Jent et al v. Northern Trust Corporation et al

Filing 26

MEMORANDUM AND ORDER RE: MOTION TO DISMISS signed by Senior Judge William B. Shubb on 1/14/14; ORDERING that defendants' 18 motion to dismiss is GRANTED.The Clerk is directed to enter judgment and close the file. CASE CLOSED (Kastilahn, A)

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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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CIV. NO. 2:13-1684 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 brought this

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action against defendants Northern Trust Corporation and the

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Northern Trust Company in connection with defendants’ allegedly

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wrongful conduct related to a residential loan.

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move to dismiss plaintiffs’ First Amended Complaint (“FAC”) 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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Defendants now

Factual and Procedural Background
In 2011, plaintiffs entered into a loan agreement
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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. 16); Defs.’ Req. for Judicial Notice (“RJN”) Ex. 1

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(Docket No. 19-1).)

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Trust, N.A., a predecessor by merger to defendant Northern Trust

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Company, as beneficiary.

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2012, plaintiffs were unable to make monthly payments.

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17.)

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plaintiffs attempted to secure additional credit with other

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(FAC ¶¶ 1, 16

The Note and Deed of Trust named Northern

(FAC ¶ 16.)

Beginning in November
(Id. ¶

At this time, the Property was listed for sale, and

financial institutions.

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(Id. ¶¶ 18-19.)

On March 21, 2013, defendants recorded a Notice of

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Default (“NOD”) on the Property, allegedly without contacting

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plaintiffs as required by California law.

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(Docket No. 19-3).)

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accompanied by a declaration pursuant to California Civil Code

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section 2923.55 making the contradictory assertions that

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defendants had both contacted plaintiffs to assess plaintiffs’

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financial situation and that defendants, despite exercising due

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diligence, were unable to contact plaintiffs.

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(Id. ¶ 23; RJN Ex. 3

According to plaintiffs, the NOD was

(FAC ¶ 24.)

Plaintiffs claim that, as a result of the recording of

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the NOD, other financial institutions withdrew their offers of

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credit.

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inconsistent statements in the declaration itself caused harm in

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the form of reduced value of the Property.

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Further, plaintiffs claim defendants made the alleged

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contradictory assertions with intent to do harm.

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In April 2013, plaintiffs informed defendants that the NOD had

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been improperly recorded, and in May defendants recorded a

(FAC ¶¶ 29-33.)

Plaintiffs also allege that the

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(Id.

¶¶ 34-35.)

(Id. ¶¶ 37-38.)

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rescission of the NOD.

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4).)

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(Id. ¶¶ 39-45; RJN Ex. 4 (Docket No. 19-

On August 18, 2013, plaintiffs filed a Complaint

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bringing claims for slander of title, negligent

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misrepresentation, negligence, and violation of California’s

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Unfair Competition Law (“UCL”), Cal. Bus. & Profs. Code § 17200

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et seq.

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dismiss the Complaint in its entirety on October 28, 2013.

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(Docket No. 15.)

(Docket No. 1.)

The court granted defendants’ motion to

On November 7, 2013, plaintiffs filed the FAC,

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realleging claims for slander of title, negligence, and

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violations of the UCL.

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dismiss the FAC for failure to state a claim pursuant to Rule

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12(b)(6).

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II.

(Docket No. 16.)

Defendants now move to

(Docket No. 18.)

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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properly take judicial notice of matters of public record outside

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the pleadings.

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504 (9th Cir. 1986).

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outside the complaint if “that document’s authenticity is not

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questioned and the plaintiff’s complaint necessarily relies on

Barron v. Reich, 13

A court may take judicial

Fed. R. Evid. 201.

A court may

See MGIC Indem. Corp. v. Weisman, 803 F.2d 500,
A court may also consider a document

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that document.”

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1007, 1014 n.3 (C.D. Cal. 2009) (citation omitted).

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Ayala v. World Sav. Bank, FSB, 616 F. Supp. 2d

Defendants request that the court judicially notice

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four recorded documents pertaining to the Property: the

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underlying promissory Note, printouts of tax assessments against

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the Property, the NOD, and the Notice of Rescission.

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Exs. 1–4.)

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will take judicial notice of the Note, the NOD, and the Notice of

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Rescission, since they are matters of public record whose

Plaintiffs do not oppose this request.

(See RJN
The court

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accuracy cannot be questioned.

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250 F.3d 668, 689 (9th Cir. 2001).

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disputes the authenticity of these documents and, having referred

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to the documents throughout the FAC, plaintiffs’ claim relies on

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them.

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assessments do not affect the outcome of this Order, and the

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court therefore declines to take judicial notice of them.

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III. Analysis

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See Lee v. City of Los Angeles,
Moreover, neither party

See Ayala, 616 F. Supp. 2d at 1014 n.3.

The tax

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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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

Scheuer v. Rhodes, 416

To survive a motion to dismiss, a plaintiff needs to

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

This “plausibility standard,” however, “asks

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

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line between possibility and plausibility.”

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

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A.

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Ashcroft v. Iqbal,

Slander of Title
“Slander of title occurs when a person, ‘without a

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privilege to do so, publishes a false statement that disparages

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title to property and causes the owner thereof some pecuniary

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loss or damage.’”

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2d ----, Civ. No. 1:12-00902 AWI BAM, 2013 WL 552097, at *3 (E.D.

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Cal. Feb. 13, 2013) (quoting Sumner Hill Homeowners’ Ass’n v. Rio

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Mesa Holdings, LLC, 205 Cal. App. 4th 999, 1030 (5th Dist.

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2012)).

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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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Civ. No. 2:10–00711 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 again claim that defendants maliciously recorded the

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NOD with an accompanying declaration that contained false and

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contradictory statements, which caused plaintiffs to lose out on

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obtaining outside credit and lowered the value and vendibility of

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the Property.

Ghuman v. Wells Fargo Bank, N.A., --- F. Supp.

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

Jackson v. Ocwen Loan Servicing, LLC,

(FAC ¶¶ 23-36.)

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Plaintiffs again fail to allege a plausible connection

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between any allegedly false statements and the losses plaintiffs

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claim to have suffered.

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action for slander of title is that the plaintiff suffered

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pecuniary damage as a result of the disparagement of title . . .

“[A]n essential element of a cause of

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(citing Manhattan Loft, 173 Cal. App. 4th at 1057).

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publication is reasonably understood to cast doubt upon the

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existence or extent of another’s interest in land, it is

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disparaging to the latter’s title.”

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Alan, 259 Cal. App. 2d 470, 489 (1st Dist. 1968)).

Sumner Hill, 205 Cal. App. 4th at 1032 (emphasis added)
“If the

Id. at 1030 (citing Hill v.

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Plaintiffs make contradictory allegations regarding

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whether it was the NOD itself or the accompanying declaration

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that caused their harm.

Although plaintiffs amended their

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complaint to allege that, “[a]ccording to multiple licensed

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California real estate agents, the inconsistent assertions in the

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declaration . . . caused the value and salability of the Subject

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Property to be lowered even after the Notice was rescinded,” (FAC

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¶ 34), plaintiffs also appear to allege that a financial

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institution withdrew on offer of credit “as a result of the

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negative affect the assertions made in the Notice of Default”

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itself, (id. ¶ 33).

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the declaration accompanying the NOD does not itself “cast doubt

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upon the existence or extent of” plaintiffs’ interest in the

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Property.”

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the declaration, by itself, makes any claim on the Property, and

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the declaration is therefore meaningless without the NOD.

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Phillips v. Glazer, 94 Cal. App. 2d 673, 677 (2d Dist. 1949)

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(citation omitted) (defining a disparaging statement as “a

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complete denial of title in others” or “any unfounded claim of an

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interest in the property which throws doubt upon its ownership”).

Moreover, the allegedly false statement in

Sumner Hill, 205 Cal. App. 4th at 1030.

Nothing in

See

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Plaintiffs appear to advance the theory that the NOD

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itself was rendered “false” by virtue of the alleged defect in
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the declaration.

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amounts to the fact that in addition to simply checking the box

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indicating that defendants contacted plaintiffs to assess

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plaintiffs’ financial situation defendants also checked the box

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indicating that despite exercising due diligence defendants were

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unable to contact plaintiffs.

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in the declaration was properly checked.

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defendants also checked the second box, in the court’s view,

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amounts to no more than surplusage.

The alleged defect upon which plaintiffs rely

Nobody disputes that the first box
The fact that

Further, the court observes

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that checking both boxes is not technically inconsistent:

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defendants could have been unable to contact plaintiffs after

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several attempts and have ultimately contacted plaintiff.

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importantly, to rely upon such a hypertechnical argument to

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invalidate the NOD would allow plaintiffs to play “gotcha” with

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defendants.

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More

The court is unwilling to effect such a result.

There is no claim that the NOD itself contained false

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statements that disparaged plaintiffs’ title.

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admit, they were unable to make the loan payments between

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November 2012 and January 2013.

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is not actionable because it is not false, and even assuming the

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declaration accompanying the NOD was false, it is not actionable

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because it does not disparage plaintiffs’ title.

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therefore, fail to allege they “suffered pecuniary damage as a

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result of the disparagement of title.”

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App. 4th at 1032.

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motion to dismiss plaintiffs’ slander of title claim.

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B.

(FAC ¶ 17.)

As plaintiffs

Therefore, the NOD

Plaintiffs,

Sumner Hill, 205 Cal.

Accordingly, the court must grant defendants’

Negligence
To assert a cause of action for negligence, plaintiffs
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must allege: “(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 again fail to allege a plausible theory

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under which defendants owed them a duty of care.

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transaction between lender and borrower does not create an

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actionable duty of care.

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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, Civ. No. 2:11-441 WBS GGH, 2011 WL 2619060, at

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

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An arm’s length

Saldate v. Wilshire Credit Corp., 711

Argueta v.

Plaintiffs now allege that defendants “exceeded the

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scope of the conventional role of a mere lender of money.”

(FAC

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¶ 56.)

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substantiate this allegation, and, without more, the court is not

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required to accept these conclusory allegations as true.

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Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir.

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2010) (“We are not . . . required to accept as true allegations

Plaintiffs do not allege any further facts to

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See

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that contradict exhibits attached to the Complaint or matters

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properly subject to judicial notice, or allegations that are

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merely conclusory, unwarranted deductions of fact, or

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unreasonable inferences.”).

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to plead the existence of a duty of care owed to plaintiffs.

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Nor do the statutory requirements for non-judicial

These allegations are not sufficient

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sales under California Civil Code section 2923.55 create a duty

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of care here.

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the proposition that they may seek damages for a violation of

Plaintiffs again fail to provide any authority for

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section 2923.55 under a theory of negligence.

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California courts have repeatedly held that “California’s non-

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judicial foreclosure statute . . . is a ‘comprehensive statutory

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framework established to govern non-judicial foreclosure sales

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[and] is intended to be exhaustive.’”

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Indus. Grp., 713 F. Supp. 1092, 1098 (E.D. Cal. 2010) (Shubb, J.)

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(alteration in original) (quoting Moeller v. Lien, 25 Cal. App.

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4th 822, 834 (2d Dist. 1994)).

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spoken: a borrower may seek an injunction to enjoin an improper

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foreclosure if a trustee’s deed upon sale has not been recorded,

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Cal. Civ. Code § 2924.12(a)(1); or, if a trustee’s deed upon sale

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has been recorded, the borrower may seek damages for violations

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of the statutory provisions, id. § 2924.12(b).

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statute provides a “safe harbor,” precluding liability “for any

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violation . . . corrected and remedied prior to the recordation

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of a trustee’s deed upon sale.”

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In contrast,

Lane v. Vitek Real Estate

The California legislature has

However, the

Id. § 2924.12(c).

Here, defendants rescinded the NOD, (RJN Ex. 4), and no

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trustee’s deed upon sale has been recorded.

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2924.12(c) precludes liability under California’s non-judicial
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Therefore, section

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foreclosure statutory scheme.

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Civ. No. 13-02902 JST, 2013 WL 6001924, at *7 (N.D. Cal. Nov. 12,

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2013) (confirming that a plaintiff “may not seek remedies under

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Section 2924.12 that do not apply to the present status of the

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property,” and noting that, “if no trustee’s deed upon sale has

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been recorded,” any damages claims “are unavailable until such

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time as the deed upon sale has been recorded”).

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of care from this statute would allow plaintiffs to sue for

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damages where the legislature expressly foreclosed liability.

See Vasquez v. Bank of Am., N.A.,

To import a duty

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Although plaintiffs contend that their alleged damages are

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otherwise left without remedy, it is not the place of this court

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to second-guess the legislature and expand the private right of

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action for violations of section 2923.55 beyond what the

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legislature has already provided.

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Civ. No. 11-0477 EMC, 2011 WL 3652501, at *5 (N.D. Cal. Aug. 19,

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2011) (holding that allowing non-judicial foreclosure statute “to

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serve as a statutory basis for a negligence claim would

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circumvent the limited scope of relief provided by the statute”).

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Cf. Ottolini v. Bank of Am.,

Finally, plaintiffs contend that the alleged violation

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of section 2923.55 constitutes negligence per se.

“Negligence

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per se delineates a specific manner, based upon statute or

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regulation, in which a breach of duty may be identified.

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However, a breach is irrelevant if no duty has first been

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established.”

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1:12-01671 AWI SMS, 2013 WL 5476806, at *11 (E.D. Cal. Sept. 30,

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2013).

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that a defendant failed to exercise due care after the court has

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already determined that the defendant owes the plaintiff an

Heflebower v. JPMorgan Chase Bank, NA, Civ. No.

Thus, negligence per se only allows for a presumption

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independent duty of care.

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Ass’n v. Am. Home Assur. Co., 62 Cal. App. 4th 1166, 1180 (1st

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Dist. 1998).

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owe plaintiffs a duty of care, plaintiffs’ negligence per se

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theory cannot support their claim.

Cal. Serv. Station & Auto. Repair

Here, having found above that defendants did not

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Accordingly, because defendants did not owe plaintiffs

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a legal duty of care, the court will grant defendants’ motion to

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dismiss plaintiffs’ negligence claim.

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C.

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

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fraudulent business act or practice . . . .”

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Code § 17200.

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some other illegal conduct or fraud committed by a defendant, and

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‘[a] plaintiff must state with reasonable particularity the facts

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supporting the statutory elements of the violation.’”

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v. Saxon Mortg. Servs., Inc., 687 F. Supp. 2d 1191, 1202 (E.D.

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Cal. 2009) (Shubb, J.) (quoting Khoury v. Maly’s of Cal., Inc.,

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14 Cal. App. 4th 612, 619 (2d Dist. 1993)).

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Cal. Bus. & Prof.

“This cause of action is generally derivative of

Castaneda

As alleged, plaintiffs’ UCL claims are wholly

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derivative of the slander of title claim and alleged section

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2923.55 violations described above.

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defendants “engaged in ‘unlawful’ business practices under the

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UCL based on the Slander of Title Claim and intentional violation

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of Civil Code 2923.55” and that defendants “engaged in ‘unfair’

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business practices under the UCL because they intentionally

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violated Civil Code section 2923.55”).)

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(See FAC ¶¶ 61-62 (alleging

Plaintiffs’ slander of title claim cannot be the basis
of their UCL claim because, as described above, the slander of
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title claim fails for lack of falsity and a plausible connection

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between any allegedly false statements and plaintiffs’ harm.

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Plaintiffs contend, however, that the aforementioned statutory

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safe harbor under section 2924.12, precluding liability “for any

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violation . . . corrected and remedied prior to the recordation

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of a trustee’s deed upon sale,” Cal. Civ. Code section

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2924.12(c), does not apply to derivative claims under the UCL

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because defendants’ alleged wrongdoing was intentional.

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The California Supreme Court has held that “[w]hen

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specific legislation provides a ‘safe harbor,’ plaintiffs may not

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use the general unfair competition law to assault that harbor.”

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Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th

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163, 182 (1999).

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Nissan North America, Inc., 201 Cal. App. 4th 572 (2d Dist.

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2011), does not establish that intentional conduct is precluded

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from statutory “safe harbor” provisions under the UCL.

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merely referenced a case limiting the applicability of a safe

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harbor provision relating to the regulation of rental cars,

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Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 1163 (1st Dist.

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2000), before holding that Schnall did not apply because Schnall

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“involve[d] a very different type of safe harbor provision.”

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Lopez, 201 Cal. App. 4th at 594.

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Despite plaintiffs’ contentions, Lopez v.

Lopez

Section 2924.12 is also “a very different type of safe

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harbor provision.”

Id.

Plaintiffs have not offered any

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authority--and the court is not aware of any--stating that the

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safe harbor established by section 2924.12 does not apply to

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intentional conduct.

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precludes from liability “any violation . . . corrected and

Instead, by its own terms, the statute

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remedied prior to a trustee’s sale.”

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(emphasis added).

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regarding intent is allowing for statutory or treble damages if

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the violation “was intentional, reckless or resulted in willful

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misconduct.”

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safe harbor for defendants’ alleged wrongdoing, and “plaintiffs

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may not use the general unfair competition law to assault that

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harbor,” allegations of intentional wrongdoing notwithstanding.

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Cel-Tech, 20 Cal. 4th at 812.

Cal. Civ. Code § 2924.12(c)

The only distinction the statute makes

Id. § 2924.12(b).

Thus, section 2924.12 provides a

Defendants’ alleged violation of

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section 2923.55, intentional or not, is not independently

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actionable under the UCL.

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Because plaintiffs’ underlying claim for slander of

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title fails, and section 2924.12 immunizes defendants’ alleged

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wrongdoing, plaintiffs’ UCL claim has no leg to stand on.

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Accordingly, the court must grant defendants’ motion to dismiss

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the claim.

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D.

Leave to Amend
Although leave to amend must be freely given, the court

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is not required to allow futile amendments.

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Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).

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the court has already permitted plaintiffs to amend their

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pleadings and it appears that plaintiffs are unable to state a

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viable claim against defendants, all claims will be dismissed

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with prejudice and without leave to amend.

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See DeSoto v. Yellow
Because

IT IS THEREFORE ORDERED that defendants’ motion to
dismiss be, and the same hereby is, GRANTED.
The Clerk of the Court is directed to enter a judgment
of dismissal in accordance with this Order and close the file.
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Dated:

January 14, 2014

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