Klara Gianna Gallusz v. LPP Mortgage, Inc. f/k/a LPP Mortgage Ltd.

Opinion

1 2 3 4 5 6 9 10 KLARA GIANNA GALLUSZ, Case No.: 25-CV-885 JLS (JAC)

11 Plaintiff, ORDER (1) GRANTING MOTION 12 v. TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT AND (2) 13 LPP MORTGAGE, INC. f/k/a LPP DENYING AS MOOT PLAINTIFF’S MORTGAGE LTD, Defendant. 15 (ECF Nos. 41, 45, 47, 48, 49) 16 17 Presently before the Court is Defendant LLP Mortgage, Inc.’s Motion to Dismiss 18 Plaintiff’s First Amended Complaint (“Mot.,” ECF No. 41). Also before the Court are 19 Plaintiff Klara Gianna Gallusz’s Opposition thereto (“Opp’n,” ECF No. 42) and 20 Defendant’s Reply in support thereof (“Reply,” ECF No. 43). Plaintiff has also filed an 21 Ex Parte Application for Leave to file Limited Sur-Reply (ECF No. 45), an Ex Parte 22 Application for Administrative Stay and Temporary Restraining Order (ECF No. 47), an 23 Ex Parte Application for Order Shortening Time to Hear Plaintiff’s Motion for Approval 24 of Notice of Pendency of Action (ECF No. 48), and a Motion for Approval of Notice of 25 Pendency of Action (ECF No. 49). Having carefully considered Plaintiff’s First Amended 26 Complaint (“FAC,” ECF No. 40), the Parties’ Motions, the Parties’ arguments, and the 27 law, the Court GRANTS Defendant’s Motion to Dismiss (ECF No. 41) and DENIES AS 28 1 MOOT Plaintiff’s Motions (ECF Nos. 45, 47, 48, 49). 3 On April 10, 2025, Plaintiff, appearing pro se, filed an initial Complaint titled 4 “Verified Petition for Declaratory and Injunctive Relief: Bill in Equity Ex Parte Hearing 5 for Declaratory Judgment and Injunctive Relief Due to Lack of Article III Standing” in the 6 Superior Court of California for the County of San Diego. See generally ECF No. 1-3 7 (“Compl.”). In her Complaint, Plaintiff indicated the real property located at 3050 Rue D 8 Orleans, Unit #410, San Diego, California 92110 (the “Property”), was “the subject of a 9 threatened non-judicial foreclosure sale scheduled for April 16, 2025, at 10:30 AM, to take 10 place at the entrance of East County Regional Center, 250 E. Main Street, El Cajon, CA 11 92020.” Id. at 3. Plaintiff sought declaratory and injunctive relief, including “a 12 determination of legal rights, and to prevent irreparable harm from unlawful foreclosure.” 13 Id. Defendant removed the case to this Court. See ECF No. 1 (“Notice of Removal”). On 14 December 19, 2025, the Court granted Defendant’s Motion to Dismiss Plaintiff’s 15 Complaint (ECF No. 15), finding that Plaintiff failed to state claims because (1) declaratory 16 and injunctive relief were not standalone claims, (2) Defendant did not need Article III 17 standing to initiate a non-judicial foreclosure, and (3) Plaintiff did not point to “a particular 18 cause of action or allege additional facts” in challenging the assignments of the Deed of 19 Trust. ECF No. 39 at 4–6. 20 Following the Court’s dismissal of the initial Complaint, Plaintiff filed the First 21 Amended Complaint, and Defendant filed a Motion to Dismiss Plaintiff’s First Amended 22 Complaint. ECF Nos. 40, 41. The FAC generally alleges that Defendant lacks the 23 authority to initiate foreclosure proceedings based on defective assignments of the Deed of 24 25

26 1 Defendant requests judicial notice of evidence relating to the assignments of the Deed of Trust and 27 Plaintiff’s bankruptcy case. See generally ECF No. 41-2 (“RJN”). Because the Court does not rely on 28 these documents in reaching its conclusion below, the Court DENIES AS MOOT Defendant’s Request 1 Trust. See FAC at 3. Plaintiff also filed several motions, similarly challenging Defendant’s 2 authority to initiate foreclosure proceedings. See ECF Nos. 47, 49. 4 I. Legal Standard 5 Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 6 defense that the complaint “fail[s] to state a claim upon which relief can be granted.” To 7 survive a 12(b)(6) motion, “a complaint must contain sufficient factual matter, accepted as 8 true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 9 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is 10 facially plausible when the facts pled “allow[] the court to draw the reasonable inference 11 that the defendant is liable for the misconduct alleged.” Id. That is not to say that the claim 12 must be probable, but there must be “more than a sheer possibility that a defendant has 13 acted unlawfully.” Id. Facts “‘merely consistent with’ a defendant’s liability” fall short of 14 a plausible entitlement to relief. Id. (quoting Twombly, 550 U.S. at 557). 15 Though this plausibility standard “does not require ‘detailed factual 16 allegations,’ . . . it [does] demand[] more than an unadorned, the-defendant-unlawfully- 17 harmed-me accusation.” Id. (quoting Twombly, 550 U.S. at 555). In other words, a 18 complaint will not suffice “if it tenders ‘naked assertion[s]’ devoid of ‘further factual 19 enhancement.’” Id. (alteration in original) (quoting Twombly, 550 U.S. at 557). Put 20 differently, “a formulaic recitation of the elements of a cause of action will not do.” 21 Twombly, 550 U.S. at 555. 22 Review under Rule 12(b)(6) requires a context-specific analysis involving the 23 Court’s “judicial experience and common sense.” Iqbal, 556 U.S. at 679. In performing 24 that analysis, “a district court must accept as true all facts alleged in the complaint, and 25 draw all reasonable inferences in favor of the plaintiff.” Wi-LAN Inc. v. LG Elecs., Inc., 26 382 F. Supp. 3d 1012, 1020 (S.D. Cal. 2019). “[W]here the well-pleaded facts do not 27 permit the court to infer more than the mere possibility of misconduct, the complaint has 28 alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’” Iqbal, 556 U.S. 1 at 679 (second alternation in original). If a complaint does not survive Rule 12(b)(6), a 2 court grants leave to amend unless it determines that no modified contention “consistent 3 with the challenged pleading could . . . possibly cure the deficiency.” Schreiber Distrib. 4 Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). 5 II. Discussion 6 A. Defendant’s Authority to Initiate Foreclosure Proceedings 7 Plaintiff’s First Amended Complaint is nearly entirely premised on the notion that 8 Defendant lacked the authority to initiate foreclosure proceedings. See generally FAC. 9 Plaintiff alleges that Defendant violated California Civil Code § 2934a(b) because it 10 “initiated and pursued nonjudicial foreclosure proceedings without a valid, properly 11 executed, and recorded Substitution of Trustee as required by Cal. Civ. Code § 2934a(b).” 12 Id. at 4. Plaintiff alleges Defendant violated California’s Homeowner Bill of Rights 13 (“HBOR”) because it “recorded foreclosure notices and pursued foreclosure activity 14 despite lacking the requisite authority to foreclose.” Id. at 4–5. Plaintiff alleges that 15 Defendant violated California’s Unfair Competition Law (“UCL”) because it “engaged in 16 unlawful and unfair business practices by initiating and pursuing nonjudicial foreclosure 17 without lawful authority.” Id. at 5. Plaintiff alleges a claim under the Truth in Lending 18 Act (“TILA”) because Defendant “asserted the right to enforce the loan and pursue 19 foreclosure without establishing that they are the owner, assignee, or otherwise a person 20 entitled to enforce the obligation as required by § 1641.” Id. at 6. Plaintiff also seeks 21 declaratory relief as to Defendant’s “claimed authority to initiate and pursue nonjudicial 22 foreclosure and the validity of the foreclosure instruments recorded against Plaintiff’s 23 property.” Id. at 5. Finally, Plaintiff alleges that Defendant violated the Fair Debt 24 Collection Practices Act (“FDCPA”) because it “attempted to collect a consumer debt and 25 pursue foreclosure activity without lawful authority.” Id. at 6–7. 26 Plaintiff’s claims fail because they improperly challenge Defendant’s authority to 27 foreclose on the Property before foreclosure has taken place. See Mot. at 3–5 (arguing that 28 Plaintiff “cannot challenge [Defendant]’s standing to commence foreclosure proceedings” 1 because “California expressly prohibits preemptive suits”). The Ninth Circuit has 2 explained that although “[t]he California Supreme Court has not directly answered the 3 question of whether preemptive, pre-foreclosure actions are viable under California law,” 4 “the existing California appellate cases demonstrate that . . . California appellate courts 5 have dismissed preemptive, pre-foreclosure actions.” Perez v. Mortg. Elec. Registration 6 Sys., Inc., 959 F.3d 334, 338–39 (9th Cir. 2020). As with “the decisions of the California 7 appellate courts,” the Ninth Circuit concluded in Perez that “California law does not permit 8 preemptive actions to challenge a party’s authority to pursue foreclosure before a 9 foreclosure has taken place.” Id. at 340. In Perez, foreclosure had not yet taken place, and 10 the court held that the appellants “d[id] not state any valid claims under California law.” 11 Id. Foreclosure has likewise not taken place in this case, and Plaintiff’s claims, though 12 pleaded under various laws and regulations, are improperly premised on whether 13 Defendant has authority to initiate foreclosure proceedings. See id.; Chu v. Fay Servicing, 14 LLC, No. 20-CV-3540 YGR, 2020 WL 3574639, at *2–3 (N.D. Cal. July 1, 2020) (finding 15 that plaintiff’s claims were “not viable” because they “preemptively challeng[ed] 16 defendants’ authority to foreclose before such authority ha[d] been exercised”). 17 Accordingly, the Court GRANTS Defendant’s Motion to Dismiss on this basis and 18 DISMISSES Plaintiff’s first, second, third, fourth, sixth, and seventh claims. 19 B. Remaining Claim 20 Plaintiff’s remaining claim under the Real Estate Settlement Procedures Act 21 (“RESPA”) also fails. Pursuant to RESPA, Plaintiff alleges that she “submitted requests 22 seeking information concerning the identity of the loan servicer,” and that Defendant 23 “failed to provide complete and accurate responses as required by § 2605(e) and, instead, 24 misrepresented or failed to clarify servicing authority.” FAC at 6. 25 Section 2605(e) applies to servicers of federally related mortgage loans and requires 26 servicers to provide a written acknowledgement in response to a “qualified written request 27 from the borrower.” 12 U.S.C. § 2605(e)(1)(A). A “qualified written request” is a “written 28 correspondence” that “includes, or otherwise enables the servicer to identify, the name and 1 account of the borrower” and “includes a statement of the reasons for the belief of the 2 borrower, to the extent applicable, that the account is in error or provides sufficient detail 3 to the servicer regarding other information sought by the borrower.” Id. § 2605(e)(1)(B). 4 A servicer “means the person responsible for servicing of a loan (including the person who 5 makes or holds a loan if such person also services the loan).” Id. § 2605(i)(2). 6 Plaintiff provides no specific details about the written requests she made to 7 Defendant, nor does she provide specific details about Defendant’s responses. Instead, she 8 makes the conclusory allegation that Defendant “failed to provide complete and accurate 9 responses” and “misrepresented or failed to clarify servicing authority.” FAC at 6. Further, 10 as Defendant points out, Plaintiff has not alleged facts establishing that Defendant is the 11 loan servicer, and thus, that § 2605(e) is applicable. Mot. at 11. 12 Accordingly, the Court GRANTS Defendant’s Motion to Dismiss Plaintiff’s fifth 13 claim. 14 III. Leave to Amend 15 Leave to amend should be freely given “when justice so requires.” Fed. R. Civ. P. 16 15(a)(2). While the rule should be interpreted liberally, leave should not be granted 17 automatically. Jackson v. Bank of Haw., 902 F.2d 1385, 1387 (9th Cir. 1990). In 18 determining whether to grant leave to amend, trial courts should consider various factors, 19 including bad faith, undue delay, prejudice to the opposing party, futility of amendment, 20 and whether the party has previously amended. Foman v. Davis, 371 U.S. 178, 182 (1962).

21 Applying the Foman factors, the Court declines to grant Plaintiff leave to amend. 22 Plaintiff has not alleged additional facts that cure the deficiencies in her initial Complaint. 23 See ECF No. 39. As Defendant asserts in its Reply, the FAC is focused on challenging 24 Defendant’s authority to initiate foreclosure proceedings, and “such an action is 25 impermissible under California law.” Perez, 959 F.3d at 341; see Reply at 1. Plaintiff has 26 not alleged additional facts or claims suggesting otherwise. See generally FAC; see also 27 Opp’n (“The FAC alleges a straightforward statutory theory: Defendant initiated and 28 pursued nonjudicial foreclosure activity without establishing lawful authority as required 1 || by California law.”). Therefore, the Court finds that “it is clear that granting leave to amend 2 || would [be] futile.” Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 3 (9th Cir. 2004). 5 As Plaintiff fails to allege any valid claim, the Court DENIES AS MOOT Plaintiff's 6 ||Ex Parte Application for Administrative Stay and Temporary Restraining Order (ECF 7 47) and Ex Parte Application for Leave to file Limited Sur-Reply (ECF No. 45). 8 || Because the Court finds that granting leave to amend would be futile and that dismissal of 9 action is warranted, the Court also DENIES AS MOOT Plaintiff's Ex Parte 10 || Application for Order Shortening Time to Hear Plaintiff's Motion for Approval of Notice 11 Pendency of Action (ECF No. 48) and Motion for Approval of Notice of Pendency of 12 || Action (ECF No. 49). 14 In light of the foregoing, the Court GRANTS Defendant’s Motion to Dismiss 15 || Plaintiff's First Amended Complaint (ECF No. 41) WITHOUT LEAVE TO AMEND 16 DENIES AS MOOT Plaintiff's Motions (ECF Nos. 45, 47, 48, 49). Because the 17 Court finds that amending the FAC would be futile, the Court DISMISSES the entire 18 above-captioned action. The Court VACATES any hearings on the Motions. As this 19 || concludes the litigation in this matter, the Clerk of Court SHALL CLOSE the file. 21 Dated: June 9, 2026 tt 22 ja Janis L. Sammartino 3 United States District Judge 24 25 26 27 28