can also be amended to state a claim under the UCL. We therefore reverse the judgment
and remand the matter to the court with directions to conduct further proceedings
consistent with this decision.
II
BACKGROUND
A
According to the allegations in the complaint, which we must accept as true for
purposes of this appeal (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919,
924), Ditech is a loan servicer and attempts to collect debts on behalf of itself and others
in the regular and ordinary course of its business. Ditech services a loan secured by a
deed of trust on Randall's home. Ditech began servicing the loan after Randall had
defaulted on the loan.
Following Randall's default, the trustee recorded a notice of default with intent to
sell. Approximately two years later, the trustee recorded a notice of trustee's sale,
1 Further statutory references are to this title of the United States Code unless otherwise specified. 2
scheduling Randall's home for public auction 21 days later. Randall subsequently
received notice the foreclosure sale was postponed for 37 days.
Meanwhile, Ditech advised Randall of the necessary payments to reinstate his
mortgage, which included improper fees and charges. Thirty-nine days prior to the
foreclosure sale, Randall paid Ditech $20,664.36 in three installments. Ditech accepted
the payments, but did not cancel the foreclosure sale.
Randall contacted Ditech multiple times about the foreclosure sale and his
mortgage reinstatement. He also enlisted the help of a real estate agent, who called
Ditech eight times in the month preceding the foreclosure sale. Two weeks before the
foreclosure sale, the real estate agent sent Ditech a written "notice of error" regarding
Ditech's failure to cancel the sale. Ditech never replied to the notice.
During a phone call one week before the foreclosure sale, a Ditech representative
stated Randall should be current on his mortgage and the foreclosure sale should be
cancelled. Although the representative stated Randall would receive a return phone call
later that day regarding the foreclosure sale, the phone call never came.
The next business day, Randall contacted Ditech again. The representative he
spoke with stated she had no knowledge of the foreclosure sale and could not confirm its
cancellation. The representative also refused to provide Randall with his current loan
balance. She told him his account needed to be audited before she could provide him
with the information. The same day, the trustee informed Randall that Ditech had neither
cancelled the foreclosure sale nor communicated anything to the trustee about the
reinstatement of Randall's loan.
3
Three days later and one day before the foreclosure sale, Randall filed the instant
action. The next day—the day of the scheduled foreclosure sale and 39 days after
Randall reinstated his loan—Ditech rescinded the notice of default and cancelled the
foreclosure sale.
B
The complaint asserted causes of action for negligence and for violating the
Americans with Disabilities Act (42 U.S.C. § 12101 et seq.), the Unruh Civil Rights Act
(Civ. Code, § 51 et seq.), the Elder and Dependent Adult Civil Protection Act (Welf. &
Inst. Code, § 15600 et seq.), California foreclosure law, the FDCPA, the Rosenthal Fair
Debt Collection Practices Act (Civ. Code, § 1788 et seq.), and the UCL. Ditech
demurred to the complaint, arguing the complaint did not state sufficient facts to
constitute any viable causes of action.
The court found deficiencies in each cause of action and sustained Ditech's
demurrer without leave to amend.2 As relevant to this appeal, the court found the
FDCPA cause of action was incurably deficient because the code section referenced in it,
section 1692f(1), does not apply to nonjudicial foreclosure activity and Randall's
allegations of overpaying to reinstate his loan were not sufficiently specific. The court
2 Ditech had previously demurred to Randall's original and first amended complaints. Both of the complaints asserted a UCL cause of action, but neither asserted an FDCPA cause of action. The record does not show the court ruled on Ditech's demurrer to the original complaint, presumably because Randall filed the first amended complaint beforehand. The court sustained Ditech's demurrer to the first amended complaint with leave to amend. 4
found the UCL cause of action was incurably deficient because "there is no underlying
wrongdoing alleged."
III
DISCUSSION
"The standards for reviewing a judgment of dismissal following the sustaining of a
demurrer without leave to amend are well settled. ' " 'We treat the demurrer as admitting
all material facts properly pleaded, but not contentions, deductions or conclusions of fact
or law. [Citation.] We also consider matters which may be judicially noticed.'
[Citation.] Further, we give the [complaint] a reasonable interpretation, reading it as a
whole and its parts in their context. [Citation.] When a demurrer is sustained, we
determine whether the [complaint] states facts sufficient to constitute a cause of action.
[Citation.] And when it is sustained without leave to amend, we decide whether there is a
reasonable possibility that the defect can be cured by amendment: if it can be, the trial
court has abused its discretion and we reverse; if not, there has been no abuse of
discretion and we affirm. [Citations.] The burden of proving such reasonable possibility
is squarely on the plaintiff." ' " (Finch Aerospace Corp. v. City of San Diego (2017) 8
Cal.App.5th 1248, 1251–1252.)
A
Under the FDCPA, "[a] debt collector may not use unfair or unconscionable
means to collect or attempt to collect any debt." (§ 1692f.) " 'To state a claim for
violation of the FDCPA, a plaintiff must allege that the defendant is a "debt collector"
5
collecting a "debt." ' [Citation.]" (Izenberg v. ETS Servs., LLC (C.D.Cal. 2008) 589
F.Supp.2d 1193, 1199.)
1
The complaint alleged Ditech violated section 1692f(1) of the FDCPA, which
prohibits "[t]he collection of any amount (including any interest, fee, charge, or expense
incidental to the principal obligation) unless such amount is expressly authorized by the
agreement creating the debt or permitted by law." For purposes of this section, " 'debt
collector' " includes a person or entity (1) engaged in "any business the principal purpose
of which is the collection of any debts," or (2) "who regularly collects or attempts to
collect … debts owed or due … another." (§ 1692a(6).) The term applies to a mortgage
loan servicer if the servicer began servicing the mortgage loan after the loan was in
default. (§ 1692a(6)(F)(iii); see Perry v. Stewart Title Co. (5th Cir. 1985) 756 F.2d 1197,
1208.)
Here, the complaint alleged Ditech "collects debts, either on behalf of itself or
others, in the regular and ordinary course of business." The complaint also alleged
Ditech began servicing Randall's mortgage loan after the loan was in default. The
complaint, therefore, adequately alleged Ditech was a debt collector for purposes of
section 1692f(1).
2
The complaint further alleged Ditech engaged in three types of unlawful debt
collection activity. Specifically, Ditech failed to halt nonjudicial foreclosure activity
after Randall paid to reinstate his loan, Ditech required Randall to pay a reinstatement
6
amount that was inconsistent with the amount of the payments Randall had missed and
included improper fees and charges, and Ditech continued to charge Randall default fees
and costs after Randall reinstated his loan.
A " 'debt' " for purposes of section 1692f(1) is an obligation of a consumer to pay
money. (§ 1692a(5); Vien-Phuong Thi Ho v. ReconTrust Company, NA (9th Cir. 2017)
858 F.3d 568, 572.) "[T]he object of non-judicial foreclosure is to retake and resell the
security, not to collect money from the borrower." (Ho, supra, at p. 571.) "Thus, actions
taken to facilitate a non-judicial foreclosure, such as sending the notice of default and
notice of sale, are not attempts to collect 'debt' " and are not actionable under section
1692f(1). (Ho, supra, at p. 572; Dowers v. Nationstar Mortgage, LLC (9th Cir. 2017)
852 F.3d 964, 969–970 (Dowers).)
However, overcharging Randall to reinstate his loan and charging default fees and
costs for a loan that is not in default are attempts to collect money and, consequently, are
actionable under section 1692f(1). Although Ditech asserts Randall's allegations on these
points were not sufficiently specific, the particularity required of a pleading varies given
the parties' relative knowledge of the facts in issue. (Semole v. Sansoucie (1972) 28
Cal.App.3d 714, 719.) "[L]ess particularity is required where the defendant may be
assumed to possess knowledge of the facts at least equal, if not superior, to that possessed
by the plaintiff." (Burks v. Poppy Construction Co. (1962) 57 Cal.2d 463, 474.)
Ultimately, the complaint is sufficient if " 'the adversary has been fairly apprised of the
factual basis of the claim against him.' " (Semole, supra, at p. 721, quoting Jones v.
Oxnard School Dist. (1969) 270 Cal.App.2d 587, 593.) Ditech is in at least as good a
7
position as Randall to know how much Ditech charged him to reinstate his loan, how
much Ditech charged him between when he reinstated his loan and when Ditech
rescinded the notice of default, and the bases for the charges. Accordingly, we conclude
Randall sufficiently pleaded an FDCPA cause of action for violation of section 1692f(1),
and the court erred in sustaining Ditech's demurrer to the cause of action.
3
For the first time on appeal, Randall contends he can amend his complaint to also
state an actionable claim under section 1692f(6) of the FDCPA for Ditech's nonjudicial
foreclosure activity. Section 1692f prohibits "[t]aking or threatening to take any non-
judicial action to effect dispossession or displacement of property" when the debt
collector has no intention of taking possession of the property, or holds "no present right
to possession of the property claimed as collateral through an enforceable security
interest." Mortgage loan servicers, as enforcers of security interests, fall within the
definition of " 'debt collectors' " for the purposes of section 1692f(6). (Dowers, supra,
852 F.3d at p. 969; see § 1692(a)(6) [authorizing the application of § 1692(f)(6) to "any
business the principal purpose of which is the enforcement of security interests"].) Since
Randall has demonstrated he can allege Ditech refused to halt its nonjudicial foreclosure
activity until well after he reinstated his loan and then only after he filed the instant
action, he has demonstrated he can amend his complaint to state an actionable claim
under section 1692f(6) and the court should permit him an opportunity to do so.
8
B
"The UCL prohibits, and provides civil remedies for, 'unfair competition,' which
includes 'any unlawful, unfair or fraudulent business act or practice.' (Bus. & Prof. Code,
§ 17200.)" (Candelore v. Tinder, Inc. (2018) 19 Cal.App.5th 1138, 1155 (Candelore).)
"The UCL's 'unlawful' prong 'borrows violations of other laws ... and makes those
unlawful practices actionable under the UCL.' [Citation.] ' "[V]irtually any law or
regulation—federal or state, statutory or common law—can serve as [a] predicate for [an]
... 'unlawful' [prong] violation." ' " (Ibid.)
In this case, the complaint did not allege the FDCPA violations as predicates for
the UCL cause of action. However, because we conclude the complaint adequately stated
a claim under section 1692f(1) of the FDCPA and can be amended to state a claim under
section 1692f(6) of the FDCPA, we conclude the complaint can also be amended to state
a claim under the UCL and the court should permit Randall an opportunity to do so.
(Candelore, supra, 19 Cal.App.5th at p. 1155.)
9
IV
DISPOSITION
The judgment is reversed and the matter is remanded to the superior court for
further proceedings consistent with this opinion. Randall is awarded his appeal costs.
McCONNELL, P. J.
WE CONCUR:
NARES, J.
GUERRERO, J.
10
AI Brief
AI-generated · verify before citing
Holding. The court held that the plaintiff sufficiently pleaded a claim under section 1692f(1) of the FDCPA and demonstrated a reasonable possibility of amending the complaint to state claims under section 1692f(6) of the FDCPA and the California Unfair Competition Law.
Issues
Whether the complaint sufficiently stated a claim under section 1692f(1) of the FDCPA regarding mortgage reinstatement fees.
Whether the plaintiff should be granted leave to amend the complaint to state a claim under section 1692f(6) of the FDCPA regarding nonjudicial foreclosure activity.
Whether the plaintiff should be granted leave to amend the complaint to state a claim under the California Unfair Competition Law.
Disposition. reversed and remanded
Quotations verified verbatim against the opinion
“We conclude the complaint stated a claim under section 1692f(1) of the FDCPA and can be amended to state a claim under section 1692f(6).”
“overcharging Randall to reinstate his loan and charging default fees and costs for a loan that is not in default are attempts to collect money and, consequently, are actionable under section 1692f(1).”
“we conclude the complaint can also be amended to state a claim under the UCL and the court should permit Randall an opportunity to do so.”