Burnett v. NBS Default Servs., 2:19-cv-367-JAM-EFB PS

ROY J. BURNETT, Plaintiff, v. NBS DEFAULT SERVICES, LLC; JOHN and JANE DOES, 1-100, Defendants.

No. 2:19-cv-367-JAM-EFB PS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

August 6, 2020

ORDER

Plaintiff seeks leave to proceed in forma pauperis pursuant to 28 U.S.C. 1915.¹ His declaration makes the showing required by 28 U.S.C. §1915(a)(1) and (2). See ECF No. 2. Accordingly, the request to proceed in forma pauperis is granted. 28 U.S.C. § 1915(a).

Determining that plaintiff may proceed in forma pauperis does not complete the required inquiry. Pursuant to § 1915(e)(2), the court must dismiss the case at any time if it determines the allegation of poverty is untrue, or if the action is frivolous or malicious, fails to state a claim on which relief may be granted, or seeks monetary relief against an immune defendant. As discussed below, plaintiff's complaint must be dismissed for failure to state a claim.

///// Although pro se pleadings are liberally construed, see Haines v. Kerner, 404 U.S. 519, 520-21 (1972), a complaint, or portion thereof, should be dismissed for failure to state a claim if it fails to set forth "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 562-563, 570 (2007) (citing Conley v. Gibson, 355 U.S. 41 (1957)); see also Fed. R. Civ. P. 12(b)(6). "[A] plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do. Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint's allegations are true." Id. at 555 (citations omitted). Dismissal is appropriate based either on the lack of cognizable legal theories or the lack of pleading sufficient facts to support cognizable legal theories. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

Under this standard, the court must accept as true the allegations of the complaint in question, Hospital Bldg. Co. v. Rex Hosp. Trustees, 425 U.S. 738, 740 (1976), construe the pleading in the light most favorable to the plaintiff, and resolve all doubts in the plaintiff's favor, Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). A pro se plaintiff must satisfy the pleading requirements of Rule 8(a) of the Federal Rules of Civil Procedure. Rule 8(a)(2) requires a complaint to include "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." Twombly, 550 U.S. at 555 (citing Conley, 355 U.S. at 47).

The complaint alleges that plaintiff's father, Lee Roy Burnett (the "decedent"), executed a promissory note to obtain a loan for the purchase of real property located at 1877 18th Street, Olivehurst, California (the "property"). Id. at 2. Sometime after the decedent's death in early 2016, defendant NBS Default Services LLC—the beneficiary of the promissory note and servicer for the decedent's loan—allegedly commenced non-judicial foreclosure proceedings. Id. at 1-2. On January 7, 2019, plaintiff, who is the sole beneficiary of the decedent's estate, mailed defendant a request for information regarding its policies and procedures for dealing with successors in interest, but defendant failed to respond. Id. at 2-3. Based on these allegations, plaintiff alleges claims for violation of the Real Estate Settlement and Procedures Act("RESPA"), 12 U.S.C. §§ 2601 et seq.; the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq.; the Federal Trade Commission Act ("FTCA"), 15 U.S.C. §§ 45 et seq.; and a state law claim for breach of the covenant of good faith and fair dealing. Id. at 3-9.

Plaintiff's allegations are insufficient to state a claim for violation of RESPA. That act requires borrowers be provided certain disclosures related to the mortgage loan settlement process. 12 U.S.C. § 2601. It also requires that loan servicers respond to qualified written requests ("QWR") from borrowers seeking information relating to the servicing of their loan. 12 U.S.C § 2605(e). Although plaintiff alleges defendant failed to respond to his request for information, the complaint reflects that the decedent, and not plaintiff, was the borrower under the loan. See Lal v. American Home Servicing, Inc., 680 F.Supp.2d 1218, 1223 (E.D. Cal. 2010). ("RESPA, 12 U.S.C. § 2605(e), requires that loan servicers timely respond to qualified written requests ('QWRs') from borrowers.") (emphasis added). Furthermore, the complaint contains no allegations reflecting plaintiff assumed any obligations under the loan after his father's death. Aldana v. Bank of Am., N.A., 2014 WL 6750276, at *3 (C.D. Cal. Nov. 26, 2014) (dismissing RESPA claim where the plaintiff was "not a borrower, did not assume obligations under the loan, and was not a third-party beneficiary of the [Deed of Trust]."); see also Brockington v. J.P. Morgan Chase Bank, N.A., 2009 WL 1916690, at *2-3 (N.D. Cal. July 1, 2009) (even though the plaintiff alleged that she was an "equitable owner" of property, the plaintiff did not have standing to challenge the defendant's conduct in connection with that loan because the plaintiff was not a party to the loan).

Likewise, plaintiff fails to state an FDCPA claim because he does not allege that he was obligated to repay the decedent's loan. To recover under the FDCPA (1) the plaintiff must be a "consumer," (2) the defendant must be a "debt collector," and (3) the defendant must have committed some act or omission that violated a provision of the FDCPA. See 15 U.S.C. § 1692a(3)-(6); Alonso v. Blackstone Financial Group LLC, 962 F. Supp. 2d 1188, 1193-94 (E.D. Cal. 2013). Under the FDCPA, a "consumer" is defined as any natural person obligated or allegedly obligated to pay any debt. 15 U.S.C. § 1692a(3).

///// Plaintiff's FDCPA claim also fails because he does not adequately allege defendant is a "debt collector" for purposes of the FDCPA. "The Act defines the term 'debt collector' to embrace anyone who regularly collects or attempts to collect . . . debts owed or due . . . another." McNair v. Maxwell & Mortgage PC, 893 F.3d 680, 682 (9th Cir. 2018) (some internal quotations omitted) (quoting Henson v. Santander Consumer USA Inc., — U.S. —, 137 S.Ct. 1718, 1721, 198 L.Ed.2d 177 (2017)). An entity is not a "debt collector" where "its only role in the debt collection process is the enforcement of a security interest." Vien-Phuong Thi Ho v. ReconTrust Co., NA, 858 F.3d 568, 573 (9th Cir. 2016) (internal quotations omitted); see Casault v. Federal Nat. Mortg. Ass'n, 915 F. Supp. 2d 1113, 1126 (C.D. Cal. Nov. 26, 2012) ("FDCPA's definition of debt collector does not include the consumer's creditors, a mortgage serving company, or any assignee of the debt, so long as the debt was not in default at the time it was assigned."). Although plaintiff claims that the defendant is a "debt collector" as that term is defined by the FDCPA (ECF No. 1 at 6), he does not provide any factual allegations to support that conclusion.

Plaintiff also claims that defendant violated the FTCA by engaging in fraudulent and deceptive commercial practices. ECF No. 1 at 7-8. The FTCA, however, does not create a private right of action. Carlson v. Coca-Cola Co., 483 F.2d 798, 280 (9th Cir. 1973); Kerr v. Am. Home Mortg. Serv'g, Inc., 2010 WL 3743879 (S.D. Cal. Sep. 22, 2010) ("It is well-established that there is no private right of action for violation of the FTCA; only the Federal Trade Commission has standing to enforce it"). Accordingly, plaintiff cannot state a claim under the FTCA.

Lastly, plaintiff fails to allege claim for violation of the covenant of good faith and fair dealing. Under California law, every contract carries with it an implied covenant of good faith and fair dealing. Carma Developers, Inc. v. Marathon Development Cal., Inc., 2 Cal. 4th 342, 371 (1992). A party breaches this duty when it acts in a way that deprives another contracting party of benefits conferred by the contract. Therefore, "[t]he prerequisite for any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties." Smith v. City & County of San Francisco, 225 Cal. App. 3d 38,49 (1990). The complaint is devoid of any allegations reflecting a contractual relationship between plaintiff and defendant. Consequently, plaintiff fails to state a claim for breach of the covenant of good faith and fair dealing.

Accordingly, plaintiff's complaint must be dismissed for failure to state a claim. Plaintiff is granted leave to amended complaint. Lopez v. Smith, 203 F.3d 1122, 1126-27 (9th Cir. 2000) (en banc) (district courts must afford pro se litigants an opportunity to amend to correct any deficiency in their complaints). Any amended complaint must allege a cognizable legal theory against a proper defendant and sufficient facts in support of that cognizable legal theory. Should plaintiff choose to file an amended complaint, the amended complaint shall clearly set forth the allegations against each defendant and shall specify a basis for this court's subject matter jurisdiction. Any amended complaint shall plead plaintiff's claims in "numbered paragraphs, each limited as far as practicable to a single set of circumstances," as required by Federal Rule of Civil Procedure 10(b), and shall be in double-spaced text on paper that bears line numbers in the left margin, as required by Eastern District of California Local Rules 130(b) and 130(c). Any amended complaint shall also use clear headings to delineate each claim alleged and against which defendant or defendants the claim is alleged, as required by Rule 10(b), and must plead clear facts that support each claim under each header.

Additionally, plaintiff is informed that the court cannot...