Plaintiff property owner sued defendant lenders, seeking a declaratory judgment that they did not have a right to foreclose on a property. The owner also sought an accounting and alleged breach of the covenant of good faith and fair dealing, unfair business practices, and violations of Cal. Civ. Code §§ 1920, 1921, and 1916.7 and Cal. Bus. & Prof. Code § 17200. The lenders moved to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6).
Table of Contents
Overview
Judicial estoppel based on a failure to disclose the complaint when the owner filed for Chapter 7 bankruptcy was inappropriate where the bankruptcy had been dismissed for failing to obtain credit counseling certificates. The original promissory note was not necessary to proceed with the nonjudicial foreclosure as nothing in Cal. Civ. Code § 2924 required production of the original note. Declaratory relief was denied as the owner failed to articulate how his reasonable belief that he did not owe the debt deprived the lenders of their right to foreclose. The owner failed to state an accounting claim where the allegations as to the lender’s use of the payments did not show that the owner was owed money. The Cal. Civ. Code §§ 1920, 1921, and 1916.7 claims failed as the allegations were conclusory and alleged no facts showing that § 1916.7 applied. The unfair business practices claim was dismissed as the owner failed to allege what particular “bait and switch” tactics were used or what information was missing. The breach of the covenant of good faith and fair dealing claim was also dismissed as the owner failed to allege which promissory note or deed of trust provision was breached. An EEOC attorney represented respondent.
Outcome
The motions to dismiss were granted.
Procedural Posture
Plaintiff, an individual, sued defendants, a mortgage company and unnamed individuals, in the Los Angeles Superior Court (California) alleging, inter alia, that defendant violated California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200 et seq. The mortgage company removed the case to federal court. The individual filed a motion to remand the action to the state court. Defendant moved to dismiss the case.
Overview
The individual alleged that, while acting as mortgage lenders, defendants engaged in practices that violated the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C.S. § 2601 et seq.; Regulation X, 24 C.F.R. § 3500 et seq.; and Cal. Fin. Code § 50505. The mortgage company wanted to dismiss the case because it could not be litigated in federal or state court: the individual lacked the U.S. Const. art. III standing necessary to present a cause of action in federal court, and the matter could not be litigated in state court because the district court had original federal jurisdiction and federal law was the foundation of the individual’s claims. Because the individual had not suffered an injury in fact, she did not have Article III standing and could not pursue her claims in federal court. However, the individual’s UCL claims were based, in part, on federal laws, specifically RESPA, which were not within the federal court’s exclusive jurisdiction. Violations of those law could be resolved in state court. Thus, the individual could pursue, in state court, her UCL claims based on defendant’s alleged unfair, fraudulent, and/or illegal practices in violation of federal and state law.
Outcome
The individuals motion to remand was granted, and the action was remanded to the state court.
