Donald A Trepany v. Deutsche Bank National Trust Company et al

Filing 26

MINUTES [In Chambers] Order GRANTING Defendants' Motion to Dismiss (Dkt. No. 17) by Judge Andre Birotte, Jr: the Court GRANTS Defendants' Motion to Dismiss. (Dkt. No. 17 ). Plaintiff's first cause of action is dismissed with prejudice . Plaintiff's second through sixth causes of action are dismissed without prejudice. Because the Court is dismissing Plaintiff's first amended complaint in its entirety, Defendants' motion to strike is DENIED as moot. Plaintiff has fou rteen (14) days from the day of this Order to file an amended complaint. Failure to file an amended complaint by the deadline will render this Order a dismissal of the action with prejudice and full adjudication on the merits of Plaintiff's claims against the moving Defendants. The Scheduling Conference set for 8/17/2015 is hereby VACATED. IT IS SO ORDERED. (jp)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

Case No.: CV 15-00965-AB (Ex)
Title:

Date:

July 23, 2015

Donald A. Trepany v. Deutsche Bank National Trust Co., et al.

Present: The Honorable

ANDRÉ BIROTTE JR.

Carla Badirian
Deputy Clerk

N/A
Court Reporter

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None Appearing

None Appearing

Proceedings:

[In Chambers] Order GRANTING Defendants’ Motion to
Dismiss (Dkt. No. 17)

Pending before the Court is Deutsche Bank National Trust Company, as Trustee for
IndyMac Indx Mortgage Loan Trust 2006-AR29; OneWest Bank, FSB; and Ocwen Loan
Servicing, LLC’s (collectively “Defendants”) motion to dismiss Plaintiff Donald A.
Trepany’s first amended complaint. (Dkt. No. 17.) Plaintiff filed an opposition brief
(Dkt. No. 21), and Defendant filed a reply brief. (Dkt. No. 22.) On July 17, 2015, the
Court deemed this matter appropriate for decision without oral argument, and the matter
was taken under submission. (Dkt. No. 25.) Having considered the materials
submitted, and for the reasons indicated below, the Court GRANTS Defendants’ motion to
dismiss. Plaintiff’s first cause of action is dismissed with prejudice. Plaintiff’s second
through and sixth causes of action are dismissed without prejudice.

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I.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff’s allegations are as follows. On August 21, 2006, Plaintiff took out a
loan for $664,000.00 and executed a note in favor of PHH Home Loans LLC dba First
Capital (“First Capital”) for the purchase of the real property located at 6077 West 75th
Place, Los Angeles, CA 90045 (“Subject Property”). (Dkt. No. 18 (“RJN”), Ex. 1; Dkt.
No. 7, First Am. Compl. (“FAC”), ¶ 18.) Plaintiff also executed a deed of trust, which
secured the loan and encumbered the property, in favor of Fidelity National Title
Company (“Fidelity National”) as trustee. (Id.)
On August 29, 2006, First Capital recorded an Assignment of Deed of Trust,
assigning the beneficial interest on Plaintiff’s loan to Mortgage Electronic Registration
Systems, Inc. (“MERS”). (RJN, Ex. 2; FAC, ¶ 19.) On January 30, 2013, MERS
recorded an Assignment of Deed of Trust, assigning the beneficial interest of Plaintiff’s
loan from MERS to Deutsche Bank National Trust Company, as Trustee for IndyMac
Indx Mortgage Loan Trust 2006-AR29 (“Deutsche Bank”). (RJN, Ex. 3; FAC, ¶¶ 13,
20.) On April 10, 2013, Deutsche Bank and Onewest recorded a Substitution of
Trustee, substituting Aztec Foreclosure Corporation as the foreclosure trustee for
Plaintiff’s deed of trust. (RJN, Ex. 4; FAC, ¶ 27.) No Substitution of Trustee was
filed substituting Aztec Foreclosure Corporation (or any other entity) in lieu of Fidelity
National, and Plaintiff asserts that Fidelity was and remains the only legal beneficiary of
the deed of trust. (Id. at ¶ 39.) On November 10, 2014, Deutsche Bank and Ocwen
Loan Servicing, LLC (“Ocwen”) – the mortgage servicer for Plaintiff’s loan – recorded
another Substitution of Trustee, substituting Western Progressive LLC as the foreclosure
trustee for Plaintiff’s deed of trust. (RJN, 5; FAC, ¶¶ 14, 28.)
As of November 15, 2014, Plaintiff had past due payments plus permitted costs
and expenses in the amount of $144,679.57. (RJN, Ex. 6, p. 2.) On November 26,
2014, Ocwen recorded a Notice of Default (“NOD”). (RJN, Ex. 6; FAC ¶ 29.) Ocwen
attached to the NOD a declaration that it complied with the due diligence requirements
provided under California Civil Code section 2923.55(f), but nonetheless it was unable to
contact Plaintiff to discuss foreclosure avoidance options with him and provide him with
the required disclosures. (RJN, Ex. 6, p. 5; FAC, ¶ 35.) Plaintiff asserts that Ocwen
did not comply with the due diligence requirements of section 2923.55(f) “prior to 30
days before recording the Notice of Default, as this statute requires,” and “although []
Ocwen had the ability to, and could have provided the statutorily required information to
Plaintiff, it did not.” (FAC, ¶¶ 36-37.) On April 13, 2014, a Notice of Trustee’s Sale
was recorded, informing Plaintiff that he was in default, that his property may be sold at a
public sale, and that the amount of unpaid balance and other charges on the Subject
Property was $784,200.08. (RJN, Ex. 7, p. 2.)

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On February 10, 2015, Plaintiff, as pro se attorney of record, filed an initial
complaint against Deutsche Bank and others, alleging various causes of action related to
his mortgage and the recorded notice of default. (Dkt. No. 1.) Plaintiff then retained
private counsel, and on April 13, 2015, Plaintiff filed a first amended complaint against
Defendants alleging claims for violations of the Homeowners’ Bill of Rights (“HBOR”),
namely California Civil Code §§ 2924(a)(6), 2924.17(b), and 2923.55; slander of title;
negligence and negligence per se; and violations of the California unfair competition law
(“UCL”). (See generally FAC.)
On May 12, 2015, Plaintiff filed an ex parte application for a temporary restraining
order (“TRO”) and an order to show cause re preliminary injunction to enjoin the May
18, 2015 foreclosure sale of the Subject Property. (Dkt. No. 12.) On May 13, 2015,
the Court denied Plaintiff’s ex parte application for a TRO on the grounds that Plaintiff
failed to establish a likelihood of success on the merits or that the balance of hardships
tipped sharply in his favor. (Dkt. No. 13.) Pending before this Court is Defendants’
motion to dismiss Plaintiff’s first amended complaint. (Dkt. No. 17.) Plaintiff filed an
opposition brief (Dkt. No. 22), and Defendants filed a reply brief. (Dkt. No. 23.)
II.

LEGAL STANDARD

Federal Rule of Civil Procedure (“Rule”) 8 requires a “short and plain statement of
the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The
statement must provide enough detail to “give the defendant fair notice of what the . . .
claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007). While Rule 8 does not require “detailed factual allegations,” it does
demand more than “an unadorned, the-defendant-unlawfully-harmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Under Rule 12, a defendant may move to dismiss a pleading for “failure to state a
claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). When ruling on the
motion, “a judge must accept as true all of the factual allegations contained in the
complaint,” Erickson v. Pardus, 551 U.S. 89, 94 (2007), but is “not bound to accept as
true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (internal
quotation marks omitted). To survive a motion to dismiss, a complaint must contain
“sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its
face.” Id. A Rule 12(b)(6) dismissal is proper only where there is either a “lack of a
cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable
legal theory.” Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988);
accord Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 248 (9th Cir. 1997) (“A complaint
should not be dismissed ‘unless it appears beyond doubt that the plaintiff can prove no set
of facts in support of his claim which would entitle him to relief.’”).

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III.

DISCUSSION
A. Judicial Notice is Proper

Defendants ask the Court to take judicial notice of seven documents: (1) a Deed of
Trust recorded on August 29, 2006; (2) an Assignment of Deed of Trust recorded on
August 29, 2006; (3) a California Assignment of Deed of Trust recorded January 30,
2013; (4) a Substitution of Trustee recorded on April 10, 2013; (5) a Substitution of
Trustee recorded on November 10, 2014; (6) a Notice of Default and Election to Sell
Under Deed of Trust recorded November 26, 2014; and (7) a Notice of Trustee’s Sale
recorded on April 13, 2015. (RJN, Ex. 1-7.) Plaintiff does not oppose the request for
judicial notice of these documents.
Ordinarily, a court may look only at the face of the complaint to decide a motion to
dismiss. Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002).
“When ruling on a Rule 12(b)(6) motion to dismiss, if a district court considers evidence
outside the pleadings, it must normally convert the 12(b)(6) motion into a Rule 56 motion
for summary judgment.” United States v. Ritchie, 342 F.3d at 907. But “[u]nder the
‘incorporation by reference’ doctrine in this Circuit, a court may look beyond the
pleadings without converting the Rule 12(b)(6) motion into one for summary judgment”
under certain circumstances. Davis v. HSBC Bank Nevada, N.A., 691 F.3d 1152, 1160
(9th Cir. 2012) (internal quotes omitted). Specifically, “[e]ven if a document is not
attached to a complaint, it may be incorporated by reference into a complaint if the
plaintiff refers extensively to the document or the document forms the basis of the
plaintiff’s claim.” United States v. Ritchie, 342 F.3d at 908; see e.g., Lynch v. RKS
Mortgage, Inc., 588 F. Supp. 2d 1254, 1256 n. 2 (E.D.Cal.2008) (granting defendant
banks’ request for judicial notice of loan documents when plaintiff homeowner had not
challenged the documents’ authenticity and had referred to them throughout his
complaint). A court “may treat such a document as part of the complaint, and thus may
assume that its contents are true for purposes of a motion to dismiss under Rule
12(b)(6).” Id. Additionally, judicial notice may be taken of a fact “not subject to
reasonable dispute in that it is capable of accurate and ready determination by resort to
sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201. As such,
a court may take judicial notice of matters of public record. See e.g., Santa Monica Food
Not Bombs v. City of Santa Monica, 450 F.3d 1022, 1025 (9th Cir. 2006) (taking judicial
notice of documents on file with the City Clerk of the City of Santa Monica and those
accessible on Santa Monica’s official website).
In his First Amended Complaint, Plaintiff refers to the first six documents and
relies on them extensively as the basis for all of his claims. (FAC, ¶¶ 18-29.) While
Plaintiff does not refer specifically to the Notice of Trustee’s Sale document, he does
refer to a “trustee’s sale,” the “power of sale,” and the “sale of the Subject Property.” (Id.
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at ¶¶ 34, 38, 41, 53, 59.) The referenced “sale” is documented in the Notice of Trustee’s
Sale. (RJN, Ex. 7.) Each document was recorded in the Los Angeles County
Recorder’s Office. (RJN, Ex. 1-7.) Because judicial notice may be taken of public
records, see Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001), and Plaintiff has
extensively referred to these documents in his operative complaint, Defendants’
unopposed request for judicial notice is GRANTED.
B. Wrongful Foreclosure (First Cause of Action)
Plaintiff alleges that, pursuant to California Civil Code section 2924, Defendants
were precluded from initiating the foreclosure process because they were not the holder
of the beneficial interest under the deed of trust, the original or the substituted trustee
under the deed of trust, or the designated agent of the holder of the beneficial interest.
(FAC, ¶ 47.) Specifically, Plaintiff alleges that the 2013 and 2014 deed of trust
assignments and substitutions are void because they occurred in contravention to the
governing Pooling Servicing Agreement (“PSA”). (FAC, ¶ 23.) The PSA provided
that the deadline to transfer mortgage loans into the Trust was September 28, 2006.
(Id.) Plaintiff argues that because the assignments and substitutions were executed
passed this deadline, they are void. (Id. at 26.)
Under California Civil Code section 2924, “[n]o entity shall record or cause a notice
of default to be recorded or otherwise initiate the foreclosure process unless it is the holder
of the beneficial interest under the mortgage or deed of trust, the original trustee or the
substituted trustee under the deed of trust, or the designated agent of the holder of the
beneficial interest.” Cal. Civ. Code § 2924(6). However, the Note and Deed of Trust
may be assigned to third-parties without changing Plaintiff’s fundamental duty to repay
the loan. Cal. Civ. Code § 2934.
Defendants contend that no cause of action exists to challenge their authority to
foreclose on the Subject Property. Defendants rely on Gomes v. Countrywide Home
Loans, Inc., 192 Cal. App. 4th 1149, 121 Cal. Rptr. 3d 819 (2011). In Gomes, the
plaintiff alleged that the entity that initiated the nonjudicial foreclosure process did not
have authority to do so because (1) the entity was not the owner of the promissory note
that was secured by the deed of trust, and (2) the entity was not an authorized agent of the
owner of the promissory note. Id. at 1152. The court rejected the plaintiff’s argument,
holding that nothing in California’s statutory scheme governing the nonjudicial
foreclosure process allows such a preemptive action, and allowing a trustor-debtor to
pursue such an action, absent a “specific factual basis for alleging that the foreclosure was
not initiated by the correct party,” would unnecessarily require the courts to interject into
an otherwise comprehensive nonjudicial scheme. Id. at 1154-56 (citing three federal
district court cases where the courts held that the plaintiff did identify a sufficient factual
basis).
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Plaintiff argues that he has alleged a sufficient factual basis for why the foreclosing
party lacks the requisite authority – i.e., the 2013 and 2014 deed of trust assignments and
substitutions occurred in violation of the governing PSA’s deadline to transfer Plaintiff’s
loan – and therefore Gomes does not apply. (Dkt. No. 21, p. 7.) Even assuming this was
a sufficient factual basis to allow Plaintiff to bring a cause of action challenging
Defendants’ authority to foreclose on the Subject Property,1 Plaintiff still fails to state a
claim for wrongful foreclosure because he lacks standing to challenge the alleged flaws in
the securitization of the loan, including the PSA, because he is not an investor of the loan.
(Dkt. No. 17, p. 6.) A majority of California courts (including federal courts applying
California state foreclosure law) have held that a plaintiff lacks standing to challenge a
securitization that is noncompliant with a PSA where the plaintiff is not a party or a
third-party beneficiary to the PSA. See, e.g., Jenkins v. JP Morgan Chase Bank, N.A.,
216 Cal. App. 4th 497, 156 Cal. Rptr. 3d 912 (2013) (affirming the superior court’s
sustaining of defendant’s demurrer with prejudice, and holding that the plaintiff lacked
standing to enforce provisions of a pooling and servicing agreement); Dahnken v. Wells
Fargo Bank, N.A., 2013 WL 5979356, at *2 (N.D. Cal. Nov. 8, 2013) (recognizing the
majority position as that “plaintiffs lack standing to challenge noncompliance with a PSA
in securitization unless they are parties to the PSA or third party beneficiaries of the
PSA”); Newman v. Bank of N.Y. Mellon, 2013 U.S. Dist. LEXIS 52487, *8, 2013 WL
1499490 (E.D. Cal. Apr. 11, 2013) (“A majority of district courts have held that
mortgagees like Newman who are not parties to a PSA do not have standing to raise
violations of a PSA or to otherwise bring claims on the basis that a PSA was violated.”);
Armeni v. America’s Wholesale Lender, 2012 WL 253967, at *2 (C.D. Cal. Jan. 25,
2012) (granting defendant’s motion to dismiss and dismissing with prejudice plaintiff’s
claims that the foreclosure was conducted in violation of a trust agreement on the grounds
that the plaintiff, who was not a party to the agreement, lacked standing to challenge such
an agreement); Bascos v. Federal Home Loan Mortg. Corp., 2011 WL 3157063, at *6
(C.D. Cal. July 22, 2011) (“To the extent Plaintiff challenges the securitization of his loan
because Freddie Mac failed to comply with the terms of its securitization agreement,
Plaintiff has no standing to challenge the validity of the securitization of the loan as he is
not an investor of the loan trust.”).
The majority position regarding standing makes sense. Here, as in most
mortgage-foreclosure cases, the Plaintiff’s claimed injury is the impending foreclosure
sale. When that happens (if it has not already happened), the foreclosure sale will have
occurred as a result of Plaintiff’s default on his loan, and Plaintiff’s default would have
occurred regardless of what entity assigned and/or substituted the deed of trust and when
the assignments and substitutions were effected (whether before or after the PSA deadline
for doing so). Even if the 2013 and 2014 deed of trust assignments and substitutions
1

The Court makes no finding on that issue, one way or another.

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were invalid, Plaintiff “is not the victim of such invalid transfers because [his] obligations
under the note remained unchanged.”
Apostol v. CitiMortgage, Inc., No.
13-CV-01983-WHO, 2013 WL 6328256, at *6 (N.D. Cal. Nov. 21, 2013). Additionally,
to recover on wrongful foreclosure claim, a borrower must demonstrate that the alleged
imperfection in the foreclosure process was prejudicial. See, e.g., Siliga v. Mortg. Elec.
Reg. Sys., Inc., 219 Cal. App. 4th 75, 87, 161 Cal. Rptr. 3d 500 (2013) (“Absent any
prejudice, the [plaintiffs] have no standing to complain about any alleged lack of authority
or defective assignment.”). However, no prejudice exists where a borrower was in default
and the assignment of the loan did not interfere with the borrower’s ability to pay. See,
e.g., Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256, 272, 129 Cal. Rptr. 3d
467 (2011) (“We also note a plaintiff in a suit for wrongful foreclosure has generally been
required to demonstrate the alleged imperfection in the foreclosure process was prejudicial
to the plaintiff’s interests . . . Prejudice is not presumed from ‘mere irregularities’ in the
process.”); Simmons v. Aurora Bank, FSB, 5:13–CV–00482 HRL, 2013 WL 5508136, *2
(N.D.Cal. Sept. 30, 2013) (“Even if there were some defect in the assignment of the deed of
trust, that assignment would not have changed plaintiff's payment obligations.”). Plaintiff
argues he suffered prejudice because the foreclosure decreases the value and marketability
of the Subject Property. (Dkt. No. 21, p. 4.) Plaintiff’s argument is unpersuasive. This
purported prejudice would have occurred regardless of who held the beneficial interest in
the Subject Property because, as stated above, the impending foreclosure is the result of
Plaintiff’s default. (RJN, Ex. 6, p. 2.) Plaintiff further contends that he has been
prejudiced by the broken chain of title which resulted in undefined property boundaries and
difficulty for prospective buyers in obtaining title insurance. However, as discussed
above, Plaintiff’s only challenge to the chain of title stems from the alleged violation of the
PSA, which Plaintiff has no standing to challenge.
Plaintiff urges the Court to adopt a minority view adopted by a single California
appellate court, Glaski v. Bank of America, National Association, 218 Cal. App. 4th 1079,
1097, 160 Cal. Rptr. 3d 449 (2013), which held that alleged violations of the PSA were
sufficient to allege a claim that the subsequent transfers of the Deed of Trust were void.
(Dkt. No. 21, p. 8.) Glaski, however, has been repeatedly criticized by numerous other
California appellate courts and federal courts considering the issue. See Mendoza v.
JPMorgan Chase Bank, N.A., 228 Cal.App.4th 1020, 1034, 175 Cal. Rptr. 3d 880 (2014)
(collecting cases and stating that the Court “can find no state or federal cases to support
the Glaski analysis and will follow the federal lead in rejecting this minority holding”).
As such, the Court decline to adopt this minority view.
Plaintiff’s only basis for why the 2013 and 2014 assignments and substitutions are
void is that they allegedly violated the PSA. Thus, the Court finds that, consistent with the
weight of California and federal court authority on the issue, Plaintiff lacks standing to
challenge alleged flaws in the securitization of his loan based on the violation of the PSA.

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Accordingly, the Court GRANTS Defendants’ motion to dismiss the first cause of action.
Because Plaintiff could not plausibly allege the necessary standing and prejudice even if
given the chance to amend, the Court dismisses the cause of action with prejudice.
C. Recording Inaccurate Title Documents (Second Cause of Action)
Plaintiff alleges that the Assignment of Deed of Trust, Substitutions of Trustee, and
the Notice of Default recorded by Defendant contain false representations on title to the
Subject Property in violation of California Civil Code section 2924.17(b). (FAC, ¶
50-52.) Defendants contend that Plaintiff’s allegations are conclusory and should be
dismissed. (Dkt. No. 17, p. 8.)
Under Civil Code section 2429.17(b), a mortgage servicer, before recording a
notice of default, “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.” Section 2429.17(b) is designed to prevent
“robo-signing,” which “occurs when persons sign a document without personal
knowledge of the content attested to therein and/or sign the documents without the
requisite authority to do so.” Mann v. Bank of Am., N.A., 2014 WL 495617, at *6 (C.D.
Cal. Feb. 3, 2014). California courts routinely dismiss claims based on allegations of
robo-signing when irregularities in the signing or assignment of the security interests do
not prejudice the borrower. See, e.g., Pedersen v. Greenpoint Mortg. Funding, Inc., 900
F.Supp.2d 1071, 1083 (E.D. Cal. 2012). This is because in the case of default, “[t]he
foreclosure would occur regardless of what entity was named as trustee, and so [the
borrower] suffered no injury” as a result of the robo-signing. Javaheri v. JPMorgan
Chase Bank, 2012 WL 3426278, at *6 (C.D. Cal. 2012).
Plaintiff fails to state a cause of action under section 2924.17(b) because he only
generally alleges a violation of the code section (see FAC, ¶¶ 49-53), and he provides no
allegation that permits an inference that Defendants engaged in robo-signing or that such
robo-signing prejudiced him. Additionally, this claim fails because it is based solely on
Plaintiff’s contention that Defendants have no right to foreclose based on the alleged
violation of the PSA. As indicated above, that argument has already been rejected.
Plaintiff thus fails to state a cause of action for violation of Civil Code section 2924.17(b).
See Pugh v. J.P. Morgan Chase Bank, N.A., No. 2:13-CV-01141-MCE, 2013 WL
5739147, at *4-5 (E.D. Cal. Oct. 22, 2013) (holding that a claim for violation of section
2924.17 fails because it is based solely on plaintiffs’ rejected contention that defendants
have no interest or right to foreclose). Accordingly, Defendants’ motion to dismiss
Plaintiff’s second cause of action is GRANTED. Because it is possible for Plaintiff to
allege additional facts that would plausible allege that Defendants engaged in robo-signing
and that it caused him prejudice, Plaintiff’s second cause of action for violation of section
2927.17 is dismissed without prejudice.
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D. Failure to Explore Foreclosure Avoidance (Third Cause of Action)
Plaintiff contends that Defendants failed to comply with Civil Code section 2923.55
before recording a Notice of Default (“NOD”) on title to the Subject Property. (FAC,
¶ 58.) Defendants contend that the Declaration of Compliance on the NOD satisfies the
due diligence requirements of section 2923.55. (Dkt. No. 17, p. 8; RJN, Ex. 6, p. 5.)
Civil Code section 2923.55 precludes a trustee from recording a NOD until 30
days after the loan servicer has made initial contact with the borrower to assess the
borrower’s financial situation, explore options for avoiding foreclosure, and provide
additional information, i.e., advise the borrower of the right to request a subsequent
meeting and provide the toll-free number made available by the United States
Department of Housing and Urban Development (“HUD”) to find a HUD-certified
housing counseling agency; or until 30 days after the loan servicer has satisfied the due
diligence requirements provided under section 2923.55(f). Due diligence requires
sending a letter by first-class mail, making three attempts to contact the borrower by
telephone, and sending a certified letter if no response is received within two weeks of
the telephone attempts. Cal. Civ. Code § 2923.55(f). Section 2923.55 also requires
that any NOD include a Declaration of Compliance which states that the mortgage
servicer has contacted the borrower, or has complied with the due diligence requirements.
Defendant Ocwen attached to the NOD a declaration that it satisfied the due
diligence requirements of section 2923.55(f) but was unable to contact Plaintiff. (RJN,
Ex. 6, p. 5; FAC, ¶ 35.) Plaintiff alleges that Ocwen did not comply with the due
diligence requirements of section 2923.55(f) (FAC, ¶ 36), but his allegations are so
generally stated that they fail to state a plausible claim for which relief can be granted.
Plaintiff’s FAC provides a detailed account of section 2923.55’s notice and due diligence
requirements (see FAC, ¶¶ 32-34; 55-56), but then states only that although Ocwen had
the ability to, and could have provided the statutorily required information to Plaintiff, it
did not. (FAC, ¶ 37.) Plaintiff echoed these general allegations in his opposition brief.
(Dkt. No. 21, p. 3.) Plaintiff also argues that, if given leave to amend, he could allege
that he would have called HUD if he had known that free counseling was available
through HUD. (Dkt. No. 21, p. 5.) This however, does not negate the possibility that
Defendants attempted to reach Plaintiff by telephone three times or that they sent him a
first-class or certified letter in compliance with section 2923.55’s requirements.
The Court is persuaded by the fact that other courts, in analogous contexts, have
held that a declaration attached to the NOD is sufficient to satisfy a defendant’s
obligations under California laws that require lenders to contact borrowers. The
declaration is sufficient to establish that Defendants have met their obligations under
section 2923.55. See, e.g., Kamp v. Aurora Loan Servs., 2009 WL 3177636 *2 (C.D.
Cal. Oct. 1, 2009) (“ [T]he Kamps’ claim fails because their conclusory assertions are
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contradicted by the notice of default attached as Exhibit A, which includes the declaration
required by § 2923.5.”); Juarez v. Wells Fargo Bank, N.A., 2009 WL 3806325 *2 (C.D.
Cal Nov. 11, 2009) (dismissing § 2923.5 claim with prejudice where declaration was
included with the notice of default stating compliance with code section).
Plaintiff has failed to allege that, notwithstanding Defendants’ declaration of
compliance attached to the NOD, Defendants failed to comply with the requirements
of section 2923.5. Accordingly, Defendants’ motion to dismiss Plaintiff’s claim for
violation of section 2923.55 is GRANTED. Because it is possible for Plaintiff to allege
additional facts to state a plausible claim for violation of section 2923.55, Plaintiff’s third
cause of action is dismissed without prejudice.
E. Slander of Title (Fourth Cause of Action)
Plaintiff alleges that the Assignment of Deed of Trust, Substitutions of Trustee, and
Notice of Default contain false representations and were recorded with malice or a lack of
reasonable grounds to believe in the instruments’ truth (FAC, ¶¶ 61-62) and without
privilege (Id. at ¶ 64). Defendants contend that Plaintiff has failed to plead any facts to
establish any of the elements of slander and that the documents in question are subject to a
qualified privilege. (Dkt. No. 17, p. 6.)
A cause of action for slander of title requires: “(1) a publication, which is (2) without
privilege or justification, (3) [that is] false, and (4) causes pecuniary loss.” La Jolla Grp.
II v. Bruce, 211 Cal. App. 4th 461, 149 Cal. Rptr. 3d 716 (2012) (emphasis in original).
California’s nonjudicial foreclosure statute – codified at Civil Code section 2924, et seq. –
“deems the statutorily required mailing, publication, and delivery of notices in nonjudicial
foreclosure, and the performance of statutory nonjudicial foreclosure procedures, to be
privileged communications under the qualified common interest privilege of [Civil Code]
section 47(c)(1).” Kachlon v. Markowitz, 168 Cal. App. 4th 316, 325, 85 Cal. Rptr. 3d
532 (2008). Privilege applies to “a communication, without malice, to a person interested
therein . . . by one who is also interested.” Civil Code § 47(c). Privileged does not apply
to a communication with malice. Kachlon, 168 Cal. App. 4th at 345.
Plaintiff baldly asserts that the documents were not privileged. (FAC, ¶ 64.)
Plaintiff further alleges that the NOD, assignment, and substitutions, are false and were
intended to create a false paper trail to allow Defendants to initiate foreclosure procedures
even though they lacked authorization to do so. (Dkt. No. 21, p. 3.) However, Plaintiff’s
FAC fails to provide a plausible factual basis as to why these documents are without
privilege. The documents in question were published in accordance with nonjudicial
foreclosure proceedings, which are subject to qualified privilege pursuant to Civil Code
section 2924, et seq. Consequently, Plaintiff must assert a plausible showing of malice to
survive a motion to dismiss. Kachlon, 168 Cal. App. 4th at 345.
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Plaintiff’s allegations resemble the “conclusions, and formulaic recitation of the
elements” that the Supreme Court deemed insufficient to survive a Rule 12(b)(6)
challenge. See Twombly, 550 U.S. at 555. Plaintiff sets forth two reasons to support the
plausibility of his allegation that Defendants acted willfully and with malice. Both
reasons fall short. First, Plaintiff alleges that Defendants purposefully withheld
information that they were supposed to offer prior to the filing of the NOD in attempt to
make foreclosure avoidance more difficult. (Dkt. No. 21, p. 10.) As noted above,
Plaintiff has not adequately alleged that Defendants failed to satisfy the due diligence
requirements of section 2923.55 prior to recording the NOD, and so Plaintiff cannot rely on
this allegation to raise a claim for slander. Second, Plaintiff alleges that Defendants
recorded the documents only to create a false paper trail that would allow Deutsche Bank to
appear to have authority to initiate the nonjudicial foreclosure. (Dkt. No. 17, p. 10.) As
stated above, Plaintiff lacks standing to challenge Defendants’ authority to initiate
foreclosure proceedings.
Absent a plausible allegation of actual malice, Plaintiff’s claim for slander fails.
Defendants’ Motion to Dismiss Plaintiff’s fourth cause of action for slander of title is
GRANTED. Because it is possible for Plaintiff to allege facts sufficient to state a cause
of action for the violation of section 2923.55, which underlies Plaintiff’s cause of action for
slander of title, Plaintiff’s fourth cause of action is dismissed without prejudice.
F. Plaintiff’s Negligence and Negligence Per Se Claims Fail (Fifth Cause of
Action)
Plaintiff’s fifth cause of action alleges that Defendants engaged in negligence or
negligence per se when they failed to comply with Civil Code sections 2923.55,
2924(a)(6), and 2924.17(b). (FAC, ¶¶ 68-69.) Defendants argue that they owed no duty
of care to Plaintiff (Dkt. No. 17, p. 10), and Plaintiff has not established any statutory
violations or alleged any harm as a result of said violations. (Id.; Dkt. No. 22, p. 5.)
The elements for a cause of action for negligence are well established. Negligence
requires “(1) a legal duty to use due care; (2) a breach of such legal duty; [and] (3) the
breach as the proximate or legal cause of the resulting injury.” Evan F. v. Hughson
United Methodist Church, 8 Cal. App. 4th 828, 10 Cal. Rptr. 2d 748 (1992) (emphasis
original). The negligence per se doctrine does not establish a claim for relief distinct from
negligence. Cal. Serv. Station & Auto. Repair Ass’n v. Am. Home Assurance Co., 62 Cal.
App. 4th 1166, 73 Cal. Rptr. 2d 182 (1998). (“[A]n underlying claim of ordinary
negligence must be viable before the presumption of negligence of Evidence Code section
669 can be employed.”).
Plaintiff’s negligence claims are entirely predicated on causes of action for
violations of Civil Code sections 2923.55, 2924(a)(6), and 2924.17(b). Because Plaintiff
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has failed to allege facts sufficient to raise a plausible claim for relief with respect to any of
these code sections, Plaintiff cannot establish a breach of any duty based on his
allegations, and his negligence and negligence per se claims must fail. In any event,
“[f]or purposes of a negligence claim . . . 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.” Das v. Bank of Am., N.A., 186
Cal. App. 4th 727, 739, 112 Cal. Rptr. 3d 439 (2010) (quoting Nymark v. Heart Fed.
Savings & Loan Assn., 231 Cal. App. 3d 1089, 283 Cal. Rptr. 53 (1991)). Further, “loan
servicers do not owe a duty to the borrowers of the loans they service.” Pok v. Am.
Home Mortgage Servicing, Inc., No. 2:09–2385, 2010 WL 476674, at *4 (E.D. Cal. Feb
3, 2010); see also Watts v. Decision One Mortgage Co., No. 09–43 CV 0043, 2009 WL
2044595, at *2 (S.D.Cal. July 13, 2009); Marks v. Ocwen Loan Servicing, No. 07–2133,
2009 WL 975792, at *7 (N.D. Cal. Apr.10, 2009). Because Plaintiff has not alleged
facts that the Defendants were acting in their capacities as anything but the conventional
lenders of money, Plaintiff has not alleged that Defendants owed Plaintiff a duty, and his
negligence claim must be dismissed.
Plaintiff argues that “courts should not rely mechanically on the ‘general rule’ that
lenders owe no duty.” (Dkt. No. 21, p. 12.) This argument is premised on a case in
which the court sought to emphasize the requirement that a lender “deal reasonably with
borrowers in default to try to effectuate a workable loan modification, Jolley v. Chase
Home Fin., LLC, 213 Cal. App. 4th 872, 903, 153 Cal. Rptr. 3d 546 (2013). Jolley and the
subsequent cases Plaintiff cites to support his allegations are distinguishable on the facts
because Plaintiff’s allegations have nothing to do with a loan modification.
Because Plaintiff has not plausibly alleged a duty or breach, Plaintiff has failed to
state negligence and negligence per se claims for relief that are plausible on their face.
Accordingly, Defendants’ motion to dismiss Plaintiff’s fifth cause of action is
GRANTED. Because Plaintiff’s underlying causes of action for violation of Civil Code
sections 2429.17 and 2923.55 were dismissed without prejudice, it is possible that
Plaintiff can allege additional facts sufficient to raise claims for negligence and
negligence per se. As such, Plaintiff’s fifth cause of action is dismissed without
prejudice.
G. Violation of California’s Unfair Competition Law (Sixth Cause of
Action)
Plaintiff’s sixth claim for relief alleges violations of California Business and
Professions Code section 17200, et seq. (FAC, ¶¶ 73-76.) The UCL prohibits “any
unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or
misleading advertising.” Cal. Bus. & Prof. Code § 17200. According to the California
Supreme Court, the UCL “borrows” violations of other laws and treats them as unlawful
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practices independently actionable under the UCL.” Farmers Ins. Exch. v. Superior
Court, 826 P.2d 730, 734 (Cal. 1992). A “defendant cannot be liable under section 17200
for committing ‘unlawful business practices’ without having violated another law.”
Ingles v. Westwood One Broadcasting Servs., Inc., 129 Cal. App. 4th 1050, 1059, 28 Cal.
Rptr. 3d 933 (2005).
Plaintiff’s UCL claims are entirely predicated on causes of action for violations of
Civil Code sections 2923.55, 2924(a)(6), and 2924.17(b); slander of title; and negligence.
Because Plaintiff has failed to allege facts sufficient to raise claims for any of these causes
of action, Plaintiff similarly fails to state a claim for a violation of the UCL. See,
e.g., Rubio v. Capital One Bank (USA), 572 F. Supp. 2d 1157, 1168 (C.D. Cal. 2008) (since
plaintiff’s underlying claim failed, plaintiff’s UCL claim predicated on it likewise failed).
Defendants’ Motion to Dismiss Plaintiff’s UCL claim is GRANTED. Because Plaintiff’s
underlying causes of action for violation of Civil Code sections 2429.17 and 2923.55,
slander of title, and negligence were dismissed without prejudice, it is possible that
Plaintiff can allege additional facts to raise a claim for a violation of the UCL.
Accordingly, Plaintiff’s sixth cause of action is dismissed without prejudice.
IV.

CONCLUSION

For the reasons articulated above, the Court GRANTS Defendants’ Motion to
Dismiss. (Dkt. No. 17). Plaintiff’s first cause of action is dismissed with prejudice.
Plaintiff’s second through sixth causes of action are dismissed without prejudice.
Because the Court is dismissing Plaintiff’s first amended complaint in its entirety,
Defendants’ motion to strike is DENIED as moot.
Plaintiff has fourteen (14) days from the day of this Order to file an amended
complaint. Failure to file an amended complaint by the deadline will render this Order a
dismissal of the action with prejudice and full adjudication on the merits of Plaintiff’s
claims against the moving Defendants.
The Scheduling Conference set for August 17, 2015 is hereby vacated.
IT IS SO ORDERED

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