Turner v. Real Time Resolutions, Inc.

MATTHEW TURNER, Plaintiff, v. REAL TIME RESOLUTIONS, INC., et al., Defendants.

No. 22-cv-1121-MMA (WVG)

United States District Court, S.D. California

February 24, 2023

ORDER GRANTING DEFENDANT SPECIALIZED LOAN SERVICING LLC'S MOTION TO DISMISS AND [DOC. NO. 13] GRANTING IN PART DEFENDANT REAL TIME RESOLUTIONS, INC.'S MOTION TO DISMISS [DOC. NO. 14]

HON MICHAEL M. ANELLO United States District Judge

On November 18, 2022, Plaintiff Matthew Turner filed a First Amended Complaint against Defendants Real Time Resolutions Inc. (“RTR”) and Specialized Loan Servicing, LLC (“SLS” and collectively with RTR “Defendants”). See Doc. No. 12 (“FAC”). Defendants now move to dismiss. See Doc. Nos. 13, 14. Both motions are fully briefed, see Doc. Nos. 15, 18-20, and the Court took the matters under submission and without oral argument pursuant to Civil Local Rule 7.1.d.1, see Doc. No. 21. For the reasons set forth below, the Court GRANTS SLS's motion and GRANTS IN PART RTR's motion.

I. Background^[1]

The factual background as alleged in the First Amended Complaint remains largely unchanged. Plaintiff is the owner of the real property located at 2906 Rancho Rio Chico, Carlsbad, California 92002 (the “Property”). FAC ¶ 5. Plaintiff purchased the Property in 1999 and has used it as his home and primary residence ever since. Id. ¶ 12. In November 2006, Plaintiff obtained a Home Equity Line of Credit with a credit limit of $100,000 secured by the Property pursuant to a Deed of Trust dated November 7, 2006 (the “HELOC” or “Loan”). Id. ¶ 13. The section 4 of the HELOC Loan Agreement provides:

A. “I promise to pay to your order, when and as due, all loans made under this Agreement . . . I agree to make my payments in the manner specified in my periodic statement, and if I do so such payments will be credited as of the day of receipt.”

B. “At a minimum, you will send me a periodic statement monthly, except that my first periodic statement may be generated and mailed to me between thirty and sixty days after I open my Account. The periodic statement will show all Account activity during the billing cycle and contain other important information including my “New Balance,” my Annual Percentage Rate, the amount of my “Minimum Payment Due,” my “Payment Due Date” and the place and manner of making payments.”

Id. ¶ 14.

Eventually, Plaintiff fell into financial hardship and, struggling to make payments, he filed for bankruptcy in 2009. Id. ¶ 15. Plaintiff's bankruptcy proceedings concluded in April 2009. Id.

In a notice dated February 16, 2010, Bank of America, N.A., who had been the servicer of Plaintiff's Loan, through its subsidiary, BAC Home Loans Servicing, LP, notified Plaintiff that the servicing of the HELOC was being assigned, sold, or transferred to RTR effective February 25, 2010 (the “Assignment Notice”). Id. ¶ 17. The Assignment Notice stated that RTR would begin accepting monthly payments on the HELOC Loan as of February 21, 2010, and would send billing statements going forward. Id. Plaintiff maintains that he did not receive the Assignment Notice until 2019, after he submitted a Qualified Written Request (“QWR”). Id.

Generally speaking, Plaintiff alleges that Defendants have presented conflicting information as to which entity held the servicing rights to Plaintiff's HELOC and at what point in time. Id. ¶ 20. For example, Plaintiff maintains that RTR and SLS were engaged in litigation from 2016 through 2021 concerning the servicing under the Collection Agreement. Id. ¶ 21. Plaintiff also contends that Defendants failed to provide periodic statements to him as required, and that he received little correspondence from RTR, specifically. Id. ¶ 22.

According to Plaintiff, he submitted three QWRs to RTR and all responses were deficient. In particular, Plaintiff alleges that RTR produced a portion of Collection Agreement between SLS and RTR. Id. ¶ 18. The Collection Agreement dated February 1, 2013, states that SLS is the servicer of the HELOC and that RTR was retained as its subcontractor with respect to collection and recovery. Id. ¶ 19. However, Plaintiff contends he was only provided three of the seventeen (17) pages. Id. ¶ 18. Plaintiff contends that RTR provided this document with a written response letter stating that it “effectively g[ave] us the right to service the account on [SLS's] behalf.” Id.

In October 2018, Plaintiff submitted his first QWR to RTR. Id. ¶ 23. Plaintiff requested that RTR provide him with specific information and documents relating to his account including: identities of the investors, records of transfers and assignments of investor rights, amoritization schedules associating with the original loan and showing the accrual accounting on the original interest rate of the loan, documents relating to servicing transfers of the loan. Id. Plaintiff contends that RTR responded on October 15, 2018 that “RTR cannot speak to the servicing of this account prior to its transfer.” Id. ¶ 24. Plaintiff asserts that this response was inadequate. Id.

Plaintiff also alleges that RTR provided Plaintiff with a payoff quote dated October 4, 2018, which included a payoff amount of $153,445.37 including a principal of $100,000, interest of $52,715.61, and fees of $729.76, with an interest rate of 6.25%. Id. ¶ 25. Further, according to a statement dated January 1, 2019, Plaintiff allegedly owed $69,939.39 in arrears with an interest rate of 7.25%. Id. ¶ 26.

On May 3, 2019, Plaintiff submitted a second QWR requesting the same information above. Id. ¶¶ 27, 63. According to Plaintiff, RTR responded in June 2019 but did not supplement or otherwise “rectify” their prior response. Id. ¶ 64.

On August 31, 2021, Plaintiff received notice from a foreclosure trustee acting on behalf of RTR, noting that the principal balance on the HELOC was $170,858.84 and that RTR intended to proceed with foreclosure if Plaintiff did not reinstate the account by paying over $101,000 within 30 days. Id. ¶ 28.

In October 2021, Plaintiff sent a third QWR, requesting the same information, and RTR again declined to supplement or otherwise rectify their prior response. Id. ¶¶ 29, 65.

On October 28, 2021, an Assignment of Deed of Trust was recorded with the San Diego County Recorder's Office “wherein all beneficial interest under the Deed of Trust” was assigned to Defendant RTR. Id. ¶ 30. Plaintiff therefore contends that RTR has been a party to the Deed of Trust since at least October 28, 2021. Id. However, Plaintiff believes that RTR has been a party to the Deed of Trust since February 2010 and was the “you” identified above in section 4 of the HELOC Loan Agreement. Id.

On January 19, 2022, Defendants recorded a Notice of Default against the Property, noting that Plaintiff was $106,000 in default. Id. ¶ 31. Plaintiff alleges that this amount was grossly overinflated with fees and amounts not owed on the loan. Id.

On May 11, 2022, Defendants recorded a Notice of Trustee's Sale against the Property, setting the sale date of June 6, 2022, and noting a $175,809.93 unpaid balance. Id. ¶ 32. Plaintiff alleges he is facing the loss of his home, see id. ¶ 33, but acknowledges that he paid the reinstatement amount in order to avoid foreclosure, see id. ¶ 56.

On May 19, 2022, Plaintiff initiated this action in the Superior Court of California, County of Orange. See Doc. No. 1-1. On August 1, 2022, SLS removed the action to this Court, see Doc. No. 1, and RTR joined in the removal, see Doc. No. 1-3. The Court previously granted Defendants' motions to dismiss, see Doc. No. 11 (the “Dismissal Order”). On November 18, 2022, Plaintiff filed a First Amended Complaint. See FAC.

II. Legal Standard

A Rule 12(b)(6)^[2] motion tests the legal sufficiency of the claims made in a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief ....” Fed.R.Civ.P. 8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is plausible on its face.” Fed.R.Civ.P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The plausibility standard demands more than “a formulaic recitation of the elements of a cause of action,” or “naked assertions devoid of further factual enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). Instead, the complaint “must contain allegations of underlying facts sufficient to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).

In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth of all factual allegations and must construe them in the light most favorable to the nonmoving party. See Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The court need not take legal conclusions as true merely because they are cast in the form of factual allegations. See Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987). Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

Where dismissal is appropriate, a court should grant leave to amend unless the plaintiff could not possibly cure the defects in the pleading. See Knappenberger v. City of Phoenix, 566 F.3d 936, 942 (9th Cir. 2009) (quoting Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000)).

III. Requests for Judicial Notice

As an initial matter, both RTR and SLS have filed requests for judicial notice in conjunction with their motions. See Doc. Nos. 13-1, 14-2. Plaintiff has not responded or otherwise opposed either request.

Generally the scope of review on a ...