Ren v. Wells Fargo Bank, N.A.

Filing 23

Order by Hon. Samuel Conti granting in part and denying in part 16 Motion to Dismiss.(sclc2, COURT STAFF) (Filed on 6/7/2013)

1
2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE NORTHERN DISTRICT OF CALIFORNIA

8

United States District Court

For the Northern District of California

9
10
11
12
13
14
15

)
)
BING TING REN,
)
)
Plaintiff,
)
)
v.
)
)
WELLS FARGO BANK, N.A. and DOES )
1-100, inclusive,
)
)
Defendants.
)
)
)

Case No. 13-0272 SC
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS'
MOTION TO DISMISS

16
17
18

I.

19

INTRODUCTION
This is a foreclosure dispute.

Now before the Court is

20

Defendant Wells Fargo Bank, N.A.'s ("Defendant") motion to dismiss

21

Plaintiff Bing Ting Ren's ("Plaintiff") first amended complaint.

22

ECF Nos. 12 ("MTD"),1 14 ("FAC").

23

Nos. 18 ("Opp'n"), 19 ("Reply"), and suitable for decision without

24

oral argument, Civ. L.R. 7-1(b).

25

motion to dismiss is GRANTED in part and DENIED in part.

26

1

27
28

The motion is fully briefed, ECF

As discussed below, Defendant's
The Court

Defendant moves in the alternative for a more definite statement
under Rule 12(e). See MTD at 13-14. The Court DENIES this motion
as moot, since the Court grants Plaintiff leave to amend (partly
for reasons of clarification) the claims that Defendant alleges
were defectively pled.

1

GRANTS Defendant's request for judicial notice, ECF No. 17, under

2

Federal Rule of Evidence 201.

3
4 II.

BACKGROUND

5

Plaintiff obtained two mortgages from Defendant around June

6

27, 2007.

FAC ¶ 7.

7

(the "note") and deed of trust (the "DOT") (collectively the "loan

8

agreements").

9

second mortgage and, in fact, paid more than the monthly minimum on

Id.

Each is governed by a separate promissory note

Plaintiff alleges that she was current on her

United States District Court

For the Northern District of California

10

it so she could pay it off before its maturity date.

11

However, Plaintiff asserts that instead of applying the second

12

mortgage's payments to interest owed and then to the principal, as

13

the DOT allegedly requires, Defendant applied each monthly payment

14

solely to the principal.

15

mortgage entered default around December 2011.

Id. ¶ 9.

Id. ¶ 7-8.

As a result, Plaintiff's second
Id.

When this happened, Plaintiff contacted Defendant, whose

16
17

agents told her that she could fix the mistake by applying for a

18

loan modification.

19

modification by being late on the first mortgage.

20

Defendant's agents purportedly promised, if Plaintiff went late,

21

she could begin the loan modification process, and Defendant would

22

not take any action against her even though the loan agreements

23

said it could.

24

arrangement.

25

2012.

26

necessary documents to Defendant, but she had to re-submit most of

27

them because Defendant repeatedly claimed that it either lost the

28

documents or never received them.

Id. ¶ 10.

Id.

Id.

As

Plaintiff reluctantly agreed to this

Id. ¶ 11.

Id. ¶ 12.

Plaintiff could only obtain such a

She began missing payments in January

Throughout the process, she sent all of the

Id. ¶¶ 11-12.

2

Sometime around

1

October 2012, while the loan modification process was ongoing,

2

Defendant sent Plaintiff notice that it intended to accelerate her

3

first mortgage.

4

entire balance of her loans.

5

reported Plaintiff as delinquent to the credit reporting agencies.

6

Id.

7

would not take such actions.

It also demanded that she tender the
Id.

At this time, Defendant also

Plaintiff maintains that Defendant previously promised that it
See id. ¶ 10.

Plaintiff's credit is ruined.

8
9

Id. ¶ 13.

Id.

¶ 14.

It is not clear at

this point whether a foreclosure sale has occurred, though a full

United States District Court

For the Northern District of California

10

reconveyance of Plaintiff's second loan was recorded on February 8,

11

2013, and that loan is no longer at issue in this case.

12

Ex. G ("Notice of Reconveyance").

13

causes of action against Defendant, based on the facts described

14

above: (i) breach of the implied covenant of good faith and fair

15

dealing; (ii) promissory estoppel; (iii) the privacy tort of false

16

light; (iv) negligent misrepresentation; and (v) violations of the

17

California Unfair Competition Law ("UCL"), Cal. Civ. Code § 17200

18

et seq.

See RJN

Plaintiff asserts the following

Defendant now moves to dismiss Plaintiff's FAC.

19
20 III.

LEGAL STANDARD

21

A.

22

A motion to dismiss under Federal Rule of Civil Procedure

Motions to Dismiss

23

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

Navarro v.

24

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

25

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

26

sufficient facts alleged under a cognizable legal theory."

27

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

28

1988).

"Dismissal can be based

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

3

1

should assume their veracity and then determine whether they

2

plausibly give rise to an entitlement to relief."

3

Iqbal, 556 U.S. 662, 679 (2009).

4

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

5

is inapplicable to legal conclusions.

6

elements of a cause of action, supported by mere conclusory

7

statements, do not suffice."

8

Twombly, 550 U.S. 544, 555 (2007)).

9

generally "limited to the complaint, materials incorporated into

Ashcroft v.

However, "the tenet that a court

Threadbare recitals of the

Id. (citing Bell Atl. Corp. v.
The court's review is

United States District Court

For the Northern District of California

10

the complaint by reference, and matters of which the court may take

11

judicial notice."

12

540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor

13

Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).

Metzler Inv. GMBH v. Corinthian Colls., Inc.,

14

B.

Rule 9(b)

15

Claims sounding in fraud are subject to the heightened

16

pleading requirements of Federal Rule of Civil Procedure 9(b),

17

which requires that a plaintiff alleging fraud "must state with

18

particularity the circumstances constituting fraud."

See Kearns v.

19

Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009).

"To satisfy

20

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

21

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

22

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

23

is false."

24

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

25

and citations omitted).

26

///

27

///

28

///

United States ex rel Cafasso v. Gen. Dynamics C4 Sys.,

4

1 IV.

DISCUSSION

2

A.

3

"The covenant of good faith and fair dealing, implied by law

4

in every contract, exists merely to prevent one contracting party

5

from unfairly frustrating the other party's right to receive the

6

benefits of the agreement actually made."

7

Inc., 24 Cal. 4th 317, 349 (Cal. 2000).

8

impose substantive duties or limits on the contracting parties

9

beyond those incorporated in the specific terms of their

Breach of the Covenant of Good Faith and Fair Dealing

The covenant "cannot

United States District Court

For the Northern District of California

10

agreement."

11

the covenant of good faith and fair dealing are:

12

Id. at 349-50.

Guz v. Bechtel Nat.

The elements of a claim for breach of

17

(1) the plaintiff and the defendant entered
into a contract; (2) the plaintiff did all
or substantially all of the things that the
contract required him to do or that he was
excused
from
having
to
do;
(3)
all
conditions required for the defendant's
performance had occurred; (4) the defendant
unfairly interfered with the plaintiff's
right to receive the benefits of the
contract; and (5) the defendant's conduct
harmed the plaintiff.

18

Woods v. Google, Inc., 889 F. Supp. 2d 1182, 1194 (N.D. Cal. 2012)

19

(citing Judicial Counsel of California Civil Jury Instructions §

20

325 (2011)).

13
14
15
16

21

Plaintiff's alleges that Defendant's promise to forego action

22

against her if she went late on her payments impeded her

23

contractual obligation to pay her loans, which interfered with her

24

rights to receive the benefits of those agreements.

25

relies mainly on the Court's holding on a similar issue from Harvey

26

v. Bank of America N.A., No. 12-3238 SC, 2013 WL 632088 (N.D. Cal.

27

Feb. 20, 2013).

28

active hindrance of plaintiff's obligation to pay his loans could

Plaintiff

In Harvey the Court found that a defendant's

5

1

be the basis for a breach of implied covenant claim.

2

Tanner v. Title Ins. & Trust Co., 20 Cal. 2d 814, 824 (Cal. 1942)).

3

Id. (citing

While Harvey supports Plaintiff's claim for promissory

covenant.

6

with Plaintiff's payments.

7

the loan modification process by going late on her payments, but

8

that was a choice only Plaintiff could make.

9

Suntrust Mortgage, Inc., No. 5:12-cv-01453 EJD, 2013 WL 843912, at

10

United States District Court

estoppel, it does not help her claim for breach of the implied

5

For the Northern District of California

4

*3 (N.D. Cal. Mar. 6, 2013) ("Being left with an impression that a

11

particular action is encouraged is something very different than

12

actually being required to do something.") (quotations omitted).

13

Plaintiff did not plead that Defendant actively frustrated her

14

ability to perform under the loan agreements.

15

accordingly DISMISSED.

16

plead facts indicating that Defendant actively hindered her payment

17

under the loan agreements.

As Defendant points out, it never actively interfered
It told Plaintiff that she could enter

See Franczak v.

This claim is

Plaintiff has leave to amend it if she can

18

B.

Promissory Estoppel

19

"Promissory estoppel requires: (1) a promise that is clear and

20

unambiguous in its terms; (2) reliance by the party to whom the

21

promise is made; (3) the reliance must be reasonable and

22

foreseeable; and (4) the party asserting the estoppel must be

23

injured by his or her reliance."

24

v. Paleewong Trading Co., Inc., 688 F. Supp. 2d 940, 953 (N.D. Cal.

25

2010).

26

lacks consideration (in the usual sense of something bargained for

27

and given in exchange) binding under certain circumstances."

Boon Rawd Trading Int'l Co., Ltd.

"The purpose of this doctrine is to make a promise that

28

6

Id.

1

Plaintiff alleges that "in or around December 2011 and

2

thereafter," Defendant's agents Bobby Mata and William Speed told

3

her that she could be eligible for a loan modification if she

4

ceased her loan payments, and that if she did, Defendant would not

5

take any action against her during the loan modification process.

6

FAC ¶¶ 10-11, 26.

7

to go late on her payments because of her excellent credit, she

8

believed Defendant's agents' assurances and began to miss payments

9

so she could qualify for a loan modification.

Plaintiff states that though she was reluctant

Id. ¶¶ 12, 26.

United States District Court

For the Northern District of California

10

Finally, Plaintiff alleges that she was injured by her reliance

11

because of the destruction of her credit and the cost of fees

12

related to this lawsuit.

13

Plaintiffs' allegations about the promise, her reliance, and her

14

damages, claiming that they are insufficiently pled or are refuted

15

by the loan agreements.

16

action is barred by the statute of frauds because it would amount

17

to a modification of the loan agreement but was not in writing.

18

MTD at 5, 7; Reply at 4-7.

19

Id. ¶¶ 26-29.

Defendant disputes

Defendant also argues that this cause of

The Court finds that Plaintiff's allegations set forth a prima

20

facie promissory estoppel claim arising from her conversation with

21

Defendant's agents.

22

about the alleged promise is not perfect, the Court finds that

23

Plaintiff's complaint is sufficiently detailed and plausible to

24

state a claim and subject Defendant to discovery on it.

25

633 F.3d at 1204.

26

While the specificity of Plaintiff's pleading

See Starr,

The Court is not convinced by Defendant's arguments that

27

Plaintiff failed to plead reasonable reliance and, consequently,

28

damages.

See Reply at 4-6.

Those arguments are essentially that

7

1

the loan agreements put Plaintiff on notice of what would happen if

2

she went late on her mortgage payments (including the risk that

3

Defendant would accelerate her loans).

4

of Plaintiff's promissory estoppel claim: Plaintiff relied on

5

Defendant's agents' promises that the loan agreements' requirements

6

would apparently not apply.

7

contractual provision.

8

find Defendant's statute of frauds argument compelling.

9

promise at issue here was not a modification of the contract,

Defendant misses the point

This promise was separate from any

For similar reasons, the Court does not
The

United States District Court

For the Northern District of California

10

subject to the statute of frauds: it was a separate matter

11

altogether.

12
13

Accordingly, the Court DENIES Defendant's motion to dismiss
Plaintiff's promissory estoppel claim.

The claim is undisturbed.

14

C.

False Light

15

To state a claim for the privacy tort of false light, a

16

plaintiff must plead (1) public disclosure of information about the

17

plaintiff that was presented as factual but was actually false or

18

created a false impression about the plaintiff; (2) the information

19

was understood by one or more persons to whom it was disclosed as

20

stating or implying something highly offensive that would have a

21

tendency to injure the plaintiff's reputation; (3) by clear and

22

convincing evidence, that the defendant acted with constitutional

23

malice; and (4) damages.

24

1082 (9th Cir. 2002).

25

Solano v. Playgirl, Inc., 292 F.3d 1078,

Plaintiff alleges that because she was never really in default

26

and any suggestion otherwise was due to Defendant's accounting

27

errors and broken promises, Defendant's recklessly or negligently

28

reporting her to credit agencies was false, highly offensive, and

8

1

harmful.

FAC ¶¶ 35-36.

Defendant argues that Plaintiff's false

2

light claim is preempted by the Fair Credit Reporting Act ("FCRA"),

3

15 U.S.C. § 1681 et seq., and that in any event, Defendant's

4

reports to the credit agencies were both truthful and privileged by

5

law.

MTD at 9-10; Reply at 7-8.
Defendant's preemption argument is right.

6

FCRA includes an

7

explicit preemption provision: "[n]o requirement or prohibition may

8

be imposed under the laws of any State . . . with respect to the

9

subject matter regulated under . . . section 1681s-2 of [FCRA],

United States District Court

For the Northern District of California

10

relating to the responsibilities of persons who furnish information

11

to consumer reporting agencies."

12

Supp. 2d 1139, 1143 (N.D. Cal. 2005) (citing 15 U.S.C. §

13

1681(b)(1)(F)).

14

light based on alleged reporting of false credit information to

15

credit reporting agencies.

16

No. 2:12-cv-04187-MCE-CMK, 2012 WL 5041359, at *9 (E.D. Cal. Oct.

17

17, 2012) ("[T]he FCRA preempts Plaintiffs' common law claim for

18

false light invasion of privacy, as the claim is based on Defendant

19

allegedly reporting false credit information to a credit reporting

20

agency.").

21

the parties' further arguments as to Plaintiff's false light claim,

22

except to say that they are not plausible.

23

address Plaintiff's arguments about whether she has stated a claim

24

under California Civil Code section 1785.25, since Plaintiff pled

25

no such a claim in her complaint and cannot add it now.

26

Accordingly, Plaintiff's false light claim is DISMISSED WITH

27

PREJUDICE.

28

///

Howard v. Blue Ridge Bank, 371 F.

Specifically, FCRA precludes claims for false

See Carson v. Bank of America, N.A.,

Since it is preempted, the Court declines to consider

9

Nor does the Court

1

D.

Negligent Misrepresentation

2

The elements for a cause of action for negligent

3

misrepresentation are (1) a misrepresentation of a material fact,

4

(2) without reasonable grounds for believing it to be true, (3)

5

with intent to induce another's reliance on the fact

6

misrepresented, (4) reasonable reliance by the plaintiff, and (5)

7

damages.

8

1986).

9

particularity per Rule 9(b), though intent may be alleged

United States District Court

For the Northern District of California

10
11

Fox v. Pollack, 181 Cal. App. 3d 954, 962 (Cal. Ct. App.
Since this claim sounds in fraud, it must be pled with

generally.
Plaintiff alleges that Defendant's agents' made their

12

representations about the loan modification process with no

13

reasonable grounds for believing that the representations were

14

true, since Defendant alone (not its agents) knew whether the loan

15

modification process would work as explained.

16

Plaintiff adds that she was unaware of the statements' falsity and

17

would not have gone late on her payments if Defendant's agents had

18

not made those representations.

19

a result of her believing what Defendant's agents said, she was

20

harmed by fees and a damaged credit score.

21

Id. ¶¶ 40-45.

FAC ¶¶ 40-42.

She states that as

Id.

Plaintiff's misrepresentation claim fails for insufficient

22

pleading.

Plaintiff's allegations of the purported promises made

23

to her by Defendant's agents are substantially the same as those

24

underlying her promissory estoppel claim.

25

of whether the economic loss rule prohibits Plaintiff from seeking

26

tort damages for what appears to be a contract claim, see, e.g.,

27

JMP Sec. LLP v. Altair Nanotechnologies Inc., 880 F. Supp. 2d 1029,

28

1042-43 (N.D. Cal. 2012), Plaintiff's allegations are not

10

Leaving aside the issue

1

sufficient to support a fraud claim.

2

best, the thrust of what was said and in what month it was said.

3

Though this is enough (barely) to satisfy the relatively relaxed

4

pleading standard required for promissory estoppel, see supra

5

Section IV.B, it is not enough to plead fraud.

6

negligent misrepresentation claim is accordingly DISMISSED.

7

Plaintiff has leave to amend this claim, but must plead her facts

8

with greater specificity, especially with reference to the relevant

9

dates, Defendant's agents' authority, and Defendants' agents'

United States District Court

For the Northern District of California

10

Plaintiff identifies, at

Plaintiff's

grounds for believing their statements.

11

E.

UCL

12

The UCL prohibits unfair competition, including, inter alia,

13

"any unlawful, unfair or fraudulent business act."

14

Prof. Code § 17200.

15

disjunctive, it establishes three varieties of unfair competition--

16

acts or practices which are unlawful, or unfair, or fraudulent."

17

Berryman v. Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1554

18

(Cal. Ct. App. 2007).

19

Cal. Bus. &

"Because [section 17200] is written in the

Plaintiff appears to bring her UCL claim under the

20

"unfairness" prong.

California courts and the legislature have not

21

specified which of several possible "unfairness" standards is the

22

proper one, but this Court recently found that the California

23

Supreme Court would likely adopt the approach to unfairness

24

provided in Camacho v. Auto. Club of S. Cal., 142 Cal. App. 4th

25

1394, 1402 (Cal. Ct. App. 2006), which incorporated the three

26

factors constituting unfairness under the Federal Trade Commission

27

Act: "(1) the injury must be substantial; (2) the injury must not

28

be outweighed by any countervailing benefits to consumers or

11

1

competition; and (3) the injury must be one that the consumer could

2

not reasonably have avoided."

3

11–01232 CW, 2011 WL 3607608, at *10 (N.D. Cal. Aug. 15, 2011)

4

(citing Camacho, 12 Cal. App. 4th at 1402).

Lyons v. Bank of America, N.A., No.

Plaintiff asserts that the conduct underlying her claims for

5
6

breach of the implied covenant of good faith, false light,

7

promissory estoppel, and negligent misrepresentation "constitute[]

8

unfair competition" under the UCL.

9

discussed supra, three of these claims fail as insufficiently pled,

FAC ¶¶ 48-51.

However, as

United States District Court

For the Northern District of California

10

with only the promissory estoppel claim surviving.

Consequently,

11

Plaintiff's UCL claims as to the other causes of action are

12

DISMISSED.

13

survives because her properly pled promissory estoppel claim

14

suffices to state a claim under the UCL as well: the injury was

15

substantial, no countervailing benefits to consumers or competition

16

exist, and Plaintiff's pleading of reasonable reliance under her

17

promissory estoppel claim also serves to show that she could not

18

reasonably have avoided the injury in this case.

Plaintiff's UCL claim for unfair business practices

19
20
21

V.

CONCLUSION
As explained above, Defendant's motion to dismiss is GRANTED

22

in part and DENIED in part.

Plaintiff's claims for promissory

23

estoppel and unfair business practices under the UCL are

24

undisturbed.

25

PREJUDICE.

26

to correct the factual deficiencies described in this Order.

27

Plaintiff may file an amended complaint within thirty (30) days of

28

this Order's signature date.

Plaintiff's false light claim is DISMISSED WITH
All remaining claims are DISMISSED with leave to amend

Failure to do so may result in the

12

1
2

deficient claims being dismissed with prejudice.
Plaintiff does not have leave to add any new causes of action

3

to her complaint as a result of this Order, but she may file a Rule

4

15 motion or request Defendant's leave to add new claims.

5
6

IT IS SO ORDERED.

7
8

7
Dated: June ___, 2013

9

UNITED STATES DISTRICT JUDGE

United States District Court

For the Northern District of California

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

13