Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02676/USCOURTS-caed-2_09-cv-02676-3/pdf.json

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

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28 This matter is deemed suitable for decision without oral argument. *

E.D. Cal. R. 230(g).

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

CHARLES DAY, )

)

Plaintiff, ) 2:09-CV-02676-GEB-KJM

)

v. ) ORDER GRANTING AND DENYING

) IN PART DEFENDANT AMERICAN 

AMERICAN HOME MORTGAGE ) HOME MORTGAGE SERVICING, INC.’S

SERVICING, INC., AMERICAN BROKERS ) MOTION TO DISMISS AND DENYING 

CONDUIT and DOES 1-50, inclusive, ) ITS MOTION FOR A MORE DEFINITE 

) STATEMENT*

) 

Defendants. )

)

Defendant American Home Mortgage Servicing, Inc.

(“Defendant”) moves for dismissal of Plaintiff’s First-Amended

Complaint (incorrectly titled as “Second-Amended Complaint”) with

prejudice under Federal Rule of Civil Procedure 12(b)(6) (“Rule

12(b)(6)”), arguing that Plaintiff has failed to allege sufficient

facts to state viable claims. In the alternative, Defendant moves for

a more definite statement under Federal Rule of Civil Procedure 12(e)

(“Rule 12(e)”). For the reasons stated below, Defendant’s dismissal

motion is granted in part and denied in part, and Defendant’s Rule

12(e) motion is denied. 

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I. LEGAL STANDARD

A. Standard for a Motion to Dismiss under Rule 12(b)(6)

A Rule 12(b)(6) dismissal motion tests the legal sufficiency

of the claims alleged in the complaint. Novarro v. Black, 250 F.3d

729, 732 (9 Cir. 2001). A pleading must contain “a short and plain th

statement of the claim showing that the pleader is entitled to relief

. . . .” Fed. R. Civ. P. 8(a)(2). The complaint must “give the

defendant fair notice of what the [plaintiff’s] claim is and the

grounds upon which relief rests . . . .” Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007). 

Dismissal of a claim under Rule 12(b)(6) is appropriate only

where the complaint either 1) lacks a cognizable legal theory, or 2)

lacks factual allegations sufficient to support a cognizable legal

theory. Balistreri v. Pacific Police Dept., 901 F.2d 696, 699 (9th

Cir. 1988). To avoid dismissal, the plaintiff must allege “only enough

facts to state a claim to relief that is plausible on its face.” 

Twombly, 550 U.S. at 547. 

In deciding a Rule 12(b)(6) motion, the material allegations

of the complaint are accepted as true and all reasonable inferences

are drawn in favor of the plaintiff. See al-Kidd v. Ashcroft, 580

F.3d 949, 956 (9th Cir. 2009). However, neither conclusory statements

nor legal conclusions are entitled to a presumption of truth. See

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009); Twombly, 550 U.S.

at 555. 

If a Rule 12(b)(6) motion is granted, the “district court

should grant leave to amend even if no request to amend the pleadings

is made, unless it determines that the pleading could not possibly be

cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d

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1122, 1127 (9 Cir. 2000)(quoting Doe v. U.S., 58 F.3d 484, 497 (9 th th

Cir. 1995)). 

B. Standard for a Motion for a More Definite Statement

“[A] party may move for a more definite statement of a

pleading [under Rule 12(e) when the pleading] ... is so vague or

ambiguous that the party cannot reasonably prepare a response.” A

Rule 12(e) motion should not be granted unless the challenged pleading

is so indefinite that the responding party cannot determine the nature

of the claim(s) asserted. See Famolare, Inc. v. Edison Bros. Stores,

Inc., 525 F.Supp. 940, 949 (E.D.Cal. 1981).

II. 

REQUEST FOR JUDICIAL NOTICE

Defendant’s motion includes a request that the Court take

judicial notice of a grant deed and a deed of trust, both recorded on

September 2, 2005 in the Yolo County Recorder’s Office. However, since

defendant has not shown how these documents are relevant to its

motion, the request is denied.

III. DISCUSSION

Defendant filed a previous dismissal motion of Plaintiff’s

original complaint, which was granted with leave to amend. Plaintiff

subsequently filed his First-Amended Complaint (“FAC”) in which he

alleges four state law claims: violation of the Rosenthal Fair Debt

Collections Practices Act (“Rosenthal Act”), breach of the implied

covenant of good faith and fair dealing, California Business &

Professions Code section 17200, and “breach of statutory duties.” 

A. The Rosenthal Act

Defendant argues Plaintiff’s Rosenthal Act claim should be

dismissed arguing that Plaintiff’s allegations are conclusory, and

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that the portion of Plaintiff’s Rosenthal Act claim premised on

Defendant contacting debtor Plaintiff when Plaintiff was represented

by an attorney fails to “allege that [Plaintiff’s] attorney notified

[Defendant] of the representation in writing[, and] request[ed] that

all communications concerning the Plaintiff be directed to his

attorney,” citing California Civil Code § 1788.14(c). (Mot. 4:5-10.) 

Plaintiff alleges Defendant’s following conduct supports his

Rosenthal Act claim: 1) “Defendant contacted Plaintiff, a known

represented party... by sending letters and calling Plaintiff after

Defendant knew Plaintiff was represented by an attorney;” 2)

“Defendant falsely stated the amount of the debt... by overstating the

alleged arrearage owed by Plaintiff;” 3) “Defendant increased the

amount of the debt by including amounts not owed by contract... by

including costs that are not allowed for in any contract between

Plaintiff and Defendant, including mailing costs of multiple,

harassing letters;” and 4) “Defendant used unfair and unconscionable

means in an attempt to collect the debt... by making numerous and

repeated telephone calls to Plaintiff designed to annoy or harass

Plaintiff.” (FAC ¶¶ 11-14.)

Plaintiff’s allegation that Defendant “falsely stated the

amount of the debt... by overstating the alleged arrearage owed by

Plaintiff,” concerns misrepresentations, and therefore, is an

“averment of fraud” governed by Federal Rule of Civil Procedure 9(b)’s

heightened pleading standard. See OSEI v. Countrywide Home Loans, No.

2:09-cv-01981-LKK-JMF, 2010 WL 727831, at * 5 (E.D. Cal. March 3,

2010). Rule 9(b) provides, “in alleging fraud or mistake, a party

must state with particularity the circumstances constituting fraud or

mistake.” Allegations of fraud must be accompanied by the “who, what,

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when, where and how of the misconduct charged. A plaintiff must set

forth more than the neutral facts necessary to identify the

transaction. The plaintiff must set forth what is false or misleading

about a statement, and why it is false.” Vess v. Ciba-Gieigy Corp.,

USA, 317 F.3d 1097, 1106 (9 Cir. 2003). th

Rule 9(b)’s heightened pleading standard applies to

allegations of fraud in all civil cases, regardless of whether or not

“fraud” is an essential element of the claim. Id., at 1104-1105. In

cases where a claim alleges some fraudulent and some non-fraudulent

conduct, only the allegations of fraud are subject to Rule 9(b)’s

standard. Id., at 1104. “The proper route is to disregard averments

of fraud not meeting Rule 9(b)’s standard and then ask whether a claim

has been stated.” Id., at 1105. 

Plaintiff has not alleged the time, place or manner of the

misrepresentation with sufficient detail to satisfy Rule 9(b)’s

heightened pleading standard. Therefore, this allegation cannot be

considered in determining if Plaintiff has stated a Rosenthal Act

Claim. Id.

Plaintiff’s remaining Rosenthal Act allegations are not

governed by Rule 9(b) and sufficiently state violations of the Act. 

The Rosenthal Act is designed to “prohibit debt collectors from

engaging in unfair or deceptive acts or practices in the collection of

consumer debts and to require debtors to act fairly in entering into

and honoring such debts.” Cal. Civil Code § 1788.1(b). The act

prohibits multiple particular debt collection practices and regulates

the form and content of communications by debt collectors to debtors

and third parties. (Cal. Civil Code §§ 1788, et seq.) In addition to

proscribing specific conduct in the act itself, the Rosenthal Act

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incorporates violations of the federal Fair Debt Collection and

Practices Act, 15 USC §§ 1692, et seq. Cal. Civ. Code § 1788.17.

Since the Rosenthal Act incorporates violations of the

federal Fair Debt Collection and Practices Act, Plaintiff’s allegation

that Defendant contacted Plaintiff when Plaintiff was represented by

an attorney survives Defendant’s dismissal motion. Although section

1788.14(c) of the Rosenthal Act prohibits a debt collector from

communicating with a represented debtor only after the debt collector

has been “notified in writing by the debtor’s attorney that the debtor

is represented,” the relevant incorporated section of the federal Fair

Debt Collection Practice Act is not as narrow. See 15 U.S.C. §

1692c(a)(2). Section 1692c(a)(2) prohibits a debt collector from

contacting a debtor whenever the debt collector “knows the consumer is

represented by an attorney with respect to such debt...” Thus,

Plaintiff has sufficiently alleged a Rosenthal Act claim predicated

upon communication with a represented debtor. 

Therefore, Defendant’s motion to dismiss this claim is

granted and denied in part. The portion of Plaintiff’s Rosenthal Act

claim predicated upon the allegation that Defendant “falsely stated

the amount of the debt... by overstating the alleged arrearage owed by

Plaintiff” is dismissed.

B. Breach of the Covenant of Good Faith & Fair Dealing

Defendant seeks dismissal of Plaintiff’s claim for breach of

the covenant of good faith and fair dealing, arguing Plaintiff does

not identify or establish the existence of a contract between

Plaintiff and Defendant, and does not allege the existence of a

fiduciary relationship between the parties. (Mot. 4:14-4:19.)

Plaintiff admits “this cause of action probably does not survive in

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tort,” but argues “it should survive in its derivative nature in

contract.” (Opp’n 3:28-4:1.)

“There is an implied covenant of good faith and fair dealing

in every contract that neither party will do anything which will

injure the right of the other to receive the benefits of the

agreement.” Comunale v. Traders & General Ins. Co., 50 Cal.2d 654, 658

(1958). The implied covenant “rests upon the existence of some

specific contractual obligation. [It] is read into contracts in order

to protect the express covenants or promises of the contract, not to

protect some general public policy interest not directly tied to the

contract’s purpose.” Racine Laramie, Ltd. v. Dept. of Parks &

Recreation, 11 Cal.App.4th 1026, 1031 (1992). The implied covenant

“cannot impose substantive duties or limits on the contracting parties

beyond those incorporated in the specific terms of [the parties’]

agreement.” McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784, 799

(2008). Since the implied covenant is based in contract, compensation

for its breach is almost always limited to contractual remedies. Foley

v. Interactive Data Corp., 47 Cal.3d 654, 684 (1988). Tort remedies

are only available in limited circumstances where a “special

relationship” exists between the contracting parties, such as the

relationship between an insurer and an insured. See Johnathan Neil &

Assoc. v. Jones, 33 Cal.4th 917, 932 (2004). 

Plaintiff alleges in this claim that “Plaintiff and

Defendant had a contract wherein Defendant would service a mortgage

owned by American Brokers Conduit for Plaintiff’s property located at

885 Wedgewood Ct, West Sacramento, CA 95605,” and that “[a] duty of

good faith and fair dealing was implied by law into the contract of

insurance that is at issue in this action.” (FAC ¶ 18.) Plaintiff

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further alleges, “[Defendant’s] duties of good faith and fair dealing

included, but were not limited to, the following: a) Defendants had a

duty to pay at least as much consideration to Plaintiff’s financial

interests as to Defendants’ financial interest; b) Defendants had a

duty to comply with all applicable laws in the State of California.”

(Id., ¶ 19.) However, Plaintiff does not allege the terms of the

contract(s) entered into between the parties or how Defendant’s

conduct frustrated any of its specific provisions. Therefore, whether

Plaintiff is seeking tort or contract remedies, Plaintiff’s breach of

the implied covenant of good faith and fair dealing claim is

dismissed. 

C. Business & Professions Code § 17200

Defendant argues Plaintiff’s California Business and

Professions Code section 17200 (“§ 17200") claim should be dismissed

because Plaintiff’s allegations are conclusory, and Plaintiff fails to

allege he suffered an injury in fact and lost either money or property

as a result of any § 17200 violation. (Mot. 7:16-8:5.)

California’s Unfair Competition Law, Cal. Bus. & Prof. Code

§ 17200, prohibits “unlawful, unfair or fraudulent” business acts and

practices. To state a § 17200 claim, Plaintiff must allege he 

“suffered injury in fact and has lost money or property.” Cal. Bus. &

Prof. Code § 17204. A plaintiff suffers an “injury in fact” when he

or she has “1) expended money due to the defendant’s acts of unfair

competition, 2) lost money or property; or 3) been denied money to

which he or she has a cognizable claim.” Hall v. Time Inc., 158

Cal.App.4th 847, 854 (2008). 

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Plaintiff does not allege any facts showing that he has

suffered “an injury in fact”. Therefore, Plaintiff’s § 17200 claim is

dismissed.

D. Breach of Statutory Duties

Defendant also seeks dismissal of Plaintiff’s breach of

“statutory duties” claim. Plaintiff agrees in his Opposition that

this claim should be dismissed, stating, “[a]fter reviewing

Defendant’s motion, Plaintiff will dismiss this claim. (Opp’n 5:6.)

Therefore, Plaintiff’s breach of statutory duties claim is dismissed. 

E. Alternative Rule 12(e) Motion

Defendant also seeks a more definite statement of each of

Plaintiff’s claims. (Mot. ¶ 9:15-24.) The portion of this motion

concerning each claim upon which Defendant prevailed on its Rule

12(b)(6) dismissal motion is denied as moot, and the remainder of the

motion is denied. Plaintiff’s allegations are not “so vague or

ambiguous that [Defendant] cannot reasonably prepare a response.”

Fed.R.Civ.P. 12(e).

IV. CONCLUSION

For the stated reasons, Defendant’s motion to dismiss is

granted and denied in part. Defendant’s motion for a more definite

statement is denied. Plaintiff is granted ten (10) days from the date

on which this order is filed to file a Second-Amended Complaint.

Dated: June 2, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

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