explaining that section 2924c limits 24 costs and trustee’s or attorney’s fees which may be claimed as foreclosure expenses, but 25 does not limit other expenses “incurred for other purposes”
How later courts described this case
- explaining that section 2924c limits 24 costs and trustee’s or attorney’s fees which may be claimed as foreclosure expenses, but 25 does not limit other expenses “incurred for other purposes”
Written by the judges who cited it.
The opinion
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8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
10
11 MATTHEW TURNER, Case No. 22-cv-1121-MMA (WVG)
12 Plaintiff,
ORDER GRANTING DEFENDANT
13 v. SPECIALIZED LOAN SERVICING,
LLC’S MOTION TO DISMISS AND
14 REAL TIME RESOLUTIONS, INC., et
15 al., [Doc. No. 13]
Defendants.
16 GRANTING IN PART DEFENDANT
17 REAL TIME RESOLUTIONS, INC.’S
MOTION TO DISMISS
18
19 [Doc. No. 14]
20
21 On November 18, 2022, Plaintiff Matthew Turner filed a First Amended
22 Complaint against Defendants Real Time Resolutions, Inc. (“RTR”) and Specialized
23 Loan Servicing, LLC (“SLS” and collectively with RTR, “Defendants”). See Doc.
24 No. 12 (“FAC”). Defendants now move to dismiss. See Doc. Nos. 13, 14. Both motions
25 are fully briefed, see Doc. Nos. 15, 18–20, and the Court took the matters under
26 submission and without oral argument pursuant to Civil Local Rule 7.1.d.1, see Doc.
27 No. 21. For the reasons set forth below, the Court GRANTS SLS’s motion and
28 GRANTS IN PART RTR’s motion.
1 I. BACKGROUND
2 The factual background as alleged in the First Amended Complaint remains largely
3 unchanged. Plaintiff is the owner of the real property located at 2906 Rancho Rio Chico,
4 Carlsbad, California 92002 (the “Property”). FAC ¶ 5. Plaintiff purchased the Property
5 in 1999 and has used it as his home and primary residence ever since. Id. ¶ 12. In
6 November 2006, Plaintiff obtained a Home Equity Line of Credit with a credit limit of
7 $100,000 secured by the Property pursuant to a Deed of Trust dated November 7, 2006
8 (the “HELOC” or “Loan”). Id. ¶ 13. The section 4 of the HELOC Loan Agreement
9 provides:
10
A. “I promise to pay to your order, when and as due, all loans made under this
11
Agreement . . . I agree to make my payments in the manner specified in my
12 periodic statement, and if I do so such payments will be credited as of the day
of receipt.”
13
B. “At a minimum, you will send me a periodic statement monthly, except
14 that my first periodic statement may be generated and mailed to me between
thirty and sixty days after I open my Account. The periodic statement will
15
show all Account activity during the billing cycle and contain other important
16 information including my “New Balance,” my Annual Percentage Rate, the
amount of my “Minimum Payment Due,” my “Payment Due Date” and the
17
place and manner of making payments.”
18
19 Id. ¶ 14.
20 Eventually, Plaintiff fell into financial hardship and, struggling to make payments,
21 he filed for bankruptcy in 2009. Id. ¶ 15. Plaintiff’s bankruptcy proceedings concluded
22 in April 2009. Id.
23 In a notice dated February 16, 2010, Bank of America, N.A., who had been the
24 servicer of Plaintiff’s Loan, through its subsidiary, BAC Home Loans Servicing, LP,
25
26
27 1 Because this matter is before the Court on a motion to dismiss, the Court must accept as true the
allegations set forth in the Complaint. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740
28
1 notified Plaintiff that the servicing of the HELOC was being assigned, sold, or transferred
2 to RTR effective February 25, 2010 (the “Assignment Notice”). Id. ¶ 17. The
3 Assignment Notice stated that RTR would begin accepting monthly payments on the
4 HELOC Loan as of February 21, 2010, and would send billing statements going forward.
5 Id. Plaintiff maintains that he did not receive the Assignment Notice until 2019, after he
6 submitted a Qualified Written Request (“QWR”). Id.
7 Generally speaking, Plaintiff alleges that Defendants have presented conflicting
8 information as to which entity held the servicing rights to Plaintiff’s HELOC and at what
9 point in time. Id. ¶ 20. For example, Plaintiff maintains that RTR and SLS were engaged
10 in litigation from 2016 through 2021 concerning the servicing under the Collection
11 Agreement. Id. ¶ 21. Plaintiff also contends that Defendants failed to provide periodic
12 statements to him as required, and that he received little correspondence from RTR,
13 specifically. Id. ¶ 22.
14 According to Plaintiff, he submitted three QWRs to RTR and all responses were
15 deficient. In particular, Plaintiff alleges that RTR produced a portion of Collection
16 Agreement between SLS and RTR. Id. ¶ 18. The Collection Agreement dated February
17 1, 2013, states that SLS is the servicer of the HELOC and that RTR was retained as its
18 subcontractor with respect to collection and recovery. Id. ¶ 19. However, Plaintiff
19 contends he was only provided three of the seventeen (17) pages. Id. ¶ 18. Plaintiff
20 contends that RTR provided this document with a written response letter stating that it
21 “effectively g[ave] us the right to service the account on [SLS’s] behalf.” Id.
22 In October 2018, Plaintiff submitted his first QWR to RTR. Id. ¶ 23. Plaintiff
23 requested that RTR provide him with specific information and documents relating to his
24 account including: identities of the investors, records of transfers and assignments of
25 investor rights, amoritization schedules associating with the original loan and showing
26 the accrual accounting on the original interest rate of the loan, documents relating to
27 servicing transfers of the loan. Id. Plaintiff contends that RTR responded on
28 October 15, 2018 that “RTR cannot speak to the servicing of this account prior to its
1 transfer.” Id. ¶ 24. Plaintiff asserts that this response was inadequate. Id.
2 Plaintiff also alleges that RTR provided Plaintiff with a payoff quote dated October
3 4, 2018, which included a payoff amount of $153,445.37 including a principal of
4 $100,000, interest of $52,715.61, and fees of $729.76, with an interest rate of 6.25%. Id.
5 ¶ 25. Further, according to a statement dated January 1, 2019, Plaintiff allegedly owed
6 $69,939.39 in arrears with an interest rate of 7.25%. Id. ¶ 26.
7 On May 3, 2019, Plaintiff submitted a second QWR requesting the same
8 information above. Id. ¶¶ 27, 63. According to Plaintiff, RTR responded in June 2019
9 but did not supplement or otherwise “rectify” their prior response. Id. ¶ 64.
10 On August 31, 2021, Plaintiff received notice from a foreclosure trustee acting on
11 behalf of RTR, noting that the principal balance on the HELOC was $170,858.84 and that
12 RTR intended to proceed with foreclosure if Plaintiff did not reinstate the account by
13 paying over $101,000 within 30 days. Id. ¶ 28.
14 In October 2021, Plaintiff sent a third QWR, requesting the same information, and
15 RTR again declined to supplement or otherwise rectify their prior response. Id. ¶¶ 29, 65.
16 On October 28, 2021, an Assignment of Deed of Trust was recorded with the San
17 Diego County Recorder’s Office “wherein all beneficial interest under the Deed of Trust”
18 was assigned to Defendant RTR. Id. ¶ 30. Plaintiff therefore contends that RTR has
19 been a party to the Deed of Trust since at least October 28, 2021. Id. However, Plaintiff
20 believes that RTR has been a party to the Deed of Trust since February 2010 and was the
21 “you” identified above in section 4 of the HELOC Loan Agreement. Id.
22 On January 19, 2022, Defendants recorded a Notice of Default against the
23 Property, noting that Plaintiff was $106,000 in default. Id. ¶ 31. Plaintiff alleges that this
24 amount was grossly overinflated with fees and amounts not owed on the loan. Id.
25 On May 11, 2022, Defendants recorded a Notice of Trustee’s Sale against the
26 Property, setting the sale date of June 6, 2022, and noting a $175,809.93 unpaid balance.
27 Id. ¶ 32. Plaintiff alleges he is facing the loss of his home, see id. ¶ 33, but acknowledges
28 that he paid the reinstatement amount in order to avoid foreclosure, see id. ¶ 56.
1 On May 19, 2022, Plaintiff initiated this action in the Superior Court of California,
2 County of Orange. See Doc. No. 1-1. On August 1, 2022, SLS removed the action to
3 this Court, see Doc. No. 1, and RTR joined in the removal, see Doc. No. 1-3. The Court
4 previously granted Defendants’ motions to dismiss, see Doc. No. 11 (the “Dismissal
5 Order”). On November 18, 2022, Plaintiff filed a First Amended Complaint. See FAC.
6 II. LEGAL STANDARD
7 A Rule 12(b)(6)2 motion tests the legal sufficiency of the claims made in a
8 complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must
9 contain “a short and plain statement of the claim showing that the pleader is entitled to
10 relief . . . .” Fed. R. Civ. P. 8(a)(2). However, plaintiffs must also plead “enough facts to
11 state a claim to relief that is plausible on its face.” Fed. R. Civ. P. 12(b)(6); Bell Atl.
12 Corp. v. Twombly, 550 U.S. 544, 570 (2007). The plausibility standard demands more
13 than “a formulaic recitation of the elements of a cause of action,” or “naked assertions
14 devoid of further factual enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
15 (internal quotation marks omitted). Instead, the complaint “must contain allegations of
16 underlying facts sufficient to give fair notice and to enable the opposing party to defend
17 itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
18 In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth
19 of all factual allegations and must construe them in the light most favorable to the
20 nonmoving party. See Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir.
21 1996). The court need not take legal conclusions as true merely because they are cast in
22 the form of factual allegations. See Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir.
23 1987). Similarly, “conclusory allegations of law and unwarranted inferences are not
24 sufficient to defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir.
25 1998).
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1 Where dismissal is appropriate, a court should grant leave to amend unless the
2 plaintiff could not possibly cure the defects in the pleading. See Knappenberger v. City
3 of Phoenix, 566 F.3d 936, 942 (9th Cir. 2009) (quoting Lopez v. Smith, 203 F.3d 1122,
4 1127 (9th Cir. 2000)).
5 III. REQUESTS FOR JUDICIAL NOTICE
6 As an initial matter, both RTR and SLS have filed requests for judicial notice in
7 conjunction with their motions. See Doc. Nos. 13-1, 14-2. Plaintiff has not responded or
8 otherwise opposed either request.
9 Generally, the scope of review on a motion to dismiss for failure to state a claim is
10 limited to the contents of the complaint. See Warren v. Fox Family Worldwide, Inc., 328
11 F.3d 1136, 1141 n.5 (9th Cir. 2003). However, a court may consider certain materials,
12 including matters of judicial notice, without converting the motion to dismiss into a
13 motion for summary judgment. See United States v. Ritchie, 342 F.3d 903, 908 (9th Cir.
14 2003). A judicially noticed fact must be one not subject to reasonable dispute in that it is
15 either (1) generally known within the territorial jurisdiction of the trial court or
16 (2) capable of accurate and ready determination by resort to sources whose accuracy
17 cannot reasonably be questioned. Fed. R. Evid. 201(b); see also Khoja v. Orexigen
18 Therapeutics, Inc., 899 F.3d 988, 999 (9th Cir. 2018) (quoting Fed. R. Evid. 201(b)).
19 Further, “a court may consider evidence on which the complaint necessarily relies if:
20 (1) the complaint refers to the document; (2) the document is central to the plaintiff’s
21 claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6)
22 motion.” Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010) (quoting
23 Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (internal quotation marks omitted)).
24 SLS asks the Court to judicially notice seven exhibits: (1) Deed of Trust recorded
25 on November 13, 2006; (2) Bankruptcy Court Order granting discharge under 11 U.S.C.
26 § 727 entered on April 7, 2009, in the United States Bankruptcy Court, Case No. 09-
27 00054-LA7; (3) Assignment of Deed of Trust recorded on October 28, 2021;
28 (4) Substitution of Trustee recorded on January 19, 2022; (5) Notice of Default and
1 Election to Sell Under Deed of Trust recorded on January 19, 2022; (6) Notice of
2 Trustee’s Sale recorded on May 11, 2022; and (7) Notice of Rescission of Notice of
3 Default recorded on June 10, 2022. See Doc. No. 13-1 (“SLS Exs.”) 1–7. RTR asks the
4 Court to judicially notice the same Notice of Rescission of Notice of Default recorded on
5 June 10, 2022 that SLS submits as Exhibit 7, see Doc. No. 14-2 (“RTR Ex.”) 1, and the
6 October 28, 2022 Assignment of Deed of Trust that SLS submits as Exhibit 3, see RTR
7 Ex. 3, as well as the HELOC Loan Agreement, see RTR Ex. 2.
8 The Court has already granted Defendants’ requests as to SLS’s Exhibits 1, 2, 3, 5,
9 6, and 7 and RTR’s Exhibits 1 and 3 and for those same reasons GRANTS their requests
10 here. See Doc. No. 11 at 5–6.3 As to SLS’s Exhibit 4, the Court finds that the January
11 19, 2022 Substitution of Trustee is a public record that is not in dispute, nor can
12 reasonably be questioned. See Koja, 899 F.3d at 999. Further, the Court finds that
13 Plaintiff incorporates the HELOC Loan Agreement, RTR’s Exhibit 2, by reference in the
14 First Amended Complaint. See, e.g., FAC ¶ 14. Accordingly, the Court GRANTS
15 Defendants’ requests as to these documents as well.
16 IV. DISCUSSION
17 By way of his First Amended Complaint, Plaintiff asserts the following claims:
18 (1) breach of contraction against RTR; (2) violation of California Civil Code § 2924c–d
19 against both Defendants; (3) violation of 12 U.S.C. § 2605 et seq. against RTR; and
20 (4) violation of California Unfair Competition Law, Cal. Civ. Code § 17200 et seq.
21 against both Defendants.4 Defendants SLS and RTR now move to dismiss all claims
22 against them. The Court addresses each claim as it relates to each Defendant in turn.
23
24
25
3 All citations to electronically filed documents refer to the pagination assigned by the CM/ECF system.
26 4 As SLS and RTR note, in the caption of the FAC, Plaintiff identifies a fifth cause of action for
violation of the Fair Debt Collection Practices Act. See Doc. No. 12 at 1. However, the Court
27 previously dismissed this cause of action with prejudice “[t]o the extent his claim is premised upon an
alleged violation of §§ 1692e(2)(A), 1692e(5), 1692e(10), and 1692f(1).” Doc. No. 11 at 19. Plaintiff
28
1 A. Breach of Contract
2 Plaintiff’s first cause of action is for breach of contract against RTR. RTR
3 contends that Plaintiff did not cure the defects noted in the Dismissal Order and advances
4 the following arguments: (1) it is not a party to the HELOC Loan Agreement;
5 (2) Plaintiff was in breach of the HELOC Loan Agreement prior to the time of RTR’s
6 alleged breach; and (3) the claim is time-barred. See Doc. No. 14-1 at 8–12.
7 To state a claim for breach of contract under California law, a plaintiff must allege:
8 “(1) the contract, (2) plaintiff’s performance or excuse for nonperformance,
9 (3) defendant’s breach, and (4) damage to plaintiff therefrom.” Wall Street Net., Ltd. v.
10 N.Y. Times Co., 80 Cal. Rptr. 3d 6, 12 (Ct. App. 2008).
11 As with the original Complaint, Plaintiff pleads that section 4 of the HELOC Loan
12 Agreement provides:
13
you will send me a periodic statement monthly . . . . The periodic statement
14
will show all Account activity during the billing cycle and contain other
15 important information including my “New Balance,” my Annual Percentage
Rate, the amount of my “Minimum Payment Due,” my “Payment Due Date”
16
and the place and manner of making payments.
17
18 FAC ¶ 14; id. ¶ 37. Plaintiff further pleads that RTR breached this provision by failing to
19 provide Plaintiff with any periodic statements. Id. ¶ 38.
20 In the Dismissal Order, the Court dismissed this claim for, among other things,
21 failure to plead that RTR was a party to the HELOC Loan Agreement. See Doc. No. 11
22 at 7. In response, Plaintiff now pleads the following:
23
On October 28, 2021, an Assignment of Deed of Trust was recorded with the
24
San Diego County Recorder’s Office wherein all beneficial interest under the
25 Deed of Trust was assigned to Defendant RTR. Thus, at least since October
28, 2021, Defendant RTR was a party to the Deed of Trust. However, Plaintiff
26
27
FDCPA claim. Thus, retention of this cause of action in the caption appears to have been an inadvertent
28
1 is informed and believes, and thereon alleges, that Defendant RTR has been a
party to the Deed of Trust since February 2010, when it became the servicer
2
of the Deed of Trust and that, as the servicer of the loan, RTR was the “you”
3 identified in Section 4 of the HELOC Loan Agreement that was required to
send periodic statements to Plaintiff.
4
5 FAC ¶ 38.
6 The Court disregards Plaintiff’s allegation that RTR is the “you” identified in
7 section 4 of the HELOC Loan Agreement. Plaintiff’s own allegations reveal that RTR
8 was not the original lender and thus not the “you” in 2006 when the Agreement was
9 executed. See FAC ¶ 17; see also RTR Ex. 2 (providing that the “you” in the HELOC
10 Loan Agreement refers to First Capital Group). Further, contrary to Plaintiff’s
11 contention, RTR did not become a party to the Deed of Trust in February 2010 when
12 Plaintiff alleges it became the servicer of the Loan. See Householder v. Specialized Loan
13 Servicing Llc, No. CV 21-1008-DMG (SKx), 2021 U.S. Dist. LEXIS 246712, at *9 (C.D.
14 Cal. June 3, 2021) (“[U]nder California law, a borrower cannot bring a claim for breach
15 of contract against a loan servicer based on the deed of trust because a loan servicer is not
16 a party to the deed of trust itself.”) (citing Conder v. Home Sav. of Am., 680 F. Supp. 2d
17 1168, 1174 (C.D. Cal. 2010)).
18 Even assuming the October 2021 assignment of the Deed of Trust made RTR a
19 party to the HELOC Loan Agreement, and thus obligated RTR to send periodic
20 statements, Plaintiff has not stated a breach of contract claim. “[I]t is elementary that one
21 party to a contract cannot compel another to perform while he himself is in default.”
22 Durell v. Sharp Healthcare, 108 Cal. Rptr. 3d 682, 697 (2010) (citations omitted).
23 Plaintiff admittedly breached the Agreement in 2009 when he stopped making mortgage
24 payments due to financial hardship. See FAC ¶ 15. The Court noted this defect in the
25 Dismissal Order. See Doc. No. 11 at 8–9. Yet Plaintiff still does not plead that he
26 resumed making payments at any time, let alone prior to the assignment. Thus, his
27 failure to perform under the contract appears to have taken place long before any alleged
28 breach by RTR.
1 Plaintiff does not cure this fatal defect by now pleading that his performance “was
2 excused by virtue of the fact that, by failing to send Plaintiff periodic statements, Plaintiff
3 was unable to make payments under the Deed of Trust,” or that RTR “interfered with
4 Plaintiff’s performance by failing to send Plaintiff the monthly statements.” FAC ¶ 40.
5 Under California law, one party’s material breach of a contract excuses the other party’s
6 duty to perform. See Brown v. Grimes, 120 Cal. Rptr. 3d 893, 902 (2011). However,
7 accepting Plaintiff’s factual allegations as true, he was in breach of the HELOC Loan
8 Agreement before RTR was assigned the Deed of Trust. That RTR did not send periodic
9 statements beginning October 2021 is not a plausible excuse for Plaintiff’s non-
10 performance beginning in 2009. See Lortz v. Connell, 78 Cal. Rptr. 6, 9 (1969).
11 Therefore, to the extent the HELOC Loan Agreement was breached, it appears from the
12 face of the pleadings that Plaintiff would be the party in breach, and RTR the party
13 discharged from performance. See James River Ins. Co. v. Medolac Labs., 290 F. Supp.
14 3d 956, 970 (C.D. Cal. 2018). Consequently, Plaintiff fails to plausibly allege his
15 performance or excuse for nonperformance prior to RTR’s alleged breach and therefore
16 fails to state a claim for breach of contract. Accordingly, the Court GRANTS RTR’s
17 motion on this basis and DISMISSES Plaintiff’s breach of contract claim. As it is clear
18 Plaintiff cannot cure this defect, dismissal is without leave to amend.
19 B. California Civil Code § 2924c–d
20 Plaintiff’s second cause of action is against both Defendants for violation of
21 California Civil Code § 2924c–d. The Court previously dismissed this claim “because
22 Plaintiff fail[ed] to plead that either RTR or SLS recorded a notice of default and/or sale
23 that included costs, expenses, or other amounts impermissible under California Civil
24 Code § 2924c–d.” Doc. No. 11 at 10.
25 As the Court noted in the Dismissal Order, “California Civil Code § 2924 et seq.
26 outlines the steps that make up a foreclosure proceeding in the state of California.”
27 Brewster v. Sun Tr. Mortg., Inc., 742 F.3d 876, 879 (9th Cir. 2014). “Civil Code sections
28 2924c and 2924d [ ] regulate costs that may be charged to a borrower only after notices
1 of default and sale have been recorded.” Walker v. Countrywide Home Loans, Inc., 121
2 Cal. Rptr. 2d 79, 90 (2002). Namely, California “Civil Code section 2924c refers to the
3 payment of the amount due as ‘shown in the notice of default,’” and section 2924d
4 delineates the specific costs and expenses that may be included for reinstatement. Id.;
5 Cal. Civ. Code, § 2924d. “After the notice of default is recorded, borrowers are
6 responsible only for the amounts stated in the notice of default plus specific costs and
7 expenses delineated by statute.” Id.
8 Plaintiff now alleges that on January 19, 2022, Defendants caused a Notice of
9 Default to be recorded against the Property, noting the amount in default was
10 approximately $106,000. FAC ¶ 52. Plaintiff asserts that this amount “was grossly
11 overinflated with fees and amounts not owed on the loan.” Id. Plaintiff contends he
12 nonetheless paid the reinstatement amount to avoid foreclosure. Id. ¶ 56.
13 As an initial matter, Plaintiff does not plausibly plead that SLS violated California
14 Civil Code sections 2924c–d. Plaintiff repeatedly asserts that “Defendants” caused the
15 Notice of Default to be recorded and demanded that Plaintiff pay impermissible amounts
16 to reinstate the Loan. See, e.g., FAC ¶¶ 51–53. However, this assertion is belied by the
17 judicially noticed records. Namely, the Deed of Trust was assigned to RTR, see SLS Ex.
18 3, RTR substituted ZBS Law, LLP as trustee, see SLS Ex. 4, and ultimately ZBS Law,
19 LLP recorded the Notice of Default, see SLS Ex. 5. Additionally, Plaintiff pleads that
20 ZBS Law was the foreclosure trustee acting on behalf of RTR, see FAC ¶ 28, not SLS.
21 Plaintiff’s conclusory allegations that SLS was involved in the foreclosure process are
22 insufficient. “Furthermore, this claim is not saved by Plaintiff’s agency allegations
23 because, again, they are nothing more than formulaic conclusion.” Morici v. HashFast
24 Techs. LLC, No. 5:14-cv-00087-EJD, 2015 U.S. Dist. LEXIS 24251, at *16 (N.D. Cal.
25 Feb. 27, 2015). Accordingly, the Court GRANTS SLS’s motion and DISMISSES
26 Plaintiff’s second cause of action against SLS without leave to amend.
27 Turning to RTR, the factual basis of Plaintiff’s claim is not clear. Plaintiff again
28 summarily alleges that RTR violated sections 2924c–d by “demanding from Plaintiff
1 exorbitant amounts in arrears,” FAC ¶ 51, and including in the Notice of Default an
2 amount that was “grossly overinflated with fees and amounts not owed on the loan, id.
3 ¶ 52. This is insufficient.
4 Neither section 2924c nor 2924d regulate charges, costs, or fees that are incurred
5 before recordation of a notice of default or notice of sale. See Walker, 121 Cal. Rptr. 2d
6 at 90. Instead, they limit charges incurred after a notice of default or sale are recorded—
7 i.e., those costs associated with the foreclosure process. For example, section 2924c
8 provides that a mortgagor may cure a default by paying the amount in default plus
9 “reasonable costs and expenses” to reinstate the loan. See id. at 89. Under this section,
10 “[t]he reasonable costs and expenses to which the mortgagor is limited to recovering are
11 those ‘incurred for recording, mailing, including certified and express mail charges,
12 publishing, and posting notices . . . and a fee for a trustee’s sale guarantee or, in the event
13 of judicial foreclosure, a litigation guarantee.’” Id. at 89–90 (quoting Cal. Civ. Code,
14 § 2924c(c)). “[S]ection 2924d also contains this limitation on the reasonable costs a
15 lender may charge to a borrower seeking to redeem property after a notice of sale has
16 been recorded.” Id. at 90.
17 Nothing in these sections regulate costs and fees associated with the pre-
18 recordation default. See Jones v. Union Bank of Cal., 25 Cal. Rptr. 3d 783, 788 (Cal. Ct.
19 App. 2005) (“Civil Code sections 2924c and 2924d provide for maximum sums that may
20 be claimed as expenses of foreclosing on the property. These maximum amounts do not
21 include other costs, including legal fees, which may be incurred by a creditor in
22 protecting the security.”); see also See Walker 121 Cal. Rptr. 2d at 90 (citing Bruntz v.
23 Alfaro, 260 Cal. Rptr. 488, 494 (Cal. Ct. App. 1989) (explaining that section 2924c limits
24 costs and trustee’s or attorney’s fees which may be claimed as foreclosure expenses, but
25 does not limit other expenses “incurred for other purposes”)). For example, it is well-
26 settled that these sections do not limit or otherwise prohibit charging a borrower the
27 attorney’s fees incurred in pre-recordation protection of the obligation as a condition of
28 reinstatement. See Walker, 121 Cal. Rptr. 2d at 90. Additionally, as Plaintiff recognizes,
1 section 2924c expressly permits inclusion of all reasonable costs and expenses that are
2 actually incurred in enforcing the terms of the obligation, deed of trust, or mortgage as a
3 condition of reinstatement. See FAC ¶ 49. Thus, to the extent Plaintiff challenges the
4 accounting of arrears included in the $106,470.73 reinstatement amount in the Notice of
5 Default or other pre-recordation costs or fees charged, see FAC ¶ 52 (asserting that the
6 reinstatement amount included “fees and amounts not owed on the loan”); id. ¶ 54
7 (alleging that Defendants continued with the foreclosure process “on an inaccurate
8 default and after having made inflated demands”), sections 2924c–d are not the
9 appropriate vehicle. In order to state a claim under sections 2924c or 2924d, Plaintiff
10 must plausibly allege that the Notice of Default and/or Notice of Sale stated amounts that
11 included post-recordation fees and costs associated with foreclosure that exceed what is
12 authorized under those statutes. Fatally, Plaintiff does not. See Dandridge v. Select
13 Portfolio Servicing, Inc., No. EDCV 22-985-GW-SHKx, 2022 U.S. Dist. LEXIS 186916,
14 at *22 (C.D. Cal. Oct. 12, 2022) (dismissing claim where the plaintiff “fail[ed] to allege
15 any facts pertaining to the circumstances of the ‘grossly inflated’ amount”).
16 It is abundantly clear that Plaintiff seeks to challenge the amount he paid to
17 reinstate his HELOC. See Doc. No. 15 at 10 (arguing in opposition that Plaintiff has
18 stated a claim under section 2924c because RTR recorded a Notice of Default with an
19 inaccurate statement of arrears). However, Plaintiff does not argue or plausibly assert
20 that the recorded notices contained post-recordation foreclosure-related charges. Plaintiff
21 contends in opposition that he has no obligation to “know the precise amount” that was
22 required to reinstate the loan and asserts that he is unable to plead such information
23 because “RTR has failed to provide the account history and detailed reinstatement
24 quote.” Doc. No. 15 at 10. However, the allegation that an amount charged for
25 reinstatement is “exorbitant,” see FAC ¶ 51, does not factually or plausibly support the
26 claim that the notices stated amounts that included specific charges limited under a
27 particular statute. Rather, these allegations are conclusory and do not state a claim under
28 sections 2924c–d. See Iqbal, 556 U.S. at 678. Consequently, the Court GRANTS RTR’s
1 motion and DISMISSES Plaintiff’s second cause of action. Because it is clear Plaintiff
2 cannot cure this defect, dismissal is without leave to amend.5
3 C. 12 U.S.C. § 2605
4 Plaintiff’s third cause of action is against RTR for violation of the Real Estate
5 Settlement Procedures Act of 1974, 12 U.S.C. § 2601 et seq. (“RESPA”). RESPA
6 imposes certain duties on loan servicers regarding borrowers’ accounts and in response to
7 their inquiries. See generally 12 U.S.C. § 2605. In particular, § 2605(e) creates a private
8 right of action for the failure by a loan servicer to comply with the statutory requirements
9 in responding to a QWR for information about the servicing of a loan. 12 U.S.C.
10 § 2605(e).
11 RTR is correct that Plaintiff’s October QWR is time-barred. See Doc. No. 14-1 at
12 13. In the Dismissal Order, the Court held that this QWR and RTR’s corresponding
13 response are untimely given the statute’s three-year statute of limitations. See Doc.
14 No. 11 at 12. The Court will not revisit that holding here.
15 Plaintiff now pleads that RTR responded to his second QWR in June 2019, see
16 FAC ¶ 64, and to his third QWR sometime after October 2021, see id. ¶ 65. These
17 allegations are facially timely. Plaintiff also now adequately pleads specific damages.
18 See id. ¶ 68.
19 The Court previously dismissed Plaintiff’s RESPA claim because, among other
20 things, he failed to plead what information he sought and that RTR did not explain why
21 such information was not available. See Doc. No. 11 at 14. Plaintiff now alleges that he
22 requested specific information, including “identities of the investors, records of transfers
23 and assignments of investor rights, amoritization schedules associating with the original
24 loan and showing the accrual accounting on the original interest rate of the loan,
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27 5 This ruling is without prejudice to Plaintiff filing a properly supported motion for leave to amend
should discovery produce evidence supporting a cause of action related to the accounting and/or
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1 documents relating to servicing transfers of the loan.” FAC ¶ 61. Plaintiff pleads that “a
2 significant amount of the requested information was not addressed in the handful of
3 documents produced by RTR.” Id. ¶ 61.
4 It is not enough that RTR did not provide all of the requested information. RESPA
5 mandates that the servicer either provide all information in its possession that is
6 responsive to a request related to the servicing or explain in writing why such
7 information is unavailable. 12 U.S.C. § 2605(e)(2)(C); see also Hueso v. Select Portfolio
8 Servicing, Inc., 527 F. Supp. 3d 1210, 1223 (S.D. Cal. 2021). Plaintiff does not
9 specifically plead that RTR did not explain in writing why certain information requested
10 was unavailable. In fact, Plaintiff pleads that RTR offered some explanation: that it
11 “cannot speak to the servicing of this account prior to its transfer to our company.” FAC
12 ¶ 62. This appears to be a written response explaining why some information was not
13 provided. Moreover, the Court agrees with RTR that some of the information requested
14 does not appear to relate to the servicing of the Loan. See Doc. No. 14-1 at 15.
15 That said, Plaintiff plausibly pleads a RESPA violation. Although he does not
16 detail what RTR failed to provide, he alleges that RTR did not address a significant
17 amount of the requested information. See FAC ¶ 62. He also asserts, for example, that
18 RTR provided three pages of a seventeen (17) page Collection Agreement with
19 redactions. See id. ¶ 66. Plaintiff contends that this was an incomplete production, see
20 id., and as pleaded, RTR’s written response does not explain why the entirety of the
21 document was unavailable.
22 RTR argues that it was not required to provide the Collection Agreement, see Doc.
23 No. 14-1 at 14, and the parties dispute the application of the Consumer Financial
24 Protection Bureau’s Regulation X, 12 C.F.R. § 1024.36. A request for information about
25 the identity of the servicer by seeking “documents related to the servicing transfers of the
26 loan,” FAC ¶ 61, would appear to fall squarely within the category of “information
27 relating to loan servicing,” 12 U.S.C. § 2605(e)(1)(A); see also Hueso, 527 F. Supp. 3d at
28 1222. However, the Court declines to reach the issue of whether RTR was required to
1 provide an entire copy of this document as it is better suited for summary judgment. It is
2 sufficient to survive dismissal that Plaintiff pleads he requested information from RTR
3 that appears related to the servicing of the Loan, that RTR did not provide all of the
4 requested information within its possession, and that RTR’s written response did not
5 explain why certain information it did not provide was unavailable. Accordingly, the
6 Court DENIES RTR’s motion as to Plaintiff’s RESPA claim.
7 D. California Business and Professions Code § 17200
8 Fourth, Plaintiff alleges that both Defendants violated California’s Unfair
9 Competition law, California Business and Professions Code § 17200 et seq. (“UCL”). As
10 the Court previously noted, the UCL prohibits three types of conduct: “unlawful,”
11 “unfair,” and “fraudulent.” See Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel.
12 Co., 20 Cal. 4th 163, 180 (Cal. 1999) (quoting Podolsky v. First Healthcare Corp., 58
13 Cal. Rptr. 2d 89, 98 (1996)) (“Because Business and Professions Code section 17200 is
14 written in the disjunctive, it establishes three varieties of unfair competition—acts or
15 practices which are unlawful, or unfair, or fraudulent.”); see also Davis v. HSBC Bank
16 Nevada, N.A., 691 F.3d 1152, 1168 (9th Cir. 2012) (same).
17 Plaintiff summarily pleads that he brings his UCL claim pursuant to all three
18 prongs, see FAC ¶ 70, however substantively, he only pleads an unlawful UCL violation,
19 see id. ¶¶ 71–74. Under the unlawful prong, the UCL “borrows violations of other laws
20 and treats them as unlawful practices that the unfair competition law makes
21 independently actionable.” Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co.,
22 20 Cal. 4th 163, 180 (Cal. 1999) (internal quotations omitted).
23 The Court GRANTS SLS’s motion and DISMISSES Plaintiff’s UCL claim
24 against SLS without leave to amend, as Plaintiff has not pleaded any predicate claim
25 against SLS. Further, as explained above, Plaintiff has stated a RESPA claim against
26 RTR and therefore, has plausibly stated a claim for violation of the unlawful prong of
27 California’s UCL against it. Accordingly, the Court DENIES RTR’s motion on this
28 basis.
V. CONCLUSION
2 For the foregoing reasons, the Court GRANTS Defendant SLS’s motion and
3 GRANTS IN PART Defendant RTR’s motion. Specifically, the Court DISMISSES
4 || Plaintiff's California Civil Code § 2924c—d claim and UCL claim against SLS without
5 ||leave to amend. The Court DISMISSES Plaintiffs breach of contract claim and
6 || California Civil Code § 2924c—d claim against RTR without leave to amend. Finally,
7 Court DENIES RTR’s motion as it relates to Plaintiffs RESPA and UCL claims
8 |;}against RTR. RTR must file and serve its Answer on or before March 10, 2023.
9 IT IS SO ORDERED.
10 || Dated: February 24, 2023
MWMaikuh M=-/ hipllr
12 HON. MICHAEL M. ANELLO
13 United States District Judge
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