Chanthavong v. Aurora Loan Services, Inc. et al
Filing
33
ORDER granting in part and denying in part defendants' 28 Motion to Dismiss, signed by Judge Garland E. Burrell, Jr., on 11/30/11. Plaintiff is GRANTED 10 days from the date on which this order is filed to file a Third Amended Complaint. (Kastilahn, A)
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IN THE UNITED STATES DISTRICT COURT
9
FOR THE EASTERN DISTRICT OF CALIFORNIA
10
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VANG CHANTHAVONG,
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13
14
Plaintiff,
v.
16
AURORA LOAN SERVICES, INC., a
Delaware Corporation; MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC.,
17
Defendants.
________________________________
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)
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)
2:10-cv-2269-GEB-JFM
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’
MOTION TO DISMISS AND DENYING
MOTION TO STRIKE
18
Defendants Aurora Loan Services, LLC (“Aurora”) and Mortgage
19
20
Electronic
Registration
Systems,
21
“Defendants”) seek dismissal of Plaintiff Van Chanthavong’s Second
22
Amended Complaint (“SAC”). Dismissal is sought under Federal Rule of
23
Civil Procedure (“Rule”) 12(b)(6), based on the argument that the SAC
24
fails to state a viable claim. (ECF No. 28.) Defendants also seek to
25
have striken Plaintiff’s request for punitive damages under Rule 12(f).
26
Id. Plaintiff filed an opposition brief. (ECF No. 29.) For the reasons
27
stated below, Defendants’ dismissal motion will be granted in part and
28
denied in part and the motion to strike will be denied.
1
Inc.
(“MERS”;
collectively,
1
I. PLAINTIFF’S ALLEGATIONS IN SAC
2
The following factual allegations are from the SAC. On August
3
24, 2007 Plaintiff and Lehman Brothers “entered into a loan agreement
4
for the refinancing of” Plaintiff’s real property located at 1900 H
5
Street,
6
Plaintiff executed an adjustable rate note (the “Note”) and a deed of
7
trust (the “Deed”) for the Property. Id. ¶¶ 24-25, Exs. A-B. The Deed
8
lists Lehman Brothers as the lender and MERS “as a nominee for Lender
9
and Lender’s successors and assigns.” Id. ¶¶ 25, 29, Ex. B. “MERS is
10
. . . the beneficiary under this Security Instrument.” Id. ¶ 25.
11
Plaintiff “default[ed] under the terms of the Note.” Id. ¶ 35. On August
12
15, 2008, a Notice of Default was recorded that listed MERS as the
13
contact to “find out the amount [Plaintiff had to] pay, or to arrange
14
for payment to stop the foreclosure[.]” Id. ¶ 36, Ex. C. On October 16,
15
2008, MERS recorded a substitution of trustee in which MERS is the
16
“‘nominee
17
beneficiary.” Id. ¶ 37. Plaintiff alleges “[u]pon information and
18
belief, MERS is not, and never has been in possession of the Note.” Id.
19
¶ 38.
Sacramento,
for
California
LEHMAN
BROTHERS
(the
BANK,
“Property”).
FSB,’
.
(SAC
.
.
¶¶
the
1,
24.)
original
20
Plaintiff filed for bankruptcy protection in the Eastern
21
District of California on April 21, 2009. Id. ¶ 43. Plaintiff alleges
22
Defendants violated the automatic bankruptcy stay on April 24, 2009 by
23
causing “to be published a Notice of Trustee’s Sale, and post[ing] it”
24
at the Property. Id. ¶ 44. MERS, as nominee for Lehman Brothers,
25
transferred all beneficial interest under the Deed to Aurora on June 8,
26
2009. Id. ¶ 45, Ex. E. Plaintiff alleges “[t]his [transfer] action was
27
void
28
endorsement or allonge evidencing that LEHMAN BROTHERS, MERS, or AURORA
because
it
violated
the
automatic
2
stay”
and
“[t]here
is
no
1
LOAN SERVICES is or was the holder of the note.” Id. ¶¶ 45-46.
2
The Bankruptcy Court filed an Order Discharging the Debtors on
3
August 3, 2009, and Plaintiff’s bankruptcy case was closed August 14,
4
2009. Id. ¶ 48. “Plaintiff alleges that since there is no evidence that
5
LEHMAN BROTHERS, MERS, nor AURORA ever took actual possession of the
6
note, its security interest was never perfected, [and was] not perfected
7
at the time of filing the debtor’s bankruptcy, and thus the underlying
8
debt was discharged.” Id. ¶ 49.
9
Plaintiff alleges that both before and after his bankruptcy
10
filing, “Plaintiff’s agent, Boomie Cotton, and AURORA Loan Services
11
. . . engaged in discussions of loan modification.” Id. ¶ 50. Plaintiff
12
further alleges: “On September 7, 2009, plaintiff’s agent contacted
13
AURORA and was advised that the payment could not be made and was told
14
that they would give a 10 day grace period. Payment was . . . credited
15
to plaintiff’s account on or about September 24, 2009.” Id. ¶ 53. “On
16
. . . September 11, 2009, Defendants caused to be published a Notice of
17
Trustee’s Sale set for September 30, 2009.” Id. ¶ 54, Ex. G. Plaintiff
18
alleges he was unaware that a Notice of Trustee’s Sale was filed and
19
never received notice. Id. ¶ 55.
20
Plaintiff
received
a
Special
Forbearance
Agreement
from
21
Aurora, which he signed and returned on September 21, 2009. Id. ¶ 56,
22
Ex. H. Plaintiff attaches to his SAC a copy of the Special Forbearance
23
Agreement that he signed; however, it is not signed by Aurora. Id. Ex.
24
H. Plaintiff alleges his agent contacted Aurora on September 24, 2009,
25
to clarify the agreement “and was told that the agreement was a six
26
month trial period[.]” Id. ¶ 57. “[P]laintiff’s agent was told by
27
representatives of AURORA that there was no sale date and that the
28
property was not in foreclosure, but that the property was in an ‘active
3
1
loan mod.’” Id. ¶ 58. “Plaintiff’s Agent contacted AURORA on a monthly
2
basis and was repeatedly told that there was no foreclosure date set[.]”
3
Id. ¶ 59.
4
Plaintiff alleges his agent mailed Plaintiff’s October payment
5
to Aurora on October 19, 2009, and again asked “if there was a sale
6
date[; the agent] was told the loan was not in foreclosure and there was
7
no sale date.” Id. ¶ 64. Plaintiff alleges: “On or about October 30,
8
2009, defendants conducted a private foreclosure sale without notice to
9
plaintiff
or
his
agent
of
any
default
in
the
loan
modification
10
agreement.” Id. ¶ 65. Plaintiff alleges the Notice of Trustee’s Sale was
11
never posted on the premises, mailed by certified mail, or received by
12
the Plaintiff. Id. ¶¶ 66-67.
13
Plaintiff alleges he was advised that the Property was for
14
sale on November 2, 2009, when a real estate agent came to the Property.
15
Id. ¶ 70. Plaintiff alleges that same day “plaintiff’s agent spoke with
16
defendant
17
agreement was canceled, and was told that it was canceled on October 20,
18
2009. Plaintiff [alleges he] never received a notice of cancellation.”
19
Id. 9:24-26.1 Plaintiff alleges on November 3, 2009, his
20
AURORA
and
asked
when
the
loan
modification/forbearance
23
agent contacted the foreclosure trustee and
discovered for the first time that the trustee’s
sale had been continued from month to month and
also learned for the first time that a new notice
of trustee’s sale had been published and a new sale
date set for October 30, 2009. AURORA advised that
. . . the property was sold on October 30, 2009.
24
Id. 10:20-24. “[P]laintiff’s agent . . . discovered that sales dates had
21
22
25
26
27
28
1
Beginning on page 9 line 21 in the SAC, Plaintiff re-uses the
numbers 53 through 70 in numbering his paragraphs; then beginning on
page 24 line 2, Plaintiff re-uses the numbers 126 through 154.
Therefore, these paragraphs are referred to by the page and line number,
rather than the paragraph numbers.
4
1
been set on 2/2/09, 3/4/09, 5/12/09, 9/12/09, 7/15/09, 8/18/09, 9/30/09,
2
and 10/30/09.” Id. 10:7-9. Plaintiff alleges that he, “and his agent or
3
representative had . . . numerous conversations with the loan servicing
4
agent and was told there was no sale date set.” Id. 10:27-28.
5
Plaintiff also alleges in the SAC that “[f]ollowing the filing
6
of this case,” the bankruptcy trustee “was advised of the possible claim
7
of the estate and . . . the Trustee [was given] an opportunity to review
8
the complaint [Plaintiff filed in this district court,] and [to] advise
9
the [bankruptcy] court whether he wished to pursue the claim on behalf
10
of the estate.” Id. 11:12-16. Plaintiff further alleges in the SAC that
11
the Bankruptcy Court did not reopen his bankruptcy case and “[a]s a
12
result, the ‘asset’ was effectively abandoned back to the debtor by
13
operation of law[.]” Id. 11: 17-19.
14
II. DISCUSSION
15
Defendants seek dismissal of Plaintiff’s claims arguing, inter
16
alia: “Plaintiff lacks standing to assert several of his . . . [claims]
17
because he failed to include those claims as assets of his estate in his
18
Chapter 7 Petition” and “each of Plaintiff’s . . . claims fails because
19
they do not meet the pleading requirements.” (Defs.’ Mem. of P. & A.
20
(“Mot.”) 1:19-21, 2:1-2.) Plaintiff’s SAC is comprised of what is
21
labeled as the following ten claims, three of which comprise more than
22
a single claim: 1) injunctive relief, 2) declaratory relief, 3) breach
23
of contract, 4) negligence/negligent misrepresentation, 5) demand to
24
produce the note, 6) demand to set aside the trustee’s sale, 7) demand
25
to cancel the trustee’s deed, 8) request to quiet title, 9) violation of
26
statute, and 10) fraud and deceit. (SAC ¶¶ 71-159.)
27
Defendants argue Plaintiff’s demand to cancel the trustee’s
28
deed and request to quiet title should be dismissed because Plaintiff
5
1
included those claims in his SAC without receiving leave of court to
2
allege these claims. (Mot. 4:23-5:4.) These claims were not alleged in
3
Plaintiff’s First Amended Complaint (“FAC”) and were included in the SAC
4
without leave of court to include the claims in a SAC. An Order filed
5
March 18, 2011, decided Defendants’ motion to dismiss Plaintiff’s FAC
6
and granted Plaintiff leave to “file a Second Amended Complaint in which
7
he could “address the deficiencies discussed” in the Order. (Order
8
20:28-21:1, ECF No. 22.) Since the two challenged claims were not
9
alleged in the FAC, this portion of Defendants’ motion to dismiss is
10
granted.
11
A. STANDING
12
Defendants also argue Plaintiff lacks standing to prosecute
13
the
14
estate”: demand to produce the note, demand to set aside the trustee’s
15
sale, violation of statute, and fraud and deceit. (Mot. 7:1-24, 7:27-
16
8:1.) Plaintiff only responds to the Defendants’ standing challenge to
17
his claim to set aside the trustee’s sale, arguing since this claim
18
“accrue[d] when the foreclosure occur[red]” he has standing to pursue
19
this claim because it is not part of the bankruptcy estate. (Opp’n
20
9:24.)
following
claims
because
they
“remain
part
of
the
bankruptcy
21
Only the trustee has standing to prosecute the claims that are
22
part of a bankruptcy estate, since “the bankruptcy trustee controls the
23
bankruptcy estate, [and] is the real party in interest in the suits that
24
belong to the estate.” Griffin v. Allstate Ins. Co., 920 F. Supp. 127,
25
130 (C.D. Cal. 1996). The filing of a bankruptcy petition “creates an
26
estate [which] is comprised of . . . all legal or equitable interests of
27
the debtor in property as of the commencement of the case.” 11 U.S.C. §
28
541(a)(1). “11
U.S.C. § 541(a)(1) . . . defines property of the
6
1
bankruptcy estate to include ‘all legal or equitable interests of the
2
debtor in property as of the commencement of the case.’ The scope of
3
section 541 is broad, and includes causes of action.” Sierra Switchboard
4
Co. v. Westinghouse Elec. Corp., 789 F.2d 705, 707 (9th Cir. 1986). “11
5
U.S.C. § 521(1) [of the bankruptcy code] provides that, ‘[t]he debtor
6
shall file a list of creditors, and unless the court orders otherwise,
7
a schedule of assets and liabilities, a schedule of current income and
8
current
9
affairs.’” Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 784
10
expenditures,
and
a
statement
of
the
debtor’s
financial
(9th Cir. 2001).
11
“[A] debtor who fail[s] to disclose a pending claim as an
12
asset in a bankruptcy proceeding where debts were permanently discharged
13
[is] estopped from pursuing such claim in a subsequent proceeding.” Id.
14
Further “[t]he debtor’s duty to disclose potential claims as assets does
15
not end when the debtor files schedules, but instead continues for the
16
duration of the bankruptcy proceeding.” Id. at 784-85. “If [the debtor]
17
fail[s] to properly schedule an asset, including a cause of action, that
18
asset continues to belong to the bankruptcy estate and does not revert
19
to [the debtor].” Cusano v. Klein, 264 F.3d 936, 945-46 (9th Cir. 2001)
20
(citing Vreugdenhill v. Navistar Int’l Transp. Corp., 950 F.2d 524, 526
21
(8th Cir. 1991) (property is not abandoned by operation of law unless
22
the debtor “formally schedule[s] the property before the close of the
23
case”)).
24
“Plaintiff did not list any claim sub judice in his bankruptcy
25
filing.” (Order 10:4-5, ECF No. 22.) “[G]enerally, a debtor has no duty
26
to schedule a cause of action that did not accrue prior to bankruptcy.”
27
Cusano, 264 F.3d at 947. A claim accrues when an “action could have been
28
brought[.]” Id.
7
1
Defendants argue “[b]ecause Plaintiff never scheduled the
2
[subject SAC claims] . . . in his bankruptcy petition, . . . Plaintiff
3
lacks standing to bring . . . [the subject claims because they] arose
4
before August 14, 2009[,]” the date on which Plaintiff’s bankruptcy case
5
was closed. (Mot. 6:15-20.) Plaintiff alleges in his SAC that his
6
unsuccessful attempt to reopen his bankruptcy case after filing this
7
action, resulted in the “‘asset[s]’ [being] effectively abandoned back
8
to the [Plaintiff] by operation of law.” (SAC 11:19.)
9
A bankruptcy trustee may abandon assets; however, property
10
that is not abandoned or administered by the trustee remains property of
11
the estate. 11 U.S.C. §§ 554 (a), (d). “‘Abandonment’ is a term of art
12
with special meaning in the bankruptcy context. It is the formal
13
relinquishment of the property at issue from the bankruptcy estate.”
14
Catalano v. C.I.R., 279 F.3d 682, 685 (9th Cir. 2002). “In short,
15
abandonment requires formal notice and a hearing.” Id. at 686 (citation
16
and internal quotation marks omitted). “The Bankruptcy Court’s Order
17
denying Plaintiff’s motion to reopen his bankruptcy case did not state
18
any property was abandoned by the trustee.” (Order 10:26-28, ECF No.
19
22.) Therefore, any claim that accrued prior to the close of Plaintiff’s
20
bankruptcy case remains in the bankruptcy estate.
21
1. Demand to Produce the Note
22
Defendants argue Plaintiff’s demand to produce the Note claim,
23
in which he alleges “Defendants lacked possession of the Note and thus
24
could not foreclose[,] accrued when the Notice of Default was recorded.”
25
(Mot. 7:1-3.) Plaintiff alleges in the SAC that the Notice of Default
26
was recorded on August 15, 2008. (SAC ¶ 36, Ex. C.)
27
Plaintiff’s demand to produce the Note claim accrued when MERS
28
recorded the Notice of Default on August 15, 2008, since an “action
8
1
could have been brought” to challenge the foreclosure proceedings and
2
Defendants’ right to foreclose once the Notice of Default was recorded.
3
Cusano, 264 F.3d at 947. Therefore, Plaintiff’s “demand to produce the
4
Note” claim accrued prior to the close of Plaintiff’s bankruptcy and
5
should have been listed in Plaintiff’s bankruptcy estate. Accordingly,
6
this claim remains in the bankruptcy estate and Plaintiff does not have
7
standing to pursue this claim. Therefore, Defendants’ motion to dismiss
8
this claim is granted.
9
Further, “Defendants request that the Court grant the Motion
10
to Dismiss . . . without leave to amend.” (Mot. 2:3.) This claim was
11
previously
12
Defendants’ previous dismissal motion challenging the FAC. (Order 15:23-
13
28, ECF No. 22.) Since Plaintiff failed to address the issues identified
14
in the previous Order, it is clear “any amendment would be futile, [and]
15
there [is] no need to prolong the litigation by permitting further
16
amendment.” Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1039 (9th Cir.
17
2002). Therefore, this claim is dismissed with prejudice.
18
dismissed
for
the
same
reasons
when
the
Court
granted
2. Demand to Set Aside the Trustee’s Sale
19
Defendants argue Plaintiff lacks standing to bring his set
20
aside of the trustee’s sale claim. (Mot. 7:6-13.) Plaintiff alleges in
21
his SAC “that at the time the Notice of Default was recorded, neither
22
LEHMAN
23
possession of the note and thus had no standing or authority to initiate
24
foreclosure proceedings on the deed of trust, rendering the Notice of
25
Default Void”; and, that “defendants failed to comply with Civil Code
26
2924f and failed to provide written notice of the trustee’s sale or post
27
said notice on the property.” (SAC ¶¶ 130-131.)
28
///
BROTHERS,
MERS,
AURORA,
nor
9
CAL
WESTERN
RECONVEYANCE
had
1
Defendants argue “Plaintiff bases this claim on Defendants’
2
lack of possession of the Note and thus their lack of authority to
3
initiate foreclosure proceedings.” (Mot. 7:6-8.) Defendants further
4
argue that since “the Notice of Default was recorded on August 15, 2008,
5
and the Notice of Trustee’s Sale was recorded on April 24, 2009[,]”
6
which is prior to the close of Plaintiff’s bankruptcy estate on August
7
14, 2009, “Plaintiff lacks standing to bring this claim here.” (Mot.
8
7:10-13.)
9
defendants occurred both before and after the bankruptcy, and since
10
. . . the foreclosure[] occurred post discharge, the claim is not
11
property of the bankruptcy estate” since this claim “accrues when the
12
foreclosure occurs.” (Opp’n 10:4-6, 9:24.) However, Defendants have not
13
shown
14
foreclosure sale occurred; therefore, this portion of the motion is
15
denied.
16
Plaintiff
that
counters
Plaintiff
could
that
“[t]he
have
brought
fraudulent
this
activities
claim
before
of
the
3. Violation of Statute
17
Defendants also argue Plaintiff lacks standing to pursue his
18
violation of statute claim, alleged under California Civil Code section
19
2924. (Mot. 7:14-19.) Plaintiff alleges in this claim that “CALIFORNIA
20
WESTERN AND AURORA violated the California Foreclosure laws by . . .
21
[f]ailing to post notice of the trustee’s sale as required[ and] . . .
22
[f]ailing to send notice of the trustee’s sale by certified mail as
23
required[.]” (SAC 25:2-5.) Defendants argue “this claim accrued on April
24
24, 2009,” when the Notice of Trustee’s Sale was recorded and posted.
25
(Mot. 7:16-17.) However, Defendants have not shown that Plaintiff could
26
have brought this claim before the foreclosure sale occurred; therefore,
27
this portion of the motion is denied.
28
///
10
1
4. Fraud and Deceit
2
Defendants also argue that Plaintiff lacks standing to pursue
3
his fraud and deceit claim, which is based on Plaintiff’s allegation
4
that Defendants fraudulently initiated foreclosure proceedings when they
5
filed the Notice of Default, since “the Notice of Default was recorded
6
prior
7
Plaintiff alleges two fraud and deceit claims; one of them is addressed
8
in this section of the Order and the other fraud and deceit claim is
9
addressed infra. (SAC 25:15-27:21.)
to
the
close
of
Plaintiff’s
bankruptcy[.]”
(Mot.
7:20-24.)
10
Plaintiff alleges in this claim that MERS and Aurora were
11
never holders of the Note and consequently, “[t]he representation that
12
[P]laintiff was in default on an obligation is false and fraudulent,
13
since there is no evidence that AURORA or MERS is or was the actual
14
beneficiary of the note.” Id. 25:27-28. Plaintiff alleges, therefore,
15
“Defendants lacked standing to commence . . . foreclosure” proceedings.
16
Id. 25:17. This claim accrued when the Notice of Default was recorded,
17
which occurred prior to the close of Plaintiff’s bankruptcy proceeding.
18
Therefore, Plaintiff lacks standing to pursue this claim, and this claim
19
is dismissed. Further, this claim was previously dismissed in a prior
20
order
21
prejudice.
22
on
these
grounds;
therefore,
this
claim
is
dismissed
with
B. FAILURE TO STATE A CLAIM
23
Defendants argue Plaintiff’s remaining claims for breach of
24
contract, negligence, negligent misrepresentation, demand to set aside
25
the trustee’s sale, violation of statute, fraud and deceit, injunctive
26
relief, and declaratory relief should be dismissed since they fail to
27
state a claim under Rule 12(b)(6).
28
///
11
1
Dismissal under Rule 12(b)(6) is appropriate only where a
2
claim either 1) lacks a cognizable legal theory, or 2) lacks factual
3
allegations sufficient to support a cognizable legal theory. Balistreri
4
v. Pacific Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). To avoid
5
dismissal, a plaintiff must allege “enough facts to state a [plausible]
6
claim to relief[.]” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547
7
(2007).
8
In deciding a Rule 12(b)(6) motion, the material allegations
9
of the complaint are accepted as true and all reasonable inferences are
10
drawn in favor of the plaintiff. See al-Kidd v. Ashcroft, 580 F.3d 949,
11
956 (9th Cir. 2009). However, “the tenet that a court must accept as
12
true all of the allegations contained in a complaint is inapplicable to
13
legal conclusions.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). “A
14
pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation
15
of the elements of a cause of action will not do.’ Nor does a complaint
16
suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual
17
enhancement.’” Id. (quoting Twombly, 550 U.S. at 555, 557). “In sum, for
18
a complaint to survive a motion to dismiss, the nonconclusory ‘factual
19
content,’ and reasonable inferences from that content, must be plausibly
20
suggestive of a claim entitling the plaintiff to relief.” Moss v. United
21
States Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).
22
1. Breach of Contract
23
Defendants argue, inter alia, that Plaintiff’s breach of
24
contract
25
Agreement is only signed by Plaintiff, and therefore the statute of
26
frauds precludes it from being enforceable against Defendants. (Mot.
27
10:16-24.)
28
///
claim
should
be
dismissed
12
since
the
Special
Forbearance
1
Plaintiff counters he “has ple[d] breaches of two written
2
agreement[s:] 1) the written agreement with LEHMAN BROTHERS, alleging
3
wrongful and fraudulent origination, assignment and servicing; [and] 2)
4
the written agreement with AURORA re the Special Forbearance Agreement.”
5
(Opp’n 5:23-25.) However, Plaintiff’s pled breach of contract claim is
6
based solely on his allegations that Defendants breached the Special
7
Forbearance Agreement. (SAC ¶¶ 94-106.) Plaintiff also argues that since
8
Aurora “accepted payments under the agreement, and agreed to postpone
9
the sale at least initially[,] . . . Aurora is estopped [from] deny[ing]
10
the existence of any agreement[.]” (Opp’n 6:24-27.)
11
“[A]n agreement by which a lender agreed to forbear from
12
exercising the right of foreclosure under a deed of trust securing an
13
interest in real property comes within the statute of frauds.” Secrest
14
v. Sec. Nat’l Mortg. Loan Trust 2002-2, 167 Cal. App. 4th 544, 547
15
(2008) (holding an unsigned forbearance agreement violated the statute
16
of frauds since it attempted to modify a promissory note and deed of
17
trust, which are subject to the statute of frauds). Therefore, since the
18
Special Forbearance Agreement modifies Plaintiff’s obligations under the
19
Note and the Deed, it comes within the statute of frauds. Further,
20
Plaintiff’s
21
agreement to postpone the foreclosure sale, estops Defendants from
22
denying the existence of an agreement “fails under well-established
23
law.” Id. at 555.
24
25
26
27
28
argument
that
payments
under
the
agreement,
Part performance allows enforcement of a contract
lacking a requisite writing in situations in which
invoking the statute of frauds would cause
unconscionable
injury.
To
constitute
part
performance,
the
relevant
acts
either
must
unequivocally refer to the contract, or clearly
relate to its terms. Such conduct satisfies the
evidentiary function of the statute of frauds by
confirming that a bargain was in fact reached. In
addition to having partially performed, the party
13
and
the
1
3
seeking to enforce the contract must have changed
position in reliance on the oral contract to such
an extent that application of the statute of frauds
would result in an unjust or unconscionable loss,
amounting in effect to a fraud.
4
Id. (internal citations and quotation marks omitted). However, “[t]he
5
payment of money is not sufficient part performance to take an oral
6
agreement out of the statute of frauds[.]” Id. Further, since Plaintiff
7
“do[es] not assert [he] changed [his] position in reliance on the
8
[Special]
9
[payments,]” the statute of frauds applies to the Special Forbearance
10
Agreement and Plaintiff has not pled an enforceable contract claim. Id.
11
Since this claim was previously dismissed on these grounds, Plaintiff’s
12
breach of contract claim is dismissed with prejudice because it is
13
evident that “any amendment would be futile[.]” Lipton, 284 F.3d at
14
1039.
2
15
Forbearance
Agreement
in
any
way
other
than
by
making
2. Negligence/Negligent Misrepresentation
16
a. Negligence
17
Defendants
argue
Plaintiff’s
negligence
claim
should
be
18
dismissed since “Plaintiff has not alleged Defendants had a duty or
19
facts showing Defendants breached any duty.” (Mot. 12:24-25.) Defendants
20
argue “Plaintiff’s SAC does not allege Defendants[’] actions extended
21
beyond its routine involvement as a lender.” Id. 13:23-24. Plaintiff
22
counters that “Aurora went beyond the scope of the role of a loan
23
originator and was actively involved in negotiating and implement[ing]
24
a Special Forbearance Agreement/Loan Modification Agreement.” (Opp’n
25
8:7-9.) Plaintiff further argues that when “Aurora undertook the duty of
26
negotiating
27
updating the borrower regarding status and terms[,] . . . it acted as
28
more than just an institution that funded the loan.” Id. 8:14-16.
the
terms
of
the
‘Special
14
Forbearance
Agreement’
and
1
“[A] financial institution owes no duty of care to a borrower
2
when the institution’s involvement in the loan transaction does not
3
exceed the scope of its conventional role as a mere lender of money.”
4
Nymark v. Heart Fed. Sav. & Loan Assn., 231 Cal. App. 3d 1089, 1096
5
(1991). Plaintiff’s allegations do not plausibly suggest that the
6
Defendants “actively participate[d] in the financed enterprise beyond
7
the domain of the usual money lender.” Id. Therefore, this portion of
8
Defendants’ dismissal motion is granted. Further, since this claim was
9
previously dismissed for this reason, Plaintiff’s negligence claim is
10
dismissed with prejudice.
11
b. Negligent Misrepresentation
12
Defendants also argue Plaintiff’s negligent misrepresentation
13
claim should be dismissed since “Plaintiff has not differentiated
14
between the different defendants nor alleged the time, place, and other
15
specifics
16
counters that his SAC “sets forth that the person(s) answering the phone
17
purported to render advice regarding the status of the loan; that the
18
persons had knowledge of the transaction and apparent authority to speak
19
for
20
misrepresentations.” (Opp’n 8:22-24.)
of
the
any
misrepresentations.”
corporation;
[and]
the
(Mot.
nature
14:17-18.)
of
Plaintiff
the
factual
21
The elements of a fraud claim under California law are: “(a)
22
misrepresentation (false representation, concealment, or nondisclosure);
23
(b) knowledge of falsity (or scienter); (c) intent to defraud, i.e., to
24
induce reliance; (d) justifiable reliance; and (e) resulting damage.”
25
Engall v. Permanente Medical Group, Inc., 15 Cal. 4th 951, 974 (1997)
26
(internal quotation marks omitted). “The same elements comprise a cause
27
of
28
requirement of intent to induce reliance.” Caldo v. Owens-Illinois,
action
for
negligent
misrepresentation,
15
except
there
is
no
1
Inc., 125 Cal. App. 4th 513, 519 (2004).
2
“It is established law . . . that Rule 9(b)’s particularity
3
requirement applies to state-law causes of action.” Vess v. Ciba-Geigy
4
Corp., 317 F.3d 1097, 1103 (9th Cir. 2003). Rule 9(b)’s heightened
5
pleading requirements apply to Plaintiff’s negligent misrepresentation
6
claim since this claim is “grounded in fraud [and is alleged] to sound
7
in fraud.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009)
8
(internal quotation marks omitted). Rule 9(b) prescribes that “[i]n
9
alleging fraud or mistake, a party must state with particularity the
10
circumstances
11
Accordingly, a fraud averment must include “an account of the ‘time,
12
place, and specific content of the false representations as well as the
13
identities of the parties to the misrepresentations.’” Swartz v. KPMG
14
LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quoting Edwards v. Marin Park,
15
Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)).
constituting
fraud
or
mistake.”
Fed.R.Civ.P.
9(b).
16
Plaintiff alleges in his negligent misrepresentation claim:
17
Plaintiff[’]s agent was in continual contact with
Aurora through the 800 number, and each time she
was told that there was no sale date, that the loan
was in bankruptcy or loan modification.
[When calling the 800 number, a] caller is prompted
to enter in the loan number and the agent comes on
the phone . . . . The representative of Aurora had
apparent authority to discuss details of the loan,
status
of
the
loan,
status
of
the
loan
modification, payments due, and status of trustee’s
sale, if any, and foreclosure status. The names of
the agent or agents plaintiff talked to are in the
possession of AURORA and peculiarly within the
knowledge of defendant.
On
10/19/09
plaintiff[’]s
agent
called
the
800-669-0102 number and asked . . . , “Is this loan
in foreclosure?” The answer was “NO.” She then said
. . . “there is NO . . . scheduled foreclosure sale
date right?” Again, the answer was “no, because
your loan is on a modification plan[.]”
18
19
20
21
22
23
24
25
26
27
28
(SAC ¶¶ 112-114.)
16
1
These allegations against Aurora in Plaintiff’s negligent
2
misrepresentation claim provide the required specificity since Plaintiff
3
sufficiently alleges the “time, place, and specific content of the false
4
representations[.]”
5
deficiency in plaintiff’s allegations of fraud is that the [S]AC does
6
not state the names of all the individual representatives of the
7
defendant[].” Susilo v. Wells Fargo Bank, N.A., No. CV 11-1814 CAS, 2011
8
WL
9
“requirement is relaxed where the defendant must necessarily possess
10
full information concerning the facts of the controversy, or when the
11
facts lie more in the knowledge of the opposite party.” Id. (internal
12
citations
13
sufficiently alleged this claim against Aurora.
2471167,
at
and
*10
Swartz,
(C.D.
quotation
476
F.3d
Cal.
marks
June
at
764.
21,
omitted).
“The
2011).
only
arguable
However,
Therefore,
9(b)’s
Plaintiff
has
14
However, “Rule 9(b) does not allow a complaint to merely lump
15
multiple defendants together but ‘require[s] plaintiffs to differentiate
16
their allegations when suing more than one defendant . . . and inform
17
each defendant separately of the allegations surrounding his alleged
18
participation in the fraud.’” Swartz, 476 F.3d at 764-765 (internal
19
citations omitted). Since Plaintiff’s factual allegations in this claim
20
are solely related to Aurora and Plaintiff does not allege any conduct
21
by MERS, Plaintiff’s negligent misrepresentation claim against MERS is
22
dismissed.
23
3. Demand To Set Aside the Trustee’s Sale
24
Defendants argue that “[b]ecause Plaintiff has not tendered
25
the amount due, he cannot challenge the foreclosure sale and the Court
26
should dismiss this claim.” (Mot. 16:12-13.) Plaintiff does not respond
27
to this argument.
28
“Wrongful
foreclosure
is
17
an
action
in
equity,
where
a
1
plaintiff seeks to set aside a foreclosure sale that has already
2
occurred.” Foster v. SCME Mortgage Bankers, Inc., No. CIV 2:10-518-WBS
3
GGH, 2010 WL 1408108, at *4 (E.D. Cal. April 7, 2010). Therefore,
4
Plaintiff’s
5
foreclosure claim. “Under a claim for wrongful foreclosure, a plaintiff
6
must allege a credible tender of the amount of the secured debt . . . .”
7
Rogue v. Suntrust Mortg., Inc., No. C-09-00040 RMW, 2010 WL 546896, at
8
*4 (N.D. Cal. Feb. 10, 2010) (citing Abdallah v. United Savings Bank, 43
9
Cal. App. 4th 1101, 1109 (1996)); see Guerrero v. Greenpoint Mortgage
10
Funding, Inc., 403 Fed. Appx. 154, 157 (9th Cir. 2010) (stating the
11
plaintiffs “lacked standing to bring a claim for ‘wrongful foreclosure,’
12
because they failed to allege actual, full and unambiguous tender of the
13
debt owed on the mortgage”) (citing Karlsen v. Am. Sav. & Loan Ass’n, 15
14
Cal. App. 3d 112, 117 (1971)). Plaintiff does not allege tender of the
15
amount of debt owed, or his ability to tender. Plaintiff was previously
16
informed of this pleading deficiency in a ruling deciding a challenge to
17
Plaintiff’s FAC. (Order 17:2-5, ECF No. 22.) Therefore, Plaintiff’s
18
claim to set aside the trustee’s sale is dismissed with prejudice since
19
it is clear “any amendment would be futile[.]” Lipton, 284 F.3d at 1039.
20
claim
to
set
aside
the
Trustee’s
Sale
is
a
wrongful
4. Violation of Statute
21
Defendants seek dismissal of Plaintiff’s violation of statute
22
claim.
23
Defendant violated: 1) California Civil Code sections 2923.52 and
24
2923.53; and 2) California Civil Code section 2924 et seq. (SAC 22:26-
25
25:9.)
26
(Mot.
20:7-27.)
Plaintiff’s
Plaintiff
claims
alleges
under
in
California
this
claim
Civil
Code
that
each
sections
27
2923.52 and 2923.53 were previously “dismissed with prejudice since
28
neither section 2923.52 or section 2923.53 provides any private right of
18
1
action.” (Order 17:16-18, ECF No. 22 (citation and internal quotation
2
marks omitted).) Therefore, these claims are stricken.
3
Further, while Plaintiff does not cite to California Civil
4
Code section 2923.5, it is clear he is alleging a claim under this
5
statute since he cites to Mabry v. Superior Court, 1185 Cal. App. 4th
6
208, 214 (2010), which held that “section 2923.5 [may] be enforced by a
7
private right of action[.]” (SAC 24:20-21.) However, this claim was not
8
alleged in Plaintiff’s FAC and was included in the SAC without leave of
9
court to include this claim in the SAC. Therefore, Plaintiff’s section
10
2923.5 claim is dismissed.
11
Defendants argue Plaintiff has not stated a claim under
12
California Civil Code section 2924. (Mot. 20:17.) Plaintiff alleges in
13
this claim that “Defendant CALIFORNIA WESTERN AND AURORA violated the
14
California Foreclosure laws by . . . [f]ailing to post notice of the
15
trustee’s sale as required [and] . . . [f]ailing to send notice of the
16
trustee’s sale by certified mail as required[.]” (SAC 25:2-5.)
17
Defendants argue, inter alia, that “Plaintiff must allege he
18
can tender the amount of the loan to state a wrongful foreclosure
19
claim.” (Mot. 21:17-18.) Plaintiff alleges the foreclosure sale was not
20
conducted in accordance with California Civil Code section 2924 et seq.
21
and “[a]s a proximate result of defendant’s violation of statute,
22
plaintiff’s property has wrongfully been foreclosed upon.” (SAC 25:5-7.)
23
Plaintiff seeks “a declaration . . . that the Trustee’s sale . . . is
24
void[.]” Id. 30:18-19. Since Plaintiff is alleging a wrongful foreclose
25
claim, he must plead tender or ability to tender. See Rogue, 2010 WL
26
546896, at *4. Plaintiff fails to do so. Therefore, Defendants’ motion
27
to dismiss this claim is granted.
28
///
19
1
5. Fraud and Deceit
2
Defendants also seek dismissal of Plaintiff’s remaining fraud
3
and deceit claim, arguing Plaintiff fails to “state the contents of
4
alleged misrepresentative statements, as well as the role of each
5
defendant in the alleged fraud, what is false or misleading about the
6
statement, who made it, when it was made, where it was made and why it
7
is false.” (Mot. 21:23-26.)
8
9
Plaintiff’s fraud and deceit claim is based on the following
allegations:
“[t]hroughout
the
course
of
the
loan
modification
10
discussions with AURORA, plaintiff’s agent had numerous discussions with
11
the representatives of AURORA” and “[t]he representations to plaintiff
12
and
13
“[D]efendant AURORA never intended to provide plaintiff with a loan
14
modification agreement, and falsely misled [Plaintiff] into believing
15
that is what he had received.” Id. 26:22-25. “AURORA, through their
16
representatives falsely misled plaintiff and his agent to believe that
17
. . . there was no sale date set; [and] that the account was in ‘loan
18
modification’ status.” Id. 26:28-27:2. Plaintiff also incorporates by
19
reference his allegations in the preceding paragraphs of his SAC. Id.
20
25:15-16. In Plaintiff’s negligent misrepresentation claim, he sets
21
forth allegations against Aurora which satisfy Rule 9(b)’s requirements.
22
Id. ¶¶ 112-114.
plaintiff’s
agent
were
in
fact
false.”
(SAC
26:12-13,
17.)
23
Since Plaintiff’s fraud and deceit claim is based on the same
24
allegations against Aurora which Plaintiff alleges in his negligent
25
misrepresentation
26
9(b),Plaintiff’s fraud and deceit claim against Aurora is sufficiently
27
alleged. However, Plaintiff fails to sufficiently allege his fraud and
28
deceit claim against MERS since Plaintiff does not include any factual
claim,
and
those
20
allegations
satisfy
Rule
1
allegations against MERS in this claim; therefore, Plaintiff’s fraud and
2
deceit claim against MERS is dismissed.
3
6. Injunctive Relief and Declaratory Relief
4
Defendants
also
argue
Plaintiff’s
injunctive
relief
and
5
declaratory
6
recognized claim for ‘injunctive relief’” and Plaintiff’s “declaratory
7
relief claim . . . is duplicative of other claims [and therefore, it]
8
should be dismissed.” (Mot. 8:5-6, 10:9:12-13.) Plaintiff responds that
9
“[w]hether fashioned as a cause of action or a remedy adjunct to the
10
causes of action is a matter of formality, not of substance.” (Opp’n
11
5:20-21.)
relief
claims
should
be
dismissed
since
there
is
“no
12
An injunction is a remedy, not a claim in and of itself. See
13
Curtis v. Option One Mortg. Corp., No. 109-cv-1608 AWI SMS, 2010 WL
14
599816, at *13 (E.D. Cal. Feb 18, 2010) (citing Washington Toxics
15
Coalition v. Environmental Protection Agency, 413 F. 3d 1024, 1034 (9th
16
Cir.
17
injunctive relief claim is granted.
2005).
Therefore,
Defendants’
motion
to
dismiss
Plaintiff’s
18
Further, a “federal court may decline to address a claim for
19
declaratory relief” where the substantive claims “would resolve the
20
issues raised by the declaratory action[.]” Fimbres v. Chapel Mortg.
21
Cop., No. 09-cv-0886-IED, 2009 WL 416332, at *5 (S.D. Cal. Nov. 20,
22
2009)
23
Plaintiff’s declaratory relief claim is duplicative of the relief sought
24
in Plaintiff’s remaining claims, Defendants’ motion to dismiss this
25
claim is granted.
26
(citations
and
internal
quotation
marks
omitted).
Since
C. MOTION TO STRIKE
27
Defendants also move under Rule 12(f) for an order striking
28
Plaintiff’s request for punitive damages, arguing these damages “are not
21
1
recoverable as a matter of law.” (Mot. 22:23-24.)
2
Rule 12(f) states that a district court “may strike from a
3
pleading
4
impertinent, or scandalous matter.” However, “Rule 12(f) does not
5
authorize district courts to strike claims for damages on the ground
6
that such claims are precluded as a matter of law.” Whittlestone, Inc.
7
v. Handi–Craft Co., 618 F.3d 970, 971 (9th Cir. 2010).
8
an
insufficient
defense
or
any
redundant,
immaterial,
The proper medium for challenging the sufficiency
of factual allegations in a complaint is through
Rule 12(b)(6), not Rule 12(f). However, where a
motion is in substance a Rule 12(b)(6) motion, but
is incorrectly denominated as a Rule 12(f) motion
to strike, the Court may convert the improperly
designated Rule 12(f) motion into a Rule 12(b)(6)
motion.
9
10
11
12
13
Parker v. Fidelity Security Life Ins. Co., No. CIV F 06-654 AWI DLB,
14
2006 WL 2190956, at *5 (E.D. Cal. Aug. 1, 2006).
15
Defendants argue “Plaintiff fails to allege sufficient facts
16
to support a request for punitive damages” since “he does not allege any
17
specific reasons for the request.” (Mot. 23:8-9, 19-20.) California
18
Civil Code section 3294(a) prescribes:
19
In an action for the breach of an obligation not
arising from contract, where it is proven by clear
and convincing evidence that the defendant has been
guilty of oppression, fraud, or malice, the
plaintiff, in addition to the actual damages, may
recover damages for the sake of example and by way
of punishing the defendant.
20
21
22
23
Since
24
Defendants’ motion to strike is denied.
25
two
of
Plaintiff’s
remaining
claims
are
grounded
in
fraud,
III. CONCLUSION
26
For the stated reasons, Defendants’ motion to dismiss is
27
granted in part and denied in part. Plaintiff is granted ten (10) days
28
from the date on which this order is filed to file a Third Amended
22
1
Complaint in which he addresses the deficiencies in any claim Plaintiff
2
was previously granted leave to include in the SAC, and which has not
3
dismissed with prejudice. Further, Plaintiff is notified that if he
4
fails to amend the dismissed claims within the prescribed time period,
5
the referenced claims could be dismissed with prejudice under Federal
6
Rule of Civil Procedure 41(b).
7
Dated:
November 30, 2011
8
9
10
GARLAND E. BURRELL, JR.
United States District Judge
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
23
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