Liu v. Shellpoint Mortgage Servicing

Background

Amy Liu, a plaintiff representing herself, sued Shellpoint Mortgage Servicing and Selene Finance LP. She asserted claims under the Consumer Financial Protection Act, 12 U.S.C. § 5531, and the Federal Trade Commission Act, 15 U.S.C. § 45, as well as a breach-of-contract claim. The claims concerned a mortgage on Liu’s primary residence. Liu alleged that the defendants mishandled mortgage payments, leaving her delinquent on the loan and unable to obtain refinancing.

Selene moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legal claim. Selene also challenged Liu’s standing, meaning her ability to bring the claims in federal court, and asked the court to take judicial notice of exhibits attached to the motion.

Court’s analysis

The court found that Liu had standing to sue concerning the mortgage held in her name. Her allegations that she made mortgage payments that were not processed, causing damages including alleged overpayments, plausibly described a concrete injury connected to the defendants’ conduct. The court said Liu had not shown the same kind of standing for claims apparently involving injuries to her sons concerning a mortgage that they, rather than Liu, took out.

The court dismissed the Consumer Financial Protection Act and Federal Trade Commission Act claims with prejudice because neither statute provides a private right of action. The court also stated that 18 U.S.C. § 1001 is a criminal statute concerning false statements to the government and could not serve as the basis for Liu’s claim.

Reading the complaint generously because Liu was representing herself, the court found that it outlined a possible breach-of-contract claim concerning the handling of her mortgage but lacked enough detail to proceed. The court dismissed that claim with leave to amend. It instructed Liu to provide facts identifying a contract, her performance or excuse for nonperformance, the defendants’ breach, and her resulting damages.

Disposition

Judge James Donato dismissed the Consumer Financial Protection Act and Federal Trade Commission Act claims with prejudice. He dismissed the breach-of-contract claim with leave to amend. He denied Selene’s request for judicial notice of the exhibits attached to its motion to dismiss.

The court noted that the federal-law claims had been dismissed with prejudice and instructed Liu, if she amended the contract claim in federal court, to allege facts establishing diversity subject-matter jurisdiction under 28 U.S.C. § 1332(a). The court said that otherwise she should pursue relief in California state court. Liu could file an amended complaint consistent with the order by May 3, 2024; no new claims or parties could be added without the court’s prior permission. The order stated that failure to meet the deadline or comply with the order would result in dismissal of the case under Rule 41(b).