ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS; SETTING CASE MANAGEMENT CONFERENCE

Re: Dkt. No. 40

EDWARD J. DAVILA, District Judge.

I. INTRODUCTION

Plaintiff Mark Feathers ("Plaintiff") brings this action against Bank of America, N.A., "Wells Fargo Bank through its wholly owned subsidiary Wells Fargo Home Mortgage," and NBS Default Services, LLC (collectively "Defendants") for alleged irregularities in the processing and servicing of the loan he obtained to purchase a home in Los Altos, California.

Defendant Bank of America, N.A., and Wells Fargo Bank, N.A. (wrongly sued as Wells Fargo Bank Through Its Wholly Owned Subsidiary Wells Fargo Home Mortgage) filed a Motion to Dismiss, and Defendant NBS Default Services, LLC filed a Joinder to the Motion to Dismiss. The Court finds it appropriate to take the motion under submission for decision without oral argument pursuant to Civil Local Rule 7-1(b). Having considered the Defendants' Motion, Plaintiff's Reply and Defendants' Reply briefs, and for the reasons set forth below, the Court grants in part and denies in part Defendants' Motion to Dismiss.

II. BACKGROUND

On or about February 27, 2006, Plaintiff Mark Feathers ("Plaintiff") and non-party Natalie Feathers executed a Deed of Trust secured by a promissory note for $1.875 million dollars in favor of Wells Fargo Bank, N.A. in order to purchase certain real property located in Los Altos, California. See "Addenda to Amended Complaint," Docket Item No. 16, at Ex. A. Plaintiff alleges in a "Verified Amended Complaint for Damages" ("Amended Complaint") that he stopped making payments required by the Deed of Trust in July, 2012, after his business was placed into receivership and he and his spouse lost their income.

The receivership referenced by Plaintiff was ordered as part of another action pending in this Court, Securities and Exchange Commission v. Small Business Capital Corp., Case No. 5:12-cv-03237-EJD (the "SEC Action"), in which Plaintiff was named as a defendant. The stipulated order appointing the receiver, filed on July 10, 2012, included the following provision imposing an injunction ("the SEC Injunction"), among others:

Plaintiff alleges that Wells Fargo sold his loan to Bank of America after its origination, but still services the loan on behalf of Bank of America. Plaintiff alleges that he has applied to Wells Fargo several times for a loan modification, but has been unsuccessful. Plaintiff attributes this lack of progress to Wells Fargo's internal operations, which he alleges resulted in an ever-changing list of loan representatives assigned to his account.

A Notice of Trustee's Sale was recorded against the Los Altos property on December 30, 2015, which notified Plaintiff that a trustee's sale was scheduled for January 21, 2016. See Amended Complaint, Ex. 1. Plaintiff initiated this action against Defendants, the alleged current noteholder, loan servicer and trustee and asserts sixteen causes of action. Under the current state of the pleadings, federal jurisdiction arises pursuant to 28 U.S.C. § 1331.1

II. LEGAL STANDARDS

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) tests the legal sufficiency of claims alleged in the complaint. Parks Sch. of Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal "is proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The complaint "must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

Pro se pleadings must be construed liberally. Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). The Court "need not give a plaintiff the benefit of every conceivable doubt" but "is required only to draw every reasonable or warranted factual inference in the plaintiff's favor." McKinney v. De Bord, 507 F.2d 501, 504 (9th Cir. 1974). The Court "should use common sense in interpreting the frequently diffuse pleadings of pro se complainants." Id. A pro se complaint should not be dismissed unless the court finds it "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Haines v. Kerner, 404 U.S. 519, 521 (1972).

III. DISCUSSION

A. First Cause of Action for Violation of Injunction

In the First Cause of Action, Plaintiff alleges that Defendants violated the SEC Injunction which, as detailed above, contained a provision restraining Plaintiff's creditors from pursuing claims during the pendency of the receivership. Defendants contend that Plaintiff lacks standing to assert the First Cause of Action.

Standing to sue is a doctrine rooted in the Constitution that limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong. Spokeo, Inc. v. Robins, 578 U.S. __ (2016). There are three requirements for standing. Specifically, a plaintiff must allege: (1) that he suffered an injury in fact; (2) that the injury is fairly traceable to the challenged conduct of the defendant(s); and (3) that the injury is likely to be redressed by a favorable judicial decision. Id.

Plaintiff does not satisfy the requirements for standing to assert a claim for violation of the SEC Injunction. As the Court previously observed in the context of Plaintiff's request for injunctive relief, the purpose of the SEC Injunction was to preserve assets for the benefit of the injured investors, and not to protect Plaintiff. Thus, even assuming—without actually finding — that Defendants' actions violated the SEC Injunction, the investors, and not Plaintiff, were the injured parties with standing to seek redress. Therefore, the First Cause of Action is dismissed with prejudice.

B. Second Cause of Action for Violation of the Homeowner's Bill of Rights

In Plaintiff's Second Cause of Action, Plaintiff alleges that Defendants violated the Homeowner's Bill of Rights, citing to Cal. Civil Code §§2923.6(c) and 2923.7(a), (b)(1), (2) and (3), by proceeding with a trustee's sale while his application for a loan modification was pending; failing to provide a single point of contact and to provide one or more direct means of communications with the single point of contact; failing to provide current and timely information; and engaging in dual tracking. Plaintiff seeks damages, injunctive relief and attorney's fees and costs pursuant to Cal. Civil Code §2924. Defendants contend that Plaintiff has failed to state sufficient facts to support a claim under the Homeowner's Bill of Rights.

California Civil Code Section 2923.6(c), which provides protection against "dual tracking," states as follows:

Plaintiff alleges in his complaint that he submitted a "Making Home Affordable Program" application ("HAMP") in November of 2013 (Am. Compl., ¶16); that "Wells Fargo corresponded with [Plaintiff] `acknowledging documentation supporting your request for mortgage assistance' was received," and yet three weeks later, Wells Fargo filed a Notice of Trustee's Sale. Id. at ¶17.

Defendants, however, contend that Wells Fargo Bank had a Notice of Default and Election to Sell recorded against the Plaintiff's property on July 10, 2013 (Defs.' Req. for Judicial Notice, Ex. 6), after complying with the requisite notices and disclosures. Defendants acknowledge that Plaintiff was twice denied a request to modify his loan after the recording of the Notice of Default, but argue that the Homeowner's Bill of Rights does not permit an unending series of loan modification attempts after a loan has been reviewed and declined for a loan modification. See Cal. Civil Code §2923.6(g).

Construing the Amended Complaint liberally, and drawing every reasonable or warranted factual inference in Plaintiff's favor, the Court finds that Plaintiff's allegations are sufficient to state a claim under Section 2923.6(c). Plaintiff alleges that he submitted an application in November of 2013 (Amended Complaint, ¶17), and while that application was pending Wells Fargo filed a Notice of Trustee's Sale. Whether Section 2923.6(g) or the July 2013 Notice of Default and Election to Sell relieved Defendants of an obligation to complete an evaluation of Plaintiff's November 2013 application before filing the Notice of Trustee's Sale is a separate issue for a later stage in the proceedings. Accordingly, Defendants' motion to dismiss the Second Cause of Action is denied.

C. Third Cause of Action for Declaratory Relief

In the Third Cause of Action, Plaintiff alleges that real property is unique and that the legal remedy of money damages would be insufficient to compensate him if his home is taken from him. Plaintiff seeks immediate relief before he is deprived of his home by a foreclosure sale that was scheduled for January 21, 2016.

The Third Cause of Action fails to state a claim upon which relief may be granted. Plaintiff has not identified a legal controversy requiring a declaration of the parties' rights, nor the relief he is seeking. Accordingly the Claim is dismissed.

D. Fourth, Eleventh, Twelfth and Thirteenth Causes of Action for Fraud

Plaintiff alleges in the Fourth Cause of Action that Wells Fargo promised him consideration of his loan modification; that Wells Fargo never intended to perform, and failed to perform, on its promise; that Plaintiff relied on Wells Fargo's promise and was harmed. In the Eleventh Cause of Action, Plaintiff alleges that Defendants fraudulently concealed from him that he was not eligible for the HAMP program. In the Twelfth Cause of Action, Plaintiff alleges that Wells Fargo "made false statements of material facts that it knew to be false, and with the intent to induce [Plaintiff] to submit loan applications for the benefit of Wells Fargo while it collected heightened servicing fees while [Plaintiff's] loan was in non-conformance with the terms of [Plaintiff's] contract, and [Plaintiff[ has incurred damages due to that." Am. Compl., ¶75. In the Thirteenth Cause of Action, entitled "Scheme Exception," (sic), Plaintiff alleges that Wells Fargo, "at the time it made promises to [Plaintiff] to act in good faith with his loan modification request, it did not actually hold such intent to execute on its representations to [Plaintiff]," Id. at ¶77. Defendants contend that these various claims for fraud fail to meet the specificity requirement of Rule 9(b), Fed.R.Civ.P., and therefore should be dismissed.

Pursuant to Fed. R. of Civ. P. Rule 9(b), "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Claims of fraud must be "accompanied by the who, what, when, where, and how of the misconduct alleged." Cooper v. Pickett, 236 F.3d 1014, 1019 (9th Cir. 2001). The circumstances constituting the alleged fraud must be pled "specific[ally] enough to give defendants notice of the particular misconduct . . . so that they can defend against the charge and not just deny that they have done anything wrong." Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009).

In this case, Plaintiff has not satisfied the heightened pleading standard for fraud. For example, in the Fourth Cause of Action, Plaintiff does not identify who promised him consideration of his loan modification, what was specifically said or written, and when and where the promise was made. Similarly, in the Fifth Cause of Action, Plaintiff alleges that Defendants fraudulently concealed from him that he was not eligible for the HAMP program, but omits facts to establish the who, what, when, where and how. Accordingly, the Fourth, Eleventh, Twelfth and Thirteenth Causes of Action are dismissed with leave to amend.

C. Fifth Cause of Action for Negligence

Plaintiff alleges that Wells Fargo engaged in "internal negligence and failure to oversee its operations in a competent manner." Amended Complaint, ¶54. Defendants contend that this claim should be dismissed because there is no duty owed by a lender to its borrower as a matter of law.

Under California law, "as a general rule, a financial institution owes no duty of care to a borrower when the institution's involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money." Nymark v. Heart Fed. Sav. & Loan Assn., 231 Cal.App.3d 1089, 1095, 283 Cal.Rptr. 53, 56 (1991). The question of whether a lender owes a duty of care to a borrower-client is, however, subject to a balancing test of several factors set forth in Biakanja v. Irving, 49 Cal.2d 647, 320 P.2d 16 (1958). Id. These factors include: "The extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, and the policy of preventing future harm." Biakanja, 320 P.2d at 19.

Plaintiff's Fifth Cause of Action lacks sufficient facts to state a claim upon which relief may be granted. Plaintiff has not stated facts showing Defendants owed Plaintiff a duty, Defendants' failure to perform that duty, proximate cause or damages, all of which must be pled in order to state a claim. See Gilmore v. Wells Fargo Bank N.A., 75 F.Supp.3d 1255 (N.D. Cal. 2014) (Wells Fargo owed duty to process loan modification with reasonable care); Lueras v. BAC Home Loans Servicing, L.P., 221 Cal.App.4th 49, 62, 163 Cal.Rptr.3d 804, 816 (2013) (no common law duty of care to consider home modification); see also Alvarez v. BAC Home Loans Servicing, L.P., 228 Cal.App.4th 941, 176 Cal.Rptr.3d 304 (2014) (because "defendants allegedly agreed to consider modification of the plaintiffs' loans, the Biakanja factors clearly weigh in favor of a duty"); Cornejo v. Ocwen Loan Servicing, LLC, 151 F.Supp.3d 1102, 1116 (E. D. Cal. 2015). Without these basic facts, Plaintiff's negligence claim, as currently pled, is not cognizable. Accordingly, Plaintiff's Fifth Cause of Action is dismissed with leave to amend.

D. Sixth Cause of Action for Violation of 15 U.S.C. §1641(g)

In the Sixth Cause of Action, Plaintiff alleges that Defendants violated 15 U.S.C. §1641(g) by failing to send him notice of Wells Fargo's sale or transfer of his mortgage loan within 30 days. Defendants contend this claim must be dismissed because Plaintiff has not stated what was violated, how Plaintiff was harmed or what relief is requested. Moreover, Defendants contend that as the original lender, they were not obligated to send Plaintiff a notice of transfer pursuant to §1641.

15 U.S.C. §1641(g) requires "the new owner or assignee" of a mortgage loan to provide the mortgage borrower with written notice of the sale, transfer, or assignment in which the mortgage loan was acquired. The notice must be provided no later than 30 days after the date on which the mortgage loan is sold or otherwise transferred or assigned to the new owner. 15 U.S.C. §1641(g).

Although Plaintiff does not set forth any facts within the Sixth Cause of Action, the factual predicate for this Cause of Action appears to be set forth separately in paragraph 34 of the Amended Complaint, which states as follows:

These allegations are insufficient to state a claim against Wells Fargo because Bank of America, not Wells Fargo, is alleged to be the new owner or assignee of Plaintiff's loan. To the extent Plaintiff is seeking redress for the alleged §1641(g) violation against Bank of America, the claim is also deficient because Plaintiff has not set forth facts to establish an injury or loss caused by the alleged failure to provide notice of the loan assignment to Bank of America. Accordingly, the Sixth Cause of Action is dismissed with prejudice as to Defendant Wells Fargo, and dismissed with leave to amend as to Defendant Bank of America.

E. Seventh and Fifteenth Causes of Action for Violation of Fair Debt Collection Practices Act

In the Seventh Cause of Action, Plaintiff alleges violations of the Federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§1692 et seq., and in the Fifteenth Cause of Action, Plaintiff alleges violation of the state law counterpart to the FDCPA, the Rosenthal Act, Cal. Civ. Code §1788 et seq. Both statutes proscribe certain conduct in connection with debt collection. Defendants contend that the statutes are not applicable to foreclosure actions and that the two causes of action should therefore be dismissed.

Although the Ninth Circuit has not yet addressed whether a foreclosure action constitutes "debt collection" under the FDCPA, the vast majority of district courts within the Ninth Circuit have concluded that it does not. See e.g. Cromwell v. Deutsche Bank Nat. Trust Co., 2012 WL 244928 (N.D. Cal. 2012) ("FDCPA does not apply to the actions taken by lenders or their agents when foreclosing on the lender's security interest under a deed of trust, in a non-judicial foreclosure of property"); Garcia v. American Home Mortg. Servicing Inc., 2011 WL 6141047 (N.D. Cal. 2011) ("non-judicial foreclosure does not constitute `debt collection' as defined by the [FDCPA]"); Geist v. OneWest Bank, 2010 WL 4117504 (N.D. Cal. 2010) (same); Gamboa v. Tr. Corps, 2009 WL 656285, at *4 (N.D. Cal. 2009) (same).

Similarly, under California law, foreclosing on a deed of trust does not invoke the statutory protection of the Rosenthal Act. See Bhandari v. Capital One, N.A., 2013 WL 1736789 (N.D. Cal. 2013) (mortgage cannot constitute a debt within the meaning of the Rosenthal Act); Benham v. Aurora Loan Servs., 2009 WL 2880232 (N.D. Cal. 2009) (foreclosing on a property pursuant to a deed of trust is not the collection of a debt within the meaning of the Rosenthal Act).

Accordingly, Plaintiff's Seventh and Fifteenth Causes of Action are dismissed with prejudice.

F. Eighth Cause of Action for Violation of California Civil Code §2923.5

Plaintiff alleges that NBS and Wells Fargo violated California Civ. Code §2923.5 when they failed to provide him with a copy of an assignment note, failed to contact him from June 2015 to December of 2015 to forewarn him of their intention to foreclose and that he was no longer in consideration for a loan modification, and failed to advise his HD Certified counselor of their intent to foreclose. Defendants contend that the claim should be dismissed because the allegations in Plaintiff's Amended Complaint show that Defendants assessed and explored alternatives to foreclosure, in compliance with the statute.

California Civil Code Section 2923.5 provides that a mortgagee, trustee, beneficiary or authorized agent may not file a notice of default until both of the following: "(A) either 30 days after initial contact is made as required by paragraph (2) or 30 days after satisfying the due diligence requirement as described in subdivision (e). (B) The mortgage servicer complies with paragraph (1) of subdivision (a) of Section 2924.18." Cal. Civ. Code §2923.5. Paragraph (2) requires the following: "A mortgage servicer shall contact the borrower in person or by telephone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgage servicer shall advise the borrower that he or she has the right to request a subsequent meeting, and if requested, the mortgage servicer shall schedule the meeting to occur within 14 days. . . ." Id.

The Court finds that Plaintiff's Amended Complaint fails to set forth sufficient facts to support a claim for violation of Section 2923.5. In this case, the Notice of Default was recorded on July 10, 2013. Defs.' Req. for Judicial Notice, Ex. 6. It is unclear from Plaintiff's Amended Complaint whether Defendants made the requisite "initial contact" or satisfied the "due diligence" requirement prior to July 10, 2013. Instead, Plaintiff alleges that Defendants failed to contact him from June 2015 through December 2015, well after the Notice of Default had already been recorded. Accordingly, the Eighth Cause of Action is dismissed with leave to amend.

G. Ninth Cause of Action for Violation of California Civil Code §2924.17

Plaintiff's Amended Complaint contains two "Ninth Causes of Action." In the first, Plaintiff alleges a violation of California Civil Code §2924.7 based upon Defendants' alleged failure to ensure a competent and reliable review of their right to foreclose before filing a Notice of Trustee Sale. Defendants contend that this cause of action is deficient in that it is contradicted by Plaintiff's pleaded facts and is stated as a bare legal conclusion.

California Civil Code §2924.7 provides, in pertinent part, that before filing a notice of default, notice of sale, or assignment of a deed of trust, "a mortgage servicer shall ensure that it has reviewed competent and reliable evidence to substantiate the borrower's default and the right to foreclose, including the borrower's loan status and loan information."

The Court finds that Plaintiff's Amended Complaint fails to state a cause of action for violation of §2924.17. By his own admission, Plaintiff stopped making payments on his loan in early July 2012 (Am. Compl., ¶10), and was therefore in default. Accordingly, Plaintiff's cause of action for violation of §2924.17 is dismissed with leave to amend.

H. Second Ninth Cause of Action for Violation of California Civil Code §2937

In the second Ninth Cause of Action, Plaintiff alleges a violation of California Civil Code §2937 based upon defendants' alleged failure to inform him of the sale of his promissory note. Once again, Defendants contend that Plaintiff has not pled sufficient facts to support his claim.

Section 2937 requires a loan servicer to provide written notice before transferring servicing responsibilities to a new mortgage servicer. Cal. Civ. Code §2937. In order to state a claim for a violation of §2397, a plaintiff must allege that the harm he suffered resulted from that statutory violation. Paulhus v. Fay Servicing, LLC, 2014 WL 2453091 (E.D. Cal. 2014).

Plaintiff has not alleged facts to show he was injured by the alleged failure to give notice. Instead, Plaintiff asserts in conclusory terms that "has suffered exposure to irreparable harm including the possibility of a foreclosure on his residence." There are no facts to establish a causal link between the failure to provide notice and the "possibility of foreclosure." Accordingly, the claim for violation of §2937 is dismissed with leave to amend.

I. Tenth Cause of Action for Violation of Business & Professions Code §17200

In the Tenth Cause of Action, Plaintiff alleges that Defendants engaged in unfair business practices in violation of California Business & Professions Code §§17200 et seq. Defendants contend that Plaintiff has not alleged any unlawful, unfair or fraudulent conduct to support a claim for violation of §17200, or any basis for restitution.

The Court agrees. Plaintiff has not recited any facts in his Tenth Cause of Action, and accordingly the claim is dismissed with leave to amend.

J. Fourteenth Cause of Action for Breach of Contract

The Fourteenth Cause of Action is for breach of contract. Defendants contend that the claim fails because Plaintiff has not identified a contract or a violation.

Plaintiff has not recited any facts in support of his Fourteenth Cause of Action, and accordingly this Cause of Action is dismissed with leave to amend.

K. Sixteenth Cause of Action for Violation of the RESPA and Dodd-Frank

Plaintiff has not recited any facts in support of his Sixteenth Cause of Action for violation of the RESPA and Dodd-Frank. Plaintiff has not stated which provisions have been violated, by whom they were violated, or how he was damaged. Accordingly, the claim is dismissed with leave to amend.

IV. CONCLUSION

For the reasons set forth above, Defendants' motion to dismiss is granted in part and denied in part as follows:

1. The First, Third, Seventh and Fifteenth Causes of Action are dismissed with prejudice and may not be reasserted.

2. The Fourth, Fifth, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth, Fourteenth and Sixteenth Causes of Action for Fraud are dismissed with leave to amend.

3. Defendants' motion is denied with respect to the Second Cause of Action.

4. The Sixth Cause of Action is dismissed with prejudice as to Defendant Wells Fargo, and dismissed with leave to amend as to Defendant Bank of America.

Plaintiff shall file and serve a Second Amended Complaint consistent with this Order no later than August 19, 2017.

Further, the Court sets a Case Management Conference for September 28, 2017 at 10:00 a.m. Pursuant to Civil L.R. 16-9(a), the parties shall file and serve separate Case Management Statements no later than September 21, 2017.

IT IS SO ORDERED.