Corazon v. Aurora Loan Services LLC

Filing 27

ORDER by Judge Samuel Conti granting 19 Motion to Dismiss (sclc2, COURT STAFF) (Filed on 8/30/2011)

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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
PLAINTIFF'S AMENDED
COMPLAINT AND EXPUNGE LIS
PENDENS

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I.

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INTRODUCTION
Before the Court is a Motion to Dismiss Plaintiff's First

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Amended Complaint ("FAC") and to Expunge Lis Pendens filed by

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Defendant Aurora Loan Services, LLC ("Defendant" or "Aurora")

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against Plaintiff Estiva Corazon ("Plaintiff").

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("Mot.").

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("Reply").

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Motion.

The Motion is fully briefed.

ECF No. 19

ECF Nos. 21 ("Opp'n"), 22

For the following reasons, the Court GRANTS Defendant's

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II.

BACKGROUND
This action concerns alleged illegal business practices

relating to a residential mortgage loan.

On January 5, 2011,

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Plaintiff filed suit in San Francisco County Superior Court against

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Aurora and fifty Doe defendants.

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Ex. 1 ("Compl.").

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Action, or lis pendens, with the state court with respect to the

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property at issue.

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("Lis Pendens").1

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See Notice of Removal.

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motion to dismiss the complaint with leave to amend.

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("May 2011 Order").

Plaintiff also filed a Notice of Pendency of

Request for Judicial Notice ("RJN") Ex. 10
Aurora removed the action on February 4, 2011.
On May 5, 2011, the Court granted Aurora's

United States District Court

ECF No. 16

Plaintiff filed her FAC on June 3, 2011.

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For the Northern District of California

ECF No. 1 ("Notice of Removal")

No. 18.

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ECF

Aurora now moves to dismiss the FAC under Federal Rule of

Civil Procedure 12(b)(6).
The following alleged facts are drawn from Plaintiff's FAC.

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Plaintiff owns the real property located at 2 Ulloa Street, San

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Francisco, California.

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in 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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was $3,437.

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She purchased the property

The loan terms provided for an original

Id.

Plaintiff's initial monthly payment

Id. ¶ 18.

As security for the loan, Plaintiff executed a deed of trust

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Id. ¶ 15.

FAC ¶¶ 2, 15.

on the property.

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

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The Deed of Trust

Defendant asks the Court to take judicial notice of various
documents pertaining to Plaintiff's loan. ECF No. 20. Plaintiff
does not oppose the request. 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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identified RMC as the lender, Mortgage Electronic Registration

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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.

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Id. at 1.

On July 27, 2007, Aurora wrote to Plaintiff

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

In January 2009, Plaintiff contacted Aurora to request a loan

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modification because she was having difficulties making her loan

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payments.

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six-month forbearance agreement with Aurora, which provided that

FAC ¶¶ 19, 20.

In February 2009, she entered into a

United States District Court

For the Northern District of California

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she would make lower monthly payments of $3,400 while her

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application for loan modification was reviewed.

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Plaintiff made the agreed upon payments, but her modification

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application was denied.

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Id. ¶¶ 21.

Id.

On October 27, 2009, a Notice of Default was recorded by the

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substituted trustee, Cal-Western Reconveyance Corporation ("CWRC").

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Id. ¶ 30; RJN Ex. 3.

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Sale was issued by CWRC indicating that the property would be sold

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on February 17, 2010.

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the Court, the scheduled trustee's sale did not take place.

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On January 28, 2010, a Notice of Trustee's

Id. ¶ 31; RJN Ex. 4.

For reasons unknown to

In February 2010, Plaintiff again entered into a six-month

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forbearance agreement with Aurora while Aurora again reviewed her

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request for a loan modification.

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agreed upon forbearance payments.

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end of the forbearance period, Plaintiff was informed that her

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request for modification had again been denied.

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Id. ¶ 22.
Id. ¶ 23.

Plaintiff made the
In July 2010, at the

Id. ¶ 24.

In August 2010, Plaintiff and Aurora executed a third and

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final forbearance agreement, which provided for Plaintiff to make

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an initial payment of $11,000 and make monthly payments of $4,885

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through February 2011.2

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these payments through December 2010 and the payments were accepted

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by Aurora.

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however, was rejected and returned to her along with a letter

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stating that no August 2010 forbearance agreement existed.3

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Trustee Sale date was then set for January 10, 2011.

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The FAC does not address whether or not the sale took place.

United States District Court

For the Northern District of California

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Plaintiff alleges that she made

She alleges that her January 2011 payment,

Id.

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FAC ¶ 32.

On April 26, 2011, Plaintiff filed for bankruptcy in the

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Id. ¶ 25.

Id. ¶ 25.

United States Bankruptcy Court for the Northern District of
California.

RJN Ex. 7 ("Bankr. Pet."); Opp'n at 6.

In her FAC, Plaintiff asserts the following seven claims: (1)

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fraud; (2) violations of California Business and Professions Code §

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17200 ("UCL"), et seq.; (3) breach of the implied covenant of good

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faith and fair dealing; (4) violation of California Civil Code §

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2923.5; (5) promissory estoppel; (6) negligence; and (7)

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misrepresentation.

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In its Motion, Defendant argues that Plaintiff has failed to

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cure the pleading deficiencies in its original complaint and asks

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the Court to dismiss the FAC with prejudice.

Reply at 8.

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III. LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure

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Although not stated in the FAC, Plaintiff's Opposition states
that these payments would have paid off Plaintiff's arrearage in
full. Opp'n at 3.
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Plaintiff's Opposition contradicts the allegation that Aurora
accepted all payments until the January 2011 payment. It states:
"the Defendant frequently rejected the Plaintiff's payments under
the Special Forbearance Agreement, claiming that no such agreement
exi[s]ted." Opp'n at 7. Moreover, the portions of the FAC
Plaintiff cites in support of this statement are entirely off
point.
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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

Ashcroft v.

However, "the tenet that a

United States District Court

For the Northern District of California

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

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

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plausible."

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.

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IV.

DISCUSSION

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In its May 2011 Order, the Court held that Plaintiff had

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failed to satisfy the notice requirement of Federal Rule of Civil

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Procedure 8(a)(2) because her allegations lumped together Aurora

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and fifty Doe defendants without specifying which actions were

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allegedly taken by Aurora.

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held that Plaintiff had failed to plead sufficient facts to state a

May 2011 Order at 7-8.

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The Court also

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plausible claim for relief under Iqbal.

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Plaintiff has at least specified that all references to "Defendant"

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refer to Aurora, FAC ¶ 4, and has specified that each claim is

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asserted against Aurora in particular.

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while minor, suffice to cure the "lumping" deficiency from which

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Plaintiff's initial complaint suffered.

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Id. at 9-10.

See FAC.

In her FAC,

These changes,

Nevertheless, as Defendant argues, Plaintiff has pleaded no

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additional facts in her FAC.

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action.

She has deleted several causes of

Aside from this change, she has merely rearranged the

United States District Court

For the Northern District of California

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order of the allegations from her original complaint.

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same observation the Court made regarding the initial complaint

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applies to the FAC as well: "aside from the two-page section

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entitled 'Specific Allegations,' most of the . . . 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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("Graham"), Plaintiff's attorney, has used nearly identical

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complaints in a multitude of cases in this district.

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the complaint filed by Graham in Melegrito v. Citimortgage, Inc.,

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No. C-11-1765 LB, 2011 U.S. Dist. LEXIS 60447, is almost a word-

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for-word copy of the complaint and FAC filed in the instant case,

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except for the two-page "Specific Allegations" section.

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n.2 (collecting cases in which Graham has filed nearly identical

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complaints).

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May 2011 Order at 9.

Thus, the

Indeed, Kenneth Graham

For example,

Id. at *3

As explained in detail below, the FAC, like its predecessor,
fails to state a claim that is plausible on its face.

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A.

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Several of Plaintiff's claims allege misconduct in the

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Claims Pertaining to Origination of the Loan

origination of Plaintiff's loan.

Defendant argues that all claims

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pertaining to the origination of the loan should be dismissed

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because Plaintiff has pleaded no facts suggesting that Aurora was

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involved in the origination of the loan in any way.

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agrees.

The Court

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In its May 2011 Order, the Court stated "Plaintiff pleads no

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facts showing how Aurora . . . was involved in the origination of

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her loan.

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'Defendants may not have been directly involved in the origination

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

Instead, she alleges without factual support:

United States District Court

For the Northern District of California

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imputed to the Defendants.'"

May 2011 Order at 9.

Plaintiff's FAC

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suffers from the same deficiency.

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was her loan servicer and "acquired the Subject Loan from RMC."

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FAC ¶ 16.

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otherwise involved in the origination . . . [of] the Subject Loan,

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are liable, such as for example, liable as successors-in-interest."

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Id. ¶ 11.

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Aurora is the successor-in-interest of RMC.

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conclusions, unsupported by facts, fail to state a plausible claim

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under Iqbal.

Plaintiff alleges that Aurora

She then alleges that "each Defendant, not directly or

She pleads no facts to support the allegation that
Such naked legal

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Because the Court has already granted Plaintiff leave to amend

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her complaint once to address this shortcoming, the Court DISMISSES

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WITH PREJUDICE all of Plaintiff's claims pertaining to misconduct

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in the origination of her loan.

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premised on allegations that Defendant made misleading statements

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"to induce Plaintiff to enter into the subject loan" and engaged in

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a wrongful practice of "recklessly granting subprime loans," is

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therefore DISMISSED WITH PREJUDICE.

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Plaintiff's negligence claim, which alleges that Plaintiff breached

Plaintiff's UCL claim, which is

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FAC ¶¶ 63, 64.

Likewise,

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its "duty of care to act as a reasonable lender in lending to

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Plaintiff and to not place Plaintiff into risky or unaffordable

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loan," is DISMISSED WITH PREJUDICE. FAC ¶ 87.

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and misrepresentation claims are based partially on alleged

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misconduct in June 2007 pertaining to the origination of her loan

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and partially on later alleged misconduct pertaining to the alleged

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August 2010 forbearance agreement.

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misrepresentation allegations pertaining to the origination of her

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loan are DISMISSED WITH PREJUDICE.

Plaintiff's fraud

Plaintiff's fraud and

The Court addresses the fraud

United States District Court

For the Northern District of California

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and misrepresentation allegations not related to the origination of

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the loan below.

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B.

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Having already dismissed Plaintiff's allegations of misconduct

Fraud and Misrepresentation Claims

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in connection with the origination of her loan, the Court now

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addresses Defendant's challenge to Plaintiff's remaining

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allegations of fraud and misrepresentation.

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for Plaintiff's fraud and misrepresentation claims is the

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allegation that Aurora falsely represented that there was no August

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2010 forbearance agreement after already accepting payments

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pursuant to such an agreement.

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The remaining basis

FAC ¶¶ 50, 97.

To state a claim for fraud under California law, Plaintiff

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must allege (1) a misrepresentation; (2) knowledge of falsity; (3)

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intent to induce reliance; (4) justifiable reliance; and (5)

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resulting damage.

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(1996).

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Plaintiff must allege: (1) a misrepresentation of material fact;

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(2) without a reasonable ground for believing it to be true; (3)

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with intent to induce the plaintiff's reliance on the fact

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

To state a claim for negligent misrepresentation,

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misrepresented; (4) ignorance of the truth and justifiable reliance

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on the misrepresentation by the plaintiff; and (5) resulting

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damage.

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983 (Ct. App. 2003).

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plead these claims with the requisite specificity for claims

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sounding in fraud.

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Shamsian v. Atlantic Richfield Co., 107 Cal. App. 4th 967,
Aurora argues that Plaintiff has failed to

Mot. at 11.

The Court agrees.

Under Federal Rule of Civil Procedure 9(b), claims sounding in

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fraud are subject to a heightened pleading standard.

"To satisfy

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Rule 9(b), a pleading must identify the who, what, when, where, and

United States District Court

For the Northern District of California

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how of the misconduct charged, as well as what is false or

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misleading about [the purportedly fraudulent] statement, and why it

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is false."

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637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks

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omitted).

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into a forbearance agreement with Aurora.

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made monthly payments in accordance with this agreement and that

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Aurora accepted these payments until January 2011.

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2011 payment was allegedly returned, along with a letter from

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Defendant stating that no forbearance agreement existed.

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alleges that the statement contained in the letter declaring that

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no forbearance agreement existed was false.

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Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc.,

Here, Plaintiff alleges that in August 2010 she entered
She alleges that she

Her January

Plaintiff

Plaintiff has pleaded what the alleged misstatement was, when

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it was made, and why it was allegedly false.

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facts as to who made the alleged false statement.

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that she need not identify who made the statement because the

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heightened pleading standard is relaxed when "the defendant must

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necessarily possess full information concerning the facts of the

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controversy" or "when the facts lie more in the knowledge of the

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She has not pleaded
Plaintiff argues

FAC ¶ 59; Opp'n at 8.4

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opposite party."

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statement of law, Susilo v. Wells Fargo Bank, N.A., --- F. Supp. 2d

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---, 2011 WL 2471167, at *10 (C.D. Cal. June 21, 2011), Plaintiff's

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attempt to invoke it here is peculiar given that Plaintiff

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allegedly received a letter containing the false statement at

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issue.

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possession of the requisite facts, including who wrote the letter.

If Plaintiff received such a letter, then she should be in

Plaintiff has also failed to plead detrimental reliance with

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While this is a correct

the requisite specificity.

She simply alleges that "Defendant

United States District Court

For the Northern District of California

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falsely represented that Plaintiff did not have August 2010

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Agreement with Defendant," and that Plaintiff "relied on these

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statements" and by foregoing "other available options."

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53.

FAC ¶¶ 52,

Such naked allegations are insufficient to satisfy Rule 9(b).
As the Court has already dismissed Plaintiff's complaint once

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for failure to plead sufficient facts to state a plausible claim,

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the Court DISMISSES WITH PREJUDICE Plaintiff's claims for fraud and

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misrepresentation.

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C.

Bad Faith Claim

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Plaintiff's third claim is for breach of the implied covenant

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of good faith and fair dealing.

"To establish a breach of an

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implied covenant of good faith and fair dealing, a plaintiff must

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establish the existence of a contractual obligation, along with

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conduct that frustrates the other party's rights to benefit from

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the contract."

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Supp. 2d 1012, 1021-22 (N.D. Cal. 2009).

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the existence of a contract between herself and Aurora.

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she simply alleges that Aurora owed her a duty of good faith under

Fortaleza v. PNC Fin. Servs. Group, Inc., 642 F.
Plaintiff fails to plead
Rather,

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This argument is primarily set forth in the FAC itself, and
alluded to in Plaintiff's Opposition.
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the "loan contracts."

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party to the mortgage itself.

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Supp. 2d 1168, 1174; see also Lomboy v. SCME Mortg. Bankers, No. C-

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09-1160 SC, 2009 U.S. Dist. LEXIS 44158, at *13 (N.D. Cal. May 26,

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2009) ("As a loan servicer, Aurora is not a party to the deed of

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trust itself.").

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Plaintiff's claim for breach of the covenant of good faith and fair

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dealing.
D.

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United States District Court

However, a loan servicer is not a

Conder v. Home Sav. Of Am., 680 F.

The Court therefore DISMISSES WITH PREJUDICE

Violation of California Civil Code § 2923.5

Plaintiff's fourth claim alleges that Aurora violated sections

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For the Northern District of California

FAC ¶ 68.

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2923.5(b), 2923.5(a)(2), and 2923.5(g) of the California Civil

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Code.

FAC ¶¶ 72-76.

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Section 2923.5(a)(2) requires a "mortgagee, trustee,

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beneficiary, or authorized agent" seeking to file a notice of

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default to first contact the borrower in person or by telephone "in

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order to assess the borrower's financial situation and explore

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options for the borrower to avoid foreclosure."

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2923.5(a)(2).

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financial situation and "explore" options to avoid foreclosure can

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be satisfied by simply asking the borrower "why can't you make your

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payments?" and "telling the borrower the traditional ways that

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foreclosure can be avoided (e.g., deeds 'in lieu,' workouts, or

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short sales)."

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(Ct. App. 2010).

Cal. Civ. Code §

The lender's obligations to "assess" the borrower's

Mabry v. Super. Ct., 185 Cal. App. 4th 208, 232

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Section 2923.5(b) requires a default notice to include a

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declaration "from the mortgagee, beneficiary, or authorized agent"

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of compliance with section 2923.5.

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a notice of default may be filed even if the borrower has not been

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Section 2923.5(g) provides that

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contacted as required by section 2923.5(a)(2) provided that the

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failure to contact the borrower occurred despite the due diligence

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of the mortgagee, trustee, beneficiary, or authorized agent.
Here, the Notice of Default clearly contains a declaration of

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compliance with section 2923.5 as required by section 2923.5(b).

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Notice of Default.

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section 2923.5(b) therefore fail.

Plaintiff's allegations that Defendant violated

violated section 2923.5(a)(2) by failing to contact her to assess

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United States District Court

Defendant argues that Plaintiff's allegations that Defendant

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For the Northern District of California

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her financial situation and explore options to avoid foreclosure

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also fail because Plaintiff admits in her FAC that Aurora entered

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into at least two forbearance agreements with her.

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agrees.

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multiple forbearance agreements with her and yet failed to satisfy

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its minimal obligations under 2923.5(a)(2) do not cross the line

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from conceivable to plausible as required by Iqbal.

Plaintiff's allegations that Defendant entered into

Accordingly, the Court DISMISSES WITH PREJUDICE Plaintiff's

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The Court

claim for violation of section 2923.5.5

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E.

Promissory Estoppel

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In her promissory estoppel claim, Plaintiff reiterates her

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allegations that Defendant entered into a third forbearance

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agreement in August 2010 and then denied the existence of that

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agreement when Plaintiff tried to make her January 2011 payment.

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FAC ¶ 80.

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promise made to the Plaintiff not to foreclose upon the Subject

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Property, as long the Plaintiff made payments according to the

She further alleges that "Defendants broke a clear

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5

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The Court need not address Plaintiff's allegations that Defendant
failed to satisfy its due diligence requirements under section
2923.5(g) because these requirements only pertain to situations in
which section 2923.5(a)(2) is not satisfied.
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Special Forbearance Agreement."

Id. ¶ 81.

Defendant argues that Plaintiff's promissory estoppel claim

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should be dismissed because it is based on a promise allegedly

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contained in a special forbearance agreement between the parties.

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Defendant argues that any such agreement would have been an express

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contract, and a promissory estoppel claim cannot be premised on a

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bargain made as part of a contract.

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Medical Capital, LLC v. Medical Insights Diagnostics Ctr., Inc.,

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471 F. Supp. 2d 1035 (N.D. Cal. 2007) ("[W]hen the promisee's

Opp'n at 15 (citing Philips

United States District Court

For the Northern District of California

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reliance was bargained for, the law of consideration applies; and

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it is only where the reliance was unbargained for that there is

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room for application of the doctrine of promissory estoppel . . .

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[P]romissory estoppel has no application when parties have entered

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into an enforceable agreement.")) (internal citations omitted).

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Plaintiff does not address Defendant's argument that the

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alleged promise cannot support a promissory estoppel claim because

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it was allegedly part of a contract.

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World Savings, FSB, 183 Cal. App. 4th 1031, 1045 (Ct. App. 2010),

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for the proposition that "to be enforceable, a promise need only be

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definite enough that a court can determine the scope of the duty,

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and the limits of performance must be sufficiently defined to

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provide a rational basis for the assessment of damages."

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10.

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a loan modification once she made all her payments under the

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alleged August 2010 forbearance agreement met these requirements.

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Id.

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Rather, she cites Garcia v.

Opp'n at

Plaintiff argues that Defendant's promise to work with her on

It is unclear from Plaintiff's FAC whether she is alleging
that Aurora promised not to foreclose on her property as part of

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the alleged forbearance agreement, or whether the alleged promise

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was made separately from the agreement.

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deficiency, the Court cannot determine whether Plaintiff's claim

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survives Defendant's challenge.

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Plaintiff has again failed to plead sufficient facts to give rise

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to a plausible claim to relief.

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details whatsoever about the alleged promise, which is not even

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mentioned until paragraph eighty-one of the FAC, she has failed to

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plead sufficient facts to state a plausible claim for promissory

United States District Court

For the Northern District of California

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Because of this pleading

What is clear, however, is that

Because Plaintiff provides no

estoppel.
"[A] district court has broad discretion . . . to deny leave

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to amend, particularly where the court has already given a

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plaintiff one or more opportunities to amend his complaint."

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v. Fosburg, 646 F.2d 342, 347 (9th Cir. 1980).

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already granted Plaintiff leave to amend once, and Plaintiff's FAC

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shows little effort to rectify the rampant pleading deficiencies

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that plagued the original complaint.

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rearranged the original complaint, deleted some portions, and re-

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filed essentially the same document.

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not grant Plaintiff leave to amend her promissory estoppel claim

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and DISMISSES the claim WITH PREJUDICE.

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The Court has

Instead, Plaintiff has

Accordingly, the Court will

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F.

Motion to Expunge Lis Pendens

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Defendant moves the Court to expunge the lis pendens clouding

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title to the property at issue.

"At any time after notice of

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pendency of action has been recorded, any party . . . may apply to

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the court in which the action is pending to expunge the notice."

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Cal. Civ. Proc. Code § 405.30.

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Civil Procedure §§ 405.31 and 405.32, a court shall order that the

Pursuant to California Code of

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notice be expunged if (1) "the court finds that the pleading on

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which the notice is based does not contain a real property claim"

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or (2) "the court finds that the claimant has not established by a

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preponderance of the evidence the probable validity of the real

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property claim."
Because Plaintiff has failed to state a claim upon which

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relief may be granted, the pleading on which the lis pendens was

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based does not contain a real property claim.

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Court ORDERS that the lis pendens shall be expunged in accordance

United States District Court

For the Northern District of California

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Accordingly, the

with California Code of Civil Procedure §§ 405.31 and 405.32.

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V.

CONCLUSION

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For the foregoing reasons, the Court GRANTS the Motion to

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Dismiss filed by Defendant Aurora Loan Services, LLC and DISMISSES

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Plaintiff Estiva Corazon's First Amended Complaint in its entirety

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WITH PREJUDICE.

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Expunge Lis Pendens and ORDERS that Plaintiff's lis pendens shall

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be expunged in accordance with California Code of Civil Procedure

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§§ 405.31 and 405.32.

The Court also GRANTS Defendant's Motion to

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IT IS SO ORDERED.

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Dated: August 30, 2011
UNITED STATES DISTRICT JUDGE

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