JOHN A. MENDEZ, District Judge.
This matter is before the Court on Select Portfolio Servicing, Inc.'s and US Bank as Trust on behalf of the holders of the WaMu Mortgage Pass-Through Certificates, Series 2007-HY6's (collectively "Defendants") Motion to Dismiss. Bettina L. Farren and Steve Farren ("Plaintiffs") sued Defendants for various claims connected to the mortgage secured by their residence. For the reasons explained below, the Court grants Defendants' Motion to Dismiss with prejudice.
The following allegations are taken as true for the purposes of this motion:
On March 23, 2007, Plaintiffs executed a Deed of Trust ("DOT") in favor of Washington Mutual Bank, FA, securing a loan of $1,464,000 with their property located at 2045 Salmon Falls Road, El Dorado Hills, CA 95862 ("Property"). Second Amended Complaint ("SAC") at ¶¶ 2, 12;
At some point after that transaction, but before December 8, 2008, Chase became the successor to Washington Mutual Bank, FA. SAC at ¶ 20. Then, on December 8, 2008, Chase caused a Notice of Default to be issued against the Property. SAC at ¶ 21. On the same day, Chase assigned the Deed of Trust and Note to LaSalle Bank NA as trustee for WaMu Mortgage Pass-Through Certificates, Series 2007—HY6. SAC at ¶ 22; Exh. 5. US Bank NA succeeded LaSalle Bank in interest as trustee for the WaMu Mortgage Pass-Through Certificates. SAC at ¶ 24. Chase continued to be the servicer of the loan throughout these transfers until, at a date unknown to Plaintiffs, Select Portfolio Servicing, Inc. ("SPS") became the servicer.
Plaintiffs originally filed suit in the Superior Court of the State of California for the County of El Dorado on April 12, 2016. Notice of Removal at ¶ 1, ECF No. 1. Chase removed the case to federal court on May 19, 2016, after which Plaintiffs requested, but were denied, a Temporary Restraining Order to enjoin the foreclosure trustee's sale. ECF Nos. 1, 13, 16. Plaintiffs submitted their First Amended Complaint on July 22, 2016, ECF No. 17, which this Court dismissed with leave to amend on November 22, 2016, ECF No. 33. The Court also dismissed Plaintiffs' claims against JPMorgan Chase Bank, N.A., with prejudice. ECF No. 34. Plaintiffs filed their Second Amended Complaint in December, removing the claim for declaratory relief— previously identified as Count 1 and which was dismissed with prejudice—and alleging the facts more concretely. ECF No. 35.
"The court considers five factors in assessing the propriety of leave to amend—bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the plaintiff has previously amended the complaint."
Plaintiffs have filed three versions of their Complaint in this action. Additionally, Plaintiffs had notice of Defendant's arguments due to the previous Motion to Dismiss raising nearly identical issues.
This Court dismissed Plaintiffs' First Amended Complaint because Plaintiffs failed to plausibly allege that they signed the Note.
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face."
Plaintiffs have plausibly alleged that they signed the Note. Beyond asserting this fact, they explain that they signed the Note concurrently with the Deed of Trust and they explain why they have a copy of the Deed of Trust but not the Note. They also allege that the Note they signed was lost, which is why only the Henrichs' signed copy of the Note is available. SAC at ¶ 104. The attached Note without their signatures does not contradict their allegations because they allege that the Note they signed has been lost. Defendants' arguments that Plaintiffs' allegations are unsupported are premature, as this Court must take those allegations as true for the purposes of a motion to dismiss. However, these allegations are not enough to support Plaintiffs' claims and each is dismissed on separate grounds, as described below.
"If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower's mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee's sale, while the complete first lien loan modification application is pending." Cal. Civil Code § 2923.6(c). Plaintiffs allege that they submitted a complete modification as of April 8, 2016. SAC at ¶ 42.
Defendants argue that Plaintiffs' application was never "pending" because Defendants refused to accept or acknowledge the modification application. MTD at 6. Plaintiffs assert that they need only allege they submitted a "complete" modification application under the code section. Opp. at 3. Defendant directs the Court's attention to Cal. Civ. Code § 2924.10, which addresses "Submission of first lien modification document; written acknowledgment of receipt" and defines the term "complete." Because an application is deemed "`complete' when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer," Defendants contend that Plaintiff will be unable to allege submission of a complete application in these circumstances.
Plaintiffs' claim under § 2923.6(c) and (d) must be dismissed as insufficiently pled. "A bald allegation that a party submitted `complete' loan modification applications—without sufficient supporting factual allegations—is a conclusory statement, and the Court does not rely on such assertions in evaluating the sufficiency of Plaintiff's complaint."
Furthermore, given the code's definition, Plaintiffs cannot allege that they submitted a complete application because their application was never acknowledged. Plaintiffs do not provide the Court with a single case in which a plaintiff proceeded on a claim for a violation of § 2923.6(c) or (d) where the defendant never acknowledged the plaintiff's application.
Count Two is dismissed without leave to amend.
To state a claim for intentional misrepresentation a plaintiff must show "(1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage."
Plaintiffs allege that, through telephone conversations, SPS employees misrepresented to Plaintiffs that they were not parties to the Note. SAC at ¶ 53. Plaintiffs fail to provide the details necessary under the heightened pleading standard. For instance, Plaintiffs have not alleged when these conversations occurred, how many conversations occurred, or how the misrepresentations were conveyed.
More fatal to Plaintiffs' claim is their theory of reliance. Plaintiffs claim that they relied on the representation that they were not parties to the loan, but Plaintiffs did not take any action or change their legal position due to that representation. As Plaintiffs put it, they "could not avail [themselves] of any option to prevent the foreclosure trustee sale," but that is because all of their remedies "would necessarily involve SPS who refused to communicate with [P]laintiffs on any option to avoid foreclosure." SAC at ¶¶ 53-54. Their problem is that SPS— wrongly or rightly—did not acknowledge them as parties to the Note and thus would not work with them on their foreclosure avoidance options. Plaintiffs were not induced to act; as alleged, they were wrongfully denied relief from their loan servicer. Plaintiffs do not cite a single case in support of this reliance theory.
Count Three is thus dismissed without leave to amend.
"The elements of negligent misrepresentation are similar to intentional fraud except for the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true."
Defendants correctly argue that because the elements of intentional and negligent misrepresentation overlap, this claim fails for the reasons described above. For those reasons, Count Four, too, is dismissed without leave to amend.
"Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement."
The only alleged breach of the implied covenant is Defendants' failure to acknowledge Plaintiffs as parties to the Note. SAC at ¶ 70. This claim is also insufficiently pled. Plaintiffs have not alleged that they performed or were excused from performance.
The SAC is also deficient with respect to causation and damages. "[N]o liability attaches if the damages sustained were otherwise inevitable or due to unrelated causes."
Count Five is also dismissed without leave to amend.
To state a claim for negligence, a plaintiff must show (1) a legal duty to use reasonable care, (2) breach of that duty, and (3) proximate cause between the breach and (4) the plaintiff's injury.
Defendants argue that they do not owe Plaintiffs a duty of care due to the "general rule [that] a financial institution owes no duty of care to a borrower when the institution's involvement in the loan transaction does not excess the scope of its conventional role as a mere lender of money." MTD at 10 (citing
While authority on this issue is divided, this Court has previously found that lending institutions do have a duty toward borrowers in processing a loan modification application.
Defendants also argue that they did not breach a duty of care because Plaintiffs were not parties to the Note. The Court accepts Plaintiffs' allegations that they signed the Note and thus this argument fails as well.
Although Defendants did not reassert the point, their argument that Plaintiff has not adequately pled causation and damages applies with the same force on this claim, which repeats the "causation/damages" allegations of the previous claims verbatim. Thus, Count Six is dismissed without leave to amend.
California's Unfair Competition Law ("UCL") defines unfair competition as any unlawful, unfair, or fraudulent business practice and any unfair, deceptive, untrue or misleading advertising. Cal. Bus. & Prof. Code § 17200. A UCL claim may be based on the violation of another law or on a practice that is unfair but not independently unlawful.
Plaintiffs argue that the violations alleged in Counts 1-6 constitute unlawful or unfair businesses practices under the UCL. SAC at ¶ 83; Opp. at 8. The Court has found the allegations insufficient to support those claims and, in turn, they will not support Plaintiffs' UCL theory as pled. This claim, too, is dismissed without leave to amend.
The elements for the tort of intentional infliction of emotional distress are: (1) extreme and outrageous conduct by the defendant with the intention of causing, or with reckless disregard of the probability of causing, emotional distress; (2) plaintiff suffered severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by defendant's outrageous conduct.
With respect to the second element, Plaintiffs' allegations are plainly insufficient. Plaintiffs simply state that "[they] did, in fact, suffer extreme and/or severe emotional distress." SAC at ¶ 89. Plaintiffs fail to offer any facts that would show the nature or extent of their distress.
Furthermore, the allegations could not sustain an outrageous conduct finding. Although "outrageous conduct" is a question of fact, the Court may still dismiss the claim if the allegations could not sustain such a finding. In the case Plaintiffs cite,
Count Eight is dismissed without leave to amend.
A claim for intentional interference with prospective economic advantage has five elements: "(1) an economic relationship between plaintiff and a third party, with the probability of future economic benefit to the plaintiff; (2) defendant's knowledge of the relationship; (3) an intentional act by the defendant, designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the defendant's wrongful act, including an intentional act by the defendant that is designed to disrupt the relationship between the plaintiff and a third party."
Defendants argue that this claim fails because Plaintiffs have failed to allege any economic relationship between themselves and any third party or allege economic harm or injury. Plaintiff did not oppose dismissal of this claim. Count Nine is thus dismissed without leave to amend.
Defendants argue that Plaintiffs' final cause of action is time barred because the statute of limitations began running from the date of the alleged execution of the Note. MTD at 14. Plaintiffs argue that the statute of limitations should run from the date Plaintiffs discovered that the Note did not exist. Opp. at 10.
"The discovery rule protects those who are ignorant of their cause of action through no fault of their own. It permits delayed accrual until a plaintiff knew or should have known of the wrongful conduct at issue."
The SAC does not allege when Plaintiffs made the discovery. Plaintiffs knew of this deficiency and failed to amend their complaint accordingly.
For the foregoing reasons, the Court GRANTS Defendants' Motion to Dismiss and the case is DISMISSED WITH PREJUDICE:
IT IS SO ORDERED.
