“The phrase ‘final judgment on the merits’ is 22 often used interchangeably with ‘dismissal with prejudice.’”
How later courts described this case
- “The phrase ‘final judgment on the merits’ is 22 often used interchangeably with ‘dismissal with prejudice.’”
Written by the judges who cited it.
The opinion
1
2
3
4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6
7 KABITA CHOUDHURI, Case No. 22-cv-06993-JST
8 Plaintiff,
ORDER RE: MOTIONS TO DISMISS,
9 v. MOTION FOR ENTRY OF DEFAULT,
MOTIONS FOR DEFAULT
10 SPECIALIZED LOAN SERVICING, et al., JUDGMENT
11 Defendants. Re: ECF No. 21, 23, 24, 31, 54
12
13 Before the Court are motions to dismiss filed by Defendant Specialized Loan Servicing,
14 ECF No. 21, and Defendant Zillow Group, Inc., ECF No. 31; motions for entry of default and
15 default judgment against Zillow, ECF Nos. 23 & 24; and a motion for entry of default judgment
16 against Defendant Bosco Credit LLC, ECF No. 54. The Court will grant in part and deny in part
17 Specialized’s motion to dismiss, grant Zillow’s motion to dismiss, and deny all motions for entry
18 of default and default judgment.
19 I. BACKGROUND
20 Pro se Plaintiff Kabita Choudhuri brings this action against Specialized, Zillow, and
21 Bosco, whom she claims engaged in a conspiracy to defraud her by illegally foreclosing on her
22 home.
23 Choudhuri filed this action on November 8, 2022. ECF No. 1. On December 15, 2022, the
24 Court granted Choudhuri’s application to proceed in forma pauperis and dismissed her initial
25 complaint under 28 U.S.C § 1915(e)(2)(B)(ii) for failure to state a claim on which relief may be
26 granted. ECF No. 16. Although the Court noted that Choudhuri’s allegations were “difficult to
27 discern,” the Court construed the complaint liberally, evaluated whether Choudhuri stated a claim
1 Court dismissed the complaint with leave to amend “solely to correct the deficiencies identified in
2 this order” and explained that “failure to do so, or failure to otherwise comply with this order,
3 w[ould] result in dismissal with prejudice.” Id. at 9.
4 Choudhuri’s first amended complaint is difficult to comprehend. Choudhuri references
5 nearly two dozen causes of action, which she groups into four “counts.”1 Mindful that Choudhuri
6 is pro se, the Court will again construe the first amended complaint to plead claims for each of the
7 statutes, regulations, and torts clearly invoked within these counts. The Court thus interprets the
8 complaint to plead claims for violation of the federal Real Estate Settlement Procedures Act
9 (“RESPA”) and implementing Regulation X, 12 C.F.R. §§ 1024.41; the California Homeowner
10 Bill of Rights (“HBOR”); the federal Truth in Lending Act (“TILA”) and implementing
11 Regulation Z, 12 C.F.R. § 226; the Holder Rule, 16 C.F.R. § 433; the federal Racketeering
12 Influenced and Corrupt Organizations (“RICO”) Act; California’s False Advertising Law
13 (“FAL”); the federal False Claims Act; Section 17(a) of the federal Securities Act of 1933; the
14 federal Fair Debt Collection Practices Act (“FDCPA”); the California Rosenthal Fair Debt
15 Collection Practices Act; and California’s Unfair Competition Law (“UCL”); as well as common
16 law claims for fraud, promissory estoppel, tortious interference, unjust enrichment, public
17 nuisance, and private nuisance.2 Choudhuri’s first amended complaint pleads only RICO, tortious
18
19
1 These counts are titled as follows: (1) “RESPA 12 U.S.C. § 2605(E)(1)(A); Cal. Civ. Code
20
§[]2923.5[(a)(I); Promissory Estoppel, 40 Fed. Reg. at 53527; HBOR Civil Code §§ 2923, 2924;
TILA, Regulation Z”; (2) “RICO VIOLATIONS by all 3 Defendants – RICO 18 U.S.C.§ 1962(d);
21
18 U.S.C.[] § 1964(c); CC 2294. 12(g); California Business and Professions Code § 17500 et
seq.”; (3) “Fraud by both Defendants – HBOR Civil Code §§ 2923, 2924; TILA; Regulation Z;
22
Regulation X 12 USC § 2605[(f)], 12 CFR § 1024.41(a), 12 CFR[] § 1024.41(g) wrongful
foreclosure by an entity that is not the true beneficiary under a deed of trust; notification
23
procedures relating to review of loss mitigation[,] 12 CFR § 1024.4[]1[](b)(2)(B); 15 U.S.C. §
77q(a)[,] ‘false record or statement,’ [] USC § 3729(a)(2),(7)[,] ‘document certifying receipt of
24
property,’ [] USC §[]3729(a)(5)[,] FD[CP]A & Rosenthal Act”; and (4) “Claim for loss of Quiet
enjoyment.” ECF No. 17 at 4-13.
25
2 Choudhuri additionally references “CC 2294. 12(g),” which she suggests, together with 18
26
U.S.C. § 1964(c)—the RICO Act—“states that the rights, remedies, or procedures provided by
this section are in addition and independent of any other rights . . . under any other laws.” ECF
27
No. 17 at 12. The Court cannot discern which statute or regulation Choudhuri seeks to invoke by
1 interference, and unjust enrichment claims against Zillow,3 and pleads each of the claims listed
2 above against Specialized and Bosco. ECF No. 17. Specialized and Zillow now move to dismiss
3 all claims against them. ECF Nos. 21, 31.
4 II. JURISDICTION
5 The Court has jurisdiction over Choudhuri’s federal claims under 28 U.S.C. § 1331 and
6 supplemental jurisdiction over her state law claims under 28 U.S.C. § 1367.
7 III. LEGAL STANDARD
8 “Dismissal under [Federal Rule of Civil Procedure] 12(b)(6) is appropriate only where the
9 complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.”
10 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). “To survive a
11 motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a
12 claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
13 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare recitals of the elements of a
14 cause of action, supported by mere conclusory statements, do not suffice.” Id.
15 When ruling on a motion to dismiss, courts “accept all factual allegations in the complaint
16 as true and construe the pleadings in the light most favorable to the nonmoving party.” Knievel v.
17 ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). Pro se complaints must be liberally construed and
18 held to a less stringent standard than formal pleadings drafted by attorneys. Erickson v. Pardus,
19 551 U.S. 89, 94 (2007) (per curiam).
20 Leave to amend a complaint “shall be freely given when justice so requires.” Fed. R. Civ.
21 P. 15(a)(2). “[A] district court should grant leave to amend even if no request to amend the
22 pleading was made, unless it determines that the pleading could not possibly be cured by the
23 allegation of other facts.” Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995) (quoting Cook,
24 Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990)). “Nevertheless,
25
26
3 In opposition to Zillow’s motion to dismiss, Choudhuri appears to allege a promissory estoppel
claim against Zillow based on emails regarding Choudhuri’s objections to the Zillow website.
27
ECF No. 33 at 4. No such promissory estoppel claim is articulated in the first amended complaint,
1 the ‘general rule that parties are allowed to amend their pleadings . . . does not extend to cases in
2 which any amendment would be an exercise in futility.’” Novak v. United States, 795 F.3d 1012,
3 1020 (9th Cir. 2015) (alteration in original) (quoting Stechman v. Hart Brewing, Inc., 143 F.3d
4 1293 1298 (9th Cir. 1998)).
5 IV. DISCUSSION
6 A. Request for Judicial Notice
7 Specialized requests that the Court judicially notice fifteen documents: nine court orders
8 issued in prior state and federal actions filed by Choudhuri involving Defendants and past
9 mortgage loan servicers and trustees, ECF Nos. 22-2, 22-3, 22-4, 22-5, 22-6, 22-7, 22-8, 22-9, 22-
10 12; the docket report of one such state action, ECF No. 22-1; three complaints filed in two such
11 federal actions, ECF Nos. 22-10, 22-11, 22-15; an attorney declaration filed in one such federal
12 action, ECF No. 22-13; and a deed of trust recorded in the Marin County Recorder’s Office, ECF
13 No. 22-14. ECF No. 22. Choudhuri opposes the request for judicial notice, arguing that each
14 document is “unverified and unauthenticated.” ECF No. 30 at 1-2.
15 Courts may judicially notice facts that are “not subject to reasonable dispute,” meaning
16 they are “generally known” or “can be accurately and readily determined from sources whose
17 accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b).
18 The court orders, docket sheet, and complaints are proper subjects of judicial notice.
19 Courts “may take judicial notice of court filings and other matters of public record.” Reyn’s Pasta
20 Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2010). “[W]hen a court takes
21 judicial notice of another court’s opinion, it may do so ‘not for the truth of the facts recited therein,
22 but for the existence of the opinion, which is not subject to reasonable dispute over its
23 authenticity.’” Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001). Accordingly, the
24 Court will take judicial notice of the court orders, docket sheet, and past complaints for the facts
25 that such actions and documents were filed and that certain issues were raised and addressed in
26 these actions. The Court will not take judicial notice of the truth of any facts recited in any of
27 these court opinions or complaints.
1 motion for summary judgment in a prior federal action. Specialized cites this document as
2 evidence that SLS rejected a loan modification application Choudhuri submitted in 2020. Such a
3 fact is not a proper subject of judicial notice; the Court may not judicially notice a court filing for
4 the truth of the facts asserted therein.
5 The deed recorded in Marin County is a public record properly subject to judicial notice.
6 Amedee v. Citimortgage, Inc., No. 15-cv-03356-HSG, 2016 WL 1070657, at *1 (N.D. Cal. Mar.
7 18, 2016) (“Publicly-recorded real estate instruments, including deeds of trust, assignments, and
8 substitutions of trustee, as well as default and foreclosure notices, are the proper subject of judicial
9 notice, unless subject to reasonable dispute.”). Choudhuri argues the deed is “unauthenticated and
10 unverified” and “fraudulent,” insisting that the deed—if ever recorded—was not recorded in
11 December 2022 and instead “was fraudulently backdated by over a month and a half by
12 [Specialized].” ECF No. 29 at 1. The date on which this deed was recorded in Marin County is
13 not subject to reasonable dispute; it can be accurately determined by reviewing the public records
14 of Marin County, which indicate that the deed was recorded on December 20, 2022. See County
15 of Marin, Recorder’s Official Records Detail, Document Number 2022-0040599,
16 https://perma.cc/SF5D-GBP7. The Court will take judicial notice of the deed of trustee’s sale, but
17 not any disputed facts within it (regarding, for example, the trustee’s compliance with statutory
18 notice requirements).
19 B. Res Judicata
20 “‘Res judicata’—otherwise known as claim preclusion—‘is applicable whenever there is
21 (1) an identity of claims, (2) a final judgment on the merits, and (3) privity between parties.”
22 V.V.V. & Sons Edible Oils Ltd. v. Meenakshi Overseas, LLC, 946 F.3d 542, 545 (9th Cir. 2019)
23 (quoting Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 322 F.3d 1064, 1077
24 (9th Cir. 2003)). “Res judicata bars relitigation of all grounds of recovery that were asserted, or
25 could have been asserted, in a previous action between the parties, where the previous action was
26 resolved on the merits.” Tahoe-Sierra, 322 F.3d at 1077 (quoting United States ex rel. Barajas v.
27 Northrop Corp., 147 F.3d 905, 909 (9th Cir. 1998)).
1 a prior federal suit against Specialized and Bosco before Judge James Donato in this district,
2 Choudhuri v. Specialized Loan Servicing, et al., No. 3:19-cv-04198-JD, and are therefore barred
3 by claim preclusion.
4 Choudhuri’s 2019 action featured similar allegations of misconduct against Specialized
5 and Bosco. ECF Nos. 22-10, 22-11. Following several rounds of motions to dismiss, Judge
6 Donato dismissed Choudhuri’s claims for violation of the FDCPA, 12 C.F.R. § 1024.41(g), Cal.
7 Civ. Code § 2923.6, and Cal. Civ. Code § 2924.11 with prejudice. ECF No. 22-8. After granting
8 Choudhuri another opportunity to amend her claims for fraud, breach of the covenant of quiet
9 enjoyment, and violation of RICO, Judge Donato also dismissed those claims with prejudice. ECF
10 No. 22-9 at 2-3. Judge Donato permitted Choudhuri’s RESPA claim under 12 U.S.C.
11 § 2605(e)(1)(A) for failure to respond to qualified written requests to proceed, then granted
12 summary judgment to Specialized and Bosco on that claim. ECF No. 22-12.
13 Choudhuri argues that the claims raised in the 2019 action “have never been actually
14 adjudicated since by some means bank attorneys have managed to get them dismissed without
15 trial.” ECF No. 29 at 2. Choudhuri is mistaken that claims must proceed to trial in order for res
16 judicata to apply. “For purposes of res judicata, judgment entered on a motion to dismiss or for
17 summary judgment is just as binding as a judgment entered after a trial of the facts.” Harris v.
18 Atchley, No. 22-cv-00529-EMC, 2022 WL 602517, at *4 (N.D. Cal. Mar. 1, 2022). The dismissal
19 with prejudice of a cause of action constitutes a judgment on the merits for claim preclusion
20 purposes. Federated Dept. Stores, Inc. v. Moitie, 452 U.S. 394, 399 n.3 (1981); see also Stewart
21 v. U.S. Bancorp, 297 F.3d 953, 956 (9th Cir. 2002) (“The phrase ‘final judgment on the merits’ is
22 often used interchangeably with ‘dismissal with prejudice.’”). The 2019 action thus resulted in a
23 final judgment on the merits as to all claims listed above.
24 Because the 2019 action resulted in a final judgment on the merits and involved both
25 Choudhuri and Specialized, the Court must determine whether identity of claims exists, such that
26 Choudhuri is precluded from litigating certain of the claims raised in the present case. The Ninth
27 Circuit has identified four factors for courts to consider in determining an identity of claims:
(1) whether rights or interests established in the prior judgment would
1 be destroyed or impaired by prosecution of the second action; (2)
whether substantially the same evidence is presented in the two
2 actions; (3) whether the two suits involved infringement of the same
right; and (4) whether the two suits arise out of the same transactional
3 nucleus of facts.
4 Turtle Island Restoration Network v. U.S. Dep’t of State, 673 F.3d 914, 917-18 (9th Cir. 2012)
5 (quoting Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir. 1982)). The
6 transactional nucleus of facts inquiry is the “most important” part of the analysis and considers
7 whether two suits are “related to the same set of facts and whether they could conveniently be
8 tried together.” Id. at 918. “Reliance on the transactional nucleus element is especially
9 appropriate because the element is outcome determinative.” ProShipLine Inc. v. Aspen
10 Infrastructures Ltd., 609 F.3d 960, 968 (9th Cir. 2010). “In most cases, ‘the inquiry into the
11 “same transactional nucleus of facts” is essentially the same as whether the claim could have been
12 brought in the first action.’” Turtle Island, 673 F.3d at 918 (quoting United States v. Liquidators of
13 Eur. Fed. Credit Bank, 630 F.3d 1139, 1151 (9th Cir. 2011)).
14 The operative complaint in the present action is too insufficiently detailed to permit the
15 Court to determine whether Choudhuri’s present claims are based on the same transactional
16 nucleus of facts as those raised in her 2019 action. Choudhuri appears to allege ongoing
17 fraudulent conduct by Defendants relating to the same mortgage loans, but because much of that
18 conduct is alleged to have occurred in the past several years—that is, after the conclusion of the
19 2019 action—the Court cannot conclude there is sufficient identity of claims to preclude litigation
20 of the present claims.
21 C. Failure to State a Claim
22 Choudhuri’s first amended complaint must be dismissed for failure to state a claim upon
23 which relief may be granted.
24 1. Holder Rule, 15 U.S.C. § 77q, and False Claims Act
25 In its prior order, the Court noted that several of the causes of action listed in Choudhuri’s
26 initial complaint could not provide her relief. As the Court previously noted, there is no private
27 right of action to enforce either the Holder Rule or Section 17(a) of the Securities Act, 15 U.S.C. §
1 claim for violation of any provision of the False Claims Act, 31 U.S.C. § 3729, because that
2 statute only relates to claims involving the United States government. ECF No. 16 at 7. Because
3 any amendment of Choudhuri’s claims under the Holder Rule, 15 U.S.C. § 77q , or 31 U.S.C.
4 § 3729 would be futile, these claims are dismissed with prejudice. See Novak, 795 F.3d at 1020.
5 2. Promissory Estoppel
6 Choudhuri does not plead a cognizable claim for promissory estoppel under California law,
7 which requires “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to
8 whom the promise is made; (3) the reliance must be both reasonable and foreseeable; and (4) the
9 party asserting the estoppel must be injured by his reliance.” Sateriale v. R.J. Reynolds Tobacco
10 Co., 697 F.3d 777, 792 (9th Cir. 2012). The Court previously dismissed this claim for failure to
11 plead the existence of a promise enforceable by Choudhuri. ECF No. 16 at 3-4. Choudhuri’s first
12 amended complaint alleges that, by providing her with loan modification application forms,
13 Specialized “implicit[ly] promise[d] that [she] would be treated with care and fairness” and that it
14 would “review the loan,” but that, while she received acknowledgements of receipt of her
15 application, she “did not even receive a decision from the banks,” which instead “deliberately held
16 the application[s] in abeyance while they proceeded to damage [her] with their malicious and
17 deliberate acts of fraudulent foreclosure.” ECF No. 17 at 5, 7.4
18 Choudhuri does not plausibly allege the existence of a “clear and unambiguous” promise
19 sufficient to support a promissory estoppel claim. Assuming, for the sake of argument, that the
20 mere provision of a loan modification application could constitute such a promise, nothing in the
21 complaint suggests that Choudhuri took or refrained from taking any action in reliance on that
22 promise, and Choudhuri has not alleged that she was injured as a result of her reliance on that
23
24
4 Specialized argues that “it is axiomatic that the mere act of providing a borrower a loan
modification application cannot serve as the basis of a claim for promissory estoppel,” relying on
25
Sheen v. Wells Fargo Bank, N.A., 12 Cal. 5th 905, 929 (2022). In Sheen, the California Supreme
Court held that lenders do not owe borrowers a duty of care with regard to loan modification
26
applications. In determining that no tort duty existed, the court relied in part on the continued
availability of other causes of action that could offer recourse to borrowers harmed by the
27
mishandling of such applications, including promissory estoppel. Sheen thus does not stand for
1 promise. The Court therefore must again dismiss Choudhuri’s promissory estoppel claims.
2 Because the Court previously dismissed these claims with specific instructions regarding
3 the necessary elements of promissory estoppel, and the pleading of additional facts concerning the
4 promise alleged in the first amended complaint would not cure the deficiency of the claims,
5 Choudhuri’s promissory estoppel claims are now dismissed with prejudice.
6 3. UCL
7 Choudhuri’s UCL claims based on false or misleading statements must once again be
8 dismissed for failure to state a claim. The Court previously dismissed the UCL claims, explaining
9 that such claims require plaintiffs to identify the misrepresentations at issue with particularity and
10 explain how such misrepresentations caused her injury. ECF No. 16 at 7. In her amended
11 complaint, Choudhuri again does not identify any particular false or misleading statements or
12 explain how she was harmed by them. Having previously dismissed these claims on the same
13 basis, the Court now dismisses Choudhuri’s UCL claims premised on false or misleading
14 statements with prejudice.
15 Read liberally, Choudhuri’s amended complaint also seems to plead UCL claims premised
16 on unlawful conduct. ECF No. 17 at 12-13. The Court’s prior order granted leave to amend
17 solely to cure the deficiencies identified in that order; it did not authorize the addition of new
18 claims. “Where leave to amend is given to cure deficiencies in certain specified claims, courts
19 have agreed that new claims alleged for the first time in the amended pleading should be dismissed
20 or stricken.” Temple of 1001 Buddhas v. City of Fremont, No. 21-cv-4661-CRB, 2022 WL
21 1570480, at *5 (N.D. Cal. May 18, 2022) (quoting DeLeon v. Wells Fargo Bank, N.A., No. 10-cv-
22 1390-LHK, 2010 WL 4285006, at *3 (N.D. Cal. Oct. 22, 2010)). To the extent the amended
23 complaint pleads new UCL claims premised on unlawful conduct against any Defendants, these
24 claims are dismissed with prejudice.
25 4. FDCPA and Rosenthal Act
26 Choudhuri’s amended complaint does not address the deficiencies in her prior claims
27 brought under the FDCPA and the Rosenthal Act. The Court previously dismissed these claims
1 had been violated; they were included in a long list of statutes and regulations in the subtitle of
2 Count Three, but not discussed elsewhere in the complaint. ECF No. 16 at 7-8. Choudhuri’s first
3 amended complaint again lists the FDCPA and the Rosenthal Act among the statutes and
4 regulations in the subtitle of Count Three, does not otherwise reference the two statutes, and
5 alleges no facts to permit the Court to infer that Defendants have violated either statute.
6 Choudhuri’s first amended complaint does not cure the deficiencies the Court identified in
7 its prior order dismissing these claims. To the extent Choudhuri’s first amended complaint
8 attempts to state claims under the FDCPA and the Rosenthal Act against any Defendants, such
9 claims are now dismissed with prejudice.
10 5. TILA and Regulation Z
11 Choudhuri also fails to state a claim for violation of TILA and Regulation Z. “TILA is
12 intended to protect consumers in credit transactions by requiring disclosure of key terms of the
13 lending arrangement and its related costs.” Rosal v. First Fed. Bank of Cal., 671 F. Supp. 2d
14 1111, 1122 (N.D. Cal. 2009). The Court previously dismissed Choudhuri’s TILA claim,
15 explaining that the prior complaint failed to provide any details about alleged overcharges, how
16 they were disguised, or how such conduct would violate TILA. ECF No. 16 at 6. The amended
17 complaint again alleges that Defendants “disguise[ed] alleged overcharges as legitimate expenses
18 thereby violating the [f]ederal Truth in Lending Act,” but provides no details about any alleged
19 overcharges, how they were disguised, or how such conduct would violate TILA or Regulation Z.
20 Nothing in Choudhuri’s complaint permits the Court to infer that key terms of her home loan were
21 not disclosed to her. Rather, the gravamen of Choudhuri’s complaint is that Defendants, through
22 fraudulent charges and interest rates, artificially inflated the value of her debts, then illegally
23 foreclosed (or attempted to foreclose) on the property.
24 Choudhuri’s first amended complaint does not cure the deficiencies the Court identified in
25 its prior order dismissing her TILA and Regulation Z claims, which the Court will now dismiss
26 with prejudice.
27 6. Tortious Interference, Unjust Enrichment, and FAL
1 must again be dismissed. The Court previously dismissed these claims for failure to plead any
2 facts to support them. ECF No. 16 at 6. Choudhuri’s amended complaint again “accuses SLS and
3 Bosco, as well as Zillow with tortious interference and unjust enrichment” and alleges that
4 Defendants “violated [the FAL], which covers deceptive and unfair trade practices.” ECF No. 17
5 at 8.
6 Despite the Court’s prior instructions, Choudhuri’s first amended complaint pleads no
7 additional facts supporting any of these causes of action. Accordingly, Choudhuri’s claims for
8 tortious interference, unjust enrichment, and violation of the FAL against all Defendants are now
9 dismissed with prejudice.
10 7. Nuisance
11 Choudhuri again pleads nuisance claims. The Court previously dismissed Choudhuri’s
12 nuisance claims, explaining that the initial complaint “d[id] not identify any basis for [the] claims,
13 and the Court c[ould not] identify any alleged conduct by Defendants that meets the statutory
14 definition of a nuisance.” ECF No. 16 at 8.
15 In California, a nuisance is “anything which is injurious to health . . . or is indecent or
16 offensive to the senses, or an obstruction to the free use of property, so as to interfere with the
17 comfortable enjoyment of life or property.” Cal. Civ. Code § 3479. “To qualify as a nuisance ‘the
18 inference must be both substantial and unreasonable.’” Redevelopment Agency of City of Stockton
19 v. BNSF Ry. Co., 643 F.3d 668, 672-73 (9th Cir. 2011). Nuisance liability depends on “whether
20 the defendant created or assisted in the creation of the nuisance”; “[u]nder California law, conduct
21 cannot be said to ‘create’ a nuisance unless it [] actively or knowingly generates or permits the
22 specific nuisance condition.” Id. at 673-74.
23 Choudhuri now alleges that Specialized and Bosco have repeatedly mailed notices of
24 postponement of sale to multiple addresses on her street, resulting in one of her neighbors leaving
25 “multiple offensive voicemail” messages for her “and on one occasion actually aggressively
26 stumbling drunkenly toward” her to give her such notices, causing her “pain and suffering.” ECF
27 No. 17 at 13-14. The Court cannot reasonably infer that Specialized or Bosco actively or
1 nuisance liability can attach for such conduct.
2 Because Choudhuri’s nuisance claims could not be cured by the pleading of additional
3 facts, these claims are dismissed with prejudice.
4 8. Fraud
5 Read liberally, Choudhuri’s first amended complaint attempts to plead a fraud claim
6 against Specialized and Bosco. The title of Count Three reads “Fraud by both Defendants,” and
7 the text that follows alleges that, “[b]y continuing its predecessors’ fraudulent practices of
8 applying illegal fees and unfair interest rates, [Specialized] is itself liable for fraud in assignee
9 liability under the Consumer Fraud Act,”5 and that, “[b]y ignoring [her] QWRs and proceeding in
10 foreclosure actions, Defendants [Specialized] and Bosco have perpetrated fraud.” ECF No. 17 at
11 12-13. In Count Two, Choudhuri states that her RICO claim is alleged “[s]eparately from the
12 fraud claim in [C]ount [One].” Id. at 7. The Court cannot discern a fraud claim in Count One, but
13 construes Count Three to allege common-law fraud by Specialized and Bosco.
14 “Under California law, ‘the indispensable elements of a fraud claim include a false
15 representation, knowledge of its falsity, intent to defraud, justifiable reliance, and damages.’”
16 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 2003) (quoting Moore v. Brewster,
17 96 F.3d 1240, 1245 (9th Cir. 1996), superseded by statute on other grounds). Pursuant to Federal
18 Rule of Civil Procedure 9(b), a party alleging fraud “must state with particularity the
19 circumstances constituting fraud.” Thus, “[a]verments of fraud must be accompanied by ‘the who,
20 what, when, where, and how’ of the misconduct charged.” Vess, 317 F.3d at 1106 (quoting
21 Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)).
22 Choudhuri’s first amended complaint both fails to state a claim for fraud and fails to meet
23 the pleading requirements of Rule 9(b). Choudhuri alleges that SLS committed fraud by applying
24 illegal fees and unfair interest rates to her home loan. ECF No. 17 at 12-13; see also id. at 9
25 (alleging that Defendants imposed “improper inspection fees and late charges”). But Choudhuri
26
27
5 The complaint does not otherwise reference the “Consumer Fraud Act,” and the Court cannot
1 does not allege any facts which permit this Court to infer that any fees charged were illegal, and it
2 is not clear how charging “unfair” interest rates, absent some representation that such rates would
3 not be charged, would constitute fraud. While ignoring qualified written requests from borrowers
4 may violate other laws, it is not clear how such conduct amounts to fraud. And none of these
5 allegations are pleaded with the specificity required by Rule 9(b), which requires Choudhuri to
6 state “the who, what, when, where, and how” of the alleged fraud. Vess, 317 F.3d at 1106.
7 Because Choudhuri’s fraud claims against Specialized and Bosco could be cured by the
8 pleading of additional facts, the Court will dismiss these claims with leave to amend.
9 9. RICO
10 The Court previously dismissed Choudhuri’s RICO claims against all Defendants. To state
11 a civil RICO claim under Section 1962(c), a plaintiff must allege: “(1) conduct (2) of an enterprise
12 (3) through a pattern (4) of racketeering activity.” Odom v. Microsoft Corp., 486 F.3d 541, 547
13 (9th Cir. 2007) (en banc) (quoting Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985)).
14 Choudhuri’s initial complaint merely alleged that “SLS and Bosco were associated with
15 the enterprise and agreed and conspired to violate [RICO] [b]y agreeing that the alleged equity
16 line holder[] Bosco would foreclose on the property . . . to maximize their profit by selling the
17 property at the lower alleged default amount so that they can pocket the profit at resale,” that
18 “Zillow[,] in turn, colluded with the other two defendants by agreeing to host misinformation
19 about the plaintiff’s property to deter potential buyers,” and that “each of the Defendants has
20 committed thousands of acts of racketeering activity . . . [causing] Plaintiff and other victims
21 [injury to] property . . . by having alleged debts inflated by unlawful and unreasonable inspection
22 and late fees.” ECF No. 1 at 5-6. In its order dismissing these claims, the Court explained that it
23 was not clear how the alleged pattern of racketeering activity related to any alleged enterprise and
24 that Choudhuri did not plead sufficient facts to support any of the elements of a RICO claim. ECF
25 No. 16 at 6.
26 Choudhuri now alleges that Specialized, the mortgage holder, and Bosco, the equity line
27 holder, engaged in a scheme to foreclose on her property, sell it at an artificially low price, then
1 showing Choudhuri’s property on its website as listed at auction, thus dissuading prospective
2 buyers at a time when Choudhuri was also attempting to sell the property herself. Notably,
3 Choudhuri alleges no other conduct by Zillow. Choudhuri alleges that only Specialized and Bosco
4 engaged in a pattern of racketeering activity by “using the postal system and email/fax to send
5 [her] inaccurate mortgage statements, correspondence, [and] notices of unauthor[i]zed inspection
6 reports,” which harmed Choudhuri because her “alleged debts [were] inflated by unlawful interest
7 rates and unreasonable late or inspection fees.” ECF No. 17 at 10.
8 Choudhuri’s RICO claim fails to comply with Rule 9(b). “Rule 9(b)’s requirement that
9 ‘[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be
10 stated with particularity’ applies to civil RICO fraud claims.” Edwards v. Marin Park, 356 F.3d
11 1058, 1065-66 (9th Cir. 2004) (quoting Fed. R. Civ. P. 9(b)). Because Choudhuri pleads predicate
12 acts of wire and mail fraud, she must identify “the who, what, when, where, and how” of each of
13 the alleged acts of fraud. Vess, 317 F.3d at 1106. Choudhuri does not identify any of the specific
14 mailings she received, when she received them, or how they violated the relevant wire and mail
15 fraud statutes.
16 Choudhuri also fails to sufficiently plead the existence of an enterprise. An associated-in-
17 fact enterprise exists where multiple individuals or entities are “associated together for a common
18 purpose of engaging in a course of conduct,” which requires “both ‘evidence of an ongoing
19 organization, formal or informal’ and ‘evidence that the various associates function as a
20 continuing unit.’” Odom, 486 F.3d at 552. “An ongoing organization is ‘a vehicle for the
21 commission of two or more predicate crimes.’” Id. (quoting United States v. Cagnina, 697 F.2d
22 915, 921. Choudhuri alleges that Defendants associated together for the common purpose of
23 retaining profits from the sale of the property at issue. However, nothing in the complaint
24 suggests an ongoing organization among Defendants: there is seemingly no connection between
25 the predicate crimes—the mailing of allegedly inaccurate mortgage statements and notices by
26 Specialized, Bosco, and various “vendors”—and the alleged association among Defendants.
27 The connection between Zillow’s alleged role in the scheme and the predicate crimes is
1 since she does not allege that Zillow was in any way involved in the commission of the alleged
2 predicate crimes. Choudhuri also does not allege that Zillow participated in the operation or
3 management of the enterprise. See Reves v. Ernst & Young, 507 U.S. 170, 185 (1993). Choudhuri
4 merely alleges that Zillow hosted “misinformation” on its website that listed her property for sale
5 at auction. Further, because Choudhuri elsewhere alleges that foreclosure proceedings had already
6 been initiated on her property and that she had received multiple notices of postponement of sale,
7 her allegation that the property being listed for sale at auction amounts to “misinformation” is
8 implausible.
9 Nothing in the first amended complaint supports a substantive RICO claim against Zillow,
10 so the Court will dismiss this claim with prejudice. Because Choudhuri fails to plead a substantive
11 violation of RICO, her conspiracy claim against Zillow is similarly dismissed with prejudice.
12 Howard, 208 F.3d at 751. Choudhuri’s substantive RICO and conspiracy claims against
13 Specialized and Bosco are dismissed with leave to amend.
14 10. HBOR
15 The Court previously dismissed Choudhuri’s HBOR claims for failure to plead sufficient
16 facts to plausibly allege a violation of any provision of the HBOR. ECF No. 16 at 4-5, 8-9.
17 Choudhuri’s first amended complaint alleges that Specialized and Bosco violated the
18 HBOR’s dual tracking prohibition. Section 2923.6(c) provides that, “[i]f a borrower submits a
19 complete application for a first lien loan modification offered by, or through, the borrower’s
20 mortgage servicer at least five business days before a scheduled foreclosure sale, a mortgage
21 servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or
22 notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification
23 application is pending.” Cal. Civ. Code § 2923.6(c). No foreclosure sale may occur until “the
24 mortgage servicer makes a written determination that the borrower is not eligible for a first lien
25 loan modification, and any appeal period . . . has expired.” Id.
26 Choudhuri alleges that she submitted a complete loan modification application to
27 Specialized by mail on September 22, 2022, and submitted the additional documents requested by
1 that the last notice of postponement she received listed November 10, 2022, as the “postponement
2 date,” which the Court assumes refers to the rescheduled date of the trustee’s sale. Id. at 3.
3 Choudhuri alleges that she never received a written decision on her applications. The trustee’s
4 deed of sale was recorded on December 20, while the applications remained pending. Choudhuri
5 thus alleges that Defendants violated Section 2923.6(c) by conducting a trustee’s sale before
6 issuing a written decision on her loan modification applications, which were submitted at least five
7 days before the scheduled sale. Morris v. JPMorgan Chase Bank, N.A., 78 Cal. App. 5th 279, 454
8 (2022) (borrower sufficiently stated claim under Section 2923.6 where she alleged that she
9 submitted a completed loan modification application more than five days before scheduled sale
10 and did not receive a written denial in advance of the trustee’s sale). However, Choudhuri does
11 not allege that Specialized or Bosco are mortgage servicers within the meaning of the statute, such
12 that she can state claims against Specialized and Bosco under Section 2923.6(c). Choudhuri’s
13 Section 2923.6(c) claims against Specialized and Bosco are dismissed with leave to amend.
14 Choudhuri also alleges that Defendants failed to mail her a copy of any notice of default.
15 The HBOR requires the mortgagee, trustee, or authorized agent to provide the mortgagor or trustor
16 a copy of the recorded notice of default, a copy of the recorded notice of sale, and an attached
17 separate summary document of each. Cal. Civ. Code § 2923.3. Section 2924b requires that,
18 within ten business days after any notice of default is recorded, the mortgagee, trustee, or other
19 person authorized to record the notice of default or the notice of sale must mail a copy of the
20 notice of default by registered or certified mail to the trustor or mortgagor. Cal. Civ. Code
21 § 2924b(b)(1). Because Choudhuri alleges that she has never received a copy of the recorded
22 notice of default, Choudhuri sufficiently pleads claims for violation of Cal Civ. Code §§ 2923.3
23 and 2924b.
24 11. RESPA and Regulation X
25 Choudhuri’s first amended complaint alleges that Specialized and Bosco violated RESPA
26 and Regulation X.
27 Under RESPA, upon receipt of a “qualified written request” from a borrower, a servicer of
1 5 days” or “take the action requested.” 12 U.S.C. § 2605(e)(1)(A). A qualified written request (1)
2 reasonably identifies the borrower’s name and account, (2) either states the borrower’s reasons for
3 believing the account is in error or provides other sufficient detail regarding the information
4 sought by the borrower, and (3) seeks information relating to the servicing of the loan. Medrano
5 v. Flagstar Bank, FSB, 704 F.3d 661, 666 (9th Cir. 2012).
6 Choudhuri alleges that she sent qualified written requests to “Bosco Credit, c/o Franklin
7 Credit Management” on October 13, 2022, and to “Speciali[z]ed Loan Servicing, LLC” on
8 October 24, 2022. ECF No. 17 at 23-25. At least some of the information requested in these
9 letters appears to relate to the servicing of the loans. Id. at 23, 25 (seeking information about
10 “payments applied to date”). Choudhuri alleges that these qualified written requests were never
11 answered. ECF No. 17 at 4. However, Choudhuri does not allege that Specialized and Bosco are
12 both servicers within the meaning of RESPA, and the requests suggest they may not be. ECF No.
13 17 at 23 (letter to “Bosco Credit c/o Franklin Credit Management” stating that it, “as the alleged
14 owner (or services? [sic]) of the alleged lender [is] obligated to respond in full to this QWR”); id.
15 at 25 (letter to Specialized stating that it, “as the alleged agent of the alleged lender [is] obligated
16 to respond”). Because this provision only applies to “servicer[s] of [] federally related mortgage
17 loan[s],” 12 U.S.C.§ 2605(e)(1)(A), and Choudhuri does not allege that Bosco and Specialized are
18 such servicers, Choudhuri’s claims under Section 2605(e)(1)(A) are dismissed with leave to
19 amend.
20 Choudhuri additionally alleges claims for violation of multiple provisions of Regulation X.
21 Choudhuri alleges that “Bosco and SLS have violated . . . Regulation X . . . 12 C[.]F[.]R[.] §[§]
22 1024.41(a) & (g) wrongful foreclosure by an entity that is not the true beneficiary under a deed of
23 trust.” ECF No. 17 at 6. Section 1024.41(a) explains that the regulation’s loss mitigation
24 procedures are enforceable under the private right of action provided in RESPA, while Section
25 1024.41(g) prohibits a mortgage servicer from conducting a foreclosure sale if a borrower submits
26 a complete loss mitigation application after the servicer has noticed the foreclosure process but
27 more than 37 days before a foreclosure sale. Elsewhere, Choudhuri invokes 12 C.F.R. §
1 or more before a foreclosure sale to notify the borrower within five days acknowledging receipt of
2 the application and informing the borrower whether or not the application is complete.
3 Choudhuri does not explain the basis on which she alleges that Bosco and Specialized
4 violated these provisions of Regulation X. Choudhuri cannot allege a violation of 12 C.F.R. §
5 1024.41(b)(2)(B), since she expressly alleges that she received “acknowledgments of receipt”
6 from SLS and Bosco, including a request for missing documents, and nothing in the complaint
7 suggests that these notices failed to comply with the regulatory requirements. ECF No. 17 at 5.
8 Construing her complaint liberally, Choudhuri’s Section 1024.41(g) claims seem to refer to the
9 same dual tracking allegations discussed above. Choudhuri alleges that she submitted a loan
10 modification application to Specialized on September 22, 2022, for which she received an
11 acknowledgement of receipt; submitted additional documents requested by Bosco in relation to
12 her loan modification application on October 28, 2022; and that “the most recent” notice of
13 postponement of sale listed November 10, 2022, as the postponed date. These allegations fail to
14 state a claim for violation of Section 1024.41(g): Choudhuri does not allege that Bosco and
15 Specialized are loan servicers within the meaning of Regulation X; does not allege the scheduled
16 date of the foreclosure sale at the time she submitted her loan modification applications; and does
17 not allege when any foreclosure sale was conducted.
18 Choudhuri’s claims for violation of 12 U.S.C. § 2605(e)(1)(A) and 12 C.F.R. § 1024.41(g)
19 are dismissed with leave to amend. All of Choudhuri’s remaining claims under RESPA and
20 Regulation X are dismissed with prejudice.
21 D. Motions for Entry of Default and Default Judgment
22 Choudhuri moves for entry of default against Zillow. ECF No. 23. On November 8, 2022,
23 Choudhuri requested that Zillow waive service of the initial complaint; Zillow agreed, which
24 established a deadline for response of January 7, 2023. ECF No. 18. On December 15, 2022, this
25 Court dismissed Choudhuri’s initial complaint. ECF No. 16. On January 17, 2023, Choudhuri
26 filed her first amended complaint. ECF No. 17. The proof of service filed with the first amended
27 complaint indicates it was served on Zillow using the Court’s CM/ECF system. Id. at 18.
1 it, Zillow had not yet appeared in this case, such that the first amended complaint could not be
2 served via CM/ECF. Absent proof of sufficient service of the first amended complaint, the Court
3 declines to enter default against Zillow. See IBEW Local 595 Health & Welfare Tr. Fund v.
4 Givens Elec., Inc., No. X, 2011 WL 2414346, at *2 (N.D. Cal. June 5, 2011) (“[A]llowing entry of
5 default on an amended complaint that was never served would contravene the objectives embodied
6 by [Federal Rules of Civil Procedure] 4 and 5(a)(2) that a defendant receive notice.”).
7 Choudhuri also moves for entry of default judgment against Zillow. ECF No. 24. Because
8 default has not been entered against Zillow, Choudhuri’s motion for default judgment against
9 Zillow is denied without prejudice.
10 Finally, Choudhuri moves for entry of default judgment against Bosco. ECF No. 54. The
11 Clerk has declined to enter default as to Bosco. ECF Nos. 46, 49, 53. Because default has not
12 been entered against Bosco, Choudhuri’s motion for default judgment against Bosco is denied
13 without prejudice.
14 CONCLUSION
15 Defendants’ motions to dismiss are granted in part and denied in part. Choudhuri
16 sufficiently pleads claims for violation of Cal. Civ. Code §§ 2923.3 and 2924b against Specialized
17 and Bosco. Choudhuri’s claims against Specialized and Bosco for fraud; violation of the RICO
18 Act; violation of the HBOR, Cal. Civ. Code. § 2923.6; violation of RESPA, 12 U.S.C. §
19 2605(e)(1)(A); and violation of Regulation X, 12 C.F.R. § 1024.41(g), are dismissed with leave to
20 amend.
21 Choudhuri’s claims against all Defendants for promissory estoppel; tortious interference;
22 unjust enrichment; nuisance; violations of the Holder Rule; 15 U.S.C. § 77q; 31 U.S.C. § 3729;
23 the UCL; the FDCPA; the Rosenthal Act; the TILA and Regulation Z; and the FAL are dismissed
24 with prejudice. Choudhuri’s RICO claims against Zillow, as well as all other claims brought
25 under the HBOR, RESPA, or Regulation X, are also dismissed with prejudice.
26 Choudhuri may file a second amended complaint within 28 days of this order. Choudhuri
27 is only permitted leave to amend her claims against Specialized and Bosco for fraud; violation of
1 § 2605(e)(1)(A); and violation of Regulation X, 12 C.F.R. § 1024.41(g). Claims the Court has
2 || dismissed with prejudice should not be pleaded in the second amended complaint.
3 Failure to file a timely second amended complaint, or failure to otherwise comply with this
4 || order, will result in dismissal with prejudice of all remaining claims.
5 The case management conference scheduled for September 26, 2023 is continued to
6 || January 30, 2024 at 2:00 p.m. Updated case management statements are due January 23, 2024.
7 IT IS SO ORDERED.
8 Dated: September 26, 2023
9
JON S. TIGA
10 United States District Judge
11
12
13
©
15
16
= 17
Z 18
19
20
21
22
23
24
25
26
27
28