Torbov v. Cenlar Agency, Inc, No. 5:2014cv00130 - Document 62 (N.D. Cal. 2014)
Court Description: ORDER GRANTING 37 MOTION TO DISMISS WITH LEAVE TO AMEND. Signed by Judge Beth Labson Freeman on 7/8/2014. (blflc1, COURT STAFF) (Filed on 7/8/2014)
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1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 TSVETAL TORBOV, Plaintiff, 9 For the Northern District of California United States District Court 12 ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND v. 10 11 Case No. 5:14-cv-00130-BLF [Re: ECF 37] CENLAR AGENCY, INC., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., TAYLOR, BAN & WHITAKER CORP, AND DOES 1-25, 13 Defendants. 14 Plaintiff Tsvetan Torbov, proceeding pro se, filed this action to stop a trustee’s sale of his 15 16 home following his default on a mortgage loan. Defendants move to dismiss Plaintiff’s second 17 amended complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon 18 which relief may be granted. The Court has considered the briefing submitted by the parties and the 19 oral argument presented at the hearing on July 3, 2014. For the reasons discussed below, the motion 20 is GRANTED with leave to amend. 21 I. BACKGROUND The following facts are taken from Plaintiff’s operative second amended complaint (“SAC”) 22 23 and from documents that are judicially noticeable.1 In September 2005, Plaintiff obtained a home 24 mortgage loan from Taylor, Bean & Whitaker Mortgage Corporation in the amount of $359,650, 25 secured by a Deed of Trust on his home. (RJN Exh. 1, ECF 38) The Deed of Trust identified 26 1 27 28 Defendant requests judicial notice of three documents recorded in the Santa Clara County Recorder’s Office with respect to Plaintiff’s property: a Deed of Trust, a Notice of Default and Election to Sell Under Deed of Trust, and a Notice of Trustee’s Sale. The request is GRANTED. See Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988) (court may take judicial notice of matters of public record). 5:14-cv-00130-BLF ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary under the Deed of 2 Trust. (Id.) On October 15, 2013, Sage Point Lender Services, LLC, the trustee under the Deed of Trust, 4 recorded a Notice of Default and Election to Sell under Deed of Trust. (RJN Exh. 2) The Notice of 5 Default stated that Plaintiff’s property was in foreclosure because he was behind on his payments; 6 that the amount of the deficiency was $30,157.55 as of October 11, 2013; and that the property 7 would be sold unless Plaintiff paid the entire amount due. (Id.) The Notice of Default advised 8 Plaintiff that he could obtain a written itemization of the amount due by writing to “Nationstar 9 Mortgage LLC c/o Cenlar FSB” at an address provided, and that he might be able to arrange for 10 additional time to cure the default or establish a schedule of payments to cure the default. (Id.) 11 For the Northern District of California United States District Court 3 On January 9, 2014, Plaintiff filed this action, alleging that Defendants had refused to accept 12 his monthly mortgage payments since February 2013. (Compl., ECF 1) On January 28, 2014, Sage 13 Point Lender Services, LLC recorded a Notice of Trustee’s Sale, scheduling a trustee’s sale of 14 Plaintiff’s home for February 20, 2014. (RJN Exh. 3) The Notice of Trustee’s Sale indicated that 15 the total unpaid balance on the mortgage was $359,723.82.2 (Id.) On February 14, 2014, the Court issued a temporary restraining order enjoining Defendants 16 17 from proceeding with the February 20, 2014 trustee’s sale. (TRO, ECF 13) On March 10, 2014, the 18 Court issued an order lifting the temporary restraining order and denying Plaintiff’s motion for a 19 preliminary injunction. (Order, ECF 30) The Court noted that “Defendant” had “submitted 20 evidence showing that Torbov failed to make his loan payments as required, and that it acted within 21 its contractual rights when it returned certain payments tendered by him, because those payments 22 were insufficient to cure the default.” (Id. at 1-2) 23 On March 26, 2014, Plaintiff filed the operative SAC, alleging that he paid his mortgage by 24 check for fifteen years; that in October 2012 Defendants advised him by telephone that under a new 25 policy payments had to be made by telephone; that Plaintiff complied with the new policy; and that 26 starting in February 2013 Defendants stopped accepting Plaintiff’s payment by telephone without 27 28 2 The Court notes that this amount is greater than the original loan amount. 2 5:14-cv-00130-BLF ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 explanation. (SAC, ECF 35) Plaintiff then began submitting his mortgage payments by check, but 2 Defendants returned those checks to Plaintiff. (Id.) Plaintiff alleges that he made several requests 3 for an explanation, but “Defendant CENLAR” did not respond. (Id.) Plaintiff believes that 4 Defendants conspired to create a situation that would put Plaintiff into default and deprive him of 5 his home. (Id.) He asserts claims for: (1) quiet title, (2) violation of RESPA, (3) violation of 6 California Business and Professions Code § 17200, and (4) conspiracy to defraud. It is not clear 7 from the record whether the trustee’s sale has been rescheduled and/or whether Plaintiff’s home has 8 been sold. 9 II. “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a 10 11 For the Northern District of California United States District Court LEGAL STANDARDS claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation Force 12 v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 13 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts as true all 14 well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese v. 15 BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the Court need not 16 “accept as true allegations that contradict matters properly subject to judicial notice” or “allegations 17 that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re 18 Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks and citations 19 omitted). While a complaint need not contain detailed factual allegations, it “must contain sufficient 20 factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. 21 Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A 22 claim is facially plausible when it “allows the court to draw the reasonable inference that the 23 defendant is liable for the misconduct alleged.” Id. 24 III. DISCUSSION 25 Before turning to Plaintiff’s claims, the Court makes two observations. First, the SAC does 26 not allege many facts. Without more information regarding communications that Plaintiff had with 27 each of the defendants, dates of those communications, and what was said or written, Plaintiff 28 cannot satisfy the basic pleading requirements set out by the Supreme Court in Twombly and Iqbal. 3 5:14-cv-00130-BLF ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 Second, Plaintiff’s opposition contains a number of assertions and theories that are not contained in 2 the SAC. On a motion to dismiss, the Court considers only whether the operative pleading states a 3 claim upon which relief may be granted; the Court cannot consider new assertions and theories 4 presented in Plaintiff’s briefing. See New Mexico State Investment Council v. Ernst & Young LLP, 5 641 F.3d 1089, 1094 (9th Cir. 2011) (when resolving a Rule 12(b)(6) motion “review is generally 6 limited to the face of the complaint, materials incorporated into the complaint by reference, and 7 matters of judicial notice”). As discussed herein, Plaintiff is granted an opportunity to amend. As 8 the Court explained at the hearing, Plaintiff may amend only the existing claims that are the subject 9 of the present motion. If Plaintiff wishes to assert new claims, he must file a motion for leave to amend his pleading pursuant to Federal Rule of Civil Procedure 15(a)(2) and Civil Local Rule 7-2. 11 For the Northern District of California United States District Court 10 Plaintiff is encouraged to include in any amended pleading as many facts as possible regarding the 12 mortgage transaction, the events that led to his default on the loan, and exactly what each defendant 13 said or did. Claim 1 – Quiet Title 14 A. 15 Claim 1 seeks to quiet title to the property. “An action may be brought . . . to establish title 16 against adverse claims to real or personal property or any interest therein.” Cal. Civ. P. Code § 17 760.020(a). “A borrower may not, however, quiet title against a secured lender without first paying 18 the outstanding debt on which the mortgage or deed of trust is based.” Lueras v. BAC Home Loans 19 Servicing, LP, 221 Cal. App. 4th 49, 86 (2013). 20 Plaintiff does not allege that he has paid the outstanding debt or that he has the ability to do 21 so. (SAC ¶¶ 1-11) Accordingly, he has failed to state a claim for quiet title. Plaintiff requests a 22 declaration that “the title to the subject property is vested in plaintiffs alone and that the defendant 23 [sic] herein, and each of them, be declared to have no estate, right, title or interest in the subject 24 property.” (Id. ¶ 8) The allegation that Defendants have no rights in the property is directly 25 contradicted by the Deed of Trust. See In re Gilead, 536 F.3d at 1055 (holding that the Court need 26 not “accept as true allegations that contradict matters properly subject to judicial notice” or 27 “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable 28 inferences”) (internal quotation marks and citations omitted). 4 5:14-cv-00130-BLF ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 Accordingly, the motion to dismiss is GRANTED as to Claim 1 with leave to amend. 2 B. 3 Claim 2 asserts that Defendants violated the Real Estate Settlement Procedures Act Claim 2 – RESPA 4 (“RESPA”) by failing to respond to a “qualified written request” made under 12 U.S.C. § 2605. 5 “RESPA requires the servicer of a federally related mortgage loan to provide a timely written 6 response to inquiries from borrowers regarding the servicing of their loans.” Medrano v. Flagstar 7 Bank, FSB, 704 F.3d 661, 665 (9th Cir. 2012) (citing 12 U.S.C. § 2605(e)(1)(A), (e)(2)). “If the 8 servicer fails to respond properly to such a request, the statute entitles the borrower to recover actual 9 damages and, if there is a ‘pattern or practice of noncompliance,’ statutory damages of up to $1,000.” Id. (citing 12 U.S.C. § 2605(f)). While a borrower’s written inquiry does not need to 11 For the Northern District of California United States District Court 10 contain any “magic” words, it constitutes a qualified written request only if it “(1) reasonably 12 identifies the borrower’s name and account, (2) either states the borrower’s ‘reasons for the belief . . 13 . that the account is in error’ or ‘provides sufficient detail to the servicer regarding other information 14 sought by the borrower,’ and (3) seeks ‘information relating to the servicing of [the] loan.’” Id. at 15 666 (quoting 12 U.S.C. § 2605(e)(1)(A)-(B)). Plaintiff does not allege facts demonstrating that he 16 sent written requests containing this information to Defendants. 17 Accordingly, the motion to dismiss is GRANTED as to Claim 2 with leave to amend. 18 C. 19 Claim 3 asserts a violation of California Business & Professions Code § 17200. In order to Claim 3 – Section 17200 20 state a claim for relief under that provision, Plaintiff must allege facts showing that Defendants 21 engaged in an “unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 22 17200. “Because the statute is written in the disjunctive, it is violated where a defendant’s act or 23 practice violates any of the foregoing prongs.” Davis v. HSBC Bank Nevada, N.A., 691 F.3d 1152, 24 1168 (9th Cir. 2012). The Court addresses each of the prongs in turn. 25 26 1. Unlawful “By proscribing any unlawful business practice, section 17200 borrows violations of other 27 laws and treats them as unlawful practices that the unfair competition law makes independently 28 actionable.” Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000) 5 5:14-cv-00130-BLF ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 (internal quotation marks and citation omitted). “It does not matter whether the underlying statute 2 also provides for a private cause of action; section 17200 can form the basis for a private cause of 3 action even if the predicate statute does not.” Id. Claim 3 does not identify any law upon which to 4 piggyback a Section 17200 claim; in fact the only statute mentioned in Claim 3 is Section 17200 5 itself. (SAC ¶¶ 14-15, ECF 35). To the extent that Plaintiff’s Section 17200 claim is based on 6 violation of RESPA, Plaintiff has failed to allege facts showing a violation, as discussed above. 7 8 9 2. Unfair In consumer cases such as this one, “the UCL does not define the term ‘unfair’ as used in Business and Professions Code section 17200.” Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 1364 (2010). The California Supreme Court has not established a definitive test to determine 11 For the Northern District of California United States District Court 10 whether a business practice is unfair either. Phipps v. Wells Fargo Bank, N.A., No. CV F 10-2025 12 LJO SKO, 2011 WL 302803, at *16 (E.D. Cal. Jan. 27, 2011). Three lines of authority have 13 developed among the California Courts of Appeal. In the first line, the test requires “that the public 14 policy which is a predicate to a consumer unfair competition action under the unfair prong of the 15 UCL must be tethered to specific constitutional, statutory, or regulatory provisions.” Drum v. San 16 Fernando Valley Bar Ass’n 182 Cal. App. 4th 247, 257 (2010) (internal quotation makes and 17 citation omitted). A second line of cases applies a test to determine whether the identified business 18 practice is “immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers 19 and requires the court to weigh the utility of the defendant’s conduct against the gravity of the harm 20 to the alleged victim.” Id. (internal quotation marks and citation omitted). The third test draws on 21 the definition of “unfair” from antitrust law and requires that “(1) the consumer injury must be 22 substantial; (2) the injury must not be outweighed by any countervailing benefits to consumers or 23 competition; and (3) it must be an injury that consumers themselves could not reasonably have 24 avoided.” Id. (internal quotation marks and citation omitted). 25 Claim 3 asserts that Defendants have fraudulently represented that Plaintiff is in default on 26 his mortgage. Plaintiff’s default is apparent from the Notice of Default and Election to Sell Under 27 Deed of Trust, and the Notice of Trustee’s Sale. Thus Plaintiff has not alleged facts showing that 28 the representation of default was “unfair.” Claim 3 also asserts that Defendants have refused to 6 5:14-cv-00130-BLF ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 provide a payment history to Plaintiff and have conspired to deprive Plaintiff of his home. Such 2 conduct might be sufficient to allege a claim under the “unfair” prong of Section 17200. However, 3 Plaintiff has not alleged any facts to support such a claim, for example, the dates and times that he 4 requested a payment history or the manner in which Defendants conspired against him. 3. 5 Fraudulent “A business practice is fraudulent under the UCL if members of the public are likely to be 6 7 deceived.” Davis, 691 F.3d at 1169. Allegations of fraud under Section 17200 must satisfy the 8 heightened pleading standard of Federal Rule of Civil Procedure 9(b). Kearns v. Ford Motor Co., 9 567 F.3d 1120, 1125 (9th Cir. 2009). Rule 9(b) requires that “a party must state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). “‘Averments of fraud must be 11 For the Northern District of California United States District Court 10 accompanied by the who, what, when, where, and how of the misconduct charged.” Kearns, 567 12 F.3d at 1124 (quoting Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). While 13 Claim 3 alleges in conclusory fashion that Defendants “fraudulently” represented that Plaintiff was 14 in default, it contains no factual allegations describing Defendants’ misconduct. As noted above, 15 Plaintiff’s default is apparent from the Notice of Default and Election to Sell Under Deed of Trust, 16 and the Notice of Trustee’s Sale. Plaintiff must allege specific facts and circumstances 17 demonstrating that these Notices were obtained fraudulently. Based upon the foregoing, the motion to dismiss is GRANTED as to Claim 3 with leave to 18 19 amend. Claim 4 – Conspiracy to Defraud 20 D. 21 Claim 4 alleges that Defendants “conspired to participate in a fraudulent scheme to foreclose 22 on Plaintiff [sic] residence.” (SAC ¶ 17) Once again, Plaintiff fails to allege “the who, what, when, 23 where, and how of the misconduct charged.” Kearns, 567 F.3d at 1124 (quoting Vess, 317 F.3d at 24 1106). The claim contains no factual allegations whatsoever regarding Defendants’ alleged 25 fraudulent scheme. 26 Accordingly, the motion to dismiss is GRANTED as to Claim 4 with leave to amend. 27 E. 28 The Court notes that Plaintiff has attempted to state a claim in three separate pleadings: his Leave to Amend 7 5:14-cv-00130-BLF ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND 1 original complaint (ECF 1), a first amended complaint filed as of right (ECF 6), and the operative 2 SAC (ECF 35), which was filed with leave of the Court (ECF 34). Because he has not yet had the 3 benefit of an order explaining the deficiencies of his claims, and in light of his pro se status, 4 Plaintiff is granted an opportunity to amend. However, if Plaintiff once again fails to allege a viable 5 claim – or at least facts showing that he could allege a viable claim if given further leave – his 6 claims will be dismissed without leave to amend and the action will be dismissed with prejudice. 7 8 9 11 For the Northern District of California United States District Court 10 IV. ORDER For the foregoing reasons, Defendants’ motion to dismiss is GRANTED with leave to amend only the existing claims that are the subject of the present motion. Any amended complaint shall be filed on or before July 29, 2014. IT IS SO ORDERED. 12 13 Dated: July 8, 2014 __________________________________ BETH LABSON FREEMAN United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 5:14-cv-00130-BLF ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND
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