Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01919/USCOURTS-casd-3_08-cv-01919-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1441 Petition for Removal - Fair Credit Reporting Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

GERARDO HUGO PUTKKURI,

Plaintiff,

CASE NO. 08cv1919 WQH (AJB)

ORDER

vs.

RECONTRUST COMPANY, DOE 1,

DOES 2-50, inclusive,

Defendants.

HAYES, Judge:

The matter before the Court is the Motion to Dismiss Complaint or, in the Alternative,

for a More Definite Statement (Doc. # 4).

Background

On or about August 12, 2008, Plaintiff initiated this action by filing a Complaint in the

Superior Court of California, County of San Diego. Not. of Removal, p. 2. On October 17,

2008, Defendant Recontrust Company (“Recontrust”) removed the Complaint to this Court

(Doc. # 1). The Complaint alleges that Plaintiff owns real property in San Marcos, CA (the

“Property”). The Complaint alleges that Plaintiff has a residential loan for the Property

secured by a Deed of Trust. The Complaint alleges that Recontrust is the appointed trustee

to the Deed of Trust. The Complaint alleges that Defendants Recontrust, Doe 1, and Does 2-

50 “are proceeding toward a Trustee’s sale of” the Property. The Complaint alleges that Doe

1 is the “holder of the note identified in the [Deed of Trust].” Complaint, ¶ 7. The Complaint

alleges:

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Doe 1 has no present right to initiate foreclosure under the [Deed of Trust]

identified in the Notice of Sale . . . , nor does it have the right to direct the

Recontrust Company to foreclose and sell the subject real property owned by

Plaintiff. Recontrust Company has been put on notice of Plaintiff’s claim in this

regard, and demand has been made of Recontrust Company to suspend any

foreclosure sale unless and until it has obtained proof that Doe 1 actually has in

its possession the original note properly endorsed to it or assigned to it as of a

date preceding the notice of default recorded by Recontrust Company.

Recontrust Company has failed and refused to suspend the sale of the property

or to provide proof of the basis of the right of Doe 1 to initiate foreclosure under

the [Deed of Trust].

Id., ¶ 8. The Complaint alleges that Plaintiff demanded written proof of Defendants’ right to

proceed in foreclosure, and that no such proof has been offered. The Complaint alleges that

Defendants have “engaged[d] in a pattern and practice of utilizing the non-judicial foreclosure

procedures of this State to foreclose on properties when they do not, in fact, have the right to

do so;” and have used the United States mail in furtherance of their conspiracy. Id., ¶¶ 9, 13.

The Complaint alleges that in pursuing non-judicial foreclosure, Defendants falsely

represented that they had a right to payment under Plaintiff’s residential loan, which was

secured by the Deed of Trust. 

The Complaint alleges causes of action for “Unfair Debt Collection Practices;”

“Predatory Lending Practices;” and “RICO.” Complaint, p. 8-9. In support of the cause of

action for Unfair Debt Collection Practices, the Complaint alleges 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),” (“RFDCPA”), the Federal Fair Debt Collections

Act, 15 U.S.C., Title 41, Subchap. V, §§ 1692, et seq.” (“FDCPA”), and the Real Estate

Settlement Procedures Act . . . , 12 U.S.C. §§ 2601-2617" (“RESPA”). Id., ¶¶ 19, 20. In

support of the cause of action for Predatory Lending Practices, the Complaint alleges that

“[a]ssuming arguendo that Defendant, Doe 1 does have the right . . . to initiate foreclosure 

. . . then Defendant Doe 1 is subject to defenses that would have been available against

Decision One Mortgage Company, LLC” (“Decision One”), the initial Lender identified in the

Deed of Trust. Id., ¶ 22. The Complaint alleges that Decision One Mortgage Company, LLC

“has engaged in deceptive practices with respect to Plaintiff . . . the specifics of which are

unknown,” in violation of the Home Ownership and Equity Protection Act, 15 U.S.C. §§ 1637

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

and the Federal Trade Commission Act, 15 U.S.C. §§ 41-58 (“FTC Act”). Id., ¶ 23. In support

of the cause of action for RICO, the Complaint alleges that “Defendants and each of them were

participating in and have participated in a scheme of racketeering as that term is defined in

RICO 18 U.S.C. §§ 1961, et seq.” Id., ¶ 26. 

On October 24, 2008, Recontrust filed the Motion to Dismiss. Plaintiff has not filed an

opposition to the Motion to Dismiss.

Standard of Review

A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests

the legal sufficiency of the pleadings. See De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir.

1978). A complaint may be dismissed for failure to state a claim under Rule 12(b)(6) where

the factual allegations do not raise the right to relief above the speculative level. See Bell

Atlantic v. Twombly, 127 S. Ct. 1955, 1965 (2007). Conversely, a complaint may not be

dismissed for failure to state a claim where the allegations plausibly show that the pleader is

entitled to relief. See id. (citing Fed R. Civ. P. 8(a)(2)). In ruling on a motion pursuant to Rule

12(b)(6), a court must construe the pleadings in the light most favorable to the plaintiff, and

must accept as true all material allegations in the complaint, as well as any reasonable

inferences to be drawn therefrom. See Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003);

see also Chang v. Chen, 80 F.3d 1293 (9th Cir. 1996).

Analysis

A. Recontrust’s Right to Initiate the Foreclosure Process

Recontrust contends that, as trustee under Plaintiff’s Deed of Trust, it has the right to

initiate the foreclosure process on behalf of Plaintiff’s lender and the owners of the note.

Recontrust contends that California law does not require production of the original note to

proceed with a non-judicial foreclosure. Defendant therefore contends that “Plaintiff’s

allegation that Defendant has no right to foreclose on his property is incorrect.” Mot. to

Dismiss, p. 6. 

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Pursuant to section 2924(a)(1) of the California Civil Code, the trustee of a Deed of

Trust has the right to initiate the foreclosure process. Cal. Civ. Code § 2924(a). Production

of the original note is not required to proceed with a non-judicial foreclosure. Id. Viewing the

allegations in the light most favorable to Plaintiff, the Complaint does not establish that

Defendant, as trustee of the Deed of Trust, lacks the right to initiate the foreclosure process.

B. Cause of Action for Unfair Debt Collection Practices

Recontrust contends that the Complaint fails to state a claim under the RFDCPA or the

FDCPA because the Complaint does not allege that Defendants engaged in any harassment or

abuse; that the Defendants used false or misleading representations; or that Defendants

engaged in any unfair practices. Recontrust contends that the Complaint fails to state a claim

under the RESPA because “Plaintiff does not allege any improper kickbacks in violation of 12

U.S.C. § 2607,” and “[t]o the extent that Plaintiff claims disclosure-related violations, the

claims must be dismissed because there is no private right of action under the disclosure rules

of RESPA.” Mot. to Dismiss, p. 7. 

To be liable for a violation of the FDCPA or the RFDCPA, the defendant must - as a

threshold requirement - be a “debt collector” within the meaning of the Acts. Heintz v.

Jenkins, 514 U.S. 291, 294 (1995); Cal. Civ. Code § 1788.2(c). The “activity of foreclosing

on [a] property pursuant to a deed of trust is not the collection of a debt within the meaning of

the” FDCPA. Hulse v. Ocwen Fed. Bank, FSB, 195 F. Supp. 2d 1188, 1204 (D. Or. 2002)

(holding that the plaintiff improperly brought a claim challenging the lawfulness of foreclosure

proceedings pursuant to a deed of trust under the FDCPA). The Complaint fails to state a

claim under the FDCPA or the RFDCPA because Plaintiff challenges the lawfulness of

foreclosure proceedings on her home pursuant to a deed of trust; Plaintiff does not allege that

Defendants were debt collectors, collecting a debt within the meaning of the FDCPA or the

RFDCPA. 

The Complaint does not identify the provisions of the RESPA that Defendants violated.

The Complaint does not allege improper kickbacks in violation of 12 U.S.C. 2607, or that

Recontrust was a “loan servicer” as required for a violation of 12 U.S.C. section 2605. To the

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extent the Plaintiff is attempting to assert disclosure-related violations, there is no private right

of action under the disclosure rules of the RESPA. Bloom v. Martin, 865 F. Supp. 1377, 1384-

85 (N.D. Cal. 1994). The Court concludes that the Complaint fails to state a claim under the

RESPA. 

C. Cause of Action for Predatory Lending Practices

Recontrust contends that the Complaint fails to state a claim under the HOEPA, TILA,

Regulation Z or the FTC Act because Plaintiff has not alleged that Defendants engaged in any

deceptive practices, or that Defendants were involved in the origination of Plaintiff’s loan. 

In support of the cause of action for Predatory Lending Practices, the Complaint alleges

wrongdoing on the part of Decision One. Decision One is a third party not named as a

defendant. The Complaint alleges Decision One committed unspecified acts which violated

unspecified provisions of federal law. The Complaint does not allege that any of the named

Defendants engaged in deceptive practices or otherwise engaged in predatory lending

practices. The Court concludes that the Complaint fails to state a claim for predatory lending

practices because Plaintiff does not allege that any of the named Defendants engaged in

conduct that violated the HOEPA, TILA, Regulation Z or FTC Act. 

D. Cause of Action for RICO

Recontrust contends that the cause of action for RICO fails because “Plaintiff’s

Complaint does not contain the required allegations.” Mot. to Dismiss, p. 9. Recontrust

contends that the Complaint does not allege that Plaintiff’s loan constitutes an “unlawful debt;”

or that Defendant engaged in “any indictable acts punishable by a year or more in prison, let

alone the two or more criminal acts required to show a ‘pattern of racketeering activity’ under

18 U.S.C. §§ 1961(5) and 1962.” Id., p. 8-9. 

To state a RICO claim, the plaintiff must allege the existence of an “enterprise” and the

connected “pattern of racketeering activity.” 18 U.S.C. § 1962; United States v. Turkette, 452

U.S. 576, 582 (1981). “The Ninth Circuit has held that allegations of predicate acts under

RICO must comply with Rule 9(b)’s specificity requirements.” U.S. Concord, Inc. v. Harris

Graphics Corp., 757 F. Supp. 1053, 1061 (N.D. Cal. 1991) (citing Schreiber Distributing Co.

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v. Serv-Well Furniture Co., 806 F.2d 1393, 1400-01) (9th Cir. 1986). A RICO plaintiff must

allege the time, place and manner of each act of fraud, and the role of each defendant in the

fraud. Lancaster Community Hospital v. Antelope Valley Hospital Dist., 940 F.2d 397, 405

(9th Cir. 1991). Aside from the conclusory allegation that “Defendants and each of them were

participating in and have participated in a scheme of racketeering as that term is defined in

RICO 18 U.S.C. §§ 1961, et seq,” Plaintiff fails to allege with any specificity the existence of

a RICO enterprise, or the conduct of a pattern of racketeering. The Court concludes that the

Complaint fails to state a claim under RICO. 

Conclusion

The Motion to Dismiss (Doc. # 4) is GRANTED. The above-captioned action is 

DISMISSED. 

DATED: January 5, 2009

WILLIAM Q. HAYES

United States District Judge

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