Riley v. Quality Loan Service Corporation et al

Filing 21

ORDER: The Motion to Dismiss filed by Defendant Specialized (ECF No. 19 ) is Granted. Plaintiff's civil conspiracy claim under 18 U.S.C. § 1343 is dismissed with prejudice. The Court declines to exercise supplemental jurisdiction over Pla intiff's remaining state law claims, and dismisses those claims without prejudice. It is further Ordered that the Motion to Dismiss filed by Defendant Quality (ECF No. 7 ) is Denied as moot. The Clerk of Court shall close the case. Signed by Judge William Q. Hayes on 01/10/2019. (All non-registered users served via U.S. Mail Service)(ajs)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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DASHA RILEY,
Plaintiff,

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No. 3:18-cv-1297-WQH-AGS
ORDER

v.

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QUALITY LOAN SERVICE CORP.;
SPECIALIZED LOAN SERVICING,
LLC; and MORTGAGE INVESTORS
GROUP, INC.

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Defendants.

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HAYES, Judge:

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The matters before the Court are the Motions to Dismiss filed by Defendant

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Quality Loan Service Corporation (Quality) (ECF No. 7) and Specialized Loan

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Servicing, LLC (Specialized) (ECF No. 19).
I.

Background
On June 15, 2018, Plaintiff initiated an action against Defendants in this Court

by filing a Complaint. (ECF No. 1). On July 23, 2018, Defendant Quality filed a
Motion to Dismiss Plaintiff’s Complaint for lack of subject matter jurisdiction and
failure to state a cause of action. (ECF No. 7). On August 13, 2018, Plaintiff filed
Opposition. (ECF No. 9). On August 17, 2018, Defendant filed a Reply. (ECF No.
10). On November 23, 2018, Defendant Specialized filed a Motion to Dismiss
Complaint for Lack of Standing. (ECF No. 19). Plaintiff did not file opposition or
notice of non-opposition.
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II.

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On May 8, 2018, Jeff and Barbara Lubin were served a notice of trustee sale

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Allegations of the Complaint

by Defendant Quality. (ECF No. 1 ¶ 14). On May 30, 2018, a trustee sale was held
for the residential property located at 2643 Hidden Valley Rd., La Jolla, California,
92037 (“Hidden Valley Rd. Property”). Id. ¶¶ 2, 16. The property was sold at a
May 30, 2018 public auction.

Id. ¶ 16.

Defendants Quality Loan Service

Corporation, Specialized Loan Servicing, LLC, and Mortgage Investors Group, Inc.
were involved in conducting the sale. Id. ¶ 9–11.

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Plaintiff Dasha Riley, proceeding pro se, “operates a private business and is

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involved in real estate transactions as a consultant and also as an investor.” Id. ¶ 13.

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Plaintiff “learned of the concerns of Jeff and Barbara Lubin regarding their home”

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and on June 11, 2018 “acquired the interests of the subject real property through an

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assignment of rights.” Id.

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Plaintiff alleges Defendants conducted an “illegal sale of property” because

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Defendants “did not have a license or permit authorizing them to conduct a sale of

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real property at the date and time of the sale [of the Hidden Valley Rd. Property] . .

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. .” Id. ¶ 24–27. Plaintiff brings claims against all Defendants for: (1) civil

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conspiracy to commit wire fraud in violation of 18 U.S.C. § 1343; (2) to set aside

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trustee sale; and (3) constructive fraud.

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III.

Motions to Dismiss1

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Defendant Specialized contends that “Plaintiff's jurisdictional analysis is

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fatally flawed. Plaintiff relies upon a federal criminal statute (18 U.S.C. §1343,

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“Fraud by wire, radio, or television”) to establish federal question jurisdiction. This

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statute does not create a private right of action and therefore cannot support the

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exercise of federal question jurisdiction under 28 U.S.C. §1331. Dismissal is

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therefore appropriate under FRCP 12(b)(1).” (ECF No. 19-1 at 6).

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The Court finds that Defendant Specialized’s jurisdictional argument is dispositive of this action. For this reason,
the Court declines to address the remainder of Specialized’s contentions or any of the contentions in favor of
dismissal made by Defendant Quality in ECF No. 7.
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Plaintiff’s opposition to Defendant Specialized’s Motion to Dismiss was due
by December 17, 2018. (ECF No. 20). As of December 28, 2018, Plaintiff has not
filed opposition or a notice of non-opposition.
IV.

Legal Standard

“Federal courts are courts of limited jurisdiction. They possess only that
power authorized by Constitution and statute, which is not to be expanded by
judicial decree. It is to be presumed that a cause lies outside this limited jurisdiction,

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and the burden of establishing the contrary rests upon the party asserting

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jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)

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(citations omitted). Federal Rule of Civil Procedure 12(b)(1) permits a court to

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dismiss a claim for “lack of subject-matter jurisdiction.” Fed. R. Civ. P. 12(b)(1).

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

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claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “A district court’s

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dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6)

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is proper if there is a ‘lack of a cognizable legal theory or the absence of sufficient

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facts alleged under a cognizable legal theory.’” Conservation Force v. Salazar, 646

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F.3d 1240, 1242 (9th Cir. 2011) (quoting Balistreri v. Pacifica Police Dep’t, 901

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F.2d 696, 699 (9th Cir. 1988)).

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V. Discussion
a. Plaintiff’s Federal Claim

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Plaintiff’s complaint states, “This Court has federal jurisdiction because this

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case arises out of a violation of federal law. 18 U.S.C. § 1343.” (ECF No. 1 at 2).

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Defendant contends that Plaintiff has failed to state a claim for civil conspiracy to

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commit wire fraud in violation of 18 U.S.C. § 1343. This Court’s jurisdiction to

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hear this matter rests entirely on the existence of a federal question, so the Court

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addresses this question first.

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In order for Plaintiff to allege a claim under a federal statute, the statute must

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provide for a private right of action. See Touche Ross & Co. v. Redington, 442 U.S.
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560, 568 (1979) (“As we recently have emphasized, ‘the fact that a federal statute
has been violated and some person harmed does not automatically give rise to a
private cause of action in favor of that person.’”) (citing Cannon v. Univ. of Chicago,
441 U.S. 677, 688 (1979)). 18 U.S.C. § 1343 is the federal criminal wire fraud
statute. The Court must determine whether Congress intended to create a private
right of action under 18 U.S.C. § 1343.2 The statute states:
Whoever, having devised or intending to devise any scheme or
artifice to defraud, or for obtaining money or property by means of
false or fraudulent pretenses, representations, or promises, transmits
or causes to be transmitted by means of wire, radio, or television
communication in interstate or foreign commerce, any writings, signs,
signals, pictures, or sounds for the purpose of executing such scheme
or artifice, shall be fined under this title or imprisoned not more than
20 years, or both. If the violation occurs in relation to, or involving
any benefit authorized, transported, transmitted, transferred,
disbursed, or paid in connection with, a presidentially declared major
disaster or emergency (as those terms are defined in section 102 of the
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5122)), or affects a financial institution, such person shall be
fined not more than $1,000,000 or imprisoned not more than 30 years,
or both.

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§ 1343. The Court finds that the statute does not evince an intent by Congress to
create a private right of action. This finding is consistent with numerous courts in
this circuit, as well as other circuits who have addressed this issue. See Chen v. T.T.
Group, 2014 WL 12613519 (C.D. Cal. May 29, 2014) (“18 U.S.C. §§ 1341 and 1343
are criminal wire fraud statutes. They do not create civil causes of action, nor do
they give this Court permission to hear state contract claims”); Soliven v. Yamashiro,
2014 WL 2938401 (D. Haw. June 30, 2014) (same); Small v. Mortgage Elec.

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Wire fraud in violation of 18 U.S.C. § 1343 can serve as a predicate offense in a civil RICO
action under 18 U.S.C. §§ 1962 and 1964. To maintain a RICO claim under 18 U.S.C. §
1962(c), however, a plaintiff must allege (1) conduct (2) of an enterprise (3) through a pattern
(4) of racketeering activity. See Rezner v. Bayerische Hypo–Und Vereinsbank AG, 630 F.3d
866, 873 (9th Cir. 2010). In this case, Plaintiff has neither alleged a violation of 18 U.S.C. §§
1962 or 1964, nor alleged facts sufficient to state a RICO claim.
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Registration Sys., Inc., 2010 WL 3719314 (E.D. Cal. Sept. 16, 2010) (same); Napper
v. Anderson, 500 F.2d 634, 636 (5th Cir. 1974) (same); Wisdom v. First Midwest
Bank, 167 F.3d 402, 408 (8th Cir. 1999) (same). Accordingly, Plaintiff has failed
to state a claim under 18 U.S.C. § 1343 upon which relief can be granted. Plaintiff’s
civil conspiracy to commit wire fraud claim is dismissed with prejudice.3
b. Jurisdiction Over Remaining Claims

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Once all claims over which a federal court has original jurisdiction have been

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dismissed, the court in its discretion may decline to exercise supplemental

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jurisdiction over any remaining state law claims. 28 U.S.C. § 1367(c)(3). Plaintiff’s

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remaining claims arise out of alleged irregularities in a foreclosure conducted

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pursuant to California’s nonjudicial foreclosure scheme, codified at California Civil

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Code section 2920 et seq. This Court finds Plaintiff’s remaining claims better suited

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for a state court, and declines to exercise its supplemental jurisdiction over

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Plaintiff’s remaining claims. See United Mine Workers of Am. v. Gibbs, 383 U.S.

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715, 726 (1966) (“Needless decisions of state law should be avoided both as a matter

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of comity and to promote justice between the parties, by procuring for them a surer-

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footed reading of applicable law.”). Plaintiff’s remaining claims are dismissed

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without prejudice.
VI.

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Conclusion

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IT IS HEREBY ORDERED that the Motion to Dismiss filed by Defendant

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Specialized (ECF No. 19) is GRANTED. Plaintiff’s civil conspiracy claim under

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18 U.S.C. § 1343 is dismissed with prejudice. The Court declines to exercise

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supplemental jurisdiction over Plaintiff’s remaining state law claims, and dismisses

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those claims without prejudice. IT IS FURTHER ORDERED that the Motion to

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The Court has considered Plaintiff’s pro se status. Haines v. Kerner, 404 U.S. 519, 520–21
(1972) (Pro se pleadings are held to a less stringent standard than those drafted by lawyers).
Although a pro se plaintiff is normally entitled to notice and an opportunity to amend before
dismissal, it is clear in this instance that no amendment can cure the defects of a claim stated
under a statute that does not provide a private right of action. See Lopez v. Smith, 203 F.3d
1122, 1129 (9th Cir. 2000) (“Under Ninth Circuit case law, district courts are only required to
grant leave to amend if a complaint can possibly be saved.”).
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Dismiss filed by Defendant Quality (ECF No. 7) is DENIED as moot. The Clerk of
Court shall close the case.
Dated: January 10, 2019

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