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Kerr v. Ocwen Loan Servicing LLC

United States District Court, D. Idaho

June 28, 2018




         I. OVERVIEW

         Pending before the Court is a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) that Defendants Ocwen Loan Servicing LLC (“Ocwen”) and Perkins Coie LLP (“Perkins Coie”) filed jointly on April 25, 2018. Dkt. 3. Having reviewed the record and briefs, the Court finds that the parties have adequately presented the facts and legal arguments. Accordingly, in the interest of avoiding further delay, and because the Court finds that the decisional process would not be significantly aided by oral argument, the Court will decide the motion without a hearing. Dist. Idaho Loc. Civ. R. 7.1(d)(2)(ii). For the reasons outlined below, the Court GRANTS the Motion to Dismiss, but gives Plaintiffs Terry Kerr and Dennis Kerr (“the Kerrs”) leave to file an Amended Complaint.


         In their Motion to Dismiss, Ocwen and Perkins Coie give the following background information:[1]

In June 2006, the Kerrs obtained a cash-out refinance loan for $210, 900. In August 2008, the Kerrs defaulted on their loan obligation. American Home Mortgage Servicing, Inc., which later became known as Homeward Residential, Inc. (“Homeward”), owned the loan and began non-judicial foreclosure proceedings in October 2009. Before the foreclosure was finalized, the Kerrs entered into a Loan Modification Agreement, effective as of June 1, 2010. Under that agreement, the Kerrs' first payment was due July 1, 2010. The Kerrs failed to make the first payment and have made no subsequent payments. Accordingly, foreclosure proceedings were initiated once again.
In response to the foreclosure proceeding, Mr. Kerr filed a complaint against Homeward in Idaho state court, which Homeward then removed to the U.S. District Court for the District of Idaho. In his Complaint, Mr. Kerr alleged that Homeward (then American Home Mortgage Servicing, Inc.) (1) altered the Loan Modification Agreement without the Kerrs' consent; (2) criminally conspired with unidentified parties in a manner that “amounted to civil racketeering” and violated the Service Members Civil Relief Act; (3) acted in bad faith and violated the implied covenant of good faith and fair dealing; (4) acted with racial animus; and (5) intentionally inflicted emotional distress. On September 26, 2012, the Kerrs' Complaint was dismissed with prejudice.
During the course of that proceeding, Mr. Kerr filed a Notice of Bad Faith and Misconduct and a Motion for Restraining Order against Perkins Coie attorney Cynthia Yee-Wallace. The court granted defendants' Motion to Strike and Motion for Sanctions, concluding that “Plaintiff's Notice and Motion for Restraining Order are patently frivolous and are without a legal or factual basis.”
In an opinion dated February 23, 2018, the Ninth Circuit affirmed the district court's order dismissing the First Action, with prejudice. Less than two months later, the Kerrs filed the instant action in which they raise the same allegations against Ocwen, which acquired Homeward and which is the current servicer of the subject note, as well as Perkins Coie LLP, the attorneys of record for Homeward in the First Action.

Dkt. 3-1, at 2-4 (internal citations and footnotes omitted).

         This “First Action” is No. 4:11-cv-00134-EJL-LMB in this District. The Court takes judicial notice of the filings in the First Action, as those documents are matters of public record or otherwise “not subject to reasonable dispute.” Fed. R. Evid 201(b); Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (taking judicial notice of briefs and other filings in related case and the appeal of that case).

         In their Complaint in this case, Dkt. 1, the Kerrs do not recite the background as laid out by Ocwen and Perkins Coie. However, in their Response to the Motion to Dismiss, Dkt. 14, the Kerrs do not deny these background facts either. The Kerrs do deny receiving notice from the Ninth Circuit that it had affirmed this Court's dismissal of the First Action. Id.

         Shortly after the Kerrs filed their Complaint, Ocwen and Perkins Coie filed the pending Motion to Dismiss. Dkt. 3. That Motion is now fully briefed and ripe for decision.

         III. ...

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