-RBB Kopopelli Community Workshop Corporation et al v. Select Portfolio Servicing, Inc. et al, No. 3:2010cv01605 - Document 46 (S.D. Cal. 2011)
Court Description: ORDER granting in part and denying in part Motion to Dismiss Plaintiffs' Third Amended Complaint by Defendants Select Portfolio Servicing, Inc. and Bill Koch and granting Stephen Wichmann's Motion to Dismiss with prejudice re 13 , 36 . Plaintiffs may file an amended Complaint consistent with this Order within 20 days after the date of this Order. Signed by Judge Dana M. Sabraw on 2/22/11. (lao) (jrl).
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-RBB Kopopelli Community Workshop Corporation et al v. Select Portfolio Servicing, Inc. et al Doc. 46 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 KOKOPELLI COMMUNITY WORKSHOP CORPORATION, et al., CASE NO. 10CV1605 DMS (RBB) 12 ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS PLAINTIFFS’ THIRD AMENDED COMPLAINT BY DEFENDANTS SELECT PORTFOLIO SERVICING, INC. AND BILL KOCH AND GRANTING STEPHEN WICHMANN’S MOTION TO DISMISS Plaintiffs, 13 vs. 14 15 16 17 SELECT PORTFOLIO SERVICING, INC., et al., Defendants. 18 19 Pending before the Court are motions to dismiss Plaintiffs’ Third Amended Complaint 20 (“TAC”) by (1) Defendants Select Portfolio Servicing, Inc. (“SPS”) and Bill Koch and (2) Defendant 21 Stephen Wichmann. For the following reasons, SPS and Koch’s motion to dismiss is granted in part 22 and denied in part and Wichmann’s motion to dismiss is granted. 23 I. 24 BACKGROUND 25 On November 7, 2005, Plaintiffs obtained a refinance mortgage loan from Novelle Financial 26 Services in the amount of $649,000.00, secured by a Deed of Trust on the subject property, which 27 28 -1- 10cv1605 Dockets.Justia.com 1 Plaintiff Betty Bryan purchased in 1950. (TAC ¶¶ 2, 46; SPS RJN Ex. 1.1) Plaintiffs allege they sent 2 a notice of rescission to Defendants pursuant to the Truth in Lending Act, dated February 5, 2007. (Id. 3 ¶¶ 29, 140.) Subsequent to the rescission, Plaintiffs made an additional approximately $80,000 in 4 payments to Defendants. (Id. at ¶¶ 282-83.) Nonetheless, a Notice of Default was recorded on June 5 19, 2008. (SPS RJN Ex. 2.) Plaintiffs filed a Complaint in San Diego Superior Court on November 6 3, 2008. (TAC ¶¶ 37, 49.) An Assignment of the Deed of Trust transferring the Deed to MTGLQ 7 Investor, LP was recorded on December 15, 2008. (SPS RJN Ex. 3.) Plaintiff Betty Bryan filed for 8 Chapter 13 bankruptcy on November 4, 2008. (TAC ¶ 122.) On March 23, 2009, Plaintiffs Betty 9 Bryan and Catherine Bryan recorded a Grant Deed deeding their interest in the subject property to 10 Kokopelli Community Workshop Corporation. (SPS RJN Ex. 4.) A Trustee’s Deed Upon Sale was 11 recorded on October 30, 2009, granting to MTGLQ Investors, LP all interest in the subject property 12 under the Deed of Trust. (SPS RJN Ex. 5.) This action was removed to this Court on August 2, 2010. 13 (Doc. 1.) Plaintiffs subsequently filed the TAC on October 8, 2010. (Doc. 9.) 14 In the TAC, Plaintiffs allege SPS “is a mortgage servicing corporation . . . who shares one 15 common corporate address and national legal department with Defendant MTGLQ Investors, LP and 16 is directly owned by defendant Goldman Sachs Bank.” (TAC ¶ 20.) Plaintiffs further allege 17 “Defendant, Bill Koch, was an agent and document control officer for Select Portfolio Servicing Inc. 18 F/K/A Fairbanks Capital Corporation.” (Id. at ¶ 26.) Koch also signed the Assignment of Deed of 19 Trust on behalf of SPS. (Id. at ¶ 123; SPS RJN Ex. 3.) Plaintiffs allege “Defendant Stephen C. 20 Wichmann was an agent and attorney for MTGLQ Investor’s, LP[,] a subsidiary division of Goldman 21 Sachs.” (TAC ¶ 27.) 22 The TAC includes 18 claims for relief: (1) violation of the Truth in Lending Act (“TILA”), (2) 23 violation fo the California Rosenthal Fair Debt Collection Practices Act, (3) violation of the Fair Debt 24 25 26 27 28 1 In support of their motion to dismiss, Defendants SPS and Koch request the Court take judicial notice of the following documents: (1) Deed of Trust, (2) Notice of Default, (3) Corporate Assignment of Deed of Trust, (4) Grant Deed, and (5) Trustee’s Deed Upon Sale. A court may take judicial notice of facts that are not subject to reasonable dispute and are either “(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). As the documents are matters of public record subject to judicial notice under Federal Rule of Evidence 201, Defendants’ request for judicial notice is granted. -2- 10cv1605 1 Collection Practices Act, (4) wrongful foreclosure, (5) violation of the Real Estate Settlement 2 Procedures Act (“RESPA”), (6) breach of fiduciary duty, (7) fraud–intentional misrepresentation, (8) 3 fraud–negligent misrepresentation, (9) violation of California Business and Professions Code § 17200, 4 (10) breach of contract, (11) breach of implied covenant of good faith and fair dealing, (12) violation 5 of California Civil Code § 2923.5, (13) quiet title, (14) elder abuse-violation of Welfare and 6 Institutions Code § 15610, (15) rescission, (16) accounting, (17) to set aside trustee’s sale, and (18) 7 to cancel the trust deed. Defendants Bill Koch and SPS filed the pending motion to dismiss the claims 8 against them on October 28, 2010. (Doc. 13.) An opposition, reply, supplemental opposition, and sur- 9 reply were filed. (Docs. 16, 20, 40, 42.) Defendant Wichmann filed the pending motion to dismiss 10 the claims against him on January 24, 2011. (Doc. 36.) Plaintiffs did not file an opposition to 11 Defendant Wichmann’s motion to dismiss. 12 II. 13 LEGAL STANDARD 14 A party may move to dismiss a claim under Rule 12(b)(6) if the claimant fails to state a claim 15 upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). The Federal Rules require a pleading to 16 include a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. 17 R. Civ. P. 8(a)(2). The Supreme Court, however, recently established a more stringent standard of 18 review for pleadings in the context of 12(b)(6) motions to dismiss. See Ashcroft v. Iqbal, ___ U.S. 19 ___, 129 S. Ct. 1937 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion 20 to dismiss under this new standard, “a complaint must contain sufficient factual matter, accepted as 21 true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct. at 1949 (quoting 22 Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content 23 that allows the court to draw the reasonable inference that the defendant is liable for the misconduct 24 alleged.” Id. (citing Twombly, 550 U.S. at 556). “Determining whether a complaint states a plausible 25 claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its 26 judicial experience and common sense.” Id. at 1950 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d 27 Cir. 2007)). The reviewing court must therefore “identify the allegations in the complaint that are not 28 entitled to the assumption of truth” and evaluate “the factual allegations in [the] complaint to -3- 10cv1605 1 determine if they plausibly suggest an entitlement to relief.” Id. at 1951. 2 III. 3 DISCUSSION 4 A. Defendants SPS and Koch’s Motion to Dismiss 5 1. 6 As an initial matter, Defendants argue Plaintiffs’ entire TAC must be dismissed because, in 7 order to challenge a foreclosure sale or to bring any claim that arises from a foreclosure sale, a plaintiff 8 must allege tender. The tender requirement–an allegation of payment of the indebtedness or an offer 9 in good faith and the ability to pay the indebtedness–applies to any claim for relief for irregularity in 10 a foreclosure sale. Abdallah v. United Sav. Bank, 43 Cal. App. 4th 1101, 1109 (1996); Karlsen v. Am. 11 Sav. & Loan Ass’n., 15 Cal. App. 3d 112, 117 (1971). The tender requirement also applies to bar any 12 claim “implicitly integrated” in the foreclosure sale. Arnolds Mgmt. Corp. v. Eischen, 158 Cal. App. 13 3d 575, 579 (1984). Here, however, Plaintiffs repeatedly allege they attempted to tender the full 14 amount of their indebtedness via a refinance in 2007 and, but for the inaction of SPS, would have so 15 refinanced. (SAC ¶¶ 40, 59-60, 119, 140, 278, 304.) Furthermore, Plaintiffs state “[w]hen plaintiff’s 16 substantial equity has been restored to plaintiff and plaintiff’s title is free and clear, Plaintiff stands 17 quite ready to tender upon rendering of a judicial determination of any amount of alleged loan that is 18 judicially determined.” (Id. at ¶ 265.) Accordingly, Defendants’ motion to dismiss on this basis is 19 denied. Failure to Tender 20 2. 21 Defendants move to dismiss Plaintiffs’ claim for violation of TILA on the basis that they were 22 not involved with the origination of the loan. However, as Defendants acknowledge, “the TILA 23 allegations that pertain to SPS revolve around the purported rescission of the loan,” and not disclosures 24 at the time of the origination of the loan. (Reply at 3.) Plaintiffs essentially allege they were not 25 provided with the requisite disclosures under TILA, they subsequently and timely exercised their right 26 to rescind the mortgage pursuant to TILA, and SPS acted wrongfully in relation to the alleged 27 rescission. Accordingly, Plaintiffs have stated a plausible claim for violation of TILA by Defendants 28 and Defendants’ motion to dismiss this claim is denied. TILA -4- 10cv1605 1 3. 2 Defendants move to dismiss Plaintiffs’ claims for violation of the California Rosenthal Fair 3 Debt Collection Practices Act (“RFDCPA”) and the federal Fair Debt Collection Practices Act 4 (“FDCPA”) on the basis that the TAC does not contain allegations that Defendants are debt collectors 5 within the meaning of the acts.2 However, Defendants offer no discussion of what it means to be a 6 “debt collector” under either statute and merely state the TAC “does not allege facts to support the 7 allegation that SPS is a debt collector within the meaning of the RFDCPA or the FDCPA.” (MTD at 8 5.) The TAC, however, refers to “debt collection Defendant Select Portfolio.” (TAC ¶ 135). 9 Defendants also summarily state that the activity of foreclosing on a property is not the collection of 10 a debt within the meaning of the Acts and cite to one case–Hulse v. Ocwen Fed. Bank, FSB, 195 F. 11 Supp. 2d 1188, 1204 (D. Or. 2002)–in support. The Court in Hulse, in analyzing a claim under the 12 FDCPA, held that “[f]oreclosing on a trust deed is distinct from the collection of the obligation to pay 13 money.” 195 F. Supp. 2d at 1204. The holding in Hulse, however, has been questioned and found to 14 be overly broad. See Allen v. United Fin. Mortg. Corp., No. 09-2507 SC, 2010 WL 1135787, at *6 15 (N.D. Cal. Mar. 22, 2010); see also Harvey G. Ottovich Revocable Living Trust v. Washington Mut., 16 Inc., No. C 10-2842 WHA, 2010 WL 3769459, at *4 (N.D. Cal. Sept. 22, 2010). Furthermore, 17 Plaintiffs here allege Defendants did more than merely wrongfully participate in foreclosure 18 proceedings; they allege Defendants repeatedly obfuscated the truth with regard to and refused to 19 substantiate the loan amount. Accordingly, Defendants have failed to meet their burden of establishing 20 Plaintiffs’ failure to state a plausible claim for relief and their motion to dismiss this claim is denied. Debt Collection Practices Acts 21 4. 22 Plaintiffs bring a wrongful foreclosure claim against Defendants SPS, MTGLQ Investors, LP, 23 and Rick Ardissoni. SPS argues Plaintiffs’ claim for wrongful foreclosure should be dismissed as to Wrongful Foreclosure 24 2 25 26 27 28 The FDCPA states “[t]he term ‘debt collector’ means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). The RFDCPA states “[t]he term ‘debt collector’ means any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection. The term includes any person who composes and sells, or offers to compose and sell, forms, letters, and other collection media used or intended to be used for debt collection, but does not include an attorney or counselor at law.” Cal. Civ. Code § 1788.2(c). -5- 10cv1605 1 it because Defendant MTGLQ actually foreclosed upon the property, Plaintiffs did not validly rescind 2 the mortgage because they did not tender, and Plaintiffs’ right to rescind was extinguished upon the 3 sale of their home. As discussed above, Plaintiffs have sufficiently alleged tender. Furthermore, 4 Plaintiffs have clearly alleged the rescission of their mortgage within the three-year period provided 5 by TILA and the Court is not in a position to determine the rescission was invalid as a matter of law 6 at this time based upon Defendants’ motion to dismiss. Accordingly, SPS’s motion to dismiss the 7 wrongful foreclosure claim is denied. 8 5. 9 Defendants argue Plaintiffs’ claims under RESPA fail because they are time-barred and 10 because the letter sent to SPS by Plaintiffs did not constitute a qualified written request pursuant to 11 12 U.S.C. § 2605(e), citing an exhibit to Plaintiffs’ Second Amended Complaint. The Court is not 12 persuaded by Defendants’ arguments. Although Defendants make much of the requirement that a 13 qualified written request relate to the servicing of the loan, they neglect to address the actual language 14 of the letter Plaintiffs allege constitutes a qualified written request, which requests information 15 regarding “loan disbursements, charges, all payments paid to date, and the principal balance,” all of 16 which relate to the servicing of the loan. As to Defendants’ argument that Plaintiffs’ claim under 17 RESPA is time-barred, a three-year statute of limitations applies to claims under § 2605. 12 U.S.C. 18 § 2614. The TAC states “[o]n February 5, 2007 Plaintiffs sent a Qualified Written Request (QWR) 19 . . . to Defendant Select . . . .” (TAC ¶ 181.) Although more than three years have elapsed since 20 Plaintiffs sent this request, in their Opposition, Plaintiffs indicate they raised this claim as to SPS in 21 their original Complaint, filed in Superior Court on November 3, 2008. (Opp. at ¶ 14-15.) 22 Accordingly, Defendants’ motion to dismiss this claim is denied. RESPA 23 6. 24 Defendants argue Plaintiffs’ claims for breach of contract, breach of fiduciary duty, and breach 25 of the implied covenant of good faith and fair dealing should be dismissed as to them because neither 26 SPS nor Koch were party to the Deed of Trust or the Note. To state a claim for breach of contract, a 27 plaintiff must allege the existence of a contract, plaintiff’s performance or excuse for nonperformance, 28 defendant’s breach, and damages as a result of the breach. CDF Firefighters v. Maldonado, 158 Cal. Breach of Contract -6- 10cv1605 1 App. 4th 1226, 1239 (2008). The basis for Plaintiffs’ breach of contract claim against SPS appears 2 to be its “failure to provide verification of mortgage and substantiation of Betty Bryan’s mortgage 3 debt.” (TAC ¶ 237.) However, Plaintiffs do not allege the existence of a contract between them and 4 SPS or Koch. Accordingly, the Court grants Defendants’ motion to dismiss the breach of contract 5 claim with leave to amend. 6 7. 7 Defendants argue this claim should be dismissed as against them because it is based upon the 8 idea that a fiduciary relationship existed between Defendants and Plaintiffs and because such a claim 9 is limited to assuring compliance with the express terms of a contract, which they were not party to. 10 The implied covenant of good faith and fair dealing is limited to enforcing compliance with the 11 express terms of a contract. See Racine & Laramie, Ltd. v. Dep’t of Parks & Recreation, 11 Cal. App. 12 4th 1026, 1033-34 (1992). As Plaintiffs have failed to allege the existence of a contract between them 13 and Defendants, this claim is dismissed with leave to amend. Breach of Good Faith and Fair Dealing 14 8. 15 Defendants further argue they owe no fiduciary duty to Plaintiffs, citing two cases for the 16 proposition that a lender does not owe a fiduciary duty to a borrower in the context of an ordinary 17 lender-borrower relationship. (MTD at 10.) Defendants then state, without citation, “as the former 18 loan servicer and an agent and attorney-in-fact for the former investor of the loan, SPS as a matter of 19 law, does not owe a fiduciary duty to Plaintiffs.” (Id.) Although the Court is not convinced by 20 Defendants’ conclusory statements that a loan servicer may never owe a fiduciary duty to a borrower 21 as a matter of law, the Court finds the TAC does not allege a fiduciary relationship between Plaintiffs 22 and Defendants, but merely alleges “[b]y failing TO COMPLY WITH HER RESCISSION, All other 23 Defendants . . . aided and abetted in the breaches of the fiduciary duties owed by Defendant Demarco 24 Fletcher.” (TAC ¶ 200; see also id. at ¶ 199 (“The other Defendants owed a duty not to aid and abet 25 the breach of fiduciary duty owed by Defendant Demarco Fletcher.”).) Accordingly, Defendants’ 26 motion to dismiss this claim is granted with leave to amend. Breach of Fiduciary Duty 27 9. 28 Plaintiffs assert a claim for fraud-intentional misrepresentation against several individual Fraud -7- 10cv1605 1 Defendants, including Koch, and a claim for fraud-negligent misrepresentation against all Defendants. 2 To recover for common law fraud under California law, Plaintiffs must demonstrate: (1) 3 misrepresentation, (2) knowledge of its falsity, (3) intent to defraud, (4) justifiable reliance, and (5) 4 resulting damage. Lazar v. Super. Ct., 12 Cal.4th 631, 638 (1996). Unlike fraud, negligent 5 misrepresentation does not require knowledge of falsity or intent to defraud. Small v. Fritz Cos., Inc., 6 30 Cal.4th 167, 173-74 (2003). Rather, negligent misrepresentation may be shown when there is a 7 false statement made by “one who has no reasonable ground for believing it to be true.” Id. (citing 8 Cal. Civ. Code § 1710(2)). However, both fraud and negligent misrepresentation claims are subject 9 to the heightened pleading standards of Federal Rule of Civil Procedure 9(b). Neilson v. Union Bank 10 of Cal., N.A., 290 F. Supp. 2d 1101, 1141 (C. D. Cal. 2003). Rule 9(b) requires a party alleging fraud 11 or mistake to “state with particularity the circumstances constituting fraud or mistake” and is applied 12 by a federal court to both federal law and state law claims. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 13 1097, 1102-03 (9th Cir. 2003). A pleading will be “sufficient under Rule 9(b) if it identifies the 14 circumstances of the alleged fraud so that the defendant can prepare an adequate answer.” Fecht v. 15 Price Co., 70 F.3d 1078, 1082 (9th Cir. 1995)(quotation omitted). The same is true for allegations of 16 fraudulent conduct. 17 accompanied by “the who, what, when, where, and how” of the misconduct charged. Id. at 1106 18 (quotation omitted). Vess, 317 F.3d at 1103-04. In other words, fraud allegations must be 19 Defendants argue Plaintiffs’ allegations are not pled with the requisite particularity as to them 20 as “[a]ll that can be ascertained [from the TAC] is that SPS, in its capacity as a loan servicer, recorded 21 an Assignment of Deed of Trust and that Bill Koch, in his capacity as an employee of SPS signed the 22 Assignment.” (MTD at 11.) Defendants further argue the claim should be dismissed as to Koch 23 because a corporate representative may only be held individually liable for damages resulting from 24 physical harm, and not economic harm, to a plaintiff. The Court agrees Plaintiffs have failed to plead 25 the elements of a claim for fraud, including the element of justifiable reliance, as to Defendants with 26 the requisite particularity. Accordingly, Defendants’ motion to dismiss Plaintiffs’ claims for 27 intentional and negligent misrepresentation is granted with leave to amend. 28 // -8- 10cv1605 1 10. 2 California law prohibits unfair competition, defined as “any unlawful, unfair or fraudulent 3 business act or practice.” Cal. Bus. & Prof. Code § 17200. “By proscribing ‘any unlawful’ business 4 practice, section 17200 borrows violations of other laws and treats them as unlawful practices that the 5 unfair competition law makes independently actionable.” Cel-Tech Commc'ns, Inc. v. Los Angeles 6 Cellular Tel. Co., 20 Cal.4th 163, 180 (1999)(citation and internal quotations omitted). Defendants 7 argue this claim must be dismissed as against them because the TAC contains no allegations directed 8 at them. However, as discussed above, Plaintiffs’ claims as to Defendants’ violations of other laws 9 survive Defendants’ motion to dismiss. Accordingly, Defendants have not demonstrated to the Court 10 that Plaintiffs have failed to state a plausible claim for relief pursuant to § 17200 and Defendants’ 11 motion to dismiss this claim is denied. California Business & Professions Code § 17200 12 11. 13 Defendants argue this claim must be dismissed as to them because California Civil Code § 14 2923.5(b) did not become effective until September 8, 2008 and the Notice of Default was recorded 15 on June 19, 2008. (MTD at 13; SPS RJN Ex. 2.) Section 2923.5(c) requires a mortgagee, trustee, 16 beneficiary, or authorized agent who filed a notice of default prior to the enactment of the section to 17 include a declaration with the notice of sale stating that it had contacted the borrower to explore 18 options to avoid foreclosure or had attempted to contact the borrower. Cal. Civ. Code § 2923.5(c). 19 However, here, Plaintiffs do not include any allegations regarding the Notice of Sale. Rather, 20 Plaintiffs allege the “Declaration of compliance with newly enacted Civil Code 2923.5 was attached 21 to plaintiffs[’] default, falsely stated that Defendant Select attempted to contact Plaintiff Betty Bryan 22 to discuss her financial situation to avoid foreclosure.” (TAC ¶ 253.) Furthermore, “the only remedy 23 provided [by section 2923.5] is a postponement of sale before it happens.” Mehta v. Wells Fargo 24 Bank, N.A., No. 10-CV-944 JLS (AJB), 2010 WL 3385020, at *6 (S.D. Cal. Aug. 26, 2010)(quoting 25 Mabry v. Super. Ct., 185 Cal. App. 4th 208, 220-21 (2010)). Accordingly, Defendants’ motion to 26 dismiss this claim is granted with prejudice. California Civil Code § 2923.5 27 12. 28 Defendants argue Plaintiffs’ claim to quiet title must be dismissed as to them because they do Quiet Title -9- 10cv1605 1 not claim any adverse interest in the property. To state a claim to quiet title, “the complaint shall be 2 verified” and must include all of the following: (1) a legal description of the property and its street 3 address or common designation; (2) the title of the plaintiff and the basis of the title; (3) the adverse 4 claims to the title of the plaintiff; (4) the date as of which the determination is sought; and (5) a prayer 5 for the determination of the title of the plaintiff against the adverse claims. Cal. Code Civ. Pro. § 6 761.020. Plaintiffs allege “Defendant Select has in addition submitted an additional unsubstantiated 7 claim to [bankruptcy] Trustee David Skelton, a secured claim of $89,000.” (TAC ¶ 72.) However, 8 they state Defendant MTGLQ claims to be in current possession of the promissory note on the subject 9 property. (Id. at ¶¶ 72, 106, 124, 127.) Accordingly, Plaintiffs have not sufficiently alleged a claim 10 for quiet title as to Defendants and Defendants’ motion to dismiss this claim is granted with leave 11 to amend. 12 13. 13 Defendants state “[f]inancial abuse of an elder occurs when any person or entity takes, secretes, 14 appropriates, or retains real or personal property of an elder adult to a wrongful use or with an intent 15 to defraud, or both; a ‘wrongful use’ is defined as taking, secreting, appropriating, or retaining property 16 in bad faith, which occurs where the person or entity knew or should have known that the elder had 17 the right to have the property transferred or made readily available to the elder or to his or her 18 representative.” (MTD at 13-14; see also Cal. Welf. & Inst. Code § 15610.30.) Defendants argue that 19 Plaintiffs’ allegations in support of this claim relate to purported misrepresentations in the loan 20 origination by the mortgage broker and property developer and, thus, the claim should be dismissed 21 as to them. However, in addition to alleging misrepresentations in the loan origination, Plaintiffs also 22 allege Defendants engaged in a wrongful foreclosure on the subject property in light of their 23 knowledge of Plaintiffs’ alleged valid rescission. (See TAC ¶¶ 65, 269.) Defendants do not discuss 24 whether these allegations are sufficient to state a plausible claim for elder abuse in violation of 25 California Welfare and Institutions Code and Defendants’ motion to dismiss this claim is therefore 26 denied. Elder Abuse 27 14. 28 Defendants move to dismiss Plaintiffs’ fifteenth through eighteenth claims–for rescission, Equitable Claims - 10 - 10cv1605 1 accounting, to set aside the trustee’s sale, and to the cancel the trustee’s deed, respectively–based on 2 Plaintiffs’ failure to tender. This argument fails for the reasons discussed above. Defendants also 3 argue they did not conduct the foreclosure sale and did not have an interest in the property and 4 therefore cannot rescind the loan, set aside the trustee’s sale, or cancel the trustee’s deed. 5 With respect to Plaintiffs’ claim for rescission, Plaintiffs allege they have already validly 6 rescinded the mortgage and Defendants failed to recognize such rescission and respond accordingly. 7 Therefore, Defendants’ motion to dismiss this claim is denied. Furthermore, SPS is listed as a contact 8 on the Notice of Default and signed, through Koch, the Corporate Assignment of the Deed of Trust. 9 (SPS RJN Exs. 2-3.) Accordingly, Defendants, by summarily stating they were “merely a loan 10 servicer,” have not met their burden of demonstrating Plaintiffs have failed to state claims for relief 11 for rescission, to set aside the trustee’s sale, and to cancel the trustee’s deed and their motion to 12 dismiss these claims is denied. 13 As to Plaintiffs’ claim for an accounting, “[t]o be entitled to an accounting, a plaintiff must 14 demonstrate at least one of the following: a breach of fiduciary duty, fraud, or that the accounts are 15 complicated and there is a dispute as to whether the money is owed.” Miller v. Cal. Reconveyance 16 Co., No. 10-CV-421 IEG (CAB), 2010 WL 2889103, at *9-10 (S.D. Cal. July 22, 2010)(citing Union 17 Bank v. Super. Ct., 31 Cal. App. 4th 573, 593-94 (1995)). Plaintiffs here allege they have not been 18 provided with documents substantiating the amount remaining on their mortgage, but believe that 19 certain amounts paid have not been credited to their account and that the mortgage has not been 20 equitably reduced pursuant to their alleged rescission. (See TAC ¶¶ 75, 77.) However, as discussed 21 above, Plaintiffs have not sufficiently stated a claim for breach of fiduciary duty or fraud as to these 22 Defendants and have not alleged the account is so complicated that a judicial accounting is necessary. 23 Accordingly, Defendants’ motion to dismiss the accounting claim is granted with leave to amend. 24 B. Defendant Wichmann’s Motion to Dismiss 25 Defendant Wichmann’s motion to dismiss is unopposed. The Court, having read and 26 considered the supporting memorandum and good cause appearing, hereby grants Defendant 27 Wichmann’s motion to dismiss with prejudice. 28 // - 11 - 10cv1605 1 IV. 2 CONCLUSION 3 For the foregoing reasons, SPS and Koch’s motion to dismiss is granted in part and denied in 4 part and Wichmann’s motion to dismiss is granted with prejudice. As the Court has herein granted 5 Plaintiffs leave to amend certain of their claims, Plaintiffs may file an amended Complaint consistent 6 with this Order within 20 days after the date of this Order. 7 8 IT IS SO ORDERED. DATED: February 22, 2011 9 10 11 HON. DANA M. SABRAW United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 12 - 10cv1605
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