UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA. CIVIL MINUTES - GENERAL Case No. SACV AG (DFMx) Date June 30, 2014

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1 Case 8:14-cv AG-DFM Document 14 Filed 06/30/14 Page 1 of 7 Page ID #:288 Present: The Honorable ANDREW J. GUILFORD Lisa Bredahl Not Present Deputy Clerk Court Reporter / Recorder Tape No. Attorneys Present for Plaintiffs: Attorneys Present for Defendants: Proceedings: [IN CHAMBERS] ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS In this case, Plaintiff Joan Benedict asserts claims concerning Defendant Wells Fargo Bank, N.A. s debt collection efforts. Before the Court is Defendant s Motion to Dismiss Plaintiff s First Amended Complaint. ( Motion, Dkt. No. 7.) The Motion is GRANTED in part and DENIED in part. The Court also GRANTS Defendant s Requests for Judicial Notice (Dkt. Nos. 8, 13), which Plaintiff does not oppose. But the Court takes judicial notice only of the existence and contents of these documents, and does not assume that the contents are true or applicable to this case. See Fed. R. Evid. 201(b). BACKGROUND The following facts come primarily from Plaintiff s First Amended Complaint ( FAC, Dkt. No. 1-1), and for purposes of this Motion, the Court assumes them to be true. Plaintiff s home loan is issued by Defendant. (FAC 5.) One of her two monthly home loan payments is automatically debited from her bank account. (Id.) Plaintiff complains about three things Defendant did. First, a denied loan modification. Around August 2012, Plaintiff began working with Defendant on a loan modification due to financial hardship. (Id. 6.) But months later, Defendant denied the loan modification. Page 1 of 7

2 Case 8:14-cv AG-DFM Document 14 Filed 06/30/14 Page 2 of 7 Page ID #:289 Second, unwarranted deductions. After Defendant denied the loan modification, it began unilaterally debiting $500 per month more than Plaintiff s loan payment from Plaintiff s personal banking account. (Id.) Defendant didn t get written agreement from Plaintiff before debiting this money. (Id. 8.) Defendant said the payments were future taxes owed by Plaintiff, but Plaintiff is unaware of any such taxes owed and doesn t believe there are any. (Id. 7.) Defendant hasn t responded to Plaintiff s multiple requests for clarification as to what the future taxes are. (Id.) And despite Plaintiff s demands that Defendant stop deducting the money, Defendant hasn t. (Id ) Third, phone calls. Beginning on February 2, 2013, Defendant began calling Plaintiff, stating that the purpose of the call was to collected an alleged debt owed. (Id. 5.) But Plaintiff wasn t behind on her loan payments, and Defendant knew it. (Id.) Defendant s conduct has caused Plaintiff severe emotional distress. (Id. 11.) Her financial situation has gotten worse because Defendant is taking the extra money from her account, and the persistent phone calls have also been distressing. (Id.) LEGAL STANDARD A court should grant a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) when, accepting all factual allegations in the complaint as true and construing them in the light most favorable to the nonmoving party, a complaint fails to state a claim upon which relief can be granted. Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1014 (9th Cir. 2012); see Fed. R. Civ. P. 12(b)(6). [D]etailed factual allegations aren t required. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). But there must be sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively... [and] plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). A court should not accept threadbare recitals of a cause of action s elements, supported by mere conclusory statements. Iqbal, 556 U.S. at 678; see also Eclectic Properties E., LLC v. Marcus & Millichap Co., 2014 WL , at *2 *3 (9th Page 2 of 7

3 Case 8:14-cv AG-DFM Document 14 Filed 06/30/14 Page 3 of 7 Page ID #:290 Cir. May 7, 2014). If a court decides to dismiss a complaint, it must also decide whether to grant leave to amend. A district court may deny a plaintiff leave to amend if it determines that allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency. Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010); see Steckman v. Hart Brewing, 143 F.3d 1293, 1298 (9th Cir. 1998) (holding that pleadings may be dismissed without leave to amend if amendment would be an exercise in futility ). ANALYSIS The FAC asserts five claims: (1) violation of the Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act ); (2) violation of the Consumer Legal Remedies Act ( CLRA ); (3) intentional infliction of emotional distress; (4) negligent infliction of emotional distress; and (5) violation of the Electronic Funds Transfer Act ( EFTA ). Defendant argues the Court should dismiss all five claims. The Court agrees that some claims should be dismissed, but does not dismiss all claims. 1. ROSENTHAL ACT Plaintiff s first claim is for unfair debt collection practices under the Rosenthal Act. Defendant argues that the claim should be dismissed because enforcing a dead of trust or proceeding with a non-judicial foreclosure is not debt collection within the meaning of either the state or federal debt collection acts as a matter of law. (Motion at 8:1-6.) But a remedy may be available under the Rosenthal Act [w]here the claim arises out of debt collection activities beyond the scope of the ordinary foreclosure process. Rockridge Trust v. Wells Fargo, N.A., 2013 WL , *38 (N.D. Cal. Sept. 25, 2013). Phone calls like Plaintiff alleges may not be part of the ordinary foreclosure process. (See Opposition at 5-7.) Defendants have failed to persuade the Court that dismissal of this claim is justified at Page 3 of 7

4 Case 8:14-cv AG-DFM Document 14 Filed 06/30/14 Page 4 of 7 Page ID #:291 this stage. The Court DENIES the Motion as to this claim. 2. CONSUMER LEGAL REMEDIES ACT Plaintiff s second claim is under the Consumer Legal Remedies Act ( CLRA ). The CLRA makes unlawful certain unfair or deceptive acts or practices used in a transaction intended to result or which results in the sale or lease of goods or services to any consumer. Cal. Civ. Code 1770(a). Services under the CLRA is defined as work, labor, and services for other than a commercial or business use, including services furnished in connection with the sale or repair of goods. Cal. Civ. Code 1761(b). Plaintiff seeks relief under the CLRA for (1) the denial of Plaintiff s loan modification and (2) deductions of $500 monthly payments from Plaintiff s bank account. (Opposition at 16:12-20.) Thus, Plaintiff s CLRA claim turns at least on whether either of those things is a service. (See Opposition at 15:23-16:3.) In Fairbanks v. Superior Court, 46 Cal. 4th 56 (2009), the California Supreme Court held that providing life insurance fell outside of the CLRA s definition of service because a contractual obligation to pay money... is not work or labor, nor is it related to the sale or repair of any tangible chattel. Id. at 61. Plaintiff cites three pre-fairbanks cases holding that the CLRA applies to mortgage loans, and argues that Defendant s obligations are clearly more than simply extending credit, since any home loan modification would require the receipt, review and analysis of Plaintiff s submitted documents and financial situation... and coordination with the requisite entities.... (Opposition at 12:27-16:3.) But the Court cannot reconcile Plaintiff s arguments concerning loan modification with Fairbanks reasoning, and other courts haven t been able to either. See, e.g., Justo v. Indymac Bancorp, SACV JVS AGRX, 2010 WL , *3 (C.D. Cal. Feb. 19, 2010) ( Under the reasoning of Fairbanks, a loan modification is not a service. ); Becker v. Wells Fargo bank, N.A., Inc., 2:10-CV LKK, 2011 WL (E.D. Cal. Mar. 22, 2011) ( [P]ursuant to these post-fairbanks authorities, the CLRA does not encompass Page 4 of 7

5 Case 8:14-cv AG-DFM Document 14 Filed 06/30/14 Page 5 of 7 Page ID #:292 plaintiff's claims arising from his attempted loan modification. ). Under similar reasoning, the Court can t conclude that the $500 deductions are a service either. The Court GRANTS the Motion as to this claim. 3. INTENTIONAL AND NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS Plaintiff s third and fourth claims are for intentional and negligent infliction of emotional distress. The elements of the tort of intentional infliction of emotional distress are: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant's outrageous conduct. Christensen v. Superior Court, 54 Cal. 3d 868, 903 (1991) (citations and quotations omitted). Conduct to be outrageous must be so extreme as to exceed all bounds of that usually tolerated in a civilized community. Id. Defendant argues this claim should be dismissed because the conduct alleged is not extreme or outrageous. The Court agrees. Plaintiff s allegations do not reflect conduct so extreme as to exceed all bounds of that usually tolerated in a civilized community. Further, to state a claim for negligent infliction of emotional distress, the plaintiff must have suffered serious emotional distress. See Molien v. Kaiser Found. Hospitals, 27 Cal. 3d 916, 928, 616 P.2d 813, 820 (1980). [S]erious mental distress may be found where a reasonable man, normally constituted, would be unable to adequately cope with the mental stress engendered by the circumstances of the case. Id. Plaintiff s allegations do not reflect serious emotional distress. The Motion is GRANTED as to these claims. 4. EFTA Page 5 of 7

6 Case 8:14-cv AG-DFM Document 14 Filed 06/30/14 Page 6 of 7 Page ID #:293 Plaintiff s fifth claim is under the EFTA. Defendant argues this claim is barred by the one year statute of limitations. (Motion at 11:20-12:15.) The parties don t appear to dispute that there is a one year statute of limitations under EFTA that begins when the first deduction is taken. Rather, they dispute only when the statute of limitations began. Defendant argues that it began in August 2007, which is when the loan documents, signed by plaintiff on July 9, 2007 state that payments will begin being debited. (Motion at 12:2-7.) But as stated, the Court does not assume that the contents of judicially noticed documents are true. And though the FAC does not appear to state exactly when the withdrawals began, (see Motion at 3:25), on a motion to dismiss, the Court construes the complaint in the light most favorable to the plaintiff. Pollard v. Geo Group, Inc., 607 F.3d 583, 585 n.3 (9th Cir. 2010). And Plaintiff alleges that the deductions began after Defendant denied her loan modification, which was months after the August 2012 request for a loan modification. (FAC 6.) In her opposition, Plaintiff says they began in June (Opposition at 21:8-19.) The Court is not persuaded by the arguments presented that the EFTA claim should be dismissed at this stage because of the statute of limitations. Defendant also argues the EFTA claim should be dismissed for failure to state a claim because Plaintiff has not stated when the $500 withdrawals began. (Motion at 3:23-25.) Although Federal Rule of Civil Procedure 9(b) has been interpreted to require a plaintiff to allege the who, what, when, where, and how of the misconduct, Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997), Rule 8 does not necessarily so require. Here, the Court is not persuaded that Plaintiff s allegations are so bare that they don t give fair notice or enable the opposing party to defend itself effectively. Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Motion is DENIED as to this claim. DISPOSITION Page 6 of 7

7 Case 8:14-cv AG-DFM Document 14 Filed 06/30/14 Page 7 of 7 Page ID #:294 The Motion is GRANTED in part and DENIED in part, with leave to amend. Any amended complaint must be filed within 14 days of this Order. : 0 Initials of Preparer lmb Page 7 of 7