Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-03911/USCOURTS-cand-4_07-cv-03911-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 15:1692 Fair Debt Collection Act

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United States District Court

For the Northern District of California

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ETS also moves to dismiss what it calls Plaintiff's seventh

cause of action. However, as discussed below, Plaintiff only lists

six causes of action. ETS has mischaracterized a prayer for relief

as a seventh cause of action.

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Defendant Greenpoint Mortgage Funding, Inc. has filed an

answer and has not moved to dismiss any causes of action.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MARCOS LOPEZ,

Plaintiff,

v.

GMAC MORTGAGE CORP.; EXECUTIVE TRUST

SERVICES, LLC; GREENPOINT MORTGAGE

FUNDING, INC.,

Defendants.

 /

No. C 07-3911 CW

ORDER GRANTING IN

PART WITH LEAVE

TO AMEND AND

DENYING IN PART

DEFENDANTS'

MOTIONS TO

DISMISS

Defendant Executive Trustee Services, LLC (ETS) moves pursuant

to Federal Rule of Civil Procedure 12(b)(6) to dismiss Plaintiff's

first, third, fourth, fifth, and sixth causes of action.1

Defendant GMAC Mortgage Corporation (GMAC) moves separately

pursuant to Rule of 12(b)(6) to dismiss Plaintiff's first, fifth

and sixth causes of action.2

 Plaintiff opposes these motions. The

Case 4:07-cv-03911-CW Document 24 Filed 11/01/07 Page 1 of 10
United States District Court

For the Northern District of California

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matter was heard on October 11, 2007. Having considered all of the

papers filed by the parties and oral argument on the motions, the

Court GRANTS IN PART and DENIES IN PART Defendants' motions to

dismiss and GRANTS Plaintiff leave to amend.

BACKGROUND

The allegations of the complaint are assumed to be true for

purposes of these motions, except where noted. Plaintiff brings

this lawsuit in connection with the attempted foreclosure sale of

the property located at 7345 Holly Street, Oakland, California. In

April, 2005, Plaintiff purchased the property. In January, 2006,

Plaintiff refinanced the property with GMAC with a note in the

amount of $371,327.71 secured by a trust deed in favor of GMAC. 

Under the terms of the note, Plaintiff is required to make monthly

mortgage payments in the amount of $1112.01. Within a month of the

refinancing, GMAC reassigned the note to Greenpoint. Over the next

several months, the note was reassigned back and forth between GMAC

and Greenpoint, eventually ending up with GMAC. During this time,

GMAC and Greenpoint rejected Plaintiff's attempts to make timely

mortgage payments. 

In March, 2007, GMAC started non-judicial foreclosure

proceedings on the property. On or about June 26, 2007, ETS

recorded a notice of trustee sale. In this notice, GMAC demanded

that Plaintiff pay $409,557.49 as the unpaid balance of the note

plus reasonably estimated costs and expenses. This amount is

$38,229.78 in excess of the principal amount of the note and of

what Plaintiff owes given his timely payments. The trustee sale was

scheduled to take place on July 27, 2007.

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Plaintiff brings six causes of action: (1) a request for a

declaration that a trustee sale would be invalid; (2) violation of

the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-

1692o; (3) violation of the Real Estate Settlement and Procedures

Act (RESPA), 12 U.S.C. §§ 2601-2617; (4) breach of the covenant of

good faith and fair dealing; (5) fraud; and (6) a claim for

punitive damages.

LEGAL STANDARD

When evaluating a motion to dismiss for failure to state a

claim, all material allegations in the complaint will be taken as

true and construed in the light most favorable to the plaintiff. 

NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). 

Although the court is generally confined to consideration of the

allegations in the pleadings, when the complaint is accompanied by

attached documents, such documents are deemed part of the complaint

and may be considered in evaluating the merits of a Rule 12(b)(6)

motion. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th

Cir. 1987).

A complaint must contain a “short and plain statement of the

claim showing that the pleader is entitled to relief.” Fed. R.

Civ. P. 8(a). “Each averment of a pleading shall be simple,

concise, and direct. No technical forms of pleading or motions are

required.” Fed. R. Civ. P. 8(e). The Federal Rules of Civil

Procedure do not require a claimant to set out in detail the facts

upon which he bases his claim. See Bell Atl. Corp. v. Twombly, __

U.S. __, 127 S.Ct. 1955, 1964 (2007). To the contrary, all the

Rules require is that the plaintiff "give the defendant fair notice

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of what the [plaintiff’s] claim is and the grounds on which it

rests.” Id. (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957))

(internal quotation marks omitted).

When granting a motion to dismiss, a court is generally

required to grant a plaintiff leave to amend, even if no request to

amend the pleading was made, unless amendment would be futile. 

Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

F.2d 242, 246-47 (9th Cir. 1990).

DISCUSSION

I. Declaratory Judgment

Plaintiff requests a declaration, pursuant to California Civil

Code § 1060, that a trustee sale, such as that originally scheduled

for July 27, 2007, would be invalid and unlawful and that the

necessary foundation has not been laid for a trustee sale as

described in California Civil Code § 2924 et seq. Defendants cite

state law to argue that Plaintiff has no basis for declaratory

relief because he seeks a determination of his rights and duties

with respect to a past wrong.

Although Plaintiff and Defendants cite state law, once a case

is removed to federal court, whether to grant declaratory relief

becomes a procedural matter implicating the Declaratory Judgment

Act (DJA), 28 U.S.C. § 2201. Golden Eagle Ins. Co. v. Travelers

Cos., 103 F.3d 750, 753 (9th Cir. 1996), overruled on other grounds

by Gov't Employees. Ins. Co. v. Dizol, 133 F.3d 1220 (9th Cir.

1998). 

The DJA permits a federal court to “declare the rights and

other legal relations” of parties to “a case of actual

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controversy." 28 U.S.C. § 2201; see Wickland Oil Terminals v.

Asarco, Inc., 792 F.2d 887, 893 (9th Cir. 1986). The “actual

controversy” requirement of the DJA is the same as the “case or

controversy” requirement of Article III of the United States

Constitution. American States Ins. Co. v. Kearns, 15 F.3d 142, 143

(9th Cir. 1993).

 Under the DJA, a two-part test is used to determine whether a

declaratory judgment is appropriate. Principal Life Ins. Co. v.

Robinson, 394 F.3d 665, 669 (9th Cir. 2005). First, the court must

determine if an actual case or controversy exists within the

court's jurisdiction. Id. Second, if so, the court must decide

whether to exercise its jurisdiction. Id.

Plaintiff alleges an actual controversy. While the trustee

sale of July 27, 2007 did not occur, the sale was rescheduled for

October 26, 2007, after the Alameda Superior Court issued a

temporary restraining order on July 26, 2007.

Accordingly, Defendants' motion to dismiss Plaintiff's first

cause of action is denied. 

II. RESPA

Plaintiff alleges that he mailed to ETS a RESPA-qualified

request for information, as defined in 12 U.S.C. § 2605(e)(1)(B). 

Plaintiff contends that ETS violated RESPA by failing to respond to

this request in the manner prescribed by 12 U.S.C. § 2605(e)(2)-

(3). Plaintiff further contends that ETS violated § 2605(e) of 

RESPA by refusing to postpone the trustee sale of the property

while the RESPA-qualified request was outstanding. ETS argues that

this cause of action against it must be dismissed because 12 U.S.C.

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§ 2605(e) does not apply to it. 

The title of the section is "Duty of loan servicer to respond

to borrower inquiries." 12 U.S.C. § 2605(e). A loan servicer is

defined by statute as a person responsible for "receiving any

scheduled periodic payments from a borrower pursuant to the terms

of any loan." 12 U.S.C. § 2605(i)(3).

Plaintiff has not alleged that ETS is a loan servicer. 

Plaintiff alleges that ETS is the trustee of the disputed loan, but

has not alleged that ETS ever received or was responsible for

receiving periodic payments on the loan. Furthermore, Plaintiff

cites no authority to support his contention that a trustee can be

sued under RESPA directly or as an agent of a loan servicer. 

Because Plaintiff has not alleged any facts that would

establish that ETS has any duties under § 2605(e), ETS's motion to

dismiss Plaintiff's third cause of action is granted. Plaintiff is

given leave to amend to allege, if he can truthfully do so, that

ETS is a loan servicer as defined by 12 U.S.C. § 2605(i)(3).

III. Breach of the Covenant of Good Faith and Fair Dealing

Plaintiff claims that ETS breached the covenant of good faith

and fair dealing. ETS argues that this claim against it must be

dismissed because it has no contractual relationship with

Plaintiff.

Under California law, "[t]he prerequisite for any action for

breach of the implied covenant of good faith and fair dealing is

the existence of a contractual relationship between the parties,

since the covenant is an implied term in the contract." Smith v.

City & County of San Francisco, 225 Cal. App. 3d 38, 49 (1990). 

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Plaintiff has not alleged that he has any direct contractual

relationship with ETS. Plaintiff's allegation that ETS acted as an

agent, employee, alter-ego, principal, employer, or co-conspirator

of the contracting party, GMAC, is conclusory. See Twombly, 127

S.Ct. at 1964. Therefore, Plaintiff has not plead facts sufficient

to state a claim that an implied covenant exists between Plaintiff

and ETS.

Accordingly, ETS's motion to dismiss Plaintiff's fourth cause

of action is granted. Plaintiff is given leave to amend to allege,

if he can truthfully do so, that he has a contractual relationship

with ETS.

IV. Fraud

Plaintiff argues that Defendants committed fraud as defined by

California Civil Code § 1572. The moving Defendants rely on state

law to argue that Plaintiff has not plead his fraud cause of action

with sufficient specificity.

Under California law, fraud is defined as:

any of the following acts, committed by a party to the

contract, or with his connivance, with intent to deceive

another party thereto, or to induce him to enter into the

contract:

 1. The suggestion, as a fact, of that which is not true, by

one who does not believe it to be true;

 2. The positive assertion, in a manner not warranted by the

information of the person making it, of that which is not

true, though he believes it to be true;

 3. The suppression of that which is true, by one having

knowledge or belief of the fact;

 4. A promise made without any intention of performing it; or,

 5. Any other act fitted to deceive.

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Cal. Civ. Code § 1572.

In a case that has been removed to federal court, the pleading

requirements for a claim of fraud are analyzed under Federal Rule

of Civil Procedure 9(b). Vess v. Ciba-Geigy Corp. USA, 317 F.3d

1097, 1103 (9th Cir. 2003) ("It is established law, in this circuit

and elsewhere, that Rule 9(b)'s particularity requirement applies

to state-law causes of action."). “In all averments of fraud or

mistake, the circumstances constituting fraud or mistake shall be

stated with particularity.” Fed. R. Civ. P. 9(b). The allegations

must be “specific enough to give defendants notice of the

particular misconduct which is alleged to constitute the fraud

charged so that they can defend against the charge and not just

deny that they have done anything wrong.” Semegen v. Weidner, 780

F.2d 727, 731 (9th Cir. 1985). Statements of the time, place and

nature of the alleged fraudulent activities are sufficient, Wool v.

Tandem Computers, Inc., 818 F.2d 1433, 1439 (9th Cir. 1987),

provided the plaintiff sets forth “what is false or misleading

about a statement, and why it is false.” In re GlenFed, Inc., Sec.

Litig., 42 F.3d 1541, 1548 (9th Cir. 1994). 

Plaintiff has not plead his fraud cause of action with

sufficient specificity. Plaintiff provides just one general

allegation: that by violating California Civil Code § 2924, the

FDCPA and RESPA, Defendants attempted to deceive Plaintiff into

foregoing his rights under California Civil Code § 2924. However,

Plaintiff fails to provide any details as to the time, place and

nature of any alleged fraudulent actions. See Wool, 818 F.2d at

1439. Nor does Plaintiff tie particular actions to specific

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Plaintiff requests that a person named Gregory Thomas should

recover punitive damages. Because this name is not referred to in

other parts of the complaint, the Court assumes this to be a

typographical error and that Plaintiff intended the name to be his

name, Marcos Lopez.

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Defendants or provide an explanation of how he was deceived by

Defendants' actions. Thus, Plaintiff does not provide Defendants

with notice of the particular misconduct which is alleged to

constitute the fraud charged. Semegen, 780 F.2d at 731.

Accordingly, the Court grants Defendants' motions to dismiss

Plaintiff's fifth cause of action. Plaintiff is given leave to

amend to plead the fraud with the required particularity.

V. Punitive Damages

As his sixth cause of action Plaintiff alleges that Defendants

are guilty of malice, fraud and oppression and asks for punitive

damages pursuant to California Civil Code § 3294.

Defendants contend and Plaintiff agrees that a request for

punitive damages is not a cause of action, but a prayer for relief. 

Plaintiff may pursue it as such if he chooses to re-allege his

cause of action for fraud.3 See Cal. Civ. Code § 3294.

VI. Accounting

Plaintiff requests that Defendants provide a detailed

accounting of the financial status of the disputed note. ETS

claims that there is no basis for this request because it has no

contractual relationship with Plaintiff and it does not maintain

the records necessary for such an accounting. 

As noted above, ETS has mischaracterized Plaintiff's prayer

for relief as a seventh cause of action. Plaintiff may pursue it

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as a prayer for relief, if any of his causes of action provide for

such relief. Or, he may state it as a cause of action if state or

federal law creates such a cause of action.

CONCLUSION

 For the foregoing reasons, Defendants' motions to dismiss

Plaintiff's first cause of action are DENIED. Defendants' motions

to dismiss Plaintiff's fifth and sixth causes of action are

GRANTED. ETS's motion to dismiss Plaintiff's third and fourth

causes of action is GRANTED. Plaintiff is granted leave to file,

within two weeks of the date of this order, an amended complaint to

remedy the deficiencies noted above. If Plaintiff does not file an

amended complaint within this time period, he may pursue the causes

of action that have not been dismissed.

IT IS SO ORDERED.

Dated: 11/1/07 

CLAUDIA WILKEN

United States District Judge

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