Lundy v. Selene Finance, LP et al
Filing
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ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS by Judge Jon S. Tigar granting in part and denying in part 57 Motion to Dismiss; granting in part and denying in part 31 Motion to Dismiss. (wsn, COURT STAFF) (Filed on 4/26/2016)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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JOHN F. LUNDY,
Case No. 15-cv-05676-JST
Plaintiff,
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v.
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SELENE FINANCE, LP, et al.,
Defendants.
ORDER GRANTING IN PART AND
DENYING IN PART MOTIONS TO
DISMISS
Re: ECF Nos. 31, 57
United States District Court
Northern District of California
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Before the Court are two Motions to Dismiss, filed by Defendants JPMorgan Chase Bank
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(“Chase”) and Bank of America, N.A. (“BANA”). ECF Nos. 31, 57. The motions are granted in
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part and denied in part.
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I.
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BACKGROUND
This is the second set of motions to dismiss that the Court has addressed in this case. In its
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previous order, dated March 17, 2016, the Court granted in part and denied in part Motions to
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Dismiss filed by Defendants Selene Finance LP and Wilmington Savings Fund Society, FSB, and
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by Defendant MTC Financial. ECF No. 73; Lundy v. Selene Finance, LP, No. 15-cv-05676-JST,
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2016 WL 1059423 (N. D. Cal. Mar. 17, 2016) (“March 17, 2016 Order”). The same order also
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denied a Motion to Expunge Lis Pendens. Id. The Court gave Plaintiff twenty-one days to amend
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his complaint, and Plaintiff has not done so. Id. Accordingly the operative complaint and
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allegations, summarized below, remain the same as described in the March 17, 2016 Order.
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A.
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For purposes of deciding this motion, the Court accepts as true the material allegations of
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Factual Background
the Complaint. Moyo v. Gomez, 40 F.3d 982, 984 (9th Cir. 1994).
On December 21, 2005, Plaintiff John Lundy obtained a mortgage loan secured by a Deed
of Trust (“DOT”) from Defendant Washington Mutual Bank, FA (“WAMU”) in the amount of
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$1,134,000.00 (“Mortgage”), in order to purchase a single family home in San Rafael, California.
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ECF No. 1-1 (“Complaint”) ¶ 9. The DOT was recorded in Marin County on December 30, 2005.
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Id. The DOT identifies WAMU as the lender and loan servicer, and conveys title and power of
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sale to California Reconveyance Corporation (“CRC”) as the trustee. Id.
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Lundy alleges that, on or before March 29, 2007, WAMU sold the Mortgage to RESI
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Finance DE Corporation 2007-B (“RESI”). Id. ¶ 11. Lundy claims that RESI then sold the
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Mortgage to Wells Fargo Bank, N.A. as the trustee for the investors in RESI Finance Limited
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Partnership, Mortgage Pass-through Certificates, Series 2007-B (“RESI 2007-B Trust”). Id.
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According to Lundy, Defendant JPMorgan Chase Bank, National Association (“Chase”)
then acquired assets of the defunct WAMU on September 25, 2008. Id. ¶ 10. As successor in
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United States District Court
Northern District of California
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interest to WAMU, Chase recorded on November 4, 2010 an Assignment of Deed of Trust dated
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November 3, 2010 (“Assignment 1”) in Marin County, transferring the DOT to Defendant Bank of
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America, National Association (“BANA”). Id. ¶ 13. After Chase transferred the DOT to BANA,
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CRC executed and recorded a Notice of Default, which Plaintiff alleges was defective because it
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was “pursuant to the foregoing void assignment.” Id. ¶ 19. CRC subsequently issued five
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separate Notices of Trustee’s Sale for the property. Id. ¶ 15.
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The gist of Lundy’s allegations is that Chase had no interest in the DOT to assign to
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BANA or anyone else in 2010 because WAMU had transferred all beneficial interests in the DOT
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to RESI before Chase acquired any assets from WAMU. Id. ¶ 13. Therefore, Assignment 1 and
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all documents stemming therefrom are fatally defective, null, and void. Id.
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The chain of assignments for the DOT was as follows. On the same date Chase recorded
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Assignment 1, CRC recorded in Marin County a Notice of Default and Election to Sell (“NOD
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1”). Id. ¶ 14. Between February 2011 and August 2013, CRC recorded five Notices of Trustee’s
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Sale, stating that it would sell the Property at a public auction sale to pay for Lundy’s unpaid
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balance and other charges under the DOT. Id. ¶ 15.
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On January 29, 2014, Chase, as attorney-in-fact for BANA, recorded a Substitution of
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Trustee dated January 16, 2014 (“SOT 1”) in Marin County, under which ALAW substituted CRC
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as trustee of the DOT. Id. ¶ 16. On March 11, 2015, BANA recorded in Marin County an
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Assignment of Deed of Trust dated February 5, 2015 (“Assignment 2”), transferring all beneficial
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interests in the DOT to Wilmington Savings Fund Society, FSB, doing Business as Christiana
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Trust, not in its individual capacity, but solely as trustee for BCAT 2014-12TT (“Wilmington”).
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Id. ¶ 17.
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On February 26, 2015, and July 2, 2015, Lundy sent Selene Finance, LP (“Selene”) and
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Wilmington Qualified Written Requests for information concerning the servicing of his mortgage
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loan, pursuant to the Real Estate Settlement Procedures Act (“RESPA”) Section 2605(e), 12
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U.S.C. § 2506(e). Id. ¶ 18-19. Among other things, Lundy requested information on all
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assignments of the Mortgage in order to establish the chain of title. Id. ¶ 18. Lundy claims, and
Defendants do not deny, that neither Selene nor Wilmington ever responded to the Qualified
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United States District Court
Northern District of California
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Written Requests, in violation of RESPA. Id. ¶ 18-19.
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On July 10, 2015, Selene, as servicer and attorney-in-fact for Wilmington, recorded a
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Substitution of Trustee dated July 2, 2015 (“SOT 2”) in Marin County. Id. at 20. Under SOT 2,
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MTC Financial Inc. dba Trustee Corps (“MTC”) substituted ALAW as trustee under the DOT. Id.
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On August 14, 2015, MTC recorded a Notice of Default dated August 13, 2015 (“NOD 2”) with
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the Marin County Recorder’s Office. Id. ¶ 21.
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B.
Procedural History
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Lundy filed the instant action in Marin County Superior Court in California on November
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6, 2015. See id. Chase removed the action to this Court on December 11, 2015. Id. A total of
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four motions to dismiss have been filed, by Selene and Wilmington (“Selene/Wilmington”), ECF
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No. 28, by Chase, ECF No. 31, by MTC, ECF No. 33, and by BANA, ECF No. 57.
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Selene/Wilmington also filed a Motion to Expunge Lis Pendens. ECF No. 26.
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On March 4, 2016, this Court issued an Order to Show Cause to the parties as to why this
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case should not be stayed as a result of the recently-issued California Supreme Court opinion in
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Yvanova v. New Century Mortgage Corp., __ P.3d __, No. S218973, 2016 WL 639526 at *3 (Cal.
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Feb. 18, 2016), and the pending opinion to be issued in Keshtgar v. U.S. Bank, 334 P.3d 686 (Cal.
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2014) (granting petition for review). ECF No. 63. On March 11, 2016, both Selene/Wilmington
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and MTC filed briefs in opposition to a stay. ECF Nos. 66, 68.
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In light of these oppositions, the Court addressed Selene/Wilmington’s two motions and
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MTC’s motion in its March 17, 2016 Order. That order dismissed all claims against MTC and
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five of Plaintiffs’ nine claims against all Defendants. March 17, 2016 Order, 2016 WL 1059423 at
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*19. In light of the remaining claims in the case, the Court denied Selene/Wilmington’s Motion to
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Expunge Lis Pendens. Id.
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Plaintiff was granted leave to file an amended complaint within twenty-one days of the
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March 17, 2016 Order but declined to do so. In addition, Plaintiff also indicated on March 30,
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2016 that he would not oppose Chase’s Motion to Dismiss in light of a settlement that the parties
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asserted was being finalized. ECF No. 76. Because no party has informed the Court of a
completed settlement, the Court will resolve Chase’s Motion to Dismiss in addition to BANA’s
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United States District Court
Northern District of California
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Motion to Dismiss. Chase filed its motion on January 15, 2016, ECF No. 31, and BANA filed its
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motion on February 18, 2016. In addition, both Chase and BANA filed requests for judicial notice
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in support of their motions. ECF Nos. 32, 58.
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II.
LEGAL STANDARD
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A.
Motion to Dismiss
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Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the
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failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6).
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“Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal
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theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp.
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Med. Ctr., 521 F.3d 1097, 1104 (9th Cir.2008). Dismissal is also proper where the complaint
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alleges facts that demonstrate that the complaint is barred as a matter of law. See Balistreri v.
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Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1990); Jablon v. Dean Witter & Co., 614 F.2d
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677, 682 (9th Cir.1980).
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For purposes of a motion to dismiss, “all allegations of material fact are taken as true and
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construed in the light most favorable to the nonmoving party.” Cahill v. Liberty Mut. Ins. Co., 80
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F.3d 336, 337–38 (9th Cir.1996). However, “[w]hile a complaint attacked by a Rule 12(b)(6)
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motion to dismiss does not need detailed factual allegations, a Plaintiff's obligation to provide the
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‘grounds' of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic
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recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S.
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544, 555 (2007). To survive a motion to dismiss, a pleading must allege “enough fact to raise a
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reasonable expectation that discovery will reveal evidence” to support the allegations. Id. at 556.
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III.
DISCUSSION
The complaint originally brought nine causes of action, of which only four remain
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following the Court’s March 17, 2016 Order. These four causes of action, identified by their
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original numbering in the complaint are: (I) Wrongful Foreclosure; (III) Violation of Cal. Civil
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Code §§ 2923.55(a) and (b)(1)(B); (VI) Violation of Cal. Civil Code § 2624.17; and (VII)
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Violation of the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200.1 Of these,
only the claims for wrongful foreclosure and violation of the UCL are brought against Defendants
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United States District Court
Northern District of California
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Chase and BANA. Though Plaintiff originally brought two additional claims against Chase and
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BANA for unjust enrichment and for accounting, these claims were dismissed and Plaintiff did not
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file an amended complaint re-asserting them. Therefore, the Court will only address Defendants’
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arguments in regards to the claims for wrongful foreclosure and violation of the UCL.
As discussed further below, the majority of arguments raised by Defendants Chase and
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BANA were addressed by the Court in its March 17, 2016 Order. The same is true for Plaintiff, as
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he did not respond to Chase’s motion and his opposition to BANA’s motion appears to be largely
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copied from his oppositions to Selene/Wilmington’s and MTC’s earlier motions, despite the
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significant differences in the various Defendants’ positions. ECF No. 60. Thus, the Court will not
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again analyze issues it has previously resolved; instead, it will refer to its March 17, 2016 Order
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when appropriate.
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A.
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Before addressing the merits of the remaining two claims against Chase and BANA, the
Judicial Notice
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Court addresses the requests for judicial notice filed by the two Defendants. Chase requests that
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the Court take judicial notice of a document described as a Purchase and Assumption Agreement
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The five dismissed claims are, as originally numbered in the complaint: (II) Quiet Title; (IV)
Violation of the RESPA, 12 U.S.C. § 2601 et seq.; (V) Violation of the California Residential
Mortgage Lending Act (CRMLA), Cal. Fin. Code § 50505; (VIII) Unjust Enrichment; and (IX)
Accounting
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between the Federal Deposit Insurance Corporation and Chase. ECF No. 32. Plaintiff did not
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oppose the request. The document is a publicly available record and was referenced by Plaintiff in
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his complaint. Id. at 2-3. Accordingly, the Court may take notice of the document, though it may
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not take notice of allegations asserted in it. Lee v. City of Los Angeles, 250 F.3d 668, 689-90 (9th
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Cir. 2001.
BANA requests the Court take judicial notice of a list of ten documents related to the
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various assignments and notices alleged by Plaintiff. ECF No. 58. Most of these documents are
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subjects of other requests for judicial notice filed by other Defendants, and which were granted by
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the Court’s prior order. See March 17, 2016 Order, 2016 WL 1059423, at *3; ECF No. 67; ECF
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No. 27. Plaintiff’s response states that he does not oppose judicial notice of these documents but
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United States District Court
Northern District of California
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objects to the Court’s accepting as true the Defendants’ interpretations and legal conclusions
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drawn from the documents. ECF No. 61. Because these documents are publicly available records
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and are referenced in the pleading papers, the Court may take judicial notice of them.
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Both Chase’s and BANA’s requests for judicial notice are granted.
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B.
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Because Chase and BANA offer many of the same arguments in response to both claims,
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Wrongful Foreclosure
the Court addresses the two motions together.
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First, both Chase and BANA argue that Plaintiff lacks standing to challenge the
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assignments underlying the foreclosure procedure. ECF No. 31 at 12-14; ECF No. 57 at 10-11.
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The Court has already addressed this argument in its March 17, 2016 Order. That order noted the
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split in California courts regarding this question and examined the California Supreme Court’s
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recent decision addressing this split, Yvanova v. New Century Mortgage Corp., 62 Cal. 4th 919
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(2016), as well as other relevant case law. March 17, 2016 Order, 2016 WL 1059423, at *8-*14.
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The Court concluded that Plaintiff had standing to bring his wrongful foreclosure claim. Id. at
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*14.
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Chase and BANA rely, as Selene/Wilmington and MTC did, on Jenkins v. JP Morgan
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Chase Bank, N.A., 216 Cal. App. 4th 497 (2013) and its progeny to argue that Plaintiff lacks
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standing. ECF No. 31 at 12; ECF No. 57 at 10. These cases have been rejected by Yvanova and
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by this Court in its March 17, 2016 Order. Similarly, Chase argues that Plaintiff has failed to
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demonstrate prejudice, relying on the case of Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App.
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4th 256, 272 (2011). ECF No. 31 at 14. This argument, too, was rejected by the Court in its prior
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order, March 17 2016 Order, 2016 WL 1059423 at *13-14, and the California Supreme Court
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disapproved of Fontenot in Yvanova.
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Second, both Chase and BANA argue that Plaintiff’s wrongful foreclosure claim should be
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dismissed because no foreclosure has occurred. ECF No. 31 at 13; ECF No. 57 at 11. As the
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Court explained in its prior order, this argument is not supported by the case law. March 17 2016
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Order, 2016 WL 1059423 at *7.
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Third, Chase and BANA also raise the contention that Plaintiff may not bring a wrongful
United States District Court
Northern District of California
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foreclosure claim without alleging either tender of the outstanding debt or the ability to tender.
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While it is true that California generally applies a tender rule to wrongful foreclosure cases, many
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courts have recognized exceptions to it, especially in circumstances such as Plaintiff’s. March 17
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2016 Order, 2016 WL 1059423 at *6-*7. Applying these exceptions, the Court concluded that
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application of the tender rule was not appropriate here. Id.
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Chase and BANA correctly note, however, that Plaintiff’s claim identifies no way in which
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either entity has any current affiliation with the foreclosure proceedings against him. ECF No. 31
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at 13; ECF No. 57 at 9. While Plaintiff alleges in his first cause of action that Chase’s conveyance
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to BANA was void because it lacked any interest in Plaintiff’s loan, he does not allege Chase’s
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involvement in the foreclosure. Complaint ¶ 30. Similarly, BANA’s assignment to Wilmington is
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alleged to be void, but Plaintiff does not allege any further involvement by BANA in the events
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leading to the foreclosure. Id. ¶ 17. Rather, it appears that Plaintiff is alleging that Chase and
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BANA were assigned, and then subsequently assigned away – in an allegedly void fashion – their
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interests in Plaintiff’s property. Plaintiff offers no response to these arguments in his opposition to
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BANA’s motion and did not file a response to Chase’s motion. The Court concludes that Plaintiff
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has not plausibly alleged a wrongful foreclosure claim against Chase or BANA. The motions to
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dismiss the wrongful foreclosure claims against Chase and BANA are granted without prejudice.
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Finally, both Chase and BANA note that Plaintiff alleges within his wrongful foreclosure
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claim that “all defendants” have violated Cal. Civ. Code § 2923.55(b)(1)(B), which requires that a
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“mortgage servicer” shall send notice to the borrower that she may request certain information
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regarding her mortgage. Complaint ¶ 35-36. This allegation is puzzling for multiple reasons.
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First, as both Chase and BANA note, the allegation against “all defendants” does not appear to be
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properly brought against them, as Plaintiff does not allege that either of them is a “mortgage
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servicer” on his property. ECF No. 31 at 14 n.3; ECF No. 57 at 11. Moreover, Plaintiff did bring
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a separate claim under Cal. Civ. Code § 2933.55(b)(1)(B) for the same alleged violation, but does
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not assert it against either Chase or BANA. Complaint ¶¶ 49-53. It appears, therefore, that the
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allegations under Plaintiff’s wrongful foreclosure claim that Chase and BANA have violated
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section 2923.55(b)(1)(B) are either in error or without plausible support. Accordingly, to the
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United States District Court
Northern District of California
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extent Plaintiff seeks to raise claims under section 2923.55(b)(1)(B) against either Chase or
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BANA, those claims are dismissed.
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C.
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A claim under the UCL requires a showing of either “an (1) ‘unlawful, unfair, or
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fraudulent business act or practice,’ or (2) ‘unfair, deceptive, untrue, or misleading advertising.’”
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Stewart v. Life Ins. Co. of N. Am., 388 F. Supp. 2d 1138, 1143 (E.D. Cal. 2005) (quoting Lippitt
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v. Raymond James Fin. Servs., 340 F.3d 1033, 1043 (9th Cir. 2003).
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UCL
Both Defendants offer similar arguments in regards to Plaintiff’s UCL claim. They
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contend that Plaintiff has failed to identify specific conduct that would violate any prong of the
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UCL. ECF No. 31 at 17-19; ECF No. 57 at 15-17. BANA also argues that Plaintiff lacks standing
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because he has not alleged an injury in fact. ECF No. 57 at 15.
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In its prior March 17, 2016 Order, the Court denied Selene/Wilmington’s motion to
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dismiss, which similarly argued that Plaintiff’s claim should be dismissed due to failure to allege
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specific conduct by Defendants and to allege an injury. March 17, 2016 Order, 2016 WL
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1059423, at *17-18. It noted that Plaintiff had in fact identified specific conduct that he asserted
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violated the UCL, including incorporation of his other counts, some of which remain in the case.
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Id. For example, Plaintiff continues to possess a claim that Selene/Wilmington unlawfully
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violated section 2923.55(b)(1)(B). Moreover, the Court noted that Plaintiff had alleged injuries8
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in-fact that resulted from the initiation of foreclosure proceedings. Id.
The UCL claim against Chase and BANA, however, is weaker. The Court has granted
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both Defendants’ motions to dismiss Plaintiff’s wrongful foreclosure claim against them, and
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therefore no other cause of action remains against them. The only other specific conduct by Chase
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and BANA identified by Plaintiff in his UCL claim is the execution of “false and misleading
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documents,” such as their allegedly void Assignments of Deed of Trust. Complaint ¶ 75. As noted
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above, however, it is unclear how either Chase or BANA is involved in the foreclosure
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proceedings at the center of this case, other than their participation in the chain of assignments
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underlying the foreclosure initiation. For this reason, Plaintiff has not demonstrated that Chase’s
or BANA’s conduct was related to the injuries-in-fact alleged to have been caused by the
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United States District Court
Northern District of California
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foreclosure proceedings. See Complaint ¶¶ 71, 77.
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Accordingly, Plaintiff’s UCL claim against Chase and BANA is dismissed without
prejudice.
CONCLUSION
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Defendants’ Motions to Dismiss are granted without prejudice. All counts against both
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Chase and BANA are therefore dismissed. Plaintiff may file an amended complaint within 14
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days of the date of this order. Any amended complaint, however, may only seek to amend the
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claims dismissed in this order.
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IT IS SO ORDERED.
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Dated: April 26, 2016
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______________________________________
JON S. TIGAR
United States District Judge
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