Jent et al v. Northern Trust Corporation et al

Filing 15

MEMORANDUM AND ORDER signed by Senior Judge William B. Shubb on 10/28/2013 re 7 Defendants' Motion to Dismiss : IT IS ORDERED that defendants' motion to dismiss be, and the same hereby is, GRANTED. Plaintiffs have ten days from the date of this Order to file an amended complaint, if they can do so consistent with this Order. (Kirksey Smith, K)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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LARRY D. JENT; MARY S. JENT,
Plaintiffs,

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v.

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NO. CIV 13-01684 WBS CKD

MEMORANDUM AND ORDER RE:
MOTION TO DISMISS

NORTHERN TRUST CORPORATION; and
THE NORTHERN TRUST COMPANY,

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Defendants.

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Plaintiffs Larry D. Jent and Mary S. Jent filed suit

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against defendants Northern Trust Corporation and the Northern

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Trust Company, bringing claims arising from defendants’ allegedly

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wrongful conduct related to a residential loan.

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the court is defendants’ motion to dismiss the complaint for

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failure to state a claim upon which relief can be granted

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pursuant to Federal Rule of Civil Procedure 12(b)(6).

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I.

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Currently before

Factual and Procedural Background
In 2011, plaintiffs entered into a loan agreement

secured by a Deed of Trust on property located at 12001 Somerset
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Drive in Truckee, California (the “Property”).

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(Docket No. 1); Defs.’ Request for Judicial Notice (“RJN”) Ex. 1

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(Docket No. 8-1).)

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Northern Trust, N.A., as beneficiary.

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in November 2012, plaintiffs were unable to make payments on the

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loan.

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sale, and plaintiffs attempted to secure additional credit with

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other financial institutions.

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(Id. ¶ 17.)

(Compl. ¶¶ 1, 16

The Note and Deed of Trust named defendant
(Compl. ¶ 1.)

Beginning

At this time, the Property was listed for

(Id. ¶¶ 18-19.)

Plaintiffs allege that, on or about March 21, 2013,

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defendants recorded a Notice of Default (“NOD”) on the Property,

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without contacting plaintiffs as required by California law.

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(Id. ¶ 20.)

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contradictory assertion that defendants had both contacted

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plaintiffs to assess plaintiffs’ financial situation and that

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defendants, despite exercising due diligence, were unable to

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contact plaintiffs.

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result of the recording, other financial institutions withdrew

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their offers of credit.

The NOD was accompanied by a statement making the

(Id. ¶ 21.)

Plaintiffs claim that, as a

(Id. ¶ 27.)

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In April 2013, plaintiffs informed defendants that the

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NOD had been improperly recorded, and in May defendants recorded

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a rescission of the NOD.

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offered a forbearance plan to plaintiffs conditioned on release

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of all liability, which plaintiffs rejected.

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(Id. ¶¶ 30-34; RJN Ex. 2.)

Defendants

(Compl. ¶ 35.)

Plaintiffs bring claims for (1) slander of title, (2)

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negligent misrepresentation, (3) negligence, and (4) violation

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California’s Unfair Competition Law (“UCL”), Cal. Bus. & Profs.

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Code § 17200 et seq.

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dismiss the Complaint for failure to state a claim pursuant to

(Compl. ¶¶ 36-60.)

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Defendants now move to

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Rule 12(b)(6).

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II.

(Docket No. 7.)

Request for Judicial Notice

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In general, a court may not consider items outside the

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pleadings when deciding a motion to dismiss, but it may consider

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items of which it can take judicial notice.

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F.3d 1370, 1377 (9th Cir. 1994).

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notice of facts “not subject to reasonable dispute” because they

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are either “(1) generally known within the territorial

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jurisdiction of the trial court or (2) capable of accurate and

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ready determination by resort to sources whose accuracy cannot

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reasonably be questioned.”

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may properly be taken of matters of public record outside the

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pleadings.

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(9th Cir. 1986).

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Barron v. Reich, 13

A court may take judicial

Fed. R. Evid. 201.

Judicial notice

See MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504

Defendants request that the court judicially notice two

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recorded documents pertaining to the Property, the underlying

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promissory note and the Notice of Rescission.

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2.)

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since they are matters of public record whose accuracy cannot be

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questioned.

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(9th Cir. 2001).

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notice of any disputed facts contained in the documents.

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690.

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III. Legal Standard

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(See RJN Exs. 1–

The court will take judicial notice of these documents,

See Lee v. City of Los Angeles, 250 F.3d 668, 689
However, the court will not take judicial
Id. at

On a motion to dismiss, the court must accept the

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allegations in the complaint as true and draw all reasonable

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inferences in favor of the plaintiff.

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U.S. 232, 236 (1974), overruled on other grounds by Davis v.
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Scheuer v. Rhodes, 416

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Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322

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(1972).

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plead “only enough facts to state a claim to relief that is

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plausible on its face.”

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544, 570 (2007).

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for more than a sheer possibility that a defendant has acted

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unlawfully,” and where a complaint pleads facts that are “merely

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consistent with” a defendant’s liability, it “stops short of the

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line between possibility and plausibility.”

To survive a motion to dismiss, a plaintiff needs to

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

This “plausibility standard,” however, “asks

Ashcroft v. Iqbal,

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556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556–57).

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IV.

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Discussion
A.

Slander of Title
To state a claim for slander of title, a plaintiff must

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allege: “1) a publication; 2) which is without privilege or

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justification; 3) which is false; and 4) which causes direct and

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immediate pecuniary loss.”

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No. 2:10–cv-00711-MCE-GGH, 2010 WL 3294397, at *4 (E.D. Cal.

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Aug.20, 2010) (citing Manhattan Loft, LLC v. Mercury Liquors,

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Inc., 173 Cal. App. 4th 1040, 1050–51 (2d Dist. 2009)).

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Plaintiffs claim that defendants maliciously recorded the NOD

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with false and contradictory statements, which caused the

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plaintiffs to lose out on obtaining outside credit.

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Jackson v. Ocwen Loan Servicing, LLC,

There is no dispute that the recording of the NOD was a

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publication.

The Complaint further alleges that the declaration

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accompanying the NOD contained the false assertions that

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defendants both attempted to contact plaintiffs to assess

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plaintiffs’ financial situation and had exercised due diligence

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to contact plaintiffs but were unable to do so.
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(Compl. ¶ 21.)

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Obviously, both assertions in the declaration could not be true,

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and plaintiffs allege that defendants neither contacted them nor

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attempted to do so.

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defendants recorded a rescission of the NOD after plaintiffs

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pointed out these inconsistencies.

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(Id. ¶ 24.)

Plaintiffs further allege that

(Id. ¶ 34.)

What is fatally lacking from this claim in the

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Complaint is any allegation from which it could plausibly be

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inferred that the loss plaintiffs claim to have suffered, i.e.,

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the withdrawal of offers of credit by other financial

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institutions, resulted from the allegedly false statements.

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Instead, it appears from the Complaint that the loss is alleged

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to have resulted from the recording of the NOD itself, rather

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than the contents of the declaration in support of it.

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(“The false recording of the Notice of Default resulted in

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substantial damages to Plaintiffs.”).)

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(Id. ¶ 26

At best, it can be inferred from this that it was the

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fact of plaintiffs’ default which discouraged the other creditors

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from extending credit to them.

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plaintiffs had stopped making payments on the loan and were

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therefore in default at the time the NOD was recorded.

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17.)

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inference that it was the assertions in the declaration relating

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to what efforts may have been made to contact plaintiffs which

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caused the other financial institutions to withhold credit.

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It is undisputed, however, that

(Compl. ¶

Plaintiffs present no theory to support any plausible

Accordingly, because the Complaint does not allege

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direct and immediate pecuniary loss resulting from the allegedly

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false publications, the court must grant defendants’ motion to

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dismiss plaintiffs’ slander of title claim.
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B.

Negligent Misrepresentation

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The elements of negligent misrepresentation under

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California law are: “(1) the misrepresentation of a past or

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existing material fact, (2) without reasonable ground for

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believing it to be true, (3) with intent to induce another's

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reliance on the fact misrepresented, (4) justifiable reliance on

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the misrepresentation, and (5) resulting damage.”

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Fund, LLC v. Roth Capital Partners, LLC, 158 Cal. App. 4th 226,

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243 (2d Dist. 2007).

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Apollo Capital

Plaintiffs’ claim for negligent misrepresentation fails

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because plaintiffs do not allege that they relied on any

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misrepresentation by defendants.

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plaintiff, to state a cause of action for deceit based on a

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misrepresentation, must plead that he or she actually relied on

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the misrepresentation.”

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1088 (1993).

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institutions from which plaintiffs sought an extension of credit

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relied on the NOD.

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fail to allege reliance on the misrepresentations in the NOD, but

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plaintiffs immediately contacted defendants to correct them.

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(Id. ¶ 30.)

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reliance on any misrepresentation, the court must grant

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defendants’ motion to dismiss plaintiffs’ negligent

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misrepresentation claim.

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C.

“It is settled that a

Mirkin v. Wasserman, 5 Cal. 4th 1082,

At most, plaintiffs allege that the financial

(Compl. ¶¶ 25-27.)

Not only do plaintiffs

Accordingly, because plaintiffs do not allege

Negligence
To prove a cause of action for negligence, plaintiff

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must show: “(1) a legal duty to use reasonable care, (2) breach

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of that duty, and (3) proximate cause between the breach and (4)
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the plaintiff’s injury.”

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App. 4th 1333, 1339 (2d Dist. 1998).

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duty to use reasonable care in a particular factual situation is

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a question of law for the court to decide.”

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Residential Invs., Inc., 118 Cal. App. 4th 269, 278 (4th Dist.

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2004).

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Mendoza v. City of Los Angeles, 66 Cal.
“The existence of a legal

Vasquez v.

Plaintiffs fail to allege a plausible theory under

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which defendants owed them a duty of care.

An arm’s length

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transaction between lender and borrower does not create an

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actionable duty of care.

Saldate v. Wilshire Credit Corp., 711

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F. Supp. 2d 1126, 1132 (E.D. Cal. 2010) (O’Neill, J.); see also

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Nymark v. Heart Fed. Sav. & Loan Assn., 231 Cal. App. 3d 1089,

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1096 (3d Dist. 1991) (“[A]s a general rule, a financial

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institution owes no duty of care to a borrower when the

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institution’s involvement in the loan transaction does not exceed

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the scope of its conventional role as a mere lender of money.”).

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“This general rule also applies to loan servicers.”

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J.P. Morgan Chase, No. CIV. 2:11-441 WBS GGH, 2011 WL 2619060, at

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*4 (E.D. Cal. June 30, 2011).

Argueta v.

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Plaintiffs argue that defendants owe a duty based on

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statutory requirements for non-judicial sales under California

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Civil Code § 2923.55.

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unpersuasive, however, because the sole remedy for a violation of

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§ 2923.55 is a postponement of the foreclosure sale.

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Superior Court, 185 Cal. App. 4th 208, 214 (2010).

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because defendants did not owe plaintiffs a legal duty of care,

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the court must grant defendants’ motion to dismiss plaintiffs’

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negligence claim.

(Compl. ¶ 50.)

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This argument is

Mabry v.
Accordingly,

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D.

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UCL
California’s UCL prohibits “any unlawful, unfair or

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fraudulent business act or practice . . . .”

Cal. Bus. & Prof.

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Code § 17200.

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competition . . . .

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unfair or deceptive even if not unlawful and vice versa.”

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Tech Comm’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163,

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180 (1999) (internal quotation marks and citations omitted).

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Plaintiffs allege violations under all three prongs.

The statute “establishes three varieties of unfair
In other words, a practice is prohibited as
Cel–

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First, § 17200’s unlawful prong “borrows violations of

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other laws and treats them as unlawful practices that the unfair

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competition law makes independently actionable.”

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Cal. 4th at 180.

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defendants’ alleged violation of § 2923.55, but, as described

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above, the sole remedy for § 2923.55 violations is a postponement

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of the foreclosure sale.

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Plaintiffs’ UCL claim therefore cannot proceed under the unlawful

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prong.

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Cel–Tech, 20

Plaintiffs base their “unlawful” claim on

Mabry, 185 Cal. App. 4th at 214.

Second, a plaintiff bringing a claim under the UCL’s

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fraudulent prong “must plead and prove actual reliance.”

In re

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Tobacco II Cases, 46 Cal. 4th 298, 329 (2009).

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“plaintiff must allege he or she was motivated to act or refrain

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from action based on the truth or falsity of a defendant’s

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statement.”

Kwikset Corp. v. Superior Court, 51 Cal. 4th 310,

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327 (2011).

As discussed above regarding plaintiffs’ negligent

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misrepresentation claim, allegations of actual reliance are

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absent here.

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under the fraudulent prong.

In other words, a

Plaintiffs’ UCL claim therefore cannot proceed

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Finally, a business practice is “unfair” when it

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“violates established public policy or if it 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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Inc., 142 Cal. App. 4th 1457, 1473 (2d Dist. 2006).

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“the Legislature has permitted certain conduct or considered a

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situation and concluded no action should lie, courts may not

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override that determination.

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a ‘safe harbor,’ plaintiffs may not use the general unfair

McKell v. Wash. Mut.,
However, if

When specific legislation provides

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competition law to assault that harbor.”

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182.

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Cel–Tech, 20 Cal.4th at

Plaintiffs allege that defendants engaged in “unfair”

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business practices “because they violated the laws and underlying

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legislative policies designed to prevent foreclosure, where

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possible, by requiring mortgage holders and servicers to engage

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in honest foreclosure prevention efforts.”

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laws plaintiffs point to, however, provide a safe harbor for the

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allegedly unfair practices here.

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(“A mortgage servicer, mortgagee, trustee, beneficiary, or

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authorized agent shall not be liable for any violation that it

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has corrected and remedied prior to the recordation of a

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trustee’s deed upon sale . . . .”)

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general unfair competition law to assault that harbor.”

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Tech, 20 Cal. 4th at 182.

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fails under all three prongs of the UCL, the court must grant

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defendants’ motion to dismiss the claim.

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(Compl. ¶ 58.)

The

See Cal. Civ. Code § 2924.12(c)

Plaintiffs “may not use the
Cel–

Accordingly, because plaintiffs claim

IT IS THEREFORE ORDERED that defendants’ motion to
dismiss be, and the same hereby is, GRANTED.
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Plaintiffs have ten days from the date of this Order to

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file an amended complaint, if they can do so consistent with this

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Order.

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Dated:

October 28, 2013

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