Trang Che v. Aurora Loan Services, LLC

Citations: 847 F. Supp. 2d 1205; 2012 U.S. Dist. LEXIS 51642; 2012 WL 899629Docket: Case No. SACV 11-01458-CJC(RNBx)

Court: District Court, C.D. California; March 15, 2012; Federal District Court

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Plaintiff Trang Che initiated a lawsuit against Defendant Aurora Loan Servicing, LLC, alleging violations of the Truth In Lending Act (TILA) and California’s Unfair Competition Law (UCL). The case arose from a loan taken by Che in 2005, secured by her property, which was later transferred to Aurora after she filed for bankruptcy in 2010. Following a foreclosure in 2011, Che filed suit in September 2011, claiming that Aurora acted as a creditor rather than a mere loan servicer, thus making it liable under TILA. Aurora countered that it was not a creditor, arguing that Che's UCL claim was invalid as it relied on the TILA claim. After considering the motions and evidence, the Court converted Aurora's motion to dismiss into a motion for summary judgment, ultimately granting the motion. The Court determined that there was no genuine dispute regarding material facts, affirming Aurora's position and concluding that it was entitled to judgment as a matter of law. Summary judgment was appropriate as the case primarily involved legal issues rather than factual disputes, with the burden of proof resting on Che to present evidence against the motion.

Section 1641(g) of the Truth In Lending Act (TILA) mandates that creditors must notify borrowers in writing within 30 days of a mortgage loan being sold or assigned to a third party. The term "creditor" refers to entities that regularly extend credit, while a "servicer" is responsible for managing the loan. Aurora claims it is a loan servicer and not liable under TILA, citing federal court rulings that exempt loan servicers from such liability. Aurora asserts that its assignment of Ms. Che’s loan does not create liability under 1641(g) since a servicer is not considered an assignee for liability purposes if the loan is only administratively assigned for servicing. 

Ms. Che contends that Aurora became her creditor upon assignment of her Deed of Trust and Promissory Note and alleges that its failure to notify her of this transfer led to her losing her home to foreclosure. She claims that proper notification could have allowed her to prevent the default. The court finds that Aurora qualifies as a loan servicer, not a creditor, since it has never owned Ms. Che’s loan. The assignment alone does not establish liability under TILA. Additionally, Ms. Che has not proven actual damages resulting from the alleged violation. Her claims of potential damage are deemed speculative, especially considering her bankruptcy filing and loan default. The court concludes that Aurora is not liable under 1641(g) due to its status as a loan servicer and the lack of demonstrated actual damages suffered by Ms. Che. Consequently, Aurora has established that no genuine issue of material fact exists regarding its liability under the statute.

Ms. Che has failed to provide evidence that Aurora violated California's Unfair Competition Law (UCL). The UCL prohibits unlawful, unfair, or fraudulent business practices and allows for violations of other laws to be actionable under its provisions. Ms. Che alleges that Aurora's actions, including violating the Truth in Lending Act (TILA), making misrepresentations to the bankruptcy court, and committing fraud during the assignment of the Deed of Trust to Aurora, constitute such violations. However, these claims lack merit. Aurora, as a loan servicer, is not liable under the TILA. Additionally, any alleged misrepresentations made to the bankruptcy court are protected by litigation privilege, granting Aurora immunity from those claims. Ms. Che's assertion of fraud regarding the assignment of her Deed of Trust lacks sufficient detail or evidentiary support, particularly her claim about the notary's involvement. The court concluded that no genuine issue of material fact exists regarding Aurora’s liability under the TILA or UCL, granting summary judgment in favor of Aurora. Furthermore, the court deemed the matter appropriate for disposition without a hearing, vacating the previously scheduled hearing. Ms. Che had previously filed suit against Aurora for quiet title/wrongful foreclosure and unfair practices and obtained a Temporary Restraining Order (TRO) to prevent eviction, but this TRO was denied upon expiration.