Arthur Biederman v. Northwest Trustee Services, Inc. et al

Filing 19

MINUTES (IN CHAMBERS) by Judge Andre Birotte, Jr: granting 13 MOTION to Dismiss Case as to Defendant JP Morgan Chase Bank, N.A. The Court GRANTS Chases motion to dismiss. (shb)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
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Case No.: CV 15-02283-AB (JCx)
Title:

Date:

June 24, 2015

Arthur Biederman v. Northwest Trustee Services, Inc. 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 Motion to Dismiss by
Defendant JP Morgan Chase Bank, N.A

In December 2014, Plaintiff Arthur Biederman filed the instant action in Superior
Court for the County of Los Angeles, alleging various causes of action in connection with a
non-judicial foreclosure proceeding over the real property located at 220 The Village #301,
Redondo Beach, California (“Subject Property”). (Dkt. No. 1-3 (“Compl.”).) Named
Defendants are Northwest Trustee Services, Inc. (“Northwest Trustee”), JP Morgan Chase
Bank, N.A. (“Chase”), Federal Deposit Insurance Corporation (“FDIC”), and Washington
Mutual Bank, F.A. (“WaMu”). (Id.) On May 22, 2015, the Court granted FDIC’s
motion to dismiss for lack of subject matter jurisdiction. (Dkt. No. 17.)
Pending before this Court is Chase’s motion to dismiss the allegations against
Chase. (Dkt. No. 13.) No opposition brief was filed. The Court deems this matter
appropriate for decision without oral argument. See Fed. R. Civ. P. 78; L. R. 7-15. The
June 29, 2015, hearing is vacated. Having considered the materials submitted, and for the
reasons indicated below, the Court GRANTS Chase’s motion to dismiss.
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I.

BACKGROUND
A.

Plaintiff’s Allegations

On or around November 2004, Plaintiff obtained a loan from WaMu for
approximately $145,000 for the purchase of the Subject Property, and the loan was secured
by a note and deed of trust against the Subject Property. (Compl., ¶ 15.) Subsequently,
there were a series of assignments of the note and deed of trust, including an assignment by
FDIC to Chase. (Id. at ¶¶ 16-20.) In October 2013, Chase substituted Northwest Trustee
as trustee for the note and deed of trust, and, following Plaintiff’s failure to make his loan
payments, Northwest Trustee recorded a Notice of Default and Election to Sell the Subject
Property pursuant to the deed of trust. (Id. at ¶¶ 21-22; See Dkt. No. 14, Request for
Judicial Notice (“RJN”), Exhibit 6.1) In October 2014, Northwest Trustee recorded a
Notice of Trustee’s Sale of the Subject Property, with the foreclosure sale scheduled for
November 3, 2014. (Id. at ¶ 25; RJN Exhibit 7.) Plaintiff makes no allegation, one way
or another, about whether the foreclosure sale actually took place or whether he ever
tendered the debt due under his loan. (See Compl.)
B.

Chase’s Acquisition of certain assets and liabilities of WaMU from
FDIC

On September 25, 2008, the former Office of Thrift Supervision closed WaMu and
appointed the FDIC as receiver of the bank. (Dkt. No. 10-2 (“Grieser Decl.”), ¶ 4, Exhibit
B.) Pursuant to its authority as receiver, FDIC transferred certain WaMu assets, including
Plaintiff’s note and deed of trust, to Chase. (Id. at ¶ 3, Ex. A.)
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). The complaint must also be “plausible on its face,” allowing the Court to
“draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has
acted unlawfully.” Id. Labels, conclusions, and “a formulaic recitation of the elements
of a cause of action will not do.” Twombly, 550 U.S. at 555.

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Pursuant to Rule 201, the Court GRANTS Chase’s unopposed request for judicial
notice. (Dkt. No. 14.)
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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 a court is “not bound to
accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678
(2009) (internal quotation marks omitted). While the scope of review is generally limited
to the contents of the complaint, a court may consider “documents whose contents are
alleged in a complaint and whose authenticity no party questions, but which are not
physically attached to the pleading” without converting a motion to dismiss under Rule
12(b)(6) into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th
Cir. 1994), overruled on other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d
1119 (9th Cir. 2002); United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (“Even 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.”). This incorporation doctrine is permitted to prevent
plaintiffs “from surviving a Rule 12(b)(6) motion by deliberately omitting references to
documents upon which their claims are based.” Parrino v. FHP Inc., 146 F.3d 699, 706
(9th Cir. 1998) superseded by statute on other grounds as recognized in Abrego Abrego v.
The Dow Chem. Co., 443 F.3d 676, 681 (9th Cir. 2006).
III.

DISCUSSION
A.

Plaintiff’s First Claim for Injunctive Relief Fails

Plaintiff’s first cause of action for injunctive relief apparently seeks an order
enjoining Defendants from foreclosing on and removing Plaintiff from the Subject
Property. Injunctive relief is a remedy and not, in itself, a cause of action. Chanthavong
v. Aurora Loan Servs., Inc., 448 B.R. 789, 802 (E.D. Cal. 2011) (“An injunction is a
remedy, not a claim in and of itself.”) (citations omitted); see also Marlin v. Aimco
Venezia, LLC, 154 Cal. App. 4th 154, 162 (2007) (“An injunction is a remedy, not a cause
of action”) (citing Roberts v. Los Angeles Cnty. Bar Assn., 105 Cal. App. 4th 604, 618
(2003)); Shell Oil Co. v. Richter, 52 Cal. App. 2d 164, 168 (1942) (“Injunctive relief is a
remedy and not, in itself a cause of action, and a cause of action must exist before
injunctive relief may be granted”). Accordingly, Plaintiff’s first “cause of action” is
dismissed with prejudice.
B.

Plaintiff’s Second and Third Claims for Fraud in the Concealment
and Fraud in the Inducement Fail

Plaintiff’s second and third causes of action allege fraud in the concealment and
fraud in the inducement. Though unclear from the complaint, Plaintiff appears to base his
fraud claims on the Defendants’ alleged failure to disclose how the mortgage would be
securitized, including the fact that it would be part of a pooling and service agreement, and
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on Defendants’ alleged misrepresentations in the Notices of Default and Trustee’s Sale that
they were the true owners of the note and deed of trust, which in turn allowed them to
attempt to collect a debt in which they had no interest.
“The elements of fraud are (a) a misrepresentation (false representation,
concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce
reliance; (d) justifiable reliance; and (e) resulting damage.” Hinesley v. Oakshade Town
Ctr., 135 Cal. App. 4th 289, 294–95 (2005). To plead a claim for fraud, Plaintiff’s
allegations must be sufficiently detailed to meet the heightened Rule 9(b) pleading
standard. Parino v. BidRack, Inc., 838 F.Supp.2d 900, 906 (N.D. Cal. 2011).
Allegations must be “specific enough to give defendants notice of the particular
misconduct which is alleged to constitute the fraud charged so that they can defend against
the charge . . . .” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985) (citation
omitted). “[I]n a fraud action against a corporation, a plaintiff must allege the names of
the persons who made the allegedly fraudulent representations, their authority to speak, to
whom they spoke, what they said or wrote, and when it was said or written.” Cisneros v.
Instant Capital Funding Grp., Inc., 263 F.R.D. 595, 607 (E.D. Cal. 2009) (internal
quotation marks omitted) (quoting Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App.
4th 153, 157 (1991)).
Plaintiff alleges generally that “Defendants” knowingly and willfully made false
representations to Plaintiff with the intent to induce reliance, and that Plaintiff reasonably
relied on those false representations. (Compl., ¶¶ 67-83.) Plaintiff does not allege which
Defendants were responsible for the alleged fraud, the names of the persons who made the
alleged fraudulent representations, what those representations were, and when they were
said or written. (Id.) Furthermore, beyond a formulaic recitation of the elements,
Plaintiff does not allege “justifiable reliance” on any alleged fraudulent representations.
(Id.) In order to establish “a bona fide claim of actual reliance,” a plaintiff must allege the
specifics of his reliance. Cadlo v. Owens-Illinois, 125 Cal. App. 4th 513, 519 (2004).
Plaintiff’s generalized allegations of willful false representations and reasonable reliance
do not comply with the pleading standards of Rule 9(b), as they do not state the “who,
what, when, where, and how” of the alleged fraudulent activity. Casault v. Fed. Nat.
Mortgage Ass’n, 915 F. Supp. 2d 1113, 1124 (C.D. Cal. 2012); Cisneros, 263 F.R.D. at
607.
Plaintiff’s fraud claims would fail as against Chase even if he were to add specificity
to his claims. With respect to Plaintiff’s fraudulent concealment claim, WaMu originated
Plaintiff’s loan (Compl. ¶ 15), and Chase was not involved in the process. When Chase
purchased Plaintiff’s note and deed trust from FDIC as receiver for WaMu, Chase
specifically did not assume liability for borrower claims related to loans or commitments to
lend made by WaMu. (See RJN Exhibit 3.) Accordingly, any claim against Chase for
fraudulent misrepresentations and omissions allegedly made in connection with WaMu’s
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issuance of Plaintiff’s loan fail as a matter of law. Because Plaintiff alleges that he did not
know that his note and deed of trust were transferred to Chase until after the Notice of
Default and Trustee’s Sale were recorded, if given an opportunity to amend, Plaintiff could
not plausibly allege that Chase made any fraudulent misrepresentations or omissions
regarding the securitization of Plaintiff’s loan.
Separately, Plaintiff’s fraudulent inducement claim alleges that Chase attempted to
collect on a debt in which they had no interest. Aside from the fact that there is no obvious
connection between a fraudulent inducement claim and Chase’s attempt to foreclose on the
Subject Property, Plaintiff lacks standing to challenge the alleged flaws in securitization
because he has not shown, and he cannot plausibly allege, that “the alleged imperfection in
the foreclosure process was prejudicial to [P]laintiff’s interests.” Fontenot v. Wells Fargo
Bank, N.A., 198 Cal. App. 4th 256, 272 (2011). Nothing about the mere substitution of
one creditor for another interfered in any manner with Plaintiff’s ability to make payments
under the note. Id. Even assuming there are irregularities in any assignments of the debt,
California law bars Plaintiff’s claim because “the true victim was not the [P]laintiff but the
original lender, which would have suffered the unauthorized loss of [the balance of the]
promissory note.” Id.; see also Bascos v. Fed. Home Loan Mort. Corp., 2011 WL
3157063, at *6 (C.D. Cal. 2011); Gilmore v. Am. Mortg. Network, 2012 WL 6193843, at *9
(C.D. Cal. 2012).
Because any amendment would be futile, Plaintiff’s second and third causes of
action are dismissed with prejudice.
C.

Plaintiff’s Fourth Claim for Intentional Infliction of Emotional
Distress Fails

In his fourth cause of action, Plaintiff alleges that Defendants’ conduct (including
initiating the foreclosure process) has resulted in Plaintiff being threatened with the
foreclosure of the Subject Property, which in turn has caused him extreme emotional
distress.
A cause of action for Intentional Infliction of Emotional Distress (“IIED”) requires a
plaintiff to allege the following: “(1) the defendant engaged in extreme and outrageous
conduct with the intention of causing, or reckless disregard of the probability of causing,
severe emotional distress to the plaintiff; (2) the plaintiff actually suffered severe or
extreme emotional distress; and (3) the outrageous conduct was the actual and proximate
cause of the emotional distress.” Ross v. Creel Printing & Publ’g Co., 100 Cal. App. 4th
736, 744-45 (2002). According to Plaintiff’s complaint, Defendants allegedly engaged in
outrageous conduct that caused him severe emotional distress when they made false
statements in the Notice of Default (apparently with respect to how Plaintiff defaulted on
the loan) and “fraudulently” initiated the foreclosure proceedings. (See Compl., ¶¶ 79,
84.) A review of the Notices of Default and Trustee’s Sale (see RJN Exhibits 6-7)
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indicate statutory compliance with the procedures set forth in California Civil Code
sections 2924 et seq., which detail the legal requirements of a valid foreclosure sale, and
Plaintiff does not otherwise identify any false statements in the documents. Further,
California law precludes Plaintiff’s IIED claim because “foreclosing on a home (absent
other circumstances) is not the kind of extreme conduct that supports an intentional
infliction of emotional distress claim.” Quinteros v. Aurora Loan Services, 740 F. Supp.
2d 1163, 1172 (E.D. Cal. 2010). Since Plaintiff has failed to plead adequate facts to
plausibly state a claim for IIED, Plaintiff’s fourth cause of action is dismissed. However,
because it is possible for Plaintiff to allege additional facts that would allow him to
plausibly state his IIED claim, the defects of Plaintiff’s fourth cause of action may be cured
by amendment. Accordingly, Plaintiff’s fourth cause of action is dismissed without
prejudice.
D.

Plaintiff’s Fifth Claim for Slander of Title Fails

Plaintiff’s fifth cause of action alleges slander with respect to the statements made in
the Notice of Default, Notice of Trustee’s Sale, and the deed of trust.
“The elements of a cause of action for slander of title are (1) a publication, which is
(2) without privilege or justification, (3) false, and (4) causes pecuniary loss.” La Jolla
Group II v. Bruce, 211 Cal. App. 4th 461, 472 (2012). California’s non-judicial
foreclosure statute—codified at Civil Code section 2924 et seq.—“deems the statutorily
required mailing, publication, and delivery of notices in non-judicial foreclosure, and the
performance of statutory non-judicial foreclosure procedures, to be privileged
communications under the qualified common interest privilege of [Civil Code] section 47,
subdivision (c)(1).” Kachlon v. Markowitz, 168 Cal. App. 4th 316, 333 (2008). Plaintiff
alleges that “Defendants, and each of them, disparaged Plaintiff’[s] exclusive valid title by
and through the preparing, posting, publishing and recording of the documents previously
described herein, including, but not limited to, the Notice of Default, Notice of Trustee’s
Sale, and Trustee’s Deed.” (Compl., ¶ 88.) These documents, however, were published
in accordance with non-judicial foreclosure proceedings pursuant to Civil Code section
2924 et seq. Consequently, absent any evidence of actual malice, such publications are
privileged. See, e.g., La Jolla Group II v. Bruce, 211 Cal. App. 4th at 472. Plaintiff
alleges that “Defendants knew the documents were false and created and published them
with the malicious intent to injure Plaintiff . . . .” (Compl., ¶ 93.) However, Plaintiff’s
complaint offers no allegation to suggest that such publications were in anyway false, or
that the publications were made with any malicious intent. 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. Twombly, 550 U.S. at
555. Because Plaintiff could allege additional specific facts that the publications were
false or malicious, his claim for slander of title may be cured by amendment.
Accordingly, Plaintiff’s fifth cause of action is dismissed without prejudice.
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E.

Plaintiff’s Sixth Claim for Quiet Title Fails

In his sixth claim for Quiet Title, Plaintiff requests a decree that permanently enjoins
the Defendants, and each of them, from asserting any adverse claim to the Subject
Property. (Compl., ¶ 102.) “It is settled in California that a mortgagor cannot quiet his
title against a mortgagee without paying the debt secured.” Shimpones v. Stickney, 219
Cal. 637, 649 (1934); see Mix v. Sodd, 126 Cal. App. 3d 386, 390 (1981) (“a mortgagor in
possession may not maintain an action to quiet title, even though the debt is
unenforceable”); Aguilar v. Bocci, 39 Cal. App. 3d 475, 477 (1974) (trustor is unable to
quiet title “without discharging his debt”). Plaintiff’s complaint makes no allegation
regarding whether he tendered the debt owed. (See Compl.) Consequently, Plaintiff’s
claim for quiet title fails. It is possible for Plaintiff to allege additional facts that he
tendered the debt owed under his loan. Accordingly, because his claim for quiet title may
be cured by amendment, Plaintiff’s sixth cause of action is dismissed without prejudice.
F.

Plaintiff’s Seventh Claim for Declaratory Relief Fails

Plaintiff’s seventh claim for Declaratory Relief requests a judicial determination of
the rights, obligations and interests of the parties with regard to the Subject Property.
(Compl., ¶ 108.) Similar to Plaintiff’s first cause of action for injunctive relief,
declaratory relief is a form of equitable relief and not an independent cause of action.
Kimball v. Flagstar Bank F.S.B., 881 F. Supp. 2d 1209, 1219-20 (S.D. Cal. 2012).
Furthermore, a declaratory relief claim fails when it is a duplicate of other claims. Id.
(citing Permpoon v. Wells Fargo Bank Nat’l Ass’n, 2009 WL 3214321, at *5 (S.D. Cal.
Sept. 29, 2009)) (dismissing declaratory judgment claim where claim was duplicate of
other invalid claims). Plaintiff’s request for declaratory relief is duplicative because it
seeks to determine the same issues as his other claims—namely, whether Chase was
authorized to collect loan payments and foreclose on the Property. (See Compl., ¶¶ 47, 51,
55, 68-70, 79-80, 101, 129, 132-136, & 143.) Consequently, Plaintiff’s seventh “cause of
action” is hereby dismissed with prejudice.
G.

Plaintiff’s Ninth Claim for Violation of California Business and
Professions Code § 17200 et seq. Fails.

Plaintiff’s ninth cause of action alleges that the Defendants’ conduct (described
throughout this Order) violated California Business and Professions Code § 17200.
California’s unfair competition law (“UCL”) prohibits “any unlawful, unfair or
fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”
Cal. Bus. & Prof. Code § 17200. Because the UCL “is written in the disjunctive, it
establishes three varieties of unfair competition—acts or practices which are unlawful, or
unfair, or fraudulent. An act can be alleged to violate any or all of the three prongs of the
UCL. . . .” Berryman v. Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1554 (2007)
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(citation omitted). In order for a private plaintiff to have standing to allege a violation of
the UCL, a plaintiff must have suffered injury in fact and lost money or property as a result
of the defendant’s conduct. Bus. & Prof. Code § 17204. The “injury must be economic,
at least in part, for a plaintiff to have standing under Business and Professions Code section
17204.” Animal Legal Defense Fund v. Mendes, 160 Cal. App. 4th 136, 147 (2008).
Plaintiff’s UCL allegations rely almost entirely on his other claims for relief, for all
of which Plaintiff has failed to state a claim. Separately, Plaintiff has not alleged any facts
establishing that he has wrongfully lost money or property within the meaning of the UCL
– Plaintiff makes no allegation that Chase received monies in which it had no vested
interest or that the Subject Property has been sold – and therefore Plaintiff’ lacks standing
to bring this claim. However, Plaintiff will have an opportunity to amend several of his
claims, and he may be able to allege additional specific facts to show that he lost money or
property as a result of Chase’s conduct. Accordingly, because Plaintiff’s UCL claim may
be cured by amendment, Plaintiff’s ninth cause of action is dismissed without prejudice.
IV.

CONCLUSION

For the reasons set forth above, the Court hereby GRANTS Chase’s motion to
dismiss. (Dkt. No. 13.) Plaintiff’s claims against Chase for injunctive and declaratory
relief, fraud in the concealment, and fraud in the inducement (first through third and
seventh causes of action) are dismissed with prejudice. Plaintiff’s remaining claims
against Chase for IIED, slander of title, quiet title, and UCL (fourth through sixth and ninth
causes of action) are dismissed without prejudice.
Plaintiff will have twenty-one (21) 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 Chase.
The July 13, 2015 Scheduling Conference is hereby vacated. The Court will re-set
a Scheduling Conference if and when Plaintiff files an amended complaint, or if and when
the remaining Defendants (Northwest Trustee and WaMu) are served and appear in this
action.
IT IS SO ORDERED.

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