ORDER GRANTING IN-PART DEFENDANTS' MOTION TO DISMISS (Re: Docket No. 66)

PAUL S. GREWAL, Magistrate Judge.

Before the court is Defendants Bank of America, N.A. ("BANA") and US Bank N.A. Trustee's motion to dismiss.1 Plaintiff Rachel Fevinger opposes. The parties appeared for a hearing.2 Having considered the arguments, the court GRANTS Defendants' motion, but only IN-PART, as explained below.

I. BACKGROUND

A. Factual Background3

In 2005, Fevinger obtained a residential mortgage for property located at 3583-3585 Mauricia Avenue, Santa Clara, CA 95051.4 To secure the loan, Fevinger executed a deed of trust and promissory note in favor of the lender American Mortgage Express Corporation5 BANA later became servicer to Fevinger's loan until Nationstar acquired the servicing rights.6 Fevinger remained current on her loan from 2005 to 2009. But then it became "increasingly difficult" for Fevinger to stay current.7

In August 2010, Fevinger responded to an offer to reinstate her loan and contacted BANA.8 BANA representative Selena advised Fevinger not to reinstate her loan and "await a loan modification and a new payment amount since Plaintiff was such a good candidate for loan modification."9 Fevinger "was only a few months behind in her payments and was ready willing and able to reinstate her loan and, in fact, would have done so."10

Fevinger applied for a loan modification on or about August 30, 2010. In September and October Fevinger called to follow up. Fevinger also followed up with written correspondence.11 During the September call, a bank representative told Fevinger that BANA's policy was not to initiate foreclosure proceedings on borrowers awaiting decisions on completed modification applications.12

In November, BANA informed Fevinger that it was reviewing her application and would respond more completely within 20 days.13 In December, after she did not hear from BANA, Fevinger contacted the bank.14 A BANA representative informed Fevinger that she had to reapply for modification, but that loan reinstatement was unnecessary because of the bank's policy to refrain from initiating foreclosure proceedings on borrowers with pending modification applications.15

In February 2011, Fevinger submitted a second loan modification application.16 In March or April, BANA informed Fevinger that it was reviewing the application.17 In late April, BANA representative Nissa informed Fevinger that her application was missing several pages.18 Fevinger provided the missing material.19 On May 6, 2011, BANA confirmed receipt.20 A week later, Fevinger called to check on her application and BANA representative Ahmed informed her that the application was under review, but reiterated that BANA would not initiate foreclosure proceedings while her application was pending and explained that, if Fevinger opted for reinstatement, she would not qualify for modification.21

In July, Fevinger contacted BANA periodically.22 On July 19, 2011, BANA representative Mario informed Fevinger that she needed to provide updated financial statements.23 Fevinger provided the requested materials.24 On August 9, 2011, BANA representative Susan informed Fevinger that her application was missing additional documents.25 Fevinger faxed the missing materials. On August 15, 2011, BANA representative Dawn Donaldson informed Fevinger that materials were still missing.26

In late August, US Bank acquired the interest of Fevinger's deed, but BANA remained the servicer of Fevinger's loan.27 In September, several BANA representatives informed Fevinger that her application was missing documents.28 Fevinger provided the additional documents despite insisting that she had previously produced them.29 On October 1, 2011, Fevinger received a letter from BANA stating that it could not process her application because the application lacked necessary documentation.30 Fevinger contacted a BANA representative who informed her that BANA had the necessary documents and the letter was sent in error.31 On October 5, 2011, Fevinger received a letter from BANA that documents were missing from her application.32 Fevinger contacted BANA and several representatives informed her that despite the letter, BANA had received all of the necessary documents and the application was complete but remained under review.33

In November, 2011, Fevinger received a letter providing that BANA would not consider her loan modification application because it was missing necessary materials.34 In response, Fevinger contacted BANA but its representative, Markus, informed her that the best solution was reapplication.35 In early 2012, Fevinger reapplied for a loan modification and BANA representatives continued to tell her that her home would not be subject to foreclosure proceedings during the pendency of her application.36 In September, 2012, Fevinger received a notice of default.37 BANA later denied her loan modification application based on the outstanding arrears still owed.38

B. Procedural History

On October 18, 2013, Fevinger filed the first complaint in this case.39 On December 2, 2013, she filed her first amended complaint.40 On March 31, 2014, the court dismissed the first amended complaint with leave to amend.41 On April 14, 2014, Fevinger filed her second amended complaint.42 On June 6, 2014, the court granted Fevinger leave to file a third amended complaint.43 This most recent complaint alleges (1) breach of the implied covenant of good faith and fair dealing, (2) interference with contract, (3) fraud and (4) unfair competition.44

II. LEGAL STANDARDS

A. Motion to Dismiss

A complaint must contain "a short plain statement of the claim showing that the pleader is entitled to relief."45 If a plaintiff fails to proffer "enough facts to state a claim to relief that is plausible on its face," the complaint may be dismissed for failure to state a claim upon which relief may be granted.46 A claim is facially plausible "when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."47 Under Fed. R. Civ. P. 12(b)(6), "dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory."48 Dismissal without leave to amend is appropriate if it is clear that the complaint could not be saved by amendment such as after a plaintiff's "repeated failure to cure deficiencies by amendments previously allowed."49

B. Request for Judicial Notice

The court may take judicial notice of a "fact that is not subject to reasonable dispute because it is generally known" or "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned."50

C. Fed. R. Civ. P. 9(b)

Under Rule 9(b), a plaintiff must state "with particularity the circumstances constituting fraud" which requires "statements regarding the time, place, and nature of the alleged fraudulent activities."51 "Mere conclusory allegations of fraud are insufficient."52 To satisfy Rule 9(b)'s heightened standard, allegations must be "specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong."53 This includes "the who, what, when, where, and how of the misconduct charged."54 A plaintiff also must allege "what is false or misleading about a statement, and why it is false."55 "A court may dismiss a claim grounded in fraud when its allegations fail to satisfy [Rule] 9(b)'s heightened pleading requirements."56

III. DISCUSSION

A. Request for Judicial Notice

Defendants request that the court take judicial notice of loan and foreclosure documents.57 Fevinger has not objected to Defendants' request. The documents' authenticity is not in dispute and may be verified by resort to the public record.58 Although the court will not rely on facts contained within the documents that reasonably may be subject to dispute, the court takes judicial notice of the loan and foreclosure documents.

B. Breach of the Implied Covenant of Good Faith and Fair Dealing

Fevinger alleges BANA breached the covenant of good faith and fair dealing implied in at least her loan agreement by interfering with Fevinger's ability to cure her default by refusing to provide Fevinger with an accurate reinstatement quote.

"The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made."59 The covenant "cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement."60 The elements of a claim for breach of the covenant of good faith and fair dealing are:

Fevinger urges Defendants breached the implied covenant when BANA advised Fevinger to pursue a loan modification and "refused to provide Plaintiff with a reinstatement quote and instead advised Plaintiff to not reinstate and apply for a loan modification."62 According to Fevinger, Defendants "refusal to provide a reinstatement calculation interfered with Fevinger's right to reinstatement pursuant to Section 19 of the Deed of Trust."63 Section 19 of the Deed of Trust also specifically provides conditions that Fevinger must satisfy before her right to reinstate matures.64 Those conditions include:

Fevinger's earlier allegations, however, belie her present argument. Fevinger previously conceded that BANA provided a reinstatement figure to her — she just took issue with the size of the figure.66 Fevinger now concedes that she was behind on her payments, but takes the position that BANA "refused" to provide a reinstatement quote. Given this irreconcilable inconsistency, the court does not credit Fevinger's new allegation.67 If Fevinger was committed to curing her several month default, she had actual knowledge of the number of payments she had missed — she represents that it was only two or three months.68 Fevinger's allegations do not marshal any alternative cognizable excuse.69

The undersigned only recently joined another judge of this district and rejected the argument that a lender's inducement of a homeowner to stop making payments on a home mortgage loan through the promise of forestalling future foreclosure proceedings provides an adequate basis to sustain a breach of the implied covenant claim. Fevinger's "election to skip payments" ultimately was Fevinger's "alone to make."70 The "core of [Fevinger's] pleadings on this cause of action remains the contention that [BANA] told her she could obtain a loan modification by going late on her payments. This does not rise above the level of encouragement. The choice to pay or not to pay remained with [Fevinger]. Plaintiff therefore fails to state a claim for breach of the implied covenant."71

Because Fevinger did not satisfy her obligations under the contract by at least paying all sums due under the mortgage agreement, Fevinger did not do "all or substantially all of the things that the contract required" her to do or establish that she was excused from fulfilling her obligations. Dismissal of Fevinger's breach of the implied covenant of good faith and fair dealing claim therefore is warranted. Because the court has already provided Fevinger with leave to amend the identified flaw with this claim72 and the flaw remains in her third amended complaint, the court is persuaded the additional amendment would be futile. Dismissal with prejudice is warranted.73

C. Intentional Interference with Contractual Relations

Fevinger alleges that BANA as the former servicer of the loan was interfering with the deed of trust between US Bank and Fevinger. In particular, Fevinger relies on law that says that a servicer is not in a contractual relationship with a borrower. The servicer therefore may be liable for interfering with the contract between the holder of the note (US Bank) and the borrower (Fevinger).

"It has long been held that a stranger to a contract may be liable in tort for intentionally interfering with the performance of the contract. The elements which a plaintiff must plead to state a cause of action for intentional interference with contractual relations are:

BANA urges that the complaint does not adequately allege (1) a valid contract between Fevinger and a third party, (2) actionable conduct or (3) any resulting damage.75 BANA's first argument is not persuasive because the complaint alleges that BANA's conduct interferes with the contract that Fevinger has with her lender, US Bank.76 BANA's second argument conflates distinct causes of action: interference with prospective economic advantage and interference with an existing contract. Interference with an existing contract does not require wrongful conduct aside from the alleged interference in and of itself.77 BANA's third argument falls short because the operative complaint offers up a panoply of damage theories.78

Dismissal of Fevinger's contract interference claim thus is not warranted.

D. Fraud

Next, Defendants challenge Fevinger's fraud-based claim. "Under California law, the indispensable elements of a fraud claim include a false representation, knowledge of its falsity, intent to defraud, justifiable reliance, and damages."79 Defendants characterize Fevinger's fraud claim as predicated on five alleged misrepresentations:

Reduced down, Fevinger's core alleged misrepresentation is that she was getting jerked around by Defendants: they repeatedly encouraged her to pursue a loan modification and, in response, the banks said they would not pursue foreclosure proceedings until the application was sorted out.

The court previously dismissed Fevinger's fraud claim because "the [first amended] complaint [did] not clearly allege that Fevinger was told that no foreclosure activity would occur while any loan modification application was pending."85 Despite Defendants' argument to the contrary, the operative complaint now states an actionable fraud claim.86 The complaint clarifies that the alleged misrepresentation was that Defendants would not initiate foreclosure proceedings, not that Defendants would not sell Fevinger's home.87 This is enough to be actionable.

Defendants also argue that Fevinger's reliance was not reasonable. A plaintiff adequately pleads justifiable reliance by alleging facts demonstrating (1) actual and (2) reasonable reliance.88 In the context of fraud claims by a borrower against a lender, California courts have found reasonable reliance where the creditor allegedly misrepresented that it had not scheduled a trustee's sale of the borrower's home while the borrower was requesting a reevaluation of the creditor's denial of a loan modification.89

Here, Fevinger adequately pleads justifiable reliance. As to actual reliance, Fevinger alleges that, but for the misrepresentations, she would have avoided accruing the additional debt that ultimately led to the notice of default by reinstating her loan initially or pursuing other foreclosure alternatives.90 Fevinger further alleges her reliance was reasonable because BANA "was the holder of Plaintiff's loan, and ostensibly possessed the requisite authority to forego foreclosure activities while modifying the loan."91 Given the relationship between the parties, Fevinger's reliance is adequately plead.92

Fevinger's fraud claim also adequately alleges damages. Fevinger seeks recovery for damages stemming from Defendants' alleged misrepresentation including "the imminent loss of her Property, loss of money including but not limited to losses through overcharges, incurred attorneys' fees and costs to save her home, a loss of reputation and goodwill, destruction of credit, severe emotional distress, loss of appetite, frustration, fear, anger, helplessness, nervousness, anxiety, sleeplessness, sadness, and depression."93 Additionally, Fevinger contends that Defendants made these misrepresentations intentionally — a necessary allegation to claim punitive damages.94 While the court agrees with Defendants that the lapsed mortgage payments are not recoverable,95 the collateral losses Fevinger allegedly has suffered could be if Fevinger proves up her fraud theory.96

Although the court cannot say whether Fevinger will ultimately prevail on her fraud claim, dismissal at the pleading stage is not warranted.

E. Unfair Competition

California's UCL provides a private cause of action for users who are harmed by unfair, unlawful or fraudulent business practices.97 Fevinger pleads her claim under the unlawful prong.98