Ruiz v. Servbank NA et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Lazaro Ruiz,
Plaintiff,
v.
Servbank NA, et al.,
Defendants.
No. CV-26-00069-TUC-JGZ
ORDER
Pending before the Court are Plaintiff’s Application for Clerk’s Entry of Default
(Doc. 24) and Defendant Servbank, N.A.’s Motion to Dismiss (Doc. 25). For the reasons
set forth below, the Court will deny the Application for Entry of Default and grant the
Motion to Dismiss.
I. Application for Entry of Default
Plaintiff, proceeding pro se, filed this action on February 3, 2026, and filed an
Amended Complaint on February 6, 2026. (Docs. 1, 5.) On June 8, 2026, Defendant
Servbank, N.A. filed a Motion to Dismiss. (Doc. 18.) Plaintiff subsequently moved for
leave to file a Second Amended Complaint. (Doc. 20.) On June 23, 2026, the Court granted
Plaintiff leave to amend and denied Defendant’s Motion to Dismiss without prejudice.
(Doc. 21.)
Plaintiff filed his Second Amended Complaint on June 24, 2026. (Doc. 22.) Under
Rule 15(a)(3), Defendant was required to respond within fourteen days after service. On
July 9, 2026, Plaintiff filed an Application for Entry of Default, asserting that Defendant’s
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response was due July 8, 2026. (Doc. 24.) On July 10, 2026, Defendant filed its Motion to
Dismiss (Doc. 25) and a Response opposing entry of default, requesting that the Court
accept its untimely motion nunc pro tunc. (Doc. 26.) Defendant acknowledges that it
missed the deadline but attributes the delay to an inadvertent calendaring error.
When a party retroactively requests the Court to consider an untimely filing, Federal
Rule of Civil Procedure 6(b)(1)(B) requires a showing of excusable neglect. Pincay v.
Andrews, 389 F.3d 853, 854–855 (9th Cir. 2004) (en banc). Whether delay was excusable
is determined by considering “(1) the danger of prejudice to the non-moving party, (2) the
length of delay and its potential impact on judicial proceedings, (3) the reason for the delay,
including whether it was within the reasonable control of the movant, and (4) whether the
moving party’s conduct was in good faith.” Id. at 855 (citing Pioneer Inv. Servs. Co. v.
Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395 (1993)). The “determination is at bottom
an equitable one, taking account of all relevant circumstances surrounding the party’s
omission.” Pioneer, 507 U.S. at 395.
Here, the Court finds that Defendant has demonstrated excusable neglect. Although
the missed deadline resulted from a calendaring error within Defendant’s control,
Defendant filed its Motion to Dismiss only two days after the deadline. Defendant has also
previously appeared and actively defended this action. Nothing in the record suggests that
the brief delay prejudiced Plaintiff, disrupted the proceedings, or resulted from bad faith.
Accordingly, the Court will extend the response deadline nunc pro tunc to July 10, 2026.
Because Defendant’s response deadline has been extended and its Motion to Dismiss is
deemed timely filed, entry of default is unwarranted.
II. Motion to Dismiss
A. Legal Standard
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a
complaint for “failure to state a claim upon which relief can be granted.” The motion may
be granted only if the complaint “lacks a cognizable legal theory or sufficient facts to
support a cognizable legal theory.” Hartmann v. California Dep't of Corr. & Rehab., 707
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F.3d 1114, 1122 (9th Cir. 2013) (quotation marks and citation omitted). Although a
complaint need contain only “a short and plain statement of the claim showing that the
pleader is entitled to relief[,]” Fed. R. Civ. P. 8(a)(2), in order to survive a motion to dismiss
this short and plain statement “must contain sufficient factual matter . . . 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, 570 (2007)). A complaint must include
something more than “an unadorned, the-defendant-unlawfully-harmed-me accusation” or
“‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’”
Id. (quoting Twombly, 550 U.S. at 555). The Court must construe the complaint in the light
most favorable to the plaintiff and accept its factual allegations as true. Erickson v. Pardus,
551 U.S. 89, 93–94 (2007). However, “‘conclusory allegations of law and unwarranted
inferences’ cannot defeat an otherwise proper motion to dismiss.” Schmier v. U.S. Court of
Appeals for Ninth Circuit, 279 F.3d 817, 820 (9th Cir. 2002) (quoting Associated Gen.
Contractors of Am. v. Metro. Water Dist. of S. California, 159 F.3d 1178, 1181 (9th Cir.
1998)).
Where dismissal is appropriate, “[t]he court should freely give [leave to amend the
pleading] when justice so requires.” Fed. R. Civ. P. 15(a)(2); see also Ascon Props., Inc. v.
Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) (“Leave need not be granted where the
amendment of the complaint . . . constitutes an exercise in futility. . . .”).
B. Discussion
Defendant moves to dismiss all three claims asserted in Plaintiff’s Second Amended
Complaint (“SAC”): (1) violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §
1681s-2(b); (2) negligent misrepresentation and inaccurate account reporting; and (3)
violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605(k),
and Regulation X. (Doc. 25.) Plaintiff opposes dismissal, arguing that the SAC sufficiently
alleges inaccurate credit reporting, inconsistent representations concerning his mortgage
account, and improper mortgage servicing practices. (Doc. 27.) Alternatively, Plaintiff
requests leave to amend.
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i. Count I — Fair Credit Reporting Act
Plaintiff fails to state a claim under the FCRA because he has not sufficiently alleged
that Defendant received notice of his credit reporting dispute from a consumer reporting
agency (“CRA”).
Under § 1681s-2(b), a furnisher of credit information must investigate disputed
information, review relevant information provided by a CRA, and take appropriate
corrective action after receiving notice of a dispute from a CRA. Gorman v. Wolpoff &
Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009). However, “[t]hese duties arise only
after the furnisher receives notice of dispute from a CRA; notice of a dispute received
directly from the consumer does not trigger furnishers’ duties under subsection (b).” Id.
Here, Plaintiff alleges that Defendant reported his mortgage account as delinquent
after reversing previously applied payments and that Plaintiff disputed the accuracy of that
reporting. (Doc. 22 ¶¶ 11–12, 16, 19.) Plaintiff further alleges that, “[a]fter receiving notice
of dispute from credit reporting agencies and/or Plaintiff,” Defendant failed to conduct a
reasonable investigation and continued reporting inaccurate information. (Id. ¶¶ 20–22.)
However, Plaintiff does not allege that he submitted a dispute to a CRA or otherwise
provide sufficient factual support for a reasonable inference that a CRA notified Defendant
of the dispute. His allegation that Defendant received notice from “credit reporting
agencies and/or Plaintiff” leaves uncertain whether Defendant received notice from a CRA,
as required under § 1681s-2(b). Accordingly, Plaintiff has failed to plausibly allege that
Defendant’s statutory duties under § 1681s-2(b) were triggered.
In his Response, Plaintiff asserts that he submitted multiple disputes to Equifax,
Experian, and TransUnion in 2023, 2024, and 2025. (Doc. 27 at 15.) Although these
allegations cannot cure the deficiencies in the SAC, see Schneider v. California Dep't of
Corr., 151 F.3d 1194, 1197 n.1 (9th Cir. 1998), they suggest that Plaintiff may be able to
state a claim through amendment. Accordingly, Count I will be dismissed with leave to
amend.
//
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ii. Count II — Negligent Misrepresentation/Inaccurate Account
Reporting
Plaintiff fails to state a claim for negligent misrepresentation under Arizona law. To
the extent Count II seeks to impose liability for Defendant’s credit reporting activities, it is
preempted by the FCRA. To the extent it concerns representations made directly to
Plaintiff, the SAC fails to adequately allege detrimental reliance and resulting pecuniary
loss.
The FCRA preempts state law requirements or prohibitions concerning the subject
matter regulated under § 1681s-2, including the responsibilities of entities furnishing
information to CRAs. 15 U.S.C. § 1681t(b)(1)(F). However, preemption does not extend
to every state law claim against an entity that furnishes credit information; it applies only
to claims concerning the entity’s legal responsibilities as a furnisher under § 1681s-2.
Aargon Agency, Inc. v. O’Laughlin, 70 F.4th 1224, 1235 (9th Cir. 2023).
To the extent Count II seeks to impose liability under Arizona law for Defendant’s
alleged furnishing of inaccurate credit information, failure to investigate credit disputes, or
failure to correct information furnished to CRAs, the claim concerns responsibilities
regulated by § 1681s-2 and is therefore preempted. Because additional factual allegations
cannot overcome this statutory preemption, amendment of that theory would be futile.
Plaintiff also alleges that Defendant made inaccurate representations directly to him
concerning his mortgage account. Specifically, Plaintiff alleges that Defendant advised him
on at least three occasions that his account was current, notwithstanding Defendant’s
continued treatment of the account as delinquent. (Doc. 22 ¶¶ 25–28.) These allegations
concern communications between Defendant and Plaintiff rather than the furnishing of
information to CRAs and therefore are not necessarily preempted by the FCRA.
Under Arizona law, negligent misrepresentation occurs when a defendant, in the
course of business, supplies false information for the guidance of another in a business
transaction without exercising reasonable care, resulting in pecuniary loss caused by the
recipient’s justifiable reliance. St. Joseph's Hosp. & Med. Ctr. v. Rsrv. Life Ins. Co., 154
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Ariz. 307, 312, 742 P.2d 808, 813 (1987) (en banc).
Although Plaintiff alleges that Defendant provided inaccurate and inconsistent
information concerning his mortgage account, his allegations of reliance and resulting
damages are conclusory. (Doc. 22 ¶¶ 25–29.) Plaintiff does not identify any action he took
or refrained from taking in reliance on Defendant’s representations or allege facts
demonstrating that such reliance caused him pecuniary loss. Without factual allegations
establishing detrimental reliance and resulting loss, Plaintiff fails to state a plausible
negligent misrepresentation claim.
Count II will therefore be dismissed. As explained above, the FCRA preempts a
state law claim premised on Defendant’s furnishing of information to CRAs or related
reporting responsibilities under § 1681s-2. Plaintiff may amend Count II to cure the
deficiencies identified in his negligent misrepresentation claim based on Defendant’s direct
representations concerning his mortgage account.
iii. Count III — RESPA and Regulation X
Plaintiff fails to state a claim under RESPA and its implementing Regulation X
because he has not sufficiently alleged that Defendant violated an applicable mortgage
servicing obligation or that he suffered actual damages resulting from such a violation.
RESPA provides an action for damages against mortgage servicers who fail to
comply with certain obligations concerning borrower inquiries and servicing errors.
Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 663 (9th Cir. 2012). Under § 2605(e), a
mortgage servicer must respond to a qualified written request (“QWR”) concerning the
servicing of a mortgage loan. A QWR must (1) reasonably identify the borrower and
account, (2) state the reasons the borrower believes the account is in error or provide
sufficient detail concerning the information sought, and (3) seek information relating to the
servicing of the loan. Id. at 666. Regulation X similarly requires mortgage servicers to
investigate and respond to qualifying written notices of error, including errors involving
the application or crediting of mortgage payments. 12 C.F.R. § 1024.35(a), (b)(2).
Additionally, § 2605(k)(1)(C) prohibits servicers from failing to take timely action in
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response to borrower requests to correct errors relating to payment allocation, final loan
balances, avoiding foreclosure, or other standard servicing duties.
A borrower may recover actual damages resulting from a servicer’s failure to
comply with § 2605. 12 U.S.C. § 2605(f)(1)(A). The alleged damages must be causally
connected to the RESPA violation itself, rather than merely to an underlying dispute
concerning the loan. Lal v. Am. Home Servicing, Inc., 680 F. Supp. 2d 1218, 1223 (E.D.
Cal. 2010).
Here, Plaintiff alleges that Defendant reversed previously applied mortgage
payments following the transfer of his loan, reallocated funds between principal, interest,
and escrow, and subsequently treated his account as delinquent despite his continued
payments. (Doc. 22 ¶¶ 6–16.) These allegations concern mortgage servicing activities
within the scope of RESPA. See 12 U.S.C. § 2605(i)(3); Medrano, 704 F.3d at 666–67.
However, allegations of servicing errors alone do not establish that Defendant violated its
statutory or regulatory obligations.
Plaintiff alleges only that Defendant “failed to adequately correct servicing errors
after notice.” (Doc. 22 ¶ 32.) The SAC does not identify a written notice of error submitted
to Defendant, describe the substance of any request to correct payment allocation errors,
or otherwise allege facts sufficient to establish a violation of an applicable servicing
obligation under § 2605(k) or Regulation X. Moreover, Plaintiff generally alleges financial
and credit related harm but does not identify actual damages causally attributable to a
violation of RESPA. See 12 U.S.C. § 2605(f)(1)(A). Accordingly, Plaintiff fails to state a
plausible claim for relief under RESPA.
In his Response, Plaintiff identifies two written requests allegedly sent to Defendant
on November 7 and November 13, 2024, seeking investigation and corrective action
concerning his mortgage account. (Doc. 27 at 14–15.) Although these allegations cannot
cure the deficiencies in the SAC, they suggest that Plaintiff may be able to state a claim
through amendment. Accordingly, Count III will be dismissed with leave to amend.
//
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III. Leave to Amend
Under Federal Rule of Civil Procedure 15(a)(2), leave to amend should be freely
granted when justice so requires. Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en
banc). Although Plaintiff has previously amended his Complaint, the Court cannot
conclude that further amendment would be futile as to all claims. As discussed above,
Plaintiff identifies additional facts in his Response that suggest he may be able to cure the
deficiencies in Counts I and III. Plaintiff may also be able to allege sufficient facts
establishing justifiable reliance and resulting pecuniary loss arising from Defendant’s
direct representations concerning his mortgage account. However, amendment would be
futile to the extent Count II seeks to impose liability under Arizona law for Defendant’s
credit reporting responsibilities governed by § 1681s-2. Accordingly, the Court will grant
Plaintiff leave to amend, consistent with this Order.
Within thirty (30) days of the date this Order is filed, Plaintiff may file a Third
Amended Complaint correcting the deficiencies identified in this Order. The amended
complaint must be clearly designated as the “Third Amended Complaint,” comply with the
Federal Rules of Civil Procedure and LRCiv 7.1, and be complete in itself without
incorporating any prior complaint by reference. An amended complaint supersedes the
original pleading and becomes the operative complaint. Ferdik v. Bonzelet, 963 F.2d 1258,
1262 (9th Cir. 1992), as amended (May 22, 1992). Any claim omitted from the Third
Amended Complaint generally will be considered abandoned. See Lacey v. Maricopa
Cnty., 693 F.3d 896, 928 (9th Cir. 2012) (en banc).
If Plaintiff elects to amend, he must provide a short and plain statement of each
claim, identify the conduct attributable to Defendant, and allege facts establishing his
entitlement to relief. Plaintiff must cure the deficiencies identified by the Court.
Specifically, for Count I, Plaintiff must allege facts supporting a reasonable inference that
Defendant received notice of his credit reporting dispute from a CRA, thereby triggering
its obligations under § 1681s-2(b). For Count II, Plaintiff must identify the allegedly false
representations made directly to him, explain how he justifiably relied on those
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representations, and allege the resulting pecuniary loss. Plaintiff may not reassert a state
law theory seeking to impose liability for Defendant’s credit reporting responsibilities
governed by § 1681s-2. For Count III, Plaintiff must identify the mortgage servicing
obligation allegedly violated, the conduct constituting that violation, and the actual
damages resulting from it. To the extent his claim depends on a written notice of error or
other borrower request, Plaintiff must allege facts concerning the request and Defendant’s
response or failure to respond.
Plaintiff is advised that failure to timely file a Third Amended Complaint correcting
the deficiencies identified in this Order may result in dismissal of the action without further
notice. See Ferdik, 963 F.2d at 1260–61.
IV. Conclusion
Accordingly,
IT IS ORDERED that Plaintiff’s Application for Clerk’s Entry of Default (Doc.
24) is denied.
IT IS FURTHER ORDERED that Defendant’s Request for Extension of Time
Nunc Pro Tunc (Doc. 26) is granted. Defendant’s Motion to Dismiss (Doc. 25) is deemed
timely filed.
IT IS FURTHER ORDERED that Defendant Servbank, N.A.’s Motion to Dismiss
(Doc. 25) is granted. Plaintiff’s Second Amended Complaint (Doc. 22) is dismissed for
failure to state a claim.
//
//
//
//
//
//
//
//
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IT IS FURTHER ORDERED that Plaintiff may file a Third Amended Complaint
within thirty (30) days of the date this Order is filed.
IT IS FURTHER ORDERED that if Plaintiff fails to file a Third Amended
Complaint within thirty (30) days, the Clerk of Court shall, without further notice, enter
judgment dismissing the remaining claims without prejudice and close this case.
Dated this 12th day of October, 2026.
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