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

Filing 35

ORDER by Judge Samuel Conti denying 12 Motion to Strike ; granting 13 Motion to Dismiss; granting 22 Motion for Leave to File Excess Pages (sclc1, COURT STAFF) (Filed on 8/25/2011)

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1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 BRYAN J. VALVERDE, 8 Plaintiff, 9 v. For the Northern District of California United States District Court 10 11 WELLS FARGO BANK, N.A.; and ETS SERVICES, LLC, INC., 12 Defendants. ) ) ) ) ) ) ) ) ) ) Case No. C-11-2423 SC ORDER GRANTING WELLS FARGO'S MOTIONS TO DISMISS AND STRIKE 13 14 I. 15 INTRODUCTION Plaintiff Bryan J. Valverde ("Plaintiff") commenced this 16 action against Defendants Wells Fargo Bank, N.A. ("Wells Fargo") 17 and ETS Services, LLC ("ETS")1 (collectively, "Defendants"), 18 bringing twelve claims relating to unsuccessful loan modification 19 discussions between Plaintiff and Wells Fargo and Defendants' 20 subsequent attempts to foreclose on Plaintiff's home. 21 ("Notice of Removal") Ex. A ("Compl."). 22 are before the Court -- Wells Fargo moves to dismiss and to strike 23 portions of Plaintiff's Complaint. 24 1 25 26 27 28 ECF No. 1 Two fully briefed motions ECF Nos. 12 ("MTS"), 13 Pursuant to California Civil Code § 2924l, ETS filed a declaration of non-monetary status in which it declares that it was named as a defendant in this action solely because it is the trustee under the deed of trust executed by Plaintiff. ECF No. 11. Because no objection to ETS's declaration has been served or filed, the Court finds that ETS shall not be required to participate in the action, shall not be subject to any monetary awards, and shall be bound by any court order relating to the subject deed of trust. Cal. Civ. Code § 2924l(d). 1 ("MTD"), 17 ("MTD Opp'n"), 18 ("MTS Opp'n"), 27 ("MTD Reply"), 28 2 ("MTS Reply").2 3 Fargo's motions. For the following reasons, the Court GRANTS Wells 4 5 II. BACKGROUND As it must on a Rule 12(b)(6) motion, the Court assumes the 6 7 truth of the well-pleaded facts in Plaintiff's Complaint.3 8 Plaintiff, a resident of Marin County, held title to a property 9 located at 122 Marion Avenue, Mill Valley, California, 94941-2617 United States District Court For the Northern District of California 10 ("the property"). Compl. ¶ 6. On or about July 14, 2007, 11 Plaintiff obtained a residential adjustable-rate home mortgage loan 12 of $1,045,000 from World Savings Bank FSB ("World Savings"). 13 9. 14 later changed its name to Wachovia Mortgage, FSB ("Wachovia"), and 15 is now a division of Wells Fargo. Id. ¶ Plaintiff alleges, and Wells Fargo concedes, that World Savings Id. ¶ 2.4 16 Plaintiff alleges that in offering the loan, World Savings 17 engaged in "predatory lending" because it knew "that housing prices 18 were inflated above real value" and it "intended to sell-off many 19 2 20 21 22 23 24 25 26 Plaintiff's MTD Opposition exceeds Civil Local Rule 7-4(b)'s page limit by several pages. After filing it, Plaintiff filed a motion seeking leave to exceed this page limit, claiming that "Plaintiff's attorney momentarily failed to consider the page limitation requirement" and ensuring the Court that such error "will not occur again." ECF No. 22. The Court GRANTS Plaintiff's Motion, and puts the parties on notice that it will not condone future violations of court rules. 3 However, the Court does not accept as true allegations that contradict exhibits attached to the Complaint or matters properly subject to judicial notice. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 4 27 28 Wells Fargo seeks judicial notice of various documents in support of these contentions. ECF No. 14 ("RJN"). The Court judicially notices the above facts, as well as the fact that Wachovia converted to Wells Fargo Bank Southwest, N.A., which then merged with and into Wells Fargo Bank, N.A. 2 1 loans that had been made to borrowers with sub-standard credit" as 2 part of a fraudulent scheme. 3 to the subsequent rapid reduction in home values, he was unable to 4 sell or refinance his home, and if World Savings had notified him 5 that housing prices were inflated and that a housing collapse was 6 imminent, he never would have agreed to the loan. Id. ¶ 10. Plaintiff alleges that due Id. Plaintiff claims representatives of Wachovia told him that he 7 8 must be sufficiently in default for three months in order to 9 qualify for in-house modification of his loan. Id. ¶ 26. United States District Court For the Northern District of California Plaintiff ultimately defaulted on his loan. 11 that when Wells Fargo took over Wachovia, it canceled this in-house 12 modification program. 13 loan modification with Defendants5 for more than a year "while at 14 the same time Wells Fargo Bank was continuing with their 15 foreclosure on their dual track approach to loan modification, 16 always holding out the carrot of a modification at the same time 17 having the hammer over the homeowner with a foreclosure on his 18 property." 19 government's HAMP loan modification program because it only went up 20 to $750,000. 21 modification application and instead continued to tell him that he 22 needed to produce documentation that he had already produced. 23 He alleges that Defendants never intended to modify his loan, but 24 led Plaintiff to believe otherwise. Id. Id. Id. Id. Plaintiff claims 10 Plaintiff alleges that he worked toward Plaintiff was told he did not qualify for the He claims Defendants failed to process his loan Id. Plaintiff brings twelve causes of action. 25 Id. First, he brings a 26 declaratory action challenging Defendants' standing to initiate 27 foreclosure proceedings on the property. 28 5 Id. ¶¶ 16-23. Second, he Plaintiff's Complaint attributes numerous actions to "Defendants" without identifying the specific parties by name. 3 1 seeks an injunction restraining Defendants from selling the 2 property. 3 infliction of emotional distress ("IIED") and negligent infliction 4 of emotional distress ("NIED") caused by Defendants' activity 5 during the attempted mortgage modification and foreclosure. 6 25-32. 7 alleging that Defendants have failed to establish a clear and 8 unbroken chain of title for both the deed of trust and the 9 promissory note. Id. ¶ 24. Third and fourth, he claims intentional Id. ¶¶ Fifth, he brings an action to quiet title to the property, Id. ¶¶ 33-39. Sixth, he brings a claim for United States District Court For the Northern District of California 10 breach of the implied covenant of good faith and fair dealing 11 ("good faith claim"), alleging that Defendants failed to evaluate 12 Plaintiff's financial condition for foreclosure avoidance; advise 13 Plaintiff of his statutory right to meet with Wells Fargo regarding 14 such foreclosure avoidance; and advise Plaintiff of the toll-free 15 HUD phone number regarding counseling opportunities to avoid the 16 subject foreclosure. 17 claim of deceit, alleging that on or about October 1, 2009, 18 Defendants falsely told Plaintiff that Plaintiff would be placed in 19 a loan modification program if he stopped making payments and went 20 into default, and that until the loan review process was completed, 21 the house would not be sold at a trustee's sale. 22 Eighth, Plaintiff brings a claim for "fraud and deceit -- negligent 23 misrepresentation." 24 for promissory estoppel. 25 claim for negligence, alleging Defendants owed Plaintiff a duty to 26 disclose information "regarding the loan and to act in accordance 27 with banking industry practice, statute, and regulations, and to 28 act with respect to Plaintiff in good faith and with fair dealing." Id. ¶¶ 40-44. Id. ¶¶ 56-58. Seventh, Plaintiff brings a Ninth, Plaintiff brings a claim Id. ¶¶ 59-64. 4 Id. ¶¶ 45-55. Tenth, Plaintiff brings a 1 Id. ¶¶ 65-68. 2 1798.82 of California's Civil Code, alleging "Defendants failed to 3 timely disclose to Plaintiff the disclosure of his personal 4 information." 5 under section 17200 of California's Business and Professions Code 6 ("section 17200"), alleging that Defendants implemented and 7 perpetrated a "fraudulent scheme of inducing Plaintiff to accept 8 mortgages based on inflated property valuations." 9 Eleventh, Plaintiff brings a claim under section Id. ¶¶ 69-71. Twelfth, Plaintiff brings a claim Id. ¶¶ 71-98. Defendants removed this action from state court. See Notice United States District Court For the Northern District of California 10 of Removal. On June 30, 2011, Plaintiff filed an ex parte motion 11 for a temporary restraining order, seeking to restrain Defendants 12 from selling the property at a trustee's sale scheduled to occur on 13 July 22, 2011. 14 the Court denied Plaintiff's motion and permitted the trustee's 15 sale to go forward as scheduled. ECF No. 30. A hearing occurred on July 7, 2011; ECF No. 34. 16 Wells Fargo moves to dismiss Plaintiff's Complaint. Wells 17 Fargo argues that Plaintiff's claims are preempted by the Home 18 Owners' Loan Act ("HOLA"); that Plaintiff lacks standing and is 19 judicially estopped from asserting claims due to his failure to 20 disclose them in bankruptcy; and that all of Plaintiff's claims 21 fail to satisfy the relevant pleading requirements. 22 Wells Fargo also moves to strike portions of Plaintiff's Complaint 23 in which fraud is alleged on the basis that Plaintiff has failed to 24 plead facts sufficient to support them. See MTD. See MTS. 25 26 27 28 III. LEGAL STANDARD A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) "tests the legal sufficiency of a claim." 5 Navarro v. 1 Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal can be based 2 on the lack of a cognizable legal theory or the absence of 3 sufficient facts alleged under a cognizable legal theory. 4 Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 5 1990). 6 should assume their veracity and then determine whether they 7 plausibly give rise to an entitlement to relief." 8 Iqbal, 129 S. Ct. 1937, 1950 (2009). 9 court must accept as true all of the allegations contained in a "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 10 complaint is inapplicable to legal conclusions. Threadbare 11 recitals of the elements of a cause of action, supported by mere 12 conclusory statements, do not suffice." 13 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Iqbal, 129 S. Ct. at 1950 14 15 IV. DISCUSSION 16 The allegations made in a complaint must be "sufficiently 17 detailed to give fair notice to the opposing party of the nature of 18 the claim so that the party may effectively defend against it." 19 Starr v. Baca, 633 F.3d 1191, 1204 (9th Cir. 2011). 20 explains, Plaintiff's Complaint fails to do this. 21 raises a number of compelling arguments in favor of prejudicial 22 dismissal in its motions, but due to the vagueness of Plaintiff's 23 Complaint, the Court cannot rule on these arguments with finality. 24 Accordingly, and for the reasons below, the Court DISMISSES 25 Plaintiff's Complaint. 26 Complaint to address the deficiencies identified below. As this Order Wells Fargo Plaintiff is granted LEAVE TO AMEND his 27 A. HOLA Preemption 28 Wells Fargo argues that all of Plaintiff's claims are 6 1 preempted by HOLA because they are "based on the origination of 2 Plaintiff's mortgage loan and on Wells Fargo's subsequent servicing 3 of the loan." 4 MTD at 5. Congress enacted HOLA "to charter savings associations under 5 federal law, at a time when record numbers of homes were in default 6 and a staggering number of state-chartered savings associations 7 were insolvent." 8 1004 (9th Cir. 2008). 9 ("OTS") "broad authority to issue regulations governing thrifts." United States District Court For the Northern District of California 10 11 Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, HOLA gives the Office of Thrift Supervision Id. at 1005 (citing 12 U.S.C. § 1464). OTS, in turn, has promulgated regulations stating that OTS 12 "occupies the entire field of lending regulation for federal 13 savings associations." 14 Section 560.2 offers a framework for determining whether a state 15 law claim is preempted by HOLA and its implementing regulations, 16 and the Ninth Circuit has held that this framework controls. 17 Silvas, 514 F.3d at 1005. 18 state law is one of the enumerated types of laws expressly 19 identified as preempted in section 560.2(b). 20 21 22 23 12 C.F.R. § 560.2(a) ("section 560.2"). Courts must first determine whether the Id. These include: (4) The terms of credit, including amortization of loans and the deferral and capitalization of interest and adjustments to the interest rate, balance, payments due, or term to maturity of the loan, including the circumstances under which a loan may be called due and payable upon the passage of time or a specified event external to the loan; 24 . . . . 25 26 27 28 (9) Disclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents and laws requiring 7 creditors to supply copies of credit reports to borrowers or applicants; 1 2 (10) Processing, origination, servicing, sale or purchase of, or investment or participation in, mortgages; 3 4 5 12 C.F.R. § 560.2(b). If the state law is one of these enumerated types, "the 6 7 analysis will end there; the law is preempted." 8 at 1005. 9 affects lending." Silvas, 514 F.3d If not, the court should determine "whether the law Id. If it does, the law is presumed to be United States District Court For the Northern District of California 10 preempted, subject to the exceptions provided by section 560.2(c). 11 Id. Section 560.2(c) provides: State laws of the following types are not preempted to the extent that they only incidentally affect the lending operations of Federal savings associations or are otherwise consistent with the purposes of [section 560.2(a)]: 12 13 14 15 (1) Contract and commercial law; 16 (2) Real property law; 17 18 (3) Homestead laws specified in 12 U.S.C. § 1462a(f); 19 (4) Tort law; 20 (5) Criminal law; and 21 (6) Any other law that OTS, upon review, finds: 22 (i) Furthers a vital state interest; and 23 (ii) Either has only an incidental effect on lending operations or is not otherwise contrary to the purposes expressed in paragraph (a) of this section. 24 25 26 12 C.F.R. § 560.2(c). 27 narrowly." 28 These exceptions are "to be interpreted Silvas, 514 F.3d at 1005. Wells Fargo argues that Plaintiff's claims are preempted under 8 1 section 560.2(b)(4), (b)(9), and (b)(10). 2 argues that Plaintiff's chief allegations of wrongdoing -- that 3 Defendants committed fraud, acted in bad faith, or otherwise 4 violated the law during the loan modification discussions and the 5 foreclosure procedure -- concern "processing" or "servicing" of the 6 mortgage and thus compel preemption. 7 MTD at 4. Wells Fargo Id. Plaintiff argues that HOLA should not apply because only 8 federal savings banks and associations are regulated by OTS and 9 covered under HOLA, and while World Savings and Wachovia were United States District Court For the Northern District of California 10 federal savings banks, Wells Fargo is not. 11 Wells Fargo counters that HOLA should apply because "in a merger 12 the surviving entity succeeds to the rights of the prior entity." 13 MTD Reply at 1. 14 this district in which HOLA was found to apply "even though the 15 conduct at issue occurred after Wells Fargo merged with Wachovia." 16 Haggarty v. Wells Fargo Bank, N.A., 2011 WL 445183 at *4 (N.D. Cal. 17 Feb. 2, 2011); DeLeon v. Wells Fargo Bank, N.A., 729 F. Supp. 2d 18 1119, 1126 (N.D. Cal. 2010). 19 MTD Opp'n at 2-3. Wells Fargo cites several court orders from within The Court finds that HOLA applies to this action, including 20 Wells Fargo's servicing of the loan. However, HOLA preemption is 21 not as broad as Wells Fargo argues it is. 22 Circuit focused not on the nature of the cause of action allegedly 23 preempted, but rather on the "functional effect upon lending 24 operations of maintaining the cause of action." 25 GreenPoint Mortg. Funding, Inc., No. 09-1542, 2009 WL 2870620, at 26 *4 (N.D. Cal. Sep. 3, 2009). 27 application of a given state law to the activities of federal 28 savings associations would 'impose requirements' regarding the In Silvas, the Ninth Naulty v. "The question was rather whether an 9 1 various activities broadly regulated by the OTS." 2 thus interpreted Silvas to not preempt all state law causes of 3 action arising out of loan modification and/or foreclosure 4 proceedings, but only those that impose new requirements on the 5 lender. 6 WL 2471167, at *4-6 (C.D. Cal. June 21, 2011) (denying bank's 7 motion to dismiss borrower's breach of contract, negligence, bad 8 faith, and fraud claims as preempted by HOLA). 9 Id. Courts have E.g., Susilo v. Wells Fargo Bank, N.A., No. 11-1814, 2011 To the extent that Plaintiff's claims are premised on fraud or United States District Court For the Northern District of California 10 promises made by Wells Fargo, such claims are not necessarily 11 preempted. 12 encouraged him to pursue loan modification when Defendants had no 13 intention of agreeing to modification; such a claim is not 14 preempted. 15 state a viable claim. 16 requirement on Wells Fargo -- the only "requirement" it imposes on 17 Wells Fargo is that it be held responsible for the statements it 18 makes to its borrowers. 19 federal savings associations would be free to lie to their 20 customers with impunity. 21 allegations that Wells Fargo failed to use proper care or comply 22 with industry standards essentially seek to impose new requirements 23 on the lender, and are thus preempted by HOLA. 24 For instance, Plaintiff alleges that Defendants As the Court will discuss, this allegation fails to However, it also does not impose a new If these causes of action were preempted, On the other hand, Plaintiff's In light of this analysis, several of Plaintiff's claims are 25 extremely susceptible to HOLA preemption -- namely, Plaintiff's 26 negligence, negligent misrepresentation, NIED, and good faith 27 claims. 28 failed to plead sufficient facts to render any of his claims And given HOLA's wide preemptive effect, Plaintiff has 10 1 plausible. Accordingly, the Court DISMISSES all twelve of 2 Plaintiff's claims, WITH LEAVE TO AMEND. 3 claims suffer from several additional flaws, the Court continues 4 its analysis below. Because Plaintiff's 5 B. 6 Wells Fargo alleges that Plaintiff filed for Chapter Seven Judicial Estoppel 7 bankruptcy in June 2010, and as a consequence, any cause of action 8 Plaintiff possessed at that time is now property of the bankrupt 9 estate and can no longer be brought by Plaintiff. MTD at 8. While United States District Court For the Northern District of California 10 Plaintiff's Complaint makes no mention of bankruptcy, Plaintiff 11 admits that he declared bankruptcy. 12 that his causes of action had not yet accrued during the bankruptcy 13 proceedings, as he was still in negotiation with Wells Fargo at 14 that time. 15 MTD Opp'n at 6-7. He argues Id. Wells Fargo is correct that the property of the bankruptcy 16 estate includes the bankrupt entity's causes of action. Sierra 17 Switchboard Co. v. Westinghouse Elec. Corp., 789 F.2d 705, 707 (9th 18 Cir. 1986). 19 wrongdoing on the part of World Savings in the initiation of his 20 loan; because any claim arising from the 2007 loan origination 21 would have accrued by the 2010 bankruptcy proceedings, Plaintiff 22 lacks standing to bring any such claims. 23 too vague as to Wells Fargo's alleged misrepresentations and 24 promises for the Court to determine whether Plaintiff's claims 25 plausibly accrued after the bankruptcy proceedings had concluded. 26 Accordingly, Plaintiff's claims related to loan modification are 27 DISMISSED WITH LEAVE TO AMEND for failure to plead with the 28 required specificity. Plaintiff's Complaint makes numerous allusions to 11 Plaintiff's Complaint is 1 C. Claims Challenging the Foreclosure Sale 2 Wells Fargo argues that Plaintiff's first, second, fifth, and 3 twelfth claims challenging the foreclosure sale fail because 4 Plaintiff has not tendered his indebtedness to Wells Fargo. 5 11. 6 the original promissory note to initiate foreclosure proceedings, 7 and so Plaintiff's declaratory relief and quiet title claims fail 8 as a matter of law. MTD at Wells Fargo also argues that it need not be in possession of Id. at 12. United States District Court Plaintiff admits that a tender of indebtedness is required to 10 For the Northern District of California 9 set aside a foreclosure, but argues that tender is not required to 11 preemptively challenge a party's standing to foreclose on a 12 property; Plaintiff cites no law for this novel proposition. 13 Opp'n at 12. 14 challenges to his "failure to produce the note" theory. MTD Plaintiff also does not respond to Wells Fargo's Id. The Court agrees with Wells Fargo, and DISMISSES Plaintiff's 15 16 first, second, fifth, and twelfth claims.6 17 cure these claims by tendering his indebtedness to Wells Fargo, the 18 Court does so WITH LEAVE TO AMEND. Because Plaintiff may 19 D. NIED and IIED Claims 20 An NIED claim has the same elements as a claim for negligence. 21 Lawson v. Mgmt. Activities, 69 Cal. App 4th 626, 656 (1999). 22 Accordingly, a plaintiff asserting an NIED claim must show that the 23 defendant owed the plaintiff a duty of care. 24 for IIED, Plaintiff must allege: "(1) extreme and outrageous 25 conduct by the defendant with the intention of causing, or reckless 26 disregard of the probability of causing, emotional distress; (2) Id. To plead a claim 27 6 28 Furthermore, as the foreclosure sale was scheduled to occur in July 2011, the Court assumes it has already occurred, and so any challenge to Wells Fargo's standing is likely moot. 12 1 the plaintiff's suffering severe or extreme emotional distress; and 2 (3) actual and proximate causation of the emotional distress by the 3 defendant's outrageous conduct." 4 Cal. 3d 868, 903 (1991). 5 when it was "so extreme as to exceed all bounds of that usually 6 tolerated in a civilized community." 7 Westminster, 32 Cal.3d 197, 185 (1982) (citation omitted). 8 emotional distress to be severe, it must be "of such substantial 9 quantity or enduring quality that no reasonable man in a civilized Christensen v. Super. Ct,, 54 Conduct is only "extreme and outrageous" Davidson v. City of For United States District Court For the Northern District of California 10 society should be expected to endure it." 11 Nat'l Life Ins. Co., 10 Cal. App. 3d 376, 397, (Ct. App. 1970). 12 Fletcher v. Western Wells Fargo argues that Plaintiff's NIED and IIED claims fail 13 as a matter of law. 14 an NIED claim, Plaintiff must allege Defendants breached a duty of 15 care owed to Plaintiff, and argues that because a financial 16 institution "owes no duty of care to a borrower when the 17 institution's involvement in the loan transaction does not exceed 18 the scope of its conventional role as a mere lender of money," 19 Plaintiff's NIED claim fails. 20 Fed. Savings & Loan, 231 Cal. App. 3d 1089, 1096 (Ct. App. 1991)). 21 Plaintiff responds that "the bank exceeded its conventional role as 22 money lender" by offering "comprehensive restructuring and loan 23 modification services." 24 MTD at 14. Wells Fargo argues that to state Id. at 14-15 (citing Nymark v. Heart MTD Opp'n at 14. The Court agrees with Wells Fargo that Plaintiff's NIED and 25 IIED claims are insufficiently pleaded. 26 and with little detail, Plaintiff alleges that he suffered extreme 27 emotional distress due to Defendants' conduct. 28 what about Defendants' conduct rendered it so extreme as to "exceed 13 In rather broad strokes He fails to state 1 all bounds of that usually tolerated in a civilized community." 2 fails to state what duty Wells Fargo owed him, and how that duty 3 was breached. 4 Court rejects Wells Fargo's arguments that these claims are barred 5 as a matter of law. He fails to allege proper damages. He However, the 6 E. Fraud and Negligent Misrepresentation Claims 7 Wells Fargo challenges Plaintiff's seventh and eighth claims, 8 as well as other portions of Plaintiff's complaint which allege 9 fraud. MTD at 17. Claims sounding in fraud are subject to a United States District Court For the Northern District of California 10 higher pleading standard. Fed. R. Civ. P. 9(b). "To satisfy Rule 11 9(b), a pleading must identify the who, what, when, where, and how 12 of the misconduct charged, as well as what is false or misleading 13 about [the purportedly fraudulent] statement, and why it is false." 14 Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 15 1047, 1055 (9th Cir. 2011) (internal quotation marks omitted). 16 Plaintiff's Complaint obliquely refers to numerous unidentified 17 "statements" by unidentified representatives of Defendants; he 18 fails to sufficiently identify "what" these statements were, "when" 19 they were made, or "who" said them. 20 than what Plaintiff supplies here. 21 seventh and eighth fraud claims are DISMISSED WITH LEAVE TO AMEND 22 and Wells Fargo's MTS is GRANTED. Far more detail is required Accordingly, Plaintiff's 23 F. 24 In California, "[e]very contract imposes upon each party a Good Faith Claim 25 duty of good faith and fair dealing in its performance and its 26 enforcement." 27 Inc., 2 Cal. 4th 342, 371 (1992). 28 imposes a duty upon a party to a contract not to deprive the other Carma Dev. (Cal.), Inc. v. Marathon Dev. California, 14 "In general, the covenant 1 party of the benefits of the contract." Sutherland v. Barclays 2 American/Mort. Corp., 53 Cal. App. 4th 299, 314 (Ct. App. 1997). 3 Wells Fargo alleges that Plaintiff's good faith claim "is in 4 actuality a claim that Wells Fargo breached Civil Code § 2923.5." 5 MTD at 20. Wells Fargo argues that section 2923.5 is preempted by 6 HOLA. Wells Fargo also argues that "one of the elements of a 7 breach of the covenant claim is that the plaintiff did all, or 8 substantially all, of the significant things the contract 9 required," and because Plaintiff admits that he defaulted on the United States District Court For the Northern District of California 10 11 Id. loan, his claim fails. Id. California's Civil Code provides a framework for non-judicial 12 foreclosure: the lender must first record a notice of default; once 13 three months have elapsed, the lender must give notice of the 14 planned foreclosure sale. 15 framework, section 2923.5 concerns the notice of default. 16 requires the "mortgagee, trustee, beneficiary, or authorized agent" 17 seeking to file a notice of default to first contact the borrower 18 in person or by telephone "in order to assess the borrower's 19 financial situation and explore options for the borrower to avoid 20 foreclosure." 21 default may not be filed until thirty days after this initial 22 contact or the statute's due diligence requirements are satisfied. 23 Id. § 2923.5(a)(1). 24 to file a notice of default must advise the borrower that he or she 25 has the right to request a subsequent meeting and, if requested, 26 schedule the meeting within fourteen days. 27 28 Cal. Civ. Code § 2924. Cal. Civ. Code § 2923.5(a)(2). Within this It The notice of During this initial contact, the party seeking Id. § 2923.5(a)(2). The California Court of Appeal has narrowly interpreted section 2923.5 "as to avoid having the state law invalidated by 15 1 federal preemption." Mabry v. Super. Ct., 185 Cal. App. 4th 208, 2 231 (Ct. App. 2010). The rights provided to borrowers under 3 section 2923.5 are purely procedural -- there is no "right" to a 4 loan modification. 5 2923.5 to "assess" the borrower's financial situation and "explore" 6 options to avoid foreclosure can be satisfied by simply asking the 7 borrower "why can't you make your payments?" and "telling the 8 borrower the traditional ways that foreclosure can be avoided 9 (e.g., deeds 'in lieu,' workouts, or short sales)." Id. The lender's obligations under section Id. at 232. United States District Court For the Northern District of California 10 The statute does not place a duty on the lender "to become a loan 11 counselor itself." 12 offers is the postponement of a foreclosure sale until the lender 13 comes into compliance with the statute. 14 at 213. 15 Id. at 219. The only remedy section 2923.5 Mabry, 185 Cal. App. 4th To the extent Plaintiff's bad faith claim is merely a claim of 16 violation of section 2923.5, this claim is likely moot given the 17 scheduled July 2011 foreclosure sale of the house, as the only 18 remedy available under section 2923.5 -- postponement of the 19 foreclosure sale -- would be no longer available. 20 Plaintiff attempts to premise a separate good faith claim for 21 damages on Wells Fargo's alleged failure to satisfy section 2923.5, 22 such a claim is preempted under Mabry's analysis. 23 To the extent Because Plaintiff has failed to identify the contract at issue 24 and the benefits deprived by Defendants, he has failed to plead 25 this claim with the required specificity. 26 rejects Wells Fargo's argument that Plaintiff's failure to make 27 payments under the note relieved Defendants of their duty to act in 28 good faith in performing under the note and in enforcing it. 16 However, the Court As 1 such, Plaintiff may be able to plead a claim based on Defendants' 2 conduct as a party to the deed of trust. 3 pleaded sufficient facts, the Court DISMISSES, WITH LEAVE TO AMEND, 4 Plaintiff's claim. Because Plaintiff has not 5 G. 6 The elements of a claim for promissory estoppel are: "(1) a Promissory Estoppel Claim 7 promise clear and unambiguous in its terms; (2) reliance by the 8 party to whom the promise is made; (3)[the] reliance must be both 9 reasonable and foreseeable; and (4) the party asserting the United States District Court For the Northern District of California 10 estoppel must be injured by his reliance." Aceves v. U.S. Bank, 11 N.A., 192 Cal. App. 4th 218, 225 (Ct. App. 2011). Wells Fargo argues that Plaintiff's Complaint does not allege 12 13 a clear and unambiguous promise upon which Plaintiff reasonably 14 relied to his detriment. 15 Plaintiff's assertion that Wells Fargo told Plaintiff to stop 16 making mortgage payments in order to qualify for a loan 17 modification is "implausible on its face." 18 that Plaintiff's claim that his decision to default on the mortgage 19 ruined his credit is implausible. MTD at 21. Wells Fargo alleges that Id. It also alleges While the Court agrees with Wells Fargo that Plaintiff has 20 21 failed to identify a "clear and unambiguous promise," it does not 22 agree that Plaintiff's allegations are implausible on their face.7 23 Plaintiff's Complaint alleges that representatives of Wachovia told 24 him that he must be sufficiently in default for three months in 25 order to qualify for in-house modification of his loan. Compl. ¶ 26 7 27 28 Wells Fargo seeks judicial notice of several filings in Plaintiff's bankruptcy proceeding in support of the factual argument that Plaintiff's indebtedness to Wells Fargo was dwarfed by his indebtedness to other creditors. The Court DECLINES this request. 17 1 26. He does not allege that these representatives promised him 2 that he would qualify for the loan if he was sufficiently in 3 default; he merely alleges that he would not qualify for in-house 4 modification if he were not considerably in default. 5 is not sufficient to support a promissory estoppel claim. 6 Plaintiff must include considerably more detail in order to render 7 this claim plausible. 8 his cause of action is not duplicative of a claim for breach of 9 contract, as "tort recovery for breach of the covenant is available This pleading Furthermore, Plaintiff must establish that United States District Court For the Northern District of California 10 only in limited circumstances, generally involving a special 11 relationship between the contracting parties." 12 Water Dist., 70 Cal. App. 4th 1358, 1370 (Ct. App. 1999). 13 Plaintiff alleges no special relationship here. Bionghi v. Met. 14 H. 15 In extremely brief language, Plaintiff claims Wells Fargo 16 violated California Civil Code § 1798.82 by failing "to timely 17 disclose to Plaintiff the disclosure of his personal information." 18 Compl. ¶ 70. 19 MTD at 23. 20 page Complaint is there even a fleeting reference to facts that 21 could support this claim. 22 much less improper disclosure of it. 23 this claim. 24 I. 25 Wells Fargo argues that Plaintiff's section 17200 claim -- California Civil Code § 1798.82 Claim Wells Fargo calls this claim "as vague as can be." The Court agrees. Nowhere in Plaintiff's twenty-five- No "personal information" is discussed, The Court therefore DISMISSES Section 17200 Claim 26 which is premised on Plaintiff's first eleven claims -- is not 27 pleaded with the requisite particularity. 28 particular, Wells Fargo contends that Plaintiff "lumps all 18 MTD at 23-24. In 1 defendants together without identifying which defendant committed 2 which alleged violation," and the claim "is defective to the same 3 extent that its underlying claims are defective." 4 agrees. 5 such, the derivative section 17200 claim fails as well. Id. The Court The Complaint fails to state a single viable claim, and as In sum, Plaintiff's Complaint falls far short of federal 6 7 pleading standards. While Plaintiff is granted leave to amend his 8 complaint to address the above shortcomings, he is put on notice 9 that any claims dismissed on a subsequent motion to dismiss will be United States District Court For the Northern District of California 10 dismissed WITHOUT LEAVE TO AMEND. The Court will only grant 11 additional leave to amend if Plaintiff files a motion under Rule 12 15(a)(2) of the Federal Rules of Civil Procedure establishing that 13 justice requires it. Furthermore, the Court puts Plaintiff and his attorney on 14 15 notice that under 28 U.S.C. § 1927, "[a]ny attorney . . . who so 16 multiplies the proceedings in any case unreasonably and vexatiously 17 may be required by the court to satisfy personally the excess 18 costs, expenses, and attorneys' fees reasonably incurred because of 19 such conduct." 20 Pacific Harbor Capital, Inc. v. Carnival Air Lines, Inc., 210 F.3d 21 1112, 1118 (9th Cir. 2000). 22 arguments in his amended complaint or pleads any clearly meritless 23 claims, he and his counsel may be subject to sanctions under 28 24 U.S.C. § 1927, Federal Rule of Civil Procedure 11, the Court's 25 local rules, and the Court's inherent power. 26 /// 27 /// 28 /// The Court may impose such sanctions sua sponte. If Plaintiff makes any frivolous 19 1 2 V. CONCLUSION For the foregoing reasons, the Court GRANTS the motion to 3 dismiss and the motion to strike filed by Defendant Wells Fargo 4 Bank, N.A. 5 WITH LEAVE TO AMEND. 6 to file an amended complaint. 7 amended complaint within this time frame, this action will be 8 dismissed WITH PREJUDICE. Plaintiff Bryan J. Valverde's Complaint is DISMISSED, Plaintiff is granted thirty (30) days' leave If Plaintiff fails to file an 9 United States District Court For the Northern District of California 10 IT IS SO ORDERED. 11 12 13 Dated: August 25, 2011 UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20

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