Miranda v. Field Asset Services et al, No. 3:2011cv01514 - Document 35 (S.D. Cal. 2013)
Court Description: ORDER Granting 29 Defendant OneWest Bank's Motion to Dismiss Without Leave to Amend. The hearing on OneWest's Motion, currently set for June 28, 2013, is hereby VACATED. Signed by Judge Gonzalo P. Curiel on 6/27/2013. (srm)
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Miranda v. Field Asset Services et al Doc. 35 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 13 14 15 16 OSCAR MIRANDA, ) ) Plaintiff, ) v. ) ) FIELD ASSET SERVICES and ) INDYMAC MORTGAGE SERVICES ) a/k/a IndyMac Federal Bank, FSB, ) ) Defendants. ) ) Case No. 3:11-cv-1514-GPC-JMA ORDER GRANTING DEFENDANT ONEWEST BANK’S MOTION TO DISMISS WITHOUT LEAVE TO AMEND (ECF NO. 29) 17 18 19 INTRODUCTION 20 Presently before the Court is a motion to dismiss filed by Defendant OneWest 21 Bank, erroneously sued as IndyMac Mortgage Services (“OneWest”). (ECF No. 29.) 22 Plaintiff opposed the motion, (ECF No. 32), and OneWest replied, (ECF No. 33). The 23 Court finds the OneWest’s Motion to Dismiss suitable for disposition without oral 24 argument. See CivLR 7.1.d.1. For the reasons below, the Court GRANTS OneWest’s 25 Motion to Dismiss WITHOUT LEAVE TO AMEND. 26 PROCEDURAL BACKGROUND 27 On July 16, 2012, Plaintiff’s initial complaint was dismissed with leave to 28 amend. (ECF No. 18.) Plaintiff thereafter filed a First Amended Complaint (“FAC”). 3:11-cv-1514-GPC-JMA Dockets.Justia.com 1 (ECF No. 19.) Plaintiff’s FAC asserted four claims for (1) violations of the Fair Debt 2 Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.; (2) violations of the 3 Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”), Cal. Civ. Code §§ 4 1788-1788.32; (3) conversion; and (4) negligence. 5 On January 9, 2013, the Court granted OneWest’s Motion to Dismiss Plaintiff’s 6 FDCPA and Rosenthal Act Claims as to OneWest without leave to amend and 7 Plaintiff’s conversion and negligence claims as to OneWest with leave to amend. (ECF 8 No. 27.) On January 30, 2013, Plaintiff filed a Second Amended Complaint (“SAC”), 9 asserting against OneWest only a claim for negligence. (ECF No. 28.) SECOND AMENDED COMPLAINT1 10 11 On some date prior to August 18, 2010, Plaintiff obtained a loan from OneWest 12 to purchase real property located at 864 Compass Way, San Diego, California (“the 13 Property”). Plaintiff thereafter defaulted on the loan and then entered into an 14 agreement with OneWest to sell the Property to a third party in a “short sale” rather 15 than enter foreclosure proceedings. Plaintiff asserts he listed the Property for sale in 16 an attempt to mitigate any losses to OneWest because of his default and inability to 17 continue making payments. A potential buyer apparently expressed interest in the 18 Property, offering to purchase it from OneWest. At some point during this period, 19 OneWest “assigned, placed, or otherwise transferred” the loan to defendant Field Asset 20 Services (“FAS”), hiring FAS for the purpose of collecting on the payments owing 21 and/or repossessing the Property. 22 Plaintiff alleges FAS advertises its services for the sole purpose of collecting 23 defaulted debts, has engaged in debt collection activities for over twelve years, and 24 deals regularly with twenty-six major mortgage companies to assist in the collection 25 of debts. FAS’s services include “locking out delinquent debtors from property being 26 collected upon” as well as providing assistance to other debt collectors like “collection 27 28 1 Unless otherwise noted, all factual allegations in this section are taken from Plaintiff’s SAC. (ECF No. 28.) 2 3:11-cv-1514-GPC-JMA 1 lawyers” to “manage the legal process” of collecting debts. 2 On or about August 18, 2010, “Defendant FAS, at the direction of Defendant 3 [OneWest],” went to the Property while Plaintiff was not present and “physically broke 4 into Plaintiff’s home,” and changed the locks, without any “present legal right” of 5 possession. During that same visit, FAS or an agent of FAS removed certain items 6 from the Property, including a flat screen television, a Panasonic surround sound 7 system, a television wall mount, and an entertainment system cabinet. 8 As a result, Plaintiff was denied entry into his “home and place of abode,” was 9 prevented from having access to or enjoying the use of his personal property, and 10 suffered “actual damages including, but not limited to, stress and humiliation, 11 specifically because Plaintiff is a law enforcement office[r].” 12 REQUEST FOR JUDICIAL NOTICE 13 In support of its argument, and pursuant to Federal Rule of Evidence 201, 14 OneWest has requested that the Court take judicial notice of facts contained in four 15 documents: (1) A Deed of Trust dated June 9, 2005, recorded on June 30, 2005, and 16 listing Plaintiff as borrower, DHI Mortgage Company, LTD., LP. as lender, Mortgage 17 Electronic Registration Systems, Inc. (“MERS”) as beneficiary, and First American 18 Title as trustee; (2) A Notice of Default and Election to Sell Under Deed of Trust dated 19 March 29, 2010, stating $12,374 as the amount owed on that date, indicating Plaintiff 20 should contact OneWest for more information, listing NDEx West as trustee and 21 MERS as beneficiary, and recorded March 30, 2010; (3) Notice of Trustee’s Sale 22 recorded July 1, 2010, indicating Plaintiff’s default under the Deed of Trust executed 23 June 9, 2005, and informing Plaintiff that the Property would be sold at public auction 24 by Trustee NDEx West on July 22, 2010, at 10:00 A.M. at a specified location; and (4) 25 A Grant Deed dated August 13, 2010, and recorded on August 25, 2010, in which 26 Plaintiff granted ownership of the Property in fee simple to William L. Mercado and 27 Stevie Kaufman. (ECF No. 29-2.) 28 These documents are already part of the record, as the Court took judicial notice 3 3:11-cv-1514-GPC-JMA 1 of these same documents as part of the Court’s Order Granting Defendants’ Motion to 2 Dismiss the Plaintiff’s first complaint. (ECF No. 18.) 3 Plaintiff filed an Objection to OneWest’s Request for Judicial Notice, arguing 4 that the documents are irrelevant to the issues presently before the court. (ECF No. 32- 5 1.) These documents, however, concern Plaintiff’s legal relationship to the Property, 6 an issue that has been addressed by both parties and is relevant to the question of 7 whether Plaintiff, as OneWest contends in its Motion to Dismiss, is improperly seeking 8 purely economic damages.2 9 Furthermore, as matters of public record, the documents submitted by OneWest 10 are properly subject to judicial notice under Federal Rule of Evidence 201. See 11 Fimbres v. Chapel Mortgage Corp., 2009 WL 4163332, at *3 (S.D. Cal. Nov. 20, 2009) 12 (taking judicial notice of a deed of trust, notice of default, notice of trustee’s sale, 13 assignment of deed of trust, and substitution of trustee, as each was a public record); 14 Heuslein v. Chase Bank U.S.A., N.A., 2009 WL 3157484, at *3 (S.D. Cal. Sept. 24, 15 2009) (taking judicial notice of a deed of trust, notice of default and election to sell 16 under deed of trust, and notice of trustee’s sale that had been recorded in the San Diego 17 County Recorder’s Office). 18 19 Thus, the Court will consider the facts contained in the four public documents attached as exhibits in support of OneWest’s Motion to Dismiss. 20 21 DISCUSSION I. Legal Standard 22 Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 23 defense that the complaint “fail[s] to state a claim upon which relief can be granted,” 24 generally referred to as a motion to dismiss. The Court evaluates whether a complaint 25 states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil 26 27 2 28 Plaintiff himself puts his legal relationship to the Property at issue in his Opposition to OneWest’s Motion to Dismiss; in his Opposition, Plaintiff argues that his claim is not barred, in part because he is seeking to recover damages for the loss of use of his “home.” (ECF No. 32.) 4 3:11-cv-1514-GPC-JMA 1 Procedure 8(a), which requires a “short and plain statement of the claim showing that 2 the pleader is entitled to relief.” Although Rule 8 “does not require ‘detailed factual 3 allegations,’ it [does] demand[] more than an unadorned, the-defendant-unlawfully- 4 harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 5 Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff’s obligation 6 to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 7 conclusions, and a formulaic recitation of the elements of a cause of action will not 8 do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). 9 “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further 10 factual enhancement.’” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 557). “To 11 survive a motion to dismiss, a complaint must contain sufficient factual matter, 12 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting 13 Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially 14 plausible when the facts pled “allow[] the court to draw the reasonable inference that 15 the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 16 556). That is not to say that the claim must be probable, but there must be “more than 17 a sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely 18 consistent with’ a defendant’s liability” fall short of a plausible entitlement to relief. 19 Id. (quoting Twombly, 550 U.S. at 557). 20 Further, the Court need not accept as true “legal conclusions” contained in the 21 complaint. Id. This review requires context-specific analysis involving the Court’s 22 “judicial experience and common sense.” Id. at 679 (citation omitted). “[W]here the 23 well-pleaded facts do not permit the court to infer more than the mere possibility of 24 misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is 25 entitled to relief.’” Id. 26 II. Analysis 27 A defendant is liable for the tort of negligence where (1) the defendant has a 28 legal duty to use reasonable care, (2) the defendant breached that duty, and (3) the 5 3:11-cv-1514-GPC-JMA 1 defendant’s breach was a proximate cause of (4) the plaintiff’s injury. Mendoza v. City 2 of Los Angeles, 66 Cal. App. 4th 1333, 1339 (1998). 3 OneWest argues Plaintiff’s negligence claim should be dismissed as to OneWest 4 because: (1) Plaintiff failed to allege adequate damages; (2) Plaintiff failed to allege 5 OneWest breached a duty of care owed to Plaintiff; and (3) Plaintiff failed to allege 6 OneWest’s actions constituted a proximate cause of Plaintiff’s injuries. 7 A. Damages 8 OneWest argues Plaintiff’s negligence claim is barred by California’s economic 9 loss rule, which, according to OneWest, provides that “plaintiffs may seek remedies for 10 strict liability and negligence only for physical injury to person or property, and not for 11 pure economic losses.” 12 Plaintiff asserts in response that he “has asked for special, general, compensatory 13 and punitive damages,” arguing his claim is not barred by the economic loss rule 14 because his alleged damages are not purely economic in nature. Plaintiff claims he 15 “lost the use of his home, and his personal property due to the Defendant’s negligent 16 hiring of [FAS].” (ECF No. 32.) 17 In reply, OneWest argues that, ultimately, Plaintiff “can only claim economic 18 damages for his lost personal property, and therefore his negligence claim is barred by 19 law.” (ECF No. 33.) More specifically, OneWest asserts: (1) Plaintiff “has not alleged 20 any physical injury that would justify recovery for emotional distress,” (2) Plaintiff may 21 not recover for damage to the Property because Plaintiff “sold the house in a short sale 22 and it now belongs to someone else,” and (3) Plaintiff may not recover punitive 23 damages because Plaintiff’s SAC lacks sufficient allegations related to malice, 24 oppression, or fraud. 25 26 27 28 1. Economic Loss Rule As a preliminary matter, the Court concludes Plaintiff’s negligence claim is not barred by the economic loss rule. In Robinson Helicopter Company, Inc. v. Dana Corporation, the Supreme Court 6 3:11-cv-1514-GPC-JMA 1 of California explained that it “first developed and applied the economic loss rule in 2 the context of product liability claims,” and that “[t]he function of the economic loss 3 rule is to prevent tort law from shifting back to sellers a specific risk that better rests 4 with buyers–the risk that a product will not perform to a particular level beyond that 5 warranted by the seller.” 34 Cal. 4th 979, 997 (2004). 6 This case does not involve a defective product or the relationship between buyer 7 and seller. Instead, Plaintiff alleges OneWest was negligent in hiring FAS as a debt 8 collector. Therefore, the economic loss rule does not bar Plaintiff’s negligence claim. 9 See N. Am. Chem. Co v. Super. Ct., 59 Cal. App. 4th 764, 780 (1997) (holding that the 10 economic loss rule does not apply to negligence claims involving the performance of 11 services because the policy concerns underlying the economic loss rule are not present 12 in such situations). 13 2. Emotional Distress Damages 14 In California, although damages for emotional distress may be recovered in the 15 absence of either physical injury or impact, Molien v. Kaiser Found. Hospitals, 27 Cal. 16 3d 916, 930 (1980), the extent to which defendants may be liable for negligent 17 infliction of emotional distress without physical injury has been limited due to public 18 policy considerations. Bro v. Glaser, 22 Cal. App. 4th 1398, 1440-41(1994). 19 The Supreme Court of California has repeatedly stressed that “negligent 20 infliction of emotional distress” is not an independent tort doctrine. See, e.g, Potter v. 21 Firestone Tire & Rubber Co., 6 Cal. 4th 965, 984 (1993) (“there is no independent tort 22 of negligent infliction of emotional distress”); Burgess v. Superior Court, 2 Cal. 4th 23 1064, 1072 (1992) (“We have repeatedly recognized that the negligent causing of 24 emotional distress is not an independent tort, but the tort of negligence.” (emphasis in 25 original) (internal quotations omitted)). 26 As a result, recovery for emotional distress in negligence cases is not available 27 “unless malice, breach of a fiduciary duty, physical injury or impact, or some other 28 unusually extreme or outrageous circumstance, can be shown.” Branch v. Homefed 7 3:11-cv-1514-GPC-JMA 1 Bank, 6 Cal. App. 4th 793, 801 (1992). 2 Here, Plaintiff has not adequately alleged that he is entitled recover damages for 3 emotional distress pursuant to his claim for negligence against OneWest. Although 4 Plaintiff cites the Restatement (Second) of Torts for the proposition that physical 5 impairment of land or chattels may be classified as a “physical harm,” damage to 6 property alone is insufficient to support a recovery of emotional distress damages in 7 a negligence cause of action. Ragland v. U.S. Bank Nat. Assn., 209 Cal. App. 4th 182, 8 206 (2012) (holding that plaintiff asserting a negligence claim against lender could not 9 recover damages for emotional distress because defendants’ conduct resulted only in 10 injury to property). 11 Furthermore, although there was a pre-existing relationship between Plaintiff and 12 OneWest, Plaintiff does not allege it was the type of fiduciary relationship that would 13 permit Plaintiff to recover damages for emotional distress. See id. (holding that the 14 relationship between plaintiff borrower and defendant lender did not support recovery 15 of emotional distress damages because “[n]o fiduciary duty exists between a borrower 16 and lender in an arm’s length transaction”). 17 Plaintiff has also failed to allege the type of malicious or outrageous conduct that 18 would support recovery of emotional distress damages. In his SAC, Plaintiff alleges 19 “[OneWest]’s conduct involved circumstances of aggravation and outrage with 20 fraudulent and evil motive on the part of [OneWest], with such a conscious and 21 deliberate disregard of the interests of Plaintiff that [OneWest]’s conduct may be called 22 willful and wanton.” (ECF No. 28.) These conclusory allegations, however, are not 23 supported by the type of factual allegations necessary to support recovery of damages 24 for emotional distress. 25 Plaintiff’s claim is that OneWest was negligent in “hiring an overzealous debt 26 collector with a questionable reputation and directing said debt collector in a manner 27 that violated federal and state law.” (Id.) The ability to recover emotional distress 28 damages requires a level of malicious and/or outrageous conduct not adequately 8 3:11-cv-1514-GPC-JMA 1 alleged in Plaintiff’s SAC. Cf. Molien, 27 Cal. 3d at 930 (holding that plaintiff may 2 recover damages for negligent infliction of emotional distress, absent physical injury, 3 where defendants erroneously diagnosed plaintiff’s wife with syphilis during a routine 4 examination, resulting in extreme emotional distress and a dissolution of the plaintiff’s 5 marriage); Branch, 6 Cal. App. 4th at 800-01 (holding that plaintiff may not recover 6 damages for emotional distress, where plaintiff was induced to leave his former 7 employer and accept a job with defendant bank based on false representations, and then 8 was mistreated and harassed after approaching upper management in an attempt to 9 resolve the dispute, because “while blameworthy, the bank’s conduct in no sense can 10 be described as ‘extreme’ or ‘outrageous,’ in terms of the conduct resulting in special 11 damage.”); Yu v. Signet Bank/Virginia, 69 Cal. App. 4th 1377, 1397 (1999) (holding 12 that plaintiff credit card holders may not recover for emotional distress resulting from 13 defendant’s ‘long-arm’ debt collection program designed to achieve default judgments 14 against certain creditors). 15 Because Plaintiff has not sufficiently alleged physical injury, breach of a 16 fiduciary duty, malice, or extreme and outrageous conduct, Plaintiff may not recover 17 damages for emotional distress pursuant to his negligence claim against OneWest. 18 3. Damages to Real Property 19 Plaintiff alleges he is entitled to recover for “damages to his home.” (ECF No. 20 32.) OneWest argues Plaintiff cannot recover for damages to the Property because 21 Plaintiff “sold the house in a short sale and it now belongs to someone else.” (ECF No. 22 33.) For the reasons stated below, the Court finds Plaintiff may not recover for 23 damages to the Property. 24 Plaintiff alleges that, “at the time FAS intentionally took possession of Plaintiff’s 25 personal and real property . . . Plaintiff had the sole right to use and possess Plaintiff’s 26 personal and real property.” (ECF No. 28.) This allegation, however, is contradicted 27 by the Grant Deed dated August 13, 2010, which indicates that Plaintiff granted 28 ownership of the Property in fee simple to William L. Mercado and Stevie Kaufman 9 3:11-cv-1514-GPC-JMA 1 five days before the incident at issue occurred. Although the court will generally 2 accept as true all factual allegations contained in the complaint for the purposes of a 3 motion to dismiss, “[t]he court need not, however, accept as true allegations that 4 contradict matters properly subject to judicial notice.” Sprewell v. Golden State 5 Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Because the Grant Deed demonstrates 6 that Plaintiff had relinquished his interest in the Property by the time of the incident on 7 August 18, 2010, Plaintiff may not recover based on the alleged damages to the 8 Property. 9 4. Damages to Personal Property 10 Plaintiff alleges FAS took possession of a television, television wall mount, a 11 sound system, and an entertainment system cabinet. While Plaintiff alleges FAS had 12 no right to do this and that, in fact, FAS’s conduct was criminal, Plaintiff does not 13 allege what ultimately happened to his personal property. In his opposition to 14 OneWest’s Motion to Dismiss, Plaintiff asserts only that he “lost the use of . . . his 15 personal property due to [OneWest]’s negligent hiring of [FAS].” (ECF No. 32 at 15.) 16 The Court finds Plaintiff’s allegations regarding the lost use of his personal 17 property to be insufficient. Plaintiff does not, for example, allege his personal property 18 was never returned to him or that it was returned in a damaged condition. Neither does 19 Plaintiff allege how long he was deprived of the use of his personal property or what 20 the consequences of that deprivation, if any, were. 21 allegations do not plausibly establish that he was more than nominally damaged by any 22 lost use of his personal property. See Duarte v. Zachariah, 22 Cal. App. 4th 1652, 23 1661-62 (1994) (“‘[A]ctual damage’ in the sense of ‘harm’ is necessary to a cause of 24 action in negligence; nominal damages are not awarded.”). Without more, Plaintiff’s 25 Moreover, the Court notes that it pointed to this deficiency in Plaintiff’s FAC 26 with regard to Plaintiff’s claim that OneWest was liable for the conversion of 27 Plaintiff’s personal property. (ECF No. 27.) There, the Court found that “[a]dditional 28 facts [were] needed regarding whether FAS prevented Plaintiff from reclaiming his 10 3:11-cv-1514-GPC-JMA 1 personal property.” Instead of providing those additional facts, Plaintiff chose not to 2 reassert his conversion claim against OneWest. 5. 3 Punitive Damages 4 Plaintiff’s SAC lacks sufficient factual allegations to support an award of 5 punitive damages against OneWest. Plaintiff alleges “[OneWest]’s conduct involved 6 circumstances of aggravation and outrage with fraudulent and evil motive on the part 7 of [OneWest], with such a conscious and deliberate disregard of the interests of 8 Plaintiff that [OneWest]’s conduct may be called willful and wanton.” (ECF No. 28.) 9 Such conclusory allegations of “fraudulent” conduct and “evil motive,” however, are 10 insufficient to support the recovery of punitive damages. Brousseau v. Jarrett, 73 Cal. 11 App. 3d 864, 972 (1977) (holding that the “conclusory characterization of defendant’s 12 conduct as intentional, willful and fraudulent” was “patently insufficient” to support 13 the recovery of punitive damages). Thus, Plaintiff has not adequately alleged he is 14 entitled to recover punitive damages. 15 In sum, Plaintiff has failed to adequately allege he was damaged by OneWest’s 16 allegedly negligent hiring of FAS. Therefore, the Court need not address OneWest’s 17 remaining arguments to conclude that Plaintiff’s negligence claim against OneWest 18 should be dismissed. 19 B. 20 Where a motion to dismiss is granted, “leave to amend should be granted ‘unless 21 the court determines that the allegation of other facts consistent with the challenged 22 pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight Sys., Inc., 23 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well 24 Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). In other words, where leave to 25 amend would be futile, the Court may deny leave to amend. See Desoto, 957 F.2d at 26 658; Schreiber, 806 F.2d at 1401. Leave to Amend 27 Here, the Court notes that Plaintiff has now had three opportunities to state a 28 claim against OneWest and that Plaintiff has been unsuccessful each time. Further, the 11 3:11-cv-1514-GPC-JMA 1 damages Plaintiff alleges he suffered because of OneWest’s negligent conduct have, 2 as set forth above, been whittled down to damages arising from the lost use of 3 Plaintiff’s personal property. 4 opportunity to elaborate on the lost use of his personal property in its order dismissing 5 Plaintiff’s FAC. Plaintiff, however, failed to do so. Accordingly, the Court finds it 6 would be futile to grant Plaintiff a fourth chance to assert a claim against OneWest. 7 CONCLUSION As noted above, the Court offered Plaintiff the 8 After considering the parties’ submissions, the record, and the applicable law, 9 and for the foregoing reasons IT IS HEREBY ORDERED that OneWest’s Motion to 10 Dismiss, (ECF No. 29), is GRANTED WITHOUT LEAVE TO AMEND. The 11 hearing on OneWest’s Motion, currently set for June 28, 2013, is hereby VACATED. 12 13 DATED: June 27, 2013 14 15 HON. GONZALO P. CURIEL United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 12 3:11-cv-1514-GPC-JMA
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