Marcoss v. JPMorgan Chase Bank, N.A.
Filing
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ORDER GRANTING Defendant's Motion to Dismiss and DIRECTING Plaintiff to File a First Amended Complaint 9 , signed by District Judge Dale A. Drozd on 7/20/2018: 28-Day Deadline. (Hellings, J)
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UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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SAMIR IBRAHIM MARCOSS,
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No. 1:18-cv-00489-DAD-EPG
Plaintiff,
v.
JPMORGAN CHASE BANK, N.A.,
ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS AND DIRECTING
PLAINTIFF TO FILE A FIRST AMENDED
COMPLAINT
Defendant.
(Doc. No. 9)
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This matter is before the court on defendant’s motion to dismiss. (Doc. No. 9.) A hearing
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on the motion was held on July 17, 2018. (Doc. No. 15.) Attorney Brian Folland appeared
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telephonically on behalf of plaintiff Samir Ibrahim Marcoss (“plaintiff”), and attorney Jonathan
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Bond appeared telephonically on behalf of defendant JPMorgan Chase Bank, N.A. (“defendant”).
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(Id.) Having reviewed the parties’ briefing and heard oral arguments, and for the reasons that
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follow, defendant’s motion to dismiss will be granted.
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BACKGROUND
In his complaint, plaintiff alleges as follows. Defendant systematically failed to
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adequately communicate alternatives to foreclosure with defaulted borrowers, including properly
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noticing foreclosure sales and reviewing completed loan modification applications in violation of
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California pre-foreclosure statutes. (Doc. No. 1-1.) On January 11, 2002, plaintiff purchased real
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property located at 2338 E. Rush Ave., Fresno, CA 93720. (Id. at ¶ 7.) The property was
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refinanced by Washington Mutual on February 16, 2006, after which defendant purchased the
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loan. (Id.) Plaintiff defaulted on the loan in August 2010. (Id. at ¶ 8.) On August 22, 2011,
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defendant recorded a notice of default (“NOD”) in the Fresno County Recorder’s Office. (Id. at ¶
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9.) Prior to recording the NOD, defendant failed to contact plaintiff to assess plaintiff’s financial
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situation and explore options for avoiding foreclosure. (Id. at ¶ 10.) Defendant did not advise
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plaintiff of his right to request a meeting regarding foreclosure alternatives that would be
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scheduled within fourteen days, nor did defendant provide plaintiff with a toll-free phone number
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to contact a United States Department of Housing and Urban Development (“HUD”) certified
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counseling agency. (Id.)
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After receipt of the NOD, plaintiff submitted a completed loan modification application to
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defendant. (Id. at ¶ 12.) Plaintiff provided defendant with the following documents: a completed
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request for modification assistance (“RMA”) application, a completed borrower and co-borrower
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acknowledgement and agreement, detailed accounts of plaintiff’s household income and
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expenses, an affidavit explaining financial hardship, a Tax Form 4506T, and a Dodd-Frank
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certification (hereinafter “the Application”). (Id.) Following receipt of the Application,
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defendant withheld determination on plaintiff’s modification application, though plaintiff had
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satisfied all the required conditions in receiving and securing the requested relief. (Id. at ¶¶ 13–
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14.)
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According to plaintiff, defendant repeatedly failed to review plaintiff’s submitted
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Application and, nonetheless, would request new iterations of the same documents to replace ones
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that had aged beyond their usefulness. (Id. at ¶ 15.) Plaintiff complied with these requests with
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responsive documentation and within the timeframe required by the request. (Id. at ¶ 16.)
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On August 26, 2016, a Notice of Trustee’s Sale (“NTS”) was recorded against the
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property, even though plaintiff’s completed Application was pending a determination on the
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merits. (Id. at ¶ 18.) Defendant failed to render a final determination on plaintiff’s eligibility for
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a loan modification and completed the foreclosure process on May 15, 2017, at which point the
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property in question was sold at an auction. (Id. at ¶ 19.)
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Plaintiff seeks general damages, compensatory damages of at least $250,000,
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consequential damages, punitive damages, attorneys’ fees, and any other relief that the court
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deems proper. (Id. at 12.)
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LEGAL STANDARD
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The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal
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sufficiency of the complaint. N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir.
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1983). “Dismissal can be based on the lack of a cognizable legal theory or the absence of
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sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901
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F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege “enough facts to state a claim to
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relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A
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claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw
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the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.
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Iqbal, 556 U.S. 662, 678 (2009).
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In determining whether a complaint states a claim on which relief may be granted, the
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court accepts as true the allegations in the complaint and construes the allegations in the light
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most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v.
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United States, 915 F.2d 1242, 1245 (9th Cir. 1989). However, the court need not assume the truth
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of legal conclusions cast in the form of factual allegations. United States ex rel. Chunie v.
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Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed
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factual allegations, “it demands more than an unadorned, the defendant-unlawfully-harmed-me
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accusation.” Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere “labels and
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conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S.
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at 555; see also Iqbal, 556 U.S. at 676 (“Threadbare recitals of the elements of a cause of action,
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supported by mere conclusory statements, do not suffice.”). Moreover, it is inappropriate to
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assume that the plaintiff “can prove facts which it has not alleged or that the defendants have
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violated the . . . laws in ways that have not been alleged.” Associated Gen. Contractors of Cal.,
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Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).
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DISCUSSION
A.
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Request for Judicial Notice
Defendant requests that the court take judicial notice of the following documents found in
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the official records of the Fresno County Recorder: 1) deed of trust recorded on February 16,
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2006; 2) deed of trust recorded on October 27, 2016; 3) NOD recorded on April1, 2016; 4) NTS
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recorded on February 15, 2017; 5) trustee’s deed upon sale recorded on May 19, 2017; and 6)
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special/limited warranty deed executed on December 15, 2017 and recorded January 30, 2018.
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(Doc. No. 9-1.) Plaintiff does not object to the court taking judicial notice of these documents.
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Ordinarily, the court considers only the complaint and attached documents in deciding a
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motion to dismiss; however, the court may also take judicial notice of matters of public record
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without converting the motion into one for summary judgment. Lee v. City of Los Angeles, 250
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F.3d 668, 689 (9th Cir. 2001). Pursuant to the Federal Rule of Evidence 201(b), a court may
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“judicially notice a fact that is not subject to reasonable dispute because it: (1) is generally
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known within the trial court’s territorial jurisdiction; or (2) can be accurately and readily
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determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid.
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201(b). Public records are properly the subject of judicial notice because the contents of such
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documents contain facts that are not subject to reasonable dispute, and the facts therein “can be
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accurately and readily determined from sources whose accuracy cannot reasonably be
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questioned.” Id.; see also Intri-Plex Techs. v. Crest Grp., Inc., 499 F.3d 1048, 1052 (9th Cir.
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2007).
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The exhibits defendant requests that judicial notice be taken of are all matters of public
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record, duly recorded with the Fresno County Recorder. (See Doc. No. 9-1.) The fact of their
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recording can be “accurately and readily determined” because the accuracy of the source of the
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records—the Fresno County Recorder—cannot reasonably be questioned. Fed. R. Evid. 201(b).
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Defendant’s unopposed request for judicial notice will therefore be granted.
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B.
California Civil Code § 2923.6
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Plaintiff’s first cause of action is for violation of California Civil Code § 2923.6(c), which
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prohibited “dual tracking,” a practice in which a lender would pursue foreclosure simultaneously
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with consideration of a borrower’s loan modification application. (Doc. No. 1-1 at ¶¶ 23–36.)
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However, plaintiff brings the claim under a repealed version of the statute that was only effective
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until December 31, 2017. See Cal. Civ. Code § 2923.6 (repealed Jan. 1, 2018, effective Jan. 1,
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2013–Dec. 31, 2017). On January 1, 2018, the prohibition on “dual tracking” codified in §
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2923.6 was repealed. Plaintiff’s complaint was filed in Fresno County Superior Court on
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February 9, 2018. (See Doc. No. 1-1 at 2.) Section 2924.11, which modified the prior legislation
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addressing dual tracking, became effective on January 1, 2018. See Cal. Civ. Code § 2924.11.
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Defendant argues that plaintiff cannot state a claim under the repealed § 2923.6 and that
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plaintiff’s claim cannot be construed as being brought under § 2924.11 because § 2923.6 does not
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contain a savings clause. (Doc. No. 9 at 10–11.) Additionally, defendant argues that even under
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§ 2924.11, plaintiff’s claim fails because plaintiff’s allegations of the completeness of the loan
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modification application are insufficient as a matter of law. (Id. at 12.) At the hearing, plaintiff
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requested leave to amend the complaint to re-allege this cause of action under § 2924.11. The
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court finds this to be appropriate and plaintiff’s claim brought under § 2923.6 will therefore
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dismissed without prejudice and with leave to amend.
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C.
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California Civil Code § 2923.7
Plaintiff’s second cause of action is for violation of § 2923.7 based on defendant’s alleged
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failure to provide plaintiff with a “single point of contact” (“SPOC”) regarding communication
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about foreclosure prevention alternatives. (Doc. No. 1-1 at ¶¶ 37–42.) Plaintiff alleges that his
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calls were “always routed to alternative individuals, one [sic] of whom had the power or available
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information to address [plaintiff’s] concerns regarding the status of his loan modification or the
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foreclosure sale of the property.” (Id. at ¶ 40.) In moving to dismiss this claim, defendant argues
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that the statute expressly permits a team of individuals to operate as a SPOC, and that plaintiff
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fails to allege any conduct constituting a violation of the provision in sufficiently specific terms.
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(Doc. No. 9 at 14.)
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California Civil Code § 2923.7 provides, in relevant part, that “[u]pon request from a
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borrower who requests foreclosure prevention alternative, the mortgage servicer shall promptly
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establish a single point of contact and provide to the borrower one or more direct means of
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communication with the single point of contact.” The section then defines a “single point of
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contact” as “an individual or team of personnel, each of whom has the ability and authority to
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perform the responsibilities described . . ..” Cal. Civ. Code § 2923.7(e).
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Here, plaintiff alleges that he had to speak with different individuals regarding the status
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of his loan modification application and received conflicting information from those various
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individuals. (Doc. No. 1-1 at ¶ 41.) Plaintiff also alleges that he requested a SPOC from
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defendant numerous times but was denied. (Id. at ¶¶ 39–40.) As pled, it is not clear whether this
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claim is based on the allegation that plaintiff did not have one designated individual point of
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contact, or whether the SPOC did not satisfy the requirements of § 2923.7. At the hearing on the
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pending motion, plaintiff’s counsel indicated that he could provide additional specific facts to
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support the allegations that plaintiff attempted to communicate with a SPOC regarding the status
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of his loan modification application. Plaintiff’s counsel also stated that, if permitted, plaintiff
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could amend the complaint to cure any deficiencies with respect to § 2924.15, which provides
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that any claims brought under § 2923.7 are only applicable to “first lien mortgages or deeds of
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trust that are secured by owner-occupied residential real property containing no more than four
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dwelling units.” Cal. Civ. Code § 2924.15. Due to these deficiencies, defendant’s motion to
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dismiss the second cause of action will be granted with leave to amend.
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D.
California Business and Professions Code § 17200
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Plaintiff’s final cause of action alleges that defendant’s pattern and practice of failing to
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review “a submitted and complete loan modification application while simultaneously pursuing
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foreclosure of the loan is designed to cause serviceable debt to increase to an amount where
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reinstatement is impossible and loan modification no longer available to otherwise qualified
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applicants” and is therefore a violation of California’s Unfair Competition Law (“UCL”),
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Business and Professions Code § 17200. (Doc. No. 1-1 at ¶¶ 43–46.) Defendant argues that
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plaintiff does not state a cognizable claim under § 17200 because his first two causes of action are
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subject to dismissal. (Doc. No. 9 at 15.) Defendant also argues that to the extent plaintiff claims
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that defendant acted fraudulently as prohibited by § 17200, such a claim must be supported by
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specific factual allegations indicating what representations were made and how the public would
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be deceived by them. (Id.)
California’s UCL prohibits false advertising and “any unlawful, unfair, or fraudulent
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business act or practice.” Cal. Bus. & Prof. Code § 17200. “The unlawful category of the UCL
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borrows violations of other laws and treats them as unlawful practices that the unfair competition
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law makes independently actionable.” Haynish v. Bank of Am., N.A., 284 F. Supp. 3d 1037, 1051
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(N.D. Cal. 2018) (citing Cel–Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th
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163, 180 (1999). “To state a claim based on an unlawful business act or practice, a plaintiff must
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allege facts sufficient to show a violation of some underlying law.” Haynish, 284 F. Supp. 3d at
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1051 (citing Johnson v. PNC Mortg., No. C 14-02976 LB, 2014 WL 3962662, at *11 (N.D. Cal.
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2014) (citations omitted).
As indicated above, plaintiff’s claims brought under §§ 2923.6 and 2323.7 will both be
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dismissed. “A UCL cause of action cannot be maintained if other causes of action based on the
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same factual allegations fail.” Palmer v. MTC Financial, Inc., No. 1:17-cv-00043-DAD-SKO,
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2017 WL 2311680, at *11 (E.D. Cal. May 26, 2017). To the extent that plaintiff wishes to bring a
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claim under the “fraud” prong of § 17200, the complaint must allege facts indicating “that
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members of the public are likely to be deceived” by specific business practices. Podolsky v. First
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Healthcare Corp., 50 Cal. App. 4th 632, 648 (1996), as modified (Nov. 5, 1996), as modified
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(Nov. 20, 1996) (citing Comm. on Children’s Television, Inc. v. General Foods Corp., 35 Cal.3d
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197, 211 (1983)). Plaintiff has not alleged that any of defendant’s specific business practices are
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likely to deceive members of the public. For these reasons, plaintiff’s third cause of action will
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also be dismissed with leave to amend.
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CONCLUSION
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Defendant’s motion to dismiss (Doc. No. 9) is granted in its entirety, with leave to amend
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being granted as well. Plaintiff is directed to file and serve any amended complaint no later than
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twenty-eight days from the service of this order.
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IT IS SO ORDERED.
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Dated:
July 20, 2018
UNITED STATES DISTRICT JUDGE
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