Smith v. Wachovia et al, No. 3:2009cv01300 - Document 23 (N.D. Cal. 2009)
Court Description: ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITH LEAVE TO AMEND and GRANTING DEFENDANT'S MOTION TO EXPUNGE LIS PENDENS. Amended Complaint is due 7/15/09. (SI, COURT STAFF) (Filed on 7/6/2009) (Additional attachment(s) added on 7/15/2009: # 1 ps) (ys, COURT STAFF).
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Smith v. Wachovia et al Doc. 23 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 CHARLES SMITH, 9 United States District Court For the Northern District of California 10 11 12 13 No. C 09-01300 SI Plaintiff, ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND and GRANTING DEFENDANT’S MOTION TO EXPUNGE LIS PENDENS v. WACHOVIA, WACHOVIA MORTGAGE CORPORATION, and DOES 1-10, Defendants. / 14 15 Defendant Wachovia Mortgage Corporation, FSB has filed a motion to dismiss plaintiff’s 16 complaint and a motion to expunge the lis pendens in effect in this case. Dkt. Nos. 9, 14. The motions 17 are currently scheduled for hearing on July 10, 2009. Pursuant to Civil Local Rule 7-1(b), the Court 18 determines that the motions are appropriate for resolution without oral argument and VACATES the 19 hearing. As set forth below, the Court GRANTS defendant’s motion to dismiss and GRANTS 20 defendant’s motion to expunge the lis pendens. Plaintiff’s complaint is dismissed with leave to amend. 21 Should plaintiff wish to file an amended complaint, he must do so by July 15, 2009. 22 23 BACKGROUND 24 On March 25, 2009, plaintiff Charles Smith commenced this action against “Wachovia,” 25 “Wachovia Mortgage Corporation,” and Does 1-10. Compl., Dkt. No. 1. The dispute concerns property 26 located at 1204 Sevier Ave., Menlo Park, California 94025 (“the Property”), allegedly owned by 27 plaintiff. Id. ¶ 19. Defendant Wachovia Mortgage, FSB moves to dismiss each of plaintiff’s claims 28 pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that plaintiff fails to allege facts sufficient Dockets.Justia.com 1 to state a claim for relief. 2 United States District Court For the Northern District of California 3 LEGAL STANDARD 4 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it 5 fails to state a claim upon which relief can be granted. The question presented by a motion to dismiss 6 is not whether the plaintiff will prevail in the action, but whether the plaintiff is entitled to offer 7 evidence in support of the claim. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other 8 grounds by Davis v. Scherer, 468 U.S. 183 (1984). 9 In answering this question, the Court must assume that the plaintiff’s allegations are true and 10 must draw all reasonable inferences in the plaintiff’s favor. See Usher v. City of Los Angeles, 828 F.2d 11 556, 561 (9th Cir. 1987). However, the Court is not required to accept as true “allegations that are 12 merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” St. Clare v. Gilead 13 Scis., Inc. (In re Gilead Scis. Sec. Litig.), 536 F.3d 1049, 1055 (9th Cir. 2008). To survive a Rule 14 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is 15 plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974 (2007). While 16 courts do not require “heightened fact pleading of specifics,” a plaintiff must provide “more than labels 17 and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 1965. 18 Plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” Id. 19 Pro se complaints are held to less rigorous standards than formal pleadings drafted by lawyers. 20 Haines v. Kerner, 404 U.S. 519, 520 (1972); see also Hughes v. Rowe, 449 U.S. 5, 9 (1980) (per 21 curiam). Where the petitioner is pro se the Court has an obligation to construe the pleadings liberally 22 and to afford the plaintiff the benefit of any doubt. Bretz v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 23 1985) (en banc). Even though pro se pleadings should be construed liberally, they must still allege facts 24 sufficient to allow a reviewing court to determine whether a claim has been stated. See Ivey v. Bd. of 25 Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). 26 If the Court dismisses the complaint, it must then decide whether to grant leave to amend. The 27 Ninth Circuit has “repeatedly held that a district court should grant leave to amend even if no request 28 to amend the pleading was made, unless it determines that the pleading could not possibly be cured by 2 1 the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citations and internal 2 quotation marks omitted). Dismissal of a pro se complaint without leave to amend is proper only if it 3 is “absolutely clear that the deficiencies of the complaint could not be cured by amendment.” Noll v. 4 Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987) (quoting Broughton v. Cutter Labs., 622 F.2d 458, 460 5 (9th Cir. 1980)). 6 United States District Court For the Northern District of California 7 DISCUSSION 8 Plaintiff did not file an opposition to defendant’s motions to dismiss and expunge the lis 9 pendens, so it is not clear whether he intends to pursue this case. As plaintiff is representing himself, 10 the Court offers the following discussion by way of guidance, should plaintiff choose to amend his 11 complaint. 12 13 1. Request for judicial notice 14 As a preliminary matter, defendant asks the Court to take judicial notice of four documents, 15 which purport to be copies of public records filed in San Mateo County. The first document is a deed 16 of trust recorded October 24, 2005 naming World Savings Bank, FSB (“World Savings”) as beneficiary, 17 Golden West Savings Association Service Co. (“Golden West”) as trustee, and securing a promissory 18 note signed by plaintiff. Ex. A (“Deed of Trust”). The second document is a notice of default and 19 election to sell under deed of trust recorded November 21, 2007, sent by Golden West to plaintiff. Ex. 20 B (“Notice of Default”). The third document is a notice of trustee sale recorded July 21, 2008 indicating 21 that the property would be sold August 8, 2008. Ex. C (“Notice of Trustee Sale”). The fourth document 22 is a trustee’s deed upon sale recorded August 15, 2008 showing that the property was sold to Wachovia 23 Mortgage, FSB f/k/a World Savings Bank, FSB at the auction held on August 8, 2008. Ex. D 24 (“Trustee’s Deed Upon Sale”). 25 These documents are highly relevant to plaintiff’s claims and are also part of the public record 26 and easily verifiable. Pursuant to Fed. R. Evid. 201, the Court GRANTS defendant’s Request for 27 Judicial Notice in support of its motion to dismiss plaintiff’s complaint. 28 3 1 United States District Court For the Northern District of California 2 2. Plaintiff’s claims 3 Plaintiff brings nine causes of action: (1) wrongful trustee sale, (2) intentional misrepresentation, 4 (3) negligent misrepresentation, (4) intentional infliction of emotional distress, (5) fraud, (6) breach of 5 contract, (7) quiet title, (8) abuse of process, and (9) civil conspiracy. The gravamen of plaintiff’s 6 complaint is that defendants wrongfully initiated a non-judicial foreclosure and trustee sale process 7 against plaintiff without presenting or possessing a “Blue Inked Promissory Note.” See Compl. ¶¶ 21, 8 24, 26-7, 33, 37, 42, 48-9, 52, 57, 63, 66, 74, 78. Plaintiff’s contention is apparently that defendants are 9 required to possess the original promissory note before initiating such proceedings. Plaintiff cites no 10 statutory or common law basis for his contention that possession of the original promissory note is 11 required. Defendants’ purported failure to produce the original note is therefore not a valid basis for 12 any of the causes of action plaintiff attempts to allege. 13 14 A. 15 Plaintiff fails to allege facts in support of his claim for a wrongful trustee sale under California 16 law. Plaintiff is incorrect that the UCC is the governing law in this matter. See Compl. ¶¶ 23, 29, 32. 17 The non-judicial foreclosure process is covered exclusively by section 2924 of the California Civil 18 Code. I.E. Assocs. v. Safeco Title Ins. Co., 702 P.2d 596, 598 (Cal. 1985). The process may be initiated 19 by a “trustee, mortgagee, or beneficiary or any of their authorized agents.” See Cal. Civ. Code § 20 2924(a)(1). Here, the documents attached to defendant’s request for judicial notice show that Golden 21 West, designated trustee under authority of the Deed of Trust, initiated the foreclosure process. See 22 Notice of Default. Wrongful trustee sale 23 Plaintiff also alleges that he did not receive proper notice prior to and during the non-judicial 24 foreclosure process. Compl. ¶ 25. Elsewhere he admits that he received some documents from 25 defendants, alleging that they contained misrepresentations. See Compl. ¶¶ 34-6, 40, 58, 75. Plaintiff’s 26 claim regarding notice appears to be that he should have been provided the original promissory note 27 before the non-judicial foreclosure process took place, and that the documents he did receive are 28 fraudulent because they represent defendant’s possession of the note. Section 2924 contains no 4 1 requirement that the lender produce the original promissory note, as alleged by plaintiff. See Cal. Civ. 2 Code § 2924(a)-(e); Gamboa v. Trustee Corps, 2009 WL 656285, at *4 (N.D. Cal. Mar. 12, 2009). To 3 the extent that any of plaintiff’s claims are based on that assumption, they do not state a basis for relief. 4 Finally, to bring a claim arising from an alleged irregularity in a foreclosure sale, such as 5 improper notice, a plaintiff must allege proper tender. Abdallah v. United Savs. Bank, 43 Cal. App. 4th 6 1101, 1110 (1996); see also U.S. Cold Storage v. Great W. Savs. and Loan Ass’n, 165 Cal. App. 3d 7 1214, 1222 (1985); Karlsen v. Am. Savs. and Loan Ass’n, 15 Cal. App. 3d 112, 117 (1971). In the 8 absence of tender, or an offer to tender, an action to set aside a trustee sale fails to state a cause of 9 action. Karlsen, 15 Cal. App. 3d at 117 (citing Leonard v. Bank of Am. Nat’l Trust & Savs. Ass’n, 16 United States District Court For the Northern District of California 10 Cal. App. 2d 341, 344 (1936)). 11 12 B. 13 Plaintiff fails to state a basis for his claims of intentional misrepresentation, negligent 14 misrepresentation and fraud, all of which are based on the premise that defendant was required to 15 produce the original promissory note to plaintiff before initiating the non-judicial foreclosure process. 16 See infra Part 2.A. Intentional misrepresentation, negligent misrepresentation and fraud 17 Under California law, the elements of common law fraud are “misrepresentation, knowledge of 18 its falsity, intent to defraud, justifiable reliance and resulting damage.” Gil v. Bank of Am., N.A., 138 19 Cal. App. 4th 1371, 1381 (2006). Common law claims of fraud must be pled with sufficient 20 particularity. See Fed. R. Civ. P. 9(b) (“[I]n all averments of fraud . . . the circumstances constituting 21 fraud . . . shall be stated with particularity.”). Therefore, in addition to the “time, place and content of 22 an alleged misrepresentation,” a complaint “must set forth what is false or misleading about a statement, 23 and . . . an explanation as to why the statement or omission complained of was false or misleading.” 24 Yourish v. Cal. Amplifier, 191 F.3d 983, 993 n.10 (9th Cir. 1999). To state a claim for negligent 25 misrepresentation, plaintiff must allege that the defendant: (1) made a misrepresentation of a material 26 fact; (2) without reasonable grounds for believing it to be true; (3) with intent to induce another’s 27 reliance and that plaintiff (4) was ignorant of the truth, (5) justifiably relied on the misrepresentation 28 and (6) suffered damages. See B.L.M. v. Sabo & Deitsch, 55 Cal. App. 4th 823, 834 (1997). 5 1 Plaintiff has not alleged that defendants misrepresented any material fact. To the extent that his 2 claims are based on something other than the failure to produce the original promissory note, the 3 complaint must plead these facts with sufficient particularity to satisfy Rule 9(b). It must allege who 4 made the misrepresentation, when and where it was made, what it was, and why it was false or 5 misleading. United States District Court For the Northern District of California 6 7 C. 8 Plaintiff fails to allege facts in support of his claim for intentional infliction of emotional distress, 9 his fourth cause of action. The elements of intentional infliction of emotional distress are: (1) extreme 10 and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the 11 probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional 12 distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous 13 conduct. Cervantez v. J. C. Penney Co., 24 Cal. 3d 579, 593 (1979) (citations omitted). For “[c]onduct 14 to be outrageous[, it] must be so extreme as to exceed all bounds of that usually tolerated in a civilized 15 community.” Id. (citations omitted). Intentional Infliction of Emotional Distress 16 Plaintiff has alleged that defendant has wrongfully and intentionally initiated non-judicial 17 foreclosure proceedings against him. See infra Part 2.A. Taking this allegation as true, this conduct was 18 not so extreme as to exceed the bounds of civilized society, nor has plaintiff alleged it to be. 19 20 D. 21 Plaintiff fails to allege facts in support of his claim for breach of contract, his sixth cause of 22 action. Under California law, the elements of a breach of a contract claim are: (1) the existence of a 23 contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) 24 resulting damage to plaintiff. See Reichert v. Gen. Ins. Co. of Am., 68 Cal. 2d 822, 830 (1968). This 25 claim is premised on the allegation that defendants were not a party to the original promissory note 26 signed by plaintiff. Compl. ¶ 74. There is no basis for plaintiff’s request that this Court enforce a 27 contract with defendant because defendant was not a party to the contract. Breach of Contract 28 6 United States District Court For the Northern District of California 1 E. 2 Plaintiff fails to allege facts in support of his claim to quiet title, his seventh cause of action. 3 An action to quiet title may be brought to establish title against adverse claims to real property or any 4 interest therein. Cal. Code Civ. Proc. § 760.020. A quiet title action must include: (1) a description of 5 the property in question; (2) the basis for plaintiff’s title; and (3) the adverse claims to plaintiff’s title. 6 Cal. Code Civ. Proc. § 761.020. Quiet Title 7 Brought under the heading of “Quiet Title,” the claim repeats plaintiff’s earlier allegations that 8 the documents presented to plaintiff were fraudulent and the non-judicial foreclosure process was 9 wrongfully initiated. Compl. ¶ 78. Plaintiff has not alleged that he is the rightful owner of the property, 10 i.e. that he has satisfied his obligations under the Deed of Trust. As such, he has not stated a claim to 11 quiet title. 12 13 F. 14 Plaintiff fails to allege facts in support of his claim for abuse of process, his eighth cause of 15 action. To state a claim for abuse of process, plaintiff must show that defendants used a legal process 16 in a wrongful manner to accomplish a purpose for which it was not designed. Spellens v. Spellens, 49 17 Cal. 2d 210, 231 (1957). The essential elements of this claim are: (1) that defendants acted with an 18 ulterior motive; and (2) that a willful act or threat was committed by defendants, not authorized by the 19 process and not proper in the regular conduct of some official proceedings; and (3) that defendants’ 20 misuse of the legal process was a cause of injury, damage, loss or harm to plaintiff. Id. at 232. The 21 nature of the tort is that it is committed by the misuse of process, i.e., the use of process for a purpose 22 other than that for which it is designed. Witkin, Summary of California Law § 517 (2005). A claim for 23 abuse of process must be based on action taken pursuant to judicial authority. See Adams v. Super. Ct., 24 2 Cal. App. 4th 521, 530 (1992) (“Process is action taken pursuant to judicial authority. It is not action 25 taken without reference to the power of the court”). Abuse of Process 26 Plaintiff alleges throughout the complaint that defendants have initiated a non-judicial 27 foreclosure process against plaintiff. As defendant is not alleged to have taken any action pursuant to 28 court authority, plaintiff has not stated a claim for abuse of process. 7 1 G. 2 Plaintiff’s last cause of action is civil conspiracy. Under California law, “a civil conspiracy does 3 not give rise to a cause of action unless an independent civil wrong has been committed. The elements 4 of an action for civil conspiracy are (1) formation and operation of the conspiracy and (2) damage 5 resulting to plaintiff (3) from a wrongful act done in furtherance of the common design.” Rusheen v. 6 Cohen, 37 Cal. 4th 1048, 1062 (2006). 7 8 Civil Conspiracy Plaintiff has attempted to allege several independent civil wrongs, but as noted above, has failed with respect to each one of them. Therefore, his claim for civil conspiracy must fail also. 9 United States District Court For the Northern District of California 10 3. Defendant’s Motion to Expunge Lis Pendens 11 Pursuant to California Code of Civil Procedure § 405.20, “[a] party to an action who asserts a 12 real property claim may record a notice of pendency of action [lis pendens] in which that real property 13 claim is alleged.” The purpose of a lis pendens notice is to provide constructive notice of a pending 14 claim that may affect title or right to possession of the real property described in the lis pendens notice. 15 See La Paglia v. Super. Ct., 264 Cal. Rptr. 63, 66 (Cal. Ct. App. 1989) (abrogated on other grounds by 16 Lewis v. Super. Ct., 19 Cal. 4th 1232 (1999)). In order to guard against potential abuse of lis pendens 17 notices, there are several statutory safeguards in California. The claimant alleging a real property claim, 18 i.e. the party placing the notice of lis pendens, has the burden of establishing the probable validity of 19 that claim. Section 405.32 states that “the court shall order that the notice be expunged if the court finds 20 that the claimant has not established by a preponderance of the evidence the probable validity of the real 21 property claim.” Cal. Civ. Proc. Code § 405.32. Furthermore, on a motion to expunge a lis pendens, 22 the court “shall” award the prevailing party reasonable attorney’s fees and costs incurred in making or 23 opposing the motion, unless the losing party acted with substantial justification, or other circumstances 24 make the imposition of fees and costs unjust. Cal. Civ. Proc. Code § 405.38. 25 In light of the facts that the Court has dismissed all of plaintiff’s claims and that plaintiff has 26 failed to oppose defendant’s motion to expunge, the Court finds that plaintiff has not met his burden to 27 establish the probable validity of his claims. Pursuant to Civil Procedure Code § 405.32, the Court 28 GRANTS defendant’s motion to expunge the lis pendens. The Court also finds that due to plaintiff’s 8 1 apparent financial hardship, the award of attorney’s fees would be unjust under Cal. Civ. Proc. Code 2 § 405.38. 3 4 CONCLUSION 5 For the foregoing reasons and for good cause shown, the Court hereby GRANTS defendant’s 6 motion to dismiss with leave to amend and GRANTS defendant’s motion to expunge lis pendens. 7 Should plaintiff choose to file an amended complaint, he must do so by July 15, 2009. 8 9 IT IS SO ORDERED. United States District Court For the Northern District of California 10 11 Dated: July 6, 2009 SUSAN ILLSTON United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9
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