Stejic v. Aurora Loan Services, Inc., et al, No. 2:2009cv00819 - Document 59 (D. Ariz. 2009)
Court Description: ORDER granting Shelter's 47 Motion to Dismiss without prejudice; granting Aurora's 49 Motion to Dismiss without prejudice; denying as moot MERS' 50 Motion to Dismiss. FURTHER ORDERED that pla's state law claims for Wrongful Foreclosure and Notice of Sale, Declaratory Relief, Injunctive Relief, Arizona Consumer Fraud Act violation and Conspiracy to Commit Fraud are DISMISSED WITHOUT PREJUDICE. FURTHER ORDERED directing the Clerk of Court to TERMINATE this matter. Signed by Judge G Murray Snow on 11/30/2009.(LAD)
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Stejic v. Aurora Loan Services, Inc., et al 1 Doc. 59 WO 2 NOT FOR PUBLICATION 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 15 16 ) ) ) Plaintiff, ) ) vs. ) ) AURORA LOAN SERVICES, LLC;) SHELTER MORTGAGE CO., LLC;) M O R T G A G E E L E C T R O N I C) REGISTRATION SYSTEMS, INC.;) ) JOHN DOES 1-100, ) ) Defendants. ) ) MILAN STEJIC, No. 09-CV-819-PHX-GMS ORDER 17 18 Three motions to dismiss are pending before the Court, one filed by each Defendant 19 (Dkt. ## 47, 49, 50.) Defendant Mortgage Electronic Registration Systems, Inc. (“MERS”) 20 also joined in Defendant Aurora Loan Services, LLC’s (“Aurora”) Motion. (Dkt. ## 47, 50.) 21 For the following reasons, the Court grants Shelter’s and Aurora’s Motions to Dismiss 22 without prejudice and denies MERS’s Motion as moot.1 23 24 25 26 27 28 1 The parties’ requests for oral argument are denied because the parties have had an adequate opportunity to discuss the law and evidence and oral argument will not aid the Court’s decision. See Lake at Las Vegas Investors Group, Inc. v. Pac. Malibu Dev., 933 F.2d 724, 729 (9th Cir. 1991). Dockets.Justia.com 1 BACKGROUND 2 In April 2007, Plaintiff contacted Shelter Mortgage Co., LLC (“Shelter”) to refinance 3 his home located at 2015 E. Barkwood Road in the Phoenix area. Plaintiff contends Shelter 4 did not provide various preliminary disclosures when it agreed to refinance the loan, but 5 Plaintiff signed the closing papers anyway on May 25, 2007. The loan was in the form of 6 two promissory notes totaling $1,420,000.00, each secured by a separate deed of trust. 7 Shelter was the lender and originator; Aurora was the servicer; and MERS was the 8 beneficiary on the deed of trust. Despite these labels, Plaintiff contends the various 9 Defendants performed other functions and exercised responsibilities inconsistent with these 10 labels. 11 At the time and continuing thereafter, Plaintiff contends he did not receive various 12 loan disclosures, including the required Good Faith Estimate, HUD-1 Settlement Statement, 13 a proper Notice of Right to Cancel, or an indication that he was paying a higher interest rate 14 so that Shelter could receive a higher yield spread premium (called a “lender credit” here). 15 On January 27, 2009, a Notice of Trustee’s sale on the property was recorded. The 16 notice lists “MERS c/o Aurora Loan Services” as the beneficiary and Quality Loan Service 17 Corporation as the trustee agent. 18 This lawsuit ensued. Plaintiff first filed his complaint on April 17, 2009, and he filed 19 his First Amended Complaint (“Complaint”) on November 11, 2009. The Complaint alleges 20 three federal law claims—Fair Debt Collection Practices Act (“FDCPA”) against Aurora; 21 Truth in Lending Act (“TILA”) against Shelter and Aurora and any assignees; Real Estate 22 Settlement Procedures Act (“RESPA”) against Shelter and Aurora—and five state law 23 claims—Wrongful Foreclosure and Notice of Sale against all Defendants; Declaratory Relief 24 against Aurora and MERS; Injunctive Relief against Aurora and MERS; Arizona Consumer 25 Fraud Act (“ACFA”) against Shelter and Aurora; Conspiracy to Commit Fraud against 26 MERS and Aurora. 27 28 -2- 1 LEGAL STANDARD 2 To survive a dismissal for failure to state a claim pursuant to Rule 12(b)(6), a 3 complaint must contain factual allegations sufficient to “raise the right of relief above the 4 speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While “a 5 complaint need not contain detailed factual allegations . . . it must plead ‘enough facts to state 6 a claim to relief that is plausible on its face.’” Clemens v. DaimlerChrysler Corp., 534 F.3d 7 1017, 1022 (9th Cir. 2008) (quoting Twombly, 550 U.S. at 570). “A claim has facial 8 plausibility when the plaintiff pleads factual content that allows the court to draw the 9 reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 10 Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). The plausibility 11 standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. 12 When analyzing a complaint for failure to state a claim under Rule 12(b)(6), “[a]ll 13 allegations of material fact are taken as true and construed in the light most favorable to the 14 non-moving party.” Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). In addition, the 15 Court must assume that all general allegations “embrace whatever specific facts might be 16 necessary to support them,” Peloza v. Capistrano Unified Sch. Dist., 37 F.3d 517, 521 (9th 17 Cir. 1994), but the Court will not assume that the plaintiff can prove facts different from 18 those alleged in the complaint, see Associated Gen. Contractors of Cal. v. Cal. State Council 19 of Carpenters, 459 U.S. 519, 526 (1983); Jack Russell Terrier Network of N. Cal. v. Am. 20 Kennel Club, Inc., 407 F.3d 1027, 1035 (9th Cir. 2005). Similarly, legal conclusions 21 couched as factual allegations are not given a presumption of truthfulness, and “conclusory 22 allegations of law and unwarranted inferences are not sufficient to defeat a motion to 23 dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). 24 At the same time, “Rule 8(e), requiring each averment of a pleading to be ‘simple, 25 concise, and direct,’ applies to good claims as well as bad, and is a basis for dismissal 26 independent of Rule 12(b)(6).” McHenry v. Renne, 84 F.3d 1172, 1179 (9th Cir. 1996) (citing 27 Fed. R. Civ. P. 12(b)(6)). Dismissal is appropriate if the complaint is so “verbose, confused, 28 and redundant that its true substance, if any, is well disguised.” Gillibeau v. City of -3- 1 Richmond, 417 F.2d 426, 431 (9th Cir. 1969). “Something labeled a complaint but written 2 more as a press release, prolix in evidentiary detail, yet without simplicity, conciseness and 3 clarity as to whom plaintiffs are suing for what wrongs, fails to perform the essential 4 functions of a complaint.” McHenry, 84 F.3d at 1180. 5 “[T]he statute of limitations defense . . . may be raised by a motion to dismiss . . . [i]f 6 the running of the statute is apparent on the face of the complaint.” Jablon v. Dean Witter 7 & Co., 614 F.2d 677, 682 (9th Cir. 1980). “Dismissal on statute of limitations grounds can 8 be granted pursuant to [Rule 12(b)(6)] ‘only if the assertions of the complaint, read with the 9 required liberality, would not permit the plaintiff to prove that the statute was tolled.’” 10 TwoRivers v. Lewis, 174 F.3d 987, 991 (9th Cir. 1999) (citing Vaughan v. Grijalva, 927 F.2d 11 476, 478 (9th Cir. 1991) (quoting Jablon, 614 F.2d at 682)); see Pisciotta v. Teledyne Indus., 12 Inc., 91 F.3d 1326, 1331 (9th Cir. 1996). 13 14 DISCUSSION I. Plaintiff’S FDCPA Claim Against Aurora Fails 15 Plaintiff alleges Aurora improperly attempted to collect on a debt, but Plaintiff’s 16 FDCPA claim fails for two reasons. First, the applicable FDCPA provisions apply only to 17 debt collectors. See, e.g., 15 U.S.C. § 1692(d)–(g) (stating in each pertinent part that “a debt 18 collector” shall take or refrain from certain actions); see also Mansour v. Cal-Western 19 Reconveyance Corp., 618 F. Supp.2d 1178, 1182 (D. Ariz. 2009) (“[T]he FDCPA applies 20 only to a debt collector who engages in practices prohibited by the Act in an attempt to 21 collect a consumer debt.”). A “debt collector” under FDCPA is “any person who uses any 22 instrumentality of interstate commerce or the mails in any business the principle purposes of 23 which is the collection of any debts, or who regularly collects or attempts to collect, directly 24 or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 25 1692a(6). “Creditors and their fiduciaries are not ‘debt collectors’ subject to the FDCPA. 26 Mansour, 618 F. Supp.2d at 1182 (citing 15 U.S.C. § 1692(a)(4), (6)(F)). Specifically, courts 27 have held that servicers are not FDCPA debt collectors. Perry v. Stewart Title Co., 756 F.2d 28 1197, 1208 (5th Cir. 1985) (finding the legislative history suggests that mortgage servicing -4- 1 companies are not debt collectors); Mansour, 618 F. Supp.2d at 1182 (granting motion to 2 dismiss in favor of servicer because it was not a debt collector) (citing S. Rep. No. 95-382, 3 at 3–4 (1977), U.S. Code Cong. & Admin. News 1977, pp. 1695, 1698 (“[T]he committee 4 does not intend the definition [of debt collector] to cover . . . mortgage service companies and 5 others who service outstanding debts for others, so long as the debts were not in default when 6 taken for servicing[.]”)); Deissner v. Mortgage Elec. Registration Sys., 618 F. Supp.2d 1184, 7 1188 (D. Ariz. 2009) (granting motion to dismiss because servicer was not a debt collector); 8 see also Nera v. Am. Home Mortgage Servicing, Inc., 2009 WL 2423109 at *4 (N.D. Cal. 9 Aug. 5, 2009) (holding that mortgagors and servicing companies are not debt collectors and 10 granting motion to dismiss because the “conclusory allegation” that “defendant is a ‘debt 11 collector’” is “not sufficient to support a [FDCPA claim”). 12 Here, the Complaint alleges that only “Aurora was acting as a debt collector in 13 obtaining payments,” (Dkt. # 46 at 41), but Plaintiff does not explain how this is the case or 14 why this means Aurora is no longer exempt from the FDCPA. 15 unpublished opinion, which itself has not yet been cited by any other courts. Feliciano v. 16 Wash. Mut. Bank, FA, 2009 WL 2390842 at *5 (E.D. Cal. Aug. 3, 2009).2 Feliciano denied 17 the motion to dismiss because an issue of fact existed as to whether defendant was not only 18 the servicer, but also a “debt collector.” However, Plaintiff’s legal conclusion that Aurora, 19 as a servicer, is a debt collector is insufficient to survive dismissal here. The key fact is that 20 Plaintiff alleges that Aurora was a servicer. Mansour makes clear that Congress did not 21 intend the FDCPA to govern servicers, and Plaintiff makes no compelling argument for 22 expanding this statutory definition. 618 F. Supp.2d at 1182. Plaintiff cites one 23 Second, the applicable sections of the FDCPA apply only to actions taken to collect 24 a debt. See e.g., 15 U.S.C. § 1692(d)–(g); Mansour, 618 F. Supp.2d at 1182. Multiple courts 25 26 27 28 2 Other courts from the same district have subsequently held dismissal is appropriate against servicers. See, e.g., Camillo v. Wash. Mut. Bank, F.A., 2009 WL 3614793 at *10 (E.D. Cal. Oct. 27, 2009); Angulo v. Countrywide Home Loans, Inc., 2009 WL 3427179 at *5 (E.D. Cal. Oct. 26, 2009). -5- 1 in this Circuit have held that non-judicial foreclosure is not the collection of a “debt” under 2 the FDCPA. Mansour, 618 F. Supp.2d at 1182 (“[N]on-judicial foreclosure is not the 3 collection of a ‘debt’ . . . .”); Hulse v. Ocwen Fed. Bank, 195 F. Supp.2d 1188, 1204 (D. Or. 4 2002) (distinguishing foreclosure of interest in property from efforts to collect funds from 5 debtor). Here, the nonjudicial foreclosure of the deed of trust is not the collection of a debt. 6 Plaintiff’s Response does not address this argument, and Plaintiff’s RESPA claim therefore 7 fails. 8 II. Plaintiff’s TILA Claims Against Shelter and Aurora Fail. 9 The statute of limitations for a TILA damage claim requires that a Plaintiff bring an 10 action “within one year from the date of the occurrence of the violation.” 15 U.S.C. § 11 1640(e). “[T]he limitations period . . . runs from the date of consummation of the 12 transaction.”King v. Cal., 784 F.2d 910, 915 (9th Cir. 1986), cert denied, 484 U.S. 802 13 (1987). Plaintiff closed on his refinancing loan on May 25, 2007, but he did not file this 14 lawsuit until April 17, 2009, nearly two years later. Thus, Plaintiff’s TILA claims are barred 15 absent an exclusion. 16 Plaintiff raises two arguments against the statute of limitations defense. Plaintiff first 17 argues the alleged wrongdoing was “ongoing.” The Court construes this as a continuing 18 violation argument. The continuing violation doctrine, however, does not apply to TILA 19 claims. King, 784 F.2d at 915. 20 Plaintiff also contends equitable tolling extends the limitations period because 21 Defendants’ misrepresentations prevented him from learning the facts necessary to 22 commence a lawsuit.3 Equitable tolling applies to TILA claims, King, 784 F.2d at 915, and 23 “focuses primarily on the plaintiff’s excusable ignorance of the limitations period.” Lehman 24 v. United States, 154 F. 3d 1010, 1016 (9th Cir. 1998) (emphasis removed). But the doctrine 25 26 27 28 3 Plaintiff also repeatedly asserts he could not have known of the facts necessary to state a claim, but his reasons underlying his inability to know these facts seem to be linked to the allegation that Defendants concealed information (whether actively or passively). The Court thus analyzes these assertions along with equitable tolling. -6- 1 applies “sparingly” and does not apply when the “late filing is due to [a] claimant’s failure 2 ‘to exercise due diligence in preserving his legal rights.’” Id. (citing Scholar v. Pac. Bell., 3 963 F.2d 264, 267–68 (9th Cir. 1992)) (emphasis removed). 4 Moreover, to allege equitable tolling based on fraudulent concealment, a plaintiff’s 5 complaint must meet the particularity pleading requirements of Federal Rule of Civil 6 Procedure 9(b). See Wasco Prods., Inc. v. Southwall Tech., Inc., 453 F.3d 989, 991–92 (9th 7 Cir. 2006) (requiring a plaintiff to meet Rule 9(b) pleading standards where plaintiff’s tolling 8 argument sounds in fraud); Guerrero v. Gates, 357 F.3d 911, 920 (9th Cir. 2004) (affirming 9 dismissal on statute of limitations grounds because plaintiff “failed to plead with 10 particularity” any facts supporting tolling); 389 Orange St. Partners v. Arnold, 179 F.3d 656, 11 662–63 (9th Cir. 1999) (holding that “[f]raudulent concealment, if affirmatively pleaded and 12 proved” may toll the limitations period) (emphasis added). Federal Rule Civil Procedure 13 9(b) requires that a plaintiff “state with particularity the circumstances constituting fraud or 14 mistake.” Fed. R. Civ. P. 9(b). Under this rule, a plaintiff “must state the time, place, and 15 specific content of the false representations as well as the identities of the parties to the 16 misrepresentation.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 17 (9th Cir. 1986); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) 18 (“Averments of fraud must be accompanied by the who, what, when, where, and how of the 19 misconduct charged.”) “The plaintiff must set forth what is false or misleading about a 20 statement, and why it is false.” Vess, 317 F.3d at 1106 (internal quotations omitted). In 21 addition to these requirements, a plaintiff must allege that he or she acted with due diligence 22 to ascertain the truth. Fed. Election Comm’n v. Williams, 104 F.3d 237, 241 (9th Cir. 1996) 23 (holding that under the doctrine of fraudulent concealment, a plaintiff must establish “due 24 diligence by the plaintiff until discovery” of the concealment of operative facts); Collins v. 25 Nationalpoint Loan Servs., 2009 WL 3213979 at *3 (S.D. Cal. Sept. 29, 2009) (rejecting 26 tolling argument and dismissing TILA claim because the plaintiff did not allege facts 27 supporting due diligence). 28 -7- 1 In this case, the Complaint’s TILA section alleges that Aurora and Shelter 2 “fraudulently misrepresented and concealed the true facts related to the items subject to 3 disclosure” and that Plaintiff “did not discover the failure to make such disclosures . . . until 4 one (1) year within the filing of this Complaint.” (Dkt. # 46 at 46.) Plaintiff’s Response (Dkt. 5 # 51) to Shelter’s Motion complains that the loan agreement was difficult to understand, 6 necessitating an expert’s review to determine how the terms were misleading. Plaintiff’s 7 Response (Dkt. # 52) to Aurora’s Motion cites eighteen paragraphs of the Complaint and 8 asserts that “[v]irtually every page of the [Complaint] contains some allegation of fraud, 9 deception, nondisclosure, or concealment.” Plaintiff highlights allegations that the various 10 Defendants had secret agreements and misrepresented their true roles in the loans, that 11 Defendants did not adequately disclose the yield spread premium, and other general 12 allegations of misrepresentations. 13 The ninety-four page Complaint (including exhibits), however, does not plead tolling 14 with particularity. Plaintiff’s assertion that Defendants “fraudulently misrepresented and 15 concealed the true facts[,]” causing Plaintiff “not [to] discover the failure to make such 16 disclosures . . . until one (1) year within the filing of this Complaint” is a legal conclusion. 17 It contains no facts explaining what the misrepresentations were, who made them, for what 18 reasons, and how they related to Plaintiff’s ability to learn enough facts to file a lawsuit. 19 Moreover, although parts of the Complaint allege various concealments or 20 misrepresentations, this alone alleges only that Defendants took those underlying actions, but 21 not that Defendants also prevented Plaintiff from discovering them. Most of the paragraphs 22 Plaintiff cites are general allegations relevant to his underlying claims, but not connected in 23 any discernible way to his ability to discover those underlying claims. As this District 24 explained, factual detail is particularly important where, as here, many of the alleged TILA 25 violations center around nondisclosures relating to a loan agreement. Cervantes v. 26 Countrywide Home Loans, Inc., 2009 WL 3157160 at *4 (D. Ariz. Sept. 24, 2009) (granting 27 dismissal on statute of limitations grounds where the plaintiff did not allege facts supporting 28 equitable estoppel); see also Hubbard v. Fidelity Fed. Bank, 91 F.3d 75, 79 (9th Cir. 1996) -8- 1 (“[N]othing prevented [the plaintiff] from comparing the loan contract, [lender’s] initial 2 disclosures, and TILA’s statutory and regulatory requirements.”). 3 Even if Plaintiff had otherwise pled equitable tolling, the argument still fails because 4 Plaintiff did not plead (or even address in his Responses) any facts showing his due diligence 5 to discover the alleged wrongdoing. Without such facts, it is impossible for Plaintiff to 6 defeat Defendants’ statute of limitations defense. 7 III. Plaintiff’s RESPA Claims Against Shelter and Aurora Fail. 8 Plaintiff makes several RESPA claims: Section 2602, 2603, and 2604 claims for 9 failure to give various disclosures and a Section 2607 claim for acceptance of kickbacks and 10 referral fees. Plaintiff’s Response to Aurora’s Motion also contends Plaintiff pled a Section 11 2605 claim for failure to respond to Plaintiff’s qualified written request and for failure to 12 provide fifteen days’ notice of assignment, sale, or transfer of the loan. 13 Plaintiff’s Section 2602, 2603, and Section 2604 claims fail because RESPA does not 14 provide a private right of action for disclosure violations. See 12 U.S.C. § 2614 (creating 15 rights of action only for Sections 2605, 2607, and 2608). Plaintiff also does not contend an 16 implied right of action exists, and, even so, other courts have found no such right exists. See 17 Collins v. FMHA-USDA, 105 F.3d 1366, 1367–68 (11th Cir. 1997) (finding no implied right 18 of action for disclosure violations under Section 2604); Bloom v. Martin, 865 F. Supp. 1377, 19 1385 (N.D. Cal. 1994) (same). Plaintiff appears to concede this, but asserts that violations 20 of RESPA’s disclosure provisions can trigger liability under TILA or ACFA. But to the 21 extent Plaintiff pleads these RESPA claims independently, they fail. 22 Plaintiff’s Section 2605 claim fails because Plaintiff did not outline it in the 23 Complaint’s RESPA section. Although other parts of the Complaint mention a qualified 24 written request, which could be relevant to a Section 2605 claim, Plaintiff does not properly 25 plead it as a cause of action. Plaintiff also admits he does not assert a claim under Section 26 2605 for failure to provide fifteen days’ notice of assignment, sale, or transfer of the loan; 27 RESPA mandates only that a borrower be informed of the transfer of servicing rights, but not 28 necessarily the loan itself, fifteen days before the effective date. -9- 1 Plaintiff’s Section 2607 claim fails because he has not stated a claim. The Complaint 2 states, “Defendants Shelter and Aurora were prohibited from paying any ‘fee, kickback, or 3 thing of value’ to any person as part of the real estate settlement service involving the loan 4 described herein.” (Dkt. # 46 at 48.) This is merely a legal statement, and it is unclear from 5 the Complaint whether Plaintiff even intend to raise this claim. Plaintiff’s Responses 6 contend the Complaint’s first thirty pages explain that the Defendants failed identify the 7 transaction’s true parties, which allowed them unlawfully acquire fees or kickbacks. These 8 statements, however, are unclear, overly-verbose, and not pled or explained in the applicable 9 section of the Complaint. Accordingly, the Court dismisses the Section 2607 claim. 10 IV. Plaintiff’s Remaining State Law Claims Are Dismissed Without Prejudice 11 Because the Court concludes no federal claims survive, the Court dismisses the state 12 claims for Wrongful Foreclosure and Notice of Sale, Declaratory Relief, Injunctive Relief, 13 ACFA violation, and Conspiracy to Commit Fraud. When a district court “dismisses [federal 14 claims] leaving only state claims for resolution, the court should decline jurisdiction over the 15 state claims and dismiss them without prejudice.” Les Shockley Racing, Inc. V. Nat’l Hot Rod 16 Ass’n, 884 F.2d 504, 509 (9th Cir. 1989). Only in the “unusual case” should federal courts 17 retain jurisdiction over the state law claims. Gini v. Las Vegas Metro. Police Dept., 40 F.3d 18 1041, 1046 (9th Cir. 1994). Plaintiff does not allege any reason this case is uniquely 19 appropriate for federal jurisdiction, and thus dismissal without prejudice is appropriate. 20 21 22 23 IT IS THEREFORE ORDERED that the motions to dismiss filed by Shelter (Dkt. # 47) and Aurora (Dkt. # 49) are GRANTED without prejudice. IT IS FURTHER ORDERED that the motion to dismiss filed by MERS (Dkt. # 50) is DENIED AS MOOT. 24 IT IS FURTHER ORDERED that Plaintiff’s state law claims for Wrongful 25 Foreclosure and Notice of Sale, Declaratory Relief, Injunctive Relief, Arizona Consumer 26 Fraud Act violation, and Conspiracy to Commit Fraud are DISMISSED WITHOUT 27 PREJUDICE. 28 - 10 - 1 2 3 IT IS FURTHER ORDERED directing the Clerk of the Court to TERMINATE this matter. DATED this 30th day of November, 2009. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 11 -
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