Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_15-cv-01413/USCOURTS-caed-2_15-cv-01413-0/pdf.json

Parties Involved:
Gem A. Barria
Plaintiff
Maria T. Barria
Plaintiff
NDEX West, LLC
Defendant
Wells Fargo Bank, N.A.
Defendant

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UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

GEM A. BARRIA and MARIA T. 

BARRIA, 

Plaintiffs, 

v. 

WELLS FARGO BANK, N.A.; NDEX 

WEST, LLC; and DOES 1-10 inclusive,1

Defendants. 

No. 2:15-cv-01413-KJM-AC 

ORDER 

This matter is before the court on the motion to dismiss the complaint by 

defendant Wells Fargo, N.A. (ECF No. 6.) Plaintiffs Gem and Maria Barria oppose the motion. 

(ECF No. 8.) Defendant replied to the opposition. (ECF No. 9.) The court decided the motion 

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 If a defendant’s identity is not known before the complaint is filed, a “plaintiff should be 

given an opportunity through discovery to identify the unknown defendants,” Wakefield v. 

Thompson, 177 F.3d 1160, 1163 (9th Cir. 1999) (quotation marks omitted) (quoting Gillespie v. 

Civiletti, 629 F.2d 637, 642 (9th Cir. 1980)). However, doe defendants will be dismissed if “it is 

clear that discovery would not uncover the[ir] identities, or that the complaint would be dismissed 

on other grounds.” Id. (quotation marks omitted) (quoting Gillespie, 629 F.2d at 642). Court also 

must dismiss defendants who have not been served within 120 days after the filing of the 

complaint unless good cause is shown. Fed. R. Civ. P. 4(m); see generally Glass v. Fields, 

No. 09-00098, 2011 U.S. Dist. LEXIS 97604 (E.D. Cal. Aug. 31, 2011). 

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without a hearing. As explained below, the court GRANTS defendant Wells Fargo’s motion to 

dismiss. 

I. BACKGROUND 

The claims in this case arise out of defendants’ alleged practice of providing 

insufficient information to borrowers so that borrowers will default on their mortgage loan and 

defendants can foreclose on their homes. (See generally First Am. Compl. (“Compl.”), ECF 

No. 1-1.) The Complaint alleges the facts set out below. 

Plaintiffs are the owners of real property located in El Dorado County (the 

Property), and defendant is the holder of the $521,242 loan secured by the Property. (Id.

¶¶ 17-19.) In 2004, plaintiffs received a mortgage loan from World Savings Bank, FSB (“World 

Savings”). (Id. ¶ 17.) World Savings subsequently changed its name to Wachovia Mortgage, 

FSB (“Wachovia”), which in turn changed its name to Wells Fargo Bank Southwest before 

merging with defendant Wells Fargo in 2009. (Id. ¶ 19.) Plaintiffs made payments for six years 

on the loan. (Id. ¶ 20.) On December 20, 2012, Wells Fargo, through its agent NDEX West, 

LLC (“NDEX”), filed a Notice of Default (“NOD”), and also included a Declaration of 

Compliance based on California Civil Code section 2923.55(c). (Id. ¶ 21.) The Declaration of 

Compliance claims that “[Wells Fargo] had contacted plaintiffs to discuss their financial situation 

and explore workout options,” but plaintiffs aver they were never actually contacted. (Id. ¶ 22.) 

“Subsequently, Wells Fargo caused three (3) Notice[s] of Trustee’s Sale to be recorded.” (Id. ¶ 

23.) Wells Fargo, NDEX, and their agents never “contact[ed] plaintiffs in person, in writing, or 

by telephone to discuss plaintiffs’ financial condition and provide potential foreclosure prevention 

options prior to filing the NOD.” (Id. ¶ 26.) Plaintiffs were available to meet with the defendants 

at all times before the NOD filing. (Id. ¶ 27.) 

Based on these allegations, plaintiffs assert the following against the defendant: 

(1) violations of California Civil Code section 2923.55; (2) violations of the Federal Fair Debt 

Collection Practices Act, 15 U.S.C. § 1692 et seq.; (3) violations of the Rosenthal Fair Debt 

Collection Practices Act, Cal. Civ. Code §§ 1788–1788.33; (4) unfair competition in violation of 

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California Business and Professions Code § 17200 et seq.; and (5) negligent training and 

supervision. (See generally ECF No. 1-1.) 

II. JUDICIAL NOTICE 

“The court may judicially notice a fact that is not subject to reasonable dispute 

because it (1) is generally known within the territorial jurisdiction, or (2) can be accurately and 

readily determined by trial courts from sources whose accuracy cannot reasonably be 

questioned.” Fed. R. Evid. 201(b). A court shall take judicial notice if requested by a party and 

supplied with the necessary information. Fed. R. Evid. 201(c)(2). Judicially noticed facts often 

consist of matters of public record, such as prior court proceedings, see, e.g., Emrich v. Touche 

Ross & Co., 846 F.2d 1190, 1198 (9th Cir. 1988) (administrative materials). 

While a court may take judicial notice of a judicial or administrative proceeding 

that has a “direct relation to the matters at issue,” a court can only take judicial notice of the 

existence of those matters of public record, such as the existence of a motion or of representations 

having been made therein. The court may not take judicial notice of the veracity of the arguments 

and disputed facts raised in the proceeding, or one party’s interpretation of the ruling. United 

States v. Southern California Edison Co., 300 F. Supp. 2d 964, 974 (E.D. Cal. Jan. 9, 2004) 

(quoting United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 

244, 248 (9th Cir. 1992)). 

Defendant asks that this court take judicial notice of eight exhibits: 

1. Exhibit A is a Deed of Trust dated January 4, 2004, and recorded in the 

El Dorado County Recorder’s Office on January 12, 2004 as DOC-2004-0002111-

00. 

2. Exhibit B is a Certificate of Corporate Existence dated April 21, 2006, 

issued by the Office of Thrift Supervision, Department of the Treasury (“OTS”), 

certifying that World Savings Bank, FSB was a federal savings bank. 

3. Exhibit C is a letter dated November 19, 2007, on the letterhead of the 

OTS, authorizing a name change from World Savings Bank, FSB to Wachovia 

Mortgage, FSB (“Wachovia”). 

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4. Exhibit D is a Charter of Wachovia, effective December 31, 2007, and 

signed by the Director of the OTS. In Section 4 of the Charter, Wachovia 

acknowledges that it was subject to the Home Owner’s Loan Act (“HOLA”) and 

the OTS. 

5. Exhibit E is an Official Certification of the Comptroller of the Currency, 

stating that effective November 1, 2009, Wachovia changed its name to Wells 

Fargo Bank Southwest, N.A., which then merged with and into Wells Fargo Bank, 

N.A. 

6. Exhibit F is a printout from the website of the Federal Deposit Insurance 

Corporation (FDIC), showing the history of World Savings and its transition to 

Wells Fargo. 

7. Exhibit G is a Notice of Default and Election to Sell Under Deed of Trust 

dated December 18, 2012 and recorded on December 20, 2012 in the El Dorado 

County Recorder’s Office as DOC-2012-006963-00. 

(ECF No. 7, Exs. A–G.) 

Plaintiffs do not object to defendant’s request. 

With respect to Exhibits A and G, judicial notice is appropriate because the 

documents are matters of public record. See Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 

2011). With respect to Exhibits B, C, D, E, and G, judicial notice is appropriate because “those 

documents reflect the official acts of the executive branch of the United States.” Preciado v. 

Wells Fargo Home Mortgage, No. 13-00382, 2013 WL 1899929, at *3 (N.D. Cal. May 7, 2013). 

With respect to Exhibit F, judicial notice is appropriate “because it is information obtained from a 

governmental website.” Id. The court takes notice as requested.2

 

2

 Defendant also states in its motion to dismiss there is an exhibit H to its request 

for judicial notice, but the court has not located such an exhibit. See Mot. at 2. 

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III. LEGAL STANDARD 

A. Motion to Dismiss 

A party may move to dismiss for “failure to state a claim upon which relief can be 

granted.” Fed. R. Civ. P. 12(b)(6). The motion may be granted only if the complaint lacks a 

“cognizable legal theory” or if its factual allegations do not support a cognizable legal theory. 

Hartmann v. Cal. Dep’t of Corr. & Rehab., 707 F.3d 1114, 1122 (9th Cir. 2013). The court 

assumes these factual allegations are true and draws reasonable inferences from them. Ashcroft v. 

Iqbal, 556 U.S. 662, 678 (2009). In making this context-specific evaluation, this court “must 

presume all factual allegations of the complaint to be true and draw all reasonable inferences in 

favor of the nonmoving party.” Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). 

This rule does not apply to “a legal conclusion couched as a factual allegation,” Papasan v. 

Allain, 478 U.S. 265, 286 (1986), quoted in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), 

to “allegations that contradict matters properly subject to judicial notice,” or to material attached 

to or incorporated by reference into the complaint, Sprewell v. Golden State Warriors, 266 F.3d 

979, 988 (9th Cir. 2001). 

A complaint need contain only a “short and plain statement of the claim showing 

that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), not “detailed factual allegations,” 

Twombly, 550 U.S. at 555. But this rule demands more than unadorned accusations; “sufficient 

factual matter” must make the claim at least plausible. Iqbal, 556 U.S. at 678. In the same vein, 

conclusory or formulaic recitations of a cause’s elements alone do not suffice. Id. (quoting 

Twombly, 550 U.S. at 555). Evaluation under Rule 12(b)(6) is a context-specific task drawing on 

“judicial experience and common sense.” Id. at 679. And aside from the complaint, district 

courts have discretion to examine documents incorporated by reference, Davis v. HSBC Bank 

Nevada, N.A., 691 F.3d 1152, 1160 (9th Cir. 2012); affirmative defenses based on the complaint’s 

allegations, Sams v. Yahoo! Inc., 713 F.3d 1175, 1179 (9th Cir. 2013); and proper subjects of 

judicial notice, W. Radio Servs. Co. v. Qwest Corp., 678 F.3d 970, 976 (9th Cir. 2012). 

///// 

///// 

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B. Leave to Amend 

In determining defendant’s motion, the court also considers whether to grant leave 

to plaintiffs to further amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to 

amend “shall be freely given when justice so requires,” bearing in mind “the underlying purpose 

of Rule 15 to facilitate decision on the merits, rather than on the pleadings or technicalities.” 

Lopez v. Smith, 203 F.3d 1122, 1127, 1140 (9th Cir. 2000) (en banc) (internal quotation marks 

and alterations omitted). When dismissing a complaint for failure to state a claim, “‘a district 

court should grant leave to amend even if no request to amend the pleading was made, unless it 

determines that the pleading could not possibly be cured by the allegation of other facts.’” Id. at 

1127 (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). Generally, leave to amend 

shall be denied only if allowing amendment would unduly prejudice the opposing party, cause 

undue delay, or be futile, or if the moving party has acted in bad faith. Leadsinger, Inc. v. BMG 

Music Publ’g., 512 F.3d 522, 532 (9th Cir. 2008). However, it is not an abuse of discretion to 

deny leave to amend when any proposed amendment would be futile. Klamath-Lake 

Pharmaceutical Ass’n v. Klamath Medical Serv. Bureau, 701 F.2d 1276, 1292–93 (9th Cir. 1983). 

IV. DISCUSSION 

A. California Civil Code Section 2923.55 

California’s Homeowner’s Bill of Rights (“HBOR”), California Civil Code section 

2924.17, took effect on January 1, 2013, providing borrowers with a private right of action 

against the mortgage servicer for, in this case, a violation of California Civil Code section 

2923.55. Rockridge Trust v. Wells Fargo, N.A., 985 F. Supp. 2d 1110, 1152 (N.D. Cal. 2013). 

Section 2923.55 states that after a trustee’s deed upon sale has been recorded, the mortgage 

servicer can be “liable . . . for actual economic damages . . . resulting from a material violation of 

section 2923.55 . . . .” Cal. Civ. Code § 2924.12(b). “If a trustee’s deed upon sale has not been 

recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of 

[s]ection 2923.55.” Id. § 2924.12(a)(1). Neither section 2924.12 nor section 2923.55 contains a 

retroactivity provision. “California courts comply with the legal principle that unless there is an 

express retroactivity provision, a statute will not be applied retroactively unless it is very clear 

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from extrinsic sources that the Legislature . . . must have intended a retroactive application.” 

Myers v. Philip Morris Cos., Inc., 28 Cal. 4th 828, 841 (2002) (quotations and citations omitted); 

see also Rockridge Trust, 985 F. Supp. 2d at 1152. 

Defendant argues plaintiffs’ claim cannot proceed under the current California 

Civil Code section 2923.55 because “[t]he foreclosure instrument was recorded prior to the 

HBOR’s enactment,” and the “HBOR does not apply retroactively.” (ECF No. 6 at 5). Plaintiffs 

respond that because current California Civil Code subsections 2923.5 and 2923.55 simply 

continue the prior version of California Civil Code section 2923.5, plaintiffs can properly assert a 

violation of section 2923.55 as currently worded. (ECF No. 8 at 4.) 

Here, plaintiffs allege the NOD is invalid because defendant failed to comply with 

section 2923.55. Plaintiffs argue that section 2923.55 is a continuation of the prior version of 

section 2923.5 with only minor changes and thus the current version of section 2923.55 also 

applies to loans and borrowers covered by the prior version; defendants should have complied 

with section 2923.55 before recording the NOD. Opp’n at 4-5. However, the NOD was recorded 

on December 20, 2012, before the HBOR was enacted. As this court has previously noted, courts 

uniformly have found the HBOR is not retroactive. Cooksey v. Select Portfolio Servicing, Inc., 

No. 14-1237, 2014 WL 4662015, at *6 (E.D. Cal. Sept. 18, 2014). 

The court dismisses the first claim with leave to amend if plaintiffs can do so 

consonant with Federal Rule of Civil Procedure Rule 11,which appears to depend on whether a 

foreclosure sale has occurred. 

B. Federal Fair Debt Collection Practices Act and California’s Rosenthal Act 

Under the provisions of the Federal Fair Debt Collection Practices Act (“the 

FDCPA”), 15 U.S.C. § 1692, debt collectors are prohibited “from making false or misleading 

representations and from engaging in various abusive and unfair practices.” Heintz v. Jenkins, 

514 U.S. 291, 292 (1995); Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1030 (9th Cir. 2010). 

California’s Rosenthal Fair Debt Collection Practices Act (“the RFDCPA” or “the Rosenthal 

Act”), “like its federal counterpart, is designed to protect consumers from unfair and abusive debt 

collection practices.” Robinson v. Managed Accounts Receivable Corp., 654 F. Supp. 2d 1051, 

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1060 (C.D. Cal. 2009) (citing Cal. Civ. Code § 1788.1); Colbert v. Sage Point Lender Services, 

No. 1:14-CV-01626-LJO, 2014 WL 7409291, at *4 (E.D. Cal. Dec. 30, 2014). Indeed, the 

provisions of the FDCPA are incorporated into the Rosenthal Act by California Civil Code 

section 1788.17. Consequently, conduct by a debt collector that violates the FDCPA violates the 

Rosenthal Act as well. See Riggs v. Prober & Raphael, 681 F.3d 1097, 1100 (9th Cir. 2012) 

(finding that whether a communication “violates the Rosenthal Act turns on whether it violates 

the FDCPA”); Crockett v. Rash Curtis & Associates, 929 F. Supp. 2d 1030, 1033 (N.D. Cal. 

Mar. 14, 2013) (finding that “a claim for violation of Rosenthal Act Section 1788.17 simply 

requires showing that a defendant violated any of several provisions of the FDCPA”). 

1. FDCPA 

To state a claim alleging violation of the FDCPA, a plaintiff must show: “(1) that 

she is a consumer; (2) that the debt arises out of a transaction entered into for personal purposes; 

(3) that the defendant is a debt collector; and (4) that the defendant violated one of the provisions 

of the FDCPA.” Miranda v. Law Office of D. Scott Carruthers, No. 10-01487, 2011 WL 

2037556, at *4 (E.D. Cal. May 23, 2011). Under the FDCPA, claims are assessed from the 

perspective of the “least sophisticated debtor,” that is, what would the least sophisticated debtor 

believe. Rockridge, 985 F. Supp. 2d at 1136. Defendant does not contend the first two elements 

of the FDCPA are not properly pled. Instead, defendant argues it is not a “debt collector” as 

defined in the FDCPA, and that plaintiffs’ allegations with respect to the fourth element are not 

“cognizable” because nonjudicial foreclosure is not the same as “debt collection” within the 

meaning of the FDCPA. (ECF No. 6 at 7.) The court will address each argument in turn. 

a) Debt Collector 

The FDCPA defines the term “debt collector” as including: (1) “any person who 

uses any instrumentality of interstate commerce or the mails in any business the principal purpose 

of which is the collection of any debts,” and (2) any person “who regularly collects or attempts to 

collect, directly or indirectly, debts owed or due or asserted to be owed or due to another.” 

15 U.S.C. § 1692a(6). To adequately plead this claim, a plaintiff must allege specific facts 

showing that a defendant is a “debt collector” within the meaning of the statute. Schlegel v. Wells 

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Fargo Bank, N.A., 720 F.3d 1204, 1208 (9th Cir. 2013); Kalnoki v. First American LoanStar 

Trustee Services LLC, No. 11- 02816, 2014 WL 1757216, at *2 (E.D. Cal. Apr. 29, 2014), recon. 

denied, No. 11- 02816, 2014 WL 2918846 (E.D. Cal. June 26, 2014) (complaint must plead 

“factual content that allows the court to draw the reasonable inference” that defendant is a debt 

collector). 

Section 1692a(6)(A) expressly excludes “creditors” from the statutory definition of 

“debt collector.” 15 U.S.C. §§ 1692a(4), 1692a(6)(A); Rowe v. Educational Credit Management 

Corp., 559 F.3d 1028, 1031 (9th Cir. 2009). A creditor is defined under section 1692a(4) as “any 

person who offers or extends credit creating a debt or to whom a debt is owed.” 

Plaintiffs fail to allege facts sufficient to support a determination that defendant is 

a debt collector. The complaint does not allege that “the ‘principal purpose’ of Wells Fargo’s 

business is debt collection” under section 1692a(6)(1). Schlegel, 720 F.3d at 1209; Rockridge, 

985 F. Supp. 2d at 1137. Plaintiffs state only that Wells Fargo is “in the business of lending and 

servicing mortgage loans on behalf of investors, lenders, and trustees.” (ECF No. 1-1 ¶ 1.) 

The complaint also fails to allege facts showing that Wells Fargo “collects or 

attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due to 

another” under 15 U.S.C. § 1692a(6). The complaint makes no factual allegations to support a 

plausible inference that Wells Fargo regularly collects debts owed to someone other than Wells 

Fargo. The complaint also does not allege that in this case Wells Fargo is collecting on debt 

owed to another. Plaintiffs first received the mortgage loan from World Savings. (ECF No. 1-1 

¶ 17.) World Savings then changed its name to Wachovia. (ECF No. 1-1 ¶ 19; ECF No. 7, Ex. 

C.) Wachovia subsequently changed its name to Wells Fargo Bank Southwest, which later 

merged into Wells Fargo. (ECF No. 1-1 ¶ 19; ECF No. 7, Ex. E.) The complaint together with 

the exhibits provided by defendant establishes that Wells Fargo is the successor-in-interest to 

Wachovia. The debt at issue is thus owed to Wells Fargo as successor-in-interest to the original 

lender. Hence, Wells Fargo is not collecting on a debt owed to another as provided by 15 U.S.C. 

§ 1692a(6). The court finds that plaintiffs fail to allege facts sufficient to support a determination 

that defendant is a debt collector. 

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b) Debt Collection 

The Ninth Circuit has not addressed whether foreclosure proceedings constitute 

debt collection under FDCPA. However, district courts in the Ninth Circuit have consistently 

concluded that nonjudicial foreclosure actions do not constitute debt collection under the FDCPA 

to the extent a defendant’s actions are limited to those necessary to effectuate the nonjudicial 

foreclosure. Natividad v. Wells Fargo Bank, N.A., No. 3:12-CV-03646 JSC, 2013 WL 2299601, 

at *9 (N.D. Cal. May 24, 2013) (“plaintiff alleging a proper FDCPA claim must allege that the 

defendant engaged in an[ ] action beyond statutorily mandated actions for non-judicial 

foreclosure”); Aniel v. T.D. Serv. Co., 2010 WL 3154087, at *1 (N.D. Cal. Aug. 9, 2010) 

(“allegations relating to the FDCPA claim relate to foreclosure proceedings and courts throughout 

this circuit have concluded that foreclosure does not constitute ‘debt collection’ under the 

FDCPA”). A proper FDCPA claim must allege that the defendant “engaged in an[ ] action 

beyond the statutorily mandated actions for nonjudicial foreclosure.” Natividad, 2013 WL 

2299601, at *9 (citing Harvey G. Ottovich Revocable Living Trust Dated May 12, 2006 v. Wash. 

Mut. Inc., 2010 WL 3769459, at *4 (N.D. Cal. Sept. 22, 2010) (defendants’ behavior went 

beyond foreclosure proceedings when they repeatedly “obfuscated the truth” concerning loan 

amounts and payments)). 

Here, plaintiffs argue that defendant “engaged in debt collection, in violation of 

the FDCPA, because its activities were beyond the scope of ordinary foreclosure process.” (ECF 

No. 8 at 8.) However, plaintiffs do not allege facts showing that defendant actually went beyond 

the scope of what is needed to complete an “ordinary” nonjudicial foreclosure process in 

California, presumably under California Civil Code sections 2924 et seq. In Rockridge, the court 

denied defendant’s motion to dismiss the FDCPA claim because the challenged acts were related 

to loan modification negotiations as oppose to the execution of the nonjudicial foreclosure 

process. See Rockridge, 985 F. Supp. 2d at 1137; cf. Cal. Civ. Code §§ 2924-2924k (including 

California nonjudicial foreclosure provisions). However, here the acts set forth in the Complaint 

are related to the execution of the nonjudicial foreclosure process. The Complaint provides only 

that “[d]efendant[ ], in [its] attempt to collect on the debt through foreclosure, filed a Declaration 

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of Compliance that falsely asserted that [it] had diligently attempted to contact [plaintiffs]” and 

“[d]efendants cannot initial a foreclosure proceeding to collect on the debt without first contacting 

plaintiffs.” (ECF No. 1-1 ¶ 54(c).) 

Because the Complaint fails to allege that Wells Fargo is a “debt collector” and 

that Wells Fargo’s activities were beyond the scope of the statutory nonjudicial foreclosure 

process, the court GRANTS defendant’s motion to dismiss the FDCPA claim, however WITH 

leave to amend if possible. 

2. Rosenthal Act 

The Rosenthal Act is intended “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. Civ. Code § 1788.1. The Rosenthal Act 

also provides, with limited exception, that “every debt collector collecting or attempting to collect 

a consumer debt shall comply with the provisions of” the FDCPA. Cal. Civ. Code § 1788.17. 

Where a Rosenthal Act claim relies on a violation of the FDCPA, the FDCPA’s objective 

standard applies. Rockridge, 985 F. Supp. 2d at 1165; Reyes v. Wells Fargo Bank, N.A., No. 10-

01667, 2011 WL 30759, at *20 (N.D. Cal. Jan. 3, 2011). In other words, as noted above, claims 

are assessed from the perspective of the “least sophisticated debtor.” Id. (citing Swanson v. S. Or. 

Credit Serv., 869 F.2d 1222, 1225 (9th Cir. 1989)). “If the least sophisticated debtor would 

‘likely be misled’ by a communication from a debt collector, the debt collector has violated the 

Act.” Id. (citing Guerrero v. RJM Acquisitions LLC, 499 F.3d 926, 934 (9th Cir. 2007) (quoting 

Swanson, 869 F.2d at 1225)). “The least sophisticated debtor is a ‘lower’ standard ‘than simply 

examining whether particular language would deceive or mislead a reasonable debtor.’” Id.

(citing Terran v. Kaplan, 109 F.3d 1428, 1431–32 (9th Cir. 1997) (quoting Swanson, 869 F.2d at 

1227)). 

At the same time, the Rosenthal Act’s definition of “debt collector” is “broader 

than that contained in the FDCPA.” Izenberg v. ETS Servs., LLC, 589 F. Supp. 2d 1193, 1199 

(C.D. Cal. 2008). Under the Rosenthal Act, a “debt collector” is defined as “any person who, in 

the ordinary course of business, regularly, on behalf of himself or herself or others, engages in 

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debt collection.” Cal. Civ. Code § 1788.2(c). “Thus, a mortgage servicer may be a ‘debt 

collector’ under the FDCPA even if it is the original lender, whereas, such an entity would be 

excluded from the definition of debt collector under the federal act.” Reyes, 2011 WL 30759, at 

*19. However, as with the FDCPA, foreclosure on a deed of trust does not give rise to a claim 

under the Rosenthal Act. Rockridge, 985 F. Supp. 2d at 1166; Sipe v. Countrywidebank, No. 09-

798, 2010 WL 2773253, at *15 (E.D. Cal. July 13, 2010) (collecting cases). The Rosenthal Act 

applies only if a claim arises out of debt collection activities beyond the scope of the ordinary 

foreclosure process. Reyes, 2011 WL 30759, at *19 (N.D. Cal. Jan. 3, 2011). 

Here, defendant as the original lender falls within the broader definition of a “debt 

collector” under the Rosenthal Act. Izenberg, 589 F. Supp. 2d, at 1199; Reyes, 2011 WL 30759, 

at *19. However, as with plaintiffs’ allegations under the FDCPA, plaintiffs’ allegations under 

the Rosenthal Act fail to allege any conduct beyond nonjudicial foreclosure. Plaintiffs allege that 

defendant violated the Rosenthal Act by “intentionally fail[ing] to contact [p]laintiffs to discuss 

foreclosure alternatives prior to recording a NOD,” “fil[ing] a Declaration of Compliance that 

falsely asserted that they had diligently attempted to contact [p]laintiffs,” and “attempting to 

collect interest, fees, or other charges from [p]laintiffs that are not expressly authorized by the 

agreement creating the alleged debt or otherwise permitted by law.” (ECF No. 1-1 ¶ 63). These 

actions all are related to the execution of the nonjudicial foreclosure process. The generalized 

allegations also are legal conclusions, and are insufficiently detailed to give defendant fair notice 

of the wrongful acts. Twombly, 550 U.S. at 555; Jacobson v. Balboa Arms Drive Trust No. 5402 

HSBC Financial Trustee, No. 10-CV-2195-JM RBB, 2011 WL 3328487, at *8 (S.D. Cal. Aug. 1, 

2011). 

 Because plaintiffs have failed to allege any conduct beyond steps to effect 

nonjudicial foreclosure, the court GRANTS defendant’s motion to dismiss plaintiffs’ claim 

that defendant violated the Rosenthal Act, WITH leave to amend if plaintiffs can do so consonant 

with Rule 11. 

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C. California Business and Professions Code § 17200, et seq. (UCL) 

To bring an unfair competition law (UCL) claim, a plaintiff must show standing 

and economic injury. See Becker v. Wells Fargo Bank, No. 12- 501 KJM, 2013 WL 3242249, *4 

(E.D. Cal. June 25, 2013) (“[T]o bring a UCL claim, a plaintiff must show . . . unlawful, unfair, or 

fraudulent business act or practice, [and] also show that he or she suffered a loss of money or 

property . . . caused by the . . . business practice.”). 

1. Standing 

To have standing under California’s UCL, plaintiffs must “(1) establish a loss or 

deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury; and 

(2) show that the economic injury was caused by the unfair business practice or false advertising 

that is the gravamen of the claim.” Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 322 (2011). 

The economic injury must be “sufficient to constitute an ‘injury in fact’ under 

Article III of the Constitution,” and the requisite injury must be “an invasion of a legally 

protected interest which is (a) concrete and particularized, and (b) actual or imminent, not 

conjectural or hypothetical.” Birdsong, 690 F.3d at 958–60 (9th Cir. 2009) (citing Buckland v. 

Threshold Enters., Ltd., 155 Cal. App. 4th 798, 814 (Cal. Ct. App. 2007)). In Kwikset, the court 

identified four injuries that would qualify as economic injury under the UCL: 

(1) surrender in a transaction more, or acquire in a transaction less, 

than he or she otherwise would have; (2) have a present or future 

property interest diminished; (3) be deprived of money or property 

to which he or she has a cognizable claim; or (4) be required to 

enter into a transaction, costing money or property, that would 

otherwise have been unnecessary. 

51 Cal. 4th at 323. 

After a plaintiff establishes loss, he or she must show a “causal connection” 

between the economic injury and the alleged unfair conduct. Id. at 326. A plaintiff fails to satisfy 

the causation prong of the statute if he or she would have suffered “the same harm whether or not 

a defendant complied with the law.” Daro v. Superior Court, 151 Cal. App. 4th 1079, 1099 (Cal. 

Ct. App. 2007); see, e.g., Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 523 

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(Cal. Ct. App. 2013) (No causal relations exist where plaintiff’s default triggered foreclosure and 

not defendant’s action though impending foreclosure is an adequate economic injury. ). 

Here, the court finds that an injury in fact is pled. Plaintiffs allege that, 

“[p]laintiffs will be evicted from their home” because of defendant’s act, and “plaintiffs have 

suffered, and will continue to suffer, substantial and irreparable injury from the imminent loss of 

their Property.” (ECF No. 1-1 ¶¶ 88–89.) Loss of property alone, an economic injury, satisfies 

the first prong of the standing requirement under the UCL. See Kwikset, 51 Cal. 4th at 323. 

Given that there is an injury, the court next looks at whether a causal relationship 

exists. Here, plaintiffs allege that defendant engaged in unfair business practices with respect to 

mortgage loan servicing, foreclosure of residential properties, and other related matters by: 

(1) [f]iling the NOD unlawfully; (2) failing to afford plaintiffs a fair 

opportunity to be evaluated for all available foreclosure prevention 

alternatives; (3) concealing the true character, quality, and nature of 

their intent to foreclose on plaintiffs’ Property without adequate 

notice; (4) filing a Declaration of Compliance that is false; and 

(5) foreclosing on the property without the legal authority or just 

cause to do so. 

(ECF No. 1-1, ¶ 75.) As in Jenkins, however, there is no causal relationship between plaintiffs’ 

economic injury and the alleged unfair practices here, because plaintiffs defaulted before the 

alleged unfair practices occurred. In fact, it was plaintiffs’ default that triggered the NOD and the 

subsequent non-judicial foreclosure on the Property. 

 Because plaintiffs have failed to establish a causal relationship between plaintiffs’ 

economic injury and the alleged unfair practices, they do not have standing to bring a UCL claim. 

Because the court grants leave to amend, with the possibility plaintiffs can establish standing, it 

addresses the elements of a UCL claim below. 

2. Elements of a UCL Claim 

The UCL prohibits unfair competition, which is defined as any “unlawful, unfair 

or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. The statute’s language 

has been construed as prohibiting three distinct types of practices: (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., 20 Cal. 4th 163, 180 (1999). Here, plaintiffs rely on all three prongs. 

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a) Unlawful 

To allege a claim under the “unlawful” prong, a plaintiff must show a violation of 

some independent law. See Farmers Ins. Exch. v. Superior Court, 2 Cal. 4th 377, 383 (1992). 

The predicate violation may be federal, state, local, or common law. Id. (section 17200 

“borrows” violations of other laws and treats them as unlawful practices actionable separately 

under section 17200). Because the statute borrows violations of other laws, a failure to state a 

claim under the underlying law translates to a failure to state a claim under the unlawful prong. 

See Saunders v. Superior Court, 27 Cal. App. 4th 832, 838 (Cal. Ct. App. 1994). 

Here, plaintiffs allege that defendant violated California Civil Code section 

2923.55(a), the FDCPA and the Rosenthal Act. (ECF No. 1-1 ¶ 79.) But the court has found 

plaintiffs have failed to state a claim under these underlying laws, meaning plaintiffs also have 

failed to state a claim under the unlawful prong of the UCL. 

b) Unfair Acts 

As this court has had an opportunity to review previously, California courts have 

provided several definitions of “unfair” under the UCL: 

1. “An act or practice is unfair if the consumer injury is substantial, 

is not outweighed by any countervailing benefits to consumers or to 

competition, and is not an injury the consumers themselves could 

reasonably have avoided.” Daugherty v. Am. Honda Motor Co., 

Inc., 144 Cal. App. 4th 824, 839 (2006). 

2. “‘[U]nfair’ business practice occurs when that practice offends 

an established public policy or when the practice is immoral, 

unethical, oppressive, unscrupulous or substantially injurious to 

consumers.” Smith v. State Farm Mut. Auto. Ins. Co., 93 Cal. App. 

4th 700, 719 (2001) (internal citation and quotation marks omitted). 

3. An unfair business practice means “the public policy which is a 

predicate to the action must be ‘tethered’ to specific constitutional, 

statutory or regulatory provisions.” Scripps Clinic v. Superior 

Court, 108 Cal. App. 4th 917, 940 (2003). 

Vincent v. PNC Mortgage, Inc., No. 14-00833, 2014 WL 2766116, at *8 (E.D. Cal. 

June 18, 2014) . 

Here, to the extent plaintiffs claim relies on defendant’s alleged violation of the 

current version of California Civil Code section 2923.5, the court has found that section does not 

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apply retroactively. Otherwise, plaintiffs simply parrot language from the statute in making 

essentially conclusory statements and have not satisfied any of the available definitions: 

[defendant’s] acts constitute ‘unfair’ business acts . . . because the 

acts offend public policy and are substantially injurious to 

[p]laintiffs and all consumers . . . Defendant[’s] actions are 

immoral, unethical . . . and are substantially injurious to consumers 

such as [p]laintiff . . . furthermore, [d]efendant[’s] wrongful 

conduct prevented [p]laintiffs from actively and quickly pursuing 

other workout options . . . . 

(ECF No. 1-1 ¶ 80–82.) Plaintiffs have not alleged with specificity any wrongdoing by the 

defendant, and so have not met the requirement of stating “with reasonable particularity the facts 

supporting the statutory elements of the violation.” Khan v. CitiMortgage, Inc., 975 F. Supp. 2d 

1127, 1145 (E.D. Cal. 2013) (citing Khoury v. Maly’s of California, Inc., 14 Cal. App. 4th 612, 

619 (1993)). 

c) Fraudulent 

The fraudulent prong of the UCL is “governed by the reasonable consumer test: a 

plaintiff may demonstrate a violation by show[ing] that [reasonable] members of the public are 

likely to be deceived.” Rubio v. Capital One Bank, 613 F.3d 1195, 1204 (9th Cir. 2010) (citation 

omitted). A UCL “plaintiff need not show that he or she or others were actually deceived or 

confused by the conduct or business practice in question.” Schnall v. Hertz Corp., 78 Cal. App. 

4th 1144, 1167 (2000). Whether a business practice is deceptive will usually be a question of fact 

not appropriate for decision on a motion to dismiss. Williams v. Gerber Products Co., 552 F.3d 

934, 938 (9th Cir. 2008). At the same time, an unfair practice claim grounded in fraud must be 

pled with the particularity required by Federal Rule of Civil Procedure 9(b). Vess v. Ciba-Geigy 

Corp. USA, 317 F.3d 1097, 1103 (2003). 

In support of their fraudulent prong UCL claim, plaintiffs allege that defendant 

engaged in a fraudulent course of conduct by unlawfully filing the NOD and failing to contact 

plaintiffs first. ECF No. 1-1 ¶ 86. This practice prevents plaintiffs and other consumers from 

exercising their right, and such practices are likely to deceive the public and affect consumers’ 

rights. Id. ¶ 85. Plaintiffs present only conclusory allegations of fraud, failing to allege with 

specificity when, how, and who engaged in fraud. In addition, to the extent plaintiffs’ claim 

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relies on an underlying claim that defendant violated California Civil Code section 2923.5, that 

section is not applicable as discussed above. 

 The court GRANTS defendant’s motion to dismiss plaintiffs’ UCL claim, WITH 

leave to amend. 

D. Negligent Supervision and Training 

Under California law, an employer can be liable for negligently hiring, supervising 

or retaining an unfit employee. Inzerillo v. Green Tree Servicing LLC, 13-06010, 2014 WL 

1347175, at * 6 (N.D. Cal. Apr. 3, 2014) (citing Doe v. Capital Cities, 50 Cal. App. 4th 1038, 

1054 (Cal. Ct. App. 1996)). “[I]f an enterprise hires individuals with characteristics which might 

pose a danger to customers or other employees, the enterprise should bear the loss caused by the 

wrongdoing of its incompetent or unfit employees.” Inzerillo, 2014 WL 1347175, at *6 (citing 

Mendoza v. City of Los Angeles, 66 Cal. App. 4th 1333, 1339 (1998)). Such liability will be 

imposed on an employer if it “knew or should have known that hiring the employee created a 

particular risk or hazard and that particular harm materializes.” Phillips v. TLC Plumbing, Inc., 

172 Cal. App. 4th 1133, 1139 (2009) (citing Doe, 50 Cal. App. 4th at 1054). A plaintiff alleging 

a negligence cause of action needs to state non-conclusory facts in support of this claim and 

identify a particularized harm that resulted from an individual employee’s action. 

Cf. O’Connor v. Capital One, N.A., No. 14-00177, 2014 WL 2215965, at *9 (N.D. Cal. May 29, 

2014). 

In addition, a plaintiff alleging negligent training under California law must show 

that the employer negligently trained the employee in the performance of the employee's job 

duties, and as a result of such negligent instruction the employee while carrying out his job duties 

caused injury or damage to the plaintiff. Garcia ex rel. Marin v. Clovis Unified School Dist., 

627 F. Supp. 2d 1187, 1208 (E.D. Cal. Apr. 16, 2009); see State Farm Fire & Casualty Co. v. 

Keenan, 171 Cal.App.3d 1, 23 (1985). 

Here, the Complaint lacks factual allegations to support plaintiffs’ claim. 

Plaintiffs have not pled any specific facts with respect to defendant’s alleged negligence in 

supervising or training any employee or individual for whom defendant could be held 

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responsible. Merely alleging that “[d]efendant[] owed [p]laintiffs a duty of reasonable care to 

train and supervise [its] employees and agents to comply with all applicable laws” (ECF No. 1-1 

¶ 92), and that “[d]efendant[] breached [its] duty by failing to ensure that [its] agents and/or 

employees complied with California Civil Code § 2923.55 . . . ,” is insufficient. (Id. ¶ 94.) 

While plaintiffs do not need to “prove the case on the pleadings,” plaintiffs must allege “more 

than conclusions.” OSU Student Alliance v. Ray, 699 F.3d 1053, 1078 (9th Cir. 2012) (quoting 

Iqbal, 556 U.S. at 679). 

Plaintiffs also have not identified any wrongful conduct by an agent and/or 

employee of defendant. Plaintiffs’ claim is based solely on allegations that defendants failed to 

ensure that their agents and/or employees complied with California Civil Code section 2923.55, 

with respect to the NOD, and the Truth in Lending Act (“TILA”). (ECF No. 1-1 ¶ 94–96.) For 

the reasons discussed above, the first two allegations do not establish wrongful conduct. 

Regarding TILA, plaintiffs brought the TILA claim more than one year after the alleged 

violation. See Rodriguez v. JP Morgan Chase & Co., 809 F. Supp. 2d 1291, 1298 (S.D. Cal. 

Aug. 25, 2011). Plaintiffs obtained the loan in January 2004, but did not file this action until 

April 1, 2015. (ECF No. 1-1.) The TILA claim is therefore time-barred. 

The court GRANTS defendant’s motion to dismiss plaintiffs’ negligent 

supervision claim WITHOUT leave to amend so far as the claim is based on TILA. The court 

GRANTS the balance of defendant’s motion to dismiss plaintiffs’ negligent supervision claim 

WITH leave to amend. 

V. CONCLUSION 

For the foregoing reasons, the court GRANTS defendant’s Motion to Dismiss. 

Plaintiffs’ first amended complaint is due within twenty-one (21) days from the date of this order. 

IT IS SO ORDERED. 

DATED: February 8, 2016. 

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