Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02676/USCOURTS-caed-2_09-cv-02676-6/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 15:1601 Truth in Lending

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28 This matter is deemed suitable for decision without oral *

argument. E.D. Cal. R. 230(g).

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

CHARLES DAY,

 Plaintiff,

 v.

AMERICAN HOME MORTGAGE

SERVICING, INC., and DOES 1-50,

inclusive, 

 Defendants.

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2:09-cv-02676-GEB-KJM

ORDER GRANTING AND DENYING IN

PART DEFENDANT’S MOTION TO

DISMISS PLAINTIFF’S SECONDAMENDED COMPLAINT AND DENYING

ITS MOTION FOR A MORE

DEFINITE STATEMENT*

Defendant moves for dismissal of Plaintiff’s Second-Amended

Complaint (incorrectly titled “Third-Amended Complaint”) with prejudice

under Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”),

arguing Plaintiff has failed to allege sufficient facts to state viable

claims. Defendant moves in the alternative for a more definite statement

under Federal Rule of Civil Procedure 12(e) (“Rule 12(e)”). For the

reasons stated below, Defendant’s dismissal motion is granted and denied

in part, and Defendant’s Rule 12(e) motion is denied.

I. LEGAL STANDARD

A. Standard for a Motion to Dismiss under Rule 12(b)(6)

A Rule 12(b)(6) dismissal motion tests the legal sufficiency

of the claims alleged in the complaint. Novarro v. Black, 250 F.3d 729,

732 (9 Cir. 2001). A pleading must contain “a short and plain th

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statement of the claim showing that the pleader is entitled to relief

. . . .” Fed. R. Civ. P. 8(a)(2). The complaint must “give the

defendant fair notice of what the [plaintiff’s] claim is and the grounds

upon which relief rests . . . .” Bell Atlantic Corp. v. Twombly, 550

U.S. 544, 555 (2007). 

Dismissal of a claim under Rule 12(b)(6) is appropriate only

where the complaint either 1) lacks a cognizable legal theory, or 2)

lacks factual allegations sufficient to support a cognizable legal

theory. Balistreri v. Pacific Police Dept., 901 F.2d 696, 699 (9 Cir. th

1988). To avoid dismissal, the plaintiff must allege “only enough facts

to state a claim to relief that is plausible on its face.” Twombly, 550

U.S. at 547. 

In deciding a Rule 12(b)(6) motion, the material allegations

of the complaint are accepted as true and all reasonable inferences are

drawn in favor of the plaintiff. See al-Kidd v. Ashcroft, 580 F.3d 949,

956 (9th Cir. 2009). However, neither conclusory statements nor legal

conclusions are entitled to a presumption of truth. See Ashcroft v.

Iqbal, 129 S. Ct. 1937, 1949-50 (2009); Twombly, 550 U.S. at 555. “In

sum, for a complaint to survive a motion to dismiss, the nonconclusory

‘factual content,’ and reasonable inferences from that content, must be

plausibly suggestive of a claim entitling the plaintiff to relief.” Moss

v. United States Secret Serv., 572 F.3d 962, 969 (9 Cir. 2009). th

If a Rule 12(b)(6) motion is granted, the “district court

should grant leave to amend even if no request to amend the pleadings is

made, unless it determines that the pleading could not possibly be cured

by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127

(9 Cir. 2000)(quoting Doe v. U.S., 58 F.3d 484, 497 (9 Cir. 1995)). th th

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B. Standard for a Motion for a More Definite Statement

“[A] party may move for a more definite statement of a

pleading [under Rule 12(e) when the pleading] ... is so vague or

ambiguous that the party cannot reasonably prepare a response.” A Rule

12(e) motion should not be granted unless the challenged pleading is so

indefinite that the responding party cannot determine the nature of the

claim(s) asserted. See Famolare, Inc. v. Edison Bros. Stores, Inc., 525

F.Supp. 940, 949 (E.D.Cal. 1981).

II. DISCUSSION

Defendant filed earlier dismissal motions challenging

Plaintiff’s original Complaint and his First-Amended Complaint, which

Plaintiff incorrectly titled “Second-Amended Complaint.” On June 17,

2010, Plaintiff subsequently filed what he titled his Third-Amended

Complaint, which is actually his Second-Amended Complaint (“SecondAmended Complaint”). Three state law claims remain in the Second-Amended

Complaint: violation of the Rosenthal Fair Debt Collections Practices

Act (“Rosenthal Act”), breach of the implied covenant of good faith and

fair dealing, and violation of California Business & Professions Code

section 17200.

A. The Rosenthal Act

Defendant seeks dismissal of Plaintiff’s Rosenthal Act claim,

arguing “[a]lthough Plaintiff alleges otherwise... [Defendant] is not

considered a ‘debt collector’-[Defendant] is merely the loan servicer.”

(Def.’s Mot. to Dismiss (“Mot.”) 5:12-13.) Plaintiff counters, “[he] has

properly plead that Defendant violated the Rosenthal Act....” (Pl.’s

Opp. to Mot. to Dismiss (“Opp’n”) 4:1-2.) Defendant further argues in

its reply brief that this claim should be dismissed for lacking the

required specificity. (Def.’s Reply to Pl.’s Opp’n to Mot. to Dismiss

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(“Reply”) 1:4-13.) Since Defendant’s specificity argument was made for

the first time in its reply brief, this argument need not be considered.

See United States v. Anderson, 472 F.3d 662, 668 (9 Cir. 2006) (“Issues th

raised for the first time in an appellant's reply brief are generally

deemed waived.”); Zamani v. Carnes, 491 F.3d 990, 997 (9 Cir. 2007) th

(“The district court need not consider arguments raised for the first

time in a reply brief.”) 

The Rosenthal Act is designed to “prohibit debt collectors

from engaging in unfair or deceptive acts or practices in the collection

of consumer debts and to require debtors to act fairly in entering into

and honoring such debts....” Cal. Civil Code § 1788.1(b). A “debt

collector” is “any person who, in the ordinary course of business,

regularly, on behalf of himself or herself or others, engages in debt

collection.” Cal. Civ. Code § 1788.2(c). 

Plaintiff alleges in his Rosenthal Act claim that "[Defendant]

is a debt collector as that term is defined in California Civil Code

1788.2. Specifically, [Plaintiff alleges in that Defendant] in the

'ordinary course of business, regularly, on behalf of himself or herself

or others, engages in debt collection.'" (Second-Am. Compl. ¶ 9.)

Defendant has not shown that these allegations are insufficient to state

a Rosenthal Act claim against Defendant. Therefore, Defendant's motion

to dismiss this claim is denied. 

B. Breach of the Covenant of Good Faith & Fair Dealing

Defendant also seeks dismissal of Plaintiff’s claim for breach

of the covenant of good faith and fair dealing (“implied covenant

claim”), arguing, inter alia, that even though Plaintiff has been given

opportunities to amend this claim, Plaintiff's newly-pled allegations

"do not respond in any way to the grounds on which this Court dismissed

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this cause of action" in its June 3, 2010 Order. Plaintiff responds that

his newly pled allegations do respond to the Court's June 3, 2010 Order,

since they state "the specific terms of the contract." (Opp'n 5:11-12.)

The June 3, 2010 Order dismissed Plaintiff's implied covenant

claim with leave to amend since "Plaintiff [did] not allege the terms of

the contract(s) entered into between the parties or how Defendant’s

conduct frustrated any of its specific provisions." (Doc. No. 37, 8:6-

8.) Plaintiff responded by amending this claim to add the following

allegations: "The terms of the loan were for 360 months. The loan

balance was for $720,000. The first five years were at 5.125% interest.

On September 1, 2010, the rate adjusted to LIBOR plus 2.250% with a cap

of 10.125%." (Second-Am. Compl. ¶ 19.) However, Plaintiff does not

allege that Defendant was a party to the loan. The alleged contract

which forms the basis of Plaintiff’s implied covenant claim is "a

contract wherein Defendant would service a mortgage owned by American

Brokers Conduit for Plaintiff's property...." (Id. ¶18.) Plaintiff

still fails to allege the necessary terms of any contract showing that

Defendant breached any implied covenant of good faith and fair dealing

claim. Therefore, this claim is dismissed. Further, since Plaintiff has

failed to remedy the pleading defects in this claim, despite having been

given two opportunities to do so, this claim is dismissed with

prejudice. 

C. Business & Professions Code § 17200

Defendant also argues Plaintiff’s California Business and

Professions Code section 17200 (“§ 17200") claim should be dismissed

because this claim "has not been pled with the requisite particularity,"

"Plaintiff does not allege how [Defendant] caused [his] injuries[,]"

"does not make any substantive allegation that [Defendant] engaged in

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any actual 'unfair' practices," and "has failed to identify... any

practices by [Defendant] which were actually fraudulent." (Mot. 11:11-2,

11:15-18.) Plaintiff rejoins that § 17200 prohibits "'any unlawful,

unfair or fraudulent' business practice, not just unfair competition and

false advertising[,]" and he has sufficiently alleged an unlawful

predicate act. (Opp'n 5:19-21, 6:4-8.)

California’s Unfair Competition Law, § 17200, prohibits

“unlawful, unfair or fraudulent” business acts and practices. Since

"unfair competition" is defined in the disjunctive, the statute

establishes three separate types actionable conduct, prohibiting

practices that are either "unfair," "unlawful," or "fraudulent." CelTech Communic’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th

163, 180 (1999). “By proscribing ‘any unlawful’ business practice,

section 17200 ‘borrows' violations of other laws and treats them as

unlawful practices that the unfair competition law makes independently

actionable.” Id. (citation omitted). 

Plaintiff's § 17200 claim allegations include:

Defendant has committed wrongful acts. These

acts include... violation of [the Rosenthal Act] as

laid out more fully in the first cause of action. 

Plaintiff is informed and believes and thereon

alleges that Defendants committed unlawful, unfair,

and/or fraudulent business practices, as defined by

California Business and Professions Code section

17200, by engaging in the unlawful, unfair, and

fraudulent business practices alleged herein.

As a result of Defendants' wrongful conduct,

Plaintiff has suffered various damages and injuries

according to proof at trial. Plaintiff has suffered

an injury in fact as follows:

a. Damage to his credit score resulting in

increased interest rates and increased

interest payments; 

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b. Increased costs to maintain his property

including bank to comply with the terms

of the mortgage.

(Second-Am. Compl. ¶¶ 26-28.) Plaintiff also incorporated by reference

all earlier allegations into his § 17200 claim. (Second-Am. Compl. ¶25.)

These allegations sufficiently state a § 17200 claim for

unlawful business practices since Defendant has not shown that

Plaintiff’s Rosenthal Act claim against it does not provide “unlawful”

predicate activity to support Plaintiff’s § 17200 claim. Therefore,

Defendant’s motion to dismiss Plaintiffs' § 17200 claim is denied. 

D. Alternative Rule 12(e) Motion

Defendant also seeks a more definite statement of each of

Plaintiff’s claims. (Mot. ¶ 12:20-23.) The portion of this motion

concerning Plaintiff’s breach of the implied covenant claim is denied as

moot. Further, the remainder of the motion is denied since Plaintiff’s

allegations are not “so vague or ambiguous that [Defendant] cannot

reasonably prepare a response.” Fed.R.Civ.P. 12(e).

III. CONCLUSION

For the stated reasons, Defendant’s dismissal motion is

granted and denied in part. Defendant’s motion for a more definite

statement is denied.

Dated: August 10, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

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