(PS) Thoreau de la Salle v. America's Wholesale Lender, et al, No. 2:2009cv02701 - Document 33 (E.D. Cal. 2010)

Court Description: FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Kimberly J. Mueller on 4/13/2010 RECOMMENDING Defendants 15 motion to dismiss be granted; Plaintiff's 30 motion for temporary restraining order be denied; and this action be closed. Referred to Judge Morrison C. England, Jr. Objections due 14 days after being served with these F & R's. (Reader, L)

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(PS) Thoreau de la Salle v. America's Wholesale Lender, et al Doc. 33 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 BERENICE THOREAU DE LA SALLE, 11 12 13 Plaintiff, No. CIV S-09-2701 MCE KJM PS vs. AMERICA’S WHOLESALE LENDER, et al., 14 Defendants. 15 FINDINGS AND RECOMMENDATIONS / 16 Defendants’ motion to dismiss is pending before the court. Upon review of the 17 documents in support and opposition, and good cause appearing therefor, THE COURT FINDS 18 AS FOLLOWS: 19 I. Background 20 In this action, plaintiff challenges the foreclosure of her home. On April 28, 2005, 21 plaintiff signed an adjustable rate note in the amount of $668,000. First Amended Complaint 22 (“FAC”), Ex. 1. The note was secured by a Deed of Trust on the subject property. Plaintiff 23 asserts defendants do not have the right to foreclose. Plaintiff alleges claims under the Truth in 24 Lending Act (“TILA”), the Federal Fair Debt Collection Practices Act (“FDCPA”), the Federal 25 Fair Credit Reporting Act (“FCRA”), the Real Estate Settlement Procedures Act (“RESPA”) and 26 for violation of due process. Plaintiff further alleges state causes of action for fraud, statutory 1 Dockets.Justia.com 1 violations of the California Civil Code, and violation of the California Unfair Competition Law 2 (“UCL”). Plaintiff also seeks injunctive relief and declaratory relief. Defendants move to 3 dismiss all claims. 4 II. Analysis Of Plaintiff’s Claims 5 Plaintiff’s first cause of action for recoupment under TILA cannot lie because 6 recoupment can only be asserted as a defense. Under California law, a nonjudicial foreclosure 7 sale is not an action; moreover, no creditor has sued plaintiff for any deficiency. See Garretson 8 v. Post, 156 Cal. App. 4th 1508, 1520-21 (2007); see also Cal. Civ. Code § 2924; Cal. Code Civ. 9 Proc. § 580a et seq. 10 Plaintiff’s claim under the FDCPA cannot lie because mortgagees and mortgage 11 servicing companies are not debt collectors under the FDCPA and the state statute. See Scott v. 12 Wells Fargo Home Mortg., Inc., 326 F. Supp. 2d 709, 718 (E. D. Va.), aff’d, 67 Fed. Appx. 238 13 (4th Cir. 2003) (“mortgagors [sic] and mortgage servicing companies” not debt collectors under 14 FDCPA); 15 U.S.C. § 1692a(6)(A) (under FDCPA, “debt collector” defined as one who collects 15 consumer debts owed to another, not including an officer or employee of a creditor while 16 collecting debts in the name of the creditor). 17 In the third cause of action, plaintiff seeks declaratory relief regarding her 18 contention that defendants do not have the right to foreclose. Defendant MERS is the nominee, 19 as established by the Deed of Trust, and has the right to initiate foreclosure proceedings. FAC, 20 Ex. 2; see Swanson v. EMC Mortgage Corp., 2009 WL 3627925 (E.D. Cal. 2009) (MERS is 21 properly designated beneficiary under deed of trust and has authority to commence non-judicial 22 foreclosures). Thus, plaintiff is not entitled to the declaratory relief she seeks. 23 Plaintiff’s fourth cause of action alleging a violation of due process fails because 24 defendants are not state actors. To the extent plaintiff is trying to predicate her due process 25 claims on violations of the Home Affordable Modification Act (HAMP), the Troubled Asset 26 Relief Program (TARP), or the National Housing Act ("NHA"), there is no private right of action 2 1 afforded under those statutes nor do they create a protected property interest. See Pantoja v. 2 Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1185 (N.D. Cal. 2009) (no private right of 3 action against TARP fund recipients); Williams v. Geithner, 2009 WL 3757380, *6-7 (D. Minn. 4 2009) (no protected property interest under HAMP); Baker v. Northland Mortg. Co., 344 F. 5 Supp. 1385, 1386 (N.D. Ill. 1972) (NHA gives mortgagor no claim to a duty owed by 6 mortgagee). 7 The fifth cause of action under the FCRA fails because the premise of this cause 8 of action is that defendants wrongfully represented to the credit bureaus that plaintiff owes a sum 9 on a mortgage loan. Plaintiff admits that her current debt as of January 2009 is the sum reported 10 to the credit agency. FAC, Ex. 4. Plaintiff fails to allege a wrongful representation sufficient to 11 establish any falsity in defendants' credit reporting. Cf. Marks v. Ocwen Loan Servicing, 2009 12 WL 975792, *7 (N.D. Cal. 2009). 13 Plaintiff’s claim for fraud alleges there were fraudulent representations in the 14 origination of her loan. The deed of trust was executed on April 28, 2005 and this action was 15 filed September 29, 2009. Plaintiff’s fraud claim is therefore barred by the three year statute of 16 limitations provided under California Code of Civil Procedure § 338(d). 17 Plaintiff’s claim under RESPA is also deficient. Under 12 U.S.C. § 2605(e)(1), a 18 servicer must provide information relating to the servicing of the loan upon a qualified written 19 request ("QWR") by the borrower. Requests for information about loan origination and transfer 20 of the loan do not trigger the protections afforded the borrower under section 2605. See 21 MorEquity, Inc. v. Naeem, 118 F.Supp. 2d 885, 901 (N.D. Ill. 2000). Even if plaintiff's letters 22 can be construed as a QWR, plaintiff received a complete response comporting with the 23 requirements under RESPA. FAC, Ex. 14(e); see 12 U.S.C. § 2605(e)(2). 24 Plaintiff also alleges claims under two statutes recently enacted in California in 25 response to the foreclosure crisis. California Civil Code § 2923.6 addresses the rights and 26 obligations of a loan servicer with respect to participants in a loan pool. There is no private right 3 1 of action created under this statute. See Farner v. Countrywide Home Loans, Inc., 2009 WL 2 189025, *22 & n.1 (S.D. Cal. 2009) (no private right of action for borrowers); Ruiz v. Saxon 3 Mort. Services, 2009 WL 1872465, *2 n.2 (C.D. Cal. 2009) (no cognizable claim for wrongful 4 foreclosure under statute). Under California Civil Code § 2923.5, a mortgagee, trustee, 5 beneficiary or authorized agent must contact or diligently attempt to contact the borrower before 6 recording a notice of default and must declare it has done so. Cal. Civ. Code §§ 2923.5(a)(1), 7 (b). Assuming, without deciding, that section 2923.5 creates a private right of action, the 8 allegations in plaintiff's complaint are fatal to a viable claim under this statute. Plaintiff admits 9 she spoke with an employee of defendants regarding loan modification, that the request for loan 10 modification was denied in January 2009, and that the notice of default and declaration was not 11 recorded until July 2009. FAC ¶ 29, Exs. 4, 6, 8. Under these circumstances, plaintiff cannot 12 state a claim under section 2923.5. 13 In the tenth cause of action, plaintiff alleges a claim under the UCL, California 14 Business and Professions Code § 17200. A claim under the UCL must rest on a violation of 15 some independent substantive statute, regulation or case law. See Farmers Ins. Exch. v. Superior 16 Court, 2 Cal. 4th 377, 383 (1992) (action under section 17200 borrows violations of other laws); 17 see also Khoury v. Maly’s of Cal., Inc., 14 Cal. App. 4th 612, 619 (1993) (plaintiff must state 18 with reasonable particularity the facts supporting statutory elements of violation of UCL). 19 Because the UCL claim is predicated on the same conduct giving rise to plaintiff’s other causes 20 of action, all of which are subject to dismissal, the UCL claim fails as well.1 21 Finally, plaintiff alleges a claim for breach of the covenant of good faith and fair 22 dealing. This claim cannot lie inasmuch as defendants are entitled to foreclose on plaintiff’s 23 property, as allowed by the contract. See Wolf v. Walt Disney Pictures & Television, 162 Cal. 24 25 26 1 But see Biggins v. Wells Fargo & Co., 2009 WL 2246199 (N.D. Cal. 2009) (allowing amendment of a complaint to allege a UCL claim including reliance on California Civil Code § 2923.6(b)). 4 1 App. 4th 1107, 1120 (2008) (implied covenant will not be read into contract to prohibit that 2 which is expressly permitted by agreement itself). To the extent plaintiff contends defendants 3 violated this covenant by denying her request for loan modification, the claim fails as a matter of 4 law because the implied covenant does not require parties to negotiate in good faith. See 5 McClain v. Octagon Plaza, LLC, 159 Cal. App. 4th 784, 799 (2008). 6 III. Motion For Temporary Restraining Order 7 On March 24, 2010, plaintiff moved for a temporary restraining order. The 8 purpose in issuing a temporary restraining order is to preserve the status quo pending a fuller 9 hearing. The cases contain limited discussion of the standards for issuing a temporary restraining 10 order due to the fact that very few such orders can be appealed prior to the hearing on a 11 preliminary injunction. It is apparent, however, that requests for temporary restraining orders 12 that are ex parte and without notice are governed by the same general standards that govern the 13 issuance of a preliminary injunction. See New Motor Vehicle Bd. v. Orrin W. Fox Co., 434 U.S. 14 1345, 1347 n.2 (1977) (Rehnquist, J.); Century Time Ltd. v. Interchron Ltd., 729 F. Supp. 366, 15 368 (S.D. N.Y. 1990). 16 The legal principles applicable to a request for preliminary injunctive relief are 17 well established. “The traditional equitable criteria for granting preliminary injunctive relief are 18 (1) a strong likelihood of success on the merits, (2) the possibility of irreparable injury to plaintiff 19 if the preliminary relief is not granted, (3) a balance of hardships favoring the plaintiff, and 20 (4) advancement of the public interest (in certain cases).” Dollar Rent A Car v. Travelers Indem. 21 Co., 774 F.2d 1371, 1374 (9th Cir. 1985). The criteria traditionally are treated as alternative 22 tests. “Alternatively, a court may issue a preliminary injunction if the moving party demonstrates 23 ‘either a combination of probable success on the merits and the possibility of irreparable injury or 24 that serious questions are raised and the balance of hardships tips sharply in his favor.’” Martin 25 v. International Olympic Comm., 740 F.2d 670, 675 (9th Cir. 1984) (quoting William Inglis & 26 Sons Baking Co. v. ITT Continental Baking Co., 526 F.2d 86, 88 (9th Cir. 1975) (emphasis in 5 1 original)). The Ninth Circuit has reiterated that under either formulation of the principles, if the 2 probability of success on the merits is low, preliminary injunctive relief should be denied: 3 Martin explicitly teaches that “[u]nder this last part of the alternative test, even if the balance of hardships tips decidedly in favor of the moving party, it must be shown as an irreducible minimum that there is a fair chance of success on the merits.” 4 5 6 Johnson v. California State Bd. of Accountancy, 72 F.3d 1427, 1430 (9th Cir. 1995) (quoting 7 Martin, 740 F.2d at 675). 8 As discussed above, all of plaintiffs claims should be dismissed. Plaintiff cannot 9 prevail on the merits; accordingly, the motion for temporary restraining order should be denied. 10 Accordingly, IT IS HEREBY RECOMMENDED that: 11 1. Defendants’ motion to dismiss be granted; 12 2. Plaintiff's motion for temporary restraining order be denied; and 13 3. This action be closed. 14 These findings and recommendations are submitted to the United States District 15 Judge assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). Within 16 fourteen days after being served with these findings and recommendations, any party may file 17 written objections with the court and serve a copy on all parties. Such a document should be 18 captioned "Objections to Magistrate Judge's Findings and Recommendations." Any reply to the 19 objections shall be served and filed within fourteen days after service of the objections. The 20 parties are advised that failure to file objections within the specified time may waive the right to 21 appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991). 22 DATED: April 13, 2010. 23 24 25 006 26 delasalle.57 6

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