Kathleen Kaurloto v. U.S. Bank, N.A. et al, No. 2:2016cv06652 - Document 32 (C.D. Cal. 2016)
Court Description: STATEMENT OF DECISION GRANTING Defendants Motion to Dismiss Plaintiff First amended Complaint by Judge John F. Walter that Defendants Motion to Dismiss Plaintiff First Amended Complaint 26 is GRANTED. Although the Court recognizes that thisCircuit has a liberal policy favoring amendments and that leave to amend should be freely granted, the Court is not required to grant leave to amend if the Courtdetermines that permitting Plaintiff to amend would be an exercise in futility. In this case, Plaintiff has failed to allege any facts in her Opposition that indicates leave to amend would not be futile. Accordingly, Plaintiffs First Amended Complaint is DISMISSED without leave to amend. (Made JS-6. Case Terminated.) (jp)
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Kathleen Kaurloto v. U.S. Bank, N.A. et al Doc. 32 1 JS-6 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 KATHLEEN KAURLOTO, an individual, 12 Plaintiff, 13 14 15 16 17 v. U.S. BANK, N.A.; CALIBER HOME LOANS, INC.; MTC FINANCIAL INC. dba TRUSTEE CORPS; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS; AND DOES 1 THROUGH 10, INCLUSIVE, Case No. 16-cv-06652-JFW-GJSx STATEMENT OF DECISION GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT Judge: Hon. John F. Walter Defendants. 18 19 20 I. PROCEDURAL POSTURE 21 22 Plaintiff Kathleen Kaurloto (“Plaintiff”) filed this action on June 15, 2016, 23 seeking monetary and declaratory relief. She filed her First Amended Complaint on 24 September 29, 2016. Defendants Caliber Home Loans, Inc. (“Caliber”), U.S. Bank 25 Trust, N.A. as Trustee for LSF9 Master Participation Trust (erroneously sued as 26 “U.S. Bank, N.A.”) (“USB Trust as Trustee for LSF9”), and Mortgage Electronic 27 Registration Systems, Inc. (“MERS”) (collectively, “Defendants”) filed their 28 Motion to Dismiss on October 31, 2016, and Plaintiff filed her Opposition on STATEMENT OF DECISION Dockets.Justia.com 1 November 8, 2016. Defendants filed their Reply on November 14, 2016. After 2 considering the moving, opposing, and reply papers, and the arguments therein, the 3 Court rules as follows: 4 5 II. STATEMENT OF FACTS 6 7 In May 2005, Plaintiff borrowed $410,000.00 from Swan Investments 8 International, Inc. dba International Mortgage. (See FAC, “Compl.” ¶ 15.) The loan 9 was secured by a Deed of Trust encumbering the property commonly known as 522 10 Albro Street, Los Angeles, California 90732 (the “Property”). (See id. ¶¶ 15-16, Ex. 11 A) The Deed of Trust lists moving defendant MERS as beneficiary in nominee 12 capacity for the lender and the lender’s successors and assigns. (See id. p. 1.) 13 In November 2015, an Assignment of Deed of Trust, noticing the public that 14 MERS assigned the Deed of Trust to co-defendant USB Trust as Trustee for LSF9, 15 was recorded. (See Compl. ¶ 20, Ex. D.) 16 Plaintiff apparently became unable to make her mortgage payments and 17 defaulted. She does not deny her default. As a result of the default, foreclosure 18 proceedings commenced. In December 2015, a Notice of Default, informing the 19 public of the default and commencement of foreclosure, was recorded. (Compl. ¶ 20 17, Ex. B.) Three months later, a Notice of Trustee’s Sale was recorded, noticing 21 the upcoming sale. (Compl. ¶ 18, Ex. C.) The sale was postponed. Plaintiff filed 22 suit in June 2016 to prevent the sale. 23 Plaintiff claims the beneficiaries of the Deed of Trust lacked authority to 24 foreclose. She sues, preemptively, to compel Defendants to prove their interest in 25 the security and authority. 26 /// 27 /// 28 /// -2STATEMENT OF DECISION 1 III. STANDARD FOR MOTION TO DISMISS 2 3 A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in 4 the complaint. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss 5 does not need detailed factual allegations, a plaintiff’s obligation to provide the 6 ‘grounds’ of her ‘entitlement to relief’ requires more than labels and conclusions, 7 and a formulaic recitation of the elements of a cause of action will not do.” 8 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations 9 must be enough to raise a right to relief above the speculative level.” Id. To survive 10 a motion to dismiss, a plaintiff must do more than assert “threadbare recitals of the 11 elements of a cause of action, supported by mere conclusory statements.” Ashcroft 12 v. Iqbal, 129 S.Ct. 1937, 1940 (2009). A complaint must “state a claim to relief that 13 is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility 14 when the plaintiff pleads factual content that allows the court to draw the 15 reasonable inference that the defendant is liable for the misconduct alleged.” 16 Ashcroft, 129 S. Ct. 1949. Although “[t]he plausibility standard is not akin to a 17 ‘probability requirement,” the complaint must demonstrate “more than a sheer 18 possibility that a defendant has acted unlawfully.” Id. A plausible claim for relief 19 requires “enough fact[s] to raise a reasonable expectation that discovery will reveal 20 evidence to support the claim. Twombly, 550 U.S. 556. 21 In considering a motion pursuant to Rule 12(b)(6), a court must accept as true 22 all material allegations in the complaint, as well as all reasonable inferences to be 23 drawn from them. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998). However, 24 a court need not accept as true unreasonable inferences or conclusory legal 25 allegations cast in the form of factual allegations. Ashcroft, 129 S. Ct. 1949 26 (assumption of truth does not apply to “legal conclusions couched as a factual 27 allegation.”). See also Sprewell v. Golden State Warriors, 266 F.3d 979, 988 28 (9th Cir. 2009); and W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). -3STATEMENT OF DECISION 1 Moreover, when evaluating the adequacy of a complaint, the court may 2 consider exhibits submitted with the complaint or those that are subject to judicial 3 notice, without converting a motion to dismiss into a motion for summary 4 judgment. Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007); Lee v. City of 5 Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001); Durning v. First Boston Corp., 6 815 F.2d 1265, 1267 (9th Cir. 1987). 7 8 9 10 11 12 IV. PLAINTIFF FAILS TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED WITH RESPECT TO EACH CAUSE OF ACTION ALLEGED AGAINST DEFENDANTS A. Plaintiff’s Cause of Action for Wrongful Foreclosure (First Claim) Fails 1. Plaintiff’s Wrongful Foreclosure Claim is Premature and Fails for Lack of Tender 13 To state a claim for wrongful foreclosure, Plaintiff must allege 14 (1) Defendants caused an illegal, fraudulent or willfully oppressive sale of the 15 Property (2) resulting prejudice or harm and (3) Plaintiff tendered the entire 16 indebtedness or is excused from tendering. Chavez v. Indymac Mortgage Servs., 17 et al., 219 Cal. App. 4th 1052, 1062 (2013). 18 Under well-settled California law, a party cannot enjoin a foreclosure sale 19 unless he has tendered the obligation in full. See United States Cold Storage v. 20 Great Western Sav. and Loan Ass ‘n, 165 Cal.App.3d 1214, 1222 (1985). The 21 “tender rule” requires that, as a precondition to challenging a foreclosure or any 22 cause of action implicitly integrated with the foreclosure, the borrower must make a 23 valid and viable tender of payment of the secured debt. Karlsen v. American 24 Savings and Loan Ass’n, 15 Cal.App.3d 112, 117 (1971); Arnolds Management 25 Corp. v. Eischen, 158 Cal.App.3d 575, 578 (1984). “A valid and viable tender of 26 payment of the indebtedness owing is essential to an action to cancel a voidable 27 sale under a deed of trust.” Karlsen, 15 Cal.App.3d at117-18. Plaintiff has not 28 -4STATEMENT OF DECISION 1 alleged that she tendered the debt or that she is excused for tendering. For this 2 reason alone, the Motion to Dismiss should be sustained as to this claim. 3 Plaintiff’s claim is also premature. “A lender or foreclosure trustee may only 4 be liable to the mortgagor or trustor for wrongful foreclosure if the property was 5 fraudulently or illegally sold under a power of sale contained in a mortgage or deed 6 of trust.” Munger v. Moore, 11 Cal. App. 3d 1, 7 (1970). Where a trustee’s sale has 7 not occurred, a cause of action for wrongful foreclosure is not ripe. See Beall v. 8 Quality Loan Serv. Corp., 2011 WL 1044148, at *3 (S.D. Cal. Mar. 21, 2011). 9 Plaintiff does not allege the Property sold at foreclosure. It hasn’t. This claim is not 10 yet ripe. 11 2. 12 13 14 No Facts Showing the Foreclosing Entities Lacked Authority to Foreclose Plaintiff seeks to challenge the authority of the parties who foreclosed, but fails to allege facts suggesting the parties lacked authority. 15 Plaintiff’s Complaint is based on the unsupported premise—that a borrower 16 may require a beneficiary of a deed of trust to prove it holds the note and has 17 authority to foreclose before it completes a trustee’s sale. A borrower cannot. See 18 Gomes v. Countrywide Home Loans, Inc., 192 Cal. App. 4th 1149, 1154 (2011) 19 (holding that a plaintiff has no right to sue to contest the foreclosing beneficiary’s 20 authority to initiate or conduct a nonjudicial foreclosure because California’s 21 framework does not permit “a court action to determine whether the owner of the 22 Note has authorized its nominee to initiate the foreclosure process” as “recognition 23 of the right to [do so] would fundamentally undermine the nonjudicial nature of the 24 process ); see also Dennis v. Wachovia Bank, FSB, 2011 WL 181373, *7-8 25 (N.D. Cal. Jan. 19, 2011) (holding that no provision of the framework requires a 26 foreclosing party to prove up the “chain of ownership” to a borrower in order to 27 non-judicially foreclose.). Indeed, the Second Appellate Division, in Yhudai v. 28 Impac Funding Corp., No. B262509, 2016 WL 4098719, at *5 (Cal. Ct. App. -5STATEMENT OF DECISION 1 July 29, 2016), held that the burden is on the plaintiff to show defects in the 2 foreclosure process, not on the defendant to show their authority to foreclose. 3 Plaintiff lacks standing to require proof of authority. 4 Even if Plaintiff could preemptively sue to question Defendants’ right to 5 enforce the security, there are no facts supporting her contention that the 6 foreclosure sale commenced without authority. A security interest follows the note. 7 See Carpenter v. Longan, 83 U.S. 271, 274 (1872). Thus, a note purchaser 8 automatically acquires authority to enforce the security. Plaintiff does not allege 9 facts suggesting that USB Trust as Trustee for LSF9 did not purchase or acquire the 10 note. Rather, she accuses the entire mortgage securities industry of failing to 11 properly assign promissory notes in unspecified instances, and cites to outdated and 12 overruled New York opinions (cf. Rajamin v. Deutsche Bank Nat’l Trust Co., 13 757 F.3d 79 (2d Cir. 2014). (See Compl. ¶¶ 49-65.) 14 Relying on her factually unsupported, but perceived issue with the mortgage 15 industry, Plaintiff alleges that USB Trust as Trustee for LSF9 must prove that it 16 purchased the note, that the note was validly assigned to the trust and that it held 17 the note when foreclosure commenced. (Compl. ¶¶ 30, 73.) As Plaintiff’s 18 Opposition concedes, her “void” loan transfer theory is premised on Glaski v. Bank 19 of America, (2013) 218 Cal.App.4th 1079. As in Glaski, Plaintiff alleges that the 20 subject loan was assigned to a securitized loan trust, which is governed by a PSA to 21 which “New York trust law” applies, but that the failure to deposit the Note into the 22 trust before the closing date is a violation of the PSAs and of New York trust law. 23 However, the state and federal courts have confirmed that Plaintiff’s untimely loan 24 transfer theory fails as a matter of law. See Morgan v. Aurora Loan Services, LLC, 25 646 F. App’x 546, 548 (9th Cir. 2016) (finding that plaintiff lacked standing 26 “because an act in violation of a trust agreement is voidable—not void—under New 27 York law, which governs the [PSA] at issue[.]”); Patel v. U.S. Bank, N.A., 2016 28 WL 4013861, at *3 (N.D. Cal. July 27, 2016); Reed v. Wilmington Trust, N.A., -6STATEMENT OF DECISION 1 2016 WL 3124611, *5 (N.D. Cal. June 3, 2016); Croskrey v. Ocwen Loan 2 Servicing, LLC, 2016 WL 3135643 (C.D. Cal. June 2, 2016); Hard v. Bank of New 3 York Mellon, 2016 WL 2593911,*12 (E.D. Cal. May 5, 2016). Plaintiff offers no 4 discussion or counter points to any of the authority cited by Defendants. 5 Plaintiff contends Yvanova v. New Century Mortgage Corp., 62 Cal.4th 919 6 (2016) gives her authority to demand USB Trust as Trustee for LSF9 prove its 7 interest before continuing with foreclosure. (Compl. ¶¶ 66-69.) She is wrong. 8 Yvanova is unsupportive to Plaintiff. 9 As the Supreme Court recently decided in Yvanova, a borrower can generally 10 raise no objection to the assignment of the deed of trust. Yvanova, 62 Cal.4th at 11 927. The Supreme Court carved out one very narrow exception to the general rule 12 that a borrower lacks standing to challenge an entity’s authority to foreclose. The 13 Court held that a borrower-claimant does not lack standing to sue for wrongful 14 foreclosure to contest the authority of the foreclosing entity if (1) the trustee’s sale 15 has completed and (2) the borrower properly alleges that the assignment is void, not 16 merely voidable. See id. at 924. 17 18 19 20 21 22 23 24 25 26 27 “Our ruling in this case is a narrow one. We hold only that a borrower who has suffered a nonjudicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the challenged assignment. We do not hold or suggest that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party’s right to proceed. Nor do we hold or suggest that plaintiff in this case has alleged facts showing the assignment is void or that, to the extent she has, she will be able to prove those facts.” (emphasis added). Plaintiff ignores the narrow limit of the holding. Yvanova did not address pre-foreclosure claims like this one. It only held that borrowers have standing to pursue wrongful foreclosure claims based on an allegedly void assignment of the loan after the foreclosure sale has occurred. 28 -7STATEMENT OF DECISION 1 The narrow scope of the Yvanova decision was recently explained in a 2 California appellate court. Earlier this year, California’s Fourth Appellate District 3 issued an opinion in Saterbak v. JPMorgan Chase Bank, N.A., 245 Cal. App. 4th 4 808 (2016), reh’g denied (Apr. 11, 2016), review denied (July 13, 2016), in which 5 the Court found that a borrower does not have standing to challenge an assignment 6 of the Deed of Trust before a foreclosure sale takes place. In Saterbak, the Court 7 determined that the borrower had the burden to establish standing and explained 8 that as the party seeking to cancel the Assignment, the borrower must demonstrate 9 “some such beneficial interest that is concrete and actual, and not conjectural or 10 hypothetical.” Saterbak at 6-7. The Court found that plaintiff failed to meet her 11 burden to establish standing because it is inconsistent with the legislature’s 12 comprehensive non-judicial foreclosure scheme to require a foreclosing entity to 13 prove its authority to foreclose in court prior to conducting a sale. Id. at 13-14. 14 The Saterbak Court then distinguished Yvanova for two reasons. First, the 15 Supreme Court expressly limited its holding to the post-foreclosure sale context. 16 Second, Yvanova expressly declined to rule on the issue of whether an assignment 17 after the Pooling and Servicing Agreement’s (“PSA”) closing date would render the 18 assignment void or voidable under the applicable law. The Court concluded that an 19 assignment that failed to comply with the terms of the PSA would be “merely 20 voidable,” adopting a Second Circuit Court of Appeals decision and rejecting the 21 contrary holding in Glaski v. Bank of America, 218 Cal. App. 4th 1079 (2013). The 22 Saterbak Court thus concluded that the borrower lacked standing because she, like 23 Plaintiff here, brought suit before the foreclosure sale occurred and because the 24 basis of her challenge was not a void assignment. 25 The two prerequisite conditions to challenging a beneficiary’s authority do 26 not exist here. The foreclosure sale has not been completed. And Plaintiff does not 27 allege facts showing the assignment of deed of trust was void. She alleges in a 28 conclusory manner that “the Assignment recorded on November 5, 2015, -8STATEMENT OF DECISION 1 purporting to transfer beneficial interests to U.S. Bank is VOID” but says nothing 2 about what makes it void. (See Compl. ¶ 74.) Plaintiff seeks to do just what the 3 Supreme Court and Court of Appeals bar—to convert a nonjudicial proceeding into 4 a judicial one. Her cause is improper and the District Courts overwhelming agree. 5 See Morgan v. Aurora Loan Services, LLC, 646 F. App’x 546, 548 (9th Cir. 2016) 6 (finding that plaintiff lacked standing “because an act in violation of a trust 7 agreement is voidable—not void—under New York law, which governs the [PSA] 8 at issue[.]”); Patel v. U.S. Bank, N.A., 2016 WL 4013861, at *3 (N.D. Cal. July 27, 9 2016); Reed v. Wilmington Trust, N.A., 2016 WL 3124611, *5 (N.D. Cal. June 3, 10 2016); Croskrey v. Ocwen Loan Servicing, LLC, 2016 WL 3135643 (C.D. Cal. 11 June 2, 2016); Hard v. Bank of New York Mellon, 2016 WL 2593911,*12 12 (E.D. Cal. May 5, 2016). 13 For all the foregoing reasons, Plaintiff has failed to allege a cause of action 14 against Defendants for wrongful foreclosure, and the claim is DISMISSED with 15 prejudice. Because each and every one of Plaintiff’s claim flows from the same 16 failed premise, that because Defendants did not have any interest in the loan they 17 were not entitled to foreclose, the Motion to Dismiss is GRANTED in its entirety. 18 In the interest of completeness, the Court hereby discusses each cause of 19 action, even though they are all based on the same failed premise. 20 B. 21 Plaintiff’s Cause of Action for Violation of Cal. Civ. Code § 2924(a)(6) (Second Claim) Fails 22 As discussed above, Plaintiff does not have standing to challenge the validity 23 of the assignments. Since this claim relies on challenges to the validity of the 24 assignments, it too fails as a matter of law. Plaintiff may not rely on perceived 25 problems with the mortgage industry as a whole to support her contention that a 26 wrongdoing occurred here. Nor may she seek to have Defendants prove their 27 interest and authority. Section 2924(a)(6) gives no such standing to Plaintiff. To 28 proceed with her claim, Plaintiff must allege facts showing the foreclosure -9STATEMENT OF DECISION 1 instruments were recorded by entities without authority. She pleads no such facts. 2 The claim is DISMISSED with prejudice. 3 /// 4 C. 5 Plaintiff’s Cause of Action for Violation of Civil Code 2924.17 (Third Claim) Fails 6 Plaintiff claims that Defendants did not comply with Cal. Civ. Code 7 § 2924.17. (Compl. ¶¶ 104-107.) This section prohibits robo-signing and requires 8 that “a mortgage servicer shall insure that it has reviewed competent and reliable 9 evidence to substantiate the borrower’s default and the right to foreclose including 10 the borrower’s loan status and loan information.” Civ. Code § 2924.17(a)-(b); see 11 Michael J. Weber Living Trust v. Wells Fargo Bank, N.A., 2013 WL 1196959, at *4 12 (N.D. Cal. Mar. 25, 2013). However, Plaintiff’s factual allegations regarding 13 Defendants are speculative and are not sufficiently pleaded. Furthermore, Plaintiff 14 has failed to articulate a legal theory to which any robo-signing claims are relevant. 15 California district courts have dismissed claims based on similar assertions. Phillips 16 v. Wells Fargo Bank, N.A., 2009 WL 3756698 at *4 (S.D. Cal. Nov. 2009); 17 Marty v. Wells Fargo Bank, 2011 WL 1103405 (E.D. Cal. March 22, 2011). 18 Under the Yvanova analysis, robo-signing also does not render an assignment 19 void. To the extent that an assignment was in fact robo-signed, it would be 20 voidable, not void, at the injured party’s option—the injured party would be the 21 assignee (USB), not Plaintiff. See Pratap v. Wells Fargo Bank, N.A., 63 F. Supp. 3d 22 1101, 1109 (N.D. Cal. 2014); Reed v. Wilmington Trust, N.A., 2016 WL 3124611, 23 *5 (N.D. Cal. June 3, 2016) (the alleged [robo-signing] defect would only render 24 the assignment voidable, rather than void).Therefore, robo-signing allegations do 25 not give the Plaintiff standing to challenge the MERS assignment. This cause of 26 action, and to the extent these robo-signing allegations underlie Plaintiff’s various 27 other causes of action, is DISMISSED with prejudice. It would be futile to grant 28 -10STATEMENT OF DECISION 1 Plaintiff leave to amend to the extent the wrongful foreclosure claim is premised on 2 the allegations of robo-signing. 3 /// 4 /// 5 D. 6 Plaintiff’s Cause of Action for Cancellation of Written Instruments (Fourth Claim) Fails 7 In order to allege a cause of action for cancellation of instrument, a plaintiff 8 must specifically plead the facts showing actual invalidity of the apparently valid 9 instrument. 5 Witkin, Cal. Proc., Pleading, § 673-674 (5th ed. 2011); Ephraim v. 10 Metropolitan Trust Co., 28 Cal. 2d 824, 833-834 (1946) (plaintiff “must state facts, 11 not mere conclusions, showing the apparent validity of the instrument designated, 12 and point out the reason for asserting that it is actually invalid”). That is, “[a]n 13 action for cancellation cannot be pleaded generally. 14 Plaintiff seeks to cancel the foreclosure instruments, specifically the Notice 15 of Default and Notice of Trustee’s Sale. (Compl. ¶ 114). But she does not allege the 16 documents were wrongfully recorded or recorded without authority. Under 17 Cal. Civ. Code section 2924(a)(1) a “trustee, mortgage or beneficiary or any of their 18 authorized agents” may conduct the foreclosure process. Under Cal. Civ. Code 19 § 2924b(b)(4) a “person authorized to record the notice of default or the notice of 20 sale” includes “an agent for the mortgagee or beneficiary, an agent of the named 21 trustee, any person designated in an executed substitution of trustee, or an agent of 22 that substituted trustee.” She also has not alleged their actual invalidity. Although 23 Plaintiff contends that the Assignment of Deed of Trust “is void because it occurred 24 after the Closing Date of the Securitized Trust”, these allegations have been 25 rejected by Rajamin (2nd Circuit), Saterbak (CA 4th Appellate District), and 26 Yhudai (2nd Appellate District), supra. 27 Further, “[i]n order to challenge the [foreclosure] sale successfully there must 28 be evidence of a failure to comply with the procedural requirements for the -11STATEMENT OF DECISION 1 foreclosure sale that caused prejudice to the person attacking the sale.” Angell v. 2 Superior Court, 73 Cal. App. 4th 691, 700 (1999); Knapp v. Dougherty, 123 Cal. 3 App. 4th 76 (2004). Here, Plaintiff does not allege how any defect caused her 4 prejudice given her status as already in default. The Notice of Default, attached to 5 Plaintiff’s FAC (Compl., Exhibit B), reveals that as of December 14, 2015, she was 6 in default in the amount of 103,618.98, and had not made any payment since before 7 December 1, 2010. Plaintiff does not dispute her default, and has failed to 8 tender/cure her default for several years. 9 Similarly, because this claim relies on challenges to the validity of the 10 assignments, it too fails as a matter of law and is hereby DISMISSED with 11 prejudice. 12 E. 13 Plaintiff’s Cause of Action for Breach of the Implied Covenant (Fifth Claim) Fails 14 Plaintiff’s fifth claim for breach of the implied covenant of good faith and 15 fair dealing fails as against Caliber because Plaintiff does not allege the existence of 16 an agreement between herself and Caliber. It fails as against all Defendants because 17 Plaintiff does not allege Defendants’ interference with her performance on the 18 contract. 19 In order to state a claim for breach of the implied covenant of good faith and 20 fair dealing, Plaintiff must allege: (1) the existence of some specific contractual 21 obligation; and (2) interference with plaintiff’s performance of the contract or 22 failure to cooperate with the plaintiff. Racine & Laramie, Ltd. v. Department of 23 Parks and Recreation, 11 Cal.App.4th 1026, 1031-1032 (1992). “The implied 24 covenant of good faith and fair dealing rests upon the existence of some specific 25 contractual obligation.” Id. This implied covenant does not extend beyond the terms 26 of the contract at issue. Guz v. Bechtel National, Inc., 24 Cal.4th 317, 349 (2000). 27 “The covenant ‘cannot impose substantive duties or limits on the contracting parties 28 beyond those incorporated in the specific terms of their agreement.’” Agosto v. -12STATEMENT OF DECISION 1 Astor, 120 Cal.App.4th 596, 607 (2004) (citations omitted). It cannot create, expand 2 or contradict contractual terms no matter how seemingly unfair. Storek & Storek, 3 Inc. v. Citicorp Real Estate, Inc., 100 Cal.App.4th 44 (2002); Racine, 4 11 Cal.App.4th at 1032 & 1043-45. “The covenant is implied in contracts, not in 5 negotiations.” Hafiz v. GreenPoint Mortgage Funding, Inc., 652 F.Supp.2d 1039, 6 1046 (N.D. Cal.,2009). 7 Plaintiff’s claim fails because she does not allege the contract on which this 8 claim is based. (See Compl. ¶¶ 120-123). Defendants should not be required to 9 plead Plaintiff’s case for her. In any event, to the extent Plaintiff charges 10 Defendants with breaching implied covenants in the loan agreement or the Deed of 11 Trust, the claim fails as against Caliber, the loan servicer who was not party to 12 either agreement. It also fails as against MERS and USB Trust as Trustee for LSF9 13 because Plaintiff does not allege their interference with her performance. Plaintiff 14 defaulted on the loan, and does not deny her default. She does not allege facts 15 showing Defendants caused the default or prevented her from curing the default. 16 Plaintiff’s claim flows from the same failed premise, that because Defendants 17 did not have any interest in the loan, they were not entitled to foreclose. Opp at 11. 18 Plaintiff has not established standing to challenge the validity of the assignments at 19 issue. Thus, Plaintiff cannot assert a claim for breach of the implied covenant of 20 good faith and fair dealing on this ground. This claim is DISMISSED with 21 prejudice. 22 F. Plaintiff’s Cause of Action for Declaratory Relief (Sixth Claim) Fails 23 24 In seeking declaratory relief, a plaintiff must satisfy a two-part test under the 25 Declaratory Judgment Act (“DJA”), 28 U.S.C. § 2201, demonstrating that a declaratory 26 judgment is appropriate. See Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 27 (9th Cir. 2005). The court must first determine if an actual case or controversy exists; 28 then, the court must decide whether to exercise its jurisdiction to grant the relief -13STATEMENT OF DECISION 1 requested. Id. For declaratory relief, there must be a substantial controversy, between 2 parties having adverse legal interests, of sufficient immediacy and reality to warrant 3 issuance of a declaratory judgment. Marin v. Lowe, 8 F.3d 28 (9th Cir. 1993); Maryland 4 Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941). Unless an actual 5 controversy exists, a court is without power to grant declaratory relief. Garcia v. 6 Brownell, 236 F.2d 356, 357-358 (9th Cir. 1956). The mere possibility, even probability, 7 that a person may in the future be adversely affected by official acts not yet threatened 8 does not create an “actual controversy.” Id. Further, declaratory relief should be denied 9 if it will “neither serve a useful purpose in clarifying and settling the legal relations in 10 issue nor terminate the proceedings and afford relief from the uncertainty and 11 controversy faced by the parties.” United States v. Washington, 759 F.2d 1353, 1356-57 12 (9th Cir.1985). 13 Here, the declaratory relief Plaintiff seeks is entirely commensurate with the relief 14 sought through her other causes of action. Thus, Plaintiff’s declaratory relief claim is 15 duplicative and unnecessary. A claim for declaratory relief is “unnecessary where an 16 adequate remedy exists under some other cause of action.” Mangindin v. Washington 17 Mutual Bank, 637 F.Supp.2d 700, 707 (N.D. Cal. 2009). In addition, because the 18 contentions underlying Plaintiff’s declaratory relief request are without basis in fact or 19 law, she cannot establish an actual present controversy that justifies this remedy. Indeed, 20 the declaratory relief claim is predicated entirely on the failed theories that provide the 21 basis for Plaintiff’s other causes of action. Accordingly, there is no real, immediate 22 controversy to adjudicate, and Plaintiff’s request for declaratory relief is DISMISSED 23 with prejudice. 24 G. 25 Plaintiff’s Cause of Action for Violation of Bus. & Prof. Code § 17200 (Seventh Claim) Fails 26 Plaintiff conclusorily alleges that Defendants violated California’s Unfair 27 Competition law, Cal. Bus. Prof. Code §17200 et seq. (“UCL”), by virtue of the 28 conduct alleged in their other causes of action. To state a claim under the UCL, -14STATEMENT OF DECISION 1 Plaintiff must allege that Defendants engaged in an “unlawful, unfair or fraudulent 2 business act or practice” as a result of which Plaintiff suffered an “injury in fact” 3 and “lost money or property.” See Bus. & Prof. Code § 17204; Bernardo v. Planned 4 Parenthood Fed. of America, 115 Cal. App. 4th 322 (2004). A UCL claim is 5 predicated entirely upon a violation of another statutory or common law. Thus, a 6 UCL claim stands or falls “depending on the fate of antecedent substantive causes 7 of action.” Krantz v. BT Visual Images, 89 Cal. App. 4th 164, 178 (2001). Plaintiff 8 predicates her UCL claim on the same allegations and theories which fail to state 9 any other viable legal claim. As discussed at length above, Plaintiff’s theories have 10 been repeatedly rejected by the California courts and cannot provide the basis for a 11 valid claim against Defendants. 12 Further, to whatever extent Plaintiff attempts to bring claims under the 13 UCL’s “unfair” or “fraudulent” prong, this claim is inadequately pled. An alleged 14 “unfair” practice must be “tethered” to specific “constitutional, statutory, or 15 regulatory provisions.” Scripps Clinic v. Superior Court, 108 Cal. App. 4th 917, 16 940 (2003). Plaintiff fails to plead facts showing that Caliber engaged in any such 17 “unfair” practices. See Simila v. American Sterling Bank, 2010 WL 3988171, *6 18 (S.D. Cal. Oct. 12, 2010) (dismissing UCL claim on this basis). Further, the FAC 19 fails to plead, with particularity, who, where, and when any employee or agent of 20 Defendants engaged in any conduct violative of the UCL. See Khoury, 14 Cal. App. 21 4th at 619. Because Plaintiff has not successfully asserted any underlying 22 substantive cause of action or pleaded any statutory violation, Plaintiff has failed to 23 show that Defendants have engaged in unlawful, unfair, or fraudulent business 24 practices. 25 Furthermore, Plaintiff failed to properly plead that any damages have been 26 incurred as a result of any purported violations of the UCL. Because the sale has 27 not occurred Plaintiff does not allege a loss of money or property. Jensen v. Quality 28 -15STATEMENT OF DECISION 1 Loan Serv. Corp., 702 F. Supp. 2d 1183, 1199 (E.D. Cal. 2010). She lacks standing 2 to assert this claim. This claim is DISMISSED with prejudice. 3 4 V. CONCLUSION 5 6 For the foregoing reasons, Defendants’ Motion to Dismiss Plaintiff’s First 7 Amended Complaint is GRANTED. 8 Circuit has a liberal policy favoring amendments and that leave to amend should be 9 freely granted, the Court is not required to grant leave to amend if the Court 10 determines that permitting Plaintiff to amend would be an exercise in futility. See, 11 e.g., Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir. 1987) 12 (“Denial of leave to amend is not an abuse of discretion where the pleadings before 13 the court demonstrate that further amendment would be futile.”). In this case, 14 Plaintiff has failed to allege any facts in her Opposition that indicates leave to 15 amend would not be futile. 16 DISMISSED without leave to amend. 17 Although the Court recognizes that this Accordingly, Plaintiff’s First Amended Complaint is IT IS SO ORDERED. 18 19 20 21 DATED: _November 17, 2016 THE HONORABLE JOHN F. WALTER UNITED STATES DISTRICT JUDGE 22 23 24 25 26 27 28 -16STATEMENT OF DECISION
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