Behl v. Specialized Loan Servicing, LLC

Background

Rajiv Behl sued Specialized Loan Servicing, LLC; First Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificates, Series 2007-FFC; and U.S. Bank National Association, as trustee. He alleged that the defendants failed to comply with various laws in servicing a second-lien mortgage. The complaint asserted one federal claim under the Truth in Lending Act (TILA), 15 U.S.C. § 1640, and eight California-law claims.

Behl alleged that he did not receive periodic loan statements from June 2009 through July 2021 and that the defendants improperly accrued interest or failed to provide required monthly statements. He sought damages and rescission of the loan. The defendants removed the case from state court based on federal-question jurisdiction and moved to dismiss all claims. Behl did not oppose the motion or otherwise appear in federal court.

TILA Claim

The court held that Behl’s TILA damages claims were barred by TILA’s generally applicable one-year statute of limitations. Behl filed the complaint on December 30, 2022, but alleged that the relevant failure to provide statements continued only through July 2021. The court also rejected Behl’s attempt to avoid the limitations period through a request for rescission under “15 C.F.R. § 1639(j),” finding that the cited regulation appeared not to exist. The court considered whether Behl might have intended to cite 15 U.S.C. § 1639(j), but found it unclear how that provision applied to his allegations or entitled him to rescission.

The court separately found that the complaint did not allege detrimental reliance or another plausible basis for actual damages. It concluded that these deficiencies could not be cured through amendment.

State-Law Claims and Disposition

The court clarified that Behl’s claim under California Civil Code § 1788.30 was pleaded under California’s Rosenthal Fair Debt Collection Practices Act, not the federal Fair Debt Collection Practices Act. After dismissing the only federal claim, the court declined to exercise supplemental jurisdiction—the federal court’s authority to hear related state-law claims. The court also stated that the complaint did not establish diversity jurisdiction.

The court granted the defendants’ motion to dismiss Behl’s TILA claim without leave to amend. It remanded the eight state-law claims to Santa Clara County Superior Court and directed the clerk to close the case. The court also granted the defendants’ request for judicial notice of recorded mortgage and foreclosure documents.