District Court (Cal.) Allows Rosenthal Act Claim, Denies FCBA and “Tort-in-Se” Theories

In Castellanos v. JP Morgan Chase & Co. 2009 WL 1833981 (S.D.Cal. 2009), Judge Huff held that the Plaintiff had sufficiently alleged facts to state a claim under the Rosenthal Act, but denied Plaintiff’s claims under the Fair Credit Billing Act, and torts of invasion of privacy and “tort in se”.    As to the FCBA claim, Judge Huff explained

The Court concludes that Plaintiff fails to state a claim under the FCBA. Plaintiff alleges that Defendants never updated their system to reflect the new billing address after notice of the new address was set forth in the written cease and desist letter on August 13, 2007, and that the cease and desist letter constitutes the written notice of this billing error. ( FAC ¶¶ 134-36, Ex. A.) However, the cease and desist letter notified Defendants of a new address to be used on future statements, does not indicate any billing error contained on past statements, and was sent to Defendants before the alleged billing errors occurred, as Plaintiff alleges that Defendants violated § 1666(b)(6) by sending statements to the old address after September 2007. (Id. ¶¶ 137-39, Ex. A.) Section 1666 applies when an incorrect statement is issued by the creditor and within 60 days the obligor sends written notice setting forth the alleged error to the creditor, triggering the creditor’s duties under § 1666. The billing statements attached to the FAC are dated October 11, 2007 and November 10, 2007 and are addressed to Plaintiff’s home address. (FAC Ex. B.) Plaintiff does not allege that he sent Defendants written notice of the alleged billing errors contained in the October and November statements within 60 days after having received the incorrect billing statements as required by § 1666(a). Accordingly, the Court grants Defendants’ motion to dismiss Plaintiff’s ninth cause of action with leave to amend.  ¶  Defendants contend that Plaintiff’s claim under the FCBA fails because there is no private right of action for a violation of § 1666. The Court disagrees. Section 1640(a) of the Act provides that an individual action for damages may be maintained against any creditor who fails to comply with any requirement imposed under part D of the subchapter. 15 U.S.C. § 1640(a). Part D contains § 1666 regulating the correction of billing errors by creditors. Accordingly, there is a private right of action provided for violations of the failure to correct billing errors under the FCBA.

As to Plaintiff’s claim of invasion of privacy, Judge Huff refused to allow that claim to proceed either. 

Plaintiff’s tenth cause of action is for invasion of privacy. “[T]he action for intrusion has two elements: (1) intrusion into a private place, conversation or matter, (2) in a manner highly offensive to a reasonable person.” Taus v. Loftus, 40 Cal.4th 683, 725, 54 Cal.Rptr.3d 775, 151 P.3d 1185 (2007) (citation omitted). The intrusion must be intentional. Id. “To prove actionable intrusion, the plaintiff must show the defendant penetrated some zone of physical or sensory privacy surrounding, or obtained unwanted access to data about, the plaintiff. The tort is proven only if the plaintiff had an objectively reasonable expectation of seclusion or solitude in the place, conversation or data source.” Shulman v. Group W Prods., Inc., 18 Cal.4th 200, 232, 74 Cal.Rptr.2d 843, 955 P.2d 469 (1998).  ¶   The Court concludes that Plaintiff fails to plead a claim for invasion of privacy. Plaintiff fails to allege the content of any of the calls placed to Plaintiff or Plaintiff’s brother-in-law and what was highly offensive about such calls. Allegations of a lender calling a debtor concerning a home equity loan extended to the debtor, especially given the current economic climate, without more is not enough to state a claim for invasion of privacy above a speculative level. Accordingly, the Court grants Defendants’ motion to dismiss Plaintiff’s tenth cause of action for invasion of privacy with leave to amend.

Finally, Judge Huff refused to recognize the tort of “tort-in-se”, explaining:

Plaintiff’s eleventh cause of action is for tort in se. “A tort in essence is the breach of a nonconsensual duty owed another. Violation of a statutory duty to another may therefore be a tort and violation of a statute embodying a public policy is generally actionable even though no specific civil remedy is provided in the statute itself. Any injured member of the public for whose benefit the statute was enacted may bring the action.” South Bay Building Enter., Inc. v. Riviera Lend-Lease, Inc., 72 Cal.App.4th 1111, 1123, 85 Cal.Rptr.2d 647 (1999) (citations omitted).  ¶  Plaintiff alleges that Defendants violated a statutory duty to Plaintiff and thus are liable under the doctrine of tort-in-se. (FAC ¶ 147.) Plaintiff alleges that Defendants liability stems from Defendants’ unlawful conduct in violation of the Rosenthal Act and the FCBA. ( Id. ¶ 149, 85 Cal.Rptr.2d 647.) Plaintiff alleges that he has suffered damages, including mental and emotional distress, out of pocket monetary damages for attorney fees and costs for protection from Defendants, and incidental actual damages. ( Id. ¶¶ 56-60, 85 Cal.Rptr.2d 647.) Defendants argue that because Plaintiff fails to state a claim under the Rosenthal Act and the FCBA, Plaintiff’s cause of action for tort-in-se also fails.  ¶  The Court concludes that Plaintiff fails to sufficiently allege a cause of action for tort-in-se. Plaintiff has failed to allege a cause of action under the FCBA and both the FCBA and the Rosenthal Act provide for a private civil remedy. The California case upon which Plaintiff relies is distinguishable from the facts of this case. South Bay stands for the “proposition that a plaintiff may rely on standards established in a criminal statute to establish a traditional tort action.” Animal Legal Defense Fund v. Mendes, 160 Cal.App.4th 136, 145, 72 Cal.Rptr.3d 553 (2008) (citing South Bay, 72 Cal.App.4th at 1123-24, 85 Cal.Rptr.2d 647). The Rosenthal Act already provides a specific private civil remedy and there is nothing to indicate that California intended to allow separate negligence tort claims based upon the duties created by the Rosenthal Act. The Court declines to recognize such a claim based on the pleading in this case in absence of California state authority. Plaintiff received a home equity loan secured by a second deed trust deed on the home, then defaulted on the loan. There is nothing in the California state case law to indicate that California intended to create general tort liability in the state under these facts, and the Ninth Circuit has not yet ruled on this issue. Accordingly, the Court grants Defendants’ motion to dismiss Plaintiff’s eleventh cause of action for tort-in-se.