(PS) Reed v. Wells Fargo Home Mortgage Inc. et al, No. 2:2010cv02133 - Document 29 (E.D. Cal. 2010)

Court Description: ORDER and FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Edmund F. Brennan on 12/10/10 ORDERING that the pretrial scheduling conference set for 12/22/10 is VACATED; As a result, the parties are not required to submit status reports as provid ed in the 8/10/10 3 Order. However, if the recommendation of dismissal herein is not adopted by the district judge, the status conference will be rescheduled and parties will be required to submit status reports; RECOMMENDING that the complaint be dismissed; that the dfts 9 and 11 Motions to Dismiss be granted; that the pltf's 24 Motion for TRO be denied; and that the Clerk be directed to close this case. Motions referred to Judge Garland E. Burrell, Jr. Objections due within 14 days. (Manzer, C)

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(PS) Reed v. Wells Fargo Home Mortgage Inc. et al Doc. 29 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 MALIK REED, 11 Plaintiff, 12 13 14 15 16 No. CIV S-10-2133 GEB EFB PS vs. WELLS FARGO HOME MORTGAGE INC.; FIRST AMERICAN LOANSTAR TRUSTEE SERVICES; NEW CENTURY MORTGAGE CORPORATION; and US BANK NATIONAL ASSOCIATION, ORDER AND FINDINGS AND RECOMMENDATIONS Defendants. ______________________________________/ 17 18 This case, in which plaintiff is proceeding pro se, is before the undersigned pursuant to 19 Eastern District of California Local Rule 302(c)(21). See 28 U.S.C. § 636(b)(1). Pending before 20 the undersigned are (1) defendant First American Trustee Servicing Solutions, LLC, f/k/a First 21 American Loanstar Trustee Services, LLC’s motion to dismiss plaintiff’s complaint, Dckt. No. 9; 22 (2) defendant Wells Fargo Home Mortgage, Inc.’s motion to dismiss plaintiff’s complaint, Dckt. 23 No. 11; and (3) plaintiff’s motion for a temporary restraining order, Dckt. No. 24. 24 I. 25 26 Background In this action, plaintiff challenges the foreclosure sale of his home. He alleges that he was “misled and taken advantage of” and that defendants engaged in fraud and unlawful, unfair, 1 Dockets.Justia.com 1 and deceptive business practices during and after the origination of his mortgage loan. Dckt. No. 2 1 at 1-2. He alleges that the mortgage loan at issue was created by America’s Servicing Co., but 3 that in order to deceive regulators and plaintiff, plaintiff’s promissory note was unlawfully sold 4 to Wall Street investors. Id. at 3. He further alleges that defendants wrongfully sold his property 5 at a trustee’s sale without producing the original note and without being the holder in due course, 6 and he alleges that he never actually received a loan. Id. at 2; ¶¶ 8, 15. Plaintiff’s complaint 7 alleges claims for fraud; violations of the Truth in Lending Act (“TILA”); violations of the 8 Federal Fair Debt Collection Practices Act (“FDCPA”) and the California Rosenthal Fair Debt 9 Collection Practices Act (“Rosenthal Act”); wrongful foreclosure; breach of the covenant of 10 11 good faith and fair dealing; and declaratory relief. Id. Specifically, plaintiff alleges that he was the owner of the real property at issue in this 12 action (“the subject property”); that on December 15, 2005, he executed and delivered to 13 defendant New Century Mortgage Corporation (“New Century”) a written promissory note in the 14 amount of $365,750.00 for the subject property; and that Wells Fargo Home Mortgage, Inc., dba 15 America’s Servicing Co. (“Wells Fargo”) served as plaintiff’s loan servicer. Compl. ¶¶ 1, 5; 16 Loanstar’s Req. for Jud. Notice, Dckt. No. 9-1, Ex. A; Wells Fargo’s Req. for Jud. Notice, Dckt. 17 No. 11, Ex. 1.1 As security for the note, plaintiff executed and delivered to New Century a deed 18 of trust dated January 11, 2006 in the amount of $365.750.00. Compl. ¶ 6; Dckt. No. 9-1, Ex. A; 19 Dckt. No. 11, Ex. 1. The deed of trust was recorded in Sacramento County on January 11, 2006. 20 Compl. ¶ 6; Dckt. No. 9-1, Ex. A; Dckt. No. 11, Ex. 1. First American Loanstar Trustee 21 Servicing LLC (“Loanstar”) is the successor trustee under the deed of trust pursuant to a 22 1 23 24 25 26 Loanstar and Wells Fargo’s requests for judicial notice of the exhibits cited herein are granted. Judicial notice may be taken of “adjudicative facts” (e.g., court records, pleadings, etc.) and other facts not subject to reasonable dispute and either “generally known” in the community or “capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably questioned.” Fed. R. Evid. 201(b). A court may also take judicial notice of court records. See MGIC Indem. Co. v. Weisman, 803 F.2d 500, 505 (9th Cir. 1986); United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980). Accordingly, the court may consider those documents on this Rule 12(b)(6) motion. 2 1 Substitution of Trustee recorded in Sacramento County on January 23, 2009. Dckt. No. 9-1, Ex. 2 C. The beneficial interest in the deed of trust was assigned to U.S. Bank pursuant to an 3 assignment deed of trust recorded in Sacramento County on March 4, 2009. Dckt. No. 9-1, Ex. 4 D; Dckt. No. 11, Ex. 3. 5 On December 10, 2008, Loanstar recorded a “Notice of Default and Election to Sell” and 6 a “Declaration of Compliance” under California Civil Code section 2923.5 in Sacramento 7 County. Dckt. No. 9-1, Ex. B; Dckt. No. 11, Ex. 2. Thereafter, on December 21, 2009, Loanstar 8 recorded a “Notice of Trustee’s Sale,” noticing the sale for January 11, 2010. Compl. ¶ 7; Dckt. 9 No. 9-1, Ex. E; Dckt. No. 11, Ex. 5; see also Dckt. No. 11, Exs. 4, 6. The subject property was 10 then sold at a Trustee’s Sale on February 11, 2010, and title to the subject property was 11 conveyed to U.S. Bank. Dckt. No. 9-1, Ex. F; Dckt. No. 11, Ex. 7. 12 On February 19, 2010, plaintiff filed a complaint in Sacramento County Superior Court 13 against defendants American’s Servicing Co. and Loanstar, to enjoin foreclosure, for declaratory 14 relief, and an accounting. Dckt. No. 9-1, Ex. G. Loanstar filed a demurrer, plaintiff opposed it, 15 and on July 6, 2010, the state court sustained the demurrer without leave to amend. Dckt. No. 9- 16 1, Exs. H, I, J. Then, on July 6, 2010, the state court entered judgment in Loanstar’s favor. 17 Dckt. No. 9-1, Ex. K. 18 On August 10, 2010, plaintiff filed a complaint herein against Wells Fargo, Loanstar, 19 New Century, and U.S. Bank. Dckt. No. 1. According to plaintiff, the notice of default and 20 election to sell were based on Loanstar’s contention that plaintiff had breached the obligation 21 secured by the deed of trust by failing to pay $409,072.76, and that Loanstar, as beneficiary, 22 elected to sell the trust property to satisfy that obligation. Id. ¶ 7. Plaintiff contends that he is 23 not in breach of that obligation since Loanstar is not the “holder in due course” and improperly 24 refused plaintiff’s tender offer to pay upon Loanstar’s validation of the debt. Id. ¶ 8. Plaintiff 25 contends that the debt is invalid under the FDCPA and the Rosenthal Act, and that defendants 26 have failed to properly respond to plaintiff’s offer and have failed to validate the purported debt. 3 1 Id. Plaintiff contends that all of the defendants acted in concert and ratified the conduct of the 2 other defendants. Id. ¶¶ 9, 13. 3 II. Motions to Dismiss Plaintiff’s Complaint 4 Defendants Loanstar and Wells Fargo both move to dismiss plaintiff’s complaint for 5 failure to state a claim pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). Dckt. 6 Nos. 9, 11. Defendants also contend that plaintiff’s complaint fails to comply with Rules 8(a) 7 and 8(d) in that the complaint does not present a “short and plain statement” of plaintiff’s claims 8 and is not “simple, concise and direct,” and that plaintiff has not pled fraud with particularity, as 9 required by Rule 9(b). Id. 10 A. Standards 11 To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint 12 must contain more than a “formulaic recitation of the elements of a cause of action”; it must 13 contain factual allegations sufficient to “raise a right to relief above the speculative level.” Bell 14 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “The pleading must contain something more 15 . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of 16 action.” Id. (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235- 17 236 (3d ed. 2004)). “[A] complaint must contain sufficient factual matter, accepted as true, to 18 ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 19 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff 20 pleads factual content that allows the court to draw the reasonable inference that the defendant is 21 liable for the misconduct alleged.” Id. Dismissal is appropriate based either on the lack of 22 cognizable legal theories or the lack of pleading sufficient facts to support cognizable legal 23 theories. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). 24 In considering a motion to dismiss, the court must accept as true the allegations of the 25 complaint in question, Hospital Bldg. Co. v. Rex Hosp. Trs., 425 U.S. 738, 740 (1976), construe 26 the pleading in the light most favorable to the party opposing the motion, and resolve all doubts 4 1 in the pleader’s favor. Jenkins v. McKeithen, 395 U.S. 411, 421, reh’g denied, 396 U.S. 869 2 (1969). The court will “‘presume that general allegations embrace those specific facts that are 3 necessary to support the claim.’” Nat’l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 256 4 (1994) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). 5 Pro se pleadings are held to a less stringent standard than those drafted by lawyers. 6 Haines v. Kerner, 404 U.S. 519, 520 (1972); Bretz v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 7 1985). However, the court’s liberal interpretation of a pro se litigant’s pleading may not supply 8 essential elements of a claim that are not plead. Pena v. Gardner, 976 F.2d 469, 471 (9th Cir. 9 1992); Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). 10 Furthermore, “[t]he court is not required to accept legal conclusions cast in the form of factual 11 allegations if those conclusions cannot reasonably be drawn from the facts alleged.” Clegg v. 12 Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). Neither need the court accept 13 unreasonable inferences, or unwarranted deductions of fact. W. Mining Council v. Watt, 643 14 F.2d 618, 624 (9th Cir. 1981). 15 The court may consider facts established by exhibits attached to the complaint. Durning 16 v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). The court may also consider facts 17 which may be judicially noticed, Mullis v. U.S. Bankr. Ct., 828 F.2d at 1388, and matters of 18 public record, including pleadings, orders, and other papers filed with the court. Mack v. South 19 Bay Beer Distribs., 798 F.2d 1279, 1282 (9th Cir. 1986). 20 A pro se litigant is entitled to notice of the deficiencies in the complaint and an 21 opportunity to amend, unless the complaint’s deficiencies could not be cured by amendment. 22 See Noll v. Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987). 23 24 25 26 B. Plaintiff’s Claims 1. Fraud, Failure of Consideration, and Usury In his first claim for relief, plaintiff alleges that defendants “used deceit and deception in creating and maintaining through its entirety a fraudulent mortgage loan.” Compl. ¶ 15. 5 1 Specifically, plaintiff contends that New Century fraudulently sold plaintiff’s promissory note 2 for equal value and that therefore, in essence, plaintiff funded his own loan. Id. Plaintiff 3 contends that New Century then transferred and/or sold the fraudulent loan to Wells Fargo. Id. 4 Plaintiff alleges that although New Century and Wells Fargo represented to plaintiff that they 5 were going to fund a loan, they “did not in fact loan money to plaintiff.” Id. Loanstar and Wells 6 Fargo move to dismiss plaintiff’s fraud claim, arguing that under Federal Rule of Civil Procedure 7 9(b), fraud must be pled with particularity and that plaintiff’s vague and general allegations do 8 not meet that standard. Dckt. No. 9 at 8; Dckt. No. 11 at 14-15. Loanstar also argues that there 9 are no fraud allegations whatsoever against Loanstar, and Wells Fargo points out that plaintiff 10 lacks any of the “who, what, when, where and how” required for alleging fraud against Wells 11 Fargo. Dckt. No. 9 at 8; Dckt. No. 11 at 16. Loanstar further argues that plaintiff has failed to 12 state a claim for failure of consideration or for usury. Dckt. No. 9 at 9. 13 Plaintiff’s claims for fraud, failure of consideration, and usury must be dismissed. 14 Plaintiff’s conclusory and nearly unintelligible fraud claim fails under Rule 9(b), which requires 15 fraud claims to be pled with particularity. To state a claim for fraud, a plaintiff must plead facts 16 specifically demonstrating “(a) misrepresentation; (b) knowledge of falsity (or scienter); (c) 17 intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” 18 Small v. Fritz Cos., 30 Cal. 4th 167, 173 (2003); see generally Cal. Civ. Code §§ 1709-10. “In 19 all averments of fraud . . . , the circumstances constituting fraud . . . shall be stated with 20 particularity.” Fed. R. Civ. Proc. 9(b). The allegations must be “specific enough to give 21 defendants notice of the particular misconduct which is alleged to constitute the fraud charged so 22 that they can defend against the charge and not just deny that they have done anything wrong.” 23 Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). In addition to the “time, place and 24 content of an alleged misrepresentation,” a complaint “must set forth what is false or misleading 25 about a statement, and . . . an explanation as to why the statement or omission complained of was 26 false or misleading.” Yourish v. Cal. Amplifier, 191 F.3d 983, 993, n.10 (9th Cir. 1999). The 6 1 complaint must also name the persons who made the allegedly fraudulent statements. See 2 Morris v. BMW of N. Am., LLC, 2007 WL 3342612, at *3 (N.D. Cal. 2007) (citing In re Glenfed, 3 Inc. Sec. Litig., 42 F.3d 1541, 1547-48 n.7 (9th Cir. 1994) (en banc)). 4 Here, plaintiff does not identify any specific misrepresentations or any facts about those 5 purported misrepresentations. Indeed, the complaint fails to reference Loanstar at all in 6 connection with plaintiff’s fraud claim, and with regard to Wells Fargo, fails to state who 7 allegedly made fraudulent representations on behalf of Wells Fargo, whether those speakers had 8 authority to speak, how the alleged misrepresentations were made, or any of the other facts 9 necessary to state a fraud claim. In other words, the complaint does not identify “‘the who, 10 what, when, where, and how’” of the alleged fraud. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 11 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). 12 Moreover, plaintiff’s fraud claim appears to be based on the theory that no money was actually 13 ever loaned to him. See Compl. ¶ 15; Pl.’s Opp’n, Dckt. No. 19 at 4. However, that theory is 14 belied by the deed of trust, which evidences that plaintiff was in fact loaned $365.750.00.2 Dckt. 15 No. 9-1, Ex. A; Dckt. No. 11, Ex. 1. 16 Plaintiff’s claim for failure of consideration also appears to be based on plaintiff’s theory 17 that no money was loaned to plaintiff and that, therefore, no consideration was given in 18 exchange for his loan obligations. However, as discussed above, that theory is belied by the 19 deed of trust. The document evidences that plaintiff was, in fact, loaned $365.750.00, and was 20 given the right to possess and hold title to the subject property in exchange for his loan 21 obligations. Dckt. No. 9-1, Ex. A; Dckt. No. 11, Ex. 1. 22 2 23 24 25 26 As Wells Fargo points out, plaintiff’s argument that he in essence “funded his own loan,” could be a variant on the long-discredited “vapor money” theory, as advanced in past years by fringe tax protestors or confidence artists running “eliminate your debt” scams. Dckt. No. 11 at 15, n.5. “The main premise [of the ‘vapor money’ theory] is that no enforceable debt accrues from a lender that funds a loan through wire transfers rather than through hard cash.” Frances Kenny Family Trust v. World Sav. Bank FSB, 2005 WL 106792, at *1 (N.D. Cal. Jan. 19, 2005). However, that theory “has been squarely addressed and rejected by various courts throughout the country for over twenty years.” Id. at 5 (citations omitted). 7 Finally, to the extent plaintiff attempts to state a claim for usury, the claim fails because 1 2 plaintiff does not allege facts demonstrating that any of the elements of a usury claim are 3 satisfied. “The essential elements of usury are: (1) The transaction must be a loan or 4 forbearance; (2) the interest to be paid must exceed the statutory maximum; (3) the loan and 5 interest must be absolutely repayable by the borrower; and (4) the lender must have a willful 6 intent to enter into a usurious transaction.” Ghirardo v. Antonioli, 8 Cal. 4th 791, 798 (1994) 7 (citations omitted). Here, plaintiff does not make any allegations about the loan’s interest rate, 8 does not allege that the loan’s interest rate was in excess of the statutory maximum rate, and does 9 not allege that defendants had a willful intent to enter into a usurious transaction with plaintiff. 10 In fact, plaintiff does not even allege that specific defendants charged plaintiff interest in 11 connection with the subject loan. 12 Therefore, plaintiff’s fraud, failure of consideration, and usury claims must be dismissed. 13 2. 14 In his second claim for relief, plaintiff alleges that defendants New Century and Wells 15 Fargo violated TILA by failing to disclose and/or concealing “the vital fact that [New Century 16 and Wells Fargo were] not making plaintiff a loan, but used ‘check kiting.’” Compl. ¶ 16. 17 Loanstar and Wells Fargo move to dismiss plaintiff’s TILA claim, arguing that plaintiff’s claim 18 is time-barred; that plaintiff lacks standing since he has not tendered or offered to tender the 19 amount due; and that his right of rescission terminated when the deed of trust was foreclosed and 20 the subject property was sold. Dckt. No. 9 at 9-10; Dckt. No. 11 at 12-13, 19-21. Wells Fargo 21 also argues that plaintiff’s TILA claim is unintelligible and that “it is difficult to ascertain what 22 exactly plaintiff is alleging by this claim.” Dckt. No. 11 at 21. According to Wells Fargo, 23 although plaintiff asserts conclusorily that Wells Fargo “used ‘check kiting’” in funding the note, 24 Compl. ¶ 16, plaintiff “has alleged no facts to support the conclusion that Wells Fargo engaged 25 //// 26 //// Truth in Lending Act (“TILA”) 8 1 in any such practice in servicing his loan.”3 Id. Moreover, Wells Fargo contends that even if 2 there were any factual support for such a claim (which it says there is not), “such a practice 3 would not constitute a fact required to be disclosed to a residential mortgage customer under 4 TILA.” Id. 5 Here, in addition to being nearly unintelligible and failing to allege any specific TILA 6 violations,4 plaintiff’s purported TILA claim is barred by the statute of limitations. TILA is 7 intended to protect consumers in credit transactions by requiring “meaningful disclosure of credit 8 terms.” 15 U.S.C. § 1601(a). A lender’s violation of TILA allows the borrower to seek damages 9 or to rescind a consumer loan secured by the borrower’s primary dwelling. Copeland v. Lehman 10 Brothers Bank, FSB, 2010 WL 2817173, at *5 (S.D. Cal. July 15, 2010). However, a plaintiff’s 11 damage claims relating to improper disclosures under TILA are subject to a one-year statute of 12 limitations, 15 U.S.C. § 1640(e), which runs from the time the loan transaction is consummated. 13 King v. State of Cal., 784 F.2d 910, 915 (9th Cir.1986); see also Meyer v. Ameriquest Mortgage 14 Co., 342 F.3d 899, 902 (9th Cir. 2003) (failure to make the required disclosures under TILA 15 occurs at the time the loan documents were signed). Rescission claims under TILA “shall expire 16 three years after the date of the consummation of the transaction or upon the sale of the property, 17 whichever occurs first,”15 U.S.C. § 1635(f). The right to rescission under TILA expires three 18 days after the necessary disclosures are provided to the borrower. 15 U.S.C. § 1635(a). 19 20 Although equitable tolling of TILA claims may be appropriate “in certain circumstances,” and can operate to “suspend the limitations period until the borrower discovers 21 22 23 24 25 26 3 “Check kiting” refers to a practice by which a bank’s customer either (1) “writ[es] a check against a bank account where funds are insufficient to cover it and hop[es] that before it is deposited the necessary funds will have been deposited,” or (2) “[t]ransfer[s] funds between two or more banks to obtain unauthorized credit from a bank during the time it takes the checks to clear.” Black’s Law Dictionary 238 (6th ed. 1990). 4 Again, it appears that the basis for plaintiff’s purported TILA violations is his theory, which is belied by the deed of trust, that plaintiff funded his own loan. See Pl.’s Opp’n, Dckt. No. 19 at 4-5. 9 1 or had reasonable opportunity to discover the fraud or non-disclosures that form the basis of the 2 TILA action,” King, 784 F.2d at 914-15, when a plaintiff fails to allege facts demonstrating that 3 he could not have discovered the alleged violations by exercising reasonable diligence, dismissal 4 is appropriate. Meyer, 342 F.3d at 902-03 (refusing to apply equitable tolling to TILA claim 5 because the plaintiff was in full possession of all loan documents and did not allege any 6 concealment of loan documents or other action that would have prevented discovery of the 7 alleged TILA violations); see also Hubbard v. Fid. Fed. Bank, 91 F.3d 75, 79 (9th Cir.1996) 8 (finding that plaintiff was not entitled to equitable tolling of her TILA claim because “nothing 9 prevented [plaintiff] from comparing the loan contract, [the lender’s] initial disclosures, and 10 TILA’s statutory and regulatory requirements”). Since the loan at issue was consummated on 11 January 11, 2006, but this action was not filed until August 10, 2010, and plaintiff has not 12 alleged any facts supporting equitable tolling of the statute of limitations, plaintiff’s TILA claim 13 is barred by the statute of limitations and must be dismissed. 14 3. Federal Fair Debt Collection Practices Act (“FDCPA”) and the California Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”) 15 16 In his third claim for relief, plaintiff alleges that defendants violated the FDCPA and the 17 Rosenthal Act, but does not include any factual allegations specific to defendants’ conduct. 18 Compl. ¶ 17. Loanstar and Wells Fargo move to dismiss plaintiff’s FDCPA and Rosenthal Act 19 claims, arguing that plaintiff cannot establish the elements of those claims, and that even if he 20 could, any such claims would be time-barred. Dckt. No. 9 at 10-11; Dckt. No. 11 at 18-19. 21 Here, plaintiff’s claims for violation of the FDCPA and the Rosenthal Act are defective not only 22 because they allege no facts that could support a finding that defendants violated the FDCPA or 23 the Rosenthal Act, but also because the FDCPA and the Rosenthal Act do not apply to lenders or 24 mortgage servicers. The FDCPA applies only to a “debt collector,” defined as “a person who 25 uses any instrumentality of interstate commerce or the mails in any business the principal 26 purpose of which is the collection of any debts, or who regularly collects or attempts to collect, 10 1 directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. 2 § 1692a. The definition explicitly excludes creditors as well as loan originators or assignees 3 who obtained the right to collect on loan when it was not in default. 15 U.S.C. § 1692a(4), 4 § 1692a(6)(A) or (B), § 1692a(ii) and (iii). 5 Additionally, to be liable under the Rosenthal Act, a defendant must be a “debt 6 collector.” Izenberg v. ETS Services, LLC, 589 F. Supp.2d 1193, 1199 (C.D. Cal. 2008) (citing 7 Heintz v. Jenkins, 514 U.S. 291, 294 (1995)). A “debt collector” under the Rosenthal Act is 8 defined as “any person who, in the ordinary course of business, regularly, on behalf of himself or 9 herself or others, engages in debt collection.” Cal. Civ. Code § 1788.2(c). 10 The “‘activity of foreclosing on [a] property pursuant to a deed of trust is not the 11 collection of a debt within the meaning of the’” FDCPA or the Rosenthal Act. Tina v. 12 Countrywide Home Loans, Inc., 2008 WL 4790906, *6 (S.D. Cal. Oct. 30, 2008) (quoting Hulse 13 v. Ocwen Fed. Bank, FSB, 195 F. Supp. 2d 1188, 1204 (D. Or. 2002)); see also Gamboa v. 14 Trustee Corps, 2009 WL 656285, at *4 (N.D. Cal. Mar. 12, 2009) (“the law is clear that 15 foreclosing on a property pursuant to a deed of trust is not a debt collection within the meaning 16 of the RFDCPA or the FDC[P]A.”); Keen v. Am. Home Mortg. Serv., Inc., 664 F. Supp. 2d 1086, 17 1095 (E.D. Cal. 2009). 18 In addition to failing allege the other necessary elements of FDCPA and Rosenthal Act 19 claims, plaintiff does not and cannot allege that defendants are debt collectors within the 20 meaning of the FDCPA or the Rosenthal Act. Accordingly, plaintiff’s claim for violations of the 21 FDCPA and the Rosenthal Act should be dismissed. 22 4. 23 In his fourth claim for relief, plaintiff alleges that defendants unlawfully and wrongfully Wrongful Foreclosure 24 foreclosed without being the “holder in due course.” Compl. ¶ 18; see also Dckt. No. 19 at 6. 25 Loanstar and Wells Fargo move to dismiss this claim, arguing that plaintiff’s “holder in due 26 course” theory is not valid in California and that plaintiff has failed to allege tender of the 11 1 2 amount due. Dckt. No. 9 at 11-13; Dckt. No. 11 at 13-14, 21. Defendants are correct that plaintiff’s “holder in due course” theory, which is the only 3 basis for plaintiff’s wrongful foreclosure claim, is not cognizable under California law. 4 California law “does not require possession of the note as a precondition to non-judicial 5 foreclosure under a Deed of Trust.” Alicea v. GE Money Bank, 2009 WL 2136969 at *2 (N.D. 6 Cal. July 16, 2009); see also De Valle v. Mortgage Bank of Cal., 2010 WL 1813505, at *1-2 7 (E.D. Cal. May 5, 2010); Nool v. HomeQ Servicing, 653 F. Supp.2d 1047, 1053 (E.D. Cal. 8 2009). Therefore, plaintiff’s wrongful foreclosure claim must be dismissed. 9 5. Breach of the Covenant of Good Faith and Fair Dealing 10 In his fifth claim for relief, plaintiff alleges that defendants violated the statutory 11 covenant of good faith and fair dealing. Compl. ¶ 19. Specifically, plaintiff claims that although 12 plaintiff contacted defendants on numerous occasions with Qualified Written Requests, 13 defendants have refused to comply with plaintiff in good faith. Id. ¶ 20. 14 Loanstar and Wells Fargo move to dismiss this claim, arguing that plaintiff cannot state a 15 claim for breach of the covenant of good faith and fair dealing since such a covenant is a contract 16 term and plaintiff fails to allege the existence of any contract between plaintiff and Loanstar or 17 Wells Fargo. Dckt. No. 9 at 14; Dckt. No. 11 at 16-17. Further, Loanstar and Wells Fargo 18 contend that to the extent plaintiff seeks to state a claim under the Real Estate Settlement 19 Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq., based on defendants’ purported failures 20 to respond to plaintiff’s Qualified Written Requests, such a RESPA claim is time-barred, is 21 conclusory, and is devoid of any facts in support thereof. Dckt. No. 9 at 15; Dckt. No. 11 at 17. 22 Under California law, “[t]he prerequisite for any action for breach of the implied covenant of 23 good faith and fair dealing is the existence of a contractual relationship between the parties.” 24 Smith v. City & County of San Francisco, 225 Cal. App. 3d 38, 49 (1990). The “implied 25 covenant of good faith and fair dealing is limited to assuring compliance with the express terms 26 of the contract, and cannot be extended to create obligations not contemplated by the contract.” 12 1 Pasadena Live, LLC v. City of Pasadena, 114 Cal. App. 4th 1089, 1093-94 (2004). Here, plaintiff’s good faith and fair dealing claim appears to be once again based on his 2 3 theory that defendants conducted a wrongful foreclosure without being the “holder in due 4 course,” which as discussed above, is not cognizable and cannot therefore be the basis for a 5 claim that defendants violated the covenant of good faith and fair dealing. More fundamentally, 6 plaintiff has not alleged a contract between plaintiff and Loanstar or between plaintiff and Wells 7 Fargo, and has not alleged that defendants failed to comply with any purported contract. 8 Therefore, plaintiff cannot state a claim against them for breach of the covenant of good faith 9 and fair dealing. Further, to the extent plaintiff claims that Loanstar or Wells Fargo breached a fiduciary 10 11 duty to plaintiff, that claim fails. “In order to plead a cause of action for breach of fiduciary 12 duty, there must be shown the existence of a fiduciary relationship, its breach, and damage 13 proximately caused by that breach. The absence of any one of these elements is fatal to the 14 cause of action.” Pierce v. Lyman, 1 Cal. App. 4th 1093, 1101 (1991). “[A]s a general rule, a 15 financial institution owes no duty of care to a borrower when the institution’s involvement in the 16 loan transaction does not exceed the scope of its conventional role as a mere lender of money.” 17 Nymark v. Heart Fed. Savings & Loan Ass’n, 231 Cal. App. 3d 1089, 1096 (1991). Plaintiff has 18 not alleged facts suggesting that any of the defendants stepped beyond the traditional role of a 19 money lender or servicer, and therefore, has not sufficiently pled a claim for breach of fiduciary 20 duty.5 21 22 23 24 25 26 5 To the extent that plaintiff’s reference to defendants’ failure to respond to his “Qualified Written Requests”suggests that he seeks to assert a claim under the Real Estate Settlement Procedures Act (“RESPA”), that claim also fails. Plaintiff has not alleged any actual RESPA claim, and has not provided any information about what may have been contained in the purported “Qualified Written Requests,” to whom they were sent, by what method, what information the “Qualified Written Requests” sought, or when they were sent. Moreover, plaintiff’s purported “Qualified Written Requests” appear to be connected to plaintiff’s legally unsupported allegations that defendants needed to “validate the purported debt” in order to foreclose on plaintiff’s home since defendants were not the “holders in due course.” Compl. ¶¶ 13 1 Therefore, plaintiff’s claim for breach of the covenant of good faith and fair dealing should be 2 dismissed. 3 6. 4 Plaintiff also seeks declaratory relief. Compl. ¶¶ 21-23. His request is based on his 5 contentions (1) that the note at issue was “invalid” and “foreclosure and Transfer unlawful, 6 illegal and not in compliance with Federal and State statutes and laws,” id. ¶ 21.a; (2) that non- 7 judicial foreclosure was “improper in that [defendants] are neither the holder of the original note 8 on the subject property nor a bona fide purchaser of the underlying asset of the note,” id. ¶¶ 21.b, 9 22; and (3) that plaintiff “funded the mortgage loan with his Promissory note (Federal Reserve 10 Bank publications and UCC ‘negotiable instruments’) which Defendants sold and gave back to 11 plaintiff and called [the] illegal transaction [a] ‘loan,’” id. ¶ 21.c. Loanstar and Wells Fargo 12 contend that such plaintiff’s request for declaratory relief has no merit since plaintiff has not set 13 forth any defect in the foreclosure proceedings or any statutory violations. Dckt. No. 9 at 16-17; 14 Dckt. No. 11 at 22. 15 Declaratory Relief In seeking declaratory relief, a plaintiff must satisfy a two part test under the Declaratory 16 Judgment Act (“DJA”), 28 U.S.C. § 2201, demonstrating that a declaratory judgment is 17 appropriate. See Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 2005). The 18 court must first determine if an actual case or controversy exists; then, the court must decide 19 whether to exercise its jurisdiction to grant the relief requested. Id. 20 For declaratory relief, there must be a substantial controversy, between parties having 21 adverse legal interests, of sufficient immediacy and reality to warrant issuance of a declaratory 22 judgment. Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941). Unless an 23 actual controversy exists, the District Court is without power to grant declaratory relief. Garcia 24 v. Brownell, 236 F.2d 356, 357-58 (9th Cir. 1956). The mere possibility, even probability, that a 25 26 19, 20; Dckt. No. 19 at 3. 14 1 person may in the future be adversely affected by official acts not yet threatened does not create 2 an “actual controversy.” Id. Further, declaratory relief should be denied if it will “neither serve 3 a useful purpose in clarifying and settling the legal relations in issue nor terminate the 4 proceedings and afford relief from the uncertainty and controversy faced by the parties.” United 5 States v. Washington, 759 F.2d 1353, 1356-57 (9th Cir. 1985). 6 Here, the declaratory relief plaintiff seeks is commensurate with the relief sought through 7 his other causes of action. Thus, plaintiff’s declaratory relief claim is duplicative and 8 unnecessary. See Permpoon v. Wells Fargo Bank Nat. Ass'n, 2009 WL 3214321, at *5 (S.D. Cal. 9 Sep. 29, 2009). In addition, because the contentions underlying plaintiff’s declaratory relief 10 request are without basis in fact or law, he cannot establish an actual present controversy that 11 justifies this remedy. Accordingly, there is no real, immediate controversy to adjudicate, and 12 plaintiff’s request for declaratory relief should be dismissed. 13 C. 14 Although a pro se litigant is typically entitled to notice of the deficiencies in the Leave to Amend 15 complaint and an opportunity to amend, leave to amend should be denied here because plaintiff’s 16 claims are based on plaintiff’s non-cognizable and legally inaccurate theories that (1) plaintiff in 17 essence “funded his own loan,” and (2) defendants improperly foreclosed on his home since they 18 were not the “holders in due course” of the note at issue, the complaint’s deficiencies cannot be 19 cured by amendment.6 See Noll v. Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987) (While the 20 court ordinarily would permit a pro se plaintiff to amend, leave to amend should not be granted 21 where it appears amendment would be futile). 22 III. Plaintiff’s Motion for a Temporary Restraining Order 23 Plaintiff moves for a temporary restraining order and a preliminary injunction. Dckt. No. 24 24. However, plaintiff fails to meet the requirements for either a temporary restraining order or a 25 6 26 Because the undersigned will recommend that all of plaintiff’s claims be dismissed, defendants’ remaining arguments in support of dismissal need not be addressed. 15 1 preliminary injunction. “The standards for granting a temporary restraining order and a 2 preliminary injunction are identical.” Haw. County Green Party v. Clinton, 980 F. Supp. 1160, 3 1164 (D. Haw. 1997); cf. Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839 4 n.7 (9th Cir. 2001) (observing that an analysis of a preliminary injunction is “substantially 5 identical” to an analysis of a temporary restraining order). The Ninth Circuit recently modified 6 its standard for preliminary injunctive relief to conform to the Supreme Court’s admonition in 7 Winter v. Natural Resources Defense Council, Inc., that the moving party must demonstrate that, 8 absent an injunction, irreparable injury is not only possible, but likely. Winter v. Natural 9 Resources Defense Council, Inc., __ U.S. __, 129 S. Ct. 365, 375-76 (2008); Stormans, Inc. v. 10 Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009). Under the new standard, “preliminary injunctive 11 relief requires a party to demonstrate ‘that he is likely to succeed on the merits, that he is likely 12 to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in 13 his favor, and that an injunction is in the public interest.’” Id. (quoting Winter, 129 S.Ct. at 14 375-76). 15 Here, plaintiff’s complaint is dismissed without leave to amend; therefore, plaintiff has 16 not shown any likelihood of success on the merits, or even that serious questions have been 17 raised. See Alliance for Wild Rockies v. Cottrell, 622 F.3d 1045, 1049-50 (9th Cir. 2010). 18 Therefore, the undersigned will recommend that plaintiff’s motion for a temporary restraining 19 order and preliminary injunction be denied. 20 III. CONCLUSION Accordingly, it is hereby ORDERED that the status (pretrial scheduling) conference 21 22 currently set for hearing on December 22, 2010, is vacated.7 23 //// 24 7 25 26 As a result, the parties are not required to submit status reports as provided in the August 10, 2010 order. See Dckt. No. 3. However, if the recommendation of dismissal herein is not adopted by the district judge, the undersigned will reschedule the status conference and require the parties to submit status reports. 16 1 It is further RECOMMENDED that: 2 1. Loanstar and Wells Fargo’s motions to dismiss, Dckt. Nos. 9 and 11, be granted; 3 2. Plaintiff’s complaint, Dckt. No. 1, be dismissed without leave to amend; 4 3. Plaintiff’s application for a temporary restraining order and preliminary injunction, 5 Dckt. No. 24, be denied; and 6 4. The Clerk be directed to close this case. 7 These findings and recommendations are submitted to the United States District Judge 8 assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen days 9 after being served with these findings and recommendations, any party may file written 10 objections with the court and serve a copy on all parties. Such a document should be captioned 11 “Objections to Magistrate Judge’s Findings and Recommendations.” Failure to file objections 12 within the specified time may waive the right to appeal the District Court’s order. Turner v. 13 Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991). 14 Dated: December 10, 2010. 15 16 17 18 19 20 21 22 23 24 25 26 17

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