Wieser v. Mr. Cooper Group, Inc.

8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA

11 RUTH WIESER, No. 2:24-cv-01910-DJC-CSK 12 Plaintiff, 13 v. ORDER 14 MR. COOPER GROUP, INC., et al., 15 Defendants.

18 Plaintiff alleges Defendants mismanaged her and her late husband’s loan 19 modification and forbearance applications for their home mortgage, including by 20 failing to include her husband’s partnership income in the loan modification 21 paperwork. Plaintiff alleges that, as a result of Defendants’ mismanagement, Plaintiff 22 and her husband were denied any form of financial relief on their loan, causing Plaintiff and her husband extreme financial, emotional, and physical stress, and contributing to the death of Plaintiff’s husband.

25 Defendants move to dismiss Plaintiff’s claims arguing that most of the claims are time-barred and that all the claims are insufficiently pled. Having considered the Parties’ briefings and arguments, the Court agrees with Defendants, and will dismiss Plaintiff’s claims with leave to amend.

1 BACKGROUND 2 Plaintiff Ruth Wieser alleges that, in 2020, she and her late husband Fred Wieser (“Wiesers”) experienced unforeseen financial challenges. (Compl. (ECF No. 1- 1) ¶ 9.) In March 2020, Defendants Mr. Cooper Group, Inc. (“Mr. Cooper”) and Joey Khalil, a loan specialist with Mr. Cooper, reached out to the Wiesers promising assistance with navigating their financial challenges, particularly their mortgage payments. (Id. ¶ 58.) Defendants assured the Wiesers they would assist them with applying for a loan modification and obtaining a forbearance agreement to alleviate their financial strain. (Id.) Plaintiff alleges that, despite these assurances, the 10 application for the loan modification, submitted on April 5, 2020, was met with delays 11 and an eventual denial on July 20, 2020, “without a clear explanation or recourse.” (Id. 12 ¶ 59.) In addition, Plaintiff alleges the forbearance agreement was mishandled 13 leading to an erroneous report of delinquency to credit agencies in June 2020. (Id.) 14 In June or July 2021, the Wiesers reached out to Defendants for assistance with 15 an upcoming balloon payment on their mortgage in September 2021. (Id. ¶¶ 10–11.)

16 The Wiesers sought to “refinance and secure a loan modification as proactive 17 measures against the impending financial strain.” (Id. ¶ 12.) In September 2021, 18 Defendants told the Wiesers they did not qualify for any loan assistance. (Id. ¶ 14.)

19 Defendants advised the Wiesers to either refinance or settle the entire debt. (Id.) 20 Plaintiff alleges the Wiesers were denied assistance because Defendants 21 negligently omitted Fred Wieser’s $30,000 partnership income from the loan 22 modification application. (Id. ¶¶ 15–17.) Plaintiff alleges that, when the Wiesers asked 23 Defendants to correct this oversight, they were met with reluctance and a 24 “disconcerting lack of commitment to resolving the Wiesers’ financial dilemma.” (Id. 25 ¶¶ 18–19.) Plaintiff further alleges that delays and miscommunications with 26 Defendants “precipitated an unwarranted decline in the Wiesers’ credit scores, 27 effectively barring them from securing loans or other financial relief.” (Id. ¶¶ 20–26.)

28 Ultimately, “Mr. Cooper’s representatives informed [the Wiesers] that refinancing or further modifications were not options . . . .” (Id. ¶ 26.) The Wiesers’ attempts to settle the debt for less than the amount owed also failed. (Id. ¶ 27.)

3 Plaintiff alleges the stress of the mortgage payments, other financial burdens, and the Wiesers’ “negative interactions with Mr. Cooper’s team” contributed to the Wiesers’ deteriorating mental and physical health, as well as Fred Wieser’s death on September 8, 2022, from Hypertensive Cardiovascular Disease. (Id. ¶¶ 24, 28–32.)

7 Plaintiff alleges the death of her husband was shocking and unexpected because he had been in relatively good health and had no known heart problems. (Id. ¶ 34.)

9 Plaintiff filed this action on February 16, 2024, in state court, alleging seven 10 causes of action for (1) negligence, (2) negligent infliction of emotional distress, 11 (3) negligent misrepresentation, (4) intentional infliction of emotional distress, 12 (5) breach of contract, (6) breach of the implied duty of good faith and fair dealing, 13 and (7) wrongful death. (Id. ¶¶ 36–88.) Defendants removed the action to federal 14 court on July 11, 2024, on the basis of diversity jurisdiction, and filed the pending 15 Motion to Dismiss on July 30, 2024. (Notice Removal (ECF No. 1); Mot. Dismiss (ECF 16 No. 4).) Plaintiff failed to timely oppose dismissal, but subsequently sought the 17 Court’s leave to file a belated Opposition, which the Court granted. (Opp’n Mot.

18 Dismiss (ECF No. 8); ECF No. 10.) The Motion to Dismiss was submitted without oral 19 argument on December 17, 2024, pursuant to Eastern District of California Local Rule 20 230(g). (ECF No. 13.)

21 LEGAL STANDARD 22 A party may move to dismiss a complaint for “failure to state a claim upon which 23 relief can be granted.” Fed. R. Civ. P. 12(b)(6). The court assumes all factual 24 allegations are true and construes “them in the light most favorable to the nonmoving 25 party.” Steinle v. City & County of San Francisco, 919 F.3d 1154, 1160 (9th Cir. 2019).

26 A complaint need contain only a “short and plain statement of the claim showing that 27 the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), not “detailed factual 28 allegations,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). That said, this rule demands more than unadorned accusations; “sufficient factual matter” must make the claim at least plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In the same vein, conclusory or formulaic recitations of elements do not alone suffice. Id. If the complaint's allegations do not “plausibly give rise to an entitlement to relief,” the motion must be granted. Id. at 679.

6 In granting a motion to dismiss, a court must also decide whether to grant leave to amend. Leave to amend should be freely given where there is no “undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment 10 . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Cap., LLC v. Aspeon, Inc., 11 316 F.3d 1048, 1052 (9th Cir. 2003). Dismissal without leave to amend is proper only 12 if “the complaint could not be saved by any amendment.” Intri-Plex Techs., Inc. v. 13 Crest Grp., Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (quoting Sparling v. Daou (In re 14 Daou Sys., Inc.), 411 F.3d 1006, 1013 (9th Cir. 2005)).

15 DISCUSSION 16 I. Plaintiff’s First Through Sixth Claims are Time-Barred 17 Defendants argue Plaintiff’s claims for negligence, negligent infliction of 18 emotional distress, negligent misrepresentation, intentional infliction of emotional 19 distress, breach of contract, and breach of the implied covenant of good faith and fair 20 dealing are barred by a two-year statute of limitations. (Mot. Dismiss at 4–5.) Plaintiff 21 fails to address this argument in her Opposition. (See Opp’n Mot. Dismiss at 5–8.)

22 The Court will dismiss these claims. In diversity actions such as this one, state 23 law provides the applicable statute of limitations for state-law claims. Mendez v. 24 Ishikawajima-Harima Heavy Indus. Co., 52 F.3d 799, 800 (9th Cir. 1995). Plaintiff 25 brings claims for negligence, negligent infliction of emotional distress, and intentional 26 infliction of emotional distress premised on Defendants alleged mishandling of the 27 Wiesers’ loan modification and forbearance applications. (Compl. ¶¶ 36–54, 62–66.)

28 In California, negligence claims, whether for “ordinary negligence” or “professional negligence,” are subject to a two-year statute of limitations. See Cal. Code Civ. P. § 335.1; id. § 339(1); Pouzbaris v. Prime Healthcare Servs.-Anaheim, LLP, 236 Cal. App. 3 4th 116, 121 (2015) (“ordinary negligence” claims are “governed by the two-year limitations period under section 335.1”); Thomson v. Canyon, 198 Cal. App. 4th 594, 606 (2011) (“A cause of action for professional negligence is generally governed by the two-year statute of limitations under” section 339(1)). The statute of limitations for negligent and intentional infliction of emotional distress claims is also two years. See Miller v. Bank of Am., Nat. Ass’n, 858 F. Supp. 2d 1118, 1127 (S.D. Cal. 2012) (two-year statute of limitations for negligent and intentional infliction of emotional distress).

10 Plaintiff alleges the Wiesers submitted applications for loan assistance in April 2020 11 and June or July 2021, and were denied assistance in July 2020 and September 2021 12 as a result of Defendants’ actions. (Compl. ¶¶ 10, 14–15, 58–59.) Thus, Defendants 13 argue Plaintiff’s claims accrued in September 2021, and Plaintiff should have brought 14 her claims by September 2023. (Mot. Dismiss at 4–5.)

15 Plaintiff also brings a negligent misrepresentation claim based on Defendants’ 16 promise to the Wiesers in March 2020 to assist with their application for a loan 17 modification and a forbearance agreement. (Compl. ¶ 58.) A cause of action for 18 negligent misrepresentation is subject to two-year statute of limitations where the 19 allegations amount to a claim of professional negligence, as they do here. See Code 20 Civ. P. § 339; R Power Biofuels, LLC v. Chemex LLC, No. 16-CV-00716-LHK, 2016 WL 21 6663002, at *12 (N.D. Cal. Nov. 11, 2016) (explaining that where the essence of the 22 negligent misrepresentation cause of action is negligence, not fraud, a two-year 23 statute of limitations applies). Plaintiff alleges that the loan modification application 24 was denied on July 20, 2020. (Compl. ¶ 59.) In addition, the Wiesers later 25 approached Defendants for assistance with another loan modification application in 26 June or July 2021 which was denied in September 2021. (Id. ¶¶ 10, 14.) Accordingly, 27 Defendants argue Plaintiff’s claim accrued no later than September 2021 and should 28 have been brought by September 2023. (Mot. Dismiss at 5.)

1 Finally, Plaintiff brings breach of contract and breach of the implied covenant of good faith and fair dealing claims premised on an alleged oral agreement between the Wiesers and Defendants in June or July 2021 that they would help them navigate their mortgage balloon payment due in September 2021. (Compl. ¶¶ 69, 76.) The statute of limitations in California for “[a]n action upon a contract, obligation or liability not founded upon an instrument of writing” is two years from the date of accrual.

7 Code Civ. P. § 339(1); see also Moss v. Infinity Ins., 197 F. Supp. 3d 1191, 1196 (N.D. 8 Cal. 2016) (statute of limitations for breach of an oral contract in California is two years); Vahora v. Masood, No. 1:16-cv-1624-LJO-SKO, 2017 WL 1213423, at *13 (E.D.

10 Cal. Apr. 3, 2017) (statute of limitations for breach of the implied covenant of good 11 faith and fair dealing claim based on oral contract is two years). Defendants argue 12 these claims accrued in September 2021, the date the Wiesers were advised that no 13 loan modification assistance was available. (Mot. Dismiss at 5.) Thus, the claims 14 should have been brought by September 2023.

15 Plaintiff filed this action in February 2024, well past the statute of limitations for 16 the above claims. Plaintiff does not dispute the applicable statute of limitations nor 17 the accrual date for any of the claims. (See Opp’n Mot. Dismiss at 5–8.) Thus, the 18 Court holds Plaintiff’s claims are time-barred and will be dismissed. However, as this is 19 the Court’s first dismissal of Plaintiff’s claims, the Court will dismiss these claims with 20 leave to amend.

21 II. Plaintiff Fails to Adequately Plead her Seventh Claim 22 Defendants argue that Plaintiff’s remaining claim for wrongful death should be 23 dismissed as Plaintiff has failed to plead any negligence by Defendants. (Mot. Dismiss 24 at 15–16.) Defendants also argue Plaintiff has failed to show their conduct was the 25 proximate cause of Fred Wieser’s death. (Id. at 16.) Plaintiff argues her claim is 26 adequately pled. (Opp’n Mot. Dismiss at 7.)

27 The Court will dismiss this remaining claim. To allege wrongful death in 28 California, the plaintiff must plead “(1) a ‘wrongful act or neglect’ on the part of one or more persons that (2) ‘cause[s]’ (3) the ‘death of [another] person.’” Norgart v. Upjohn Co., 21 Cal. 4th 383, 390 (1999) (quoting Cal. Code Civ. P. § 377.60). In a wrongful death action, “it must, of course, be established that the proximate cause of the death was the negligence or other wrongful act of the defendant.” Salin v. Pac. Gas & Elec. Co., 136 Cal. App. 3d 185, 190 (1982). A defendant’s conduct is a “proximate cause” of a plaintiff’s injury if “it was not just any cause, but one with a sufficient connection to the result.” Paroline v. United States, 572 U.S. 434, 444 (2014). In other words, the wrongful act or neglect “must be a substantial factor in bringing about the death.”

9 Bromme v. Pavitt, 5 Cal. App. 4th 1487, 1497 (1992). “Proximate cause is often 10 explicated in terms of foreseeability,” such that the proximate cause requirement 11 “preclude[s] liability in situations where the causal link between conduct and result is 12 so attenuated that the consequence is more aptly described as mere fortuity.”

13 Paroline, 572 U.S. at 445.

14 The wrongful death claim fails because Plaintiff fails to plausibly plead 15 Defendants’ conduct was the proximate cause of Fred Wieser’s death. Plaintiff alleges 16 that the Wiesers were denied financial assistance with their balloon payment in 17 September 2021. (Compl. ¶ 14.) Plaintiff alleges that, during that time, Fred Wieser’s 18 health “significantly deteriorated under the constant stress from the financial disputes 19 with Mr. Cooper” and that this stress contributed to Fred Wieser’s death on 20 September 8, 2022, from Hypertensive Cardiovascular Disease. (Id. ¶¶ 29, 32, 49–52, 21 85.) Plaintiff alleges that Fred Wieser’s death was “shocking” because he had been in 22 relatively good health and had no known heart problems. (Id. ¶¶ 30, 34.) As Plaintiff 23 alleges, “[t]he diagnosis of Hypertensive Cardiovascular Disease as the cause of Fred’s 24 sudden death, starkly contrasts with his previously noted physical resilience, 25 suggesting a lethal acceleration of disease progression directly linked to emotional 26 strain.” (Id. ¶ 50.)

27 These allegations do not plausibly establish a causal link between Defendants’ 28 actions and Fred Wieser’s death. While Plaintiff alleges Defendants’ “cumulative actions directly contributed to Mr. Wieser’s untimely death,” (id. ¶ 85), these allegations are conclusory at best and fail to explain how Fred Wieser’s death a year later was a foreseeable consequence of Defendants’ mishandling of the loan modification and forbearance applications. Courts have rejected similar claims at the pleadings stage on this basis. For example, in Burke v. Aurora Loan Services, No. SACV 11-00006-JVS (RNBx), 2014 WL 12586240 (C.D. Cal. Apr. 16, 2014), the court considered plaintiff’s allegations that a loan servicer’s delay in modifying her loan was a substantial factor in causing or aggravating her partner’s cancer, leading to his death. Id. at *1. The court dismissed plaintiff’s wrongful death claim, noting “Plaintiffs 10 have identified no case, and the Court can find none, permitting a wrongful death 11 claim rooted in a loan servicer’s delayed and inappropriate processing of a loan 12 modification to move past the pleading stage.” Id. at *4. The court reasoned that to 13 allow a claim “that a loan servicer can be liable for causing or aggravating a 14 nonborrower's cancer due to its handling of a modification” would “ignore the central 15 lesson of Twombly.” Id. Thus, the court held that such an “implausible claim for relief” 16 “must be dismissed at the pleading stage.” Id. 17 Similarly, in Noble v. Wells Fargo Bank, N.A., No. 1:14-cv-01963-TLN-GSA, 2015 18 WL 5687675 (E.D. Cal. Sept. 25, 2015), the court dismissed plaintiff’s claim that the 19 “lockout and stress” of her and her mother’s eviction from their home caused her 20 mother’s death five months later, deeming it “too attenuated to conclude that being 21 evicted five months previous was the cause of death.” Id. at *6. The court reasoned 22 there were “insufficient facts to suggest that Defendant could have foreseen that the 23 act of eviction had a high degree of risk of death or great bodily harm.” Id. These 24 cases compel a similar conclusion here: Plaintiff’s claim that Defendants’ 25 mismanagement of their loan applications caused her husband’s death is too 26 attenuated and must be dismissed.

27 Therefore, Plaintiff’s claim for wrongful death will be dismissed with leave to 28 amend.

1 CONCLUSION 2 In accordance with the above, it is hereby ORDERED that Defendants’ Motion | to Dismiss (ECF No. 4) is GRANTED. Plaintiff's first through seventh causes of action | are dismissed with leave to amend. Plaintiff is granted leave to file an amended || complaint within thirty (30) days. j IT 1S SO ORDERED.

8 | Dated: _January 17, 2025 “Daal A Hon. Daniel alabretta ? UNITED STATES DISTRICT JUDGE | DJc4 - Wieser24ev1910.MTD