Corazon v. Aurora Loan Services LLC

Filing 16

ORDER by Judge Samuel Conti granting in part and denying in part 4 Motion to Dismiss (sclc2, COURT STAFF) (Filed on 5/5/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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ESTIVA CORAZON, an individual,

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Plaintiff,

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v.

United States District Court

For the Northern District of California

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AURORA LOAN SERVICES, LLC, a
limited liability company, and
DOES 1 through 50, inclusive,
Defendants.

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Case No. 11-00542 SC
ORDER GRANTING DEFENDANT'S
MOTION TO DISMISS; DENYING
DEFENDANT'S MOTION TO
STRIKE; DENYING DEFENDANT'S
MOTION TO EXPUNGE LIS
PENDENS

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I.

INTRODUCTION
On January 5, 2011, Plaintiff Estiva Corazon ("Plaintiff" or

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"Corazon") filed this action in San Francisco County Superior Court

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against Defendant Aurora Loan Services, LLC ("Aurora") and fifty

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Doe defendants.

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Aurora removed the action on February 4, 2011.

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Removal.

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Federal Rule of Civil Procedure 12(b)(6), to strike certain

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portions of the Complaint pursuant to Federal Rule of Civil

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Procedure 12(f), and to expunge Plaintiff's lis pendens.

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("Mot.").

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and "Reply," respectively).

ECF No. 1 ("Notice of Removal") Ex. 1 ("Compl.").
See Notice of

Aurora now moves to dismiss the Complaint pursuant to

The Motion is fully briefed.

ECF No. 4

ECF Nos. 13, 15 ("Opp'n"

Pursuant to Civil Local Rule 7-1(b),

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the Court finds the Motion suitable for determination without oral

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argument.

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Motion to Dismiss, DENIES AS MOOT Aurora's Motion to Strike, and

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DENIES WITHOUT PREJUDICE Aurora's Motion to Expunge Lis Pendens.

For the reasons stated below, the Court GRANTS Aurora's

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II.

BACKGROUND
This action concerns alleged illegal business practices

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relating to a residential mortgage loan.

See Compl.

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alleged facts are taken largely from the Complaint, with occasional

The following

United States District Court

For the Northern District of California

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supplementation from judicially noticed documents.

The lack of

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specifics in some places is due to the dearth of specifics in the

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Complaint.
Plaintiff owns the real property located at 2 Ulloa Street,

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Id. ¶ 2.

She purchased the property in

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San Francisco, California.

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June 2007 using funds borrowed from Residential Mortgage Capital

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("RMC").

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principal balance of $990,000 with an interest rate fixed at 7.125

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percent for a five-year introductory period and subject to

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adjustment thereafter.

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executed a deed of trust on the property.

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Notice ("RJN") Ex. 1 ("Deed of Trust").1

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identified RMC as the lender, Mortgage Electronic Registration

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Id. ¶ 31.

The loan terms provided for an original

Id.

As security for the loan, Plaintiff

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Request for Judicial
The Deed of Trust

Defendant asks the Court to take judicial notice of various
documents pertaining to Plaintiff's loan. ECF No. 5. Plaintiff
does not oppose the RJN. While generally a court may not consider
material beyond the facts alleged in the complaint when deciding a
motion to dismiss, the Ninth Circuit has recognized an exception to
this rule if "the plaintiff's claim depends on the contents of
[the] document, the defendant attaches the document to its motion
to dismiss, and the parties do not dispute the authenticity of the
document." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).
Here, because Plaintiff's claims depend on the contents of the
documents in question and Plaintiff does not dispute their
authenticity, the Court GRANTS Defendant's RJN.
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System, Inc. ("MERS") as the beneficiary, and First National Title

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as trustee.

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advising her that Aurora was being assigned the servicing rights of

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her loan with RMC.

Id. at 1.

On July 27, 2007, Aurora wrote to Plaintiff

RJN Ex. 2 ("Notice of Assignment").

Plaintiff defaulted on her loan in January 2009.

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Compl. ¶ 35.

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Immediately thereafter, Plaintiff sought modification of her loan.

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She entered into two consecutive six-month forbearance agreements

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with an unspecified defendant,2 which provided that Plaintiff would

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make certain payments while her application for loan modification
Id. ¶¶ 37-40.

Each time, her application was

United States District Court

For the Northern District of California

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was reviewed.

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denied.

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by the substituted trustee, Cal-Western Reconveyance Corporation

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("CWRC").

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Trustee's Sale was issued by CWRC indicating that the property

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would be sold on February 17, 2010.

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reasons unknown to the Court, the scheduled trustee's sale did not

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take place.

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10, 2011.

Id.

On October 27, 2009 a Notice of Default was recorded

Id. ¶ 46; RJN Ex. 3.

On January 28, 2010, a Notice of

Id. ¶ 47; RJN Ex. 4.

For

The trustee's sale date was rescheduled for January

Id. ¶ 48.

In August 2010, Plaintiff and the unnamed defendant executed a

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third Special Forbearance Agreement, which provided for Plaintiff

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to make an initial payment of $11,000 and pay off the remainder of

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her arrearage in monthly installments through February 2011.

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¶ 41.

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rejected.

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check stating that no forbearance agreement existed.

Id.

When Plaintiff made her January 2011 payment, it was
Id. ¶ 42.

She received a letter along with a return
Id.

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As explained below, Plaintiff's Complaint consistently refers
only to "Defendants" or "Defendant." At no point in the Complaint
does Plaintiff distinguish which actions were allegedly taken by
Aurora and which were allegedly performed by the numerous Doe
defendants named in the Complaint.
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On January 5, 2011, Plaintiff filed this action in San

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Francisco County Superior Court asserting the following claims: (1)

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violations of the Truth in Lending Act, 15 U.S.C. § 1601, et seq.;

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(2) violations of California Business and Professions Code § 17200,

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et seq.; (3) fraud; (4) breach of implied covenant of good faith

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and fair dealing; (5) conversion; (6) breach of fiduciary duty; (7)

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breach of contract; (8) violation of California Civil Code §

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2913.5; (9) promissory estoppel; (10) negligence; (11) predatory

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lending in violation of California Financial Code §§ 4970-4979.8;

United States District Court

For the Northern District of California

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(12) misrepresentation; and (13) violation of California Civil Code

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§ 1632.

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Action, also known as a lis pendens, with the state court with

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respect to the property at issue.

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Aurora removed the case to this Court on February 4, 2011 and filed

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the instant Motion shortly thereafter.

Thereafter, Plaintiff also filed a Notice of Pendency of

RJN Ex. 9 ("Lis Pendens").

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III. LEGAL STANDARD

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A.

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A motion to dismiss under Federal Rule of Civil Procedure

Motion to Dismiss

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12(b)(6) "tests the legal sufficiency of a claim."

Navarro v.

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Block, 250 F.3d 729, 732 (9th Cir. 2001).

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on the lack of a cognizable legal theory or the absence of

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sufficient facts alleged under a cognizable legal theory.

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Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

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1990).

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should assume their veracity and then determine whether they

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plausibly give rise to an entitlement to relief."

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Iqbal, 129 S. Ct. 1937, 1950 (2009).

Dismissal can be based

"When there are well-pleaded factual allegations, a court

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Ashcroft v.

However, "the tenet that a

complaint is inapplicable to legal conclusions.

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recitals of the elements of a cause of action, supported by mere

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conclusory statements, do not suffice."

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(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

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complaint need not contain "detailed factual allegations," but it

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must provide more than an "unadorned, the-defendant-unlawfully-

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harmed-me accusation."

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should be granted if the plaintiff fails to proffer "enough facts

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United States District Court

court must accept as true all of the allegations contained in a

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For the Northern District of California

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to . . . nudge[] [its] claims across the line from conceivable to

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plausible."

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B.

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Rule 12(f) provides that "[t]he court may strike from a

Id. at 1949.

Threadbare

Iqbal, 129 S. Ct. at 1950
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Thus, a motion to dismiss

Twombly, 550 U.S. at 570.

Motion to Strike

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pleading an insufficient defense or any redundant, immaterial,

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impertinent, or scandalous matter." Fed. R. Civ. P. 12(f).

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to strike are generally regarded with disfavor.

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of San Mateo, No. 06-3923, 2007 WL 902551, at *1 (N.D. Cal. Mar.

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22, 2007).

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"avoid the expenditure of time and money that must arise from

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litigating spurious issues by dispensing with those issues prior to

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trial."

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1993), rev'd on other grounds, 510 U.S. 517 (1994).

Motions

Ganley v. County

The essential function of a Rule 12(f) motion is to

Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir.

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C.

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Federal courts look to state law in matters pertaining to lis

Motion to Expunge Lis Pendens

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pendens.

See 28 U.S.C. § 1964.

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Procedure § 405.20, "[a] party to an action who asserts a real

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property claim may record a notice of pendency of action, [a lis

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pendens], in which that real property claim is alleged."

Under California Code of Civil

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The

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purpose of a lis pendens is to give "constructive notice that an

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action has been filed affecting title or right to possession of the

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real property described in the notice."

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Court, 75 Cal. App. 4th 952, 966 (Ct. App. 1999). "Its effect is

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that anyone acquiring an interest in the property after the action

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was filed will be bound by the judgment."

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is filed, it clouds the title and effectively prevents the

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property's transfer until the litigation is resolved or the lis

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pendens is expunged."

BGJ Assocs., LLC v. Super.

Id.

"Once a lis pendens

Id. at 967.

United States District Court

For the Northern District of California

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"At any time after notice of pendency of action has been

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recorded, any party . . . may apply to the court in which the

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action is pending to expunge the notice."

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405.30.

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405.31 and 405.32, a court shall order that the notice be expunged

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if (1) "the court finds that the pleading on which the notice is

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based does not contain a real property claim" or (2) "the court

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finds that the claimant has not established by a preponderance of

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the evidence the probable validity of the real property claim."

Cal. Code Civ. Proc. §

Further, pursuant to California Code of Civil Procedure §§

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IV.

DISCUSSION

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A.

Motion to Dismiss

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Plaintiff has named Aurora and fifty Doe defendants in her

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Complaint.3

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the defendants.

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wrongdoing by undifferentiated defendants, such as: "Defendants

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induced Plaintiff to accept this risky loan," Compl. ¶ 21;

However, none of her allegations distinguishes among
The Complaint is rife with allegations of various

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The only information provided in the Complaint as to the
identities of the Doe defendants is the allegation that:
"Defendants either: own, have an interest in, control, and/or
service the Subject Loan." Compl. ¶ 15.
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"Defendants' general business practice was to steer borrowers

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toward a risky loan without adequate disclosure," id. ¶ 20; and

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"Defendants have failed to properly service the Subject Loan," id.

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¶ 23.

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Complaint -- in paragraph four -- wherein Plaintiff alleges that

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Aurora does business in San Francisco County in the State of

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California.

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Aurora is only mentioned by name once in the entire

Id. ¶ 4.

Aurora argues that Plaintiff's failure to differentiate among
the defendants fails to provide Aurora with proper notice of the

United States District Court

For the Northern District of California

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allegations against it as required by Federal Rule of Civil

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Procedure 8.

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lumping of defendants" is alone sufficient grounds for dismissal of

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the Complaint.

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Mot. at 6.

Aurora contends that this "improper

Id.

Plaintiff argues in response that "Aurora, the Defendant, is

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correctly named in the Complaint."

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does not properly respond to Aurora's challenge to the Complaint.

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According to Aurora, the problem with the Complaint is not that

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Aurora is not a proper defendant, but rather that the Complaint

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does not provide Aurora with fair notice of the basis for the

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allegations against it.

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The Court agrees with Aurora.

Opp'n at 7.

This assertion

"Undifferentiated pleading
Aaron v. Aguirre, No.

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against multiple defendants is improper."

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06-CV-1451, 2007 U.S. Dist LEXIS 16667, at *75 n.6 (S.D. Cal. Mar.

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8, 2007); see also Gauvin v. Trombatore, 682 F. Supp. 1067, 1071

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(N.D. Cal. 1988) (lumping together multiple defendants in one broad

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allegation fails to satisfy notice requirement of Federal Rule of

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Civil Procedure 8(a)(2)).

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statement of the claim to put defendants on sufficient notice of

Rule 8(a)(2) requires a short and plain

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the allegations against them.

Here, Plaintiff simply refers to

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"Defendants" in nearly all of her allegations.

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allegations where she alleges misconduct by a singular defendant,

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she fails to specify which one.

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a singular defendant could be fairly read to pertain to Aurora as

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servicer of Plaintiff's loan.

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accepted payments from the Plaintiff in the past and are [sic] now

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claiming that there is no Agreement between the Plaintiff and

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Defendant").

In the few

Some of these allegations against

E.g., Compl. ¶ 43 ("Defendant has

Another, however, refers to the "Defendant" at issue

United States District Court

For the Northern District of California

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as Plaintiff's "lender," which Aurora was not, and refers to

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misconduct in the origination of the loan.

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("Defendant failed to act as a reasonable lender by placing the

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Plaintiff in risky, unreasonable, and unaffordable loans.").

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Aurora should not be required to guess which allegations pertain to

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it.

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defendant is the subject of Plaintiff's various allegations,

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Plaintiff's Complaint violates Rule 8(a)(2) because it fails to

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provide Aurora with fair notice of its alleged misconduct.

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re Sagent Tech., Inc., 278 F. Supp. 2d 1079, 1094 (N.D. Cal. 2003)

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("[T]he complaint fails to state a claim because plaintiffs do not

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indicate which individual defendant or defendants were responsible

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for which alleged wrongful act.")

See id. ¶ 45

By failing to differentiate among defendants or specify which

See In

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Plaintiff's failure to differentiate among defendants is

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particularly troubling because many of her allegations pertain to

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the origination, not servicing, of her loan.

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¶ 19 ("Defendants indicated Plaintiff was properly qualified for

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the Subject Loan"); ¶ 20 ("Defendants' general business practice

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was to steer borrowers toward a risky loan without adequate

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See, e.g., Compl.

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disclosure of the real risks"); ¶ 21 ("Defendants induced Plaintiff

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to accept this risky loan").

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Aurora, her loan servicer, was involved in the origination of her

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loan.

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may not have been directly involved in the origination of the

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Subject Loan, but . . . the actions of each party are imputed to

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the Defendants."

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Plaintiff pleads no facts showing how

Instead, she alleges without factual support: "Defendants

Id. ¶ 18.

Aurora further contends that the Complaint is a formulaic
pleading that fails to provide sufficient factual support for its

United States District Court

For the Northern District of California

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claims.

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must accept as true the allegations of the Complaint and draw

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reasonable inferences in the Plaintiff's favor.

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Doe v. United States, 419 F.3d 1058, 1062 (9th Cir. 2005)).

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Plaintiff further states that she intends to set forth facts in

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support of her allegations at trial and intends to develop those

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facts through discovery.

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Mot. at 20.

Plaintiff argues in response that the Court

Opp'n at 3 (citing

Opp'n at 4.

The Court finds that Plaintiff's Complaint fails to plead

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sufficient facts to state a plausible claim for relief under the

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standard articulated in Iqbal.

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accept as true well-pleaded factual allegations; it need not accept

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as true "naked assertions devoid of further factual enhancement."

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Iqbal, 129 S. Ct. at 1949.

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naked assertions.

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"Specific Allegations," most of the twenty-five page Complaint

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appears to contain boilerplate assertions untailored to the facts

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of this case.

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failed to properly service the Subject Loan, including . . .

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pressuring homeowners facing imminent foreclosure to enter into

Under Iqbal, the Court need only

Plaintiff's Complaint is rife with such

Indeed, aside from the two-page section entitled

For example, Plaintiff alleges that "Defendants have

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[certain] contracts with oppressive terms."

Compl. ¶ 23.

This

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statement is a mere generality with no specifics relating to the

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instant case.

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than empty boilerplate."

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Supp. 948, 962 (S.D. Cal. 1996).

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within the section entitled "Specific Allegations" fail to specify

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the particular defendant to which they pertain.

It has long been clear that Rule 8 requires "more
Gen-Probe, Inc. v. Amoco Corp., 926 F.
Furthermore, even the allegations

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Once a plaintiff's well-pleaded complaint survives a motion to

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dismiss, then the plaintiff is indeed entitled to develop its facts

United States District Court

For the Northern District of California

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for trial through the discovery process.

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requirements mandate that Plaintiff provide at least a modicum of

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factual support for her claims even at the pre-discovery stage.

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Plaintiff must plead "enough facts to . . . nudge[] [her] claims

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across the line from conceivable to plausible."

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at 570.

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do so.

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However, federal pleading

Twombly, 550 U.S.

The Court finds that in this case Plaintiff has failed to

Having reviewed each of Plaintiff's thirteen causes of action,

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the Court finds the allegations supporting them to lack the

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specificity required to state a proper claim for relief.

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Plaintiff's failure to indicate which defendant was allegedly

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responsible for which wrongful act and to provide well-pleaded

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factual allegations in support of each cause of action renders the

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Complaint deficient under Rule 8.

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Aurora's Motion and DISMISSES THE COMPLAINT WITH LEAVE TO AMEND.

Accordingly, the Court GRANTS

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Lastly, the Court reminds Plaintiff that Federal Rule of Civil

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Procedure 11(b)(3) requires the signatory to a complaint to certify

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that "the allegations and other factual contentions have

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evidentiary support or, if specifically so identified, are likely

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to have evidentiary support after a reasonable opportunity for

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further investigation or discovery."

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This certification requirement imposes "an affirmative duty to

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conduct a reasonable inquiry into the facts and the law before

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filing."

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111 S. Ct. 922 (1991) (upholding sanctions against party for filing

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complaint of copyright infringement with no factual basis).

Fed. R. Civ. P. 11(b)(3).

Business Guides, Inc. v. Chromatic Communications Enter.,

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B.

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In light of this Court's dismissal of Plaintiff's Complaint,

United States District Court

For the Northern District of California

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Motion to Strike

the Court DENIES AS MOOT Defendant's Motion to Strike.

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C.

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The Court DENIES Aurora's Motion to Expunge the Lis Pendens

Motion to Expunge Lis Pendens

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WITHOUT PREJUDICE until the Court has had an opportunity to

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consider the merits of Plaintiff's amended complaint, if she

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chooses to file one.

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LLC, No. 10-CV-00092, 2010 U.S. Dist. LEXIS 68638, at *9 (E.D. Cal.

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July 9, 2010) (dismissing plaintiff's complaint but denying motion

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to expunge lis pendens pending filing of amended complaint); Quiroz

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v. Countrywide Bank, N.A., No. CV-09-5855, 2009 U.S. Dist. LEXIS

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111881, *18 (C.D. Cal. Nov. 16, 2009) (same).

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renew its Motion to Dismiss and/or Expunge Lis Pendens following

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Plaintiff's filing of an amended complaint.

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See, e.g., Edwards v. Aurora Loan Servs.,

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Defendant may timely

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V.

CONCLUSION
For the foregoing reasons, the Court DISMISSES Plaintiff

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Estiva Corazon's Complaint in its entirety WITH LEAVE TO AMEND.

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The Court DENIES AS MOOT Defendant Aurora Loan Services, LLC's

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Motion to Strike and DENIES WITHOUT PREJUDICE Defendant's Motion to

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Expunge Lis Pendens.

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complaint, it shall be filed within thirty (30) days of this Order.

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In the event that Plaintiff does not amend her complaint within

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thirty (30) days, the Court will dismiss this action WITH

United States District Court

For the Northern District of California

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If Plaintiff chooses to file an amended

PREJUDICE.

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IT IS SO ORDERED.

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Dated: May 5, 2011
UNITED STATES DISTRICT JUDGE

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