CAROLYN K. DELANEY, Magistrate Judge.
Plaintiff, proceeding pro se and in forma pauperis, asserts claims against defendant financial entities relating to the foreclosure sale of real property at 256 Shilling Avenue in Lathrop, California. In November 2018, after a hearing on defendants' motion to dismiss, the undersigned dismissed the original complaint for failure to state a claim, granting leave to amend. Plaintiff filed the First Amended Complaint (FAC) one month later. (ECF No. 36.) Before the court is defendants' motion to dismiss the FAC, which is fully briefed. (ECF Nos. 38, 40, 43 & 44.)
On April 10, 2019, the undersigned held a hearing on defendants' motion to dismiss the FAC pursuant to Rule 12(b)(6). Plaintiff appeared pro se, and Brett Goodman and James Ramos appeared telephonically on behalf of defendants. At the close of the hearing, the court took the matter under submission.
The factual background to plaintff's claims is as follows
In the FAC, as in the original complaint, plaintiff alleges that the Loan was improperly assigned and therefore unenforceable.
The FAC goes into greater detail about plaintiff's attempt to obtain a second loan modification after he concluded that the first one was based on inaccurate figures.
Plaintiff further alleges that, upon receiving the April 10, 2017 letter, he called Ms. Negron.
While these allegations describe an impending May 24, 2017 trustee's sale, no such sale occurred until October 11, 2017, nine months after the final Notice of Default.
Plaintiff also adds new claims of racial discrimination in the FAC. In his second cause of action, he asserts that Rushmore employees made racially discriminatory statements to him in 2015 and 2017
In order to survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than a "formulaic recitation of the elements of a cause of action"; it must contain factual allegations sufficient to "raise a right to relief above the speculative level."
In his first cause of action, plaintiff claims defendants violated multiple provisions of the California Homeowner's Bill of Rights (HBOR). Section 2920.5 is definitional and does not prohibit any conduct. Nor does § 2923.4 ("Purpose of the Act") prohibit any conduct. Thus any claims pursuant to these sections must be dismissed.
Civ. Code § 2923.55 prohibits a mortgage lender/servicer from recording a Notice of Default until it contacts the borrower to discuss alternatives to foreclosure. The undersigned takes judicial notice of defendants' Exhibit H, which includes a copy of a November 30, 2015 declaration of compliance with § 2923.55. (Defs. Request for Judicial Notice, ECF No. 39-1 at 28-29.) The declaration states that "the letter required by Civil Code § 2923.55(f)(3) was mailed on 5/7/15," and plaintiff alleges that less than two weeks later, he spoke to a Rushmore representative about possible alternatives to foreclosure. FAC, ¶ 128. Plaintiff alleges that, between May 2015 and May 2017, three Rushmore employees spoke with him about ways to prevent foreclosure: Byron Dean in Texas, Matt Kim in California, and Miranda Negron in Puerto Rico. FAC, ¶¶ 132-136. Based on the foregoing, plaintiff fails to state a claim under this section.
Civ. Code § 2924.17 requires that certain foreclosure notice declarations be "accurate and complete and supported by competent and reliable evidence." Civ. Code § 2924(a)(6) prevents an entity from recording a Notice of Default "unless it is the holder of the beneficial interest under the mortgage or deed of trust, the original trustee . . . or the designated agent of the holder of the beneficial interest." Aside from his theory that the DOT was improperly assigned, as discussed in the November 2018 order and found insufficient to state a claim, plaintiff has not alleged any facts showing that one or more defendants violated these sections.
In his seventh cause of action, plaintiff asserts an HBOR claim under Cal. Civil Code § 2923.6. As stated in the order granting defendants' first motion to dismiss, the HBOR prohibits lenders from engaging in "dual tracking," which is the practice of advancing the foreclosure process while the borrower's application for a loan modification is pending review. Cal. Civ. Code § 2923.6(c). Section 2923.6(c) provides in relevant part that "[i]f a borrower submits a complete application for a
Here, plaintiff concedes that he received a "first lien modification" in 2013 and made payments pursuant to the new agreement before he "discovered discrepancies" in the agreement and sought a second modification. FAC, ¶¶ 80-83. Cal. Civil. Code § 2923.6(g) provides:
(Emphasis added.) As the FAC does not allege a "material change" in plaintiff's financial circumstances between his first loan modification and his application(s) for a second modification, warranting a new review under the HBOR, it does not plead a violation of this section.
In his eighth cause of action, plaintiff asserts a violation of Civil Code § 2923.7, which requires the provision of a single point of contact ("SPOC") in relation to a mortgage modification. Section 2923.7 provides in relevant part that "[u]pon request from a borrower who requests a foreclosure prevention alternative, the mortgage servicer shall promptly establish a single point of contact and provide to the borrower one or more direct means of communication with the single point of contact." The section defines a "single point of contact" as "an individual or team of personnel, each of whom has the ability and authority to perform the responsibilities described . . ." Cal. Civ. Code § 2923.7(e).
Plaintiff alleges that, on May 19, 2015, he "requested from Rushmore that they provide him with foreclosure prevention alternatives and a specific contact person to work with him to prevent foreclosure on the Property." FAC, ¶ 128. "Rushmore placed him in contact with Bryan Dean of their loss mitigation department. . . . Upon Plaintiff's initial telephone contact with Mr. Dean, they discussed Plaintiff's foreclosure prevention alternatives[.]"
"A violation of § 2923.7 is actionable only when that violation is material. A material violation is one where the alleged violation affected a plaintiff's loan obligations or the modification process."
In his second cause of action, plaintiff asserts that defendants discriminated against him in violation of the Unruh Civil Rights Act.
The Unruh Civil Rights Act provides: "All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever." Cal. Civ. Code § 51(b). The Act provides for full and equal accommodations and services "in all business establishments of any kind whatsoever."
Here, while plaintiff alleges that two Rushmore representatives made racial comments in the course of discussing his foreclosure, the FAC does not allege that plaintiff was deprived of services or accommodations based on race. Nor does the FAC plead that any defendant intentionally discriminated against him in any specific way. Its conclusory assertion that "defendants deprived Plaintiff of the full and equal accommodations, advantages, privileges, and services of Rushmore and the other defendants named in this action" is too vague and conclusory to state a claim.
Plaintiff asserts the following additional state claims: intentional infliction of emotional distress (third cause of action); negligent infliction of emotional distress (fourth cause of action); violation of Cal. Business and Professions Code § 17200, et seq. (fifth cause of action); negligent processing (sixth cause of action); and quiet title (ninth cause of action).
"A cause of action for intentional infliction of emotional distress exists when there is (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiffs suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant's outrageous conduct."
California's Business and Professions Code § 17200 broadly defines unfair competition to include any business act or practice that is unlawful, unfair, or misleading. The Ninth Circuit has observed that
Finally, the FAC does not allege the elements of a quiet title claim and should be dismissed. "Under California law, it is well-settled that a mortgagor cannot quiet his title against the mortgagee without paying the debt secured. . . . Therefore, to maintain a quiet title claim, a plaintiff is required to allege tender of the proceeds of the loan at the pleading stage." Solano v. America's Servicing Co., 2011 WL 4500874, *10 (E.D. Cal. Sept. 27, 2011) (citations omitted).
As plaintiff has had one opportunity to amend and it does not appear further amendment would cure the pleading's defects, the FAC should be dismissed with prejudice for failure to state a claim.
Accordingly, IT IS HEREBY RECOMMENDED that:
These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen days after being served with these findings and recommendations, plaintiff may file written objections with the court and serve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Plaintiff is advised that failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).
