Rovai v. Select Portfolio Servicing, Inc.

MOTION to Dismiss for Lack of Jurisdiction

S.D. Cal.May 22, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3:14-cv-01738-BAS-WVG JENNIFER L. GRAY (State Bar No. 287855) Jennifer.gray@gtlaw.com GREENBERG TRAURIG, LLP 1840 Century Park East, Suite 1900 Los Angeles, California 90067-2121 Telephone: (310) 586-7700 Facsimile: (310) 586-7800 Attorneys for Defendant Select Portfolio Servicing, Inc. UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA ADRIANA ROVAI, individually, and on behalf of the class of all others similarly situated, Plaintiff, v. SELECT PORTFOLIO SERVICING, INC., Defendant. CASE NO. 3:14-cv-01738-BAS-WVG DEFENDANT SELECT PORTFOLIO SERVICING, INC.’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT PURSUANT TO FED. R. CIV. P. 12(b)(1) [NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT] Judge: Hon. Cynthia Bashant Date: June 26, 2017 Location: Courtroom 4B Action Filed: July 24, 2014 Case 3:14-cv-01738-BAS-WVG Document 44 Filed 05/22/17 PageID.815 Page 1 of 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 3:14-cv-01738-BAS-WVG TO THE COURT, PLAINTIFF, AND COUNSEL OF RECORD: PLEASE TAKE NOTICE THAT on June 26, 2017, or as soon thereafter as the matter may be heard before the Hon. Cynthia Bashant in Courtroom 4B of the United States District Court, Southern District of California, at 221 West Broadway, Suite 4145, San Diego, CA 92101, Defendant Select Portfolio Servicing, Inc., will and hereby does move the Court pursuant to Federal Rule of Civil Procedure 12(b)(1), for an order dismissing Plaintiff’s First Amended Complaint for lack of subject matter jurisdiction, based upon Plaintiff’s lack of Article III standing. The Court should grant the Motion without leave to amend because further amendment would be futile. This Motion is made and based upon this Notice of Motion, the accompanying Memorandum of Points and Authorities, all pleadings, and such other written and oral argument as the Court may entertain. DATED: May 22, 2017 Respectfully submitted, GREENBERG TRAURIG, LLP By /s/ Jennifer L. Gray__________________ Jennifer L. Gray Attorneys for Defendant Select Portfolio Servicing, Inc. Case 3:14-cv-01738-BAS-WVG Document 44 Filed 05/22/17 PageID.816 Page 2 of 2 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNIFER L. GRAY (State Bar No. 287855) jennifer.gray@gtlaw.com GREENBERG TRAURIG, LLP 1840 Century Park East, Suite 1900 Los Angeles, California 90067 Telephone: (310) 586-7700 Facsimile: (310) 586-7800 Attorneys for Defendant Select Portfolio Servicing, Inc. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA ADRIANA ROVAI, individually, and on behalf of the class of all others similarly situated, Plaintiff, v. SELECT PORTFOLIO SERVICING, INC., Defendant. CASE NO. 3:14-cv-1738-BAS-WVG MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT SELECT PORTFOLIO SERVICING, INC.’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT PURSUANT TO FED. R. CIV. P. 12(b)(1) [NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT] Judge: Hon. Cynthia Bashant Date: June 26, 2017 Location: Courtroom 4B Action filed: July 24, 2014 Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.817 Page 1 of 14 2 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page INTRODUCTION AND SUMMARY OF MOTION ......................................................... 5 ARGUMENT ....................................................................................................................... 6 I. THE AMENDED COMPLAINT ALLEGES NO NEW FACTS AND IS INDISTINGUISHABLE FROM SMITH. .................................................. 6 II. THE FAC FAILS TO ESTABLISH INJURY-IN-FACT ............................... 9 A. Rovai Fails To Allege The Invasion Of A Legally Protected Interest. .................................................................................................. 9 B. Rovai fails To Allege “Concrete And Particularized” Injury. ............ 10 III. SPS DID NOT CAUSE ROVAI’S ALLEGED “INJURY.” ........................ 11 IV. ROVAI’S ALLEGED INJURY IS NOT REDRESSABLE BY THIS COURT. ........................................................................................................ 12 CONCLUSION .................................................................................................................. 13 Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.818 Page 2 of 14 3 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Federal Cases Arjay Assocs., Inc. v. Bush, 891 F.2d 894 (Fed. Cir. 1989) ...................................................................................... 10 Barhoumi v. Obama, — F. Supp. 3d. —, 2017 WL 211171 (D.D.C. January 18, 2017) ................................. 9 Barnum Timber Co. v. E.P.A., 633 F.3d 894 (9th Cir. 2011) .......................................................................................... 6 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ........................................................................................................ 8 Bennett v. U.S., 361 F. Supp. 2d 510 (W.D. Va. 2005) .......................................................................... 11 Bernhardt v. Cty. of L.A., 279 F.3d 862 (9th Cir. 2002) ........................................................................................ 12 Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115 (9th Cir. 2010) .................................................................................. 7, 11 Citizens United v. FEC, 558 U.S. 310 (2010) ........................................................................................................ 9 Claybrook v. Slater, 111 F.3d 904 (D.C. Cir. 1997) ........................................................................................ 9 Ewing v. SQM US, Inc., 2016 WL 5846494 (S.D. Cal. Sept. 29, 2016) .............................................................. 12 Greater San Diego Cty. Assoc. of Realtors, Inc. v. Sandicor, Inc., 2016 WL 4597536 (S.D. Cal. May 25, 2016) .............................................................. 12 Lujan v. Def. of Wildlife, 504 U.S. 555 (1992) .................................................................................................... 6, 9 McConnell v. FEC, 540 U.S. 93 (2003) .......................................................................................................... 9 Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.819 Page 3 of 14 4 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The Parkway Hosp., Inc. v. Daines, 2010 WL 3000018 (S.D.N.Y. July 20, 2010) ............................................................... 10 Romero v. Dep’t Stores Nat’l, 199 F. Supp. 3d 1256 (S.D. Cal. 2016)........................................................................... 8 Schmier v. U.S. Ct. of Appeals for Ninth Cir., 279 F.3d 817 (9th Cir. 2002) .......................................................................................... 8 Schwartz v. HSBC Bank USA, N.A., 2017 WL 95118 (S.D.N.Y. Jan. 9, 2017) ....................................................................... 8 Smith v. Bank of America, N.A., — F. App’x —, 2017 WL 631696 (9th Cir. Feb. 16, 2017) ............................... 5, 6, 7, 8 Smith v. Bank of America, N.A., 2015 WL 12979198 (C.D. Cal. Feb. 3, 2017) ................................................................ 7 Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) .......................................................................................... 7, 9, 10 Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) ........................................................................................................ 10 Ward v. Am. Family Life Assurance Co., 444 F. Supp. 2d 544 (D. S.C. 2006) ............................................................................. 12 Federal Statutes 26 U.S.C. § 6050H ........................................................................................................... 5, 8 Rules Federal Rules of Civil Procedure, Rule 12(b)(1) ................................................................. 7 Constitutional Provisions U.S. Constitution, Article III ....................................................................................... passim Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.820 Page 4 of 14 5 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 INTRODUCTION AND SUMMARY OF MOTION Defendant Select Portfolio Servicing (“SPS”) moves to dismiss the First Amended Complaint (“FAC”) on the grounds that Plaintiff Adrianna Rovai (“Rovai” or “Plaintiff”) lacks Article IIII standing to bring this action (“Action”).1 After issuing an Order to Show Cause (“OSC”) why this case should not be dismissed in the wake of Smith v. Bank of America, N.A., — F. App’x —, 2017 WL 631696 (9th Cir. Feb. 16, 2017), the Court granted Rovai leave to amend her complaint as to standing. The FAC fails to establish Article III standing. Smith, therefore, compels dismissal of this Action. Rovai’s claim has been discussed in SPS’s prior submissions. By way of brief background, SPS acquired the servicing rights to Rovai’s “option arm” mortgage loan in December 2011. The loan terms allowed Rovai to make monthly payments that were less than the fully amortizing amount of interest and principal. If Rovai paid less than the full monthly interest due, the unpaid amount was added or “capitalized” into the total unpaid principal balance under the loan terms. The total increase in the principal balance (over the original principal balance) is “negative amortization.” Rovai alleges that her total unpaid loan balance when SPS acquired her loan included negative amortization. Rovai alleges that her 2011 Form 1098 reported that Rovai had paid $1,443.58 in interest and $1,254.62 in principle during 2011. She contends that SPS should have reported both amounts as mortgage interest for on her 2011 Form 1098. She makes similar claims regarding her 2012 Form 1098. Rovai contends that SPS “violated” 26 U.S.C. § 6050H (“Section 6050H”) by “underreporting her mortgage interest.” As discussed in prior briefs, the premise of Rovai’s case is legally flawed for several reasons. First, she assumes, without authority, that “negative amortization” remains “interest” even after it is capitalized and otherwise 1 Pursuant to the Court’s Order dated April 24, 2017, Defendant Select Portfolio Services, Inc., addresses herein only those amendments to the original Complaint that go to Plaintiff’s standing. In doing so, Defendant does not waive any other legal arguments or defenses, including but not limited to those asserted in Defendant’s Motion to Dismiss the original Complaint. Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.821 Page 5 of 14 6 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 treated as principal. Second, she assumes—again without authority—that a servicer must “track” negative amortization separately from the loan’s original principal balance and then apply monthly payments first toward the “negative amortization” portion of the unpaid principal balance before any of the original principal balance. Third, Rovai contends that payments applied toward “negative amortization” must be reported as paid mortgage interest on IRS Form 1098 even though there is no IRS rule or regulation requiring this. Plaintiff’s case is a house of cards that collapses at every turn. The Court previously dismissed Rovai’s Section 6050H claim and stayed the remainder of her case on primary jurisdiction grounds. While the stay was pending, the Ninth Circuit decided Smith v. Bank of America, N.A., —F. App’x—, 2017 WL 631696 (9th Cir. Feb. 16, 2017), which dismissed nearly identical claims because the plaintiffs had failed to establish Article III standing. Given the similarity in pleadings between the Smith and Rovai complaints, the Court issued the above-referenced OSC. Rovai’s response conceded that she had failed to plead standing under Smith. The Court dismissed the Action but allowed Rovai leave to amend as to standing only. SPS moves to dismiss the FAC with prejudice because it fails to adequately plead facts supporting Article III standing. ARGUMENT I. THE AMENDED COMPLAINT ALLEGES NO NEW FACTS AND IS INDISTINGUISHABLE FROM SMITH. To satisfy the “irreducible constitutional minimum” of Article III standing, a plaintiff must establish (i) injury-in-fact, (ii) a “causal connection” between that injury and the complained-of conduct, and (iii) a likelihood “that the injury will be redressed by a favorable decision.” Lujan v. Def. of Wildlife, 504 U.S. 555, 560-61 (1992) (internal quotation marks omitted); accord Barnum Timber Co. v. E.P.A., 633 F.3d 894, 897 (9th Cir. 2011). As the Supreme Court reaffirmed last year, the injury-in-fact element requires a plaintiff to show: (i) “an invasion of a legally protected interest,” (ii) “that is concrete and particularized,” and (iii) “actual or imminent, not conjectural or Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.822 Page 6 of 14 7 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 hypothetical.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547-48 (2016) (quoting Lujan, 504 U.S. at 560) (internal quotation marks omitted). Rovai fails to satisfy her burden of establishing the prerequisites of Article III standing. See Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010) (“The party asserting federal subject matter jurisdiction bears the burden of proving its existence.”). The FAC is substantively identical to the Smith complaint, which failed to establish Article III standing, according to the Ninth Circuit. The Smith plaintiffs alleged that their lender, Bank of America, N.A. (“BANA”) had agreed to modify the terms of their mortgage after they defaulted. Smith v. Bank of America, N.A., 2015 WL 12979198, at *1 (C.D. Cal. Feb. 3, 2017). As part of the modification, accrued unpaid monthly interest was capitalized into the loan’s principal balance and treated thereafter as principal under the modified loan. Id. BANA applied the plaintiffs’ monthly payments towards principal and monthly interest and reported the payments applied toward monthly interest on their Form 1098. Id. Plaintiffs asserted that BANA should have treated the capitalized amounts as “interest” for the life of their loan and reported payments applied toward those amounts as mortgage interest on their Form 1098. Id. Plaintiffs’ purported injury was the inability to deduct mortgage interest on their tax returns for the amounts applied towards the capitalized interest, causing them to overpay their taxes. Id. at p. *2. In ruling on BANA’s motion to dismiss, the District Court expressed substantial doubt that the plaintiffs had suffered injury-in-fact, but dismissed the case based on the IRS’s exclusive enforcement authority over Form 1098s. Id. at p. *3-4. On appeal, the Ninth Circuit vacated the District Court’s order and remanded the case with instructions to dismiss the case under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction because the plaintiffs had failed to allege injury-in-fact via “an invasion of a legally protected interest which is . . . concrete and particularized” and “actual or imminent.” Smith, supra, 2016 WL 631696 at *1 (citing Lujan, supra, 504 U.S. at 561). The Court explained: “Although Plaintiffs allege that [BANA] provided Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.823 Page 7 of 14 8 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 them with a Form 1098 that did not comply with the requirements of 26 U.S.C. § 6050H, Plaintiffs do not allege that they filed erroneous tax returns in reliance on the allegedly erroneous Form or received a smaller tax deduction as a result. Mere receipt of an erroneous Form, without more, is insufficient to establish injury-in-fact.” Smith, supra, 2016 WL 631696 at *1. In response to the Court’s OSC, Rovai conceded that her original complaint did not allege that she had filed erroneous tax returns in reliance on the SPS-issued Form 1098s and had received smaller tax deductions as a result. In an attempt to cure these defects, the FAC adds a single new sentence: For tax years 2011 and 2012 described above, and others, Plaintiff relied upon the incorrect information in the Form 1098s that were sent to her by defendant, and as a result she both: (1) filed erroneous tax returns in those years and perhaps others (where her returns claimed only mortgage interest stated on her Form 1098) and (2) received smaller tax deductions in at least 2011 and 2012 tax years than she would have received had the proper information been provided to her on her Form 1098 by [SPS]. Dkt. No. 39, FAC ¶ 16. However, this statement is nothing more than a "naked assertion" devoid of "further factual enhancement," which the Supreme Court has clearly denounced as insufficient under federal pleadings standards. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). A plaintiff must “clearly …allege facts demonstrating each element of standing.” Schwartz v. HSBC Bank USA, N.A., 2017 WL 95118, at **6-7 (S.D.N.Y. Jan. 9, 2017) (dismissing action under Article III because allegations were conclusory); see also Romero v. Dep’t Stores Nat’l, 199 F. Supp. 3d 1256, 1260-61 (S.D. Cal. 2016). To avoid dismissal, Rovai needed to do more than simply parrot the words of the Ninth Circuit—she needed (but failed) to “allege[e] specific facts sufficient” to show she incurred greater taxes because of her Form 1098. Schmier v. U.S. Ct. of Appeals for Ninth Cir., 279 F.3d 817, 821 (9th Cir. 2002). Because the FAC is substantively no different than the Smith complaint that failed to satisfy Article III, the Ninth’s Circuit’s ruling mandates dismissal of this Action. Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.824 Page 8 of 14 9 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 II. THE FAC FAILS TO ESTABLISH INJURY-IN-FACT Injury-in-fact is (1) the “invasion of a legally protected interest” which is (2) “concrete and particularized” and (3) “actual or imminent, not conjectural, or hypothetical.” Lujan, supra, 504 U.S. at 560 (internal quotation marks omitted). “A ‘concrete’ injury must be ‘de facto,’ that is, it must actually exist.” Spokeo, supra, 136 S. Ct. at 1548. The Supreme Court has explained: “[w]hen we have used the adjective ‘concrete,’ we have meant to convey the usual meaning of the term— ‘real,’ and not ‘abstract.’” Id. These elements are not met here. A. Rovai Fails To Allege The Invasion Of A Legally Protected Interest. To establish injury-in-fact, Rovai must allege the invasion of a legally protected interest; she fails to do so. While Rovai claims to have support for her legal theory, it is indisputable that no IRS law, rule, regulation, or guidance—either in 2011 or today— required SPS to apply and report negative amortization in the manner she claims. In fact, the IRS implicitly acknowledged there was no existing guidance regarding the reporting of capitalized mortgage interest when it announced that it would issue formal guidance on the subject following notice and comment. That the IRS has not provided specific guidance strongly suggests that no rules or regulations required SPS to include the payments Rovai disputes in her 2011 and 2012 Form 1098s. Thus, Rovai did not have a “legally protected” or cognizable interest in a Form 1098 that reported the disputed payments as interest because her “asserted legal source—whether constitutional, statutory, common law or otherwise—[did] not apply or does not exist.” Barhoumi v. Obama, — F. Supp. 3d. —, 2017 WL 211171, at *1 (D.D.C. January 18, 2017); see also Citizens United v. FEC, 558 U.S. 310, 365-366 (2010) (where precedent on which claims were based was deemed invalid, claims failed to invoke a legally cognizable right); McConnell v. FEC, 540 U.S. 93, 227 (2003), overruled in part on other grounds (litigants lacked standing where their interest was premised on a mistaken interpretation of legal precedent that did not apply to them; plaintiff’s “claim of injury …[was] therefore, not to a legally cognizable right”); Claybrook v. Slater, 111 F.3d 904, 907 Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.825 Page 9 of 14 10 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (D.C. Cir. 1997) (“[I]f the plaintiff’s claim has no foundation in law, he has no legally protected interest and thus no standing to sue.”); Arjay Assocs., Inc. v. Bush, 891 F.2d 894, 898 (Fed. Cir. 1989) (“We hold the appellants lack standing because the injury they assert is to a non-existent right.”). Rovai’s failure to identify any “legally protected interest” is fatal to Article III standing. B. Rovai fails To Allege “Concrete And Particularized” Injury. Even if Rovai had a “right” to her desired Form 1098 (she did not), she fails to show “concrete” and “particularized” injury. The FAC contains a single conclusory allegation that Rovai “received smaller tax deductions … than she would have received had the proper information been provided to her on her Form 1098 by [SPS].” This allegation, which simply parrots the Ninth Circuit’s language in Smith, is not substantiated with any factual allegations—it amounts to nothing more than pure conjecture and speculation. Rovai cannot plausibly allege that she paid more in taxes than she would have with a different Form 1098 because the only way to know that would have been to file a return (or amended return) with the higher deduction to see whether the IRS would allow it and what impact it would have overall tax liability. Neither Rovai, SPS, or the Court can determine whether Rovai in fact paid any more in taxes than she would have with a different Form 1098. Whether the IRS would even have allowed these deductions is pure speculation, since Rovai refused to follow IRS instructions requiring her to claim the higher amount. Rovai, therefore, has not shown concrete injury. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998) (rejecting the doctrine of hypothetical jurisdiction); The Parkway Hosp., Inc. v. Daines, 2010 WL 3000018, at *2 (S.D.N.Y. July 20, 2010) (dismissing a complaint where “[t]he complaint fails to allege, and [plaintiff] failed otherwise to establish, that he had any property interest”). Rovai also fails to allege “particularized” injury—injury that affects her in a personal and individualized way. Spokeo, supra, 136 S. Ct. at 1543 (quoting Lujan, supra, 504 U.S. at 560, n.1). While the FAC pertains to Rovai’s own Form 1098s, Rovai Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.826 Page 10 of 14 11 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 has not alleged facts showing that SPS breached a legal duty or norm as to her in particular. Rovai’s true complaint and that of the other plaintiffs in the many similar cases filed by her attorneys is that the IRS should require lenders to treat and report capitalized interest in a certain way. But that is a grievance, not a concrete and particularized injury. III. SPS DID NOT CAUSE ROVAI’S ALLEGED “INJURY.” Even if the FAC adequately alleged that Rovai paid taxes higher than she might have otherwise (it does not), it fails to show that such injury is traceable to SPS because any “lost” deduction was of her own making. Rovai ignored the IRS’s plain and simple instructions for claiming a larger mortgage interest deduction than the amount displayed on her Form 1098).2 She also disregarded the express written advice of an IRS representative who, in a letter to Rovai’s counsel, advised that Rovai should amend her prior returns and claim any additional amount by following the above-referenced IRS instructions. See Dkt. No. 32 [Rovai’s Notice to the Court Re: IRS Action and Request for Status Conference Ex. A]. Once again, Rovai refused to do so. Rovai’s failure to show that SPS caused her alleged injury is fatal to Article III standing. See, e.g., Chandler, supra, 598 F.3d at 1122 (finding no standing where “plaintiff has not yet attempted to recover [disputed] sum from the third-party tortfeasor…without first attempting to recover the $63.49 from the tortfeasor. Plaintiff cannot show that Defendant has done anything to impair Plaintiff's ability to assert his rights and recover the $63.49.”); Bennett v. U.S., 361 F. Supp. 2d 510, 518 (W.D. Va. 2005) (plaintiff has 2 The instructions for Line 10 of Schedule A to Form 1040 (the Form used to itemize tax deductions), states: “If you paid more interest to the recipient than is shown on Form 1098, see Publication 936 to find out if you can deduct the additional interest. If you can, attach a statement to your paper return explaining the difference and enter ‘see attached’ to the right of Line 10.” See Dkt. No. 11-1, SPS’s Request for Judicial Notice (“RJN”), Ex. B, 2013 Instructions at p. A-7, Line 10. In addition, IRS Publication 936, which covers the “Home Mortgage Interest Deduction,” provides the same instructions as Line 10 of Schedule A to Form 1040 stated above. See Dkt. No. 11-1, SPS’s RJN, Ex. C, Home Mortgage Interest Deduction at p. 9. Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.827 Page 11 of 14 12 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “not suffered any real injury…because he has the opportunity to file his federal income tax return and receive the full amount of any income taxes withheld that are in excess of his ultimate tax liability”); Greater San Diego Cty. Assoc. of Realtors, Inc. v. Sandicor, Inc., 2016 WL 4597536, at *9 (S.D. Cal. May 25, 2016) (finding no injury-in-fact where plaintiff failed to explain whether she attempted to recover lost property or merely assumed such efforts would be futile); Ewing v. SQM US, Inc., 2016 WL 5846494, at **2-3 (S.D. Cal. Sept. 29, 2016) (finding plaintiff failed to establish that defendants’ use of ATDS caused him to incur a charge he would not have incurred had defendants manually dialed his number). IV. ROVAI’S ALLEGED INJURY IS NOT REDRESSABLE BY THIS COURT. The final “irreducible element” of standing requires Rovai to show that the injury- in-fact can be redressed by a favorable judicial decision. See Bernhardt v. Cty. of L.A., 279 F.3d 862, 869 (9th Cir. 2002) (“To establish redressability, [plaintiff] must show that it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.”). This Action is not the proper arena for determining Rovai’s alleged injury, as all questions pertaining to Rovai’s claimed mortgage interest deduction are appropriate for determination by the IRS and the IRS is currently formulating tax policy addressing the reporting of capitalized mortgage interest. There is no remedy this Court can award Rovai. The time for her to amend her 2011 and 2012 returns has passed, so it is not even clear what remedy she seeks or could obtain. The forthcoming IRS guidance may provide a way for negative amortization to be deducted at some other point during the life of the loan, but only the IRS can determine that. Similarly, because only the IRS—not SPS or the Court—could have approved a higher tax deduction and determined the impact on Rovai’s tax liability, a damage award is not an option. See Ward v. Am. Family Life Assurance Co., 444 F. Supp. 2d 544 & n.6 (D. S.C. 2006) (claim was not redressable because “the ultimate decision of taxability rests with the IRS and not the Defendant,” and therefore the amended information return “may have Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.828 Page 12 of 14 13 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 absolutely no effect on the IRS’s determination of Plaintiff’s tax liability”). Thus, there is no way for the Court to redress Rovai’s alleged injury. CONCLUSION Considering the foregoing, SPS respectfully requests this Action be dismissed in its entirety, with prejudice. DATED: May 22, 2017 Respectfully submitted, GREENBERG TRAURIG, LLP By /s/ Jennifer L. Gray Jennifer L. Gray Attorneys for Defendant Select Portfolio Servicing, Inc. Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.829 Page 13 of 14 14 3:14-cv-1738-BAS-WVG LA 133071192v2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CERTIFICATE OF SERVICE I hereby certify that on May 22, 2017, a copy of the MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT SELECT PORTFOLIO SERVICING, INC.’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT PURSUANT TO FED. R. CIV. P. 12(b)(1) was filed electronically and served by U.S. mail on anyone unable to accept electronic filing. Pursuant to CM/ECF system, registration as a CM/ECF user constitutes consent to electronic serve through the Court’s transmission facilities. The Court’s CM/ECF system sends a “Notice of Electronic Filing” of the filing to the parties and counsel of record listed below who are registered with the Court’s CM/ECF System. MORRIS POLICH & PURDY, LLP David J. Vendler, Esq. Email: dvendler@mpplaw.com 1055 West Seventh Street, Suite 2400 Los Angeles, CA 90017 MICHAEL R. BROWN, APC Michael R. Brown, Esq. Email: mbrown@mrbapclaw.com 18101 Von Karman Ave, Suite 1900 Irvine CA 92612 Attorneys for Plaintiff Adriana Rovai (FEDERAL) I declare under penalty of perjury that the foregoing is true and correct, and that I am employed at the office of a member of the bar of this Court. Executed on May 22, 2017 at Los Angeles, California. /s/ Jennifer L. Gray Jennifer L. Gray Case 3:14-cv-01738-BAS-WVG Document 44-1 Filed 05/22/17 PageID.830 Page 14 of 14