Cynthia Covington v. Aryming Asset Management, LLC; Madison Management Services, LLC; PHH Mortgage Corporation; Veripro Solutions, Inc.; Nationstar Mortgage, LLC; ARY LS 4 LLC; and Does 1–50

Summary

The United States District Court for the Eastern District of California granted PHH Mortgage Corporation’s motion to dismiss claims arising from a defaulted residential mortgage. The court held that the plaintiff had not adequately pleaded successor liability, breach of the implied covenant of good faith and fair dealing, a violation of 12 C.F.R. § 1026.41, or a California Unfair Competition Law claim against PHH. The dismissal was without prejudice, and the plaintiff was granted 14 days to amend.

Holdings

1. Plaintiff failed to state a claim that PHH was liable for the actions or obligations of its predecessors because she alleged only that PHH was a successor by merger and did not plead facts showing that PHH acquired all of Ocwen's assets without consideration available to creditors or that the consideration consisted wholly of PHH stock distributed in connection with Ocwen's liquidation.
2. Plaintiff failed to state a claim against PHH for breach of the implied covenant because she did not adequately plead successor liability, a contractual relationship with PHH, or that PHH withheld a benefit due under the loan contract.
3. Plaintiff failed to state a claim against PHH under 12 C.F.R. § 1026.41 because she did not allege that PHH owned or serviced the mortgage loan or otherwise qualified as an entity required to provide periodic statements.
4. Plaintiff failed to state a UCL claim against PHH because she lumped all defendants together and did not identify a specific unlawful, unfair, or fraudulent practice by PHH.

Questions Presented

1. Whether plaintiff adequately pleaded that PHH was liable as a successor by merger for the obligations or conduct of Argent and Ocwen.
2. Whether plaintiff stated a claim against PHH for breach of the implied covenant of good faith and fair dealing.
3. Whether plaintiff stated a claim under 12 C.F.R. § 1026.41 based on PHH's alleged failure to provide periodic mortgage statements.
4. Whether plaintiff adequately pleaded a California Unfair Competition Law claim against PHH.

Disposition

other