-JFM Smith v. National City Mortgage et al, No. 2:2010cv00359 - Document 32 (E.D. Cal. 2010)

Court Description: ORDER granting in part and denying in part defendant PNC's Motion to Dismiss signed by Judge John A. Mendez on 12/29/10. Plaintiff shall file his amended complaint within twenty (20) days of the date of this Order. (Kaminski, H)
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-JFM Smith v. National City Mortgage et al Doc. 32 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 WILLIAM ALLEN SMITH, 12 Plaintiff, 13 14 15 16 v. NATIONAL CITY MORTGAGE, UNITED LENDERS GROUP; JEFF MOORE; KONDAUR CAPITAL CORPORATION; DOES I through 100, inclusive, 17 Defendants. 18 ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 2:10-CV-00359 JAM-JFM ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT PNC s MOTION TO DISMISS This matter comes before the Court on Defendant PNC Bank 19 20 National Association s (“PNC”) Motion to Dismiss (Doc. 16) and 21 Motion to Strike Portions of Plaintiff s First Amended Complaint 22 (Doc. 19). 23 the First Amended Complaint (“FAC”) (Doc. 13) filed by Plaintiff 24 William Allen Smith (“Plaintiff”). 25 motions.1 PNC asks the Court to dismiss and to strike portions Plaintiff opposes the 26 27 28 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). 1 Dockets.Justia.com 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 Plaintiff alleges that Defendants National City Mortgage,2 3 United Lenders Group (“United”), Jeff Moore (“Moore”), and 4 Kondaur Capital Corporation (“Kondaur”) fraudulently conspired 5 to induce him into an usurious loan for their financial gain and 6 that his right to cancel the loan agreement was improperly 7 reneged by PNC. 8 9 In October of 2006, Plaintiff sought a construction loan to finance the construction of a home located at 5 Stonefield 10 Court, Sacramento, California. 11 loan from PNC, Plaintiff was contacted by Moore, an independent 12 broker, who allegedly stated that he had been directed by PNC to 13 broker Plaintiff s loan through United. 14 One week after being denied a Moore allegedly advised Plaintiff that he could get him the 15 best deal and the best interest rate available on the market. 16 On or about January 31, 2007, PNC approved Plaintiff for a 17 construction loan at a 30-year fixed rate of 7.825% to borrow a 18 principal sum of $880,000.00 with a monthly mortgage payment of 19 $6,350.10 per month. 20 authorization, Plaintiff began construction on his home. Based on PNC s alleged verbal 21 Plaintiff alleges that United and Moore overstated his 22 income on the loan application without Plaintiff s knowledge or 23 consent. 24 $23,000.00 per month whereas Moore stated his income as 25 $33,000.00 per month. Plaintiff claims he accurately stated his income as Plaintiff avers that since Plaintiff 26 2 27 28 PNC is a successor by merger to National City Bank, previously doing business as National City Mortgage. The Court will refer to PNC instead of National City Mortgage since it is the current party in interest. 2 1 already gave PNC his correct income in his initial loan 2 application, PNC was aware that Moore inflated Plaintiff s 3 income in order to qualify him for the loan. 4 On February 9, 2007, the day of the loan closing, Plaintiff 5 alleges that the loan terms presented were worse than the terms 6 he had been promised. 7 adjustable rate loan that included a ten year interest-only 8 provision and required twice the down payment. 9 he felt pressured to sign the loan documents because On closing day, the loan was an Plaintiff claims 10 construction had already began on his house. 11 that he would not have signed the loan agreement except that the 12 loan documents contained a right to cancel notification citing 13 the Truth in Lending Act (“TILA”). 14 agent reassured him that the TILA notice gave him the right to 15 cancel the loan within three days of signing. 16 that he agreed to sign the documents based on the promise he 17 could rescind the loan. 18 Plaintiff alleges Plaintiff claims the escrow Plaintiff alleges Plaintiff alleges that within the three day cancellation 19 period, he exercised and delivered the loan cancellation to the 20 lender and title company. 21 representatives of PNC and Moore that the construction loan 22 could not be cancelled. 23 Plaintiff was notified by In or around June 2008, Plaintiff sought a forbearance 24 settlement and Plaintiff was allegedly advised by a PNC 25 representative that he would be eligible for a permanent 26 modification of his loan after a three month trial payment 27 period, if Plaintiff reduced his unsecured debt. 28 July 3, 2008, PNC sent a “forbearance agreement” to Plaintiff 3 On or about 1 requesting payments of $2,895.00 respectively, for Plaintiff s 2 July, August, and September mortgage payments. 3 alleges that at PNC s direction, he filed Chapter 7 bankruptcy 4 on July 30, 2008 to reduce his unsecured debt. 5 2008, Plaintiff contacted PNC and was advised by a PNC customer 6 representative that PNC had approved the loan modification and 7 that the modification paperwork was forthcoming. Plaintiff On December 15, 8 While waiting for the loan modification confirmation, 9 Plaintiff was allegedly notified by PNC that his loan had been 10 sold to Kondaur, who would finalize the loan modification. 11 February 12, 2009, Plaintiff alleges he was assured by a Kondaur 12 representative that the modification began by PNC would continue 13 to be processed. 14 Default to Plaintiff. 15 On On the same day, Kondaur issued a Notice of Plaintiff brings this action alleging nine causes of action 16 for fraud, declaratory relief (T.I.L.A.), breach of fiduciary 17 duty, declaratory relief (U.C.C. and California Commercial 18 Code), accounting, violation of the Rosenthal Debt Collection 19 Act, unjust enrichment, negligence and violation of California 20 Business and Professions Code Section 17200 et. seq. 21 22 23 24 25 II. OPINION A. Legal Standard 1. Motion to Dismiss A party may move to dismiss an action for failure to state 26 a claim upon which relief can be granted pursuant to Federal 27 Rule of Civil Procedure section 12(b)(6). 28 motion to dismiss, the court must accept the allegations in the 4 In considering a 1 complaint as true and draw all reasonable inferences in favor of 2 the plaintiff. 3 overruled on other grounds by Davis v. Scherer, 468 U.S. 183 4 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). 5 are mere “legal conclusions,” however, are not entitled to the 6 assumption of truth. 7 (2009), citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 8 (2007). 9 plead “enough facts to state a claim to relief that is plausible Scheuer v. Rhodes, 416 U.S. 232, 236 (1975), Assertions that Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 To survive a motion to dismiss, a plaintiff needs to 10 on its face.” 11 appropriate where the plaintiff fails to state a claim 12 supportable by a cognizable legal theory. 13 Pacifica Police Department, 901 F.2d 696, 699 (9th Cir. 1990). 14 Twombly, 550 U.S. at 570. Dismissal is Balistreri v. Upon granting a motion to dismiss for failure to state a 15 claim, the court has discretion to allow leave to amend the 16 complaint pursuant to Federal Rule of Civil Procedure § 15(a). 17 “Dismissal with prejudice and without leave to amend is not 18 appropriate unless it is clear . . . that the complaint could 19 not be saved by amendment.” 20 Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). 21 2. Eminence Capital, L.L.C. v. Aspeon, Motion to Strike 22 Rule 12(f) provides in pertinent part that: 23 The Court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. . . . Motions to strike are disfavored and infrequently granted. A motion to strike should not be granted unless it is clear that the matter to be stricken could have no possible bearing on the subject matter of the litigation. 24 25 26 27 28 Bassett v. Ruggles, et al., 2009 WL 2982895 at *24(E.D. 5 1 Cal. Sept. 14, 2009) (internal citations omitted). 2 3 B. Claims for Relief 4 5 1. Fraud PNC argues that Plaintiff does not plead his first claim 6 for fraud with particularity. 7 the fraud elements with sufficient detail to satisfy Rule 9(b) s 8 heightened pleading requirements. 9 Plaintiff responds that he pleads While pleadings generally require “a short and plain 10 statement of the claim showing that the pleader is entitled to 11 relief,” FED.R.CIV.P. 8(a)(2), when fraud is alleged “a party 12 must state with particularity the circumstances constituting 13 fraud. 14 . . .” FED.R.CIV.P. 9(b). Rule 9(b) requires fraud claims to be “specific enough to 15 give defendants notice of the particular misconduct . . . so 16 that they can defend against the charge and not just deny that 17 they have done anything wrong.” 18 F.3d 1014, 1019 (9th Cir. 2001) (internal quotations omitted). 19 “Averments of fraud must be accompanied by the who, what, when, 20 where, and how of the misconduct charged.” 21 Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (internal 22 citations omitted). 23 pleading standard, it “does not require nor make legitimate the 24 pleading of detailed evidentiary matter.” 25 Enterprises, 476 F.2d 393, 397 (9th Cir. 1973). 26 Bly-Magee v. California, 236 Vess v. Ciba-Geigy While Rule 9(b) requires a heightened Walling v. Beverly To plead a cause of action for fraud, Plaintiff must show: 27 (1) a misrepresentation; (2) knowledge of falsity; (3) intent to 28 defraud; (4) justifiable reliance; and (5) resulting damage. 6 1 Buckland v. Threshold Enterprises, Ltd., 155 Cal.App.4th 798, 2 807 (Cal. Ct. App. 2d 2007). 3 Plaintiff does not properly allege the intent to defraud and the 4 justifiable reliance elements of the fraud allegation. 5 PNC s main argument is that The Court finds that Plaintiff has sufficiently pled the 6 intent to defraud element by alleging that PNC “paid Moore and 7 United commissions based on their ability to make these false 8 statements and induce Plaintiff into the loan agreement.” 9 at ¶ 114. Id. Plaintiff also alleges a scheme in which PNC s intent 10 “under the securitization process, was to trap as many 11 unsuspecting borrowers as possible . . . regardless of the 12 borrower s credit history or ability to pay, take as much of the 13 borrower s equity as possible, then sell the note to an entity 14 who could foreclose upon the note free from fraud allegations.” 15 Id. at ¶ 43. 16 Furthermore, Plaintiff has properly alleged justifiable 17 reliance. 18 because he was given a written agreement that he had the right 19 to cancel the loan within three days and he was verbally assured 20 he could rescind within those three days. 21 Plaintiff also alleges that he paid his mortgage payments in 22 reliance on PNC s promises that he could receive a loan 23 modification. 24 Plaintiff avers that he signed the loan documents Id. at ¶ 61-62. Id. at ¶ 69. The FAC is specific enough to put PNC on notice of the 25 charges. Accordingly, PNC s motion to dismiss Claim 1 alleging 26 fraud is DENIED. 27 2. Breach of Fiduciary Duty 28 PNC argues that Claim 3, alleging a breach of fiduciary 7 1 duty, fails to state a claim because Moore represented himself 2 to be Plaintiff s fiduciary, not PNC. 3 of California law, financial institutions owe no legal or 4 fiduciary duty of care to borrowers. 5 since PNC referred Moore to Plaintiff, the fiduciary 6 relationship that existed between Moore and Plaintiff extended 7 to PNC through agency principles and, as a matter of law, a 8 fiduciary relationship exists between a real estate loan broker 9 and a borrower. 10 Additionally, as a matter Plaintiff counters that “The elements of a cause of action for breach of fiduciary 11 duty are: 1) the existence of a fiduciary duty; 2) a breach of 12 the fiduciary duty; and 3) resulting damage.” 13 Weiss, 165 Cal.App.4th 515, 524 (Cal. Ct. App. 6d 2008). 14 lending context, “a financial institution owes no duty of care 15 to a borrower when the institution s involvement in the loan 16 transaction does not exceed the scope of its conventional role 17 as a mere lender of money.” 18 Loan Ass n, 231 Cal.App.3d 1089, 1096 (Cal. Ct. App. 3d 1991). 19 Pellegrini v. In the Nymark v. Heart Federal Savings & Plaintiff does not state a claim for breach of fiduciary 20 duty. 21 no fiduciary duty towards Plaintiff. 22 existence of a fiduciary relationship, there can be no claim for 23 relief against PNC. 24 3 alleging a breach of fiduciary duty is GRANTED WITH PREJUDICE. 25 26 3. PNC was the “mere lender of money” in this case and holds As such, without the Accordingly, PNC s motion to dismiss Claim Declaratory Relief In Claim 2, Plaintiff pleads that he had the right to 27 rescind the loan based on TILA, 15 U.S.C § 1635(a), and 28 Regulation Z, 12 C.F.R. § 226.15. 8 In Claim 4, Plaintiff pleads 1 that PNC violated the California Commercial Code § 3301, et seq. 2 PNC argues that both of Plaintiff s claims fail as a matter of 3 law so there is no controversy necessitating declaratory relief. 4 “Declaratory relief is appropriate (1) when the judgment 5 will serve a useful purpose in clarifying and settling the legal 6 relations in issue, and (2) when it will terminate and afford 7 relief from the uncertainty, insecurity, and controversy giving 8 rise to the proceeding.” 9 (9th Cir. 1986) (citations omitted). 10 Guerra v. Sutton, 783 F.2d 1371, 1376 Plaintiff s claims for declaratory relief fail as a matter 11 of law. Claim 2 alleges that PNC violated Plaintiff s right to 12 cancel the loan as prescribed by TILA, 15 U.S.C. § 1635(a) and 13 Regulation Z, 12 C.F.R. § 226.15. 14 provision does not apply to “residential mortgage 15 transaction[s].” 16 residential mortgage transaction is “a transaction in which a 17 mortgage . . . is created . . . to finance the acquisition or 18 initial construction of such dwelling.” 19 (emphasis added). 20 construction loan to finance the construction of a home for his 21 family. 22 not apply to this loan as a matter of law. FAC ¶ 45. However, the recission 15 U.S.C. 1635(e); 12 C.F.R. § 226.15(f). A 15 U.S.C. § 1602(w) Here, Plaintiff alleges that the loan was a Therefore, TILA s recission provision does 23 24 Similarly, the Court cannot issue a declaratory judgment under 25 Claim 4. Plaintiff seeks a declaratory judgment stating that PNC 26 and the other defendants did not follow the legal requirements of 27 the California Commercial Code § 3301, et seq. to produce a proper 28 promissory note with which to foreclose the property. 9 However, 1 nonjudicial foreclosures are not governed by California Commercial 2 Code § 3301. 3 2010 WL 3853325, at *2 (E.D.Cal. Sept. 30, 2010). 4 foreclosures are governed by California Civil Code § 2924 which 5 does not require possession of a promissory note to initiate 6 foreclosure proceedings. 7 Inc., No. 2:09-2385, 2010 WL 476674, at *7 (E.D. Cal. Feb. 3, 8 2010). 9 violation of an inapplicable Commercial Code provision, there is no Singh v. America s Servicing Co., No. 2:10-CV-0836, Nonjudicial Pok v. American Home Mortgage Servicing, Therefore, because Claim 4 is premised upon the alleged 10 actual controversy and the Court cannot issue declaratory relief. 11 Accordingly, PNC s motion to dismiss Claim 2 and Claim 4 is GRANTED 12 WITH PREJUDICE. 13 4. Accounting 14 PNC argues that with respect to Claim 5, Plaintiff fails to 15 state a cause of action for an accounting because there is no 16 fiduciary duty between PNC and Plaintiff and because Plaintiff does 17 not allege that he is confused about who he owes or that any funds 18 are owed to him. 19 relationship between PNC and Plaintiff and an agency relationship 20 between PNC and the other defendants. 21 because the loan was modified and sold to a third party and there 22 are various parties contesting the amount of the note, he needs an 23 accounting. 24 Plaintiff alleges that there is a fiduciary Plaintiff also alleges that Under California law, “a fiduciary relationship between the 25 parties is not required to state a cause of action for accounting. 26 All that is required is that some relationship exists that requires 27 an accounting”. 28 (Cal. Ct. App. 3d 2009). Teselle v. McLoughlin, 173 Cal.App.4th 156, 179 10 1 2 3 4 5 An action for an accounting is equitable in nature. It may be brought to compel the defendant to account to the plaintiff for money or property, (1) where a fiduciary relationship exists between the parties, or (2) where, even though no fiduciary relationship exists, the accounts are so complicated that an ordinary legal action demanding a fixed sum is impracticable. 6 Quinteros v. Aurora Loan Services, No. CIV-F-09-2200, 2010 7 WL 3817541, at * 5 (E.D.Cal. Sept. 30, 2010). 8 9 Accounts that are complicated enough to warrant an accounting generally involve a dispute where the plaintiff 10 claims the defendant owes him money. 11 Superior Court, 31 Cal.App.4th 573, 593-94 (Cal. Ct. App. 12 2d 1995) (dismissing the accounting claims since the 13 defendant owed no money to plaintiffs and did not deprive 14 them of any monies). 15 See Union Bank v. As this Court found, supra, there is no fiduciary 16 relationship between PNC and Plaintiff. Additionally, the 17 amounts at issue are monies Plaintiff owes to PNC under the 18 mortgage. 19 owed money, has no right to seek an accounting.” 20 First American Loanstar Trustee Services, No. 10cv00119, 2010 WL 21 1445192 *5 (S.D. Cal. Apr. 12, 2010). 22 needs an accounting because there are multiple parties connected 23 to his note and that the parties are contesting the amount 24 Plaintiff owes. 25 an accounting. 26 appears from the complaint that none is necessary. 27 James Church of Christ Holiness v. Superior Court In and For Los 28 Angeles County, 135 Cal.App.2d 352, 359 (Cal. Ct. App. 2d 1955). “Plaintiffs, as the party owing money, not the party Hernandez v. Plaintiff argues that he These allegations are not sufficient to merit “A suit for an accounting will not lie where it 11 . . .” St. 1 Accordingly, PNC s motion to dismiss Claim 5 is GRANTED WITH 2 PREJUDICE. 3 5. Unjust Enrichment 4 PNC argues that Claim 7, alleging unjust enrichment, is 5 flawed because the allegations are vague, conclusory and fail to 6 reflect any facts showing that PNC was unjustly enriched. 7 Plaintiff has not responded to this argument, and a review of 8 this claim reveals that it lacks factual detail. 9 must allege sufficient factual detail to support violations of A plaintiff 10 the elements of the alleged causes of action. Ashcroft v. 11 Iqbal, 129 S.Ct. 1937, 1950 (2009). 12 conclusory manner, the elements for unjust enrichment but does 13 not provide any supporting facts alleging how any of the 14 commissions and fees PNC received by selling the loan to Kandaur 15 constitutes unjust enrichment. 16 dismiss the unjust enrichment claim is GRANTED WITH LEAVE TO 17 AMEND. The FAC alleges, in a Accordingly, PNC s motion to 18 6. Negligence 19 PNC argues that Claim 8 fails to state a claim against PNC for 20 negligence. Plaintiff s reply clarifies that he is not alleging a 21 claim for negligence against PNC. 22 dismiss Claim 8 is GRANTED WITH PREJUDICE. Accordingly, PNC s motion to 23 7. Business and Professions Code § 17200 24 PNC argues that Plaintiff does not state a claim under 25 California Business and Professions Code (“UCL”) § 17200 because he 26 fails to sufficiently plead any unlawful conduct by PNC, he fails 27 to plead any fraudulent conduct by PNC, and he fails to plead 28 damages capable of restitution. 12 1 Section 17200 prohibits any “unlawful, unfair or fraudulent 2 business act or practice.” Cal. Bus. & Prof. Code § 17200. An 3 action based on this statute “borrows violations of other laws and 4 treats these violations, when committed pursuant to business 5 activity, as unlawful practices independently actionable under 6 § 17200 and subject to the distinct remedies provided thereunder.” 7 Farmers Insurance Exchange v. Superior Court, 2 Cal. 4th 377, 383 8 (Cal. 1992) (internal quotations omitted). 9 action under this section must be based on some predicate act Therefore, a cause of 10 involving a violation of some other statue. Cal-Tech 11 Communications v. L.A. Cellular Telephone Co., 20 Cal. 4th 163, 180 12 (Cal. 1999). 13 Here, Plaintiff alleges that PNC violated several laws: 14 (1) Plaintiff alleges PNC violated the California Commercial Code 15 § 3301 et seq. for improper procedures surrounding the mortgage 16 note; (2) breach of fiduciary duty; (3) negligence for breaching 17 its fiduciary duty; (4) fraud for approving Plaintiff s loan; and 18 (5) fraud and a violation of predatory lending laws when it 19 allegedly ordered and authorized Moore s conduct. 20 supra, Plaintiff does not have a claim for a violation of § 3301 21 since this is a nonjudicial foreclosure and PNC does not owe 22 Plaintiff a fiduciary duty. 23 potentially actionable under the UCL. 24 As discussed, Thus, only the fraud claims are As with allegations of fraud, “a plaintiff alleging unfair 25 business practices under these statutes must state with reasonable 26 particularity the facts supporting the statutory elements of the 27 violation.” 28 CV-1561, 2010 WL 2618729, at * 12 (S.D. Cal. June 25, 2010). Quintero Family Trust v. OneWest Bank, F.S.B., No. 09- 13 As 1 discussed, supra, Plaintiff adequately pled the fraud allegations. 2 Plaintiff has not, however, alleged an injury in fact, a 3 necessary element for a § 17200 claim. Plaintiff alleges that as a 4 result of PNC s business practices, he was required to pay usurious 5 loan payments and he now suffers from a negative credit rating due 6 to petitioning for Chapter 7 bankruptcy, allegedly at PNC s 7 direction. 8 “A plaintiff suffers an injury in fact for purposes of 9 standing under the UCL when he or she has: (1) expended money due 10 to the defendant's acts of unfair competition; (2) lost money or 11 property; or (3) been denied money to which he or she has a 12 cognizable claim.” 13 1008, 1012 (S.D. Cal. 2009) (internal citations omitted). 14 statutory limitation requires that a plaintiff show he has suffered 15 losses capable of restitution.” 16 Registration Systems, Inc., Nos. 2:09-cv-0458 & 2:10-cv-0342, 2010 17 WL 3719314, at *12 (E.D. Cal. Sept. 16, 2010) (internal citations 18 omitted). 19 that he has parted, deliberately or otherwise, with some 20 identifiable sum formerly belonging to him or subject to his 21 control; it has passed out of his hands by some means, such as 22 being spent or mislaid.” 23 Cal.App.4th 210, 244 (Cal. Ct. App. 6d 2010). 24 Marilao v. McDonald s Corp., 632 F.Supp. 2d “This Small v. Mortgage Electronic “Ordinarily when we say someone has „lost money we mean Silvaco Data Systems v. Intel Corp., 184 The mortgage payments are not subject to restitutionary 25 damages. Plaintiff made his mortgage payments pursuant to his 26 contractual obligations and in accordance with the terms and 27 conditions of the loan, which he knew and understood at the time of 28 closing. Likewise, the negative credit rating due to filing for 14 1 bankruptcy is not a loss capable of restitution. A negative credit 2 rating is not an identifiable sum of money. 3 Pacific Mortgage Co. Inc., No. CV F 10-1018, 2010 WL 2574161, at 4 *15 (E.D. Cal. June 25, 2010) (“UCL claim offers an insufficient, 5 bare allegation that unlawful business practices „damaged 6 plaintiff s creditworthiness. ”). 7 dismiss the § 17200 claim is GRANTED WITH PREJUDICE. See Manabat v. Sierra Accordingly, PNC s motion to 8 C. Motion to Strike 9 PNC asks the Court to strike reference to punitive or 10 exemplary damages and attorneys fees. A motion to strike must 11 survive a stringent standard and “should not be granted unless it 12 is absolutely clear that the matter to be stricken could have no 13 possible bearing on the litigation.” 14 F.Supp. 2d 1101, 1113 (E.D. Cal. 2009). Brewer v. Indymac Bank, 609 15 1. Punitive or Exemplary Damages 16 PNC uses the Motion to Strike as another opportunity to 17 reargue that Plaintiff has not sufficiently alleged fraud and 18 therefore is unable to recover punitive damages. 19 Court found supra that Plaintiff properly alleged the fraud 20 claim and since Plaintiff could possibly recover punitive 21 damages if he proves that PNC engaged in “oppression, fraud, and 22 malice,” California Civil Code § 3294, Plaintiff s request for 23 punitive damages could bear on the litigation. 24 PNC s motion to strike Plaintiff s request for punitive damages 25 is DENIED. Since the Accordingly, 26 2. Attorneys Fees 27 PNC argues that Plaintiff cannot recuperate attorneys fees 28 because Plaintiff does not allege a breach of the loan contract. 15 1 PNC reasons that even though the loan contract has an attorneys 2 fees provision, Plaintiff is not trying to enforce that contract so 3 he is not entitled to attorneys fees. 4 attorneys fees are not available under the UCL. 5 counters that attorneys fees can be recovered as costs of suit 6 when there is an express provision in the contract that provides 7 for recovery of fees, and the parties to the litigation are parties 8 to the contract containing the attorneys fees provision. 9 Plaintiff also argues that the UCL provides attorney s fees. 10 PNC also argues that Plaintiff California Code of Civil Procedure § 1033.5(a)(10)(A) permits 11 recovery of attorney fees “when authorized by . . . Contract.” 12 California Civil Code § 1717(a) addresses recovery of attorney fees 13 in contract actions and provides: 14 17 In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract . . . shall be entitled to reasonable attorney's fees in addition to other costs. 18 Even though Plaintiff is not directly alleging a breach of 19 contract, he alleges fraud which could ultimately undermine the 20 validity of the contract. 21 incurred in the enforcement of a contract „includes attorneys' fees 22 incurred in defending against a challenge to the underlying 23 validity of the obligation. ” 24 Cal.App.4th 873, 878 (Cal. Ct. App. 6d 1994) (internal citations 25 omitted). 26 attorneys fees to defendants who must litigate to maintain their 27 property rights in a promissory note, so might this Court award 28 attorneys fees to Plaintiff if he can successfully prove that the 15 16 “[A]n obligation to pay attorney fees Siligo v. Castellucci, 21 Since the Eastern District of California has awarded 16 1 note is tainted by fraud. 2 No. CV F 10-0029, 2010 WL 1444675, at * 3 (E.D. Cal. Apr. 12, 3 2010). 4 See Whittle v. Wells Fargo Bank, N.A., As to the UCL claim for attorneys fees, the Court decided 5 supra to dismiss Plaintiff s TILA claim. Thus, he is not entitled 6 to attorneys fees under the UCL. 7 strike Plaintiff s request for attorneys fees is DENIED. Accordingly, PNC s motion to 8 9 III. ORDER 10 For the reasons set forth above, 11 PNC s motion to dismiss Claim 1 alleging fraud claim is 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DENIED. PNC s motion to dismiss Claim 2 requesting declaratory relief is GRANTED WITH PREJUDICE. PNC s motion to dismiss Claim 3 alleging a breach of fiduciary duty is GRANTED WITH PREJUDICE. PNC s motion to dismiss Claim 4 requesting declaratory relief is GRANTED WITH PREJUDICE. PNC s motion to dismiss Claim 5 requesting an accounting is GRANTED WITH PREJUDICE. PNC s motion to dismiss Claim 7 alleging unjust enrichment claim is GRANTED WITH LEAVE TO AMEND. PNC s motion to dismiss Claim 8 alleging negligence is GRANTED WITH PREJUDICE. PNC s motion to dismiss Claim 9 alleging a violation of § 17200 is GRANTED WITH PREJUDICE. PNC s motion to strike reference to punitive damages is DENIED. 17 1 2 3 4 5 6 7 PNC s motion to strike reference to attorneys fees is DENIED. Plaintiff shall file his amended complaint within twenty (20) days of the date of this Order. IT IS SO ORDERED. Dated: December 29, 2010 ____________________________ JOHN A. MENDEZ, UNITED STATES DISTRICT JUDGE 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18