Hielo v. Bank of America Servicing Company et al
Filing
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FINDINGS and RECOMMENDATIONS recommending Dismissing Plaintiff's First Amended Complaint Without Leave to Amend, signed by Magistrate Judge Jennifer L. Thurston on 8/6/2015. Referred to Judge O'Neill. Objections to F&R due within 14 days. (Hall, S)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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KAHIR B. HELO,
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Plaintiff,
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v.
BANK OF AMERICA SERVICING
COMPANY, et al.,
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Defendants.
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Case No.: 1:14-cv-01522 - LJO - JLT
FINDINGS AND RECOMMENDATIONS
DISMISSING PLAINTIFF’S FIRST AMENDED
COMPLAINT WITHOUT LEAVE TO AMEND
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Plaintiff Kahir Helo initiated this action by filing a complaint against Bank of America
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Servicing Company and Nationstar Mortgage, asserting the companies are liable for misrepresentation
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and foreclosure procedures that violated of California’s Business and Professions Code. Because
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Plaintiff fails to allege facts sufficient to support his claims for relief, and it appears leave to amend
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would be futile, the Court recommends that Plaintiff’s First Amended Complaint be DISMISSED with
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out leave to amend.
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I.
Screening Requirement
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When a plaintiff proceeds in forma pauperis, the Court is required to review the complaint, and
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shall dismiss the case at any time if the Court determines that the allegation of poverty is untrue, or the
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action or appeal is “frivolous, malicious or fails to state a claim on which relief may be granted; or . . .
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seeks monetary relief against a defendant who is immune from such relief.” 28 U.S.C. 1915(e)(2). A
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claim is frivolous “when the facts alleged arise to the level of the irrational or the wholly incredible,
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whether or not there are judicially noticeable facts available to contradict them.” Denton v. Hernandez,
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504 U.S. 25, 32-33 (1992).
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II.
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Pleading Standards
General rules for pleading complaints are governed by the Federal Rules of Civil Procedure. A
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pleading stating a claim for relief must include a statement affirming the court’s jurisdiction, “a short
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and plain statement of the claim showing the pleader is entitled to relief; and . . . a demand for the relief
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sought, which may include relief in the alternative or different types of relief.” Fed. R. Civ. P. 8(a).
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The Federal Rules adopt a flexible pleading policy, and pro se pleadings are held to “less stringent
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standards” than pleadings by attorneys. Haines v. Kerner, 404 U.S. 519, 521-21 (1972).
A complaint must give fair notice and state the elements of the plaintiff’s claim in a plain and
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succinct manner. Jones v. Cmty Redevelopment Agency, 733 F.2d 646, 649 (9th Cir. 1984). Further, a
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plaintiff must identify the grounds upon which the complaint stands. Swierkiewicz v. Sorema N.A., 534
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U.S. 506, 512 (2002). The Supreme Court noted,
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Rule 8 does not require detailed factual allegations, but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation. A pleading that offers
labels and conclusions or a formulaic recitation of the elements of a cause of action will
not do. Nor does a complaint suffice if it tenders naked assertions devoid of further
factual enhancement.
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Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009) (internal quotation marks and citations omitted).
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Conclusory and vague allegations do not support a cause of action. Ivey v. Board of Regents, 673 F.2d
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266, 268 (9th Cir. 1982). The Court clarified further,
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[A] complaint must contain sufficient factual matter, accepted as true, to “state a claim
to relief that is plausible on its face.” [Citation]. A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged. [Citation]. 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. [Citation]. Where a complaint
pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of
the line between possibility and plausibility of ‘entitlement to relief.’
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Iqbal, 556 U.S. at 679 (citations omitted). When factual allegations are well-pled, a court should
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assume their truth and determine whether the facts would make the plaintiff entitled to relief; legal
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conclusions in the pleading are not entitled to the same assumption of truth. Id.
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The Court has a duty to dismiss a case at any time it determines an action fails to state a claim,
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“notwithstanding any filing fee that may have been paid.” 28 U.S.C. § 1915e(2). Accordingly, a court
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“may act on its own initiative to note the inadequacy of a complaint and dismiss it for failure to state a
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claim.” See Wong v. Bell, 642 F.2d 359, 361 (9th Cir. 1981) (citing 5 C. Wright & A. Miller, Federal
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Practice and Procedure, § 1357 at 593 (1963)). However, leave to amend a complaint may be granted
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to the extent deficiencies of the complaint can be cured by an amendment. Lopez v. Smith, 203 F.3d
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1122, 1127-28 (9th Cir. 2000) (en banc).
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III.
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Factual Allegations
Plaintiff alleges he is the owner of a real property located in Kyle, Texas, commonly referred to
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as 161 Goldenrod Street. (Doc. 7 at 2, ¶ 5) He asserts that he began negotiating a loan modification
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agreement with defendant Bank of America in July 2013, and sent documents requested by a
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representative to Bank of America on July 5, 2013. (Id. at 3, ¶¶ 8-9) Plaintiff asserts he did not receive
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any response from Bank of America, and contacted the company about the status of his application.
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(Id., ¶ 11) Bank of America informed Plaintiff “that only two documents had been received by them, of
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the 13 documents set [sic] by Plaintiff[], so nothing had been done,” and Plaintiff re-sent the documents
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on July 21, 2013. (Id. at 4, ¶ 12) Bank of America told Plaintiff the documents were received, and
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informed Plaintiff “it would take at least 90 days” to process his application and for a decision to be
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made on his application for a loan modification. (Id., ¶¶ 13-14) However, Bank of America transferred
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his mortgage servicing to Nationstar Mortgage Company without notifying Plaintiff. (Id., ¶ 15-16)
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According to Plaintiff, Bank of America did not transfer his application for a loan modification
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or the supporting documents Nationstar. (Doc. 7 at 4, ¶ 16) Plaintiff asserts he submitted payments on
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this mortgage to Nationstar, “but the payments were refused by it, making Plaintiff’s mortgage
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delinquent.” (Id., ¶ 17) Plaintiff contacted Nationstar and began “a new application process for a loan
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modification.” (Id. at 5, ¶ 18) He reports that he submitted the requested documents, but on June 2,
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2014, Plaintiff was advised by an employee named Luis that his documents ‘had not been received’ by
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Nationstar.” (Id., ¶ 19) Plaintiff alleges he re-submitted the necessary documents on July 1, 2014, but
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was informed that “the documents had only been ‘partially’ received” on July 14, 2014. (Id., ¶ 20)
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Nationstar set a Trustee’s Sale for the property on August 4, 2014. (Id, ¶ 21)
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Based upon these facts, Plaintiff states the following claims for relief: (1) violations of
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California’s Business and Professions Code § 17200 et seq., (2) intentional misrepresentation, and (3)
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negligent misrepresentation.
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IV.
Discussion and Analysis
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As an initial matter, Plaintiff raises only claims arising under California law against the
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defendants for actions related to property located in Texas. However, Plaintiff fails to allege whether
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the loan modification application contained a choice of law provision. Thus, it is unknown whether the
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laws of California or Texas apply. Nevertheless, the Court will apply California law based upon the
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causes of action identified by Plaintiff in his First Amended Complaint.
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A.
Intentional Misrepresentation
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Plaintiff asserts Defendants are liable for intentional misrepresentation because “employees
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acting at their discretion, made representations and promises about material facts without any intention
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of performing them.” (Doc. 7 at ¶ 26) “Under California law, the elements for an intentional-
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misrepresentation, or actual-fraud, claim are (1) misrepresentation; (2) knowledge of falsity; (3) intent
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to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage.” UMG Recording,
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Inc. v. Bertelsmann AG, 479 F.3d 1078, 1096 (9th Cir.2007).
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To state a cognizable claim for intentional misrepresentation, a plaintiff must meet the
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heightened pleading standards of Rule 9 of the Federal Rules of Civil Procedure, which requires a
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plaintiff to state “with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). In other
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words, the plaintiff must articulate the “who, what, when, where, and how” of the fraud alleged.
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Kearns v. Ford Motor Co., 567 F.3d 1120, 1126 (9th Cir. 2009); see also Edwards v. Marin Park, Inc.,
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356 F.3d 1058, 1066 (9th Cir. 2004) (explaining that to avoid dismissal for failure to meet the standards
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under Rule 9(b), “[a] complaint would need to state the time, place, and specific content of the false
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representations as well as the identities of the parties to the misrepresentation”). If allegations of fraud
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do not meet the heightened pleading standard, the “averments . . . should be disregarded, or stripped
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from the claim for failure to satisfy Rule 9(b).” Kearns, 567 F.3d at 1124 (quotations omitted).
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“For corporate defendants, 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
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wrote, and when it was said or written.” Flowers v. Wells Fargo Bank, N.A., 2011 WL 2748650, at *6
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(N.D. Cal. July 13, 2011). Here, though Plaintiff identifies the individuals to whom he spoke regarding
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his loan applications, Plaintiff fails to allege their authority to speak on behalf of Bank of America or
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Nationstar. In addition, Plaintiff fails to identify any specific representations that were made to
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Plaintiff regarding the status of his loan modification application, or facts supporting a finding that the
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representatives knew the statements were false. The Court informed Plaintiff previously that without
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such factual allegations, his factual allegations failed to meet the heightened pleading requirements
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under Rule 9 for a claim sounding in fraud. (See Doc. 4 at 6) Nevertheless, Plaintiff has failed to
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allege further facts to support his claim. Consequently, the Court finds further leave to amend would
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be futile, and recommends that Plaintiff’s intentional misrepresentation be DISMISSED without leave
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to amend.
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B.
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The elements of a cause of action for negligent misrepresentation are the same as those of a
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claim for fraud, except “negligent misrepresentation does not require scienter or intent to defraud.”
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Small v. Fritz Companies, Inc., 30 Cal. 4th 167, 173 (2003). Thus, to state a cognizable claim for
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negligent misrepresentation, a plaintiff must allege “a misrepresentation of fact by a person who has no
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reasonable grounds for believing it to be true.” Chapman v. Skype Inc., 220 Cal.App.4th 217, 230-31
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(2013). Like a claim for intentional misrepresentation, a claim for “negligent misrepresentation must
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meet Rule 9(b)’s particularity requirements.” Neilson v. Union Bank of Cal., 290 F. Supp. 2d 1101,
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1141 (C.D. Cal. 2003); Das v. WMC Mortg. Corp., 831 F. Supp. 2d 1147, 1166 (N.D. Cal. 2011).
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Negligent misrepresentation
Here, Plaintiff again fails to allege who made representations to him regarding his loan
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modification application, or that the individual(s) knew the representation was untrue. Further, it
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appears that any representations made by Bank of America and Nationstar employees were related to
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future events related to the processing of Plaintiff’s application. Importantly, “predictions as to future
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events, or statements as to future action by some third party, are deemed opinions, and not actionable
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fraud.” Tarmann v. State Farm Mutual Auto. Ins. Co., 2 Cal. App. 4th 153, 158 (1991) (citation
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omitted). Because Plaintiff again fails to allege sufficient facts to support a claim for negligent
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misrepresentation, the Court finds granting leave to amend would be futile, and recommends Plaintiff’s
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claim for negligent misrepresentation be DISMISSED without leave to amend.
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C.
Violation of California Business and Professions Code § 17200
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California prohibitis any “unlawful, unfair, or fraudulent business act or practice.” Cal. Bus. &
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Prof. Code § 17200. Therefore, there are three prongs under which a claim may be established under
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§17200. Daro v. Superior Court, 151 Cal.App.4th 1079, 1093 (2007) (“Because section 17200 is
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written in the disjunctive, a business act or practice need only meet one of the three criteria—unlawful,
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unfair, or fraudulent—to be considered unfair competition”); Lozano v. AT&T Wireless Servs., 504
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F.3d 718, 731 (9th Cir. 2007) (“[e]ach prong . . . is a separate and distinct theory of liability”).
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Unlawful act or practice
Actions prohibited by § 17200 include “any practices forbidden by law, be it civil or criminal,
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federal, state, or municipal, statutory, regulatory, or court-made.” Saunders v. Superior Court, 27
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Cal.App.4th 832, 838-39, 33 Cal.Rptr.2d 438 (1994). Thus, the “unlawful” prong requires an
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underlying violation of law. Krantz v. BT Visual Images, 89 Cal.App.4th 164, 178, 107 Cal.Rptr.2d
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209 (2001). Here, as detailed above, Plaintiff has not alleged facts sufficient to support a finding that
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Defendants violated underlying laws.
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2.
Unfair act or practice
A claim under the “unfair” prong requires “conduct threatening incipient violation of antitrust
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laws, or violates the policy or spirit of those laws . . . , or otherwise significantly threatens or harms
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competition.” Cal-Tech Communications v, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th
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163, 187, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999). In this case, Plaintiff has neither alleged a
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violation of antitrust laws, nor alleged threatened or harmed competition.
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3.
Fraudulent act or practice
A “fraudulent” act under § 17200 is “one which is likely to deceive the public,” and “may be
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based on misrepresentations . . . which are untrue, and also those which may be accurate on some level,
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but will nonetheless tend to mislead or deceive.” McKell v. Washington Mutual, Inc., 142 Cal.App.4th
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1457, 1474, 49 Cal.Rptr.3d 227 (2006). Thus, the term “fraudulent” under §17200 “does not refer to
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the common law tort of fraud,” Puentes v. Wells Fargo Home Mortg., Inc., 160 Cal.App.4th 638, 645
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(Ct. App. 2008), but still requires allegations that the misrepresentation was directly related to injurious
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conduct, and that the claimant actually relied on the alleged misrepresentation. In re Tobacco II Cases,
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46 Cal.4th 298, 36-27 (2009). Nevertheless, claims based upon the “fraudulent” prong of §17200
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remain subject to the heightened pleading requirements of Rule 9(b). Kearns, 567 F.3d at 1124-25;
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Meridian Project Sys., 404 F.Supp.2d at 1219. Because Plaintiff failed to plead the circumstances
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surrounding fraud with particularity, his claim for fraudulent practices under § 17200 fails as well.
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Conclusion
Significantly, a claim under § 17200 must rest on a violation of another law. Farmers Ins.
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Exch. v. Superior Court, 2 Cal.4th 377, 383, 6 Cal.Rptr.2d 487, 826 P.2d 730 (1992). As discussed
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above, Plaintiff fails to allege facts to support his claims of intentional and negligent misrepresentation.
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In addition, he has not alleged facts sufficient to support a claim that Bank of America and Nationstar
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may be held liable for violations arising under § 17200. Accordingly, the Court recommends this claim
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be DISMISSED without leave to amend.
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V.
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Findings and Recommendations
Previously, the Court granted Plaintiff an opportunity to file an amended complaint that set
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forth facts sufficient to support his claims. (Doc. 4 at 7, citing Noll v. Carlson, 809 F.2d 1446, 1448-
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49 (9th Cir. 1987)) However, Plaintiff failed to allege additional facts. Consequently, the Court finds
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Plaintiff is unable to allege facts sufficient to support his claims against Bank of America and
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Nationstar, and that further leave to amend would be futile. See Lopez, 203 F.3d at 1127-28 (leave to
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amend is not futile when the deficiencies may be cured).
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Based upon the foregoing, IT IS HEREBY RECOMMENDED:
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Plaintiff’s First Amended Complaint be DISMISSED without leave to amend
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The Clerk of Court be DIRECTED to close this matter.
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These Findings and Recommendations are submitted to the United States District Judge
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assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 304 of the Local
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Rules of Practice for the United States District Court, Eastern District of California. Within fourteen
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days after being served with these Findings and Recommendations, Plaintiff may file written
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objections with the Court. Such a document should be captioned “Objections to Magistrate Judge’s
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Findings and Recommendations.”
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Plaintiff is advised that failure to file objections within the specified time may waive the right
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to appeal the District Court’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991); Wilkerson v.
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Wheeler, 772 F.3d 834, 834 (9th Cir. 2014).
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IT IS SO ORDERED.
Dated:
August 6, 2015
/s/ Jennifer L. Thurston
UNITED STATES MAGISTRATE JUDGE
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