-JFM Chanthavong v. Aurora Loan Services, Inc. et al, No. 2:2010cv02269 - Document 33 (E.D. Cal. 2011)

Court Description: ORDER granting in part and denying in part defendants' 28 Motion to Dismiss, signed by Judge Garland E. Burrell, Jr., on 11/30/11. Plaintiff is GRANTED 10 days from the date on which this order is filed to file a Third Amended Complaint. (Kastilahn, A)
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-JFM Chanthavong v. Aurora Loan Services, Inc. et al Doc. 33 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 VANG CHANTHAVONG, 12 13 14 15 16 17 Plaintiff, v. AURORA LOAN SERVICES, INC., a Delaware Corporation; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants. ________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) 2:10-cv-2269-GEB-JFM ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS AND DENYING MOTION TO STRIKE 18 Defendants Aurora Loan Services, LLC (“Aurora”) and Mortgage 19 20 Electronic Registration Systems, Inc. (“MERS”; collectively, 21 “Defendants”) seek dismissal of Plaintiff Van Chanthavong’s Second 22 Amended Complaint (“SAC”). Dismissal is sought under Federal Rule of 23 Civil Procedure (“Rule”) 12(b)(6), based on the argument that the SAC 24 fails to state a viable claim. (ECF No. 28.) Defendants also seek to 25 have striken Plaintiff’s request for punitive damages under Rule 12(f). 26 Id. Plaintiff filed an opposition brief. (ECF No. 29.) For the reasons 27 stated below, Defendants’ dismissal motion will be granted in part and 28 denied in part and the motion to strike will be denied. 1 Dockets.Justia.com 1 I. PLAINTIFF’S ALLEGATIONS IN SAC 2 The following factual allegations are from the SAC. On August 3 24, 2007 Plaintiff and Lehman Brothers “entered into a loan agreement 4 for the refinancing of” Plaintiff’s real property located at 1900 H 5 Street, 6 Plaintiff executed an adjustable rate note (the “Note”) and a deed of 7 trust (the “Deed”) for the Property. Id. ¶¶ 24-25, Exs. A-B. The Deed 8 lists Lehman Brothers as the lender and MERS “as a nominee for Lender 9 and Lender’s successors and assigns.” Id. ¶¶ 25, 29, Ex. B. “MERS is 10 . . . the beneficiary under this Security Instrument.” Id. ¶ 25. 11 Plaintiff “default[ed] under the terms of the Note.” Id. ¶ 35. On August 12 15, 2008, a Notice of Default was recorded that listed MERS as the 13 contact to “find out the amount [Plaintiff had to] pay, or to arrange 14 for payment to stop the foreclosure[.]” Id. ¶ 36, Ex. C. On October 16, 15 2008, MERS recorded a substitution of trustee in which MERS is the 16 “‘nominee 17 beneficiary.” Id. ¶ 37. Plaintiff alleges “[u]pon information and 18 belief, MERS is not, and never has been in possession of the Note.” Id. 19 ¶ 38. Sacramento, for California LEHMAN BROTHERS (the BANK, “Property”). FSB,’ . (SAC . . ¶¶ the 1, 24.) original 20 Plaintiff filed for bankruptcy protection in the Eastern 21 District of California on April 21, 2009. Id. ¶ 43. Plaintiff alleges 22 Defendants violated the automatic bankruptcy stay on April 24, 2009 by 23 causing “to be published a Notice of Trustee’s Sale, and post[ing] it” 24 at the Property. Id. ¶ 44. MERS, as nominee for Lehman Brothers, 25 transferred all beneficial interest under the Deed to Aurora on June 8, 26 2009. Id. ¶ 45, Ex. E. Plaintiff alleges “[t]his [transfer] action was 27 void 28 endorsement or allonge evidencing that LEHMAN BROTHERS, MERS, or AURORA because it violated the automatic 2 stay” and “[t]here is no 1 LOAN SERVICES is or was the holder of the note.” Id. ¶¶ 45-46. 2 The Bankruptcy Court filed an Order Discharging the Debtors on 3 August 3, 2009, and Plaintiff’s bankruptcy case was closed August 14, 4 2009. Id. ¶ 48. “Plaintiff alleges that since there is no evidence that 5 LEHMAN BROTHERS, MERS, nor AURORA ever took actual possession of the 6 note, its security interest was never perfected, [and was] not perfected 7 at the time of filing the debtor’s bankruptcy, and thus the underlying 8 debt was discharged.” Id. ¶ 49. 9 Plaintiff alleges that both before and after his bankruptcy 10 filing, “Plaintiff’s agent, Boomie Cotton, and AURORA Loan Services 11 . . . engaged in discussions of loan modification.” Id. ¶ 50. Plaintiff 12 further alleges: “On September 7, 2009, plaintiff’s agent contacted 13 AURORA and was advised that the payment could not be made and was told 14 that they would give a 10 day grace period. Payment was . . . credited 15 to plaintiff’s account on or about September 24, 2009.” Id. ¶ 53. “On 16 . . . September 11, 2009, Defendants caused to be published a Notice of 17 Trustee’s Sale set for September 30, 2009.” Id. ¶ 54, Ex. G. Plaintiff 18 alleges he was unaware that a Notice of Trustee’s Sale was filed and 19 never received notice. Id. ¶ 55. 20 Plaintiff received a Special Forbearance Agreement from 21 Aurora, which he signed and returned on September 21, 2009. Id. ¶ 56, 22 Ex. H. Plaintiff attaches to his SAC a copy of the Special Forbearance 23 Agreement that he signed; however, it is not signed by Aurora. Id. Ex. 24 H. Plaintiff alleges his agent contacted Aurora on September 24, 2009, 25 to clarify the agreement “and was told that the agreement was a six 26 month trial period[.]” Id. ¶ 57. “[P]laintiff’s agent was told by 27 representatives of AURORA that there was no sale date and that the 28 property was not in foreclosure, but that the property was in an ‘active 3 1 loan mod.’” Id. ¶ 58. “Plaintiff’s Agent contacted AURORA on a monthly 2 basis and was repeatedly told that there was no foreclosure date set[.]” 3 Id. ¶ 59. 4 Plaintiff alleges his agent mailed Plaintiff’s October payment 5 to Aurora on October 19, 2009, and again asked “if there was a sale 6 date[; the agent] was told the loan was not in foreclosure and there was 7 no sale date.” Id. ¶ 64. Plaintiff alleges: “On or about October 30, 8 2009, defendants conducted a private foreclosure sale without notice to 9 plaintiff or his agent of any default in the loan modification 10 agreement.” Id. ¶ 65. Plaintiff alleges the Notice of Trustee’s Sale was 11 never posted on the premises, mailed by certified mail, or received by 12 the Plaintiff. Id. ¶¶ 66-67. 13 Plaintiff alleges he was advised that the Property was for 14 sale on November 2, 2009, when a real estate agent came to the Property. 15 Id. ¶ 70. Plaintiff alleges that same day “plaintiff’s agent spoke with 16 defendant 17 agreement was canceled, and was told that it was canceled on October 20, 18 2009. Plaintiff [alleges he] never received a notice of cancellation.” 19 Id. 9:24-26.1 Plaintiff alleges on November 3, 2009, his 20 AURORA and asked when the loan modification/forbearance 23 agent contacted the foreclosure trustee and discovered for the first time that the trustee’s sale had been continued from month to month and also learned for the first time that a new notice of trustee’s sale had been published and a new sale date set for October 30, 2009. AURORA advised that . . . the property was sold on October 30, 2009. 24 Id. 10:20-24. “[P]laintiff’s agent . . . discovered that sales dates had 21 22 25 26 27 28 1 Beginning on page 9 line 21 in the SAC, Plaintiff re-uses the numbers 53 through 70 in numbering his paragraphs; then beginning on page 24 line 2, Plaintiff re-uses the numbers 126 through 154. Therefore, these paragraphs are referred to by the page and line number, rather than the paragraph numbers. 4 1 been set on 2/2/09, 3/4/09, 5/12/09, 9/12/09, 7/15/09, 8/18/09, 9/30/09, 2 and 10/30/09.” Id. 10:7-9. Plaintiff alleges that he, “and his agent or 3 representative had . . . numerous conversations with the loan servicing 4 agent and was told there was no sale date set.” Id. 10:27-28. 5 Plaintiff also alleges in the SAC that “[f]ollowing the filing 6 of this case,” the bankruptcy trustee “was advised of the possible claim 7 of the estate and . . . the Trustee [was given] an opportunity to review 8 the complaint [Plaintiff filed in this district court,] and [to] advise 9 the [bankruptcy] court whether he wished to pursue the claim on behalf 10 of the estate.” Id. 11:12-16. Plaintiff further alleges in the SAC that 11 the Bankruptcy Court did not reopen his bankruptcy case and “[a]s a 12 result, the ‘asset’ was effectively abandoned back to the debtor by 13 operation of law[.]” Id. 11: 17-19. 14 II. DISCUSSION 15 Defendants seek dismissal of Plaintiff’s claims arguing, inter 16 alia: “Plaintiff lacks standing to assert several of his . . . [claims] 17 because he failed to include those claims as assets of his estate in his 18 Chapter 7 Petition” and “each of Plaintiff’s . . . claims fails because 19 they do not meet the pleading requirements.” (Defs.’ Mem. of P. & A. 20 (“Mot.”) 1:19-21, 2:1-2.) Plaintiff’s SAC is comprised of what is 21 labeled as the following ten claims, three of which comprise more than 22 a single claim: 1) injunctive relief, 2) declaratory relief, 3) breach 23 of contract, 4) negligence/negligent misrepresentation, 5) demand to 24 produce the note, 6) demand to set aside the trustee’s sale, 7) demand 25 to cancel the trustee’s deed, 8) request to quiet title, 9) violation of 26 statute, and 10) fraud and deceit. (SAC ¶¶ 71-159.) 27 Defendants argue Plaintiff’s demand to cancel the trustee’s 28 deed and request to quiet title should be dismissed because Plaintiff 5 1 included those claims in his SAC without receiving leave of court to 2 allege these claims. (Mot. 4:23-5:4.) These claims were not alleged in 3 Plaintiff’s First Amended Complaint (“FAC”) and were included in the SAC 4 without leave of court to include the claims in a SAC. An Order filed 5 March 18, 2011, decided Defendants’ motion to dismiss Plaintiff’s FAC 6 and granted Plaintiff leave to “file a Second Amended Complaint in which 7 he could “address the deficiencies discussed” in the Order. (Order 8 20:28-21:1, ECF No. 22.) Since the two challenged claims were not 9 alleged in the FAC, this portion of Defendants’ motion to dismiss is 10 granted. 11 A. STANDING 12 Defendants also argue Plaintiff lacks standing to prosecute 13 the 14 estate”: demand to produce the note, demand to set aside the trustee’s 15 sale, violation of statute, and fraud and deceit. (Mot. 7:1-24, 7:27- 16 8:1.) Plaintiff only responds to the Defendants’ standing challenge to 17 his claim to set aside the trustee’s sale, arguing since this claim 18 “accrue[d] when the foreclosure occur[red]” he has standing to pursue 19 this claim because it is not part of the bankruptcy estate. (Opp’n 20 9:24.) following claims because they “remain part of the bankruptcy 21 Only the trustee has standing to prosecute the claims that are 22 part of a bankruptcy estate, since “the bankruptcy trustee controls the 23 bankruptcy estate, [and] is the real party in interest in the suits that 24 belong to the estate.” Griffin v. Allstate Ins. Co., 920 F. Supp. 127, 25 130 (C.D. Cal. 1996). The filing of a bankruptcy petition “creates an 26 estate [which] is comprised of . . . all legal or equitable interests of 27 the debtor in property as of the commencement of the case.” 11 U.S.C. § 28 541(a)(1). “11 U.S.C. § 541(a)(1) . . . defines property of the 6 1 bankruptcy estate to include ‘all legal or equitable interests of the 2 debtor in property as of the commencement of the case.’ The scope of 3 section 541 is broad, and includes causes of action.” Sierra Switchboard 4 Co. v. Westinghouse Elec. Corp., 789 F.2d 705, 707 (9th Cir. 1986). “11 5 U.S.C. § 521(1) [of the bankruptcy code] provides that, ‘[t]he debtor 6 shall file a list of creditors, and unless the court orders otherwise, 7 a schedule of assets and liabilities, a schedule of current income and 8 current 9 affairs.’” Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 784 10 expenditures, and a statement of the debtor’s financial (9th Cir. 2001). 11 “[A] debtor who fail[s] to disclose a pending claim as an 12 asset in a bankruptcy proceeding where debts were permanently discharged 13 [is] estopped from pursuing such claim in a subsequent proceeding.” Id. 14 Further “[t]he debtor’s duty to disclose potential claims as assets does 15 not end when the debtor files schedules, but instead continues for the 16 duration of the bankruptcy proceeding.” Id. at 784-85. “If [the debtor] 17 fail[s] to properly schedule an asset, including a cause of action, that 18 asset continues to belong to the bankruptcy estate and does not revert 19 to [the debtor].” Cusano v. Klein, 264 F.3d 936, 945-46 (9th Cir. 2001) 20 (citing Vreugdenhill v. Navistar Int’l Transp. Corp., 950 F.2d 524, 526 21 (8th Cir. 1991) (property is not abandoned by operation of law unless 22 the debtor “formally schedule[s] the property before the close of the 23 case”)). 24 “Plaintiff did not list any claim sub judice in his bankruptcy 25 filing.” (Order 10:4-5, ECF No. 22.) “[G]enerally, a debtor has no duty 26 to schedule a cause of action that did not accrue prior to bankruptcy.” 27 Cusano, 264 F.3d at 947. A claim accrues when an “action could have been 28 brought[.]” Id. 7 1 Defendants argue “[b]ecause Plaintiff never scheduled the 2 [subject SAC claims] . . . in his bankruptcy petition, . . . Plaintiff 3 lacks standing to bring . . . [the subject claims because they] arose 4 before August 14, 2009[,]” the date on which Plaintiff’s bankruptcy case 5 was closed. (Mot. 6:15-20.) Plaintiff alleges in his SAC that his 6 unsuccessful attempt to reopen his bankruptcy case after filing this 7 action, resulted in the “‘asset[s]’ [being] effectively abandoned back 8 to the [Plaintiff] by operation of law.” (SAC 11:19.) 9 A bankruptcy trustee may abandon assets; however, property 10 that is not abandoned or administered by the trustee remains property of 11 the estate. 11 U.S.C. §§ 554 (a), (d). “‘Abandonment’ is a term of art 12 with special meaning in the bankruptcy context. It is the formal 13 relinquishment of the property at issue from the bankruptcy estate.” 14 Catalano v. C.I.R., 279 F.3d 682, 685 (9th Cir. 2002). “In short, 15 abandonment requires formal notice and a hearing.” Id. at 686 (citation 16 and internal quotation marks omitted). “The Bankruptcy Court’s Order 17 denying Plaintiff’s motion to reopen his bankruptcy case did not state 18 any property was abandoned by the trustee.” (Order 10:26-28, ECF No. 19 22.) Therefore, any claim that accrued prior to the close of Plaintiff’s 20 bankruptcy case remains in the bankruptcy estate. 21 1. Demand to Produce the Note 22 Defendants argue Plaintiff’s demand to produce the Note claim, 23 in which he alleges “Defendants lacked possession of the Note and thus 24 could not foreclose[,] accrued when the Notice of Default was recorded.” 25 (Mot. 7:1-3.) Plaintiff alleges in the SAC that the Notice of Default 26 was recorded on August 15, 2008. (SAC ¶ 36, Ex. C.) 27 Plaintiff’s demand to produce the Note claim accrued when MERS 28 recorded the Notice of Default on August 15, 2008, since an “action 8 1 could have been brought” to challenge the foreclosure proceedings and 2 Defendants’ right to foreclose once the Notice of Default was recorded. 3 Cusano, 264 F.3d at 947. Therefore, Plaintiff’s “demand to produce the 4 Note” claim accrued prior to the close of Plaintiff’s bankruptcy and 5 should have been listed in Plaintiff’s bankruptcy estate. Accordingly, 6 this claim remains in the bankruptcy estate and Plaintiff does not have 7 standing to pursue this claim. Therefore, Defendants’ motion to dismiss 8 this claim is granted. 9 Further, “Defendants request that the Court grant the Motion 10 to Dismiss . . . without leave to amend.” (Mot. 2:3.) This claim was 11 previously 12 Defendants’ previous dismissal motion challenging the FAC. (Order 15:23- 13 28, ECF No. 22.) Since Plaintiff failed to address the issues identified 14 in the previous Order, it is clear “any amendment would be futile, [and] 15 there [is] no need to prolong the litigation by permitting further 16 amendment.” Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1039 (9th Cir. 17 2002). Therefore, this claim is dismissed with prejudice. 18 dismissed for the same reasons when the Court granted 2. Demand to Set Aside the Trustee’s Sale 19 Defendants argue Plaintiff lacks standing to bring his set 20 aside of the trustee’s sale claim. (Mot. 7:6-13.) Plaintiff alleges in 21 his SAC “that at the time the Notice of Default was recorded, neither 22 LEHMAN 23 possession of the note and thus had no standing or authority to initiate 24 foreclosure proceedings on the deed of trust, rendering the Notice of 25 Default Void”; and, that “defendants failed to comply with Civil Code 26 2924f and failed to provide written notice of the trustee’s sale or post 27 said notice on the property.” (SAC ¶¶ 130-131.) 28 /// BROTHERS, MERS, AURORA, nor 9 CAL WESTERN RECONVEYANCE had 1 Defendants argue “Plaintiff bases this claim on Defendants’ 2 lack of possession of the Note and thus their lack of authority to 3 initiate foreclosure proceedings.” (Mot. 7:6-8.) Defendants further 4 argue that since “the Notice of Default was recorded on August 15, 2008, 5 and the Notice of Trustee’s Sale was recorded on April 24, 2009[,]” 6 which is prior to the close of Plaintiff’s bankruptcy estate on August 7 14, 2009, “Plaintiff lacks standing to bring this claim here.” (Mot. 8 7:10-13.) 9 defendants occurred both before and after the bankruptcy, and since 10 . . . the foreclosure[] occurred post discharge, the claim is not 11 property of the bankruptcy estate” since this claim “accrues when the 12 foreclosure occurs.” (Opp’n 10:4-6, 9:24.) However, Defendants have not 13 shown 14 foreclosure sale occurred; therefore, this portion of the motion is 15 denied. 16 Plaintiff that counters Plaintiff could that “[t]he have brought fraudulent this activities claim before of the 3. Violation of Statute 17 Defendants also argue Plaintiff lacks standing to pursue his 18 violation of statute claim, alleged under California Civil Code section 19 2924. (Mot. 7:14-19.) Plaintiff alleges in this claim that “CALIFORNIA 20 WESTERN AND AURORA violated the California Foreclosure laws by . . . 21 [f]ailing to post notice of the trustee’s sale as required[ and] . . . 22 [f]ailing to send notice of the trustee’s sale by certified mail as 23 required[.]” (SAC 25:2-5.) Defendants argue “this claim accrued on April 24 24, 2009,” when the Notice of Trustee’s Sale was recorded and posted. 25 (Mot. 7:16-17.) However, Defendants have not shown that Plaintiff could 26 have brought this claim before the foreclosure sale occurred; therefore, 27 this portion of the motion is denied. 28 /// 10 1 4. Fraud and Deceit 2 Defendants also argue that Plaintiff lacks standing to pursue 3 his fraud and deceit claim, which is based on Plaintiff’s allegation 4 that Defendants fraudulently initiated foreclosure proceedings when they 5 filed the Notice of Default, since “the Notice of Default was recorded 6 prior 7 Plaintiff alleges two fraud and deceit claims; one of them is addressed 8 in this section of the Order and the other fraud and deceit claim is 9 addressed infra. (SAC 25:15-27:21.) to the close of Plaintiff’s bankruptcy[.]” (Mot. 7:20-24.) 10 Plaintiff alleges in this claim that MERS and Aurora were 11 never holders of the Note and consequently, “[t]he representation that 12 [P]laintiff was in default on an obligation is false and fraudulent, 13 since there is no evidence that AURORA or MERS is or was the actual 14 beneficiary of the note.” Id. 25:27-28. Plaintiff alleges, therefore, 15 “Defendants lacked standing to commence . . . foreclosure” proceedings. 16 Id. 25:17. This claim accrued when the Notice of Default was recorded, 17 which occurred prior to the close of Plaintiff’s bankruptcy proceeding. 18 Therefore, Plaintiff lacks standing to pursue this claim, and this claim 19 is dismissed. Further, this claim was previously dismissed in a prior 20 order 21 prejudice. 22 on these grounds; therefore, this claim is dismissed with B. FAILURE TO STATE A CLAIM 23 Defendants argue Plaintiff’s remaining claims for breach of 24 contract, negligence, negligent misrepresentation, demand to set aside 25 the trustee’s sale, violation of statute, fraud and deceit, injunctive 26 relief, and declaratory relief should be dismissed since they fail to 27 state a claim under Rule 12(b)(6). 28 /// 11 1 Dismissal under Rule 12(b)(6) is appropriate only where a 2 claim either 1) lacks a cognizable legal theory, or 2) lacks factual 3 allegations sufficient to support a cognizable legal theory. Balistreri 4 v. Pacific Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). To avoid 5 dismissal, a plaintiff must allege “enough facts to state a [plausible] 6 claim to relief[.]” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547 7 (2007). 8 In deciding a Rule 12(b)(6) motion, the material allegations 9 of the complaint are accepted as true and all reasonable inferences are 10 drawn in favor of the plaintiff. See al-Kidd v. Ashcroft, 580 F.3d 949, 11 956 (9th Cir. 2009). However, “the tenet that a court must accept as 12 true all of the allegations contained in a complaint is inapplicable to 13 legal conclusions.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). “A 14 pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation 15 of the elements of a cause of action will not do.’ Nor does a complaint 16 suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual 17 enhancement.’” Id. (quoting Twombly, 550 U.S. at 555, 557). “In sum, for 18 a complaint to survive a motion to dismiss, the nonconclusory ‘factual 19 content,’ and reasonable inferences from that content, must be plausibly 20 suggestive of a claim entitling the plaintiff to relief.” Moss v. United 21 States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). 22 1. Breach of Contract 23 Defendants argue, inter alia, that Plaintiff’s breach of 24 contract 25 Agreement is only signed by Plaintiff, and therefore the statute of 26 frauds precludes it from being enforceable against Defendants. (Mot. 27 10:16-24.) 28 /// claim should be dismissed 12 since the Special Forbearance 1 Plaintiff counters he “has ple[d] breaches of two written 2 agreement[s:] 1) the written agreement with LEHMAN BROTHERS, alleging 3 wrongful and fraudulent origination, assignment and servicing; [and] 2) 4 the written agreement with AURORA re the Special Forbearance Agreement.” 5 (Opp’n 5:23-25.) However, Plaintiff’s pled breach of contract claim is 6 based solely on his allegations that Defendants breached the Special 7 Forbearance Agreement. (SAC ¶¶ 94-106.) Plaintiff also argues that since 8 Aurora “accepted payments under the agreement, and agreed to postpone 9 the sale at least initially[,] . . . Aurora is estopped [from] deny[ing] 10 the existence of any agreement[.]” (Opp’n 6:24-27.) 11 “[A]n agreement by which a lender agreed to forbear from 12 exercising the right of foreclosure under a deed of trust securing an 13 interest in real property comes within the statute of frauds.” Secrest 14 v. Sec. Nat’l Mortg. Loan Trust 2002-2, 167 Cal. App. 4th 544, 547 15 (2008) (holding an unsigned forbearance agreement violated the statute 16 of frauds since it attempted to modify a promissory note and deed of 17 trust, which are subject to the statute of frauds). Therefore, since the 18 Special Forbearance Agreement modifies Plaintiff’s obligations under the 19 Note and the Deed, it comes within the statute of frauds. Further, 20 Plaintiff’s 21 agreement to postpone the foreclosure sale, estops Defendants from 22 denying the existence of an agreement “fails under well-established 23 law.” Id. at 555. 24 25 26 27 28 argument that payments under the agreement, Part performance allows enforcement of a contract lacking a requisite writing in situations in which invoking the statute of frauds would cause unconscionable injury. To constitute part performance, the relevant acts either must unequivocally refer to the contract, or clearly relate to its terms. Such conduct satisfies the evidentiary function of the statute of frauds by confirming that a bargain was in fact reached. In addition to having partially performed, the party 13 and the 1 3 seeking to enforce the contract must have changed position in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud. 4 Id. (internal citations and quotation marks omitted). However, “[t]he 5 payment of money is not sufficient part performance to take an oral 6 agreement out of the statute of frauds[.]” Id. Further, since Plaintiff 7 “do[es] not assert [he] changed [his] position in reliance on the 8 [Special] 9 [payments,]” the statute of frauds applies to the Special Forbearance 10 Agreement and Plaintiff has not pled an enforceable contract claim. Id. 11 Since this claim was previously dismissed on these grounds, Plaintiff’s 12 breach of contract claim is dismissed with prejudice because it is 13 evident that “any amendment would be futile[.]” Lipton, 284 F.3d at 14 1039. 2 15 Forbearance Agreement in any way other than by making 2. Negligence/Negligent Misrepresentation 16 a. Negligence 17 Defendants argue Plaintiff’s negligence claim should be 18 dismissed since “Plaintiff has not alleged Defendants had a duty or 19 facts showing Defendants breached any duty.” (Mot. 12:24-25.) Defendants 20 argue “Plaintiff’s SAC does not allege Defendants[’] actions extended 21 beyond its routine involvement as a lender.” Id. 13:23-24. Plaintiff 22 counters that “Aurora went beyond the scope of the role of a loan 23 originator and was actively involved in negotiating and implement[ing] 24 a Special Forbearance Agreement/Loan Modification Agreement.” (Opp’n 25 8:7-9.) Plaintiff further argues that when “Aurora undertook the duty of 26 negotiating 27 updating the borrower regarding status and terms[,] . . . it acted as 28 more than just an institution that funded the loan.” Id. 8:14-16. the terms of the ‘Special 14 Forbearance Agreement’ and 1 “[A] financial institution owes no duty of care to a borrower 2 when the institution’s involvement in the loan transaction does not 3 exceed the scope of its conventional role as a mere lender of money.” 4 Nymark v. Heart Fed. Sav. & Loan Assn., 231 Cal. App. 3d 1089, 1096 5 (1991). Plaintiff’s allegations do not plausibly suggest that the 6 Defendants “actively participate[d] in the financed enterprise beyond 7 the domain of the usual money lender.” Id. Therefore, this portion of 8 Defendants’ dismissal motion is granted. Further, since this claim was 9 previously dismissed for this reason, Plaintiff’s negligence claim is 10 dismissed with prejudice. 11 b. Negligent Misrepresentation 12 Defendants also argue Plaintiff’s negligent misrepresentation 13 claim should be dismissed since “Plaintiff has not differentiated 14 between the different defendants nor alleged the time, place, and other 15 specifics 16 counters that his SAC “sets forth that the person(s) answering the phone 17 purported to render advice regarding the status of the loan; that the 18 persons had knowledge of the transaction and apparent authority to speak 19 for 20 misrepresentations.” (Opp’n 8:22-24.) of the any misrepresentations.” corporation; [and] the (Mot. nature 14:17-18.) of Plaintiff the factual 21 The elements of a fraud claim under California law are: “(a) 22 misrepresentation (false representation, concealment, or nondisclosure); 23 (b) knowledge of falsity (or scienter); (c) intent to defraud, i.e., to 24 induce reliance; (d) justifiable reliance; and (e) resulting damage.” 25 Engall v. Permanente Medical Group, Inc., 15 Cal. 4th 951, 974 (1997) 26 (internal quotation marks omitted). “The same elements comprise a cause 27 of 28 requirement of intent to induce reliance.” Caldo v. Owens-Illinois, action for negligent misrepresentation, 15 except there is no 1 Inc., 125 Cal. App. 4th 513, 519 (2004). 2 “It is established law . . . that Rule 9(b)’s particularity 3 requirement applies to state-law causes of action.” Vess v. Ciba-Geigy 4 Corp., 317 F.3d 1097, 1103 (9th Cir. 2003). Rule 9(b)’s heightened 5 pleading requirements apply to Plaintiff’s negligent misrepresentation 6 claim since this claim is “grounded in fraud [and is alleged] to sound 7 in fraud.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009) 8 (internal quotation marks omitted). Rule 9(b) prescribes that “[i]n 9 alleging fraud or mistake, a party must state with particularity the 10 circumstances 11 Accordingly, a fraud averment must include “an account of the ‘time, 12 place, and specific content of the false representations as well as the 13 identities of the parties to the misrepresentations.’” Swartz v. KPMG 14 LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quoting Edwards v. Marin Park, 15 Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)). constituting fraud or mistake.” Fed.R.Civ.P. 9(b). 16 Plaintiff alleges in his negligent misrepresentation claim: 17 Plaintiff[’]s agent was in continual contact with Aurora through the 800 number, and each time she was told that there was no sale date, that the loan was in bankruptcy or loan modification. [When calling the 800 number, a] caller is prompted to enter in the loan number and the agent comes on the phone . . . . The representative of Aurora had apparent authority to discuss details of the loan, status of the loan, status of the loan modification, payments due, and status of trustee’s sale, if any, and foreclosure status. The names of the agent or agents plaintiff talked to are in the possession of AURORA and peculiarly within the knowledge of defendant. On 10/19/09 plaintiff[’]s agent called the 800-669-0102 number and asked . . . , “Is this loan in foreclosure?” The answer was “NO.” She then said . . . “there is NO . . . scheduled foreclosure sale date right?” Again, the answer was “no, because your loan is on a modification plan[.]” 18 19 20 21 22 23 24 25 26 27 28 (SAC ¶¶ 112-114.) 16 1 These allegations against Aurora in Plaintiff’s negligent 2 misrepresentation claim provide the required specificity since Plaintiff 3 sufficiently alleges the “time, place, and specific content of the false 4 representations[.]” 5 deficiency in plaintiff’s allegations of fraud is that the [S]AC does 6 not state the names of all the individual representatives of the 7 defendant[].” Susilo v. Wells Fargo Bank, N.A., No. CV 11-1814 CAS, 2011 8 WL 9 “requirement is relaxed where the defendant must necessarily possess 10 full information concerning the facts of the controversy, or when the 11 facts lie more in the knowledge of the opposite party.” Id. (internal 12 citations 13 sufficiently alleged this claim against Aurora. 2471167, at and *10 Swartz, (C.D. quotation 476 F.3d Cal. marks June at 764. 21, omitted). “The 2011). only arguable However, Therefore, 9(b)’s Plaintiff has 14 However, “Rule 9(b) does not allow a complaint to merely lump 15 multiple defendants together but ‘require[s] plaintiffs to differentiate 16 their allegations when suing more than one defendant . . . and inform 17 each defendant separately of the allegations surrounding his alleged 18 participation in the fraud.’” Swartz, 476 F.3d at 764-765 (internal 19 citations omitted). Since Plaintiff’s factual allegations in this claim 20 are solely related to Aurora and Plaintiff does not allege any conduct 21 by MERS, Plaintiff’s negligent misrepresentation claim against MERS is 22 dismissed. 23 3. Demand To Set Aside the Trustee’s Sale 24 Defendants argue that “[b]ecause Plaintiff has not tendered 25 the amount due, he cannot challenge the foreclosure sale and the Court 26 should dismiss this claim.” (Mot. 16:12-13.) Plaintiff does not respond 27 to this argument. 28 “Wrongful foreclosure is 17 an action in equity, where a 1 plaintiff seeks to set aside a foreclosure sale that has already 2 occurred.” Foster v. SCME Mortgage Bankers, Inc., No. CIV 2:10-518-WBS 3 GGH, 2010 WL 1408108, at *4 (E.D. Cal. April 7, 2010). Therefore, 4 Plaintiff’s 5 foreclosure claim. “Under a claim for wrongful foreclosure, a plaintiff 6 must allege a credible tender of the amount of the secured debt . . . .” 7 Rogue v. Suntrust Mortg., Inc., No. C-09-00040 RMW, 2010 WL 546896, at 8 *4 (N.D. Cal. Feb. 10, 2010) (citing Abdallah v. United Savings Bank, 43 9 Cal. App. 4th 1101, 1109 (1996)); see Guerrero v. Greenpoint Mortgage 10 Funding, Inc., 403 Fed. Appx. 154, 157 (9th Cir. 2010) (stating the 11 plaintiffs “lacked standing to bring a claim for ‘wrongful foreclosure,’ 12 because they failed to allege actual, full and unambiguous tender of the 13 debt owed on the mortgage”) (citing Karlsen v. Am. Sav. & Loan Ass’n, 15 14 Cal. App. 3d 112, 117 (1971)). Plaintiff does not allege tender of the 15 amount of debt owed, or his ability to tender. Plaintiff was previously 16 informed of this pleading deficiency in a ruling deciding a challenge to 17 Plaintiff’s FAC. (Order 17:2-5, ECF No. 22.) Therefore, Plaintiff’s 18 claim to set aside the trustee’s sale is dismissed with prejudice since 19 it is clear “any amendment would be futile[.]” Lipton, 284 F.3d at 1039. 20 claim to set aside the Trustee’s Sale is a wrongful 4. Violation of Statute 21 Defendants seek dismissal of Plaintiff’s violation of statute 22 claim. 23 Defendant violated: 1) California Civil Code sections 2923.52 and 24 2923.53; and 2) California Civil Code section 2924 et seq. (SAC 22:26- 25 25:9.) 26 (Mot. 20:7-27.) Plaintiff’s Plaintiff claims alleges under in California this claim Civil Code that each sections 27 2923.52 and 2923.53 were previously “dismissed with prejudice since 28 neither section 2923.52 or section 2923.53 provides any private right of 18 1 action.” (Order 17:16-18, ECF No. 22 (citation and internal quotation 2 marks omitted).) Therefore, these claims are stricken. 3 Further, while Plaintiff does not cite to California Civil 4 Code section 2923.5, it is clear he is alleging a claim under this 5 statute since he cites to Mabry v. Superior Court, 1185 Cal. App. 4th 6 208, 214 (2010), which held that “section 2923.5 [may] be enforced by a 7 private right of action[.]” (SAC 24:20-21.) However, this claim was not 8 alleged in Plaintiff’s FAC and was included in the SAC without leave of 9 court to include this claim in the SAC. Therefore, Plaintiff’s section 10 2923.5 claim is dismissed. 11 Defendants argue Plaintiff has not stated a claim under 12 California Civil Code section 2924. (Mot. 20:17.) Plaintiff alleges in 13 this claim that “Defendant CALIFORNIA WESTERN AND AURORA violated the 14 California Foreclosure laws by . . . [f]ailing to post notice of the 15 trustee’s sale as required [and] . . . [f]ailing to send notice of the 16 trustee’s sale by certified mail as required[.]” (SAC 25:2-5.) 17 Defendants argue, inter alia, that “Plaintiff must allege he 18 can tender the amount of the loan to state a wrongful foreclosure 19 claim.” (Mot. 21:17-18.) Plaintiff alleges the foreclosure sale was not 20 conducted in accordance with California Civil Code section 2924 et seq. 21 and “[a]s a proximate result of defendant’s violation of statute, 22 plaintiff’s property has wrongfully been foreclosed upon.” (SAC 25:5-7.) 23 Plaintiff seeks “a declaration . . . that the Trustee’s sale . . . is 24 void[.]” Id. 30:18-19. Since Plaintiff is alleging a wrongful foreclose 25 claim, he must plead tender or ability to tender. See Rogue, 2010 WL 26 546896, at *4. Plaintiff fails to do so. Therefore, Defendants’ motion 27 to dismiss this claim is granted. 28 /// 19 1 5. Fraud and Deceit 2 Defendants also seek dismissal of Plaintiff’s remaining fraud 3 and deceit claim, arguing Plaintiff fails to “state the contents of 4 alleged misrepresentative statements, as well as the role of each 5 defendant in the alleged fraud, what is false or misleading about the 6 statement, who made it, when it was made, where it was made and why it 7 is false.” (Mot. 21:23-26.) 8 9 Plaintiff’s fraud and deceit claim is based on the following allegations: “[t]hroughout the course of the loan modification 10 discussions with AURORA, plaintiff’s agent had numerous discussions with 11 the representatives of AURORA” and “[t]he representations to plaintiff 12 and 13 “[D]efendant AURORA never intended to provide plaintiff with a loan 14 modification agreement, and falsely misled [Plaintiff] into believing 15 that is what he had received.” Id. 26:22-25. “AURORA, through their 16 representatives falsely misled plaintiff and his agent to believe that 17 . . . there was no sale date set; [and] that the account was in ‘loan 18 modification’ status.” Id. 26:28-27:2. Plaintiff also incorporates by 19 reference his allegations in the preceding paragraphs of his SAC. Id. 20 25:15-16. In Plaintiff’s negligent misrepresentation claim, he sets 21 forth allegations against Aurora which satisfy Rule 9(b)’s requirements. 22 Id. ¶¶ 112-114. plaintiff’s agent were in fact false.” (SAC 26:12-13, 17.) 23 Since Plaintiff’s fraud and deceit claim is based on the same 24 allegations against Aurora which Plaintiff alleges in his negligent 25 misrepresentation 26 9(b),Plaintiff’s fraud and deceit claim against Aurora is sufficiently 27 alleged. However, Plaintiff fails to sufficiently allege his fraud and 28 deceit claim against MERS since Plaintiff does not include any factual claim, and those 20 allegations satisfy Rule 1 allegations against MERS in this claim; therefore, Plaintiff’s fraud and 2 deceit claim against MERS is dismissed. 3 6. Injunctive Relief and Declaratory Relief 4 Defendants also argue Plaintiff’s injunctive relief and 5 declaratory 6 recognized claim for ‘injunctive relief’” and Plaintiff’s “declaratory 7 relief claim . . . is duplicative of other claims [and therefore, it] 8 should be dismissed.” (Mot. 8:5-6, 10:9:12-13.) Plaintiff responds that 9 “[w]hether fashioned as a cause of action or a remedy adjunct to the 10 causes of action is a matter of formality, not of substance.” (Opp’n 11 5:20-21.) relief claims should be dismissed since there is “no 12 An injunction is a remedy, not a claim in and of itself. See 13 Curtis v. Option One Mortg. Corp., No. 109-cv-1608 AWI SMS, 2010 WL 14 599816, at *13 (E.D. Cal. Feb 18, 2010) (citing Washington Toxics 15 Coalition v. Environmental Protection Agency, 413 F. 3d 1024, 1034 (9th 16 Cir. 17 injunctive relief claim is granted. 2005). Therefore, Defendants’ motion to dismiss Plaintiff’s 18 Further, a “federal court may decline to address a claim for 19 declaratory relief” where the substantive claims “would resolve the 20 issues raised by the declaratory action[.]” Fimbres v. Chapel Mortg. 21 Cop., No. 09-cv-0886-IED, 2009 WL 416332, at *5 (S.D. Cal. Nov. 20, 22 2009) 23 Plaintiff’s declaratory relief claim is duplicative of the relief sought 24 in Plaintiff’s remaining claims, Defendants’ motion to dismiss this 25 claim is granted. 26 (citations and internal quotation marks omitted). Since C. MOTION TO STRIKE 27 Defendants also move under Rule 12(f) for an order striking 28 Plaintiff’s request for punitive damages, arguing these damages “are not 21 1 recoverable as a matter of law.” (Mot. 22:23-24.) 2 Rule 12(f) states that a district court “may strike from a 3 pleading 4 impertinent, or scandalous matter.” However, “Rule 12(f) does not 5 authorize district courts to strike claims for damages on the ground 6 that such claims are precluded as a matter of law.” Whittlestone, Inc. 7 v. Handi–Craft Co., 618 F.3d 970, 971 (9th Cir. 2010). 8 an insufficient defense or any redundant, immaterial, The proper medium for challenging the sufficiency of factual allegations in a complaint is through Rule 12(b)(6), not Rule 12(f). However, where a motion is in substance a Rule 12(b)(6) motion, but is incorrectly denominated as a Rule 12(f) motion to strike, the Court may convert the improperly designated Rule 12(f) motion into a Rule 12(b)(6) motion. 9 10 11 12 13 Parker v. Fidelity Security Life Ins. Co., No. CIV F 06-654 AWI DLB, 14 2006 WL 2190956, at *5 (E.D. Cal. Aug. 1, 2006). 15 Defendants argue “Plaintiff fails to allege sufficient facts 16 to support a request for punitive damages” since “he does not allege any 17 specific reasons for the request.” (Mot. 23:8-9, 19-20.) California 18 Civil Code section 3294(a) prescribes: 19 In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant. 20 21 22 23 Since 24 Defendants’ motion to strike is denied. 25 two of Plaintiff’s remaining claims are grounded in fraud, III. CONCLUSION 26 For the stated reasons, Defendants’ motion to dismiss is 27 granted in part and denied in part. Plaintiff is granted ten (10) days 28 from the date on which this order is filed to file a Third Amended 22 1 Complaint in which he addresses the deficiencies in any claim Plaintiff 2 was previously granted leave to include in the SAC, and which has not 3 dismissed with prejudice. Further, Plaintiff is notified that if he 4 fails to amend the dismissed claims within the prescribed time period, 5 the referenced claims could be dismissed with prejudice under Federal 6 Rule of Civil Procedure 41(b). 7 Dated: November 30, 2011 8 9 10 GARLAND E. BURRELL, JR. United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23