Asper v. Wells Fargo Bank et al, No. 3:2018cv00049 - Document 16 (S.D. Cal. 2018)

Court Description: ORDER Granting in Part 6 Defendant's Motion to Dismiss. The Court grants in part Defendant's motion to dismiss, and dismisses Plaintiff's FCBA claim with leave to amend. Plaintiff must file an amended complaint that cures the defici encies identified herein on or before 6/8/2018. The Court defers ruling on the sufficiency of Plaintiff's state law claims until Plaintiff can state a claim arising under federal law, or demonstrate that the Court has diversity jurisdiction. Signed by Judge Michael M. Anello on 5/17/2018. (rmc)
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Asper v. Wells Fargo Bank et al Doc. 16 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 10 11 12 13 14 15 16 SOUTHERN DISTRICT OF CALIFORNIA Case No.: 18cv0049-MMA (JLB) LAITH KH ASPER, v. ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS Plaintiff, WELLS FARGO BANK, a National Association, [Doc. No. 6] Defendant. 17 18 19 Plaintiff Laith KH Asper (“Plaintiff”) filed this action against Defendant Wells 20 Fargo Bank, N.A. (“Defendant”) on January 5, 2018, alleging four causes of action in 21 connection with real property located at 1247 Jamacha Road, El Cajon, California, 22 92019, for: (1) fraud; (2) violations of the Fair Credit Billing Act (“FCBA”), 15 U.S.C. § 23 1666, et seq.; (3) violations of the California Homeowner Bill of Rights (“HBOR”); and 24 (4) violations of California’s Unfair Competition Law (“UCL”), Business & Professions 25 Code § 17200, et seq. See Complaint. Defendant moves to dismiss Plaintiff’s Complaint 26 for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). See Doc. 27 No. 6. Plaintiff filed an opposition, to which Defendant replied. See Doc. Nos. 9, 14. 28 The Court found the matter suitable for determination on the papers and without oral -1- 18cv0049-MMA (JLB) 1 argument pursuant to Civil Local Rule 7.1.d.1. See Doc. No. 15. For the reasons set 2 forth below, the Court GRANTS IN PART Defendant’s motion to dismiss. BACKGROUND1 3 4 Plaintiff Laith Asper is an individual residing at 1247 Jamacha Road, El Cajon, 5 California. Complaint ¶ 4. Defendant is “a national banking association established 6 under the laws of the United States of America.” Id. ¶ 5. 7 In November 2007, Plaintiff and his wife borrowed $570,000 from World Savings 8 Bank, FSB (Wells Fargo’s predecessor) pursuant to a promissory note that was secured 9 by a Deed of Trust recorded against the real property located at 1247 Jamacha Road, El 10 Cajon, California. See Doc. No. 7 (hereinafter “RJN”), Exh. A. Plaintiff defaulted on the 11 loan, and the trustee under the Deed of Trust recorded a Notice of Default in April 2010. 12 RJN, Exh. C. In April 2011, the trustee recorded a Notice of Sale. RJN, Exh. D. 13 Plaintiff then filed for bankruptcy, which was dismissed a few weeks later. RJN, Exh. E. 14 Shortly after the first bankruptcy was dismissed, the foreclosure sale was reset. 15 Plaintiff filed for bankruptcy a second time, however, in January 2012. RJN, Exh. F. 16 The bankruptcy filing was dismissed without Plaintiff receiving a discharge. Id. The 17 trustee recorded a new Notice of Sale in November 2015. RJN, Exh. G. The Notice of 18 Sale indicated that Plaintiff owed $721,712.11, and that the sale would proceed on 19 December 2, 2015 if Plaintiff did not pay the debt. Id. On December 2, 2015, Plaintiff 20 filed for bankruptcy a third time. RJN, Exh. H. The bankruptcy filing was again 21 dismissed a few weeks later. Id. 22 The foreclosure sale was then reset. Plaintiff filed for bankruptcy for the fourth 23 time in February 2016, which was dismissed shortly after the filing of bankruptcy. RJN, 24 Exh. I. Wells Fargo recorded a new Notice of Trustee’s Sale in August 2017, and 25 26 27 28 1 Because this matter is before the Court on a motion to dismiss, the Court must accept as true the allegations set forth in the complaint. See Hosp. Bldg. Co. v. Trs. Of Rex Hosp., 425 U.S. 738, 740 (1976). -2- 18cv0049-MMA (JLB) 1 2 rescheduled the foreclosure sale for October 2, 2017. RJN, Exh. K. On or around September 18, 2017, Defendant sent Plaintiff a billing statement that 3 listed an unpaid principal balance of $499,000.38 on the mortgage loan with Wells Fargo. 4 See Doc. No. 9-1. Plaintiff filed for bankruptcy for the fifth time on September 29, 2017. 5 RJN, Exh. L. In his bankruptcy petition, Plaintiff alleged a credit billing statement error 6 on the September 2017 billing statement he received from Defendant. See Complaint ¶ 8. 7 After “‘receiving notice from an obligor’ regarding the correction of disputed billing 8 errors, Wells Fargo in fact has adversely ‘reported on the obligor’s credit rating or credit 9 standing because of the obligor’s failure to pay’ in violation of [the FCBA].” Id. (quoting 10 15 U.S.C. § 1666a(a)). The bankruptcy case was dismissed on January 4, 2018. RJN, 11 Exh. L. 12 The following day, on January 5, 2018, Plaintiff commenced the instant action 13 against Defendant alleging: (1) fraud; (2) violations of the FCBA; (3) violations of 14 HBOR; and (4) violations of the UCL. See Complaint. On February 14, 2018, Plaintiff 15 filed an ex parte motion for a temporary restraining order (“TRO”) seeking to prohibit 16 Defendant from “engaging in or performing any act to deprive Plaintiff of his interest and 17 possession of the subject property including the ‘trustee sale’ planned for February 22, 18 2018[.]” Doc. No. 11. The Court denied Plaintiff’s motion for a TRO because Plaintiff 19 failed to show “a likelihood of success on the merits of his claims” and failed to “raise[] 20 serious questions going to the merits [of such claims].” Doc. No. 13 at 3.2 21 22 LEGAL STANDARD A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro 23 v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and plain 24 statement of the claim showing that the pleader is entitled to relief. . . .” Fed. R. Civ. P. 25 26 27 28 2 In opposition to the instant motion, Plaintiff requests the Court enjoin Defendant from violating the FCBA. See Doc. No. 9 at 10. Plaintiff’s request is procedurally improper and moot in light of the Court’s ruling on Plaintiff’s ex parte motion for a TRO. See Doc. No. 13. -3- 18cv0049-MMA (JLB) 1 8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is 2 plausible on its face.” Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 3 570 (2007). The plausibility standard thus demands more than a formulaic recitation of 4 the elements of a cause of action, or naked assertions devoid of further factual 5 enhancement. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Instead, the complaint “must 6 contain allegations of underlying facts sufficient to give fair notice and to enable the 7 opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 8 2011). 9 In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth 10 of all factual allegations and must construe them in the light most favorable to the 11 nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). 12 The court need not take legal conclusions as true merely because they are cast in the form 13 of factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987). 14 Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to 15 defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). 16 In determining the propriety of a Rule 12(b)(6) dismissal, courts generally may not 17 look beyond the complaint for additional facts. United States v. Ritchie, 342 F.3d 903, 18 908 (9th Cir. 2003). “A court may, however, consider certain materials—documents 19 attached to the complaint, documents incorporated by reference in the complaint, or 20 matters of judicial notice—without converting the motion to dismiss into a motion for 21 summary judgment.” Id.; see also Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 22 2001). Where dismissal is appropriate, a court should grant leave to amend unless the 23 plaintiff could not possibly cure the defects in the pleading. Knappenberger v. City of 24 Phoenix, 566 F.3d 936, 942 (9th Cir. 2009). 25 26 27 28 DISCUSSION A. Request for Judicial Notice & Incorporation by Reference As an initial matter, Defendant requests the Court take judicial notice of sixteen (16) documents in connection with its motion to dismiss (Exhibits A-L). See RJN. -4- 18cv0049-MMA (JLB) 1 Specifically, Defendant requests the Court take judicial notice of: (1) the Deed of Trust, 2 dated November 5, 2007; (2) various documents relating to the history of World Savings 3 Bank, FSB (Wells Fargo’s predecessor); (3) Notice of Default and Election to Sell Under 4 the Deed of Trust, dated April 9, 2010; (4) Notice of Trustee’s Sale, dated April 27, 2011; 5 (5) the docket for Chapter 13 Bankruptcy Case No. 11-19595-PB13, filed on December 6 1, 2011; (6) the docket for Chapter 13 Bankruptcy Case No. 12-00320-PB13, filed on 7 January 12, 2012; (7) Notice of Trustee’s Sale, dated November 2, 2015; (8) the docket 8 for Chapter 13 Bankruptcy Case No. 15-07797-MM13, filed on December 2, 2015; (9) 9 the docket for Chapter 13 Bankruptcy Case No. 16-00738-MM13, filed on February 16, 10 2016; (10) Judgment in a Civil Case filed on March 3, 2017; (11) Notice of Trustee’s 11 Sale, dated August 18, 2017; and (12) the docket for Chapter 13 Bankruptcy Case No. 12 17-05916-MM13, filed on September 29, 2017. See id. Plaintiff did not file an 13 opposition to Defendant’s request for judicial notice. 14 Generally, a district court’s review on a 12(b)(6) motion to dismiss is “limited to 15 the complaint.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) overruled 16 on other grounds by Galbraith v. Cnty. Of Santa Clara, 307 F.3d 1119, 1125–26 (9th Cir. 17 2002) (quoting Cervantes v. City of San Diego, 5 F.3d 1273, 1274 (9th Cir. 1993)). 18 However, “a court may take judicial notice of matters of public record,” id. at 689 19 (internal quotations omitted), and of “documents whose contents are alleged in a 20 complaint and whose authenticity no party questions, but which are not physically 21 attached to the pleading,” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled 22 on other grounds by Galbraith, 307 F.3d at 1125–26; see also Fed. R. Evid. 201. 23 Here, the Court finds that Exhibits A-L are all public records which are properly 24 the subject of judicial notice. Specifically, Exhibits A, C, D, G, and K have been 25 recorded in San Diego County Recorder’s Office; thus, these exhibits are a matter of 26 public record. See Fed. R. Evid. 201(b). Moreover, Exhibits E, F, H, I, and L are 27 similarly a matter of public record, as “a paper filed in a case under [the Bankruptcy 28 Code] and the dockets of a bankruptcy court are public records.” Reusser v. Wachovia -5- 18cv0049-MMA (JLB) 1 Bank, N.A., 525 F.3d 855, 857 n.1 (9th Cir. 2008) (quoting 11 U.S.C. § 107(a)); see also 2 Swartz, 2015 WL 846789, at *3 (taking judicial notice of a voluntary petition filed in 3 bankruptcy court). Lastly, Exhibits B and J are matters of public record, and not subject 4 to reasonable dispute. See Fed. R. Evid. 201(b). Accordingly, the Court GRANTS 5 Defendant’s request for judicial notice as to Exhibits A-L. 6 Moreover, Plaintiff attaches four (4) exhibits to her opposition to the instant 7 motion (Exhibits 1-4), requesting that the Court incorporate by reference such documents 8 into the Complaint because “the complaint specifically refers to these relevant 9 documents[.]” Doc. No. 9 at 8. Specifically, Exhibit 1 is a copy of the billing statement 10 Plaintiff received from Wells Fargo, dated September 18, 2018. See Doc. No. 9-1. 11 Exhibits 2 and 3 are copies of Plaintiff’s Experian and TransUnion Credit reports, 12 respectively. See Doc. Nos. 9-2, 9-3. Exhibit 4 is a copy of a “Notice to Postponement 13 of Trustee’s Sale” regarding the subject property. See Doc. No. 9-4. Defendant did not 14 file an opposition to Plaintiff’s request to incorporate by reference Exhibits 1-4 into the 15 Complaint. 16 “[E]ven if a document is not attached to a complaint, it may be incorporated by 17 reference into a complaint if the plaintiff refers extensively to the document or the 18 document forms the basis of the plaintiff's claim.” Ritchie, 342 F.3d at 908 (internal 19 citations omitted). “A court may consider a writing referenced in a complaint but not 20 explicitly incorporated therein if the complaint necessarily relies on the document and its 21 authenticity is unquestioned.” Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998), 22 superseded by statute on other grounds in Abrego v. Dow Chem. Co., 443 F.3d 676 (9th 23 Cir. 2006). 24 Here, the Court notes that contrary to Plaintiff’s assertion, the Complaint does not 25 specifically reference any of the four exhibits described above. In construing Plaintiff’s 26 Complaint liberally, however, the Court finds that the four exhibits form the basis of 27 Plaintiff’s claims, and the authenticity of such documents is unquestioned. See Ritchie, 28 342 F.3d at 908. As such, the Court finds that Exhibits 1-4 are incorporated by reference -6- 18cv0049-MMA (JLB) 1 into Plaintiff’s Complaint. 2 B. 3 Defendant’s Motion to Dismiss In its motion, Defendant argues that the Court should dismiss Plaintiff’s Complaint 4 because each of Plaintiff’s causes of action are defectively pleaded, and Plaintiff’s state 5 law claims are preempted by federal law. See Doc. No. 6-1. The Court proceeds by first 6 addressing Plaintiff’s claim arising under the FCBA. 7 1. 8 In his Complaint, Plaintiff alleges that Defendant “adversely” reported on 9 Plaintiff’s credit after Plaintiff provided notice to Defendant regarding alleged disputed Fair Credit Billing Act Claim 10 billing errors in violation of the FCBA. See Complaint ¶ 8; see also 15 U.S.C. § 11 1666a(a). In his opposition to the instant motion, Plaintiff provides additional details 12 indicating that Defendant sent a billing statement to Plaintiff on or around September 18, 13 2017, that listed an unpaid principal balance of $499,000.38 on the mortgage loan. See 14 Doc. No. 9 at 7-8; see also Doc. No. 9-1. Plaintiff disputed the amount of the billing 15 statement by filing for Chapter 13 bankruptcy on September 28, 2017. Doc. No. 9 at 7-8. 16 Plaintiff claims that Defendant’s failure to respond to the alleged billing error within 17 sixty days, in addition to adversely reporting on Plaintiff’s credit, violates the FCBA. See 18 id. 19 “Congress enacted the FCBA in order to regulate billing disputes involving ‘open 20 end consumer credit plans.’” Lyon v. Chase Bank USA, N.A., 656 F.3d 877, 880 (9th Cir. 21 2011) (quoting 15 U.S.C. § 1666). “An open end credit plan is one where the creditor 22 reasonably contemplates repeated transactions, which prescribes the terms of such 23 transactions, and which provides for a finance charge which may be computed from time 24 to time on the outstanding unpaid balance.” Roybal v. Equifax, 405 F. Supp. 2d 1177, 25 1182 (E.D. Cal. 2005); see 15 U.S.C. § 1602(j). “If a credit-card holder sends a written 26 notice disputing a charge within sixty days of receiving a bill, the FCBA requires a 27 credit-card issuer to acknowledge the dispute within thirty days, investigate the matter, 28 and provide a written explanation of its decision within ninety days.” Lyon, 656 F.3d at -7- 18cv0049-MMA (JLB) 1 880. “After receiving notice from an obligor as provided in section 1666(a) or this title, a 2 creditor or his agent may not directly or indirectly threaten to report to any person 3 adversely on the obligor’s credit rating or credit standing because of the obligor’s failure 4 to pay the amount indicated by the obligor[.]” 15 U.S.C. § 1666a(a). 5 Here, the Court finds that Plaintiff fails to state a claim under the FCBA. First, 6 Plaintiff fails to allege that his loan constituted an open-end credit transaction. Plaintiff’s 7 Complaint quotes various provisions of the FCBA without providing any factual 8 allegations. See Complaint ¶¶ 12-14. As noted above, the FCBA applies only to open- 9 end consumer credit plans, like credit card accounts. See 15 U.S.C. § 1666; see also 10 Gray v. Am. Express Co., 743 F.2d 10, 13 (D.C. Cir. 1984) (“The Fair Credit Billing Act 11 seeks to prescribe an orderly procedure for identifying and resolving disputes between a 12 cardholder and a card issuer as to the amount due at any given time.”) (emphasis added). 13 In fact, numerous courts have found that mortgage transactions are closed-end credit 14 transactions, and thus not governed by the FCBA. See, e.g., Frank v. Wells Fargo Bank. 15 Nat. Ass’n, No. 11-CV-8035-PCT-NVW, 2011 WL 1480041, at *5 (D. Ariz. Apr. 19, 16 2011) (“Plaintiff’s allegation that Defendants violated the FCBA by reporting derogatory 17 credit ratings to national credit reporting agencies and failing to respond to Plaintiff’s 18 written complaint fails because the FCBA’s prohibitions on reporting a defaulting debtor 19 apply only in cases of open-end credit accounts, not mortgage transactions”); Allen v. 20 Homeq Servicing Inc., No. 8-CV-1698-MMA, 2008 WL 2609801, at *1 (N.D. Cal. June 21 30, 2008) (noting that Section 1666(a) applies only to open end consumer credit plans 22 and “the mortgage at issue is not an open end consumer credit plan.”); Wilkinson v. Wells 23 Fargo Bank MN, No. 6-CV-1288, 2007 WL 1414888, at *3 n.4 (E.D. Wis. May 9, 2007) 24 (“To the extent that Wilkinson alleges a mortgage loan in the complaint, that loan creates 25 a closed-end credit relationship”); Roybal, 405 F. Supp. 2d at 1180 (“Because the 26 definition of ‘creditor’ as used in section 1666 only applies to creditors offering open end 27 credit plans and Plaintiffs have not alleged that the transaction underlying this claim is 28 based on an open end credit plan, this claim must be dismissed with leave to amend.”). -8- 18cv0049-MMA (JLB) 1 Based upon Plaintiff’s failure to allege the existence of an open-end credit relationship 2 that is governed by the FCBA, Plaintiff’s FCBA is subject to dismissal. 3 Second, even if Plaintiff could sufficiently allege the existence of an open-end 4 credit relationship subject to the FCBA’s requirements, Plaintiff fails to show that filing a 5 Chapter 13 bankruptcy petition is sufficient “notice” of a billing error required by Section 6 1666(a). See 15 U.S.C. § 1666(a)(1)-(3) (noting that the notice the obligor sends to the 7 creditor must set forth the obligor’s name and account number, indicate the obligor’s 8 belief that the statement contains a billing error and the amount of such billing error, and 9 explain the reasons for the obligor’s belief that the statement contains a billing error). 10 Plaintiff provides no explanation or argument relating to the sufficiency of the notice 11 provided to Defendant. As such, Plaintiff fails to state a claim under the FCBA. See 12 Frank, 2011 WL 1480041, at *5 (“[I]n any event, Plaintiff has not shown that her notice 13 of written complaint complies with the requirements of 15 U.S.C. § 1666(a).”). 14 Accordingly, because Plaintiff fails to allege the existence of an open-end credit 15 relationship, and fails to show that the notice provided to Defendant complies with the 16 requirements of the statute, the Court DISMISSES Plaintiff’s FCBA claim with leave to 17 amend. 18 2. 19 Plaintiff’s remaining claims arise under state law. In his Complaint, Plaintiff State Law Claims 20 alleges that this Court has federal question jurisdiction and diversity jurisdiction. See 21 Complaint ¶ 2. With respect to diversity jurisdiction, however, Plaintiff fails to allege 22 any facts that the parties in this action are diverse, and that the amount in controversy 23 exceeds $75,000. See 28 U.S.C. 1332(a)(1) (noting that federal courts have diversity 24 jurisdiction over “all actions where the matter in controversy exceeds the sum or value of 25 $75,000, exclusive of interest and costs,” and the dispute is between citizens of different 26 states). Aside from indicating that Plaintiff is a resident of the County of San Diego, 27 Plaintiff summarily states “Defendant Wells Fargo Bank, National Association (“Wells 28 Fargo”) is a national banking association established under the laws of the United States -9- 18cv0049-MMA (JLB) 1 of America.” Complaint ¶ 5. Plaintiff further notes that Wells Fargo Home Mortgage, 2 Inc. as a “California corporation,” and a “division of Wells Fargo Bank, N.A.” Id. As 3 such, Plaintiff fails to establish that the Court has diversity jurisdiction. 4 The Court’s only remaining basis for jurisdiction over Plaintiff’s state law claims, 5 as currently pleaded, is supplemental jurisdiction. Under 28 U.S.C. § 1367, a district 6 court “may decline to exercise supplemental jurisdiction over a state law claim if” the 7 court “has dismissed all claims over which it has original jurisdiction.” 28 U.S.C. § 8 1367(c). Unless “considerations of judicial economy, convenience[,] and fairness to 9 litigants” favor the exercise of supplemental jurisdiction, “a federal court should hesitate 10 to exercise jurisdiction over state claims.” United Mine Workers v. Gibbs, 383 U.S. 715, 11 726 (1966). At this time, the Court DEFERS ruling on the sufficiency of Plaintiff’s state 12 law claims until Plaintiff can sufficiently allege a claim arising under federal law, or 13 demonstrate that the Court has diversity jurisdiction. 14 CONCLUSION 15 Based on the foregoing, the Court GRANTS IN PART Defendant’s motion to 16 dismiss, and DISMISSES Plaintiff’s FCBA claim with leave to amend. Plaintiff must 17 file an amended complaint that cures the deficiencies identified herein on or before 18 June 8, 2018. The Court DEFERS ruling on the sufficiency of Plaintiff’s state law 19 claims until Plaintiff can state a claim arising under federal law, or demonstrate that the 20 Court has diversity jurisdiction. 21 22 IT IS SO ORDERED. 23 24 25 26 27 Dated: May 17, 2018 _____________________________ HON. MICHAEL M. ANELLO United States District Judge 28 -10- 18cv0049-MMA (JLB)