Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_14-cv-01669/USCOURTS-caed-2_14-cv-01669-3/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-(Citizenship)

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

TENA ROBINSON,

Plaintiff,

v.

OCWEN LOAN SERVICING, LLC; and 

DOES 1-100, inclusive,

Defendant.

No. 2:14-cv-01669-MCE-EFB

MEMORANDUM AND ORDER

Through the present action, Plaintiff Tena Robinson (“Plaintiff”) seeks redress 

from Defendant Ocwen Loan Servicing, LLC (“Ocwen”). Ocwen services the mortgage 

on Plaintiff’s home located at 3350 Y Street, Sacramento County, California (“the subject 

property”). According to Plaintiff, Ocwen failed to apply a loan modification promised by 

its predecessor, GMAC Mortgage LLC (“GMACM”). Presently before the Court is 

Ocwen’s Motion to Dismiss Plaintiff’s First Amended Complaint (“FAC”) in its entirety for 

failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil 

Procedure 12(b)(6).

1

 As set forth below, Ocwen’s Motion will be GRANTED.2

 1 All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless 

otherwise noted.

2 Having determined that oral argument would not be of material assistance, the Court ordered this 

matter submitted on the briefs in accordance with Local Rule 230(g).

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BACKGROUND3

On May 5, 2006, Plaintiff refinanced her mortgage on the subject property with a 

$309,600 loan. ECF No. 21-1 at 2 ¶ 1.4 The loan was serviced by GMACM, and 

secured by a deed of trust. In February, 2008, a notice of default was recorded on the 

dead of trust because Plaintiff owed over $7,000 in arrearages. ECF No. 21-1 at 30. On 

April 1, 2009, GMACM agreed to modify Plaintiff’s loan to a 1% interest rate provided 

she paid the principal balance due. Despite the interest rate modification, Plaintiff 

defaulted again in September, 2010. Meanwhile, Plaintiff had filed three bankruptcy 

petitions between June 2006, and December, 2010. Each one of Plaintiff’s bankruptcy 

proceedings had been dismissed without discharge for various reasons, including failure 

to file required documents and failure to adhere to agreed payment arrangements.

Plaintiff’s allegations in the present lawsuit stem from a permanent loan 

modification she claims was offered by GMACM on September 13, 2012. That 

modification was conditioned on Plaintiff completing a Trial Payment Period (“TPP”). In 

order to complete the TPP, Plaintiff had to make payments of $1,421.05 on the first of 

October, November, and December of 2012. According to Plaintiff, once she made all 

payments under the TPP, her permanent loan modification was supposed to be 

forthcoming and applied to her account. Plaintiff claims she made all payments 

contemplated by the TPP and alleges that near the end of December, 2012, she 

received a letter from GMACM stating that “she now qualified for the final loan 

modification and would receive it within about 30 days.” FAC, ¶ 15. Plaintiff states she 

never received that promised modification.

Meanwhile, GMACM’s parent company, Residential Capital, filed for Chapter 11 

 3 The following recitation of facts is taken, sometimes verbatim, from Plaintiff’s FAC, ECF No. 10, 

and Defendant’s Motion to Dismiss, ECF No. 21.

4 Ocwen’s Motion includes unopposed requests, pursuant to Federal Rule of Evidence 201, that 

the Court judicially notice various documents either on grounds that said documents are referred to in 

Plaintiff’s complaint but not attached, or on the basis that the documents constitute matters of public 

record whose authenticity can be readily determined. Those Requests for Judicial Notice are GRANTED.

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bankruptcy protection along with some subsidiaries, including GMACM. On 

November 2, 2012, during GMACM’s bankruptcy case, Ocwen entered into an Asset 

Purchase Agreement (APA) with GMACM. The relevant parts of the APA are as follows:

“[Ocwen] shall purchase from [GMACM], all of [GMACM’s] rights, title and interest in, to 

and under the following assets as they exist on the Closing Date. . . in each case free 

and clear of all Claims and Liens. APA, attached as Ex. G to Ocwen’s Request for 

Judicial Notice (“RJN”), ECF No. 21-3. p. 33, Section 2.1 (emphasis added).

Under the APA, a “claim” is defined as: “. . . any right to an equitable remedy for 

breach of performance if such breach gives rise to a right of payment, whether or not 

such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, 

unmatured, disputed, undisputed, secured or unsecured, known or unknown.” Id. at 

p. 15.

The APA also states that “[GMACM] shall retain and be responsible for all 

Retained Liabilities and [Ocwen] shall not have any obligation of any nature or kind with 

respect thereto.” Id. at p. 33, Section 2.8. “Retained Liability”, in turn, is defined as:

. . . any and all Liabilities of any kind or nature whatsoever of 

[GMACM] or any of its Affiliates (other than any Assumed 

Liability), including Liabilities arising under, in connection with 

or otherwise related to

(e) any and all lawsuits . . . and all claims made or 

pertaining to the period prior to the Closing Date . . . .

Id. at p. 23.

GMACM would consequently retain liability for any claims arising before the 

Closing Date, February 15, 2016. Conversely, Ocwen was responsible for “Assumed 

Liabilities” including, but not limited to:

“(iii) the Liabilities arising under any Assumed Contract to 

the extent such Liabilities arise on and after the Closing; [and]

(vi) all Liabilities of the business or Purchased Assets to 

the extent arising from the conduct of the Business on or after 

the Closing other than any Retained Liabilities...”

Id. at p. 4. 

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On November 21, 2012, the APA was approved by the bankruptcy court that was 

handling GMACM’s case. The bankruptcy court clarified that Ocwen agreed to the 

transaction and “does not and would not agree to assume anything other than the 

Assumed Liabilities.” RJN, Ex. H, ¶ R. The bankruptcy court’ s Order goes on to 

specifically recognize Ocwen’s right to be “free and clear of all Interests and including 

rights or Claims based upon successor or transferee liability, Claims or Liabilities relating 

to any act or omission of any originator, holder or servicer of Mortgage Loans prior to 

[February 15, 2013]. Id. at ¶ T.

Plaintiff received a letter dated February 6, 2013, from both Ocwen and GMACM,

notifying Plaintiff that the Ocwen would soon be servicing her loan. The letter had 

additional information regarding loan modifications, and states that “[i]f you are currently 

on a trial modification plan or have a modification review underway, this process will 

continue.” FAC, Ex. 2. On February 16, 2013, Ocwen officially became the new servicer 

of Plaintiff’s loan.

On July 11, 2014, Plaintiff commenced this action in state court. Following its 

removal on diversity of citizenship grounds, Ocwen filed a Motion to Dismiss. ECF 

No. 5. On October 29, 2014, the Plaintiff was granted leave to file a FAC, which was 

filed on October 31, 2014. See ECF Nos. 9, 10. Both parties were subsequently 

granted a stay of litigation in order for Ocwen to process Plaintiff’s loan modification 

application and review Plaintiff’s entitlement to a modification. ECF No. 13. On March 

25, 2016, after they were unable to resolve their differences, both parties filed a Joint 

Status Report so that the matter could proceed forward. ECF No. 20. Then, on March 

28, 2016, Ocwen filed the instant Motion to Dismiss Plaintiff’s FAC now before this 

Court.

///

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///

///

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STANDARD

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

Procedure 12(b)(6), all allegations of material fact must be accepted as true and 

construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. 

Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) requires only “a short and plain 

statement of the claim showing that the pleader is entitled to relief” 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) (quoting Conley v. Gibson, 355 U.S. 41, 

47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require 

detailed factual allegations. However, “a plaintiff’s obligation to provide the grounds of 

his entitlement to relief requires more than labels and conclusions, and a formulaic 

recitation of the elements of a cause of action will not do.” Id. (internal citations and 

quotations omitted). A court is not required to accept as true a “legal conclusion 

couched as a factual allegation.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009) 

(quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a 

right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles 

Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) 

(stating that the pleading must contain something more than “a statement of facts that 

merely creates a suspicion [of] a legally cognizable right of action”).

Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket 

assertion, of entitlement to relief.” Twombly, 550 U.S. at 556 n.3 (internal citations and 

quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard 

to see how a claimant could satisfy the requirements of providing not only ‘fair notice’ of 

the nature of the claim, but also ‘grounds’ on which the claim rests.” Id. (citing 5 Charles 

Alan Wright & Arthur R. Miller, supra, at § 1202). A pleading must contain “only enough 

facts to state a claim to relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . 

have not nudged their claims across the line from conceivable to plausible, their 

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complaint must be dismissed.” Id. However, “[a] well-pleaded complaint may proceed 

even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a 

recovery is very remote and unlikely.’” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 

232, 236 (1974)).

A court granting a motion to dismiss a complaint must then decide whether to 

grant leave to amend. Leave to amend should be “freely given” where there is no 

“undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice 

to the opposing party by virtue of allowance of the amendment, [or] futility of the 

amendment”. Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. 

Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to 

be considered when deciding whether to grant leave to amend). Not all of these factors 

merit equal weight. Rather, “the consideration of prejudice to the opposing party . . . 

carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 

185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that 

“the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, 

Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 

1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 

1989) (“Leave need not be granted where the amendment of the complaint . . . 

constitutes an exercise in futility”).

ANALYSIS

A. No Breach Of Contract

To state a claim for breach of contract a Plaintiff must allege: (1) the contract, 

(2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) 

the resulting damages to plaintiff. Reichert v. General Ins. Co., 68 Cal. 2d 822, 830 

(1968); Austin v. Ocwen Loan Servicing, LLC, 2014 WL 3845182, at *4 (E.D. Cal. Aug 1, 

2014). Plaintiff alleges two theories under which Ocwen allegedly assumed GMACM’s 

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obligation to modify Plaintiff’s mortgage. First, citing the February 6, 2013 letter she 

received from both Ocwen and GMACM, Plaintiff claims that Ocwen ratified GMACM’s 

obligation. Second, Plaintiff alleges that Ocwen assumed the obligation to modify her

mortgage by assuming GMACM’s entire servicing contract. For the following reasons, 

the Court disagrees with both theories.

1. The Defendant did not ratify agreement made between GMACM 

and Plaintiff.

As indicated above, Plaintiff initially argues that Ocwen ratified GMACM’s 

contractual obligations to modify Plaintiff‘s loan by letter dated February 6, 2013. The 

letter notified borrowers that the Ocwen would soon be servicing their loans and 

contained the following statement: “If you are currently on a trial modification plan or 

have a modification review underway, this process will continue.” ECF No. 12 at 10.

Plaintiff relies on this language in arguing that Ocwen assumed, ratified, or “would be 

honoring all TPP/loan modifications agreements made with GMACM.” ECF No. 10 at 3.

The language from Ocwen’s February 6, 2013 letter does not square with the 

interpretation Plaintiff advances. The language expressly states that any trial 

modification plan or review that is “currently” occurring “will continue.” FAC, Ex. 2. This 

clause can only mean that Ocwen wanted to assume and honor potential loan 

modifications that were “currently” on trial or being reviewed. Plaintiff‘s complaint, on the 

other hand, states she had already been accepted for a permanent loan modification by 

GMACM in December, 2012 after having already completed the TPP process. GMACM 

assured Plaintiff the loan modification would be applied to her account within the next 

thirty days. Because both the TPP and the modification review process had already 

been completed, the February 6, 2013 correspondence relied upon by Plaintiff did not 

apply to Plaintiff’s permanent loan modification because she was neither “on a trial 

modification plan”, nor currently under review for modification.

5 As to Ocwen, there was 

 5 Plaintiff’s promissory estoppel claim relies on the same language of the letter. ECF No. 23 at 7. 

One of the elements of promissory estoppel requires a promise clear and unambiguous in its terms. 

Advanced Choices, Inc. v. State Dept. Health Services, 182 Cal. App. 4th 1661, 1672 (2010). Due to the 

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no contract under which it agreed to honor representations made by GMACM that 

GMACM had already agreed to assume before the Closing Date of the APA.

2. The Defendant is not a successor in liability.

As its second argument, Plaintiff alternatively claims that Ocwen consented to 

assume all of GMACM’s obligations by assuming the loan servicing contract. Under 

California Civil Code section 1589, “a voluntary acceptance of the benefit of a 

transaction is equivalent to a consent to all the obligations arising from it, so far as the 

facts are known, or ought to be known, to the person accepting.” Plaintiff argues, under 

Section 1589, that Ocwen assumed GMACM’s obligation to modify Plaintiff’s loan merely 

because it had assumed the loan servicing contract. Ordinarily, an assignee of a 

contract would assume the obligations of the assignor. Here, however, Ocwen 

purchased the loan servicing contract from GMACM under conditions which foreclosed 

its liability for actions arising prior to the February 15, 2013 date it assumed the loan 

servicing contract.

On November 2, 2012, Ocwen and GMACM entered into the APA for purchase of 

GMACM’s loan servicing contracts. The terms of the APA provided that GMACM would 

be responsible for all retained liabilities. As indicated above, the APA defines such 

retained liabilities as “any and all lawsuits . . . and all claims made or pertaining to the 

period prior to the Closing Date” of February 15, 2013. APA, p. 23. At the time, 

GMACM was filing for Chapter 11 bankruptcy, and the bankruptcy court approved the 

APA in an order on November 21, 2012. The bankruptcy court unequivocally found that 

Ocwen “does not and would not agree to assume” any retained liabilities. RJN, Ex. H. 

¶ R. Therefore, Ocwen is not liable for GMACM’s conduct occuring prior to the closing 

date of the APA.

Plaintiff’s breach of contract claim consists of “retained liabilities,” as defined 

under the APA. Plaintiff alleges GMACM offered to permanently modify her loan in 

 timing of the letter, the Defendant’s promise to continue all modifications that were on trial or under review 

did not apply to Plaintiff. Therefore, no promise was ever made by the Defendant and Plaintiff’s 

promissory estoppel claim is dismissed without leave to amend.

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September, 2012. Sometime in December, 2012, GMACM allegedly promised that 

Plaintiff’s loan would be modified with the changes posted to her account within thirty 

days. Nonetheless, according to Plaintiff, GMACM never applied the permanent loan 

modification to her loan. All conduct related to Plaintiff’s breach of contract claim

consequently pertains to the period prior to the Closing Date of the APA. Therefore,

Defendant cannot be held liable for GMACM’s failure to modify Plaintiff’s loan because 

of the terms of the APA, as approved by the bankruptcy court, precluded Ocwen’s 

liability for claims arising prior to February 15, 2013.

Accordingly, the Court dismisses Plaintiff’s breach of contract claim.6 Because 

Plaintiff cannot state a breach of contract claim against Ocwen as a matter of law, leave 

to amend is denied. Furthermore, all other contractual breaches pertaining to Ocwen 

are moot, because Plaintiff cannot establish that Ocwen made a promise to Plaintiff to 

modify her loan in this first instance.

B. Alleged Negligence For Instructing Plaintiff To Continue Making 

Payments

Plaintiff also alleges that Ocwen was negligent by instructing her “to make trial 

payments [to Defendant], while it continued to ‘investigate’ her situation.” (ECF No. 10 at 

4 ¶ 22.) A viable negligence claim entails the following elements: “(1) a legal duty to use 

reasonable care; (2) breach of that duty, and (3) proximate [or legal] cause between the 

breach and (4) the plaintiff’s injury.” Mendoza v. City of L.A., 66 Cal. App. 4th 1333, 

1339 (1998). 

Ocwen argues here that Plaintiff’s negligence claim fails to show it owed any 

cognizable legal duty. “[A]s a general rule, a financial institution owes no duty of care to 

 6

 Plaintiff also fails to state a breach of implied covenant claim. In order to successfully plead a 

breach of an implied covenant of good faith and fair dealing claim, a plaintiff must establish the 

existence of a contractual obligation, and as set forth above that obligation is lacking here. McClain 

v. Octagon Plaza, LLC, 159 Cal. App. 4th 784, 799 (2008); Kanady v. GMAC Mortg., LLC, 2010 WL 

4010289, at *16 (E.D. Cal. Oct 13, 2010) (holding no covenant existed during negotiations and prior 

to the existence of a contract). Plaintiff’s implied covenant claim is thereby dismissed without leave to 

amend.

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a borrower when the institution's involvement in the loan transaction does not exceed the 

scope of its conventional role as a mere lender of money.” Nymark v. Heart Fed. Sav. & 

Loan Assn., 231 Cal. App. 3d 1089 (1991).

Courts look to the so-called Biakanja factors when determining whether to 

recognize a duty of care. Lueras v. BAC Home Loans Servicing, LP, 221 Cal. App. 4th 

49, 63 (2013), (citing Biakanja v. Irving, 49 Cal. 2d 947, 650 (1958)) Those factors are 

(1) the extent to which the transaction was intended to affect the plaintiff, (2) the 

foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered 

injury, (4) the closeness of the connection between the defendant's conduct and the 

injury suffered, (5) the moral blame attached to the defendant's conduct, and (6) the 

policy of preventing future harm. Id. at 63.

In Lueras, the court held that the Biankanja factors did not support a common law 

duty to offer or approve a loan modification. Id. at 67 (reasoning that if “the lender did 

not place the borrower in a position creating a need for a loan modification, then no 

moral blame would be attached to the lender’s conduct”). The plaintiff in Lueras had 

requested and submitted documents for a loan modification through Fannie Mae. Id. at 

58. In turn, Fannie Mae sent the documents to the defendant, the loan servicer of 

plaintiff’s loan. Id. The defendant sent a letter to plaintiff stating they were reviewing the 

loan modification and that the original documents had been sent to the wrong 

department by accident. Id. at 59. After receiving the letter, plaintiff contacted the 

defendant, who then proceeded to tell plaintiff that the letter had been sent on accident 

because his loan had already been approved. Plaintiff was never notified that his loan 

was rejected, either from the defendant or Fannie Mae. Id. Soon thereafter, the 

defendant conducted foreclosure sale on plaintiff’s home. Plaintiff filed a negligence 

claim against the lender claiming the lender breached their duty by “’failing to comply 

with state consumer protection laws, properly service the loan, and use consistent 

methods to determine modification approvals.’” Id. at 63.

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The court in Lueras held that the lender “did not have a common law duty of care 

to offer, consider, or approve a loan modification.” Compare Id. at 68; with Alvarez v. 

BAC Home Loans Servicing, LP, 228 Cal. App. 4th 941, 944-51 (2014) (finding the 

existence of a duty to review loan modification requests with reasonable care once loan 

servicers agreed to consider them). The Lueras court reasoned that allegations of the 

lender owing a duty to “’follow through on their own agreements,’ [and] to comply with 

consumer protections laws . . . fail to state a cause of action for negligence because 

such duties, if any, are imposed by the loan documents. . . .” Id. The court ultimately 

held that if the lender failed to uphold an agreement, then the plaintiff’s “remedy lies in a 

breach of contract, not negligence.” Id.

The Court finds the court’s logic in Lueras persuasive in the present matter. 

Plaintiff alleges that Ocwen was negligent by instructing her to continue making 

payments under the loan modification plan while her situation was investigated. Plaintiff 

also contends that Ocwen breached the duty it owed by failing to apply the loan 

modification allegedly agreed to by GMACM. Plaintiff does not allege, however, that 

Ocwen, as opposed to GMACM, ever promised to approve her loan, offered her a loan

modification, or considered her previous loan modification with GMACM. Given those 

facts, Ocwen owed no duty to review the loan modification with reasonable care or 

accept a loan modification. Cf. Alvarez, 228 Cal. App. at 944-951.

Even if Ocwen applied the loan modification which GMACM purportedly promised, 

Ocwen does not owe a duty to follow through with those promises, and any redress 

necessarily lies with “breach of contract, not negligence.” Lueras, 221 Cal. App. at 68. 

For the reasons stated above, Defendant cannot be held accountable for the faults of its 

successor, GMACM. Therefore, Plaintiff’s FAC does not, and cannot as a matter of law, 

state a claim for negligence based on Ocwen’s instructions that Plaintiff continue paying

her loan while they investigated the loan modification. As a result, Plaintiff’s negligence 

claim is dismissed without further leave to amend.

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C. Violation Of Civil Code Section 17200

The Unfair Competition Law (“UCL”) permits civil recovery for “any unlawful, unfair 

or fraudulent business act or practice and unfair, deceptive, untrue or misleading 

advertising....” Cal. Bus. & Prof. Code, § 17200. “Because Business and Professions 

Code section 17200 is written in the disjunctive, it establishes three varieties of unfair 

competition—acts or practices which are unlawful, or unfair, or fraudulent...” Lueras, 221 

Cal. App. 4th at 80-81 (internal citations omitted).

Plaintiff alleges that Ocwen’s promise to honor GMACM’s loan modification 

constituted “unfair” and “fraudulent” business practices under the UCL. However, 

Plaintiff’s allegations are based on the February 6, 2013 letter sent by GMACM and 

Ocwen. As stated above, contrary to Plaintiff’s representation otherwise, that letter did 

not contain any representation that Ocwen intended to honor the TPP agreements 

GMACM had with its borrowers. Therefore, as a matter of law, Plaintiff’s FAC fails to 

state a claim for violating California’s UCL. Accordingly, Plaintiff’s UCL claim is 

dismissed without leave to amend.

CONCLUSION

For all the foregoing reasons, Ocwen’s Motion to Dismiss, ECF No. 21, is 

GRANTED. Plaintiff’s First Amended Complaint is DISMISSED without further leave to 

amend. The Clerk of Court is directed to close the file.

IT IS SO ORDERED.

Dated: October 18, 2016

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