Lanier v. Specialized Loan Servicing, LLC

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CHRISTINE LANIER, Case No. 23-cv-01396-JST

8 Plaintiff, ORDER GRANTING MOTION TO 9 v. DISMISS

10 SPECIALIZED LOAN SERVICING, LLC, Re: ECF No. 32 et al., 11 Defendants.

12 13 Before the Court is Defendants Specialized Loan Servicing, LLC, First Franklin Mortgage 14 Loan Trust, and U.S. Bank National Association’s (collectively “Specialized”) motion to dismiss 15 Plaintiff’s second amended complaint (“SAC”). ECF No. 32. For the reasons stated below, the 16 Court will grant the motion. 17 I. BACKGROUND 18 On October 30, 2023, Plaintiff Christine Lanier filed her SAC in this action against 19 Specialized, whom she claims illegally seeks to collect a debt allegedly owed by her. Because the 20 facts are well-known to the parties and the Court has summarized Lanier’s allegations in detail in 21 its prior motion to dismiss order, ECF No. 30, the Court will not elaborate them here. 22 In its prior order, the Court dismissed Lanier’s claims for negligence, violations of the Fair 23 Debt Collection Practices Act (“FDCPA”), the Real Estate Settlement Procedures Act (“RESPA”), 24 the Truth in Lending Act (“TILA”), California’s Unfair Competition Law (“UCL”), as well as her 25 request for declaratory relief.1 The Court granted leave to file an amended complaint. See id. at 26

27 1 Although Lanier alleges that Specialized breached the “Consumer Financial Protection Act,” the 1 13. 2 Lanier’s SAC renews the six claims set forth in her original complaint. She now adds 3 allegations that Specialized is “subject to Fannie Mae’s servicing guidelines” and integrates 4 various provisions of the guidelines into her claims. ECF No. 31 ¶ 31; see id. ¶¶ 68–70, 82–84, 5 86, 96–99, 105–06, 129–34, 140–45, 149–50, 167–70. These guidelines, which are incorporated 6 by reference as Exhibit D to Lanier’s SAC, state that a “servicer must ensure all pre-petition and 7 post-petition payments are properly applied and monitored in accordance with all applicable laws 8 and as described [herein].” Id. ¶ 33. 9 Specialized now moves to dismiss the SAC pursuant to Federal Rule of Civil Procedure 10 12(b)(6). ECF No. 32. 11 II. JURISDICTION 12 The Court has jurisdiction over Lanier’s federal claims pursuant to 28 U.S.C. § 1331 and 13 supplemental jurisdiction over her state law claims under 28 U.S.C. § 1367. 14 III. LEGAL STANDARD 15 “Dismissal under [Federal Rule of Civil Procedure] 12(b)(6) is appropriate only where the 16 complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” 17 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). “To survive a 18 motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a 19 claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 20 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare recitals of the elements of a 21 cause of action, supported by mere conclusory statements, do not suffice.” Id. When ruling on a 22 motion to dismiss, courts “accept all factual allegations in the complaint as true and construe the 23 pleadings in the light most favorable to the nonmoving party.” Knievel v. ESPN, 393 F.3d 1068, 24 1072 (9th Cir. 2005). 25 Leave to amend a complaint “shall be freely given when justice so requires.” Fed. R. Civ. 26 P. 15(a)(2). “[A] district court should grant leave to amend even if no request to amend the 27 pleading was made, unless it determines that the pleading could not possibly be cured by the 1 Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990)). “Nevertheless, 2 the ‘general rule that parties are allowed to amend their pleadings . . . does not extend to cases in 3 which any amendment would be an exercise in futility.’” Novak v. United States, 795 F.3d 1012, 4 1020 (9th Cir. 2015) (alteration in original) (quoting Stechman v. Hart Brewing, Inc., 143 F.3d 5 1293 1298 (9th Cir. 1998)). 6 IV. JUDICIAL NOTICE 7 Specialized requests that the Court judicially notice eight documents: assignment of the 8 deed of trust recorded on December 17, 2019 in Alameda County, ECF No. 33 at 6–8; the docket 9 for Lanier’s Chapter 13 voluntary petition filed in the United States Bankruptcy Court for the 10 Northern District of California, Case No. 16-42795, id. at 9–18; Lanier’s proof of claim filed on 11 February 7, 2017, id. at 19–27; Lanier’s first amended application to modify the Chapter 13 12 bankruptcy plan on April 17, 2018, id. at 28–34; the bankruptcy court’s order modifying the 13 Chapter 13 plan on June 18, 2018, id. at 35–37; the bankruptcy court’s order of discharge on 14 January 12, 2022, id. at 38–39; Specialized’s response to Lanier’s qualified written request 15 (“QWR”) dated March 30, 2022, id. at 40–125; and Specialized’s final notice to Lanier, sent on 16 March 10, 2022, that the matured loan full payment was due, id. at 126–28. 17 Pursuant to Federal Rule of Evidence 201(b), courts may judicially notice facts that are 18 “not subject to reasonable dispute,” meaning they are “generally known” or “can be accurately and 19 readily determined from sources whose accuracy cannot reasonably be questioned.” Because the 20 deed of trust, docket sheet, proof of claim, bankruptcy court filings, and bankruptcy court orders 21 are “court filings [or] other matters of public record,” the Court will take judicial notice of them. 22 Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2010). 23 Additionally, under the incorporation by reference doctrine, the Court will take judicial 24 notice of Specialized’s QWR responses and the final notice of the matured loan payment. Lanier’s 25 claims “depend on the contents” of these documents, Specialized has attached the documents to its 26 motion, and the parties do not dispute their authenticity. See Knievel, 393 F.3d at 1076. 27 1 V. DISCUSSION 2 A. Fannie Mae Servicing Guidelines 3 Although Lanier’s SAC renews the same six claims from her original complaint, she now 4 attempts to bolster each claim with allegations that Specialized is “subject to Fannie Mae’s 5 servicing guidelines” and failed to adhere to them. ECF No. 31 ¶¶ 31, 37. Specialized argues that 6 Fannie Mae’s servicing guidelines cannot serve as a basis for any of Lanier’s claims. ECF No. 32 7 at 10–11. For the reasons set forth below, the Court agrees with Specialized. 8 The law is clear that “an alleged violation or breach of the Fannie Mae Servicing Guide 9 does not give rise to any cause of action.” Vega v. Ocwen Fin. Corp., No. 2:14-CV-04408-ODW, 10 2015 WL 3441930, at *4 (C.D. Cal. May 28, 2015), aff’d, 676 F. App’x 647 (9th Cir. 2017). 11 “[F]ederal courts have uniformly concluded, to the extent that the [Fannie Mae] servicing 12 guidelines can be read as creating enforceable contractual duties, that borrowers are neither parties 13 nor third-party beneficiaries entitled to enforce the . . . servicing guidelines.” McKenzie v. Wells 14 Fargo Bank, N.A., 931 F. Supp. 2d 1028, 1044 (N.D. Cal. 2013); see also Hinton v. Fed. Nat. 15 Mortgage Ass’n, 945 F. Supp. 1052, 1056–57 (S.D. Tex. 1996) (rejecting the notion that a 16 violation of the Fannie Mae servicing guidelines may give rise to a cause of action); Pennell v. 17 Wells Fargo Bank, N.A., No. 10–cv–00582, 2012 WL 2873882, at *8 (S.D. Miss. July 12, 2012) 18 (same). Lanier attempts to distinguish Vega on the ground that the plaintiff in that action “did not 19 establish a contractual relationship with the servicer that would include the Fannie Mae 20 guidelines,” whereas she “made plausible allegations that suggest a closer contractual 21 relationship.” ECF No. 34 at 12. Regardless of whether Lanier alleges “a closer contractual 22 relationship” with Specialized, she still has not provided any authority that suggests that she has 23 standing to enforce the servicing guidelines. See McKenzie, 931 F. Supp. 2d at 1044. 24 Therefore, to the extent that Lanier’s claims in the SAC are premised on violations of 25 Fannie Mae’s servicing guidelines, these allegations do not plausibly allege a claim. Nor would 26 discovery cure this problem, as Lanier suggests. See ECF No. 34 at 13 (asserting that “[d]iscovery 27 is critical to uncover evidence that could support [her] claims”). 1 B. Negligence 2 Lanier again alleges that Specialized “had a duty to exercise reasonable care and skill in 3 managing and applying the payments for the Loan appropriately,” and that it breached its duty 4 when it “wrongfully applied [her] payments to only the interest balance of the loan and not the 5 principal balance as required . . . under the Loan terms and Fannie Mae Servicing Guidelines.” 6 ECF No. 31 ¶¶ 85, 86. 7 This Court previously dismissed Lanier’s negligence claim, reasoning that “California 8 courts have made clear that ‘as a general rule, a financial institution owes no duty of care to a 9 borrower when the institution’s involvement in the loan transaction does not exceed the scope of 10 its conventional role as a mere lender of money.’” ECF No. 30 at 5 (quoting Nymark v. Heart 11 Fed. Sav. & Loan Assn., 231 Cal. App. 3d 1089, 1096 (Ct. App. 1991)). Although liability to a 12 borrower for negligence may arise when a “lender actively participates in the financed enterprise 13 beyond the domain of the usual money lender,” id. (internal quotations and citations omitted), the 14 Court found that Specialized’s role as a loan servicer fell short of the active participation required 15 to give rise to liability. Id. 16 In her opposition, Lanier now contends that the “relationship and the subsequent actions” 17 of Specialized “extend well beyond the conventional role as a mere lender of money.” ECF No. 18 34 at 22. She states that, as a result of her Chapter 13 bankruptcy filing, Specialized was subject 19 to “heightened” obligations and duties. Id. at 23. But Lanier provides no support for this 20 conclusory assertion. Lanier also asks the Court to reconsider its prior decision on the ground that 21 it failed to “balance the following non-exhaustive factors” articulated in Biakanja v. Irving, 49 22 Cal.2d 647, 650 (1958):

23 i. the extent to which the transaction was intended to affect the plaintiff, 24 ii. the foreseeability of harm to him, iii. the degree of certainty that the plaintiff suffered injury, 25 iv. the closeness of the connection between the defendant’s conduct and the injury suffered, 26 v. the moral blame attached to the defendant’s conduct, and vi. the policy of preventing future harm. 27 ECF No. 34 at 22 (citing Rowland v. JPMorgan Chase Bank, N.A., No. C 14-00036 LB, 2014 WL 1 992005, at *7 (N.D. Cal. Mar. 12, 2014)). As Specialized points out, however, recent California 2 Supreme Court authority makes clear that the Biakanja factors “are commonly employed to 3 ascertain whether a court should recognize a duty, but are useful and appropriate for that purpose 4 only in situations involving parties that are not in privity with one another.” Sheen v. Wells Fargo 5 Bank, N.A., 12 Cal. 5th 905, 923 (2022), reh’g denied (June 1, 2022); see ECF No. 35 at 8. Here, 6 Lanier and Specialized are in privity with each other. Lanier’s SAC states that “[t]he contractual 7 agreement between Plaintiff and [Specialized] is the Loan,” ECF No. 31 ¶ 80, and she also 8 acknowledges in her opposition that “there was a contractual agreement between [herself] and 9 [Specialized].” ECF No. 34 at 24. Because negligence claims “are barred when they arise from— 10 or are not independent of—the parties’ underlying contracts,” Sheen, 12 Cal. 5th at 922, the Court 11 finds that Lanier fails to state a claim for negligence. The Court therefore dismisses this claim, 12 this time with prejudice. See McQuillion v. Schwarzenegger, 369 F.3d 1091, 1099 (9th Cir. 2004) 13 (finding no error to deny amendment where amendment would be futile). 14 C. FDCPA 15 The Court turns next to Lanier’s claim under the Fair Debt Collection Practices Act 16 (“FDCPA”), which seeks to protect consumers against deceptive debt collection practices. See 15 17 U.S.C. § 1692. 18 As a threshold matter, almost all of the new FDCPA allegations in Lanier’s SAC rely on 19 the Fannie Mae servicing guidelines. See ECF No. 31 ¶¶ 96–100, 104–05. As discussed above, 20 see supra Section V-A, “an alleged violation or breach of the Fannie Mae Servicing Guide does 21 not give rise to any cause of action.” Vega, 2015 WL 3441930, at *4. Accordingly, to the extent 22 that Lanier’s claims are premised upon Specialized’s alleged violation of the guidelines, these 23 claims are subject to dismissal. 24 The Court also agrees with Specialized that the remainder of Lanier’s FDCPA allegations 25 “contradict the Exhibits attached to the SAC without any legal basis.” ECF No. 32 at 17. For 26 example, Lanier alleges that “if [Specialized] would simply adhere to their own Counsel’s filing 27 with the 4100R Form, the maximum amount that [Specialized] should be alleging to be owed is 1 2021 represents the payments due since the petition date, not the total amount required to pay off 2 the loan in full. See id. at 852–60; see also Sprewell v. Golden State Warriors, 266 F.3d 979, 988 3 (9th Cir. 2001), opinion amended on denial of reh’g, 275 F.3d 1187 (9th Cir. 2001) (holding the 4 court need not “accept as true allegations that contradict matters properly subject to judicial notice 5 or by exhibit.”). 6 Having previously dismissed Lanier’s FDCPA claim, the Court now dismisses this claim 7 with prejudice. 8 D. RESPA 9 Lanier’s next claim is for a violation of the Real Estate Settlement Procedures Act, 12 10 U.S.C. § 2601, et seq. (“RESPA”). Under Section 2605, a borrow may submit “a qualified written 11 request” (“QWR”) to a loan servicer “for information relating to the servicing of such loan.” 12 12 U.S.C. § 2605(e)(1)(A). “[A] borrower’s written inquiry requires a response as long as it (1) 13 reasonably identifies the borrower’s name and account, (2) either states the borrower’s ‘reasons 14 for the belief . . . that the account is in error’ or ‘provides sufficient detail to the servicer regarding 15 other information sought by the borrower,’ and (3) seeks ‘information relating to the servicing of 16 [the] loan.’” Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 666 (9th Cir. 2012) (quoting 12 17 U.S.C. § 2605(e)(1)(A)–(B)). A QWR may not request duplicative, confidential, proprietary, 18 privileged, irrelevant, or overbroad and unduly burdensome information. See 12 C.F.R. § 19 1024.36(f)(1)(i)–(iv). 20 The RESPA allegations in Lanier’s SAC are nearly identical to those in her original 21 complaint. Lanier renews her contention that she “never received any written correspondence 22 from SLS containing [various] items and information.” ECF No. 31 ¶ 124. In its prior order, the 23 Court explicitly noted that “Specialized’s QWR responses demonstrate that Lanier received a 24 breakdown of claimed arrears, escrow statements, and copies of the note, deed of trust, servicing 25 transfer letter, loan modification offer, and loan payoff quote,” and it did not provide Lanier leave 26 to amend these allegations. ECF No. 30 at 9. Further, Specialized argued that it did not furnish 27 certain documents because those requests fell “beyond the scope” of the statute. ECF No. 19 at 1 the requirements of 12 U.S.C. § 2605.” ECF No. 30 at 9. 2 Lanier has failed to demonstrate that her requests fall within the scope of the statute. Like 3 her first complaint, she provides only conclusory allegations that Specialized was “obligated to 4 provide” various documents but “failed to do so.” ECF No. 31 ¶ 125.2 And although Lanier 5 contends that “[m]ost if not all documents requested within the QWR are within the ordinary 6 course of [Specialized’s] business,” ECF No. 31 ¶ 128, this does little to show that the information 7 she seeks “relat[es] to the servicing of [the] loan.” 12 U.S.C. § 2605(e)(1)(A). 8 Having previously dismissed Lanier’s RESPA claim on the same ground, the Court now 9 dismisses this claim with prejudice. 10 E. TILA 11 In her SAC, Lanier renews her allegation that Specialized violated the Truth in Lending 12 Act (“TILA”), 15 U.S.C. § 1601. The statute requires that loan servicers “provide the consumer, 13 for each billing cycle, a periodic statement” that includes information about the amount due, the 14 amount of any fees or charges imposed since the last statement, and any payment amount past due. 15 12 C.F.R. § 1026.41 (Regulation Z). 16 The Court previously dismissed Lanier’s TILA claim on the ground that it was barred by 17 the one-year statute of limitations, and that she did not plead facts demonstrating that 18 “extraordinary circumstances beyond [her] control made it impossible to file the claims on time.” 19 ECF No. 30 (quoting Huynh v. Chase Manhattan Bank, 465 F.3d 992, 1004 (9th Cir. 2006)). In 20 her opposition, Lanier effectively concedes that her claim was brought outside the statute of 21 limitations. See ECF No. 34 at 16. Although she claims that the elements of equitable tolling 22 “have been established in specificity throughout the FAC and within this Opposition,” the 23 argument is not persuasive. Id. Lanier offers few facts, if any, demonstrating that she either 24 diligently pursued her rights, or that some extraordinary circumstance prevented her from timely 25 26 2 Like her FDCPA, TILA, and negligence claims, Lanier alleges that Specialized violated RESPA 27 in part because it failed to adhere to the Fannie Mae servicing guidelines. For the reasons set forth 1 filing her claim.3 2 Because Lanier’s TILA claim was previously dismissed on the same ground, the Court 3 now dismisses this claim with prejudice. 4 F. UCL 5 The Court turns next to Lanier’s claim that Specialized’s “unlawful acts and practices . . . 6 constitute unlawful business acts and/or practices” under Section 17200 of the California Business 7 and Professions Code. ECF No. 31 ¶ 165. In its motion to dismiss, Specialized contends that 8 Lanier’s UCL claim is “derivative” of her other claims and therefore it “also fails.” ECF No. 35 at 9 7. It is well-established that “when the predicate claims fail, so too must the UCL claim.” ECF 10 No. 30 at 12; see Warner v. Tinder Inc., 105 F. Supp. 3d 1083, 1095 (C.D. Cal. 2015) (finding that 11 where the predicate claims on which a plaintiff’s UCL claims are based fail, the UCL claim fails 12 as well). 13 Having previously provided Lanier the opportunity to reassert this claim, the Court now 14 dismisses this claim with prejudice. 15 G. Declaratory Relief 16 Finally, Lanier renews her claim for declaratory relief in her SAC. As the Court stated in 17 its prior order, “[d]eclaratory relief is not a standalone claim.” ECF No. 30 at 12 (quoting Doe 1 v. 18 GitHub, Inc., --- F. Supp. 3d ---, No. 22-CV-06823-JST, 2023 WL 3449131, at *14 (N.D. Cal. 19 May 11, 2023)). Because declaratory relief is a remedy and not a cause of action, see Lane v. 20 Vitek Real Estate Indus. Grp., 713 F. Supp. 2d 1092, 1104 (E.D. Cal. 2010), when the underlying 21 claims are dismissed, the declaratory relief cause of action must be dismissed as well. Shaterian v. 22 Wells Fargo Bank, N.A., 829 F. Supp. 2d 873, 888 (N.D. Cal. 2011). 23 Having previously provided Lanier the opportunity to reassert this claim, the Court now 24 dismisses this claim with prejudice. 25 26

27 3 Because the Court finds that Lanier’s claim is barred by the statute of limitations, it declines to 1 CONCLUSION 2 For the foregoing reasons, the Court grants Specialized’s motion. Because the Court finds 3 || that amendment of Lanier’s claims would be futile, her claims are now dismissed with prejudice. 4 || Novak, 795 F.3d at 1020. 5 The Clerk shall enter judgment and close the file. 6 IT ISSO ORDERED.

7 Dated: March 4, 2024 8 JON S. TIGA 9 United States District Judge 10 11 a 12

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