HOWARD R. LLOYD, Magistrate Judge.
This action arises out of foreclosure proceedings. Plaintiffs Randall and Trini Bond sued Wells Fargo Bank, N.A. ("Wells Fargo"), the servicer of a consumer loan they obtained from World Savings Bank to refinance their residential mortgage, in state court. Dkt. No. 1 ("Notice of Removal"); Dkt. No. 1, Exh. A ¶ 15 ("Complaint"). Plaintiffs also sued LSI Title Company ("LSI") as "agent for the ... beneficiary [Wells Fargo]" and Cal-Western Reconveyance Corp. ("Cal Western") as the trustee of the Deed of Trust.
Wells Fargo moves to dismiss the complaint and requests judicial notice of five documents in support of its motion. Dkt. No. 9. Plaintiffs have not opposed the motion. Plaintiffs have moved for a preliminary injunction to halt the foreclosure sale. Dkt. No. 12. Wells Fargo opposed the motion, and requests judicial notice of additional documents in support of its opposition. Dkt. Nos. 13, 14. Plaintiffs have not filed any reply. This court held a hearing on the motions to dismiss and for a preliminary injunction on May 15, 2012. Plaintiffs made no appearance. All parties who have been served have consented to the undersigned's jurisdiction pursuant to 28 U.S.C. § 636(c). Based on the moving papers, the arguments presented at hearing, and all applicable authority, the court rules as follows.
Wells Fargo argues in its Notice of Removal that co-defendants LSI and Cal Western, who did not join in the removal and have not been served in this action, are fraudulent defendants whose presence is not required for removal and whose citizenship
"[F]raudulently joined defendants will not defeat removal on diversity grounds."
In this action, plaintiffs assert that LSI and Cal Western acted as "agent" and "trustee," respectively, of Wells Fargo when they executed the Notice of Default. Complaint ¶ 17. Plaintiffs make no allegation that either LSI or Cal Western acted as a "dual agent" or for personal advantage. In
Plaintiffs have failed to state a claim for relief against LSI or Cal Western accordingly to the settled rules of California law. Accordingly, LSI and Cal Western are fraudulent defendants whose citizenship shall not destroy diversity jurisdiction over this action. Wells Fargo also asserts that LSI and Cal Western are nominal parties. Notice of Removal ¶ 9. The court does not find it necessary to reach this argument because it has found that the defendants are fraudulently joined.
A motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) tests the legal sufficiency of the claims in the complaint. "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory."
Federal Rule of Civil Procedure 8(a)(2) requires "a short and plain statement of the claim showing that the pleader is entitled to relief," meaning that the "[f]actual allegations must be enough to raise a right to relief above the speculative level."
Wells Fargo requests that the court take judicial notice of five documents in support of its motion to dismiss: (1) a Deed of Trust signed by plaintiffs and recorded with the Santa Clara County recorder on April 26, 2005; (2) a letter dated November 17, 2007 from the Office of Thrift Supervision to the Vice President and Assistant General Counsel of Wachovia Corp.; (3) a letter dated November 9, 2009 from the Comptroller of Currency to the Vice President of Wells Fargo Bank; (4) a Notice of Default recorded with the Santa Clara County recorder on November 16, 2011; and (5) a Certificate of Corporate Existence dated April 26, 2006. Dkt. No. 10. It also requests judicial notice of two documents in support of its opposition to plaintiff's motion for a preliminary injunction: (1) a Substitution of Trustee dated December 23, 2011 and recorded with the Santa Clara County recorder on January 10, 2012; and (2) a Notice of Trustee's Sale, dated February 17, 2012 and recorded with the Santa Clara County recorder on the same date.
In deciding a motion to dismiss, the court is ordinarily limited to only "allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice."
Four of the seven documents are in the public record. Accordingly, the court may and will take judicial notice of the Deed of Trust, the Notice of Default, the Substitution of Trustee, and the Notice of Trustee's Sale.
One of the documents is a Certificate of Corporate Existence. Although Wells Fargo has not directed the court to a website or other place where the certificate could be verified, the court concludes that the fact of World Savings Bank's corporate existence in 2006 could be determined by resort to public or quasi-public sources whose accuracy cannot be questioned. Accordingly, the court will judicially notice the Certificate.
Finally, two of the five documents are correspondence between federal governmental agencies and banks. One letter is to Wachovia Corp., and the other is to Wells Fargo Bank, N.A. Wells Fargo has not offered any evidence that these documents are part of the public record. However, courts in this district have judicially noticed these very letters.
Several of plaintiffs' claims rely on alleged Home Affordable Modification Program ("HAMP") violations. Plaintiffs allege that they are third-party beneficiaries of Wells Fargo's contract to comply with HAMP, but this assertion is squarely contradicted by governing authority. All claims reliant upon alleged HAMP violations must be dismissed.
In the context of government contracts, such as HAMP, there is a presumption that any beneficiaries are only incidental beneficiaries. "Parties that benefit from a government contract are generally assumed to be incidental beneficiaries, and may not enforce the contract absent a clear intent to the contrary."
Plaintiffs' claims for breach of oral contract, breach of written contract, promissory estoppel, and for liability under the Rosenthal Act are all premised on the allegation that Wells Fargo failed to comply with the HAMP guidelines by initiating foreclosure proceedings while plaintiffs were trying to pursue a loan modification, and seek recovery on the basis that plaintiffs are third party beneficiaries of the HAMP contract. The oral contract claim states that Wells Fargo promised or told plaintiffs it would not initiate foreclosure proceedings while a loan modification application was pending. Complaint ¶ 25. The written contract claims states that Wells Fargo violated the terms of its HAMP contract with Fannie Mae.
Several of plaintiffs' claims must fail because plaintiffs have not alleged tender of the amount owed on their loan. Their claims for wrongful foreclosure, quiet title, and cancellation of instruments allege irregularities or impropriety in the foreclosure proceedings and sale.
Accordingly, plaintiffs' claims for wrongful foreclosure, quiet title, and cancellation of instruments are DISMISSED. Plaintiffs may amend these claims only if they can truthfully allege tender.
Plaintiffs allege that the "sale trustee" slandered plaintiffs' title to the subject property by issuing the various notices required in foreclosure proceedings. Complaint ¶¶ 51-53. Plaintiffs do not allege any acts whatsoever by Wells Fargo in this claim. "`Slander of title' ... may be defined to be defamation of title to property, real or personal, by one who falsely and maliciously disparages the title thereto, and thereby causes the owner thereof some special pecuniary loss or damage. ... [M]alice, express or implied, in the making of slanderous statements is an essential ingredient of a cause of action for damages for slander of title."
Accordingly, this claim must be DISMISSED. Because plaintiffs have made no allegations against Wells Fargo, the only non-fraudulent defendant in this action, and because plaintiffs have made no allegation of malice (and indeed, the court is highly skeptical that plaintiffs could truthfully allege malice), this claim is dismissed without leave to amend.
The elements of a negligence cause of action under California law are (1) the existence of a duty to exercise due care, (2) breach of that duty, (3) causation, and (4) damages.
Accordingly, no duty of care exists and plaintiffs' claim must be DISMISSED. Plaintiffs may amend this claim only if they can truthfully allege some action by Wells Fargo above and beyond the role of money lender, so as to give rise to a duty of care.
To prove fraud under California law, plaintiffs must establish: (1) misrepresentation, (2) scienter or knowledge of its falsity, (3) intent to induce reliance (intent to defraud), (4) actual, detrimental, and justifiable reliance, and (5) resulting damage.
Plaintiffs' claims for fraud and negligent misrepresentation fall well short of the requirements of Fed. R. Civ. P. 9(b). Plaintiffs name no individuals anywhere in their complaint, nor do they describe any specific conduct or false representations by any employee or agent of Wells Fargo. Rather, their claims all rely on the same, very general allegations that Wells Fargo failed to abide by the HAMP guidelines (which, as explained above, does not give rise to a private right of action), and that the sale trustee was not authorized to issue various notices or conduct foreclosure proceedings (which, as explained above, does not create separate liability for the sale trustee). Accordingly, these claims are DISMISSED. Plaintiffs may amend these claims only if they can truthfully allege the kind of particularized facts required for fraud claims under Fed. R. Civ. P. 9(b).
Cal. Bus. & Prof. Code § 17200, et seq. ("UCL") allows a plaintiff to recover for "fraudulent business act[s] or practice[s]." In its motion to dismiss, Wells Fargo asserts that the Home Owner's Loan Act ("HOLA") preempts plaintiffs' UCL claim. Dkt. No. 9, pp. 18-19. Wells Fargo's statement of the law is correct. The UCL is preempted when plaintiffs seek to challenge "processing, origination, servicing, sale or purchase of, or investment or participation in, mortgages."
Here, plaintiffs repeat many of the allegations contained elsewhere in the complaint, as well as some allegations that appear to have nothing to do with plaintiffs' own claims, briefly summarized as follows: the defendants (1) executed a variety of foreclosure-related documents (such as substitution of trustee forms) improperly; (2) failed to comply with certain California notice requirements; (3) violated HAMP guidelines; (4) "misrepresent[ed] the foreclosure status of properties to borrowers"; and (5) "demand[ed] and accept[ed] payments for debts that were non-existent." Complaint ¶ 107. Of these, plaintiffs have alleged that the first three happened in their case, but they never assert that the last two occurred. In any event, all of these activities relate to servicing mortgages and collecting payment thereon, and so fall squarely into "processing, origination, servicing, sale or purchase of, or investment or participation in, mortgages."
Accordingly, plaintiff's UCL claim is preempted and must be DISMISSED, without leave to amend.
When there is an "actual controversy" between parties, a federal court may "declare the rights and other legal relations" of the parties. 28 U.S.C. § 2201. The standard used to determine whether there is an actual controversy is the same as the "case or controversy" requirement of the U.S. Constitution.
Injunctive relief is a remedy, not a claim. Accordingly, this claim is dismissed without leave to amend to the extent plaintiffs seek to assert it as a separate claim for relief.
Plaintiffs also move for a preliminary injunction to halt the impending foreclosure sale. Dkt. No. 12. A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.
Rather than addressing the well-settled elements of a motion for a preliminary injunction, plaintiffs spend much of their motion repeating the allegations contained in the complaint that LSI and Cal Western were not authorized to institute foreclosure proceedings even if they were acting as agents of Wells Fargo.
Plaintiffs have completely ignored the remaining factors to be considered. They have not alleged that irreparable harm would result in the absence of preliminary relief, nor have they made any argument that the balances of equities tip in their favor or that an injunction would be in the public interest. Plaintiffs did not even appear at the May 15 hearing to argue in support of their motion for preliminary injunction. In the absence of any evidence in support of granting such a motion, the court cannot possibly conclude that a preliminary injunction is warranted. Accordingly, plaintiffs' motion is DENIED.
Based on the foregoing, IT IS ORDERED THAT:
Leave to amend is limited to those claims pled in the complaint and consistent with the rulings above. The court is dubious that plaintiffs can truthfully allege facts sufficient to state the claims above, especially in light of their failure to oppose Wells Fargo's motion to dismiss or appear at the hearing held on the motion to dismiss and motion for a preliminary injunction. Plaintiffs are cautioned not to waste judicial resources by filing an amended complaint that does not cure the numerous deficiencies contained in the original complaint. To the extent plaintiffs intend to assert new or different claims for relief or add new parties, they must make an appropriate application pursuant to Fed. R. Civ. P. 15. Plaintiff may file and serve any amended complaint within