FILED
NOT FOR PUBLICATION
FEB 15 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARY LOU VEGA; et al., No. 15-55885
Plaintiffs-Appellants, D.C. No.
2:14-cv-04408-ODW-PLA
v.
OCWEN FINANCIAL CORPORATION, MEMORANDUM*
a Florida corporation; and OCWEN
LOAN SERVICING, LLC,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Otis D. Wright, II, District Judge, Presiding
Argued and Submitted February 7, 2017
Pasadena, California
Before: GRABER, BYBEE, and CHRISTEN, Circuit Judges.
Plaintiffs Mary Lou Vega, Tara Inden, and Regina Saffold-Sanders appeal
the dismissal for failure to state a claim of their putative class action alleging RICO
violations, RICO conspiracy, fraud, violations of California’s Unfair Competition
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Law, violations of California’s Rosenthal Fair Debt Collection Practices Act, and
unjust enrichment. We have jurisdiction under 28 U.S.C. § 1291. Reviewing de
novo, and viewing the complaint in the light most favorable to the nonmoving
party, Odom v. Microsoft Corp., 486 F.3d 541, 545 (9th Cir. 2007) (en banc), we
affirm.
1. In the event of default, the plaintiffs’ mortgage contracts authorize their
lenders to charge the plaintiffs for property inspections that are “reasonable or
appropriate” to protect the lenders’ interest in the properties. Plaintiffs allege that
the defendants conspired with Altisource to order, conduct, and fraudulently assess
their mortgage accounts for unreasonable property inspections, conducted for the
purpose of maximizing profits and not to protect the lenders’ interest in the
properties. The district court ruled that whether the property inspections and
associated fees were “reasonable or appropriate” to protect the lenders’ interest is
“a breach of contract claim and nothing more.” The court emphasized that it would
“not allow Plaintiffs to spin a breach of contact action into a fraud case.” We do
not agree with the district court’s conclusion that the plaintiffs could bring only a
breach-of-contract claim, but we do affirm the district court’s dismissal of
plaintiffs’ First Amended Complaint because they failed to adequately plead a
fraudulent scheme, as required by Federal Rule of Civil Procedure 9(b).
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2. Rule 9(b)’s requirement that fraud must be pleaded with particularity
applies to the plaintiffs’ federal RICO claims and their state-law claims because all
of them allege fraudulent conduct. Kearns v. Ford Motor Co., 567 F.3d 1120,
1125 (9th Cir. 2009); Edwards v. Marin Park, Inc., 356 F.3d 1058, 1065–66 (9th
Cir. 2004). Plaintiffs contend that the property inspections were not conducted for
the purpose of protecting the lenders’ interest because (1) the defendants
automatically ordered property inspections on a monthly basis once borrowers fell
into default, without determining whether individual inspections were “reasonable
or appropriate”; (2) the defendants did not have a policy or procedure in place to
review the resulting property-inspection reports; and (3) the inspections were not
always conducted at thirty-day intervals. These allegations are insufficient to
support an inference that the inspections were not conducted to protect the lenders’
interest in the subject properties.
The misrepresentation alleged here differs from those that district
courts have allowed to survive motions to dismiss in similar cases. See, e.g., Bias
v. Wells Fargo & Co., 942 F. Supp. 2d 915, 938–39 (N.D. Cal. 2013) (ruling
plaintiffs adequately pleaded fraud where defendants allegedly labeled default-
related fees “other charges” to disguise their true nature; omitted the fact that the
fees included undisclosed markups; and dissuaded plaintiffs from challenging the
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charges by telling them that they were in accordance with their mortgages). The
plaintiffs here did not allege that the defendants marked up the actual cost of the
property-inspection fees or dissuaded them from challenging the fees. Nor did the
plaintiffs allege that the property-inspection fees were mislabeled; that any of their
payments were misapplied to generate additional late fees; or that they were
charged for multiple inspections on the same day. Vega alleged that she was
charged for inspections on back-to-back days in January 2013, but she stated only
that this happened once, and she was still charged for only twelve property
inspections over the course of one year. On these alleged facts, we affirm the
dismissal of plaintiffs’ fraud-based claims.
AFFIRMED.
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