Daghlan v. TBI Mortgage Company et al

Filing 38

ORDER, Wells Fargo Bank, N.A.'s Motion to Dismiss Plaintiff's Second Amended Complaint 33 is granted; Plaintiff's Second Amended Complaint 32 is dismissed with prejudice for failure to state a claim upon which relief can be granted; the Clerk shall enter judgment dismissing this action with prejudice and shall terminate this case. Signed by Judge Neil V Wake on 4/8/13.(REW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Abraham Daghlan,

No. CV-12-01415-PHX-NVW
Plaintiff,

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vs.

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TBI Mortgage Company, et al.,

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ORDER

Defendant.
Before the Court is Wells Fargo Bank, N.A.’s Motion to Dismiss Plaintiff’s

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Second Amended Complaint (Doc. 33).

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I.

PROCEDURAL BACKGROUND

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This case was initially pled against Defendants Deutsche Bank National Trust

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Company, as Trustee for the RBSGC Mortgage Loan Trust Series 2007-B (“Deutsche”),

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Mortgage Electronic Registration Systems, Inc. (“MERS”), and TBI Mortgage Co.

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(“TBI”) in the Maricopa County Superior Court of the State of Arizona and subsequently

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removed to this Court. On August 22, 2012, Defendants’ motion to dismiss was granted,

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and Plaintiff was given leave to file an amended complaint.

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On September 7, 2012, Plaintiff filed his First Amended Verified Complaint,

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which added Defendants Wells Fargo Home Mortgage and Wells Fargo, N.A.

On

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January 17, 2013, the Court dismissed the First Amended Verified Complaint under Fed.

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R. Civ. P. 8(a) with leave to amend and ordered that no further leave to amend would be

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granted. On February 8, 2013, Plaintiff filed a Second Amended Complaint (Doc. 32)

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against only Wells Fargo Bank, N.A. (“Wells Fargo”).

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II.

LEGAL STANDARD

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On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), all

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allegations of material fact are assumed to be true and construed in the light most

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favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir.

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2009). To avoid dismissal, a complaint must contain “sufficient factual matter, accepted

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as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S.

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662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Id. The

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principle that a court accepts as true all of the allegations in a complaint does not apply to

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legal conclusions or conclusory factual allegations. Id.
Certain elements of fraud claims must satisfy a higher standard of pleading under

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the Federal Rules of Civil Procedure.

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knowledge, and other conditions of a person’s mind may be alleged generally, but the

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circumstances must be alleged with particularity. Fed. R. Civ. P. 9(b). Rule 9(b) requires

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allegations of fraud to be “specific enough to give defendants notice of the particular

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misconduct which is alleged to constitute the fraud charged so that they can defend

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against the charge and not just deny that they have done anything wrong.” Bly-Magee v.

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California, 236 F.3d 1014, 1019 (9th Cir. 2001). Plaintiffs alleging fraud “must state the

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time, place, and specific content of the false representations as well as the identities of the

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parties to the misrepresentations.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806

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F.2d 1393, 1401 (9th Cir. 1986); accord Odom v. Microsoft Corp., 486 F.3d 541, 553

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(9th Cir. 2007).

In alleging fraud or mistake, malice, intent,

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Generally, material beyond the pleadings may not be considered in deciding a

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Rule 12(b)(6) motion. However, material properly submitted as part of the complaint and

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documents not physically attached to the complaint whose contents are alleged in a

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complaint and whose authenticity no party questions may be considered. Branch v.

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Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith v.

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County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002).

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III.

FACTS ALLEGED IN PLAINTIFF’S SECOND AMENDED COMPLAINT

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On October 17, 2006, Plaintiff purchased a home at 31904 North 19th Avenue,

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Phoenix, Arizona. To purchase the home, he borrowed $764,150.00. The loan was

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secured by a Deed of Trust identifying the Lender as TBI Mortgage Company, the

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Trustee as Westminster Title Agency, and MERS as the beneficiary.

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In 2008, Plaintiff contacted Wells Fargo and requested a loan modification. Wells

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Fargo informed Plaintiff that he would not be considered for a loan modification unless

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he was at least 90 days past due in making his loan payments, and Plaintiff therefore did

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not make three monthly payments. Missing these payments adversely affected Plaintiff’s

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bond insurance for his work line of credit. In March 2009, Plaintiff paid a law center to

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assist him in obtaining a loan modification. Plaintiff does not allege that he made any

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payments in 2009.

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On February 19, 2010, Wells Fargo entered into a Loan Modification Agreement

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with Plaintiffs, which stated that it “amends and supplements (1) the Mortgage, Deed of

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Trust, or Security Deed (the “Security Instrument”) dated OCTOBER 17, 2006 and (2)

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the adjustable rate/fixed rate note (the “Note”), bearing the same date as, and secured by,

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the Security Instrument.” The Loan Modification Agreement stated that, as of January

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21, 2010, the unpaid principal balance was $841,693.59, and interest would be charged

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on the unpaid principal balance at the annual rate of 5.450% from January 21, 2010. It

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further stated, “Borrower promises to make monthly payments of interest of U.S.

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$3,822.69, beginning on 03/01/2010 until 02/01/2015; at which time the interest rate will

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be determined in accordance with the terms of the Note.” And: “In addition to monthly

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payments, Borrower shall make monthly escrow deposits as defined in the Note. Escrow

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deposit payments may be subject to change in the future.” The Loan Modification

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Agreement also stated that all rights and conditions in the Deed of Trust relating to

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default in the making of payments under the Deed of Trust applied to default in the

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making of the modified payments.

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After entering into the Loan Modification Agreement, Plaintiff made the following

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five payments to Wells Fargo: $4,400.00 on February 26, 2010; $4,487.06 on March 24,

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2010; $3,842.69 on April 28, 2010; $3,842.69 on May 27, 2010; and $3,822.69 on June

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29, 2010. Plaintiff does not allege that he made any additional escrow deposit payments.

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In June 2010, Plaintiff received a voice mail message from a representative of Wells

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Fargo, stating that the Loan Modification Agreement was being cancelled by Wells

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Fargo. At some point thereafter, Wells Fargo began sending Plaintiff statements that no

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longer reflected the modified terms.

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On October 27, 2010, Plaintiff signed a Forbearance Agreement that stated his

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loan was due for the April 1, 2009 payment. It also stated, “This is not a waiver of the

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accrued or future payments that become due, but a period for you to determine how you

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will be able to resolve your financial hardship.” It required Plaintiff to pay $1,493.00 for

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five months, November 10, 2010, through March 10, 2011, and then to pay $112,413.94

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on April 10, 2011. Plaintiff does not allege that he made any payments required under

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the Forbearance Agreement.
On April 3, 2012, a notice of trustee’s sale for Plaintiff’s home was recorded.

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Plaintiff does not allege that the home has been sold.

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IV.

ANALYSIS

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A.

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Count One alleges that Wells Fargo breached the Loan Modification Agreement

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by cancelling it and refusing to continue to accept modified payments. It further alleges

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that “Plaintiff performed under the modified terms, paying his timely full payment, and

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sometimes in excess of the required $3,822.69 monthly payment,” but payments of

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Count One (Breach of Contract)

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$3,822.69 do not include the required escrow deposits for property taxes and insurance.

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In fact, in a previous pleading, Plaintiff alleged that Wells Fargo “put force place

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insurance on his home.”

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Further, Plaintiff alleges he received notice of the cancellation by a voicemail

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message in June 2010, but does not allege receiving written notice as required by the

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Deed of Trust before he stopped making payments. The Second Amended Complaint

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does not allege when Plaintiff began receiving statements requesting payments in the

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amounts required before the Loan Modification Agreement was executed, but as pled, it

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appears that he did not comply with the terms of the Loan Modification Agreement

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before June 2010 and did not make any payment after June 29, 2010. Receiving a

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voicemail would not be sufficient to cancel the Loan Modification Agreement, but even if

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it were, Plaintiff would have been required to make payments required under the Deed of

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Trust.

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On November 2, 2010, Plaintiff signed a Forbearance Agreement, which the Court

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can consider because Plaintiff referenced it in and attached it to the First Amended

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Complaint and its authenticity is not disputed.

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Forbearance Agreement abrogated and discharged the Loan Modification Agreement, but

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it makes no difference because, as alleged, Plaintiff did not make any payments from July

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2010 through October 2010 and was in default.

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The parties dispute whether the

Therefore, Count One will be dismissed because it fails to state a claim upon
which relief can be granted.

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B.

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Count Two alleges that Wells Fargo breached the covenant of good faith and fair

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dealing implied in the Loan Modification Agreement by failing to tell Plaintiff it planned

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to breach it. It also alleges that Wells Fargo misled Plaintiff regarding its authority to

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enter into the Loan Modification Agreement, but it does not allege that the

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Count Two (Breach of the Covenant of Good Faith and Fair Dealing)

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misrepresentation caused any injury. It does not allege that Wells Fargo’s authority had

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any relationship to cancellation of the Loan Modification Agreement. Plaintiff’s alleged

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facts show that his actions led to the cancellation.

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Moreover, it is not plausible that Wells Fargo would enter into a Loan

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Modification Agreement with the intent to breach it. Plaintiff was already in default, and

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Wells Fargo could have noticed a trustee’s sale without pretense.

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Therefore, Count Two will be dismissed because it fails to state a claim upon
which relief can be granted.

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C.

Count Three (Fraud/False Representation)

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Count Three alleges that Wells Fargo falsely represented that it “had the authority

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and the willingness to perform a permanent modification of Daghlan’s loan.” But the

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Loan Modification Agreement expressly does not provide a permanent modification. It

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provided a reduced payment schedule for March 1, 2010, through February 1, 2015, after

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which the interest rate and amount of monthly payments could change in accordance with

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the terms of the Note. Moreover, the Second Amended Complaint does not allege that

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the Loan Modification Agreement was cancelled because Wells Fargo lacked authority to

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execute it. Thus, any misrepresentations regarding Wells Fargo’s authority did not cause

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Plaintiff’s alleged damages.

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Count Three also alleges that Plaintiff relied on Wells Fargo’s false

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representations by making five monthly payments based on the Loan Modification

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Agreement—in amounts less than required by the Deed of Trust. He does not allege that,

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but for entering into the Loan Modification Agreement, he would not have made any

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payments.

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Agreement, he could and would have paid all of the arrearages accrued before February

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2010 and he could and would have made the monthly payments required by the Deed of

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Trust, thereby avoiding late fees, credit damage, loss of equity, overdraft fees, etc.

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Nor does he allege that, but for entering into the Loan Modification

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Rather, the Second Amended Complaint expressly alleges that Plaintiff requested a loan

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modification “stressing financial hardship.”
Therefore, Count Three fails to state a claim upon which relief can be granted.

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V.

LEAVE TO AMEND

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Although leave to amend should be freely given “when justice so requires,” Fed.

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R. Civ. P. 15(a)(2), the Court has “especially broad” discretion to deny leave to amend

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where the plaintiff already has had one or more opportunities to amend a complaint.

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Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1161 (9th Cir. 1989). “Leave to

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amend need not be given if a complaint, as amended, is subject to dismissal.” Moore v.

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Kayport Package Exp., Inc., 885 F.2d 531, 538 (9th Cir. 1989).

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unsuccessfully amended his complaint twice and will not be granted leave for further

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amendment.

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Plaintiff has

IT IS THEREFORE ORDERED that Wells Fargo Bank, N.A.’s Motion to Dismiss
Plaintiff’s Second Amended Complaint (Doc. 33) is granted.

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IT IS FURTHER ORDERED that Plaintiff’s Second Amended Complaint (Doc.

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32) is dismissed with prejudice for failure to state a claim upon which relief can be

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granted.

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IT IS FURTHER ORDERED that the Clerk shall enter judgment dismissing this
action with prejudice and shall terminate this case.
Dated this 8th day of April, 2013.

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