Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-01407/USCOURTS-casd-3_10-cv-01407-2/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 15:1601 Truth in Lending

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DAVID CARAVANTES, an individual,

Plaintiff,

CASE NO. 10-CV-1407 - IEG (AJB)

ORDER GRANTING

DEFENDANTS’ MOTION TO

DISMISS PLAINTIFF’S FIRST

AMENDED COMPLAINT

[Doc. No. 20]

vs.

CALIFORNIA RECONVEYANCE

COMPANY, a California corporation;

WASHINGTON MUTUAL BANK, FA, a

Federal Savings Bank organized and existing

under the laws of the United States; CHASE

HOME FINANCE LLC, a Delaware Limited

Liability Company; VREJ JOUKADARIAN,

an individual, CLEMENTS J. DURKIN, an

individual, DEBORAH BRIGNAC, an

individual, ANN THORN, an individual, and

DOES 1-20, inclusive,

Defendants.

This is a mortgage case. Plaintiff’s First Amended Complaint (“FAC”) asserts six causes

of action arising from Defendants’ conduct in issuing and servicing a mortgage loan, as well as

their conduct in initiating non-judicial foreclosure proceedings when Plaintiff defaulted on the

loan. [Doc. No. 18.] Presently before the Court is a motion to dismiss brought by certain

Defendants: California Reconveyance Company; JPMorgan Chase Bank, N.A., an acquirer of

certain assets and liabilities of Washington Mutual Bank from the FDIC acting as receiver; Chase

Home Finance LLC; and Deborah Brignac (collectively “Defendants” or “the moving

Defendants”). [Doc. No. 20.] Defendants seek dismissal of three of Plaintiff’s causes of action. 

[Id.] For the reasons described below, the Court GRANTS Defendants’ motion.

Case 3:10-cv-01407-CAB-MDD Document 46 Filed 08/03/11 Page 1 of 9
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BACKGROUND

Plaintiff became the owner of property located at 5189 Argonne Court, San Diego, CA

92117 on or about August 15, 2007. [See FAC ¶¶ 5, 17.] He acquired the property via a loan from

Defendant Washington Mutual Bank, F.A. (“WaMu”). [Id. ¶ 18.] The corresponding Deed of

Trust was recorded in San Diego on August 27, 2007. [Id.] The Deed of Trust identified

Defendant WaMu as the lender and Defendant California Reconveyance Company (“CRC”) as the

trustee. [Id.]

Plaintiff appears to have experienced problems in making his loan payments when his

income decreased dramatically in 2008. [Id. ¶ 20.] In September 2008, after Defendant WaMu

closed, Plaintiff alleges he received a form letter stating that Defendant WaMu had become

Defendant JPMorgan Chase Bank, N.A. (“JPMorgan”). [Id. ¶ 21.] Plaintiff subsequently received

statements from Defendant Chase Home Finance LLC (“Chase”), and he directed payments to

Chase, assuming that Chase was the new servicer of his loan. [Id.]

In or around November 2009, Plaintiff received a letter from the Chase Home Ownership

Preservation Office stating that many Americans are experiencing difficulty with their mortgage

payments and that if Plaintiff was experiencing financial difficulty, there were some options

available to him that would assist him with making payments. [Id. ¶ 22.] Plaintiff subsequently

received several additional letters of the same nature. [Id.] According to Plaintiff, none of these

letters discussed Plaintiff’s actual financial situation. [Id.]

On January 25, 2010, Defendant Chase mailed Plaintiff a letter titled “Notice of Collection

Activity,” alleging Plaintiff was in default under the terms of his loan. [Id. ¶ 23.] The letter did

not attempt to discuss any options available to Plaintiff to avoid foreclosure other than paying the

full amount allegedly due. [Id.] On March 10, 2010, Defendant CRC recorded a Notice of Default

on Plaintiff’s property. [Id. ¶ 24.] The Notice of Default was accompanied by a Declaration of

Compliance signed by Defendant Durkin for JPMorgan. [Id. ¶ 25.] The Declaration of

Compliance indicates that the “mortgagee, beneficiary or authorized agent tried with due diligence

but was unable to contact the borrower” to discuss the borrower’s financial situation and to explore

options for the borrower to avoid foreclosure as required by Cal. Civ. Code § 2923.5, and that

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more than thirty days had elapsed since due diligence was completed. [Id. ¶ 26.] However, except

for the generic letters discussed above, none of the Defendants sent any letters or made any phone

calls to Plaintiff concerning his personal financial situation and options to avoid foreclosure that

were specifically available to him. [Id. ¶ 27.]

In March 2010, Plaintiff began investigating his legal rights concerning the foreclosure and

retained a mortgage auditing firm. [Id. ¶ 28.] On March 23, 2010, Plaintiff sent a Qualified

Written Request (“QWR”) letter to Defendants CRC, JPMorgan, and Chase. [Id. ¶ 29.] The letter

made several requests for documentation and information concerning Plaintiff’s loan. [Id.] 

Defendant CRC acknowledged the receipt of the letter on March 26, 2010 and stated that it

forwarded the letter to Defendant JPMorgan. [Id. ¶ 30.] Also on March 26, 2010, Defendant

Chase acknowledged the receipt of Plaintiff’s letter and indicated that a further response would be

forthcoming. [Id.] On June 3, 2010, Chase responded to Plaintiff’s letter, providing some of the

requested information and indicating that other information was being withheld because it was

either proprietary or unavailable. [Id. ¶ 32.]

On June 11, 2010, Defendant CRC executed a Notice of Trustee’s Sale, indicating that the

sale was scheduled for July 6, 2010 at 10:00 a.m. [Id. ¶¶ 33, 34.] The Notice of Trustee’s Sale

was accompanied by a Declaration Pursuant to California Civil Code Section 2923.54, stating that

the undersigned loan servicer had complied with the requirements under Section 2923.54. [Id. ¶

35.] 

Based on the foregoing, Plaintiff cannot determine who directed Defendant CRC to conduct

the Trustee’s Sale of the Property. [Id. ¶ 36.] Plaintiff contends he never received anything

indicating that JPMorgan was the new beneficiary. [Id.] As such, Plaintiff believes Defendant

JPMorgan is not and was not the holder of the Note, in possession of the Note, or otherwise

entitled by law to initiate a non-judicial foreclosure under the Deed of Trust or to direct Defendant

CRC to foreclose and sell the property. [Id. ¶ 37.]

Plaintiff filed suit in July 2010. The Court issued a temporary restraining order and

preliminary injunction, [Doc. Nos. 6 and 10], and later granted in part and denied in part

Defendants’ motion to dismiss, [Doc. No. 17.] Plaintiff filed the FAC in November 2010, [Doc.

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No. 18], and Defendants filed the present motion soon thereafter, [Doc. No. 20]. When the parties

indicated at oral argument that their dispute might be resolved were Plaintiff to obtain a loan

modification, the Court postponed ruling on the motion and directed the parties to discuss loan

modification options before the Magistrate Judge. Those discussions may yet prove fruitful, but

the Court must nevertheless keep the case moving by issuing the present Order.

DISCUSSION

I. Legal Standard for a Rule 12(b)(6) Motion to Dismiss

A complaint must contain “a short and plain statement of the claim showing that the

pleader is entitled to relief.” Fed. R. Civ. P. 8(a) (2009). A motion to dismiss pursuant to Rule

12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in

the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The

court must accept all factual allegations pled in the complaint as true, and must construe them and

draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty

Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 12(b)(6) dismissal, a

complaint need not contain detailed factual allegations, rather, it must plead “enough facts to state

a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007). A claim has “facial plausibility when the plaintiff pleads factual content that allows the

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 

Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556).

However, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’

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

action will not do.” Twombly, 550 U.S. at 555 (citation omitted). A court need not accept “legal

conclusions” as true. Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1949 (2009). In spite of the

deference the court is bound to pay to the plaintiff's allegations, it is not proper for the court to

assume that “the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have

violated the . . . laws in ways that have not been alleged.” Associated Gen. Contractors of Cal.,

Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

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 Plaintiff’s FAC contains six causes of action, but the moving Defendants seek dismissal of 1

three causes of action only. Plaintiff’s first and third causes of action are directed exclusively to

WaMu and FDIC, [Doc. No. 18], and the Court previously held Plaintiff adequately alleged that

Defendants violated California Civil Code § 2923.5, [Doc. No. 17]. Accordingly, the Court addresses

only Plaintiff’s second, fourth, and fifth causes of action here (alleging violation of RESPA, civil

conspiracy and unfair business practices, respectively).

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II. Analysis1

A. Second Cause of Action: Real Estate Settlement Procedures Act (RESPA)

Plaintiff alleges the moving Defendants violated RESPA by failing to adequately respond

to his Qualified Written Request (“QWR”) letter. [See FAC ¶¶ 59-64, 66-67.] 

A QWR is “a written correspondence, other than notice on a payment coupon or other

payment medium supplied by the servicer that -- (i) includes, or otherwise enables the servicer to

identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the

belief of the borrower, to the extent applicable, that the account is in error or provides sufficient

detail to the servicer regarding other information sought by the borrower.” 12 U.S.C. §

2605(e)(1)(B). Upon receipt of a QWR, a loan servicer must provide a letter of acknowledgment

within twenty business days and a response within sixty business days. 12 U.S.C. § 2605(e)(1)-(3). 

The requirements for an adequate response are limited. “Section 2605 only requires servicers to

respond to a proper QWR by correcting the account discrepancy, explaining why the account is

correct, or if the information is unavailable, by providing contact information for someone who can

assist the borrower with her inquiry.” Simila v. American Sterling Bank, 2010 WL 3988171, at *3

(S.D. Cal. Oct. 12, 2010) (citation omitted).

A loan servicer who fails to adequately respond to a QWR may be liable for actual or 

statutory damages, or both, as well as reasonable costs and attorney’s fees. 12 U.S.C. §

2605(f)(1)(A)-(B). To recover actual damages, a plaintiff must state allegations demonstrating

pecuniary loss. See, e.g., Amaral v. Wachovia Mortgage Corp., 692 F. Supp. 2d 1226, 1232 (E.D.

Cal. 2010) (dismissing RESPA claim because Plaintiff’s damages allegation did not amount to a

factual allegation, only a conclusory statement of law); Garcia v. Wachovia Mortgage Corp., 676

F. Supp. 2d 895, 909 (C.D. Cal. 2009) (same). To recover statutory damages (up to $1,000), a

plaintiff must plead a pattern or practice of noncompliance with RESPA. Lal v. Am. Home

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Servicing, Inc., 680 F. Supp. 2d 1218, 1223 (E.D. Cal. 2010).

Defendants maintain Plaintiff’s allegations fail to demonstrate that he suffered pecuniary

loss as a result of JPMorgan and Chase’s alleged failure to adequately respond to his QWR letter. 

[See Defs.’ Mot. at 3.] In addition, Defendants contend Plaintiff has not alleged facts

demonstrating entitlement to statutory damages, noting Plaintiff’s pattern and practice allegations

are directed to WaMu and noting the absence of allegations suggesting Defendants made it a

regular practice to ignore the provisions of RESPA. [Id. at 4.]

The Court agrees that Plaintiff has not adequately pleaded entitlement to statutory damages. 

Plaintiff does not allege the moving Defendants engaged in a pattern or practice of noncompliance

with RESPA, instead directing his pattern and practice allegations to WaMu (and FDIC as

receiver). [See FAC ¶¶ 53-67.]

Likewise, the Court agrees that Plaintiff has not adequately pleaded pecuniary losses. 

Plaintiff contends he has “incurred costs in filing fees, a loan audit, and legal consultation in order

to [] determine his rights under the loan documents he signed.” [FAC ¶ 66.] To the extent

Plaintiff maintains Defendant’s response interfered with his ability to determine the status of his

account, Plaintiff has not alleged a pecuniary loss. See Joern v. Ocwen Loan Servicing, LLC, 2010

WL 3516907, at *3 (E.D. Wash. Sept. 2, 2010).

More fundamentally, RESPA does not require loan servicers to respond to broad requests

for information in a QWR. Under RESPA, Defendants were required to explain and correct any

discrepancy identified by Plaintiff or, if the information was unavailable, to provide contact

information for an individual or office capable of providing further assistance. See 12 U.S.C. §

2605(e)(2)(A)-(C); Simila v. American Sterling Bank, 2010 WL 3988171, at *3 (S.D. Cal. Oct. 12,

2010) (citation omitted). Plaintiff’s QWR did not identify a specific discrepancy; it asked for a

broad range of information pertaining to the subject loans. [See FAC, Ex. 4 (Plaintiff’s QWR).] 

Defendant Chase responded by letter and appears to have provided Plaintiff with extensive

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 Defendant Chase provided the following documents: copies of the Adjustable Rate Note, 2

Security Instrument, HUD-1 Settlement Statement, Good Faith Estimate, Truth in Lending Statement,

Loan Application, Appraisal, Notice of Right to Cancel/Disclosures, and a Loan Transaction History.

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documentation. [See FAC, Ex. 8 (Response to QWR by Defendant Chase).] Defendant Chase 2

noted that any other information was unavailable and provided contact information for further

assistance. [See id.] In sum, Chase adequately responded to Plaintiff’s QWR.

Based on the foregoing, the Court DISMISSES WITHOUT PREJUDICE Plaintiff’s

second cause of action.

B. Fourth Cause of Action: Civil Conspiracy

Plaintiff alleges Defendants “conspired and agreed to implement a scheme to defraud and

victimize Plaintiff through the unlawful acts alleged herein.” [FAC ¶ 74.]

Civil conspiracy is “not a cause of action, but a legal doctrine that imposes liability on

persons who, although not actually committing a tort themselves, share with the immediate

tortfeasors a common plan or design in its perpetration.” Applied Equip. Corp. v. Litton Saudi

Arabia Ltd., 869 P.2d 454, 457 (Cal. 1994). The elements of civil conspiracy are (1) the formation

and operation of the conspiracy, (2) a wrongful act done pursuant to the conspiracy, and (3)

damage resulting to the plaintiff from the act. See id. “Plaintiff must allege facts showing the role

each defendant allegedly played in the conspiracy . . .” Green v. Alliance Title, 2010 WL 3505072,

at *12 (E.D. Cal. Sept. 2, 2010); Velasquez v. Chase Home Finance LLC, 2010 WL 3211905, at *5

(N.D. Cal. Aug. 12, 2010).

In this case, Plaintiff’s FAC alleges: that JPMorgan “specifically negotiated for the FDIC

to absorb WaMu’s liability in selling predatory loans to unknowing borrowers so that JPMorgan

could profit on foreclosing on said borrowers without having to face the predatory lending causes

of action which JPMorgan knew or reasonably should have known WaMu could be liable for”; that

JPMorgan “enlisted the assistance of Chase Home Finance and CRC to institute unlawful

foreclosures as quickly as possible”; and that JPMorgan encouraged Chase Home Finance to fail to

offer Plaintiff any options to avoid foreclosure.” 

However, Plaintiff does not set forth any specific facts regarding the formation or operation

of a conspiracy or a wrongful act by Defendants. JPMorgan did not commit a wrongful act in

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seeking to avoid liability for the wrongful acts of WaMu. See West Park Assocs. v. Butterfield Sav.

& Loan Ass’n, 60 F.3d 1452, 1459 (9th Cir. 1995) (noting the FDIC has “broad powers to allocate

assets and liabilities” of a failed institution). Nor has Plaintiff alleged specific facts in support of

his theory that Defendants’ conduct in instituting foreclosures is unlawful. See generally FAC. 

Plaintiff’s allegations do not raise his right to relief above a speculative level. See Twombly, 550

U.S. at 555. Because the Court is persuaded that amendment would be futile, Reddy v. Litton

Indus., Inc., 912 F.2d 291, 296-97 (9th Cir. 1990), the Court DISMISSES Plaintiff’s fourth cause

of action WITH PREJUDICE.

C. Fifth Cause of Action: Unfair Competition Law (UCL) 

Section 17200 defines unfair competition as “any unlawful, unfair or fraudulent business

act or practice” and “unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code

§ 17200. Because the statute is written in the disjunctive, it prohibits three separate types of unfair

competition: (1) unlawful acts or practices, (2) unfair acts or practices, and (3) fraudulent acts or

practices. Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 540 (Cal. 1999).

Plaintiff’s UCL claims against JPMorgan and Chase are appropriately construed as alleging

unlawful business practices. Plaintiff alleges JPMorgan and Chase violated RESPA by

inadequately responding to Plaintiff’s QWR. Because the Court has concluded that JP Morgan and

Chase did not violate RESPA, Plaintiff’s UCL claim against those Defendants must fail. See

Newsom v. Countrywide Home Loans, Inc., 714 F. Supp. 2d 1000, 1011 (N.D. Cal. 2011) (“Where

a plaintiff cannot state a claim under the ‘borrowed’ law, he or she cannot state a [claim under the

UCL] either”) (citation omitted).

Plaintiff also alleges that certain Defendants engaged in fraudulent business practices. He

alleges that “Defendants Joukadarian, Durkian, Brignac and Thorn have engaged in giving false

and improper declarations in support of the other Defendants unlawful activities.” [FAC ¶ 90.]

Without more, the foregoing allegation is insufficient to provide Defendants with adequate notice

of the claims against them. See Fortaleza, 642 F. Supp. 2d at 1020 (dismissing UCL claim

because plaintiff failed to allege “with ‘reasonable particularity’ the facts surrounding any

purportedly fraudulent statements made by defendants-i.e., the who, what, where, and when of

such statements”).

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Last, Plaintiff alleges Defendant CRC failed “to conduct a diligent investigation as to the

validity of said foreclosure for pecuniary gain.” [FAC ¶ 89.] Though unclear as to which

particular prong of the UCL Plaintiff’s allegation is directed to, the Court concludes the allegation

is too vague to state a plausible claim against CRC under any prong of the UCL. However, the

Court will allow Plaintiff to amend his complaint in order to bolster his allegations.

Accordingly, the Court DISMISSES WITHOUT PREJUDICE Plaintiff’s fifth cause of

action.

CONCLUSION

For the foregoing reasons, the Court GRANTS the moving Defendants’ motion to dismiss

and ORDERS as follows:

– Plaintiff’s second and fifth causes of action are DISMISSED WITHOUT

PREJUDICE. 

– Plaintiff’s fourth cause of action is DISMISSED WITH PREJUDICE.

IT IS SO ORDERED.

DATED: August 3, 2011

IRMA E. GONZALEZ, Chief Judge

United States District Court

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