Kelly et al v. Clear Recon Corp et al

1
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
ETHEL and LEWIS KELLY,
Plaintiffs,
v.
CLEAR RECON CORP, FEDERAL
NATIONAL MORTGAGE ASSOCIATION,
and LOAN DEPOT.COM, LLC,
Defendants.
Case No. 3:19-cv-00185-TMB
ORDER ON LOAN DEPOT.COM,
LLC’S MOTION TO DISMISS COUNT
IV OF PLAINTIFFS’ THIRD AMENDED
COMPLAINT (DKT. 52)
I. 	INTRODUCTION
The matter comes before the Court on Defendant loanDepot.com, LLC’s (“loanDepot” or
“Defendant loanDepot”) Motion to Dismiss Count IV of Plaintiffs’ Third Amended Complaint
(the “Motion”).1 	The Motion seeks to dismiss Count IV of Plaintiffs Ethel and Lewis Kelly’s
(collectively, “the Kellys”) Third Amended Complaint (“TAC”)2 pursuant to Fed. R. Civ. P.
12(b)(6) for failure to state a claim.3 	Count IV of the Kellys’ claim is brought under the Real
Estate Settlement Procedure Act (“RESPA”).4 The Motion was fully briefed by the Parties.5 The
Parties have not requested oral argument, and the Court finds it would not be helpful. 	For the
reasons stated below, loanDepot’s Motion is GRANTED in part and DENIED in part.
1 Dkt. 52 (Motion).
2 Dkt. 36 at ¶¶ 48–60 (Third Amended Complaint).
3 Dkt. 52 at 1.
4 12 U.S.C. § 2601 et. seq.
5 Dkts. 52; 54 (Opposition); 55 (Reply).
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 1 of 24

2
II. 	BACKGROUND
The present dispute before the Court arises from a foreclosure sale coordinated by
loanDepot, Federal National Mortgage Association (“Fannie Mae”), and Clear Recon Corporation
(“Clear Recon” and, collectively, the “Defendants”).6 The allegations contained in the TAC are
summarized below.
A. 	Procedural History and Third Amended Complaint
In 2001, the Kellys acquired a home loan with Homestate Mortgage Company, LLC.7 The
resulting Deed of Trust (“DOT”) named Homestate Mortgage Company, LLC as a beneficiary and
Pacific Northwest Title as trustee.8 After executing several subsequent Deeds of Trust, in 2013,
the Kellys claim they executed the DOT that named loanDepot as the beneficiary.9 Sometime in
the period between 2016 and 2018, the Kellys fell behind on their loan payments to loanDepot.10
In response, loanDepot accelerated the Kellys’ loan.11 On August 22, 2018, loanDepot appointed
Clear Recon as successor trustee.12 On that same day, Clear Recon recorded a Notice of Default,
which stated that a foreclosure sale by public auction would occur on November 28, 2018.13
6 Dkt. 36 at ¶¶ 1–21.
7 Id. at ¶ 8.
8 Id. at ¶ 9.
9 Id. at ¶ 10.
10 Id. at ¶¶ 11–13.
11 Id. at ¶ 14.
12 Id. at ¶ 15.
13 Id. at ¶ 16.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 2 of 24

3
However, on or about November 19, 2018, Ethel Kelly filed for bankruptcy, which stayed
the foreclosure proceedings.14 Clear Recon postponed the auction.15 Ethel Kelly’s bankruptcy
proceedings were eventually dismissed.16 After the dismissal, on January 30, 2019, Clear Recon
conducted a foreclosure auction without notifying them of the time or place of the rescheduled
sale.17 The Kellys were unaware that the rescheduled sale had taken place until they were informed
by Alaska Legal Services Corporation.18 Following the sale, on February 8, 2019, Clear Recon
assigned the property to Fannie Mae.19 Fannie Mae scheduled a second sale of the property for
April 8–10, 2019.20 	On March 15, 2019, the Kellys requested information from loanDepot
pursuant to RESPA to no avail.21 	In their RESPA request, the Kellys identified the property
address and loan number, and specifically listed the information requested.22 	Despite the
foreclosure sale, the Kellys remain in possession of the property.23
14 Id. at ¶ 17.
15 Id. at ¶¶ 17–18.
16 Id. at ¶ 19.
17 Id. at ¶¶ 20–23.
18 Id. at ¶ 23.
19 Id. at ¶ 22.
20 Id. at ¶ 24.
21 Dkt. 36 at ¶¶ 27–28.
22 Id. at ¶ 28 (citing Dkt. 36-1 (Qualified Written Request (“QWR”)).
23 Id. at ¶ 33.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 3 of 24

4
On March 29, 2019, the Kellys filed a Complaint in the Superior Court for the State of
Alaska.24 On June 12, 2019, the Kellys filed an Amended Complaint in state court.25 On July 2,
2019, loanDepot and Fannie Mae removed this action to federal court invoking the Court’s federal
question jurisdiction under 28 U.S.C. § 1331.26 On July 9, 2019, loanDepot and Fannie Mae filed
a Motion to Dismiss the Amended Complaint (the “First Motion to Dismiss”) pursuant to Fed. R.
Civ. P. 12(b)(6), which Clear Recon joined.27
The Kellys’ Amended Complaint raised four claims.28 First, the Kellys requested that the
Court quiet title in their favor for the property at issue here, or alternatively “remove the cloud on
plaintiffs’ title.”29 Second, the Kellys claimed that their DOT mandated that loanDepot give them
notice before accelerating their loan, which it failed to do.30 Therefore, the Kellys claimed that
loanDepot is in breach of contract and requested that the Court rescind the foreclosure sale and
award damages to the Kellys.31 Third, the Kellys claimed that their DOT mandated loanDepot
give them notice of the time and place of a foreclosure sale before conducting the sale, which it
failed to do.32 	Therefore, the Kellys claimed that loanDepot again breached its contract and
24 Dkt. 1-1.
25 Id. at 27–36.
26 Dkt. 1 (Notice of Removal).
27 Dkts. 4 (First Motion to Dismiss); 5 (Joinder to Motion).
28 Dkt. 1-1 (Amended Complaint).
29 Id. at ¶¶ 30–33.
30 Id. at ¶¶ 34–39.
31 Id. at ¶¶ 38–39.
32 Id. at ¶¶ 40–45.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 4 of 24

5
requested that the Court rescind the foreclosure sale and award damages.33 Fourth, by failing to
respond to their request for information, the Kellys claimed loanDepot violated RESPA, entitling
them to actual damages, statutory damages, costs, and attorney’s fees.34
The Court granted in part the First Motion to Dismiss without prejudice and denied it in
part.35 Relevant here is the Court’s treatment of Count IV, the RESPA claim. The Court found
that the Kellys “sufficiently pleaded that loanDepot was their loan servicer bound by RESPA.”36
However, the Court found that the Kellys did not provide any information about their request sent
to loanDepot, such as “the date on which the request was sent” or “the contents of the request[,]”
which would be necessary to allege that it complied with RESPA.37 As a result, the Court found
that the “Amended Complaint [did] not properly put Defendants on notice of a RESPA
violation.”38 The Court further found that “the Kellys have not adequately pleaded damages.”39
The Amended Complaint only alleged that loanDepot was “liable for actual damages, statutory
damages, and costs[,]” but did not “allege a basis for actual damages” or “a pattern or practice
33 Id..
34 Id. at 8, ¶¶ 46–52.
35 Dkts. 4 (Defendants’ First Motion to Dismiss); 18 (Order on Defendants’ First Motion to
Dismiss).
36 Id. at 16.
37 Id.
38 Id.
39 Id.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 5 of 24

6
which would entitle them to statutory damages.”40 The Court accordingly granted the First Motion
to Dismiss as to Count IV, but gave the Kellys leave to amend.41
The Kellys filed a Second Amended Complaint.42 Defendants then filed a Second Motion
to Dismiss, which was denied as moot because subsequent to Defendants’ filing of the Second
Motion to Dismiss, the Court granted the Kellys’ Motion to File Third Amended Complaint.43 The
TAC was filed on April 2, 2020, bringing four claims on substantially the same basis as the
Amended Complaint previously considered by the Court.44 The parties then engaged in settlement
discussions over several months, which were unsuccessful.45 	Clear Recon and Fannie Mae
subsequently filed Answers to the TAC, and loanDepot filed the present Motion, seeking to
dismiss Count IV.46
B. 	Motion to Dismiss Count IV
Defendant loanDepot moves to dismiss Count IV of the TAC.47 It makes two arguments
in support of its Motion. First, it argues that “Plaintiffs are still unable to plead any cognizable
claim for RESPA” because “information requests sent after a foreclosure sale occurs . . . trigger[]
40 Id. at 17.
41 Id.
42 Dkt. 21 (Second Amended Complaint).
43 See Dkts. 22 (Second Motion to Dismiss); 28 (Motion to File Third Amended Complaint); 29
(Memorandum in Support of Motion to File Third Amended Complaint); 35 (Text Order Granting
Motion to Amend Third Amended Complaint and Denying Second Motion to Dismiss as moot).
44 Dkt. 36.
45 See Dkts. 47 (Joint Case Status Report); 48 (Text Order).
46 See Dkts. 51 (Clear Recon Answer); 52; 53 (Fannie Mae Answer).
47 Dkt. 52 at 1.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 6 of 24

7
no duties or obligations under RESPA.”48 Defendant loanDepot argues that once the foreclosure
sale occurs, there is “no mortgage loan and thus no servicing relationship subject to RESPA’s
obligations” and “[o]n that basis alone, Count IV should be dismissed.”49 For RESPA to apply,
loanDepot states that “at the time loanDepot received Plaintiffs’ correspondence, it must have been
a servicer of a federally-related mortgage loan.”50 It cites various federal regulations, including
12 C.F.R. §§ 1024.36(a), 1024.31, and 1024.2 for the proposition that loanDepot had to be actively
servicing the Kellys’ loan at the time the Kellys submitted their qualified written request
(“QWR”).51 Since the foreclosure sale took place on January 30, 2019, and the QWR was sent on
March 15, 2019, “no duties or obligations under RESPA were triggered.”52
Second, loanDepot argues that, even if the Kellys could state a claim under RESPA, Count
IV should still be dismissed because “[the Kellys] failed to plead any facts supporting their
conclusory allegation of damages.”53 It argues that the Kellys “must show actual injury” and that
the actual damages alleged, including “‘costs of copy documents, travel expenses to and from their
attorney’s office, postage fees and emotional and psychological damages’” are insufficient to carry
the Kellys’ burden to sufficiently allege actual damages.54 More specifically, loanDepot argues
that the Kellys have not alleged sufficient facts to show that their damages were suffered as a
48 Id. at 2 (emphasis in original).
49 Id.
50 Id. at 5.
51 Id.
52 Id. at 5–6.
53 Id. at 2.
54 Id. at 7–8.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 7 of 24

8
result of the RESPA violation.55 	It notes that authority in the Ninth Circuit is split as to the
recoverability of damages for emotional distress, however, it asserts that the Kellys have not
alleged how emotional distress arose from the alleged RESPA violation.56 	Finally, loanDepot
argues that the Kellys’ “conclusory allegation of loanDepot’s purported ‘pattern and practice’ of
violations . . . must also be rejected.”57 It argues that the Kellys have alleged no additional facts
that would cure the deficiency as to these statutory damages.58
C. The Kellys’ Response
The Kellys oppose the Motion and argue that they have pleaded sufficient facts to state a
claim under RESPA.59 	First, they argue that the cases cited by loanDepot pertain to judicial
foreclosures—as opposed to here, which was a non-judicial foreclosure—and that “[h]ere, [] there
is no final judgment for foreclosure and there is nothing in Alaska law holding that a homeowner’s
claims are ‘merged’ once a non-judicial foreclosure sale occurs.”60 The Kellys further argue that
federal regulations provide “that servicers must respond to qualified written requests up to a year
after the loan is transferred or discharged.”61
55 Id. at 8 (emphasis added).
56 Id. at 10.
57 Id. at 11–12.
58 Id. at 12.
59 Dkt. 54 at 1, 4.
60 Id. at 4.
61 Id. at 4–5 (citing 12 C.F.R. § 1024.36) (emphasis removed). 	The Kellys cite to 12
C.F.R. §§ 1024.36(a)(g)(1)(iii) and 1024.35(a)(f)(1)(v), however, the applicable C.F.R. section
appears to be § 1024.36(f)(1)(v). See id.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 8 of 24

9
Second, the Kellys argue that their pleading sufficiently alleges actual and statutory
damages.62 They cite Watson v. Bank of Am., N.A., a district court opinion cited by the Court in
its Order addressing the First Motion to Dismiss, which supports the proposition that alleging
damages such as “the costs of copying documents, travel expenses to and from their attorney’s
office, postage fees and emotional and psychological damages” is sufficient.63 As to damages for
emotional and psychological distress, the Kellys state that “the [Ninth] Circuit has determined that
emotional damages are obtainable under RESPA” and that since the Kellys “have pled emotional
distress as a result of loanDepot’s RESPA violations,” the Motion should fail.64
D. Defendant loanDepot’s Reply
Defendant loanDepot filed a Reply reiterating its arguments.65 It argues that the Kellys’
theory that “somehow RESPA’s QWR provisions apply post-sale in the non-judicial foreclosure
context, but not in the judicial foreclosure context, is a distinction without any meaningful
difference” and is “legally irrelevant.”66 Defendant loanDepot argues that “once a foreclosure sale
occurs . . . there is simply no ‘servicer’ of a ‘federally-related mortgage loan’ as a matter of law.”67
In a footnote, loanDepot dismisses the Kellys’ argument that 12 C.F.R. § 1024.36(f)(1)(v) requires
loanDepot to respond to a QWR up to one year after the loan is discharged.68 It notes that the
62 Id. at 5.
63 See id.; No. 16CV513-GPC(MDD), 2016 WL 3552061, (S.D. Cal. June 30, 2016).
64 Dkt. 54 at 6.
65 Dkt. 55.
66 Id. at 2–3.
67 Id. at 3.
68 Id. at 4–5 n.2.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 9 of 24

10
Kellys’ loan was not “service-transferred to anyone else” or discharged in bankruptcy and that
here, once the sale occurred, there was no loan within the meaning of RESPA.69
As to the Kellys’ argument regarding damages, loanDepot argues that the Kellys “baldly
allege” their actual damages but have not established a link between the alleged RESPA violation
and those damages.70 It cites multiple cases where district courts in the Ninth Circuit have rejected
claims for emotional damages where the plaintiff does not sufficiently allege a causal connection
between the alleged damages and the RESPA violation.71
III. 	LEGAL STANDARDS
A. 	Federal Rule of Civil Procedure 12(b)(6)
Defendant loanDepot moves under Federal Rule of Civil Procedure (“Rule”) 12(b)(6) to
dismiss Count IV of the TAC for failure to state a claim upon which relief can be granted.72 In
order to survive a motion to dismiss under Rule 12(b)(6), a complaint must set forth “a short and
plain statement of the claim showing that the pleader is entitled to relief,”73 and “contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”74 In ruling
69 Id.
70 Id. at 5–6.
71 See id. at 6–7.
72 Dkt. 52 at 1.
73 Fed. R. Civ. P. 8(a)(2).
74 Ashcroft v. Iqbal, 556 U.S. 662, 677‒78 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 10 of 24

11
on a 12(b)(6) motion, the Court must “‘accept all factual allegations of the complaint as true and
draw all reasonable inferences in favor of the nonmoving party.’”75
In determining whether a complaint pleads sufficient facts to cross “the line between
possibility and plausibility,” “[t]hreadbare recitals of the elements of a cause of action” and
“conclusory statements” do not suffice.76 However, a plaintiff need not plead “all facts necessary
to carry” his or her burden.77 	“Determining whether a complaint states a plausible claim for
relief . . . [is] a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.”78 So long as plaintiffs meet this standard of plausibility, their
claim survives a 12(b)(6) motion even if defendants present a similarly plausible description of the
disputed events.79 “‘A dismissal for failure to state a claim is proper only if it appears beyond
doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to
relief.’”80
75 Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 923 (9th Cir. 2001) (quoting Nat’l
Ass’n for the Advance. of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043, 1049 (9th Cir.
2000)).
76 Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 557).
77 Al-Kidd v. Ashcroft, 580 F.3d 949, 977 (9th Cir. 2009), rev’d on other grounds 563 U.S. 713
(2011).
78 Iqbal, 556 U.S. at 679 (citation omitted).
79 Starr v. Baca, 652 F.3d 1202, 1216–17 (9th Cir. 2011).
80 Arpin, 261 F.3d at 923 (quoting Pillsbury, Madison & Sutro v. Lerner, 31 F.3d 924, 928 (9th
Cir. 1994)).
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 11 of 24

12
Generally, the court should not consider materials outside of the pleadings when ruling on
a motion to dismiss for failure to state a claim.81 Courts may consider additional materials where
the complaint “necessarily relies” on those documents and their authenticity is not disputed.82
B. 	RESPA
RESPA requires the servicer of a federally-related mortgage loan to provide a timely
written response to inquiries from borrowers regarding the servicing of their loans.83 	A loan
servicer must comply with the regulatory requirements under RESPA for any request for
information that (1) is written; (2) includes the name of the borrower; (3) includes “information
that enables the servicer to identify the borrower’s mortgage loan account”; and (4) “states the
information the borrower is requesting with respect to the borrower’s mortgage loan.”84 	The
requirements of 12 C.F.R. § 1024.36 do not apply where “[t]he information request is delivered to
a servicer after more than one year after . . . [t]he mortgage loan is discharged.”85
Within five days of receiving a compliant request, the servicer must provide the borrower
a written acknowledgment of the information request.86 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.87 If the servicer fails to respond to a proper request,
81 Id. at 925 (citing Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994)).
82 Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998–99 (9th Cir. 2010) (citations omitted).
83 12 U.S.C. § 2605(e)(1)(A), (e)(2).
84 12 C.F.R. § 1024.36(a).
85 12 C.F.R. § 1024.36(f)(v)(B).
86 12 U.S.C. § 2605(e)(1)(A).
87 12 U.S.C. § 2605(e)(2).
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 12 of 24

13
RESPA entitles the borrower to recover actual damages and, if there is a “pattern or practice of
noncompliance,” statutory damages of up to $2,000.88
In order to survive a motion to dismiss, a plaintiff must sufficiently allege the following
elements: (1) defendant is a loan servicer bound by RESPA; (2) defendant received a compliant
request under 12 U.S.C. § 2605(e) from plaintiff; (3) defendant failed to respond adequately; and
(4) “plaintiffs must also allege actual, cognizable damages resulting from the Defendants’ failure
to respond . . . .”89 A plaintiff must provide sufficient information about the nature of their request
for information as to put the defendant on notice.90 For example, where a plaintiff fails to attach
letters to the servicer or otherwise describe their contents, dismissal is proper.91
IV. 	DISCUSSION
The Court will address the two elements disputed by the Parties. First, whether loanDepot
was bound by RESPA at the time the Kellys sent their QWR and, second, whether the Kellys have
sufficiently pleaded actual and statutory damages resulting from loanDepot’s failure to respond to
the Kellys’ QWR. The Court finds that based on the request attached to the TAC as Exhibit 36-1,
88 12 U.S.C. § 2605(f).
89 See 12 U.S.C. § 2605(e); Eddy v. Fed. Home Loan Mortg. Corp. (As Tr. for Freddie Mac
MultiClass Certificates Series 3450, No. 218-cv-2267-KJM-EFB PS, 2019 WL 4298043, at *5
(E.D. Cal. Sept. 11, 2019) (internal quotation marks and emphasis omitted); Walker v. Branch
Banking & Tr. Co., 237 F. Supp. 3d 1326, 1331 (S.D. Fla. 2017).
90 Evans v. Nationstar Mortg., LLC, No. 215-cv-1213-JAM-GGH PS, 2015 WL 6756255, at *8
(E.D. Cal. Nov. 5, 2015).
91 Id. (holding where “plaintiff has failed to attach any of the letters . . . [and] plaintiff’s description
of the letters fails to state whether they included plaintiff’s name, information from which
[defendant] could identify plaintiff’s mortgage loan account, and what information plaintiff was
requesting in regard to the loan” the defendant was not put on notice of the claim).
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 13 of 24

14
the Kellys have sufficiently alleged the other elements as required by statute.92 For the reasons
discussed below, loanDepot’s Motion is GRANTED in part and DENIED in part.
A. 	Whether loanDepot was obligated under RESPA to respond to the Kellys’ QWR dated
March 15, 2019
The Court finds that the foreclosure sale on January 30, 2019, did not absolve loanDepot
from responding to the QWR dated March 15, 2019.
Defendant loanDepot asks the Court to find that after January 30, 2019, “there is [was] no
mortgage loan and thus no servicing relationship subject to RESPA’s obligations.”93 Defendant
loanDepot argues that “a condition precedent to any right of action under . . . RESPA is that at the
time loanDepot received Plaintiffs’ correspondence, it must have been a servicer of a federally-
regulated mortgage loan.”94 	It cites to cases in which district courts dismissed RESPA claims
based on QWRs sent after a foreclosure.95 The Kellys disagree, arguing that the cases cited by
loanDepot are distinguishable and that loan servicers still have obligations under RESPA even
after they are no longer actively servicing a loan.96
In interpreting the meaning of 12 U.S.C. § 2605(e), the applicable section of RESPA, the
Court “first consider[s] the plain text of the statute.”97 	The Court “‘examine[s] not only the
92 By attaching a copy of the QWR, the Kellys addressed the Court’s previous concern that the
RESPA claim was not adequately pleaded without attaching a copy of the QWR or “otherwise
describ[ing] the contents of the request[.]” See Dkt. 18 at 16.
93 Dkt. 52 at 2.
94 Id. at 5.
95 Id. at 6.
96 Dkt. 54 at 4–5.
97 Corns v. Labs. Intern. Union of N.A., 709 F.3d 901, 908 (9th Cir. 2013) (citing Washington v.
Chimei Innolux Corp., 659 F.3d 842, 847 (9th Cir. 2011)); Thomas v. CalPortland Co., 993 F.3d
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 14 of 24

15
specific provision at issue, but also the structure of the statute as a whole, including its object and
policy.’”98 Section 2605(e) imposes duties on loan servicers to respond to borrower inquiries. It
states:
If any servicer of a federally related mortgage loan receives a qualified written
request from the borrower (or an agent of the borrower) for information relating to
the servicing of 	such 	loan, 	the servicer shall 	provide 	a 	written 	response
acknowledging receipt of the correspondence within 5 days[.]99
The Section goes on to state that after receiving a QWR, a servicer100 must comply with the
following:
Not later than 30 days . . . after the receipt from any borrower of any qualified
written request . . . and, if applicable, before taking any action with respect to the
inquiry of the borrower, the servicer shall . . .
(B) after conducting an investigation, provide the borrower with a written
explanation or clarification that includes—
(i) to the extent applicable, a statement of the reasons for which
the servicer believes the account of the borrower is correct as
determined by the servicer; and
(ii) the name and telephone number of an individual employed by,
or 	the office 	or 	department 	of, 	the servicer who 	can 	provide
assistance to the borrower; or
(C) after conducting an investigation, provide the borrower with a written
explanation or clarification that includes—
(i) information requested by the borrower or an explanation of why
the information requested is unavailable or cannot be obtained by
the servicer; and
1204, 1209 (9th Cir. 2021) (noting statutory interpretation begins with examining the plain text of
a statute).
98 Chimei Innolux, 659 F.3d 842 at 847–48 (quoting Children’s Hosp. & Health Ctr. v. Belshe, 188
F.3d 1090, 1096 (9th Cir. 1999)).
99 12 U.S.C. § 2605(e)(1)(A).
100 A “servicer” is “the person responsible for servicing of a loan (including the person who makes
or holds a loan if such person also services the loan).” 12 U.S.C. § 2605(i).
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 15 of 24

16
(ii) the name and telephone number of an individual employed by,
or 	the office 	or 	department 	of, 	the servicer who 	can 	provide
assistance to the borrower.101
RESPA also empowers the Bureau of Consumer Financial Protection (“CFPB”) to “establish any
requirements necessary to carry out this section.”102
As the Ninth Circuit has recognized, RESPA was intended by Congress “to serve
consumer-protection purposes.”103 “Congress enacted RESPA in 1974 ‘to increase the supply of
information available to mortgage consumers . . . and to eliminate abusive practices.’”104 Although
RESPA was originally targeted at the real estate settlement process, “the scope of the statute’s
provisions was expanded in 1990 to encompass loan servicing.”105 	“Accordingly, RESPA’s
provisions relating to loan servicing procedures should be ‘construed liberally’ to serve the
statute’s remedial purpose.”106
Defendant loanDepot asserts, without citing any statutory or binding authority, that “as a
condition precedent to any right of action under . . . RESPA . . .at the time loanDepot received
101 12 U.S.C. § 2605(e)(2)(B) –(C).
102 12 U.S.C. § 2605(j)(3).
103 Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 665–66 (9th Cir. 2012) (interpreting what
qualifies as a QWR under § 2605(e) and recognizing the “broad remedial purpose” of RESPA).
104 Gilliam, Trustee of Lou Easter Ross Revocable Tr. v. Levine, Trustee of the Joel Sherman
Revocable Tr., et al., 955 F.3d 1117, 1120 (9th Cir. 2020) (quoting Schuetz v. Banc One Mortg.
Corp., 292 F.3d 1004, 1008 (9th Cir. 2002)).
105 Medrano, 704 F.3d at 665.
106 Id. at 665–66 (citing Greenpoint Mortg. Funding, Inc. v. Herrera (In re Herrera), 422 B.R.
698, 711–12 (9th Cir. BAP 2010), aff’d sub nom. Home Funds Direct v. Monroy (In re
Monroy), 650 F.3d 1300, 1301 (9th Cir. 2011)).
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 16 of 24

17
Plaintiffs’ correspondence, it must have been a servicer of a federally-related mortgage loan.”107
Put another way, loanDepot argues it has no RESPA obligations for loans it is not actively
servicing. The Court disagrees. Contrary to loanDepot’s arguments, once the loan is extinguished
through a foreclosure sale, loanDepot is not necessarily free of its obligations under RESPA.
RESPA does not expressly eliminate a loan servicer’s duty to respond to a QWR under 12 U.S.C.
§ 2605(e) when a loan is discharged or extinguished through a foreclosure. Defendant loanDepot
only needs to be a “servicer of a federally related mortgage loan” and “receive[] a [QWR] from
the borrower” for loanDepot’s obligations to be triggered.108
There is no dispute that the Kellys have adequately alleged that they had a “federally related
mortgage loan” that—at some point—was being serviced by loanDepot. 	Defendant loanDepot
asserts that it stopped servicing the loan when the foreclosure sale occurred on January 30, 2019.109
The QWR appended to the TAC indicates that when the QWR was sent, the Kellys believed that
loanDepot was actively servicing a mortgage loan on the subject property.110 	Defendant
loanDepot’s position, however, is that the Kellys were simply out of luck because even though the
Kellys believed they had an active loan with loanDepot, and even though the Kellys assert that the
foreclosure sale was “illegal[,]”111 at the time the Kellys sent the QWR loanDepot asserts it had
107 Dkt. 52 at 5.
108 See 12 U.S.C. § 2605(e)(1)(A).
109 See Dkt. 52 at 5.
110 Dkt. 36-1 at 1 (“Please be advised that I represent Ms. Kelly with respect to the mortgage loan
you are servicing on the property . . . .” (emphasis added)). Despite this, loanDepot asserts that it
is “undisputed the lien was extinguished” and “there was no ‘federally related mortgage loan’ to
service[.]” Dkt. 52 at 5–6.
111 Dkt. 36 at ¶ 22.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 17 of 24

18
no obligation whatsoever to respond to their request for information. 	This would be tough
medicine for the very consumers Congress intended to protect through RESPA.
Importantly, RESPA’s implementing regulations clearly impose obligations on servicers
that extend after a loan is discharged or otherwise extinguished. Indeed, loanDepot “shall retain
records that document actions taken with respect to a borrower’s mortgage loan account until one
year after the date a mortgage is discharged . . . .”112 Federal regulations also exempt servicers
from the requirements of 12 C.F.R. § 1024.36, which regulates the QWR process, if “[t]he
information request is delivered to a servicer more than one year after . . . [t]he mortgage loan is
discharged.”113 	Federal regulations contemplate borrowers requesting information from loan
servicers up to one year after a loan is discharged, which is incongruent with loanDepot’s position
that its duties were obviated after the foreclosure sale. 	Defendant loanDepot’s position would
render 12 C.F.R. § 1024.36 meaningless and is unpersuasive.114
Defendant loanDepot implies that even if it had an obligation to respond after a loan was
“discharged” per 12 C.F.R. § 1024.36, here “[t]he loan was not . . . discharged in bankruptcy” and
thus the Kellys continue to be out of luck.115 On this issue, the Court further finds the official
commentary on the applicable RESPA regulations to be informative. The CFPB adopted a final
112 12 C.F.R. § 1024.38(c)(1).
113 12 C.F.R. § 1024.26(f)(1)(v)(b); see also 12 C.F.R. § 1024.35(g)(1)(iii)(B) (notice of error is
untimely if delivered to servicer more than one year after a mortgage loan balance is paid in full).
114 Courts generally avoid interpreting statutes or regulations that would render the text
superfluous. See Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 167 (2004) (“[The Court]
must, if possible, construe a statute to give every word some operative effect.”); Boise Cascade
Corp. v. U.S. E.P.A., 942 F.2d 1427, 1432 (9th Cir. 1991) (“[The Court must] interpret statutes as
a whole, giving effect to each word and making every effort not to interpret a provision in a manner
that renders other provisions of the same statute inconsistent, meaningless or superfluous.”).
115 Dkt. 55 at 4 n.2.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 18 of 24

19
rule in 2013 which amended the RESPA regulations.116 	In adopting the current version of 12
C.F.R. § 1024.36(f)(1)(v)(B), the CFPB stated:
The Bureau believes it would be impractical to require a servicer to resolve errors
and provide information at a time when [RESPA] no longer requires the servicer to
retain the relevant records. Conversely, the Bureau believes the servicer should be
responsible to correct those records during the period when [RESPA] does require
a servicer to retain records, if necessary, and provide borrowers information from
the records. 	Further, the Bureau believes the use of the term “discharged” is
appropriate, especially given that the term is already used in the timing of the
record-retention requirement. 	For purposes of the Bureau’s mortgage servicing
rules, as opposed to bankruptcy purposes, a mortgage loan is discharged when both
the debt and all corresponding liens have been extinguished or released, as
applicable.117
The CFPB’s position appears to be that servicers have an obligation to respond to QWRs up to one
year after a mortgage loan is discharged. 	Further, the CFPB’s interpretation of the term
“discharged” is distinguishable from the term’s use in the bankruptcy context, contrary to
loanDepot’s position. While the CFPB’s interpretation of its own regulation is not dispositive, the
Court finds that the CFPB’s position is both persuasive and consistent with the plain text of the
statute, the statute’s implementing regulations, and Congress’s intent. 	Other courts have also
looked to the CFPB’s commentary when interpreting the CFPB’s regulations.118 Accordingly, for
116 Amendments to the 2013 Mortgage Rules Under the Equal Credit Opportunity Act (Regulation
B), Real Estate Settlement Procedures Act (Regulation X), and the Truth in Lending Act
(Regulation Z), 78 FR 60382–01, 2013 WL 5428278, *60392–93 (Oct. 1, 2013).
117 Id.
118 See, e.g., Zaychick v. Bank of Am., N.A., No. 9:15–CV–80336–ROSENBERG, 2015 WL
4538813, at *2 (S.D. Fla. July 27, 2015) (citing official CFPB commentary); Nash v. PNC Bank,
N.A., No. TDC-16-2910, 2017 WL 1424317, at *4 (D. Md. Apr. 20, 2017) (“Although the CFPB’s
commentary is not binding authority, courts have found its official interpretations to be ‘highly
persuasive’ when they fill ‘a gap in the text [of a regulation] . . . .” (citation omitted)); He v. Ocwen
Loan Serv., LLC, No. 15-CV-4575 (JS)(AKT), 2016 WL 3892405, at *2 (E.D.N.Y. July 14, 2016)
(CFPB’s official commentary is “highly persuasive”); see also Auer v. Robbins, 519 U.S. 452, 461
(1997) (agency’s interpretation of its ambiguous regulation is controlling unless it is “‘plainly
erroneous or inconsistent with the regulation.’”).
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 19 of 24

20
the foregoing reasons, the Court concludes that loanDepot was not absolved of its duties under
RESPA to respond to the Kellys’ QWR sent on March 15, 2019.119 The Court will therefore not
dismiss the Kellys’ RESPA claim on this basis.
B. 	Whether the Kellys have sufficiently pleaded actual and statutory damages resulting
from loanDepot’s failure to respond to the Kellys’ QWR.
In the Court’s Order addressing the First Motion to Dismiss, the Court dismissed the
Kellys’ RESPA claim without prejudice in part due to the Kellys’ deficient pleading regarding
damages.120 	The Court found that the Kellys did not adequately plead any actual damages, as
required by statute, and that by “only alleg[ing] a single instance of noncompliance with
RESPA[,]” they could not be entitled to statutory damages.121 	The Court finds that the TAC
adequately alleges some actual damages, but not statutory damages. The Court will address each
in turn.
119 The Court also notes that all but one of the cases cited by loanDepot involved QWRs sent more
than one year after discharge of the underlying mortgage loan at issue. 	See Kajla v. U.S. Bank
Nat’l Ass’n ex. rel. Credit Suisse First Boston MBS ARMT 2005-8, No. 17–8953, 2018 WL
1128498, at *7 (D. N.J. Mar. 1, 2018) (foreclosure judgment entered in March 2015, but purported
QWR sent in August 2017); Goodgame v. Countrywide Home Loans, Inc., No. 1:16-CV-0634-
LMM-JFK, 2016 WL 10988802, at *7 (N.D. Ga. Dec. 16, 2016) (foreclosure sale scheduled for
August 2014, but purported QWR sent in 2016); Wright ex rel. Estate of Wright v. Nationstar
Mortg., LLC, 2016 WL 1077164, at *7 (D. Md. Mar. 18, 2016) (foreclosure sale took place in June
2013, but purported QWR sent in September 2014); Ahmed v. Wells Fargo Bank, N.A., 432 F.
Supp. 3d 556, 562–64 (E.D. Pa. 2020) (no date of purported QWR request provided and where the
court declined to decide whether the plaintiff’s QWR allegations were sufficient).
The Court disagrees with the approach taken by the District of New Jersey in the unpublished case
of Perez v. Seterus, cited by loanDepot, in which the court summarily dismissed a plaintiff’s
RESPA claim because the plaintiff’s QWR was sent to the defendant loan servicer three months
after a foreclosure judgment. See Perez v. Seterus, Inc., No. 17–5862 (JLL), 2017 WL 5513687,
at *4 (D. N.J. Nov. 16, 2017).
120 See Dkt. 18 at 16 (“Additionally, the Kellys have not adequately pleaded damages.”).
121 Id. at 17.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 20 of 24

21
i. 	Claim for Actual Damages
The Kellys allege that they “suffered damages . . . including but not limited to the costs of
copying documents, travel expenses to and from their attorney’s office, postage fees and emotional
and psychological damages.”122 	Defendant loanDepot argues that the Kellys’ claim for actual
damages is “not accompanied by any facts . . . to establish ‘a link between the alleged damages
and the alleged RESPA violations.’”123 It concedes that courts in the Ninth Circuit are divided as
to whether emotional and psychological damages are recoverable under RESPA, but reiterates that
the Kellys have not alleged a sufficient nexus between their damages and the alleged RESPA
violation.124 	On the other hand, the Kellys, with citation to relevant case law, assert that their
allegations are “sufficient to withstand a motion to dismiss.”125
The Court agrees with the Kellys that, at the motion to dismiss stage, they have adequately
pleaded certain actual damages as a result of loanDepot’s alleged violation of RESPA. The Court
finds the TAC plausible on its face that expenses such as “the costs of copying documents, travel
expenses to and from their attorney’s office, [and] postage fees” would arise from loanDepot’s
failure to respond to the Kellys’ QWR, especially given the amount of information requested by
the Kellys through the QWR. However, the Court does not find the Kellys’ claim for “emotional
and psychological damages[,]” without further elaboration, to be plausible.126 The TAC details
122 Dkt. 36 at ¶ 31.
123 Dkt. 52 at 8 (quoting Krasucki v. Nationstar Mortg., LLC, No. C15-0229JLR, 2015 WL
11251850, at *4 (W.D. Wash. July 8, 2015)).
124 Id. at 9–10.
125 Dkt. 54 at 5.
126 The Court need not weigh in on the split within the Ninth Circuit about whether emotional and
psychological damages are recoverable under RESPA, since here it finds the Kellys’ pleading of
emotional and psychological damages implausible. See Phillips v. Bank of Am. Corp., No. 5:10–
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 21 of 24

22
circumstances in the years preceding their submission of the QWR to loanDepot, including family
health challenges, falling behind on their mortgage payments, being victims of a scam
organization, filing for bankruptcy, and ultimately, having their home foreclosed upon.127 	The
Kellys allege that loanDepot did not receive the QWR until March 19, 2019, and it is undisputed
that the earliest date loanDepot could have been in violation of RESPA is March 24, 2019.128 The
first Complaint in this case was filed on March 29, 2019.129 The Kellys make no effort, in the
TAC or their briefing, to explain how it is plausible, rather than merely possible, that loanDepot’s
silence caused discrete damages in the form of emotional and psychological distress after its
alleged RESPA violation.130 	The Kellys did not meet their obligation to allege “more
than . . . conclusions, and a formulaic recitation of the elements of a cause of action[.]”131 The
Court agrees with courts in the Ninth Circuit that conclusory allegations of emotional damages,
like here, are insufficient.132
CV–04561 EJD, 2011 WL 4844274, at *5 (N.D. Cal. Oct. 11, 2011) (rejecting a claim for
emotional distress because the plaintiff did not allege a plausible claim that he suffered emotional
distress as a result of the defendant’s alleged RESPA violation).
127 See Dkt. 36 at ¶¶ 11–13, 17, 21–22.
128 Id. at ¶ 29. 	The Court reaches this conclusion since loanDepot had at least five days after
receiving the QWR to send an acknowledgment of the request, assuming the QWR was received
on March 19, 2019. See 12 U.S.C. § 2605(e)(1)(A).
129 Dkt. 1-1.
130 See Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief
above the speculative level[.]” (citation omitted)).
131 Id.
132 See, e.g., Krasucki, No. C15-0229JLR, 2015 WL 11251850, at *4 (dismissing a RESPA claim
where plaintiff’s damages allegations were conclusory); Phillips, No. 5:10–CV–04561 EJD, 2011
WL 4844274, at *5; Lawther v. Onewest Bank, No. C 10–0054 RS, 2010 WL 4936797, at *7 (N.D.
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 22 of 24

23
Accordingly, the Motion is DENIED in part as to the Kellys’ alleged actual damages for
“the costs of copying documents, travel expenses to and from their attorney’s office, [and] postage
fees,” and GRANTED in part as to the Kellys’ claim for emotional and psychological damages.
ii. 	Claim for Statutory Damages
Next, the Court finds that the Kellys failed to adequately allege a basis for statutory
damages. Under RESPA, if the servicer fails to respond to a proper request, RESPA entitles the
borrower to recover damages of up to $2,000 if plaintiffs can allege a “pattern or practice of
noncompliance[.]”133 The Court in its Order addressing the First Motion to Dismiss found that the
Kellys “only alleged a single instance of noncompliance with RESPA” and dismissed without
prejudice the Kellys’ statutory damages claim.134 The Kellys continue to allege only one instance
of noncompliance with RESPA and otherwise failed to adequately cure their defective pleading.
Since the TAC alleges no additional facts that would establish a “pattern or practice of
noncompliance,” the Motion is GRANTED in part as to the Kellys’ demand for statutory
damages.135
Cal. Nov. 30, 2010) (no colorable relationship between alleged RESPA violation and emotional
harm).
133 12 U.S.C. § 2605(f).
134 Dkt. 18 at 17.
135 See, e.g., Lawther, No. C 10–0054 RS, 2010 WL 4936797, at *7 (noting that statutory damages
are not available based on a “single QWR refusal”); Givant v. Vitek Real Estate Indus. Grp., Inc.,
No. 2:11–cv–03158–MCE–JFM, 2012 WL 5838934, at *5 (E.D. Cal. Nov. 15, 2012) (rejecting
claim for statutory damages as conclusory); Nash, No. TDC-16-2910, 2017 WL 1424317, at *4
(rejecting statutory damages claim based on single alleged RESPA violation).
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 23 of 24

24
V. 	CONCLUSION
Having carefully reviewed the allegations in the TAC and the parties’ briefing, the Motion
is GRANTED in part and DENIED in part as follows. The Court GRANTS in part loanDepot’s
Motion as to the Kellys’ RESPA claim in Count IV for (1) emotional and psychological damages
and (2) statutory damages. The Court further finds that permitting the Kellys leave to amend the
TAC would be futile. The Court DENIES in part the Motion as to the Kellys’ RESPA claim in
Count IV for certain actual damages including “the costs of copying documents, travel expenses
to and from their attorney’s office, [and] postage fees[.]” Pursuant to Rule 12(a)(4)(A), loanDepot
shall file its Answer to the Kellys’ TAC within fourteen days of this Order’s issuance.
IT IS SO ORDERED.
Dated at Anchorage, Alaska, this 13th day of August, 2021.
/s/_Timothy M. Burgess__________
TIMOTHY M. BURGESS
UNITED STATES DISTRICT JUDGE
Case 3:19-cv-00185-TMB Document 57 Filed 08/13/21 Page 24 of 24