Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_16-cv-02519/USCOURTS-casd-3_16-cv-02519-3/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 12:2601 Real Estate Settlement Procedures Act (RESPA) (findings &amp; purpose)

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MARGARETTE SMITH, on behalf of

herself and all others similarly

situated, 

Plaintiff,

CASE NO. 16cv2519-GPC(BLM)

ORDER DENYING DEFENDANT’S

MOTION TO DISMISS

v. [Dkt. No. 19.]

SPECIALIZED LOAN SERVICING,

LLC,

Defendant.

On May 24, 2017, Defendant filed a motion to dismiss the first amended

complaint (“FAC”). (Dkt. No. 19.) On July 12, 2017, the Court deferred ruling on the

motion to dismiss until the Court’s ruling on an impending motion to substitute to be

filed by Plaintiff. After the motion to substitute parties wasfully briefed, on September

13, 2017, the Court granted the motion for substitution of parties. The Court now

addressesthe motion to dismissfiled by Defendant. Based on the reasoning below, the

Court DENIES Defendant’s motion to dismiss. 

Background

Plaintiff Margarette Smith (“Plaintiff” or “Smith”) filed a purported first

amended class action complaint against Defendant Specialized Loan Servicing, LLC

(“Defendant” or “SLS”) for alleged violations of Regulation X of the Real Estate

Settlement Procedures Act (“RESPA”), 12 C.F.R. §1024.41; and California Unfair

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Competition Law (“UCL”), Cal. Bus. & Prof. Code 17200 et seq. (Dkt. No. 17, FAC.) 

Prior to the filing of the FAC, Smith died on April 18, 2017. (Id. ¶ 8.) On September

13, 2017, the Court granted the movants Zarah Kimble, Sarah Sakinah Groza

O’Loughlin, and Seher Basak’s motion to substitute them in as plaintiffs. (Dkt. No.

30.) A second amended complaint adding the movants as plaintiffs has not yet been

filed. (Dkt. No. 31.) 

Most of the arguments raised in the motion to dismiss are now mooted by the

Court’s order granting substitution of parties. However, Defendant’s motion also

included an alternative argument, that the class allegations should be struck pursuant

to Federal Rule of Civil Procedure (“Rule”) 12(f), in the event the Court denied its

motion to dismiss. The Court now addresses the remaining argument in Defendant’s

motion to dismiss. 

Discussion

A. Legal Standard on Federal Rule of Civil Procedure 12(f)

Rule 12(f) provides that the court “may strike from a pleading an insufficient

defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ.

P. 12(f). “The function of a 12(f) motion to strike is to avoid the expenditure of time

and money that must arise from litigating spurious issues by dispensing with those

issues prior to trial . . . .” Whittlestone, Inc. v. Handi–Craft Co., 618 F.3d 970, 973 (9th

Cir. 2010) (quoting Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd

on other grounds 510 U.S. 517 (1994)). 

“Motions to strike are ‘generally disfavored because they are often used as

delaying tactics and because of the limited importance of pleadings in federal

practice.’” Cortina v. Goya Foods, Inc., 94 F. Supp. 3d 1174, 1182 (S.D. Cal. 2015)

(quoting Rosales v. Citibank, 133 F. Supp. 2d 1177, 1180 (N.D. Cal. 2001)). As such,

“motions to strike should not be granted unless it is clear that the matter to be stricken

could have no possible bearing on the subject matter of the litigation.” Colaprico v.

Sun Microsys., Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 1991). “Courts will not grant

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motions to strike unless ‘convinced that there are no questions of fact, that any

questions of law are clear and not in dispute, and that under no set of circumstances

could the claim or defense succeed.’” Novick v. UNUM Life Ins. Co. of America, 570

F. Supp. 2d 1207, 1208 (C.D. Cal. 2008) (quoting RDF Media Ltd. v. Fox Broad. Co.,

372 F. Supp. 2d 556, 561 (C.D. Cal. 2005)). “When ruling on a motion to strike, this

Court ‘must view the pleading under attack in the light most favorable to the pleader.” 

Id. (citing RDF Media Ltd., 372 F. Supp. 2d at 561). 

B. Motion to Strike Class Allegations

Defendantseeksto strike the class allegations in the FAC arguing that Plaintiffs,

as successors-in-interests, cannot satisfy the typicality and adequacy requirements for

class certification because they are subject to unique defenses that will delay class

certification. Defendant contends that while Plaintiffs may be successors-in-interest

to the Property at issue, they are not successors in interest to Plaintiff’s causes of

action.

1 Next, it contends that Plaintiffs will be subject to unique defenses such as the

fact that they are limited in the types of damages they can recover as successors in

interest, whether the Property was Plaintiff’s principal place of residence during the

relevant time period, and whetherthePlaintiffs, as successors-in-interest, have personal

knowledge of the underlying facts in the case. 

“The grounds for a motion to strike must appear on the face of the pleading

under attack, or from matters which the Court may take judicial notice.” In re Toyota

Motor Corp., 790 F. Supp. 2d 1152, 1170 (C.D. Cal. 2011). While class allegations

may be stricken at the pleading stage, the granting of a motion to dismiss or strike class

allegations before discovery has commenced should be done rarely. In re Wal–Mart

Stores, Inc. Wage and Hour Litig., 505 F. Supp. 2d 609, 615 (N.D. Cal. 2007) (noting

1Defendant explainsthat the Property is not the subject to the litigation; it is only

tangentially related to Plaintiff’s claim. While the Loan happens to be secured by the

Property, Plaintiff’s remedies in this action, seeking actual and statutory damages and

restitution are unrelated to the Property. The Court is not persuaded with Defendant’s

argument and Defendant fails to provide any legal authority to support its argument. 

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that the “better course is to deny such a motion because ‘the shape and form of a class

action evolves only through the process of discovery”).

The issues raised by Defendant are factual issues that have not yet been subject

to discovery and Plaintiffs should be given the opportunity to present their evidence

to support class certification. See In re Wal-Mart Stores, 505 F. Supp. 2d at 615-16

(“While plaintiffs’ class definitions are suspicious and may in fact be improper,

plaintiffs should at least be given the opportunity to make the case for certification

based on appropriate discovery . . . .”). The Court concludes that the motion to strike

class allegations is premature and Defendant may raise its arguments at the time of

class certification. See Cholakyan v. Mercedes–Benz USA, LLC, 796 F. Supp. 2d

1220, 1246 (C.D. Cal. 2011) (finding that a motion to strike class allegations was

premature where defendant had not filed an answer and discovery had not begun). 

Conclusion

Based on the above, the Court DENIES Defendant’s motion to dismissthe FAC. 

IT IS SO ORDERED.

DATED: September 21, 2017

HON. GONZALO P. CURIEL

United States District Judge

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