Snyder v. Nationstar Mortg. LLC, Case No. 15-cv-03049-JSC

Decision Date13 November 2015
Docket NumberCase No. 15-cv-03049-JSC
CourtU.S. District Court — Northern District of California
Re: Dkt. No. 18

Plaintiff Pamela Snyder ("Plaintiff") brings this action challenging the conduct of Defendant Nationstar Mortgage LLC ("Defendant") in relation to a residential mortgage loan. Now pending before the Court is Defendant's Motion to Dismiss Plaintiff's First Amended Complaint ("FAC"). (Dkt. No. 18.) Having reviewed the parties' submissions, and having had the benefit of oral argument on November 12, 2015, the Court GRANTS in part and DENIES in part Defendant's motion. The California Civil Code § 1788.13(e) claim is dismissed with prejudice. Plaintiff's other claims survive, although Plaintiff must amend her complaint to specify that she brings her Fair Credit Reporting Act claim pursuant to 15 U.S.C. § 1681s-2(b)(1)(E) and to identify the specific injunctive relief she seeks pursuant to the Unfair Business Practices Act, Cal. Bus. & Prof. Code §§ 17200-17210.

I. Complaint Allegations

This action involves real property located at 2548-2550 Sutter Street, San Francisco, California 94115 (the "Property"). (FAC ¶ 3.) In November 2006, Plaintiff took out a mortgage loan from Sierra Pacific Mortgage, Inc., secured by a Deed of Trust against the Property listing Plaintiff as the borrower.1 (Id. ¶ 9; Dkt. No. 19 at 2.) The Deed of Trust secured a debt in the amount of $1,330,000. (Dkt. No. 19 at 3.) Along with the Deed of Trust, Plaintiff executed an Escrow Waiver Agreement, under which the lender agreed not to establish an escrow account and Plaintiff agreed to pay all real estate taxes and insurance premiums for the Property directly. (FAC ¶ 9.) Thereafter, Plaintiff made timely payments on the loan. (Id.)

In or around May 2012, Plaintiff and her then-servicer, Aurora Loan Services, LLC ("Aurora"), entered into a repayment plan. (Id. ¶¶ 9-10.) The plan provided that, beginning on June, 15, 2012, Plaintiff would make increased monthly payments for twelve months and, if Plaintiff's payments were timely, Aurora would not report Plaintiff as in default. (Id. ¶ 10.) Pursuant to the plan, Plaintiff made timely payments on June 15, 2012 and thereafter. (Id.)

In or around July 2012, Defendant acquired the servicing rights to Plaintiff's loan. (Id. ¶ 11.) Defendant opened an escrow account for the loan, collected escrow funds from Plaintiff's regular mortgage payments, and made payments on Plaintiff's behalf for property taxes and insurance premiums. (Id. ¶¶ 11-12.) Because Plaintiff's Escrow Waiver Agreement provided that she paid her own property taxes and insurance premiums, her monthly mortgage payments did not account for these additional escrow funds. (Id. ¶¶ 11-12.) Defendant thus considered Plaintiff's payments insufficient and reported her as in default. (Id. ¶ 13.)

In or around June 2013, Defendant advised Plaintiff that she was in default for a total of $10,553.41. (Id. ¶ 14.) Plaintiff informed Defendant that this was an error, as Plaintiff not only made timely mortgage payments, but also maintained her own taxes and insurance premiums. (Id.¶¶ 11, 14.) Accordingly, Defendant reversed the escrow payments and refunded Plaintiff in the amount of $2,106.69. (Id. ¶ 15.) Approximately one month later, however, Defendant advised Plaintiff that there was still an escrow balance on her account. (Id.) Then, in 2014, Defendant opened a second escrow account for Plaintiff's loan even though Plaintiff remained current on her payments. (Id. ¶ 16.)

Throughout this period, Defendant (1) reported Plaintiff as in default to credit reporting agencies and (2) made automated phone calls to Plaintiff. (Id. ¶¶ 17, 21.) Following her unsuccessful attempts to open lines of credit, Plaintiff disputed her negative credit reports. (Id. ¶ 17.) She did so on three separate occasions: in 2013, 2014, and 2015. (Id. ¶¶ 18-20.) First, in July 2013, Plaintiff contacted several credit reporting agencies who, in turn, asked Defendant to conduct an investigation. (Id. ¶¶ 18, 36.) Defendant subsequently removed some, but not all, of Plaintiff's negative reports. (Id. ¶¶ 18, 36.) Second, in mid to late 2014, Plaintiff again contacted the credit reporting agencies—including Experian, Equifax, and Transunion—to dispute the negative reports. (Id. ¶¶ 19, 37.) Rather than remove the reports, Defendant filed an additional nine negative reports. (Id. ¶¶ 19, 37.) Finally, in January 2015, Plaintiff attempted to clear her record by contacting the credit reporting agencies. (Id. ¶¶ 20, 38.) Although all of the reports were incorrect, Defendant willfully refused to remove them. (Id. ¶¶ 20, 38, 40.)

Also during this period, Defendant called Plaintiff eight to ten times per day, every day, between the hours of 5:00 a.m. and 11:00 p.m., for a two-year period. (Id. ¶¶ 21, 46.) When Plaintiff returned Defendant's automated calls, as Defendant's message instructed, Defendant claimed that Plaintiff was represented by counsel, and thus refused to speak to her. (Id. ¶¶ 21, 46.) Even after Plaintiff's counsel granted Defendant the authority to speak with Plaintiff regarding the loan, Defendant continued its automated calls to Plaintiff yet refused to speak with her. (Id. ¶¶ 21, 46.)

II. Procedural History

Plaintiff initiated this action on June 30, 2015. (Dkt. No. 1.) Plaintiff has since filed the FAC, in which she brings five causes of action for violations of: (1) California Civil Code § 2954;(2) the Fair Credit Reporting Act, 15 U.S.C. § 1681s-2(b); (3) California Civil Code §§ 1788.11(d) and (e); (4) California Civil Code § 1788.13(e); and (5) the Unfair Business Practices Act, Cal. Bus. & Prof. Code §§ 17200-17210. (FAC at 1.) Plaintiff seeks an order requiring Defendant to show cause why it should not be enjoined during the pendency of this lawsuit (but Plaintiff does not indicate what particular conduct she seeks to enjoin), disgorgement of monies Defendant wrongfully obtained, compensatory damages, statutory damages, attorneys' fees and costs, and exemplary damages. (Id. at 14.) Defendant now moves the Court to dismiss Plaintiff's FAC under Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Dkt. No. 18.)


A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the complaint where the action fails to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). Under Federal Rule of Civil Procedure 8(a)(2) a party is only required to make "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 554 (internal citations and quotations omitted).

For purposes of ruling on a Rule 12(b)(6) motion, the court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the non-moving party." Manzarek v. St. Paul Fire & Mar. Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). However, even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal citations and quotations omitted). "Determining whether acomplaint states a plausible claim for relief . . . [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

Generally, when a complaint is dismissed, "leave to amend shall be freely given when justice so requires." Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892 (9th Cir. 2010); see Fed. R. Civ. P. 15(a). The Ninth Circuit has "repeatedly held that a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citations and internal quotation marks omitted).


Defendant seeks to dismiss all but the California Civil Code section 2954 claim.

I. Fair Credit Reporting Act

In the second cause of action, Plaintiff alleges that Defendant violated the Fair Credit and Reporting Act ("FCRA") by failing to correct inaccuracies on Plaintiff's credit report. To ensure that credit reports are accurate, the FCRA imposes duties on entities called "furnishers," which are the sources that provide credit information to credit reporting agencies. Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153-54 (9th Cir. 2009). In this case, Defendant filed negative reports against Plaintiff (FAC ¶ 35), and is therefore a "furnisher" of information under the FCRA.

Section 1681s-2 of the FCRA sets forth furnishers' responsibilities, delineating two categories of responsibilities. Gorman, 584 F.3d at 1154. Subsection (a) imposes the duty to "provide accurate information." Id. Subsection (b) details five distinct duties. Id. "These duties arise only after the furnisher receives notice of dispute from a [credit reporting agency]; notice of a dispute received directly from the consumer does not trigger furnishers' duties under subsection (b)." Id.; see also § 1681i(a...

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