Manantan v. National City Mortgage et al, No. 4:2011cv00216 - Document 37 (N.D. Cal. 2011)

Court Description: ORDER GRANTING DEFENDANTS 5 , 8 MOTIONS TO DISMISS AND DENYING AS MOOT DEFENDANT PNCS 9 MOTION TO STRIKE. Case Management Statement due by 9/29/2011. Case Management Conference set for 10/6/2011 02:00 PM. Motion Hearing set for 10/6/2011 02:00 PM before Hon. Claudia Wilken. Signed by Judge Claudia Wilken on 7/28/2011. (ndr, COURT STAFF) (Filed on 7/28/2011)

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Manantan v. National City Mortgage et al Doc. 37 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 REGINA MANANTAN, 9 United States District Court For the Northern District of California 10 No. C-11-00216 CW Plaintiff, v. 11 NATIONAL CITY MORTGAGE, et al., 12 Defendants. / 13 ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS (Docket Nos. 5 and 8) AND DENYING AS MOOT DEFENDANT PNC’S MOTION TO STRIKE (Docket No. 9) 14 15 Defendants GMAC Mortgage, LLC and ETS Services, LLC move to 16 dismiss the complaint of Plaintiff Regina Manantan. 17 Bank, N.A., as successor by merger to National City Bank, sued as 18 National City Mortgage (NCM) and National City Bank of Indiana 19 (NCB), separately moves to dismiss and moves to strike portions of 20 Plaintiff’s complaint. 21 considered all of the papers filed by the parties, the Court grants 22 the motions to dismiss and denies as moot the motion to strike. 23 Defendant PNC Plaintiff opposes the motions. Having BACKGROUND 24 Plaintiff alleges that in April 2006 she engaged the services 25 of mortgage broker American Prime Financial (APF) to refinance the 26 existing home mortgage loan on her primary residence located at 27 2671 Hacienda Street in San Mateo, California. 28 APF prepared a loan application on Plaintiff’s behalf, which was Compl. ¶¶ 9, 12. Dockets.Justia.com 1 approved by NCM. 2 an adjustable rate note in the amount of $825,000, naming NCM as 3 the lender and payee, and a deed of trust securing repayment of the 4 Note, naming NCB as the trustee. 5 Compl. ¶ 13. On July 7, 2006, Plaintiff executed Compl. ¶¶ 16-17. On May 18, 2010, NCB recorded an “Assignment of Deed of Trust” 6 assigning its rights under the deed to GMAC. 7 On August 13, 2010, GMAC recorded a “Substitution of Trustee,” 8 naming ETS as the trustee in place of NCB. 9 same date, ETS recorded a “Notice of Default and Election to Sell Compl. Ex. E at 3. Compl. Ex. C. On the United States District Court For the Northern District of California 10 under Deed of Trust.” 11 recorded a “Notice of Trustee’s Sale” of the property to be held on 12 December 9, 2010. 13 Compl. Ex. D. On November 12, 2010, ETS Compl. ¶ 24. Plaintiff alleges that APF1 and NCM failed to (1) explain a 14 mortgage broker fee paid by NCM to APF, Compl. ¶ 18.1; (2) explain 15 the consequences of the Yield Spread Premium included in 16 Plaintiff’s loan, Compl. ¶ 18; (3) make disclosures required by 17 California Civil Code § 1916.7(10)(c), Compl. ¶ 19; and (4) verify 18 Plaintiff’s income and ability to repay the loan, Compl. ¶¶ 13, 15. 19 Plaintiff alleges that GMAC and ETS lack authority to carry 20 out the pending foreclosure sale of her property because (1) NCM 21 committed fraud in the origination of Plaintiff’s loan, Compl. 22 ¶¶ 56-60; (2) GMAC is not the “holder in due course” of the note, 23 Compl. ¶¶ 49-50; (3) Defendants have not followed the correct 24 procedures to assign GMAC as beneficiary under the deed and to 25 substitute ETS as the trustee of the deed, Compl. ¶ 62; and 26 1 27 28 Although many of Plaintiff’s allegations concern the conduct of APF, APF is not a named defendant in this action. 2 1 (4) Defendants did not post the Notice of Trustee’s Sale in a 2 public place or publish it in a newspaper of general circulation, 3 Compl. ¶ 61. 4 LEGAL STANDARD 5 A complaint must contain a “short and plain statement of the 6 claim showing that the pleader is entitled to relief.” 7 Civ. P. 8(a). 8 failure to state a claim, dismissal is appropriate only when the 9 complaint does not give the defendant fair notice of a legally Fed. R. On a motion to dismiss under Rule 12(b)(6) for United States District Court For the Northern District of California 10 cognizable claim and the grounds on which it rests. 11 Corp. v. Twombly, 550 U.S. 544, 555 (2007). 12 the complaint is sufficient to state a claim, the court will take 13 all material allegations as true and construe them in the light 14 most favorable to the plaintiff. 15 F.2d 896, 898 (9th Cir. 1986). 16 inapplicable to legal conclusions; "threadbare recitals of the 17 elements of a cause of action, supported by mere conclusory 18 statements," are not taken as true. 19 ___, 129 S.Ct. 1937, 1949-50 (2009) (citing Twombly, 550 U.S. at 20 555). 21 Bell Atlantic In considering whether NL Indus., Inc. v. Kaplan, 792 However, this principle is Ashcroft v. Iqbal, ___ U.S. Although the court is generally confined to consideration of 22 the allegations in the pleadings, when the complaint is accompanied 23 by attached documents, such documents are deemed part of the 24 complaint and may be considered in evaluating the merits of a Rule 25 12(b)(6) motion. 26 1267 (9th Cir. 1987). Durning v. First Boston Corp., 815 F.2d 1265, 27 When granting a motion to dismiss, the court is generally 28 3 1 required to grant the plaintiff leave to amend, even if no request 2 to amend the pleading was made, unless amendment would be futile. 3 Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 4 F.2d 242, 246-47 (9th Cir. 1990). 5 would be futile, the court examines whether the complaint could be 6 amended to cure the defect requiring dismissal "without 7 contradicting any of the allegations of [the] original complaint." 8 Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). 9 Leave to amend should be liberally granted, but an amended In determining whether amendment United States District Court For the Northern District of California 10 complaint cannot allege facts inconsistent with the challenged 11 pleading. Id. at 296-97. 12 13 DISCUSSION I. Liability for Causes of Action Accruing at Origination 14 GMAC and ETS move to dismiss Plaintiff’s Third, Fourth, Fifth, 15 Sixth, Seventh, Eighth, Ninth, and Twelfth Causes of Action because 16 they arise from conduct that took place at the time the loan 17 originated, before GMAC was assigned the rights under the deed and 18 ETS was substituted as trustee. 19 ETS are liable for these causes of action because they “ratified 20 the wrongful conduct of the originating Defendants.” 21 4. 22 Plaintiff contends that GMAC and Pl. Opp. at Plaintiff cites River Colony Estates Gen. Partnership v. 23 Bayview Fin. Trading Group, 287 F. Supp. 2d. 1213 (S.D. Cal. 2003), 24 for the proposition that a party’s knowledge of a failure to 25 disclose loan terms “coupled with substantial assistance” by that 26 party supports liability “for aiding and abetting breach of 27 fiduciary duty.” 28 Pl. Opp. at 4. River Colony actually states: “To 4 1 establish liability for aiding and abetting, plaintiffs must prove: 2 (1) the fact of perpetration of the overall improper scheme; 3 (2) the aider and abettor's knowledge of such a scheme; and (3) the 4 aider and abettor's substantial assistance furthered the scheme.” 5 287 F. Supp. 2d at 1225. 6 Here, Plaintiff has not alleged that GMAC and ETS had 7 knowledge of the scheme or provided any assistance to the 8 originators of her loan, let alone “substantial assistance” in 9 furtherance of the allegedly improper acts. As Plaintiff admits, United States District Court For the Northern District of California 10 GMAC and ETS were not involved in the origination of the loan. 11 Opp. at 4. 12 assistance to the other Defendants at that time. 13 Pl. Thus, they could not have provided substantial Accordingly, Plaintiff’s Third, Fourth, Fifth, Sixth, Seventh, 14 Eighth, Ninth, and Twelfth Causes of Action fail to state a claim 15 against GMAC and ETS, and their motion to dismiss these claims is 16 granted with leave to amend. 17 II. Statute of Limitations 18 All Defendants move to dismiss Plaintiff’s Third, Fourth, 19 Fifth, Sixth, Seventh, Eighth, Ninth, and Eleventh Causes of Action 20 as barred by the applicable statutes of limitations. 21 The relevant statutes of limitations are summarized as 22 follows: 23 California Unfair Competition Law (UCL), California Business & 24 Professions Code § 17200 et seq., is subject to a four year statute 25 of limitations. 26 of Action, for “Reformation/Revision,” the Sixth, for “Damages By 27 Reason of Deceit,” and the Seventh, for “Fraud,” are all based on 28 The Third Cause of Action, for violation of the Cal. Bus. & Prof. Code § 17208. 5 The Fourth Cause 1 underlying allegations of fraud, as Plaintiff concedes. 2 at 4-6. 3 limitations pursuant to California Code of Civil Procedure 4 § 338(d). 5 Civil Code § 1916.7(c), appears to be subject to a three year 6 limitations period pursuant to California Code of Civil Procedure 7 § 338(a). 8 violations of 15 U.S.C. § 1639(h) or 12 C.F.R. § 226.34, is subject 9 to a two year limitations period. Pl. Opp. They are therefore subject to a three year statute of The Fifth Cause of Action, for violation of California The Eighth Cause of Action, for negligence based on Cal. Code Civ. Proc. § 339(1); United States District Court For the Northern District of California 10 Jackson v. Cedars-Sinai Med. Ctr., 220 Cal. App. 3d 1315, 1319-21 11 (1990) (holding that where a cause of action based on a statute 12 “sounds in tort,” the statute of limitations for tort actions 13 rather than statutory violations applies). 14 Action, for breach of the covenant of good faith and fair dealing, 15 and the Eleventh Cause of Action, for rescission/cancellation of 16 the loan agreement, are contract actions and are both subject to a 17 four year statute of limitations period pursuant to California Code 18 of Civil Procedure § 337. 19 The Ninth Cause of Defendants point out that the conduct alleged in these causes 20 of action all was committed on or before July 2006, when 21 Plaintiff’s loan originated, while she filed this suit in December 22 2010. 23 time-barred. 24 action were filed after the statutes of limitations had run, but 25 argues that, because she only recently discovered the existence of 26 her claims, at least some of them are subject to equitable tolling. Defendants argue, therefore, that these causes of action are Plaintiff does not dispute that these causes of 27 Plaintiff bases her equitable tolling argument on Fonua v. 28 6 1 First Allied Funding, 2009 WL 816291 (N.D. Cal.), arguing that the 2 time to bring an action is calculated from the time a plaintiff 3 discovers the fraudulent conduct. 4 than just the plaintiff’s ignorance of the claims. 5 6 7 8 9 Equitable tolling requires more In general, equitable tolling may be applied if, despite all due diligence, a plaintiff is unable to obtain vital information bearing on the existence of his claim. . . . If a reasonable plaintiff would not have known of the existence of a possible claim within the limitations period, then equitable tolling will serve to extend the statute of limitations for filing suit until the plaintiff can gather what information he needs. Santa Maria v. Pacific Bell, 202 F.3d 1170, 1178 (9th Cir. 2000). United States District Court For the Northern District of California 10 The court in Fonua agreed that equitable tolling requires that a 11 plaintiff “might not have had a reasonable opportunity to discover” 12 his or her claims within the statute of limitations period. 13 WL 816291, at *2 (citing King v. State of Cal., 784 F.2d 910, 915 14 (9th Cir. 1986). 15 2009 Plaintiff does not allege that she did not have a “reasonable 16 opportunity” to discover the conduct alleged in her complaint, or 17 that she was unable to obtain the information she needed before the 18 statute of limitations expired on her claims. 19 that she had doubts that NCM and APF had complied with all 20 applicable laws in issuing her loan, and in September 2010 engaged 21 the services of a forensic loan examiner, who informed her of the 22 alleged violations. 23 doubt the legality of NCM and APF’s actions, when her doubts arose 24 or why she waited until September 2010 to have her loan documents 25 examined. 26 September 2010, two significant events took place: 27 Plaintiff stopped making payments on her mortgage, and five months 28 Instead, she alleges Plaintiff does not specify what led her to According to the Complaint, between July 2006 and 7 In March 2010, 1 later, in August, she received the Notice of Default. 2 Plaintiff does not allege that the Notice gave her any new 3 information that led to doubts about the origination of the loan. 4 Nor does Plaintiff allege that she was prevented from engaging the 5 services of the forensic loan examiner at an earlier point in time. 6 Indeed, Plaintiff admits that she was given the loan documents 7 after the transaction closed. 8 July 2006 she was in possession of all the information she provided 9 to the forensic loan examiner in September 2010. United States District Court For the Northern District of California 10 However, It appears that in or shortly after Plaintiff argues that “merely having the papers does not give 11 Plaintiff notice that he [sic] has been defrauded.” 12 District courts in this circuit have split on the applicability of 13 equitable tolling in the context of residential mortgages. 14 Diaz v. Bank of America Home Loan Servicing, 2010 WL 5313417, at 15 *3-4. (C.D. Cal.) (noting cases where failure to translate mortgage 16 terms into Spanish for non-English speakers held sufficient to 17 invoke equitable tolling, but ultimately agreeing with cases 18 denying equitable tolling where plaintiffs failed to act diligently 19 to have their loan documents translated or reviewed). 20 applicable here is Ortega v. Wells Fargo Bank, 2010 WL 1904878 21 (S.D. Cal.). 22 plaintiff, who submitted documents for “forensic review” two years 23 after receiving his loan and months after he stopped making 24 mortgage payments. 25 in [plaintiff’s] loan would have been apparent from the face of the 26 documents he received at closing. 27 finding the alleged irregularities preclude his . . . claim.” 28 Pl. Opp. at 6. See Particularly In Ortega, the court denied equitable tolling to the Id. at *3. The court held, “Any irregularities [Plaintiff’s] belated efforts at 8 Id. 1 The Court finds the reasoning of Ortega persuasive. From the 2 time she received the loan documents, Plaintiff appears to have 3 been in possession of all the facts needed for the forensic loan 4 examiner to uncover the alleged violations more than four years 5 later. 6 her loan only after she stopped making payments and had received 7 the Notice of Default demonstrates that she was less than diligent 8 in uncovering her claims. 9 the basis for equitable tolling of the statutes of limitations for The fact that she came to have doubts about the validity of Because the Complaint does not allege United States District Court For the Northern District of California 10 Plaintiff’s Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, 11 and Eleventh Causes of Action, Defendants’ motion to dismiss these 12 causes of action is granted with leave to amend. 13 III. Quiet Title 14 Plaintiff’s Tenth Cause of Action asks that title in the 15 property be quieted in her favor. 16 under California law, a plaintiff’s complaint must contain: (1) a 17 description of the property; (2) the title of the plaintiff and its 18 basis; (3) the adverse claims to that title; (4) the date as of 19 which the determination is sought; and (5) a prayer for relief of 20 quiet title. 21 plaintiff seeking to quiet title in the face of foreclosure must 22 allege tender of an offer of the amount borrowed. 23 Wash. Mut. Bank, 637 F. Supp. 2d 700, 712 (N.D. Cal. 2009); Arnolds 24 Mgmt. Corp. v. Eischen, 158 Cal. App. 3d 575, 578-79 (1984) (claim 25 to set aside trustee's sale must be accompanied by offer to pay 26 full amount of debt for which the property was security). 27 28 To state a claim for quiet title Cal. Code Civ. Proc. § 761.020. In addition, a Mangindin v. Defendants argue that the claim for quiet title fails because 9 1 Plaintiff has not alleged or argued that she can tender the amount 2 of the indebtedness. 3 “antiquated and unreasonable,” and contends that she is “not 4 required to ‘do equity’ or make tender on a contract that has been 5 procured through fraud.” 6 Truesdail v. Lewis, 45 Cal. App. 2d 718 (1941), in which the court 7 allowed an action to quiet title to proceed without an allegation 8 of tender. However, Truesdail does not support Plaintiff’s 9 argument. The court in Truesdail made clear that any final Plaintiff responds that the tender rule is Pl. Opp. at 16. Plaintiff cites United States District Court For the Northern District of California 10 determination quieting title in the plaintiff’s favor would be 11 “subject to his paying [defendant] the money which he received on a 12 void transaction.” Id. at 722. 13 Plaintiff argues that if the Court does not grant her quiet 14 title and allows the foreclosure sale to proceed, tender will be 15 satisfied upon foreclosure. 16 if the Court does grant her quiet title, she still would be 17 required to tender the loan amount. 18 borrower without tender of the loan amount would be inequitable to 19 the lender. 20 loaned to the borrower, but also of title to the property it took 21 as security for the loan. 22 transaction between Plaintiff and Defendants, but it would not 23 allow Plaintiff to gain quiet title and keep the money she 24 borrowed. 25 Plaintiff fails to acknowledge that, To vest title in a defaulting The lender would be deprived not only of the money it Defendants’ alleged fraud may void the Because Plaintiff has not alleged that she can now or will in 26 the future be able to tender the amount borrowed, Defendants’ 27 motion to dismiss her Tenth Cause of Action is granted with leave 28 10 1 to amend. 2 IV. Unjust Enrichment 3 PNC argues that Plaintiff’s Twelfth Cause of Action should be dismissed because “unjust enrichment” is not a cause of action in 5 California. 6 there is an independent cause of action for unjust enrichment. 7 Baggett v. Hewlett-Packard Co., 582 F. Supp. 2d 1261, 1270-71 (C.D. 8 Cal. 2007) (applying California law). 9 enrichment is not a cause of action, or even a remedy, but rather a 10 United States District Court For the Northern District of California 4 general principle, underlying various legal doctrines and remedies. 11 McBride v. Boughton, 123 Cal. App. 4th 379, 387 (2004). 12 McBride, the court construed a "purported" unjust enrichment claim 13 as a cause of action seeking restitution. 14 two potential bases for a cause of action seeking restitution: 15 (1) an alternative to breach of contract damages when the parties 16 had a contract which was procured by fraud or is unenforceable for 17 some reason; and (2) where the defendant obtained a benefit from 18 the plaintiff by fraud, duress, conversion, or similar conduct and 19 the plaintiff chooses not to sue in tort but to seek restitution on 20 a quasi-contract theory. 21 implies a contract, or quasi-contract, without regard to the 22 parties' intent, to avoid unjust enrichment. 23 California courts appear to be split as to whether Id. at 388. One view is that unjust Id. In There are at least In the latter case, the law Id. Another view is that a cause of action for unjust enrichment 24 exists and its elements are “receipt of a benefit and unjust 25 retention of the benefit at the expense of another.” 26 v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000); First Nationwide 27 Savings v. Perry, 11 Cal. App. 4th 1657, 1662-63 (1992). 28 11 Lectrodryer 1 Plaintiff has not stated a basis for a restitutionary remedy against Defendants. 3 “Defendant NCM (or its successor/s in interest) has been unjustly 4 enriched to the detriment of Plaintiff by wrongfully collecting 5 money to which Defendant NCM, in equity, is not entitled. 6 Defendant NCM has retained the amounts wrongfully collected.” 7 Compl. ¶ 157. 8 amounts as the “illegal kickback fees, in the form of the [yield 9 spread premium].” Pl. Opp. at 17. 10 United States District Court For the Northern District of California 2 in the Complaint. Plaintiff’s Twelfth Cause of Action fails to 11 state a claim against Defendants for unjust enrichment. 12 Defendants’ motion to dismiss is granted with leave to amend. 13 V. Instead, Plaintiff vaguely claims that In her opposition, Plaintiff identifies these These allegations do not appear Unconscionability 14 All Defendants move to dismiss Plaintiff’s Thirteenth Cause of 15 Action on the basis that unconscionability is not a cause of action 16 but a defense to enforcement of a contract. 17 Cause of Action cites California Civil Code §§ 1670.5 and 1770(s).2 18 Compl. ¶ 162. 19 Plaintiff’s Thirteenth Civil Code § 1670.5 provides a defense to the enforcement of 20 an unconscionable contract rather than an affirmative cause of 21 action. 22 1539 (2003). 23 create an affirmative cause of action for unconscionability in 24 Civil Code §§ 1770(a)(19) and 1780, see Cal. Grocers Ass’n. v. Bank 25 of America, 22 Cal. App. 4th 205, 217-18 (1994), the CLRA does not See Jones v. Wells Fargo Bank, 112 Cal. App. 4th 1527, And, although the Consumer Legal Remedies Act does 26 27 28 2 Civil Code § 1770(s) was redesignated § 1770(a)(19) in 1996. 12 1 apply to transactions involving the sale of real property. 2 v. Washington Mut., Inc., 142 Cal. App. 4th 1457, 1488 (2006). 3 Therefore, Plaintiff fails to state a claim for unconscionability, 4 and Defendants’ motion to dismiss the Thirteenth Cause of Action is 5 granted without leave to amend. 6 VI. 7 McKell Injunctive Relief Plaintiff’s Fourteenth Cause of Action seeks injunctive relief 8 in the form of a temporary restraining order and a preliminary 9 injunction against the sale of Plaintiff’s property. “Injunctive United States District Court For the Northern District of California 10 relief is a remedy, not a cause of action.” 11 Hearts, LLC, 179 Cal. App. 4th 1177, 1187 (2009) (quoting City of 12 South Pasadena v. Dep’t of Transp., 29 Cal. App. 4th 1280, 1293 13 (1994)). 14 Gallagher, 62 Cal. App. 4th 501, 503 (1998), is not to the 15 contrary. 16 requires Plaintiff to prove “the elements of a cause of action 17 involving the wrongful act sought to be enjoined.” 18 clear that injunctive relief is not itself a separate cause of 19 action. 20 Fourteenth Cause of Action is granted without leave to amend. 21 Plaintiff may seek injunctive relief as a remedy if she is able to 22 state a valid cause of action. 23 VII. Declaratory Relief 24 Guessous v. Chrome Plaintiff’s citation to San Diego Unified Port Dist. v. As stated in Gallagher, a claim for injunctive relief Id. This makes Accordingly, Defendants’ motion to dismiss Plaintiff’s Plaintiff’s First and Second Causes of Action seek 25 declarations that the note, Substitution of Trustee, Notice of 26 Default and Notice of Trustee’s Sale are “void ab initio,” that 27 GMAC cannot collect payments under the note, and that ETS lacks 28 13 1 authority to foreclose on Plaintiff’s property and conduct a 2 trustee’s sale. 3 When a claim for declaratory relief is removed to federal 4 court, the court must conduct its analysis under the Declaratory 5 Judgment Act (DJA). 6 103 F.3d 750, 753 (9th Cir. 1996), overruled on other grounds by 7 Gov’t Emps. Ins. v. Dizol, 133 F.3d 1220 (9th Cir. 1998); see also 8 Gamble v. GMAC Mortgage Corp., 2009 WL 400359, at *2 (N.D. Cal.). 9 The DJA permits a federal court to “declare the rights and other See Golden Eagle Ins. Co. v. Travelers Cos., United States District Court For the Northern District of California 10 legal relations” of parties to “a case of actual controversy.” 11 U.S.C. § 2201; see Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 12 887, 893 (9th Cir. 1986). 13 the Declaratory Judgment Act is the same as the “case or 14 controversy” requirement of Article III of the United States 15 Constitution. 16 (9th Cir. 1993). 17 28 The “actual controversy” requirement of American States Ins. Co. v. Kearns, 15 F.3d 142, 143 Defendants argue that there is no “actual controversy” 18 underlying Plaintiff’s claims because they concern past wrongdoing. 19 Plaintiff responds that there is a pending foreclosure sale of her 20 property. 21 requirement for declaratory relief. 22 This appears to satisfy the “actual controversy” Plaintiff presents four theories underlying her claim for 23 declaratory relief that the pending foreclosure sale is invalid: 24 (1) NCM committed fraud in the origination of her loan; (2) GMAC is 25 not the “holder in due course” of her note; (3) Defendants have not 26 followed the correct procedures to assign GMAC as beneficiary under 27 the deed and to substitute ETS as the trustee of the deed; and 28 14 1 (4) Defendants did not post the Notice of Trustee’s Sale in a 2 public place or publish it in a newspaper of general circulation. 3 Plaintiff alleges that she is entitled to declaratory relief because the inclusion of a yield spread premium that was not 5 disclosed or explained to her by NCM constituted fraud, rendering 6 the note, Substitution of Trustee, Notice of Default and Notice of 7 Trustee’s Sale illegal and invalid. 8 noted above, Plaintiff’s fraud claims (Sixth and Seventh Causes of 9 Action) are time-barred. “[T]he statute of limitations governing a 10 United States District Court For the Northern District of California 4 request for declaratory relief is the one applicable to an ordinary 11 legal or equitable action based on the same claim.” 12 Aerojet-General Corp., 230 Cal. App. 3d 1125, 1155 (1991). 13 result, Plaintiff’s declaratory relief causes of action based on 14 fraud are also time-barred. 15 Compl. ¶¶ 56-60. However, as Mangini v. As a Plaintiff also seeks declaratory relief on the grounds that 16 GMAC is not in physical possession of the original note. 17 48. 18 note can collect payments and initiate a foreclosure of the 19 property. 20 Compl. ¶ Plaintiff argues that only the “holder in due course” of the Id. ¶¶ 49-50. “The statutory provisions regulating the nonjudicial 21 foreclosure of deeds of trust are contained in [Civil Code] 22 sections 2924-2924i. 23 exercise of the power of sale contained in a deed of trust.” 24 Assocs. v. Safeco Title Ins. Co., 39 Cal.3d 281, 285 (1985). 25 Importantly, these provisions “contain[] no requirement that the 26 lender produce the original note to initiate the foreclosure 27 process.” 28 These provisions cover every aspect of I.E. Gamboc v. Tr. Corps, 2009 WL 656285, at *4 (N.D. Cal.). 15 1 Whether or not GMAC is in possession of Plaintiff’s Note is 2 irrelevant to its authority to collect payments and initiate a non- 3 judicial foreclosure. 4 therefore not sufficient to state a claim for declaratory relief. 5 Plaintiff’s allegations on this point are Plaintiff next seeks declaratory relief based on her 6 allegations that “Defendant ETS has not been legally and/or 7 properly appointed as substitute/successor trustee.” 8 Plaintiff’s allegations are contradicted by the documents attached 9 to and referred to in Plaintiff’s Complaint. Compl. ¶ 62. Plaintiff quotes United States District Court For the Northern District of California 10 paragraph 24 of the deed, which provides that the lender may 11 appoint a successor trustee by an instrument which “contain[s] the 12 name of the original Lender, Trustee and Borrower . . . and the 13 name and address of the successor trustee.” 14 for Judicial Notice, Ex. A ¶ 24.3 15 GMAC, the assigned beneficiary of the deed, executed the 16 Substitution of Trustee naming NCB as the original trustee and NCM 17 as the original beneficiary, and provided the name and address of GMAC and ETS Request Following these procedures, 18 3 19 20 21 22 23 24 25 26 27 28 GMAC and ETS filed a Request for Judicial Notice of Plaintiff’s First Deed of Trust. Plaintiff referred to this Deed of Trust in her Complaint and purported to attach it as Exhibit B, although she actually attached the Second Deed of Trust. See Compl. ¶ 16(3) & Ex. B. "Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, under the incorporation by reference doctrine, when a plaintiff alleges in his or her complaint the contents of documents whose authenticity is not challenged but does not attach them to the pleadings, such documents may be introduced by the defendants and may be considered in ruling on a Rule 12(b)(6) motion. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). Because Plaintiff referred to the document and intended to attach it to the Complaint, the Court will consider the Deed of Trust incorporated by reference, and denies as moot the Request for Judicial Notice of GMAC and ETS. 16 1 ETS, the substitute trustee. 2 allegations of improper procedures are plainly contradicted by 3 documents attached to and referred to in her Complaint, she fails 4 to state a claim that ETS was improperly appointed as the trustee 5 under the deed. 6 7 8 9 United States District Court For the Northern District of California 10 Compl. Ex. C. Because Plaintiff’s Finally, Plaintiff seeks declaratory relief on the grounds that she is not aware of any fact showing that the Notice of Trustee’s Sale . . . has been published in a newspaper of general circulation in the County of San Mateo, State of California, nor has it been posted in at least one public place in the City of San Mateo, County of San Mateo, State of California. 11 Compl. ¶ 61. 12 brief, the requirements that a notice of trustee’s sale be 13 published and posted come from California Civil Code § 2924f. 14 However, the notice requirements are waived if actual notice is 15 received. 16 (3d ed.). 17 Although not cited in the Complaint or Plaintiff’s See 4 Miller & Starr, California Real Estate § 10:199 Plaintiff received the Notice of Trustee’s Sale and attached 18 it to the Complaint. 19 publication requirements have not been satisfied, Plaintiff has 20 received actual notice. 21 therefore waived. 22 state a basis for the declaratory relief she seeks. 23 Compl. ¶ 24 & Ex. E. Even if the posting and Any other notice requirements are Plaintiff’s allegations on this point fail to Because the allegations underlying Plaintiff’s causes of 24 action for declaratory relief are either time-barred or fail to 25 allege any wrongdoing by Defendants, there is no “actual 26 controversy” existing between Plaintiff and Defendants justifying 27 declaratory relief. 28 Accordingly, Defendants’ motions to dismiss 17 1 Plaintiff’s First and Second Causes of Action are granted with 2 leave to amend to plead a valid basis for declaratory relief. 3 VIII. PNC’s Motion to Strike 4 Because the Court has dismissed all of Plaintiff’s causes of 5 action, PNC’s motion to strike portions of the complaint referring 6 to punitive or exemplary damages and attorneys’ fees is denied as 7 moot. 8 not plead a valid basis for punitive damages or attorneys’ fees. 9 Even if Plaintiff’s underlying claims were valid, she has Under Federal Rule of Civil Procedure 12(f), the Court may United States District Court For the Northern District of California 10 strike from a pleading “any redundant, immaterial, impertinent or 11 scandalous matter.” 12 12(f) motion is to avoid spending time and money litigating 13 spurious issues. 14 (9th Cir. 1993), rev’d on other grounds, 510 U.S. 517 (1994). 15 matter is immaterial if it has no essential or important 16 relationship to the claim for relief plead. 17 impertinent if it does not pertain and is not necessary to the 18 issues in question in the case. Fed. R. Civ. P. 12(f). The purpose of a Rule Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 Id. A A matter is Id. 19 A. 20 California Civil Code § 3294, which governs the right to 21 22 23 24 25 26 27 28 Punitive Damages recover punitive damages, provides: (a) In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant. . . . (c) As used in this section, the following definitions shall apply: (1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which 18 1 is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. (2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights. (3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. 2 3 4 5 6 Cal. Civ. Code § 3294. To support a claim for punitive damages, a 7 complaint must allege facts demonstrating “circumstances of 8 oppression, fraud or malice.” Grieves v. Superior Court, 157 Cal. 9 App. 3d 159, 166 (1984). United States District Court For the Northern District of California 10 Plaintiff contends that her allegations regarding Defendants’ 11 statutory violations, lack of disclosures and failure to 12 investigate her ability to repay her loans support her prayer for 13 punitive damages. These allegations do not show “circumstances of 14 oppression, fraud or malice.” See Grieves, 157 Cal. App. 3d at 15 166. Plaintiff does not allege that these violations occurred with 16 “intent to cause injury,” or that they constituted “despicable 17 conduct . . . in conscious disregard” of her rights. Cal. Civil 18 Code § 3294(c). 19 Plaintiff also argues that Defendants “made misrepresentations 20 as to the terms of Plaintiff’s financing.” Pl. Opp. at 20. 21 Plaintiff’s actual allegations are that NCB failed to explain or 22 disclose the meaning and consequences of the Yield Spread Premium 23 or the Mortgage Broker Fee that were included in her loan. Compl. 24 ¶¶ 18-18.1. Nowhere does Plaintiff allege that Defendants’ failure 25 to disclose the meaning of these terms was done with the intention 26 of depriving her of property or legal rights. 27 28 19 Cal. Civil Code 1 § 3294(c)(3). 2 Finally, Plaintiff contends that the Complaint “alleges that 3 Defendants did not allow Plaintiff to review the loan documents, 4 made assurances that were not true, and refused to provide 5 Plaintiff with loan papers after they were requested.” 6 19. 7 malice, none of them actually appears in the Complaint. 8 the Complaint fails to set forth circumstances of oppression, fraud 9 or malice, Plaintiff has not plead an entitlement to punitive Pl. Opp. at Although these allegations may show oppression, fraud or Because United States District Court For the Northern District of California 10 damages. 11 amended complaint, she may include a prayer for punitive damages if 12 she is able truthfully to remedy these deficiencies. If Plaintiff is able to state any valid claims in an 13 B. 14 Attorneys’ fees may be recovered only where provided by Attorneys’ Fees 15 statute or contract. 16 Photon Dynamics, Inc., 158 Cal. App. 4th 1582, 1601 (2008). 17 Plaintiff argues that she may be entitled to attorneys’ fees under 18 California Code of Civil Procedure § 1021.5, or under the deed of 19 trust, which has a provision for attorneys’ fees. 20 21 22 23 24 25 26 27 28 Cal. Civ. Proc. Code § 1021; Amtower v. Section 1021.5 provides that a court may award attorneys’ fees to a successful party in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any. Cal. Civ. Proc. Code § 1021.5. Plaintiff argues that her “attempts 20 1 to enjoin unlawful and fraudulent foreclosure practices would have 2 a public benefit.” 3 injunctive relief would enjoin only the foreclosure of her home. 4 Plaintiff fails to explain any public benefit to be gained from an 5 injunction against her foreclosure. 6 to plead a basis for an attorneys’ fee award under section 1021.5. 7 Pl. Opp. at 20. Plaintiff’s prayer for Therefore, the Complaint fails Plaintiff also argues that she may be entitled to attorneys’ 8 fees under the deed of trust. 9 charge Borrower fees for services performed in connection with The deed provides: “Lender may United States District Court For the Northern District of California 10 Borrower’s default, for purposes of protecting Lender’s interest in 11 the Property and rights under this Security Instrument . . . 12 including, but not limited to, attorneys’ fees . . . .” 13 Plaintiff does not explain how this provision would entitle her to 14 attorneys’ fees against PNC in this action. 15 would invoke California Civil Code § 1717, which makes unilateral 16 fee provisions such as this one applicable to both parties to a 17 contract. 18 (2008). 19 under the deed of trust, PNC is no longer entitled to attorneys’ 20 fees under the deed. 21 Plaintiff to attorneys’ fees against PNC under the deed. 22 fails to plead a basis for an attorneys’ fee award against PNC 23 under the deed of trust. 24 deficiencies, she may include a prayer for attorneys’ fees in an 25 amended complaint. 26 27 28 Deed ¶ 14. Presumably Plaintiff See Kachlon v. Markowitz, 168 Cal. App. 4th 316, 347 However, following the substitution of GMAC as beneficiary Therefore, section 1717 does not entitle Plaintiff If Plaintiff can remedy these CONCLUSION For the foregoing reasons, GMAC and ETS’ (Docket No. 5) and 21 1 PNC’s (Docket No. 8) motions to dismiss are GRANTED. 2 to strike (Docket No. 9) is DENIED as moot. 3 are summarized as follows: 4 1. PNC’s motion The Court’s rulings Plaintiff’s First and Second Causes of Action against all 5 Defendants are dismissed with leave to amend to plead a 6 valid basis for declaratory relief. 7 2. Plaintiff’s Third, Fourth, Fifth, Sixth, Seventh, Eighth, 8 Ninth, and Twelfth Causes of Action against GMAC and ETS 9 are dismissed with leave to amend to state a claim United States District Court For the Northern District of California 10 11 against GMAC and ETS. 3. Plaintiff’s Third, Fourth, Fifth, Sixth, Seventh, Eighth, 12 Ninth, and Eleventh Causes of Action against all 13 Defendants are dismissed with leave to amend to plead a 14 basis for equitable tolling of the statute of 15 limitations. 16 4. Plaintiff’s Tenth Cause of Action against all Defendants 17 is dismissed with leave to amend to plead tender of the 18 full loan amount. 19 5. Plaintiff’s Twelfth Cause of Action against all 20 Defendants is dismissed with leave to amend to plead a 21 basis for a restitutionary remedy. 22 6. Plaintiff’s Thirteenth and Fourteenth Causes of Action 23 against all Defendants are dismissed without leave to 24 amend. 25 If Plaintiff wishes to file an amended complaint, she must do 26 so within fourteen days of the date of this order. 27 Defendants must respond twenty-one days later. 28 22 If she does, If they respond 1 with a motion to dismiss, they must notice it for October 6, 2011 2 at 2 P.M. A case management conference will be held on that date 3 and time. If Plaintiff does not timely file an amended complaint, 4 the case will be dismissed for failure to prosecute. 5 IT IS SO ORDERED. 6 7 Dated: 7/28/2011 CLAUDIA WILKEN United States District Judge 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23

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