Nathaniel J. Friedman v. U.S. Bank National Association et al

Filing 61

MINUTES OF DEFENDANT BANK OF AMERICA, N.A.'S MOTION TO DISMISS 26 ; DEFENDANT NATIONSTAR MORTGAGE, LLC AND U.S. BANK NATIONAL ASSOCIATION'S MOTION TO DISMISS 31 ; PLAINTIFF'S EX PARTE APPLICATION FOR A TEMPORARY RESTRAINING ORDER A ND PRELIMINARY INJUNCTION 53 Hearing held before Judge Christina A. Snyder. In accordance with the foregoing, the Court GRANTS without prejudice defendants U.S. Bank and Nationstar's motion to dismiss plaintiff's complaint in its enti rety. The Court also GRANTS without prejudice defendant BANA's motion to dismiss plaintiff's complaint. Plaintiff is granted fourteen (14) days to file an amended complaint addressing the deficiencies identified herein. Failure to do so may result in dismissal with prejudice. In light of the court's dismissal with leave to amend, defendants and their agents, employees, representatives, successors, assigns, attorneys, and all others acting in concert or in participation w ith them are hereby ENJOINED for thirty (30) days from proceeding with the non-judicial foreclosure sale of the Property located at 1423 Schuyler Road, Beverly Hills, California 90210. IT IS SO ORDERED. Court Reporter: Laura Elias. (lom) Modified on 6/7/2016 (lom).

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV16-2265-CAS(FFMx)

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

Present: The Honorable

Date

‘O’
June 6, 2016

CHRISTINA A. SNYDER, U.S. DISTRICT JUDGE

Connie Lee
Deputy Clerk

Laura Elias
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Charles Ruben

Parisa Jassim
Laura Coombe
William Brown, Jr.

Proceedings:

DEFENDANT BANK OF AMERICA, N.A.’S MOTION TO
DISMISS (Dkt. 26, filed April 25, 2016)
DEFENDANT NATIONSTAR MORTGAGE, LLC AND U.S.
BANK NATIONAL ASSOCIATION’S MOTION TO DISMISS
(Dkt. 31, filed April 25, 2016)
PLAINTIFF’S EX PARTE APPLICATION FOR A
TEMPORARY RESTRAINING ORDER AND PRELIMINARY
INJUNCTION (Dkt. 53, filed May 25, 2016)

I.

INTRODUCTION

On April 1, 2016, plaintiff Nathaniel J. Friedman filed this action against
defendants U.S. Bank National Association (“U.S. Bank”); Bank of America, N.A.
(“BANA”); Nationstar Mortgage, LLC (“Nationstar”); Veriprise Processing Solutions,
LLC (“Veriprise”); Aztec Foreclosure Corporation (“Aztec”); and Does 1-10, inclusive.
Plaintiff’s complaint asserts claims for (1) breach of contract; (2) breach of the implied
covenant of good faith and fair dealing; (3) accounting; (4) “injunctive relief for

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

temporary restraining order, preliminary and permanent injunction”;1 (5) violation of
California Civil Code § 2924c; and (6) money had and received. See Dkt. 1 (Compl.).
On April 25, 2016, defendants Nationstar and U.S. Bank filed a joint motion to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), as well as a request for
judicial notice. Dkts. 31-32. On April 25, 2016, defendant BANA filed a separate
motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), as well as a
request for judicial notice. Dkts. 26-27. Pursuant to a court scheduling order, plaintiff
timely filed his opposition on May 16, 2016, as well as a request for judicial notice.2
Dkts. 48-51. On May 23, 2016, defendants filed their replies. Dkts. 51-52.

1

Plaintiff contends that he is entitled to a Temporary Restraining Order (“TRO”),
Preliminary Injunction, and Permanent Injunction “enjoining all Defendants . . . from
selling . . . or in any other way disposing of the PROPERTY” at issue in this action.
Compl. at ¶ 110. However, “[i]njunctive 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.”
Lawrence v. Aurora Loan Servs. LLC, No. CV F 09-1598 LJO DLB, 2010 WL 364276,
at *12 (E.D. Cal. Jan. 25, 2010) (quoting Shell Oil Co. v. Richter, 52 Cal. App. 2d 164,
168 (1942). Accordingly, plaintiff’s claim for “Temporary Restraining Order,
Preliminary Injunction, and Permanent Injunction” is hereby DISMISSED without
prejudice.
2

Plaintiff filed one request and defendants filed two requests for judicial notice of
certain documents contained in the official public records of the County of Los Angeles.
See Dkts. 27, 32, 50. The Court grants plaintiff’s and defendants’ requests for judicial
notice because the documents contained therein are in the public record and their
existence is “capable of accurate and ready determination by resort to sources whose
accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). Indeed, courts
routinely take judicial notice of these types of documents. See, e.g., Liebelt v. Quality
Loan Serv. Corp., 2011 WL 741056, at *6 n.2 (N.D. Cal. Feb.24, 2011); Reynolds v.
Applegate, 2011 WL 560757, at *1 n.2 (N.D. Cal. Feb.14, 2011); Giordano v. Wachovia
Mortg., 2010 WL 5148428, at *1 n.2 (N.D. Cal. Dec. 14, 2011).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

On May 25, 2016, defendant filed an ex parte application for a temproary
restraining order and preliminary injunction.3 On May 27, 2016, defendants U.S. Bank
and Nationstar filed an opposition to plaintiff’s ex parte application.
Having carefully considered the parties’ arguments, the Court finds and concludes
as follows.
II.

BACKGROUND

3

The instant ex parte application for a TRO is the third such application that
plaintiff has filed. Plaintiff filed his first ex parte application for a TRO on April 1, 2016.
After being served, defendants postponed the pending foreclosure sale on the underlying
property in this action from April 14, 2016 to May 12, 2016, and plaintiff accordingly
withdrew his ex parte application. On April 28, 2016, plaintiff filed his second ex parte
application for a TRO. After being served, defendants again postponed the sale from
May 12, 2016 to June 9, 2016, after which plaintiff again withdrew his ex parte
application for a TRO. In the ex parte application presently before the Court, plaintiff
argues, much as he does in his complaint and oppositions to defendants’ motions to
dismiss, that he has an absolute right under California Civil Code section 2924c to
reinstate his loan by paying all penalties, interests, and charges. Plaintiff avers that
defendants have failed and refused to inform plaintiff of the amount necessary to reinstate
his loan, despite plaintiff’s repeated letters and phone calls. A plaintiff seeking a
temporary restraining order must establish “that he is likely to succeed on the merits, that
he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance
of equities tips in his favor, and that an injunction is in the public interest.” Winter v.
Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); Stuhlbarg Int'l Sales Co. v. John
D. Brushy & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001) (noting that the standards for
issuing a temporary restraining order and a preliminary injunction are “substantially
identical”). In light of the Court’s dismissal of plaintiff’s complaint with leave to amend,
the Court DEFERS FINAL JUDGMENT on plaintiff’s pending ex parte application for
a TRO; however, the Court temporarily enjoins defendants from proceeding with a nonjudicial foreclosure sale on the Property, as detailed in the Conclusion (Part V) of this
order.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

Plaintiff Nathaniel J. Friedman, who is 79-years old and has been diagnosed with
end-stage renal failure, cardiac arrhythmia, and prostate cancer, has lived at the real
property located at 1423 Schuyler Road, Beverly Hills, California 90210 (the “Property”)
for over 26 years. Compl. at ¶¶ 1-2, 14. On April 19, 2006, plaintiff obtained a
$2,100,000 loan from Countrywide Home Loans, Inc., the predecessor to defendant
BANA, in order to purchase the Property. Id. at ¶¶ 1-2. A Deed of Trust was entered
evidencing a mortgage. Id., Ex. T. As is relevant here, the Deed of Trust provides as
follows:
Lender may return any payment or partial payment if the
payment or partial payments are insufficient to bring the Loan
current. Lender may accept any payment or partial payment
insufficient to bring the Loan current without waiver of any
rights hereunder or prejudice to its rights to refuse such
payment or partial payments in the future, but Lender is not
obligated to apply such payments at the time such payments
are accepted. . . . Lender may hold such unapplied funds until
Borrower makes payment to bring the Loan current.
RJN 1, Ex. 11 (emphasis added).
On July 1, 2013, plaintiff entered into a loan modification agreement with
defendant BANA which provided that the new principal loan balance was $2,558,066.10.
Compl. at ¶ 3, Ex. A. This agreement required monthly payments of $10,375.87 for
principal and interest only, as well additional payments to Nationstar for certain “escrow
items,” including property taxes and insurance premiums. See Complaint at ¶ 5; RJN 1,
Ex. 5, ¶ 6; Complaint, Ex. A. Specifically, the loan modification provided as follows:
I shall pay Lender the Funds for Escrow Items unless Lender
waives my obligation to pay the Funds for any or all Escrow
Items. Lender may waive my obligation to pay Lender Funds
for any or all Escrow Items at any time. Any such waiver may
only be writing.

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

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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

RJN 1, Ex. 5, at ¶ 6; Compl., Ex. A. On July 16, 2013, shortly after plaintiff entered the
loan modification agreement, defendant BANA assigned the Deed of Trust to defendant
Nationstar, and this assignment was later recorded on October 10, 2013. Compl. at ¶ 4;
Defs.’ BANA Request for Judicial Notice, Ex. A.
In the instant complaint, plaintiff alleges that he has timely made every required
mortgage payment, “in the amount of $10,385.87,” to Nationstar. Compl. at ¶ 9.
According to plaintiff, however, he did not make the additional “escrow item” payments
directly to Nationstar; rather, plaintiff allegedly made property tax payments directly to
the California Tax Authority, as well as all insurance payments directly to the insurance
carrier, California Fair Plan. See Compl. at ¶ 6, Ex. P-R. Plaintiff further avers that
because he made the tax and insurance payments directly to the California Tax Authority
and the insurance carrier, defendants Nationstar and BANA have refused to apply
plaintiff’s mortgage payments to the loan, and have also refused to accept some mortgage
payments. Compl. at ¶ 7, Ex. S.
In the operative complaint, plaintiff acknowledges that he “may have, in a
technical sense, breached the [loan modification] contract by not making payments for
taxes and insurance into the [Nationstar] impound account.” Compl. at ¶ 12.
Nonetheless, plaintiff contends that he has timely made “all payments of any kind or
nature” on the property, including his mortgage payments (to the lender), tax payments
(to the California tax authority), and insurance premiums (to the insurance carrier).
Compl. at ¶ 12.
On January 30, 2015, a Substitution of Trustee was recorded whereby defendant
Veriprise was substituted in as the Foreclosure Trustee. Compl. at ¶ 7, Ex. M.
Thereafter, Veriprise filed a Notice of Default and Election to Sell under Deed of Trust
and recorded it against the Property. Id. On March 3, 2015, defendant Veriprise also
filed a Notice of Sale and recorded it against the Property. Compl. at ¶ 8, Ex. U. On
March 25, 2015, plaintiff filed suit against defendants in the Los Angeles County
Superior Court (the “state action”). Defs. U.S. Bank, et al.’s Req. Judicial Notice (RJN)
Ex. 1, Ex. 2. The first amended complaint in the state action was filed on September 1,
2015, and alleged six causes of action based upon the terms of the loan modification
agreement. On January 6, 2016, defendant Nationstar’s motion for summary judgment in
the state action was granted in its entirety. RJN, Ex. 8. On February 24, 2016, plaintiff
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

filed a notice of appeal, which is still pending before the California Court of Appeal.
RJN, Ex. 10.
In the instant complaint, filed on April 1, 2016, plaintiff asserts that the defendants
have now accelerated the loan balance, claiming $2,671,482.07 due at the time of the
Foreclosure Sale, which––at the time of the complaint’s filing––was set for April 14,
2016. Compl. at ¶ 8, Ex. U. Plaintiff also asserts that defendants BANA and U.S. Bank
have failed and refused to give plaintiff full credit for the monies paid for each month
from July 1, 2013 onward. Compl. at ¶ 9. Plaintiff contends that defendants are in
essence requiring plaintiff to “double pay the taxes and insurance” before defendants will
apply plaintiff’s mortgage payments, simply because the tax and insurance payments
were not paid through defendant’s impound account, in accordance with the requirements
of the loan modification agreement, but rather paid directly to the California Tax
Authority and California Fair Plan. Compl. at ¶¶ 9-10.
Plaintiff contends that he has the absolute right, pursuant to California Civil Code
§ 2924c, to reinstate the loan agreement as if no acceleration had been made by paying all
amounts needed to cure at least five days before the date of the foreclosure sale. Compl.
at ¶ 13. Plaintiff further avers that he has made multiple demands upon defendants to
ascertain the amount needed to pay to cure the default, reinstate the loan, and stop the
foreclosure sale, but defendants have generally refused to respond or otherwise responded
in an untimely manner. Compl. at ¶¶ 13-14; 61-65; 76-78.
At the present time, following a rescheduling of the sale date, the foreclosure sale
is set for Thursday, June 9, 2016.
III.

LEGAL STANDARD

A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the claims asserted in a complaint. Under this Rule, a district court
properly dismisses a claim if “there is a ‘lack of a cognizable legal theory or the absence
of sufficient facts alleged under a cognizable legal theory.’ ” Conservation Force v.
Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Polic Dep’t,
901 F.2d 696, 699 (9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must
be enough to raise a right to relief above the speculative level.” Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service,
572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,
“[d]etermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
Unless a court converts a Rule 12(b)(6) motion into a motion for summary
judgment, a court cannot consider material outside of the complaint (e.g., facts presented
in briefs, affidavits, or discovery materials). In re American Cont’l Corp./Lincoln Sav. &
Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on other grounds sub nom
Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court
may, however, consider exhibits submitted with or alleged in the complaint and matters
that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon
Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); Lee v. City of Los Angeles,
250 F.3d 668, 689 (9th Cir. 2001).
As a general rule, leave to amend a complaint which has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the
court determines that the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th
Cir. 2000).
IV.

DISCUSSION
A.

Nationstar and U.S. Bank’s Motion to Dismiss
1.

Res Judicata

In their motion to dismiss, defendant Nationstar and U.S. Bank assert that all of
plaintiff’s claims in this action are barred by res judicata. Defs. U.S. Bank, et al.’s Mot.
Dismiss at 8; Def. BANA’s Reply Supp. Mot. Dismiss at 2. However, plaintiff rightfully
notes that under California law, a judgment like that obtained by defendants in the state
court action “is not final for purposes of res judicata during the pendency of and until the
resolution of the appeal.” Agarwal v. Johnson, 25 Cal. 3d 932, 954 n.11 (1979) (citing
Cal. Code Civ. Proc. § 1049).
Accordingly, plaintiff’s claims in the instant suit are not barred by res
judicata––indeed, defendants appear to concede as much, as they no longer argue in their
reply that res judicata bars this action.
2.

Plaintiff’s Claim for Breach of Contract

A claim for breach of contract requires: (1) the existence of a valid contract; (2)
plaintiff’s performance or excuse for non-performance under the contract; (3) defendant’s
breach; and (4) resulting damages to the plaintiff. Oasis W. Realty, LLC v. Goldman,
250 P.3d 1115, 1121 (Cal. 2011). In the operative complaint, plaintiff alleges that he
“will suffer damages by losing his home to foreclosure” as a “direct result of
[defendants’] breach of contract.” Compl. at ¶ 89. However, plaintiff’s complaint fails
to state a claim for multiple reasons.
First, as Nationstar and U.S. Bank rightly note, the operative complaint fails to
specify which contract was breached, the manner in which the contract was breach, and
by whom the contract was breached.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

Second, plaintiff himself alleges that he “may have, in a technical sense, breached
the contract by not making payments for taxes and insurance into the impound account”
as required by the plain language of the Loan Modification Agreement. Compl. at ¶ 12,
Ex. A. Plaintiff’s admission that he failed to make payments on the terms provided by a
mortgage loan agreement constitutes non-performance and would ordinarily bar a
plaintiff from prevailing on a breach of contract claim based on that loan. See, e.g., Wise
v. Wells Fargo Bank, N.A., 850 F. Supp. 2d 1047, 1056 (C.D. Cal. 2012) (Marshall, J.)
(dismissing breach of contract claim where plaintiff alleged that she “performed all of her
conditions on the Deed of Trust, including timely paying her mortgage to Defendants,”
but also admitted to having defaulted on the loan). Here, “[b]ecause [p]laintiff failed to
perform under the contract, [based upon the allegations as currently pled in the
complaint,] [p]laintiff’s breach of contract cause of action fails as a matter of law.” Id.
To the extent plaintiff now contends that his failure to perform is excused, the complaint
fails sufficiently to plead facts supports any such contention. Specifically, plaintiff
contends in his opposition that he received waivers of his obligation under the loan
modification agreement to pay defendants for “escrow items,” citing to exhibits G and I
of the complaint. For purposes of the instant motion, plaintiff’s argument regarding
waiver or excuse is unavailing, both because plaintiff has failed sufficiently to plead facts
regarding waiver in the complaint, and because the exhibits to which plaintiff cites in his
opposition appear not to support his contentions regarding waiver. See Compl. at Ex. G,
I.
Finally, plaintiff’s claim also fails because it appears largely to be premised upon
conduct by defendants that actually comports with the express terms of the loan
modification agreement and Deed of Trust. For example, plaintiff alleges that defendants
“took [his] mortgage payments, cashed the checks, and then placed the funds into a
suspense account without giving [p]laintiff credit for the mortgage payments in the
monthly sum of $10,375.87.” Compl. at ¶ 94. However, the Deed of Trust itself appears
to allow for precisely such conduct. See RJN 1, Ex. 11. (“Lender may accept any
payment or partial payment insufficient to bring the Loan current without waiver of any
rights hereunder or prejudice to its rights to refuse such payment or partial payments in
the future, but Lender is not obligated to apply such payments at the time such payments
are accepted. . . . Lender may hold such unapplied funds until Borrower makes payment
to bring the Loan current.”) (emphasis added); see also RJN 1, Ex. 5 (loan modification
agreement), at ¶ 6 (stating that borrow “shall pay Lender the Funds for Escrow Items
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

unless Lender waives [borrower’s] obligation to pay the Funds for any or all Escrow
Items”). “It is of course a simple matter to determine whether given conduct is within the
bounds of a contract’s express terms. For this it is enough that the conduct is either
expressly permitted or at least not prohibited.” Carma Developers (Cal.), Inc. v.
Marathon Dev. California, Inc., 2 Cal. 4th 342, 373 (1992).
Accordingly, plaintiff’s claim for breach of contract is DISMISSED without
prejudice.
3.

Plaintiff’s Claim for Breach of the Implied Covenant of Good
Faith and Fair Dealing

Plaintiff asserts that defendants have breached the implied covenant of good faith
and fair dealing. Compl. at ¶ 94. Under California law, “the factual elements necessary
to establish a breach of the covenant of good faith and fair dealing are: (1) the parties
entered into a contract; (2) the plaintiff fulfilled his obligations under the contract; (3) any
conditions precedent to the defendant’s performance occurred; (4) the defendant unfairly
interfered with the plaintiff’s rights to receive the benefits of the contract; and (5) the
plaintiff was harmed by the defendant’s conduct.” Rosenfeld v. JPMorgan Chase Bank,
N.A., 732 F. Supp. 2d 952, 968 (N.D. Cal. 2010).
Here, as explained above, plaintiff concedes that he “technical[ly]” failed to fulfill
his obligations under the loan modification agreement contract by “refus[ing]” to pay the
escrow items directly to defendant Nationstar, despite the express terms of the agreement.
Compl. at ¶¶ 12, 32. Accordingly, by his own estimation, plaintiff has not fulfilled his
obligations under the contract, and has therefore failed to state a claim for violation of the
implied covenant of good faith an fair dealing. See, e.g., Mora v. US Bank, No. cv-152436, 2015 WL 4537218, at *4 (C.D. Cal. July 27, 2015) (Pregerson, J.) (dismissing
claim for breach of the implied covenant of good faith and fair dealing where plaintiffs
had “not alleged that they fulfilled their obligations under the mortgage loan contract,”
alleging instead that they could not make scheduled payments, declared bankruptcy to
avoid foreclosure, and further stopped performing when “it was clear that they were
excused from further performance by acts of discrimination against them”).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
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Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

Accordingly, plaintiff’s claim for breach of the implied covenant of good faith and
fair dealing is DISMISSED without prejudice.
4.

Plaintiff’s Accounting Claims

Plaintiff avers that he is entitled to an “accounting of the payments, fees, charges
and other transactions which occurred as a result of the Notice of Default” in order to
ascertain the amount of money needed to reinstate plaintiff’s loan. Compl. at ¶¶ 102-03.
To state a claim for accounting, plaintiff must allege the following: (1) a relationship or
other circumstances appropriate to the remedy; and (2) a balance due from the defendant
to the plaintiff that can only be ascertained by an accounting. Brea v. McGlashan, 39
P.2d 877, 880 (Cal. 1934); see also Teselle v. McLoughlin, 173 Cal. App. 4th 156, 17980 (2009). Here, plaintiff has not sufficiently alleged a claim for accounting.
First, the complaint fails adequately to allege that a relationship exists between
plaintiff and any defendant that might require an accounting. Generally, a mortgagorlender relationship alone does not suffice. See, e.g., Saridakis v. JPMorgan Chase Bank,
14-06279, 2015 WL 570116, at *3 (C.D. Cal. Feb. 11, 2015); Williams v. Wells Fargo
Bank, N.A., 13-2075, 2014 WL 1568857 at *9 (C.D. Cal. Jan. 27, 2014). And while it is
true, as plaintiff contends, that a fiduciary relationship between the parties is not required
to state a claim for accounting, Teselle, 173 Cal. App. 4th at 179, in order “[t]o properly
plead a relationship other than a fiduciary duty that could give rise to a claim for an
accounting, [p]laintiff must allege at least that [defendant] was in control of some aspect
of [p]laintiff’s business for some period of time, was [p]laintiff’s trusted agent, caused a
loss to [p]laintiff through specific misconduct, and is now liable to [p]laintiff for the
damages resulting from that misconduct.” EMC Corp. v. Sha, No. 13-CV-0118, 2013
WL 4399025, at *7 (N.D. Cal. Aug. 13, 2013) (citing Teselle, 173 Cal. App. 4th at 17980). As currently pled, plaintiff’s complaint fails to do so.
Second, plaintiff’s accounting claim fails because plaintiff’s allegations fail to
explain why the amount due on the loan cannot be ascertained without resort to
accounting. Teselle, 173 Cal. App. 4th at 179 (noting that a claim for “an accounting
requires a showing . . . that some balance is due the plaintiff that can only be ascertained
by an accounting”) (emphasis added). Here, plaintiff alleges that he received a
reinstatement quote on March 30, 2016 which stated that $196,311.67 was owed by
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Page 11 of 16

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

‘O’

Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

plaintiff on the loan in order to make the loan current. Compl. at ¶¶ 81, 98 (noting that on
March 30, 2016, defendants “finally gave Plaintiff the Reinstatement Quote of
$196,311.67”). Accordingly, it is unclear why the total amount of payments made by
plaintiff here cannot be ascertained without resort to accounting. See Shkolnikov v.
JPMorgan Chase Bank, 12-03996, 2012 WL 6553988, at *23 (N.D. Cal. Dec. 14, 2012)
(dismissing plaintiffs’ claim for accounting where “the total amount of payments made
by Plaintiffs [could] be ascertained without resort to accounting”); Penney v. Wells Fargo
Bank, NA, 11-5567, 2012 WL 2071705, at *13 (C.D. Cal. June 8, 2012) (same); c.f.
Robinson v. Bank of America, 2012 WL 1932842, at *10 (N.D. Cal. May 29, 2012)
(holding that asserting the defendants’ failure to apply or return plaintiff’s payments for
his mortgage is insufficient to establish a claim for accounting).
Accordingly, because the complaint fails to allege a relationship between the
parties necessary to justify accounting, and further fails to demonstrate that some balance
is due to plaintiff that can only be ascertained by an accounting, plaintiff’s claim for
accounting is DISMISSED without prejudice.
5.

Plaintiff’s Claims for Violation of California Civil Code § 2924c

California Civil Code § 2924c specifies that a trustor may have “the legal right to
bring [his] account in good standing by paying all of [his] past due payments plus
permitted costs and expenses within the time permitted by law.” Cal. Civ. Code §
2924c(b)(1). In order to comply with the statute, a trustee must (1) issue a Notice of
Default with the requisite statutory language; and (2) respond to requests for the amount
necessary to reinstate the loan. Cal. Civ. Code § 2924c(b)(1); see also Carson v. Bank of
America NA, No. 13-15368, 611 Fed. App’x 379, 380 (9th Cir. Apr. 30, 2015). Here,
plaintiff does not allege that there was a deficiency in the Notice of Default. Thus, his
claim appears to rest upon defendants’ alleged failure to respond to his requests for a
Reinstatement Quote. Compl. at ¶ 82.
Specifically, plaintiff alleges that defendants have violated California Civil Code
section 2924c by “fail[ing] and refus[ing] to give [him] the required and requested
Reinstatement Quote that [he] must pay in order to reinstate his loan.” Compl. at ¶ 116.
However, plaintiff’s claim under section 2924c fails for at least two reasons.
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Page 12 of 16

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

‘O’

Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

First, defendants appear to have satisfied their duty under § 2924c. Indeed,
plaintiff acknowledges that he received a Reinstatement Quote in response to his March
1, 2016 request on March 30, 2016. Compl. at ¶ 82; see also id. at ¶¶ 61, 77. While it is
unclear, plaintiff appears to allege that defendants have failed to respond to his requests
for a current Reinstatement Quote in a timely manner. Compl. at ¶ 82. However,
plaintiff does not cite any authority suggesting that defendants must respond to plaintiff’s
request within a certain period of time. Moreover, defendants’ response on March 30,
2016 was over two weeks before the then-scheduled foreclosure sale date of April 14,
2016. Pursuant to California Civil Code section 2924c(e), plaintiff’s “[r]einstatement . . .
may be made at any time within the period commencing with the date of recordation of
the notice of default until five business days prior to the date of sale set forth in the initial
recorded notice of sale.” Cal. Civ. Code § 2924c(e) (emphasis added). Accordingly,
plaintiff appears to have been given ample time to tender the reinstatement amount in a
manner that would have fulfilled the five-business-day requirement of section 2924c(e).
Second, plaintiff fails to allege that he has tendered performance upon receiving
the reinstatement quote. While the initial “burden is placed on [the beneficiary] by
sections 2924 and 2924c to inform [the trustor] correctly about the amounts ‘then due’ on
the obligations properly noticed in the notice of default and the foreclosure costs,” once
“[g]iven that information[, the trustor] is required to project the amount presently due and
to tender that amount as a cure of the default.” Anderson v. Heart Fed. Sav. & Loan
Ass’n, 208 Cal. App. 3d 202, 216 (1989). “The tenderer must do and offer everything
that is necessary on his part to complete the transaction . . . . [I]t is a debtor's
responsibility to make an unambiguous tender of the entire amount due or else suffer the
consequence that the tender is of no effect.” Gaffney v. Downey Sav. & Loan Assn., 200
Cal. App. 3d 1154, 1165 (1988). Again, plaintiff does not actually allege that he sent any
payment to defendants in an effort to bring his account in good standing pursuant to
section 2924c, despite knowing both the total amount due (on March 30, 2016), as well as
the proper mailing address of the beneficiary through the Notice of Default and
Reinstatement Quotes. Compl., Ex. M, W, CC.
Accordingly, plaintiff’s claim for violation of California Civil Code § 2924c is
DISMISSED without prejudice.
6.
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Plaintiff’s Claim for Money Had and Received
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Page 13 of 16

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

‘O’

Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

Plaintiff avers that within the last four years, defendants “became indebted to
Plaintiff in the sum of $100,000 or more, for money had and received by Defendants . . .
for the use and benefit of Plaintiff.” Compl. at ¶ 119. To assert a claim for money had
and received, plaintiff must demonstrate: (1) that defendants received money; (2) that the
money received by defendants was for plaintiff’s use; and (3) that defendants are
indebted to plaintiff. Fireman’s Fund Ins. Co. v. Commerce & Indus. Ins. Co., No. 981060, 2000 WL 1721080, at *8 (N.D. Cal. Nov. 7, 2000) (citing Schultz v. Harney, 27
Cal. App. 4th 1611, 1623 (1994)).
“[M]oney had and received is a common count which, under California law, is not
a specific claim but is instead a form of pleading used to aver the existence of monetary
indebtedness.” Mar Partners 1, LLC v. Am. Home Mortgage Servicing, Inc., 10-2906,
2011 WL 11501, at *4 (N.D. Cal. Jan. 4, 2011). Thus, the claim “does not survive if the
underlying claim does not survive.” Id. (citing McBride v. Boughton, 123 Cal. App. 4th
379, 394 (2004)). Therefore, plaintiff’s claim for money had and received cannot survive
here, as all of his other claims have been dismissed without prejudice.
Furthermore, an action for money had and received is based on the existence of a
quasi-contract. See Pollak v. Staunton, 210 Cal. 656, 665 (1930). Generally, “[a]n action
in quasi-contract . . . does not lie when an enforceable, binding agreement exists defining
the rights of the parties.” Id. (quoting Paracor Fin., Inc. v. Gen. Elec. Capital Corp., 96
F.3d 1151, 1167 (9th Cir. 1996)). While there are exceptions to this rule, they apply only
when a plaintiff, for reasons independent of the contract with defendant, has a remedy in
quasi-contract. See, e.g., Supervalu, Inc. v. Wexford Underwriting Managers, Inc., 175
Cal. App. 4th 64, 78-79 (2009) (citing Minor v. Baldridge, 55 P. 783 (Cal. 1898)). Here,
plaintiff’s claim for money had and received is based on the same facts as his claim for
breach of contract. Plaintiff fails to allege facts sufficient for an independent remedy in
quasi-contract. Because the complaint indicates that there is an enforceable, binding
agreement that exists to define the rights of the parties, plaintiff has not stated a claim for
money had and received. Mar Partners, 2011 WL 11501, at *4.
Accordingly, plaintiff’s claim for money had and received is DISMISSED without
prejudice.
B.
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BANA’s Motion to Dismiss
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Page 14 of 16

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

‘O’

Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

In its motion to dismiss, BANA contends that plaintiff’s claims against it must fail
because all of plaintiff’s allegations pertain to events that occurred after BANA ceased to
have an interest in the loan––that is, after BANA service-released plaintiff’s loan and
assigned the Deed of Trust on July 1, 2013. Def. BANA’s Mot. Dismiss at 4. In his
opposition to BANA’s motion, plaintiff argues that BANA is still involved in the
transaction, and its assignment “obfuscates [its] true status or role.” Pl.’s Opp’n BANA
1.
However, plaintiff pleads very few facts in the complaint itself with respect to any
alleged conduct by BANA. Plaintiff conclusorily asserts that BANA was “the agent and
employee of each of the other Defendants,” that it “wilfully conspired . . . and agreed to
do all acts . . . described,” and that it “authorized and ratified” all actions of defendant
Nationstar. Compl. at ¶¶ 24, 25, 26. Yet plaintiff fails to allege facts sufficient to support
these claims. “While legal conclusions can provide the framework of a complaint, they
must be supported by factual allegations. When there are well-pleaded factual
allegations, a court should assume their veracity and then determine whether they
plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. Here, it is unclear
from the face of the complaint what specific role, if any, BANA played with respect to
the alleged facts underlying plaintiff’s claims for breach of contract, breach of implied
covenant of good faith and fair dealing, accounting, injunctive relief, violation of
California Civil Code § 2924c, and money had and received.
Accordingly, defendant BANA is DISMISSED from this action without prejudice.
V.

CONCLUSION

In accordance with the foregoing, the Court GRANTS without prejudice
defendants U.S. Bank and Nationstar’s motion to dismiss plaintiff’s complaint in its
entirety. The Court also GRANTS without prejudice defendant BANA’s motion to
dismiss plaintiff’s complaint. Plaintiff is granted fourteen (14) days to file an amended
complaint addressing the deficiencies identified herein. Failure to do so may result in
dismissal with prejudice.

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

‘O’

Case No.

CV16-2265-CAS(FFMx)

June 6, 2016

Title

NATHANIEL J. FRIEDMAN V. U.S. BANK NATIONAL
ASSOCIATION, ET AL.

In light of the court’s dismissal with leave to amend, defendants and their agents,
employees, representatives, successors, assigns, attorneys, and all others acting in concert
or in participation with them are hereby ENJOINED for thirty (30) days from
proceeding with the non-judicial foreclosure sale of the Property located at 1423 Schuyler
Road, Beverly Hills, California 90210.
IT IS SO ORDERED.
00
Initials of Preparer

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:

02

CL

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