Myrette-Crosley v. Ditech Financial LLC

Background

Faye Myrette-Crosley sued US Bank Trust National Association and Fay Servicing LLC on multiple California state-law claims concerning the handling of her loan, her loan modification, and payments toward her loan balance for property she owns in Richmond, California. The opinion states that her lawyer was allowed to withdraw and that she appeared to be proceeding without a lawyer.

The defendants jointly moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim, asking the court to dismiss the second amended complaint. The defendants also asked the court to take judicial notice of materials. The court denied that request and stated that it did not rely on those materials.

Reasons for dismissal

The court found that the second amended complaint did not fairly inform the defendants what conduct they were being asked to defend against. It listed mortgage-related events dating back to Myrette-Crosley’s purchase of the property in 1992, but did not connect those events to specific conduct by the defendants. The complaint also asserted that the defendants were liable for actions by prior mortgage servicers without explaining why that liability was plausible.

The court further found that the complaint lacked facts plausibly alleging that the defendants were negligent or unfair in their dealings with Myrette-Crosley or violated the cited California statutes. The negligent-misrepresentation claim was also deficient because it sounded in fraud and therefore had to meet Federal Rule of Civil Procedure 9(b)’s heightened pleading requirement. The complaint did not identify the alleged fraud’s who, what, when, where, and how.

Disposition

The court granted the motion to dismiss and dismissed the second amended complaint without prejudice. The court allowed Myrette-Crosley to file a third amended complaint by April 25, 2022, but said the amended complaint could not add new parties or claims without the court’s prior permission. The court also required a separate paragraph alleging facts establishing federal subject-matter jurisdiction and noted that the complaint referred to other lawsuits involving the same property; Myrette-Crosley was instructed to be prepared to explain why her claims were not barred by preclusion.

The court stated that failure to comply with the order would result in dismissal with prejudice under Rule 41(b), meaning the case could be dismissed in a way that bars refiling. The court also said that, because Myrette-Crosley had already had prior opportunities to amend, this would likely be the last time she would be allowed to do so. Judge James Donato signed the order.