Champlaie v. BAC Home Loans Servicing, LP, No. 2:2009cv01316 - Document 38 (E.D. Cal. 2009)

Court Description: ORDER granting in part and denying in part 29 dfts' Motion to Dismiss, signed by Senior Judge Lawrence K. Karlton on 10/22/09. All dismissals are without prejudice. Pltf is GRANTED 30 days to file an amended complaint. Dfts' motion to strike, also presented in Doc. No. 29, is DENIED. (Kastilahn, A) Modified on 10/22/2009 (Kastilahn, A).

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Champlaie v. BAC Home Loans Servicing, LP Doc. 38 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 FOR THE EASTERN DISTRICT OF CALIFORNIA 8 TARRANCE CHAMPLAIE, 9 NO. CIV. S-09-1316 LKK/DAD 10 11 Plaintiff, v. O R D E R 12 BAC HOME LOANS SERVICING, LP, et al., 13 14 Defendants. 15 16 / This case concerns plaintiff’s mortgage and the potential 17 foreclosure premised on an asserted default. Plaintiff’s first 18 amended complaint (“FAC”) names eight defendants and ten causes of 19 action, many of which incorporate multiple theories of liability. 20 Four defendants have moved to dismiss all claims against them, and 21 to strike portions of the FAC. 22 Stepping back from the multitude of particular arguments, 23 defendants’ primary challenge is that plaintiff fails to provide 24 the notice as to the basis of his claims that is required by the 25 Supreme Court’s recent decisions in Ashcroft v. Iqbal, ___ U.S. 26 ___, 129 S. Ct. 1937 (2009) and Bell Atlantic v. Twombly, 550 U.S. 1 Dockets.Justia.com 1 544 (2007). 2 discuss these two cases in the context of the foreclosure cases 3 currently flooding the district courts. 4 court concludes that in numerous ways, plaintiff's complaint falls 5 short of these requirements established by those cases. 6 Defendants' motion therefore compels the court to As explained below, the A second broad issue is plaintiff's attempt to cure these 7 deficiencies in his opposition memorandum. 8 complaint are mere blanket allegations of wrongdoing. Plaintiff's 9 opposition attempts to salvage these claims by connecting them to 10 factual allegations in ways not made clear by the complaint, and 11 by alleging altogether new facts. 12 disregarded in this order. 13 claims' bases are also insufficient, the court discusses what would 14 result from including these explanations in an amended complaint 15 to the extent that the parties' briefing permits the court to do 16 so. 17 in over two dozen cases in this district, and similar memoranda in 18 opposition to motions to dismiss in each case. 19 of these cases are shambling through a slow process of curing the 20 complaints' many deficiencies. 21 briefed issues likely to be raised in an amended complaint, the 22 court finds that a discussion of those issue serves the interests 23 of the parties and the court. 24 Many claims in the New factual allegations are While post-hoc explanations of the Plaintiff's counsel has filed essentially the same complaint Most, if not all, Where parties in this case have The court resolves these motions on the papers and after oral 25 argument. For the reasons stated below, defendants’ motion to 26 dismiss are granted in part and denied in part, and the motion to 2 1 strike is denied. I. STANDARDS1 2 3 A. Standard for a Motion to Dismiss under Fed. R. Civ. P. 4 12(b)(6) 5 A Fed. R. Civ. P. 12(b)(6) motion challenges a complaint's 6 compliance with the pleading requirements provided by the Federal 7 Rules. 8 Civ. P. 8, although claims that “sound[] in” fraud or mistake must 9 meet the requirements provided by Fed. R. Civ. P. 9(b). 10 In general, these requirements are established by Fed. R. Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1103-04 (9th Cir. 2003). 11 1. 12 Under Federal Rule of Civil Procedure 8(a)(2), a pleading must 13 contain a "short and plain statement of the claim showing that the 14 pleader is entitled to relief." 15 "fair notice of what the claim is and the grounds upon which it 16 rests." 17 modification omitted). 18 Dismissal of Claims Governed by Fed. R. Civ. P. 8 Twombly, 550 U.S. The complaint must give defendant at 555 (internal quotation and To meet this requirement, the complaint must be supported by 19 factual allegations. 20 conclusions can provide the framework of a complaint," neither 21 legal 22 sufficient, and such statements are not entitled to a presumption conclusions Iqbal, 129 S. Ct. at 1950. nor conclusory statements "While legal are themselves 23 24 25 26 1 In this case, where the parties’ primary dispute is whether the allegations contained in the complaint are conclusory, the court finds it appropriate to discuss the standards by which the court evaluates these allegations before turning to the allegations themselves. 3 1 of truth. Id. at 1949-50. Iqbal and Twombly therefore proscribe 2 a two step process for evaluation of motions to dismiss. The court 3 first identifies the non-conclusory factual allegations, and the 4 court then determines whether these allegations, taken as true and 5 construed in the light most favorable to the plaintiff, "plausibly 6 give rise to an entitlement to relief." 7 551 U.S. 89 (2007).2 Id.; Erickson v. Pardus, 8 "Plausibility," as it is used in Twombly and Iqbal, does not 9 refer to the likelihood that a pleader will succeed in proving the 10 allegations. 11 factual allegations, when assumed to be true, "allow[] the court 12 to draw the reasonable inference that the defendant is liable for 13 the 14 plausibility standard is not akin to a 'probability requirement,' 15 but it asks for more than a sheer possibility that a defendant has 16 acted unlawfully." 17 complaint may fail to show a right to relief either by lacking a 18 cognizable legal theory or by lacking sufficient facts alleged 19 under a cognizable legal theory. Balistreri v. Pacifica Police 20 Dep't, 901 F.2d 696, 699 (9th Cir. 1990). 21 Instead, it refers to whether the non-conclusory misconduct alleged." Iqbal, 129 S.Ct. at 1949. "The Id. (quoting Twombly, 550 U.S. at 557). A The line between non-conclusory and conclusory allegations is 22 2 23 24 25 26 As discussed below, the court may consider certain limited evidence on a motion to dismiss. As an exception to the general rule that non-conclusory factual allegations must be accepted as true on a motion to dismiss, the court need not accept allegations as true when they are contradicted by this evidence. See Mullis v. United States Bankr. Ct., 828 F.2d 1385, 1388 (9th Cir. 1987), Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). 4 1 not always clear. Rule 8 "does not require 'detailed factual 2 allegations,' 3 the-defendant-unlawfully-harmed-me accusation." Iqbal, 129 S. Ct. 4 at 1949 (quoting Twombly, 550 U.S. at 555). 5 the first case that directed the district courts to disregard 6 “conclusory” allegations, the court turns to Iqbal and Twombly for 7 indications of the Supreme Court’s current understanding of the 8 term. 9 "defendants but it demands more than an unadorned, While Twombly was not In Twombly, the Court found the naked allegation that 'ha[d] entered into a contract, combination or 10 conspiracy to prevent competitive entry . . . and ha[d] agreed not 11 to compete with one another,'" absent any supporting allegation of 12 underlying details, to be a conclusory statement of the elements 13 of an anti-trust claim. 14 551). 15 “parallel conduct” were not conclusory, because plaintiffs had 16 alleged specific acts argued to constitute parallel conduct. 17 Twombly, 550 U.S. at 550-51, 556. In contrast, Id. at 1950 (quoting Twombly, 550 U.S. at the Twombly plaintiffs’ allegations of 18 Twombly also illustrated the second, “plausibility” step of 19 the analysis by providing an example of a complaint that failed and 20 a complaint that satisfied this step. 21 Twombly 22 regarding parallel conduct were non-conclusory, they failed to 23 support a plausible claim. 24 was said to be ordinarily expected to arise without a prohibited 25 agreement, an allegation of parallel conduct was insufficient to 26 support the inference that a prohibited agreement existed. failed. While the Twombly Id. at 566. 5 The complaint at issue in plaintiffs’ allegations Because parallel conduct Id. 1 Absent such an agreement, plaintiffs were not entitled to relief. 2 Id.3 3 In contrast, Twombly held that the model pleading for 4 negligence demonstrated the type of pleading that satisfies Rule 5 8. 6 public highway called Boylston Street in Boston, Massachusetts, 7 defendant negligently drove a motor vehicle against plaintiff who 8 was then crossing said highway.” Form 9, Complaint for Negligence, 9 Forms App., Fed. Rules Civ. Proc., 28 U.S.C. App., p 829. Id. at 565 n.10. This form provides “On June 1, 1936, in a These 10 allegations adequately "'state[] . . . circumstances, occurrences, 11 and events in support of the claim presented.'" Twombly, 550 U.S. 12 at 556 n.3 (quoting 5 C. Wright & A. Miller, Federal Practice and 13 Procedure 14 allegations 15 plaintiff render plausible the conclusion that defendant drove 16 negligently. 17 2. 18 A Rule 12(b)(6) motion to dismiss may also challenge a § 1216, that at 94, defendant 95 (3d drove ed. at a 2004)). certain The time factual and hit Dismissal of Claims Governed by Fed. R. Civ. P. 9(b) 19 complaint’s compliance with Fed. R. Civ. P. 9(b). See Vess, 317 20 F.3d at 1107. 21 mistake, a party must state with particularity the circumstances 22 constituting fraud or mistake. This rule provides that “In alleging fraud or Malice, intent, knowledge, and 23 24 25 26 3 This judge must confess that it does not appear self-evident that parallel conduct is to be expected in all circumstances and thus would seem to require evidence. Of course, the Supreme Court has spoken and thus this court's own uncertainty needs only be noted, but cannot form the basis of a ruling. 6 1 other conditions of a person's mind may be alleged generally.” 2 These circumstances include the “time, place, and specific content 3 of the false representations as well as the identities of the 4 parties to the misrepresentations.” 5 756, 764 (9th Cir. 2007) (quoting Edwards v. Marin Park, Inc., 356 6 F.3d 1058, 1066 (9th Cir. 2004)). 7 involving multiple defendants, a plaintiff must, at a minimum, 8 ‘identif[y] 9 fraudulent scheme.’” Id. at 765 (quoting Moore v. Kayport Package the role of [each] Swartz v. KPMG LLP, 476 F.3d “In the context of a fraud suit defendant[] in the alleged 10 Express, 885 F.2d 531, 541 (9th Cir. 1989)). Claims subject to 11 Rule 9(b) must also satisfy the ordinary requirements of Rule 8. 12 B. Standard for a Motion to Strike under Fed. R. Civ. P. 12(f) 13 Rule 12(f) authorizes the court to order stricken from any 14 pleading "any redundant, immaterial, impertinent, or scandalous 15 matter." 16 after the filing of the pleading under attack. The court, however, 17 may make appropriate orders to strike under the rule at any time 18 on its own initiative. 19 untimely motion to strike where it is proper to do so. 20 Wright and Miller, Federal Practice and Procedure: Civil 2d § 1380. 21 Motions to strike are generally viewed with disfavor, and will 22 usually be denied unless the allegations in the pleading have no 23 possible relation to the controversy, and may cause prejudice to 24 one of the parties. 25 34 (N.D. Ill. 1985). 26 challenged matter may raise an issue of fact or law, the motion to A party may bring on a motion to strike within 20 days Thus, the court may consider and grant an Id.; See 5A see also Hanna v. Lane, 610 F. Supp. 32, If the court is in doubt as to whether the 7 1 strike should be denied, leaving an assessment of the sufficiency 2 of the allegations for adjudication on the merits. See 5A Wright 3 & Miller, supra, at § 1380. II. BACKGROUND 4 5 6 A. Exhibits The parties’ filings in connection with the motion have 7 included numerous exhibits. There are three types of evidence 8 which a court may properly consider on a motion to dismiss. 9 first consists of exhibits attached to the complaint. The No such 10 exhibits are present here. The second is evidence subject to 11 judicial notice under Fed. R. Evid. 201. 12 H, and I to Defendants’ Request for Judicial Notice (“Defs.’ RFJN”) 13 are all publicly recorded documents as to which judicial notice is 14 proper. 15 May 29, 2008 Notice of Default; the September 5, 2008 Notice of 16 Trustee’s Sale; the October 29, 2008 Trustee’s Deed Upon Sale; the 17 Notice of Rescission of Trustee’s Deed Upon Sale; the March 26, 18 2009 Notice of Trustee’s Sale; and the Substitution of Trustee. Exhibits B, D, E, F, G, Respectively, these documents are the Deed of Trust; the 19 The third type of evidence a court may consider consists of 20 “documents whose contents are alleged in a complaint and whose 21 authenticity no party questions, but which are not physically 22 attached to the pleading.” 23 (9th Cir. 1994), overruled on other grounds by Galbraith v. County 24 of Santa Clara, 307 F.3d 1119, 1124 (9th Cir. 2002). 25 serves to “prevent plaintiffs from surviving a Rule 12(b)(6) motion 26 by deliberately omitting documents upon which their claims are Branch v. Tunnell, 14 F.3d 449, 454 8 This rule 1 based.” Swartz, 476 2 modification omitted). F.3d at 763 (internal quotation and 3 The Branch rule encompasses several documents as to which the 4 parties seek judicial notice, but for which judicial notice is 5 improper 6 otherwise verifiable. 7 note for plaintiff’s loan. This document is extensively referenced 8 by the FAC. 9 Lending Disclosure Statement” and “Mortgage Insurance Disclosure.” 10 Defs.’ RFJN Ex. C; Defendant’s Supplemental Request for Judicial 11 Notice, Ex. J. 12 documents 13 provided to plaintiff at closing, see, e.g., FAC ¶¶ 27, 29, and to 14 various disclosures, see, e.g., FAC ¶ 62. 15 plaintiff's request for judicial notice, a monthly statement sent 16 by CHL dated March 1, 2009, is similarly referred to by the 17 complaint. Thus, these four documents’ contents are alleged in the 18 complaint. 19 of these four documents. 20 cites to, and affirmatively relies upon, the exhibits offered by 21 defendant, demonstrating that plaintiff agrees that these exhibits 22 are authentic. 23 without transforming the motion into a motion for summary judgment. 24 The court cannot consider the second exhibit to plaintiff's 25 request for judicial notice. This exhibit is an article purporting 26 to describe defendant MERS in general. because the documents are not publicly recorded or Exhibit A to Defs.’ RFJN is the promissory Defendants also ask the court to consider a “Truth in by While the FAC does not refer to either of these name, the FAC repeatedly refers to “documents” The first exhibit to Neither party has questioned the authenticity of any Notably, plaintiff’s opposition memo The court may therefore consider these documents 9 It is neither judicially 1 noticeable nor the type of evidence contemplated by Branch, and is 2 therefore ignored. 3 B. Plaintiff’s Loan and Mortgage4 4 In April of 2007, Jake Weathers, a loan officer employed by 5 Ron Allen & Associates Real Estate, solicited plaintiff to enter 6 a loan transaction. 7 Weathers could secure the “best deal” and “best interest rates” 8 available, that loan payments would be “approximately $1600 per 9 month,” and that the loan could be refinanced if the payments FAC ¶ 23. Weathers advised plaintiff that 10 became unaffordable. 11 plaintiff retained “Ron Allen & Associates Real Estate, Ronnie D 12 Allen, and Jake Weathers as his agents for the purpose of obtaining 13 a loan to finance the property.” 14 Allen & Associates Real Estate and Ronnie D Allen as defendants in 15 this suit, but these defendants are not parties to the instant 16 motion. 17 complaint, but has been dismissed by plaintiff in the FAC, in light 18 of a bankruptcy filing by Weathers. 19 FAC ¶¶ 25, 26, 28. After this solicitation, FAC ¶ 93. Plaintiff names Ron Jake Weathers was named as a defendant in the initial FAC ¶ 13. Plaintiff completed the loan transaction between July 25 and 20 August 3, 2007. FAC ¶ 31. 21 documents: the promissory note, the deed of trust, the “Truth in 22 Lending 23 Disclosure.” Disclosure In so doing, plaintiff signed four Statement,” and the Defs.’ RFJN Ex. A, B, C, J. “Mortgage Insurance The promissory note 24 25 26 4 Many of the following facts are drawn from the FAC. Unless otherwise noted, the court assumes, for the purposes of this motion only, that the facts alleged in the FAC are true. 10 1 states that plaintiff borrowed $256,500.00 in principal from 2 defendant Countrywide Home Loans, Inc., d/b/a America’s Wholesale 3 Lender (“CHL”). 4 plaintiff’s “monthly payment will be in the amount of $1,859.90.” 5 Id. Defs.’ RFJN Ex. A. The note is dated July 25, 2007. The note specifies that Id. 6 The deed of trust identifies defendant CHL as the lender and 7 defendant ReconTrust Company, N.A. (“ReconTrust”) as a trustee. 8 Defs.’ RFJN Ex. B, 2; see also FAC ¶ 31. 9 identifies defendant Mortgage Electronic The deed further Registration Systems 10 (“MERS”) as the beneficiary to the trust, “acting solely as nominee 11 for” the lender and the lender’s successors and assigns. 12 RFJN Ex. B, 2. 13 pay the premiums for, “mortgage insurance” in addition to the 14 obligation to pay the loan. 15 25, 2007, was signed and notarized July 26, 2007, and was recorded 16 on August 3, 2007. 17 Defs.’ The deed of trust obliges plaintiff to secure, and Id. at 8-10. The deed is dated July Id. at 1, 16. The “Truth in Lending Disclosure Statement” is signed by 18 plaintiff and dated July 26, 2007. 19 document states that the “amount financed” is $254.856.96 and that 20 the “annual percentage rate” is 9.527 percent. 21 loan as a fixed rate 30 year loan, and specifies the monthly 22 payments plaintiff will be obliged to make, inclusive of the amount 23 paid for the mandatory mortgage insurance. 24 that plaintiff will make 153 payments of $2,246.69, followed by 206 25 payments of $1,859.80, and one payment at $1,864.24. The “Mortgage 26 Insurance Disclosure” explains that the decrease in the monthly 11 Defs.’ RFJN Ex. C. This It identifies the The disclosure states 1 payment obligation occurs because the mortgage insurance will 2 terminate when the borrower has repaid a certain fraction of the 3 loan. 4 triggers for cancellation of plaintiff's mortgage insurance). See Defs.’ Supplemental RFJN Ex. J, 3-4 (explaining various 5 Plaintiff concedes that he received the above documents, 6 notwithstanding the FAC’s allegation that “When the loan was 7 consummated, Plaintiff did not receive the required disclosures 8 including, but not limited to[,] the TILA disclosure and the 9 required number of copies of the Notice of Right to Cancel stating 10 the date that the rescission period expires.” FAC ¶ 40. Elsewhere 11 in the FAC, plaintiff alleges that he did receive some “loan 12 documents,” 13 documents because he did not receive them prior to closing, and 14 that at closing, he was given only a few minutes to sign the 15 various documents, with no explanation as to what they were, and 16 without an opportunity to review them. FAC ¶ 27. In opposing this 17 motion, plaintiff retreats from the former allegation (that he did 18 not receive the disclosures at all), and rests his argument on the 19 latter.5 but that he was Amended Opp’n, 8. prevented from reviewing these In light of the position taken by 20 5 21 22 23 24 25 26 Moreover, plaintiff explicitly relies on the Truth in Lending Disclosure Statement to argue that the disclosures were inadequate. Specifically, plaintiff argues that the disclosure is internally inconsistent, because it states both that plaintiff has a fixed rate loan and that the monthly obligation will change at two points. As explained above, the first change in payments was adequately explained to be due to the termination of mortgage insurance, such that plaintiff would no longer be obliged to pay insurance premiums. The second change, in the amount due on the final payment, is simply due to the fact that the total obligation is not divided into perfectly equal monthly payments. Plaintiff’s allegation that the Truth in Lending Disclosure Statement itself 12 1 plaintiff in his opposition, and the fact that plaintiff signed the 2 Truth in Lending Disclosure Statement and 3 Disclosure, the court rejects the allegation that these documents 4 were not provided, but the court assumes to be true the alternative 5 allegation that these documents were disclosed late in the process 6 and with minimal opportunity for review. 7 Mortgage Insurance As note above, plaintiff also alleges that he never received 8 any disclosures related to his right to rescind the loan. 9 40, see also, e.g., FAC ¶¶ 56-58, 64, 68. Because plaintiff’s loan 10 is a “residential mortgage transaction” as defined in 15 U.S.C. § 11 1602(w), plaintiff had no right to rescind the loan under the Truth 12 in Lending Act (“TILA”), and no disclosures regarding rescission 13 were required. 14 point. 15 rescind, the allegation that defendants did not inform plaintiff 16 that he had a right to rescind is irrelevant.6 15 U.S.C. § 1635(e)(1). Amended Opp’n at 10. FAC ¶ Plaintiff concedes this Because plaintiff had no right to 17 18 19 reveals that the loan was other than a fixed rate loan is therefore without merit. 6 20 21 22 23 24 25 26 Accordingly, although plaintiff’s FAC explicitly states a TILA claim for rescission, this claim is meritless, has been abandoned, and is not further discussed by the court. In plaintiff’s amended opposition, he argues that he is separately entitled to rescission under a state law theory. The FAC, in enumerating the remedies sought under the various claims, does not list rescission as a remedy for any claim other than the TILA claim. In light of the sprawling, “shotgun” nature of the claims actually included in the FAC, the court declines to speculate on the potential validity of claims plaintiff has not alleged, including a claim for rescission under state law. As discussed below, plaintiff is granted leave to amend the complaint. Plaintiff's amendment may allege a theory for rescission under state law if consistent with his allegation of facts. 13 1 In a final allegation relating to the initial transaction, 2 plaintiff alleges that because he was prevented from reviewing loan 3 documents 4 Weathers has falsified plaintiff’s loan application by inflating 5 plaintiff’s monthly income. 6 failed to discover” this inaccuracy. 7 C. 8 prior to closing, plaintiff FAC ¶ 27. did not discover that CHL allegedly “negligently Id. Events After Initiation of Plaintiff’s Loan Plaintiff has not alleged how defendant BAC Home Loans 9 Servicing, f/k/a Countrywide Home Loans Servicing, (“BAC”) became 10 involved in plaintiff’s loan, and the parties’ exhibits do not 11 explicitly address BAC’s role. 12 became the “servicer” of plaintiff’s loan after the transaction was 13 completed. It appears, however, that BAC 14 Plaintiff alleges that when he began making payments on the 15 loan, the monthly obligation “turned out to be” over $2,600, 16 increasing to over $2,900 per month by March 2009. 17 also Pl.’s RFJN Ex. 1 (bill showing payment due for March 1, 2009 18 as $2,979.37). 19 that either the initial disclosures did not reflect the loan 20 actually sold to plaintiff, or alternatively that the initial 21 disclosures were correct but that defendants have breached their 22 terms. 23 FAC ¶ 26, see Plaintiff alleges that this increase demonstrates At some point after the loan was initiated, plaintiff failed 24 to make the payments required of him. 25 trustee 26 foreclosure. under the deed of trust, Defendant RetconTrust, the initiated See Cal. Civ. Code § 2924. 14 a nonjudicial ReconTrust issued a 1 Notice of Default on the loan, which was recorded on May 29, 2008. 2 FAC ¶ 43, Defs.’ RFJN Ex. D. This notice stated that plaintiff was 3 $18,587.76 behind on his payments. 4 of Trustee’s Sale, the next step in the non-judicial foreclosure 5 process, and recorded this notice on September 5, 2008.7 6 Defs.’ RFJN Ex. E. 7 October 23, 2008, selling the property to the Federal National 8 Mortgage Association. 9 (alleging that foreclosure occurred “on or about October 26, 10 ReconTrust executed a Notice FAC ¶ 44, ReconTrust then foreclosed on the property on Defs.’ RFJN Ex. F; see also FAC ¶ 46 2008”). 11 ReconTrust rescinded this foreclosure sale roughly three weeks 12 later, on November 12, 2008, and thereby returned the property to 13 plaintiff. 14 a “failure to communicate timely[] notice of conditions.” 15 RFJN Ex. G. 16 or notice of trustee sale was executed. 17 noticeable exhibits demonstrate that a second Notice of Trustee’s FAC ¶ 46. The stated purpose of this rescission was Defs.’ Plaintiff alleges that no further notice of default However, the judicially 18 19 20 21 22 23 24 25 26 7 Plaintiff alleges that after this initial notice of trustee’s sale was recorded, plaintiff engaged “Defendant Brett Roberts who represented himself as working for Defendant Planned Resources, a foreclosure rescue company,” in an effort to halt foreclosure. FAC ¶ 45. This effort was apparently unsuccessful, and does not appear to be relevant to the motions under consideration. It is unclear whether plaintiff intends for Brett Roberts and Planned Resources to be defendants in this suit. Plaintiff named both as defendants in the caption to plaintiff’s original complaint, but plaintiff omitted their names in the caption to the FAC. Similarly, these individuals are not discussed in the “Parties” section of the FAC. FAC ¶¶ 7-16. The court therefore assumes that references to these individuals as “defendants” are in error. 15 1 Sale was recorded on March 26, 2009. 2 this second Notice of Trustee’s Sale stated that the property would 3 be sold on April 14, 2009, no evidence or allegation indicates that 4 a second sale occurred. 5 Plaintiff alleges that Defs.’ RFJN Ex. H. throughout this Although time, various 6 communications and misrepresentations were directed to plaintiff 7 by various defendants. 8 conclusory. 9 material facts with the intent of forcing Plaintiff to either pay 10 large sums of money to the Defendants, to which they were not 11 entitled, or to abandon the Property to a foreclosure sale, 12 resulting 13 allegation 14 Twombly, 550 U.S. at 556 n.3, including which defendant made the 15 representations, when, or the content of the representation.8 This 16 allegation is therefore conclusory, and the court does not discuss 17 it further. Many of these allegations, however, are Plaintiff alleges that “Defendants misrepresented in profit fails to for the identify Defendants.” any FAC “occurrences” ¶ or 51. This “events,” 18 Plaintiff sent a letter to defendant BAC on April 9, 2009, 19 requesting rescission of the loan under TILA. FAC ¶ 33. Plaintiff 20 alleges that this letter constituted a “qualified written request” 21 22 23 24 25 26 8 In plaintiff’s opposition memorandum, plaintiff alleges that BAC made misrepresentations in phone calls and letters to plaintiff “immediately after Plaintiff defaulted.” Amended Opp’n at 11. While plaintiff’s opposition cites paragraph 51 of the FAC in purported support of this assertion, that paragraph, as discussed above, makes no such allegation. As discussed below, plaintiff is granted leave to file a second amended complaint, and the court does not find it appropriate to speculate as to the effect of allegations that plaintiff may add through such an amendment. 16 1 under the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 2 et seq. (“RESPA”). A “qualified written request” is a request “for 3 information relating to the servicing of [federally regulated 4 mortgage loans].” 5 plaintiff’s letter constituted a qualified written request is 6 conclusory, and plaintiff has not alleged that this letter, in 7 addition to seeking to rescind the loan, requested information 8 related to servicing. 9 2d 885, 901 (N.D. Ill. 2000).9 10 D. 12 U.S.C. § 2605(a)(1)(A). The allegation that See MorEquitity Inc. v. Naeem, 118 F. Supp. Secondary Mortgage Markets, Securitization, and Assignment of 11 Plaintiff’s Loan 12 Plaintiff also makes numerous assertions concerning the 13 mortgage lending industry generally rather than conduct specific 14 to this case. 15 of selling mortgages on secondary markets, and in particular the 16 practice of securitizing mortgages. 17 was created to circumvent laws that would limit these practices. 18 FAC ¶ 19. 19 underwriting standards to fuel the secondary market. 20 The relevance of these allegations has not been explained. 21 22 Plaintiff’s FAC and opposition decry the practice Plaintiff alleges that MERS Plaintiff separately alleges that lenders lowered FAC ¶ 21. Here, defendants did not acquire plaintiff’s loan through the secondary market. According to plaintiff’s own allegations, CHL, 23 9 24 25 26 Plaintiff’s amended opposition states that plaintiff’s letter also requested “documents relating to the servicing of Plaintiff’s loan . . . and a statement of the reasons for Plaintiff’s belief that his loan is in error.” Amended Opp’n, 15. Again, the issue tendered by the motion addresses the present state of the pleadings, not what an amended complaint might state. 17 1 MERS, and ReconTrust were the parties to the original transaction, 2 although plaintiff alleges that MERS was not entitled to act as 3 such. 4 confirm that these three defendants were party to the original 5 transaction. 6 allegations, Plaintiff alleges without further explanation that 7 “[n]o interest in the Mortgage Note, Deed of Trust, or Property was 8 ever 9 defendants “failed to follow the basic legal requirements for the 10 transfer of a negotiable instrument and an interest in real 11 property,” and that as a result “Defendants are in effect legal 12 strangers to this contractual transaction.” 13 court cannot countenance these latter allegations insofar as they 14 imply that defendants’ interests were acquired only by assignment 15 from entities other than plaintiff, because this implication is 16 contradicted by the exhibits considered by the court, the position 17 taken by plaintiff in opposition to this motion, and by plaintiff’s 18 factual allegations as to the role of the parties.10 FAC ¶¶ 31, 32, 38. legally The exhibits considered by the court See, e.g., Defs.’ RFJN Ex. B. transferred to any of the Notwithstanding these Defendants,” because FAC ¶¶ 19, 20. The 19 Separate from the allegation that the loan was assigned to 20 defendants, plaintiff alleges that defendants have assigned the 21 loan to other parties. 22 . . Plaintiff[’s] home loan . . . to other financial entities,” and 23 that as a result, “Defendants do not own the loan subject to this Plaintiff alleges that “Defendants sold . 24 10 25 26 While it is true that the federal rules tolerate contradictory allegations, the present complaint cannot reasonably be construed as such a pleading. See Coleman v. Std. Life Ins. Co., 288 F. Supp. 2d 1116, 1119 (E.D. Cal. 2003). 18 1 action [sic] and are 2 interest.” 3 “are not entitled to enforce the security interest” is a legal 4 conclusion not entitled to an assumption of truth. The exhibits 5 establish assigned 6 transferred their interests and obligations under the deed of 7 trust, and plaintiff has not alleged that any such assignment or 8 transfer as to the deed of trust has occurred. 9 Contractors v. Cal. State Council of Carpenters, 459 U.S. 519, 526 10 (1983) (courts shall not assume that plaintiffs may prove facts 11 they have not alleged). 12 whether 13 promissory note, and because plaintiff alleges that this note was 14 transferred, the court must at this stage assume this allegation 15 to be true. 16 E. FAC ¶ 34.11 that CHL neither has not entitled to enforce the security Plaintiff’s allegation that defendants MERS nor ReconTrust have or Associated General Because the exhibits do not speak to assigned the beneficial interest under the MERS 17 Plaintiff’s remaining factual allegations concern challenges 18 to three aspects of MERS’s operation. First, he alleges that the 19 practice of designating MERS as the nominee for the real party in 20 interest 21 subverting state recording and notice requirements. FAC ¶¶ 19, 32. 22 This allegation is invoked only to support plaintiff’s “produce the on a deed of trust has the purpose and effect of 23 24 25 26 11 However, as noted above, plaintiff also alleges that all attempted assignments suffered procedural defects and were therefore ineffective. FAC ¶ 19. The court assumes that the allegation of defects (which is itself a legal conclusion) is brought in the alternative. 19 1 note” argument, and is not otherwise explained or supported by 2 factual allegations. 3 licensed to conduct business in California. 4 plaintiff alleges that MERS’s own “terms and conditions” prohibit 5 MERS from asserting rights to mortgaged properties, FAC ¶ 10, and 6 that this prohibits MERS from foreclosing on properties, FAC ¶¶ 11, 7 32. Second, plaintiff alleges that MERS is not III. ANALYSIS 8 9 FAC ¶ 32. Third, A. Preliminary Issues 10 1. Preemption of Plaintiff's State Law Claims 11 The extent to which federal law preempts state law claims 12 relating to mortgage lending is unclear. TILA includes a broad 13 “savings clause” that limits TILA’s preemptive effect. 14 § 1610. 15 a regulation under the Home Owners Loan Act, 12 U.S.C. § 1461 that 16 purports to preempt “the entire field of lending regulation for 17 federal savings associations.” 18 Circuit upheld this regulation in Silvas v. E*Trade Mortg. Corp., 19 514 F.3d 1001 (9th Cir. 2008). 20 claims under California’s Unfair Competition Law, Cal. Bus. and 21 Prof. Code section 17200 et seq., (“UCL”) arguing that defendant 22 had advertised that certain payments where non-refundable when TILA 23 required that defendant make a refund available. 24 at 1003. 25 the OTS’s HOLA regulation. Id. at 1005 (citing 12 C.F.R. § 560.2). 26 This result was based on the conclusion that plaintiffs sought to 15 U.S.C. However, the Office of Thrift Supervision has promulgated 12 C.F.R. § 560.2(a). The Ninth In Silvas, plaintiffs brought Silvas, 514 F.3d The panel held that plaintiffs’ claims were preempted by 20 1 use the UCL to directly regulate credit activities. 2 (applying 12 C.F.R. § 560.2(b)). 3 it 4 application of the UCL would be preempted as a law that only 5 incidentally affected credit activities, but that if the panel were 6 to reach the question, it would hold that the UCL was preempted 7 insofar as it provided a longer statute of limitations than TILA. 8 Id. at 1006-07, 1007 n.3. 9 “[did] not reach the Id. at 1006 The panel then stated that while question” of whether plaintiffs’ District courts have differed in their application of Silvas 10 to 11 Silvas to have held that numerous state law claims were preempted 12 in their entirety. 13 C 09-1542, 2009 U.S. Dist. LEXIS 79250, *10-*12 (N.D. Cal. Sept. 14 2, 2009) (Patel, J.), Kelley v. Mortgage Elec. Registration Sys., 15 No. C 09-01538, 2009 U.S. Dist. LEXIS 70796, *11-*12 (N.D. Cal. 16 Aug. 12, 2009) (Ikuta, J.). Others have read Silvas for the narrow 17 proposition that the UCL may not be used to extend TILA’s statute 18 of limitations. 19 LEXIS 71736 (E.D. Cal. Aug. 14, 2009) (Ishii, J.). 20 subsequent In this foreclosure cases. Several courts have read Naulty v. Greenpoint Mortg. Funding, Inc., No. Santos v. Countrywide Home Loans, 2009 U.S. Dist. case, defendants cite Silvas solely for the 21 proposition that the UCL may not be used to extend TILA’s statute 22 of limitations--that is, that if the UCL claim is predicated upon 23 a violation of TILA, the UCL claim must be brought within TILA’s 24 limitations period. Silvas spoke to this specific issue in detail. 25 Silvas, 514 F.3d at 1007 n.3. 26 demarcated as dicta, it is dicta that this court does not disregard While this discussion is explicitly 21 1 lightly. See United States v. Montero-Camargo, 208 F.3d 1122, 1133 2 n.17 (9th Cir. 2000) (discussing the weight accorded to dicta of 3 a reviewing court). 4 follows Silvas on this issue. 5 Because There being no adverse reasoning, the court preemption is largely a defense, and because 6 defendants have only invoked preemption on the above issue, the 7 court does not discuss whether plaintiff’s state law claims are 8 otherwise preempted. 9 553 F.3d 1241, 1244 (9th Cir. 2009) (in the context of removal 10 jurisdiction, labeling preemption as “federal law defense to a 11 state-law claim.”) See Moore-Thomas v. Alaska Airlines, Inc., 12 2. MERS’s Authority to Operate in California 13 The FAC fleetingly alleges that "MERS [is] not registered to 14 do business in California." 15 status receives no other mention in the complaint, plaintiff's 16 opposition memorandum purports to support several of plaintiff's 17 claims with this allegation, and defendant's reply discusses it on 18 the merits. 19 The FAC ¶ 9. While MERS's registration The court therefore discusses this issue here. California Corporations intrastate business” Code in requires California entities to that 20 “transact[] acquire a 21 “certificate of qualification” from the California Secretary of 22 State. Cal. Corp. Code § 2105(a). MERS argues that its activities 23 fall within exceptions to the statutory definition of transacting 24 intrastate business, such that these requirement does not apply. 25 See Cal. Corp. Code § 191. 26 MERS's activity is exempt. It is not clear to the court that 22 1 MERS primarily relies on Cal. Corp. Code § 191(d)(3). Cal. 2 Corp. Code § 191(d) enumerates various actions that do not trigger 3 the registration requirement when performed by “any foreign lending 4 institution.” 5 that MERS is such an institution, MERS cannot protect itself under 6 this exemption at this stage. The statute defines “foreign lending 7 institution” as “including, but not limited to: [i] any foreign 8 banking corporation, [ii] any foreign corporation all of the 9 capital stock of which is owned by one or more foreign banking 10 corporations, [iii] any foreign savings and loan association, [iv] 11 any foreign insurance company or [v] any foreign corporation or 12 association authorized by its charter to invest in loans secured 13 by real and personal property[.]” 14 Neither any published California decision nor any federal decision 15 has interpreted these terms. 16 does not itself invest in loans or lend money, it appears that [i], 17 [iii], and [v] do not apply. 18 insurance company under [ii]. 19 that not all of MERS’s owners are foreign corporations. 20 stage of litigation, the court cannot conclude that MERS falls 21 within any of the five enumerated examples of “foreign lending 22 institutions,” and the court declines to address sua sponte whether 23 MERS otherwise satisfies subsection (d). 24 Because neither the FAC nor the exhibits indicate Cal. Corp. Code § 191(d). Because plaintiff alleges that MERS MERS does not claim to be an Finally, it is certainly plausible At this Defendants also invoke a second exemption, Cal. Corp. Code § 25 191(c)(7). While section 191(c) is not restricted to “lending 26 institutions,” MERS’s acts do not 23 fall into the categories 1 enumerated 2 Plaintiff alleges that MERS directed the trustee to initiate non- 3 judicial foreclosure on the property. 4 that “[c]reating evidences of debt or mortgages, liens or security 5 interests on real or personal property” is not intrastate business 6 activity. 7 trustee to initiate foreclosure proceedings appears to be more than 8 merely creating evidence of a mortgage. 9 fact that a separate statutory section, § 191(d)(3) (which MERS 10 cannot invoke at this time, see supra), exempts “the enforcement 11 of any loans by trustee's sale, judicial process or deed in lieu 12 of foreclosure or otherwise.” 13 include these activities would render (d)(3) surplusage, and such 14 interpretations 15 California law. 16 Hughes v. Bd. of Architectural Examiners, 17 Cal. 4th 763, 775 17 (1998). 18 activity.12 19 under the section, including subsection (c)(7). Section 191(c)(7) provides Although this language is unexplained, directing the of California This is supported by the Interpreting section (c)(7) to statutes are disfavored under People v. Arias, 45 Cal. 4th 169, 180 (2008), Accordingly, section 191(c)(7) does not exempt MERS’s For these reasons, plaintiff’s argument that MERS has acted 20 12 21 22 23 24 25 26 The court notes that two other opinions have concluded, at the motion to dismiss stage, that MERS is not required to register under Cal. Corp. Code § 2105(a). Lomboy v. SCME Mortg. Bankers, No. C-09-1160 SC, 2009 WL 1457738, *3 (N.D. Cal. May 26, 2009); see also Benham v. Aurora Loan Services, No. C-09-2059, 2009 U.S. Dist. LEXIS 78384, *14 (N.D. Cal. Sept. 1, 2009) (following Lomboy). Lomboy held that MERS was exempt under sections 191(c)(1), (c)(7), and (d)(3). However, the case did not address section (d)’s predicate requirement that the entity be a “foreign lending institution,” nor did the opinion address whether sections (c)(1) and (c)(7) themselves sufficed. Benham provided no further discussion. 24 1 in violation of Cal. Corp. Code § 2105(a) is plausible, and cannot 2 be rejected at this stage in the litigation. 3 3. 4 Plaintiff separately argues that MERS has acted in violation 5 of its own “terms and conditions.” These “terms” allegedly provide 6 that 7 Whether MERS Has Acted Ultra-Vires MERS shall serve as mortgagee of record with respect to all such mortgage loans solely as a nominee, in an administrative capacity, for the beneficial owner or owners thereof from time to time. MERS shall have no rights whatsoever to any payments made on account of such mortgage loans, to any servicing rights related to such mortgage loans, or to any mortgaged properties securing such mortgage loans. MERS agrees not to assert any rights (other than rights specified in the Governing Documents) with respect to such mortgage loans or mortgaged properties. References herein to “mortgage(s)” and “mortgagee of record” shall include deed(s) of trust and beneficiary under a deed of trust and any other form of security instrument under applicable state law.” 8 9 10 11 12 13 14 15 16 FAC ¶ 10. The FAC does not specify the source of these “terms and 17 conditions.” 18 are taken from MERS’s corporate charter, implying that an action 19 in violation thereof would be ultra vires. 20 then alleges that these terms do not permit MERS to “act as a 21 nominee or beneficiary of any of the Defendants.” 22 However, the terms explicitly permit MERS to act as nominee. 23 Plaintiff has not alleged a violation of these terms. Plaintiff’s opposition memorandum states that they Opp’n at 4. Plaintiff FAC ¶ 32. 24 4. Defendants’ Authority to Foreclose 25 Another theme underlying many of plaintiff’s claims is that 26 defendants have attempted to foreclose or are foreclosing on the 25 1 property 2 Plaintiff argues that foreclosure is barred because no defendant 3 is a person entitled to enforce the deed of trust under the 4 California Commercial Code and because defendants failed to issue 5 a renewed notice of default after the initial trustee’s sale was 6 rescinded. 7 8 9 without a. satisfying the requirements for doing so. Applicability of the California Commercial Code California Civil Code sections 2924 through 2924l govern nonjudicial foreclosures pursuant to a deed of trust. may be initiated by a “trustee, Non-judicial 10 foreclosure mortgagee, or 11 beneficiary, or any of their authorized agents.” Cal. Civ. Code § 12 2924(a)(1). 13 designates a party as a trustee or beneficiary and the party 14 complies with the remaining requirements of sections 2924 through 15 2924l, this is not sufficient to demonstrate that a party has the 16 power to foreclose, because the party must also demonstrate that 17 it is a “person entitled to enforce” the deed of trust under 18 California Commercial Code section 3301. 19 defendants must therefore “produce the [promissory] note,” or at 20 the least, identify the current holder of the note. 21 joins the chorus of opinions holding that California law imposes 22 no such requirement. Plaintiff argues that even when the deed of trust Plaintiff argues that The court 23 California Commercial Code sections 3301 through 3312 govern 24 enforcement of negotiable instruments. Plaintiff assumes, without 25 discussion, that the promissory note at issue here is a negotiable 26 26 1 instrument as defined by Cal. Comm. Code section 3104.13 2 3301 provides that a negotiable instrument may be enforced by “(a) 3 the holder of the instrument, (b) a nonholder in possession of the 4 instrument who has the rights of a holder, or (c) a person not in 5 possession of the instrument who is entitled to enforce the 6 instrument pursuant to Section 3309 . . . .” 7 an instrument for purposes of this section, a party or one of its 8 agents must be in possession of the instrument. 9 § 1201(21); see also In re Kang Jin Hwang, 393 B.R. 701, 707 10 (Bankr. C.D. Cal. 2008) (interpreting Cal. Comm. Code § 3301). 11 Plaintiff argues that because no defendant has shown that the 12 requirements of Cal. Comm. Code section 3309 have been met, 13 defendants must “produce the note” to demonstrate that one of them 14 possesses it. Section To be a “holder” of Cal. Comm. Code FAC ¶¶ 11, 50, 131. 15 As noted above, California’s non-judicial foreclosure process 16 is governed by a statutory framework that is distinct from the 17 commercial code, California Civil Code sections 2924 through 2924l. 18 No California court has discussed whether actual possession of the 19 promissory note must be demonstrated in a non-judicial foreclosure. 20 Several dozen federal district courts within California have 21 22 23 24 25 26 13 Although the court does not decide this issue, the court notes that plaintiff’s view receives at least some support from other opinions. Saks v. Charity Mission Baptist Church, 90 Cal. App. 4th 1116, 1132 (2001) (“[A] promissory note is a form of negotiable instrument.”), Am. Sec. Bank v. Clarno, 151 Cal. App. 3d 874, 881 (1984) (promissory note may be a negotiable instrument); see also In re Kang Jin Hwang, 393 B.R. at 707 (assuming without deciding that a promissory note satisfied Cal. Comm. Code § 3104). 27 1 considered the issue, however, and so far as this court is aware, 2 the district courts have unanimously concluded that in a non- 3 judicial 4 possession 5 Countrywide Home Loans, Inc., 628 F. Supp. 2d 1237, 1244 (S.D. Cal. 6 2009), Wood v. Aegis Wholesale Corp., 2009 U.S. Dist. LEXIS 57151, 7 *11-*15 (E.D. Cal. July 2, 2009) (Ishii, J.). foreclosure, of the a party underlying need not note. demonstrate See, e.g., actual McGrew v. 8 The rationale underlying these district court decisions is 9 that Civil Code sections 2924-2924l establish an exhaustive set of 10 requirements for non-judicial foreclosure, and that production of 11 the note is not one of these requirements. 12 have summarized these requirements: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 The California courts Upon default by the trustor, the beneficiary may declare a default and proceed with a non-judicial foreclosure sale (Cal. Civ. Code §2924). The foreclosure process is commenced by the recording of a notice of default and election to sell by the trustee (Cal. Civ. Code §2924). After the notice of default is recorded, the trustee must wait three calendar months before proceeding with the sale (Cal. Civ. Code §2924(b)). After the 3 month period has elapsed, a notice of sale must be published, posted and mailed 20 days before the sale and recorded 14 days before the sale (Cal. Civ. Code §2924f). The trustee may postpone the sale at any time before the sale is completed (Cal. Civ. Code §2924g(c)(1)). If the sale is postponed, the requisite notices must be given (Cal. Civ. Code §2924g(d)). The conduct of the sale, including any postponements, is governed by Civil Code Section 2924g. The property must be sold at public auction to the highest bidder (Cal. Civ. Code §2924g(a)). Moeller v. Lien, 25 Cal. App. 4th 822, 830 (1994). Some courts appear to have reasoned that plaintiff’s position 28 1 would create an explicit conflict with the statute’s provisions. 2 The statute authorizes the “trustee, mortgagee, or beneficiary, or 3 any of their authorized agents” to initiate foreclosure. Cal. Civ. 4 Code § 2924(a)(1). Under California Civil Code section 2924(b)(4), 5 a "person authorized to record the notice of default or the notice 6 of sale" includes "an agent for the mortgagee or beneficiary, an 7 agent of the named trustee, any person designated in an executed 8 substitution of trustee, or an agent of that substituted trustee." 9 Several courts have held that this language demonstrates that 10 possession of the note is not required, apparently concluding that 11 the statute authorizes initiation of foreclosure by parties who 12 would not be expected to possess the note. 13 DHI Mortg. Co., No. 09-0925, 2009 U.S. Dist. LEXIS 55191, *23-*24 14 (E.D. Cal. June 30, 2009) (O'Neill, J.). 15 reasoning of these cases is unclear.14 See, e.g., Spencer v. However, the precise 16 A second argument adopted by sister district courts is that 17 even if requiring possession of the promissory note does not 18 contradict the statute’s provisions, it nonetheless extends them, 19 and such extensions are impermissible. 20 Countrywide Bank, FSB, No. C 08-5583, 2009 U.S. Dist. LEXIS 53940, 21 *23-*24 22 described the statute as establishing a “comprehensive scheme” for 23 non-judicial foreclosures. (N.D. Cal. June 25, 2009). See, e.g., Bouyer v. California courts have Homestead Sav. v. Darmiento, 230 Cal. 24 14 25 26 These courts may be relying on an understanding that neither the trustee or an authorized representative would be in possession of the note. Because this court has no way of knowing that is the case, I respectfully cannot join in that view. 29 1 App. 3d 424, 433 (1991)). 2 exhaustive,” 3 additional obligations, such as allowing a debtor to invoke a 4 separate statutory right to cure a default. 5 4th at 834 (refusing to apply Cal. Civ. Code § 3275). 6 California Supreme Court has similarly held that “[t]he rights and 7 powers of trustees in nonjudicial foreclosure proceedings have long 8 been regarded as strictly limited and defined by the contract of 9 the parties and the statutes.” California Because this scheme “is intended to be courts have refused to incorporate Moeller, 25 Cal. App. The I.E. Associates v. Safeco Title 10 Ins. Co., 39 Cal. 3d 281, 288 (1985). 11 while a trustee has a statutory duty to contact a trustor at the 12 trustor’s last known address prior to non-judicial foreclosure, the 13 Court could not impose a further duty to search for the trustor’s 14 actual current address. 15 Associates and Moeller to hold that the trustee's duties are 16 "strictly limited" to those contained specifically in the non- 17 judicial foreclosure statute, section 2924 et seq. 18 Bouyer v. Countrywide Bank, FSB, 2009 U.S. Dist. LEXIS 53940, *23- 19 *24 (N.D. Cal. June 25, 2009). These courts have held that because 20 section 2924 does not specify that any party must possess the note, 21 such possession is not required. 22 refused to require a trustee “to identify the party in physical 23 possession of the original promissory note prior to commencing a 24 nonjudicial foreclosure.” Id. I.E. Associates held that District courts have applied I.E. Id. See, e.g., Courts have similarly Ritchie v. Cmty. Lending Corp., 2009 25 26 30 1 2 U.S. Dist. LEXIS 73216, *20 (C.D. Cal. Aug. 12, 2009).15 Finally, while the above arguments have focused on and 3 rejected a requirement of production of the note, a series of 4 opinions by Judge Ishii have held that under California law, 5 possession of the note is not required either. 6 Servicing Corp., 2009 U.S. Dist. LEXIS 77697 *11 (E.D. Cal. Aug. 7 18, 2009), Topete v. ETS Servs., LLC, 2009 U.S. Dist. LEXIS 77761 8 *10-*11 (E.D. Cal. Aug. 18, 2009), Wood v. Aegis Wholesale Corp., 9 2009 U.S. Dist. LEXIS 57151, *14 (E.D. Cal. July 2, 2009). Garcia v. HomEq These 10 opinions reason as follows. Under Cal. Civ. Code § 2932.5, when 11 the beneficial interest under the promissory note is assigned, the 12 assignee may exercise a security interest in real property provided 13 that the assignment is “duly acknowledged and recorded.” 14 e.g., Wood, 2009 U.S. Dist. LEXIS 57151 at *14. 15 has applied California law to hold that promissory notes arising 16 out of real estate loans could be sold without transfer of 17 possession of the documents themselves. 18 Plan of Cal., Inc., 829 F.2d 705, 707, 708 n.2, 710 (9th Cir. 19 1986)). 20 validly own a beneficial interest in a promissory note without 21 possession See, The Ninth Circuit Id. (citing In re Golden Judge Ishii concluded that because a party may come to of the promissory note itself, and because this 22 23 24 25 15 To say that a trustee's duties are strictly limited does not appear to this court to preclude possession of the note as a prerequisite to foreclosure. On the other hand, perhaps it is not unreasonable to suggest that such a prerequisite imposes a nonstatutory duty. 26 31 1 interest, if recorded on the deed of trust, carries with it the 2 right to foreclose, possession of the promissory note is not a 3 prerequisite to non-judicial foreclosure. Id. 4 Having reviewed the arguments adopted by the district courts, 5 the court is left with the sense that reasonable minds could 6 disagree. 7 "strictly limited" to those arising under the "statutes," and a 8 reasonable 9 incorporates Notably, I.E. Associates held that trustee's duties are jurist the could conclude Commercial Code. that the plural Although the "statutes" Civil Code 10 authorizes a number of parties to initiate nonjudicial foreclosure, 11 it could be that whichever of those parties possesses the note may 12 foreclose. 13 At some point, however, the opinion of a large number of 14 decisions, while not in a sense binding, are by virtue of the sheer 15 number, determinative. 16 by the district courts is unreasonable or does not accord with the 17 law. 18 with the policies underlying the California statutes. The apparent 19 purpose of requiring possession of a negotiable instrument is to 20 avoid fraud. In the context of non-judicial foreclosures, however, 21 the danger of fraud is minimized by the requirement that the deed 22 of trust be recorded, as must be any assignment or substitution of 23 the parties thereto. 24 the note would have done something to limit the mischief that led 25 to the economic pain the nation has suffered, the great weight of 26 authority has reasonably concluded that California law does not I cannot conclude that the result reached I further note that this conclusion is not obviously at odds While it may be that requiring production of 32 1 impose this requirement. 2 While the court concludes that neither production nor 3 possession is required, the court need not decide whether this is 4 because promissory notes are not “negotiable instruments,” or 5 instead because Cal. Civ. Code § 2924 et seq. render the Commercial 6 Code 7 California 8 possession of the promissory note nor identification of the party 9 in possession is a prerequisite to non-judicial foreclosure. inapplicable. courts. b. 10 The court leaves that question The court solely concludes for that the neither Compliance with Cal. Civ. Code §§ 2924 - 2924l 11 Plaintiff alternatively argues that defendants have failed to 12 comply with the procedural requirements imposed by California Civil 13 Code sections 2924 through 2924l. 14 property can be sold through a non-judicial foreclosure, the 15 trustee or other foreclosing party must record a Notice of Default 16 followed by a Notice of Trustee’s Sale. 17 recorded these two documents, and then conducted a trustee’s sale 18 on October 23, 2008. 19 rescinded. 20 necessarily also rescinded the antecedent Notice of Default and 21 Notice of Trustee’s Sale. Plaintiff offers no authority to support 22 this position, and plaintiff’s position is contrary to California 23 law. 24 record title to the real property described in the trustee's deed 25 and the existence and priority of all lienholders to the status quo 26 prior to the recordation of the trustee's deed upon sale.” As explained above, before a Defs.’ RFJN Ex. F. Plaintiff argues that Defendant ReconTrust The sale itself was then rescission of the sale Rescission of a trustee’s deed “restore[s] the condition of 33 Cal. 1 Civ. Code § 1058.5(b). 2 to recordation of the deed upon sale included the notice of default 3 and notice of trustee’s sale. 4 second Notice of Trustee’s Sale, there was no requirement to also 5 issue a renewed notice of default. 6 reason 7 precedent documents. 8 B. to that Although ReconTrust recorded a rescission That is, there appears no of the sale canceled the Specific Claims 1. 9 believe The record of title on the property prior Truth in Lending Act 10 Plaintiff’s TILA claim seeks civil damages from defendant CHL 11 on the ground that CHL violated TILA’s disclosure obligations.16 12 Although 13 conclusory and fail to support a claim, plaintiff alleges a basis 14 for TILA liability that is plausible and that cannot be dismissed 15 as untimely at this stage. 16 17 some of the allegations underlying this claim are Plaintiff generally alleges that CHL violated TILA in that CHL: 18 (a) fail[ed] to provide required disclosures prior to consummation of the transaction; 19 20 (b) fail[ed] to make required disclosures clearly and conspicuously in writing; 21 22 (c) fail[ed] to timely deliver to Plaintiff notices required by TILA; 23 24 (d) plac[ed] terms prohibited by TILA into the 25 16 26 As noted above, plaintiff has conceded that rescission of his loan is not available under TILA. 34 1 transaction; and 2 4 (e) fail[ed] to disclose all finance charge details and the annual percentage rate based upon properly calculated and disclosed finance charges and amounts financed. 5 FAC ¶ 62. Two of these allegations, (b) and (d), must be rejected. 6 The “Truth in Lending Disclosure Statement” and “Mortgage Insurance 7 Disclosure” both bear plaintiff’s dated signature, the authenticity 8 of 9 ultimately received these documents. The court accordingly rejects 10 (b) insofar as it alleges that the information contained in these 11 documents was never disclosed. 12 that neither it nor anything else in the FAC provide any notice as 13 to what terms, if any, were ‘included in the transaction’ but 14 prohibited by TILA. 3 which plaintiff does not contest. Plaintiff therefore Allegation (d) is conclusory in 15 The remaining allegations cannot be disregarded, and CHL has 16 not met its burden of explaining how these allegations fail to 17 support a TILA claim. 18 specific disclosures, the FAC’s other allegations make it clear 19 that plaintiff alleges that he did not receive any disclosures in 20 advance of closing. 21 allegation, in that plaintiff’s signature on the disclosures and 22 the deed of trust is dated July 26, 2007, and the signature on the 23 promissory note is undated. 24 legal theory that even when written disclosures are provided to and 25 signed by the borrower, these disclosures may not satisfy TILA’s 26 disclosure obligations when the borrower is denied an adequate Although (a) and (c) do not identify The exhibits do not conclusively refute this CHL has not addressed plaintiff’s 35 1 opportunity to review them prior to closing. 2 this issue, the court assumes for purposes of this motion that this 3 theory is valid. 4 claim for relief. 5 The final Absent argument on These allegations therefore state a “plausible” allegation, (e), is partially refuted by the 6 exhibits, in that CHL did state the amount financed, annual 7 percentage rate, or finance charges. 8 exhibit does not establish, however, that these statements were 9 accurate. Insofar as plaintiff alleges that CHL failed to disclose See Defs.’ RFJN Ex. C. The 10 accurate information, allegation (e) is not refuted. 11 above, plaintiff alleges that his monthly payments have increased 12 beyond the amount indicated in these disclosures. 13 Plaintiff has therefore adequately alleged a claim that disclosure 14 obligations were violated because the disclosures were inaccurate. 15 CHL separately argues that even if As discussed FAC ¶ 26.17 plaintiff adequately 16 alleges a failure to make disclosures required by TILA under any 17 of the above theories, plaintiff’s TILA claim is barred by TILA’s 18 one year statute of limitations for civil damages claims. 19 U.S.C. § 1640(e). 20 of failure to make required disclosures at the time the loan was 21 entered, which was on or around July 26, 2007. 22 period began to run at that time, King v. California, 784 F.2d 910, 23 914 (9th Cir. 1986), and would normally have expired on July 26, 15 Here, plaintiff’s TILA claim arises solely out The limitations 24 25 17 26 Plaintiff has also provided some evidence to this effect. Pl.’s RFJN Ex. 1. 36 1 2 Plaintiff’s initial complaint was filed May 12, 2009.18 2008. This does not end the inquiry, however, because TILA’s 3 limitations period for civil damages may be equitably tolled, King, 4 784 F.2d at 915, and subject to equitable estoppel, Ayala v. World 5 Sav. Bank, FSB, 616 F. Supp. 2d 1007 (C.D. Cal. 2009). 6 argues that one or both doctrines apply here, because plaintiff did 7 not have “reasonable opportunity to discover” the facts underlying 8 the claim. 9 Because the statute of limitations is an Plaintiff affirmative 10 defense, its invocation in the context of a motion to dismiss 11 raises specific concerns, especially when the plaintiff raises 12 an equitable tolling or equitable estoppel argument. "Generally, 13 the applicability of equitable tolling depends on matters outside 14 the pleadings, so it is rarely appropriate to grant a Rule 15 12(b)(6) motion to dismiss . . . if equitable tolling is at 16 issue." 17 (9th Cir. 2006) (citing Supermail Cargo, Inc. v. United States, 18 68 F.3d 1204, 1206 (9th Cir. 1995)). In light of these concerns, 19 the Ninth Circuit has held that a motion to dismiss on statute 20 of limitations grounds cannot be granted if “the complaint, 21 liberally construed in light of our ‘notice pleading’ system, 22 adequately alleges facts showing the potential applicability of 23 the equitable tolling doctrine.” Cervantes v. City of San Diego, Huynh v. Chase Manhattan Bank, 465 F.3d 992, 1003-04 24 18 25 26 For purposes of this motion, the court need not determine whether the relevant filing date is the one provided above, which is the date the original complaint was filed, or instead the date for the amended complaint, as defendants argue. 37 1 5 F.3d 1273, 1277 (9th Cir. 1993); see also Morales v. City of 2 Los Angeles, 214 F.3d 1151, 1153, 1155 (9th Cir. 2000). 3 equitable tolling turns on matters outside of the pleadings, the 4 Supreme Court’s recent decisions in Twombly and Iqbal, which 5 concerned the requirements of Fed. R. Civ. P. 8, do not provide 6 reason to revisit this rule. 7 discussed the rule since Twombly was decided, other courts have 8 continued to follow it. 9 F. Supp. 2d 1090, 1098 (N.D. Cal. 2008), Nava v. Virtualbank, 10 2008 U.S. Dist. LEXIS 72819 (E.D. Cal. July 16, 2008) (Damrell, 11 J); see also USPPS, Ltd. v. Avery Dennison Corp., 2009 U.S. App. 12 LEXIS 13076 (5th Cir. Tex. June 17, 2009) (unpublished Fifth 13 Circuit decision applying a similar rule). Because Although the Ninth Circuit has not Plascencia v. Lending 1st Mortg., 583 14 In applying this rule to non-TILA cases, the Ninth Circuit 15 has held that dismissal was appropriate where “it [was] clear 16 that [plaintiffs] have had the information necessary to bring 17 suit . . . for many years,” and plaintiffs did not argue that 18 “extraordinary circumstances beyond [their] control made it 19 impossible to file the claims on time.” 20 1004. 21 alleged both “that it did not discover” the defendant’s alleged 22 wrongdoing until soon before the claim was filed and that 23 plaintiff’s “failure to discover the [wrongdoing] earlier was not 24 due to [plaintiff’s] lack of diligence, but rather to the 25 [defendant]'s deliberate failure to provide [plaintiff] with 26 accurate information.” Lien Huynh, 465 F.3d at Conversely, dismissal was inappropriate where plaintiff Supermail Cargo, 68 F.3d at 1208; see 38 1 also Cervantes, 5 F.3d at 1277 (reversing dismissal). 2 Here, insofar as plaintiff’s TILA claim is based on the 3 allegation that the required disclosures were not made prior to 4 completion of the transaction, it is clear that plaintiff knew 5 all the pertinent 6 Plaintiff admits receiving the disclosures; he merely argues that 7 they should have been made earlier. 8 the fact that he did not receive the disclosures at an earlier 9 time. facts throughout the limitations period. Plaintiff was well aware of Nor has plaintiff identified any potential barrier to 10 bringing suit on this issue prior to now. Under Lien Huynh, 11 dismissal on statute of limitations grounds is appropriate as to 12 this basis for plaintiff’s TILA claim. 465 F.3d at 1004. 13 Insofar as plaintiff’s TILA claim is based on the allegation 14 that the disclosures contained inaccurate information, however, 15 the court cannot determine when plaintiff learned of these 16 inaccuracies, and the court therefore cannot conclude that there 17 is no potential for equitable tolling. 18 1277. 19 that this information was inaccurate until his monthly bills 20 increased, and that the statute tolled for a period sufficient 21 to render this claim timely. Cervantes, 5 F.3d at It may be that plaintiff could not and did not discover 22 2. Real Estate Settlement Procedures Act 23 Plaintiff brings RESPA claims against CHL and BAC. 24 Plaintiff alleges that CHL (together with Ron Allen & Associates 25 Real Estate and Ronnie D Allen) “violated RESPA at the time of 26 closing on the sale of the Property by failing to correctly and 39 1 accurately comply with the disclosure requirements provided 2 therein.” 3 fails to identify what information, if any, CHL failed to 4 disclose or CHL inaccurately disclosed.19 5 FAC ¶ 86. This allegation is conclusory in that it Plaintiff alleges that BAC violated RESPA by failing to 6 respond to a “qualified written request” under RESPA.20 7 discussed in part II.C above, a “qualified written request” is 8 a 9 [federally request “for regulated 10 2605(a)(1)(A). 11 information. 12 information relating mortgage to the loans].” As servicing 12 U.S.C. of § Plaintiff has not alleged that he requested such Plaintiff’s RESPA claim is therefore dismissed without 13 prejudice. 14 that 15 servicing, 16 disclosed particular information required by RESPA, plaintiff may 17 amend this claim. his If plaintiff may allege, consistent with Rule 11, letter or to that BAC CHL sought failed information to disclose regarding or loan inaccurately 18 3. Rosenthal Fair Debt Collection Practices Act 19 California's Rosenthal Fair Debt Collection Practices Act 20 19 21 22 23 24 25 26 Plaintiff argues that this allegation constructively identifies specific information that should have been disclosed, because “the only disclosures mandated under RESPA at the time of closing[] are those pertaining to escrow costs.” Amended Opp’n, 15. Of the two citations plaintiff provides in purported support of this argument, 12 U.S.C. § 2601 is a statement of purpose containing no requirements, and 12 C.F.R. § 3500.2(b) is not a valid citation. 20 Plaintiff also argues that CHL violated RESPA in this manner. However, plaintiff has not alleged that he requested any information from CHL. 40 1 prohibits creditors and debt collectors from, among other things, 2 making false, deceptive, or misleading representations in an 3 effort to collect a debt. 4 “debt collector” is “any person who, in the ordinary course of 5 business, regularly, on behalf of himself or herself or others, 6 engages in debt collection.” 7 also Izenberg v. ETS Services, LLC, 589 F. Supp. 2d 1193, 1199 8 (C.D. Cal. 2008). 9 violated the Rosenthal Act by: 10 Cal. Civ. Code § 1788, et seq. A Cal. Civ. Code § 1788.2(c); see Plaintiff allege that defendants CHL and BAC threaten[ing] to take actions not permitted by law, including but not limited to: collecting on a debt not owed to [them], making false reports to credit reporting agencies, foreclosing upon a void security interest, foreclosing upon a Note of which they were not in possession nor otherwise entitled to payment, falsely stating the amount of a debt, increasing the amount of a debt by including amounts that are not permitted by law or contract, and using unfair and unconscionable means in an attempt to collect a debt. 11 12 13 14 15 16 17 FAC ¶ 72. Among these allegations, the allegation that 18 defendants “threatened to . . . us[e] unfair and unconscionable 19 means in an attempt to collect a debt,” without any indication 20 as to what those means were, is plainly conclusory. 21 The allegations regarding foreclosure, while not necessarily 22 conclusory, identify conduct that is not prohibited by the 23 Rosenthal Act. 24 is not debt collection activity encompassed by the Rosenthal Act. 25 Cal. Civ. Code § 2924(b), Izenberg, 589 F. Supp. 2d at 1199; see 26 also Yulaeva v. Greenpoint Mortgage Funding, No. 09-1504, 24-25, Foreclosure on a property as security on a debt 41 1 2009 U.S. Dist. LEXIS 79094, *29-*30 (E.D. Cal. Sept. 3, 2009) 2 (Karlton, 3 Practices Act, 15 U.S.C. § 1692 et seq.). 4 claim is formally based on the “threat” to foreclose rather than 5 foreclosure itself, the Rosenthal Act only prohibits threats when 6 the threatened conduct is also prohibited by the Rosenthal Act; 7 the Act does not prohibit a creditor from honestly representing 8 that he can and will foreclose. 9 J) (discussing the Federal Fair Debt Collection Although plaintiff’s Cal. Civ Code § 1788.13.21 Plaintiff then alleges that defendants threatened to “mak[e] 10 false reports to credit reporting agencies.” Although the 11 Rosenthal Act does 12 information to a credit agency, the Act explicitly incorporates 13 federal law, Cal. Civ. Code § 1788.17, and the federal Fair Debt 14 Collection 15 threatening to communicate to any person credit information which 16 is known or which should be known to be false,” 15 U.S.C. § 17 1692e(8).22 18 of Rule 8, in that it identifies the circumstances, occurrences 19 and events of the challenged conduct. not explicitly prohibit reporting false Practices Act prohibits “[c]ommunicating or This allegation satisfies the general requirements Rule 9(b)’s heightened 20 21 22 23 21 Cal. Civ. Code § 1788.10 enumerates the types of “threats” that are prohibited under the Rosenthal Act. Section 1788.10(f) prohibits “The threat to take any action against the debtor which is prohibited by this title.” 22 24 25 26 While the court is unaware of any Rosenthal Act provision prohibiting communication of false information to a credit reporting agency, the Rosenthal Act does prohibit falsely stating that information will be reported to a credit agency. Cal. Civ. Code § 1788.13(f). Plaintiff has not alleged that defendants made or threatened to make such a false representation. 42 1 requirements do not apply to this theory of liability, in that 2 this theory does not “sound[] in fraud.” 3 Co., 567 F.3d 1120, 1125-26 (9th Cir. 2009). 4 allege that false representations were actually made and relied 5 upon, only that they were threatened. 6 the “basis of [the] claim,” and Fed. R. Civ. P. 9(b) does not 7 apply. Kearns v. Ford Motor Plaintiff does not Accordingly, fraud is not Vess, 317 F.3d at 1103-04. 8 Plaintiff further alleges that defendants threatened to 9 “increas[e] the amount of a debt by including amounts that are 10 not permitted by law or contract collecting on a debt not owed 11 to [them].” 12 not be lawfully added. 13 particularity required by Rule 8. 14 Section 1788.13(e) prohibits adding fees that may This claim also provides the minimal Finally, plaintiff alleges that CHL and BAC “threatened to 15 . . . falsely stat[e] the amount of a debt.” FAC ¶ 72. As to 16 this allegation, an alleged “threat” is nearly 17 Plaintiff apparently means simply that CHL and BAC falsely stated 18 the debt. 19 representations, it sounds in fraud, and is subject to Rule 20 9(b)’s heightened requirements. 21 requirements, alleging that misrepresentations occurred in the 22 monthly statements sent to plaintiff, which were allegedly false 23 in that they stated overly high balances and corresponding 24 monthly obligations. 25 CHL and BAC’s particular roles in these representations, this 26 omission is excusable. incoherent; Because this allegation concerns particular false Plaintiff has satisfied these Although plaintiff has not distinguished Plaintiff’s monthly statements are sent 43 1 by “Countrywide Home Loans.” At this stage of litigation, 2 plaintiff may not be able to allege whether the statements are 3 sent by BAC, which was formerly known as “Countrywide Home Loans 4 Servicing,” or by CHL, i.e., “Countrywide Home Loans, Inc.” 5 such allegation is required. No 6 Accordingly, some, but not all, of plaintiff’s theories of 7 liability under the Rosenthal Act are sufficiently alleged. 8 Defendants’ motion is granted in part and denied in part as to 9 plaintiff’s Rosenthal Act claim. 10 4. 11 Plaintiff brings a claim for breach of fiduciary duty 12 against defendants Ron Allen & Associates Real Estate, Ronnie D. 13 Allen, and CHL. 14 issue in this motion. 15 because plaintiff has not alleged facts supporting the conclusion 16 that CHL owed plaintiff a fiduciary duty, nor has plaintiff 17 provided a legal theory under which CHL may be liable under the 18 brokers' fiduciary duties. 19 Breach of Fiduciary Duty The former two defendants are not directly at The court dismisses this claim as to CHL, In general, a lender does not owe a fiduciary duty to a 20 borrower. “A commercial lender is entitled to pursue its own 21 economic 22 inconsistent with the obligations of a fiduciary which require 23 that the fiduciary knowingly agree to subordinate its interests 24 to act on behalf of and for the benefit of another.” 25 Heart Fed. Savings & Loan Assn., 231 Cal. App. 3d 1089, 1093 n.1 26 (1991). “[A]bsent special circumstances . . . a loan transaction interests in a loan 44 transaction. This right is Nymark v. 1 is at arm’s length and there is no fiduciary relationship between 2 the 3 Superior Court, 145 Cal. App. 4th 453, 466 (2006) (collecting 4 cases). borrower and lender.” Oaks Management Corporation v. 5 Plaintiff argues that because of CHL’s influence upon 6 plaintiff’s brokers, Ron Allen & Associates Real Estate and 7 Ronnie D. Allen, CHL is subject to the fiduciary duty a broker 8 owes to the client. CHL's influence allegedly consisted of 9 commissions the paid to brokers based on the volume and 10 profitability (for CHL) of the loans brokers sold, as well as 11 “train[ing], 12 plaintiff has not explained the sense in which CHL directed or 13 authorized the broker’s conduct. 14 relied upon by plaintiff, Wyatt v. Union Mortg. Co., held that 15 “[d]irectors and officers of a corporation . . . may become 16 liable [for a corporation’s torts] if they directly ordered, 17 authorized or participated in the tortious conduct.” 18 Union Mortg. Co., 24 Cal. 3d 773, 785 (1979) (emphasis added). 19 Neither Wyatt nor the authorities cited therein suggests that 20 this rule imposes liability outside the relationship between a 21 corporation and its officers. 22 23 direct[ion], [and] authoriz[ation],” FAC ¶¶ 22, 35, 92. although The case Wyatt v. Plaintiff also argues that CHL may be vicariously liable under employer/employee, agency, and conspiracy theories.23 The 24 23 25 26 Because the court concludes that each of these theories fails, the court does not address the relationship between these theories and the reasoning in Wyatt. See Doctors' Co. v. Superior Court, 49 Cal. 3d 39, 48 (1989) (citing Wyatt v. Union Mortgage 45 1 factual allegations do not support employee or agency theories. 2 As to master/servant relationships, the “primary factor” in 3 whether 4 purported employee. 5 Court, 32 Cal. 4th 491, 512 (2004) (following the Restatement 6 Second of Agency (1958), § 220). Plaintiff has not alleged facts 7 indicating that CHL exercised the requisite control over the 8 brokers’ activities. 9 analysis are not relevant here. See Tieberg v. Unemployment Ins. 10 Appeals Board, 2 Cal. 3d 943, 950 (1970) (quoting Restatement of 11 Agency, Second § 220(2)(b)-(j)). 12 As the to purported agency, exercises control over the See Metropolitan Water Dist. v. Superior Other factors courts may consider in this an an agency relationship agent and bind a 14 principal. 15 alleged that CHL offered the brokers incentives to act in ways 16 that furthered CHL’s interests, there is no allegation indicating 17 that the CHL gave the brokers authority to represent or bind CHL, 18 or that CHL took some action that would have given plaintiff the 19 impression that such a relationship existed. 20 2299, 2300; J.L. v. Children's Institute, Inc., 177 Cal. App. 4th 21 388, 403-404 (2009). 22 support a finding of either actual or ostensible agency. the Here, although plaintiff has Cal. Civ. Code §§ Therefore, plaintiff’s allegations do not Turning finally to conspiracy, CHL may not be liable for 24 25 represent where principal Cal. Civ. Code § 2295. to exists 13 23 authorizes employer Co., 24 Cal. 3d at 785). 26 46 1 conspiracy to breach a fiduciary duty. Under California law, a 2 party may be vicariously liable for another’s tort in a civil 3 conspiracy where the plaintiff shows “(1) formation and operation 4 of the conspiracy and (2) damage resulting to plaintiff (3) from 5 a wrongful act done in furtherance of the common design." 6 Rusheen v. Cohen, 37 Cal. 4th 1048, 1062 (2006) (citing Doctors' 7 Co. v. Superior Court, 49 Cal.3d 39, 44 (1989)), see also Applied 8 Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 511 9 (1994).24 The California Supreme Court has held that even when 10 these elements are shown, however, a conspirator cannot be liable 11 unless he personally owed the duty that was breached. 12 Equipment, 7 Cal. 4th at 511, 514. 13 create a duty . . . . [i]t allows tort recovery only against a 14 party who already owes the duty.” 15 has thus sharply limited the scope of civil conspiracy liability. 16 Numerous California cases have cited Applied Equipment to limit 17 civil conspiracy liability, and this court is aware of only two 18 post-Applied Equipment cases imposing civil conspiracy liability. 19 Kesmodel v. Rand, 119 Cal. App. 4th 1128, 1133, 1141 (2004), 20 Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone, 21 107 Cal. App. 4th 54, 84 (2003). These cases involved generally- 22 applicable tort duties, respectively, the duty not to falsely Applied Civil conspiracy “cannot Id. at 511. Allied Equipment 23 24 25 26 24 Rusheen stated in passing that these were "The elements of an action for civil conspiracy." 37 Cal. 4th at 1062. In cases more directly considering civil conspiracy liability, however, the California Supreme Court has explained that "Conspiracy is not a cause of action." Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 510 (1994). 47 1 arrest, and the duty not to engage in affirmative fraud. In 2 contrast, courts have specifically held that civil conspiracy 3 cannot impose liability for breach of fiduciary duty on a party 4 that does not already owe such a duty. 5 Whitehall Real Estate Ltd. Partnership XI, 100 Cal. App. 4th 6 1102, 1107 (2002) (citing Doctors' Co., 49 Cal. 3d at 41-42, 44 7 and Allied Equipment, 7 Cal. 4th at 510-512). 8 conspiracy allows imposition of vicarious liability on a party 9 who owes a tort duty, but who did not personally breach that Everest Investors 8 v. Thus, civil 10 duty. Doctors' Co., 49 Cal. 3d at 44 (A party may be liable 11 "irrespective of whether or not he was a direct actor and 12 regardless of the degree of his activity."); see also Kesmodel, 13 119 Cal. App. 4th at 1141 (illustrating application of this 14 rule). 15 The California Supreme Court's holdings appears to compel 16 the conclusion that in this case, where CHL is alleged to have 17 induced another, the broker, to engage in a joint scheme that 18 will breach the broker's fiduciary duty, CHL may not be liable 19 under an independent civil conspiracy claim nor under a claim for 20 civil conspiracy to commit breach of fiduciary duty. 21 Equipment, 7 Cal. 4th at 511, 514. 22 rule, the court is bound by the California Supreme Court's 23 holdings on this issue. 24 other theory, for interfering with the fiduciary duty owed to 25 plaintiff by plaintiff’s mortgage brokers. 26 to speculate on what such a claim would entail, or its likelihood Applied Whatever the wisdom of this It may be that CHL is liable, on some 48 The court declines 1 of success. 2 U.S. 3 interference identified by plaintiff is insufficient to give rise 4 to a fiduciary duty running from the lender to the borrower. 5 Oaks Management, 145 Cal. App. 4th at 466. 6 plaintiff’s claim for breach of fiduciary duty must be dismissed 7 as to CHL. at Associated General Contractors of California, 459 526. In the present complaint, the purported Absent such a duty, 8 5. 9 Plaintiff brings a claim for fraud as to all defendants. 10 The elements of a claim for intentional misrepresentation under 11 California law are (1) misrepresentation (a false representation, 12 concealment or nondisclosure), (2) knowledge of falsity, (3) 13 intent to defraud (to induce reliance), (4) justifiable reliance, 14 and (5) resulting damage. 15 596, 603 (2004). 16 pleading requirement under Fed. R. Civ. P. 9(b), as discussed 17 above. 18 19 20 21 22 23 24 25 26 Fraud Agosta v. Astor, 120 Cal. App. 4th Claims for fraud are subject to a heightened The FAC’s allegations in support of the claim for fraud are that: Defendants, and each of them, have made several representations to Plaintiff with regard to material facts. [¶] These material representations made by Defendants were false. [¶] Defendants knew that these material representations were false when made, or these material representations were made with reckless disregard for the truth. [¶] Defendants intended that Plaintiff rely on these material representations. [¶] Plaintiff reasonably relied on said representations. [¶] As a result of Plaintiff[’s] reliance, he was harmed and suffered damages. 49 1 FAC ¶¶ 102-105. These allegations are simply conclusory, and 2 they fail to meet the specificity required by Fed. R. Civ. P. 3 9(b). 4 absolutely no indication as to what fraud underlies the fraud 5 claims. They refer to no specific conduct, and give defendants 6 Without attempting to defend the general allegations quoted 7 above, plaintiff contends that the claim nonetheless satisfies 8 Rule 9 allegations in the complaint. The FAC is twenty five pages long, 9(b) because 140 incorporates as 12 Moreover, none of these allegations specifically identify any 13 misrepresentation by the parties to this motion. 14 shotgun incorporation of allegations by reference 15 provide the notice required by Rule 9, and plaintiff's fraud 16 claim is dismissed. purports noted other contains allegations relating to eight separate defendants. memorandum and, all 11 opposition paragraphs, reference consists Plaintiff's numbered by 10 17 of it above, Plaintiff's to fails to identify 18 various particular allegations sufficient to support a claim for 19 fraud. 20 court discusses whether amending the complaint to indicate that 21 the fraud claim is predicated on these allegations would be 22 futile. Because defendant has responded to these arguments, the 23 Many of the representations highlighted by plaintiff in his 24 opposition were made by Jake Weathers, who is no longer a 25 defendant in this suit, and by defendants Ron Allen & Associates 26 Real Estate and Ronald D. Allen, who are not parties to this 50 1 motion. 2 induced . . . by Defendants RAARE, Allen and Weathers,” Opp’n at 3 18-19 (citing FAC ¶¶ 22-25), and specifically that Weathers 4 promised that plaintiff would be able to refinance his loan, FAC 5 ¶ 28. Allied Equipment does not preclude holding CHL vicariously 6 liable in a claim for civil conspiracy to commit this fraud, 7 because the duty not to engage in affirmative fraud, unlike a 8 fiduciary duty, is owed generally. Shafer, 107 Cal. App. 4th at 9 84. 10 For example, plaintiff argues that he was “fraudulently Because the parties have not further discussed this issue, the court's discussion stops here. 11 Plaintiff also argues that MERS and ReconTrust 12 misrepresented their interests in the property when initiating 13 foreclosure 14 beneficiary under the deed of 15 supported by any allegations in the FAC--i.e., the FAC does not 16 allege that MERS represented that it was a beneficiary while 17 knowing that it was not. 18 contain allegations that would render plausible the argument 19 that, 20 beneficiary on the deed of trust and that no assignment has been 21 recorded, MERS is not the beneficiary. proceedings notwithstanding by the representing trust. that MERS was a This theory is not More importantly, the FAC does not fact that MERS is listed as a 22 Plaintiff’s remaining arguments amount to the claim that 23 “the entire scheme of selling and transferring notes and deeds 24 . . . was fraudulent.” Opp’n, 19. Even if, as plaintiff argues, 25 this 26 wrongfulness sounds in fraud and results in damages to plaintiff, scheme is wrongful, plaintiff 51 must explain how this 1 2 as contrasted with society as a whole. Plaintiff has not identified 4 defendants’ motion to dismiss the fraud claim is granted as to 5 defendants 6 complaint now before the court is without merit in this regard, 7 the court cannot say that a more carefully crafted complaint 8 might not state a cause of action. 9 will be without prejudice. MERS, fraud claim.25 representations BAC, the particular 3 CHL, underlying further and ReconTrust. Accordingly, Although the Accordingly, the dismissal Plaintiff is warned, however, that 10 an amended complaint drafted with the same lack of merit as the 11 instant one will result in appropriate sanctions. 12 6. Negligence 13 Plaintiff’s claim for negligence is brought as to all 14 defendants. Under California law, the elements of a claim for 15 negligence are “(a) a legal duty to use due care; (b) a breach 16 of such legal duty; and (c) the breach as the proximate or legal 17 cause of the resulting injury.” 18 Cal. 4th 913, 917 (1996) (internal citations and quotations 19 omitted); see also Cal Civ Code § 1714(a). 20 argue that plaintiff has not adequately alleged facts supporting 21 any of these elements. 22 negligence as to each defendant separately.26 Ladd v. County of San Mateo, 12 Moving defendants The court discusses the allegations of 23 25 24 Plaintiff has not argued that his fraud claim is or may be predicated on a failure to make statutorily required disclosures. 25 26 26 Plaintiff’s negligence claim contains only two factual allegations, that “defendants” “failed to maintain the original Mortgage Note, failed to properly create original documents, and 52 a. 1 i. 2 3 CHL Lenders’ Duty of Care to Borrowers The court rejects defendants’ argument that a lender never 4 owes a duty of care to borrowers. California courts have stated 5 that "as a general rule, a financial institution owes no duty of 6 care to a borrower when the institution's involvement in the loan 7 transaction does not exceed the scope of its conventional role 8 as a mere lender of money." 9 Applying this rule, the court in Nymark granted summary judgment 10 to defendant on a claim that the defendant lender had acted 11 negligently in appraising the borrower's collateral to determine 12 if it is adequate security for a loan refinancing the borrower’s 13 mortgage, as the court concluded as a matter of law that no duty 14 of care existed with respect to the appraisal. Id. at 1096. See 15 also Wagner v. Benson, 101 Cal. App. 3d 27, 35 (1980) (a lender 16 has no duty to ensure that borrower will use borrowed money 17 wisely). Nymark, 231 Cal. App. 3d at 1096. 18 The court understands Nymark to be limited in two ways. 19 First, a lender may owe to a borrower a duty of care sounding in 20 negligence when the lender’s activities exceed those of a 21 22 23 24 25 26 failed to make the required disclosures to the Plaintiff,” and “took payments to which they were not entitled, charged fees they were not entitled to charge, and made or otherwise authorized negative reporting of Plaintiff creditworthiness to various credit bureaus wrongfully.” FAC ¶ 79-80. As with plaintiff’s fraud claim, plaintiff relies on allegations incorporated by reference to provide details to these allegations. Because the negligence claim provides at least some indication as to its basis, the court does not dismiss the claim on this ground alone. Plaintiff is cautioned, however, against future reliance on this mode of pleading. 53 1 conventional lender. 2 does not allege, nor does anything in the summary judgment papers 3 indicate, that the appraisal was intended to induce plaintiff to 4 enter into the loan transaction or to assure him that his 5 collateral was sound."27 6 that had such an intent been present, the lender may have had a 7 duty to exercise due care in preparing the appraisal. 8 Wagner v. Benson, 101 Cal. App. 3d 27, 35 (1980) (“Liability to 9 a borrower for negligence arises only when the lender actively 10 participates in the financed enterprise beyond the domain of the 11 usual money lender.”). 12 The Nymark court noted that the "complaint Id. at 1096-97. Nymark thereby implied See also Second, even when a lender’s acts are confined to their 13 traditional scope, Nymark announced only a “general” rule. 14 Rather than conclude that no duty existed per se, the Nymark 15 court determined whether a duty existed on the facts of that case 16 by applying the six-factor test established by the California 17 Supreme Court in Biakanja v. Irving 49 Cal. 2d 647, 320 P.2d 16 18 27 19 20 21 22 23 24 25 26 The court notes that in Nymark, the loan was being taken to refinance a mortgage. In this scenario, a borrower may have less need to know the value of the property. The home has already been bought, and if the lender attempts to enforce the security through a non-judicial foreclosure, the lender may not seek a deficiency judgment against the borrower. Alliance Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1236 (1995) (citing Roseleaf Corp. v. Chierighino, 59 Cal. 2d 35, 43-44 (1963)). Even in this situation, however, the borrower has an interest in the value of the home, at least because the lender may seek a deficiency judgment after a judicial foreclosure. Id. In the context of a purchase money loan, the borrower has a much clearer interest in the appraisal, and the instant court doubts that Nymark could be extended to such a case. In this case, however, there is no dispute regarding the accuracy of the appraisal. The court instead discusses Nymark for its general holdings. 54 1 (1958). 2 Jackson Inc. v. Roe, 273 F.3d 1192, 1197 (9th Cir. 2001). 3 test balances six non-exhaustive factors: 4 Nymark, 231 Cal. App. 3d at 1098; see also Glenn K. This 8 [1] the extent to which the transaction was intended to affect the plaintiff, [2] the foreseeability of harm to him, [3] the degree of certainty that the plaintiff suffered injury, [4] the closeness of the connection between the defendant's conduct and the injury suffered, [5] the moral blame attached to the defendant's conduct, and [6] the policy of preventing future harm. 9 Roe, 273 F.3d at 1197 (quoting Biakanja, 49 Cal. 2d at 650) 5 6 7 10 (modification in Roe). 11 determines “whether in a specific case the defendant will be held 12 liable to a third person not in privity” with the defendant, 49 13 Cal. 2d. at 650, Nymark held that this test also determines 14 “whether a financial institution owes a duty of care to a 15 borrower-client,” 231 Cal. App. 3d at 1098. 16 factors to the specific facts in that case, the Nymark court 17 assumed 18 remaining factors all indicated against finding a duty of care. 19 Id. at 1098-1100. that plaintiff Although Biakanja stated that this test suffered injury, but Applying these held that the 20 In Roe, the Ninth Circuit noted that the California Supreme 21 Court “arguably limited” Biakanja in Bily v. Arthur Young & Co., 22 3 Cal. 4th 370, (1992), which held a court must consider three 23 additional factors before imposing a duty of care. Roe, 273 F.3d 24 at 1198. 25 particular cases be out of proportion to fault; (2) parties 26 should be encouraged to rely on their own ability to protect Roe summarized these factors as “(1) liability may in 55 1 themselves through their own prudence, diligence and contracting 2 power; and (3) the potential adverse impact on the class of 3 defendants upon whom the duty is imposed.” 4 Cal. 4th at 399-405). 5 discussed therein. 6 ii. Id. (citing Bily, 3 Bily was decided before Nymark, but not CHL’s Allegedly Negligent Acts 7 Both limitations to the Nymark rule require the court to 8 consider the particular conduct underlying the negligence claim. 9 Plaintiff alleges three types of conduct here. Although the 10 court engages in this fact-specific analysis, the court is 11 mindful of fact that plaintiff has not provided a single example 12 of a case in which a lender was found to owe a duty of care 13 sounding 14 discovered any such authority under California law. 15 in negligence to a borrower, nor has the court First, plaintiff argues that CHL was negligent in failing 16 to provide the disclosures required by TILA and RESPA. FAC ¶¶ 17 62, 79, 86. 18 alleged a failure to provide any disclosure required by RESPA. 19 Plaintiff has alleged plausible failures to provide disclosures 20 required by TILA. 21 disclosures. Although the disclosures are undoubtedly within the 22 scope of a lender’s normal activities, each of the Biakanja 23 factors support finding a duty of care, and the policy concerns 24 identified 25 adequately alleged a duty to make accurate disclosures, a breach As explained above, plaintiff has not adequately in CHL had a duty of care with regard to these Bily are inapplicable 26 56 here. Plaintiff has 1 of that duty, and damages.28 2 Second, plaintiff argues that CHL was negligent in 3 “directing [plaintiff] into a loan transaction that [he] may not 4 have otherwise qualified for by industry standards, resulting in 5 excessive fees paid by the Plaintiff and payments in excess of 6 Plaintiff[’s] ability to pay.” 7 of Appeal has directly spoken to this issue, holding that a 8 lender “owes no duty of care to the [borrower] in approving [a] 9 loan.” FAC ¶ 78. Wagner, 101 Cal. App. 3d at 35. The California Court Wagner held that as a 10 matter of law, the lender did not owe a duty in negligence not 11 to place borrowers in a loan even where there was a foreseeable 12 risk 13 conclusion is consistent with the principles described above. 14 Approving and providing a loan is within the scope of activities 15 conventionally performed by a lender. 16 factor, borrowers “should be encouraged to rely on their own 17 ability 18 diligence and contracting power.” Roe, 273 F.3d at 1198 (citing 19 Bily, 3 Cal. 4th at 399-405). While borrowers’ ability to 20 protect themselves may depend on access to accurate information, 21 a lender’s duty to provide that information is distinct from a 22 duty that would prohibit the lender from offering the loan at 23 all. 24 borrowers to would protect be unable themselves to repay. through Id. Wagner’s Under Bily’s second their own prudence, From the conclusion that a lender does not owe a duty to the 25 26 28 Defendants have not addressed whether this claim is preempted and the court expresses no opinion on that question. 57 1 borrower in approving the loan it follows that the lender’s 2 failure to discover that the loan application inaccurately stated 3 the borrower’s income, without more, cannot breach a duty owed 4 to the borrower in negligence. 5 consequence arising from the alleged failure. Here, plaintiff has alleged no 6 Plaintiff finally alleges that CHL was negligent in failing 7 to maintain the original promissory note and in “failing to 8 properly create original documents.” 9 allegations regarding disclosures, plaintiff has not identified 10 any defect in the promissory note, deed of trust, or attached 11 documents. 12 plaintiff has not alleged facts supporting the conclusion that 13 any failure to maintain this note caused any harm to plaintiff. 15 Other than the As to preservation of the original promissory note, b. 14 FAC ¶ 79. BAC Plaintiff’s sole allegation supporting the claim for 16 negligence as to BAC is that BAC was negligent in servicing the 17 loan because the loan was “invalid,” such that if BAC had 18 exercised due care, BAC would not have attempted to collect 19 payment under the loan. 20 legal theory supporting the conclusion that the loan was void ab 21 initio. The claim for negligence as to BAC is dismissed. c. 22 Plaintiff has not provided facts or a MERS 23 With the possible exception of failure to maintain the 24 original promissory note, plaintiff’s negligence claim does not 25 allege any conduct that plaintiff attributes to MERS. FAC ¶¶ 79- 26 80. As explained above, plaintiff 58 has not alleged facts 1 indicating that failure to maintain the note harmed plaintiff. d. 2 3 ReconTrust Similarly, of none the are acts that FAC alleged to have alleges 4 negligence, 5 ReconTrust. In opposing this motion, plaintiff separately argues 6 that ReconTrust was negligent in executing a trustee’s sale that 7 was procedurally defective, and in issuing a second notice of 8 trustee’s sale after rescission of the first sale without also 9 issuing a second notice of default. As described above, a second of default was not required. been constituted performed by 10 notice As to the defective 11 trustee’s sale, a trustee’s actions in executing a non-judicial 12 foreclosure are privileged communications under Cal. Civ. Code 13 section 47, and as such will not support a tort claim other than 14 one for malicious prosecution. 15 Kachlon v. Markowitz, 168 Cal. App. 4th 316, 333 (2008); see also 16 Bouyer v. Countrywide Bank, FSB, 2009 U.S. Dist. LEXIS 53940 17 (N.D. Cal. June 25, 2009). Cal. Civ. Code §§ 47, 2924(d), 18 7. Unfair Competition 19 California’s Unfair Competition Law, Cal. Bus. & Prof. Code 20 § 17200, (“UCL”) proscribes “unlawful, unfair or fraudulent” 21 business 22 specifying 23 “Plaintiff is informed and believe that Defendants[’] acts as 24 alleged herein constitute unlawful, unfair, and/or fraudulent 25 business practices, as defined in the California Business and 26 Professions Code § 17200 et seq.” acts the and practices. conduct Plaintiff’s underlying 59 the UCL FAC ¶ 110. sole allegation claim is that 1 Thus, as with the fraud claim, plaintiff’s UCL claim merely 2 conclusorilly alleges the barest elements of an UCL claim, and 3 directs defendants to scour the remainder of the complaint to 4 determine which, if any, of the allegations incorporated by 5 reference provide the basis for this claim. 6 fails to provide notice of the basis for any claim arising out 7 of unfair or fraudulent business practices.29 The FAC therefore 8 Plaintiff’s UCL claim must therefore proceed, if at all, on 9 the theory that defendants acted unlawfully. As discussed above, 10 plaintiff has adequately alleged unlawful acts in that CHL 11 violated TILA, that CHL and BAC violated the Rosenthal Act, and 12 that CHL acted negligently. These allegations identify predicate 13 acts supporting a UCL claim. 14 Plaintiff has also adequately alleged that MERS acted 15 unlawfully by failing to register as a foreign corporation as 16 required under Cal. Corp. Code § 2105(a). 17 indicates 18 plaintiff's statement of the parties, identifies conduct that is 19 the basis for the UCL claim. 20 a complaint for mere unskillful pleading, the court also cannot 21 endorse an approach that would require defendants to scour the 22 complaint for every passing hint as to possible additional bases 23 for claims. that this cursory allegation, Nothing in the FAC made as part of Although the court cannot dismiss Plaintiff may amend his complaint to state this 24 29 25 26 Above, the court noted that plaintiff might, in an amended complaint, argue that CHL is vicariously liable for affirmative fraud by the brokers. The court does not speculate as whether such a claim may be brought under the UCL. 60 1 basis for his UCL claim, so that defendants may squarely answer 2 it or seek to have it dismissed. 3 Defendants' motion to dismiss is therefore granted in part. 4 8. 5 Plaintiff’s claim for breach of contract is brought only as Breach of Contract 6 to defendants Ronnie D. Allen and CHL. A cause of action for 7 breach of contract includes four elements: that a contract exists 8 between the parties, that the plaintiff performed his contractual 9 duties or was excused from nonperformance, that the defendant 10 breached those contractual duties, and that plaintiff's damages 11 were a result of the breach. 12 Cal. 2d 822, 830 (1968); First Commercial Mortgage Co. v. Reece, 13 89 Cal. App. 4th 731, 745 (2001). Reichert v. General Ins. Co., 68 14 In plaintiff’s opposition, he specifies that the contract 15 underlying this claim, at least as it pertains to CHL, is the 16 promissory note itself. Opp’n 22-23. Plaintiff alleges that CHL 17 breached 18 refinance. 19 included a term promising plaintiff that he would be able to 20 refinance is refuted by the note itself. 21 that CHL breached the contract by issuing monthly bills for 22 amounts in excess of what was identified in the contract. 23 exhibits do not refute this allegation. 24 adequately alleged a breach. this contract However, by refusing plaintiff’s to permit allegation plaintiff that the to note Plaintiff also alleges The Plaintiff has therefore 25 In light of this allegation, the court cannot conclude that 26 plaintiff’s conceded non-performance under the contract, FAC ¶ 61 1 45, is inexcusable. 2 claim may proceed on this theory. 3 9. Breach of The Implied Covenant of Good Faith and Fair Dealing 4 5 Accordingly, plaintiff’s breach of contract Plaintiff brings a claim for breach of the implied covenant 6 of good faith and fair dealing as to all defendants. 7 claim is predicated upon the existence of an underlying contract. 8 Plaintiff has not alleged that BAC, MERS, or ReconTrust entered 9 into any contract with plaintiff, instead mistakenly arguing that 10 no contract is required. 11 dismissed as to these defendants. 12 Such a The good faith claim is therefore Plaintiff has alleged a contract with CHL. Turning to CHL’s 13 alleged breach of the implied covenant, as with many of 14 plaintiff’s claims, the factual allegations underlying the good 15 faith claim are largely conclusory.30 16 name individual defendants, plaintiff implicitly concedes that 17 many of the allegations regarding “defendants’” conduct are not 18 pertinent to CHL. These allegations do not 19 In his opposition, plaintiff argues that the good faith 20 claim is based on “CHL [having] placed Plaintiff into a toxic 21 loan with predatory terms.” 22 of the duty of good faith is a claim that a defendant deprived However, because a claim for breach 23 24 25 26 30 For example, plaintiff alleges that defendants violated the duty of good faith by “performing the acts and failures to act alleged herein, and by failing to perform the duties specifically enumerated herein,” FAC ¶ 123, and by “failing to comply with all applicable laws, including notice requirements, before foreclosure,” FAC ¶ 124. 62 1 plaintiff of benefits reasonably expected by the parties under 2 the contract, entry into the contract itself cannot constitute 3 a violation of the duty of good faith. 4 Accordingly, plaintiff’s claim for breach of the implied 5 covenant of good faith and fair dealing is dismissed as to all 6 moving defendants. 7 10. Wrongful Foreclosure 8 Finally, plaintiff brings a claim for wrongful foreclosure, 9 as to BAC and ReconTrust. Assuming without deciding that a claim 10 for wrongful foreclosure may be brought when foreclosure has not 11 yet occurred, plaintiff has failed to allege a violation of any 12 of the requirements for a non-judicial foreclosure. As explained 13 above, defendants were not required to produce the promissory 14 note, identify the holder of the promissory note, or re-issue a 15 notice of default. 16 C. Accordingly, this claim is dismissed. 17 Motion to Strike Defendants summarily argue that plaintiff’s requests for 18 punitive damages and for attorneys fees should be stricken. As 19 to fees, defendants simply argue that because plaintiff’s claims 20 should all be dismissed, plaintiff will be unable to recover 21 fees. 22 the factual predicate of this argument fails. 23 damages, defendants argue that all of plaintiff’s allegations 24 regarding oppression, fraud, or malice are conclusory and should 25 be stricken under Iqbal, leaving the FAC without support for 26 punitive damages. Because the court denies the motion to dismiss in part, As to punitive Mindful of the principle that motions to 63 1 strike are disfavored, the court finds plaintiff’s allegations 2 adequate. IV. CONCLUSION 3 4 5 For the reasons stated above, defendants’ motion to dismiss, Doc. No. 29, is GRANTED IN PART. 6 The court DISMISSES the following claims: 7 1. 8 9 Third Claim, for negligence, as to defendants BAC, MERS, and ReconTrust 2. 10 Fourth Claim, under RESPA, as to CHL, BAC, MERS, and ReconTrust. 11 3. Fifth Claim, for breach of fiduciary duty, as to CHL. 12 4. Sixth Claim, for fraud, as to CHL, BAC, MERS, and 13 14 ReconTrust. 5. 15 16 Seventh Claim, under the UCL, as to defendants BAC, MERS, and ReconTrust 6. Ninth Claim, for breach of the implied covenant of 17 good faith and fair dealing, as to CHL, BAC, MERS, and 18 ReconTrust. 19 20 21 7. Tenth Claim, for wrongful foreclosure, as to CHL, BAC, MERS, and ReconTrust. All dismissals are without prejudice. Plaintiff is granted 22 thirty (30) days to file an amended complaint. It appears to the 23 court that the plaintiff may truthfully amend to cure defects on 24 some of his claims. 25 plead insufficient claims, or to falsely plead. 26 However, plaintiff is cautioned not to re- The court DENIES defendants’ motion as to the following 64 1 claims, insofar as they are premised on the theories found 2 adequate in the analysis above: 3 1. First Claim, for civil damages under TILA 4 2. Second Claim, under the Rosenthal Act 5 3. Third Claim, for negligence, as to CHL only 6 4. Seventh Claim, under the UCL, as to CHL and BAC 7 6. Eighth Claim, for breach of contract 8 Defendants’ motion to strike, also presented in Doc. No. 29, 9 is DENIED. 10 IT IS SO ORDERED. 11 DATED: October 22, 2009. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 65

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