Ellis v. PennyMac Loan Services LLC

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Darrell Beauford Ellis,
Plaintiff,
v.
PennyMac Loan Services LLC,
Defendant.
No. CV-25-00493-TUC-JCH (JR)
REPORT & RECOMMENDATION
Pending before the Court is Defendant PennyMac Loan Services LLC’s
(“Defendant” or “PennyMac”) Motion to Dismiss Plaintiff Darrell Beuford Ellis’s First
Amended Complaint. (Doc. 32.) The Motion is fully briefed. (See Docs. 34, 37.) This
matter has been referred to the undersigned for Report and Recommendation. (Doc. 18.)
As set forth below, the Magistrate Judge recommends the district court grant Defendant
PennyMac’s Motion and dismiss the Plaintiff’s Complaint with leave to amend as further
explained herein.
I. Legal Standard
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007))
(internal quotation marks omitted). Dismissal is only appropriate if the complaint's factual
allegations, together with all reasonable inferences drawn in the plaintiff's favor, fail to
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state a plausible claim for relief. Id. at 678; see also Erickson v. Pardus, 551 U.S. 89, 94
(2007) (allegations in the complaint must be construed in the light most favorable to the
plaintiff). While a complaint need not plead “detailed factual allegations,” the factual
allegations it does include “must be enough to raise a right to relief above the speculative
level.” Twombly, 550 U.S. at 545. The plausibility standard does not amount to a
probability requirement, however, it demands “more than a sheer possibility that a
defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. A mere formulaic recitation of the
elements of a cause of action is not sufficient to establish a claim, and legal conclusions
are not entitled to an assumption of truth. Id. at 679.
II. Background
Plaintiff alleges that he obtained a VA-guaranteed loan for his home. (Doc. 31 at 2.)
After Plaintiff lost his job, he entered a COVID-related forbearance, and PennyMac
provided extensions through May 31, 2022. (Id.) On October 5, 2023, PennyMac issued a
Notice of Default and Intent to Accelerate stating that Plaintiff’s loan was due on May 1,
2023, and requested subsequent payments. (Id.) In the notice, PennyMac demanded
immediate payment, added fees, and threatened acceleration and foreclosure. (Id.) In the
communications sent to Plaintiff, PennyMac included FDCPA warnings which state “This
is an attempt by a debt collector to collect a debt and any information obtained will be used
for that purpose.” (Docs. 31 at 3; 31-1 at 10, 24, 26, 28, 33, 41, 44, 49, 51, 59.)
On May 16, 2025, Plaintiff sent PennyMac a Qualified Written Request (“QWR”)
and Notice of Error requesting loan servicing records, payment history, identity of the loan
owner, clarification of delinquency amounts, and documentation supporting the claimed
default. (Docs. 31 at 3; 31-1 at 1, 35-38.) PennyMac sent a letter dated May 27, 2025,
confirming receipt of Plaintiff’s May 16th letter. (Doc. 31-1 at 40-41.) PennyMac
responded to Plaintiff’s request in a May 30, 2025 letter stating “Pennymac previously
responded to similar concerns from you through our letters dated between December 28,
2023 and May 5, 2025 (copies enclosed),1 and our position regarding this matter remains
1 Plaintiff did not include PennyMac’s referenced enclosures in his exhibits. (See Doc. 31-
1.)
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unchanged.” (Doc. 31-1 at 42.) The letter continues:
Your correspondence is overly broad and lacks specificity.
Therefore, I have gathered the following information for your
review; however, if you requested any documents or
information that we have not included, Pennymac has
determined your request to be unduly burdensome, irrelevant
to the servicing of the loan, or the information you requested is
considered proprietary.
Our records further indicate that the loan was referred to
foreclosure on November 29, 2023. Pennymac processes all
foreclosures in accordance with state and federal law, and the
terms of your signed loan agreement. Your claim that the
foreclosure was initiated unlawfully is without merit. Since our
last response, I confirmed that you completed a loan
modification on May 9, 2025, bringing the loan current. You
were not required to sign for or accept the modification offer;
however, under section 22 of your signed Deed of Trust (copy
enclosed),2 if the delinquency persisted and you did not
reinstate or pay the loan in full, or seek foreclosure alternatives,
Pennymac was permitted to pursue all remedies to protect our
interest in the property, up to an including foreclosure. Your
allegation that you were forced to accept the loan modification
under duress is unfounded and without merit. As of the date of
this letter, the loan is due for the July 2025 payment. The
unpaid principal balance is $306,350.20.
Please find the enclosed copies: Note, Ded of Trust, Welcome
Letter, Assignment of Deed of Trust, Notifications of
Assignment, Sale or Transfer of Your Mortgage Loan (“404
Notices”), Mortgage Electronic Registration System
(“MERS”) Milestone Report, and a Customer Account
Activity Statement reflecting activity that has occurred since
Pennymac began servicing the loan.3
(Doc. 31-1 at 42.) Plaintiff sent additional dispute letters on June 3, 12, and 16, 2025, as
well as a “Notice of Noncompliance” on June 23, 2025. (Doc. 31 at 3.)
III. Analysis
On February 11, 2026, Plaintiff filed the First Amended Complaint (“FAC”)
alleging PennyMac failed to comply with the Real Estate Settlement Procedures Act
(“RESPA”), 12 U.S.C. § 2601 et seq., and the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692 et seq. (Doc. 31.) In the FAC, Plaintiff asserts three claims
for relief. First, Plaintiff asserts that PennyMac’s response to his QWR violated RESPA.
2 Plaintiff did not include the referenced deed of trust in his exhibits. (See Doc. 31-1.)
3 Plaintiff did not include any of the reference materials in his exhibits. (See Doc. 31-1.)
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(Doc. 31 at 4.) Plaintiff alleges that because of these failures he “suffered actual damages,
including time lost, postage, credit inaccuracy, emotional distress, and increased
foreclosure risk.” (Id.)
Next, Plaintiff asserts that PennyMac acted as a debt collector under the FDCPA
during his loan servicing. (Id.) Plaintiff argues that PennyMac is therefore liable for
violations of the FDCPA including misrepresenting the character or amount of the debt,
use of deceptive means to collect, unfair or unconscionable collection conduct, and failing
to validate the debt after dispute. (Id.)
Finally, Plaintiff asserts a claim for declaratory relief asserting that “[a] real dispute
exists regarding the identity of the true creditor and PennyMac’s authority.” (Id. at 5.)
Plaintiff seeks a declaration from the Court declaring the legal owner of his mortgage,
PennyMac’s servicing and collection authority, and “[w]hether the amounts claimed are
lawful and accurate.” (Id.)
A. Plaintiff’s FAC is non-conforming
On November 19, 2025, Plaintiff filed a Motion for Leave to File First Amended
Complaint. (Doc. 27.) Pursuant to Local Rule 15.1(a), Plaintiff, when moving for leave to
file an amended complaint “must attach a copy of the proposed amended pleading as an
exhibit to the motion, which must indicate in what respect it differs from the pleading which
it amends, by bracketing or striking through the text to be deleted and underlining the text
to be added.” LRCiv. 15.1(a). Attached to Plaintiff’s motion was a redlined version of the
Complaint in compliance with Local Rule 15.1(a). (See Doc. 27-2.) On February 5, 2026,
the Court granted Plaintiff’s Motion. (Doc. 30.) On February 11, 2026, Plaintiff filed his
FAC. (Doc. 31.) Upon review of the FAC, the document does not conform with the redlined
version Plaintiff attached to his Motion to Amend. (Compare id, with Doc. 27-2.)
Defendant now requests the Court strike Plaintiff’s FAC as nonconforming, arguing
that the amendment exceeds the scope of the Court’s Order. (Docs. 32 at 5; 37 at 2.)
Defendant’s argument relies on case law where courts struck amended complaints which
added new additional claims outside the scope of the orders granting those plaintiffs leave
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to amend. See Sifuentes v. Google, Inc., 2023 WL 4181267 (N.D. Cal. June 26, 2023)
(striking unrelated claims added to amended pleading beyond scope of Court order); Marin
v. Marshall, 2025 WL 1082745 (S.D. Cal. April 10, 2025) (striking conversion claim Court
previously dismissed without leave to amend).
Here, while Plaintiff did not file a conformed version, the FAC that was filed does
not add any new or additional claims. Because a subsequent motion to file the current FAC
would be granted, and striking Plaintiff’s FAC but allowing him to refile the same would
be a waste of judicial resources, the Court in its discretion will deny Defendant’s request.
However, the Court warns Plaintiff that continued failure to follow court orders will
ultimately result in the dismissal of the case. Ferdik v. Bonzelet, 963 F.2d 1258, 1260 (9th
Cir. 1992).
B. Count I fails to state a claim for relief under RESPA
Rule 8 requires every complaint to contain “a short and plain statement of the claim
showing that the pleader is entitled to relief” and “a demand for the relief sought.” Fed. R.
Civ. P. 8(a)(2), (3). While Rule 8 does not require detailed factual allegations, “it demands
more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556
U.S. at 678. “Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id.
Plaintiff alleges that PennyMac failed to acknowledge the QWR, conduct a
reasonable investigation, provide servicing records, identify the owner of the loan, correct
servicing errors, and provide a complete and timely response in violation of 12 U.S.C. §§
2605(e)(1)(A), 2605(e)(2), and 2605(k). (Doc. 31 at 4.) Further, Plaintiff alleges that his
QWR requested loan servicing records, payment history, identity of the loan owner,
clarification of delinquency amounts, and documentation supporting the claimed default.
(Doc. 31 at 4.) Attached to the FAC is Plaintiff’s QWR and PennyMac’s response thereto.
(Doc. 31-1 at 35-45.) PennyMac’s response to Plaintiff’s QWR indicates that it also
enclosed (1) the MERS registration; (2) chain of title documents including the promissory
note, deed of trust, all transfers and assignments; and (3) a full servicing and payment
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history. (Doc. 31-1 at 42.)
Plaintiff has failed to provide the Court with the materials sent to him by PennyMac
or discuss with any specificity how the contents of such materials are insufficient under
either § 2605(e)(2) or (k)(1)(D). (See Docs. 31, 33.) The FAC simply concludes that
PennyMac “did not provide the required information,” “failed to provide a complete
response, failed to identify the loan owner, and failed to correct or investigate errors,”
without providing the Court with the full response from PennyMac. (Doc. 31 at 3, 4.)
Accordingly, Plaintiff’s Complaint simply fails to allege “sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at
678 (citation and internal quotation marks omitted).
However, PennyMac’s full response to the QWR and attachments thereto are
contained in the record as exhibits to a previous motion to dismiss. (See Doc. 19-2.)
Normally, if a district court considers evidence outside the pleadings when ruling on a Rule
12(b)(6) motion, it must convert that motion into a Rule 56 motion for summary judgment.
United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). However, the Court can
“consider certain materials—documents attached to the complaint, documents
incorporated by reference in the complaint, or matters of judicial notice—without
converting the motion to dismiss into a motion for summary judgment.” Id. at 908.
Incorporation by reference allows courts to consider “documents whose contents are
alleged in a complaint and whose authenticity no party questions, but which are not
attached to the [plaintiff's] pleading.” Davis v. HSBC Bank Nevada, N.A., 691 F.3d 1152,
1160 (9th Cir. 2012) (quoting Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)). Here,
the content of PennyMac’s full QWR response is alleged to by Plaintiff in the FAC, (Doc.
31 at 4), PennyMac relied on those exhibits in its immediate Motion, (Doc. 32 at 2, 3, 7-
9), and Plaintiff did not question the authenticity of such exhibits. (See Doc. 34; see also
Doc. 20 (response to prior motion to dismiss)). Accordingly, the Court will consider those
exhibits for the purpose of resolving the immediate motion to dismiss.
//
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1. 12 U.S.C. § 2605(e)(1)(A)
“Within five days of receiving a compliant request, the servicer must provide the
borrower a written acknowledgment of the information request.” Kelly v. Clear Recon
Corp., 2019 WL 6040439, at *6 (D. Alaska Nov. 14, 2019) (citing 12 U.S.C. §
2605(e)(1)(A)). Here, PennyMac received Plaintiff’s QWR on May 22, 2025 and
acknowledged its receipt within five days on May 27, 2025. (See Doc. 31-1 at 40-41.)
Accordingly, based on the attachments to the FAC, Plaintiff has alleged that PennyMac
complied with 12 U.S.C. § 2605(e)(1)(A) and therefore Plaintiff has failed to state a claim
for which relief could be granted under that statute.
2. 12 U.S.C. § 2605(e)(2)
“Within 30 days of the request, the servicer must also provide the borrower with the
requested information or notification that the servicer has determined the information is
not available.” Kelly, 2019 WL 6040439, at *6 (citing 12 U.S.C. § 2605(e)(2)). Here,
PennyMac provided Plaintiff with the requested information enclosed with a letter dated
May 30, 2025, eight days after receiving the QWR. (Doc. 31-1 at 42.) Therefore,
PennyMac did not violate the timing element of 12 U.S.C. § 2605(e)(2).
As discussed above, Plaintiff alleges the QWR requested loan servicing records,
payment history, identity of the loan owner, clarification of delinquency amounts, and
documentation supporting the claimed default.4 (Doc. 31 at 4.) Upon review, Plaintiff’s
QWR does not specifically include requests for the clarification of delinquency amounts
nor for documentation supporting the claimed default. (See Doc. 31 at 36-37.) Regardless,
PennyMac’s May 30, 2025 response states “Since our last response, I confirmed that you
completed a loan modification on May 9, 2025, bringing the loan current.” (Doc. 31-1 at
42.) Plaintiff does not explain how PennyMac’s response, which confirms that his loan is
current, fails to adequately address his delinquency concerns, nor how said confirmation is
deficient under 12 U.S.C. § 2605(e)(2).
4 PennyMac asserts that only Plaintiff’s request for payment history is related to loan
servicing. (Doc. 32 at 7.) As explained later, loan assignee contact information is required
to be given upon request pursuant to 12 U.S.C. § 2605(k)(1)(D).
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Enclosed with PennyMac’s response to the QWR were title documents related to
Plaintiff’s home and mortgage recorded in Pima County dating back to at least 2006. (Docs.
19-1 at 2-3; 19-2 at 23-33, 47.) Plaintiff does not explain how the documents provided by
PennyMac failed to fulfill his request for chain of title documents, confirmation of public
records compliance, the disclosure of loan ownership transfers, how such information is
deficient under 12 U.S.C. § 2605(e)(2), nor how these title documents are related to loan
servicing. 5
Also enclosed was what appears to the Court to be a full loan payment history from
June 17, 2021, the approximate date PennyMac became the loan servicer, to May 29, 2025,
the day immediately preceding PennyMac’s QWR response. (Doc. 19-2 at 48-77.) Plaintiff
does not explain how these records failed to fulfill his request for the exact same
information, nor how such information is deficient under 12 U.S.C. § 2605(e)(2).
Finally, Plaintiff’s QWR requested MERS report be provided. (Doc. 31-1 at 36.)
Enclosed with PennyMac’s response was a MERS report. (19-2 at 78-79.) Plaintiff does
not explain how the provided MERS failed to fulfill his request for the exact same
information, nor how such information is deficient under 12 U.S.C. § 2605(e)(2).
3. 12 U.S.C. § 2605(k)(1)(D)
Pursuant to 12 U.S.C. § 2605(k)(1)(D) a “servicer of a federally related mortgage
shall not fail to respond within 10 business days to a request from a borrower to provide
the identity, address, and other relevant contact information about the owner or assignee
of the loan.” (emphasis added). As stated above, PennyMac responded to Plaintiff’s QWR
within the 10 business days prescribed by statute, and so, if such response contained the
relevant information, namely the name and contact information of the loan owner or
assignee, PennyMac did not violate § 2605(k)(1)(D). Further, along with and referenced in
its response to Plaintiff’s QWR, PennyMac provided the Corporate Assignment of Deed
5 Plaintiff also requested multiple document and confirmations under Arizona state
law, but did not bring action under those laws in his FAC. (See Docs. 31, 31-1 at 36.)
Because PennyMac is not required to respond to such requests under RESPA, and Plaintiff
did not assert claims under Arizona law, PennyMac’s response to those requests is non-
determinative to Plaintiff’s RESPA claim.
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of Trust, recorded in Pima County on August 23, 2023, identifying PennyMac as the
assignee and its address. (Doc. 19-2 at 47.) Accordingly, Plaintiff is unable to state a claim
for which relief could be granted under 12 U.S.C. § 2605(k)(1)(D).
4. Damages
Defendant argues that Plaintiff has failed to allege adequate damages to sustain his
RESPA claims. (Doc. 32 at 9.) Here, Plaintiff alleges that due to PennyMac’s alleged
RESPA violations, he suffered “actual damages, including time lost, postage, credit
inaccuracy, emotional distress, and increased foreclosure risk.” (Doc. 31 at 4.)
RESPA authorized “actual damages to the borrower as a result of the failure to
comply with RESPA requirements.” Lal v. American Home Servicing, Inc., 680 F.Supp.2d
1218, 1223 (E.D. Cal. Jan. 2010) (cleaned up) (citing 12 U.S.C. § 2605(f)(1)(A)). However,
under RESPA, a borrower may not recover actual damages for nonpecuniary losses. Id.
Accordingly, Plaintiff has not sufficiently pleaded actual damages under RESPA. See Allen
v. United Fin. Mortg. Corp., 660 F. Supp. 2d 1089, 1097 (N.D. Cal. 2009) (denying RESPA
claim due to conclusory damage allegations).
Further, to recover statutory damages, Plaintiffs must plead some pattern or practice
of noncompliance with RESPA. 12 U.S.C. § 2605(f)(1)(B). Here, Plaintiff does not allege
a pattern of noncompliance on behalf of PennyMac, nor state any facts to support such
allegations, which would allow him to recover statutory damages. (See Doc. 31.)
5. Leave to Amend Count I
As the United States Court of Appeals for the Ninth Circuit has instructed, courts
must “continue to construe pro se filings liberally.” Hebbe v. Pliler, 627 F.3d 338, 342 (9th
Cir. 2010). A complaint filed by a pro se litigant “must be held to less stringent standards
than formal pleadings drafted by lawyers.” Id. (citation omitted). If the Court determines a
pleading could be cured by alleging additional facts, a pro se litigant is entitled to an
opportunity to amend a complaint before dismissal of the action. See Lopez, 203 F.3d at
1127–29; Jackson v. Barnes, 749 F.3d 755, 767 (9th Cir. 2014). However, if it is absolutely
clear that the plaintiff cannot cure the deficiencies of the complaint, the Court may dismiss
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the complaint with prejudice. Id.
Because it is not absolutely clear that Plaintiff is unable to allege additional facts
related to the deficiencies of PennyMac’s QWR response under 12 U.S.C. § 2605(e)(2)
that could state a claim,6 nor that he suffered pecuniary losses because of those violations,
the undersigned recommends the district court dismiss Plaintiff’s Count I of the FAC for
failure to state a claim with leave to amend.
C. Count II fails to state a claim for relief under FDCPA
Here, PennyMac moves to dismiss Plaintiff’s FDCPA claim in Count II, arguing:
(1) PennyMac is not a “debt collector” subject to the terms of the FDCPA; and (2) that
Plaintiff has failed to plead PennyMac violated the FDCPA. (Doc. 32 at 10-15.) Plaintiff
asserts that dismissal is not appropriate because PennyMac represented itself as a debt
collector during its communications with him. (Doc. 34 at
The FDCPA subjects “debt collectors” to civil damages for engaging in certain
abusive practices while attempting to collect debts. Ho v. ReconTrust Company, NA, 858
F.3d 568, 571 (9th Cir. 2017). The FDCPA defines “debt collector” as any person who
“regularly collects or attempts to collect, directly or indirectly, debts owed or due or
asserted to be owed or due another.” 15 U.S.C. § 1692a(6). The term explicitly does not
include “any person collecting or attempting to collect any debt owed or due or asserted to
be owed or due another to the extent such activity...concerns a debt which was not in default
at the time it was obtained by such person.” 15 U.S.C. § 1692a(6)(F). Here, there is no
dispute, and therefore Plaintiff cannot allege, that at the time PennyMac obtained Plaintiff’s
mortgage, it was not in default. Accordingly, PennyMac is not a “debt collector” and
excluded from the FDCPA pursuant to § 1692a(6)(F). See Diessner v. Mortg. Elec.
Registration Sys., 618 F.Supp.2d 1184, 1188-89 (D. Ariz. 2009) (“…mortgage servicing
companies are not debt collectors under the FDCPA when the debts were not in default
when taken for servicing.”); see also Tierney v. Carrington Mortg. Servs., 2021 WL
6 While Plaintiff may be able to articulate or allege facts additional facts to support a
cause of action under 12 U.S.C. § 2605(e)(2), the Court finds that it is clear that Plaintiff
could not allege additional facts to state a claim under 12 U.S.C. §§ 2605(e)(A)(1) nor
2605(k). See Lopez, 203 F.3d at 1127-29.
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5280022, at *6 (W.D. Wash. Nov. 12, 2021) (defining mortgage companies as “creditors”
under 15 U.S.C. 1692a(4), and not “debt collectors” under 1692a(6).)
To the extent Plaintiff alleges that PennyMac’s October 5, 2023 “Notice of Default
and Intent to Accelerate” is debt-collection conduct to be governed by the FDCPA, such
conduct does not fall within the one-year statute of limitations and thus such claim is
barred. See 15 U.S.C. § 1692k(d).
Because it is absolutely clear that Plaintiff cannot plead additional facts to state a
claim against PennyMac under the FDCPA, the undersigned recommends that the district
court dismiss Count II with prejudice. See Lopez, 203 F.3d at 1127–29; Jackson v. Barnes,
749 F.3d 755, 767 (9th Cir. 2014).
D. Count III - Declaratory Relief
Declaratory relief is not an independent cause of action, but a relief that
“presupposes the existence of a judicially remedial right.” Schilling v. Rogers, 363 U.S.
666, 677 (1960); see also City of Reno v. Netflix, Inc., 52 F.4th 874, 878 (9th Cir. 2022)
(explaining the same.) Because Plaintiff is unable to state an independent claim for
declaratory relief as matter of law, the undersigned recommends the district court dismiss
Count III with prejudice.7
RECOMMENDATION
The Magistrate Judge RECOMMENDS that the district court, after its independent
review, issue an order ADOPTING this Report and Recommendation, GRANTING the
Defendant’s Motion to Dismiss (Doc. 32) and DISMISSING Petitioner’s First Amended
Complaint (Doc. 31) with leave to amend.
Pursuant to Federal Rule of Civil Procedure 72(b)(2), any party may serve and file
written objections within fourteen days of being served with a copy of the Report and
Recommendation. A party may respond to the other party=s objections within fourteen
days. No reply shall be filed unless leave is granted by the district court. If objections are
7 This Court does not make a recommendation whether declaratory relief would be
appropriate as, for the reasons contained herein, Plaintiff’s FAC has not otherwise stated a
claim for which relief could be granted.
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not timely filed, they may be deemed waived. Failure to file timely objections to any factual
or legal determination of the Magistrate Judge may be considered a waiver of a party's right
to de novo consideration of the issues. See United States v. Reyna-Tapia, 328 F.3d 1114,
1121 (9th Cir. 2003) (en banc). If objections are filed, the parties should use the following
case number: CV-25-493-TUC-JCH.
Dated this 28th day of April, 2026.
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