Chyba v. Bayview Loan Servicing, LLC et al

Filing 60

ORDER: (1) Granting in Part 50 Motion to Dismiss; (2) Denying 51 Motion to Strike; and (3) Denying as Moot Plaintiff's 53 Motion to Compel. Defendants' Motion to Dismiss for lack of personal jurisdiction and improper venue is deni ed. The Motion to Dismiss for failure to state a claim is granted in part. Counts One and Three against Marilyn Coro are dismissed. Count Five is dismissed as to both Defendants. Defendants' Motion to Strike is denied. Plaintiffs Motion to Compel is denied as moot. Defendants shall file an Answer on or before August 3, 2015. Signed by Judge Roger T. Benitez on 7/21/2015. (knb)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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CASE NO. 14-CV-1415-BEN (BLM)

PAMELA CHYBA,

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Plaintiff,

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(1) GRANTING IN PART MOTION

TO DISMISS

vs.

(2) DENYING MOTION TO
STRIKE

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ORDER:

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BAYVIEW LOAN SERVICING, LLC
aka BAYVIEW and MARILYN
CORO

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(3) DENYING PLAINTIFF'S
MOTION TO COMPEL AS MOOT

Defendants.

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[Docket Nos. 50, 51, 53]

Defendants Bayview Loan Servicing, LLC ("Bayview") and Marilyn Coro

19 filed a Motion to Dismiss and a Motion to Strike, which are presently before this
20 Court. (Docket Nos. 50, 51.)
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BACKGROUND
I. Procedural Background
On June 10,2014, Plaintiff Pamela Chyba, proceeding pro se, filed a

24 Complaint alleging violations of the Fair Debt Collection Practices Act, the Fair
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Credit Reporting Act, the Telephone Consumer Protection Act, and the Rosenthal

26 Fair Debt Collection Practices Act. (Docket No. 1.) On October 29, 2014, Plaintiff
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filed a First Amended Complaint. (Docket No. 25.) On November 12, 2014,

28 Defendants filed a Motion to Dismiss and a Motion to Strike. (Docket Nos. 27, 28.)
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1 On March 23,2015, the Court granted Defendants' Motion to Dismiss for failure to
2 state a claim, denied as moot Defendants' motion to strike, and granted Plaintiff
3 leave to amend. (Docket No. 46.) Plaintiff filed a "Third Amended Complaint"
4 ("TAC"Y on April 22, 2015, which is the operative complaint in this matter.
5 (Docket No. 48.)
6 II. Factual Background 2
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On October 26,2012, Marilyn Coro, First Vice President of Bayview,

8 notified Plaintiff that Bayview had become the servicer of her loan on October 16,
9 2012. (TAC, Ex. 6.) On October 30,2012, Ms. Coro contacted Plaintiff again,
10 providing more details ofthe loan. (TAC, Ex. 5.) On November 14,2012, Plaintiff
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sent her first letter to Defendants disputing the debt's validity. (TAC, Ex. 4.) On

12 November 20, 2012, Plaintiff sent a "Qualified Written Request" for information
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regarding the mortgage loan. (TAC, Ex. 3.)
On October 1,2013, Bayview obtained Plaintiffs credit information, and a

15 Ms. Killen informed Plaintiff in writing that she was working to bring Plaintiffs
16 account current. (TAC, Exs. 10, 12.) On November 21,2013, a Mr. Shorts, another
17 representative of Bayview, informed Plaintiff that her account had been referred to
18 him. (TAC, Ex. 8.) On December 8, 2013, Plaintiff sent a "third request" for
19 validation. (TAC, Ex. 2.) On December 20, 2013, Bayview acknowledged receipt
20 of Plaintiffs dispute. (TAC, Ex. 7.) On January 11,2014, Bayview sent a debt
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validation letter to Plaintiff. (TAC, Ex. 9.) The debt validation letter included a

22 copy of the Note, which indicates the loan was secured by real property located in
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Texas. (Jd.)

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lAlthough the Second Amended Complaint was stricken from the record the
Court will refer to the operative amended complaint as the Third Amended Complaint
26 for the sake of consistency and clarity.
2Unless otherwise noted, the following background is drawn from the allegations
of Plaintiffs TAC. The Court is not mak:mg any factual findil}gs, but rather only
28 sumpla~izing the relevant facts alleged for purposes of evaluating Defendants' motion
to dlsmlss.

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On January 26, 2014, Plaintiff expressed her dissatisfaction with the debt

2 validation letter. (TAC, Ex. 1.) On May 12,2014, Bayview sent a notice of default
3 to Plaintiff. (TAC, Ex. 11.) Plaintiff alleges the notice of default indicates the loan
4 went into default on October 1, 2010. (TAC ~~ 22, 24.) Plaintiff also alleges
5 Bayview called her cell phone ten times between October 2012 and October 2013
6 by using an automatic telephone dialing system. (TAC ~~ 16, 52.)

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LEGAL STANDARDS

8 I. MOTION TO DISMISS

9

Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a

10 complaint if, taking all factual allegations as true, the complaint fails to state a
11 plausible claim for relief on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
12 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556-57 (2007). Dismissal is appropriate
13 if the complaint fails to state enough facts to raise a reasonable expectation that
14 discovery will reveal evidence of the matter complained of, or if the complaint lacks
15 a cognizable legal theory under which relief may be granted. Twombly, 550 U.S. at
16 556. "Threadbare recitals of the elements of a cause of action, supported by mere
17 conclusory statements, do not suffice." Iqbal, 556 U.S. at 678.
18 II. MOTION TO STRIKE
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Federal Rule of Civil Procedure 12(t) authorizes a court to strike from a

20 pleading "an insufficient defense or any redundant, immaterial, impertinent, or
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scandalous matter." "[T]he function of a 12(t) motion to strike is to avoid the

22 expenditure of time and money that must arise from litigating spurious issues by
23 dispensing with those issues prior to trial." Sidney-Vinstein v. A.H Robins Co., 697
24 F.2d 880,885 (9th Cir. 1983). In ruling upon a motion to strike, a court must view
25 the pleadings in a light most favorable to the nonmoving party. In re
26 2TheMart.com, Inc. Sec. Litig., 114 F. Supp. 2d 955,965 (C.D. Cal. 2000). Motions
27 to strike will not be granted unless the "matter to be stricken could have no possible
28 bearing on the subject matter ofthe litigation." Chan v. Chancelor, No. 09-cv-3-

14cvl415

1 1839,2011 WL 5924281, at *2 (S.D. Cal. Nov. 28, 2011) (quoting Platte Anchor

2 Bolt, Inc. v. IHL Inc., 352 F. Supp. 2d 1048, 1057 (N.D. Cal. 2004)).
DISCUSSION3

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4 I. DEFENDANTS' MOTION TO DISMISS UNDER 12(b)(2)-(3)

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Defendants move to dismiss the TAC for improper venue and lack of

6 personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and (3).
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"[C]ertain defenses under [Rule 12] must be raised at the first available

8 opportunity, or, if they are not, they are forever waived. Am. Ass 'n a/Naturopathic

9 Physicians v. Hayhurst, 227 F.3d 1104, 1106 (9th Cir. 2000). Rule 12(g)(2)
10 provides: "a party that makes a motion under [Rule 12] must not make another
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motion under this rule raising a defense or objection that was available to the party

12 but omitted from its earlier motion." Rule 12(h)(1 )(A) states that a party waives any
13 defense listed in Rule 12(b)(2)-(5) by omitting it from a motion in the circumstances
14 described in Rule 12(g)(2)."
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On November 12, 2014, Defendants filed a motion to dismiss the First

16 Amended Complaint pursuant to Rule 12(b)(6). This Court granted Defendants'
17 Rule 12 motion, but permitted Plaintiff to file an amended complaint. Now
18 Defendants move to dismiss the operative TAC pursuant to Rule 12(b)(2), (3), and
19 (6). Defendants' motion under Rule 12(b)(2) and (3) is improper because the
20 defenses of improper venue and lack of personal jurisdiction were available to
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Defendants at the time they brought their first Rule 12 motion. Defendants

22 therefore waived their right to challenge venue and personal jurisdiction in this
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case. Accordingly, Defendants' Motion to Dismiss for improper venue and lack of

24 personal jurisdiction is DENIED.
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3As an initial matter, the Court GRANTS in part and DENIES in part
Plaintiffs Request for Judicial Notice. The Court judicially notices the fact that
27 Bayview filed Form S-ll with the SEC, and that Standard and Poor's is a nationally
recognized statistical ratin~ organization (RJN, Ex. 4.) The Court declines to take
28 judiCIal notice of Bayview s website (RJN, Ex. 1) and Standard and Poor's website
(RJN, Exs. 2-3).

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1 II. DEFENDANTS' MOTION TO DISMISS UNDER 12(b)(6)

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A. Fair Debt Collection Practices Act - Counts One and Two
(1) "Debt Collector"

For Counts One and Two, Defendants contend that Plaintiffs claims under

5 the Fair Debt Collection Practices Act ("FDCPA") fail because Bayview and
6 Marilyn Coro are not "debt collectors" within the meaning ofthe Act.
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Only a "debt collector" attempting to collect a debt can violate the FDCPA.

8 The FDCPA defines "debt collector" as any "person ... who regularly collects or
9 attempts to collect, directly or indirectly, debts owed or ... due another .... " 15
10 U.S.C. § 1692a(6). That term does not include "any person collecting or attempting
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to collect any debt owed or due or asserted to be owed ... to the extent such activity

12 ... (iii) concerns a debt which was not in default at the time it was obtained by such
13 person ...." 15 U.S.C. § 1692a(6)(F).
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In other words, a debt collector is any person who collects debts, but only if

15 the person is collecting a debt which was in default before the person acquired the
16 debt. See De Dios v. Int'l Realty & Invs., 641 F.3d 1071, 1074 (9th Cir. 2011)
17 (affirming that defendant was not a debt collector because defendant acquired the
18 debt before the debt went into default). An employee of a corporation is also
19 subject to the definition of "debt collector." Cruz v. Int'l Collection Corp., 673 F.3d
20 991, 999 (9th Cir. 2012)( citing Fox v. Citicorp Credit Servs., 15 F.3d 1507, 1513
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(9th Cir. 1994».
Here, Plaintiff alleges the loan went into default on October 1, 2010, two
years before Bayview began servicing the loan. Taking these facts as true, the loan

24 was in default before Bayview acquired it. In addition, Plaintiff alleges that
25 Marilyn Coro, as Vice President of Bayview, regularly engages in debt collection.
26 Plaintifftherefore alleged facts sufficient to support a claim that Bayview and
27 Marilyn Coro are debt collectors within the meaning of the FDCPA.
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Concluding that Plaintiff alleged facts sufficient to support her claim that
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1 Defendants are debt collectors, the Court now considers whether Plaintiff has
2 sufficiently pleaded that Defendants engaged in acts that violate the FDCPA.
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(2) Count One -15

u.s.c. § 1692g

In Count One, Plaintiff contends that Defendants continued their debt

5 collection efforts even after Plaintiff disputed the debt.
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If the consumer disputes the validity ofthe debt within thirty days of

7 notification, the debt collector must stop debt collection until it sends to the
8 consumer verification ofthe debt, or the name and address ofthe original creditor.
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IS U.S.C. § 1692g(b).
According to Plaintiffs exhibits, Plaintiff requested that Defendants validate

11 the alleged debt in November 2012 and December 2013. It was not until January
12 11,2014, that Bayview responded to Plaintiffs request for debt validation by
13 sending her a copy ofthe Note, which included the name ofthe original creditor,
14 Ryland Mortgage Company, and an address. After Plaintiff disputed the debt, but
15 before Bayview sent verification, Bayview obtained Plaintiffs credit report.
16 Plaintiff also claims she received several phone calls from Bayview in connection
17 with the debt. In addition, Plaintiff received two separate written correspondences
18 from Bayview alerting Plaintiff that her account might be referred to an attorney for
19 legal action. Viewing the facts in the light most favorable to Plaintiff, it appears
20 that Bayview continued its debt collection efforts after it was notified that the debt
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was in dispute, but before it provided validation.
However, Plaintiff alleges no facts that indicate Ms. Coro contacted Plaintiff
after Plaintiff first disputed the debt in November 2012. In fact, Plaintiff alleges

24 that Ms. Coro last contacted Plaintiff in a letter dated October 30, 2012. As a result,
25 it appears that Ms. Coro did not attempt to collect a debt from Plaintiff in violation
26 of section 1692g(b).
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In conclusion, Plaintiff failed to adequately state a claim for relief under

28 Count One against Ms. Coro. But, Plaintiff has sufficiently pleaded a claim for
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1 relief under 15 U.S.c. § 1692g(b) against Bayview. Accordingly, Defendants'
2 Motion to Dismiss Count One as to Ms. Coro is GRANTED, and their Motion to
3 Dismiss Count One as to Bayview is DENIED.
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(3) Count Two -15 Us.c. § 1692e(4)

In Count Two, Plaintiff claims Defendants used false and deceptive

6 information by sending her the transfer of service notice (TAC, Ex. 6), the 2012
7 debt letter (TAC, Ex. 5), and the 2014 debt validation letter (TAC, Ex. 9).
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Section 1692e ofthe FDCPA proscribes the use of "any false, deceptive, or

9 misleading representation or means in connection with the collection of any debt."
10 Further, "[w]ithout limiting the general application ofthe foregoing," section 1692e
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delineates several subsections describing specific conduct that will constitute a

12 violation. Section 1692e(4) specifically prohibits a debt collector from representing
13 or implying that "nonpayment of any debt will result in the arrest or imprisonment
14 of any person or the seizure ... or sale of any property ... unless such action is
15 lawful and the debt collector or creditor intends to take such action."
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Courts must consider an alleged violation of section 1692e according to the

17 "least sophisticated debtor" standard-that is, whether "the least sophisticated
18 debtor would likely be misled by a communication." Donohue v. Quick Collect,
19 Inc., 592 F.3d 1027, 1033 (9th Cir. 2010). Further, a misleading statement must be

20 material to be actionable. Id.
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The transfer notice states that the previous loan servicer was Bank of

22 America, N.A. (TAC, Ex. 6.) Plaintiff alleges that the 2012 debt letter refers to a
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loan number that is not associated with Plaintiff. (TAC, Ex. 5.) The letter also

24 includes the following statement: "[t]his is a serious matter, which ifleft
25 unresolved, may result in damage to your credit rating and the eventual loss of your
26 home." (Id.) The 2014 debt validation letter attached a Note which displays
27 Plaintiff's signature and lists Ryland Mortgage Company as the creditor. (TAC, Ex.
28 9.) Defendant Coro signed the 2012 debt letter and the transfer notice.
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Plaintiff argues that these letters are misleading by reporting a previous loan

2 servicer (Bank of America) and creditor (Bank of New York Mellon) that Plaintiff
3 is not familiar with. Plaintiff attests she does not recognize the loan number
4 referred to, and cannot trust that her original loan was in fact transferred to Bayview
5 and is the same loan that Bayview acquired.
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The Court recognizes that Plaintiff has not alleged a violation of section

7 1692e(4). Particularly, Plaintiff did not allege that Bayview made any
8 representation regarding the consequences of failing to pay the debt that it could not
9 lawfully make. However, Plaintiff has sufficiently alleged that she does not
10 recognize the creditor's identity, which the courts have found misleading under
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section 1692e. See Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1121

12 (9th Cir. 2014) ("[T]he identity of a consumer's original creditor is a critical piece
13 of information, and therefore its false identification in a dunning letter would be
14 likely to mislead some consumers in a material way."); Isham v. Gurstel, Staloch &

15 Chargo, P.A., 738 F. Supp. 2d 986, 996 (D. Ariz. 2010) ("To preserve the
16 protections and policies ofthe FDCPA, it is important to know the proper identity
17 of the creditor."). As the least sophisticated debtor might be misled by such
18 information, the Court DENIES Defendants' Motion to Dismiss Count Two.
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B. Rosenthal Fair Debt Collection Practices Act - Count Four

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Plaintiff argues that Defendants violated the Rosenthal Act by violating

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section 1692j of the FDCPA.
The Rosenthal Act requires debt collectors to comply with the FDCPA. Cal.

23 Civ. Code § 1788.17. Section 1692j proscribes the creation of a "false belief in a
24 consumer that a person other than the creditor of such consumer is participating in
25 the collection of ... a debt ... when in fact such person is not so participating."
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Plaintiff points to the same letters relied upon in Count Two to show that

27 Bayview has attempted to mislead Plaintiff. However, a review of those letters
28 shows that Bayview did not suggest that any party other than itself was attempting
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1 to collect the debt. Thus, Plaintifffaiis to state a claim under section 1692j.
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On the other hand, as stated above, Plaintiff sufficiently alleged violations of

3 15 U.S.C. §§ 1692g(b) and 1692e. Accordingly, Plaintiff has adequately stated a
4 claim for relief under the Rosenthal Act, as far as it relates to sections 1692g(b) and
5 1692e of the FDCPA. Defendants' Motion as to Count Four is DENIED.
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C. Telephone Consumer Protection Act - Count Three

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Plaintiff argues that Defendants violated the Telephone Consumer Protection

8 Act ("TCPA") by calling her cell phone regarding the loan in dispute.
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Under the TCPA, it is unlawful for a person to use an automatic telephone

10 dialing system to call someone's cell phone. 47 U.S.C. § 227(b)(I)(A). An
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"automatic telephone dialing system" refers to "equipment which has the capacity to

12 store or produce telephone numbers to be called, using a random or sequential
13 number generator; and to dial such numbers." 47 U.S.C. § 227(a)(I).
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Plaintiff contends that Defendants used an automatic dialing system to make

15 ten calls to her cell phone without her consent. Plaintiff alleges that she did not
16 provide Bayview with her phone number. And, Plaintiff claims that at the
17 beginning of each unsolicited call there was an "artificial time delay." These facts
18 are sufficient to support a claim under the TCPA. However, Plaintiff alleges no
19 facts to suggest Ms. Coro used an automated system, or attempted to call Plaintiff.
20 The Court therefore GRANTS the Motion to Dismiss Count Three against Ms.
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Coro, but DENIES the Motion to Dismiss Count Three against Bayview.

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D. Fair Credit Reporting Act - Count Five

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Plaintiff argues Defendants violated the Fair Credit Reporting Act ("FCRA")

24 by obtaining her credit report.
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The FCRA provides that consumer reporting agencies may disclose a

26 consumer's credit information to a third party only for a "permissible purpose." 15
27 U.S.C. § 1681 b. One such permissible purpose is where a debt collector attempts to
28 collect a debt owed by the consumer. 15 U.S.c. § 1681b(a)(3)(A); Chyba v. Green
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1 Tree Servicing, LLC, 586 F. App'x 397,398 (9th Cir. 2014).
2

Plaintiff alleged that Defendants were attempting to collect a debt. (TAC ~

3 14, Exs. 2, 4.) Thus, by Plaintiffs admission, Defendants had a permissible purpose
4 to obtain her credit information. The Motion as to Count Five is GRANTED.

5 III. DEFENDANTS' MOTION TO STRIKE
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Defendants move to strike Plaintiffs affidavit filed in conjunction with her

7 verified TAC, because they argue it is redundant and improper. Plaintiffs affidavit
8 is not likely to cause litigation of irrelevant and spurious issues. The Court
9 therefore DENIES the Motion to Strike. The Court also DENIES as moot the
10 Motion to Strike Plaintiffs request for judicial notice.
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IV. PLAINTIFF'S MOTION TO COMPEL

Plaintiff states that Defendants failed to comply with Federal Rule of Civil

13 Procedure 7.1 and Local Rule 40.2. As a result, she argues that Defendants'
14 Motions should be denied. Out of an abundance of caution, Bayview filed a
15 Corporate Disclosure Statement. Plaintiffs Motion is therefore DENIED as moot.
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CONCLUSION
Defendants' Motion to Dismiss for lack of personal jurisdiction and improper

18 venue is DENIED. The Motion to Dismiss for failure to state a claim is
19 GRANTED in part. Counts One and Three against Marilyn Coro are
20 DISMISSED. Count Five is DISMISSED as to both Defendants. Defendants'
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Motion to Strike is DENIED. Plaintiffs Motion to Compel is DENIED as moot.

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Defendants shall file an Answer on or before August 3. 2015.

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IT IS SO ORDERED.

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25 Dated: JUlyfl-, 2015
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