Shepardson v. U.S. Bank Trust National Association

Background

John Shepardson’s remaining claim alleged that U.S. Bank Trust National Association violated California’s Unfair Competition Law (UCL) and False Advertising Law (FAL) when its agent, SN Servicing Corporation, sent him a December 23, 2022, notice seeking the full outstanding balance on his balloon note. Shepardson alleged that the notice improperly gave him approximately 30 days instead of at least 90 days to cure his default.

The court had dismissed Shepardson’s earlier complaints and dismissed all claims in his third amended complaint except part of the claim concerning the December 23, 2022, notice. In that earlier ruling, the court found that the notice violated California Civil Code sections 2924i and 2966. The court also denied Shepardson’s request to file a fourth amended complaint.

After the loan was paid in full, U.S. Bank and SN Servicing moved for summary judgment under Federal Rule of Civil Procedure 56. Summary judgment is appropriate when the evidence shows no genuine dispute over a fact that could affect the outcome and the moving party is entitled to judgment under the law.

Analysis

The court explained that remedies under the UCL and FAL are generally limited to restitution and injunctive relief; damages are not available under those statutes. The court considered whether Shepardson could establish either remedy.

Injunctive relief

The court ruled that Shepardson was not entitled to an injunction because he presented no evidence that defendants were likely to send him additional notices violating sections 2924i or 2966. He had not shown that defendants sent him other notices about balloon payments or that he expected to enter another loan transaction with them. The parties agreed at the hearing that the loan had been paid in full.

The court rejected Shepardson’s argument that an injunction was justified by the possibility that other people might receive noncompliant notices. The relevant question was whether Shepardson himself faced a threat of repeated misconduct, and the court found that he had not shown such a personal threat.

Restitution

The court also ruled that Shepardson was not entitled to restitution. Restitution requires evidence of a measurable amount that the defendant acquired through the statutory violation and that would restore the plaintiff’s loss.

First, Shepardson argued that defendants were unjustly enriched when SN Servicing received his $2,273.12 payment, did not credit it to his account, and returned it without interest. The court found no evidence that defendants received a benefit from the payment, such as by cashing the check or placing the funds in an interest-bearing account. Shepardson also could not identify the amount of interest allegedly owed or show that the lack of interest resulted from the defective notice.

Second, Shepardson argued that defendants had improperly added late fees, collection costs, and interest to the loan balance. The court found that he did not provide evidence connecting those charges to the defective notice or supporting the amount of restitution he sought. California Civil Code section 2966(b) provides that failure to give the required notice does not extinguish the borrower’s payment obligation and that interest continues to accrue. The court therefore found that the additional charges would have continued regardless of whether the notice gave 30 or 90 days to pay.

The court also noted that Shepardson did not identify the amount of the alleged late fees, collection costs, and interest or point to evidence supporting his claim. At summary judgment, unsupported assertions were insufficient.

Disposition

Because Shepardson could not raise a genuine dispute showing that he was entitled to injunctive relief or restitution, the court concluded that he had no right to a remedy under the UCL or FAL. Judge Nathanael M. Cousins accordingly granted defendants’ motion for summary judgment.