(PS) Catherine v. Wells Fargo Bank N.A

Filing 31

ORDER signed by District Judge John A. Mendez on 9/8/2020 DENYING 22 Motion for Leave to Amend the Complaint. (Reader, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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DONALD CATHERINE,

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No.

2:19-cv-01487-JAM-DB

Plaintiff,

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v.

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WELLS FARGO BANK, N.A.,

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ORDER DENYING MOTION FOR LEAVE
TO AMEND COMPLAINT

Defendant.

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Before the Court is Plaintiff Donald Catherine’s

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(“Plaintiff”) motion for leave to amend his first amended

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complaint.

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N.A., (“Defendant” or “Wells Fargo”) opposes this motion.

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ECF No. 25.

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Plaintiff’s motion.1
I.

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Defendant Wells Fargo Bank,
Opp’n,

For the reasons set forth below the Court DENIES

FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

In 2004, Plaintiff obtained a refinance loan for his home

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Mot., ECF No. 22, at 2.

from Wells Fargo’s predecessor-in-interest, World Savings Bank,

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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 August 11, 2020.
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FSB.

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¶ 14.

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Mot., Exh. A, Proposed Second Amended Complaint (“SAC”)

In 2014, Plaintiff stopped making payments on the loan and

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Wells Fargo initiated a non-judicial foreclosure in 2015.

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¶ 16.

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Wells Fargo seeking to challenge the foreclosure proceedings.

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Opp’n at 3.

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2017.

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judgment in favor of Wells Fargo.

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Id.

In response, Plaintiff then filed a prior lawsuit against

This lawsuit was dismissed with prejudice in March

Plaintiff appealed and the Ninth Circuit affirmed the
Opp’n at 1.

In February 2018, Wells Fargo once again initiated

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foreclosure proceedings against Plaintiff’s home.

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¶ 16.

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current with financial aid from the state-funded Keep Your Home

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California program.

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Proposed SAC

In May 2018, Plaintiff was able to bring his mortgage

Id. ¶ 23.

Although there were no longer any pending foreclosure

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proceedings, Plaintiff filed a second lawsuit pro se against

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Wells Fargo in December 2018 in Sacramento Superior Court.

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of Removal, ECF No 1, at 1.

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court in August 2019.

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Plaintiff’s Complaint.

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Magistrate Judge presiding over the case granted Wells Fargo’s

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motion and gave Plaintiff 28 days to amend his complaint.

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Dismissing Complaint, ECF No. 14.

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complaint within that allotted time.

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counsel and now seeks leave to file a SAC on the grounds that he

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inadvertently and mistakenly failed to timely amend his complaint

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because he was a pro se litigant.

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proposed SAC alleges four causes of action: (1) violations of

Id.

Not.

Wells Fargo removed the suit to this
Wells Fargo then moved to dismiss

Mot. to Dismiss, ECF No. 4.

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The

Order

Plaintiff failed to amend his
He thereafter obtained

Mot. at 2.

Plaintiff’s

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Real Estate Settlement of Procedures Act (“RESPA”) under 12

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U.S.C. § 2601 et seq., (2) Negligence, (3) Violations of

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California Unfair Competition Law under Business and Professions

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Code § 17200 et seq., and (4) Breach of the Implied Covenant of

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Good Faith and Fair Dealing.

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II.

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See Proposed SAC.

JUDICIAL NOTICE

In support of its Opposition, Wells Fargo requests judicial

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notice of various documents related to the subject refinance

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loan including notes and agreements of the loan, and court

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filings of Plaintiff’s first suit against Defendant.

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ECF No. 26.

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See RJN,

A court may take judicial notice of a fact that is not

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“subject to a reasonable dispute” because “it is either

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(1) generally known within the territorial jurisdiction of the

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trial court or (2) capable of accurate and ready determination

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by resort to sources whose accuracy cannot reasonably be

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questioned.”

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take judicial notice of court filings and matters of public

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record.

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Servicing Co., No. 09-0007 SC, 2009 WL 656285, *2-3 (N.D. Cal.

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Mar. 12, 2009) (court took judicial notice of recorded documents

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related to the foreclosure sale, including grant deed and deed

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of trust: “[t]hese documents are also part of the public record

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and are easily verifiable”).

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Fed. R. Evid. 201(a).

For this reason, courts may

See e.g., Gamboa v. Tr. Corps & Cent. Mortg. Loan

Because the documents for which Defendant requests judicial

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notice are not subject to reasonable dispute, and because

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Plaintiff does not oppose, the Court GRANTS Defendant’s request.

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///
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III.

OPINION

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A.

Legal Standard

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Under Federal Rule of Civil Procedure 15, a litigant may

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amend his complaint once within twenty-one days of serving it.

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Fed. R. Civ. P. 15(a)(1)(A).

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party may amend its pleading only with the opposing party’s

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written consent or the court’s leave.”

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15(a)(2).

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requires.”

After that deadline has passed, “a

Fed. R. Civ. P.

“The court should freely give leave when justice so
Id.

In other words, “this policy is to be applied

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with extreme liberality.”

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Inc., 316 F.3d 1048, 1051 (9th Cir. 2003).

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Eminence Capital, LLC v. Aspeon,

In deciding a request for leave to amend, a court considers

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“bad faith, undue delay, prejudice to the opposing party,

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futility of amendment, and whether the plaintiff has previously

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amended the complaint.”

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(9th Cir. 1999).

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weight.”

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prejudice, or a strong showing of the other factors, there is “a

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presumption under Rule 15(a) of granting leave to amend.”

Johnson v. Buckley, 356 F.3d 1067, 1077

But “not all of the factors merit equal

Eminence Capital, 316 F.3d at 1052.

Without

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B.

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Id.

Analysis

Wells Fargo argues allowing Plaintiff to amend his

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complaint “would result in significant prejudice” because

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amendment would be futile.

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alone can justify the denial of a motion for leave to amend.

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Missouri ex rel. Koster v. Harris, 847 F.3d 646, 656 (9th Cir.

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2017).

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under the amendment to the pleadings that would constitute a

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valid and sufficient claim or defense.”

Opp’n at 4.

Futility of amendment

Amendment is futile when “no set of facts can be proved

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Id. (citations

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omitted).

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the allegations contained in a complaint.”

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

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opposed two prior versions of the complaint and in response to

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Plaintiff’s motion to amend herein requests this Court to deny

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further leave to amend given the flaws that plague the proposed

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claims in the SAC.

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the Court grants Wells Fargo’s request.

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At this stage, the Court “must accept as true all of

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Ashcroft v. Iqbal,

Wells Fargo has already successfully

Opp’n at 4.

For the reasons detailed below,

RESPA Claim

Under 12 U.S.C. § 2605, a loan servicer has a duty to

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respond to a borrower’s “qualified written request (QWR)” by

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acknowledging receipt of correspondence within 5 days and taking

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appropriate action within 30 days.

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A QWR is a written correspondence identifying the name and

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account of borrower, that either: (1) includes a statement of

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the reasons the borrower believes the account is in error or

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(2) provides sufficient detail regarding information sought by

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the borrower.

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12 U.S.C. § 2605(e)(1)-(2).

12 U.S.C. § 2605(e)(1)(B)(i)-(ii).

In his proposed SAC, Plaintiff alleges that he sent Wells

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Fargo two QWRs, one on March 15, 2018 and the other on June 11,

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2018.

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failed to timely acknowledge receipt of the QWRs and to timely

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take the requested action in violation of RESPA.

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alleges Wells Fargo’s wrongful acts caused him damages.

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¶ 30.

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defects” such that granting amendment to this claim would be

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futile.

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Plaintiff’s RESPA claim fails for three reasons: (1) Plaintiff

Proposed SAC ¶ 28.

He further alleges that Wells Fargo

Id.

Plaintiff
Id.

Wells Fargo argues these allegations suffer from “severe

Opp’n at 4.

Specifically, Wells Fargo contends

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did not submit a legitimate QWR, (2) Wells Fargo responded to

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the QWRs, and (3) because Plaintiff has not adequately

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articulated damages.

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Given that the Court must take Plaintiff’s allegations as

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true for purposes of this motion, Wells Fargo’s arguments that

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Plaintiff did not file legitimate QWR’s and that Wells Fargo

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adequately responded to the purported QWR’s fail.

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SAC ¶ 28; see also Reply at 4.

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proposed amendment of this claim is futile because Plaintiff has

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See Proposed

But the Court finds that the

failed to adequately articulate damages.

Opp’n at 7.

Servicers are liable to borrowers for damages resulting

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from a RESPA violation.

12 U.S.C. § 2605(f).

Although not

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explicit, “[C]ourts have read the statute as requiring a showing

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of pecuniary damages in order to state a claim.”

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Mortg. Corp., 660 F. Supp. 2d 1089, 1097 (N.D. Cal. Sept. 15,

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2009).

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caused him to incur “excessive interest accumulation, negative

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amortization, loss of equity, damage to credit, late fees,

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attorney’s fees, litigation costs, and [emotional damages].”

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Proposed SAC ¶ 30.

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purported damages were incurred directly as a result of Wells

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Fargo’s RESPA violation.

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harmed because had Wells Fargo responded in time, he would have

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been able to “reinstate [his] Subject Mortgage in March 2018.”

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Id. ¶ 24.

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reinstate his mortgage caused those specific damages.

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example, Plaintiff failed to include “facts linking interest and

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penalties on the loan to the alleged RESPA violations.”

Allen v. Fin.

Plaintiff contends that Wells Fargo’s RESPA violations

But Plaintiff fails to specify how these

Plaintiff merely argues that he was

This does not explain, however, how failing to

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For

Panno

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v. Wells Fargo Bank, N.A., No. SA CV 16-0118-DOC, 2016 WL

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74955834, *8 (C.D. Cal. Apr.1, 2016).

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Fargo cites to numerous cases supporting its argument that

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Plaintiff’s allegations are merely conclusory, see Opp’n at 7 n.

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4, Plaintiff opposes this argument without citing to any cases

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that support his contention, see Reply at 5-8.

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Moreover, while Wells

In short, Plaintiff has failed to allege “facts sufficient

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to establish that it is plausible, rather than merely possible,”

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that his alleged damages resulted from Wells Fargo’s RESPA

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violations.

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Plaintiff’s proposed amendment of this claim is futile.

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2.

Panno, 2016 WL 74955834, at *9.

The Court finds

Negligence Claim

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Wells Fargo argues amendment to Plaintiff’s negligence

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claim is also futile because it did not owe Plaintiff a duty of

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care.

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a defendant to a plaintiff is a prerequisite to establishing a

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claim for negligence.”

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231 Cal. App. 3d 1089, 1095 (1991).

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generally “owe[] no duty of care to a borrower when the

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institution’s involvement in the loan transaction does not

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exceed the scope of its conventional role as a mere lender of

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money.”

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Court to consider this to be an instance that exceeded the scope

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of Wells Fargo’s conventional role as a “mere lender of money.”

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Reply at 10.

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Opp’n at 8-10.

Id. at 1095.

“The existence of a duty of care owed by

Nymark v. Heart Fed. Sav. & Loan Ass’n,
But financial institutions

Plaintiff concedes as much yet asks the

The Court disagrees.

Although authority has recently emerged that has deviated

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from the general duty of care rule, those cases have only

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imposed a duty of care on lenders “that undertake[] to review a
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loan for potential modification.”

Alvarez v. BAC Home Loans

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Servicing, L.P., 228 Cal. App. 4th 941, 948 (2014)(stating that

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Garcia v. Ocwen Loan Servicing, LLC, No. C 10-0290 PVT,2010 WL

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1881098, *2-4 (May 10, 2010) “is representative of those

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cases.”).

Those cases are inapplicable to the case at hand.

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Plaintiff argues that Mahoney v. Bank of Am., N.A., is

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“particularly analogous to the facts here” but that case is

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readily distinguishable.

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2197068, at *7 (S.D. Cal. May 27, 2014); Reply at 14.

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plaintiffs in Mahoney were also attempting to obtain a

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reinstatement quote, they were doing so to liquidate their

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retirement savings to pay the balance of their mortgage.

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WL 2197068, at *2.

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majority of their outstanding loan, defendant accepted but

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failed to deposit the payment for over a month.

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then refused to accept the rest of plaintiffs’ timely mortgage

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payments but continued to penalize them with late fees and

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penalties.

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outside the scope of a mere lender of money, and therefore found

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a duty of care existed.

Id.

No. 13-cv-2530-W(JMA), 2014 WL
While the

2014

When the plaintiffs attempted to pay the

Id.

Defendant

The court in Mahoney found this behavior was

Id. at *7.

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In the instant case, Wells Fargo was not reviewing

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Plaintiff’s loan for a potential modification nor rejecting

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Plaintiff’s mortgage payments.

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Fargo was negligent by simply failing to timely respond to his

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QWR requesting a reinstatement quote.

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behavior falls squarely within Wells Fargo’s conventional role

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as a mere lender of money.

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of care, as prescribed under the well-established general rule

Rather, Plaintiff alleges Wells

Proposed SAC ¶ 33.

This

It therefore owed Plaintiff no duty

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in Nymark.

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futile because this claim fails as a matter of law.

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Accordingly, the Court finds that amendment would be

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UCL Claim

California's Unfair Competition Law (“UCL”) prohibits “any

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unlawful, unfair or fraudulent business act or practice and

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unfair, deceptive, untrue or misleading advertising.”

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& Prof. Code § 17200.

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“unlawful,” “unfair” or “fraudulent.”

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Chase Bank, N.A., No. 2:13-cv-01099-KJM, 2013 WL 5597148, at *8-

Cal. Bus.

An act violates the UCL if it is
McGarvey v. JP Morgan

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9 (E.D. Cal. Oct. 11, 2013) (quoting Rubio v. Capitol One Bank,

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613 F.3d 1195, 1203 (9th Cir. 2010)).

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amended UCL Claim is predicated on the “unlawful” prong.

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Proposed SAC ¶ 45.

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plaintiff must successfully allege a predicate violation of the

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law.

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Plaintiff’s proposed

To establish an unlawful business practice,

McGarvey, 2013 WL 5597148, at *8-9.
As Defendant argues, this claim fails because Plaintiff’s

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first two claims fail.

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successfully allege a predicate violation of the law, makes the

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proposed amendment of this claim futile.

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4.

Opp’n at 14.

Plaintiff’s failure to

Implied Covenant Claim

Under contract principles, “California law implies a

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covenant of good faith and fair dealing in every contract.”

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Mundy v. Household Fin. Corp., 885 F.2d 542, 544 (9th

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Cir.1989)(citation omitted).

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certain obligations on contracting parties as a matter of law-

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specifically, that they will discharge their contractual

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obligations fairly and in good faith.”

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“To state a claim for breach of the implied covenant, a

“The implied covenant imposes

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Id. (citation omitted).

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plaintiff must allege performance or excuse for nonperformance

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under the contract.”

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00749, 2015 WL 6126815, at *4 (E.D. Cal. Oct. 19, 2015)(quoting

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Enuke v. Am.'s Wholesale Lender, No. CV-11-6661 PA (SPx), 2011

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WL 11651341, at *9 (C.D. Cal. Dec. 18, 2011)).

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Wells Fargo argues Plaintiff’s implied covenant claim fails in

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part because he cannot establish that he “fufille[d] [his]

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obligations under the loan contract.”

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Plaintiff contends this claim is sufficiently plead, he fails to

Berkeley v. Wells Fargo Bank, No. 15-cv-

Opp’n at 16.

While

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respond to this specific argument in his Reply.

See Reply at

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12-13.

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2014 and failed to make mortgage payments until mid-2018.

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Accordingly, Plaintiff has failed to show, and cannot show, that

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he substantially performed under the contract.

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claim would therefore also be futile.

It is undisputed that Plaintiff defaulted on his loan in
Id.

Amending this

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Given the Court’s findings that the proposed SAC fails to

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state any viable cause of action, further amendment is futile

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and denial of Plaintiff’s motion to amend is warranted.

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IV.

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ORDER

For the reasons set forth above, the Court DENIES
Plaintiff’s Motion for Leave to Amend his complaint.
IT IS SO ORDERED.
Dated: September 8, 2020

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