Bernard F. Clark v. Countrywide Home Loans, Inc. et al, No. 1:2009cv01998 - Document 45 (E.D. Cal. 2010)

Court Description: MEMORANDUM DECISION and ORDER Re Countrywide Home Loans, Inc., Recontrust Company, Bank of America, N.A., Mortgage Electronic Registration Systems, Inc., (erroneously sued as MERS, Inc.), Chase Home Finance 24 36 signed by Judge Oliver W. Wanger on 8/9/2010. Amended complaint due within thirty (30) days of electronic service. (Esteves, C)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 FOR THE EASTERN DISTRICT OF CALIFORNIA 9 10 BERNARD F. CLARK, 11 1:09-CV-01998-OWW-GSA Plaintiff, 12 13 14 15 MEMORANDUM DECISION AND ORDER RE COUNTRYWIDE HOME LOANS, INC., RECONTRUST COMPANY, BANK OF AMERICA, N.A., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., (erroneously sued as MERS, INC., Chase Home Finance v. COUNTRYWIDE HOME LOANS, INC., et al., Defendants. 16 17 I. INTRODUCTION 18 19 20 On or about August 2, 2007, Plaintiff Bernard F. Clark obtained a mortgage loan in the amount of $360,000 secured by a 21 deed of trust encumbering real property in Groveland, California. 22 Plaintiff defaulted on the loan, and Defendants proceeded to 23 foreclose on the real property. 24 Notice ( RJN ), Exs. B-D. 25 26 27 28 Defendant s Request for Judicial On August 24, 2009, Plaintiff filed a complaint in the Superior Court of the State of California, County of Tuolumne, alleging ten causes of action. Doc. 1. 1 On November 12, 2009, 1 Defendants removed the action to federal court pursuant to 28 2 U.S.C. §§ 1331, 1441, based on federal question jurisdiction. 3 Id. 4 Plaintiff s amended complaint, filed March 17, 2010, alleges 17 causes of action: (1) Fraud; (2) Breach of Loan Commitment; 5 6 7 (3) Negligence; (4) Breach of Good Faith; (5) Breach of Fiduciary Duty; (6) Economic Duress; (7) Civil RICO; (8) Cal. Civ. Code § 8 2923.5; (9) Cal. Civ. Code § 2923.6; (10) California s Rosenthal 9 Fair Debt Collection Practices Act ( RFDCPA ), Cal. Civ. Code. §§ 10 1788.17; (11) Cal. Civ. Code § 1572; (12) Real Estate Settlement 11 Procedures Act ( RESPA ), (12) U.S.C. § 2607(b); (13) Quiet 12 13 14 15 16 Title; (14) Unfair business practices, Cal. Bus. Prof. Code §§ 17200, et seq.; (15) Produce the Original Note; (16) Cal. Civ. Code § 1572; (17) Injunctive Relief. Doc. 16. On April 5, 2010, Defendants Countrywide Home Loans, Inc. 17 ( Countrywide ), ReconTrust Company ( ReconTrust ), Bank of 18 America, N.A. ( BANA ), and Mortgage Electronic Registration 19 Systems, Inc. s ( MERS ), (collectively Countrywide Defendants ) 20 moved to dismiss all of the claims in the case pursuant to 21 Federal Rule of Civil Procedure 12(b)(6). Doc. 24. Plaintiff 22 23 24 opposed the motion to dismiss. Countrywide Defendants replied. Doc. 31, filed June 1, 2010. Doc. 33, filed June 7, 2010. 25 Defendant Chase Home Finance, LLC.1 ( Chase ) filed a separate 26 motion to dismiss on June 22, 2010. Doc. 36. Plaintiff filed 27 1 28 Although Chase was named as a Defendant to this action, no claim specifically refers to Chase. 2 1 an opposition to Countrywide Defendants reply2 and an opposition 2 to Chase s motion to dismiss.3 3 Chase replied.4 4 Doc. 38, filed July 21, 2010. Doc. 39. II. LEGAL STANDARD 5 6 7 A motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a claim. 8 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). 9 whether to grant a motion to dismiss, the court accept [s] all 10 factual allegations of the complaint as true and draw[s] all 11 reasonable inferences in the light most favorable to the 12 13 14 15 nonmoving party. 1999). In deciding TwoRivers v. Lewis, 174 F.3d 987, 991 (9th Cir. To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to Ashcroft v. Iqbal, 129 16 relief that is plausible on its face. 17 S. Ct. 1937, 1949 (May 18, 2009) (quoting Bell Atl. Corp v. 18 Twombly, 550 U.S. 544, 570 (2007)). 19 20 21 22 23 24 25 26 27 28 2 The local rules do not permit Plaintiff to file an opposition to Countrywide Defendants reply. See Local Rule 230 (Fed. R. Civ. P 78). 3 Plaintiff s opposition to Chase s motion to dismiss largely restates previous arguments and nowhere refers specifically to Chase or Chase s motion to dismiss. It also contains various incorrect statements, including that the motion to dismiss intentionally skips any answer to the concerted fraud committed to the plaintiff.... Doc. 38 2:12-13. This is inaccurate, as Chase addressed the fraud claim in detail in its motion to dismiss. Doc. 36 at 3-5. 4 Chase claims that it did not receive an opposition or statement of non-opposition to the motion to dismiss and that neither are present on the docket. Chase is mistaken, as Doc. 38, which is titled an opposition to Countrywide Defendants reply, contains Plaintiff s opposition to Chase s motion to dismiss. However, Document 38 was filed on July 21, 2010, two days after the July 19, 2010 deadline for the filing of his opposition to Chase s motion. Plaintiff dated the document July 19, 2010, but gives no explanation as to why it was not filed with the Clerk of court on that date. 3 1 A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant s liability, it stops short of the line between possibility and plausibility of entitlement to relief. 2 3 4 5 6 7 8 9 10 11 Id. (citing Twombly, 550 U.S. 556-57). based on the lack of a cognizable legal theory. Balistreri v. Pacifica Police Dep t, 901 F.2d 696, 699 (9th Cir. 1990). 12 III. 13 14 Dismissal also can be BACKGROUND On or about July 26, 2007, Plaintiff financed the purchase of a residential property located at 12689 Mt. Jefferson Street, 15 16 17 Groveland, California ( Subject Property ) through a promissory note with First Magnus Financial Corp. ( First Magnus ) in the 18 amount of $360,000 ( Subject Loan ) secured by a deed of trust. 19 Doc. 16 at ¶ 9. 20 On January 27, 2009, a Notice of Default and Election to Sell 21 Under Deed of Trust, Instrument No. 2007013088, was recorded in 22 23 Plaintiff later defaulted on the Subject Loan. the Office of the County Recorder of Tuolumne County. ¶ 21. Doc. 16 at The default was not cured, and on May 1, 2009, a notice of 24 25 26 27 28 trustee s sale, Instrument No. 2009005160, was also recorded. Id. Plaintiff alleges that (1) no Defendant has the original note to prove that it is a party authorized to conduct the 4 1 foreclosure (Doc. 16 at ¶ 24); (2) Defendants breached an oral 2 promise to modify the existing loan terms (Doc. 16 at ¶ 31); and 3 (3) Plaintiff was not contacted to explore his financial 4 situation prior to notice of default (Doc. 16 at ¶ 156-160). 5 6 7 These allegations form the basis of most of Plaintiff s causes of action. 8 IV. 9 A. Constructive or Actual Fraud 10 ANALYSIS Plaintiff s first cause of action alleges fraud by each 11 Defendant. 12 each Defendant has represented to Plaintiff and to third parties 13 that they were the owner of the Trust Deed and Note as either the 14 15 16 17 18 19 This claim is based largely on the allegation that Trustee or the beneficiary regarding ... Possession of the Note is not incidental to the right to foreclose, it is absolutely necessary. Doc. 16 at ¶ 34. This is a wholly discredited legal theory serially advanced in mortgage fraud cases. It is well established that there is no requirement under 20 California law that the party initiating foreclosure be in 21 possession of the original note. 22 Supp. 2d 1047, 1053 (E.D. Cal. 2009); Candelo v. NDEX West, LLC, 23 Nool v. HomeQ Servicing, 653 F. 2008 WL 5382259, at *4 (E.D. Cal. Dec. 23, 2008) ( No requirement 24 25 26 exists under statutory framework to produce the original note to initiate non-judicial foreclosure. ); Putkkuri v. ReconTrust Co., 27 2009 WL 32567, *2 (S.D. Cal. Jan 5, 2009)( Production of the 28 original note is not required to proceed with a non-judicial 5 1 foreclosure. ). 2 Countrywide Defendants and Chase did not possess the note is not 3 grounds for a wrongful foreclosure or a fraud claim. 4 Therefore, Plaintiff s assertion that Plaintiff also alleges that the broker committed fraud by 5 6 7 placing him in a sub-prime mortgage on the promise that things would get better and the borrower could refinance when the value 8 of their home increases. 9 must comply with Federal Rule of Civil Procedure 9(b), which 10 requires that Plaintiff clearly set forth the who, what, when, 11 where, and how concerning their fraud allegations. 12 13 14 15 16 17 Doc. 1 ¶ 39. All claims for fraud Vess v. Ciba Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Plaintiff entirely fails to describe which of the many defendants was the broker, what the broker told him, and when and how any such statements were made. Plaintiff has been previously afforded leave to amend the 18 fraud claim. 19 Defendants and Chase is DISMISSED WITH PREJUDICE. The fraud cause of action against the Countrywide 20 21 22 B. Breach of Loan Commitment Plaintiff s second cause of action alleges a breach of loan 23 commitment against MERS and First Magnus. 24 based on supposed oral promises made by First Magnus to modify 25 the loan and a breach of those promises. 26 27 28 This allegation is Doc. 16 at ¶ 127. Plaintiff further alleges that MERS is liable as a nominee of the lender who breached a contract. Doc. 16 at ¶ 128. 6 As breach of 1 loan commitment is not a cognizable legal claim, Plaintiff s 2 claim is analyzed as a breach of contract claim. 3 for a breach of contract are: (1) the existence of a valid 4 The elements contract, (2) plaintiff s performance or excuse for 5 6 7 8 9 nonperformance, (3) defendants breach, and (4) resulting damage. McKell v. Washington Mutual, Inc. 142 Cal. App. 4th 1457, 1489 (2006). Certain types of contracts are invalid unless memorialized 10 by a written document signed by the party against whom the 11 contract is being enforced. 12 13 14 15 Cal. Civ. Code § 1624. Mortgages and deeds of trust are subject to the statute of frauds. Secrest v. Sec. Nat l Mortg. Loan Trust 2002-2, 167 Cal. App. 4th 544, 552 (2008). An agreement to modify a contract that is subject 16 to the statute of frauds is also subject to the statute of 17 frauds and must be in writing. 18 Pac. Funding Group, 2010 WL 2902368 (E.D. Cal. July 22, 19 2010)(dismissing a claim that defendant breached an oral contract 20 to provide plaintiffs with a loan modification because, under the 21 Id. at 553; see also Basham v. statute of frauds, absent a writing, there can be no contract, 22 23 24 much less a breach of contract. ); Justo v. Indymac Bancorp, et al., 2010 WL 623715 (E.D. Cal. Feb. 19, 2010)(plaintiff s claim 25 that defendants breached an oral contract to modify his loan and 26 cancel the foreclosure sale was barred by the statute of frauds). 27 A written contract may not be modified by an oral agreement, 28 7 1 unless that oral agreement is memorialized in writing and signed 2 by the parties. 3 4 Cal. Civ. Code § 1698. Here, the alleged promise for a loan modification is subject to the statute of frauds. Absent a written agreement to modify 5 6 7 8 9 the loan, any claim based upon an oral contract to modify the loan is barred by the statute of frauds. See Secrest, 167 Cal. App. 4th at 552. At oral argument, Plaintiff claimed that Countrywide 10 promised him that if he brought the loan current, they would 11 modify his loan. 12 13 14 15 Plaintiff further claims that, in reliance on this promise, he obtained money (approximately $8,000) to bring the loan current, but Countrywide refused the loan modification. Although Plaintiff cannot state a breach of contract claim based 16 upon this conduct, he may be able to state a claim for fraud. 17 California, the elements for a claim of fraud are: (1) 18 misrepresentation; (2) knowledge of falsity; (3) intent to 19 defraud; (4) justifiable reliance; and (5) resulting damage. 20 Small v. Fritz Companies, Inc., 30 Cal. 4th 167, 173 (2003). 21 In Upon removal to federal court, all claims for fraud must be pled 22 23 24 with sufficient particularity to satisfy Federal Rule of Civil Procedure Rule 9(b). [W]hile a federal court will examine state 25 law to determine whether the elements of fraud have been pled 26 sufficiently to state a cause of action, the Rule 9(b) 27 requirement ... is a federally imposed rule. 28 8 Vess, 317 F.3d at 1 1103). 2 3 4 The Countrywide Defendants motion to dismiss the second cause of action is GRANTED WITH LEAVE TO AMEND. Plaintiff shall have one final opportunity to amend his complaint to state a 5 6 7 fraud claim based upon the conduct discussed at oral argument. C. Negligence 8 9 10 11 12 13 Plaintiff alleges negligence against First Magnus and BANA. The claim against BANA is based solely upon BANA s violation of RESPA. Doc. 16 at ¶¶ 129-132. Plaintiff further alleges that he sent a Qualified Written Request ( QWR ) to BANA and the reply was untimely. 14 To establish a negligence claim, it must be shown that (1) 15 the defendant owed the plaintiff a legal duty, (2) the defendant 16 breached that duty, and (3) the breach was a proximate or legal 17 18 cause of the plaintiff's injuries. The absence of any one of these three elements is fatal to a negligence claim. Gilmer v. 19 20 Ellington, 159 Cal. App. 4th 190, 195 (2008) (internal citation 21 omitted). 22 borrower when the institution s involvement in the loan 23 transaction does not exceed the scope of its conventional role as 24 a mere lender of money. 25 231 Cal. App. 3d 1089, 1096 (1991). 26 27 28 Financial institutions owe no duty of care to a Nymark v. Heart Fed. Sav. & Loan Ass n, As BANA owes no duty to the Plaintiff, Plaintiff cannot assert a claim of negligence against BANA. 9 1 To the extent Plaintiff s negligence claim can be 2 interpreted as a stand-alone claim under RESPA against BANA, 3 Plaintiff has not alleged how BANA failed to respond to the QWR. 4 RESPA requires: 5 6 7 8 9 if any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondent within 20 days ... unless the action requested is taken within such period. 10 12 U.S.C. § 2605(e)(1)(A). 11 respond to the QWR, but contends that the response was untimely. 12 13 14 15 16 17 18 19 20 21 Here, Plaintiff admits that BANA did However, Plaintiff fails to provide any other details regarding the QWR and the untimely response. Plaintiff did not request leave to amend the negligence claim. Countrywide Defendants motion to dismiss is GRANTED WITHOUT LEAVE TO AMEND. D. Breach of Fiduciary Duty As a general rule, a financial institution owes no duty of care to a borrower where the institution s involvement in the loan transaction does not exceed the scope of its conventional Nymark v. Hart Fed. Savings & Loan 22 role as a lender of money. 23 Assn., 231 Cal. App. 3d 1089, 1096 (1991). 24 relationship between Plaintiffs and any defendant. 25 the Countrywide Defendants motion to dismiss the fiduciary duty 26 claim is GRANTED WITHOUT LEAVE TO AMEND. 27 28 10 There is no fiduciary Accordingly, 1 2 E. Breach of Implied Covenant of Good Faith and Fair Dealing The implied covenant of good faith and fair dealing exists 3 in every contract. 4 effective the agreement s promises. 5 The implied covenant is aimed at making Kransco v. Am. Empire Surplus Lines Ins. Co., 23 Cal. 4th 390 (2000). Broadly stated, 6 7 8 9 10 that covenant requires that neither party do anything which will Freeman & deprive the other of the benefits of the agreement. Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th 85 (1995). A tortuous breach of the covenant of good faith and fair 11 dealing claim is limited to situations in which a fiduciary or 12 special relationship exists. 13 14 15 16 Mitsui Manuf. Bank v. Superior Court, 212 Cal. App. 3d 726, 730 (1989). As no fiduciary relationship exists here, the Countrywide Defendants motion to dismiss this cause of action is GRANTED WITHOUT LEAVE TO AMEND to 17 the extent it alleges tortuous breach of contract. If it is 18 meant to allege a breach of contract claim, a sufficient 19 independent breach of contract claim must be stated. 20 21 22 F. Economic Duress Plaintiff s sixth claim against all Defendants is for 23 economic duress. 24 that Countrywide made an oral promise to the Plaintiff to modify 25 the loan. 26 27 28 Plaintiff asserts this claim on the grounds Doc. 16 at ¶¶ 143-148. A party s consent to a contract must be freely given. Civ. Code § 1565. Cal. Apparent consent is not free when obtained 11 1 through duress, menace, fraud, undue influence, or mistake. § 2 1567. 3 unlawful act of another to make a contract or perform some act 4 Duress generally exists whenever one is induced by the under circumstances that deprive him of the exercise of free 5 6 7 Tarpy v. County of San Diego, 110 Cal. App. 4th 267, 276 will. (2003). Economic duress does not necessarily involve an unlawful 8 act, but may arise from the doing of a wrongful act which is 9 sufficiently coercive to cause a reasonably prudent person faced 10 with no reasonable alternative to succumb to the perpetrator's 11 pressure. 12 13 14 15 16 17 Rich & Whillock, Inc. v. Ashton Development, Inc., 157 Cal. App. 3d 1154, 1158 (1984). Examples of such wrongful acts include [t]he assertion of a claim known to be false or a bad faith threat to breach a contract or to withhold a payment.... Id. at 1159. Here, Plaintiff s claim of economic duress is that 18 defendants proceeded with the foreclosure sale in violation of an 19 oral promise that they would not do so if Plaintiff brought the 20 loan current. 21 Doc. 1 ¶¶ 146-147. This is an allegation of breach of oral contract, not of economic duress. He also 22 23 24 complains that the parties never assigned the deed to one another, an invocation of the failure to hold the original 25 promissory note theory, which is meritless. 26 failed to plead a claim for economic duress. 27 28 Plaintiff has Plaintiff did not request leave to amend the claim for 12 1 economic duress. 2 Economic Duress claim is GRANTED WITHOUT LEAVE TO AMEND. Countrywide Defendants motion to dismiss the 3 4 5 6 7 G. Civil RICO The seventh cause of action is a Civil RICO claim against all Defendants. 18 U.S.C. § 1962 provides in pertinent part: 10 (c) It shall be unlawful for any person employed by or associated with any enterprise engaged in or the activities of which effect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise s affairs through a pattern of racketeering activity or collection of unlawful debt. 11 A civil RICO complaint must at least allege: (1) conduct 8 9 12 13 14 (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as predicate acts ) (5) causing injury to plaintiff's business or property. Flores v. Emerich & Fike, 15 16 416 F. Supp. 2d 885, 911 (E.D. Cal. 2006). A civil RICO claim 17 must also comply with Rule 9(b) s particularity requirement. 18 Id. at 912. 19 Plaintiff essentially alleges that every defendant was aware 20 that the notice of default was invalid and that every defendant 21 either participated in or rendered substantial assistance in the 22 23 24 25 issuance of the invalid notice. These allegations are not remotely sufficient to support of a Civil RICO violation. Plaintiff did not request leave to amend the Civil RICO claim. 26 Countrywide Defendants and Chase s motions to dismiss the Civil 27 RICO claim are GRANTED WITHOUT LEAVE TO AMEND. 28 13 1 2 H. Cal. Civ. Code §§ 2923.5 & 2923.6. Plaintiff alleges that Countrywide and ReconTrust failed to 3 comply with California Civil Code §§ 2923.5 (requiring lenders to 4 contact borrower prior to filing notice of default), Doc. 16 at ¶ 5 156-160, and that all Defendants failed to comply with 2923.6 6 7 8 (requiring certain waiting periods prior to giving notice of sale). There is no private right of action under either Gaitan, 2009 WL 3244729, *7, succinctly summarized 9 provision. 10 the state of the law and the relevant analysis: 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Under California law, a statute will only be deemed to contain a private right of action if the Legislature has manifested an intent to create such a right. Moradi-Shalal v. Fireman's Fund Ins. Companies, 46 Cal.3d 287, 305 (1988). The Perata Mortgage Relief Act was enacted relatively recently, and thus California courts have had little chance to examine its provisions. Nevertheless, section 2923.6, passed along with section 2923.5, clearly does not create a private right of action. That section solely creat[es] a duty between a loan servicer and a loan pool member. The statute in no way confers standing on a borrower to contest a breach of that duty. Farner v. Countrywide Home Loans, No. 08cv2193 BTM (AJB), 2009 WL 189025, at *2 (S.D.Cal. Jan. 26, 2009). Other courts to consider this question have agreed unanimously with the Farner court. See Tapia v. Aurora Loan Servs., LLC, No. 1:09-cv-01143 AWI (GSA), 2009 WL 2705853, at *1 (E.D.Cal. Aug. 25, 2009); Anaya v. Advisors Lending Group, No. CV F 09-1191 LJO DLB, 2009 WL 2424037, at *8 (E.D.Cal. Aug. 5, 2009); Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1147, 1188, No. C 09-01615 JW, 2009 WL 2423703, at *7 (N.D.Cal. July 9, 2009); Connors v. Home Loan Corp., No. 08cv1134-L (LSP), 2009 WL 1615989, at *7 (S.D. Cal. June 9, 2009). Whether or not section 2923.5 creates a private right of action, however, has not been the subject of unanimity among the courts. Only two courts have considered this question, and they have reached inconsistent results. See Yulaeva v. Greenpoint Mortgage Funding, Inc., No. CIV. S-09-1504 LKK/KJM, 2009 WL 2880393, at *11 (E.D. Cal. Sept. 03, 2009) 14 1 (assuming without deciding that section 2923.5 does not provide a private right of action); Ortiz v. Accredited Home Lenders, Inc., 69 F. Supp. 2d 1159, 1166, No. 09 CV 0461 JM (CAB), 2009 WL 2058784, at *5 (S.D. Cal. Jul. 13, 2009) (finding section 2923.5 does contain a private right of action, as the California legislature would not have enacted this urgency legislation, intended to curb high foreclosure rates in the state, without any accompanying enforcement mechanism. ). 2 3 4 5 6 Under California law, courts are not at liberty to impute a particular intention to the Legislature when nothing in the language of the statute implies such an intention. Dunn-Edwards Corp. v. Bay Area Air Quality Management Dist., 9 Cal. App. 4th 644, 658 (1992). Thus, if the Legislature intends to create a private cause of action, we generally assume it will do so directly, in clear, understandable, unmistakable terms. Vicko Ins. Servs., Inc. v. Ohio Indemnity Co., 70 Cal. App. 4th 55, 62-63 (1999), quoting MoradiShalal, 46 Cal. 3d at 294-295 (internal marks omitted). 7 8 9 10 11 12 13 14 15 16 Section 2923.5 contains no language that indicates any intent whatsoever to create a private right of action. Neither section 2923.5 or 2923.6 creates a private right of action. Plaintiff offers no contrary authority or argument. Plaintiff did not request leave to amend the Section 2923.5 17 claim. 18 brought under California Civil Code Section 2923.5 is GRANTED 19 WITHOUT LEAVE TO AMEND. Plaintiff has been previously afforded 20 21 The Countrywide Defendants motion to dismiss the claim leave to amend the Section 2923.6 claim. Countrywide Defendants and Chase s motion to dismiss the Section 2923.6 claim is GRANTED 22 23 24 25 26 27 28 WITHOUT LEAVE TO AMEND. I. Rosenthal Fair Debt Collection Practices Act The complaint next alleges a violation of the Rosenthal Fair Debt Collection Practices Act ( RFDCPA ), Section 1788.17 against all Defendants. The RFCDPA was enacted to prohibit debt 15 1 collectors from engaging in unfair and deceptive acts or 2 practices in the collection of consumer debts, and to require 3 debtors to act fairly in entering into and honoring such debts. 4 Cal. Civ. Code § 1788.1. Plaintiff s allegations simply list 5 6 7 8 statutory language then conclude that Defendants violated each section. The law is clear that foreclosing on a deed of trust does Collins v. 9 not invoke the statutory protections of the RFDCPA. 10 Power Default Servs., Inc., No. 09-4838 SC, 2010 WL 234902, at *3 11 (N.D. Cal. Jan. 14, 2010)(collecting numerous cases). 12 13 14 15 Foreclosure pursuant to a deed of trust does not constitute debt collection under the RFDCPA. Casteneda v. Saxon Mortgage Serve., Inc., 687 F. Supp. 2d 1191, 1197 (E.D. Cal 2009); see 16 also Gonzalez v. First Franklin Loan Servs., No. 1:09-CV-00941 17 AWI-GSA, 2010 WL 144862, at *7 (E.D. Cal. Jan. 11, 2010) 18 ( Foreclosure related actions ¦do not implicate the RFDCPA. ) 19 conduct Plaintiff complains of concerns foreclosure related 20 actions in connection with his residential mortgage. 21 conduct is not covered by the RFDCPA. The This For this reason, 22 23 24 Plaintiff s RFDCPA claim is subject to dismissal. Plaintiff has been previously afforded leave to amend the 25 RFDCPA claim. Countrywide Defendants and Chase s motions to 26 dismiss the RFDCPA claim are GRANTED WITHOUT LEAVE TO AMEND. 27 28 16 1 2 J. Cal. Civ. Code § 1572 Plaintiff s eleventh cause of action is against First Magnus 3 and MERS for violation of California Civil Code § 1572 (Actual 4 Fraud). 5 6 7 8 9 10 The complaint alleges: The misrepresentations by Defendants and/or Defendants predecessors, failures to disclose, and failure to investigate as described above were made with the intent to induce Plaintiff to obligate themselves on the Loan in reliance on the integrity of Defendants and/or Defendants predecessors. (Compl. at ¶ 180). 11 In California, [t]he elements of fraud, which give[] rise 12 to the tort action for deceit, are (a) misrepresentation (false 13 representation, concealment, or nondisclosure); (b) knowledge of 14 falsity (or scienter); (c) intent to defraud, i.e., to induce 15 16 17 reliance; (d) justifiable reliance; and (e) resulting damage. Small v. Fritz Companies, Inc., 30 Cal. 4th 167, 173 (2003) 18 (internal quotation marks omitted). 19 subject to Rule 9(b)'s elevated pleading standard. 20 Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). 21 22 23 24 25 Plaintiff's fraud claim is Vess v. Ciba- The allegations in the complaint fail to specify the who, what, when, where, and how of the misconduct charged. Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 1120) (internal quotation marks omitted). The complaint provides no particular 26 details on what specific role First Magnus or MERS played in the 27 scheme to fraudulently induce Plaintiff to enter into his 28 loan transaction, or when and where the scheme occurred. 17 See 1 Swartz, 476 F.3d at 764-65 (concluding that, in a fraud suit 2 involving multiple defendants, a plaintiff must identif[y] the 3 role each defendant played in the alleged fraudulent scheme, 4 informing each defendant separately of the allegations 5 6 7 surrounding his alleged participation in the fraud ) (alteration in original) (internal quotation marks omitted); Vess v. Ciba- 8 Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (concluding 9 that a fraudulent conspiracy claim failed to satisfy Rule 9(b) 10 because, among other things, the pleading failed to provide the 11 particulars of when, where, or how the alleged conspiracy 12 13 14 15 occurred ). In addition, the complaint fails to specify what particular misrepresentation was involved in the fraudulent scheme. First Magnus, MERS, or any defendant, is not required to 16 guess what particular misrepresentation(s) are at issue in the 17 fraud claim. 18 Plaintiff s sixteenth cause of action restates the 19 allegations from the eleventh cause of action against all 20 Defendants and fails for the same reasons. 21 Plaintiff has been previously afforded leave to amend the 22 23 24 Section 1572 claim. He has not done so. Countrywide Defendants motion to dismiss the eleventh cause of action is GRANTED WITHOUT 25 LEAVE TO AMEND. 26 dismiss the sixteenth cause of action are GRANTED WITHOUT LEAVE 27 TO AMEND. 28 Countrywide Defendants and Chase s motions to 18 1 2 3 4 K. Real Estate Settlement Procedures Act Plaintiff reasserts a RESPA claim against each Defendant, 5 alleging: (1) That the failure to respond to Plaintiff s RESPA 6 constitutes a violation of 12 U.S.C. § 2607(b); and (2) Plaintiff 7 has suffered damages actually and proximately caused by 8 Defendants violation of the within statute. 9 10 196, 198). (Doc. 16 at ¶¶ Plaintiff s claim against each Defendant is unfounded, as he only addressed a RESPA letter to BANA. 11 12 Just as Plaintiff s prior alleged RESPA claim failed to 13 state a claim, this RESPA claim fails. 14 allege who or how each Defendant violated RESPA. 15 allegation simply affords the conclusion of law that the 16 Defendants violated RESPA resulting in damages to the Plaintiff. 17 Plaintiff did not request leave to amend the RESPA claim. 18 19 20 21 22 23 24 The new claim does not Instead the Countrywide Defendants and Chase s motions to dismiss this RESPA cause of action are GRANTED WITHOUT LEAVE TO AMEND. L. Quiet Title [A] mortgagor of real property cannot, without paying his debt, quiet his title against the mortgagee. Miller v. Provost, 26 Cal. App. 4th 1703, 1707 (1994) (citations omitted). Here, 25 26 27 28 Plaintiff defaulted on the Subject Loan, and does not allege that he has since paid the outstanding balance. Plaintiff has been previously afforded leave to amend the 19 1 claim for Quiet Title. 2 motions to dismiss the fourth cause of action are GRANTED WITHOUT 3 LEAVE TO AMEND. 4 N. Countrywide Defendants and Chase s Cal. Bus. & Prof. Code §17200 5 6 Plaintiff asserts a claim under California's Unfair 7 Competition Law ( UCL ). 8 Section 17200 prohibits any unlawful, unfair or fraudulent 9 business act or practice and unfair, deceptive, untrue or 10 misleading advertising. 11 injury in fact and lost money or property as a result of the 12 Cal. Bus. & Prof. Code § 17200. [A] plaintiff must have suffered an unfair competition to have standing to pursue either an 13 14 15 16 17 18 19 individual or a representative claim under the California Unfair Competition Law. Hall v. Time, Inc., 158 Cal. App. 4th 847, 849 (2008); see also Cal. Bus. & Prof. Code § 17204. Defendants argue that Plaintiff did not state a claim under the UCL because: (1) Plaintiff has not alleged sufficient facts under Fed. R. Civ. P. 8 ; (2) Plaintiff did not allege statutory 20 21 22 violations or allege that any conduct was unlawful, unfair, or fraudulent; (3) Plaintiff did not plead claims of fraud and 23 misrepresentation with specificity; (4) Plaintiff did not state 24 what money and property was lost. 25 26 27 28 The UCL prohibits unfair competition including any unlawful, unfair or fraudulent business act or practice. Bus. & Prof. Code § 17200. Cal. Because the statute is written in the 20 1 disjunctive, it applies separately to business acts or practices 2 that are (1) unlawful, (2) unfair, or (3) fraudulent. 3 Pastoria v. Nationwide Ins., 112 Cal. App. 4th 1490, 1496 (2003). 4 See Each prong of the UCL is a separate and distinct theory of 5 6 7 8 liability; thus, the unfair practices prong offers an independent basis for relief. Kearns, 567 F.3d at 1127. As to the unlawful prong, the UCL incorporates other laws 9 and treats violations of those laws as unlawful business 10 practices independently actionable under state law. 11 United Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000). 12 13 14 15 Chabner v. As to the unfair prong, [a]n unfair business practice is one that either offends an established public policy or is immoral, unethical, oppressive, unscrupulous or substantially McDonald v. Coldwell Banker, 543 F.3d 16 injurious to consumers. 17 498, 506 (9th Cir. 2008) (quoting People v. Casa Blanca 18 Convalescent Homes, Inc., 159 Cal. App. 3d 509, 530 (1984)). 19 to the fraudulent prong, fraudulent acts are ones where members 20 of the public are likely to be deceived. 21 As Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1151-52 (9th Cir. 2008). For 22 23 24 UCL claims, [a] plaintiff must state with reasonable particularity the facts supporting the statutory elements of the Khoury v. Maly's of Cal., Inc., 14 Cal. App. 4th 25 violation. 26 612, 619 (1993). 27 28 Plaintiff s UCL claim has several deficiencies. 21 First, 1 Plaintiff's UCL allegations do not specify the basis for his 2 claim, i.e., whether it is based on an unlawful, unfair, or 3 fraudulent practice, let alone state, with reasonable 4 particularity, the facts supporting the statutory elements of the 5 6 7 violation. Second, to the extent Plaintiff asserts an UCL claim based on a violation of other law, his complaint fails to state a 8 claim for a violation of law. 9 claim is predicated on the violation of other law, it is 10 insufficiently pled. 11 UCL claim that is based on or grounded in fraud, it must meet the 12 13 14 15 Accordingly, to the extent the UCL Third, to the extent Plaintiff asserts a requirements of Rule 9(b), Kearns, 567 F.3d at 1124-27, Vess, 317 F.3d at 1103-04, which it does not. The complaint fails to specify what particular role Defendants played in the fraudulent 16 scheme, when and where the scheme occurred, or details on the 17 specific misrepresentation(s) involved in the fraudulent scheme. 18 Plaintiff has been previously afforded leave to amend the 19 Section 17200 claim. 20 17200 cause of action is GRANTED WITHOUT LEAVE TO AMEND. 21 O. Defendants motion to dismiss the Section Production of Original Note 22 23 24 The complaint s 15th cause of action against ReconTrust and MERS alleges that no Defendant owns the note and therefore has no 25 right to foreclose. Doc. 16 ¶ 214. 26 not the law in California. 27 note fails as matter of law for the reasons stated above. 28 As discussed above, this is Plaintiff s demand to produce the 22 1 Plaintiff did not request leave to amend this claim. 2 Defendants motion to dismiss the 15th cause of action is GRANTED 3 WITHOUT LEAVE TO AMEND. 4 Q. Injunctive Relief 5 6 7 Countrywide Defendants and Chase move to dismiss the last cause of action for injunctive relief on the grounds that: (1) 8 injunctive relief is not a cause of action; and (2) it must be 9 tethered to some independent legal duty owed by the defendant to 10 the plaintiff. 11 12 13 14 15 Plaintiff alleges Defendants threaten to, and unless restrained, will foreclose upon Plaintiff s home by conducting a trustee s sale or causing a trustee s sale to be conducted, or otherwise. Doc. 16 at ¶ 229. Plaintiff further alleges that 16 [i]njunctive relief is necessary to enjoin Defendants from 17 foreclosing upon Plaintiff s home. 18 Doc. 16 at ¶ 231. Injunctive relief is a remedy and not, in itself, a cause 19 of action, and a cause of action must exist before injunctive 20 relief may be granted. 21 Camp v. Board of Supervisors, 123 Cal. App. 3d 334, 356 (1981) (quoting Shell Oil Co. v. Richter, 52 22 23 24 25 26 27 28 Cal. App. 2d 164, 168 (1942)). Here, as all of the substantive allegations have been dismissed, Plaintiff cannot obtain injunctive relief. Plaintiff has been previously afforded leave to amend the claim for injunctive relief. Countrywide Defendants and Chase s 23 1 motions to dismiss the final cause of action are GRANTED WITHOUT 2 PREJUDICE, but only if Plaintiff states a sufficient fraud claim. 3 V. CONCLUSION 4 For the reasons set forth above, Defendants motions to 5 6 7 dismiss are GRANTED in their entirety. Plaintiff requests leave to amend to state a fraud claim 8 against the Countrywide Defendants in connection with the alleged 9 oral promise to modify the loan agreement. 10 shall be filed within thirty (30) days of electronic service. 11 claims may be reasserted against Chase. Any amended complaint 12 13 14 15 16 SO ORDERED Dated: August 9, 2010 /s/ Oliver W. Wanger Oliver W. Wanger United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 24 No

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