Opinion
For Sandra Turner, Kim Turner, Plaintiffs: Alysson Russell Snow, LEAD ATTORNEY, Legal Aid Society of San Diego Inc, San Diego, CA; Laurel Carnes, LEAD ATTORNEY, Legal Aid Society of San Diego, San Diego, CA.
For Ocwen Loan Servicing, LLC, Defendant: Gabriel Ozel, LEAD ATTORNEY, Houser & Allison, APC, Carlsbad, CA.
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS [DOC. 8]
M. James Lorenz, United States District Judge.
Pending before the Court is Defendant Ocwen Loan Servicing, LLC's (" Ocwen") Motion to Dismiss Plaintiffs Sandra and Kim Turner's (the " Turners") First Amended Complaint (" FAC"). Def.'s Mot. Dismiss, ECF No. 8. The motion is fully briefed. Pls.' Opp'n, ECF No. 9; Def.'s Reply, ECF No. 10. The Court decides the matter on the parties' briefs and the record without oral argument. CivLR 7.1(d.1). For the reasons discussed below, the Court GRANTS IN PART and DENIES IN PART Ocwen's motion.
I. Background
According to the FAC, the Turners reside at their home, located at 4617 Del Monte Avenue, San Diego, California, 92107 (the " Property"). First Am. Compl. ¶ 12, ECF No. 5. The Turners purchased the Property in 1997, and refinanced their home loan in 2003 with a loan (the " Loan") from Option One Mortgage Corporation (" Option One"). Id. ¶ 13. In January 2013, the Turners entered into a forbearance agreement with Homeward Residential, Inc. (" Homeward"), the company which was servicing the Loan at the time. Id. ¶ 15. Under the terms of the forbearance agreement, the Turners agreed to make a down payment of $3,500.00 and monthly payments in the amount of $2,265.45 for the following year thereafter. Id. On January 11, 2013, pursuant to the forbearance agreement, the Turners made a payment of $3,500.00. Id. ¶ 16. On February 5, 2013, as agreed upon, the Turners made a monthly payment for $2,265.45. Id.
On February 19, 2013, Defendant Ocwen began servicing the Loan, and continued to do so until December 31, 2013. Id. ¶ 19. On February 22, 2013, the Turners received their first billing statement from Ocwen, which erroneously stated that a forbearance payment of $2,076.67 was past due and that there had been no transactions since the January statement. Id. ¶ 20. This billing statement also inaccurately listed Plaintiffs' monthly payment amount. Id.
As a result of Ocwen's inaccurate billing, the Turners were assessed $102.33 in late fees for February 2013. Id. ¶ 22. When the Turners were unable to pay the combined amount Ocwen claimed they owed in February and March of 2013, the Turners defaulted on their loan. Id. ¶ 23. At the time of the alleged default, they held equity in their home. Id. ¶ 24. The Turners disputed the amounts owed in multiple phone calls with Ocwen. Id. ¶ 25.
On August 16, 2013, the Turners sent Ocwen a Qualified Written Request (" QWR") via certified mail pursuant to the Real Estate Settlement Procedures Act (" RESPA"). Id. ¶ 26. The QWR " included the names of the borrowers, the loan account number, [] the address of the property . . .a statement of the reasons for the belief of the borrowers that the account was in error . . . [and] sufficient detail to [Ocwen] regarding the information sought by the borrowers." Id. ¶ 27. Specifically, the QWR disputed the amount owed as of the most recent Ocwen billing statement (April 24, 2013), indicated that Ocwen did not properly credit the February 2013 payment, and requested addition information regarding the servicing of the Loan. Id. ¶ ¶ 28, 29, 30.
On August 23 and August 27, 2013, Ocwen responded to the QWR, but did not correct the Turners' account or provide them with a written explanation as to why Ocwen believed the account was correct. Id. ¶ ¶ 31, 32. Moreover, Ocwen's response did not provide the Turners all the information they requested. Id. ¶ 33.
On October 21, 2013, the Turners sent Ocwen another QWR, including " a statement of the reasons for the belief of the borrowers that the account was in error and provided sufficient detail to Defendants regarding information sought by the borrowers." Id. ¶ ¶ 35, 36. On October 30, 2013, Ocwen sent the Turners a response to the second QWR, which the Turners again found insufficient. Id. ¶ ¶ 38-41.
On December 31, 2013, the Turners entered into a " Home Equity Conversion Mortgage (HECM)" secured by the Property. Id. ¶ 42. Under the HECM, " funds were disbursed to [Ocwen] to fully discharge [the Turners'] obligations under" the Loan. Id. Included in this disbursement was $5,765.45 in payments and $102.33 in late fees which the Turners contend were improper, and thus never owed. Id. ¶ ¶ 43, 72-74.
On February 19, 2014, the Turners filed the instant action in California state court. Compl., ECF No. 1-2. On March 21, 2014, the matter was removed to this Court. Notice of Removal, ECF. No. 1. On March 28, 2014, Ocwen filed a motion to dismiss. Def.'s First Mot. Dismiss, ECF. No. 4. On April 18, 2014, the Turners filed their First Amended Complaint (" FAC"), rendering the pending motion to dismiss moot. First Am. Compl., ECF No. 5.; Order Dismissing Motion As Moot, ECF No. 11.
The FAC includes four causes of action for: (1) violations of the Real Estate Settlement Procedures Act (" RESPA"), 12 U.S.C. 2601, et seq .; (2) violations of the California Rosenthal Fair Debt Collection Practices Act (" RFDCPA"), Cal. Civ. Code. § § 1788, et seq .; (3) conversion; and (4) violations of the Business and Professions Code § 17200, et seq . First Am. Compl., 7, 8, 10. On May 2, 2014, Ocwen filed the instant motion to dismiss, arguing that all of the Turners' claims are insufficiently plead. Def.'s Mot. Dismiss, ECF No. 8-1; Def.'s Reply, ECF No. 10. The Turners oppose. Pls.' Opp'n, ECF No. 9.
II. Legal Standard
Courts must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory or for insufficient facts under a cognizable theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). In ruling on the motion, a court must " accept all material allegations of fact as true and construe the complaint in a light most favorable to the non-moving party." Vasquez v. L.A. Cnty., 487 F.3d 1246, 1249 (9th Cir.2007).
However, the courts are not " required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001). " While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Instead, the allegations in the complaint must " contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 570). " The plausibility standard is not akin to a 'probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id.
Generally, courts may not consider material outside the complaint when ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990). However, courts may consider documents specifically identified in the complaint whose authenticity is not questioned by parties. Fecht v. Price Co., 70 F.3d 1078, 1080 n. 1 (9th Cir.1995) (superceded by statutes on other grounds). Moreover, courts may consider the full text of those documents, even when the complaint quotes only selected portions. Id. Courts may also consider material properly subject to judicial notice without converting the motion into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir.1994) (citing Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), abrogated on other grounds by Astoria Fed. Sav. and Loan Ass'n v. Solimino, 501 U.S. 104, 111 S.Ct. 2166, 115 L.Ed.2d 96, (1991)).
III. Discussion
A. Ocwen's Request for Judicial Notice
Ocwen seeks judicial notice of five documents: (1) a Deed of Trust recorded on April 22, 2003 in San Diego, (2) a Long Form Deed of Trust and Assignment of Rents for Home Equity Revolving Line of Credit recorded on November 8, 2004 in San Diego, (3) the Notice of Default and Election to Sell Under Deed of Trust recorded on May 9, 2013 in San Diego, (4) the Adjustable Home Equity Conversion Deed of Trust recorded on January 7, 2014 in San Diego, and (5) the Adjustable Home Equity Conversion Second Deed of Trust recorded January 7, 2014 in San Diego. Defs.' RJN, ECF No. 8-2. The Turners do not oppose. The Court may take notice of facts that are " not subject to reasonable dispute in that [they are] ... capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably questioned." Fed.R.Evid. 201(b)(2). Because the documents are matters of public record, and their accuracy is not subject to reasonable dispute, the Court GRANTS Ocwen's request and takes notice of each of them. See Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n. 6 (9th Cir.2006).
B. Ocwen's Motion to Dismiss
1. The Turner's RESPA Claims
Ocwen contends that the Turner's RESPA claims are insufficiently plead. Specifically, Ocwen argues that the Turner's allegations that Ocwen failed to appropriately respond to their QWRs are insufficient because they do not indicate what information that Ocwen provided was " incomplete or incorrect" nor " why it was incorrect." Def.'s Mot. Dismiss, 5. In addition, Ocwen suggests that the Turner's allegations are conclusory and that their claims should be dismissed because they fail to attach the QWRs to the FAC, or to fully set forth their contents. Id., 6. Lastly, Ocwen contends that the Turners fail to adequately plead entitlement to statutory damages. Id., 7-10.
RESPA requires the servicer of a federally related mortgage loan to provide a timely written response to " qualified written requests" from borrowers regarding the servicing of their loans. 12 U.S.C. § 2605(e)(1)(A), (e)(2). If the servicer fails to respond properly to such a request, the statute entitles the borrower to recover actual damages and, if there is a " pattern or practice of noncompliance, " statutory damages of up to $1,000. Id. § 2605(f). RESPA defines a " qualified written request" as follows:
For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that--
(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.
12 U.S.C. § 2605(e)(1)(B). Under § 2605(e)(1)(A), a servicer must respond to such a letter if it requests or challenges " information relating to the servicing of such loan." Id. § 2605(e)(1)(A), (e)(2).
The statute does not explicitly require any " magic" words, and an interpretation according to which it did so implicitly would be inconsistent with Congress' intent that the statute serve a broad remedial purpose. Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 666 (9th Cir. 2012). " Instead, under § 2605(e), a borrower's written inquiry requires a response as long as it (1) reasonably identifies the borrower's name and account, (2) either states the borrower's " reasons for the belief ... that the account is in error" or " provides sufficient detail to the servicer regarding other information sought by the borrower, " and (3) seeks " information relating to the servicing of [the] loan." 12 U.S.C. § 2605(e)(1)(A)-(B)
As an initial matter, it is not a requirement that a putative RESPA plaintiff attach a purported QWR to the complaint. Nonetheless, Ocwen advances the meritless argument that because the Turners failed to attach their purported QWRs to the FAC, their claim should be dismissed " [o]n this basis alone." Def.'s Mot. Dismiss, 6. The cases Ocwen relies on for this assertion, Williams v. Wells Fargo Bank, N.A., 2012 WL 72727 (W.D. Wash. Jan. 10, 2012) and Lettenmaier v. Fed. Home Loan Mortg. Corp., 2011 WL 3476648, at *12 (D. Or. Aug. 8, 2011), are inapposite. Even a cursory review of these cases shows that Ocwen's argument is disingenuous at best. See Williams, 2012 WL 72727, at *7 (" The amended complaint does not attach the QWR or otherwise alleged its date, its contents, or subject matter, or any other pertinent information, including which, if any, of the Defendants is the 'loan servicer' subject to the claim ") (emphasis added); see also Lettenmaier, 2011 WL 3476648, * 12 (" Plaintiffs' allegation that they made a QWR upon Wells Fargo . . . is insufficient . . . because plaintiffs fail to attach a copy of their correspondence to the Complaint or to allege facts showing that the communication concerned servicing of the loan as defined by the statute .") Counsel is reminded that maintaining the integrity and competence of the legal profession requires candor to the Court and opposing counsel. Model Rules of Prof'l Conduct R. 3.1, 3.3, 8.4 (2013).
The Turner's allegations with respect to the first purported QWR are sufficient, at this stage of the proceedings. They identify the name and account of the borrower, as well as the reasons why the Turners believed the account was in error. First Am. Compl. ¶ ¶ 27, 28, 29, 30, 47, 49. Ocwen claims these allegations are conclusory. Def.'s Mot. Dismiss 13. However, the FAC specifically identifies " the reasons for the belief of the borrower, to the extent applicable, that the account is in error." 12 U.S.C. § 2605(e)(1)(B); First Am Compl. ¶ ¶ 29.
The same is true for the second purported QWR. Although the allegations are sparse, the allegations are sufficient to put Ocwen on notice of the Turners' claims. First. Am. Compl. ¶ ¶ 36, 37. Therefore, Ocwen's motion to dismiss is DENIED to the extent it suggests that the Turners failed to properly allege that they sent Ocwen QWRs.
Ocwen next argues that the Turner's RESPA claims under 12 U.S.C. § 2605(e) fail because they fail to properly plead actual damages. Def.'s Mot. Dismiss, 8. Specifically, Ocwen claims that Turner's damage allegations are conclusory and unsupported by any facts. Id. However, the Turner's have alleged concrete financial damages in the amount of $5,765.45 plus late fees. First Am. Compl. ¶ 54. The Turners also allege that these damages were the result of Ocwen's failure to properly respond to their QWRs and failure to investigate and correct the alleged billing errors. Id. ¶ ¶ 33, 52. This is sufficient to allege actual damages. Mashiri v. Ocwen Loan Servicing, LLC, 2013 WL 5797584, at * 7 (S.D. Cal. October 28, 2013). Therefore, Ocwen's motion is DENIED to the extent it suggests the Turner's allegations of actual damages are insufficient.
Ocwen also challenges the Turner's allegations of statutory damages, claiming that they simply allege in conclusory fashion that Ocwen engaged in a " pattern or practice of noncompliance." Def.'s Mot. Dismiss, 8. Although sparse, the Turner's factual allegations are sufficient to make their claims of a " pattern or practice" plausible on their face. The Turners complain of two separate incidents where Ocwen failed to provide any meaningful response to their QWRs. First Am. Compl. ¶ ¶ 32, 33, 39, 40. Reading the FAC in a manner most favorable to Plaintiff, it is plausible that Ocwen had a practice of providing insufficient responses to QWRs. Therefore, Ocwen's motion is DENIED to the extent it suggests the Turner's allegations entitling them to statutory damages are insufficient.
Ocwen also appears to argue that the Turner's RESPA claims based on " emotional distress" should be dismissed. However, Ocwen fails to point to where the Turner's RESPA claim mentions " emotional distress." Nonetheless, some general allegations of emotional distress do appear in the FAC. First Am. Compl. ¶ ¶ 44. The Turners fail to provide any allegations of a causal relationship between the alleged emotional distress they suffered and Ocwen's alleged RESPA violations. So, to the extent that the Turner's RESPA claims were based on emotional distress, they are DISMISSED WITHOUT PREJUDICE.
2. The Turner's FDCPA and RFDCPA Claims
Ocwen next argues that " because non-judicial foreclosures are exempt from the Federal and Rosenthal Fair Debt Collection Practice Acts (" FDCPA" and " RFDCPA" respectively), " these claims should be dismissed. Def.'s Mot. Dismiss, 10. Ocwen also claims that the Turners " fail to allege how Ocwen is a 'debt collector' under the RFDCPA or FDCPA." The Turners refute these claims, but only with respect to the RFDCPA. Id.
Ocwen is correct with respect to the FDCPA. The FDCPA does not govern efforts by creditors collecting their own debts. 15 U.S.C. § 1692a(6). Moreover, the term debt collector does not include " any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity . . . (ii) concerns a debt which was originated to such person; (iii) concerns a debt which was not in default at the time it was obtained by such person..." U.S.C. § 1692a(6)(F). There is no dispute here that Ocwen is exempt from the FDCPA in this matter as they are the predecessor in interest to Option One Mortgage, the originator of the debt in question. First Am. Compl. ¶ ¶ 13-17. Therefore, Ocwen motion to dismiss the Turner's FDCPA claims is GRANTED and these claims are DISMISSED WITH PREJUDICE.
It appears from review of the FAC that the Turners do not make any FDCPA claims. However, both parties argue as if some FDCPA claims are asserted in the FAC. So, in an abundance of caution, this order addresses such claims, to the extent that they exist.
On the other hand, the Turners have sufficiently plead that Ocwen is a " debt collector" under the RFDCPA. " The definition of the 'debt collector' under the [Rosenthal Act] is broader than under the [FDCPA] and includes any person who, 'in the ordinary course of business, ' collects a debt 'on behalf of himself or herself or others.'" Horton v. California Credit Corp. Retirement Plan, 835 F.Supp.2d 879, 890 (S.D. Cal. December 7, 2011) (citing Cal. Civ. Code § 1788.2(c)); see 15 U.S.C. § 1692a(6) (" The term 'debt collector' means any person who . . . regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another ")(emphasis added).
The Turners explicitly allege that Ocwen collects " debts, either on behalf of themselves or others, in the regular and ordinary course of business." First Am. Compl. ¶ 56. Those allegations, along with the specific allegations of Ocwen's collection practices discussed above, are sufficient at this stage of the proceedings to establish that Ocwen is a " debt collector" under the RFDCPA.
Moreover, " the Rosenthal Act does not categorically bar all claims based on a debt collector's communications in connection with a debt secured by a residential mortgage loan." Lopez v. AM Solutions, LLC, 13-cv-1689-SVW-SP, 2014 WL 1272773, *3 (C.D. Cal. March 3, 2014). In light of the foregoing, Ocwen's motion to dismiss the Turner's RFDCPA claims is DENIED.
3. The Turner's Conversion Claim
Ocwen also moves to dismiss the Turner's conversion claim on the grounds that " they do not allege a wrongful act over their personal property." Def.'s Mot. Dismiss, 13. Specifically, Ocwen contends that the Turner's have failed to allege that Ocwen is an agent and that conversion cannot be based on a demand for a refund. Id. at 15. The Court disagrees.
" 'Conversion is the wrongful exercise of dominion over the property of another.'" The elements of a claim for conversion are (1) " the plaintiff's ownership or right to possession of the property at the time of the conversion, " (2) " the defendant's conversion by a wrongful act or disposition of property rights, " and (3) damages. " It is not necessary that there be a manual taking of the property, " only " an assumption of control or ownership over the property, or that the alleged converter has applied the property to his [or her] own use." Prakashpalan v. Engstrom, Lipscomb and Lack, 223 Cal.App.4th 1105, 1135, 167 Cal.Rptr.3d 832 (2nd Dist. 2014) (citations omitted). A cause of action for conversion of money can be stated only where defendant interferes with plaintiff's possessory interest in a specific, identifiable sum, such as when a trustee or agent misappropriates the money entrusted to him. McKell v. Washington Mut., Inc., 142 Cal.App.4th 1457, 1492, 49 Cal.Rptr.3d 227 (2006). " 'Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment.'" Kim v. Westmoore Partners, Inc., 201 Cal.App.4th 267, 284, 133 Cal.Rptr.3d 774 (4th Dist.2011) (citations omitted).
First, there is no requirement that a plaintiff must allege that a defendant was an agent for a conversion claim to survive. In McKell,, the court used agent misappropriation as an example of conversion of a identifiable sum of money. 142 Cal.App.4th at 1492. The case does not hold that agent misappropriation is the only conversion claim that lies for a sum certain. See id. Second, the Turners assert that pursuant to their Loan and forbearance agreement, they entrusted a specific sum of money to Ocwen, which it was to use for a specific purpose-to credit to their mortgage account. First Am. Compl. ¶ ¶ 70, 74. The Turners assert that instead of doing so, Ocwen kept the money and is refusing to return it. Id. ¶ 73. This states a claim for conversion, so Ocwen's motion to dismiss with respect to the conversion claim is DENIED.
4. The Turner's Business and Professions Code Claim
Finally, Ocwen maintains that the Turners Business and Professions Code claims should be dismissed because (1) they are premised on insufficient allegations, (2) the Turners failed to allege a substantial injury, and (3) the Turners failed to allege that Ocwen's acts were fraudulent or deceptive. Def.'s Mot. Dismiss 16-19.
Ocwen's first argument is premised on the failure of the Turner's claims at the pleading stage. The Court has not dismissed all of the Turner's previous claims. However, some claims have been dismissed, either with or without prejudice. Therefore, the Court GRANTS IN PART Ocwen's motion and DISMISSES the Turner's Business and Professions Codes claims which were premised on their dismissed claims above. The motion is otherwise DENIED, for the following reasons.
Ocwen's second and third arguments are without merit. The Turner's have alleged a substantial injury, namely $5,765.45 in payments and $102.33 in late fees. Ocwen provides no authority that this amount of money is not " substantial" with respect to UCL jurisprudence.
In addition, the Turner's have sufficiently alleged that members of the public are likely to be deceived by Ocwen's practices. The term " fraudulent" as used in Business and Professions Code section 17200 requires only a showing that members of the public are likely to be deceived. Committee on Children's Television, Inc. v. General Foods Corp., 35 Cal.3d 197, 211, 197 Cal.Rptr. 783, 673 P.2d 660 (1983). Unlike common law fraud, a section 17200 violation can be shown even without allegations of actual deception, reasonable reliance and damage. Id. Here, the Turners allege that Ocwen " misrepresented to Plaintiffs that non-judicial foreclosure proceedings were being conducted on their property" and " misrepresented to Plaintiffs the amount owed under their loan." First. Am. Compl. ¶ 82. They specifically allege that this " provided Plaintiffs with the false impression that Defendants were pursuing non-judicial foreclosure of their home." Id. ¶ 65. This is sufficient to state claim based upon deception, and the same allegations suffice to state a claim under the unfairness prong of the UCL, as " a practice which is deceptive is necessarily unfair." Blakemore v. Superior Court, 129 Cal.App.4th 36, 49, 27 Cal.Rptr.3d 877 (2005).
IV. Conclusion
In light of the foregoing, Ocwen's motion to dismiss is GRANTED IN PART and DENIED IN PART. The FAC is dismissed WITH LEAVE TO AMEND in part, but only as indicated above.
IT IS SO ORDERED.