Gerard v. Wells Fargo Bank, N.A. et al

Filing 19

FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Dale A. Drozd on 1/23/15 RECOMMENDING that 5 MOTION to DISMISS filed by Wells Fargo Bank, N.A. be granted; Plaintiff's Complaint be dismissed without leave to amend; and that this action be closed. Referred to Judge Garland E. Burrell, Jr.; Objections to F&R due within 14 days after being served with these findings and recommendations. (Meuleman, A)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

FOR THE EASTERN DISTRICT OF CALIFORNIA

10
11

JULIA GERARD,

12

Plaintiff,

13
14
15

No. 2:14-cv-1605 GEB DAD PS

v.

FINDINGS AND RECOMMENDATIONS

WELLS FARGO BANK, N.A., and
REGIONAL TRUSTEE SERVICES
CORPORATION,

16

Defendants.

17
This matter came before the court on September 12, 2014, for hearing of defendant Wells

18
19

Fargo Bank, N.A.‟s motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil

20

Procedure (hereinafter “Rule”).1 Attorney Chanel Oldham appeared on behalf of the defendant.

21

No appearance was made by, or on behalf of, plaintiff Julia Gerard who is proceeding pro se in

22

this matter.2
For the reasons set forth below, the undersigned will recommend that defendant‟s motion

23
24

to dismiss be granted.

25

/////

26

1

27
28

2

Defendant Regional Trustee Services has not appeared in this action.

Plaintiff did, however, file a written opposition to the motion to dismiss, (Dkt. No. 11), and also
did appear telephonically at a Telephonic Status Conference on October 1, 2014. (Dkt. No. 18.)
1

1

BACKGROUND

2

Plaintiff Julia Gerard commenced this action on May 27, 2014, by filing a complaint in

3

the El Dorado County Superior Court alleging causes of action for violation of the California

4

Homeowner Bill of Rights, promissory estoppel, intentional misrepresentation, “declaratory

5

relief” and wrongful foreclosure. (Dkt. No. 2-1 at 1.) Defendant Well Fargo Bank, N.A. (“Wells

6

Fargo”) removed the matter to this court on July 7, 2014, based on diversity jurisdiction. (Dkt.

7

No. 1.)

8

On July 28, 2014, defendant Wells Fargo filed a motion to dismiss pursuant to Rule

9

12(b)(6) of the Federal Rules of Civil Procedure. (Dkt. No. 5.) The motion, however, was

10

improperly noticed for hearing before the assigned District Judge. (Dkt. No. 7.) On July 29,

11

2014, defendant re-noticed the motion to dismiss for hearing before the undersigned. (Dkt. No.

12

10.) On August 11, 2014, plaintiff filed an opposition to defendant‟s motion to dismiss, (Dkt. No.

13

11), and defendant filed a reply on August 25, 2014. (Dkt. No. 12.)

14
15

STANDARDS
I. Legal Standards Applicable to Motions to Dismiss Pursuant to Rule 12(b)(6)

16

The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal

17

sufficiency of the complaint. N. Star Int‟l v. Ariz. Corp. Comm‟n, 720 F.2d 578, 581 (9th Cir.

18

1983). “Dismissal can be based on the lack of a cognizable legal theory or the absence of

19

sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep‟t, 901

20

F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege “enough facts to state a claim to

21

relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A

22

claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw

23

the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.

24

Iqbal, 556 U.S. 662, 678 (2009).

25

In determining whether a complaint states a claim on which relief may be granted, the

26

court accepts as true the allegations in the complaint and construes the allegations in the light

27

most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v.

28

United States, 915 F.2d 1242, 1245 (9th Cir. 1989). In general, pro se complaints are held to less
2

1

stringent standards than formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519,

2

520-21 (1972). However, the court need not assume the truth of legal conclusions cast in the

3

form of factual allegations. United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th

4

Cir. 1986). While Rule 8(a) does not require detailed factual allegations, “it demands more than

5

an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A

6

pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the

7

elements of a cause of action.” Twombly, 550 U.S. at 555. See also Iqbal, 556 U.S. at 676

8

(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory

9

statements, do not suffice.”). Moreover, it is inappropriate to assume that the plaintiff “can prove

10

facts which it has not alleged or that the defendants have violated the . . . laws in ways that have

11

not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters,

12

459 U.S. 519, 526 (1983).

13

In ruling on a motion to dismiss brought pursuant to Rule 12(b)(6), the court is permitted

14

to consider material which is properly submitted as part of the complaint, documents that are not

15

physically attached to the complaint if their authenticity is not contested and the plaintiff‟s

16

complaint necessarily relies on them, and matters of public record. Lee v. City of Los Angeles,

17

250 F.3d 668, 688-89 (9th Cir. 2001).

18
19

ANALYSIS
I.

California‟s Homeowner Bill of Rights

20

The complaint‟s first cause of action alleges that the defendant‟s actions violated

21

California‟s Homeowner Bill of Rights. (Compl. (Dkt. No. 2-1) at 10.) The Homeowner Bill of

22

Rights, (“HBOR”) which took effect January 1, 2013, reformed aspects of California‟s non-

23

judicial foreclosure process by amending the California Civil Code to prohibit deceptive and

24

abusive home foreclosure practices. See Flores v. Nationstar Mortgage LLC, No. CV 13-3898-

25

PLA, 2014 WL 304766 at *3 (C.D. Cal. Jan. 6, 2014).

26

However, HBOR is only applicable to owner-occupied homes. See Corral v. Select

27

Portfolio Servicing, Inc., No. 14-cv-2251-MEJ, 2014 WL 3900023, at *5 (N.D. Cal. Aug. 7,

28

2014) (“Section 2924.15 of the HBOR limits its application to owner-occupied homes, meaning
3

1

that the home is „the principal residence of the borrower and is security for a loan made for

2

personal, family, or household purposes.‟”); Penermon v. Wells Fargo Bank, N.A., --- F. Supp.2d

3

---, ---, Case No. 14-cv-0065-KAW, 2014 WL 2754596, at *7 (N.D. Cal. June 11, 2014)

4

(“HBOR, however, is limited in that it only applies to foreclosures of first liens on owner-

5

occupied, one-to-four unit properties.”); Masson v. Selene Finance LP, No. 12-05335 SC, 2013

6

WL 271256, at *3 (N.D. Cal. Jan. 24, 2013) (dismissing HBOR claim in part for failure to meet

7

the owner-occupied requirement).

8

Here, plaintiff alleges in her complaint, (Compl. (Dkt. No. 2-1) at 5), and in her opposition

9

to defendant‟s motion to dismiss, (Pl.‟s Opp.‟n (Dkt. No. 11) at 10), that the property at issue is

10

not owner-occupied but is instead a rental property.3 The complaint also alleges that as a “result

11

of Defendants‟ conduct” plaintiff has “suffered the loss of the rents and profits of the Subject

12

Property.” (Compl. (Dkt. No. 2-1) at 13.)
Accordingly, defendant‟s motion to dismiss should be granted as to the complaint‟s

13
14

HBOR claim.

15

II.

Promissory Estoppel
The complaint‟s first cause of action also asserts, in the alternative, a claim for promissory

16
17

estoppel. (Compl. (Dkt. No. 2-1) at 10.) “„The elements of promissory estoppel are: (1) a clear

18

promise, (2) reliance, (3) substantial detriment, and (4) damages measured by the extent of the

19

obligation assumed and not performed.‟” Quinteros v. Aurora Loan Servs., 740 F.Supp.2d 1163,

20

1171 (E.D. Cal. 2010) (quoting Poway Royal Mobilehome Owners Ass‟n v. City of Poway, 149

21

Cal. App.4th 1460, 1471 (2007)).
Here, plaintiff‟s complaint fails to state the elements of a promissory estoppel claim

22
23

plainly or succinctly. Moreover, the allegations found in the complaint are devoid of any alleged

24

clear promise made by defendant Wells Fargo that caused plaintiff damages. In this regard, the

25

complaint alleges as follows. Plaintiff defaulted on the loan sometime in 2013, and “began

26
27
28

3

Defendant has also requested that the court take judicial notice of the deed of trust which
indicates that the property was purchased by way of a non-owner occupied loan. (RJN (Dkt. No.
6-1) at 15.)
4

1

negotiating a modification of the loan” with the defendant. (Compl. (Dkt. No. 2-1) at 5.)

2

Although the defendant “had not made a written determination,” the defendant did inform

3

plaintiff “that she may qualify for a modification on her rental property.” (Id.) (emphasis added).

4

On May 22, 2014, plaintiff made a request to “reinstate her mortgage loan account” and was

5

informed that “she could come into the Wells Fargo Bank” branch. (Id. at 4.) On May 23, 2014,

6

plaintiff “went to the West Hollywood Wells Fargo branch, on Santa Monica Blvd . . . . to see

7

which account Plaintiff was going to pull the funds from necessary to reinstate the mortgage

8

loan.” (Id. at 3.) Plaintiff was informed by a “Wells Fargo employee named Ivan,” that “a

9

bankruptcy [was] showing up connected to the property,” and that plaintiff could not “pay the

10

arrearage” or reinstate the mortgage “until the bankruptcy stay is lifted.” (Id. at 3-4.) “Plaintiff

11

offered the full amount necessary to reinstate her mortgage loan” but the defendant refused to

12

accept plaintiff‟s tender.4 (Id. at 4.)

13

However, even accepting these allegations as true, plaintiff has failed to allege that the

14

defendant made a clear promise to plaintiff that caused her any damage. Accordingly,

15

defendant‟s motion to dismiss should be granted as to the complaint‟s promissory estoppel claim.

16

III.

Intentional Misrepresentation

17

The complaint‟s second cause of action asserts a claim for intentional misrepresentation.

18

In this regard, the complaint alleges that on May 22, 2013, the defendant “made a promise . . . to

19

induce Plaintiff to come into the Wells Fargo Branch in person for the specific purpose of

20

tendering . . . the entire amount necessary to reinstate Plaintiff‟s mortgage loan . . . .” (Compl.

21

(Dkt. No. 2-1) at 13.) Plaintiff did appear at the Wells Fargo Branch but the defendant refused to

22

accept plaintiff‟s payment. (Id. at 14.) According to the complaint, “[w]hen defendant . . . made

23

these representations that [defendant] would accept Plaintiff‟s proper tender of her funds

24

necessary to cure the mortgage default and reinstate Plaintiff‟s loan in good standing [defendant]

25

knew them to be false . . . .” (Id.)

26

4

27
28

Although not relevant to resolution of the pending motion to dismiss, the undersigned notes that
at the October 1, 2014 telephonic Status Conference counsel for defendant stated that plaintiff
was welcome to reinstate her loan. Plaintiff responded that she would be willing to do so if at the
same time there was an agreed-upon modification of her the subject loan.
5

“Under California law, the elements for an intentional-misrepresentation, or actual-fraud,

1
2

claim are (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud, i.e., to induce

3

reliance; (4) justifiable reliance; and (5) resulting damage.” UMG Recording, Inc. v. Bertelsmann

4

AG, 479 F.3d 1078, 1096 (9th Cir. 2007). Intentional misrepresentation is a species of fraud and

5

therefore subject to the Rule 9(b)‟s heightened pleading requirement. See Neilson v. Union Bank

6

of Cal., 290 F.Supp.2d 1101, 1141 (C.D. Cal. 2003). This means the plaintiff must allege the

7

“who, what, when, where and how” supporting the intentional misrepresentation claim. Vess v.

8

Ciba-Geigy Corp., USA, 317 F.3d 1097, 1106 (9th Cir. 2003). “Moreover, merely attributing a

9

misrepresentation to a corporate entity is inadequate; a specific person must be named, or at least

10

identified.” Celebrity Chefs Tour, LLC v. Macy‟s, Inc., 16 F.Supp.3d 1123, 1134 (S.D. Cal.

11

2014).

12

Here, the complaint fails to allege the specific person who made the misrepresentation to

13

plaintiff and, therefore, the complaint‟s intentional misrepresentation claim fails to satisfy Rule

14

9(b). Moreover, the allegations found in the complaint fail to allege reliance and damages

15

stemming from a fraudulent misrepresentation.

16

In this regard, the complaint alleges that the defendant knowingly misrepresented to

17

plaintiff that if she would appear in person at a Wells Fargo Branch the defendant would accept

18

her tender of payment. Ignoring that the complaint also alleges that the reason the defendant

19

could not accept plaintiff‟s payment was because there was “a bankruptcy showing up connected

20

to the property,” (Compl (Dkt. No. 2-1) at 3), and accepting as true the allegations that the

21

defendant informed plaintiff that if she came into a Wells Fargo Branch that the defendant would

22

accept her tender and that the defendant knew that statement to be false when the statement was

23

made, plaintiff has not alleged that she relied on that misrepresentation to her determinant. Thus,

24

it cannot be said that this the allegedly false misrepresentation altered plaintiff‟s legal position to

25

the defendant or her willingness to tender the money to the defendant. See Alliance Mortgage

26

Co. v. Rothwell, 10 Cal.4th 1226, 1239 (Cal. 1995) (“Reliance exists when the misrepresentation

27

or nondisclosure was an immediate cause of the plaintiff‟s conduct which altered his or her legal

28

relations, and when without such misrepresentation or nondisclosure he or she would not, in all
6

1

reasonable probability, have entered into the contract or other transaction.”).
Accordingly, defendant‟s motion to dismiss should be granted as to the complaint‟s

2
3

intentional misrepresentation claim.

4

IV.

Declaratory Relief
The complaint‟s third cause of action asserts a purported claim for declaratory relief.

5
6

(Compl. (Dkt. No. 2-1) at 16.) However, declaratory relief is not an independent claim but is

7

instead a form of relief. See Lane v. Vitek Real Estate Industries Group, 713 F.Supp.2d 1092,

8

1104 (E.D. Cal. 2010).
Accordingly, defendant‟s motion to dismiss should be granted as to the complaint‟s claim

9
10

for declaratory relief.

11

V.

Wrongful Foreclosure
The complaint‟s final claim for relief attempts to assert a claim for wrongful foreclosure.

12
13

(Compl. (Dkt. No. 2-1) at 17.) The complaint, however, does not allege that the property at issue

14

has been sold.5 “A lender or foreclosure trustee may only be liable to the mortgagor or trustor for

15

wrongful foreclosure if the property was fraudulently or illegally sold under a power of sale

16

contained in a mortgage or deed of trust.” Rosenfeld v. JPMorgan Chase Bank, N.A., 732

17

F.Supp.2d 952, 961 (N.D. Cal. 2010). See also Pugh v. JPMorgan Chase Bank, N.A., No. 2:13-

18

cv-1141 MCE DAD, 2013 WL 5739147, at *3 (E.D. Cal. Oct. 22, 2013) (“Plaintiffs do not allege

19

their property has already been foreclosed. Accordingly, Plaintiffs‟ wrongful foreclosure claim

20

must be dismissed.”); Ramirez v. Kings Mortg. Services, Inc., No. 1:12-cv-1109 AWI SKO, 2012

21

WL 5464359, at *6 (E.D. Cal. Nov. 8, 2012) (“Unless the foreclosure sale has already taken

22

place, Plaintiff‟s claim for wrongful foreclosure is premature even to the extent there are,

23

theoretically, ground upon which the claim could be predicated.”); Pey v. Wachovia Mortg.

24

Corp., No. 11-2922 SC, 2011 WL 5573894, at *8 (N.D. Cal. Nov. 15, 2011) (“A claim for

25
5

26
27
28

In her opposition to defendant‟s motion to dismiss, plaintiff stated that after she filed her
complaint, she received a notice that the defendant had “agreed to re-review [her] loan
modification in connection with the property” at issue in this action. (Pl.‟s Opp.‟n (Dkt. No. 11)
at 3.) Moreover, at the October 1, 2014, telephonic Status Conference plaintiff stated that the
defendant was at that time evaluating plaintiff for a loan modification.
7

1

wrongful foreclosure requires the occurrence of a foreclosure sale.”); Vega v. JPMorgan Chase

2

Bank, N.A., 654 F.Supp.2d 1104, 1113 (E.D. Cal. 2009) (“a purported wrongful foreclosure claim

3

is premature given there has been no foreclosure of the property”).
Accordingly, defendant‟s motion to dismiss should be granted as to the complaint‟s

4
5

wrongful foreclosure claim.

6

LEAVE TO AMEND

7

For the reasons explained above, defendant‟s motion to dismiss should be granted and

8

plaintiff‟s complaint dismissed for failure to state a claim upon which relief may be granted. The

9

court has carefully considered whether plaintiff may amend her complaint to state a claim upon

10

which relief can be granted. “Valid reasons for denying leave to amend include undue delay, bad

11

faith, prejudice, and futility.” California Architectural Bldg. Prod. v. Franciscan Ceramics, 818

12

F.2d 1466, 1472 (9th Cir. 1988). See also Klamath-Lake Pharm. Ass‟n v. Klamath Med. Serv.

13

Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983) (holding that while leave to amend shall be freely

14

given, the court does not have to allow futile amendments).

15

Here, in light of the allegations found in the complaint and the legal principles set forth

16

above, the undersigned finds that granting leave to amend would be futile in this case.6 See

17

Chaset v. Fleer/Skybox Int‟l, 300 F.3d 1083, 1088 (9th Cir. 2002) (there is no need to prolong the

18

litigation by permitting further amendment where the “basic flaw” in the underlying facts as

19

alleged cannot be cured by amendment); Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1039 (9th

20

Cir. 2002) (“Because any amendment would be futile, there was no need to prolong the litigation

21

by permitting further amendment.”).

22

/////

23

/////

24
6

25
26
27
28

Of the complaint‟s asserted causes of action, it appears that under the facts alleged therein the
only claim that could, under any circumstances, be amended to state a cognizable claim is the
claim for wrongful foreclosure. Nothing before the court, however, suggests that the property at
issue has been sold, in which case a wrongful foreclosure claim would fail on its face. If that is
no longer the case and the property has been sold, plaintiff should address that fact along with any
offer to tender on her part in objections she may elect to file to these findings and
recommendations.
8

1
2
3
4

CONCLUSION
Accordingly, IT IS HEREBY RECOMMENDED that:
1. Defendant‟s July 28, 2014 motion to dismiss (Dkt. No. 5), re-noticed for
hearing before the undersigned (Dkt. No. 10) be granted;

5

2. Plaintiff‟s complaint (Dkt. No. 2-1) be dismissed without leave to amend; and

6

3. This action be closed.

7

These findings and recommendations will be submitted to the United States District Judge

8

assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen (14)

9

days after being served with these findings and recommendations, plaintiff may file written

10

objections with the court. A document containing objections should be titled “Objections to

11

Magistrate Judge‟s Findings and Recommendations.” Plaintiff is advised that failure to file

12

objections within the specified time may, under certain circumstances, waive the right to appeal

13

the District Court‟s order. See Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

14

Dated: January 23, 2015

15
16
17

DAD:6
Ddad1\orders\pro se\gerard1605.mtd.f&rs.docx

18
19
20
21
22
23
24
25
26
27
28
9