Smith v. Specialized Loan Servicing, LLC

Filing 31

ORDER Denying 19 Defendant's Motion to Dismiss First Amended Complaint. Signed by Judge Gonzalo P. Curiel on 09/21/2017. (ajs)

Download PDF
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MARGARETTE SMITH, on behalf of herself and all others similarly situated, 12 13 14 15 v. Plaintiff, CASE NO. 16cv2519-GPC(BLM) ORDER DENYING DEFENDANT’S MOTION TO DISMISS [Dkt. No. 19.] SPECIALIZED LOAN SERVICING, LLC, Defendant. 16 17 On May 24, 2017, Defendant filed a motion to dismiss the first amended 18 complaint (“FAC”). (Dkt. No. 19.) On July 12, 2017, the Court deferred ruling on the 19 motion to dismiss until the Court’s ruling on an impending motion to substitute to be 20 filed by Plaintiff. After the motion to substitute parties was fully briefed, on September 21 13, 2017, the Court granted the motion for substitution of parties. The Court now 22 addresses the motion to dismiss filed by Defendant. Based on the reasoning below, the 23 Court DENIES Defendant’s motion to dismiss. 24 25 Background Plaintiff Margarette Smith (“Plaintiff” or “Smith”) filed a purported first 26 amended class action complaint against Defendant Specialized Loan Servicing, LLC 27 (“Defendant” or “SLS”) for alleged violations of Regulation X of the Real Estate 28 Settlement Procedures Act (“RESPA”), 12 C.F.R. §1024.41; and California Unfair -1- - 16cv2519 GPC(BLM) 1 Competition Law (“UCL”), Cal. Bus. & Prof. Code 17200 et seq. (Dkt. No. 17, FAC.) 2 Prior to the filing of the FAC, Smith died on April 18, 2017. (Id. ¶ 8.) On September 3 13, 2017, the Court granted the movants Zarah Kimble, Sarah Sakinah Groza 4 O’Loughlin, and Seher Basak’s motion to substitute them in as plaintiffs. (Dkt. No. 5 30.) A second amended complaint adding the movants as plaintiffs has not yet been 6 filed. (Dkt. No. 31.) 7 Most of the arguments raised in the motion to dismiss are now mooted by the 8 Court’s order granting substitution of parties. However, Defendant’s motion also 9 included an alternative argument, that the class allegations should be struck pursuant 10 to Federal Rule of Civil Procedure (“Rule”) 12(f), in the event the Court denied its 11 motion to dismiss. The Court now addresses the remaining argument in Defendant’s 12 motion to dismiss. 13 Discussion 14 A. Legal Standard on Federal Rule of Civil Procedure 12(f) 15 Rule 12(f) provides that the court “may strike from a pleading an insufficient 16 defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. 17 P. 12(f). “The function of a 12(f) motion to strike is to avoid the expenditure of time 18 and money that must arise from litigating spurious issues by dispensing with those 19 issues prior to trial . . . .” Whittlestone, Inc. v. Handi–Craft Co., 618 F.3d 970, 973 (9th 20 Cir. 2010) (quoting Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd 21 on other grounds 510 U.S. 517 (1994)). 22 “Motions to strike are ‘generally disfavored because they are often used as 23 delaying tactics and because of the limited importance of pleadings in federal 24 practice.’” Cortina v. Goya Foods, Inc., 94 F. Supp. 3d 1174, 1182 (S.D. Cal. 2015) 25 (quoting Rosales v. Citibank, 133 F. Supp. 2d 1177, 1180 (N.D. Cal. 2001)). As such, 26 “motions to strike should not be granted unless it is clear that the matter to be stricken 27 could have no possible bearing on the subject matter of the litigation.” Colaprico v. 28 Sun Microsys., Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 1991). “Courts will not grant -2- - 16cv2519 GPC(BLM) 1 motions to strike unless ‘convinced that there are no questions of fact, that any 2 questions of law are clear and not in dispute, and that under no set of circumstances 3 could the claim or defense succeed.’” Novick v. UNUM Life Ins. Co. of America, 570 4 F. Supp. 2d 1207, 1208 (C.D. Cal. 2008) (quoting RDF Media Ltd. v. Fox Broad. Co., 5 372 F. Supp. 2d 556, 561 (C.D. Cal. 2005)). “When ruling on a motion to strike, this 6 Court ‘must view the pleading under attack in the light most favorable to the pleader.” 7 Id. (citing RDF Media Ltd., 372 F. Supp. 2d at 561). 8 B. Motion to Strike Class Allegations 9 Defendant seeks to strike the class allegations in the FAC arguing that Plaintiffs, 10 as successors-in-interests, cannot satisfy the typicality and adequacy requirements for 11 class certification because they are subject to unique defenses that will delay class 12 certification. Defendant contends that while Plaintiffs may be successors-in-interest 13 to the Property at issue, they are not successors in interest to Plaintiff’s causes of 14 action.1 Next, it contends that Plaintiffs will be subject to unique defenses such as the 15 fact that they are limited in the types of damages they can recover as successors in 16 interest, whether the Property was Plaintiff’s principal place of residence during the 17 relevant time period, and whether the Plaintiffs, as successors-in-interest, have personal 18 knowledge of the underlying facts in the case. 19 “The grounds for a motion to strike must appear on the face of the pleading 20 under attack, or from matters which the Court may take judicial notice.” In re Toyota 21 Motor Corp., 790 F. Supp. 2d 1152, 1170 (C.D. Cal. 2011). While class allegations 22 may be stricken at the pleading stage, the granting of a motion to dismiss or strike class 23 allegations before discovery has commenced should be done rarely. In re Wal–Mart 24 Stores, Inc. Wage and Hour Litig., 505 F. Supp. 2d 609, 615 (N.D. Cal. 2007) (noting 25 26 1 Defendant explains that the Property is not the subject to the litigation; it is only tangentially related to Plaintiff’s claim. While the Loan happens to be secured by the 27 Property, Plaintiff’s remedies in this action, seeking actual and statutory damages and restitution are unrelated to the Property. The Court is not persuaded with Defendant’s 28 argument and Defendant fails to provide any legal authority to support its argument. -3- - 16cv2519 GPC(BLM) 1 that the “better course is to deny such a motion because ‘the shape and form of a class 2 action evolves only through the process of discovery”). 3 The issues raised by Defendant are factual issues that have not yet been subject 4 to discovery and Plaintiffs should be given the opportunity to present their evidence 5 to support class certification. See In re Wal-Mart Stores, 505 F. Supp. 2d at 615-16 6 (“While plaintiffs’ class definitions are suspicious and may in fact be improper, 7 plaintiffs should at least be given the opportunity to make the case for certification 8 based on appropriate discovery . . . .”). The Court concludes that the motion to strike 9 class allegations is premature and Defendant may raise its arguments at the time of 10 class certification. See Cholakyan v. Mercedes–Benz USA, LLC, 796 F. Supp. 2d 11 1220, 1246 (C.D. Cal. 2011) (finding that a motion to strike class allegations was 12 premature where defendant had not filed an answer and discovery had not begun). 13 Conclusion 14 Based on the above, the Court DENIES Defendant’s motion to dismiss the FAC. 15 IT IS SO ORDERED. 16 17 DATED: September 21, 2017 18 19 HON. GONZALO P. CURIEL United States District Judge 20 21 22 23 24 25 26 27 28 -4- - 16cv2519 GPC(BLM)

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?