Tyler v. National City Mortgage Co. et al

Filing 65

ORDER by Judge Hamilton granting 54 Motion to Dismiss (pjhlc1, COURT STAFF) (Filed on 1/26/2012)

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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LEROY TYLER,
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For the Northern District of California

United States District Court

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Plaintiff,

No. C 10-3415 PJH

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v.
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NATIONAL CITY MORTGAGE CO.,
et al.,

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ORDER GRANTING MOTION
TO DISMISS

Defendants.
_______________________________/

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Defendants’ motion to dismiss the second amended complaint for failure to state a

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claim came on for hearing before this court on November 30, 2011. Plaintiff Leroy Tyler

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appeared by his counsel Veronica Garcia, and defendants PNC Bank N.A. (“PNC”) as

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successor by merger to National City Bank, sued as “National City Mortgage Co.,” and U.S.

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Bank, N.A. (“U.S. Bank”), sued as “U.S. Bancorp,” appeared by their counsel Marcus

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Brown. Having read the parties’ papers and carefully considered their arguments and the

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relevant legal authority, and good cause appearing, the court hereby GRANTS the motion

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as follows for the reasons stated at the hearing.

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A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the legal

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sufficiency of the claims alleged in the complaint. Ileto v. Glock, Inc., 349 F.3d 1191,

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1199-1200 (9th Cir. 2003). Review is limited to the contents of the complaint. Allarcom Pay

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Television, Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 385 (9th Cir. 1995). To survive a

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motion to dismiss for failure to state a claim, a complaint generally must satisfy only the

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minimal notice pleading requirements of Federal Rule of Civil Procedure 8.

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Rule 8(a)(2) requires only that the complaint include a “short and plain statement of

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the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Specific

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facts are unnecessary – the statement need only give the defendant “fair notice of the claim

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and the grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing

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Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

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All allegations of material fact are taken as true. Id. at 94. However, legally

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conclusory statements, not supported by actual factual allegations, need not be accepted.
See Ashcroft v. Iqbal, 556 U.S. 662, __, 129 S.Ct. 1937, 1949-50 (2009) (courts are not

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For the Northern District of California

United States District Court

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bound to accept as true “a legal conclusion couched as a factual allegation”). A plaintiff's

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obligation to provide the grounds of his entitlement to relief “requires more than labels and

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conclusions, and a formulaic recitation of the elements of a cause of action will not do.”

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Twombly, 550 U.S. at 555 (citations and quotations omitted). Rather, the allegations in the

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complaint “must be enough to raise a right to relief above the speculative level.” Id.

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In addition, when resolving a motion to dismiss for failure to state a claim, the court

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may not generally consider materials outside the pleadings, although the court may

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consider a matter that is properly the subject of judicial notice. Lee v. City of Los Angeles,

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250 F.3d 668, 688-89 (9th Cir. 2001). Additionally, the court may consider exhibits

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attached to the complaint, see Hal Roach Studios, Inc. V. Richard Feiner & Co., Inc., 896

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F.2d 1542, 1555 n.19 (9th Cir. 1989), and documents referenced by the complaint and

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accepted by all parties as authentic. See Van Buskirk v. Cable News Network, Inc., 284

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F.3d 977, 980 (9th Cir. 2002).

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Finally, in actions alleging fraud, “the circumstances constituting fraud or mistake

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shall be stated with particularity.” Fed. R. Civ. P. 9(b). Under Rule 9(b), the complaint

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must allege specific facts regarding the fraudulent activity, such as the time, date, place,

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and content of the alleged fraudulent representation, how or why the representation was

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false or misleading, and in some cases, the identity of the person engaged in the fraud. In
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re GlenFed Sec. Litig., 42 F.3d 1541, 1547-49 (9th Cir.1994).
Plaintiff was formerly the owner of real property located in Oakland, California (“the

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property”). He owned the property for 28 years. In July 2003, plaintiff obtained a loan in

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the amount of $206,000, secured by a Deed of Trust on the property. Plaintiff fell behind in

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the payments in early 2009 due to “financial hardships,” and on March 25, 2009, a notice of

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default was recorded. The property was sold in a trustee’s sale on May 10, 2010.

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Plaintiff filed the original complaint on August 3, 2010, against National City

PNC’s motion to dismiss, with leave to amend as to certain claims. Plaintiff filed a first

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amended complaint (“FAC”) on January 31, 2011. On April 22, 2011, the court granted

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For the Northern District of California

Mortgage Co. and U.S. Bancorp. On December 23, 2010, the court granted defendant

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United States District Court

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PNC’s motion to dismiss, with leave to amend as to certain claims.

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Plaintiff filed the second amended complaint (“SAC”) on September 2, 2011,

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asserting claims of fraud, against PNC and U.S. Bank; quiet title, against U.S. Bank;

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cancellation of instruments pursuant to California Code of Civil Procedure § 2924f, against

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U.S. Bank; and unfair business practices in violation of California Business & Professions

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Code § 17200, against both defendants. Defendants seek an order dismissing all four

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causes of action. Plaintiff has conceded that he cannot state a claim for fraud or unfair

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business practices against U.S. Bank.

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The motion to dismiss the fraud and § 17200 claims against PNC is GRANTED.

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Under California law, the elements of common law fraud are “misrepresentation, knowledge

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of its falsity, intent to defraud, justifiable reliance, and resulting damages.” Gil v. Bank of

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Am., Nat’l Ass’n, 138 Cal. App. 4th 1371, 1381 (2006). The court previously dismissed the

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fraud claim alleged in the original complaint for failure to plead the elements of the claim

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with particularity, and dismissed the same claim alleged in the FAC for failure to adequately

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allege detrimental reliance.

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In repleading the claim in the SAC, plaintiff has failed to correct the deficiencies.

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Plaintiff alleges that PNC orally agreed to a loan modification on November 2, 2009, and

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told his agent that the modification agreement would be sent to plaintiff by overnight mail.
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Plaintiff asserts that rather than continuing to seek a loan modification, he simply waited for

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the modification agreement to arrive, and that the detrimental reliance consisted of ceasing

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his efforts to obtain a loan modification during this time.

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This claim is not plausible. It might possibly suggest detrimental reliance if he

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alleged that he refrained from seeking other opportunities to refinance for some relatively

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short period of time. But to say that PNC agreed to the loan modification on November 2,

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2009, and told him that the modification agreement would be sent by overnight mail, and

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that he simply kept waiting for that mail to arrive without making any further effort to contact

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PNC, and that the property was finally sold at a trustee’s sale six months later, is not
sufficient to allege detrimental reliance. The motion to dismiss the § 17200 claim against

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For the Northern District of California

United States District Court

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PNC is GRANTED, for the same reasons, as it is predicated on the identical conduct

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alleged in the cause of action for fraud.

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The motion to dismiss the quiet title and cancellation of instruments claims – which

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are alleged only against U.S. Bank – is GRANTED. Even if plaintiff had stated a basis to

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set aside the trustee’s sale and foreclosure (which he has not), he must in addition prove

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that he can tender the balance of the loan. Under California law, an action to set aside a

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trustee’s sale for irregularities in the sale must be accompanied by an offer to pay the full

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amount of the debt for which the property was security. See Panjoja v. Countrywide Home

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Loans, Inc., 640 F.Supp. 2d 1177, 1183-84 (N.D. Cal. 2009). Plaintiff nowhere alleges that

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he is willing and able to satisfy this requirement.

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At the hearing, plaintiff’s counsel argued that it would be improper for the court to

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rule on the motion, because the parties were attempting to reach a settlement. The court

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agreed to delay issuing a written decision until after defendants’ counsel had submitted a

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statement advising that plaintiff’s application for a loan modification had been either granted

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or denied. On January 17, 2012, PNC Bank filed a notice stating that it had reviewed the

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materials submitted by plaintiff in support of his loan modification application, and that it

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had determined that plaintiff did not qualify.

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Accordingly, the court now finds that the claims alleged in the SAC must be
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dismissed. The dismissal is WITH PREJUDICE, as plaintiff has been given two

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opportunities to amend, and has not persuaded the court that further amendment will cure

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the deficiencies in the complaint.

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IT IS SO ORDERED.

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Dated: January 26, 2012
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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For the Northern District of California

United States District Court

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