Swasey v. Seterus, Inc.
| Decision Date | 30 May 2018 |
| Docket Number | No. 2:16-cv-01633-TLN-EFB,2:16-cv-01633-TLN-EFB |
| Parties | MARK SWASEY and TRISHELE SWASEY, Plaintiffs, v. SETERUS, INC.; CITIMORTGAGE, INC.; FEDERAL NATIONAL MORTGAGE ASSOCIATION, Defendants. |
| Court | U.S. District Court — Eastern District of California |
This matter is before the Court pursuant to Defendant CitiMortgage, Inc.'s ("Citi") Motion to Dismiss Plaintiffs Mark Swasey and Trishele Swasey's (collectively, "Plaintiffs") Complaint. (ECF No. 4.) Plaintiffs oppose this motion. (ECF No. 10.) Citi filed a reply. (ECF No. 14.) For the reasons set forth below, the Court hereby GRANTS Citi's Motion to Dismiss, (ECF No. 4), with leave to amend.
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This matter concerns the property at 547 Penstock Drive, Grass Valley, California 95945 ("Property"). (ECF No. 1 at 6-7 ¶ 2.) Plaintiffs allege they obtained a $264,000 loan from Aegis Wholesale Corporation in September 2004 secured by a Deed of Trust ("DOT"). (ECF No. 1 at 7, 9 ¶¶ 3, 15.) Plaintiffs allege Citi serviced Plaintiffs' loan from September 2004 until at least February 2014. (ECF No. 1 at 9-10 ¶¶ 17, 24.) Plaintiffs allege Citi modified Plaintiffs' loan in 2012, reducing their monthly payment from $1,519.73 to $1,484.06. (ECF No. 1 at 9 ¶ 22.)
Plaintiffs allege defendant Federal National Mortgage Association ("Fannie Mae") acquired Plaintiffs' mortgage "pursuant to a Corporate Assignment of the DOT. (ECF No. 1 at 7 ¶ 4.) Plaintiffs allege they received a letter from defendant Seterus, Inc. ("Seterus") around February 13, 2014, stating Seterus would be "the servicer and debt-collector" of the mortgage, "on behalf of Fannie Mae," the creditor. (ECF No. 1 at 7-8 ¶ 24; ECF No. 1 at 52-53.) Plaintiffs allege Seterus was the servicer "at all times relevant to the allegations." (ECF No. 1 at 7 ¶ 5.)
Plaintiffs allege Seterus, in the February 2014 letter, directed Plaintiffs to make all mortgage payments to Seterus. (ECF No. 1 at 8 ¶ 24; ECF No. 1 at 52-53.) Plaintiffs allege a system called the Mortgage Electronic Registration System ("MERS") still identified Citi as the servicer of Plaintiffs' mortgage. (ECF No. 1 at 8 ¶ 24.) Plaintiffs allege Citi informed Plaintiffs in March 2014 that Plaintiffs' monthly payment was reduced again from $1,484.06 to $1,395.02. (ECF No. 1 at 8 ¶ 25.) Plaintiffs allege they made their monthly payments to Citi for March and April 2014. (ECF No. 1 at 8 ¶ 25.) Plaintiffs allege that in May 2014 they made their monthly payment for May 2014 to Seterus. (ECF No. 1 at 8 ¶ 26.)
Plaintiffs allege they submitted a modification application to Seterus about a year later, in summer 2015, which Plaintiffs allege Seterus mishandled. (ECF No. 1 at 8-13 ¶ 32-52.) Plaintiffs allege Seterus delayed evaluating their application until the Property was eventually sold in foreclosure to Fannie Mae in May 2016. (ECF No. 1 at 8-13 ¶ 32-52.) Plaintiffs sued Seterus, Fannie Mae, and Citi, asserting Citi had agency relationships with Seterus and Fannie Mae during 2015 and 2016 and is liable for their conduct. (ECF No. 1 at 14-15 ¶¶ 57-66.) Citi moves to dismiss all claims against it for failure to state a claim. (ECF No. 4.)
Federal Rule of Civil Procedure 8(a) requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." See Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Under notice pleading in federal court, the complaint must "give the defendant fair notice of what the claim ... is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations omitted). "This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002).
A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a motion to dismiss, the factual allegations of the complaint are assumed to be true. Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the well-pleaded allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege "'specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." Twombly, 550 U.S. at 570 (citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 (2009)). "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678-79 (citing Twombly, 550 U.S. at 556).
Nevertheless, a court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, "it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 (). Additionally, it is inappropriate to assume that the plaintiff "can prove facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).
Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). While the plausibility requirement is not akin to a probability requirement, it demands more than "a sheer possibility that a defendant has acted unlawfully." Id. at 678. This plausibility inquiry is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.
In ruling upon a motion to dismiss, the court may consider only the complaint, any exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of United States, Inc., 12 F. Supp. 2d 1035, 1042 (C.D. Cal. 1998).
If a complaint fails to state a plausible claim, "'[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) (en banc) (quoting Doe v. United States, 58 F.3d 484, 497 (9th Cir. 1995)); see also Gardner v. Marino, 563 F.3d 981, 990 (9th Cir. 2009) (). Although a district court should freely give leave to amend when justice so requires under Federal Rule of Civil Procedure 15(a)(2), "the court's discretion to deny such leave is 'particularly broad' where the plaintiff has previously amended its complaint[.]" Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (quoting Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)).
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Citi argues Plaintiffs fail to allege facts against Citi to support a claim because Plaintiffs state Citi is liable for Seterus and Fannie Mae's conduct based on agency relationships but fail to allege facts showing Citi had an agency relationship with either. (ECF No. 4 at 3.) Plaintiffs allege two factual bases for their claim Citi had agency relationships with Seterus and Fannie Mae: (1) that Seterus's letter to Plaintiffs informing Plaintiffs that Seterus was the servicer of their mortgage and Fannie Mae the creditor did not state Citi was no longer involved with the mortgage and (2) MERS continues to list Citi as the servicer of their loan. (ECF No. 10 at 5-6.)
Plaintiffs allege Seterus and Fannie Mae engaged in wrongful conduct from summer 2015, when Plaintiffs submitted their modification to Seterus, through May 2016, when the Property was sold in foreclosure to Fannie Mae. (ECF No. 1 at 8-13 ¶¶ 32-52.) That period is one to two years after Plaintiffs allege they had contact with Citi, (ECF No. 1 at 10 ¶¶ 25-26), therefore, Plaintiffs must establish a relationship between Citi and Seterus and Fannie Mae to hold Citi liable for their alleged conduct. Mendez v. Selene Fin. LP, 2017 WL 6940522, at *3 (C.D. Cal. Feb. 7, 2017). Plaintiffs rely on an agency theory of liability. (ECF No. 1 at 14-15 ¶¶ 57-66.)
Agency can be established either by agreement between the agent and the principal, an "actual agency," or it can be founded on "ostensible authority." CAL. CIV. CODE §§ 2298—2300; Deutsch v. Masonic Homes of Cal., Inc., 164 Cal. App. 4th 748, 781 (2008). "Under California law, an agency is ostensible when a principal causes a third person to believe another to be his agent, who is not really employed by him." Van Maanen v. Youth With A Mission-Bishop, 852 F. Supp. 2d 1232, 1250 (E.D. Cal. 2012) (citing CAL. CIV. CODE § 2300), aff'd sub nom. Van Maanen v. Univ. of the Nations, Inc., 542 F. App'x 581 (9th Cir. 2013). The principal to be charged must make the representation of agency through an act or neglect and the third person must reasonably rely on the agent's authority and must change position or be injured as a result of that reliance. Deutsch, 164 Cal. App....
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