Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—EDCal: Loan Holder Failed to State Unfair Competition Law Claims Based on Violations of the Fair Debt Collection Practices Act, (Apr 12, 2013)

By Jody Coultas, J.D.

A loan holder failed to state a California Unfair Competition Law (UCL) claim against The Bank of New York Mellon (BONY), Mortgage Electronic Recording Systems (MERS), and Bank of America because he failed to allege unlawful, unfair, or fraudulent conduct, according to the federal district court in Fresno (Newman v. Bank of New York Mellon, April 10, 2013, Ishii, A.).

MERS was the beneficiary and nominee of the lender and its assigns and successors until it assigned its beneficial interest in only the deed of trust to BONY. The loan holder stopped making mortgage payments, and then contacted Bank of America to restructure the loan. The loan holder eventually filed for bankruptcy, and the house was set for a foreclosure sale.

The loan holder failed to state a UCL claim against the companies on the basis of unlawful conduct, according to the court. He alleged a sufficient injury based on paying too much interest and an adverse effect on his credit score, but failed to produce evidence of unlawful acts. The unlawful prong claims were based on violations of the Fair Debt Collection Practices Act (FDCPA) and California law. However, the court held that the loan holder’s FDCPA claim failed.

The claims under the unfair and fraudulent prongs also failed, according to the court. The loan holder argued that the companies did not have a valid interest in the mortgage, note, and/or deed of trust and therefore could not foreclose or collect money. The court held that the loan holder failed to show why the companies were not the right entities to initiate foreclosure.

The case is No. 1:12-CV-1629 AWI GSA.

Attorneys: Malcolm D. Gross (Law Office of Malcolm D. Gross) for David Newman. Aaron R. Marienthal (Reed Smith LLP) for The Bank of New York Mellon.

Companies: The Bank of New York Mellon; Mortgage Electronic Recording Systems; Bank of America

Cases: StateUnfairTradePractices CaliforniaNews