Kwan v. Wells Fargo Bank, NA et al, No. 3:2012cv01793 - Document 34 (S.D. Cal. 2013)
Court Description: ORDER granting Defendants' 20 Motion to Dismiss and 21 Motion to Dismiss for Failure to State a Claim; denying as moot Defendants' 22 Motion to Strike. Court grants Dfts' motion to dismiss the causes of action for declaratory relief, wrongful foreclosure and quiet title in the First Amended Complaint with prejudice. Court grants Dfts' motion to dismiss the remaining causes of action w/o prejudice. Pla is granted leave to file a Second Amended Complaint within 20 days of the day the Order is filed. Signed by Judge Gonzalo P. Curiel on 7/23/2013. (jah)
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Kwan v. Wells Fargo Bank, NA et al Doc. 34 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 WILLIE KWAN, 11 12 CASE NO. 12CV1793-GPC(MDD) Plaintiff, vs. 13 14 23 WELLS FARGO BANK, N.A., individually and as successor by merger to AMERICA’S SERVICING COMPANY, a National Association; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware Corporation; CARRINGTON MORTGAGE SERVICES, LLC, a Delaware Limited Liability Company; ALL PERSONS UNKNOWN CLAIMING ANY LEGAL OR EQUITABLE RIGHT, TITLE, ESTATE LIEN OR INTEREST IN THE PROPERTY DESCRIBED IN THE COMPLAINT ADVERSE TO PLAINTIFF’S TITLE THERETO; and DOES 1-100, inclusive, 24 ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT AND DENYING DEFENDANTS’ MOTION TO STRIKE AS MOOT Defendants. 15 16 17 18 19 20 21 22 [Dkt. Nos. 20, 21, 22.] 25 26 On November 13, 2012, Defendants Carrington Mortgage Services, LLC 27 (“Carrington”) and Wells Fargo Bank, N.A., (“Wells Fargo”) only in its capacity as 28 Trustee for Carrington Mortgage Loan Trust, Series 2006-FRE1 Asset-Backed Pass-1- [12cv1793-GPC(MDD)] Dockets.Justia.com 1 Through Certificates (erroneously sued as “Wells Fargo Bank, NA, individually and 2 as successor by merger to America’s Servicing Company, a National Association”) 3 filed a motion to dismiss the first amended complaint. (Dkt. No. 20.) On November 4 16, 2012, Defendants Wells Fargo Bank, N.A. d/b/a/ America’s Servicing Company 5 in its capacity as servicer of the deed of trust recorded on October 25, 2005 as 6 Instrument No. 20050922901 (erroneously sued as “Wells Fargo Bank, NA, 7 individually and as successor by merger to America’s Servicing Company, a National 8 Association”); and Mortgage Electronic Registration Systems, Inc. (“MERS”)1 filed a 9 motion to dismiss and a motion to strike portions of Plaintiff’s first amended complaint. 10 (Dkt. Nos. 21, 22.) 11 Plaintiff Willie Kwan2 filed an opposition on November 26, 2012 as to 12 Defendants Carrington and Wells Fargo, as Trustee’s motion to dismiss. (Dkt. No. 24 13 at 2.) On December 3, 2012, Defendants Carrington and Wells Fargo only in its 14 capacity as Trustee for Carrington Mortgage Loan Trust filed a reply. (Dkt. No. 25.) 15 On December 10, 2012, Wells Fargo Bank, NA, d/b/a America’s Servicing Company, 16 and MERS also filed a reply. (Dkt. Nos. 27, 28.) On February 14, 2013, Defendant 17 Atlantic and Pacific Foreclosure Services filed a joinder in Carrington and Wells Fargo, 18 as Trustee’s, motion to dismiss. (Dkt. No. 31.) After a review of the briefs, supporting 19 documentation, and applicable law, the Court GRANTS Defendants’ motion to dismiss. 20 21 Background On October 29, 2012, Plaintiff Willie Kwan filed an amended complaint3 against 22 23 1 28 3 Wells Fargo Bank, N.A. d/b/a America’s Servicing Company in its capacity as servicer of the deed of trust recorded on October 25, 2005 as Instrument No. 24 20050922901 and MERS are no longer parties to this case since the FAC seeks relief on a different deed of trust and property from the original complaint. 25 2 In a footnote, Defendants argue, without legal authority, that Plaintiff’s wife 26 should be joined pursuant to Federal Rule of Civil Procedure 19(a)(1) and 19(a)(2) as a party to this case since she is a co-borrower. If Defendants seek to add Plaintiff’s 27 wife as a Plaintiff in this case, they must file an appropriate motion before the Court. The amended complaint seeks relief on a different deed of trust and property as alleged in the original complaint. (See Dkts. Nos. 1, 18.) -2- [12cv1793-GPC(MDD)] 1 Defendants Carrington Mortgage Services, LLC;Wells Fargo Bank, N.A. only in its 2 capacity as Trustee for Carrington Mortgage Loan Trust, Series 2006-FRE1 Asset3 Backed Pass-Through Certificates; and Atlantic and Pacific Foreclosure Services, LLC. 4 (Dkt. No. 18, FAC.) Plaintiff seeks to establish that Wells Fargo, as Trustee, is not the 5 true creditor of his loan and has no legal, equitable or pecuniary right in the debt 6 obligation secured by the real property located at 10456 Couser Way, Valley Center, 7 CA 92082. Defendant Carrington Mortgage Services, Inc. is the master loan servicer 8 for the trust and Defendant Atlantic and Pacific Foreclosure Services (“Atlantic”) was 9 hired by Carrington to foreclose on Plaintiff’s property. (Dkt. No. 18, FAC ¶ 7.) 10 On March 10, 2006, Plaintiff and his wife Cynthia Rios-Kwan obtained a home 11 loan in the amount of $740,000.00 from Freemont Investment and Loan Corporation 12 secured by a Deed of Trust (“Deed of Trust”) to the real property located at 10456 13 Couser Way, Valley Center, CA 92082. (Dkt. No. 23, Ds Carrington and Wells 14 Fargo’s Request for Judicial Notice (“RJN”), Ex. 1.) On March 17, 2006, a Deed of 15 Trust was recorded reflecting Plaintiff’s loan. (Id.) The original trustee was Fremont 16 General Credit Corporation. (Id.) 17 On April 27, 2011, an Assignment of Deed of Trust was recorded reflecting that 18 the beneficial interest in the Deed of Trust was assigned to Wells Fargo, as Trustee for 19 Carrington Mortgage Loan Trust, Series 2006-FRE1 Asset-Backed Pass-Through 20 Certificates. (Id., Ex. 2.) On the same day, a Substitution of Trustee was executed by 21 Carrington Mortgage Services, LLC (“CMS”) as servicer and attorney-in-fact for Wells 22 Fargo designating Atlantic & Pacific Foreclosure Services, LLC as Trustee under the 23 DOT. (Id., Ex. 3.) The Notice of Default reflects that as of April 26, 2011, Plaintiff 24 was in default in the amount of $37,152.00. (Id., Ex. 4.) On July 28, 2011, a Notice 25 of Trustee’s Sale was recorded. (Id., Ex. 5.) On February 22, 2012, a Trustee’s Deed 26 Upon Sale was recorded reflecting that the Property sold to Wells Fargo, as Trustee, 27 on February 16, 2012. (Id., Ex. 6.) 28 In the first amended complaint, Plaintiff asserts that the investment trust was -3- [12cv1793-GPC(MDD)] 1 formed by a type of trust agreement known as a Pooling and Servicing Agreement 2 (“PSA”). (Dkt. No. 18, FAC ¶ 25.) Plaintiff alleges that the PSA falls under New York 3 trust law and under that law, an inter vivos gift requires delivery of the gift or a 4 constructive or symbolic delivery sufficient to divest the donor of dominion and control 5 over the property. (Id. ¶¶ 26, 27.) Plaintiff contends that under New York Law, there 6 was never a valid delivery of Plaintiff’s note to the Trust. (Id. ¶ 30.) Specifically, he 7 contends that the Trust never acquired ownership of the mortgage loan because the 8 parties failed to comply with the terms of the PSA and New York law requires a valid 9 transfer of property to the Trust. (Id.) Also, the PSA requires a complete chain of 10 endorsements to be in place by the Trust’s closing or cut-off date or under no 11 circumstances later than 90 days after the Trust’s cut-off date. (Id. ¶ 33) Plaintiff 12 believes that the Trust’s purported acquisition of Plaintiff’s loan was acquired more 13 than 90 days after the cut-off date and there are no documents reflecting the transfer 14 to the Trust. (Id.) Therefore, Plaintiff’s note was never been securitized and there 15 was never an effective conveyance of Plaintiff’s note to the Trust, which has claimed 16 ownership and foreclosed on the property (Id. ¶ 35.) “The parties involved in the 17 securitization and transfer of Plaintiff’s note and deed of trust failed to adhere to the 18 PSA which requires that the note and deed be properly endorsed, transferred, accepted 19 and deposited in the Trust on or before the “closing date.” (Id. ¶ 37.) Therefore, the 20 “sale” never took place and the Trust cannot claim any right, title, or interest in 21 plaintiffs’ property or deed of trust. (Id.) 22 Plaintiff alleges he was current on his payments up until about September 2010 23 when Carrington unilaterally increased the monthly payments from $4,200 to $4,500. 24 (Id. ¶ 43.) He alleges that he does not have a copy of the modified loan agreement. 25 (Id.) 26 Plaintiff alleges six causes of action for 1) declaratory relief; 2) negligence; 3) 27 breach of contract; 4) violation of the Fair Debt Collection Practices Act; 5) wrongful 28 foreclosure; and 6) quiet title. -4- [12cv1793-GPC(MDD)] 1 A. Legal Standard on Federal Rule of Civil Procedure 12(b)(6) 2 Federal Rule of Civil Procedure (“Rule”) 12(b)(6) permits dismissal for "failure 3 to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Dismissal 4 under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory 5 or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police 6 Dep’t., 901 F.2d 696, 699 (9th Cir. 1990). Under Federal Rule of Civil Procedure 7 8(a)(2), the plaintiff is required only to set forth a “short and plain statement of the 8 claim showing that the pleader is entitled to relief,” and “give the defendant fair notice 9 of what the . . . claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. 10 Twombly, 550 U.S. 544, 555 (2007). 11 A complaint may survive a motion to dismiss only if, taking all well-pleaded 12 factual allegations as true, it contains enough facts to "state a claim to relief that is 13 plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 14 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual 15 content that allows the court to draw the reasonable inference that the defendant is 16 liable for the misconduct alleged.” Id. “Threadbare recitals of the elements of a cause 17 of action, supported by mere conclusory statements, do not suffice.” Id. “In sum, for 18 a complaint to survive a motion to dismiss, the non-conclusory factual content, and 19 reasonable inferences from that content, must be plausibly suggestive of a claim 20 entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 21 2009) (quotations omitted). In reviewing a Rule 12(b)(6) motion, the Court accepts as 22 true all facts alleged in the complaint, and draws all reasonable inferences in favor of 23 the plaintiff. al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). 24 In ruling on a motion to dismiss pursuant to Rule 12(b)(6), a Court may consider 25 exhibits attached to the complaint, matters subject to judicial notice, or documents 26 necessarily relied on by the complaint whose authenticity no party questions. See 27 Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007); Lee v. City of Los Angeles, 28 250 F.3d 668, 688–689 (9th Cir. 2001); United States v. Ritchie, 342 F.3d 903, 908 -5- [12cv1793-GPC(MDD)] 1 (9th Cir. 2003) (“A court may, however, consider certain materials-documents attached 2 to the complaint, documents incorporated by reference in the complaint, or matters of 3 judicial notice-without converting the motion to dismiss into a motion for summary 4 judgment.”). 5 Defendants move to dismiss all causes of action in the first amended complaint. 6 Plaintiff opposes. 7 B. Defendants’ Request for Judicial Notice 8 Defendants Carrington and Wells Fargo, as Trustee filed a request for judicial 9 notice of documents recorded in the official records of the San Diego County 10 Recorder’s Office. (Dkt. No. 20-1, Exs. 1-6.) Plaintiff does not oppose the request. 11 The Court finds that the documents are all part of the public record and may be 12 judicially noticed. See Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 13 n. 6 (9th Cir. 2006). Accordingly, the Court GRANTS Defendants’ request for judicial 14 notice.4 15 C. Declaratory Relief - First Cause of Action; Wrongful Foreclosure - Fifth 16 Cause of Action; and Quiet Title - Sixth Cause of Action 17 Plaintiff alleges three causes of action concerning the wrongful foreclosure of 18 his property. He seeks declaratory relief asking the Court to declare the actual rights 19 and obligations of the parties and to make a determination as to whether the trustee’s 20 sale of plaintiff’s property is legally effective or void because it was initiated by a party 21 without a security interest in the property. (Dkt. No. 18, FAC ¶¶ 45-48.) He also 22 alleges wrongful foreclosure. (Id. ¶¶ 65-67.) Plaintiff further contends that Defendants 23 did not have standing to foreclose and Plaintiff seeks to quiet title as of the date of the 24 foreclosure sale by a judicial declaration that Defendants have no right in the property. 25 (Id. ¶¶ 69-72.) 26 27 4 Defendants Wells Fargo and MERS filed a request for judicial notice to support their motion to dismiss and motion to strike. (Dk.t No. 23.) Since they are not parties 28 to the amended complaint, the Court DENIES Defendants Wells Fargo and MERS’ request for judicial notice. -6- [12cv1793-GPC(MDD)] 1 Defendants argue that Plaintiff lacks standing to challenge the validity of the 2 securitization of the loan since he is not a party to the PSA. Plaintiff disagrees. 3 “Ninth Circuit district courts have come to different conclusions when analyzing 4 plaintiff’s right to challenge the securitization process.” Johnson v. HSBC Bank USA, 5 N.A., 11cv2091-JM(WVG), 2012 WL 928433, at *2 (S.D. Cal. Mar. 19, 2012) (citing 6 Schafer v. CitiMortgage, Inc., No. CV 11-3919 ODW (FFMx), 2011 WL 2437267, at 7 *4 (C.D. Cal. June 15, 2011) (denying defendants’ motion to dismiss declaratory relief 8 claim, which was based on alleged improper transfer due to alleged fraud in signing of 9 documents)); Vogan v. Wells Fargo Bank, N.A., No. 2:11cv2098-JAM-KJN, 2011 WL 10 5826016, at *7 (E.D. Cal. Nov. 17, 2011) (allowing § 17200 claim when plaintiffs 11 alleged that assignment was executed after the closing date of securities pool, “giving 12 rise to a plausible inference that at least some part of the recorded assignment was 13 fabricated”); but see Junger v. Bank of America, N.A., No. CV 11-10419 CAS(VBKx), 14 2012 WL 603262, at *3 (C.D. Cal. Feb.24, 2012) (“The Court finds that plaintiff lacks 15 standing to challenge the process by which his mortgage was (or was not) securitized 16 because he is not a party to the PSA.”). 17 The majority of the district courts in the Ninth Circuit have held that “plaintiffs 18 lack standing to challenge noncompliance with a PSA in securitization unless they are 19 parties to the PSA or third party beneficiaries of the PSA.” Baldoza v. Bank of 20 America, N.A., No. C-12-5966 JCS, 2013 WL 978268, at *10 (N.D. Cal. Mar. 12, 21 2013); see also Mobine v. OneWest Bank, FSB, 11cv2550-IEG(BGS), 2012 WL 22 1520116, at *3 (S.D. Cal. Apr. 27, 2012) (dismissing unjust enrichment claim because 23 plaintiff failed to show defendant lacked standing to collect payments on the loan as 24 a result of the securitization process); Armstrong v. Chevy Chase Bank, FSB, 25 11cv5664 EJD, 2012 WL 4747165, at *2 (N.D. Cal. Oct. 3, 2012) (“Plaintiffs lack 26 standing to allege a breach of the PSA” and citing numerous district court cases that 27 have held the same); Bascos v. Federal Home Loan Mortgage Co., No. CV 11-396828 JFW(JCx), 2011 WL 3157063, at *6 (C.D. Cal. July 22, 2011) (holding that borrower -7- [12cv1793-GPC(MDD)] 1 did not have standing to challenge the validity of the securitization of the loan based 2 upon it reassignment or sale); E.g. In re Correia, 452 B.R. 319, 324 (B.A.P. 1st Cir. 3 2011) (holding that debtors lacked standing to challenge the mortgage’s change of title 4 under the PSA as they were not a party to the contract). The Court finds the majority 5 approach persuasive. 6 Here, Plaintiff is challenging the securitization of the loan based on a breach of 7 the PSA and has no standing to assert such a claim. Accordingly, the Court GRANTS 8 Defendants’ motion to dismiss the causes of action challenging the securitization of 9 the loan with prejudice. See Armstrong, 2012 WL 4747165, at 3 (dismissing 10 declaratory relief claim based on the claim that the mortgage was not properly assigned 11 to the defendant before the required closing date as set forth in the PSA.) 12 Plaintiff also seeks to challenge Wells Fargo’s authority to foreclose based on 13 the fact that only a beneficiary or trustee under a DOT may initiate nonjudicial 14 foreclosure pursuant to California Civil Code section 2924(a)(1) and therefore, only 15 a beneficiary may appoint the trustee for the DOT. (Dkt. No. 18, FAC ¶ 20.) “Wells 16 Fargo purported to appoint a trustee, but the appointment is invalid because Wells 17 Fargo never qualified as a beneficiary.” (Id.) Therefore, Plaintiff contends that Well 18 Fargo did not have authority to foreclose on Plaintiff’s property. (Id.) 19 California law applies to whether there was a valid transfer of the DOT and 20 substitution of trustee. See Cal. Civil Code 2934a. It appears that Plaintiff conflates 21 section 2924(a)(1) concerning who has authority to initiate nonjudicial foreclosure with 22 who has authority to substitute a Trustee under a DOT. 23 Based on the recorded documents in Defendants’ request for judicial notice, 24 Plaintiff has not shown that the assignment of the deed of trust; substitution of trustee; 25 and subsequent Notice of Default and Election to Sell under Deed of Trust; and 26 Trustee’s Deed Upon Sale are improper or invalid. (Dkt. No. 20, Ds’ RJN, Exs. 1-6.) 27 Contrary to Plaintiff’s allegation, Atlantic & Pacific Foreclosure Services, as Trustee 28 proceeded with the nonjudicial foreclosure, not Wells Fargo. While Carrington -8- [12cv1793-GPC(MDD)] 1 Mortgage Services, the servicer and attorney-in-fact for Wells Fargo, substituted 2 Fremont General Credit Corporation with Atlantic & Pacific, as Trustee, Plaintiff has 3 not shown that a lender’s attorney-in fact is not allowed to substitute a trustee. See 4 Aceves v. U.S. Bank, N.A., 192 Cal. App. 4th 218, 231 (2011) (finding that a lender’s 5 use of its attorney in fact to sign a “Substitution of Trustee” was not an irregularity in 6 the foreclosure process where the trust deed did not preclude an attorney in fact from 7 signing a Substitution of Trustee). Accordingly, Plaintiff has not sufficiently alleged 8 that the foreclosure was improper based on the Substitution of Trustee. 9 In addition, another court, based on different reasoning, also held that plaintiff 10 may not challenge the foreclosure based on an invalid assignment under the PSA 11 because Plaintiff has not been prejudiced. See Flemister v. Citibank, N.A., No. CV 12 12–5368 CAS (JCGx), 2012 WL 6675273, at * 2-3 (C.D. Cal. Dec. 20, 2012).5 The 13 plaintiffs in Flemister argued that the assignment assigning plaintiffs’ deed of trust and 14 note to Citibank as “trustee for the benefit of the certificate holders of CWABS, Inc., 15 Asset-Backed Certificates, Series 2007-QH2" did not comply with the terms of the PSA 16 that governed the securitization of plaintiffs’ mortgage. Id. at 2. They also argued that 17 the assignment was invalid under New York trust law since the assignment was 18 executed four years after the closing of the trust. Id. The court, following the court of 19 appeals case of Fontenot v. Wells Fargo Bank, 298 Cal. App. 4th 256, 272 (2011), 20 dismissed plaintiffs’ claims challenging the foreclosure sale because plaintiffs had not 21 22 23 24 25 26 27 28 5 In Fontenot, the plaintiff challenged a nonjudicial foreclosure sale on the grounds that a defendant “lacked authority to foreclose, never having received a proper assignment of the debt.” Fontenot v. Wells Fargo Bank, 198 Cal. App. 4th 256, 271 (2011). The court rejected this argument pursuant to the principle that “a plaintiff in a suit for wrongful foreclosure has generally been required to demonstrate the alleged imperfection in the foreclosure process was prejudicial to the plaintiff's interests.” Id. at 272. In particular, the court explained that the “assignment merely substituted one creditor for another, without changing her obligations under the note,” and pointed out that plaintiff failed to allege how “the transfer to [the defendant] interfered in any manner with her payment of the note.” Id. Additionally, the court observed that if there were any irregularities in the assignment of the debt, “the true victim was not plaintiff but the original lender, which would have suffered the unauthorized loss of a $1 million promissory note.” Id. at 272. -9- [12cv1793-GPC(MDD)] 1 set out a plausible theory explaining how the alleged violations of the PSA or New 2 York trust law were prejudicial to their interest. The court explained “[p]laintiffs do 3 not, for example, allege that the default and foreclosure sale occurred only because they 4 made timely payments to the assignor of the debt as opposed to the assignee, or that the 5 violations of New York trust law somehow kept timely payments from being properly 6 credited to their account. Without tethering the alleged violations of the PSA and New 7 York trust law to their interests, plaintiffs are attempting to challenge their foreclosure 8 based solely on irregularities that do not actually affect them, and California law 9 therefore bars their claims.” Id. at 3. 10 In this case, Plaintiff concedes that he was in default but does not explain that 11 the transfer to Wells Fargo interfered with his ability to pay on the note.6 Therefore, 12 the Court GRANTS Defendants’ motion to dismiss the causes of action for declaratory 13 relief, wrongful foreclosure, and quiet title which all challenge the validity of the deed 14 of trust and note with prejudice. 15 D. Negligence - Second Cause of Action 16 In the amended complaint, Plaintiff alleges that the Bank owed a duty of care to 17 Plaintiff and the public in general to refrain from foreclosing on property when it is not 18 the owner of a security interest. (Dkt. No. 18, FAC ¶ 51.) He also contends that the 19 Bank breached its duty to plaintiff “by not properly crediting the plaintiff’s account or 20 distributing the plaintiff’s payments appropriately and by applying to plaintiff’s 21 account charges in an authorized manner not authorized by the loan documents and in 22 a way that made a default more likely.” (Id. ¶ 52.) Plaintiff further alleges that, in May 23 2008, Carrington negotiated a loan modification with him. (Id. ¶ 45.) In 2010, Wells 24 Fargo and Carrington negligently interpreted the modification agreement made in 2008 25 so as to increase the monthly payment by $300 per month when the terms of the 26 agreement did not provide such increase. (Id. ¶ 53.) He alleges that they tricked 27 6 Plaintiff asserts that he defaulted when Carrington increased his payments by 28 $300, not because of any allegedly invalid transfer or assignment of the note or DOT to the Trust. - 10 - [12cv1793-GPC(MDD)] 1 plaintiff into a modification agreement knowing that the property would be sold in 2 foreclosure and pulling the plug on the agreement after plaintiff paid almost $100,000. 3 (Id.) Plaintiff claims he suffered damages to include the defective chain of title 4 rendered the property unmarketable and suffered general and special damages, and 5 emotional distress. (Id. ¶ 54.) 6 Defendants argue that there is no duty of care owed to Plaintiff because a lender- 7 borrower relationship does not give rise to a special or fiduciary relationship. Plaintiff 8 maintains that Defendants owed her a duty of care because of their unconventional 9 relationship. 10 Under California law, the elements of a claim for negligence are that: (1) 11 defendant had a legal duty to plaintiff, (2) defendant breached this duty, (3) defendant 12 was the proximate and legal cause of plaintiff's injury, and (4) plaintiff suffered 13 damage. Cal. Civ. Code § 1714; Merrill v. Navegar, Inc., 26 Cal.4th 465, 500 (2001). 14 As a general rule, under California law, “a financial institution owes no duty of care to 15 a borrower when the institution’s involvement in the loan transaction does not exceed 16 the scope of its conventional role as a mere lender of money.” Nymark v. Heart Fed. 17 Sav. & Loan Ass’n, 231 Cal. App. 3d 1089, 1095–96 (1991). However, “liability to 18 a borrower for negligence arises only when the lender actively participates in the 19 financed enterprise beyond the domain of the usual money lender.” Id. at 1096. 20 Here, Plaintiff contends that Wells Fargo’s status as a trustee creates an 21 unconventional relationship with Plaintiff. He contends that Well Fargo is not 22 receiving the benefits of Plaintiffs’ note and mortgage but holding it for the benefit of 23 the certificate holders. Plaintiff does not provide any legal support that Wells Fargo’s 24 status as a trustee creates a unconventional relationship. Besides arguing that Wells 25 Fargo owed a duty of care to Plaintiff, he does not address whether Carrington, as loan 26 servicer, and whether Atlantic, as the company that foreclosed on the property, owed 27 a duty of care to Plaintiff. 28 Moreover, even if there was a duty of care, Plaintiff has not alleged how Wells - 11 - [12cv1793-GPC(MDD)] 1 Fargo, Atlantic, and Carrington violated any duty of care. Plaintiff’s sole allegation as 2 to a breach of a duty of care on the loan is that “Select breached its duty to plaintiff by 3 not properly crediting the plaintiff’s account or distributing the plaintiff’s payments 4 appropriately and by applying to plaintiff’s account charges in an unauthorized manner 5 not authorized by the loan documents and in a way that made a default more likely.” 6 (Dkt. No. 18, FAC ¶ 52.) First, Plaintiff improperly named a Defendant “Select” not 7 named in the FAC and the Court cannot determine which Defendant allegedly breached 8 its duty to Plaintiff. Moreover, these allegations of a breach of a duty are conclusory 9 without any supporting facts to support the claim. See Flemister, 2012 WL 6675273 10 at *5 (similar allegation in plaintiff’s complaint was dismissed as being conclusory). 11 As to the loan modification, Plaintiff alleges that Defendants Well Fargo and 12 Carrington “tricked” plaintiff “into a modification agreement and then pulled the plug 13 on the agreement after plaintiff paid almost $100,000.” (Dkt. No. 18, FAC ¶ 53.) 14 Plaintiff’s allegations sound in fraud or misrepresentation and is subject to Federal 15 Rule of Civil Procedure 9(b) (“Rule 9(b)”). Rule 9(b) requires that a party alleging 16 fraud or mistake “must state with particularity the circumstances constituting fraud or 17 mistake.” Fed. R. Civ. P. 9(b). A plaintiff alleging fraud at a minimum must plead the 18 "time, place, and specific content of the false representations as well as the identities 19 of the parties to the misrepresentations.” Sanford v. Memberworks, Inc., 625 F.3d 550, 20 558 (9th Cir. 2010) (quoting Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th 21 Cir. 2004)). “In the context of a fraud suit involving multiple defendants, a plaintiff 22 must, at a minimum, ‘identif[y] the role of [each] defendant[ ] in the alleged fraudulent 23 scheme.’” Swartz v. KPMG, LLP, 476 F.3d at 756 765 (9th Cir 2007) (quoting Moore 24 v. Kayport Package Express, 885 F.2d 531, 541 (9th Cir. 1989)). 25 In this case, Plaintiff has failed to plead the time, place and specific contents as 26 to each defendant. Accordingly, the amended complaint fails to satisfy the Rule 9(b) 27 pleading standard as to negligence. 28 While the amended complaint alleges negligence as to the loan modification, - 12 - [12cv1793-GPC(MDD)] 1 Plaintiff does not present any arguments to support his claim. In his opposition, he 2 cites to Ansanelli v. J.P. Morgan Chase Bank. N.A., No. C 10-3892 WHA, 2011 WL 3 1134451, at *7 (N.D. Cal. Mar. 28, 2011) (court found duty of care where complaint 4 alleged that defendant went beyond its role as a silent lender and loan servicer to offer 5 an opportunity to plaintiffs for loan modification and to engage with them concerning 6 the trial period plan) without arguing how this case applies to Defendants. 7 Plaintiff has not sufficiently alleged a cause of action for negligence. 8 Accordingly, the Court GRANTS Defendants’ motion to dismiss the negligence claim 9 without prejudice. 10 E. Breach of Contract - Third Cause of Action 11 As to the third cause of action for breach of contract, Plaintiff does not oppose 12 the motion to dismiss. Accordingly, the Court GRANTS Defendants’ motion to 13 dismiss breach of contract claim without prejudice. 14 F. FDCPA - Fourth Cause of Action 15 Plaintiff also does not oppose the fourth cause of action for a violation of the 16 FDCPA. Accordingly, the Court GRANTS Defendants’ motion to dismiss without 17 prejudice.7 18 G Defendants’ Motion to Strike 19 Defendants Wells Fargo and MERS filed a motion to strike. (Dkt. No. 22.) 20 Because the Court GRANTS their motion to dismiss and because these Defendants are 21 no longer parties in the first amended complaint, the Court DENIES Defendants Wells 22 Fargo and MERS’ motion to strike as moot. 23 24 Conclusion Based on the above, the Court GRANTS Defendants’ motion to dismiss the 25 causes of action for declaratory relief, wrongful foreclosure and quiet title in the first 26 27 7 In his opposition, Plaintiff alleges that the complaint states a claim for a violation of 15 U.S.C. § 1641(g) of the Truth in Lending Act. The FAC does not allege 28 a cause of action under 15 U.S.C. § 1641(g). It appears this section may have been a boilerplate argument in another case handled by Plaintiff’s counsel. - 13 - [12cv1793-GPC(MDD)] 1 amended complaint with prejudice and GRANTS Defendants’ motion to dismiss the 2 remaining causes of action without prejudice. The Court also DENIES Defendants’ 3 motion to strike as MOOT. Plaintiff is granted leave to file a second amended 4 complaint within 20 days of the day the order is filed. 5 IT IS SO ORDERED. 6 7 DATED: July 23, 2013 8 9 HON. GONZALO P. CURIEL United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 14 - [12cv1793-GPC(MDD)]
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