Escobedo v. Countrywide Home Loans Inc et al, No. 3:2009cv01557 - Document 11 (S.D. Cal. 2009)
Court Description: ORDER Granting in part and Denying in part 5 Motion to Dismiss; Order Denying 4 Motion to Strike Punitive Damages Allegations. Signed by Judge Barry Ted Moskowitz on 12/15/09. (vet) (jrl).
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Escobedo v. Countrywide Home Loans Inc et al Doc. 11 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ANTONIO ESCOBEDO, an individual,, CASE NO. 09cv1557 BTM(BLM) Plaintiff, 12 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS; ORDER DENYING MOTION TO STRIKE PUNITIVE DAMAGES ALLEGATIONS v. 13 15 COUNTRYWIDE HOME LOANS, INC., a corporation; and DOES 1 through 20 inclusive, 16 Defendants. 14 17 18 19 20 21 22 23 24 Defendant Countrywide Home Loans, Inc. (“Defendant” or “Countrywide”), has filed a motion to dismiss Plaintiff’s Complaint for failure to state a claim. For the reasons discussed below, Defendant’s motion is GRANTED as to Plaintiff’s first cause of action for breach of contract and second cause of action for declaratory relief. Defendant’s motion is DENIED as to Plaintiff’s third, fourth, and fifth causes of action. Defendant has also filed a motion to strike Plaintiff’s punitive damages allegations. Defendant’s motion to strike is DENIED. 25 26 27 28 I. FACTUAL BACKGROUND In February 2007, Plaintiff took out a loan that was secured by his home. (Compl. ¶ 15.) Plaintiff alleges that on a date unknown, Countrywide began acting as an agent for the 1 09cv1557 BTM(BLM) Dockets.Justia.com 1 beneficiary of the loan and became the servicer of the loan. (Compl. ¶ 17.) 2 On April 17, 2009, Countrywide and Fannie Mae entered into a Servicer Participation 3 Agreement (“Agreement”) for the Home Affordable Modification Program under the 4 Emergency Economic Stabilization Act of 2008. (Ex. 1 to Compl.) The Agreement provided 5 that Countrywide shall perform the loan modification and other foreclosure prevention 6 services described in the Financial Instrument (attached to the Agreement) and the program 7 guidelines and procedures issued by the Treasury. 8 Plaintiff alleges that when he attempted a modification of his loan, Countrywide would 9 not provide him with a modification. (Compl. ¶ 20.) Plaintiff also alleges that after he 10 stopped making payments, Countrywide began harassing him in an attempt to collect 11 payments on the loan. (Compl. ¶ 21.) 12 Plaintiff asserts causes of action for: (1) breach of written contract; (2) declaratory 13 relief; (3) violation of California’s Rosenthal Fair Debt Collection Practices Act (“RFDCPA”), 14 Cal. Civ. Code §1788, et. seq.; (4) invasion of privacy; and (5) unfair business practices in 15 violation of Cal. Bus. & Prof. Code § 17200. 16 17 II. STANDARD 18 Under Fed. R. Civ. P. 8(a)(2), the plaintiff is required only to set forth a “short and plain 19 statement” of the claim showing that plaintiff is entitled to relief and giving the defendant fair 20 notice of what the claim is and the grounds upon which it rests. Conley v. Gibson, 355 U.S. 21 41, 47 (1957). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should 22 be granted only where a plaintiff's complaint lacks a "cognizable legal theory" or sufficient 23 facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 24 699 (9th Cir. 1988). When reviewing a motion to dismiss, the allegations of material fact in 25 plaintiff’s complaint are taken as true and construed in the light most favorable to the plaintiff. 26 See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Although 27 detailed factual allegations are not required, factual allegations ”must be enough to raise a 28 right to relief above the speculative level.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 2 09cv1557 BTM(BLM) 1 (2007). “A plaintiff’s obligation to prove the ‘grounds’ of his ‘entitle[ment] to relief’ requires 2 more than labels and conclusions, and a formulaic recitation of the elements of a cause of 3 action will not do.” Id. 4 III. DISCUSSION 5 6 A. Breach of Contract 7 Plaintiff attempts to sue on the Agreement as a third-party beneficiary. Countrywide 8 argues that Plaintiff lacks standing to sue because he is not an intended third-party 9 beneficiary. The Court agrees with Countrywide. 10 The Agreement is governed by and must be construed under federal law. 11 (Agreement, § 11A). In applying federal law regarding third-party beneficiaries, the Ninth 12 Circuit is guided by the Restatement of Contracts. See Klamath Water Users Protective 13 Ass’n v. Patterson, 204 F.3d 1206, 1210-11 (9th Cir. 2000). The Restatement on Contracts 14 explains: 15 17 (1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and . . . (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. 18 (2) An incidental beneficiary is a beneficiary who is not an intended beneficiary. 16 19 Restatement (Second) of Contracts § 302 (1979) (“Restatement”). 20 “To sue as a third-party beneficiary of a contract, the third party must show that the 21 contract reflects the express or implied intention of the parties to the contract to benefit the 22 third party.” Klamath, 204 F.3d at 1211. “One way to ascertain such intent is to ask whether 23 the beneficiary would be reasonable in relying on the promise as manifesting an intention to 24 confer a right on him or her.” Id. (citing Restatement § 302(1)(b) cmt. d.). 25 The Ninth circuit cautions, “Parties that benefit from a government contract are 26 generally assumed to be incidental beneficiaries, and may not enforce the contract absent 27 a clear intent to the contrary. See Restatement § 313(2). ‘Government contracts often 28 benefit the public, but individual members of the public are treated as incidental beneficiaries 3 09cv1557 BTM(BLM) 1 unless a different intention is manifested.’ Id. cmt. a.” Klamath, 204 F.3d at 1211. 2 In Klamath, the Ninth Circuit held that although a contract between the United States 3 and a dam operator operated to the irrigators’ benefit and was “undoubtedly entered into with 4 the irrigators in mind,” nothing in the contract evinced an intention of the parties to the 5 contract to grant the irrigators enforceable rights. 6 explained, “[T]o allow them intended third-party beneficiary status would open the door to all 7 users receiving a benefit from the Project achieving similar status, a result not intended by 8 the Contract.” Id. at 1212. Id. at 1211-12. The Ninth Circuit 9 As in Klamath, the Agreement was entered into in part for the benefit of qualified 10 borrowers and with these borrowers in mind. However, the language of the contract does 11 not show that the parties intended to grant qualified borrowers the right to enforce the 12 Agreement. Indeed, the Agreement specifies that it “shall inure to the benefit of . . . the 13 parties to the Agreement and their permitted successors-in-interest.” (Agreement, § 11.E.) 14 (emphasis added). 15 A qualified borrower would not be reasonable in relying on the Agreement as 16 manifesting an intention to confer a right on him or her because the Agreement does not 17 require that Countrywide modify eligible loans. The Agreement sets forth Home Affordable 18 Modification Program Guidelines. The Guidelines set forth eligibility requirements and states: 19 “Participating servicers are required to consider all eligible loans under the program 20 guidelines unless prohibited by the rules of the applicable PSA and/or other investor 21 servicing agreements.” (Compl., Ex. 1 at 42) (emphasis added). The Agreement does not 22 state that Countrywide must modify all mortgages that meet the eligibility requirements. 23 Qualified borrowers are incidental beneficiaries of the Agreement and do not have 24 enforceable rights under the contract. Therefore, Plaintiff lacks standing to sue for an alleged 25 breach of the Agreement. Defendant’s motion is GRANTED as to this claim. 26 27 28 B. Declaratory Relief Defendant argues that Plaintiff’s declaratory relief claim is duplicative of the breach 4 09cv1557 BTM(BLM) 1 of contract claim. In his opposition, Plaintiff agrees to forgo this claim in favor of the breach 2 of contract claim. Therefore, the Court GRANTS Defendant’s motion as to this claim. 3 4 5 6 C. RFDCPA Defendant argues that Plaintiff’s RFDCPA claim should be dismissed because Plaintiff has failed to allege sufficient facts to support such a claim. The Court disagrees. 7 Although Plaintiff’s Complaint is not very detailed, it sufficiently alleges harassing 8 conduct that would violate Cal. Civ. Code §1788.11(d), (e) and § 1788.17 (by violating 15 9 U.S.C. § 1692b(2), (6)). Plaintiff alleges that Countrywide representatives continuously made 10 telephone calls to Plaintiff, contacting him at his workplace, home phone, and mobile phone. 11 (Compl. ¶¶ 21-23.) Plaintiff also alleges that although Countrywide was provided with the 12 name and phone number of Plaintiff’s attorney, Countrywide representatives continued to 13 contact and harass Plaintiff and also contacted Plaintiff’s employer. (Comp. ¶¶ 24-25.) 14 In addition, Plaintiff alleges that Countrywide failed to give him the notice required by 15 Cal. Civ. Code § 1812.700. (Comp. ¶ 50(d)). There is little else that can be pled with respect 16 to a failure to give notice. 17 18 Plaintiff has alleged sufficient facts to support a claim under the RFDCPA. Therefore, Defendant’s motion to dismiss is DENIED as to this claim. 19 20 D. Invasion of Privacy 21 Defendant seeks to dismiss Plaintiff’s invasion of privacy claim on the ground that 22 Plaintiff has not alleged facts establishing (1) a sufficiently serious invasion of his privacy 23 interest; and (2) damages. 24 The essential elements of a claim for invasion of privacy are: (1) the defendant 25 intentionally intruded upon the solitude or seclusion, private affairs or concerns of the plaintiff; 26 (2) the intrusion was substantial, and of a kind that would be highly offensive to an ordinarily 27 reasonable person; and (3) the intrusion caused plaintiff to sustain injury, damage, loss or 28 harm. Cal. BAJI 7.20. 5 09cv1557 BTM(BLM) 1 Repeated phone calls may rise to the level of an intrusion of privacy that supports a 2 cause of action. See Joseph v. J.J. MacIntyre Companies, LLC., 238 F. Supp. 2d 1158, 3 1169 (N. D. Cal. Dec. 12, 2002) (holding that given the number and pattern of telephone calls 4 alleged, there was a genuine issue of fact as to whether the plaintiff’s privacy was invaded). 5 As discussed above, Plaintiff has alleged facts regarding repeated and continuous calls to 6 his home, work, and cell phone in addition to telephone calls to his employer. These facts 7 support a plausible claim of a substantial invasion of privacy that would be offensive to a 8 reasonable person. 9 As for damages, Plaintiff alleges that as a result of the invasions of privacy, he “was 10 harmed and caused great mental and physical pain.” (Compl. ¶ 59.) This allegation is 11 sufficient to satisfy the element of damages. See Miller v. National Broadcasting Co., 187 12 Cal. App. 3d 1463, 1484-85 (1986) (explaining that where there is a wrongful invasion of 13 privacy, damages may be recovered for mental anguish alone). 14 15 Accordingly, Defendant’s motion to dismiss is DENIED as to Plaintiff’s invasion of privacy claim. 16 17 E. Cal. Bus. & Prof. Code § 17200 18 Defendant argues that Plaintiff’s § 17200 claim fails because it is premised on 19 Plaintiff’s other claims, which fail to state a claim. However, Defendant’s motion was denied 20 as to Plaintiff’s RFDCPA and invasion of privacy claims. Therefore, Plaintiff has stated a § 21 17200 claim. 22 23 F. Motion to Strike 24 Defendant moves to strike Plaintiff’s prayer for punitive damages and punitive damage 25 allegations on the ground that Plaintiff has failed to plead facts establishing that Defendant’s 26 acts were oppressive, fraudulent, or malicious and has failed to plead facts establishing that 27 Defendant, as a corporate employer, is liable for any acts of oppression, fraud or malice. 28 However, under federal pleading requirements, malice and intent may be averred 6 09cv1557 BTM(BLM) 1 generally. Clark v. Allstate Ins. Co., 106 F. Supp. 2d 1016, 1020 (S. D. Cal. 2000). “[T]he 2 fact that California courts may impose a heightened pleading requirement on claims for 3 punitive damages is irrelevant, because such a requirement conflicts with federal procedural 4 law.” Robinson v. Managed Accounts Receivable Corp., __ F. Supp. 2d __, 2009 WL 5 2500571 (C.D. Cal. Aug. 4, 2009). 6 misconduct are sufficient to support a claim for punitive damages. Clark, 106 F. Supp. 2d 7 at 1020. Conclusory assertions of intentional and malicious 8 Plaintiff alleges that Defendants “willfully and intentionally intruded into Plaintiff’s 9 solitude, seclusion and private affairs by repeatedly and unlawfully attempting to collect a 10 debt” and that Defendants “acted with oppression or malice.” (Compl. ¶¶ 57. 60.) These 11 allegations are sufficient under federal pleading standards. Therefore, Defendant’s motion 12 to strike is DENIED. 13 14 IV. CONCLUSION 15 For the reasons discussed above, Defendant’s motion to dismiss is GRANTED IN 16 PART and DENIED IN PART. Defendant’s motion is GRANTED as to Plaintiff’s first cause 17 of action for breach of contract and second cause of action for declaratory relief. 18 Defendant’s motion is DENIED as to Plaintiff’s third, fourth, and fifth causes of action. 19 Defendant’s motion to strike Plaintiff’s punitive damages allegations is DENIED. 20 IT IS SO ORDERED. 21 DATED: December 15, 2009 22 23 24 Honorable Barry Ted Moskowitz United States District Judge 25 26 27 28 7 09cv1557 BTM(BLM)
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