WILLIAM Q. HAYES, District Judge.
The matters before the Court are (1) the motion to dismiss the First Amended Complaint filed by Defendants Select Portfolio Servicing, Inc. ("SPS") and National Default Servicing Corporation ("NDSC") (ECF No. 25), and (2) the motion to dismiss the First Amended Complaint filed by Defendant JPMorgan Chase Bank, N.A. ("Chase") (ECF No. 36).
On April 29, 2015, Plaintiff Laura D. Saterbak initiated this action by filing a Complaint against Defendants SPS and NDSC. (ECF No. 1).
On June 12, 2015, Defendants filed a motion to dismiss for failure to state a claim. (ECF No. 8). On October 1, 2015, the Court issued an Order granting Defendants' motion to dismiss. (ECF No. 12).
On January 18, 2016, Plaintiff filed a First Amended Complaint ("FAC") against Defendants SPS, NDSC, and Chase. (ECF No. 24). In the FAC, Plaintiff alleges that Plaintiff's loan is unenforceable, and in the alternative, Plaintiff alleges that due to violations of various laws, Defendants' collection and foreclosure efforts must cease.
On February 10, 2016, Defendants SPS and NDSC filed a motion to dismiss. (ECF No. 25). On February 24, 2016, Plaintiff filed an opposition. (ECF No. 30). On March 1, 2016, Defendants SPS and NDSC filed a reply. (ECF No. 31).
On April 8, 2016, Defendant Chase filed a motion to dismiss. (ECF No. 36). On May 10, 2016, Plaintiff filed an opposition. (ECF No. 42). On May 16, 2016, Defendant Chase filed a reply. (ECF No. 43).
"4826 Mount Helix Dr., La Mesa, California . . . was acquired by way of a Grant Deed dated April 30, 2007." (ECF No. 24 ¶ 12). "Plaintiff entered a financial transaction whereas ABC represented to be the `lender' but in fact, ABC is a nonexistent entity." Id. ¶ 14. "Plaintiff alleges that ABC was used to conceal the real creditor funding the loan and the MERS ID used was for American Home Mortgage Holding, Inc., a separate legal entity from American Home Mortgage and ABC . . . to conceal the true creditor . . . ." Id. ¶ 18. Plaintiff alleges that "said concealment resulted in what HUD classifies as a table funded loan." Id. Plaintiff alleges that "ABC, AHM, MERS and SAMI conspired to convert the federally regulated real transaction under UCC 9 to a risky security investment under UCC 8 without notice or consent by Plaintiff." Id. ¶ 19. Plaintiff alleges that Defendants Select Portfolio Servicing, Inc. ("SPS") and National Default Servicing Corporation ("NDSC") have sent correspondence to the Plaintiff though the United States Mails claiming that "they or their alleged principal are owed a sum certain, which is not correct, and which they know or should know is not correct," and that "they are collecting for an undisclosed principal." Id. ¶¶ 23-24. "Plaintiff believes and alleges the amount noted for collection or the amount stated that is needed to satisfy the foreclosure is incorrect, and discovery is highly likely to show Defendant's alleged `principal' has been paid (in full or in part) due to third party payers, and thus a full explanation or accounting is requested." Id. ¶ 23. Plaintiff alleges that
Id. ¶ 29. Plaintiff alleges that "actions of the Defendants, jointly and severally, now constitute an imminent threat to the Plaintiff's possession of the property, which is the subject of this Complaint." Id. ¶ 31.
"Defendant NDSC . . . by and through its agent, and or under the discretion of Defendant SPS, sent correspondence and various Notices of Trustee's Sales to the Plaintiff, only to later postpone or completely cancel them." Id. ¶ 33. "The Plaintiff alleges that directives given in this regard and other similar notices that NDSC sent Plaintiff each and every month through April 2015 are identical and possess inherent issues based on the lack of authority due to defendants: (a) Having done improper accounting relating to the actual sum due and owing; and (b) Failure to establish a full and verifiable chain of custody as to the note or Deed of Trust (`DOT') between Plaintiff and the `real party in interest.'" Id.
"Defendants' (NDSC and SPS) activities are wrongful because it emanates from a void or voidable DOT . . . and Note . . . because ABC was not a valid, legal entity capable of contracting and MERS had no agency agreement with ABC and therefore was not capable of contracting as the beneficiary as nominee of ABC." Id. ¶ 34. Plaintiff alleges that "neither entity was capable of acting or holding property, and no matter what, were not authorized to do business in the State of California at the time." Id. "It is impossible for SPS or any other party to appoint a Substitute Trustee or NDSC to act as such for a number of reasons:
Id. ¶ 36. "It is alleged that the real party in interest has not authorized the commencement of foreclosure proceedings herein." Id. ¶ 37.
Id. ¶¶ 37, 40.
Plaintiff alleges a separate basis for action against Defendant SPS. Plaintiff alleges that
Id. ¶ 41. "Plaintiff believes and alleges that the SAMI II 2007-AR7 Trust is regulated by a [Pooling Servicing Agreement ("PSA")] . . . . Specifically, there was a Closing Date stated in this trust's PSA of September 18, 2007. . . . Here, this date was not met." Id. ¶ 42.
Id. ¶¶ 43-44, 46.
Plaintiff's Complaint alleges twenty-three causes of action: (1) invalidity of contracts for violation of Civil Codes §§ 1549, 1550, 1558, 1598 against all Defendants; (2) Cancellation of Instruments against all Defendants; (3) Rescission based upon voidable contract against all Defendants; (4) Declaratory Relief against all Defendants; (5) Statutory violations under FDCPA against Defendant SPS; (6) Statutory violations under FDCPA against Defendant NDSC; (7) Fraud and Deceit against all Defendants; (8) Interference with Contract and Prospective Business Relations against all Defendants; (9) violation of Deceptive Trade Practices Act against Defendant SPS; (10) Injunctive or Equitable Relief against all Defendants; (11) violation of the California Homeowner's Bill of Rights against all Defendants; (12) Regulation X of RESPA and Regulation Z of TILA violation against Defendant SPS; (13) violation of 12 C.F.R. § 1024.36(d)(2)(B) against Defendant SPS; (14) violation of 12 C.F.R. § 1024.36(d)(a)(i)-(ii) against Defendant SPS; (15) violation of 12 C.F.R. § 1026.36(c)(3) against Defendant SPS; (16) violation of 12 C.F.R. § 1026.3 against Defendant SPS; (17) violation of 12 C.F.R. § 1024.35(e)(1)(A) against Defendant SPS; (18) Negligence against all Defendants; (19) violations of Business and Professions Code § 17200 against all Defendants; (20) Demand for Accounting against all Defendants; (21) violation of 11 U.S.C. § 1691(d)(1) against Defendant SPS; (22) RICO and Civil Conspiracy against all Defendants; (23) Slander of Title against all Defendants.
"As a general rule, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). However, there are "two exceptions to the requirement that consideration of extrinsic evidence converts a 12(b)(6) motion to a summary judgment motion." Id. First, Federal Rule of Evidence 201 provides that "[t]he court may judicially notice a fact that is not subject to reasonable dispute because it . . . is generally known within the trial court's territorial jurisdiction; or . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed R. Evid. 201(b). "[U]nder Fed.R.Evid. 201, a court may take judicial notice of `matters of public record.'" Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (quoting Mack v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir.1986)). Second, under the doctrine of incorporation by reference, "[a] district court ruling on a motion to dismiss may consider documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleadings." Parrino v. FHP, Inc., 146 F.3d 699, 705 (9th Cir. 1998) (internal quotation marks omitted).
Defendants SPS and NDSC request judicial notice of the publicly recorded Deed of Trust related to this action. Defendant Chase requests judicial notice of the publicly recorded Deed of Trust, the Notice of Default and Election to Sell Under Deed of Trust, the Corporate Assignment of Deed of Trust, and the Notice of Trustee's Sale related to this action. The Court takes judicial notice of these matters of public record which are not subject to reasonable dispute over their authenticity. See Fed R. Evid. 201(b); Lee, 250 F.3d at 690.
Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides that "[a] pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
"[A] plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R. Civ. P. 8(a)). When considering a motion to dismiss, a court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). However, a court is not "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) (internal quotation marks omitted).
Defendant Chase contends that the doctrine of res judicata bars Plaintiff's FAC against Chase. Chase contends that claim preclusion applies because Plaintiff brought an action against Chase in San Diego Superior Court based on the same loan, the same Deed of Trust, and same Assignment recorded against the same property that form the basis of Plaintiff's FAC. Defendant Chase contends that the instant action contains allegations related to the allegedly void assignment that are substantially similar to the allegations in the state court action. Defendants contend that Plaintiff's FAC implicates the same primary rights as the state court action despite asserting an additional thirteen causes of action against Chase. Defendant asserts that the state court action was dismissed with prejudice and the Court of Appeal affirmed the judgment of dismissal.
Plaintiff contends that res judicata is not applicable. Plaintiff contends that res judicata does not bar the instant action against Chase because Plaintiff has alleged that the deed of trust is unenforceable due to Defendant's tortious conduct in this case. Plaintiff contends that in the state case, Plaintiff alleged that Defendants could not claim ownership over the debt based on the assignment Chase created. (ECF No. 41 at 12).
The Court takes judicial notice of the opinion of the California Court of Appeal in the state action filed by Plaintiff, Saterbak v. JPMorgan Chase Bank, N.A., 245 Cal.App.4th 808 (2016).
The opinion of the Court of Appeal shows that both the state case and the instant action are based on the same underling events and documents. Specifically, in the state case
Saterbak, 245 Cal.App.4th at 811. In the instant action, Plaintiff asserts claims against Chase for: invalidity of contracts, cancellation of instruments, rescission based on voidable contract, declaratory relief, fraud and deceit, interference with contract and prospective business relations, injunctive relief, violation of the California Homeowner's Bill of Rights, negligence, violations of California Business and Professions Code § 17200, accounting, RICO and civil conspiracy, and slander of title
The Full Faith and Credit Act, 28 U.S.C. § 1738, requires that a federal court "give the same preclusive effect to a state court judgment as another court of that State would give." Parsons Steel, Inc. v. First Alabama Bank, 474 U.S. 518, 523 (1986). Accordingly, the Court applies California law to determine if res judicata bars Plaintiff's current action against Defendant Chase. See Palomar Mobilehome Park Ass'n v. City of San Marcos, 989 F.2d 362, 364 (9th Cir. 1993). "In California, a judgment entered after the sustaining of a general demurrer is a judgment on the merits, and, to the extent that it adjudicates that the facts alleged do not establish a cause of action, it will bar a second action on the same facts." Id. (citing Crowley v. Modern Faucet Mfg. Co., 282 P.2d 33, 34 (Cal. 1955) (indicating that if facts alleged in second action are substantially the same as those in the first action, which has been dismissed after the sustaining of a general demurrer, the second action is barred by the doctrine of res judicata)). "California, as most states, recognizes that the doctrine of res judicata will bar not only claims actually litigated in a prior proceeding, but also claims that could have been litigated." Id. "It is well settled that res judicata bars subsequent actions on all grounds for recovery that could have been asserted, whether they were or not." Id. at 365.
"While it is true that res judicata will only bar relitigation of the same cause of action by the same parties, the question of whether a cause of action is identical for purposes of res judicata depends not on the legal theory or label used, but on the `primary right' sought to be protected in the two actions." Johnson v. American Airlines, Inc., 157 Cal.App.3d 427, 432 (1984). "[T]he `cause of action' is based on the harm suffered, as opposed to the particular theory asserted by the litigant." Slater v. Blackwood, 15 Cal.3d 791, 795 (1975) (citing Peiser v. Mettler, 50 Cal.2d 594, 605 (1958)). "Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief. Hence, a judgment for the defendant is a bar to a subsequent action by the plaintiff based on the same injury to the same right, even though he presents a different Legal ground for relief." Id. "That several remedies may be available for violation of one `primary right' does not create an additional `cause of action.' However, it is also true that a given set of facts may give rise to the violation of more than one `primary right,' thus giving a plaintiff the potential of two separate lawsuits against a single defendant." Sawyer v. First City Financial Corp., 124 Cal.App.3d 390, 399 (1981). In "deciding how many `primary rights' derive from a single transaction," courts look to the source of the right and the harm suffered. Sawyer v. First City Financal Corp., 124 Cal.App.3d 390, 399 (1981). Where federal and state rights overlap in their purpose, they do not create two primary rights and res judicata should bar a second suit on the same facts. See id. at 400 (citing Mattson v. City of Costa Mesa, 106 Cal.App.3d 441 (1980)).
Plaintiff's state court action and the instant action are premised on many of the same factual allegations. In both actions Plaintiff has asserted claims for cancellation of instruments and has sought declaratory relief based on allegations that misconduct by Chase renders the Deed of Trust or the assignment of the Deed of Trust void. While Plaintiff asserts additional claims and legal theories in the current action, the underlying remedy Plaintiff seeks is the same—a court order protecting Plaintiff's home from foreclosure by invalidating the instruments through which Plaintiff's mortgage loan originated and was transferred. Although Plaintiff contends that the instant action is distinguishable from the state court action because it asserts new allegations of tortious conduct, Plaintiff's claims in the state court action were based, in part, on Chase's alleged tortious forgery of the assignment of the Deed of Trust. The theory of harm to Plaintiff alleged in both actions appears to be the same. Plaintiff was not precluded in the state action from asserting any of the thirteen claims that she now asserts against Chase in this action. The state court issued a judgment against Plaintiff, which was affirmed by the state court of appeal. The Court concludes that Plaintiff has asserted the same claims in both the state and instant action alleging violation of the same primary right, there has been a final judgment on the merits in the state action, and the parties in the instant action are identical to the parties in the state action. The Court concludes that res judicata applies to bar all of Plaintiff's claims against Defendant Chase.
Plaintiff relies on the recent California Supreme Court ruling, Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919 (2016) to support her contention that she has standing to challenge the assignment of her loan. Plaintiff contends that the cases cited in the Court's October 1, 2015 Order were disapproved of by the court in Yvanova, including Jenkins v. JPMorgan Chase Bank, N.A., 216 Cal.App.4th 497 (2013).
Defendants SPS and NDSC contend that the Plaintiff fails to acknowledge that Yvanova is limited to circumstances where a plaintiff is challenging an assignment after a nonjudicial foreclosure has occurred.
The Yvanova court stated,
62 Cal.4th at 924. In Yvanova, the court stated that "[t]his action of Jenkins, disallowing the use of a lawsuit to preempt a nonjudicial foreclosure, is not within the scope of our review . . . . We do not address the distinct question of whether, or under what circumstances, a borrower may bring an action for injunctive or declaratory relief to prevent a foreclosure from going forward." Id. at 934. The California Supreme Court's decision in Yvanova does not impact the Court's analysis in this case, where the Plaintiff is challenging an assignment of a deed in order to prevent a nonjudicial foreclosure that has not yet occurred.
The Court's prior Order relied on Jenkins to conclude that a borrower who was not a party to the assignment cannot preempt a nonjudicial foreclosure. Jenkins' authority on this point remains good law. Plaintiff brings this action before a non-judicial foreclosure has occurred. On the same grounds discussed in the Court's Order dismissing the original Complaint, the Court finds that Plaintiff lacks standing to challenge the assignment of the Deed of Trust because a foreclosure has not yet occurred. See ECF No. 12 at 10.
Defendants contend that Plaintiff's first, second, and third causes of action are time-barred because Plaintiff disputed the debt in October 2008 and alleges the cause of action for invalidity of contracts for the first time in January 2016 and the causes of action for cancellation of instruments and rescission for the first time in April 2015. Plaintiff contends that her claims are timely because Defendants' continual threats and actions are ongoing, therefore the statute of limitations has not begun to accrue.
"The limitations period, the period in which a plaintiff must bring suit or be barred, runs from the moment a claim accrues . . . . [O]rdinarily, the statute of limitations runs from the occurrence of the last element essential to the cause of action." Aryeh v. Canon Business Solutions, Inc., 292 P.3d 871, 875 (Cal. 2013) (quotations omitted). "To align the actual application of the limitations defense more closely with the policy goals animating it, the courts and the Legislature have over time developed a handful of equitable exceptions to and modifications of the usual rules governing limitations periods." Id. "The most important of these doctrines, the discovery rule, where applicable, postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action." Id. (quotations omitted). Under another exception, "the theory of continuous accrual, a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period." Id. The continuing violation doctrine is meant to serve equitable purposes when "injuries are the product of a series of small harms, any one of which may not be actionable on its own," or when the plaintiff has alleged "a pattern of reasonably frequent and similar acts . . . justifying treating the acts as an indivisible course of conduct actionable in its entirety, notwithstanding that the conduct occurred partially outside and partially inside the limitations period." Id. at 879. The burden is on the plaintiff to allege that his or her claims fall within the applicable statute of limitations or survive based on an exception to limitations period. See id. at 879.
"Ordinarily a suit to set aside and cancel a void instrument is governed by Sec. 343 of the [California] Code of Civil Procedure." Zakaessian v. Zakaessian, 70 Cal.App.2d 721, 725 (1945). Section 343 of the California Code of Civil Procedure requires a plaintiff to bring suit within four years from the date the cause of action accrues. Plaintiff does not contest that she began contesting the validity of the loan in October 2008. Plaintiff's claims that a contract was invalid based on the incapacity of ABC to contract and that there was no meeting of the minds prior to contract formation do not support Plaintiff's theory that the claim has not begun to accrue and the statute of limitations has not begun to run yet. The contract formation occurred in 2007 and the four-year statute of limitations began to run at that time. Plaintiff does not allege facts to support the application of the delayed discovery doctrine because she does not allege that she was unable to discover her claims until recently, despite reasonable diligence. Plaintiff appears to have begun questioning the validity of her debt in as early as October 2008. Plaintiff's claim for invalidity of contracts is barred by the statute of limitations. See Cal. Code Civ. P. § 343. The first cause of action for invalidity of contracts is dismissed with prejudice.
The claim for cancellation of instruments is based on allegations that the Note and Deed of Trust dated May 24, 2007 and the assignment of the Deed of Trust dated December 27, 2011 should be cancelled because ABC did not have capacity to contract, because Plaintiff did not receive any notice of the sale of her debt, and because there are problems in the chain of title. The statute of limitations for the claim to cancel the Note and Deed of Trust began to run in May 2007. Plaintiff first contested the validity of the loan in October 2008; therefore, the statute of limitations has run on the claim to cancel the Note and Deed of Trust. Plaintiff has not alleged sufficient facts to support an inference that an exception to the statute of limitations applies.
To the extent that Plaintiff's claim for cancellation of instruments is based on the assignment of the Deed of Trust, it is not barred by the statute of limitations. However, the Court has concluded that Plaintiff lacks standing to challenge the assignment of the Deed of Trust. The Court concluded in the Order dismissing the original Complaint that MERS has authority to assign the loan pursuant to the Deed of Trust. (ECF No. 12 at 9). The Court further concluded that
Id. at 10. Because Plaintiff's claim to cancel the Deed of Trust is barred by the statute of limitations and the Court has found that Plaintiff lacks standing to challenge the assignment of the Deed of Trust, Plaintiff has failed to allege a cause of action for cancellation of instruments. Plaintiff cannot cure the defects of this claim by amending the FAC. Plaintiff's second cause of action for cancellation of instruments is dismissed with prejudice.
A claim for rescission is barred by the four-year statute of limitations governing rescission of a written contract. Cal. Code Civ. P. § 337. Plaintiff executed the Note and Deed of Trust in May 2007 and began contesting the validity of the contract in October 2008. Plaintiff has not alleged sufficient facts to support a finding that an exception to the statute of limitations applies. Plaintiff's claim for rescission is barred by the statute of limitations. The third cause of action for rescission is dismissed with prejudice.
Plaintiff alleges claims for violation of the FDCPA against Defendants SPS and NDSC. The only new allegation regarding the FDCPA claims in the FAC is that Defendants used "debt collection language in their correspondence to Plaintiff, language that is specifically addressed in the Fair Debt Collection Practices Act." FAC ¶ 25.
Many courts have held that including language in letters sent to consumers indicating that the sender is "a debt collector attempting to collect a debt" does not raise an inference that the sender is a debt collector attempting to collect a debt under the FDCPA. See Hernandez v. Green Tree Servicing LLC, No. 2:14-cv-1438, 2014 WL 2586932, at *3 (C.D. Cal. June 9, 2014) ("Plaintiff responds that he has received a letter from Green Tree concerning his loan that included the disclaimer: "This communication is from a debt collector. It is an attempt to collect a debt' . . . . This argument fails: whether Green Tree is a debt collector under the FDCPA does not turn on whether Green Tree holds itself out as a debt collector"); Golliday v. Chase Home Finance, LLC, 761 F.Supp.2d 629, 636 (W.D. Mich. 2011) ("The fact that FDCPA disclaimers were sent in connection with a non-judicial foreclosure proceeding does not automatically transform the defendants into `debt collectors.' . . . [T]he use of the disclaimer . . . is insufficient to raise a triable issue of fact on the question of the firm's status as a debt collector."); Stamper v. Wilson & Assoc., P.L.L.C., No. 3:09-cv-270, 2010 WL 1408585, at *8-9 (E.D. Tenn. Mar. 312, 2010) ("it is perfectly reasonable for [defendant law firm] to err on the side of caution by including FDCPA disclaimers . . . . if they did not include FDCPA disclaimers, they would be opening themselves up to potential liabiluty under 15 U.S.C. § 1692f(6)").
In the Order dismissing the original Complaint, the Court concluded that allegations against Defendant NDSC do not support an inference that Defendant NDSC is a "debt collector" pursuant to the FDCPA. See ECF No. 12 at 13. The Court concludes that whether Defendants used debt collection language in their correspondence to Plaintiff does not impact the Court's conclusion that the foreclosure-related correspondence to Plaintiff did not constitute debt collection. Plaintiff's FDCPA claims against Defendant NDSC are dismissed.
In the Order dismissing the original Complaint, the Court dismissed Plaintiff's claims that Defendant SPS violated 15 U.S.C. §§ 1692e(5) and 1692f(6)(A) because Plaintiff lacked standing to challenge the securitization of her loan or any subsequent assignment of the Deed of Trust. Id. at 14-15. The Court also dismissed Plaintiff's claim that Defendant SPS violated 15 U.S.C. § 1692e(2)(A) because Plaintiff failed to allege sufficient facts to support an inference that SPS "made a false representation of the character, amount, or legal status of any debt." Id. at 15. The FDCPA claims against Defendant SPS are dismissed for the same reasons discussed in the prior Order. See ECF No. 12 at 14-15.
Defendants SPS and NDSC contend that Plaintiff's allegation that Defendants misrepresented something to her is conclusory because Plaintiff does not provide facts to show that her efforts to modify the loan constitutes detrimental reliance and Plaintiff does not allege facts to show she was harmed. Defendants SPS and NDSC contend that Plaintiff has failed to allege fraud with the requisite specificity. Defendant Chase contends that the FAC does not allege facts to support a claim of fraud against Chase.
Plaintiff contends that the FAC contains factual allegations of inconsistent representations about who the lender is, but Plaintiff needs additional information before she can identify specific individuals and policies that established the practice of table funding loans through ABC. Plaintiff contends that the allegations in the FAC that Chase was pretending to be MERS to the detriment of Plaintiff support a fraud claim.
Under California law, the elements of a claim for fraud are: "(1) a misrepresentation, which includes a concealment or nondisclosure; (2) knowledge of the falsity of the misrepresentation, i.e., scienter; (3) intent to induce reliance on the misrepresentation; (4) justifiable reliance; and (5) resulting damages." Cadlo v. Owens-Illinois, Inc., 125 Cal.App.4th 513, 519 (2004) (citing Small v. Fritz Cos., Inc., 30 Cal.4th 167, 173 (2003)). Claims sounding in fraud or mistake must comply with the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which requires that a complaint "must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). "[O]ne purpose of Rule 9(b)'s requirement that plaintiffs plead fraud with particularity is to prevent the filing of a complaint as a pretext for the discovery of unknown wrongs." Neubronner v. Milken, 6 F.3d 666, 671 (9th Cir. 1985) (quotations omitted). Rule 9(b) requires that "allegations of fraud are 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." Id. (citing Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Rule 9(b) "requires . . . an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quotation omitted); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (averments of fraud must be accompanied by "the who, what, when, where, and how of the misconduct charged") (quotation omitted).
The FAC alleges that
FAC ¶¶ 169-73.
The allegations of fraud in the FAC do not sufficiently allege an injury. The FAC does not allege that transfers of the loan affected Plaintiff's obligations under the loan nor does the FAC support an inference that Plaintiff has standing to challenge the securitization or assignment of the loan. Additionally, the FAC does not allege facts, including the "specific content of the false representations as well as the identities of the parties to the misrepresentations," that are sufficient to support an inference of fraud. See Swartz, 476 F.3d at 764. The allegations of the FAC lack the specificity to meet the requirements of Rule 9(b). Plaintiff cannot use her claim of fraud "as a pretext for the discovery of unknown wrongs" because her claim is not pleaded with particularity. See Neubronner, 6 F.3d at 671. Plaintiff's cause of action for fraud and deceit against all Defendants is dismissed.
Plaintiff's eighth cause of action alleges interference with contract and prospective business relations. Defendants SPS and NDSC contend that Plaintiff cannot show improper conduct by the Defendants and that Plaintiff concedes that Defendants had a valid reason to foreclose by admitting she has not tendered a loan payment since 2008. Defendant Chase contends that Plaintiff's allegations regarding interference with contract do not contain any facts showing wrongdoing by Chase. Chase contends that Plaintiff does not allege facts to support any of the elements of interference with contract and prospective business relations.
Plaintiff contends that the Complaint alleges that Defendants have been acting in their own interest to the detriment of both Plaintiff and the lender, and as such, are liable for their interference. Plaintiff contends that Chase pretending to be MERS has interfered with Plaintiff's ability to identify the real lender.
To state a claim for intentional interference with prospective economic advantage, the plaintiff must allege: "(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant." Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1153 (2003). To allege interference with contract, the plaintiff "must allege that the contract would otherwise have been performed, and that it was breached and abandoned by reason of the defendant's wrongful act and that such act was the moving cause thereof." Augustine v. Trucco, 124 Cal.App.2d 229, 246 (1954).
Plaintiff alleges that "Defendants by doing what they are doing (engaging in foreclosure activity against Plaintiff . . .) intend to and are disrupting and interfering with the relationship and contracts of the true lender and the legitimate assignee, or holder of the note, as well as the vendors Plaintiff deals with as the homeowner . . . ." FAC ¶ 183. The facts alleged do not support an inference that Plaintiff's economic injury in having her home foreclosed was caused by tortious conduct of the Defendants rather than the conduct of Plaintiff in not making payments on her mortgage. The FAC contains generalized allegations which fail to state facts sufficient to support a cause of action against any Defendant for interference with contract and prospective business relations. Plaintiff's eighth cause of action is dismissed.
Plaintiff's allegations to support her claim against Defendant SPS for violation of the Deceptive Trade Practices Act are identical to the allegations made in the original Complaint. The Court dismisses the claim under the Deceptive Trade Practices Act, Utah statute § 13-11a-3 because, as the Court stated in its prior Order, the security instrument at issue in this action is governed by the law of California. (ECF No. 12 at 16).
Plaintiff's allegations to support her claim against all Defendants for violation of the Homeowner's Bill of Rights are identical to the allegations made in the original Complaint. In the response to Chase's motion to dismiss, Plaintiff requests that the Court dismiss the claim under the California Homeowner Bill of Rights against Defendant Chase and allow Plaintiff to "re-allege claims as appropriate" when "the basis of Chase's involvement is further revealed." (ECF No. 42 at 19).
The Court dismisses the claim under the Homeowner's Bill of Rights against Defendant SPS and NDSC for the same reasons discussed in the Court's prior Order. (ECF No. 12 at 16). Plaintiff's claim under the Homeowner's Bill of Rights against Defendant Chase is dismissed pursuant to Plaintiff's request and based on Plaintiff's failure to allege sufficient facts to state a claim against Defendant Chase. To the extent that Plaintiff does not currently possess sufficient facts to state a negligence claim against Defendant Chase, nine years after the Deed of Trust was executed and nearly five years after the assignment of the Deed of Trust was executed, the Court concludes that the delay that would be caused by allowing Plaintiff to re-file her claim against Chase if additional facts are "further revealed to Plaintiff" would prejudice Defendant Chase. Plaintiff has had the opportunity to amend her allegations as to Defendants SPS and NDSC and admits that she does not possess sufficient facts to state a negligence claim for violation of the Homeowner's Bill of Rights against Defendant Chase. The Court dismisses the claim for violation of the Homeowner's Bill of Rights against all Defendants with prejudice.
Plaintiff's twelfth (Regulation X/Regulation Z of TILA), thirteenth (12 C.F.R. § 1024.36(d)(2)(B)), fourteenth 12 C.F.R. (§ 1024.36(d)(a)(i)(ii)), fifteenth (12 C.F.R. § 1024.36(c)(3)), sixteenth (12 C.F.R. § 1026.3), and seventeenth (12 C.F.R. § 1024.35(e)(1)(A)) causes of action against Defendant SPS in the FAC and the allegations in support of the TILA and RESPA claims are identical to the allegations of the original Complaint. The Court dismisses these claims for the same reasons discussed in the Court's Order dismissing the original Complaint; Plaintiff fails to provide facts to show that Defendant SPS did not comply with RESPA or that Defendants SPS and NDSC are lenders to whom TILA applies. See ECF No. 12 at 28-30.
Plaintiff's eighteenth cause of action alleges negligence against all Defendants. The FAC alleges facts identical to the facts alleged in the Original Complaint. The Court dismisses the negligence claim against Defendants SPS and NDSC for the same reasons discussed in the Court's Order dismissing the Original Complaint. Specifically, the Court finds that Plaintiff's allegations are not sufficient to show that Defendants SPS and NDSC owed a duty of care. Plaintiff's claim of negligence against Defendants SPS and NDSC is dismissed.
Defendant Chase contends that the Complaint does not allege any wrongdoing by Chase and does not allege sufficient facts to support an inference that Chase owed a duty of care to Plaintiff. Plaintiff contends that Chase has concealed its involvement with the loan and Chase's involvement is unclear. Plaintiff requests the Court to dismiss the negligence claim against Chase without prejudice and allow Plaintiff to re-allege claims against Chase when Chase's involvement is revealed.
The negligence claim against Defendant Chase is dismissed pursuant to Plaintiff's request. To the extent that Plaintiff does not currently possess sufficient facts to state a negligence claim against Defendant Chase, nine years after the Deed of Trust was executed and nearly five years after the assignment of the Deed of Trust was executed, the Court concludes that the delay that would be caused by allowing Plaintiff to re-file her claim against Chase if additional facts are "further revealed to Plaintiff" would prejudice Defendant Chase. Plaintiff has had the opportunity to amend her allegations as to Defendants SPS and NDSC and admits that she does not possess sufficient facts to state a negligence claim against Defendant Chase. The Court dismisses the negligence claim against all Defendants with prejudice.
(ECF No. 12 at 32). The FAC adds allegations regarding Defendants engaging in table funding the mortgage loan, concealing the real lender, and concealing the true nature of the financial transaction. FAC ¶ 302. The FAC adds an allegation that Defendants created and notarized instruments in land records in violation of California law. Id. The allegations added to the FAC do not remedy Plaintiff's lack of standing to pursue a claim under California Business and Professions Code § 17200. The Court dismisses Plaintiff's claim under California Business and Professions Code § 17200 for the same reasons discussed in the Court's prior Order. See ECF No. 12 at 32.
Plaintiffs twentieth claim requests an accounting against all Defendants. The allegations in support of the accounting claim are identical to the allegations of the original Complaint, with the addition of the following: "It is common sense that if someone maintains a debt is owed to them that they provide an accounting to the party from whom they are demanded money." FAC ¶ 313. The Court stated in its Order dismissing the original Complaint,
(ECF No. 12 at 23). Plaintiffs FAC fails to allege facts demonstrating that a relationship exists between Plaintiff and any of the Defendants that requires an accounting or that some balance is due to Plaintiff that can only be determined by an accounting. See Tamburri, 2011WL 6294472, at *17; Teselle, 173 Cal. App. 4th at 179. Plaintiff's accounting claim is dismissed.
Plaintiff's twenty-first cause of action alleges a violation of the Equal Credit Opportunity Act, 11 U.S.C. § 1691(d)(1), against Defendant SPS. The allegations in support of the Equal Credit Opportunity Act claim in the FAC are identical to the allegations of the original Complaint. The Court's Order dismissing the original Complaint concluded, "Plaintiff's Complaint fails to allege that she is a member of a protected class, or that she was denied credit despite being qualified. Plaintiff specifically alleges that her loan modification application is still pending . . . . The Court concludes that Plaintiff fails to plausibly allege facts under the Equal Credit Opportunity Act." (ECF No. 12 at 25). The Court dismisses the claim under the Equal Credit Opportunity Act for the same reasons discussed in the Court's Order dismissing the Original Complaint.
Defendants SPS and NDSC contend that Plaintiff's RICO claim is barred by a four-year statute of limitations. Defendants SPS and NDSC contend that Plaintiff has alleged only legal conclusions, not specific facts to show an enterprise between alleged co-conspirators or a pattern or practice of alleged co-conspirators. Defendant Chase contends that Plaintiff does not plead RICO allegations with the requisite specificity. Defendant Chase contends that the FAC does not explain Chase's role in the alleged mail fraud scheme. Defendant Chase contends that because Plaintiff fails to plead a viable RICO claim, her claim for conspiracy also fails.
Plaintiff contends that the FAC and attached exhibits 34 and 35 show the specific date, time, and individuals related to the RICO and conspiracy claim. Plaintiff contends that the allegations that Defendants sent communications by mail alleging to be an agent of the lender, and that Defendants sent Plaintiffs the Deed of Trust, assignment, Substitution of Trustee, and Notices of Trustee Sale, all containing false statements, through the U.S. mail.
Under the Racketeer Influenced and Corrupt Organizations Act ("RICO") statutes (18 U.S.C. § 1961 et seq.) A plaintiff must plead "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." McMartin v. Children's Institute Int'l, 212 Cal.App.3d 1393, 1406. RICO claims have a four-year statute of limitations period. Rotella v. Wood, 528 U.S. 549, 552 (2000). "In pleading a violation of the mail fraud statute (18 U.S.C. § 1341) as a predicate act under a RICO scheme, plaintiffs must allege that (1) defendants devised a scheme or artifice to defraud, (2) defendants used the mails in furtherance of the scheme, and (3) defendants did so with the specific intent to deceive or defraud." McMartin, 212 Cal. App. 3d at 1407. Federal Rule of Civil Procedure Rule 9(b) particularity requirements are to RICO claims. Moore v. Kayport Package Exp., Inc., 885 F.2d 531 (9th Cir. 1989).
The FAC alleges, in part, that Defendants "conspired with remaining defendants to interfere with Plaintiff's quiet enjoyment of her property, to secure a nonjudicial foreclosure through the use of false instruments, sham pleadings, [and] manufactured evidence . . . ." FAC ¶ 333. The FAC alleges that "Defendants knowingly prepared, made and subscribed notarized writings to record in the official land records of San Diego County with the intent to make fraudulent claims for interest in real property . . . ." Id. ¶ 327. The FAC alleges that "Defendants entered into agreement(s) with each other to defraud Plaintiff by creating false instruments and giving false testimony regarding the funding of the subject loan, the validity of the endorsement on the Note and the default of the Loan to parties with no legal or valid interest in the debt . . . ." Id. ¶ 325.
The Court concludes that the allegations in the FAC alleging RICO violations by the Defendants are conclusory do not meet the particularity requirements of Rule 9(b). Plaintiff does not allege facts to show an enterprise or a pattern of racketeering between the Defendants and alleged co-conspirators. The FAC and the attached exhibits do not contain sufficient factual allegations to support a RICO claim. The RICO claim may be barred by the statute of limitations, however, the lack of specificity in the allegations prevents the Court from determining when the statute of limitations on the alleged RICO claim began. Because the Plaintiff has not adequately alleged a RICO claim, her derivative claim for conspiracy is also insufficient. See Westways World Travel, Inc. v. AMR Corp., 265 Fed. Appx. 472, 474 (9th Cir. 2009). Plaintiff's twenty-second cause of action for RICO and civil conspiracy is dismissed.
Defendants SPS and NDSC contend that Plaintiff's claim for slander of title is barred by the statute of limitations. Defendants SPS and NDSC contend that Plaintiff has not alleged that she has suffered harm as a result of the alleged misconduct. Defendants contend that the alleged publication and recordation of documents was privileged pursuant to California Civil Code § 2924(d) because the conduct was required for the nonjudicial foreclosure process. Defendants contend that Plaintiff's claim for slander of title does not allege facts that facts to show malice.
Plaintiff contends that malice or ill will is unnecessary for the tort of slander of title; an untrue statement alone supports a finding of slandered title. Plaintiff contends that the recordation of an instrument that is facially valid but is without underlying merit gives rise to an action for slander of title. Plaintiff did not respond to Defendants' contentions that the publication and recordation of the Deed of Trust, the Assignment of Deed of Trust, Notice of Default, and Notice of Trustee's Sale was privileged.
"Slander of title occurs when there is an unprivileged publication of a false statement that disparages title to property and causes pecuniary loss." Compass Bank v. Peterson, 886 F.Supp.2d 1186, 1197 (C.D. Cal. 2012) (quoting Stalberg v. W. Title Ins. Co., 27 Cal.App.4th 925, 929 (1994). The elements of the tort of slander of title are "publication, falsity, absence of privilege, and disparagement of another's land which is relied upon by a third party and which results in pecuniary loss." Smith v. Commonwealth Land Title Ins. Co., 177 Cal.App.3d 625, 630 (1986). "A privilege, either absolute or qualified, is a defense to a charge of slander of title." Id. "[W]here the Complaint shows that the communication or publication is one within the classes of qualified privilege, it is necessary for the plaintiff to go further and plead and prove that the privilege is not available as a defense in the particular case, e.g., because of malice. Id. (citing 4 Witkin Summary of Cal. Law (8th ed. 1974) Torts, § 302, p. 2573). "For this purpose, malice is defined as actual malice, meaning that the publication was motivated by hatred or ill will towards the plaintiff or by showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff's rights. Kachlon v. Markowitz, 168 Cal.App.4th 316, 336 (2008).
Section 2924 of the California Civil Code provides the legal framework and procedures for nonjudicial foreclosures. Section 2924(d) of the California Civil Code states that "the following shall constitute privileged communications . . . (1) the mailing, publication, and delivery of notices as required by this section. (2) Performance of the procedures set forth in this article." Cal. Civ. Code § 2924(d). Section 2924 requires the trustee, mortgagee, or beneficiary to file a notice of default, a statement identifying the mortgage or deed of trust, a notice of sale. Cal. Civ. Code § 2924. The Court concludes that filing the Notice of Default and Notice of Trustee's Sale was privileged. The privilege of these documents appears on the face of Plaintiff's Complaint. Plaintiff does not allege sufficient facts to show malice as to the Defendants. See Kachlon, 168 Cal. App. 4th at 336.
To the extent that the claim for slander of title relies on Plaintiff's allegations that ABC and Doe Defendant recorded a false Deed of Trust with MERS as the beneficiary because ABC was not the real lender and the Deed of Trust fails to identify the real parties to the transaction, the claim is barred by the statute of limitations. The Deed of Trust was filed in 2007 and Plaintiff began questioning the validity of the Deed of Trust in October 2008, therefore, Plaintiff's claim for slander of title stemming from filing a Deed of Trust with inaccurate information is barred because it was not brought within the three-year statute of limitations and Plaintiff has not alleged facts to show that any exception to the statute of limitations apply. See Cal. Code Civ. P. § 338(g). Furthermore, the Court concludes that Plaintiff's claim for slander of title fails to allege sufficient facts to support an inference that Defendants published and recorded documents that were false, that were not privileged, that disparaged Plaintiff's property, and that were relied on by a third party, resulting in pecuniary loss the Plaintiff. See 177 Cal. App. 3d at 630. Plaintiff's claim for slander of title is dismissed.
Plaintiff's allegations to support her claim against all Defendants for injunctive relief are identical to the allegations made in the original Complaint. The Court concluded in its prior Order that Plaintiff was not entitled to injunctive relief pursuant to FDCPA violations, was not entitled to relief pursuant to Federal Rule of Civil Procedure 65, and was not entitled to injunctive relief pursuant to Plaintiff's other claims because all claims had been dismissed. The Court has dismissed all the claims in the FAC on which Plaintiff relies for injunctive relief, therefore, the Court dismisses Plaintiff's request for injunctive relief for the same reasons the Court discussed in the Order dismissing the original Complaint. See ECF No. 12 at 27.
A claim for declaratory relief is not a stand-alone claim. See Eugene N. Gordon, Inc. v. La-Z-Boy, Inc., No. 2:06CV2353, 2007 WL 1101456, at *7 (E.D. Cal. Apr. 12, 2007) ("Plaintiffs' claims for specific performance and declaratory relief have been dismissed because they are remedies as opposed to stand-alone claims."); Mayen v. Bank of Am., N.A., No. 14-CV-03757, 2015 WL 179541, at *5 (N.D. Cal. Jan. 14, 2015) ("The Court agrees that declaratory relief is not a standalone claim."). If a plaintiff's substantive claims have been dismissed, plaintiff's claim for declaratory relief will be dismissed as well. See Mayen, 2015 WL 179541, at *5 ("The Court also agrees that, because Plaintiff's complaint will be dismissed in its entirety, no viable cause of action remains to support Plaintiff's request for declaratory relief. Plaintiff's declaratory relief claim must be dismissed."); Ballard v. Chase Bank USA, NA, No. 10CV790, 2010 WL 5114952, at *8 (S.D. Cal. Dec. 9, 2010) ("A claim for declaratory relief rises or falls with [the] other claims.").
The substantive claims in Plaintiff's FAC have been dismissed. Plaintiff's claim for declaratory relief must also be dismissed because it is not a stand-alone claim and does not adequately allege a basis that would entitle Plaintiff to declaratory relief.
Federal Rule of Civil Procedure 15 mandates that leave to amend "be freely given when justice so requires." Fed. R. Civ. P. 15(a). In Foman v. Davis, 371 U.S. 178 (1962), the Supreme Court offered several factors for district courts to consider in deciding whether to grant a motion to amend under Rule 15(a):
Foman, 371 U.S. at 182; see also Smith v. Pac. Prop. Dev. Co., 358 F.3d 1097, 1101 (9th Cir. 2004) (citing Foman factors). In applying the Foman factors, "[n]ot all factors merit equal weight." Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). "[I]t is the consideration of prejudice to the opposing party that carries the greatest weight." Id. "[T]he grant or denial of an opportunity to amend is within the discretion of the District Court . . . ." Foman, 371 U.S. at 182. "[W]here the plaintiff has previously been granted leave to amend and has subsequently failed to add the requisite particularity to its claims, the district court's discretion to deny leave to amend is particularly broad." Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009). "A district court does not abuse its discretion when it denies leave to amend where a plaintiff . . . did not propose any new facts or legal theories for an amended complaint and therefore give the Court any basis to allow an amendment." Boehm v. Shemaria, 478 Fed. Appx. 457, 457 (9th Cir. 2012). When amendment would be futile, the district court need not grant leave to amend. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir. 2002).
Plaintiff was previously granted leave to amend her claims and the FAC subsequently failed to add the requisite particularity to its claims and failed to allege sound legal theories. The Court concludes that allowing Plaintiff to further amend her claims would be futile and would prejudice Defendants. Therefore, the Court dismisses the FAC with prejudice.
IT IS HEREBY ORDERED that the motion to dismiss the First Amended Complaint filed by Defendants SPS and NDSC (ECF No. 25) is granted. Plaintiff's claims against Defendants SPS and NDSC are dismissed with prejudice.
IT IS FURTHER ORDERED that the motion to dismiss the First Amended Complaint filed by Defendant Chase (ECF No. 36) is granted. Plaintiff's claims against Defendant Chase are dismissed with prejudice.
