Filed 5/24/18
                            CERTIFIED FOR PUBLICATION

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                      DIVISION ONE

                                   STATE OF CALIFORNIA



D.C. RANDALL, JR.,                                D072142

        Plaintiff and Appellant,

        v.                                        (Super. Ct. No. 37-2016-00014205-
                                                  CU-OR-CTL)
DITECH FINANCIAL, LLC,

        Defendant and Respondent.


        APPEAL from a judgment of the Superior Court of San Diego County, Joel M.

Pressman, Judge. Reversed and remanded with directions.



        Legal Aid Society of San Diego, Inc., Alysson Snow and Kathleen Box for

Plaintiff and Appellant.

        Locke Lord and Regina J. McClendon for Defendant and Respondent.

                                             I

                                     INTRODUCTION

        D.C. Randall, Jr., appeals from a judgment dismissing his operative second

amended complaint (complaint) against Ditech Financial, LLC (Ditech) after the trial

court sustained Ditech's demurrer to the complaint without leave to amend. Randall
contends the court erred in its ruling as to his causes of action for violation of the federal

Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. § 1692 et seq.)1 and for violation

of the state unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.) because

these causes of action stated or can be amended to state viable claims.

       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). Consequently, the complaint

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
