Vincent v. PNC Mortgage, Inc.

Filing 13

ORDER signed by Judge Kimberly J. Mueller on 6/17/14 GRANTING IN PART and DENYING IN PART 5 Motion to Dismiss. Defendant's 5 Motion to Dismiss plaintiff's UCL claim predicated on the breach of contract claim is GRANTED, with leave to a mend; defendant's 5 Motion to Dismiss plaintiff's breach of contract claim is DENIED; defendant's 5 Motion to Dismiss plaintiff's UCL claim predicated on the unfair prong is DENIED. Plaintiff shall have 21 days from the date of this order to file a first amended complaint. (Meuleman, A)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 LINDA VINCENT as Executrix of the Estate of JOHN G. VINCENT, Plaintiff, 13 ORDER v. 14 15 No.: 14-cv-00833-KJM-CMK PNC MORTGAGE, INC. and Does 1 through 50, inclusive, 16 Defendants. 17 18 This matter is before the court on the motion by defendant PNC Bank, N.A. 19 (erroneously sued as PNC Mortgage, Inc.) to dismiss plaintiff Linda Vincent’s Complaint. 20 (Def.’s Mot. to Dismiss, ECF 5.) Plaintiff opposes the motion. (Pl.’s Opp’n, ECF 6.) The court 21 decided the matter without a hearing. As explained below, the court DENIES in part and 22 GRANTS in part defendant’s motion. 23 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND The claims in this case arise out of defendant’s alleged wrongful foreclosure on the 24 25 property of plaintiff’s deceased husband. (See Def.’s Notice of Removal, Ex. A, Compl., ECF 1 26 (“Compl.”) ¶ 47.) “Plaintiff is the executrix of the Estate of John G. Vincent, deceased [(“the 27 Decedent”)].” (Id. ¶ 1.) The property at issue was located in Chilcoot, California (“Subject 28 ///// 1 1 Property”). (Id. ¶ 2.) Defendant was the servicer of the loan on the Subject Property. (Id. ¶ 3.) 2 Plaintiff has also sued several Doe defendants.1 (See id. at 1.) 3 The Decedent purchased the property in 2005 and took out a loan in the amount of 4 $304,000 on the property, with monthly payments of $1,550.80 (“Subject Loan”). (Id. ¶¶ 10–11.) 5 The Subject Loan was secured by a deed of trust (“DOT”), recorded in 2005. (Id. ¶ 11.) At the 6 time the Decedent took out the mortgage, he was not required to advance funds into an escrow 7 account to pay for property taxes and insurance (“impound account”), but the DOT permitted “an 8 impound requirement subject to the Real Estate Settlement Procedures Act” (“RESPA”), 12 9 U.S.C. § 2601, et seq. (Id. ¶ 12.) Plaintiff alleges “the [p]roperty taxes on the Subject Property 10 were approximately $4,037.54” per year. (Id. ¶ 13.) 11 In 2008, because the economic downturn “severely reduced” the Decedent’s 12 income (id. ¶ 14), the Decedent contacted Lassen County (the “County”) seeking relief from 13 property taxes (id. ¶ 15). The Decedent believed he did not need to make his April 2008 payment 14 during that process. (Id. ¶ 16.) In June 2008, the Decedent sent a check “in the approximate 15 amount of $2,018 to the Lassen County Treasurer . . . representing the taxes due in April 2008.” 16 (Id. ¶ 17.) However, in July 2008, the County returned the check, stating the check did not 17 provide for penalties that had accrued. (Id.) Although the Decedent applied for an installment 18 plan with the County, the County issued a notice on July 25, 2008 to the Decedent, stating the 19 property taxes were in default. (Id.) 20 21 22 23 24 25 26 27 28 In September 2008, the Decedent sent a payment in the amount of $1,550.80 representing the monthly payment for the mortgage, and defendant’s predecessor (“Bank”) 1 Plaintiff identifies a number of Doe defendants. The Ninth Circuit provides that “‘[plaintiffs] should be given an opportunity through discovery to identify [] unknown defendants’” “in circumstances . . . ‘where the identity of the alleged defendant[] [is] not [] known prior to the filing of a complaint.’” Wakefield v. Thompson, 177 F.3d 1160, 1163 (9th Cir. 1999) (quoting Gillespie v. Civiletti, 629 F.2d 637, 642 (9th Cir. 1980)) (modifications in the original). Plaintiff is warned, however, that such defendants will be dismissed where “‘it is clear that discovery would not uncover the identities, or that the complaint would be dismissed on other grounds.’” Id. (quoting Gillespie, 629 F.2d at 642). Plaintiff is further warned that Federal Rule of Civil Procedure 4(m), which states that the court must dismiss defendants who have not been served within 120 days after the filing of the complaint unless plaintiff shows good cause, is applicable to Doe defendants. See Glass v. Fields, No. 09-00098, 2011 U.S. Dist. LEXIS 97604, at * 1–3 (E.D. Cal. Aug. 31, 2011); also Hard Drive Prods. v. Does, No. 11-01567, 2011 U.S. Dist. LEXIS 109837, at *2–4 (N.D. Cal. Sep. 27, 2011). 2 1 accepted it. (Id. ¶ 20.) In the same month, however, the Bank sent an escrow account statement 2 to the Decedent, requiring monthly payments of $3,063.90. (Id. ¶ 21.) The Decedent alleges the 3 new amount was based “on the false assumption that his property taxes were $8,075.08 per year, 4 instead of the actual amount of $4,037.54 per year.” (Id.) When the Decedent contacted the 5 Bank about the alleged miscalculation, the Bank told the Decedent to apply for mortgage relief. 6 (Id. ¶ 22.) 7 The Decedent continued tendering the original amount of $1,550.80 in October 8 and November 2008, and the Bank accepted those payments. (Id. ¶¶ 23–24.) Plaintiff avers the 9 Bank paid the County $4,698.75 for property taxes in November 2008. (Id. ¶ 25.) 10 Beginning in December 2008, the Bank stopped accepting the Decedent’s 11 payments (see id. ¶¶ 26–27), and in January 2009, the Bank sent a notice, requiring a payment of 12 “past due” amount of $7,741.96 (id. ¶ 28). On March 16, 2009, a notice of default was recorded 13 for the amount of $6,203.20; this amount represented “the exact amount of total payments [the 14 Decedent] had attempted to make between December 2008 and March 2009 and rejected by 15 [d]efendants.” (Id. ¶ 31.) 16 In April 2009, the Decedent spoke with a Bank representative, who acknowledged 17 the mistake in calculating the property taxes and promised to send the new amount to plaintiff’s 18 attorney. (Id. ¶¶ 32–33.) The Decedent never received the re-calculated amount. (Id. ¶ 33.) 19 Moreover, in August 2009, a notice of trustee’s sale was recorded with a sale date of September 20 16, 2009. (Id. ¶ 34.) “In the ensuing months, [the Decedent] attempted to reach a modification 21 agreement with [defendant] . . . to maintain ownership of the Subject Property,” but defendant 22 informed the Decedent “that he did not qualify for a modification.” (Id. ¶ 36.) During the time 23 when the Decedent tried to work out a modification plan, he was never told what his payments 24 were. (Id. ¶ 37.) But when the Decedent contacted defendant in early July 2010, he was told 25 “that the monthly payments on the Subject Loan had been returned to $1,550.80.” (Id.) 26 Eventually, the Subject Property was sold on September 7, 2010. (Id. ¶ 38.) Plaintiff concludes 27 that if defendant had told the Decedent that his payments had returned to $1,550.80 earlier, the 28 Decedent would have been able to save the Subject Property. (Id. ¶ 37.) 3 1 Plaintiff commenced this action in the Lassen County Superior Court on 2 January 27, 2014. (See Compl., ECF 1.) The Complaint alleges two claims: (1) breach of 3 contract and (2) violations of California’s Business and Professions Code section 17200, et seq. 4 (“UCL”). (Id. at 9, 11.) Defendant removed the case on April 3, 2014, on the basis of diversity 5 jurisdiction under 28 U.S.C. § 1332. (ECF 1 at 1–2.) Defendant now moves to dismiss plaintiff’s 6 Complaint. (ECF 5.) Plaintiff opposes the motion (ECF 6), and defendant has replied (Def.’s 7 Reply, ECF 8). 8 II. LEGAL STANDARD ON A MOTION TO DISMISS 9 Federal courts exercising diversity jurisdiction apply the substantive law of the 10 state in which they are located, here California, and federal procedural rules. Erie R.R. Co. v. 11 Tompkins, 304 U.S. 64, 78 (1938). Under Federal Rule of Civil Procedure 12(b)(6), a party may 12 move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” A 13 court may dismiss “based on the lack of cognizable legal theory or the absence of sufficient facts 14 alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 15 (9th Cir. 1990). 16 Although a complaint need contain only “a short and plain statement of the claim 17 showing that the pleader is entitled to relief,” FED. R. CIV. P. 8(a)(2), to survive a motion to 18 dismiss, this short and plain statement “must contain sufficient factual matter . . . to ‘state a claim 19 to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell 20 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must include something more 21 than “an unadorned, the-defendant-unlawfully-harmed-me accusation” or “‘labels and 22 conclusions’ or ‘a formulaic recitation of the elements of a cause of action . . . .’” Id. (quoting 23 Twombly, 550 U.S. at 555). Determining whether a complaint will survive a motion to dismiss 24 for failure to state a claim is a “context-specific task that requires the reviewing court to draw on 25 its judicial experience and common sense.” Id. at 679. Ultimately, the inquiry focuses on the 26 interplay between the factual allegations of the complaint and the dispositive issues of law in the 27 action. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). 28 ///// 4 1 In making this context-specific evaluation, this court “must presume all factual 2 allegations of the complaint to be true and draw all reasonable inferences in favor of the 3 nonmoving party.” Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). This rule 4 does not apply to “a legal conclusion couched as a factual allegation,” Papasan v. Allain, 5 478 U.S. 265, 286 (1986), quoted in Twombly, 550 U.S. at 555, to “allegations that contradict 6 matters properly subject to judicial notice,” or to material attached to or incorporated by reference 7 into the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 8 9 Finally, a party may raise a statute of limitations argument in a motion to dismiss if it is apparent from the face of the complaint that the complaint was not timely filed and that 10 plaintiff will be unable to prove facts to establish the timeliness of the claim. Von Saher v. 11 Norton Simon Museum, 592 F.3d 954, 969 (9th Cir. 2010). 12 III. 13 JUDICIAL NOTICE As an initial matter, plaintiff requests the court take judicial notice of the DOT 14 recorded on September 29, 2005, with the County Recorder’s Office as instrument number 15 2005-09271. (Pl.’s Req. Judicial Notice, ECF 7.) 16 The court GRANTS plaintiff’s request because the DOT is a matter of public 17 record. See Harris v. Cnty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (“We may take 18 judicial notice of undisputed matters of public record . . . .”). 19 IV. 20 DISCUSSION Defendant makes four principal arguments in support of its Motion to Dismiss: 21 First, the entire Complaint is time-barred. (ECF 5-1 at 5–6.) Second, plaintiff has no standing to 22 sue as an Executrix of the Decedent’s Estate. (Id. at 6.) Third, plaintiff’s breach of contract 23 claim cannot proceed because the Complaint’s allegations do not meet the elements of the claim. 24 (Id. at 6–8.) Finally, plaintiff’s UCL claim cannot proceed because plaintiff has no standing and 25 because the allegations do not satisfy any of the legal grounds for the claim. (Id. at 8–9.) The 26 court addresses defendant’s arguments by first addressing whether plaintiff has standing as an 27 Executrix; and second, whether the claims are time-barred and whether the Complaint’s 28 allegations are sufficient to meet the requirements of plaintiff’s substantive claims. 5 1 A. 2 Standing Defendant argues plaintiff does not allege she has been appointed as the Executrix 3 of the Decedent’s Estate, and therefore has no standing to sue on behalf of the Decedent. (ECF 4 5-1 at 6.) Plaintiff responds she has specifically alleged she is the executrix of the Decedent’s 5 Estate. (ECF 6 at 4.) 6 Rule 17(a)(1) requires that every action “be prosecuted in the name of the real 7 party in interest.” The rule lists an executor as an appropriate party in interest. FED. R. CIV. P. 8 17(a)(1)(A). In diversity actions, whether a plaintiff is the proper party to maintain the action is 9 determined by state law. See Allstate Ins. Co. v. Hughes, 358 F.3d 1089, 1094–95 (9th Cir. 10 2004). The real party in interest is the person who, under the substantive law, has the right to sue. 11 See U-Haul Int’l, Inc. v. Jartran, Inc., 793 F.2d 1034, 1038 (9th Cir. 1986). 12 Here, plaintiff’s allegations of executorship are sufficient. The complaint 13 explicitly alleges that “plaintiff is the executrix of the Estate of John G. Vincent.” (Compl. ¶ 1.) 14 Defendant does not dispute that plaintiff, as an executrix, can pursue her husband’s potential 15 claims under California law. Therefore, at this stage of the litigation and in light of defendant’s 16 narrow argument, the court, accepting plaintiff’s allegations as true, finds them sufficient to 17 survive a motion to dismiss. See Estate of Migliaccio v. Midland Nat’l. Life Ins. Co., 436 F. 18 Supp. 2d 1095, 1101 (C.D. Cal. 2006); see also FED. R. CIV. P. 9(a)(1)(A)–(C) (providing “a 19 pleading need not allege” “a party’s capacity to sue . . .; [or] a party’s authority to sue”). 20 21 B. Breach of Contract Defendant makes two main arguments: first, that plaintiff’s breach of contract 22 claim is time-barred (ECF 5-1 at 5), and second, she has not alleged the necessary elements for a 23 breach of contract claim (id. 6–8). The court addresses these arguments in turn. 24 1. 25 Defendant argues plaintiff’s breach of contract claim is time-barred because the Statute of Limitations 26 alleged breach occurred in September 2008, and thus, the four-year statute of limitations 27 applicable to a breach of contract claim ran in September 2012, more than a year before the 28 complaint was filed. (Id. at 5.) 6 1 Plaintiff responds that the real harm “was the loss of the home, damage to [the 2 Decedent’s] credit, and increased interest and arrears that [the Decedent] would not have 3 otherwise incurred but for the total breach of the [DOT].” (ECF 6 at 4.) Accordingly, plaintiff 4 states the statute of limitations did not start to run until the Decedent “suffered the last of his 5 damages: the sale of the Subject Property,” which occurred in September 2010. (Id.) 6 Federal courts apply state statutes of limitations in diversity actions. Guar. Trust 7 Co. of N.Y. v. York, 326 U.S. 99, 109 (1945). A statute of limitations begins to run when the 8 claim accrues. CAL. CIV. PROC. CODE § 312. As a general rule, a claim accrues when the last 9 element required for that claim occurs. Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 806 10 (2005). An important exception to this general rule is the “discovery rule,” “which postpones 11 accrual of a [claim] until the plaintiff discovers, or has reason to discover, the [claim].” Id. at 12 807. When damages are a required element of a claim, the claim does not accrue until the 13 damages are sustained. City of Vista v. Robert Thomas Sec., Inc., 84 Cal. App. 4th 882, 886 14 (2000). To start the accrual, however, the damages must be of a type recoverable under the 15 particular claim involved. Cnty. of Santa Clara v. Atl. Richfield Co., 137 Cal. App. 4th 292, 317 16 (2006). 17 In California, an action for breach of a written contract is subject to a four-year 18 statute of limitations. CAL. CIV. PROC. CODE § 337. A claim for breach of contract, as a general 19 rule, accrues when the contract is breached and a plaintiff suffers actual harm. See Romano v. 20 Rockwell Internat., Inc., 14 Cal. 4th 479, 488–89 (1996). 21 Here, plaintiff limits the actual harm to the loss of the Subject Property. (ECF 6 at 22 4.) This is the last of plaintiff’s damages, plaintiff reasons. (Id.) Plaintiff lost the Subject 23 Property on September 7, 2010. (Compl. ¶ 38.) Plaintiff commenced this action on January 27, 24 2014. (See id. at 1.) Accordingly, plaintiff’s breach of contract claim is timely as it was filed 25 within the four-year statutory period. However, plaintiff may incorporate the clarification, that 26 the actual harm is limited to the loss of the Subject Property, into the amended complaint. 27 ///// 28 ///// 7 1 2. 2 Defendant argues plaintiff’s breach of contract claim cannot proceed because Sufficiency of the Allegations 3 plaintiff’s allegations do not meet the elements of a breach of contract claim. (ECF 5-1 at 6.) 4 Specifically, defendant argues plaintiff’s allegations are insufficient to meet the existence of the 5 contract element because plaintiff does not attach the contract to the Complaint. (Id. at 7.) 6 Plaintiff’s allegations do not show the Decedent performed his part of the bargain as he did not 7 pay the required property taxes. (Id.) Finally, defendant argues, plaintiff’s allegations do not 8 show the Decedent suffered any damages as a result of the alleged miscalculation. (Id. at 7–8.) 9 Plaintiff responds she identified the DOT as the relevant contract and has asked the 10 court to take judicial notice of it; thus, with the taking of notice, the DOT is properly before the 11 court. (ECF 6 at 6.) As to performance, plaintiff responds the Decedent “was under no duty to 12 pay any amount for which he was not billed.” (Id. at 7.) Finally, as to causation, plaintiff 13 responds that “the damages begin with the improper calculations, snowball through the refusal to 14 accept payment . . . and end with the foreclosure . . . .” (Id.) 15 The necessary elements of a breach of contract claim are: (1) the contract; 16 (2) plaintiff’s performance or excuse of nonperformance; (3) defendant’s breach of the contract; 17 and (4) damages resulting from defendant’s breach. San Mateo Union High Sch. Dist. v. Cnty. of 18 San Mateo, 213 Cal. App. 4th 418, 439 (2013). 19 Here, the court finds plaintiff’s allegations are sufficient to state a claim for breach 20 of contract. First, the existence of a contract element is satisfied because plaintiff alleges the 21 Decedent and the Bank entered into a “Loan Agreement.” (Compl. ¶ 51.) While it may not be 22 clear from that language to what agreement plaintiff refers, plaintiff in the opposition brief and in 23 several places in the Complaint specifies that the contract plaintiff refers to is the DOT. (ECF 6 24 at 5–6.) Plaintiff may incorporate the clarification, that the contract plaintiff refers to is the DOT, 25 into the amended complaint. 26 Second, the performance element is satisfied because plaintiff alleges the Decedent 27 tendered the monthly payments required up to the date when defendant refused to accept the 28 payments. (See id. ¶ 52.) 8 1 Third, the breach element is satisfied because plaintiff’s complaint sets forth six 2 specific instances of defendant’s alleged breaches of the contract. (Id. ¶¶ 53–54.) Specifically, 3 plaintiff alleges defendant: 4 i. Erroneously calculated the property taxes due on the Subject Property as approximately $8,000.00 instead of the correct approximation of $4,000.00; ii. Erroneously doubled [the Decedent’s] monthly payments based on that erroneous tax calculation; iii. Refused to accept [the Decedent’s] normal payments of $1,550.80 for the months of December 2008, and January through March 2009[;] iv. Failed to correct the mistake its agent admitted [defendant] had made; v. Failed to inform [the Decedent] that his monthly payment had been returned to its original amount until approximately two months prior to the foreclosure; and vi. Foreclosed on the Subject Property based on an erroneous determination of default that was based solely on [d]efendant[‘s] improper, incorrect, and erroneous escrow calculation. 5 6 7 8 9 10 11 12 13 14 15 (Id.) 16 17 At this stage of litigation, these allegations are sufficient to meet the breach element. 18 Finally, the damages element is also satisfied. Plaintiff alleges that as a result of 19 defendant’s breach, the Decedent “suffered injury, including but not limited to loss of his entire 20 interest in the Subject Property[,] damage to his credit, and increased interest and arrears that he 21 would not have otherwise incurred.” (Id. ¶ 54.) 22 23 24 Accordingly, because plaintiff’s allegations are sufficient to state a claim for breach of contract, the court DENIES defendant’s Motion to Dismiss. C. UCL 25 Defendant makes three arguments in support of its Motion to Dismiss plaintiff’s 26 UCL claim. First, plaintiff’s UCL claim is time-barred (ECF 5-1 at 5–6). Second, plaintiff has 27 no standing under the UCL. (Id. at 8.) Finally, plaintiff has not stated a predicate claim for UCL 28 to apply. (Id.) 9 1 As to the statute of limitations argument, plaintiff responds because the same harm 2 from the breach of contract claim forms the basis of the UCL claim, plaintiff’s UCL claim is 3 timely. (ECF 6 at 4.) As to standing, plaintiff responds her damages allegations are sufficient to 4 have standing under the UCL. (Id. at 8.) Finally, as to defendant’s predicate claim argument, 5 plaintiff responds her breach of contract claim is sufficient, or in the alternative, the allegations 6 are sufficient to state a UCL claim under the “unfair” prong. (Id.) The court addresses these 7 arguments in turn. 8 1. 9 The statute of limitations for a UCL claim is four years. CAL. BUS. & PROF. CODE 10 § 17208. California courts apply common law accrual rules to UCL claims. See Aryeh v. Canon 11 Bus. Solutions, Inc., 55 Cal. 4th 1185, 1193 (2013). 12 Statute of Limitations Here, the court finds plaintiff’s UCL claim predicated on her breach of contract 13 claim is timely. Because plaintiff bases her UCL claim on her breach of contract claim (see 14 Compl. ¶ 57), the court’s analysis as set forth above in the statute of limitations section of the 15 breach of contract claim applies here. Because the court finds that plaintiff’s breach of contract 16 claim is timely, plaintiff’s UCL claim is timely to the same extent. 17 As to plaintiff’s UCL claim predicated on the “unfair” prong, the court finds 18 defendant has not met its burden of showing that plaintiff’s entire UCL claim based on the 19 “unfair” prong is untimely. It is not enough to show that some of the allegedly “unfair” acts are 20 time-barred; rather, defendant must have shown that each alleged “unfair” act is time-barred for 21 the entire claim to be time-barred. See Pointe San Diego Residential Cmty., L.P. v. Procopio, 22 Cory, Hargreaves & Savitch, LLP, 195 Cal. App. 4th 265, 274 (2011). 23 2. 24 To have standing under the UCL, a plaintiff must have “suffered injury in fact” 25 and “lost money or property.” CAL. BUS. & PROF. CODE § 17204. Because the “injury in fact” 26 requirement under the UCL is the same as that for federal standing, to establish “injury in fact” 27 here, a plaintiff must establish that there was “an invasion of a legally protected interest which is 28 (a) concrete and particularized . . . ; and (b) actual or imminent, not conjectural or hypothetical.” Standing under the UCL 10 1 Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 322 (2011) (internal quotation marks and 2 citations omitted). However, unlike the federal “injury in fact” requirement, to have standing 3 under the UCL, plaintiff must prove an economic injury. Id. at 323. Lost money or property “is 4 itself a classic form of injury in fact.” Id. 5 Here, the court finds the standing requirement satisfied. Simply stated: “Plaintiff 6 does plead that [the Decedent] lost his entire interest in the Subject Property . . . .” (ECF 6 at 8.) 7 Loss of property, being an economic injury, satisfies the standing requirement under the UCL. 8 See Kwikset Corp., 51 Cal. 4th 310, 323 (2011). 9 3. 10 Sufficiency of the Allegations The UCL prohibits unfair competition, which is defined as prohibiting any 11 “unlawful, unfair or fraudulent business act or practice.” CAL. BUS. & PROF. CODE § 17200. The 12 statute’s language has been construed as prohibiting three distinct types of practices: (1) unlawful 13 acts or practices; (2) unfair acts or practices; and (3) fraudulent acts or practices. Cel-Tech 14 Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999). 15 In determining whether a practice is “unlawful” within the meaning of the statute, 16 courts consult federal, state, local, or common law as a predicate for a section 17200 violation. 17 See Farmers Ins. Exch. v. Superior Court, 2 Cal. 4th 377, 383 (1992). Hence, to allege a claim 18 under the “unlawful” prong, a plaintiff must show a violation of some independent law. Id. 19 (section 17200 “borrows” violations of other laws and treats them as unlawful practices 20 actionable separately under section 17200). “[A] breach of contract may form the predicate for a 21 section 17200 claim, provided it also constitutes conduct that is unlawful, or unfair, or 22 fraudulent.” Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1152 (9th Cir. 2008) 23 (alteration in original) (internal quotation marks and citation omitted). 24 ///// 25 ///// 26 ///// 27 ///// 28 ///// 11 1 2 3 Over the years, California courts have provided several definitions of “unfair” under the UCL. They are: 1. “An act or practice is unfair if the consumer injury is substantial, is not 4 outweighed by any countervailing benefits to consumers or to competition, and 5 is not an injury the consumers themselves could reasonably have avoided.” 6 Daugherty v. Am. Honda Motor Co., Inc., 144 Cal. App. 4th 824, 839 (2006). 7 2. “‘[U]nfair’ business practice occurs when that practice offends an established 8 public policy or when the practice is immoral, unethical, oppressive, 9 unscrupulous or substantially injurious to consumers.” Smith v. State Farm 10 Mut. Auto. Ins. Co., 93 Cal. App. 4th 700, 719 (2001) (internal citation and 11 quotation marks omitted). 12 3. An unfair business practice means “the public policy which is a predicate to 13 the action must be ‘tethered’ to specific constitutional, statutory or regulatory 14 provisions.” Scripps Clinic v. Superior Court, 108 Cal. App. 4th 917, 940 15 (2003). 16 Here, plaintiff cannot bring a UCL claim based on her alleged breaches of contract 17 because plaintiff has not satisfied any of the available tests by pleading that the breaches “are 18 independently unlawful, unfair, or fraudulent.” Sybersound Records, Inc., 517 F.3d at 1152. 19 Plaintiff merely states in a conclusory fashion that “[d]efendants violated the . . . [c]ommon [l]aw 20 prohibition against breaching contracts . . . .” (Compl. § 57.) 21 Hence, the court grants defendant’s Motion to Dismiss plaintiff’s UCL claim to the 22 extent the claim is predicated on her breach of contract claim. Plaintiff is granted leave to amend 23 if she can do so consonant with Rule 11. 24 As to plaintiff’s UCL claim predicated on the “unfair” prong, the court finds 25 plaintiff’s allegations sufficiently pled to satisfy the unfairness test described in Daugherty. 144 26 Cal. App. 4th at 839. That test is the most relevant in this case because this case involves a 27 consumer alleging unfair conduct by a business. See Yanting Zhang v. Superior Court, 57 Cal. 28 4th 364, 381 (2013) (noting that in consumer actions, the balancing test has not been 12 1 disapproved). In alleging six instances of unfair conduct by defendant, plaintiff alleges there was 2 no countervailing benefit to consumers. (Compl. ¶ 58.) Specifically, plaintiff alleges “it was 3 unfair for [d]efendants”: 4 a. [T]o overcharge [the Decedent] for any amounts [d]efendants may have paid to cover the [Decedent’s] remaining property tax deficiency for 2008; 5 6 b. [T]o miscalculate [the Decedent’s] monthly payments based on its original miscalculation of [the Decedent’s] property taxes, to refuse to listen to [the Decedent’s] attempts to correct the error; 7 8 c. [T]o refuse to accept [the Decedent’s] good faith attempts to make his normal monthly mortgage payments and then base its March 2009 default notice on the same amounts [d]efendant[] refused to accept; 9 10 d. [T]o recognize their error and then not to take steps to correct said error; 11 12 e. [T]o presumably correct the error and fail to inform [the Decedent] that his monthly payment had been restored to its original amount until it was virtually too late to correct his arrearages; and 13 14 f. [T]o ultimately foreclose on the Subject Property warranted solely by [d]efendants[’] own error. 15 16 Id. 17 At this stage of the litigation, plaintiff’s allegations are sufficient to state a UCL 18 claim based on the “unfair” prong of the UCL. The court denies defendant’s Motion to Dismiss 19 plaintiff’s UCL claim predicated on the “unfair” prong.2 20 V. CONCLUSION 21 For the foregoing reasons, the court orders as follows: 22 1. Defendant’s Motion to Dismiss plaintiff’s UCL claim predicated on the breach 23 of contract claim is GRANTED, with leave to amend. 24 2. Defendant’s Motion to Dismiss plaintiff’s breach of contract claim is 25 26 DENIED. ///// 27 2 28 Because the court finds plaintiff can assert a UCL claim based on the “unfair” prong, the court does not address the “fraudulent” prong. 13 1 2 3 4 5 6 3. Defendant’s Motion to Dismiss plaintiff’s UCL claim predicated on the “unfair” prong is DENIED. 4. Plaintiff shall have 21 days from the date of this order to file a first amended complaint. IT IS SO ORDERED. DATED: June 17, 2014. 7 8 9 UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14

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