                                                                             FILED
                            NOT FOR PUBLICATION
                                                                             FEB 15 2017
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS


                            FOR THE NINTH CIRCUIT


MARY LOU VEGA; et al.,                            No.    15-55885

              Plaintiffs-Appellants,              D.C. No.
                                                  2:14-cv-04408-ODW-PLA
 v.

OCWEN FINANCIAL CORPORATION,                      MEMORANDUM*
a Florida corporation; and OCWEN
LOAN SERVICING, LLC,

              Defendants-Appellees.


                    Appeal from the United States District Court
                        for the Central District of California
                    Otis D. Wright, II, District Judge, Presiding

                      Argued and Submitted February 7, 2017
                               Pasadena, California

Before: GRABER, BYBEE, and CHRISTEN, Circuit Judges.

      Plaintiffs Mary Lou Vega, Tara Inden, and Regina Saffold-Sanders appeal

the dismissal for failure to state a claim of their putative class action alleging RICO

violations, RICO conspiracy, fraud, violations of California’s Unfair Competition

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Law, violations of California’s Rosenthal Fair Debt Collection Practices Act, and

unjust enrichment. We have jurisdiction under 28 U.S.C. § 1291. Reviewing de

novo, and viewing the complaint in the light most favorable to the nonmoving

party, Odom v. Microsoft Corp., 486 F.3d 541, 545 (9th Cir. 2007) (en banc), we

affirm.

      1. In the event of default, the plaintiffs’ mortgage contracts authorize their

lenders to charge the plaintiffs for property inspections that are “reasonable or

appropriate” to protect the lenders’ interest in the properties. Plaintiffs allege that

the defendants conspired with Altisource to order, conduct, and fraudulently assess

their mortgage accounts for unreasonable property inspections, conducted for the

purpose of maximizing profits and not to protect the lenders’ interest in the

properties. The district court ruled that whether the property inspections and

associated fees were “reasonable or appropriate” to protect the lenders’ interest is

“a breach of contract claim and nothing more.” The court emphasized that it would

“not allow Plaintiffs to spin a breach of contact action into a fraud case.” We do

not agree with the district court’s conclusion that the plaintiffs could bring only a

breach-of-contract claim, but we do affirm the district court’s dismissal of

plaintiffs’ First Amended Complaint because they failed to adequately plead a

fraudulent scheme, as required by Federal Rule of Civil Procedure 9(b).


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      2. Rule 9(b)’s requirement that fraud must be pleaded with particularity

applies to the plaintiffs’ federal RICO claims and their state-law claims because all

of them allege fraudulent conduct. Kearns v. Ford Motor Co., 567 F.3d 1120,

1125 (9th Cir. 2009); Edwards v. Marin Park, Inc., 356 F.3d 1058, 1065–66 (9th

Cir. 2004). Plaintiffs contend that the property inspections were not conducted for

the purpose of protecting the lenders’ interest because (1) the defendants

automatically ordered property inspections on a monthly basis once borrowers fell

into default, without determining whether individual inspections were “reasonable

or appropriate”; (2) the defendants did not have a policy or procedure in place to

review the resulting property-inspection reports; and (3) the inspections were not

always conducted at thirty-day intervals. These allegations are insufficient to

support an inference that the inspections were not conducted to protect the lenders’

interest in the subject properties.

      The misrepresentation alleged here differs from those that district

courts have allowed to survive motions to dismiss in similar cases. See, e.g., Bias

v. Wells Fargo & Co., 942 F. Supp. 2d 915, 938–39 (N.D. Cal. 2013) (ruling

plaintiffs adequately pleaded fraud where defendants allegedly labeled default-

related fees “other charges” to disguise their true nature; omitted the fact that the

fees included undisclosed markups; and dissuaded plaintiffs from challenging the


                                           3
charges by telling them that they were in accordance with their mortgages). The

plaintiffs here did not allege that the defendants marked up the actual cost of the

property-inspection fees or dissuaded them from challenging the fees. Nor did the

plaintiffs allege that the property-inspection fees were mislabeled; that any of their

payments were misapplied to generate additional late fees; or that they were

charged for multiple inspections on the same day. Vega alleged that she was

charged for inspections on back-to-back days in January 2013, but she stated only

that this happened once, and she was still charged for only twelve property

inspections over the course of one year. On these alleged facts, we affirm the

dismissal of plaintiffs’ fraud-based claims.

      AFFIRMED.




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