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

Filing 13

ORDER signed by Judge John A. Mendez on 11/14/14 GRANTING 4 Motion to Dismiss with leave to amend within 20 days. Mellen Law Firm shall pay sanctions within 20 days in the amount of $150 for failure to comply with LR 230(c). (Manzer, C)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JOHN TAYLOR, an individual;
ANITA TAYLOR, an individual,

No.

2:14-cv-02007-JAM-CMK

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Plaintiffs,
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ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS

v.
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WELLS FARGO BANK, N.A.; CALWESTERN RECONVEYANCE CORP.,

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Defendants.

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Defendants Wells Fargo Bank, N.A. (“Wells Fargo”) and Cal-

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Western Reconveyance Corporation (“Cal-Western”) (collectively

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“Defendants”) move to dismiss (Doc. #4) Plaintiffs John and Anita

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Taylor’s (collectively “Plaintiffs”) entire complaint (Doc. #1,

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Exh. A). 1

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foreclosure and sale of a property previously belonging to

The action arises out of a dispute over the

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled
for October 15, 2014.
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Plaintiffs and the loan modification negotiations and notice

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preceding that sale.

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I.

FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

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In January 2007, Plaintiffs obtained a loan in the amount of

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$384,000 (“the loan”) secured by a deed of trust recorded against

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property located at 6918 N. Old Stage Road, Weed, California

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96094 (“the property”).

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Exh. A.

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Request for Judicial Notice (Doc. #5),

In July 2013, Plaintiffs applied for a loan modification

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through Defendant Wells Fargo.

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received Plaintiffs’ application, it sent Plaintiffs a letter

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stating:

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Comp. ¶ 10.

When Wells Fargo

“[y]ou have requested assistance under the federal
government’s Home Affordable Modification Program
(“HAMP”) . . . [i]f the loan has been previously
referred to foreclosure, the foreclosure process will
continue. However, a foreclosure sale will not be held
and you will not lose your home during this time
period.”

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Id.

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house loan modification through Wells Fargo.

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During this time period, Plaintiffs were also seeking an inId. ¶ 11.

In September 2013, Plaintiffs received a letter from Wells

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Fargo denying their application for an in-house modification

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based on its calculation of Plaintiffs’ net present value.

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¶ 12.

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the denial and stated “[y]our home will not be sold in a

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foreclosure sale during the appeal period.”

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submitted an appeal of the denial.

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///

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///

Comp.

The letter informed Plaintiffs of their right to appeal

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Id. ¶ 13.

Id.

Plaintiffs

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On October 25, 2013, Wells Fargo sent Plaintiffs a letter

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acknowledging their appeal and indicating it would “provide a

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written response to the [appeal] by November 23, 2013.”

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¶ 14.

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Trustee’s Sale against the property. 2

Comp.

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On November 26, 2013, Wells Fargo filed a Notice of
Id.

Plaintiffs allege they never received the Notice of

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Trustee’s Sale and Wells Fargo never gave them a determination on

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either of their loan modification applications.

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On June 2, 2014, Wells Fargo instructed Cal-Western to sell

Comp. ¶¶ 15-16.

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Plaintiffs’ property at a trustee’s sale at which Wells Fargo

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took back title to the property.

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sufficient funds “to reinstate their loan prior to the sale by

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paying all amounts in default and would have reinstated the loan

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had they known that the foreclosure sale would take place.”

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¶ 17.

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Id.

Plaintiffs allege they had

Id.

Plaintiffs plead five causes of action in their complaint:

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(1) Wrongful Foreclosure; (2) Negligent Misrepresentation;

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(3) Fraud; (4) Breach of the Implied Covenant of Good Faith and

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Fair Dealing; and (5) Quiet Title.

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to this Court and filed the present motion.

Defendants removed the matter

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II.

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OPINION

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A.

Request for Judicial Notice

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Defendants initially request the Court take judicial notice

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(Doc. #5) of ten exhibits in support of their motion to dismiss.

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Defendants point out, and Plaintiffs appear to concede, that
the complaint erroneously dates the filing of the notice one
month early. MTD at p. 2; Opp. at p. 2.
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In addition, Defendants filed a “Supplemental Request for

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Judicial Notice” (Doc. #9) in support of their reply, seeking

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notice of two additional documents.

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Generally, the Court may not consider material beyond the

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pleadings in ruling on a motion to dismiss for failure to state a

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claim.

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the complaint so long as authenticity is not disputed, or matters

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of public record, provided that they are not subject to

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reasonable dispute.

The exceptions are material attached to, or relied on by,

E.g., Sherman v. Stryker Corp., 2009 WL

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2241664, at *2 (C.D. Cal. 2009) (citing Lee v. City of Los

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Angeles, 250 F.3d 668, 688 (9th Cir. 2001) and Fed. R. Evid.

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201). Plaintiffs have not objected to the request for judicial

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notice and the Court finds that it is appropriate to take such

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notice of all the requested exhibits other than exhibits K and L

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since they are not relevant to the Court’s determination of this

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motion.

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B.

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Local Rule 230(c) provides that opposition to the granting

Sanctions for late filing of Plaintiffs’ Opposition

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of a motion shall be filed and served not less than fourteen days

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preceding the hearing date.

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was October 15, 2014.

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on October 7, 2014, nearly a week late.

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filed a declaration (Doc. #10) the following day, placing the

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blame for noncompliance on their email service “somehow” moving

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the deadline.

Only the Court has the power to move the deadline

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for briefing.

The Court will consider the arguments presented in

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the opposition and address the motion on its merits.

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pursuant to Local Rule 110, the Court hereby sanctions Mellen Law

The hearing date set for this motion

Plaintiffs’ counsel filed the opposition

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Plaintiffs’ counsel

However,

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Firm, $150 for noncompliance with Local Rule 230(c).
C.

Discussion
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Tender

Defendants contend Plaintiffs are not entitled to relief

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because they have failed to allege an adequate tender.

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pp. 5-6; Reply pp. 3, 10.

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not apply and that their claims are viable because they have

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alleged they would have been able to reinstate the loan and cure

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the default if they had known of the intent to foreclose.

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MTD at

Plaintiffs contend the tender rules do

Opp.

at pp. 5-7.
This Court has recently addressed the requirements regarding
tender in the context of a wrongful foreclosure claim:
For a wrongful foreclosure claim, a plaintiff must
allege that “(1) Defendants caused an illegal,
fraudulent, or willfully oppressive sale of the
property pursuant to a power of sale in a mortgage or
deed of trust; (2) Plaintiffs suffered prejudice or
harm; and (3) Plaintiffs tendered the amount of the
secured indebtedness or were excused from tendering.”
Nugent v. Fed. Home Loan Mortgage Corp., 2:12–CV–00091–
GEB, 2013 WL 1326425, at *7 (E.D. Cal. 2013). . . . A
plaintiff may be able to state a wrongful foreclosure
claim without full tender, “[i]f, after a default, the
trustor and beneficiary enter into an agreement to cure
the default and reinstate the loan, no contractual
basis remains for exercising the power of sale.”
[Barroso v. Ocwen Loan Servicing, LLC, 208 Cal.App.4th
1001, 1017 (2012)].

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Gilliland v. Chase Home Fin., LLC, No. 2:13-CV-02042 JAM-AC, 2014

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WL 325318, at *5 (E.D. Cal. 2014) (emphasis added).

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has also addressed the requirement in the context of a quiet

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title claim concluding that “‘[a] mortgagor cannot quiet his

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title against the mortgagee without paying the debt secured.’”

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Hall v. Mortgage Investors Grp., No. 2:11-CV-00952-JAM, 2011 WL

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4374995, at *8 (E.D. Cal. 2011) (quoting Dyachishin v. America's
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The Court

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Wholesale Lenders, No. 2:09-CV-02639-JAM-GGH, 2010 WL 1525703, at

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*2 (E.D. Cal. 2010)).

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Plaintiffs have failed to allege their ability to tender the

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full amount of their indebtedness.

They also have not alleged

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any agreement with Defendants to cure the default and/or

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reinstate the loan prior to the foreclosure and sale of the

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property.

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dismiss Plaintiffs’ first cause of action for wrongful

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foreclosure and fifth cause of action for quiet title.

The Court therefore grants Defendants’ motion to

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2.

Negligent Misrepresentation and Fraud

Defendants contend Plaintiffs’ claims for negligent

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misrepresentation and fraud fail on the merits.

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Reply at pp. 4-8.

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claims should fail because Plaintiffs cannot adequately allege

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damages.

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loss of their property, negative credit history, and emotional

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damages.

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to, and would have, brought their loan current if not for

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Defendants’ misrepresentations.

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MTD at pp. 8-10;

Among other arguments, Defendants contend the

Plaintiffs respond that they have alleged damages for

Opp. at pp. 11-12.

Plaintiffs contend they were able

The essential elements of fraud are (1) a misrepresentation;

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(2) knowledge of falsity; (3) intent to induce reliance;

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(4) actual and justifiable reliance; and (5) resulting damage.

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Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996).

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essential elements of a count for negligent misrepresentation are

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the same except that it does not require knowledge of falsity,

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but instead requires a misrepresentation of fact by a person who

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has no reasonable grounds for believing it to be true.”
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“The

Chapman

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v. Skype Inc., 220 Cal. App. 4th 217, 230-31 (2013).

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plaintiff’s claim for fraud must also satisfy the heightened

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requirements of Federal Rule of Civil Procedure 9(b):

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Rule 9(b) demands that, when averments of fraud are
made, the circumstances constituting the alleged fraud
“be ‘specific enough to give defendants notice of the
particular misconduct . . . so that they can defend
against the charge and not just deny that they have
done anything wrong.’” Bly–Magee [v. California], 236
F.3d [1014,] 1019 [(9th Cir. 2001)] (quoting Neubronner
v. Milken, 6 F.3d 666, 672 (9th Cir. 1993)). Averments
of fraud must be accompanied by “the who, what, when,
where, and how” of the misconduct charged. Cooper v.
Pickett, 137 F.3d 616, 627 (9th Cir. 1997). “[A]
plaintiff must set forth more than the neutral facts
necessary to identify the transaction. The plaintiff
must set forth what is false or misleading about a
statement, and why it is false.” Decker v. GlenFed,
Inc. (In re GlenFed, Inc. Sec. Litig.), 42 F.3d 1541,
1548 (9th Cir. 1994).

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Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.
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2003).
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Plaintiffs’ negligent misrepresentation and fraud claims
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rely on two alleged misrepresentations: (1) Defendants told them
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that while a HAMP modification application was being processed,
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no foreclosure sale would take place; and (2) Defendants told
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Plaintiffs that if Plaintiffs appealed a loan modification
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denial, no foreclosure sale would take place during the appeal
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period.

Comp. ¶ 30; Opp. at p. 9.

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The Court finds that these allegations are insufficient to
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maintain these causes of action because Plaintiffs have failed to
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adequately allege that they were damaged as a result of these
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misrepresentations.

There are no allegations that either

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Defendant ever promised Plaintiffs that they would receive a loan
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modification or that their failure to pay on the loan was
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excused.

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cure their arrearage but failed to do so.

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already contractually obligated to make loan payments and were

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aware of the consequences of failing to do so--default and

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foreclosure.

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By their own allegations, Plaintiffs had the ability to
Plaintiffs were

“In the context of mortgage foreclosures, courts applying

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California law have generally been reluctant to permit borrowers

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to assert claims arising out of forbearance agreements . . .,

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whether styled as claims for breach of contract, conversion or

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fraud.

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WL 30759, at *13 (N.D. Cal. 2011).

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claims have granted motions to dismiss on these grounds.

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Newgent v. Wells Fargo Bank, N.A., 09CV1525 WQH, 2010 WL 761236,

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at *6-7 (S.D. Cal. 2010) (finding that because the “Plaintiff was

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already legally obligated to make payments on her mortgage . . .

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reliance on the promise that Wells Fargo would delay the

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trustee's sale was not detrimental”); Zierolf v. Wachovia

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Mortgage, C-12-3461 EMC, 2012 WL 6161352, at *5-7 (N.D. Cal.

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2012), appeal dismissed (July 31, 2013) (finding “[t]he risk that

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one's home loan could go into default and one's home be sold at a

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foreclosure auction for nonpayment is a remedy provided in the

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loan agreement itself, not a consequence of allegedly relying on

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promises to process a loan modification”).

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Reyes v. Wells Fargo Bank, N.A., No. C-10-01667 JCS, 2011
Other courts facing similar
See

Applying these cases to the instant case, the Court is

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compelled to grant Defendants’ motion to dismiss Plaintiffs’

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second cause of action for negligent misrepresentation and third

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cause of action for fraud based on Plaintiffs’ failure to

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adequately allege damages as a result of the misrepresentations,
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a necessary element of each claim.

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3.

Breach of Implied Covenant

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Defendants contend Plaintiffs have failed to articulate an

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actionable claim for relief in their fourth cause of action for

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breach of the implied covenant of good faith and fair dealing.

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MTD at pp. 10-11.

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deficiencies in this cause of action and merely request leave to

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amend.

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dismiss Plaintiffs’ fourth cause of action.

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In their opposition, Plaintiffs concede the

Opp. at p. 12.

4.

The Court grants Defendants’ motion to

Request for Leave to Amend

Leave to amend must be freely given, however, the Court is

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not required to allow futile amendments.

See DeSoto v. Yellow

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

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Am. Home Mortgage Servicing, Inc., CIV. 2:13-00201 WBS, 2013 WL

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5299180, at *6 (E.D. Cal. 2013).

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proceedings, it is not clear to the Court that amendment would be

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futile.

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However, “plaintiffs are admonished that failure to cure the

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defects identified in this Order will be grounds for dismissal

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without further leave to amend.”

At this early stage of the

Therefore leave to amend the complaint is granted.

Dick, at *6.

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III.

ORDER

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For the reasons set forth above, the Court GRANTS

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Defendants’ motion to dismiss WITH LEAVE TO AMEND. Plaintiffs

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must file their Amended Complaint within twenty days from the

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date of this Order and Defendants responsive pleading is due

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within twenty days thereafter.

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within twenty days of this Order, Mellen Law Firm shall pay

It is further ordered that

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sanctions of $150 to the Clerk of the Court for failure to comply

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with Local Rule 230(c).

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IT IS SO ORDERED.
Dated:

November 14, 2014

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