Opinion
NOT FOR PUBLICATION
MEMORANDUM DECISION
PETER W. BOWIE, Chief Judge United States Bankruptcy Court
Plaintiff filed a complaint against the current holder of a note and deed of trust on her residence, as well as the original lender. The complaint includes a cause of action for violation of the Real Estate Settlement Procedures Act (RESPA). The current holder of the note and deed of trust and the servicer have moved to dismiss the complaint on multiple grounds, including that the RESPA claims are preempted by the Bankruptcy Code. The Court took the matter under submission to consider that issue. The Court finds that because the RESPA claim against Chase arose prepetition, if at all, it is not preempted. The remainder of the issues raised in the motion to dismiss are addressed below as well.
This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334 and General Order No. 312-D of the United States District Court for the Southern District of California. This is alleged to be a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B), (C) & (K) .
DISCUSSION
Plaintiff owns real property located at 7214 Gatewood Lane, San Diego, California (Property). In December 2005, Plaintiff obtained a refinancing loan from BNC Mortgage, Inc., (BNC) in the amount of $400,000 (Loan). The Loan was secured by a deed of trust which was recorded on December 22, 2005 (Deed of Trust). Chase Home Finance LLC (Chase) is the current servicer of the Loan. Plaintiff defaulted under the terms of the Note, and on October 29, 2007, a Notice of Default was recorded. A Notice of Trustee's Sale was recorded on February 1, 2008.
On February 14, 2008, Plaintiff and James Sloan filed a petition under chapter 7.
The Deed of Trust was assigned to U.S. Bank National Association, Trustee for Lehman Brothers Structured Asset Investment Loan Trust SAIL 2006-BNC1 (USBank) pursuant to an assignment recorded on February 29, 2 008.
Plaintiff filed a complaint against BNC, Charter Funding of Hawaii, Chase and USBank, asserting multiple causes of action, including one for violation of the Real Estate Settlement Procedures Act (RESPA). Chase and USBank (collectively Moving Defendants) have moved for dismissal of Plaintiff's First Amended Complaint (FAC) on the ground that it fails to state a claim upon which relief can be granted under Rule 12(b) (6) . Moving Defendants raised several arguments, but one in particular required additional briefing and consideration - whether Plaintiff's RESPA claims are preempted by the Bankruptcy Code.The Court has reviewed the supplemental briefs and the authorities cited and finds that Plaintiff's RESPA claims are not preempted by the Bankruptcy Code.
Moving Defendants had also alleged that Plaintiff lacked standing to pursue these claims as they were property of the bankruptcy estate. That objection was nullified by the August 13, 2008 order of this Court approving the transfer of the estate's interest in the action to the Plaintiff.
RESPA Claims
Courts have addressed the issue of whether RESPA claims are preempted by the Bankruptcy Code and come to divergent conclusions. The courts in In re Laskowski, 384 B.R. 518, 528 (Bankr.N.D.Ind. 2008), In re Holland, 374 B.R. 409, 443 (Bankr.D.Mass. 2007) and In re Payne, 387 B.R. 614 (Bankr.D.Kan. 2008), held that RESPA claims were not preempted. Each case specifically rejected In re Nosek, 354 B.R. 331 (D.Mass. 2006), in which the Court held that the RESPA claims involved therein were preempted. The court in Nosek based its ruling in part upon the Ninth Circuit's holding in Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 510 (9th Cir. 2002) (holding that the Fair Debt Collections Practices Act was preempted in part by Bankruptcy-Code § 524). The Court finds Walls inapplicable to this RESPA issue because in this case, the alleged qualified written request was made to Chase prepetition. If it was properly made, and if Chase failed to timely respond, any claim plaintiff might have would be a prepetition claim and it would not conflict with the Bankruptcy Code, in contrast to Nosek.
Plaintiff's complaint also alleges other violations of RESPA. See FAC at ¶¶ 24(a)-(f)& 71-76 . The Court finds no overlap or conflict between these provisions and the Bankruptcy Code. Thus, there is no cause to hold that they are preempted by the Code. The motion is denied with respect to the remaining alleged violations of RESPA.
Other Claims
As mentioned above, the motion also sought dismissal of the other non-RESPA causes of action.
The Court grants the motion as to the claims for intentional and negligent misrepresentation as the FAC fails to allege any representations whatsoever by either of the Moving Defendants.
As to Plaintiff's cause of action for negligence, the motion is denied. The bulk of the "negligent" acts asserted in the FAC are attributable on their face to defendants other than the Moving Defendants. However, the FAC does contain an allegation that unlawful, post-transfer late fees were charged. See FAC at ¶ 63. This is apparently directed to Moving Defendants. It is possible that Moving Defendants will be able to establish that their involvement "did not exceed the scope of [their] conventional role as a mere lender of money...," and thus they owe no duty to Plaintiff. Nymark v. Heart Federal Savings and Loan Assn., 231 Cal.App.3d 1089, 1096 (1991). However, based upon the allegations in the FAC, which the Court accepts for the purposes of this Rule 12(b)(6) motion, the Court cannot find, as a matter of law, that Moving Defendants did not have a greater involvement. Accordingly, the motion is granted in large part as to the alleged negligence, but denied as to alleged post-transfer late fees.
With respect to Plaintiff's cause of action for violation of the Truth In Lending Act (TILA), 15 U.S.C. § 1601 et seq., the motion is granted in part and denied in part. The motion is granted as to Chase. Liability for damages under TILA is limited to the original creditor and assignees. 15 U.S.C. §§ 1640(a) & 1641(a). Chase, as servicer of the Loan, is neither. See 15 U.S.C. § 1641(f). With respect to USBank, the bulk of the acts which Plaintiff alleges violated TILA cannot be attributed to USBank. However, the FAC does contain the allegation that the transfer of the obligation was not properly disclosed to Plaintiff under 15 U.S.C. § 1641(g)(1) (requiring a transferee to notify the borrower of an assignment of a mortgage loan.) See FAC at ¶ 67. Moving Defendants argue that the claim is barred by the one-year statute of limitations of 15 U.S.C. § 1640. However, the transfer which USBank allegedly failed to disclose occurred in February of 2008. The complaint was filed on April 18, 2008, well within the one-year window.
The motion is denied with respect to the cause of action for violation of Business and Professions Code § 17200, et seq. Moving Defendants' argument is that this cause of action falls with the causes of action under TILA and RESPA. Since, however, some TILA and RESPA claims survive with respect to the Moving Defendants, this cause of action survives the Rule 12(b)(6) motion as well.
The motion is granted as to the claim for unjust enrichment as to the Moving Defendants. The FAC contains no allegation of a benefit received and retained by Moving Defendants.
Finally, the motion is granted with respect to the cause of action for quiet title. See FAC at ¶¶ 85-86. California Code of Civil Procedure § 761.020 provides the pleading requirements for a quiet title action:
The complaint shall be verified and shall include all of the following:
(a) A description of the property that is the subject of the action. In the case of tangible personal property, the description shall include its usual location. In the case of real property, the description shall include both its legal description and its street address or common designation, if any.
(b) The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title. If the title is based upon adverse possession, the complaint shall allege the specific facts constituting the adverse possession.
(c) The adverse claims to the title of the plaintiff against which a determination is sought.
(d) The date as of which the determination is sought.
If the determination is sought as of a date other than the date the complaint is filed, the complaint shall include a statement of the reasons why a determination as of that date is sought.
(e)A prayer for the determination of the title of the plaintiff against the adverse claims.
Plaintiff's FAC is not verified. It does not include a legal description of the Property. It also fails to set forth Plaintiff's claim to title. Further, it fails to allege any interest Chase claims in the Property. Plaintiff did not oppose the motion as to this cause of action.
CONCLUSION
As set forth above, the motion is granted in part and denied in part. Moving Defendants may lodge an order consistent herewith. Further, Plaintiff is granted thirty (30) days leave to further amend her complaint consistent with the foregoing and to allege with specificity each act or omission Plaintiff asserts results in liability of Chase and/or USBank, moving defendants herein.
IT IS SO ORDERED.