Jose v. Select Portfolio Servicing, Inc. et al

Filing 25

ORDER Granting Defendant's 20 Motion to Dismiss. Signed by Judge Michael M. Anello on 5/2/2017. (ag)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

SOUTHERN DISTRICT OF CALIFORNIA

10
11

FOLUKE JOSE,

Case No.: 16cv106-MMA (RBB)
Plaintiff,

12
13

v.

ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS

14

SELECT PORTFOLIO SERVICING,
INC.,

[Doc. No. 20]

15

Defendant.

16
17
18

On December 8, 2015, Plaintiff Foluke Jose filed a complaint in the Superior Court

19
20

of California, County of San Diego against Defendant Select Portfolio Servicing, Inc.

21

alleging various causes of action arising out of Plaintiff’s default on a loan. On January

22

15, 2016, Defendant removed the action to this Court. Defendant now moves to dismiss

23

Plaintiff’s First Amended Complaint (FAC) pursuant to Federal Rule of Civil Procedure

24

12(b)(6). See Doc. Nos. 15, 20. The Court found the matter suitable for determination

25

on the papers and without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the

26

reasons set forth below, the Court GRANTS Defendant’s motion to dismiss, Doc. No.

27

20.

28
1
16cv106-MMA (RBB)

BACKGROUND1

1
2

Plaintiff alleges she purchased a home in 2003. In 2005, Plaintiff states that she

3

refinanced the property with a loan from Argent Mortgage Company, LLC. She alleges,

4

“[o]n information and belief, her loan was then bundled in Pass-Through Certificates,

5

which was and is a federal procedure.” Doc. No. 14, FAC ¶ 8. “The resulting loan pool

6

is apparently an asset of a trust, the trustee of which is apparently Wells Fargo Bank.”

7

FAC ¶ 8. Plaintiff alleges the loan is thus “federally related” and “subject to [] federal

8

statutes, regulations and federal public policy.” FAC ¶ 11. Defendant is currently the

9

mortgage servicing company for the loan. FAC ¶ 2. Plaintiff defaulted on the loan,

10

making her last payment on August 11, 2014. FAC ¶ 26. Defendant filed a notice of

11

default on August 12, 2015. FAC ¶ 27.

12

On December 8, 2015, Plaintiff filed this action alleging causes of action for

13

negligence, intentional infliction of emotional distress, civil conspiracy, bad faith breach

14

of contract, and seeking equitable remedies such as quiet title, and declaratory and

15

injunctive relief. Defendant removed the action to this Court and subsequently moved to

16

dismiss Plaintiff’s original Complaint. The Court granted Defendant’s motion to dismiss

17

the Complaint, and allowed Plaintiff leave to amend. The FAC alleges causes of action

18

for negligence and intentional infliction of emotional distress, and seeks equitable relief

19

such as quiet title, and declaratory and injunctive relief.

20

LEGAL STANDARD

21

A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro

22

v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and plain

23

statement of the claim showing that the pleader is entitled to relief. . . .” Fed. R. Civ. P.

24

8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is

25

plausible on its face.” Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,

26

27

1

28

Because this matter is before the Court on a motion to dismiss, the Court must accept as true the
allegations set forth in the complaint. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740
(1976).
2
16cv106-MMA (RBB)

1

570 (2007). The plausibility standard thus demands more than a formulaic recitation of

2

the elements of a cause of action, or naked assertions devoid of further factual

3

enhancement. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Instead, the complaint “must

4

contain allegations of underlying facts sufficient to give fair notice and to enable the

5

opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir.

6

2011).

7

In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth

8

of all factual allegations and must construe them in the light most favorable to the

9

nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996).

10

The court need not take legal conclusions as true merely because they are cast in the form

11

of factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987).

12

Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to

13

defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

14

In determining the propriety of a Rule 12(b)(6) dismissal, courts generally may not

15

look beyond the complaint for additional facts. United States v. Ritchie, 342 F.3d 903,

16

908 (9th Cir. 2003). “A court may, however, consider certain materials—documents

17

attached to the complaint, documents incorporated by reference in the complaint, or

18

matters of judicial notice—without converting the motion to dismiss into a motion for

19

summary judgment.” Id.; see also Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.

20

2001). Where dismissal is appropriate, a court should grant leave to amend unless the

21

plaintiff could not possibly cure the defects in the pleading. Knappenberger v. City of

22

Phoenix, 566 F.3d 936, 942 (9th Cir. 2009).

23

DISCUSSION

24

A.

25

Generally, a district court’s review of a 12(b)(6) motion to dismiss is “limited to

Requests for Judicial Notice

26

the complaint.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) overruled

27

on other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119, 1125–26 (9th Cir.

28

2002) (quoting Cervantes v. City of San Diego, 5 F.3d 1273, 1274 (9th Cir. 1993)).
3
16cv106-MMA (RBB)

1

Consideration of extrinsic evidence ordinarily converts a 12(b)(6) motion to dismiss into

2

a summary judgment motion. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.

3

2001). However, “a court may consider ‘material which is properly submitted as part of

4

the complaint.’” Id. That includes documents that are physically attached to the

5

complaint, and those that are not, but whose authenticity is not contested and where the

6

plaintiff’s complaint necessarily relies on them. Id. (citing Parrino v. FHP, Inc., 146

7

F.3d 699, 705–06 (9th Cir. 1998) (internal quotations omitted)). Second, a court may

8

take judicial notice of matters of public record. Id. at 688–89 (citing Mack v. South Bay

9

Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986) (internal quotations omitted).

10

Defendant requests judicial notice of:

11

a. A copy of the Deed of Trust recorded on April 25, 2005 (Doc. No. 20-2,

12

Exhibit A);

13

b. A copy of the Notice of Default and Election to Sell Under Deed of Trust

14

regarding the subject property and recorded on August 12, 2015 (Doc.

15

No. 20-2, Exhibit B); and

16

c. A copy of the Notice of Trustee’s Sale regarding the subject property and

17

recorded on November 17, 2015 (Doc. No. 20-2, Exhibit C).

18

A court may take judicial notice of matters of public record, such as the Deed of

19

Trust. Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir. 2001). The parties do

20

not dispute authenticity of the copy of the Deed of Trust, and the document has some

21

relevance to this litigation because it pertains to the subject property. Thus, the Court

22

GRANTS Defendant’s request for judicial notice. The Court DENIES AS MOOT

23

Defendant’s remaining requests because the Court has already taken judicial notice of

24

those documents in conjunction with Defendant’s initial motion to dismiss. See Doc. No.

25

14.

26

B.

27

The gravamen of the FAC is that Defendant was required, pursuant to “federal

28

Failure to Cure Deficiencies

public policy,” to file a notice of default within seven or eight months after Plaintiff made
4
16cv106-MMA (RBB)

1

her last payment on the loan, but Defendant did not do so until twelve months after

2

Plaintiff’s default. Based on that contention, Plaintiff alleges causes of action for

3

negligence and intentional infliction of emotional distress and seeks equitable remedies

4

such as quiet title, and declaratory and injunctive relief.

5

Previously, the Court granted Defendant’s motion to dismiss the Complaint,

6

dismissing all of Plaintiff’s claims and allowing Plaintiff leave to amend most claims. In

7

the FAC, Plaintiff fails to cure the deficiencies outlined in the Court’s prior Order. See

8

Doc. No. 14. Plaintiff has reorganized the pleading and added additional legal

9

arguments, but her claims remain substantively the same and Plaintiff fails to add

10

additional factual content that would change the Court’s analysis.

11

i.

12

As did the Complaint, the FAC fails to allege facts supporting Plaintiff’s

13

contention that Defendant, as a loan servicing company, owed her a duty of care that

14

could give rise to a negligence claim. See Aguinaldo v. Ocwen Loan Servicing, LLC, No.

15

12CV1393-EJD, 2012 WL 3835080, at *6–7 (N.D. Cal. Sept. 4, 2012) (stating that “a

16

duty between a borrower and loan servicer that would give rise to a negligence action [. .

17

.] has not been recognized under the law”); Shepherd v. Am. Home Mortg. Servs., No.

18

Civ. 09-1916 WBS GGH, 2009 WL 4505925, at *2 (E.D. Cal. 2009) (stating that loan

19

servicers do not owe duties to borrowers); Weismann v. Caliber Home Loans, Inc., No.

20

16CV203-GPC(BLM), 2016 WL 6680212, at *4 (S.D. Cal. Nov. 14, 2016). For the same

21

reasons as set forth in the Court’s previous order, Plaintiff again fails to allege any special

22

circumstances that would apply to warrant an exception to the general rule that financial

23

institutions and loan servicers owe no duty of care to borrowers where their conduct does

24

not exceed the scope of their conventional roles. See Anderson v. Deutsche Bank Nat.

25

Trust Co. Americas, 649 F. App’x 550, 552 (9th Cir.) (citing Biakanja v. Irving, 320 P.2d

26

16 (1958)) (declining to impose a duty of care on a loan servicer where “the borrowers’

27

negligence claims [were] based on allegations of delays in the processing of their loan

28

modification applications”).

Negligence

5
16cv106-MMA (RBB)

1

Likewise, even were the Court to assume that Defendant owed Plaintiff a duty of

2

care to file a notice of default in some amount of time, Plaintiff again fails to allege facts

3

that would constitute a breach of that duty. Plaintiff merely alleges that Defendant filed a

4

notice of default approximately twelve months after Plaintiff defaulted on the loan, which

5

Plaintiff urges was “untimely” without pointing to any persuasive legal authority.

6

Specifically, Plaintiff argues that “[t]he period of time by which the notice of default

7

must be filed in California should be seven months after the last date of payment”

8

because applying such a deadline would bring “all Federally related loans foreclosures

9

[sic] comfortably within the Federal housing law public policy re [sic] foreclosures, and

10

should completely get rid of the abuse by the servicers, and the bad homeowners.” FAC

11

¶ 42. For the reasons set forth in the Court’s previous Order, the Court is again

12

unpersuaded by Plaintiff’s argument.2 See Doc. No. 14 (finding the Complaint provided

13

“inadequate support for the proposition that . . . Defendant was bound to a seven- or

14

eight-month period in which to file a notice of default”); see also Weismann, 2016 WL

15

6680212, at *3 (stating, regarding an essentially identical complaint, that the plaintiff

16

failed to plausibly allege the existence of a “‘Federal housing law public policy’ based on

17

agency statutes, regulations, rules and/or guidelines”).

18
19

For the foregoing reasons, the Court GRANTS Defendant’s motion to dismiss as
to Plaintiff’s negligence claim.

20

ii.

21

Intentional Infliction of Emotional Distress

Plaintiff also fails to cure the deficiencies the Court delineated with regard to her

22

cause of action for intentional infliction of emotional distress (IIED). As in the

23

Complaint, Plaintiff’s only basis for her IIED claim is her assertion that Defendant should

24

have filed a notice of default four or five months earlier than it did. Thus, all of the

25

reasons that the Court discussed in its initial Order are equally applicable to the FAC.

26

27

2

28

Also, Plaintiff’s new allegation that Defendant “has a declared in-house policy of never filing a notice
of default when they could and should on time” does not cure this deficiency, as Plaintiff fails to
delineate a sound legal basis for her interpretation of what would be “on time.” See FAC ¶ 15.
6
16cv106-MMA (RBB)

1

For example, as the Court stated previously, nonjudicial foreclosure proceedings

2

do not typically constitute extreme and outrageous conduct giving rise to IIED claims.

3

See Smith v. Wachovia, No. C 09-01300 SI, 2009 WL 1948829, at *4 (N.D. Cal. July 6,

4

2009) (stating that the plaintiff’s allegations that the defendant wrongfully and

5

intentionally initiated nonjudicial foreclosure proceedings were insufficient to state a

6

claim for IIED); Hart v. Bayview Loan Servicing, No. 216CV01309CASAFMX, 2016

7

WL 3921139, at *7 (C.D. Cal. July 18, 2016). In fact, even where lenders or loan

8

servicers inaccurately told homeowners that their homes would not be foreclosed on,

9

courts have declined to find their conduct extreme or outrageous for the purposes of IIED

10

claims. See e.g., Mehta v. Wells Fargo Bank, N.A., 737 F. Supp. 2d 1185, 1204 (S.D.

11

Cal. 2010) (“The fact that one of Defendant Wells Fargo’s employees allegedly stated

12

that the sale would not occur but the house was sold anyway is not outrageous as that

13

word is used in this context.”); Aguinaldo, 2012 WL 3835080, at *2, *7.

14

Further, as discussed above and in the Court’s prior Order, Plaintiff fails to allege

15

that Defendant’s conduct violated any law or “Federal housing law public policy

16

concerning foreclosures,” which undermines her assertions that Defendant’s conduct was

17

extreme and outrageous. See FAC ¶ 21. It is also noteworthy that Defendant’s conduct

18

in filing a notice of default was prompted by Plaintiff’s own default. The Court finds, as

19

a matter of law, that Defendant’s conduct was not “so extreme as to exceed all bounds of

20

that usually tolerated in a civilized society,” as would be required to state a claim for

21

IIED. See Vasquez v. Franklin Mgmt. Real Estate Fund, Inc., 222 Cal. App. 4th 819, 832

22

(2013); Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., 129

23

Cal. App. 4th 1228, 1259 (2005).

24

Moreover, the Court notes that Plaintiff’s amended allegations remain insufficient

25

to allege that Defendant’s failure to file a notice of default within seven or eight months

26

of Plaintiff’s default proximately caused her any emotional distress that she would not

27

have otherwise suffered due to the inherently stressful nature of foreclosure proceedings.

28

“Common sense dictates that home foreclosure is a terrible event and likely to be fraught
7
16cv106-MMA (RBB)

1

with unique emotions and angst.” Davenport v. Litton Loan Servicing, LP, 725 F. Supp.

2

2d 862, 884 (N.D. Cal. 2010) (dismissing IIED claim in part because of the plaintiff’s

3

inability to connect the defendant’s allegedly improper conduct to her distress).

4

For the foregoing reasons, and for those stated in the Court’s Order dismissing

5

Plaintiff’s original Complaint, Plaintiff has not stated a plausible claim for IIED. The

6

Court GRANTS Defendant’s motion to dismiss as to Plaintiff’s IIED claim.

7

iii.

8

Requests for Equitable Remedies: Declaratory Relief, Quiet Title,
and Injunctive Relief

9

Plaintiff’s requests for equitable relief are premised on Plaintiff’s assertion that

10

Defendant was bound by a seven- or eight-month deadline in which to file a notice of

11

default. Because Plaintiff has failed to sufficiently allege that Plaintiff’s loan was subject

12

to such a deadline, or that Defendant had a duty to abide by that deadline, the Court

13

GRANTS Defendant’s motion to dismiss as to Plaintiff’s claims for declaratory relief,

14

quiet title, and preliminary and permanent injunctions.

15

C.

16

Federal Rule of Civil Procedure 15(a) states that “leave to amend shall be freely

Leave to Amend

17

given when justice so requires.” See Schmidt v. PNC Bank, NA, 591 F. App’x 642, 643

18

(9th Cir. 2015). While liberally granted, “leave to amend is not automatic.” Id. It is

19

within the discretion of district courts to deny leave to amend based on various factors,

20

including futility of amendment. Id.; Star Patrol Enterprises, Inc. v. Saban Entm’t, Inc.,

21

129 F.3d 127 (9th Cir. 1997). Here, based on the nature of the deficiencies, amendment

22

appears futile. Further, Plaintiff has failed to correct the deficiencies noted by the Court

23

previously when it allowed Plaintiff leave to amend her original Complaint, and Plaintiff

24

does not request further leave to amend. Accordingly, the Court declines to allow

25

Plaintiff further amendment.

26

//

27

//

28

//
8
16cv106-MMA (RBB)

1
2

CONCLUSION
For the reasons stated above, the Court GRANTS Defendant’s motion to dismiss

3

the Complaint, Doc. No. 20, as to all causes of action and DISMISSES Plaintiff’s claims

4

with prejudice and without leave to amend. The Clerk of Court is instructed to close this

5

case. IT IS SO ORDERED.

6
7

Dated: May 2, 2017

8
9
10

Hon. Michael M. Anello
United States District Judge

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
9
16cv106-MMA (RBB)