Whatley v. Bank of America, N.A. et al

Filing 23

MEMORANDUM and ORDER signed by Judge Morrison C. England, Jr on 7/13/12: Defendants' Motion to Dismiss is GRANTED with leave to amend. Not later than twenty (20) days following the date this Memorandum and Order is electronically filed, Plaintiff may (but is not required to) file an amended complaint. (Kaminski, H)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JACK E. WHATLEY

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Plaintiff,

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No. 2:11-cv-02901-MCE-GGH

v.

MEMORANDUM AND ORDER

BANK OF AMERICA, N.A.,
et al.,

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Defendants.
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----oo0oo----

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Plaintiff Jack E. Whatley (“Plaintiff”) initiated this

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action seeking damages and injunctive relief against Defendants

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Bank of America, N.A. (“BofA”), BAC Home Loans Servicing, LP

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(“BAC”), U.S. Bank National Association, as Trustee for the

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benefit of Harborview 2005-2 Trust Fund, and Mortgage Electronic

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Registration Systems, Inc., (collectively “Defendants”) as a

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result of Defendants’ conduct arising out of a loan issued to

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Plaintiff in connection with the purchase of his residence.

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Presently before the Court is Defendants’ Motion to Dismiss

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(“Motion”) Plaintiff’s Complaint in its entirety.

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reasons set forth below, Defendants’ Motion is GRANTED.1

For the

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BACKGROUND2

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In approximately February of 2005, Plaintiff obtained a

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$560,000 loan to purchase a piece of residential property.

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Defendants’ Request for Judicial Notice (“RJN”), Exh. 1.3

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Plaintiff executed a promissory note and Deed of Trust (“DOT”) in

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connection with that loan.

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BAC were, at all relevant times, the loan servicers.

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Id., Exhs. 1, 2.

Defendants BofA and

Plaintiff alleges that, a few years after origination of the

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loan, in approximately January of 2009, he contacted BofA by

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telephone via the entity’s customer service number and that the

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BofA representative with whom he spoke indicated Plaintiff “was

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not far enough behind [on his mortgage payments] to qualify for a

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loan modification.”

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Complaint, ¶ 20.

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Because oral argument will not be of material assistance,
the Court ordered this matter submitted on the briefing. E.D.
Cal. Local Rule 78-230(h).

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Unless otherwise stated, the following facts are derived,
at times verbatim, from Plaintiff’s Complaint.
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To the extent documents submitted by Defendants via their
RJN are relied on within this Order, that Request is GRANTED.
See Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994)
(“[D]ocuments whose contents are alleged in a complaint and whose
authenticity no party questions, but which are not physically
attached to the pleading, may be considered in ruling on a Rule
12(b)(6) motion to dismiss.”).

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That representative purportedly advised Plaintiff that once he

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was far enough behind on his payments, he would qualify.

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According to Plaintiff, he was also told by someone “that he

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would receive a modification if he became seriously delinquent

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and that BofA would give him a modification” because BofA would

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then receive related subsidies from the government.

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As a result, Plaintiff stopped making his mortgage payments.

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Id., ¶ 55.

Over the next nine months, Plaintiff was repeatedly advised
by BofA that he was not far enough behind on his mortgage

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payments to apply for a loan modification.

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advised that he should continue calling back to inquire as to

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whether he was sufficiently behind in making his payments so that

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he could apply for the sought-after modification.

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Plaintiff received a letter from BofA stating he was pre-approved

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for a modification pursuant to the Home Affordable Modification

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Program.

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multiple application packages and requested documents.

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was subsequently advised his modification was being processed,

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but, ultimately, he was notified that, to the contrary, his

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application had been closed and his property was going to be sold

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at a trustee’s sale.

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Plaintiff was further

Eventually,

Plaintiff thereafter submitted and re-submitted
Plaintiff

Plaintiff thus initiated this action in Sacramento County

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Superior Court alleging causes of action against all Defendants

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for: 1) deceit; 2) promissory estoppel; 3) wrongful foreclosure;

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and 4) violation of California’s Unfair Competition Law, Business

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and Professions Code §§ 17200, et seq. (“UCL”).

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Defendants thereafter removed the action to this Court and filed

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the instant Motion to Dismiss.

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Defendants’ Motion is GRANTED with leave to amend.

For the following reasons,

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STANDARD

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On a motion to dismiss for failure to state a claim under

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Federal Rule of Civil Procedure 12(b)(6),4 all allegations of

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material fact must be accepted as true and construed in the light

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most favorable to the nonmoving party.

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Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).

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“requires only ‘a short and plain statement of the claim showing

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that the pleader is entitled to relief,’ in order to ‘give the

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defendant fair notice of what the...claim is and the grounds upon

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which it rests.’”

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(2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

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complaint attacked by a Rule 12(b)(6) motion to dismiss does not

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require detailed factual allegations.

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plaintiff’s obligation to provide the grounds of his entitlement

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to relief requires more than labels and conclusions, and a

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formulaic recitation of the elements of a cause of action will

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not do.”

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court is not required to accept as true a “legal conclusion

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couched as a factual allegation.”

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662, 678 (2009) (quoting Twombly, 550 U.S. at 555).

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Id.

Cahill v. Liberty Mut.
Rule 8(a)(2)

Bell. Atl. Corp. v. Twombly, 550 U.S. 544, 555

Id.

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However, “a

(internal citations and quotations omitted).

Ashcroft v. Iqbal, 556 U.S.

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All further references to “Rule” or “Rules” are to the
Federal Rules of Civil Procedure unless otherwise noted.
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The Court also is not required “to accept as true allegations

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that are merely conclusory, unwarranted deductions of fact, or

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unreasonable inferences.”

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536 F.3d 1049, 1055 (9th Cir. 2008) (internal citations and

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quotations omitted). “Factual allegations must be enough to raise

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a right to relief above the speculative level.”

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U.S. at 555.

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In re Gilead Sciences Sec. Litig.,

Twombly, 550

Furthermore, “Rule 8(a)(2)...requires a ‘showing,’ rather
than a blanket assertion, of entitlement to relief.”

Twombly,

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550 U.S. at 556 n.3 (internal citations and quotations omitted).

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“Without some factual allegation in the complaint, it is hard to

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see how a claimant could satisfy the requirements of providing

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not only ‘fair notice’ of the nature of the claim, but also

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‘grounds’ on which the claim rests.”

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pleading must contain “only enough facts to state a claim to

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relief that is plausible on its face.”

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“plaintiffs...have not nudged their claims across the line from

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conceivable to plausible, their complaint must be dismissed.”

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Id.

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strikes a savvy judge that actual proof of those facts is

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improbable, and ‘that a recovery is very remote and unlikely.’”

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Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

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Id.

(citation omitted).

Id. at 570.

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If the

However, “a well-pleaded complaint may proceed even if it

Under Rule 9(b), however, a party alleging fraud or

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intentional misrepresentation must satisfy a heightened pleading

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standard by stating with particularity the circumstances

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constituting fraud.

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“[a]verments of fraud must be accompanied by ‘the who, what,

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when, where, and how’ of the misconduct charged.”

Fed. R. Civ. P. 9(b).

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Specifically,

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Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)

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(quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)).

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Further, “a plaintiff must set forth more than the neutral facts

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necessary to identify the transaction.

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forth what is false or misleading about a statement, and why it

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is false.”

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1548 (9th Cir. 1994).

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The plaintiff must set

Id. (quoting Decker v. GlenFed, Inc., 42 F.3d 1541,

A court granting a motion to dismiss a complaint must then
decide whether to grant a leave to amend.

Leave to amend should

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be “freely given” where there is no “undue delay, bad faith or

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dilatory motive on the part of the movant,...undue prejudice to

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the opposing party by virtue of allowance of the amendment, [or]

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futility of the amendment....”

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(1962); Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048,

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1052 (9th Cir. 2003) (listing the Foman factors as those to be

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considered when deciding whether to grant leave to amend).

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Dismissal without leave to amend is proper only if it is clear

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that “the complaint could not be saved by any amendment.”

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Plex Techs., Inc. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th

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Cir. 2007) (internal citations and quotations omitted).

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Foman v. Davis, 371 U.S. 178, 182

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Intri-

ANALYSIS

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A.

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Defendants’ Motion to Dismiss Plaintiff’s First Cause
of Action for Deceit.

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Plaintiff contends in his first cause of action that

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Defendants BofA and BAC fraudulently induced him to fall behind

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in making his mortgage payments “because they wanted Plaintiff to

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become seriously delinquent on his mortgage so that Plaintiff

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could not retain his home through bankruptcy protection and

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because Defendants wanted to receive...money from the federal

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government for managing the ‘troubled asset.’”

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“The elements of fraud, which gives rise to the tort action for

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deceit, are (a) misrepresentation (false representation,

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concealment, or nondisclosure); (b) knowledge of falsity (or

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‘scienter’); (c) intent to defraud, i.e., to induce reliance;

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(d) justifiable reliance; and (e) resulting damage.”

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Superior Court, 12 Cal. 4th 631, 638 (1996) (internal quotations

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and citations omitted).

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the particularity required by Rule 9(b), meaning Plaintiff is

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required to plead “the ‘who, what, when, where, and how’ of the

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misconduct charged.”

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wholly failed to do so here.

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Complaint, ¶ 66.5

Lazar v.

This cause of action must be pled with

Vess, 317 F.3d at 1106.

Plaintiff has

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The Court is cognizant that Plaintiff vacillates
throughout the Complaint between alleging BofA advised him he
must be “seriously delinquent” or just “delinquent” in his
payments. Compare Complaint, ¶ 66, with id., ¶ 48. This
distinction makes no difference in the Court’s disposition of any
aspect of Defendants’ Motion.
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First, the only allegations Plaintiff has pled with any

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detail are those as to the statements made on some undisclosed

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date by some unnamed BofA representative indicating that

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Plaintiff “would qualify” for a modification if he became

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delinquent in making his mortgage payments.

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allegations lacking the requisite particularity under Rule 9(b),

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there is also no indication in the Complaint that these

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statements were false.

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Plaintiff would not qualify for a modification if his payments

Not only are these

Indeed, the Complaint makes clear that

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were timely and that to even be considered for a modification his

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payments needed to be in arrears.

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that someone at BofA told him he “would receive” a modification

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so that Defendants could capitalize on available government

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funding is even more sparsely pled.

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of particularity supporting Plaintiff’s allegations of fraud,

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Defendants’ Motion to Dismiss Plaintiff’s first cause of action

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is GRANTED with leave to amend.

Plaintiff’s further assertions

Accordingly, given the lack

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B.

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Defendants’ Motion to Dismiss Plaintiff’s Second Cause
of Action for Promissory Estoppel.

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Plaintiff’s second cause of action for promissory estoppel

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is based on the premise that Defendants promised him a loan

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modification and that he relied on this promise to his detriment.

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To properly allege a cause of action for promissory estoppel,

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Plaintiff must adequately plead:

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“(1) a promise that is clear and unambiguous in its terms;

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(2) reliance by the party to whom the promise is made; (3) the

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reliance must be reasonable and foreseeable; and (4) the party

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asserting the estoppel must be injured by his or her reliance.”

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Boon Rawd Trading Intern. Co., Ltd. v. Paleewong Trading Co.,

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Inc., 688 F. Supp. 2d 940, 953 (N.D. Cal. 2010).

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Plaintiff’s instant claim is flawed for multiple reasons, though

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the Court need address only one here.

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Plaintiff’s only allegation that he “would receive” some sort of

As pled,

More specifically,

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modification is connected to the requirement that Plaintiff

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become “seriously delinquent” or “delinquent” in making his

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mortgage payments.

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any purported modification promise neither clear nor unambiguous.

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Moreover, Plaintiff alleges no facts as to who promised Plaintiff

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a modification and when such a promise was made.

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promissory estoppel claim thus fails at the threshold requirement

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that a clear and unambiguous promise be alleged.

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v. CitiMortgage Inc., 2011 WL 2197534, *13 (N.D. Cal.)

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(allegations that some unspecified individual agreed to modify a

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plaintiff’s loan on unspecified terms at an unspecified point in

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the future insufficient to state a cause of action for promissory

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estoppel); see also Dooms v. Federal Home Loan Mortg. Corp.,

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2011 WL 1232989, *10 (E.D. Cal.).

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Motion to Dismiss Plaintiff’s second cause of action is GRANTED

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with leave to amend.

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These vague delinquency requirements render

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Plaintiff’s

See Melegrito

Accordingly, Defendants’

C.

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Defendants’ Motion to Dismiss Plaintiff’s Third Cause
of Action for Wrongful Foreclosure.

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Defendants move to dismiss Plaintiff’s third cause of action

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for wrongful foreclosure on the basis that, among other things,

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Plaintiff failed to allege an unconditional offer to tender the

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amount of the secured indebtedness.

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of payment of the indebtedness owing is essential to an action to

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cancel a voidable sale under a deed of trust.”

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Sav. & Loan Ass’n, 15 Cal. App. 3d 112, 117 (1971).

“A valid and viable tender

Karlsen v. Am.
A plaintiff

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must “tender the obligation in full as a prerequisite to

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challenge of the foreclosure sale.”

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W. Sav. & Loan Ass’n, 165 Cal. App. 3d 1214, 1222 (1985).

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Indeed, “[i]t would be futile to set aside a foreclosure sale on

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[] technical ground[s], if the party making the challenge did not

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first make full tender and thereby establish his ability to

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purchase the property.”

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be valid, it must be unconditional.”

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Franklin Financial Corp., 2010 WL 3895351, *3 (S.D. Cal.) (citing

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Karlsen, 15 Cal. App. 3d at 118-20).

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manner in which Plaintiff has attempted to plead his ability to

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tender, Defendant’s Motion is now GRANTED with leave to amend.

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Id. at 1225.

U.S. Cold Storage v. Great

“For an offer of tender to
Christopher v. First

Given the conditional

More specifically, Plaintiff alleges in the Complaint that

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he “unconditionally offers to tender to the extent required by

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law any amount due and owing after offset for damages for

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wrongful foreclosure on the Subject Property, to the true

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beneficiary under the deed of trust or holder of the note in due

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course.”

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Complaint, ¶ 97.

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That “unconditional” promise is actually conditioned on a variety

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of speculative findings as to who Plaintiff believes is owed his

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payments and what damages Plaintiff believes he has sustained to

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offset the amount owed.

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survive the instant Motion.6

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(concluding that plaintiffs’ allegation that they are “willing

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and able to tender any amounts to the real and true owners of the

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original promissory note upon proof that the note is in the

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lawful possession of the true...owners and upon any credits paid

That offer is thus insufficient to
See Christopher, 2010 WL 3895351

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by insurance in the event of a default” was insufficient to

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unconditionally allege a tender offer); see also Halajian v. Ndex

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West, L.L.C., 2012 WL 1969131, *6-7 (E.D. Cal.); McFadden v.

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Deutsche Bank Nat. Trust Co., 2011 WL 3606797, *14 (E.D. Cal.).

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Defendant’s Motion to Dismiss Plaintiff’s third cause of action

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is thus GRANTED with leave to amend.

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D.

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Defendants’ Motion to Dismiss Plaintiff’s Fourth Cause
of Action for Violation of California’s UCL.

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Finally, Plaintiff failed to state a claim for violation of

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California’s UCL as well.

The UCL makes actionable “any

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unlawful, unfair or fraudulent business act.”

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Code § 17200.

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the three prongs of the UCL-unlawful, unfair, or fraudulent.”

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Cal. Bus & Prof.

“An act can be alleged to violate any or all of

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In his Opposition, Plaintiff makes a variety of arguments
as to why tender should be excused in his case. Opp’n,
10:22-11:22. None of these theories are supported by the facts
as alleged in the Complaint. Accordingly, Plaintiff’s attempts
to evade the tender requirement are rejected.
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Berryman v. Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1554

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(2007).

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“borrow[] violations of other laws and treat[] them as unlawful

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practices that the unfair competition law makes independently

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actionable.”

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Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999).

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predicated on unfair business practices may be grounded upon a

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violation of a statute or be a standalone claim based on an

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alleged act that violates established public policy or if it is

Causes of action arising out of the “unlawful” prong

Cal-Tech Communications, Inc. v. Los Angeles
“A UCL claim

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immoral, unethical, oppressive, or unscrupulous and causes injury

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to consumers which outweighs its benefits.”

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Inc., 2009 WL 5069144, *4 (N.D. Cal.) (internal citations and

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quotations omitted).

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brought based upon conduct akin to common-law fraud or an alleged

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course of conduct that is likely to deceive the public.”

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Hovsepian v. Apple,

“A claim based upon the fraud prong may be

Id.

To the extent Plaintiff’s UCL claim is based on Defendants’

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purportedly unlawful or fraudulent acts, it is entirely

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derivative of Plaintiff’s above causes of action and thus fails

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for those reasons already stated.

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argues in Opposition that he has stated a claim under the UCL’s

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“unfair” prong because “Defendants deceived Plaintiff, like so

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many others, by promising them that they would receive help with

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their mortgages, including receiving a loan modification, if they

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became delinquent.”

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Plaintiff nonetheless also

Opp’n, 12:25-27.

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Even assuming this argument is not encompassed within Plaintiff’s

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above causes of action, which it is, none of Plaintiff’s

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allegations are sufficient to point this Court to any “alleged

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act that violates established public policy” or that “is immoral,

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unethical, oppressive, or unscrupulous and causes injury to

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consumers which outweighs its benefits.”

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5069144, *4 (internal citations and quotations omitted); see also

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Sosa v. Bank of New York Mellon Trust, 2012 WL 2568188, *3 (N.D.

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Cal.).

Hovsepian, 2009 WL

Moreover, even if some of Plaintiff’s allegations are

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construed as supporting a violation of the UCL’s unfairness

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prong, none of those facts has been pled with nearly the

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requisite particularity.

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1120, 1124-25 (9th Cir. 2009) (applying Rule 9(b) to CLRA and UCL

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claims predicated on alleged misrepresentations).

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for liability under the UCL have been alleged or argued by

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Plaintiff.

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fourth cause of action is GRANTED with leave to amend.

See Kearns v. Ford Motor Co., 567 F.3d

No other bases

As such, Defendants’ Motion to Dismiss Plaintiff’s

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CONCLUSION

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For the reasons stated above, Defendants’ Motion to Dismiss

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is GRANTED with leave to amend.

Not later than twenty (20) days

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following the date this Memorandum and Order is electronically

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filed, Plaintiff may (but is not required to) file an amended

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complaint.

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If no amended complaint is filed within said twenty (20)-day

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period, without further notice to the parties, the causes of

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action dismissed by virtue of this Memorandum and Order will be

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dismissed with prejudice.

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IT IS SO ORDERED.
Dated: July 13, 2012

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_____________________________
MORRISON C. ENGLAND, JR.
UNITED STATES DISTRICT JUDGE

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