Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-01403/USCOURTS-caed-2_09-cv-01403-2/pdf.json

Parties Involved:
American Home Mortgage Servicing
Defendant
Clinton Petracek
Plaintiff
Kelly Petracek
Plaintiff

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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

CLINTON PETRACEK and KELLY )

PETRACEK, ) 2:09-cv-001403-GEB-KJM

)

Plaintiffs, ) ORDER GRANTING MOTION TO 

) DISMISS*

v. )

) 

AMERICAN HOME MORTGAGE SERVICING )

and LENDER DOE, )

)

Defendants )

)

On September 16, 2009, Defendant American Home Mortgage 

Servicing, Inc. (“AHMSI”) filed a motion to dismiss Plaintiffs’ First

Amended Complaint (“FAC”) under Federal Rule of Civil Procedure

12(b)(6) for failure to state a claim upon which relief can be

granted. AHMSI argues it has been erroneously named as American Home

Mortgage Servicing. Plaintiffs allege the following claims against

AHMSI in connection with a loan they obtained to finance their home:

(1) violation of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601

et seq.; (2) violation of the Real Estate Settlement Procedures Act

(“RESPA”), 12 U.S.C. §§ 2601, et seq.; (3) violation of the Rosenthal

Fair Debt Collection Practices Act, California Civil Code §§ 1788.17,

et seq., “subject to the remedies of 15 U.S.C. § 1692(k)”; (4)

violation of California Business and Professions Code section 17200;

(5) breach of the implied covenant good faith and fair dealing; and

(6) slander of credit. Plaintiffs assert this Court has subject

matter jurisdiction under 28 U.S.C. §§ 1331 and 1337. However, a

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review of Plaintiffs’ FAC reveals Plaintiffs have not alleged a viable

federal claim. Therefore, the Court will decline to continue

exercising supplemental jurisdiction over Plaintiffs’ state claims. 

I. Doe Defendants

Plaintiffs have only identified the second holder of the 

mortgage note in the FAC as “Lender Doe.” (FAC ¶ 1.) Plaintiffs were

provided forty-five days to conduct discovery concerning this “Doe”

defendant, and to file a motion in which they could seek to add a

named party in place of Lender Doe, in the Pretrial Scheduling Order

in this case issued on August 6, 2009. (Docket No. 10.) Since the

time to file this motion has elapsed, Lender Doe is dismissed under

the rationale in the Order Setting Status (Pretrial Scheduling)

Conference filed May 21, 2009, in which it is stated: “Failure to set

forth specific information regarding the time Plaintiff(s) needs to

identify any "Doe" defendants will be deemed an abandonment of any

claims against such defendants, and a dismissal order will follow.” 

Therefore, AHMSI is the only Defendant in this case.

II. Truth in Lending Act

A review of Plaintiffs’ FAC reveals Plaintiffs have not 

alleged a viable TILA claim against AHMSI. Plaintiffs concede AHMSI

is a loan servicer and is not liable as a servicer under TILA. (FAC

¶¶ 16, 36, 37.) Civil liability under TILA applies to creditors and

assignees of creditors. See 15 U.S.C. §§ 1640(a), 1641(a). Under §

1641(f)(1), loan servicers “shall not be treated as an assignee of [a

consumer] obligation for purposes of [TILA] unless the servicer is or

was the owner of the obligation.” See also Marks v. Ocwen Loan

Servicing, 2008 WL 344210, *2 (N.D. Cal. 2008) (“Although TILA

provides that assignees of a loan may be liable for TILA violations,

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loan servicers are not liable under TILA as assignees unless the loan

servicer owned the loan obligation at some point.”).

However, Plaintiffs allege AHMSI “ha[s] liability under

common law (Restatement of Agency)” since AHMSI is intentionally

withholding the identity of an unidentified principal note holder. 

(FAC ¶ 37.) Plaintiffs have not alleged AHMSI ever owned the loan

obligation and “ha[ve] provided no authority that extends the common

law doctrine of agency to the servicer of a loan under a TILA claim.” 

Fullmer v. JPMorgan Chase Bank, N.A., 2010 WL 95206, *4 (E.D. Cal.

2010). Thus, Plaintiffs have not stated a viable TILA claim against

AHMSI.

III. Real Estate Settlement Procedures Act

AHMSI seeks dismissal of Plaintiffs’ second claim in which 

Plaintiffs allege AHMSI violated § 2605(e) of RESPA by failing to

provide a proper and timely written response to Plaintiffs’ Qualified

Written Request (“QWR”) mailed on January 12, 2009, and which is

attached as Exhibit B to Plaintiffs’ FAC. In the January 12, 2009

letter, Plaintiffs requested numerous loan documents, offered to

modify the terms of their loan, and demanded rescission of the loan

under the provisions of TILA if the offer was rejected. (FAC Ex. B.) 

AHMSI argues the January 12, 2009 letter was not a QWR as defined in

RESPA, since it “fails to explain Plaintiffs’ reason for believing

there was any error on the account,” and therefore, Plaintiffs have

failed to state a RESPA claim.

Under RESPA, “If any servicer of a federally related 

mortgage loan receives a [QWR] from the borrower for information

relating to the servicing of such loan, the servicer shall provide a

written response acknowledging receipt of the correspondence within 20

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days . . . .” 12 U.S.C. § 2605(e)(1)(A) (emphasis added). “Not later

than 60 days after the receipt [of the QWR] . . . the servicer shall 

. . . make appropriate corrections [to] the account . . .[, or]

provide the borrower with a written explanation . . . of the reasons 

. . . the account of the borrower is correct . . . [, or] provide the

borrower with . . . an explanation of why the information requested is

unavailable . . . .” 12 U.S.C. § 2605(e)(2). “The term ‘servicing’

means receiving any scheduled periodic payments . . . and making the

payments of principal and interest and such other payments with

respect to the amounts received from the borrower as may be required

pursuant to the terms of the loan.” 12 U.S.C. § 2605(i)(3). A QWR is

a written correspondence that “includes a statement of the reasons for

the belief of the borrower . . . 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).

Here, Plaintiffs’ January 12, 2009 letter does not “relat[e] 

to the servicing of the loan.” 28 U.S.C. § 2605(e)(1). The letter

states:

The loan being serviced is defective. Mr. and

Mrs.Petracek were provided four copies of the

Notice of Right to Cancel (copy attached as Exhibit

“B”). The two provided to Kelly Petracek have

blank dates for the date of her right of rescission

expires [sic]. Of the two provided to Mr.

Petracek, one has blank dates for the date that his

right of rescission expires and the other has dates

but the signature states Mr. Petracek has

rescinded. As such, this error of not providing

proper copies with the correct dates of the Notice

of Right to Cancel, as required by TILA, extends

the right to cancel for 3 years.

(FAC Ex. B.) The letter goes on to offer to modify the terms of the

loan by decreasing the principal balance and fixing the interest rate

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of the loan at 5.25%. (Id.) The letter also requests “the name,

address, and telephone number of the owner/note holder/beneficiary/

master servicer of the obligation” and copies of several documents

related to the loan. (Id.) However, the letter does not contain a

statement of the reasons Plaintiffs believe the account was in error

or details regarding other loan servicing information sought by

Plaintiffs. In the letter, Plaintiffs “simply disputed the validity

of the loan and not its servicing.” “That a QWR must address the

servicing of the loan, and not its validity, is borne out by the fact

that § 2605(e) expressly imposes a duty upon the loan servicer, and

not the owner of the loan.” Consumer Solutions REO, LLC v. Hillery, --

F. Supp. 2d ---, 2009 WL 2711264, *9 (N.D. Cal. 2009). Since AHMSI

did not “receive[] a [QWR] from [Plaintiffs] for information relating

to the servicing of [the] loan,” AHMSI had no duty to respond to

Plaintiffs’ January 12, 2009 letter under 12 U.S.C. § 2605(e)(1)(A). 

Therefore, Plaintiffs’ have failed to state a claim under RESPA. 

Therefore, Defendants motion to dismiss Plaintiffs’ second claim is

GRANTED.

IV. Fair Debt Collection Practices Act

The nature of Plaintiffs’ third claim is now considered for

the purpose of determining whether this is a federal claim. 

Plaintiffs allege in this claim that AHMSI violated the Rosenthal Fair

Debt Collection Practices Act, California Civil Code section 1788.2

(the “Rosenthal Act”), “subject to the remedies of” the Federal Fair

Debt Collection Practices Act. (FAC ¶ 87.) Plaintiffs only seek

relief under the California Rosenthal Act in this claim. (FAC ¶ 91.) 

Plaintiffs do not mention the Federal Fair Debt Collection Practices

Act in this claim other than to state their Rosenthal Act claim is

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“subject to the remedies of” the Federal Fair Debt Collection

Practices Act. Further, Plaintiffs do not argue they alleged a

Federal Fair Debt Collection Practices Act claim in their Opposition

to AHMSI’s motion to dismiss the Rosenthal Act claim.

Ordinarily, the existence of federal question

jurisdiction is determined from the face of the

complaint. Whether the complaint states a claim

‘arising under’ federal law must be ascertained by

the legal construction of the plaintiff’s

allegations, and not by the effect attributed to

those allegations by the adverse party. The

plaintiff is the ‘master’ of his complaint[.] 

Ultramar Am. Ltd. v. Dwelle, 900 F.2d 1412, 1414 (9th Cir. 1990)

(citations and quotes omitted). Plaintiffs’ statement that their

Rosenthal Act claim is “subject to the remedies” of the Federal Fair

Debt Collection Practices Act is insufficient to state a claim

“arising under” the Federal Fair Debt Collection Practices Act. 

Therefore, Plaintiffs third claim does not provide a basis for federal

subject matter jurisdiction and only Plaintiffs’ state claims remain.

V. Supplemental Jurisdiction

Plaintiffs allege 28 U.S.C. § 1367 provides the Court with

supplemental jurisdiction over their state claims. (FAC ¶ 7.) Under

28 U.S.C. § 1367(c)(3), a district court “may decline to exercise

supplemental jurisdiction over a [state] claim” if “the district court

has dismissed all claims over which it has original jurisdiction

 . . . .” “While discretion to decline . . . supplemental

jurisdiction over state law claims is triggered by the presence of one

of the conditions in § 1367(c), it is informed by the . . . values of

economy, convenience, fairness and comity” as delineated by the

Supreme Court in United Mine Workers of America v. Gibbs, 383 U.S.

715, 726 (1966). Acri v. Varian Assoc., Inc., 114 F.3d 999, 1001 (9th

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Cir. 1997) (en banc). “Since state courts have the primary

responsibility to develop and apply state law, . . . the Gibbs values

do not favor continued exercise of supplemental jurisdiction over

Plaintiff’s state claims . . . .” Anderson v. Countrywide Fin., 2009

WL 3368444, *5 (E.D. Cal. 2009); see also Wade v. Regional Credit

Ass’n, 87 F.3d 1098, 1101 (9th Cir. 1996) (stating that “where a

district court dismisses a federal claim, leaving only state claims

for resolution, it should decline jurisdiction over the state claims

and dismiss them without prejudice”). Accordingly, Plaintiff’s state

claims are dismissed without prejudice under 28 U.S.C. § 1367(c)(3).

VI. Conclusion

Since Plaintiffs have failed to allege a viable federal 

claim and this Court declines to exercise supplemental jurisdiction

over Plaintiffs’ remaining state claims, this case is dismissed

without prejudice under 28 U.S.C. § 1367(c)(3). The Clerk of Court

shall close this case.

Dated: February 10, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

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