Choudhuri v. Specialized Loan Servicing

Background

Kabita Choudhuri, proceeding without a lawyer, sued Specialized Loan Servicing, Zillow Group, and Bosco Credit. She alleged that the defendants conspired to defraud her by illegally foreclosing, or attempting to foreclose, on her home. Her first amended complaint invoked numerous federal and California statutes and common-law theories, including the Real Estate Settlement Procedures Act, the California Homeowner Bill of Rights, the Truth in Lending Act, the Fair Debt Collection Practices Act, the Racketeer Influenced and Corrupt Organizations Act, California’s Unfair Competition Law, fraud, tortious interference, unjust enrichment, nuisance, and promissory estoppel.

The court had previously dismissed her initial complaint for failure to state a legally sufficient claim and allowed amendment only to correct identified deficiencies. The court also considered a prior related proceeding involving Choudhuri, Specialized, and Bosco. Although that earlier case had produced dismissals with prejudice and summary judgment, the court could not determine from the insufficiently detailed amended complaint whether the current claims arose from the same set of facts. The court therefore did not dismiss the current claims on claim-preclusion grounds.

Motions to Dismiss

The court applied the standard for dismissal under Federal Rule of Civil Procedure 12(b)(6), which asks whether the complaint alleges a legally recognized theory supported by enough facts to make relief plausible. The court construed Choudhuri’s allegations liberally because she was proceeding without a lawyer.

The court held that Choudhuri sufficiently pleaded claims against Specialized and Bosco under California Civil Code sections 2923.3 and 2924b, concerning delivery of foreclosure notices. She alleged that she had not received a copy of the recorded notice of default. Those claims were allowed to proceed at this stage.

The court dismissed with leave to amend Choudhuri’s fraud claims against Specialized and Bosco because the allegations might be cured by additional facts. The court also dismissed with leave to amend her claims against Specialized and Bosco under the federal racketeering statute, the federal loan-servicing provision requiring responses to qualified written requests, and the specified Regulation X provision concerning foreclosure during a pending loss-mitigation application. The court found deficiencies including the lack of specific facts, failure to identify the defendants’ status as loan servicers where required, and failure to provide the required details about alleged fraudulent acts.

The court dismissed with prejudice, meaning the claims could not be repleaded in this case, Choudhuri’s claims against all defendants for promissory estoppel, tortious interference, unjust enrichment, nuisance, violations of the Holder Rule, Section 17(a) of the Securities Act, the False Claims Act, California’s Unfair Competition Law, the Fair Debt Collection Practices Act, the Rosenthal Act, the Truth in Lending Act and Regulation Z, and California’s False Advertising Law. The court also dismissed with prejudice Choudhuri’s racketeering claims against Zillow and all other claims brought under the Homeowner Bill of Rights, the Real Estate Settlement Procedures Act, or Regulation X.

The court granted Zillow’s motion to dismiss. It granted in part and denied in part Specialized’s motion to dismiss. The conclusion stated that Choudhuri sufficiently pleaded only the claims under California Civil Code sections 2923.3 and 2924b against Specialized and Bosco among the claims challenged in these motions.

Default Motions

The court denied Choudhuri’s motion for entry of default against Zillow because the amended complaint had not been properly served on Zillow. The court denied without prejudice her motion for default judgment against Zillow because no default had been entered. It also denied without prejudice her motion for default judgment against Bosco because the clerk had not entered default against Bosco.

Next Steps and Disposition

Choudhuri was permitted to file a second amended complaint within 28 days. The court limited amendment to the fraud, racketeering, qualified-written-request, and specified Regulation X claims against Specialized and Bosco. It instructed that claims dismissed with prejudice should not be included. The case-management conference was continued to January 30, 2024, and updated case-management statements were ordered for January 23, 2024. Judge Jon S. Tigar signed the order.