Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-05821/USCOURTS-cand-3_15-cv-05821-2/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 15:1601 Truth in Lending

---

ORDER (No. 3:15-cv-05821-LB)

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

San Francisco Division

FARID GHALEHTAK, et al.,

Plaintiffs,

v.

FNBN I, LLC,

Defendant.

Case No. 3:15-cv-05821-LB 

ORDER GRANTING DEFENDANT'S 

MOTION TO DISMISS

Re: ECF No. 33

INTRODUCTION

This is an action brought to enforce a mortgage rescission and to collect monetary relief for an 

alleged defective securitization of the mortgage.

1

The plaintiffs, Farid Ghalehtak and Shirin 

Tabatabai, who are representing themselves, allege that the defendant, FNBN I, LLC, “is a thirdparty stranger to their mortgage” that lacks ownership interest in the loan and thus cannot collect

on the associated debt.

2

FNBN moves to dismiss the complaint under Rules 12(b)(6) and 

12(b)(1).

3

 

1

See Second Amended Complaint (“SAC”) Part I – ECF No. 31 (“SAC Part I”); SAC Part II – ECF 

No. 31-1; SAC Part III – ECF No. 31-2; SAC Part IV – ECF No. 31-3; SAC Part V – ECF No. 31-4; 

SAC Part VI – ECF No. 31-5; Part VII – ECF No. 31-6; SAC Part VIII – ECF No. 31-7; SAC Part IX 

– ECF No. 31-8. Record citations refer to material in the Electronic Case File (“ECF”); pinpoint 

citations are to the ECF-generated page numbers at the top of documents. 

2

SAC Part I at 2.

3 Motion to Dismiss SAC – ECF No. 33.

Case 3:15-cv-05821-LB Document 41 Filed 08/02/16 Page 1 of 11
ORDER (No. 3:15-cv-05821-LB) 2

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The court can decide this matter without oral argument. See N.D. Cal. Civ. L.R. 7-1(b). The 

court grants the motion because the plaintiffs do not state plausible claims for relief supporting

federal-question jurisdiction, and the court declines to exercise supplemental jurisdiction over their

remaining state-law claims. 

STATEMENT

In 2007, the plaintiffs Farid Ghalehtak and Shirin Tabatabai mortgaged their home with lender 

First National Bank of Arizona (“FNBA”).4They executed a Promissory Note secured by a Deed 

of Trust that identified FNBA as the lender and Mortgage Electronic Registration Systems 

(“MERS”) as the beneficiary.

5

The plaintiffs do not dispute that they owe money on the mortgage, 

but they instead challenge FNBN’s right to collect their mortgage payments due to an allegedly 

defective loan securitization.

6

At or near the date of mortgage execution, “FNBA attempted to securitize and sell [the 

plaintiffs’] loan[] to another entity or entities[,]” which the plaintiffs allegedly discovered in 2014

after commissioning a Property Securitization Analysis Report.

7

The securitization did not comply 

with the terms of the securitization trust’s Pooling and Servicing Agreement (“PSA”), which

required that the Note and Deed of Trust “be properly endorsed, transferred, accepted, and 

deposited” with the trust (or its custodian) by or within 90 days after November 1, 2011.8 Alluding

to a lack of valid assignments in the Alameda County records, the plaintiffs assert that any transfer 

of the instruments violated the PSA (and New York trust law), broke the chain of title, and 

rendered FNBN’s lien unperfected and unenforceable.9

 

4

SAC Part I at 9. 

5

Id.; Deed of Trust – ECF No. 31-2 at 10-11.

6

SAC Part I at 9; SAC Part II at 3.

7

SAC Part I at 9-10; see Property Securitization Analysis Report – ECF No. 31-4 at 6.

8

SAC Part I at 10. 

9

Id. at 10-11.

Case 3:15-cv-05821-LB Document 41 Filed 08/02/16 Page 2 of 11
ORDER (No. 3:15-cv-05821-LB) 3

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FNBN obtained this challenged interest from MERS — the original Deed of Trust beneficiary 

— on October 2, 2015, but FNBN never provided notice of the assignment to the plaintiffs.

10 The 

following week, the plaintiffs mailed a Notice to Rescind their mortgage and a Qualified Written 

Request (“QWR”) to PennyMac Loan Services, LLC, the loan’s purported servicer.

11 In response

to the QWR, PennyMac identified FNBN as the loan’s current beneficiary.12 Neither PennyMac 

nor FNBN responded to or challenged the Notice to Rescind, which the plaintiffs allege should 

automatically result in the rescission of the loan.

13

On October 26, 2015, FNBN recorded a Notice of Default and Election to Sell against the

property, advising that all mortgage payments owed since March 2012 were now due

($276,230.43 plus accruing interest).

14 The plaintiffs sued FNBN two months later.15 FNBN 

moved to dismiss the initial complaint, and the plaintiffs amended their complaint as of right by 

filing their First Amended Complaint (“FAC”).16 FNBN again moved to dismiss.17

This court granted FNBN’s motion to dismiss plaintiffs’ FAC.

18 The court dismissed

plaintiffs’ TILA claims for rescission and damages with prejudice and granted leave to assert any 

additional claims arising out of the subject transactions.

19 In their Second Amended Complaint

(“SAC”), the plaintiffs reassert their TILA claims and bring new claims against FNBN: 1) a 

violation of 15 U.S.C. § 1641(g); 2) a violation of the Fair Debt Collection Practices Act, 15 

U.S.C. § 1692 et seq. (“FDCPA”); 3) a violation of the Real Estate Settlement Practices Act, 12 

 

10 Id. at 13-14; Assignment of Deed of Trust – ECF No. 31-8 at 8.

11 Id. at 12, 14; Qualified Written Request – ECF No. 31-6 at 11; Plaintiffs’ Letter Rescinding Loan –

ECF No. 31-8 at 10. 

12 SAC Part I at 12; Assignment of Deed of Trust – ECF No. 31-8 at 8. 

13 SAC Part I at 14-15.

14 Defendant’s Request for Judicial Notice – ECF No. 33-3 at 2-3.

15 Complaint – ECF No. 1.

16 See Motion to Dismiss Plaintiffs’ Complaint – ECF No. 6; see First Amended Complaint – ECF No. 

12. 

17 Motion to Dismiss Plaintiffs’ First Amended Complaint – ECF No. 20. 

18 Order Granting Defendant’s Motion to Dismiss – ECF No. 30.

19 Id. at 11.

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ORDER (No. 3:15-cv-05821-LB) 4

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U.S.C. § 2605 (“RESPA”); 4) declaratory relief pursuant to 28 U.S.C. §§ 2201, 2202; 5) a claim 

seeking to “Void and/or Cancel Ab Initio Deed of Trust and Promissory Note”; 6) a violation of 

California Civil Code §§ 2924.17 & 2924(a)(6); 7) quasi contract; and 8) “Quiet Title Relating to 

Violations of the Federal Truth in Lending Act.”

20

FNBN moved to dismiss the SAC, arguing that the plaintiffs’ federal-question claims fail, the 

court lacks diversity jurisdiction, and the court should decline to exercise supplemental 

jurisdiction over the remaining state-law claims.21

RULE 12( b)(6) STANDARD

A complaint must contain a “short and plain statement of the claim showing that the pleader is 

entitled to relief” to give the defendant “fair notice” of what the claims are and the grounds upon 

which they rest. See Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 

(2007). A complaint does not need detailed factual allegations, but “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. Factual allegations must be 

enough to raise a claim for relief above the speculative level . . . .” Twombly, 550 U.S. at 555 

(internal citations omitted). 

To survive a motion to dismiss, a complaint must contain sufficient factual allegations, 

accepted as true, “‘to state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 

U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when 

the plaintiff pleads factual content that allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a 

‘probability requirement,’ but it asks for more than a mere possibility that a defendant has acted 

unlawfully.” Id. (quoting Twombly, 550 U.S. at 556). “Where a complaint pleads facts that are 

 

20 See generally SAC – ECF No. 31.

21 See generally Motion to Dismiss SAC – ECF No. 33.

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ORDER (No. 3:15-cv-05821-LB) 5

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‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and 

plausibility of ‘entitlement to relief.’’” Id. (quoting Twombly, 550 U.S. at 557).

“A claim may be dismissed under Rule 12(b)(6) on the ground that it is barred by the 

applicable statute of limitations only when ‘the running of the statute is apparent on the face of the 

complaint.’” Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 969 (9th Cir. 

2010) (quoting Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997 (9th Cir. 2006)). Documents 

properly incorporated by reference and judicially noticeable facts may be considered on a Rule 

12(b)(6) motion without converting it to a motion for summary judgment. See Knievel v. ESPN, 

393 F.3d 1068, 1076-77 (9th Cir. 2005) (incorporation by reference); Skilstaf, Inc. v. CVS 

Caremark Corp., 669 F.3d 1006, 1016 n.9 (9th Cir. 2012) (judicial notice).

If a court dismisses a complaint, it should give leave to amend unless the “the pleading could 

not possibly be cured by the allegation of other facts.” Cook, Perkiss and Liehe, Inc. v. Northern 

California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990).

ANALYSIS

1. Requests for Judicial Notice

The plaintiffs ask the court to take judicial notice of certain judicial opinions.22 FNBN does 

not oppose the request. The court considers these cases without taking judicial notice. See Fed. R.

Evid. 201 advisory comm. n. (1972); Von Saher v. Norton Simon Museum of Art at Pasadena, 592 

F.3d 954, 960 (9th Cir. 2010); Toth v. Grand Trunk R.R., 306 F.3d 335, 349 (6th Cir. 2002) 

(“[J]udicial notice is generally not the appropriate means to establish the legal principles 

governing the case.”). 

FNBN asks the court to take judicial notice of the Notice of Default and Election to Sell Under 

Deed of Trust (“Notice”).23 The plaintiffs oppose the request, generally citing California evidence 

law and asserting (without explanation) that the document is disputed.24 A district court generally 

 

22 Plaintiffs’ Request for Judicial Notice – ECF No. 38 at 1-2.

23 Defendant’s Request for Judicial Notice – ECF No. 33-2 at 2.

24 Plaintiffs’ Opposition to Defendant’s Request for Judicial Notice – ECF No. 35.

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ORDER (No. 3:15-cv-05821-LB) 6

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“may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion.” Lee v. 

City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001), overruled on other grounds by 

Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002). A court may, however, consider 

judicially noticeable “matters of public record.” Id. Here, the Notice was recorded in the Official 

Records of Alameda County, California on October 26, 2015, as Document No. 2015287610.25

The court thus judicially notices the Notice’s existence — not the truth of its contents — because

it is a matter of public record.

2. The Court Dismisses All Federal Claims

The court’s subject-matter jurisdiction is premised on the plaintiffs’ four federal-question 

claims for relief. The court dismisses all four claims.

2.1 TILA Claim for Rescission

In their FAC, the plaintiffs asserted a claim to enforce what they called an automatic and 

already effective rescission of their mortgage.26 The court dismissed the claim with prejudice 

because it was barred by the statute of limitations.27 The plaintiffs now assert the same claim in 

their SAC without any new reasoning and without requesting leave to reassert the claim or 

reconsideration of the court’s prior order.

28 For the reasons set forth in the earlier order at ECF No. 

30, the court dismisses the plaintiffs’ third claim with prejudice. Cf. Haines v. Brand, 2012 WL 

2237366, at *7 (N.D. Cal. June 14, 2012) (dismissing claim that was previously dismissed with 

prejudice where the plaintiff did not seek leave to replead the claim).

 

25 Defendant’s Request for Judicial Notice – ECF No. 33-2 at 2.

26 See First Amended Complaint – ECF No. 12.

27 Order Granting Defendant’s Motion to Dismiss – ECF No. 30 at 6.

28 SAC Part II at 6-9, 13.

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ORDER (No. 3:15-cv-05821-LB) 7

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2.2 New TILA Claim

The plaintiffs assert a new TILA claim seeking relief for FNBN’s alleged failure to provide 

them with notice that it had been assigned MERS’s interest in the mortgage.

29 Section 1641(g) 

states that “[n]ot later than 30 days after the date on which a mortgage loan is sold or otherwise 

transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt 

shall notify the borrower in writing of such transfer . . . .” 15 U.S.C. § 1641(g)(1). To state a claim

for actual damages (as the plaintiffs do), a plaintiff must show that he or she suffered a loss by 

relying on an inaccurate or incomplete disclosure. See Gold Country Lenders v. Smith, 289 F.3d 

1155, 1157 (9th Cir. 2002). Detrimental reliance thus is a required element of a claim for actual 

damages. See 15 U.S.C. § 1640(a); Turner v. Beneficial Corp., 242 F.3d 1023, 1028 (11th Cir. 

2011). TILA’s legislative history clarifies that, although TILA provides for “statutory remedies on 

proof of a simple TILA violation,” the statute requires a “more difficult showing of detrimental 

reliance to prevail on a claim for actual damages.” Turner, 242 F.3d at 1028; see H.R. Rep. No. 

104-193, pt. 1, at 95 (1995). Therefore, “a plaintiff must present evidence to establish a causal link 

between the financing institution’s noncompliance and his damages.” Turner, 242 F.3d at 1028.

In Cox v. Old Republican Nat’l Title Ins. Co., the plaintiff failed to allege detrimental reliance 

“on the alleged lack of 1641(g) disclosures.” No. 15-cv-02253-BLF, 2016 WL 301974, at * 12 

(N.D. Cal. Jan. 25, 2016). The mortgage was assigned to a new beneficiary but the assignee did 

not provide notice to the plaintiff. Id. The plaintiff alleged “economic damages from diminished 

property value and unmarketable title” but did not allege how “these damages resulted from 

detrimental reliance” on the lack of notice. Id. The court thus dismissed the claim. Id.

As in Cox, the plaintiffs allege actual damages, including the costs of over-calculation and 

overpayment of interest, costs of repairing credit, and costs of removing the cloud from their 

title.

30 But they do not allege that they detrimentally relied on the undisclosed assignment of 

interest to FNBN and instead only generally challenge the assignment as improper.

31 And as in 

 

29 Id. at 14-15.

30 Id. at 9.

31 See SAC Part I at 10-12.

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ORDER (No. 3:15-cv-05821-LB) 8

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Cox, while the plaintiffs allege damages, they do not plausibly demonstrate a connection between 

the failure to receive notice from FNBN and their alleged damages.32

Moreover, the plaintiffs base their claim on FNBN’s alleged failure to provide timely notice of 

the transfer of ownership interest in the loan (via the Assignment of Deed of Trust).

33 The

Assignment of Deed of Trust is dated October 2, 2015, and was recorded in the Official Records 

of Alameda County, California, eleven days later.34 The plaintiffs received PennyMac’s response 

to their QWR on November 2, 2015, naming FNBN as the loan’s creditor, within the thirty days 

FNBN had under the statute to notify the plaintiffs of its ownership interest.35 The plaintiffs 

dispute that they received notice from FNBN, but they indisputably knew about FNBN’s 

ownership interest within thirty days. Given the plaintiffs’ actual notice, the court dismisses the

claim with prejudice. 

2.3 FDCPA Claim

In their fifth claim, the plaintiffs allege that FNBN’s attempt to collect on the plaintiffs’ debt 

obligation violates the FDCPA.

36 The plaintiffs claim that the mortgage was securitized

improperly, in violation of the PSA, and that this securitization broke the chain of title on the 

mortgage and left FNBN without standing to enforce the loan.37 They acknowledge the debt on the 

property but allege that FNBN does not have an ownership interest in the mortgage, cannot collect 

payments thereunder, and thus violated the FDCPA when it tried to do so.

38

The FDCPA “prohibits ‘debt collector[s]’ from making false or misleading representations and 

from engaging in various abusive and unfair practices.” Heintz v. Jenkins, 514 U.S. 291, 292 

(1995) (citation omitted). The elements of a FDCPA claim are as follows: “(1) plaintiff has been 

 

32 SAC Part II at 9.

33 Id. at 15.

34 Assignment of Deed of Trust – ECF No. 31-8 at 8.

35 Motion to Dismiss – ECF No. 33-1 at 24.

36 SAC Part II at 15-16.

37 SAC Part I at 10-12; SAC Part II at 15.

38 SAC Part II at 15-16.

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ORDER (No. 3:15-cv-05821-LB) 9

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the object of collection activity arising from a consumer debt; (2) the defendant qualifies as a ‘debt 

collector’ under the FDCPA; and (3) the defendant has engaged in a prohibited act or has failed to 

perform a requirement imposed by the FDCPA.” Ellis v. Phillips & Cohen Associates, Ltd., No. 

5:14-cv-05539-EJD, 2016 WL 3566981, at *3 (N.D. Cal. June 30, 2016) (quoting Dang v. 

CitiMortgage, Inc., No. 5:11-cv-05036 EJD, 2012 WL 762329, at *10 (N.D. Cal. Mar. 7, 2012)). 

The issue is whether FNBN qualifies as a “debt collector” under the FDCPA.

A “debt collector” includes a person who: 1) uses interstate commerce or the mail in a business 

the principal purpose of which is debt collection; 2) “regularly collects or attempts to collect, 

directly or indirectly, debts owed or due or asserted to be owed or due another[;]” or 3) is “any 

creditor who, in the process of collecting his own debts, uses any name other than his own which 

would indicate that a third person is collecting or attempting to collect such debts.” 15 U.S.C. § 

1692a(6). “The FDCPA specifically excludes creditors collecting their own consumer debts. . . .

Mortgage loan beneficiaries and servicing companies are not ‘debt collectors’ under the FDCPA.” 

Wise v. Wells Fargo Bank, N.A., 850 F. Supp. 2d 1047, 1053 (C.D. Cal. 2012) (quoting 

Derakhshan v. Mortgage Electronic Registration Systems, Inc., No. SACV08-1185 AG (RNBx), 

2009 WL 3346780, at *7 (C.D. Cal. Oct. 13, 2009)); see also Gieseke v. Bank of America, N.A., 

No. 13-cv-04772-JST, 2014 WL 718463, at *5 (N.D. Cal. Feb. 23, 2014) (“The law is well settled 

that FDCPA’s definition of debt collector does not include the consumer’s creditors, a mortgage 

servicing company, or any assignee of the debt.”) (citing Lal v. Am. Home Servicing, Inc., 680 F.

Supp. 2d 1218, 1224 (E.D. Cal. 2010)) (internal quotations omitted). Furthermore, “the legislative 

history of section 1692a(6) indicates conclusively that a debt collector does not include the 

consumer’s creditors, a mortgage servicing company, or an assignee of the debt.” Wise, 680 F. 

Supp. 2d at 1053 (quoting Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985)). 

The plaintiffs suggest that FNBN is not a beneficiary or creditor and instead is a third party 

that is (improperly) attempting to collect on the debt.39 But FNBN is the loan’s creditor.40

 

39 SAC Part I at 2.

40 SAC Part I at 12; SAC Part II at 15; Response to Qualified Written Request – ECF No. 31-8 at 4; 

Assignment of Deed of Trust – ECF No. 31-8 at 8.

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ORDER (No. 3:15-cv-05821-LB) 10

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Moreover, “debtors may not pursue judicial challenges to the authority of a foreclosing beneficiary 

based on an improper securitization theory.” Kennedy v. World Savings Bank, FSB, 2015 WL 

1814634, at *6-7 (N.D. Cal. Apr. 21, 2015); Ordono v. U.S. Bank Nat. Ass’n, et al., 2014 WL 

3610952, at *3 (N.D. Cal. July 21, 2014). “[A]s an unrelated third party to the alleged 

securitization, and any other subsequent transfers of the beneficial interest under the promissory 

note, [a plaintiff] lacks standing to enforce any agreements, including the investment trust’s 

pooling and servicing agreement, relating to such transactions.” Kennedy, 2015 WL 1814634 at *6 

(quoting Jenkins v. J.P. Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 515 (2013)). The 

plaintiffs cannot cure this deficiency; the court thus dismisses the FDCPA claim with prejudice.

2.4 RESPA Claim

RESPA provides that borrowers may inquire about federally related mortgages by submitting a 

QWR. 12 U.S.C. § 2605(e)(1)(A). A QWR must describe why a borrower believes her account is 

in error or provide sufficient detail to the servicer regarding other information sought by the 

borrower. 15 U.S.C. § 2605(e)(1)(B). RESPA provides plaintiffs with a private right of action for, 

among other wrongful acts, a loan servicer’s failure to respond in a specific manner to a QWR for 

information about the loan. 15 U.S.C. § 2605(f); see Choudhuri v. Wells Fargo Bank, N.A., No. C 

11-00518 SBA, 2011 WL 5079480, at *8 (N.D. Cal. Oct. 25, 2011) (citing Patague v. Wells 

Fargo Bank, N.A., No. C 10-03460 SBA, 2010 WL 4695480, at *3 (N.D. Cal. Nov. 8, 2010)).

RESPA requires loan servicers to provide written responses to a QWR that seeks “information 

relating to the servicing of [a] loan.” 12 U.S.C. § 2605(e)(1)(A). “That a QWR must address the 

servicing of the loan and not its validity, is borne out by the fact that section 2605(e) expressly 

imposes a duty upon the loan servicer, and not the owner of the loan.” Consumer Solution REO, 

LLC v. Hillery, 658 F. Supp. 2d 1002, 1014 (N.D. Cal. 2009). 

Here, the plaintiffs’ allegations all involve PennyMac’s response to the QWR.

41 They do not 

allege that they sent anything to FNBN. Moreover, to state a RESPA claim, FNBN would have to 

 

41 SAC Part I at 12; see Qualified Written Request – ECF No. 31-6 at 11; see Response to Qualified 

Written Request – ECF No. 31-8 at 2-5..

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ORDER (No. 3:15-cv-05821-LB) 11

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be the loan’s servicer. Here, PennyMac is the loan’s servicer, and FNBN is the loan’s creditor and 

assignee.

42 The plaintiffs cannot assert a RESPA claim against FNBN because FNBN is not the 

loan servicer. The court therefore dismisses the RESPA claim with prejudice.

3. The Court Declines to Extend Supplemental Jurisdiction Over the Remaining Claims 

The court declines to exercise supplemental jurisdiction over the remaining state-law claims. 

See 28 U.S.C. § 1367(c)(3); Carnegie-Mellon University v. Cohill, 484 U.S. 343, 350 (1988); 

Paulick v. Starwood Hotels & Resorts Worldwide, Inc., No. C-10-01919 JCS, 2012 WL 2990760, 

at *16 (N.D. Cal. July 20, 2012).

CONCLUSION

The court grants FNBN’s motion to dismiss, dismisses the federal claims with prejudice, and 

declines to exercise supplemental jurisdiction over the state-law claims. The dismissal is without 

prejudice to the plaintiffs’ pursuing state-law claims in state court. 

IT IS SO ORDERED.

Dated: August 2, 2016

______________________________________

LAUREL BEELER

United States Magistrate Judge

 

42 SAC Part I at 12; Assignment of Deed of Trust – ECF No. 31-8 at 8.

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