Marzette v. Provident Savings Bank, F.S.B. et al
Filing
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ORDER signed by Judge John A. Mendez on 11/9/2011 GRANTING 8 Motion to Dismiss filed by America's Servicing Company, Wells Fargo, N.A.. If Plaintiff chooses to file an amended complaint pursuant to this order, it must be filed within 21 days of the date of this Order. (Reader, L)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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PAULINE MARZETTE, an individual, )
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Plaintiff,
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v.
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PROVIDENT SAVINGS BANK, F.S.B.; )
WELLS FARGO; AMERICAN SERVICING )
COMPANY; NDEX WEST, LLC.;
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E*TRADE BANK; and DOES 1-20,
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inclusive,
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Defendants.
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Case No. 2:11-CV-2089 JAM-CKD
ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS
This matter comes before the Court on Defendants’ Wells Fargo
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(“Wells Fargo”) and America’s Servicing Company, named in the
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Complaint as American Servicing Company, (“ASC”) (collectively
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“Defendants”) Motion to Dismiss (Doc. #8) Plaintiff Pauline
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Marzette’s (“Plaintiff”) Complaint (Doc. #1, Ex. A), for failure to
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state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).
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Plaintiff opposes the motion to dismiss (Doc. #13).1
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reasons set forth below, the motion to dismiss is GRANTED.2
For the
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The Court has considered Plaintiff’s late-filed opposition.
This matter was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). Oral argument was scheduled
for October 19, 2011.
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I.
FACTUAL ALLEGATIONS
Plaintiff’s Complaint (Doc. #1, Ex. A) alleges that she has a
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mortgage loan from Wells Fargo, secured by a Deed of Trust that
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encumbers her home.
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financial difficulties, causing her to fall behind in her mortgage
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payments.
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an attempt to seek a loan modification, but that ASC refused to
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negotiate with her until she hired an attorney and her home was on
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the brink of foreclosure.
Compl., ¶¶ 1, 12.
Compl., ¶¶ 14-15.
Plaintiff suffered
She alleges that she contacted ASC in
Compl., ¶¶ 17-21.
ASC then offered her
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a loan modification that allowed for reduced interest only payments
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for five years, which she alleges she accepted under duress.
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Compl., ¶¶ 21-22.
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her that this modification did not include escrow, and she did not
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understand that she would need to make separate escrow payments in
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addition to the modified mortgage payments.
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Complaint alleges that Plaintiff cannot afford to make additional
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escrow payments, and has realized that once her five year loan
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modification expires, she will be in the same, or worse, position
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than she was before the modification.
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brings state law claims for (1) breach of contract/breach of the
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covenant of good faith and fair dealing, and (2)unfair business
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practices under California Business and Professions Code §§ 17200,
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et seq.
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prejudice due to failure to state a claim.
Plaintiff alleges that ASC did not make clear to
Compl., ¶ 24.
Compl., ¶ 25.
The
Plaintiff
Defendants argue that all claims should be dismissed with
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II.
PROCEDURAL BACKGROUND
Plaintiff’s Complaint was originally filed in the Superior
Court in El Dorado County, on July 5, 2011.
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Wells Fargo and ASC
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removed the case to this Court on August 5, 2011 (Doc. #1).
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Defendant NDEX West joined in removal (Doc. #2).
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Provident Savings Bank was dismissed from the Complaint (Doc. 10).
Defendant
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III. OPINION
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A.
Legal Standard
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A party may move to dismiss an action for failure to state a
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claim upon which relief can be granted pursuant to Federal Rule of
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Civil Procedure 12(b)(6).
In considering a motion to dismiss, the
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court must accept the allegations in the complaint as true and draw
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all reasonable inferences in favor of the plaintiff.
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Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by
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Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319,
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322 (1972).
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are not entitled to the assumption of truth.
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129 S. Ct. 1937, 1950 (2009) (citing Bell Atl. Corp. v. Twombly,
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550 U.S. 544, 555 (2007)).
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plaintiff needs to plead “enough facts to state a claim to relief
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that is plausible on its face.”
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Dismissal is appropriate where the plaintiff fails to state a claim
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supportable by a cognizable legal theory.
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Police Department, 901 F.2d 696, 699 (9th Cir. 1990).
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Scheuer v.
Assertions that are mere “legal conclusions,” however,
Ashcroft v. Iqbal,
To survive a motion to dismiss, a
Twombly, 550 U.S. at 570.
Balistreri v. Pacifica
Upon granting a motion to dismiss for failure to state a
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claim, the court has discretion to allow leave to amend the
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complaint pursuant to Federal Rule of Civil Procedure 15(a).
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“Dismissal with prejudice and without leave to amend is not
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appropriate unless it is clear . . . that the complaint could not
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be saved by amendment.”
Eminence Capital, L.L.C. v. Aspeon, Inc.,
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316 F.3d 1048, 1052 (9th Cir. 2003).
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Generally, the court may not consider material beyond the
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pleadings in ruling on a motion to dismiss for failure to state a
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claim.
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complaint or relied on by the complaint, or when the court takes
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judicial notice of matters of public record, provided the facts are
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not subject to reasonable dispute.
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WL 2241664 at *2 (C.D. Cal. Mar. 30, 2009) (internal citations
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omitted).
There are two exceptions: when material is attached to the
Sherman v. Stryker Corp., 2009
Defendants request judicial notice (Doc. #9) of four
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recorded documents: the Deed of Trust, Notice of Default, Notice of
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Trustee’s Sale, and Notice of Rescission of Notice of Default.
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Plaintiff does not object to the Court taking judicial notice of
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these public documents, some of which are referenced in the
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Complaint.
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requested.
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B.
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Claims for Relief
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Accordingly, the Court takes judicial notice as
Unfair Business Practices
The first claim for relief, brought against all defendants,
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asserts that ASC violated California’s unfair competition law,
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California Business and Professions Code § 17200 (“UCL”), by
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refusing to negotiate with Plaintiff regarding a loan modification
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because Plaintiff was not current on her payments, only negotiating
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once Plaintiff retained an attorney, and waiting until shortly
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before foreclosure to offer Plaintiff a loan modification.
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Plaintiff alleges that the terms of the modification are such that
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she is not contributing to the equity that she had in her home,
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making it more difficult to afford payments once the modified terms
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end.
Further, Plaintiff alleges that ASC took advantage of
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Plaintiff’s duress by not clearly explaining to her that she would
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still be responsible for escrow payments, a fact she realized
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belatedly.
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Defendants contend that Plaintiff has failed to state a claim
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for violation of the UCL because she does not cite any wrongful
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conduct by ASC.
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requirement that a loan servicer or beneficiary under a deed of
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trust offer a borrower a loan modification or even consider a
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borrower for a modification.
Defendants contend that there is no legal
Additionally, to invoke the doctrine
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of economic duress, Plaintiff must show wrongful conduct by
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Defendants.
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injury to have standing to bring a UCL claim, and Defendants assert
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that the Complaint does not state that Plaintiff has suffered any
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financial harm as a result of wrongful conduct by Defendants.
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Moreover, Plaintiff must have suffered financial
California Business and Professions Code 17200 defines unfair
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competition as an unlawful, unfair or fraudulent business act or
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practices.
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Plaintiff must allege facts sufficient to establish a violation of
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some law.
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with particularity, facts sufficient to establish that the public
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would likely be deceived by Defendants’ conduct, including specific
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deceptive statements or omission with alleged facts showing why
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those specific statements or omission would be likely to deceive
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the public.
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Plaintiffs must state facts showing that Defendants’ conduct is
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unfair.”
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(N.D. Cal. Oct. 24, 2011) (internal citations omitted).
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Complaint does not meet this standard, as Plaintiff fails to plead
To make out a claim based on unlawful conduct,
To establish fraudulent conduct, Plaintiff must allege,
Finally, to assert an unfair business act or practice,
Banaga v. Taylor Bean Mortg. Co., 2011 WL 5056985, *6
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Here, the
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facts showing violation of a law, fraud, or unlawful conduct.
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While Plaintiff’s opposition brief states that ASC acted
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unfairly and in a manner likely to injure and deceive the public
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when it represented to Plaintiff that her total monthly payment
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under the loan modification would include escrow and then later
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demanded a separate escrow payment, these allegations are not
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contained in the Complaint.
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merely allege delay in negotiating and offering a loan
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modification, and a misunderstanding by Plaintiff of the
The allegations of the Complaint
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modification terms.
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declared that a servicer acts in the best interests of all parties
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if it implements a loan modification; however nothing in section
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2923.6 imposes a duty on servicers of loans to modify the terms of
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loans or creates a private right of action for borrowers.
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v. Indymac Mortg. Services, 2010 WL 1031013, *6 (S.D. Cal. Mar. 19,
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2010) (citing cases).
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In Cal. Civ. Code § 2923.6 the legislature
Vissuet
Proposition 64 restricts standing to bring an unfair
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competition claim to any “person who has suffered injury in fact
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and has lost money or property” as a result of unfair competition.
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Shaw v. BAC Home Loans Servicing, LP, 2011 WL 805938, *2 (S.D. Cal.
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Feb. 28, 2011) (citing Cal Bus. & Prof Code 17204).
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innumerable ways in which economic injury from unfair competition
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may be shown.
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Superior Court, 51 Cal.4th 310 (2011)).
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brief did not address Defendants’ Proposition 64 argument.
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Moreover, the Complaint is devoid of any allegations of economic
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injury.
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not foreclosed upon.
There are
Shaw, 2011 WL 805938 at *3 (citing Kwikset Corp. V.
Plaintiff’s opposition
Plaintiff received a loan modification and her house was
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Accordingly, the Court finds that the allegations of the
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Complaint fail to state a claim for violation of Cal. Bus. & Prof.
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Code 17200, as Plaintiff has failed to allege unlawful, fraudulent
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or unfair conduct by Defendants, nor has she alleged an injury
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conferring standing to bring a UCL claim.
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the UCL claim is GRANTED, and the claim is dismissed with leave to
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amend.
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2.
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The motion to dismiss
Breach of Contract/Breach of Duty of Good Faith and
Fair Dealing
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The second claim for relief, brought against all defendants,
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contains allegations of breach of contract and breach of the duty
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of good faith and fair dealing.
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agreed to service Plaintiff’s mortgage and breached this agreement
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by not adequately servicing the mortgage when it refused to
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negotiate a loan modification with Plaintiff until she hired an
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attorney.
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discuss any negotiation with Plaintiff regarding the terms of her
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mortgage, ASC interfered with Plaintiff’s rights to have ASC act as
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adequate mortgage servicer, in violation of the duty of good faith
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and fair dealing.
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The complaint alleges that ASC
Alternatively, the Complaint alleges that by refusing to
Defendants argue that Plaintiff has failed to state a claim
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for breach of contract because her allegations that ASC refused to
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negotiate a modification do not constitute breach of any contract.
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Defendants note, in the motion and reply, that Plaintiff fails to
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attach the purported contract or refer to its terms.
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that Plaintiff is basing her claim on oral representations,
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Defendants argue that the terms of an actual contract would prevail
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over any oral representations to the contrary.
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To the extent
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Plaintiff’s opposition brief argues that according to her
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written loan modification contract, her monthly payments would
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include escrow.
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of 2010 that escrow was not included and she was required to make
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additional escrow payments.
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Plaintiff contends the Complaint stated a claim for breach of
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contract and breach of the duty of good faith and fair dealing.
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However, none of these new allegations are included in the
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Complaint, thus the Court cannot consider them in deciding the
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Plaintiff contends that she discovered in February
Based on these new allegations,
motion to dismiss.
In California, “[a] cause of action for breach of contract
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requires proof of the following elements: (1) existence of the
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contract; (2) plaintiff's performance or excuse for nonperformance;
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(3) defendant’s breach; and (4) damages to plaintiff as a result of
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the breach.”
CDF Firefighters v. Maldonado, 158 Cal.App.4th 1226,
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1239 (2008).
A breach of contract claim rests upon the actual
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terms of a contract and a plaintiff must allege a breach of the
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express provisions of a contract.
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Mortgage Funding, Inc., 2008 WL 3891126, at *4 (C.D. Cal. Aug. 19,
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2008) (dismissing breach of contract claim where “[p]laintiff has
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failed to set forth any provisions of the Notes that were
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breached.”).
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covenant of good faith and fair dealing, a plaintiff must establish
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the existence of a contractual obligation, along with conduct that
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frustrates the other party’s rights to benefit from the contract.”
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Fortaleza v. PNC Fin. Servs. Group, Inc., 2009 U.S. Dist. LEXIS
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64624 **15-16 (N.D. Cal. July 27, 2009).
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to set forth the terms of a contract that was breached, and thus
See Nichols v. Greenpoint
Likewise, “to establish a breach of an implied
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Here, the Complaint fails
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Plaintiff failed to properly plead a claim for either breach of
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contract or breach of the duty of good faith and fair dealing.
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Accordingly, the motion to dismiss the second claim for relief is
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GRANTED.
The second claim is dismissed with leave to amend.
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IV.
ORDER
For the reasons set forth to above, the Motion to Dismiss is
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GRANTED.
Because Plaintiff may be able to amend the Complaint to
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properly plead her claims for relief, the Court will allow
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Plaintiff the opportunity to file an amended complaint.
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notes that the Complaint does not contain any allegations
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pertaining to actions taken by defendants Wells Fargo, NDEX West or
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E*Trade Bank.
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any allegations against these defendants they will be dismissed
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with prejudice at that time.
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The Court
If the amended complaint likewise does not contain
If Plaintiff chooses to file an amended complaint pursuant to
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this order, it must be filed within twenty-one (21) days of the
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date of this Order.
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IT IS SO ORDERED.
Dated: November 9, 2011
____________________________
JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE
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