Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01997/USCOURTS-casd-3_08-cv-01997-0/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1692 Fair Debt Collection Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JUAN GABRIEL CARBAJAL AND

MARIA ELENA CARBAJAL,

Plaintiffs,

CASE NO. 08cv1997 BTM(WMc)

ORDER GRANTING MOTION TO

DISMISS

vs.

ETS SERVICES, LLC, DOE 1, and

DOES 2-50,

Defendants.

Defendant Executive Trustee Services, LLC (“Defendant” or “ETS”) has filed a motion

to dismiss Plaintiffs’ Complaint. For the reasons discussed below, Defendant’s motion is

GRANTED.

I. BACKGROUND

On September 10, 2008, Plaintiffs commenced this action in the Superior Court of

California, County of San Diego - North County. On October 28, 2008, Defendant removed

the action to federal court.

Plaintiffs are the owners of the real property located at 1502 Rock Springs Road, San

Marcos, California 92069 (“Property”). (Compl. ¶ 6.) Plaintiffs allege that ETS and the Doe

defendants are proceeding toward a Trustee’s sale of the Property (Compl. ¶ 5.) Plaintiffs

allege, “Upon information and belief, DOE 1 is not the holder of the note identified in the

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security instrument, is not in possession of the note properly endorsed to it, nor is it otherwise

entitled by law in this State to initiate foreclosure under the security instrument identified in

Exhibit 1.” (Compl. ¶ 7.) Plaintiffs further allege that DOE 1 has no right to initiate

foreclosure or direct ETS to foreclose or sell the Property. (Compl. ¶ 8.)

Plaintiffs allege that although their attorney demanded proof of Defendants’ right to

proceed in foreclosure, Defendants have not offered any proof. Plaintiffs also allege that

their attorney demanded a detailed accounting of the amount Defendants stated must be

paid to redeem the Property from foreclosure. (Compl. ¶ 11.) According to Plaintiffs, any

response by Defendants has been so inadequate that Plaintiffs have been prevented from

determining whether any or all of the charges included in the payoff demand were justified.

(Id.) 

The Complaint sets forth the following causes of action: (1) unfair debt collection

practices; (2) predatory lending practices; and (3) RICO violations.

II. STANDARD

Under Fed. R. Civ. P. 8(a)(2), the plaintiff is required only to set forth a “short and plain

statement” of the claim showing that plaintiff is entitled to relief and giving the defendant fair

notice of what the claim is and the grounds upon which it rests. Conley v. Gibson, 355 U.S.

41, 47 (1957). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should

be granted only where a plaintiff's complaint lacks a "cognizable legal theory" or sufficient

facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696,

699 (9th Cir. 1988). When reviewing a motion to dismiss, the allegations of material fact in

plaintiff’s complaint are taken as true and construed in the light most favorable to the plaintiff.

See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Although

detailed factual allegations are not required, factual allegations ”must be enough to raise a

right to relief above the speculative level.” Bell Atlantic v. Twombly, 550 U.S. 544, 127 S.Ct.

1955, 1965 (2007). “A plaintiff’s obligation to prove the ‘grounds’ of his ‘entitle[ment] to

relief’ requires more than labels and conclusions, and a formulaic recitation of the elements

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of a cause of action will not do.” Id.

III. DISCUSSION

ETS moves to dismiss Plaintiffs’ Complaint for failure to state a claim. The Court

grants ETS’s motion because the Complaint is vague and conclusory. Although Plaintiffs

generally allege violations of certain statutes, Plaintiffs fail to allege how ETS violated the

statutes or plead sufficient facts establishing a violation.

A. Unfair Debt Collection Practices

Plaintiffs allege that Defendants have violated “provisions of California’s Rosenthal

Fair Debt Collection Practices Act, including but not limited to Civil Code § 1788 (e) and (f),

and the Fair Debt Collection Practices Act, 15 U.S.C., Title 41, Subchap. V. §§ 1692 et seq.

and the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617.” (Compl. ¶ 20.)

With respect to the Fair Debt Collection Practices Act and the Real Estate Settlement

Procedures Act, Plaintiffs do not specify what provision(s) of these acts ETS violated or what

ETS in particular did to violate the acts. To the extent Plaintiffs claim that ETS violated the

Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(e), by failing to take action with

respect to Plaintiffs’ September 5, 2008 inquiry (Ex. 1 to the Compl.), Plaintiffs’ claim was

premature. Under § 2605(e), after a servicer of a federally related mortgage loan receives

a qualified written request from the borrower for information relating to the servicing of such

loan, the servicer shall provide a written response acknowledging receipt of the

correspondence within 20 days and must take action on the request within 60 days. Plaintiffs

filed their Complaint on September 10, 2008, less than a week after making their inquiry.

As for Plaintiffs’ claim under California’s Rosenthal Fair Debt Collection Practices Act,

Plaintiffs cite to Cal. Civ. Code § 1788 (e) and (f). The Court assumes that Plaintiffs intended

to cite to Cal. Civ. Code § 1788.10(e) and (f) (there is no § 1788(e) or (f)). Subsection (e)

provides that no debt collector shall collect or attempt to collect a consumer debt by “the

threat to any person that nonpayment of the consumer debt may result in . . . the seizure,

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garnishment, attachment or sale of any property . . . unless such action is in fact

contemplated by the debt collector and permitted by the law.” Subsection (f) prohibits the

collection or attempted collection of debts by “[t]he threat to take any action against the

debtor which is prohibited by this title.” 

The Complaint does not allege facts establishing a violation of subsections (e) and/or

(f). Plaintiffs contend that the foreclosure of their home is not permitted by law because DOE

1 is not the holder of the note identified in the security instrument. (Compl. ¶¶ 7-8.)

However, it appears that Plaintiffs are just speculating that DOE 1 has initiated the

foreclosure proceedings and is not in a legal position to do so due to an invalid assignment

of rights or otherwise. Plaintiffs do not provide any facts in support of their allegations and,

instead, rely upon mere “information and belief.” (Compl. ¶ 7.) These allegations do not

raise Plaintiffs’ right to relief above a speculative level. To the extent that Plaintiffs contend

that DOE 1 must possess the original note to initiate foreclosure proceedings, Plaintiffs have

not cited legal authority supporting such a dubious proposition.

Plaintiffs have not stated a claim against ETS under the FDCPA, RESPA, or the

RFDCPA. Therefore, the Court grants ETS’s motion as to Plaintiffs’ Unfair Debt Collection

Practices Act cause of action.

B. Predatory Lending Practices

Plaintiffs allege that Equifirst, the original lender, engaged in deceptive practices ”in

violation of the Home Ownership and Equity Protection Act (“HOEPA”), 15 U.S.C. § 1637,

the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601, Regulation Z, 12 C.F.R. 226, and the

Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 41-58, the specifics of which are

unknown, but which are subject to discovery and with respect to which the specifics will be

alleged by amendment to this complaint when ascertained.” (Compl. ¶ 23.) Plaintiffs further

allege that DOE 1 is “subject to defenses that would have been available against Equifirst.”

It is unclear whether Plaintiffs intend to allege this cause of action against ETS. (Comp. ¶

22.) To the extent that they do, Plaintiffs do not state how ETS, a trustee, violated the

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various statutes or can be held liable for any violations by Equifirst or DOE 1. Accordingly,

the Court dismisses this cause of action for failure to state a claim.

C. RICO 

Plaintiffs allege that Defendants violated RICO, 18 U.S.C. §§ 1961, et seq., by

participating in a scheme of racketeering. (Comp. ¶ 26.) Again, Plaintiffs do not specify what

provision of the RICO statute Defendants allegedly violated, nor do they allege the elements

of a civil RICO claim – i.e., (1) conduct (2) of an enterprise (3) through a pattern (4) of

racketeering activity (5) causing injury to plaintiff’s business or property. Living Designs, Inc.

v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 361 (9th Cir. 2005). 

Based on Ex. 2 to the Complaint, it appears that Plaintiffs claim that Defendants are

in violation of 18 U.S.C. § 1962, which provides:

It shall be unlawful for any person who has received any income derived,

directly or indirectly, from a pattern of racketeering activity or through collection

of an unlawful debt in which such person has participated as a principal within

the meaning of section 2, title 18, United States Code, to use or invest, directly

or indirectly, any part of such income, or the proceeds of such income, in

acquisition of any interest in, or the establishment or operation of, any

enterprise which is engaged in, or the activities of which affect, interstate or

foreign commerce. 

Although Plaintiffs make the conclusory claim that Defendants “have participated in a

scheme of racketeering,” Plaintiffs fail to identify the predicate acts that form the basis of the

alleged “scheme of racketeering.” See Izenberg v. ETS Services, LLC, __ F. Supp. 2d __,

2008 WL 5179088 at *7 (C.D. Cal. Dec. 8, 2008). Similarly, there are no facts establishing

collection of an “unlawful debt.” An “unlawful debt” means a debt (a) incurred or contracted

in gambling activity which was in violation of the law; and (b) which was incurred in

connection with the business of gambling in violation of the law or the business of lending

money at a usurious rate at least twice the enforceable rate. 18 U.S.C. § 1961(6). It does

not appear that the debt at issue here falls within the definition of 18 U.S.C. § 1961(6).

Therefore, this cause of action is dismissed for failure to state a claim.

///

IV. CONCLUSION

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For the reasons discussed above, Defendant ETS’s motion to dismiss is GRANTED

and Plaintiffs’ Complaint is DISMISSED WITHOUT PREJUDICE. The Court grants Plaintiffs

leave to file an amended complaint addressing the deficiencies identified above. Any

amended complaint must be filed within 30 days of the filing of this order. If Plaintiffs do not

file an amended complaint within the prescribed time, the Court shall order the Clerk to enter

judgment dismissing this case without prejudice, and the case shall be closed.

IT IS SO ORDERED.

DATED: February 2, 2009

Honorable Barry Ted Moskowitz

United States District Judge

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