(PS) Davis v. Wells Fargo, N.A., et al., No. 2:2016cv00890 - Document 25 (E.D. Cal. 2016)

Court Description: ORDER AND FINDINGS AND RECOMMENDATIONS signed by Magistrate Judge Allison Claire on 12/2/2016 ORDERING Defendant Wells Fargo shall extend the present de facto stay of foreclosure sale until the assigned district judge rules on these Findings and Reco mmendations; Promptly upon the district judge's ruling, the matter will be set for a mandatory court settlement conference; RECOMMENDED that 15 Defendant's Motion to Dismiss be Granted in Part and Denied in Part; Plaintiff's 16 Motion for a Preliminary Injunction be Granted; Referred to Judge John A. Mendez; Objections due within 14 days after being served with these F & R's. (Reader, L)

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(PS) Davis v. Wells Fargo, N.A., et al. Doc. 25 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 CORECIA DAVIS, 12 13 14 15 No. 2:16-cv-00890 JAM AC Plaintiff, v. ORDER AND WELLS FARGO, N.A., FINDINGS AND RECOMMENDATIONS Defendant. 16 17 Defendant’s motion to dismiss, ECF No. 15, and plaintiff’s motion for a preliminary 18 injunction, ECF No. 16, came on for hearing before the undersigned on October 19, 2016. 19 Plaintiff appeared in pro se, and attorney Leigh Curran appeared on behalf of Wells Fargo. For 20 the reasons that follow, the court recommends that the motion to dismiss be granted in part and 21 denied in part, and that the motion for a preliminary injunction be granted. The court will also set 22 this matter for a mandatory settlement conference, to be scheduled promptly upon the assigned 23 direct judge’s ruling on these Findings and Recommendations. 24 25 PROCEDURAL BACKGROUND This case involves the pending foreclosure of residential property located in Auburn, 26 California. Homeowner and plaintiff Corecia Davis (“plaintiff” or “Davis”) sued defendant Wells 27 Fargo, N.A. (“Wells Fargo” or “the Bank”) for negligence and fraud in Sacramento Superior 28 1 Dockets.Justia.com 1 Court on April 15, 2016. ECF No. 1 at 10.1 On April 28, 2016, the Bank removed the matter 2 based on diversity jurisdiction. ECF No. 1 at 1. Plaintiff subsequently filed a First Amended 3 Complaint (“FAC”), ECF No. 12, and a Motion for Preliminary Injunction, ECF No. 16. 4 The FAC asserts 14 causes of action: (1) negligence; (2) unjust enrichment; (3) violations 5 of the Fair Debt Collection Practices Act; (4) violation of the Real Estate Settlement Procedures 6 Act; (5) violation of Cal. Business and Professions Code 17200; (6) fraud; (7) a claim seeking to 7 void or cancel assignment of Deed of Trust; (8) wrongful foreclosure; (9) breach of the implied 8 covenant of good faith and fair dealing; (10) quiet title; (11) slander of title; (12) promissory 9 estoppel; (13) negligent misrepresentation; and (14) invasion of privacy. Defendant moved to 10 dismiss the FAC pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). ECF 15. 11 Defendant also filed a Request for Judicial Notice of documents to be considered by this Court in 12 deciding the Motion. ECF 14. 13 REQUEST FOR JUDICIAL NOTICE 14 I. Defendant’s Request 15 Defendants seek judicial notice of the following documents: 16 (1) the fixed Rate Mortgage Note executed between Stephen Michael Woo (plaintiff’s 17 then-husband) and Wachovia Mortgage, FSB, dated February 15, 2008 (Request for 18 Judicial Notice (“RJN”) Exh. 12); 19 (2) the Deed of Trust Recorded by Wachovia Mortgage, FSB with the Placer County 20 Recorder on February 22, 2008 (id. Exh. 2); 21 (3) a Certificate of Corporate Existence of World Savings Bank, FSB, issued by the Office 22 of Thrift Supervision on April 21, 2006 ( id. Exh. 3); 23 (4) a letter recognizing the name change of World Savings Bank, FSB to Wachovia 24 Mortgage, issued by the Office of Thrift Supervision on November 19, 2007, id. Exh. 4; 25 (5) a certification of the conversion of Wachovia Mortgage, FSB, to a national bank with 26 27 28 1 Citations to court documents refer to the page numbers assigned by the court’s electronic docketing system and not those assigned by the parties. 2 The documents submitted for judicial notice are found at ECF No. 14-1. 2 1 the name Wells Fargo Bank Southwest, issued by the Comptroller of the Currency on 2 November 1, 2009 (id. Exh. 5); 3 (6) a Substitution of Trustee in which Wachovia Mortgage, FSB, its successors and/or 4 assignees, substituted NBS Default Services, LLC, as Trustee for the property at issue 5 here, dated November 12, 2015 (id. Exh. 6); 6 (7) an opinion letter from the General Counsel of the Federal Home Loan Bank Board, 7 dated August 13, 1985 and published at 1985 FHLBB LEXIS 178, regarding the scope of 8 federal preemption (id. Exh. 7); 9 (8) an opinion letter from the Chief Counsel of the Office of Thrift Supervision, dated July 10 22, 2003 and published at 2003 OTS LEXIS 6, regarding preemption of the New Jersey 11 Predatory Lending Act (id. Exh. 8). 12 II. 13 Legal Standards The court may take notice of facts that are capable of accurate and ready determination by 14 resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b); United 15 States v. Bernal–Obeso, 989 F.2d 331, 333 (9th Cir. 1993). Facts subject to judicial notice may be 16 considered by a court on a motion to dismiss. In re Russell, 76 F.3d 242, 244 (9th Cir. 1996). In 17 actions arising from mortgage disputes, courts may take judicial notice of the deed of trust and 18 other documents pertaining to the loan. Kelley v. Mortgage Electronic Registration Systems, 19 Inc., 642 F.Supp.2d 1048, 1052–53 (N.D. Cal. 2009). A court may also take “judicial notice of 20 matters of public record outside the pleadings.” Indemnity Corp. v. Weisman, 803 F.2d 500, 504 21 (9th Cir. 1986). 22 III. Discussion 23 The court has examined each of the exhibits for which judicial notice is requested, and 24 finds that defendant’s Exhibits 1 through 6 are suitable for judicial notice as matters of public 25 record outside of the pleadings. See Fed. R. Evid. 201(b). These documents pertain directly to 26 the property and loan at issue, and therefore constitute relevant historical facts. Exhibits 7 and 8, 27 however, are legal opinions from regulatory agencies. While the existence of these documents 28 can accurately and readily be determined, the factual assertions and legal analyses they contain 3 1 are not proper subjects of judicial notice. Because the existence of these opinion letters and the 2 fact that they were issued are not relevant to the issues before the court, the request for judicial 3 notice will be denied as to Exhibits 7 and 8. See Ruiz v. City of Santa Maria, 160 F.3d 543, 548 4 n.13 (9th Cir. 1998) (judicial notice is inappropriate where the facts to be noticed are not relevant 5 to the disposition of the issues before the court). The court does, however, consider these opinion 6 letters as proffered persuasive authority to the extent that defendant relies on them to support its 7 preemption argument, which is discussed below. 8 9 MOTION TO DISMISS I. 10 Legal Standards A. Dismissal Under Federal Rule of Civil Procedure 12(b)(6) 11 The purpose of a Rule 12(b)(6) motion to dismiss is to test the legal sufficiency of the 12 Complaint. N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). “Dismissal 13 can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged 14 under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 15 1990). 16 In order to survive dismissal for failure to state a claim, a complaint must contain more 17 than a “formulaic recitation of the elements of a cause of action;” it must contain factual 18 allegations sufficient to “raise a right to relief above the speculative level.” Bell Atlantic Corp. v. 19 Twombly, 550 U.S. 544, 555 (2007). It is insufficient for the pleading to contain a statement of 20 facts that “merely creates a suspicion” that the pleader might have a legally cognizable right of 21 action. Id. (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 22 (3d ed. 2004)). Rather, the complaint “must contain sufficient factual matter, accepted as true, to 23 ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 24 (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads 25 factual content that allows the court to draw the reasonable inference that the defendant is liable 26 for the misconduct alleged.” Id. 27 28 In reviewing a complaint under this standard, the court “must accept as true all of the factual allegations contained in the complaint,” construe those allegations in the light most 4 1 favorable to the plaintiff, and resolve all doubts in the plaintiffs’ favor. See Erickson v. Pardus, 2 551 U.S. 89, 94 (2007); Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 3 960 (9th Cir. 2010), cert. denied, 131 S. Ct. 3055 (2011); Hebbe v. Pliler, 627 F.3d 338, 340 (9th 4 Cir. 2010). However, the court need not accept as true, legal conclusions cast in the form of 5 factual allegations, or allegations that contradict matters properly subject to judicial notice. See 6 Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981); Sprewell v. Golden State 7 Warriors, 266 F.3d 979, 988 (9th Cir. 2001), as amended, 275 F.3d 1187. 8 9 Pro se pleadings are held to a less stringent standard than those drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520 (1972). Pro se complaints are construed liberally and may 10 only be dismissed if it appears beyond doubt that the plaintiff can prove no set of facts in support 11 of his claim which would entitle him to relief. Nordstrom v. Ryan, 762 F.3d 903, 908 (9th Cir. 12 2014). A pro se litigant is entitled to notice of the deficiencies in the complaint and an 13 opportunity to amend, unless the complaint’s deficiencies could not be cured by amendment. See 14 Noll v. Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987). 15 16 17 18 19 20 21 22 B. Requirements of Federal Rule of Civil Procedure 9(b) Rule 9 establishes heightened pleadings standards for “special matters” including fraud claims. Specifically, the rule states as follows: Fraud or Mistake; Conditions of Mind. In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge and other conditions of a person’s mind may be alleged generally. Rule 9(b), Fed. R. Civ. Proc. A pleading satisfies Rule 9(b) if it identifies the circumstances constituting fraud so that 23 the defendant can prepare an adequate answer from the allegations. Neubronner v. Milken, 6 24 F.3d 666, 671-72 (9th Cir. 1993). Accordingly, “[t]he complaint must specify such facts as the 25 times, dates, places, benefits received and other details of the alleged fraudulent activity.” Id. at 26 672. In other words, a fraud claim must specifically identify “the who, what, when, where, and 27 how” of the misconduct charged. Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997). 28 Moreover, in a fraud action brought against a corporation under California law, a plaintiff must 5 1 “allege the names of the persons who made the allegedly fraudulent representations, their 2 authority to speak, to whom they spoke, what they said or wrote, and when it was said or 3 written.” Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 4th 153, 157 (1991). 4 II. 5 The First Amended Complaint The property at issue, a home in Auburn, California, was purchased in May 2004 for 6 $540,000 and was encumbered by a First Deed of Trust in the amount of $432,000 with Provident 7 Savings Bank, FSB. Id. at ¶ 9. In September 2005 the property was refinanced with a new loan 8 amount of $543,239 from Centex Home Equity Company, LLC. FAC (ECF No. 12) at ¶ 10. 9 When the housing market went into a slump in 2007, plaintiff and her then-husband Stephen Woo 10 engaged in a year-long effort to modify the loan, which was finally accomplished on February 15, 11 2008 when a new Fixed Rate Mortgage Note was entered between Mr. Woo and Wachovia 12 Mortgage, FSB, in the amount of $555,000. Id. at ¶¶ 11, 12. The accompanying Deed of Trust, 13 which plaintiff alleges to be both modifiable and assumable, is provided as Attachment A to the 14 FAC. 15 On May 20, 2011, Stephen Woo quitclaimed the property to plaintiff as part of a divorce 16 settlement, although he remained in residence there until July 2013 when he vacated the property 17 and stopped making mortgage payments. Id. at ¶¶ 16-17, 19. Plaintiff alleges she has been 18 working with Wells Fargo in an effort to obtain a loan modification from July 2013 until her 19 original complaint was filed. Id. ¶ 20. 20 In 2013 plaintiff was assigned to a home modification employee at Wells Fargo, Jesse 21 Scott, id. at ¶ 21, but was unsuccessful in her efforts with Mr. Scott and unnamed others to 22 achieve either assumption of or modification to the loan. As a result she vacated the subject 23 property in 2014 and it became a rental property. Id. at ¶ 22. Plaintiff would not have vacated 24 the property had she been advised that assumption was an option if she remained in the residence. 25 ¶ 54. 26 In 2013 and 2014 plaintiff dealt with Michael Wulff in home modification, id. at ¶ 23, 27 who incorrectly or falsely told her the bank could communicate only with Mr. Woo. Id. at ¶ 24. 28 On December 15, 2014 Davis apparently acquired an authorization from Mr. Woo which 6 1 informed Wells Fargo that the Bank had his permission to contact plaintiff about the loan but, 2 since the Bank had mistakenly recorded plaintiff’s name to be “Patricia” in its records, employees 3 with whom she spoke continued to insist they could not provide her with information. Id. at ¶¶ 4 26-27. Once Wells Fargo acknowledged plaintiff was entitled to receive information, unnamed 5 employees asserted the loan was not assumable, and, alternatively, that even if it were assumable 6 the mortgage had to be paid current before assumption would be considered, and that the amount 7 of information they could give plaintiff was “limited,” all of which assertions are alleged to be 8 false. Id. at ¶¶ 28-31. Plaintiff discovered that a Notice of Default had been recorded on the 9 property on December 18, 2015 without any notice given to her as the sole titleholder on the 10 11 property, which she alleges renders the filing “fraudulent.” Id. at ¶ 32. In February 2016, Davis was “told” that Wells Fargo could deal with her effort to modify 12 the loan without Mr. Woo’s involvement, and she provided requested financial information 13 including tax returns, a contribution letter, pay stubs and other unspecified material she 14 transmitted to the bank by facsimile. Id. at ¶ 34. On February 29, 2015 plaintiff faxed defendant 15 asking that they cease foreclosure activity and complete a Qualified Written Request for 16 documents, but there was no compliance with either request. Id. at ¶ 35. 17 Plaintiff recounts subsequent telephone conversations with various Wells Fargo 18 employees on specific dates. Those employees are identified as “Eboniece,” who told her the 19 home was in active foreclosure but no sale date had been set, verified plaintiff was interested in 20 loss mitigation and modification options, and confirmed her financial documents had been 21 received on February 29 and March 1, 2015, and then passed her along to another Bank 22 employee, “Michele.” Id. at ¶ 36. Michelle informed plaintiff that the file was reviewed on 23 March 1 and there were questions about the divorce decree, but acknowledged the quitclaim deed 24 executed by Mr. Woo was in the file. Id. at ¶ 37. 25 On March 11, 2016, Davis was passed around between Bank employees “LaToya,” who 26 verified there was no sale date on the house and that Michael Wulff was her home preservation 27 specialist, “Debra” and “Louisa Mogra” in the re-entry department. Plaintiff was told to call back 28 in 48-72 hours, and the tenor of the request led her to believe she was being considered for a 7 1 modification. Id. at ¶¶ 38. On March 14 and 15, 2016, Stephen Woo received conflicting letters 2 from Wells Fargo first asserting that they could not proceed with his request for mortgage 3 assistance, and then stating that once his application and the documents requested of him were 4 received they would begin processing his application. Id. at ¶¶ 39-40. 5 On March 15, 2016, plaintiff spoke with “Nkia” who advised that the file was closed in 6 February for failure to provide documentation, and “Cynthia” who told her the home was in 7 active foreclosure and she needed to talk to the re-entry department -- but “Michael” in that 8 department told her she needed to talk to the assumption department, and “Victoria” in the 9 assumption department referred her to the refinance department. When plaintiff connected with 10 employee Jeanette Skeet in the refinance department, she was told that Mr. Woo had to be 11 involved and needed to provide his tax returns and proof of income. Id. at ¶¶ 40-44. 12 On March 24, 2016, Mr. Woo got a letter from Michael Wulff asking for his information, 13 and plaintiff talked to “Alicia” who informed her that Wells Fargo had recorded receipt of phone 14 calls from her on February 11, March 8 and March 15, 2015, and advised plaintiff that she could 15 assume the loan or get outside refinancing. Id. at ¶¶ 47-48. On March 25, 2016, Mr. Woo got 16 another letter from the Bank advising that by “completing the assumption and modification 17 process” he would be adding plaintiff to the existing mortgage to take over the monthly 18 payments. Id. at ¶ 50. 19 On or about March 28, 2016, plaintiff got a letter from Jeannette Skeet dated March 23, 20 2016 indicating the same alternatives, apologizing for incorrect information that had been 21 provided to her earlier about the need for Mr. Woo’s involvement in the process, and referring her 22 to a new preservation specialist, Annie Meza. Id. at 51. When Davis and Meza spoke on April 1, 23 2016, Davis was told she could assume the loan but only if she was the occupant of the home, and 24 that she had until April 25, 2016 to submit a complete packet of information or the home would 25 be sold on May 3, 2016. Id. at ¶ 52. Plaintiff contends that she had earlier moved out and rented 26 the house in reliance on the contrary and incorrect information she had received previously from 27 Wells Fargo employees. Id. at ¶¶ 53-54. On April 8, 2016, Mr. Woo got a letter from the Bank 28 telling him he had been removed from the HAMP review process having withdrawn his request, 8 1 which Davis alleges he had not done. Id. at ¶ 57. 2 On April 14, 2016, Ms. Davis spoke with “Jennica” who told her she did not qualify for 3 assumption, then Ms. Meza who told her that was bad information. Id. at ¶ 62. At this point 4 Davis filed a complaint with the Bureau of Real Estate. Id. at ¶ 64. Ms. Davis filed her state 5 court complaint on April 15, 2016 and on April 18, 2016 the Placer County Superior Court issued 6 a TRO to prevent sale of the property which Order plaintiff faxed to Wells Fargo on April 18. 7 The property remained on the sale calendar, however, on April 19. Id. at ¶¶ 66-69. Plaintiff 8 spoke to employees “Vonn,” “Evelyn,” and “Brent” on April 20, while the sale date remained of 9 record, and was finally told by “Christina Moss” that she needed to bring the loan current. Id. at ¶ 10 70-72. 11 The litany of contacts, all providing different information, continued as Davis spoke with 12 employees Christina Moss and Annie Meza on April 21, id. at ¶¶ 73-74. Also on April 21, 2016, 13 Wells Fargo Senior Vice President Leesa Whitt-Potter wrote to Stephen Woo indicating the Bank 14 was reviewing an inquiry from Davis and it would be completed by May 2, 2015. Id. at ¶ 75. On 15 May 16, Davis received a letter from employee Paul Gruber informing her that the Bank hoped to 16 have the results of her “inquiry” completed by May 16 or May 31, 2015. Id. at ¶ 76. Finally, on 17 May 24, 2016, Mr. Woo received a letter identifying Michael Wolff as the Home Preservation 18 Specialist yet again which, plaintiff alleges, should have put the matter in modification review 19 and suspended all foreclosure activity. Id. at ¶ 77. 20 In addition to this course of communication and miscommunication regarding plaintiff’s 21 efforts to assume and modify the home loan, the FAC alleges that Wells Fargo improperly 22 divulged plaintiff’s personal information to her tenant. The FAC states that plaintiff’s property 23 management agent received an email on March 18, 2016 from Randy Robinson, who was living 24 in the subject property as a renter, in which Robinson indicated that he had a lot of personal 25 information about plaintiff. Id. at ¶ 46. On April 7, 2016, plaintiff got a copy of the email from 26 Robinson and, and concluded after reading it that he did, indeed, have confidential information – 27 the same confidential information that plaintiff had submitted to defendant in her efforts to 28 achieve modification. Id. at ¶ 56. On April 11, 2016, Robinson informed plaintiff’s agent that his 9 1 cousin worked in the fraud department at Wells Fargo. Id. at ¶ 58. On April 14, 2016, having 2 reason to believe that Robinson had obtained information regarding her taxes, her place of 3 employment, her income, and facts about her divorce that could only have been acquired from 4 Wells Fargo, plaintiff called Wells Fargo employee Lucas Varley who told her it would not be 5 possible to identify the source of that information leak. Id. at ¶¶ 60-61. 6 III. Discussion 7 A. HOLA Preemption 8 Defendant contends first and foremost that the FAC must be dismissed because all of 9 plaintiff’s claims are preempted by the Home Owners Loan Act (“HOLA”), 12 U.S.C. §§ 1461- 10 1470. HOLA was enacted by Congress in 1933 to charter and regulate savings associations at a 11 time when a record number of home loans were in default and many of the savings associations 12 were insolvent. “HOLA was designed to restore public confidence by creating a nationwide 13 system of federal savings and loan associations to be centrally regulated according to nationwide 14 ‘best practices.’” Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1004 (9th Cir. 2008) (quoting 15 Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 160-161 (1982)). The regulatory scheme 16 developed by the Office of Thrift Supervision pursuant to HOLA includes an express preemption 17 provision, 12 C.F.R. § 560.2(a), that has the force of law. Id. It provides that the HOLA 18 regulations occupy “the entire filed of lending regulation for federal savings associations,” and 19 therefore generally preempt state law. 12 C.F.R. § 560.2(a). Pursuant to this rule, state law 20 claims including negligence and fraud are preempted and must be dismissed when brought 21 against a federal savings association (“FSA”). 22 Wells Fargo is not a federal savings association, it is a national bank. As such, it is not 23 regulated or directly protected by HOLA. Defendant argues that HOLA preemption nonetheless 24 applies because the loan at issue originated with an FSA.3 Although the Ninth Circuit has held in 25 general terms that HOLA preemption applies when a loan originates with an FSA and is later 26 acquired by another type of financial institution, Silvas, 514 F.3d at 1004, it has not addressed the 27 28 3 As previously noted, the loan originated with Wachovia Mortgage, FSB. 10 1 specific question whether a non-FSA that acquires a loan from an FSA enjoys HOLA protections 2 for its own post-acquisition conduct. 3 Many district courts have applied preemption to claims against successor entities when the 4 loan at issue was originally made by an FSA. See, e.g., Kenery v. Wells Fargo, N.A., 2014 U.S. 5 Dist. LEXIS 4672, *11 (N.D. Cal. Jan. 14, 2014); Marquez v. Wells Fargo, N.A., 2013 U.S. Dist. 6 LEXIS 131364, *11 (N.D. Cal. Sept. 13, 2013). A growing number of courts, however, have 7 found that HOLA preemption applies after an FSA’s merger with a national bank only to claims 8 arising from the conduct of the FSA. See, e.g., Penermon v. Wells Fargo Bank, N.A., 47 F. Supp. 9 3d 982, 995 (N.D. Cal. June 11, 2014); Rijhwani v. Wells Fargo Home Mortgage, Inc., 2014 U.S. 10 Dist. LEXIS 27416 at *7 (N.D. Cal. March 3, 2014); Narvasa v. U.S. Bancorp, 2016 U.S. Dist. 11 LEXIS 98991 at *9-10 (E.D. Cal. July 27, 2016).4 The undersigned finds the Penermon, 12 Rijhwani and Narvasa line of cases to be persuasive. 13 HOLA was intended to ensure the stability of federal savings and loan associations, not to 14 protect national banks from liability for their own conduct. As the district court in Penermon 15 explained: 16 HOLA concerns laws “affecting the operations . . . of federal savings associations, with an aim to . . . facilitate the safe and sound operation” of those associations. 12 C.F.R. § 560.2(a). . . . [T]he reason for HOLA’s enactment was to encourage lending and to ensure stability in federal savings loans. . . . HOLA was not enacted to provide a defense to actions that would otherwise violate consumer protection laws. Moreover, it is unlikely that HOLA contemplated the subsequent mortgage crisis and the resulting mergers of federal savings banks into national banks or loan servicing as it exists today. 17 18 19 20 21 22 Penermon, 47 F. Supp. 3d at 995. 23 24 25 26 27 28 4 See also Valtierra v. Wells Fargo Bank, N.A., 2011 U.S. Dist. LEXIS 18669 (E.D. Cal. Feb. 10, 2011); Gerber v. Wells Fargo Bank, N.A., 2012 U.S. Dist. LEXIS 15860 (D. Ariz. Feb. 9, 2012); Rhue v. Wells Fargo Home Mortgage, Inc., 2012 U.S. Dist. LEXIS 188384 (C.D. Cal. Nov. 27, 2012); Rodriguez v. U.S. Bank Nat. Ass’n, 2012 U.S. Dist. LEXIS 77228 (N.D. Cal. June 4, 2012); Cerezo v. Wells Fargo Bank, 2013 U.S. Dist. LEXIS 110755 (N.D. Cal. Aug. 6, 2013); Leghorn v. Wells Fargo Bank, N.A., 950 F. Supp. 2d 1093, 1107-08 (N.D. Cal. 2013); Hopkins v. Wells Fargo Bank, N.A., 2013 U.S. Dist. LEXIS 72803 (E.D. Cal. May 22, 2013); Pimentel v. Wells Fargo, 2015 U.S. Dist. LEXIS 62913 (N.D. Cal. May 7, 2015). 11 1 The cases adopting a portability model of preemption follow the general principle that 2 liabilities and defenses of the original lender travel with the loan and apply to its successor owner. 3 See, e.g., Matta v. Wells Fargo Bank, 2013 U.S. Dist. LEXIS 108197 (C.D. Cal. July 31, 2013) 4 (HOLA “follows the loan” if original lender covered). This principle makes eminent sense when 5 applied to liabilities and defenses related to the conduct of the originating lender. Claims which 6 would have been preempted pre-acquisition should remain preempted post-acquisition. This 7 principle does not, however, support effectively immunizing successor entities for otherwise 8 actionable post-acquisition conduct. See Penermon, 47 F. Supp. 3d at 995; Narvasa, 2016 U.S. 9 Dist. LEXIS 98991 at *9-10. For these reasons, the court concludes that preemption does not 10 extend to post-merger or successive conduct by an entity that is not otherwise governed by 11 HOLA. 12 This court must therefore ask whether the alleged violations took place when the banking 13 entity was covered by HOLA. See Rijhwani, 2014 U.S. Dist. LEXIS 27416 at *7; Narvasa, 2016 14 U.S. Dist. LEXIS at 10. In this case, the conduct plaintiff complains of is Wells Fargo’s handling 15 of plaintiff’s requests to assume and modify the loan. This conduct occurred entirely after the 16 merger by which Wells Fargo acquired the loan. None of plaintiff’s claims involve the inception 17 of the loan or any pre-merger conduct by the FSA. Accordingly, HOLA does not preempt the 18 claims. 19 Defendant contends that this court must give deference to the opinions of the Office of 20 Thrift Supervision (“OTS”) and its predecessor, the Federal Home Loan Bank Board, as the 21 federal agencies charged with regulating FSAs, that HOLA preemption applies to successor 22 financial institutions. See RJN (ECF No. 14-1), Exhs. 7 & 8. The cited opinion letters, however, 23 do not address the specific issue of a successor financial institution’s civil liability for its own 24 post-acquisition conduct. Accordingly, deference to the OTS interpretation of the regulations 25 does not require a different result. See Penermon, 47 F. Supp. 3d at 993-94 (rejecting argument 26 that OTS opinion letter governs preemption where alleged wrongdoing arises from Wells Fargo’s 27 post-merger conduct). 28 Defendant also relies on language in the mortgage note and Deed of Trust (“DOT”) for the 12 1 proposition that it is contractually entitled to HOLA preemption. The loan contract and DOT 2 provide that any entity who takes over the original lender’s rights or obligations will have all the 3 lender’s rights. See ECF No. 14-1 at 2 (mortgage note), 9-10 (DOT). Both documents provide 4 that the instruments “shall be governed by and construed under federal law and federal rules and 5 regulations including those for federally chartered savings institutions,” id. at 6 (mortgage note), 6 18 (DOT). This general language does not entitle defendant to HOLA preemption where federal 7 law does not require its application. HOLA preemption “is not some sort of asset that can be 8 bargained, sold, or transferred.” Gerber v. Wells Fargo Bank, N.A, 2012 U.S. Dist. LEXIS 15860 9 (D. Ariz. Feb. 9, 2012). As previously explained, federal law requires that the successor lender is 10 entitled to HOLA preemption to the same extent that the original lender was – in defense of 11 claims arising from the conduct of the FSA. The contract can require no more. 12 Wells Fargo “should not be allowed to hide behind a defense created solely for the 13 [savings association], a non-party, in order to defeat allegations made against the [bank] that are 14 unrelated to any acts of that non-party.” In re Toliver, 464 B.R. 720, 739 (Bankr. E.D. Ky. 2012). 15 Because plaintiff’s claims do not arise from the actions of Wachovia or any other FSA, but are 16 based entirely on the post-acquisition conduct of a successor national bank not entitled to HOLA 17 protection for its actions, HOLA preemption does not apply. 18 19 20 B. Defendant’s Challenge To “Any Claim Based On A Dispute Regarding Wells Fargo’s Right To Enforce The Loan” The FAC alleges in many places that Wells Fargo lacks the right to enforce the home loan. 21 See, e.g., FAC, ECF No. 12, ¶¶ 13-15, 79-81, 89, 110, 117, 126, 137, 178, 181-85, 202-204, 213. 22 Defendant argues that plaintiff lacks standing to challenge its rights under the loan, and that its 23 enforcement rights are undisputable under the terms of the judicially noticeable mortgage note 24 and Deed of Trust. Defendant contends that Claims Two (unjust enrichment), Three (Fair Debt 25 Collection Practices Act), Seven (seeking cancellation of Deed of Trust), Ten (seeking to quiet 26 title), and Eleven (slander of title) are based entirely on the allegation that the Bank lacks the right 27 to enforce the home loan, and that Claims Four (Real Estate Settlement Procedures Act), Five 28 (Cal. Bus. & Prof. Code § 17200) and Eight (wrongful foreclosure) are based in part on that 13 1 allegation. Defendant accordingly moves for dismissal of all those claims. Motion to Dismiss 2 (“MTD”), ECF No. 15 at 18-20. 3 Rule 12(b)(6) requires the court to consider the elements of a particular claim for relief 4 and then determine whether facts sufficient to establish each element have been pleaded. The 5 undersigned will proceed to that inquiry on a claim-by-claim basis. Defendant is correct that the 6 judicially noticed documents establish its status as the lender under the note and beneficiary under 7 the Deed of Trust, and thus its contractual right as a general matter to enforce against the 8 borrower. The complaint alleges not only that Wells Fargo lacks the power to foreclose in the 9 abstract, however, but that its own conduct – engaging in a lengthy and misleading course of 10 communications with the sole owner of the property regarding her assumption and modification 11 of the loan – precludes it from taking plaintiff’s home under the circumstances of this case. 12 Accordingly, the fact that Wells Fargo is the successor to Wachovia does not require dismissal 13 unless that fact is fatally inconsistent with the essential elements of a particular claim. Surplusage 14 in the complaint, including dubious or even frivolous legal theories, will be disregarded but does 15 not without more support dismissal under Rule 12(b)(6). 16 17 18 C. Sufficiency Of The Allegations To State A Claim For Relief 1. First Claim for Relief – Negligence To state a cause of action under California law for negligence, a plaintiff must allege that 19 (1) the defendant owed the plaintiff a duty of care, (2) the defendant breached that duty, and (3) 20 the breach proximately caused the plaintiff's damages or injuries. Thomas v. Stenberg, 206 Cal. 21 App. 4th 654, 662 (2012). Defendant argues that plaintiff has failed to allege a duty of care and 22 either a factual or legal basis for the claim. 23 “Whether a duty of care exists is a question of law to be determined on a case-by-case 24 basis. . . . We start by identifying the allegedly negligent conduct by [defendants] because our 25 analysis is limited to ‘the specific action the plaintiff claims the particular [defendant] had a duty 26 to undertake in the particular case.’” Lueras v. BAC Home Loans Servicing, LP, 221 Cal. App. 27 4th 49, 62 (2013). Here, interpreting the pro se complaint liberally, the allegedly negligent 28 conduct includes mishandling the loan assumption and modification process by lying to and/or 14 1 misleading plaintiff regarding matters including her status as an applicant, failing to maintain 2 accurate and complete records, failing to process the loan assumption and modification as 3 promised, and failing to negotiate in good faith; failing to provide information, prior to initiating a 4 foreclosure sale, about programs for which plaintiff might be eligible; and failing to safeguard 5 plaintiff’s confidential information, including the failure to properly hire, supervise and train 6 employees. FAC, ECF No. 12, at 16-19. 7 Defendant relies on the proposition that “absent extraordinary and specific facts, a bank 8 does not owe a duty of care to a noncustomer.” Software Design & Application v. Hoefer & 9 Arnett, 49 Cal. App. 4th 472, 478-79 (1996). Plaintiff’s negligence claim, however, like the 10 complaint as a whole, turns in significant part on allegations that Wells Fargo treated plaintiff 11 (albeit inconsistently) like a customer, or at least like an applicant for assumption and 12 modification. For this reason, the general rule regarding noncustomers does not apply. 13 Both California and federal courts have held that when a bank accepts an application for a 14 loan modification, it assumes a duty of reasonable care in handling the application. See, Alvarez 15 v. BAC Home Loans Servicing, LP, 228 Cal. App. 4th 941, 948-49 (2014); Garcia v. Ocwen Loan 16 Servicing, LLC, 2010 U.S. Dist. LEXIS 45375 at *8-10 (N.D. Cal. May 10, 2010); Trant v. Wells 17 Fargo Bank, N.A., 2012 U.S. Dist. LEXIS 98404 at *19-22 (S.D. Cal. July 12, 2012); Rijhwani, 18 2014 U.S. Dist. LEXIS 27516 at *57-62. Whether the defendant in this case accepted an 19 application for modification may be a factual dispute for the future. For present purposes, a 20 liberal reading of the complaint supports an inference that the Bank agreed to review plaintiff’s 21 application for an assumption and modification of the loan – or at least that Bank employees led 22 plaintiff to believe that she was under consideration for assumption and modification. 23 Although a lender is not a fiduciary of its borrowers and owes them no general duty of 24 care, a duty may nonetheless arise where a financial institution’s role exceeds the scope of its 25 “conventional role as a mere lender of money.” See Nymark v. Heart Fed. Savings & Loan 26 Ass’n, 231 Cal. App. 3d 1089, 1095-96 (1991); see also Wagner v. Benson, 101 Cal. App. 3d 27, 27 35 (1980) (“Liability to a borrower for negligence arises only when the lender actively 28 participates in the financed enterprise beyond the domain of the usual money lender.”). Whether 15 1 a duty of care is owed to a borrower is determined according to a non-exhaustive six factor test. 2 Nymark, 231 Cal. App. 3d at 1098; Osei v. Countrywide Home Loans, 692 F. Supp. 2d 1240, 3 1249 (E.D. Cal. 2010). The courts in Alvarez, Garcia, Trant and Rijhwani reached their results 4 by applying this framework, which balances (1) the extent to which the transaction was intended 5 to affect the plaintiff, (2) the foreseeability of harm to her, (3) the degree of certainty that the 6 plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and 7 the injury suffered, (5) the moral blame attached to the defendant's conduct, and (6) the policy of 8 preventing future harm. See Nymark, 231 Cal. App. 3d at 1098. 9 The undersigned finds that these factors support a duty of care in the instant case. First, 10 accepting plaintiff’s allegations as true, the contemplated transactions (potential assumption and 11 modification) were plainly intended for her benefit. Second, the potential harm to her was readily 12 foreseeable: the loss of the opportunity to keep her home. Third, although the home has not yet 13 been sold, the injury to plaintiff absent success in this lawsuit is certain.5 Fourth, there is a direct 14 connection between defendant’s alleged conduct and plaintiff’s injury. 15 Regarding the fifth factor, the blameworthiness of defendant’s conduct, the Alvarez court 16 noted that a borrower’s “ability to protect his own interests in the loan modification process [is] 17 practically nil” and the bank holds “all the cards.” Alvarez, 228 Cal. App. 4th at 949 (quoting 18 Jolley v. Chase Home Finance, LLC, 213 Cal. App. 4th 872, 900 (2013)). After reviewing the 19 structure and recent history of the mortgage industry, the court concluded that “[t]he borrower’s 20 lack of bargaining power, coupled with conflicts of interest that exist in the modern loan service 21 industry, provide a moral imperative that those with the controlling hand be required to exercise 22 reasonable care in their dealings with borrowers seeking a loan modification.” Id. The court also 23 found that allegations of “dual tracking” – the simultaneous pursuit of modification and 24 foreclosure – further supported a finding of blameworthiness. The complaint here also includes 25 allegations of dual tracking. 26 27 28 5 Wells Fargo has voluntarily stayed the foreclosure, and agreed at hearing on the motion that the sale would not take place until 14 days after plaintiff files her objections to these Findings and Recommendations. 16 1 The sixth factor, a policy of preventing future harm, is readily satisfied by the existence of 2 state and federal initiatives intended to help homeowners impacted by the home foreclosure crisis. 3 See, e.g., Cal. Civ. Code § 2923.6 (encouraging lenders to offer loan modifications to borrowers 4 in appropriate circumstances); see also www.MakingHomeAffordable.gov (describing the federal 5 “Making Home Affordable Program,” which promotes modification opportunities and seeks to 6 avoid foreclosures). The California courts have noted the state legislature’s strong preference for 7 preventing unnecessary foreclosures. See Jolley, 213 Cal. App. 4th at 903; Alvarez, 228 Cal. App. 8 4th at 950-51 (detailing provisions of the California Homeowner Bill of Rights). 9 Because all six factors weigh in plaintiff’s favor, the court concludes for present purposes 10 that the complaint alleges facts establishing a duty of care. Plaintiff has sufficiently alleged a 11 breach of that duty6 and resulting imminent injury. Accordingly, the motion to dismiss should be 12 denied as to Claim One. 13 2. Second Claim for Relief – Unjust Enrichment 14 Defendant contends that Claim Two must be dismissed because unjust enrichment is not 15 an independent cause of action under California law. MTD, ECF No. 15 at 32. There is a split of 16 authority on the question whether unjust enrichment may be maintained as a separate, stand-alone 17 claim. See Davenport v. Litton Loan Servicing, L.P., 725 F. Supp. 2d 862, 885 (N.D. Cal. 2010) 18 (surveying cases). Although it is sometimes characterized as a remedy, some California courts 19 take the view that unjust enrichment is “not a cause of action . . . or even a remedy, but rather a 20 principle, underlying various legal doctrines and remedies. It is synonymous with restitution.” 21 McBride v. Boughton, 123 Cal. App. 4th 379, 387 (2004) (internal quotation marks and citations 22 omitted); cf. Melchior v. New Line Prod., Inc., 106 Cal. App. 4th 779, 793 (2003) (“The phrase 23 ‘unjust enrichment’ does not describe a theory of recovery, but an effect: the result of a failure to 24 make restitution under circumstances where it is equitable to do so.”). 25 //// 26 6 27 28 As described above, plaintiff alleges that the Bank failed to failed to perform a timely review, provided inconsistent and misleading information about requirements and about the status of her application, foreclosed while the application was purportedly in process, and mishandled documents and payments. 17 1 However it is characterized, the prevailing view in this district is that unjust enrichment is 2 not an independent cause of action. See 3W S.A.M. Tout Bois v. Rocklin Forest Prods., Inc., No. 3 2:10-cv-01070 MCE KJN, 2011 U.S. Dist. LEXIS 11530 (E.D. Cal. Feb. 7, 2011); Foster Poultry 4 Farms v. Alkar-Rapidpak-MP, No. 1:11-cv-00030 AWI SMS, 2011 U.S. Dist. LEXIS 61008 5 (E.D. Cal. June 8, 2011); Albizo v. Wachovia Mortgage, No. 2:11-cv-02991 AC, 2012 U.S. Dist. 6 LEXIS 55985 (E.D. Cal. April 20, 2012); Randhawa v. Skylux Inc., No. 2:09-cv-02304 WBS 7 DAD, 2012 U.S. Dist. LEXIS 154281 (E.D. Cal. Oct. 26, 2012); Tohumculuk v. H.J. Heniz Co., 8 No. 2:13-cv-0773 WBS KJN, 2013 U.S. Dist. LEXIS 162592 (E.D. Cal. November 14, 2013). 9 The undersigned agrees that unjust enrichment is duplicative of theories for relief already 10 11 available under other legal doctrines, and therefore adopts this prevailing view. Because unjust enrichment is not an independent cause of action, Claim Two should be 12 dismissed without leave to amend. Plaintiff is informed that such dismissal will not bar her from 13 alleging in relation to other claims that defendant obtained unjust benefits from its allegedly 14 wrongful conduct, or from seeking a remedy of restitution. 15 16 3. Third Claim for Relief – Fair Debt Collection Practices Act Defendant contends that plaintiff’s claim under the Fair Debt Collection Practices Act 17 (“FDCPA”) fails both because Wells Fargo is not a debt collector within the meaning of the 18 statute, and because plaintiff is not a protected consumer. MTD, ECF No. 15 at 30-31. Because 19 defendant is correct on the first point, the court need not address the second. 20 21 22 23 24 25 26 Congress passed the FDCPA in 1977 with the stated purposes of eliminating “abusive debt collection practices,” ensuring “that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged,” and promoting “consistent State action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). In furtherance of these purposes, the FDCPA bans a variety of debt collection practices and allows individuals to sue offending debt collectors. Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1207-08 (9th Cir. 2013) To state a claim under the FDCPA, a plaintiff must allege facts establishing that: (1) the 27 plaintiff has been the object of collection activity arising from a consumer debt; (2) the defendant 28 attempting to collect the debt qualifies as a ‘debt collector’ under the FDCPA; and (3) the 18 1 defendant has engaged in a prohibited act or has failed to perform a requirement imposed by the 2 FDCPA. Pratap v. Wells Fargo Bank, N.A., 63 F.Supp.3d 1101, 1113 (N.D. Cal. 2014). An 3 entity qualifies as a “debt collector” under the statute if (1) its principal purpose is debt collection, 4 (2) it regularly seeks to collect debts owed to another, or (3) its principal purpose is the 5 enforcement of security interests. See 15 U.S.C. § 1692a(6). Entities that regularly collect debts 6 owed to themselves do not come within the statutory definition. Schlegel, 720 F.3d at 1209-10. 7 That includes mortgage holders. Id. 8 It is well-established that a mortgage lender or other creditor who seeks to recover the 9 security for its loan is not a “debt collector” within the meaning of the FDCPA. See Hulse v. 10 Ocwen Fed. Bank, FSB, 195 F. Supp. 2d 1188, 1204 (D. Or. 2002) (“[The] activity of foreclosing 11 on [a] property pursuant to a deed of trust is not the collection of a debt within the meaning of the 12 [FDCPA]”). Importantly, a debt collector does not include “any person collecting or attempting 13 to collect any debt owed or due or asserted to be owed or due another to the extent such activity . 14 . . concerns a debt which was not in default at the time it was obtained by such person.” 15 Fitzgerald v. PNCBank, 2011 U.S. Dist. LEXIS 43629 (D. Idaho 2011) (quoting 15 U.S.C. § 16 1692a(6)(F)). To this end, courts — including this court — have concluded that “lenders and 17 mortgage companies are not ‘debt collectors’ within the meaning of the FDCPA.” Williams v. 18 Bank of America, No. 2:12-cv-2513 JAM AC, 2013 U.S. Dist. LEXIS 65216 (May 7, 2013); see 19 also Cherian v. Countrywide Home Loans, Inc., 2012 U.S. Dist. LEXIS 96823 (D. Idaho 2012); 20 Ines v. Countrywide Home Loans, Inc., 2008 U.S. Dist. LEXIS 55245 (S.D. Cal. 2008); Williams 21 v. Countrywide, 504 F. Supp. 2d 176, 190 (S.D. Tex. 2007) (“Mortgage companies collecting 22 debts are not ‘debt collectors.’”). Accordingly, plaintiff's FDCPA claim should be dismissed. 23 Because the allegations of the complaint, plaintiff’s exhibits, and the judicially noticed 24 documents related to the loan are all inconsistent with any allegation that Wells Fargo purchased 25 the loan while it was in default, amendment would be futile. Claim Three should therefore be 26 dismissed with prejudice. 27 4. 28 Fourth Claim for Relief – Violation of Real Estate Settlement Procedures Act Congress enacted the Real Estate Settlement Procedures Act (“RESPA”) to control real 19 1 estate settlement costs by “insuring that consumers throughout the Nation are provided with 2 greater and more timely information on the nature and costs of the settlement process and are 3 protected from unnecessarily high settlement charges caused by certain abusive practices that 4 have developed in some areas of the country.” 12 U.S.C. § 2601(a) (1989). Among other things, 5 RESPA requires loan servicers to respond “after the receipt from any borrower” of a Qualified 6 Written Response (“QWR”) for information related to the servicing of a loan.7 12 U.S.C. § 7 2605(e). Plaintiff alleges that she sent Wells Fargo a QWR explaining why she believed the 8 account was in error, and that Wells Fargo failed to reply in violation of RESPA. FAC, ECF No. 9 12 at ¶¶ 129-131. Defendant contends that this claim must be dismissed because RESPA creates 10 duties on the part of loan servicers to borrowers only, and plaintiff was not a borrower. MTD, 11 ECF No. 15 at 30. 12 Defendant is correct that at the time it acquired the loan and at the time plaintiff allegedly 13 sent a QWR, she was not a party to the loan and was thus not a “borrower” within the meaning of 14 RESPA.8 This entire lawsuit is about Wells Fargo’s allegedly improper thwarting of plaintiff’s 15 attempt to assume and modify the loan in order to prevent foreclosure and the loss of her home. 16 As defendant aptly puts it, plaintiff wants to become a borrower, but the statute does not create 17 any duties toward individuals who are not already borrowers. 18 19 This court has found in relation to Claim One that the California common law of negligence permits the recognition of a duty of care arising from defendant’s alleged treatment of 20 7 21 22 23 24 25 26 27 A QWR is “a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that (i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.” 12 U.S.C. § 2605(e)(3). 8 The statute does not contain a definition of “borrower,” see 12 U.S.C. § 2602 (Definitions), so the usual meaning of the term applies. It is indisputable that plaintiff’s ex-husband was the sole borrower on the original loan. RJN Exh. 1 (fixed rate mortgage note), ECF No. 14-1 at 2. The original Deed of Trust includes a spousal joinder, signed by plaintiff, which expressly provides that the spouse waives all interest in the property and incurs no personal liability under the Note. RJN Exh. 2 (Deed of Trust), ECF No. 14-1 at 25. Although borrower Stephen Woo subsequently transferred title of the property to plaintiff, Woo remained the only person contractually obligated on the loan. 28 20 1 plaintiff as an applicant for assumption and modification. Statutory duties, however, are not 2 subject to expansive construction by the court based on the circumstances of a given case. 3 Accordingly, the motion to dismiss this claim should be granted. Because amendment would be 4 futile, leave to amend the RESPA claim is not appropriate.9 5 5. Fifth Claim for Relief – Violation of Bus. & Prof. Code § 17200 6 California’s Unfair Competition Law prohibits any “unlawful, unfair or fraudulent 7 business act or practice.” Bus. & Prof. Code § 17200. The statute incorporates other laws and 8 treats violations of those laws as independently actionable unlawful business practices. Chabner 9 v. United Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000). Plaintiff alleges that the 10 same events giving rise to her other claims also violate § 17200. See FAC, ECF No. 12 at 22-26. 11 Defendant presents a single ground for dismissal: that Claim Five is predicated in part on the 12 untenable proposition that Wells Fargo has no legal right to enforce its rights under the loan. 13 MTD, ECF No. 15 at 18. Defendant cites to a single, one-sentence paragraph, ¶ 137, in a claim 14 that is set forth in paragraphs numbered 135 through 163, and spanning five pages. The cited 15 paragraph states in full: “Defendant WELLS FARGO violated Cal. Business & Prof. Code 16 Section 17200 by collecting payments that they lacked the right to collect, and engaging in 17 unlawful business practices by violating FDCPA and RESPA.” FAC, ECF No. 12 at 22, ¶ 137. 18 Defendant provides no argument why this single conclusory allegation, even if it fails to 19 support relief standing alone, requires the dismissal of plaintiff’s entire section 17200 claim. 20 Because the moving party has failed to support its motion as to Claim Five, it should be denied. 21 6. Sixth Claim for Relief – Fraud 22 Defendant contends that the complaint fails to allege facts that support relief for fraud. 23 Defendant argues first that plaintiff has not stated a claim for fraudulent concealment of facts, and 24 second that her claim based on affirmative misrepresentation fails because she has not pled facts 25 9 26 27 28 The court notes that loan servicers are obligated to respond to QWRs received from “a borrower (or an agent of the borrower).” § 2605(e)(1)(A). Even if plaintiff were able upon amendment to truthfully allege that she submitted the QWR as an agent for her ex-husband Stephen Woo, the servicer’s obligation to respond would run to Woo and not to plaintiff. Accordingly, such amendment would fail to cure the defect. 21 1 2 showing reliance or damages. MTD, ECF No. 15 at 25-28. To state a claim for fraud under California law, plaintiff must establish (1) 3 misrepresentation (false representation, concealment or nondisclosure); knowledge of falsity (or 4 “scienter”); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting 5 damage. Lazar v. Superior Court, 12 Cal.4th 631,638 (1996). The Federal Rules of Civil 6 Procedure require that fraud be pleaded with particularity. Rule 9(b), Fed. R. Civ. P. “Averments 7 of fraud must be accompanied by the ‘who, what when, where and how’ of the misconduct 8 charged.” Cooper v. Pickett, 137 F.3d 616, 626 (9th Cir. 1997). “The plaintiff must set forth what 9 is false or misleading about a statement, and why it is false.” Decker v. GlenFed, Inc. (In re 10 GlenFed. Inc. Sec. Litig.), 42 F.3d 1541, 1548 (9th Cir. 1994). Moreover, in a fraud action against 11 a corporation, a plaintiff must “allege the names of the persons who made the allegedly fraudulent 12 representations, their authority to speak, to whom they spoke, what they said or wrote and when it 13 was said or written.” Tarmann v. State Farm Mut. Auto Ins. Co., 2 Cal. App. 4th 153, 157 (1991). 14 Plaintiff has, for the most part, identified the individuals with whom she spoke, when she 15 spoke with them, what they told her, and why she believes the representations were false or 16 misleading. The facts recited in the complaint, as summarized in section II, supra, are more than 17 sufficient to satisfy Rule 9 as to these aspects of the fraud claim. However, because the FAC fails 18 to adequately identify which of the specific “who,” “what” and “when” allegations are 19 incorporated into Claim Six, ECF No. 12 at 26-28, plaintiff must be required to amend. 20 Defendant argues that insofar as the claim rests on fraudulent concealment, it is time- 21 barred. Defendant’s untimeliness theory is based on its isolation of a single allegation (that Wells 22 Fargo withheld information from plaintiff related to the 2008 finalization of Woo’s loan) as the 23 sole basis for the claim. MTD, ECF No. 15 at 26. Plaintiff, however, alleges a continuing course 24 of false and misleading affirmative statements combined with the withholding of information, 25 which characterized her own direct interactions with the bank from July 2013 until the filing of 26 this lawsuit in April 2016. Defendant’s assertion of the statute of limitations should therefore be 27 rejected. 28 Defendant next contends that it owed no duty of disclosure to plaintiff because she was 22 1 not the borrower. This is the same argument that has been rejected in the negligence context, and 2 fails for the same reasons here. Although the duties of disclosure owed by the Bank to plaintiff 3 were not co-extensive with those owed to Woo, the issue in Claim Six is whether defendant 4 deliberately mislead plaintiff to her detriment by its statements and omissions to her. Plaintiff’s 5 status as a non-borrower does not defeat this claim. 6 Finally, defendant argues more convincingly that the complaint fails to adequately plead 7 reliance and damages. In various places, the complaint states that plaintiff relied on the 8 information provided to her by supplying documents, changing her living arrangements, 9 resubmitting applications and documents when they were misplaced by defendant, and forgoing 10 alternative means for relief. Actions such as supplying documents and resubmitting paperwork 11 do not constitute detrimental reliance in the fraud context, because they do not incur any legal or 12 financial liability or otherwise lead to cognizable damage. On the other hand, plaintiff’s 13 implication that she moved out of the subject property in reliance on defendant’s statements, and 14 was thus rendered ineligible for assumption, could establish detrimental reliance. However, the 15 court must read between the lines of the complaint to infer this theory. If plaintiff means to allege 16 that the residency requirement was fraudulently withheld from her until after she vacated the 17 premises, she has failed to allege specific facts establishing that defendant’s failure to explain the 18 requirement was made with knowledge that she intended to vacate and intent to cause her to 19 become ineligible for assumption.10 Plaintiff also fails to specifically identify the alternate means 20 for relief that she forfeited in reliance on the belief that she was being considered for assumption 21 and modification, and the specifics of the financial or other consequences. For these reasons, 22 Rule 9 is not satisfied as to reliance and damages. The claim therefore must be dismissed, but 23 plaintiff should be given an opportunity to amend. 24 //// 25 10 26 27 28 Plaintiff alleges in Claim Six at ¶ 168: “They waited until the subject property needed to be her primary residence [sic], knowing that it was not, to advise her that she was eligible for an assumption only if the property were her primary residence. However when the property was her primary residence, WELLS FARGO falsely told Ms. Davis that she did not qualify inducing her reliance.” FAC, ECF No. 12 at 27. 23 1 7. Seventh Claim for Relief – To Void or Cancel Assignment of Deed of Trust 2 Defendant argues briefly that all of plaintiff’s equitable claims must be dismissed because 3 “plaintiff’s failure to tender their outstanding debt precludes equitable relief.” MTD, ECF No. 15 4 at 31. This argument is utterly inconsistent with defendant’s insistence that plaintiff is not the 5 borrower, which necessarily means that she had no outstanding debt. This is not the typical 6 foreclosure action brought by a debtor. Rather, plaintiff is challenging the Bank’s alleged 7 machinations in preventing her from being in a position via assumption to take whatever actions 8 were necessary to prevent foreclosure of her home. “Tender may not be required where it would 9 be inequitable to do so,” Onofrio v. Rice, 55 Cal. App. 4th 413, 424 (1997), and plaintiff’s 10 allegations suggest that is the case here. 11 Moreover, several federal courts sitting in California have held that the tender rule applies 12 only in cases seeking to set aside a completed sale, rather than an action to prevent a pending sale. 13 See, e.g., Robinson v. Bank of America, 2012 U.S. Dist. LEXIS 74212 (N.D. Cal. May 29, 2012); 14 Vissuet v. Indymac Mortg. Servs., 2010 U.S. Dist. LEXIS 26241 (S.D. Cal. Mar.19, 2010); 15 Giannini v. American Home Mortg. Servicing, Inc., 2012 U.S. Dist. LEXIS 12241 (N.D. Cal. 16 Feb.1, 2012). Other courts have held that the tender rule does not apply when plaintiff alleges 17 that defendant lacked authority to foreclose. See Subramani v. Wells Fargo Bank, N.A., 2013 18 U.S. Dist. LEXIS 156556 (N.D. Cal. Oct. 13, 2013). Most significantly for this case, it is entirely 19 unclear that the tender rule would apply when plaintiff alleges “dual tracking” – the simultaneous 20 consideration of loan modification and pursuit of foreclosure. Cf. Mabry v. Superior Court,185 21 Cal. App. 4th 208, 225 (2010) (finding tender rule inapplicable where plaintiff alleged violation 22 of since-superseded California statute that required consideration of alternatives prior to 23 foreclosure). Defendant does not address these matters. For all these reasons, the tender 24 argument fails. 25 Defendant’s stronger argument is that Claim Seven relies entirely on plaintiff’s allegation 26 that Wells Fargo lacks the right to enforce the home loan. MTD, ECF No. 15 at 18. As discussed 27 above, Wells Fargo’s status as successor to the rights of the original lender is established by the 28 //// 24 1 judicially noticed documents.11 Because plaintiff’s statement of this cause of action rests on 2 wholesale incorporation of the complaint’s previous 176 paragraphs, see FAC, ECF No. 12 at 28, 3 the undersigned cannot readily determine whether the complaint contains factual material that 4 would otherwise support her assertion that the Assignment of the Deed of Trust is void ab initio 5 or voidable for any other reason (or that she has standing to make such a claim, since she was not 6 a party to the Deed of Trust).12 7 Claim Seven should therefore be dismissed as inadequately pleaded. The court is unable 8 to conclude on the present record, however, that “it is absolutely clear that no amendment can 9 cure the defect.” Lucas v. Dep’t of Corr., 66 F.3d 245, 248 (9th Cir. 1995). Accordingly, in light 10 of the liberality with which pro se plaintiffs should be provided leave to amend, see id., such 11 leave should be granted. 12 8. Eighth Claim for Relief – Wrongful Foreclosure 13 Defendant identifies Claim Eight as based partially on the allegation that Wells Fargo 14 lacks the authority to enforce the loan. MTD, ECF No. 15 at 18. The complaint asserts numerous 15 grounds for claiming the imminent foreclosure to be wrongful. Defendant’s attack on one such 16 ground, no matter how well taken, does not support dismissal of the entire claim. Defendant does 17 not identify the elements that plaintiff must plead in order to establish entitlement to relief for 18 wrongful foreclosure under California law, or otherwise present a cogent argument under Rule 19 12(b)(6). 20 As previously noted, the Bank also broadly challenges the general sufficiency of 21 plaintiff’s equitable claims on grounds including failure to tender, but does so in cursory fashion 22 that fails to meet its burden as the moving party. For these reasons, the motion should be denied 23 as to Claim Eight. 24 11 25 26 27 28 In assessing the sufficiency of the complaint, the court need not accept as true, legal conclusions cast in the form of factual allegations, or allegations that contradict matters properly subject to judicial notice. See Western Mining Council, 643 F.2d at 624; Sprewell, 266 F.3d at 988. 12 Defendant fails to support its motion with any discussion of what a California plaintiff is required to plead in order to state an equitable claim for the cancellation of assignment of a deed of trust, so the court does not consider that matter at this time. 25 1 9. Ninth Claim for Relief – Breach of Implied Covenant of Good Faith and Fair 2 Dealing 3 Defendant’s one-paragraph argument for dismissal of Claim Nine rests on the proposition 4 that a claim for breach of the implied covenant of good faith and fair dealing depends on the 5 existence of a contract, and plaintiff has no contract with Wells Fargo. “Plaintiff here is not a 6 party to either the note or the deed of trust, and therefore has no ‘rights’ under those contracts.” 7 MTD, ECF No. 15 at 29. 8 9 In California, “[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” . . . The covenant of good faith finds particular 10 application in situations where one party is invested with a discretionary power affecting the 11 rights of another. Such power must be exercised in good faith.” Sutherland v. Barclays 12 American Mortgage Corp., 53 Cal. App. 4th 299, 314 (1997). “The covenant not only imposes 13 upon each contracting party the duty to refrain from doing anything which would render 14 performance of the contract impossible by any act of his own, but also the duty to do everything 15 that the contract presupposes that he will do to accomplish its purpose.” Id. (quoting Floystrup v. 16 City of Berkeley Rent Stabilization Bd., 219 Cal. App. 3d 1309, 1318 (1990)). 17 While defendant is correct that the covenant of good faith arising from the note and Deed 18 of Trust exists only between the parties to those contracts (the lender and Stephen Woo), the 19 complaint also suggests that plaintiff may be able to plead facts giving rise to an oral contract 20 with her to consider an application for assumption and modification. See, e.g., FAC, ECF 12 at ¶ 21 34. Such a contract could potentially support a claim for breach of the implied covenant of good 22 faith and fair dealing. The court makes no finding that the allegations of the FAC are sufficient to 23 support an oral contract, but at this stage it is not “absolutely clear that no amendment can cure 24 the defect.” See Lucas, 66 F.3d at 248. 25 Because Claim Nine as pleaded rests entirely on a covenant arising from the note and 26 Deed of Trust, FAC, ECF No. 12 at 30-32, it must be dismissed. Plaintiff should be permitted an 27 opportunity to amend. 28 //// 26 1 10. Tenth Claim for Relief – Quiet Title 2 3 Defendant’s argument based on failure to tender do not support dismissal for the reasons previously explained in relation to Claim Seven. 4 Defendant also summarily contends that the quiet title claim is based entirely on the 5 allegation that Wells Fargo lacks authority to enforce the terms of the loan, a proposition that is 6 inconsistent with its documented status as successor to the original lender. MTD, ECF No. 15 at 7 18.13 However, the complaint suggests several potential legal obstacles to foreclosure. The 8 possibility remains that plaintiff, who is the sole owner of the subject property, may on 9 amendment establish a theory that entitles her to remove the existing cloud on the title – or at 10 least to assume the position necessary to do so. See Aguilar v. Bocci, 39 Cal. App. 3d 475, 477 11 (1974) (a cloud upon title will persist until the debt on the property is paid). 12 As Claim Ten is presently pleaded, defendant is correct that it rests primarily on the 13 allegation that “these Defendants have no interest in the Subject Property and no right to entertain 14 any rights of ownership including the right to foreclose[…].” FAC, ECF No. 12 at 32. 15 Accordingly, Claim Ten must be dismissed. Because the complaint suggests other potential bases 16 for plaintiff’s pursuit of quiet title, however, and the court cannot on the present record conclude 17 that amendment would be futile, leave to amend should be granted. 18 11. Eleventh Claim for Relief – Slander of Title 19 20 For the reasons previously explained, plaintiff’s failure to tender does not support dismissal of her equitable claims as defendant urges. 21 Defendant also contends that the claim is defective because based entirely on the 22 allegation that it lacks the right to enforce the loan. MTD, ECF No. 15 at 18. While most of the 23 allegations in Claim Eleven involve defendants NBS Default Services and Title 365, neither of 24 whom has appeared, plaintiff also alleges that “[n]one of the Defendants is a trustee, beneficiary 25 or assignee of any beneficiary of any Deed of Trust recorded against the Subject Property.” FAC, 26 27 28 13 Defendant fails to support its motion with any discussion of what a California plaintiff is required to plead in order to state a claim for quiet title, so the court does not consider that matter at this time. 27 1 ECF No. 12 at 33, ¶ 213. The court need not accept this allegation as true because, as to Wells 2 Fargo, it is refuted by judicially noticed materials. See Western Mining Council, 643 F.2d at 624; 3 Sprewell, 266 F.3d at 988. Accordingly, the motion should be granted as to Claim Eleven. 4 Defendant presents no discussion of what a California plaintiff is required to plead in 5 order to state a claim for slander of title. In deciding whether leave to amend is appropriate, the 6 court nonetheless considers the elements of a slander of title claim, which are (1) a publication, 7 (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and 8 immediate pecuniary loss. Manhattan Loft, LLC v. Mercury Liquors, Inc., 173 Cal. App. 4th 9 1040, 1050-51 (2009). Plaintiff’s slander of title claim appears to be premised upon the recording 10 of false instruments against the subject property by entities other than Wells Fargo. It appears 11 unlikely that plaintiff could by amendment state a claim against the moving defendant. But 12 because this claim is so closely related to Claim Ten (quiet title), which may be amended, leave to 13 amend Claim Eleven is also appropriate. Plaintiff is informed that she is not required to add 14 allegations against Wells Fargo to Claim Eleven in a Second Amended Complaint; she may also 15 expressly omit Wells Fargo from this claim. 16 12. Twelfth Claim for Relief – Promissory Estoppel 17 Defendant contends that the FAC fails to state a claim for promissory estoppel for three 18 reasons: (1) the complaint does not allege a clear and unambiguous promise not to foreclose; (2) 19 any promise not to foreclose would be unenforceable; and (3) plaintiff has not alleged damages. 20 MTD, ECF No. 15 at 28-29.14 21 Under California law, “[a] promise which the promisor should reasonably expect to 22 induce action or forbearance on the part of the promisee or a third person and which does induce 23 such action or forbearance is binding if injustice can be avoided only by enforcement of the 24 promise.” Kajima/Ray Wilson v. Los Angeles County Metro. Transp. Auth, 23 Cal. 4th 305, 310 25 (2000). To support a promissory estoppel claim, the promise must be “clear and unambiguous in 26 its terms.” Laks v. Coast Fed. Sav. & Loan Assn., 60 Cal. App. 3d 885, 890 (1976). An offer 27 28 14 Defendant’s tender argument also applies to this claim, because the claim is equitable in nature, but is rejected for the reasons previously explained. 28 1 that is conditional, or that lacks finalized and specific terms, does not meet this standard. Id. at 2 891. 3 The FAC does not allege that defendant promised to grant assumption and modification, 4 but does allege that plaintiff was assured the Bank would not foreclose on the property while her 5 request was under consideration. It also alleges plaintiff was led to believe that modification was 6 likely. Defendant contends that any such statements cannot reasonably have induced reliance in 7 light of the contradictory statements also described in the complaint – including the representation 8 that the home was in active foreclosure status. Defendants rely here on Granadino v. Wells Fargo 9 Bank, N.A., 236 Cal. App. 4th 411, 418 (2015), in which the court held on summary judgment 10 that the formal denial of plaintiff’s application for modification rendered unreasonable any 11 reliance on a prior promise not to move forward with foreclosure. The facts alleged here are 12 distinguishable, involving a lengthy history of repeatedly contradictory and sometimes ambiguous 13 statements both supporting the alleged promise and negating it. Defendant is correct, however, 14 that this very ambiguity and history of contradiction is inconsistent with a clear and unambiguous 15 promise and with reasonable reliance. For this reason, Claim Twelve must be dismissed with leave to amend.15 Plaintiff’s 16 17 attempt to assert a promissory estoppel claim is consistent with the incipient oral contract theory 18 that the court has identified in the complaint. In this pro se case, it would be premature to 19 conclude that amendment is futile. 20 13. Thirteenth Claim for Relief – Negligent Misrepresentation 21 Defendant seeks dismissal of plaintiff’s negligent misrepresentation claim on the same 22 grounds it seeks dismissal of the cause of action for negligence: lack of a duty of care. See MTD, 23 ECF No. 15 at 21-25 (addressing negligence and negligent misrepresentation claims together). 24 15 25 26 27 28 The court rejects defendant’s other challenges to this claim. Defendant contends that a promise to postpone foreclosure would be unenforceable, but this proposition is supported only by an unexplained reference to the statute of frauds, without analysis. MTD, ECF No. 15 at 29. This argument is inadequate to support dismissal. Regarding damages, plaintiff has alleged inter alia that she vacated the premises based on inaccurate information from defendant, and then was told that this rendered her ineligible for the assumption and modification she was pursuing. Given the imminence of foreclosure, these allegations are sufficient. 29 1 Accordingly, the court adopts its previous analysis of that issue and incorporates it here. For the 2 same reasons that the motion to dismiss should be denied as to Claim One, supra at pp. 14-17, it 3 should be denied as to Claim Thirteen. 4 14. Fourteenth Claim for Relief – Invasion of Privacy 5 Defendant makes no argument regarding the sufficiency of Claim Fourteen. The court 6 having concluded that HOLA does not preempt plaintiff’s state law claims, there are no grounds 7 for dismissal remaining for consideration. Accordingly, the motion to dismiss should be denied 8 as to Claim Fourteen. 9 15. Conclusion re Motion to Dismiss 10 For all the reasons set forth above, the undersigned will recommend that Claims Two 11 (unjust enrichment), Three (FDCPA), and Four (RESPA) be dismissed with prejudice; that 12 Claims Six (fraud), Seven (seeking to cancel assignment of the deed of trust), Nine (breach of the 13 implied covenant of good faith and fair dealing), Ten (quiet title), Eleven (slander of title), and 14 Twelve (promissory estoppel) be dismissed with leave to amend; and that the motion to dismissed 15 be denied with regard to Claims One (negligence), Five (Cal. Bus. & Prof. Code § 17200), Eight 16 (wrongful foreclosure), Thirteen (negligent misrepresentation), and Fourteen (invasion of 17 privacy). 18 PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION 19 20 21 Plaintiff seeks an injunction preventing the foreclosure sale of the subject property during the pendency of this case. ECF No. 16. I. Standards Governing Preliminary Injunctive Relief 22 “The sole purpose of a preliminary injunction is to ‘preserve the status quo ante litem 23 pending a determination of the action on the merits.’” Sierra Forest Legacy v. Rey, 577 F.3d 24 1015, 1023 (9th Cir. 2009) (quoting L.A. Memorial Coliseum Comm’n v. NFL, 634 F.2d 1197, 25 1200 (9th Cir. 1980)). In evaluating the merits of a motion for preliminary injunctive relief, the 26 court considers whether the movant has shown that “he is likely to succeed on the merits, that he 27 is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities 28 tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Resources 30 1 Defense Council, 555 U.S. 7, 20 (2008); accord Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 2 (9th Cir. 2009). 3 Because the Winter test is a balancing test, a stronger showing of one element may offset 4 a weaker showing of another. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th 5 Cir. 2011). “At a minimum, a plaintiff seeking preliminary injunctive relief must demonstrate 6 that it will be exposed to irreparable harm. Speculative injury does not constitute irreparable 7 injury sufficient to warrant granting a preliminary injunction. A plaintiff must . . . demonstrate 8 immediate threatened injury as a prerequisite to preliminary injunctive relief.” Caribbean Marine 9 Serv. Co. v. Baldridge, 844 F.2d 668, 674 (9th Cir. 1988) (citations omitted). A preliminary 10 injunction is appropriate when a plaintiff demonstrates “‘serious questions going to the merits’ 11 and a hardship balance that tips sharply toward the plaintiff . . ., assuming the other two elements 12 of the Winter test are also met.” Alliance for the Wild Rockies, 632 F.3d at 1132. 13 II. 14 Discussion A. Likelihood of Success On The Merits 15 Although it is impossible at this state of the proceedings to predict plaintiff’s chances of 16 success, the foregoing discussion of the motion to dismiss demonstrates that plaintiff has 17 presented several non-frivolous claims that deserve to proceed.16 While the court cannot 18 conclude that she is likely to prevail, is does conclude with confidence that plaintiff has 19 demonstrated serious questions going to the merits. This factor therefore weights slightly in 20 plaintiff’s favor. 21 B. Likelihood of Irreparable Harm 22 Absent a preliminary injunction, the subject property will be sold. There is nothing 23 speculative about this imminent harm, which is both significant and inherently irreparable. 24 Plaintiff is the sole owner of the property, which is the former family residence that she acquired 25 from her ex-husband in their divorce. A foreclosure sale will permanently deprive plaintiff of this 26 27 28 16 Defendant’s opposition to the motion for preliminary injunction, ECF No. 18, largely repeats its arguments regarding the sufficiency of plaintiff’s claims. Those matters have been addressed in relation to the motion to dismiss and require no further discussion here. 31 1 property. Because real property is unique, money damages after the fact of sale would not 2 adequately remedy the harm. Defendant argues that the property is not currently plaintiff’s 3 residence, and that loss of a rental property is a less significant (or at least more reparable) harm, 4 but this argument is undercut by plaintiff’s allegations that she relinquished residence because of 5 misleading information provided by defendants. The property was plaintiff’s home when she 6 initiated communications with defendant regarding her desire to assume and modify the 7 mortgage. This factor therefore weighs heavily in plaintiff’s favor. 8 9 C. Balance of the Equities While plaintiff faces a strong probability of irreparable harm if the property is sold, a 10 preliminary injunction will not prejudice defendant to the same degree. If Wells Fargo ultimately 11 prevails, its ability to sell will not have been impaired. Defendant emphasizes that it is prejudiced 12 by its inability to collect revenue from the property in the meantime, but that loss is relatively 13 minor for Wells Fargo while the harm to plaintiff from sale is substantial. Moreover, defendant 14 would retain its security interest in the underlying property. On balance, the equities therefore 15 favor plaintiff. 16 17 D. The Public Interest The public interest in preventing improper foreclosures is great. Since the recent 18 foreclosure crisis, there has been widespread recognition of the public interest in residential 19 foreclosure prevention and the regulation of lenders to protect current and prospective mortgage 20 holders. Both California and the federal government have taken measures to protect this public 21 interest by passing legislation such as the state Homeowner Bill of Rights, S.B. 900, Ch. 87(1)(a), 22 2011-2012 Reg. Sess. (Cal. 2012), and creating assistance programs such as the Home Affordable 23 Modification Program (“HAMP”) (part of the federal Making Homes Affordable program). See 24 supra at p. 17. This strong policy of preventing harm to borrowers and homeowners demonstrates 25 the significant public interest considerations that weigh in plaintiff’s favor here. 26 Admittedly, it serves no public interest to prevent a party from proceeding with a 27 foreclosure sale to which it is entitled. However, there are serious questions in this case whether 28 Wells Fargo may properly proceed with foreclosure absent good faith and transparent 32 1 consideration of the property-owner’s desire to assume and modify the loan. On balance, the 2 public interest lies in plaintiff’s favor. 3 E. Conclusion 4 For all these reasons, it is appropriate to preserve the status quo ante litem pending 5 resolution of the case. Because the Winter factors weigh in plaintiff’s favor, the undersigned will 6 recommend that Wells Fargo be enjoined from selling the subject property during the pendency 7 of this action. 8 9 III. Security Federal Rule of Procedure 65(c) provides that a preliminary injunction may be issued 10 “only if the movant gives security in an amount that the court deems proper to pay the costs and 11 damages sustained by any party found to have been wrongfully enjoined or restrained.” 12 Defendant contends that if an injunction issues, plaintiff should be required to post a bond of at 13 least $68,940. ECF No. 18 at 24. Defendant arrives at this figure by estimating the fair rental 14 value of the property and the rate of return on the current value of the property. Id. at 25-26. 15 Plaintiff seeks a waiver of the bond requirement. ECF No. 16 at 14. 16 Rule 65(c) invests the district court with discretion as to the amount of security required, 17 if any. Jorgensen v. Cassiday, 320 F.3d 906, 919 (9th Cir. 2003) (quoting Barahona-Gomez v. 18 Reno, 167 F.3d 1228, 1237 (9th Cir. 1999)); Governing Council of Pinoleville Indian Community 19 v. Mendocino County, 684 F. Supp. 1042, 1047 (N.D. Cal. 1988) (citing People of California v. 20 Tahoe Regional Planning Agency, 766 F.2d 1319, 1325-26 (9th Cir.1985)) (“[C]ourts have 21 discretion to excuse the bond requirement . . . .”) The court finds that defendant is adequately 22 protected by its security interest in plaintiff’s property. See Jorgensen 320 F.3d at 919 (“The 23 district court may dispense with the filing of a bond when it concludes there is no realistic 24 likelihood of harm to the defendant from enjoining his or her conduct.”); see also Ticketmaster 25 L.L.C. v. RMG Technologies, Inc., 507 F. Supp. 2d 1096, 1116 (C.D. Cal. 2007) (“A bond may 26 not be required, or may be minimal, when the harm to the enjoined party is slight or where the 27 movant has demonstrated a likelihood of success.”) 28 Moreover, it is unclear whether plaintiff has the financial resources to pay the requested 33 1 bond. “The court has discretion to dispense with the security requirement, or to request mere 2 nominal security, where requiring security would effectively deny access to judicial review.” 3 People of State of Cal. ex rel. Van De Kamp v. Tahoe Reg’l Planning Agency, 766 F.2d 1319, 4 1325 (9th Cir. 1985), amended, 775 F.2d 998 (9th Cir. 1985); see also Taylor-Failor v. County of 5 Hawaii, 90 F. Supp. 3d 1095, (D. Haw. 2015) (bond waived where “[p]laintiffs are individuals of 6 limited financial means and there is significant public interest underlying this action”); V.L. v. 7 Wagner, 669 F. Supp. 2d 1106, 1123 (N.D. Cal. 2009) (bond waived where plaintiffs were 8 indigent). Defendant’s request for a $68,940 bond was presented in its opposition to plaintiff’s 9 motion, and plaintiff filed no reply. No information about plaintiff’s financial circumstances is 10 before the court. Accordingly, the court is unable to determine whether a bond would be beyond 11 plaintiff’s means and thus effectively deprive her of access to judicial review. 12 Waiver of bond is nonetheless appropriate in light of defendant’s ongoing security interest 13 in the property, which is sufficient protection against losses. Accordingly, the undersigned will 14 recommend that the security requirement be excused. 15 16 17 18 19 CONCLUSION For the reasons explained above, IT IS HEREBY ORDERED as follows: 1. Defendant Wells Fargo shall extend the present de facto stay of foreclosure sale until the assigned district judge rules on these Findings and Recommendations; 2. Promptly upon the district judge’s ruling, the matter will be set for a mandatory court 20 settlement conference. 21 Further, IT IS HEREBY RECOMMENDED that: 22 1. Defendant’s Motion to Dismiss, ECF No. 15, be GRANTED IN PART AND DENIED IN 23 PART as follows: 24 a. GRANTED as to Claims Two (unjust enrichment), Three (FDCPA), and Four 25 (RESPA), which should be dismissed with prejudice; 26 b. GRANTED as to Claims Six (fraud), Seven (seeking to cancel assignment of the deed 27 of trust), Nine (breach of the implied covenant of good faith and fair dealing), Ten 28 (quiet title), Eleven (slander of title), and Twelve (promissory estoppel), which should 34 1 be dismissed with leave to amend; and 2 c. DENIED as to Claims One (negligence), Five (Cal. Bus. & Prof. Code § 17200), Eight 3 (wrongful foreclosure), Thirteen (negligent misrepresentation), and Fourteen (invasion 4 of privacy); 5 2. Plaintiff’s Motion for a Preliminary Injunction, ECF No. 16, be GRANTED; defendant 6 Wells Fargo enjoined from proceeding with the foreclosure sale of the subject property 7 until resolution of the case or further order of the court; and the bond requirement, Fed. R. 8 Civ. P. 65(c) waived. 9 These findings and recommendations are submitted to the United States District Judge 10 assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen days 11 after being served with these findings and recommendations, any party may file written 12 objections with the court and serve a copy on all parties. Such a document should be captioned 13 “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections 14 shall be served and filed within fourteen days after service of the objections. The parties are 15 advised that failure to file objections within the specified time may waive the right to appeal the 16 District Court’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991). 17 DATED: December 2, 2016 18 19 20 21 22 23 24 25 26 27 28 35

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