Torliatt v. Ocwen Loan Servicing, LLC

Background

Lawrence Torliatt alleged that Ocwen Loan Servicing, LLC and PHH Mortgage Corporation charged him $7.50 “pay-to-pay” or convenience fees when he made mortgage payments online or by telephone. His remaining claims were under the Rosenthal Fair Debt Collection Practices Act and California’s Unfair Competition Law. The case had completed fact discovery, was nearing the end of expert discovery, and had a pending motion for class certification.

PHH moved to stay, or pause, the proceedings until the Ninth Circuit resolved an appeal in a related case involving similar convenience-fee allegations against another mortgage servicer. The related district court case had dismissed federal and state-law claims, including claims under the federal Fair Debt Collection Practices Act and the Rosenthal Act.

Legal standard

The court applied the discretionary stay standard from Landis v. North American Co. It weighed possible damage from a stay, hardship or unfairness to the party opposing the stay, and whether waiting would simplify the issues, evidence, or legal questions. When a stay could harm another party, the moving party must show a clear case of hardship or unfairness; the ordinary cost of defending a lawsuit is not enough.

Analysis

Judge Orrick concluded that PHH had not shown that the Ninth Circuit’s decision would materially simplify this case. Torliatt’s Rosenthal Act claims included a claim under California Civil Code section 1788.14(b), which prohibits a debt collector from collecting certain fees or charges for debt-collection services unless permitted by law. The court explained that this claim was independent of the federal-law provision addressed in the related appeal.

The court also noted that the related district court had not specifically analyzed the section 1788.14(b) claim. Even if the Ninth Circuit held that federal law did not categorically prohibit convenience fees, the question would remain whether PHH’s conduct violated section 1788.14(b). PHH also did not show a clear hardship or unfairness from continuing the case, particularly because the evidence for the different Rosenthal Act theories would be the same and a stay might not conserve resources.

Finally, the court found that Torliatt had legitimate concerns about delay. He alleged that PHH would continue charging the fees and sought injunctive relief for ongoing and future harm. The court stated that delaying possible injunctive relief weighed against a stay.

Disposition

The court denied PHH’s motion to stay proceedings. Judge Orrick stated that PHH might have better results with a renewed motion if the class were certified only under the Rosenthal Act provision tied to the federal law and the Ninth Circuit had not yet decided the related appeal.