Raya v. Wachovia Mortgage et al, No. 2:2009cv01325 - Document 23 (E.D. Cal. 2009)
Court Description: ORDER GRANTING 11 Motion to Dismiss signed by Judge Frank C. Damrell, Jr on 10/22/2009; pltf granted 15 days to file second amended complaint; dfts granted 30 from date of service of pltf's second amended complaint to file response. (Suttles, J)
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Raya v. Wachovia Mortgage et al Doc. 23 1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 EASTERN DISTRICT OF CALIFORNIA 12 ----oo0oo---- 13 TONY RAYA, JR., NO. CIV. 2:09-cv-01325-FCD-GGH 14 15 16 17 18 19 20 21 22 Plaintiff, v. MEMORANDUM AND ORDER WACHOVIA MORTGAGE,FSB, individually and as successor in interest to WORLD SAVINGS BANK; ETS Services, LLC; EMILIO LANDEROS; JANINE THRASH; and DOES 1 to 10, inclusive, Defendants. ----oo0oo---This matter is before the court on the motion of defendant 23 Wachovia Mortgage, FSB (“Wachovia”) to dismiss plaintiff’s First 24 Amended Complaint pursuant to Federal Rule of Civil Procedure 25 (“FRCP”) 12(b)(6) and motion to strike portions of the First 26 Amendment Complaint pursuant to FRCP 12(f). Plaintiff Tony Raya, 27 28 Dockets.Justia.com 1 Jr. (“plaintiff” or “Raya”) opposes the motion. 2 set forth below,1 defendants’ motion is GRANTED. BACKGROUND 3 4 For the reasons Plaintiff brought this action against Wachovia, ETS 5 Services, LLC (“ETS”), Emilio Landeros, and Janine Thrash 6 (collectively, “defendants”) for conduct arising out of a loan 7 and subsequent foreclosure activity. 8 Complaint (“Compl.”), filed June 25, 2009, ¶ 14.) 9 alleges that in January and February of 2006, Landeros and Thrash 10 told him that they were loan officers for World Savings Bank, now 11 renamed as Wachovia Mortgage, FSB, and solicited him to refinance 12 his residence. 13 that Landeros and Thrash told him that they could get him the 14 “best deal” and the “best interest rates” available on the 15 market. 16 qualified for a better loan program but defendants told him that 17 the mortgage loan at issue was the only mortgage loan program 18 that plaintiff could qualify for. 19 (Pl.’s First Amended (Id. ¶ 20; Wachovia’s Ex. A.) (Id. ¶ 21.) Plaintiff Plaintiff alleges Plaintiff claims that he could have (Id. ¶ 23.) Prior to the closing of the loan, plaintiff alleges that 20 defendants did not provide him with any loan documentation. (Id. 21 ¶ 25.) 22 would be adjustable only after the closing. 23 plaintiff questioned Landeros and Thrash about it, they allegedly 24 asked plaintiff to sign the documents because the loan at issue 25 was the only loan available to him and defendants would “fix it” Plaintiff claims that he discovered that his loan rate (Id.) When 26 27 28 1 Because oral argument will not be of material assistance, the court orders this matter submitted on the briefs. E.D. Cal. L.R. 78-230(h). 2 1 later. 2 would refinance the loan if the loan ever became unaffordable. 3 (Id.) 4 (Id.) Landeros and Thrash also told plaintiff that they During the closing, plaintiff alleges that he was given only 5 a few minutes to sign the loan. (Id. ¶ 26.) Plaintiff alleges 6 that the notary did not explain any of the documents and that 7 plaintiff was not allowed to review them. 8 alleges that, at the time of closing, he did not receive the 9 disclosures and the number of copies of the Notice of Right to (Id.) Plaintiff also 10 Cancel that were required under the Truth In Lending Act 11 (“TILA”).2 12 (Id. ¶ 39.) On or about May 15, 2006, plaintiff claims that he completed 13 the loan on the property.3 14 were memorialized in a promissory note secured by a Deed of Trust 15 on the property. 16 Savings Bank, FSB as the lender. (Id.) (Id. ¶ 28.) The terms of the loan The Deed of Trust identified World (Id.) 17 Plaintiff alleges that, on February 10, 2009, a Qualified 18 Written Request (“QWR”) pursuant to the Real Estate Settlement 19 2 20 21 22 23 24 25 26 27 28 The court notes that the Federal TILA Disclosure Required By Regulation Z is dated June 2, 2006 and bears plaintiff’s signature, dated June 5, 2006, acknowledging receipt of the document. (Federal Truth In Lending Disclosure Required By Regulation Z, attached as Def.’s Ex. E.) The court also considers that the Notice Of Right To Cancel is dated June 2, 2006, and bears plaintiff’s signature, dated June 5, 2006, acknowledging the receipt of two copies of the notice. (Notice Of Right To Cancel - Refinancing, attached as Def.’s Ex. F.) The document states that plaintiff has until June 8, 2006 to cancel the transaction without cost. (Id.) 3 The court considers that the Deed of Trust bears plaintiff’s signature and is dated June 2, 2006. (Deed of Trust, attached as Def.’s Ex. C.) The attached notary acknowledgment also bears plaintiff’s signature and is dated June 5, 2006. (Id.) 3 1 Procedures Act (“RESPA”) was mailed to Wachovia. 2 Plaintiff alleges that the QWR also included a demand to cancel 3 the pending trustee sale and to rescind the loan pursuant to 4 TILA. 5 (Id. ¶ 29.) (Id.) Plaintiff claims, upon “information and belief,” that 6 defendants sold their home loans to other financial entities and, 7 accordingly, do not own the loan that is the subject of this 8 action. 9 allegations regarding the practices of the lending industry; (Id. ¶ 30.) Plaintiff also makes other general 10 specifically, he claims that borrowers were steered into loans 11 with less favorable terms because lenders gave higher commissions 12 for placing borrowers in these types of loans. 13 (Id.) On November 24, 2008, a Notice of Default was filed in 14 Sacramento County. 15 do not possess the note and are not entitled to payment. 16 42.) 17 (Id. ¶ 40.) Plaintiff claims that defendants (Id. ¶ In his First Amended Complaint, plaintiff asserts claims for 18 1) violation of TILA, 15 U.S.C. §§ 1601 et seq.; 2) violation of 19 the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”), 20 California Civil Code §§ 1788 et seq., 3) negligence, 4) 21 violation of RESPA, 12 U.S.C. §§ 2601 et seq., 5) breach of 22 fiduciary duty, 6) fraud, 7) violation of California Business and 23 Professions Code § 17200; 8) breach of contract, 9) breach of 24 implied covenant of good faith and fair dealing, and 10) wrongful 25 foreclosure. 26 claims on grounds of HOLA preemption and plaintiff’s failure to 27 state cognizable claims. 28 (“Wachovia’s Mem.”), filed Sept. 18, 2009.) (Compl.) Wachovia now moves to dismiss plaintiff’s (Wachovia’s Mem. Mot. Dismiss 4 Wachovia also moves 1 to strike portions of plaintiff’s First Amended Complaint, 2 specifically plaintiff’s pleas for punitive damages in the Third 3 and Sixth claims, and for attorney’s fees in the Eighth and Ninth 4 claims.4 5 6 STANDARD Under Federal Rule of Civil Procedure 8(a), a pleading must 7 contain “a short and plain statement of the claim showing that 8 the pleader is entitled to relief.” 9 S. Ct. 1937, 1949 (2009). See Ashcroft v. Iqbal, 129 Under notice pleading in federal 10 court, the complaint must “give the defendant fair notice of what 11 the claim is and the grounds upon which it rests.” 12 v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations 13 omitted). 14 liberal discovery rules and summary judgment motions to define 15 disputed facts and issues and to dispose of unmeritorious 16 claims.” 17 Bell Atlantic “This simplified notice pleading standard relies on Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002). On a motion to dismiss, the factual allegations of the 18 complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 19 322 (1972). 20 every reasonable inference to be drawn from the “well-pleaded” 21 allegations of the complaint. 22 Schermerhorn, 373 U.S. 746, 753 n.6 (1963). 23 allege “‘specific facts’ beyond those necessary to state his 24 claim and the grounds showing entitlement to relief. 25 550 U.S. at 570. The court is bound to give plaintiff the benefit of Retail Clerks Int’l Ass’n v. A plaintiff need not Twombley, “A claim has facial plausibility when the 26 4 27 28 Because, as set forth infra, the court grants defendant’s motion to dismiss in its entirety, the court does not reach the merits of the motion to strike. Accordingly, the motion is DENIED as MOOT. 5 1 plaintiff pleads factual content that allows the court to draw 2 the reasonable inference that the defendant is liable for the 3 misconduct alleged.” 4 Iqbal, 129 S. Ct. at 1949. Nevertheless, the court “need not assume the truth of legal 5 conclusions cast in the form of factual allegations.” United 6 States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th 7 Cir. 1986). 8 allegations, “it demands more than an unadorned, the defendant- 9 unlawfully-harmed-me accusation.” While Rule 8(a) does not require detailed factual Iqbal, 129 S. Ct. at 1949. A 10 pleading is insufficient if it offers mere “labels and 11 conclusions” or “a formulaic recitation of the elements of a 12 cause of action.” 13 1950 (“Threadbare recitals of the elements of a cause of action, 14 supported by mere conclusory statements, do not suffice.”). 15 Moreover, it is inappropriate to assume that the plaintiff “can 16 prove facts which it has not alleged or that the defendants have 17 violated the . . . laws in ways that have not been alleged.” 18 Associated Gen. Contractors of Cal., Inc. v. Cal. State Council 19 of Carpenters, 459 U.S. 519, 526 (1983). 20 Twombly, 550 U.S. at 555; Iqbal, 129 S. Ct. at Ultimately, the court may not dismiss a complaint in which 21 the plaintiff has alleged “enough facts to state a claim to 22 relief that is plausible on its face.” 23 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 24 (2007)). 25 her] claims across the line from conceivable to plausible,” is 26 the complaint properly dismissed. 27 plausibility requirement is not akin to a probability 28 requirement, it demands more than “a sheer possibility that a Iqbal, 129 S. Ct. at 1949 Only where a plaintiff has failed to “nudge [his or 6 Id. at 1952. While the 1 defendant has acted unlawfully.” Id. at 1949. This plausibility 2 inquiry is “a context-specific task that requires the reviewing 3 court to draw on its judicial experience and common sense.” 4 at 1950. Id. 5 In ruling upon a motion to dismiss, the court may consider 6 only the complaint, any exhibits thereto, and matters which may 7 be judicially noticed pursuant to Federal Rule of Evidence 201. 8 See Mir v. Little Co. Of Mary Hospital, 844 F.2d 646, 649 (9th 9 Cir. 1988); Isuzu Motors Ltd. V. Consumers Union of United 10 States, Inc., 12 F. Supp. 2d 1035, 1042 (C.D. Cal. 1998). ANALYSIS 11 12 13 A. Wachovia’s Exhibits In ruling upon a motion to dismiss, the court may also 14 consider matters which may be judicially noticed pursuant to 15 Federal Rule of Evidence 201. 16 Hospital, 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. 17 Consumers Union of United States, Inc., 12 F. Supp.2d 1035, 1042 18 (C.D. Cal. 1998). 19 complaint, it may be incorporated by reference into a complaint 20 if the plaintiff refers extensively to the document or the 21 document forms the basis of the plaintiff's claim.” 22 States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). 23 defendant may offer such a document, and the district court may 24 treat such a document as part of the complaint, and thus may 25 assume that its contents are true for purposes of a motion to 26 dismiss under Rule 12(b)(6).” 27 the rule is to prevent plaintiffs “from surviving a Rule 12(b)(6) 28 motion by deliberately omitting references to documents upon See Mir v. Little Co. of Mary “Even if a document is not attached to a Id. 7 United “The The policy concern underlying 1 which their claims are based.” 2 699, 706 (9th Cir. 1998). 3 Parrino v. FHP, Inc., 146 F.3d Plaintiff’s complaint alleges several causes of action that 4 are premised on defendants’ failure to provide the disclosures 5 and number of copies of the Notice of Right to Cancel as required 6 by TILA. 7 the basis of the relevant causes of action, the court considers 8 them and assumes that the contents are true for the purpose of a 9 motion to dismiss. 10 11 B. (Compl. ¶ 39.) Accordingly, as these documents form TILA Violation The First claim asserts that Wachovia violated TILA by 12 failing to provide the required disclosures to plaintiff at the 13 time of closing and failing to give clear and conspicuous 14 disclosures. 15 also gives notice and demands rescission of the loan transaction. 16 (Id. ¶ 54.) 17 (1) the claim for damages is time-barred by the one-year statute 18 of limitation; (2) plaintiff fails to plead sufficient facts to 19 state a cognizable claim of relief; and (3) plaintiff’s claim for 20 rescission fails because he has not alleged ability to tender the 21 indebtedness. 22 1. 23 Wachovia argues that the claim for damages arising under (Compl. ¶ 49.) Through the complaint, plaintiff Wachovia moves to dismiss the count on grounds that: (Wachovia’s Mem. at 2.) Claim For Damages 24 TILA is time-barred because plaintiff’s one-year statute of 25 limitation ran on June 2, 2007 and plaintiff did not file this 26 suit until May 14, 2009. 27 on equitable tolling to suspend the statute of limitations. (Id. at 6.) 28 8 Plaintiff, however, relies 1 (Pl.’s Opp’n Mot. Dismiss (“Pl.’s Opp’n”), filed Sept. 18, 2009, 2 at 12.) 3 TILA violations include the failure to provide the required 4 disclosures pursuant to 15 U.S.C. § 1631 and the failure to 5 clearly and conspicuously disclose information relating to the 6 “annual percentage rate” and the “finance charge” pursuant to 15 7 U.S.C. § 1632. 8 violations, a plaintiff must file an action to recover damages 9 “within one year from the date of the occurrence of the To recover damages arising from alleged TILA 10 violation.” 11 circumstances, equitable tolling of civil damages claims brought 12 under TILA might be appropriate. 13 California, 784 F.2d 910, 915 (9th Cir. 1986). 14 equitable tolling may be appropriate when the imposition of the 15 statute of limitations would be unjust or would frustrate TILA’s 16 purpose “to assure a meaningful disclosure of credit terms so 17 that the consumer will be able to ... avoid the uninformed use of 18 credit.” 19 therefore, have the discretion to evaluate specific claims of 20 equitable tolling and adjust the limitations period accordingly 21 when the borrower may not have reasonable opportunity to discover 22 the fraud or nondisclosures that give rise to a TILA action. 23 15 U.S.C. § 1640(e). However, in certain See King v. State of Id. (quoting 15 U.S.C. § 1601(a)). The doctrine of District courts, Id. In this case, plaintiff alleges that he consummated the loan 24 on or about May 15, 2006. (Compl. ¶ 28.) The loan documents are 25 dated either June 2, 2006 or June 5, 2006. 26 C, E, F.) 27 until May 14, 2006, more than one year has passed since the 28 alleged TILA violations. (Wachovia’s Ex.s B, Accordingly, as plaintiff did not bring the claim 9 1 To support the claim, plaintiff alleges that he did not 2 receive any loan documentation, including the disclosures 3 required by TILA, prior to the closing. 4 Plaintiff also alleges that, during the closing, plaintiff did 5 not receive the required copies of a proper notice of 6 cancellation. 7 specifically referred by plaintiff in his complaint show that 8 plaintiff acknowledged on June 5, 2006 that he received the TILA 9 disclosure and the Notice Of Right To Cancel. (Id. ¶ 26.) (Id. ¶¶ 25, 39.) However, the loan documents (Wachovia’s Ex.s 10 E, F.) Accordingly, plaintiff cannot allege that Wachovia 11 violated TILA by failing to provide these required disclosures or 12 that he was not aware of these disclosures in June 2006. 13 Plaintiff also alleges that defendants failed to provide 14 clear and conspicuous disclosures regarding the loan terms in 15 writing. 16 Federal TILA Required By Regulation Z form, which “clearly and 17 conspicuously” states the annual percentage rate and finance 18 charge. 19 TILA violation premised on the failure to disclose these loan 20 terms in writing or that he was not on notice of these terms in 21 June 2006. 22 predicated on these facts cannot survive a motion to dismiss and 23 the court need not reach the issue of equitable tolling. 24 (Compl. ¶ 34.) The allegation is refuted by the (Wachovia’s Ex. E.) Plaintiff therefore cannot allege a Therefore, plaintiff’s claim of TILA violations To the extent that plaintiff seeks equitable tolling on the 25 basis of Wachovia’s misrepresentations of the loan rate, 26 plaintiff’s claim also fails. 27 explain how Wachovia concealed the true facts or why plaintiff 28 could not otherwise have discovered the TILA violations at the Plaintiff pleads no other facts to 10 1 consummation of his loan. “Such factual underpinnings are all 2 the more important ... since the vast majority of [p]laintiff’s] 3 alleged violations under TILA are violations that are 4 self-apparent at the consummation of the transaction.” 5 v. Countrywide Home Loans, Inc., 2009 U.S. Dist. LEXIS 87997, at 6 ** 13-14 (D. Ariz. 2009) (holding that equitable tolling was not 7 appropriate when plaintiffs simply alleged that defendants 8 “fraudulently misrepresented and concealed the true facts related 9 to the items subject to disclosure”). Cervantes Indeed, plaintiff alleges 10 that he discovered that his loan rate would be adjustable after 11 the closing, which is well within the one-year statute of 12 limitation. 13 14 (Compl. ¶ 25.) Accordingly, Wachovia motion to dismiss plaintiff’s claim for damages is GRANTED without leave to amend. 15 2. 16 Wachovia argues that plaintiff’s rescission claim fails Claim For Rescission 17 because plaintiff’s right to rescind expired on June 8, 2008. 18 (Wachovia’s Mem. at 7.) 19 forfeited the right to restitution in allegedly failing to make 20 the required disclosures and refusing to honor plaintiff’s 21 election to cancel made through the QWR. 22 Plaintiff argues that Wachovia has (Pl.’s Opp’n at 14.) “TILA provides two private remedies: damages and 23 rescission.” Shelley v. Quality Loan Serv. Corp., 2009 U.S. 24 Dist. LEXIS 58156, at *5 (C.D. Cal. June 17, 2009). 25 has the right to rescind the loan transaction “until midnight of 26 the third business day following the consummation of the 27 transaction or the delivery of the information and rescission 28 forms ... together with a statement containing the material 11 A borrower 1 disclosures.” 2 forms and disclosures have not been delivered to the obligor, 15 3 U.S.C. § 1635(f) provides that “[a]n obligor’s right of 4 rescission shall expire three years after the date of 5 consummation of the transaction or upon the sale of the property, 6 whichever occurs first.” 7 15 U.S.C. § 1635(a). However, where the required As plaintiff has a right to rescind the loan within three 8 years only if Wachovia has not provided the documents required by 9 TILA, plaintiff cannot state a claim for relief. Plaintiff 10 acknowledged receipt of the TILA disclosure and Notice Of Right 11 To Cancel on June 5, 2006. 12 plaintiff’s right to rescind expired on June 8, 2006. 13 (Wachovia’s Exs. E, F.) Therefore, Furthermore, the Ninth Circuit has held that rescission 14 under TILA “should be conditioned on repayment of the amounts 15 advanced by the lender.” 16 1167, 1170 (9th Cir. 2003) (emphasis in original). 17 courts in this circuit have dismissed rescission claims under 18 TILA at the pleading stage based upon the plaintiff’s failure to 19 allege an ability to tender loan proceeds. 20 Am. Home Mortgage, 2009 U.S. Dist. LEXIS 7448, at *15 (E.D. Cal. 21 Jan. 27, 2009) (stating that “rescission is an empty remedy 22 without [the borrower’s] ability to pay back what she has 23 received”); Ibarra v. Plaza Home Mortgage, 2009 U.S. Dist. LEXIS 24 80581, at *22 (S.D. Cal. Sept. 4, 1009); Carnero v. Weaver, 2009 25 U.S. Dist. LEXIS 62665, at *8 (N.D. Cal. July 20, 2009); Pesayco 26 v. World Sav., Inc., 2009 U.S. Dist. LEXIS 73299, at *4 (C.D. 27 Cal. July 29, 2009); Ing Bank v. Korn, 2009 U.S. Dist. LEXIS 28 73329, at *7 (W.D. Wash. May 22, 2009). Yamamoto v. Bank of N.Y., 329 F. 3d 12 District See, e.g., Garza v. In this case, plaintiff 1 has failed to allege any facts relating to his ability to tender 2 the loan principal. 3 Accordingly, Wachovia’s motion to dismiss plaintiff’s 4 rescission claims is also GRANTED. 5 C. 6 RESPA Violation The Fourth claim alleges that Wachovia violated 12 U.S.C. § 7 2605 by failing to provide a written explanation in response to 8 plaintiff’s QWR. 9 alleges that Wachovia failed to comply with RESPA’s disclosure (Compl. ¶ 71.) Plaintiff also generally 10 requirements at the time of closing and that defendants engaged 11 in a pattern or practice of non-compliance with 12 U.S.C. § 2605. 12 (Id. ¶¶ 70, 72.) 13 that the claim is time-barred and that plaintiff fails to plead a 14 cognizable claim. Wachovia moves to dismiss this claim on grounds (Defs.’ Mem. at 10-11.) 15 1. Section 2605 16 Section 2605 requires a loan servicer to provide disclosures 17 relating to the assignment, sale, or transfer of loan servicing 18 to a potential or actual borrower: (1) at the time of the loan 19 application, and (2) at the time of transfer. 20 The loan servicer also has a duty to respond to a borrower’s 21 inquiry or “qualified written request.” 22 qualified written request is a written correspondence that 23 enables the servicer to identify the name and account of the 24 borrower. 25 statement describing why the borrower believes that the account 26 is in error or provides sufficient detail to the servicer 27 regarding other information sought by the borrower. 28 loan servicer is required to respond by making appropriate 12 U.S.C. § 2605(e)(1). 13 12 U.S.C. § 2605. 12 U.S.C. § 2605(e). A It also either includes a Id. The 1 corrections to the borrower’s account, if necessary and, after 2 conducting an investigation, providing the borrower with a 3 written clarification or explanation. 4 The statute of limitation to bring an action for a Section 2605 5 violation is three years. 6 12 U.S.C. § 2605(e)(2). 12 U.S.C. § 2614. Plaintiff alleges that he sent a QWR to Wachovia Mortgage, 7 FSB on February 10, 2009 and has yet to receive a response. 8 (Compl. ¶ 29.) 9 statute of limitation, plaintiff’s claim is not time-barred. 10 As plaintiff’s complaint is filed well within the Wachovia argues that plaintiff’s purported QWR does not meet 11 the description in Section 2605(e)(1) because the allegations 12 reflect that the “QWR” did not challenge the accuracy of the 13 account or information regarding servicing of the loan. 14 (Wachovia’s Mem. at 11.) 15 means receiving any scheduled periodic payments from a borrower . 16 . . and making the payments of principal and interest and such 17 other payments with respect to the amounts received from the 18 borrower.” 19 February 10, 2009 letter “simply disputed the validity of the 20 loan and not its servicing.” 21 Hillery, -- F. Supp. 2d --, 2009 WL 2711264 (Aug. 26, 2009 N.D. 22 Cal. 2009); see MorEquity, Inc. v. Naeem, 118 F. Supp. 2d 885, 23 900-01 (N.D. Ill. 2000) (noting that the “[t]he counterclaim 24 alleges [that the request alleged] a forged deed, and 25 irregularities with respect to the recoding of the two loans, but 26 [made] no claim with respect to improper servicing” and therefore 27 dismissing claim pursuant to § 2605(e)). Pursuant to § 2605(i), “‘servicing’ According to the allegations in the complaint, the Consumer Solutions REO, LLC v. 28 14 As such, plaintiff has 1 failed to set forth facts alleging that he sent a valid and 2 actionable QWR to defendant. 3 Wachovia also argues that plaintiff’s failure to allege 4 actual damages is fatal to the claim. (Id. at 11.) A claim of a 5 RESPA violation cannot survive a motion to dismiss when the 6 plaintiff does not plead facts showing how the plaintiff suffered 7 actual harm due to defendant’s failure to respond to a qualified 8 written response. 9 Dist. LEXIS 91287, at **10-11 (N.D. Cal. Oct. 1, 2009); Singh v. See Benham v. Aurora Loan Servs., 2009 U.S. 10 Wash. Mut. Bank, 2009 U.S. Dist. LEXIS 73315, at *16 (N.D. Cal. 11 Aug. 19, 2009). 12 liberally, the plaintiff must at least allege what or how the 13 plaintiff suffered the pecuniary loss. 14 Mortgage Funding, Inc., 2009 U.S. Dist. LEXIS 79094, at *44 (E.D. 15 Cal. Sept. 3, 2009) (holding that the plaintiff’s claim was 16 sufficient to survive a motion to dismiss because the plaintiff 17 alleged that she was made to pay a referral fee that was 18 prohibited by RESPA); Hutchinson v. Del. Sav. Bank FSB, 410 F. 19 Supp. 2d 374, 383 (D.N.J. 2006) (holding that the plaintiffs 20 adequately pled actual damages when they alleged that they 21 suffered “negative credit ratings on their credit reports [and] 22 the inability to obtain and borrow another mortgage loan and 23 other financing”). 24 suffered actual damages as a result of Wachovia’s failure to 25 respond to the QWR. 26 pled facts showing a cognizable RESPA violation. 27 28 While courts interpret this requirement See Yulaeva v. Greenpoint Here, plaintiff does not allege how plaintiff Therefore, plaintiff has not sufficiently Plaintiff also claims that defendants engaged in a pattern or practice of non-compliance of 12 U.S.C. § 2605 but alleges no 15 1 facts relating to Wachovia’s conduct that suggest such an 2 inference.5 3 prove facts which it has not alleged,” this assertion also cannot 4 survive a 12(b)(6) motion. 5 6 As it is inappropriate to assume that plaintiff “can Accordingly, Wachovia’s motion to dismiss the Fourth claim as predicated on a Section 2605 violations is GRANTED. 7 2. Section 2607 8 RESPA also requires a lender to provide disclosures when it 9 pays fees, salaries, or other forms of compensation to its agents 10 or pursuant to referral agreements between real estate agents and 11 brokers or affiliated business arrangements. 12 2607(c). 13 statute of limitation to bring an action for a Section 2607 14 violation is three years. 15 that Wachovia violated RESPA at the time of closing because 16 Wachovia did not comply with disclosure requirements. 17 70.) However, plaintiff fails to identify what the disclosures 18 are. As such, plaintiff’s general allegation is insufficient to 19 give Wachovia notice of the purported violation. 20 Wachovia’s motion to dismiss the Fourth claim as predicated on a 21 Section 2605 violations is GRANTED.6 22 ///// 23 ///// 12 U.S.C. § This disclosure may occur during closing. 12 U.S.C. § 2614. Id. The Plaintiff alleges (Compl. ¶ Accordingly, 24 25 26 5 Plaintiff later alleges a possible violation of 12 U.S.C. § 2607(a) but gives no facts supporting this allegation. (Pl.’s Opp’n at 20 n.16.) 6 27 28 In its opposition, plaintiff also vaguely references § 2601. Contrary to plaintiff’s assertion, 12 U.S.C. § 2601 is a declaration of the legislative purpose underlying RESPA and does not create a violation for failing to disclose escrow costs. 16 1 D. Violation Of The RFDCPA 2 The Second claim asserts that Wachovia violated the RFDCPA 3 and provides a litany of general allegations “including but not 4 limited to: foreclosing upon a void security interest; 5 foreclosing upon a note of which [defendants] were not in 6 possession nor otherwise entitled to payment; falsely stating the 7 amount of a debt; increasing the amount of a debt by including 8 amounts that are not permitted by law or contract; and using 9 unfair and unconscionable means in an attempt to collect a debt.” 10 (Id. ¶ 57.) 11 RFDCPA because the Act is not a lending regulation; rather, it 12 only regulates the practice of collecting a debt once a loan is 13 made. 14 Plaintiff argues that HOLA does not preempt the (Pl.’s Opp’n at 10.) The purpose of the RFDCPA is “to prohibit debt collectors 15 from engaging in unfair or deceptive acts or practices in the 16 collection of consumer debts and to require debtors to act fairly 17 in entering into and honoring such debts.” 18 1788.1(b). 19 harassment, threats, the use of profane language, false 20 simulation of the judicial process, or when it cloaks its true 21 nature as a licensed collection agency in an effort to collect a 22 debt. 23 Cal. Reconveyance Co., 2009 U.S. Dist. LEXIS 13936, at * 13 (E.D. 24 Cal. Feb. 23, 2009) (holding that a RFDCPA claim failed because 25 the complaint lacked allegations of harassment or abuse, false or 26 misleading representations of the debt collector’s identity, or 27 unfair practices during the process of collecting debt). 28 RFDCPA is not applicable until after a loan is made and does not Cal. Civ. Code § A debt collector violates the act when it engages in See Cal. Civ. Code §§ 1788.10-88.18; see also Hernandez v. 17 The 1 constitute a lending regulation. 2 Inc., 336 F. Supp. 2d 1061, 1064 (N.D. Cal. 2004). 3 foreclosing on a deed of trust does not implicate the RFDCPA. 4 See e.g. Benham v. Aurora Loan Servs., 2009 U.S. Dist. LEXIS 5 78384, at *6 (N.D. Cal. Sept. 1, 2009); Ricon v. Recontrust Co., 6 2009 U.S. Dist. LEXIS 67807, at *9 (S.D. Cal. Aug. 4, 2009); 7 Hepler v. Wash. Mut. Bank, F.A., 2009 U.S. Dist. LEXIS 33883, at 8 *11 (C.D. Cal. April 17, 2009). 9 See Alkan v. Citimortgage, Moreover, Plaintiff’s complaint fails to allege any facts supporting 10 how Wachovia violated the RFDCPA. Plaintiff neither alleges 11 threats, harassment, or profane language that occurred after the 12 loan was made nor does plaintiff identify who among the 13 defendants acted as a debt collector. 14 point to any provision of the RFDCPA that Wachovia purportedly 15 violated. 16 the promissory note and thus is not entitled to enforce the 17 security interest. 18 actionable conduct under the RFDCPA. 19 Mortgage Funding, Inc., 2009 U.S. Dist. LEXIS 60818 (N.D. Cal. 20 July 15, 2009) (finding that the plaintiff “entirely misstate[d] 21 the law in alleging that defendants must present a note in order 22 to foreclose under the deed of trust” and holding that alleging 23 that the note was assigned to a trust pool did not give rise to a 24 cognizable legal claim). Plaintiff also does not Plaintiff alleges only that Wachovia does not possess (Compl. ¶ 116.) This does not constitute an See Hafiz v. Greenpoint Without any facts that give rise to an 25 26 27 28 18 1 inference that Wachovia violated the RFDCPA, plaintiff has not 2 stated a plausible claim.7 Accordingly, Wachovia’s motion to dismiss the Second claim 3 4 is GRANTED.8 5 E. Breach Of Contract and Breach Of Covenant Of Good Faith And Fair Dealing 6 7 The Eighth claim asserts that Wachovia, together with 8 Landeros and Thrash, breached agreements made during the loan 9 application process and also breached an agreement to provide (Id. ¶¶ 98-101.) The Ninth 10 plaintiff with an affordable loan. 11 claim asserts that Wachovia, together with Landeros, Thrash, and 12 ETS, breached duties of good faith and fair dealing that are 13 implied by law into the “contract that is at issue in this 14 action.” 15 In California, “[a] cause of action for breach of contract 16 requires proof of the following elements: (1) existence of the 17 contract; (2) plaintiff's performance or excuse for 18 nonperformance; (3) defendant’s breach; and (4) damages to 19 plaintiff as a result of the breach.” CDF Firefighters v. 20 21 22 23 24 25 26 7 Plaintiff attempts to rescue his RFDCPA claim by later alleging in his opposition that defendants made “numerous phone calls, sent letters, and otherwise misrepresented material facts.” (Pl.’s Opp’n at 17.) Making numerous phone calls and sending letters does not constitute actionable offenses under the Alleging that RFDCPA. See Cal. Civ. Code §§ 1788.10-88.18. defendants misrepresented material facts, without more, is a legal conclusion that does not give Wachovia sufficient notice of the nature of the claim because not every misrepresentation is actionable under the RFDCPA. 8 27 28 As the court grants Wachovia’s motion to dismiss plaintiff’s RFDCPA claim on the ground that plaintiff has pled insufficient facts to state a claim, the court does not address whether HOLA preempts the RFDCPA. 19 1 Maldonado, 158 Cal. App. 4th 1226, 1239 (2008). Further, “[t]he 2 prerequisite for any action for breach of the implied covenant of 3 good faith and fair dealing is the existence of a contractual 4 relationship between the parties.” 5 Francisco, 225 Cal. App. 3d 38, 49 (1990). 6 breach of an implied covenant of good faith and fair dealing, a 7 plaintiff must establish the existence of a contractual 8 obligation, along with conduct that frustrates the other party's 9 rights to benefit from the contract.” Smith v. City & County of San “To establish a Fortaleza v. PNC Fin. 10 Servs. Group, Inc., 2009 U.S. Dist. LEXIS 64624, at **15-16 (N.D. 11 Cal. July 27, 2009). 12 fair dealing is limited to assuring compliance with the express 13 terms of the contract, and cannot be extended to create 14 obligations not contemplated by the contract.” 15 LLC v. City of Pasadena, 114 Cal. App. 4th 1089, 1093-1094 16 (2004). 17 further the contract's purpose; it will not be read into a 18 contract to prohibit a party from doing that which is expressly 19 permitted by the agreement itself.” 20 and Television, 162 Cal. App. 4th 1107, 1120 (2008). The “implied covenant of good faith and Pasadena Live, “[T]he implied covenant will only be recognized to Wolf v. Walt Disney Pictures 21 Plaintiff generally alleges in the complaint that all named 22 defendants breached a number of agreements but fails to identify 23 which defendant made which contract with plaintiff. 24 allegations on the face of the complaint are insufficient to give 25 notice to Wachovia of the contract that it allegedly entered into 26 with plaintiff or how Wachovia breached that particular 27 28 20 The 1 contract.9 2 survive a motion to dismiss. 3 Therefore, plaintiff has insufficiently pled facts to Accordingly, Wachovia’s motion to dismiss the Eighth and 4 Ninth claims is GRANTED.10 5 F. 6 Wrongful Foreclosure The Tenth claim asserts a wrongful foreclosure claim against 7 Wachovia, together with ETS, that is predicated on violations of 8 Section 2923.5 of the California Civil Code and Section 3301 of 9 the California Commercial Code. (Compl. ¶¶ 115, 118.) 10 1. California Civil Code § 2923.5 11 Section 2923.5 of the California Civil Code provides that a 12 declaration shall be included in a notice of default stating that 13 “the mortgagee, beneficiary, or authorized agent . . . has 14 contacted the borrower . . . or tried with due diligence to 15 contact the borrower.” 16 alleges that Wachovia failed to properly record and give notice 17 of the Notice of Default. 18 insufficient to state a cognizable violation of Section 2923.5. 19 Accordingly, to the extent that plaintiff’s claim is predicated 20 on a violation of Section 2923.5, plaintiff’s claim fails. 21 ///// 22 ///// In support of this claim, plaintiff only (Compl. ¶ 118.) This allegation is 23 9 24 25 26 27 28 In the Opposition to Wachovia’s Motion To Dismiss, plaintiff refers to the promissory note as the contract at issue in this claim. While the court grants plaintiff leave to amend, the court also notes that plaintiff’s factual allegations regarding the provisions in the promissory note do not comport with the actual statements in the document. (Wachovia’s Ex. B.) 10 As the court grants Wachovia’s motion for plaintiff’s failure to plead sufficient facts, the court does not reach the issue of whether HOLA preempts these claim. 21 1 2. California Commercial Code § 3301 2 Section 3301 of the California Commercial Code defines a 3 “[p]erson entitled to enforce” as “(a) the holder of the 4 instrument, (b) a nonholder in possession of the instrument who 5 has the rights of a holder, or (c) a person not in possession of 6 the instrument who is entitled to enforce the instrument . . . .” 7 However, possession of the original promissory note is not 8 required to permit foreclosure. 9 Co., Ltd., 2009 U.S. Dist. LEXIS 65674, at *24 (E.D. Cal. July See e.g. Rangel v. DHI Mortg. 10 20, 2009); Pantoja v. Countrywide Home Loans, Inc., 2009 U.S. 11 Dist. LEXIS 70856, at *14 (N.D. Cal. July 9, 2009); Calderon v. 12 Endres, 2009 U.S. Dist. LEXIS 57936, at *8 (S.D. Cal. July 7, 13 2009). 14 have the original note or has not received it is insufficient to 15 render the foreclosure proceeding invalid. See Neal v. Juarez, 16 2007 U.S. Dist. LEXIS 98068, 2007 WL 2140640, *8 (S.D. Cal. 17 2007). A mere allegation that a trustee or a lender does not 18 In his complaint, plaintiff merely alleges that neither 19 defendants nor their beneficiaries or assignees are in possession 20 of the promissory note. 21 support plaintiff’s claim as a matter of law. 22 construing plaintiff’s complaint liberally, plaintiff’s 23 allegation is predicated on “information and belief” 24 defendants sold home loans to other unnamed financial entities. 25 (Compl. ¶ 30.) 26 allegation. 27 to show a violation of Section 3301. (Compl. ¶ 116.) The allegation fails to Moreover, even that Plaintiff sets forth no facts to support this Therefore, plaintiff has not stated sufficient facts 28 22 Accordingly, Wachovia’s motion to dismiss the Tenth claim is 1 2 GRANTED.11 3 G. Negligence 4 The Third claim asserts that Wachovia, together with 5 Landeros, Thrash, and ETS, breached a duty of care by directing 6 plaintiff to a loan that he would not otherwise have qualified 7 for by industry standards. 8 HOLA does not preempt the claim because plaintiff does not seek 9 to impose a lending requirement on defendants but to enforce 10 (Compl. ¶ 61.) defendants’ duty not to harm the plaintiff. Plaintiff argues that (Pl.’s Opp’n at 11.) 11 In the field of lending regulation of federal savings 12 associations, the presumption against preemption of state law is 13 inapplicable. 14 1001, 1004 (9th Cir. 2008). 15 preemption regulation that “occupies the entire field of lending 16 regulation for federal savings associations.” 17 1464; 12 C.F.R. § 560.2. 18 “no less preemptive effect than federal statutes.” 19 Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 153 (1982). 20 Section 560.2(b) of Title 12 of the Code of Federal See Silvas v. E*Trade Mortgage Corp., 514 F.3d Through HOLA, OTS issued a See 12 U.S.C. § The regulations promulgated by OTS have See Fid. Fed. 21 Regulations preempts state laws that purport to impose 22 requirements regarding: 23 24 25 “(4) The terms of credit, including amortization of loans and the deferral and capitalization of interest and adjustments to the interest rate, balance, payments due, or term to maturity of the loan, including the circumstances under which a loan may be called due and payable upon the passage of time or a specified event external to the loan; 26 27 28 11 As the court grants Wachovia’s motion to dismiss on the ground that plaintiff fails to plead a cognizable claim, the court does not address the issue of HOLA preemption. 23 1 2 (5) Loan-related fees, including without limitation, initial charges, late charges, prepayment penalties, servicing fees, and overlimit fees; ... 3 4 5 6 (9) Disclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents and laws requiring creditors to supply copies of credit reports to borrowers or applicants; 7 8 9 10 (10) Processing, origination, servicing, sale or purchase of, or investment or participation in, mortgages ...” 12 C.F.R. § 560.2(b). However, Section 560.2 does not preempt state laws such as 11 contract and commercial law and tort law, but only to the extent 12 that they either only have an incidental effect on lending 13 operations or are not otherwise contrary to the purpose of 14 “allowing federal savings associations to conduct their 15 operations ... free from undue regulatory duplication and 16 burden”. 17 12 C.F.R. § 560.2(a), (c). To analyze whether a specific state law is preempted under § 18 560.2, the first inquiry is whether the type of law is listed in 19 subsection (b) of Section 560.2. 20 If the type of law in question is listed in paragraph (b), the 21 analysis ends; the law is preempted. 22 described in subsection (b), the second question is whether the 23 law affects lending. 24 presumed preempted. 25 it can be shown that the law only incidentally effects lending 26 operations or does not impose undue regulatory duplication and 27 burden. 28 in favor of preemption. Id. Id. See Silvas, 514 F.3d at 1005. Id. If the law is not If the law affects lending, the law is The presumption is reversed only when Id.; 12 C.F.R. § 560.2(a), (c). Any doubts are resolved Silvas, 514 F.3d at 1005. 24 1 Though not artfully pled, the complaint alleges that 2 Wachovia’s employees, namely Trash and Landeros, should have 3 informed plaintiff of other loan options instead of directing 4 plaintiff to a loan that he could not afford. 5 62.) 6 involves a discussion of the credit terms and the requirements to 7 qualify for a loan. 8 in 22 C.F.R. §§ 560.2(b)(4) and (9). 9 Bank, 2009 U.S. Dist. LEXIS 68391, at **2-3, *7 (S.D. Cal. Aug. (Compl. ¶¶ 5, 61- Whether plaintiff could have qualified for another loan This falls within the descriptions set forth See Rivera v. Wachovia 10 4, 2009) (finding that plaintiff’s allegations that the lender 11 induced him to sign the loan documents although knowing that the 12 plaintiff could not afford the mortgage payments involved a 13 discussion of credit terms; thus, HOLA preempted the state law 14 claims including the tort claim). 15 should have told plaintiff about other loan options is related to 16 the advertising of loans, fitting the description set forth in 22 17 C.F.R. § 560.2(b)(9). 18 will more than incidentally affect loan qualification and 19 advertising standards, plaintiff’s negligence claim is preempted 20 by HOLA. 21 Additionally, whether Wachovia As a determination in plaintiff’s favor Furthermore, even if HOLA preemption does not apply, 22 plaintiff’s negligence claim is fatally flawed because Wachovia, 23 as a lender, does not owe plaintiff a duty. 24 existence of a legal duty of care . . . 25 law which is to be determined by the courts alone.” 26 Interstate Bank of Ariz., N.A. v. Murphy, Weir & Butler, 210 F.3d 27 983, 987 (9th Cir. 2000). 28 there can be no breach and no negligence.” “The question of the presents a question of First “Absent the existence of duty ... , 25 Nichols v. Keller, 15 1 Cal. App. 4th 1672, 1683 (1993). “Under California law, a lender 2 does not owe a borrower or third party any duties beyond those 3 expressed in the loan agreement, except[] those imposed due to 4 special circumstance.” 5 F.3d 1206, 1214 (9th Cir. 1994) (citing Nymark v. Heart Fed. Sav. 6 & Loan Ass’n., 231 Cal. App. 3d 1089, 1096 (1991)); see also 7 Cataulin v. Wash. Mut. Bank, 2009 U.S. Dist. LEXIS 59708, at *6 8 (S.D. Cal. July 13, 2009); Spencer v. DHI Mortgage Co., 2009 U.S. 9 Dist. LEXIS 55191, at *8 (E.D. Cal. June 30, 2009); Mangindin v. Resolution Trust Corp. v. BVS Dev., 42 10 Wash. Mut. Bank, 2009 U.S. Dist. LEXIS 51231, at *21 (N.D. Cal. 11 June 17, 2009). 12 actively participates in the financed enterprise. 13 231 Cal. App. 3d at 1096; Wagner v. Benson, 101 Cal. App. 3d 27, 14 35 (1980). 15 actions of a mortgage broker, who has a fiduciary duty to its 16 borrower-client, if there is an agency relationship between the 17 lender and the broker. 18 U.S. Dist. LEXIS 38807, at *23 (N.D. Cal. Dec. 13, 2005). 19 Special circumstances arise when a lender See Nymark, A lender may also be secondarily liable through the See Plata v. Long Beach Mortg. Co., 2005 In his complaint, plaintiff describes nothing more than an 20 arms-length loan transaction between Wachovia and himself. 21 Plaintiff also does not allege that Wachovia actively 22 participated in the financed enterprise beyond the usual 23 practices associated with the lending business. 24 Wachovia owes plaintiff no duty of care and the negligence claim 25 must fail also for this reason. As such, Accordingly, Wachovia’s motion to dismiss the Third claim is 26 27 GRANTED without leave to amend. 28 ///// 26 1 H. 2 Breach Of Fiduciary Duty The Fifth claim asserts that Wachovia, together with 3 Landeros and Thrash, breached their fiduciary duties to act 4 primarily for plaintiff’s benefit by allegedly obtaining a loan 5 with unfavorable terms, failing to disclose the negative 6 consequences of the loan, and securing a secret profit by failing 7 to comply with TILA, RESPA and engaging in unfair business 8 practices. 9 (Compl. ¶¶ 79-81.) Plaintiff’s claim fails for the same reason the negligence 10 claim fails. 11 is at arms-length and there is no fiduciary relationship between 12 the borrower and lender.” 13 U.S. Dist. LEXIS 65674, at *8 (E.D. Cal. July 20, 2009); see also 14 e.g. Tasaranta v. Homecomings Fin., 2009 U.S. Dist. LEXIS 87372, 15 at *15 (S.D. Cal. Sept. 21, 2009); Brittain v. IndyMac Bank, FSB, 16 2009 U.S. Dist. LEXIS 84863, at * 14 (N.D. Cal. Sept. 16, 2009); 17 Dinsmore-Thomas v. Ameriprise Fin., Inc., 2009 U.S. Dist. LEXIS 18 68882, at *29 (C.D. Cal. Aug. 3, 2009). 19 fiduciary duty, there can be no breach. 20 “Absent special circumstances, a loan transaction Rangel v. DHI Mortgage Co., Ltd., 2009 In the absence of any Because, as set forth above, plaintiff has failed to allege 21 any facts that would give rise to a fiduciary relationship, 22 defendants’ motion to dismiss the Fifth claim is GRANTED. 23 I. 24 Fraud The Sixth claim asserts that the conduct of Wachovia, 25 together with Thrash, Landeros, and ETS, constitutes fraud. 26 (Compl. ¶¶ 85-91.) 27 that Wachovia’s employees, Landeros and Thrash, made the 28 following false allegations in January and February 2006: (a) Specifically, plaintiff’s complaint alleges 27 1 that they could get him the “best deal” and the “best interest 2 rates” available on the market; (b) that Plaintiff could qualify 3 for only the loan program at issue; and (c) that Plaintiff 4 qualified for a fixed rate loan with an interest rate of 5%. 5 (Compl. ¶¶ 20-24.) 6 15, 2006, when he closed on the loan, defendants Landeros and 7 Thrash falsely assured plaintiff that: (a) they would “fix” the 8 loan after plaintiff discovered that it had an adjustable rate; 9 and (b) that they would refinance the loan into an affordable Plaintiff also alleges that on or about May (Id. ¶ 25.) In 10 loan if the loan ever became unaffordable. 11 addition to HOLA preemption, Wachovia moves to dismiss this count 12 also on the ground that plaintiff fails to plead with the 13 required specificity. (Wachovia’s Mem. at 12-13.) 14 The court first addresses whether HOLA preempts this claim. 15 “Under California law, ‘the indispensable elements of a fraud 16 claim include a false representation, knowledge of its falsity, 17 intent to defraud, justifiable reliance, and damages.’” Vess v. 18 Ciba-Geigy Corp. USA, 317 F.3d 1097, 1105 (quoting Hackethal v. 19 Nat'l Cas. Co., 189 Cal. App. 3d 1102, 1111 (1987)). 20 is a state law claim that is not specifically listed in 12 C.F.R. 21 560.2(b), “it is arguable that [p]laintiff’s claim is preempted 22 by HOLA pursuant to [§] 560.2(b)(4) because the gravamen of 23 th[is] fraud ... claim[] is the ‘terms of credit.’” 24 Ruggles, 2009 U.S. Dist. LEXIS 83349, at *58 (E.D. Cal. Sept. 14, 25 2009); see also Naulty v. Greenpoint Mortgage Funding, Inc., 2009 26 U.S. Dist. LEXIS 79250, at *14 (N.D. Cal. Sept. 2, 2009); 27 Wilkerson v. World S&L Ass'n, 2009 U.S. Dist. LEXIS 76539, at *10 28 (E.D. Cal. Aug. 26, 2009); Kelley v. Mortgage Elec. Registration 28 While this Bassett v. 1 Sys., Inc., 2009 U.S. Dist. LEXIS 70796, at *11 (N.D. Cal. Aug. 2 12 2009). 3 claim that incidentally effects lending operations. 4 C.F.R. § 560.2(c). However, HOLA does not preempt a common law fraud See 12 5 In this case, HOLA preempts this claim to the extent that 6 plaintiff alleges that Wachovia, through its employees, misled 7 him about credit terms to induce him to enter into a loan with an 8 interest rate higher than an alternative one for which he may 9 have been qualified. See Bassett, 2009 U.S. Dist. LEXIS 83349, 10 at *60. 11 him to enter into a loan by promising to “fix” or refinance the 12 loan, however, are fraudulent representations of their commitment 13 to a future action. 14 these facts turns on defendants’ conduct and plaintiff’s 15 reliance, not credit terms. 16 491 F.3d 638, 644 (7th Cir. 2007) (“[If] the mortgagee 17 fraudulently represents to the mortgagor that it will forgive a 18 default, and then forecloses, it would be surprising for a 19 federal regulation to bar a suit for fraud.”). 20 the extent that the fraud claim is predicated on the promises of 21 future action made by Wachovia’s employees, HOLA does not 22 necessarily preempt this claim. 23 Plaintiff’s allegations that Landeros and Thrash induced A determination of a fraud claim based on Cf. In re Ocwen Loan Servicing, LLC, Accordingly, to However, plaintiff’s fraud claim must satisfy FRCP 9(b)’s 24 heightened pleading requirement. This means that plaintiff “must 25 state with particularity the circumstances constituting fraud.” 26 Fed. R. Civ. P. 9(b). 27 “the who, what, when, where, and how” of the fraud. 28 (citations omitted). In other words, the plaintiff must include Id. at 1106 “The plaintiff must set forth what is false 29 1 or misleading about a statement, and why it is false.” Decker v. 2 Glenfed, Inc., 42 F.3d 1541, 1548 (9th Cir. 1994). 3 “Rule 9(b) does not allow a complaint to merely lump multiple 4 defendants together but require[s] plaintiffs to differentiate 5 their allegations when suing more than one defendant . . . and 6 inform each defendant separately of the allegations surrounding 7 his alleged participation in the fraud.” 8 F.3d 756, 765-66 (9th Cir. 2007). 9 ensure that defendants accused of the conduct specified have Furthermore, Swartz v. KPMG LLP, 476 The purpose of Rule 9(b) is to 10 adequate notice of what they are alleged to have done, so that 11 they may defend against the accusations. Concha v. London, 62 12 F.3d 1493, 1502 (9th Cir. 1995). 13 When asserting a fraud claim against a corporation, “the 14 plaintiff’s burden . . . is even greater. . . . The plaintiff 15 must ‘allege the names of the persons who made the allegedly 16 fraudulent representations, their authority to speak, to whom 17 they spoke, what they said or wrote, and when it was said or 18 written.’” 19 (quoting Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 20 4th 153, 157 (1991)); see also Mohammad Akhavein v. Argent 21 Mortgage Co., 2009 U.S. Dist. LEXIS 61796, at *10 (N.D. Cal. July 22 17, 2009); Spencer v. DHI Mortgage Co., 2009 U.S. Dist. LEXIS 23 55191, at *18 (E.D. Cal. June 30, 2009). 24 Lazar v. Superior Court, 12 Cal. 4th 631, 645 (1996) Plaintiff alleges that Landeros and Thrash are Wachovia’s 25 employees. (Compl. ¶ 20.) Plaintiff alleges that, at the loan 26 closing, Landeros and Thrash made misrepresentations that they 27 would fix the loan and refinance it when it became unaffordable. 28 (Id. ¶ 25.) Plaintiff also specifies that the allegedly false 30 1 statements, which are the alleged assurances of future conduct, 2 induced him into signing the loan documents. 3 plaintiff has not set forth any specific facts explaining why the 4 assurances were false and misleading. 5 allegations are insufficient to meet FRCP 9(b)’s heightened 6 pleading standard. However, Therefore, plaintiff’s Accordingly, Wachovia’s motion to dismiss the Sixth claim is 7 8 GRANTED. 9 J. 10 (Id.) Violation of California Business & Professions Code § 17200. The Seventh claim asserts that Wachovia, together with 11 Landeros, Thrash, and ETS, violated Section 17200 of the 12 California Business & Professions Code by engaging in unlawful, 13 unfair, and fraudulent business practices. 14 Plaintiff predicates this claim on all the other purported 15 statutory and common law violations alleged in the complaint. 16 (Pl.’s Opp’n at 25.) 17 (Compl. ¶ 94.) The Unfair Competition Law (“UCL”), California Business and 18 Professions Code §§ 17200, et seq., forbids acts of unfair 19 competition, which includes “any unlawful, unfair or fraudulent 20 business act or practice.” 21 UCL is broad in scope, embracing anything that can properly be 22 called a business practice and that at the same time is forbidden 23 by law.” 24 App. 4th 950, 959 (2008) (internal citations omitted). 25 Cal. Bus. & Prof. Code § 17200. “The People ex rel. Gallegos v. Pacific Lumber Co., 158 Cal. To the extent that this claim is premised on negligence and 26 breach of fiduciary duty, HOLA preempts this claim for the 27 reasons mentioned supra. To the extent that this claim is 28 31 1 predicated on TILA,12 RESPA, the RFDCPA, fraud, breach of 2 contract, breach of implied covenant of good faith and fair 3 dealing, and wrongful foreclosure, this claim fails for the same 4 reasons set forth above. 5 6 Accordingly, Wachovia’s motion to dismiss the Seventh claim is GRANTED. 7 8 9 CONCLUSION For the foregoing reasons, Wachovia’s motion to dismiss is GRANTED. Plaintiff is granted fifteen (15) days from the date of 10 this order to file a second amended complaint in accordance with 11 this order. 12 the date of service of plaintiff’s second amended complaint to 13 file a response thereto. 14 15 Defendants are granted thirty (30) days from IT IS SO ORDERED. DATED: October 22, 2009 FRANK C. DAMRELL, JR. UNITED STATES DISTRICT JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 28 12 HOLA also preempts this claim based on a TILA violation for another reason; TILA concerns lending requirements and fits squarely within the description in 12 C.F.R. § 560.2(b). 32
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