Sevier v. Real Time Resolutions, Inc. a Texas Corporation

Background

Nicole Sevier and Robert Thurman filed an amended complaint in Contra Costa Superior Court challenging Real Time Resolutions, Inc.’s attempts to foreclose on their property. They asserted claims under California Civil Code section 2924(a)(1), the Truth in Lending Act, the Rosenthal Fair Debt Collection Practices Act, California Financial Code provisions, California’s unfair-competition law, California Civil Code section 3412 concerning cancellation of written instruments, and wrongful foreclosure. The plaintiffs voluntarily dismissed their claim under California Civil Code section 2924(a)(1). Real Time Resolutions removed the case to federal court and moved to dismiss.

Rulings on the Claims

The court applied Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim for relief. The court generally limited its review to the complaint and accepted its factual allegations as true for purposes of the motion.

- Truth in Lending Act: The plaintiffs alleged that Real Time Resolutions failed to provide periodic mortgage statements. The court held that this claim was time-barred on the face of the complaint under the one-year limitations period in 15 U.S.C. section 1640(e). The court granted the motion to dismiss this claim, with leave to amend. - Rosenthal Act and Fair Debt Collection Practices Act allegations: The plaintiffs alleged that Real Time Resolutions made false statements about the amount of their debt, including interest and fees. The court found that they did not identify the allegedly false communications, the improperly charged amounts, or the other allegedly false statements. The court granted the motion to dismiss the Rosenthal Act claim, with leave to amend. - California Financial Code and usury claims: The plaintiffs relied on California Financial Code sections 4973(f)(1) and 4979.5. The court concluded that those provisions did not apply because Real Time Resolutions was alleged to be the loan servicer, not the loan originator or a mortgage broker. The plaintiffs also relied on Article XV, section 1 of the California Constitution, but the court would not consider additional facts about the alleged interest rate that appeared only in the opposition to the motion. The court granted the motion to dismiss the claims under the California Financial Code provisions and Article XV, section 1, with leave to amend. - Cancellation of instrument: The plaintiffs alleged that a notice of default was void or voidable and could cause serious injury if left outstanding. The court found that they did not allege facts showing how they would be injured or why the notice was void or voidable. The court granted the motion to dismiss this claim, with leave to amend. - Unfair-competition claim: The court stated that the claim depended on the other causes of action. Because it dismissed each underlying cause of action, it also granted the motion to dismiss the unfair-competition claim, with leave to amend if the plaintiffs could allege sufficient facts supporting their underlying claims. - Wrongful foreclosure: The plaintiffs based this claim on the alleged violations discussed above. The court held that they had not alleged that they tendered, or were able to tender, the debt owed. Applying California’s tender requirement for challenging a foreclosure sale or a claim closely connected to one, the court granted the motion to dismiss the wrongful-foreclosure claim, with leave to amend.

Disposition

The court granted Real Time Resolutions’ motion to dismiss with leave to amend. It directed the plaintiffs to file a second amended complaint consistent with the order by August 25, 2023. Judge Jeffrey White did not enter a final merits judgment on the challenged claims in this order; the plaintiffs were permitted to attempt to correct the pleading deficiencies.