment).
15

Finally, Clear Recon Corp. initially appeared in this action on December 16, 2014

16 by filing a “Declaration of Non-Monetary Status” pursuant to California Civil Code
17 section 2924l. (ECF No. 104). On December 23, 2014, Plaintiffs filed an objection to
18 the “Declaration of Non-Monetary Status.” (ECF No. 105). On January 8, 2015, Clear
19 Recon Corp. filed a notice of joinder to the Moving Defendants’ Motion to Dismiss.
20 (ECF No. 116). Clear Recon Corp. is not in default. The Motion for Default Judgment
21 is denied as to Defendant Clear Recon Corp.
22

The Motion for Default Judgment is denied.

23
24 VI.

Conclusion

25

IT IS HEREBY ORDERED that the “Motion to Strike Defendants Documents

26 Dispute Authenticity,” the “Amended Motion to Strike Defendants Immaterial Evidence
27 Dispute Authenticity,” and the Motion to Strike Defendants Answer to Plaintiffs’
28
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1 Fourth Amended Complaint (ECF Nos. 107, 119, 121) are DENIED as moot.
2

IT IS FURTHER ORDERED that the Motion to Dismiss Plaintiffs’ Fourth

3 Amended Complaint (ECF No. 103) is GRANTED. The Fourth Amended Complaint
4 is DISMISSED as to all Moving Defendants. Plaintiffs’ FDCPA, TCPA, FCRA, Fifth
5 Amendment, and Fourteenth Amendment claims are DISMISSED with prejudice as to
6 all Moving Defendants. Plaintiffs’ TILA and RICO claims are dismissed without
7 prejudice as to the Moving Defendants.
8

IT IS FURTHER ORDERED that the Motion for a Preliminary Injunction (ECF

9 No. 122) is DENIED.
10

IT IS FURTHER ORDERED that the Fourth Amended Complaint is

11 DISMISSED without prejudice as to Defendants ComUnity Lending, Inc. and New
12 Century Mortgage for failure to serve in accordance with Federal Rule of Civil
13 Procedure 4.
14

IT IS FURTHER ORDERED that the Motion for Default Judgment (ECF No.

15 118) and Amended Motion for Default Judgment (ECF No. 120) are DENIED.
16 DATED: February 9, 2015
17
18

WILLIAM Q. HAYES
United States District Judge

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