Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-01287/USCOURTS-cand-3_16-cv-01287-4/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1692 Fair Debt Collection Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

PREETINDER K HUNDAL, et al.,

Plaintiffs,

v.

PLM LOAN MANAGEMENT SERVICES, 

INC., et al.,

Defendants.

Case No. 3:16-cv-01287-WHO 

ORDER ON PLM'S MOTION TO 

DISMISS THIRD AMENDED 

COMPLAINT

Re: Dkt. No. 56

INTRODUCTION

Plaintiffs Preetinder Hundal and Nishan Hundal (“the Hundals”) brought this action for 

wrongful foreclosure and related claims against their lender, Alice Glazer as Trustee of the Glazer 

Living Trust dated 12/30/87 (“Glazer”), the trustee, PLM Loan Management Services, Inc. 

(“PLM”), and the purchaser in the foreclosure sale, Eagle Vista Equities, LLC (“Eagle Vista”). I 

previously dismissed Eagle Vista with prejudice and various claims against the other defendants 

without prejudice. Order on Defs.’ Mots. to Dismiss Second Am. Compl. (“MTD SAC Order”) 

(Dkt. No. 53). PLM now seeks to dismiss the Hundals’ first cause of action for wrongful 

foreclosure and their second cause of action for breach of statutory duties.1 Mot. to Dismiss Third 

Am. Compl. by Def. PLM Loan Management Services, Inc. (“Mot.”) (Dkt. No. 56). 

The acts about which the Hundals complain involve PLM’s collection and distribution of 

the proceeds of the foreclosure sale, which the Hundals argue makes PLM liable under the Fair 

Debt Collection Practices Act (“FDCPA”) as a debt collector and for tort damages in the wrongful 

 

1 As PLM noted in the motion, the newly alleged “breach of statutory duties” claim conflates the 

Hundals’ FDCPA claims with their previously asserted “breach of state law duties” claim. This 

decision somewhat complicates the analysis, but, in an attempt to minimize confusion, I will 

differentiate between FDCPA and state law claims in the discussion of “statutory duties.”

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foreclosure claim. They either misunderstand or mischaracterize PLM’s role. To be liable as a 

debt collector, PLM must (i) do something more than enforce security interests (the Hundals point 

to PLM’s distribution of cash proceeds from the sale and PLM’s decision to ignore the Hundals’ 

request to interplead the proceeds), (ii) regularly engage in the business of debt collection, and (iii) 

violate a federal law. But all PLM is alleged to have done were acts consistent with being the 

foreclosure trustee (enforcing security interests), paying the lender (Glazer) the amount of its

demand and, eventually, paying the Hundals the surplus. If PLM was guilty of malice or 

significant wrong-doing, a claim would lie. But no such claim is pleaded. At this stage, with this 

pleading (the fourth complaint filed by the Hundals), there is no plausible claim stated against 

PLM and no federal claim is left in this lawsuit. Accordingly, I GRANT PLM’s motion and 

remand the matter to California Superior Court, County of Alameda. 

BACKGROUND

I reiterate only the background information relevant to this motion, and omit factual 

allegations pertaining to arguments that I previously rejected. On October 20, 2003, the Hundals 

borrowed $450,000 from Argent Mortgage Company, LLC and secured the transaction with a 

deed of trust (“First DOT”) against their residence (the “Property”). Third Am. Compl. (“TAC”) 

(Dkt. No. 54)2, ¶ 2. On March 8, 2006, the Hundals borrowed an additional $165,000 and again 

secured the transaction with a deed of trust (“Second DOT”) against the Property. Id. ¶ 3; PLM 

RJN Ex. 2 (Dkt. No. 56-1).

3

 The Second DOT identifies “Associated Real Estate Advisors, a 

 

2

Page three, as well as the exhibits to the third amended complaint were inadvertently omitted 

from the electronic filing. Opp’n (Dkt. No. 61), 1. Plaintiffs corrected this error by filing a 

complete version of the TAC as an attachment to their Opposition. See Dkt. No. 61-1.

3

PLM’s request for judicial notice (Dkt. No. 56-1) is GRANTED IN PART AND DENIED IN 

PART. The Hundals object to the request on the basis that the court should not take notice of 

disputed facts, specifically, the amount of default documented in the Notice of Default. Dkt. No. 

60 at 2-4. The Hundals misconstrue the purpose of noticing the Notice of Default. The court need 

not accept the amount as the actual amount due. The court notices only that the Notice of Default 

reflects a certain amount due. The Hundals’ objections on this ground are OVERRULED. Next, 

the Hundals object to the court taking judicial notice of the findings of fact in the bankruptcy 

proceeding and PLM’s Declaration of Non-Monetary Status filed in Superior Court prior to 

removal. For the former, the court takes notice only that the Relief from Stay was granted. 

Judicial notice of the latter is not necessary, and so the Hundals objection is SUSTAINED as to it.

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Partnership” (“AREA”) as the trustee in the Second DOT. See Second DOT. at p.1. The 

beneficiary and lender was Bank of the West as Trustee for the Donald A. Glazer IRA (“Bank of 

the West”). See id. at p.1, Ex. A.

On January 24, 2008, Bank of the West executed a Substitution of Trustee substituting 

PLM in place of AREA as the trustee under the Second DOT. Id. ¶ 7; PLM RJN Ex. 3. The 

Substitution of Trustee was recorded on February 4, 2008. Id.

On May 12, 2012, Bank of the West executed an Assignment of Deed of Trust transferring 

all beneficial interest in the Second DOT from Bank of the West to Glazer. TAC ¶ 5; PLM RJN 

Ex. 4. The Assignment of Deed of Trust was recorded on June 4, 2012. Id.

The Hundals defaulted on their obligations under the Second DOT, see, e.g., TAC ¶ 10,4

and on January 21, 2015, PLM caused to be recorded a Notice of Default and Election to Sell 

Under Deed of Trust. PLM RJN Ex. 5. The Notice of Default identified a default amount of 

$365,124.08 as of January 15, 2015. Id. Then, on April 24, 2015, PLM caused to be recorded a 

Notice of Trustee's Sale identifying the “[a]mount of unpaid balance and other charges” as 

$373,147.98 and setting the trustee's sale for May 20, 2015. PLM RJN Ex. 6.

The Hundals then filed for bankruptcy under Chapter 13 of the United States Bankruptcy 

Code in the United States Bankruptcy Court for the Northern District of California. TAC ¶ 12. 

On July 31, 2015, the Bankruptcy Court granted Glazer's Motion for Relief From the Automatic 

Stay, finding that the Hundals’ bankruptcy petition was part of a scheme to hinder, delay, or 

defraud creditors and permitting Glazer “to exercise her lawful remedies and lien rights under 

 

4

The Hundals plead this inconsistently. They say that they made their payments under the Second 

DOT to Oak Financial Services, and “that these payments to Oak Financial Services were not 

properly credited towards repayment of this loan.” TAC ¶ 4. They claim that they “had received 

assurances from Ocwen that this second lien would be paid by Ocwen’s principal,” but they were 

prevented from pursuing this course of action since PLM failed to provide the Hundals with an 

accounting of the default. Id. They allege that the “loan principal was not due or could have been 

repaid upon receipt of a proper accounting.” Id. at ¶ 8. And further, they add that “[t]he default 

which existed was with respect to the payments on the senior loan in which Ocwen was the 

servicer ... [and] plaintiffs had secured a loan modification from Ocwen that would have removed 

the default.” Id. And they conclude this paragraph by stating the “trustee sale was void since it 

was held despite the absence of a default... .” Id. I take from the pleading that the Hundals admit 

that they were in default but that they dispute the exact amount. At the most recent hearing, the 

Hundals’ counsel admitted that the Hundals owed Glazer around $200,000 at the time of the sale 

but disputed the amount of the attorneys’ fees demanded.

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applicable non-bankruptcy law as to [the Property].” PLM RJN Ex. 7.

Eagle Vista subsequently purchased the Property at the trustee's sale for $640,100. PLM 

RJN Ex. 8. After receiving Glazer’s demand, PLM remitted $440,784.86 to Glazer and allotted 

$704.55 to the documentary transfer tax, leaving a surplus of $198,610.59. TAC ¶ 18. PLM paid 

the Hundals this surplus amount only after the Joint Case Management Statement was filed in this 

case. Id. ¶ 17. 

The Hundals filed this action—their third lawsuit—on December 8, 2015 in the Superior 

Court of California for the County of Alameda. Dkt. No. 1. They filed their first amended 

complaint (“FAC”) on February 19, 2016, preceding removal to this court. Id. The FAC brought 

six causes of action: (1) wrongful foreclosure against all defendants, FAC ¶¶ 13-17; (2) breach of 

fiduciary duty against PLM and Glazer, id. ¶¶ 18-20; (3) violation of the federal Fair Debt 

Collection Practices Act (“FDCPA”) against PLM and Glazer, id. ¶¶ 21-27; (4) breach of contract 

against PLM and Glazer; (5) dual tracking against PLM and Glazer, id. ¶¶ 32-35; and (6) 

violations of California's Rosenthal Act against PLM and Glazer, id. ¶¶ 36-37. 

On March 16, 2016, PLM removed the case to federal court, asserting federal question 

jurisdiction on the basis of the FDCPA claim for relief. Notice of Removal ¶ 2 (Dkt. No. 1). On 

March 23, 2016, PLM and Eagle Vista moved to dismiss. Dkt. Nos. 6, 8. On May 20, 2016, I 

issued the Prior Order granting PLM’s and Eagle Vista’s motions to dismiss, and on June 3, 2016, 

the Hundals filed the SAC. Dkt. Nos. 36, 37. Defendants filed their motions to dismiss shortly 

thereafter. Dkt. Nos. 38, 39, 41. I heard arguments on August 31, 2016, and on September 2, 

2016, I dismissed Eagle Vista from the action with prejudice and granted PLM’s motion to 

dismiss claims for wrongful foreclosure, breach of state law duties, and dual tracking. Dkt. No. 

53. I also granted Glazer’s motion to dismiss claims for wrongful foreclosure, FDCPA violations, 

dual tracking, and Rosenthal Act violations, but denied her motion to dismiss the breach of 

contract claim. Id. 

The Hundals filed the TAC on September 14, 2016 (Dkt. No. 54), alleging three causes of 

actions: (1) wrongful foreclosure against all defendants, TAC ¶¶ 19-23; (2) “breach of statutory 

duties” against PLM, id. ¶¶ 24-34; and (3) breach of contract against Glazer, TAC ¶¶35-38. PLM 

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now moves to dismiss the remaining claims against it.

LEGAL STANDARD

Federal Rule of Civil Procedure 8(a)(2) requires a complaint to contain “a short and plain

statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), in 

order to “give the defendant fair notice of what the claim is and the grounds upon which it rests,” 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks and alterations 

omitted). 

A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 

12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 

2001). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable 

legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela 

Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). While a complaint “need not contain 

detailed factual allegations” to survive a Rule 12(b)(6) motion, “it must plead enough facts to state 

a claim to relief that is plausible on its face.” Cousins v. Lockyer, 568 F.3d 1063, 1067-68 (9th 

Cir. 2009) (internal quotation marks and citations omitted). A claim is facially plausible when it 

“allows the court to draw the reasonable inference that the defendant is liable for the misconduct 

alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). 

In considering whether a claim satisfies this standard, the court must “accept factual 

allegations in the complaint as true and construe the pleadings in the light most favorable to the 

nonmoving party.” Manzarek v. St. Paul Fire & Marines Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 

2008). However, “conclusory allegations of law and unwarranted inferences are insufficient to 

avoid a Rule 12(b)(6) dismissal.” Cousins, 568 F.3d at 1067 (internal quotation marks omitted). 

A court may “reject, as implausible, allegations that are too speculative to warrant further factual 

development.” Dahlia v. Rodriguez, 735 F.3d 1060, 1076 (9th Cir. 2013).

DISCUSSION

I. WRONGFUL FORECLOSURE

Since I previously found Eagle Vista to be a bona fide purchaser, MTD SAC Order at 8, 

the Hundals base their wrongful foreclosure claim on a tort-based, rather than equitable, theory. 

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Such a claim requires that: “(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully 

oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the 

party attacking the sale ... was prejudiced or harmed; and (3) in cases where the trustor or 

mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured 

indebtedness or was excused from tendering.” Miles v. Deutsche Bank Nat'l Trust Co., 236 Cal. 

App. 4th 394, 408 (2015) (internal quotation marks and citation omitted). 

Given my prior rulings, the Hundals focus on the contention that PLM was a debt collector 

under the FDCPA. 5 They claim that PLM’s failure to comply with the FDCPA provisions 

deprived them of their opportunity to repay the Glazer loan, and resulted in the wrongful 

foreclosure of their property. TAC ¶ 24-34. PLM responds that the Hundals’ wrongful 

foreclosure cause of action must fail because of the immunity granted to trustees in pursuit of nonjudicial foreclosure under California Civil Code section 2924 et seq. and the Hundals’ failure to 

adequately allege that tender was made or excused. Mot. 10-15; Reply 11-14. Given that the 

theory underlying the cause of action depends on the FDCPA, I will address PLM’s arguments 

after discussing the FDCPA.

A. The Fair Debt Collection Practices Act

In prior motions to dismiss, PLM did not argue that it was not liable under the FDCPA. 

MTD SAC Order at 7:12-13. Now it does. See Mot. 18 

For the Hundals to plausibly allege a wrongful foreclosure cause of action against PLM 

based on the FDCPA, the underlying violations must render the foreclosure “illegal, fraudulent, or 

willfully oppressive.” See Miles, 236 Cal. App. 4th at 408 (reciting the elements for a tortious 

wrongful foreclosure). It is not enough that failure to comply with the FDCPA “effectively 

deprived plaintiffs of the opportunity to recover their property and to secure reinstatement of the 

debt.” TAC ¶ 33.

 

5

I previously rejected their claims that: (1) PLM was never lawfully appointed trustee under the 

SDOT and therefore lacked the authority to conduct the trustee’s sale; and (2) Glazer never had 

the lawful authority to appoint PLM as trustee on the SDOT. See Prior Order (Dkt. No. 36) at 5-6; 

MTD SAC Order (Dkt. No. 53) at 7:5-7.

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The Ninth Circuit recently addressed whether the trustee of a California deed of trust is a 

‘debt collector’ under the FDCPA in Vien-Phuong Thi Ho v. Recontrust Co., NA, No. 10-56884, 

2016 U.S. App. LEXIS 18836, at *5 (9th Cir. Oct. 19, 2016). Ho does not support the Hundals’

FDCPA theories.

To start, the Ho majority noted that the FDCPA includes a “general definition of ‘debt 

collector,’ contained at section 1692a(6),” as well as a “narrower definition of the term [that] ‘also 

includes’ entities whose principal business purpose is ‘the enforcement of security interests.’” Id. 

at *11 (quoting 15 U.S.C. § 1692a). It reasoned that the narrower definition “would be 

superfluous if all entities that enforce security interests were already included in the definition of 

debt collector for purposes of the entire FDCPA.” Id. Trustees falling under the narrow definition 

are not liable under the FDCPA. Id. at *9-10. Because the mere acts of sending a notice of 

default and a notice of sale are not attempts to collect “debts,” trustees must do something more, 

such as “engag[ing] in activities that constitute debt collection,” to fall within the FDCPA’s ambit. 

Id. at *12. Further, a trustee’s decision to include a disclaimer on a notice stating that a trustee “is 

a debt collector attempting to collect a debt” is insufficient to label the trustee a debt collector 

under the FDCPA. Id. at *16 n.7.

The narrower definition would include PLM as a debt collector because it “includes 

entities whose principal business purpose is the enforcement of security interests.” See id. at *11; 

see also id. (“All parties agree that [the trustee] is a debt collector under the narrow definition.”).

6

 

But PLM is not a debt collector under the general definition of the FDCPA. The court in Ho

“affirmed the leading case of Hulse v. Ocwen Federal Bank, 195 F. Supp. 2d 1188, 1204 (D. Or. 

2002), which held that ‘foreclosing on a trust deed is an entirely different path’ than ‘collecting 

funds from a debtor.’” 2016 U.S. App. LEXIS 18836, at *9. 

Ho does not elaborate on what kinds of additional activities would be sufficient to 

 

6

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

(“Foreclosure by the trustee is not the enforcement of the obligation because it is not an attempt to 

collect funds from the debtor. ... [T]he activity of foreclosing on the property pursuant to a deed 

of trust is not the collection of a debt within the meaning of the FDCPA.”)

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constitute “debt collection,”7but the dissent points out that the majority “could not mean 

additional egregious actions in which some debt collectors engage, such as banging on the 

debtor’s door or calling her incessantly.” Id. at *47. Indeed, the plaintiff in Ho alleged that the 

defendants engaged in just those activities (e.g., banging on the door, trespassing, and posting 

false notices), and it wasn’t enough for the majority to conclude they were engaged in debt 

collecting because the trustee still would not be attempting to collect a “debt.” Notably, the Hulse

court held that “any actions taken by [the defendant] in pursuit of the actual foreclosure may not 

be challenged as FDCPA violations.”8 Hulse, 195 F. Supp. 2d at 1204 (emphasis added). 

Presumably, activities constituting debt collection would have to involve an attempt to collect 

actual money, since “[f]or the purposes of the FDCPA, the word ‘debt’ is synonymous with 

‘money.’” Ho, 2016 U.S. App. LEXIS 18836 at *8. 

The Hundals allege that PLM’s final act of distributing the funds exceeds the scope of the 

limited definition of a debt-collector under § 1692f(6), and brings PLM within the scope of the 

general definition of a debt collector. TAC ¶¶ 32-33. They contend that PLM ignored their claims 

that Glazer’s demand for $440,000 was unfounded and their requests for PLM to interplead the 

funds. TAC ¶¶ 17-18. They assert that the distribution of surplus funds is a discretionary act 

under § 1692f(6) that transforms PLM into a debt collector covered by the FDCPA and they 

specifically identify PLM’s “[t]aking and retaining $640,100 and insisting on a release of liability 

before releasing any money” as an abusive debt collection practice. Opp’n 14.

Under Hulse, none of these actions could be challenged as FDCPA violations because they 

were all taken “in pursuit of the actual foreclosure.” Hulse, 195 F. Supp. 2d at 1204. Holding 

 

7 But Ho does point to Derisme v. Hunt Leibert Jacobson P.C., 880 F. Supp. 2d 311, 326 (D. 

Conn. 2012), which lists cases drawing “a distinction between non-judicial foreclosures which are 

intended to only enforce the mortgagee's security interest and judicial foreclosure which also seeks 

a personal judgment against the debtor for a deficiency which would amount to a debt collection.”

8

See supra note 9. The Natividad court, however, listed some actions related to nonjudicial 

foreclosure that might be considered debt collection under the FDCPA. See Natividad v. Wells 

Fargo Bank, N.A., No. 3:12-cv-03646 JSC, 2013 U.S. Dist. LEXIS 74067, at *28 (N.D. Cal. May 

24, 2013) (“For instance, persons who regularly or principally engage in communications with 

debtors concerning their default that go beyond the statutorily mandated communications required 

for foreclosure may be considered debt collectors.”).

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money that was indisputably due to the Hundals may be an act arguably outside of the scope of the 

actual foreclosure. But it is hardly “an attempt to collect a debt” under the FDCPA. Moreover, 

PLM would have to regularly engage in such activities to be a debt collector under the general 

definition. See 15 U.S.C. § 1692a(6) (“The term ‘debt collector’ means any person ... who 

regularly collects or attempts to collect... .”). The TAC is devoid of any such allegations.

To state a claim under the FDCPA, the Hundals also have to allege that PLM’s debt 

collection activities violated a federal statute. Natividad, 2013 U.S. Dist. LEXIS 74067, at *11. 

The Hundals allege that PLM violated Section 1692f(6)(A) because it had no present right to 

possess the property in the foreclosure, TAC ¶ 30, and that PLM “received information from 

plaintiffs that they were actively securing a loan modification and were ready willing and able to 

cure any default on this second lien.” TAC ¶ 14. But the allegation that the Hundals were 

“actively securing” a loan modification does not mean PLM had no present right to possess the 

property. That the Hundals were seeking a loan modification does not automatically cure any 

default. Indeed, by alleging their willingness to cure any default, they effectively concede that the 

second lien was in default. 

They also assert that the full amount of the loan could not have been due because Glazer 

did not provide notice that the loan would not renew automatically. TAC ¶ 23. This goes to the 

breach of contract claim against Glazer. The trustee was entitled to rely on the representations of 

the beneficiary. Given the amount reflected in the notice of default and PLM’s right as trustee to 

rely on information from the beneficiary, the Hundals’ allegations are insufficient to support their 

claim that PLM had no present right to possess the property at the time of the sale.

B. Non-FDCPA Based Wrongful Foreclosure Allegations and Statutory Immunity

Turning to the Hundals non-FDCPA dependent allegations for this cause of action, they 

contend that “PLM breached its obligation to investigate” and “breached its obligation to provide 

an accounting or itemization of the basis for the alleged default described in its Notice of Default.” 

TAC ¶ 21. They do not cite authority for these obligations.9 The statutory framework provides 

 

9

Later in the TAC, however, plaintiffs cite to 15 U.S.C. § 1692g in connection with their failure to 

investigate claim. TAC ¶ 28. This citation turns us back to the FDCPA provisions targeted 

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immunity for “any good faith error resulting from reliance on information provided in good faith 

by the beneficiary regarding the nature and the amount of the default under the secured obligation, 

deed of trust, or mortgage.” Cal. Civil Code § 2924(b); see also Flores v. EMC Mortg. Co., 997 F. 

Supp. 2d 1088, 1127 (E.D. Cal. 2014) (“In the absence of allegations of [trustee’s] malice or other 

significant wrongdoing, section immunity 2924(d) bars purported claims against [the trustee].”) 

PLM contends that its conduct in pursuit of non-judicial foreclosure is privileged pursuant 

to Civil Code sections 47 and 2924(d). Mot. 10-12; Reply 11-13. The Hundals urge the court not 

to apply the state statutory privilege since “[t]his case is in Federal Court on the basis of Federal 

Question jurisdiction.” Opp’n 21. They then argue, “even under § 47b, PLM must establish it had 

a ‘reasonable’ belief that the Hundals owed $365, 124.08 as of 1-18-2015.” Id. The Hundals are 

mistaken. PLM, as trustee, is entitled to immunity for state law causes of action, even though this 

case is in federal court on the basis of federal question jurisdiction. California Civil Code section 

2924(d) extends the general litigation privilege under Civil Code section 47 to the “mailing, 

publication, and delivery of notices [and p]erformance of [non-judicial foreclosure] procedures.” 

Cal. Civ. Code 2924(d). 

The Hundals rattle off a list of reasons why PLM should not be entitled to statutory 

immunity. Opp’n 22. Two attack PLM’s purported good faith: PLM insisted on a waiver of all 

claims as a condition precedent to giving the Hundals the “surplus” money owed to them; and, 

PLM made no effort to exercise due diligence as required by Civil Code section 2924j and still has 

not provided the Hundals with an accounting of the basis for the payments to Glazer.10 The 

statutory provision requiring the exercise of due diligence arises only if the trustee receives written 

claims to the surplus. Cal. Civ. Code § 2924j (“The trustee shall exercise due diligence to 

determine the priority of the written claims received by the trustee to the trustee’s sale surplus 

proceeds from those persons to whom notice was sent... .”) Here, PLM received no conflicting 

claims to the surplus. It eventually distributed the full amount of the surplus to the Hundals, so no 

 

towards the general definition of a “debt collector.”

10 At the hearing the Hundals reported that Glazer has now provided them with an accounting.

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due diligence requirement attached.

The Hundals’ true issue does not concern distribution of the surplus, but rather distribution 

of the entire proceeds from the sale, because they dispute the amount in default. TAC ¶¶ 25, 26, 

29, 32. The Hundals have alleged that PLM should have known that the amount due was 

significantly less than the $440,000 paid to Glazer. TAC ¶ 14 (“PLM knew, or should have 

known, that the deed of trust called for payment of principal of $165,000. ... PLM knew that 

roughly two years of payments, totaling about $30,000 may also have been delinquent.”); see also

Opp’n 21 (“[PLM’s] own evidence shows it knew the claim of $365,124.08 was false.”).

11

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$165,000 and $30,000 figures account for the amount of the actual default, totaling around 

$200,000. But that figure does not include “interest, late charges, legal fees and foreclosure fees” 

to which Glazer may have been entitled from the proceeds of the foreclosure sale. See Notice of 

Default and Election to Sell, PLM RJN Ex. 5 (Dkt. No. 56). PLM, as trustee, was entitled to rely 

on the representations of the foreclosing beneficiary. Cal. Civ. Code § 2924(b). Although the 

$440,000 was more than twice the principal amount under the Second DOT, that fact alone is 

insufficient to assert PLM’s bad faith in paying Glazer that amount.

The Hundals allege that PLM’s conditional payment of the surplus and its failure to 

provide an accounting amount to malice. But they have received the full amount of the surplus 

from PLM and an accounting from Glazer that will allow them to litigate their breach of contract 

claim. Glazer, not PLM, had the records to provide for the accounting. PLM’s alleged attempt to 

extract a release before distributing the surplus indisputably belonging to the Hundals is a sharp 

practice, but it does not by itself constitute malice. In the absence of additional allegations 

regarding malice or bad faith, PLM is entitled to statutory immunity, and the Hundals’ cause of 

action for wrongful foreclosure is DISMISSED.

C. Tender Requirement

If the privilege did not apply, the Hundals’ cause of action would still fail because they 

 

11 Hundal notes that two years before the instant NOD, PLM recorded an NOD claiming around 

$11,000 due and payments of $2,200 per month. Opp. 21-22. PLM does not explain how this 

amount due grew to over $440,000. Id.

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have once again failed to adequately allege tender. The Hundals simultaneously assert that they 

made a tender offer and that they are excused from tender. During the hearing, the Hundals 

attempted to clarify that what they called tender was actually participation in the loan modification 

procedure. But “tender must be one of full performance ... and must be unconditional to be valid.” 

Arnolds Mgmt. Corp. v. Eischen, 158 Cal. App. 3d 575, 580 (Cal. Ct. App. 1984). “Nothing short 

of the full amount due the creditor is sufficient to constitute a valid tender, and the debtor must at 

his peril offer the full amount.” Rauer's Law etc. Co. v. S. Proctor Co., 40 Cal. App. 524, 525 

(Cal. Ct. App. 1919). Although a loan modification may have enabled the Hundals to eventually

cure any default on the Second DOT, this alone does not amount to tender of “the full amount 

due.” See id. Since the Hundals have not alleged that they offered Glazer the full amount of the 

default, their allegations of tender fail.

The Hundals also argue that they do not “have a duty to make tender as a condition 

precedent to their wrongful foreclosure claims,” (Opp’n 23), but the basis of their argument is not 

at all clear. They cite Yvanova v. New Century Mortgage Corporation for the proposition that 

“[t]ender has been excused when, among other circumstances, the plaintiff alleges the foreclosure 

deed is facially void.” 62 Cal. 4th 919, 929 (2016). But they fail to include plausible allegations 

that the foreclosure deed is facially void. I previously rejected arguments concerning unlawful 

substitution and assignment. See MTD SAC Order at 6:18-7:10. If the Hundals are relying on 

their allegations that the Second DOT was not in default, containing conflicting facts on this issue 

as they do (see supra note 4) or that they were undergoing a loan modification that would have 

cured any default, TAC ¶ 10, see id. at 3 n.4, neither renders the foreclosure deed facially void.

The Hundals rely on Pfeifer v. Countrywide Home Loans, Inc., 211 Cal. App. 4th 1250 

(Cal. Ct. App. 2012), and Fonteno v. Wells Fargo Bank, N.A., 228 Cal. App. 4th 1358 (Cal. Ct. 

App. 2014) in support of their tender arguments. Both cases are distinguishable. The plaintiffs in 

both alleged that the foreclosure was void based on the lenders’ failure to comply with HUD 

regulations where the FHA DOT explicitly required compliance with the HUD regulations.

Pfeifer, 211 Cal. App. 4th at 1280; Fonteno, 228 Cal. App. 4th at 1368. Nothing here explicitly 

requires PLM to comply with the FDCPA regulations prior to conducting the trustee’s sale, so the 

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same reasoning does not apply. 

Additionally, in Pfeifer, no foreclosure sale had occurred. Pfeifer, 211 Cal. App. 4th at 

1280. The court noted, “[a] number of courts have explicitly held that the tender rule applies only 

in cases seeking to set aside a completed sale, rather than an action seeking to prevent a sale in the 

first place.” Id. Here, of course, the sale has occurred. And in Fonteno, plaintiffs challenged the 

authority of the trustee to conduct the sale (without complying with the HUD regulations), and 

therefore alleged that the sale was void or voidable. But there is no question here that PLM had 

the authority to conduct the sale. Neither Pfeifer nor Fonteno help the Hundals.

The Hundals also confusingly point to FDCPA provisions to support their claim that no 

tender is required. Reply 23-24. They focus on PLM’s disclaimer in its notice that it was a debt 

collector to justify application of the FDCPA provisions. Reply 24. But the Ho court conclusively 

stated, “this disclaimer isn’t sufficient to show that [trustee] is a debt collector.” Ho, 2016 U.S. 

App. LEXIS 18836 at *16 n.7. As I have discussed at some length, PLM is not subject to the 

FDCPA. There is no plausible theory that would allow the Hundals not to plead tender to support 

their cause of action for wrongful foreclosure. This cause of action is meritless. 

II. STATUTORY VIOLATIONS

The task of sorting through the various allegations involving statutory violations is 

complicated by the Hundals’ choice to combine their previously alleged federal and state causes of 

action in the TAC. I will attempt to sort through the allegations and address each statutory 

violation separately.

A. Failure to Interplead the “Disputed Funds” – Cal. Civ. Code § 2924j

The Hundals claim that within 15 days of the trustee sale, they demanded that all funds be 

distributed through the Court in an interpleader action in accordance with California Civil Code 

2924j(e). TAC ¶ 15. Instead, PLM distributed the funds in accordance with California Civil Code 

§ 2924k. As discussed above, PLM justifiably relied on the good faith claim of the beneficiary in 

determining how to distribute the proceeds from the sale. Mot. 10-12. If the Hundals disputed the 

proposed distribution, they could have brought an action for declaratory relief. See, e.g., Smith v. 

James A. Merrill, Inc., 64 Cal. App. 4th 94, 97 (1998).

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The Hundals allege, “PLM is liable for damages for failing to properly allocate the money 

it received.” Opp’n 17. But they offer no coherent theory or plausible basis for this contention. 

They state that “[t]he TAC alleges a dispute over $165,000 because of failure to demand 

payment.” Opp’n 18 (citing TAC ¶ 8). It seems the Hundals are claiming that, prior to 

distribution, they disputed the amount allocated for payment to the beneficiary because the 

principal loan amount was not due, and given this dispute, PLM should not have distributed the 

sale proceeds according to the information provided by the beneficiary. But elsewhere, they admit 

the amount due was $165,000, plus $30,000. TAC ¶ 14. They fail to cite any non-FDCPA 

provisions that place an obligation to investigate conflicting claims to the sale proceeds. 

Accordingly, PLM’s motion to dismiss a cause of action for failure to interplead the funds is 

GRANTED.

B. Other State Statutory Violations

The Hundals include various other allegations throughout their complaint, some of which 

fail to reference specific code sections. See, e.g., TAC ¶ 30 (“The California Civil Code requires 

the lender or its agent to provide the payoff demand before commencing a non-judicial foreclosure 

case.”) They do not cite a specific statutory section requiring the trustee to provide a payoff 

demand before commencing a non-judicial foreclosure. The litigation privilege protects PLM as 

trustee, so the other state statutory violations must be dismissed.

C. FDCPA Violations

As discussed above, I find that PLM is a debt collector only under the limited definition of 

Section 1692a(6). But the Hundals’ claim for relief under Section 1692f(6) fails because they do 

not plausibly allege that PLM had no right to possess the property. All other claims for statutory 

violations alleged under the FDCPA’s general definition of debt collector, including 

Sections1692g, 1692f(1), 1692e(2), 1692e(5) and 1692n, are DISMISSED.

CONCLUSION

For the reasons stated above, the claims the Hundals seek to bring against PLM under the 

FDCPA are meritless and they have failed for the fourth time to plausibly plead a cause of action 

against PLM. Accordingly, I GRANT PLM’s motion to dismiss without leave to amend.

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Further, because there is no basis for federal jurisdiction in the remaining claims the 

Hundals have against Glazer, this case is REMANDED to the California Superior Court, County 

of Alameda.

The Clerk shall close the file.

IT IS SO ORDERED.

Dated: December 8, 2016

______________________________________

WILLIAM H. ORRICK

United States District Judge

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