Hussein v. Bank of New York et al

Filing 26

ORDER GRANTING MOTION TO DISMISS AND VACATING HEARING by Hon. William Alsup [granting 22 Motion to Dismiss].(whasec, COURT STAFF) (Filed on 4/28/2015)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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MOHAMMED S. HUSSEIN and ROZINA HUSSEIN,

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For the Northern District of California

United States District Court

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Plaintiffs,

No. C 15-00907 WHA

v.
BANK OF NEW YORK MELLON fka THE BANK
OF NEW YORK, AS TRUSTEE ON BEHALF OF
THE HOLDERS OF THE ALTERNATIVE LOAN
TRUST 2007-OH2, MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2007-OH2; NATIONAL
DEFAULT SERVICING CORPORATION; SELECT
PORTFOLIO SERVICING, INC.; and DOES 1–50
inclusive,

ORDER GRANTING
MOTION TO DISMISS
AND VACATING
HEARING

Defendants.

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/

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INTRODUCTION

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In this action for violations of the California Homeowner Bill of Rights and related

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contract claims, defendants move to dismiss. For the following reasons, the motion is

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GRANTED.

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STATEMENT

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Plaintiffs Mohammed and Rozina Hussein executed a deed of trust for a property in

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Hayward, California, in 2007. Plaintiffs “transferred a portion of the property to others” but

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remain “fully responsible” for the deed of trust. A notice of default was recorded in 2013.

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A notice of trustee’s sale was recorded the next year, after plaintiffs applied for a loan
modification (Compl. ¶¶ 11–17).

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Plaintiffs filed a state court lawsuit regarding the notice of default and notice of

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trustee’s sale, and defendants removed here on the basis of diversity jurisdiction for removal.

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Plaintiffs allege several violations of the California Homeowner Bill of Rights, primarily claims

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related to a lack of statutorily-required notice, and also allege related contract claims. For the

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following reasons, plaintiffs’ lawsuit is DISMISSED.

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ANALYSIS

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Plaintiffs allege that defendants violated several statutes enacted as part of the California

notice of default in the ways mandated by California Civil Code Section 2923.5, and that, as a

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result, they are entitled to injunctive relief under Section 2924.19(a)(1). Next, plaintiffs allege

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For the Northern District of California

Homeowner Bill of Rights. First, plaintiffs allege that they were not contacted regarding the

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United States District Court

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violations of Sections 2923.55 and 2924.7, and request injunctive relief under Section 2924.12.

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Plaintiffs’ final statutory claim alleges a violation of Section 2923.6(c)–(d), for recording the

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notice of trustee’s sale while plaintiffs’ loan modification application remained pending.

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Based on these statutory violations, plaintiffs allege breach of contract, breach of the covenant

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of good faith and fair dealing, intentional misrepresentation, negligent misrepresentation, and

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violation of the California Unfair Competition Law (Compl. ¶¶ 19–25, 29, 36, 39, 45, 46, 50,

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52).

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Except for Section 2924.7, all of the allegedly-violated statutes apply solely to first

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lien mortgages or deeds of trust secured by owner-occupied residential real property.

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Plaintiffs, however, never allege that they occupied the property in dispute. Section 2924.7,

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in turn, seems to have been alleged by mistake. This section is alleged in the context of

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defendants’ alleged failure to provide plaintiffs with a single point of contact, but the section

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does not discuss any such requirement. This section instead relates to the enforcement of

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provisions regarding maturity-date accelerations and disbursements of property-insurance

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proceeds. Defendants suggest that plaintiffs must have meant to allege a violation of Section

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2923.7, which does relate to a single-point-of-contact requirement. However, even if that were

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the case, Section 2923.7, like the other statutes named in the complaint, is only applicable to

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deeds of trust secured by an owner-occupied residential real property. See Cal. Civ. Code
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§ 2924.15(a). Since plaintiffs never allege that they occupied the property in question, they

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fail to state a claim under any of the relevant statutory provisions.

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The remaining claims are based entirely on the alleged statutory violations. Thus,

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plaintiffs also fail to state a claim for breach of contract, breach of the covenant of good faith

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and fair dealing, intentional misrepresentation, negligent misrepresentation, or violation of

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the California Unfair Competition Law. Defendants’ motion to dismiss is GRANTED.

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Defendants request that leave to amend be denied, since the property in question is not

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“owner-occupied.” For support, defendants request judicial notice of three documents, but none

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of these documents prove conclusively that the property in question is not owner-occupied.
As such, this order does not hold that amendment would be futile.

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For the Northern District of California

United States District Court

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CONCLUSION
For the foregoing reasons, defendants’ motion to dismiss is GRANTED. The hearing set

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for May 28, 2015 is VACATED. Plaintiffs will have until MAY 12, 2015 AT NOON, to file a

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motion, noticed on the normal 35-day calendar, for leave to amend their claims. A proposed

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amended complaint must be appended to this motion. Plaintiffs must plead their best case.

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The motion should clearly explain how the amended complaint cures the deficiencies identified

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herein, and should include as an exhibit a redlined or highlighted version identifying all changes.

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If such a motion is not filed by the deadline, this case will be closed.

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IT IS SO ORDERED.

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Dated: April 28, 2015.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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