Manantan v. National City Mortgage et al
Filing
37
ORDER GRANTING DEFENDANTS 5 , 8 MOTIONS TO DISMISS AND DENYING AS MOOT DEFENDANT PNCS 9 MOTION TO STRIKE. Case Management Statement due by 9/29/2011. Case Management Conference set for 10/6/2011 02:00 PM. Motion Hearing set for 10/6/2011 02:00 PM before Hon. Claudia Wilken. Signed by Judge Claudia Wilken on 7/28/2011. (ndr, COURT STAFF) (Filed on 7/28/2011)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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8
REGINA MANANTAN,
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United States District Court
For the Northern District of California
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No. C-11-00216 CW
Plaintiff,
v.
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NATIONAL CITY MORTGAGE, et al.,
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Defendants.
/
13
ORDER GRANTING
DEFENDANTS’
MOTIONS TO
DISMISS (Docket
Nos. 5 and 8) AND
DENYING AS MOOT
DEFENDANT PNC’S
MOTION TO STRIKE
(Docket No. 9)
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15
Defendants GMAC Mortgage, LLC and ETS Services, LLC move to
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dismiss the complaint of Plaintiff Regina Manantan.
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Bank, N.A., as successor by merger to National City Bank, sued as
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National City Mortgage (NCM) and National City Bank of Indiana
19
(NCB), separately moves to dismiss and moves to strike portions of
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Plaintiff’s complaint.
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considered all of the papers filed by the parties, the Court grants
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the motions to dismiss and denies as moot the motion to strike.
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Defendant PNC
Plaintiff opposes the motions.
Having
BACKGROUND
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Plaintiff alleges that in April 2006 she engaged the services
25
of mortgage broker American Prime Financial (APF) to refinance the
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existing home mortgage loan on her primary residence located at
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2671 Hacienda Street in San Mateo, California.
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APF prepared a loan application on Plaintiff’s behalf, which was
Compl. ¶¶ 9, 12.
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approved by NCM.
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an adjustable rate note in the amount of $825,000, naming NCM as
3
the lender and payee, and a deed of trust securing repayment of the
4
Note, naming NCB as the trustee.
5
Compl. ¶ 13.
On July 7, 2006, Plaintiff executed
Compl. ¶¶ 16-17.
On May 18, 2010, NCB recorded an “Assignment of Deed of Trust”
6
assigning its rights under the deed to GMAC.
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On August 13, 2010, GMAC recorded a “Substitution of Trustee,”
8
naming ETS as the trustee in place of NCB.
9
same date, ETS recorded a “Notice of Default and Election to Sell
Compl. Ex. E at 3.
Compl. Ex. C.
On the
United States District Court
For the Northern District of California
10
under Deed of Trust.”
11
recorded a “Notice of Trustee’s Sale” of the property to be held on
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December 9, 2010.
13
Compl. Ex. D.
On November 12, 2010, ETS
Compl. ¶ 24.
Plaintiff alleges that APF1 and NCM failed to (1) explain a
14
mortgage broker fee paid by NCM to APF, Compl. ¶ 18.1; (2) explain
15
the consequences of the Yield Spread Premium included in
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Plaintiff’s loan, Compl. ¶ 18; (3) make disclosures required by
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California Civil Code § 1916.7(10)(c), Compl. ¶ 19; and (4) verify
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Plaintiff’s income and ability to repay the loan, Compl. ¶¶ 13, 15.
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Plaintiff alleges that GMAC and ETS lack authority to carry
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out the pending foreclosure sale of her property because (1) NCM
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committed fraud in the origination of Plaintiff’s loan, Compl.
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¶¶ 56-60; (2) GMAC is not the “holder in due course” of the note,
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Compl. ¶¶ 49-50; (3) Defendants have not followed the correct
24
procedures to assign GMAC as beneficiary under the deed and to
25
substitute ETS as the trustee of the deed, Compl. ¶ 62; and
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Although many of Plaintiff’s allegations concern the conduct
of APF, APF is not a named defendant in this action.
2
1
(4) Defendants did not post the Notice of Trustee’s Sale in a
2
public place or publish it in a newspaper of general circulation,
3
Compl. ¶ 61.
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LEGAL STANDARD
5
A complaint must contain a “short and plain statement of the
6
claim showing that the pleader is entitled to relief.”
7
Civ. P. 8(a).
8
failure to state a claim, dismissal is appropriate only when the
9
complaint does not give the defendant fair notice of a legally
Fed. R.
On a motion to dismiss under Rule 12(b)(6) for
United States District Court
For the Northern District of California
10
cognizable claim and the grounds on which it rests.
11
Corp. v. Twombly, 550 U.S. 544, 555 (2007).
12
the complaint is sufficient to state a claim, the court will take
13
all material allegations as true and construe them in the light
14
most favorable to the plaintiff.
15
F.2d 896, 898 (9th Cir. 1986).
16
inapplicable to legal conclusions; "threadbare recitals of the
17
elements of a cause of action, supported by mere conclusory
18
statements," are not taken as true.
19
___, 129 S.Ct. 1937, 1949-50 (2009) (citing Twombly, 550 U.S. at
20
555).
21
Bell Atlantic
In considering whether
NL Indus., Inc. v. Kaplan, 792
However, this principle is
Ashcroft v. Iqbal, ___ U.S.
Although the court is generally confined to consideration of
22
the allegations in the pleadings, when the complaint is accompanied
23
by attached documents, such documents are deemed part of the
24
complaint and may be considered in evaluating the merits of a Rule
25
12(b)(6) motion.
26
1267 (9th Cir. 1987).
Durning v. First Boston Corp., 815 F.2d 1265,
27
When granting a motion to dismiss, the court is generally
28
3
1
required to grant the plaintiff leave to amend, even if no request
2
to amend the pleading was made, unless amendment would be futile.
3
Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911
4
F.2d 242, 246-47 (9th Cir. 1990).
5
would be futile, the court examines whether the complaint could be
6
amended to cure the defect requiring dismissal "without
7
contradicting any of the allegations of [the] original complaint."
8
Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990).
9
Leave to amend should be liberally granted, but an amended
In determining whether amendment
United States District Court
For the Northern District of California
10
complaint cannot allege facts inconsistent with the challenged
11
pleading.
Id. at 296-97.
12
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DISCUSSION
I.
Liability for Causes of Action Accruing at Origination
14
GMAC and ETS move to dismiss Plaintiff’s Third, Fourth, Fifth,
15
Sixth, Seventh, Eighth, Ninth, and Twelfth Causes of Action because
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they arise from conduct that took place at the time the loan
17
originated, before GMAC was assigned the rights under the deed and
18
ETS was substituted as trustee.
19
ETS are liable for these causes of action because they “ratified
20
the wrongful conduct of the originating Defendants.”
21
4.
Plaintiff contends that GMAC and
Pl. Opp. at
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Plaintiff cites River Colony Estates Gen. Partnership v.
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Bayview Fin. Trading Group, 287 F. Supp. 2d. 1213 (S.D. Cal. 2003),
24
for the proposition that a party’s knowledge of a failure to
25
disclose loan terms “coupled with substantial assistance” by that
26
party supports liability “for aiding and abetting breach of
27
fiduciary duty.”
28
Pl. Opp. at 4.
River Colony actually states: “To
4
1
establish liability for aiding and abetting, plaintiffs must prove:
2
(1) the fact of perpetration of the overall improper scheme;
3
(2) the aider and abettor's knowledge of such a scheme; and (3) the
4
aider and abettor's substantial assistance furthered the scheme.”
5
287 F. Supp. 2d at 1225.
6
Here, Plaintiff has not alleged that GMAC and ETS had
7
knowledge of the scheme or provided any assistance to the
8
originators of her loan, let alone “substantial assistance” in
9
furtherance of the allegedly improper acts.
As Plaintiff admits,
United States District Court
For the Northern District of California
10
GMAC and ETS were not involved in the origination of the loan.
11
Opp. at 4.
12
assistance to the other Defendants at that time.
13
Pl.
Thus, they could not have provided substantial
Accordingly, Plaintiff’s Third, Fourth, Fifth, Sixth, Seventh,
14
Eighth, Ninth, and Twelfth Causes of Action fail to state a claim
15
against GMAC and ETS, and their motion to dismiss these claims is
16
granted with leave to amend.
17
II.
Statute of Limitations
18
All Defendants move to dismiss Plaintiff’s Third, Fourth,
19
Fifth, Sixth, Seventh, Eighth, Ninth, and Eleventh Causes of Action
20
as barred by the applicable statutes of limitations.
21
The relevant statutes of limitations are summarized as
22
follows:
23
California Unfair Competition Law (UCL), California Business &
24
Professions Code § 17200 et seq., is subject to a four year statute
25
of limitations.
26
of Action, for “Reformation/Revision,” the Sixth, for “Damages By
27
Reason of Deceit,” and the Seventh, for “Fraud,” are all based on
28
The Third Cause of Action, for violation of the
Cal. Bus. & Prof. Code § 17208.
5
The Fourth Cause
1
underlying allegations of fraud, as Plaintiff concedes.
2
at 4-6.
3
limitations pursuant to California Code of Civil Procedure
4
§ 338(d).
5
Civil Code § 1916.7(c), appears to be subject to a three year
6
limitations period pursuant to California Code of Civil Procedure
7
§ 338(a).
8
violations of 15 U.S.C. § 1639(h) or 12 C.F.R. § 226.34, is subject
9
to a two year limitations period.
Pl. Opp.
They are therefore subject to a three year statute of
The Fifth Cause of Action, for violation of California
The Eighth Cause of Action, for negligence based on
Cal. Code Civ. Proc. § 339(1);
United States District Court
For the Northern District of California
10
Jackson v. Cedars-Sinai Med. Ctr., 220 Cal. App. 3d 1315, 1319-21
11
(1990) (holding that where a cause of action based on a statute
12
“sounds in tort,” the statute of limitations for tort actions
13
rather than statutory violations applies).
14
Action, for breach of the covenant of good faith and fair dealing,
15
and the Eleventh Cause of Action, for rescission/cancellation of
16
the loan agreement, are contract actions and are both subject to a
17
four year statute of limitations period pursuant to California Code
18
of Civil Procedure § 337.
19
The Ninth Cause of
Defendants point out that the conduct alleged in these causes
20
of action all was committed on or before July 2006, when
21
Plaintiff’s loan originated, while she filed this suit in December
22
2010.
23
time-barred.
24
action were filed after the statutes of limitations had run, but
25
argues that, because she only recently discovered the existence of
26
her claims, at least some of them are subject to equitable tolling.
27
Plaintiff bases her equitable tolling argument on Fonua v.
28
6
Defendants argue, therefore, that these causes of action are
Plaintiff does not dispute that these causes of
1
First Allied Funding, 2009 WL 816291 (N.D. Cal.), arguing that the
2
time to bring an action is calculated from the time a plaintiff
3
discovers the fraudulent conduct.
4
than just the plaintiff’s ignorance of the claims.
5
6
7
8
Equitable tolling requires more
In general,
equitable tolling may be applied if, despite all due
diligence, a plaintiff is unable to obtain vital information
bearing on the existence of his claim. . . . If a reasonable
plaintiff would not have known of the existence of a possible
claim within the limitations period, then equitable tolling
will serve to extend the statute of limitations for filing
suit until the plaintiff can gather what information he needs.
Santa Maria v. Pacific Bell, 202 F.3d 1170, 1178 (9th Cir. 2000).
10
United States District Court
For the Northern District of California
9
The court in Fonua agreed that equitable tolling requires that a
11
plaintiff “might not have had a reasonable opportunity to discover”
12
his or her claims within the statute of limitations period.
13
WL 816291, at *2 (citing King v. State of Cal., 784 F.2d 910, 915
14
(9th Cir. 1986).
15
2009
Plaintiff does not allege that she did not have a “reasonable
16
opportunity” to discover the conduct alleged in her complaint, or
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that she was unable to obtain the information she needed before the
18
statute of limitations expired on her claims.
19
that she had doubts that NCM and APF had complied with all
20
applicable laws in issuing her loan, and in September 2010 engaged
21
the services of a forensic loan examiner, who informed her of the
22
alleged violations.
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doubt the legality of NCM and APF’s actions, when her doubts arose
24
or why she waited until September 2010 to have her loan documents
25
examined.
26
September 2010, two significant events took place:
27
Plaintiff stopped making payments on her mortgage, and five months
28
Instead, she alleges
Plaintiff does not specify what led her to
According to the Complaint, between July 2006 and
7
In March 2010,
1
later, in August, she received the Notice of Default.
2
Plaintiff does not allege that the Notice gave her any new
3
information that led to doubts about the origination of the loan.
4
Nor does Plaintiff allege that she was prevented from engaging the
5
services of the forensic loan examiner at an earlier point in time.
6
Indeed, Plaintiff admits that she was given the loan documents
7
after the transaction closed.
8
July 2006 she was in possession of all the information she provided
9
to the forensic loan examiner in September 2010.
United States District Court
For the Northern District of California
10
However,
It appears that in or shortly after
Plaintiff argues that “merely having the papers does not give
11
Plaintiff notice that he [sic] has been defrauded.”
12
District courts in this circuit have split on the applicability of
13
equitable tolling in the context of residential mortgages.
14
Diaz v. Bank of America Home Loan Servicing, 2010 WL 5313417, at
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*3-4. (C.D. Cal.) (noting cases where failure to translate mortgage
16
terms into Spanish for non-English speakers held sufficient to
17
invoke equitable tolling, but ultimately agreeing with cases
18
denying equitable tolling where plaintiffs failed to act diligently
19
to have their loan documents translated or reviewed).
20
applicable here is Ortega v. Wells Fargo Bank, 2010 WL 1904878
21
(S.D. Cal.).
22
plaintiff, who submitted documents for “forensic review” two years
23
after receiving his loan and months after he stopped making
24
mortgage payments.
25
in [plaintiff’s] loan would have been apparent from the face of the
26
documents he received at closing.
27
finding the alleged irregularities preclude his . . . claim.”
28
Pl. Opp. at 6.
See
Particularly
In Ortega, the court denied equitable tolling to the
Id. at *3.
The court held, “Any irregularities
[Plaintiff’s] belated efforts at
8
Id.
1
The Court finds the reasoning of Ortega persuasive.
From the
2
time she received the loan documents, Plaintiff appears to have
3
been in possession of all the facts needed for the forensic loan
4
examiner to uncover the alleged violations more than four years
5
later.
6
her loan only after she stopped making payments and had received
7
the Notice of Default demonstrates that she was less than diligent
8
in uncovering her claims.
9
the basis for equitable tolling of the statutes of limitations for
The fact that she came to have doubts about the validity of
Because the Complaint does not allege
United States District Court
For the Northern District of California
10
Plaintiff’s Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth,
11
and Eleventh Causes of Action, Defendants’ motion to dismiss these
12
causes of action is granted with leave to amend.
13
III. Quiet Title
14
Plaintiff’s Tenth Cause of Action asks that title in the
15
property be quieted in her favor.
16
under California law, a plaintiff’s complaint must contain: (1) a
17
description of the property; (2) the title of the plaintiff and its
18
basis; (3) the adverse claims to that title; (4) the date as of
19
which the determination is sought; and (5) a prayer for relief of
20
quiet title.
21
plaintiff seeking to quiet title in the face of foreclosure must
22
allege tender of an offer of the amount borrowed.
23
Wash. Mut. Bank, 637 F. Supp. 2d 700, 712 (N.D. Cal. 2009); Arnolds
24
Mgmt. Corp. v. Eischen, 158 Cal. App. 3d 575, 578-79 (1984) (claim
25
to set aside trustee's sale must be accompanied by offer to pay
26
full amount of debt for which the property was security).
27
28
To state a claim for quiet title
Cal. Code Civ. Proc. § 761.020.
In addition, a
Mangindin v.
Defendants argue that the claim for quiet title fails because
9
1
Plaintiff has not alleged or argued that she can tender the amount
2
of the indebtedness.
3
“antiquated and unreasonable,” and contends that she is “not
4
required to ‘do equity’ or make tender on a contract that has been
5
procured through fraud.”
6
Truesdail v. Lewis, 45 Cal. App. 2d 718 (1941), in which the court
7
allowed an action to quiet title to proceed without an allegation
8
of tender.
However, Truesdail does not support Plaintiff’s
9
argument.
The court in Truesdail made clear that any final
Plaintiff responds that the tender rule is
Pl. Opp. at 16.
Plaintiff cites
United States District Court
For the Northern District of California
10
determination quieting title in the plaintiff’s favor would be
11
“subject to his paying [defendant] the money which he received on a
12
void transaction.”
Id. at 722.
13
Plaintiff argues that if the Court does not grant her quiet
14
title and allows the foreclosure sale to proceed, tender will be
15
satisfied upon foreclosure.
16
if the Court does grant her quiet title, she still would be
17
required to tender the loan amount.
18
borrower without tender of the loan amount would be inequitable to
19
the lender.
20
loaned to the borrower, but also of title to the property it took
21
as security for the loan.
22
transaction between Plaintiff and Defendants, but it would not
23
allow Plaintiff to gain quiet title and keep the money she
24
borrowed.
25
Plaintiff fails to acknowledge that,
To vest title in a defaulting
The lender would be deprived not only of the money it
Defendants’ alleged fraud may void the
Because Plaintiff has not alleged that she can now or will in
26
the future be able to tender the amount borrowed, Defendants’
27
motion to dismiss her Tenth Cause of Action is granted with leave
28
10
1
to amend.
2
IV. Unjust Enrichment
3
PNC argues that Plaintiff’s Twelfth Cause of Action should be
dismissed because “unjust enrichment” is not a cause of action in
5
California.
6
there is an independent cause of action for unjust enrichment.
7
Baggett v. Hewlett-Packard Co., 582 F. Supp. 2d 1261, 1270-71 (C.D.
8
Cal. 2007) (applying California law).
9
enrichment is not a cause of action, or even a remedy, but rather a
10
United States District Court
For the Northern District of California
4
general principle, underlying various legal doctrines and remedies.
11
McBride v. Boughton, 123 Cal. App. 4th 379, 387 (2004).
12
McBride, the court construed a "purported" unjust enrichment claim
13
as a cause of action seeking restitution.
14
two potential bases for a cause of action seeking restitution:
15
(1) an alternative to breach of contract damages when the parties
16
had a contract which was procured by fraud or is unenforceable for
17
some reason; and (2) where the defendant obtained a benefit from
18
the plaintiff by fraud, duress, conversion, or similar conduct and
19
the plaintiff chooses not to sue in tort but to seek restitution on
20
a quasi-contract theory.
21
implies a contract, or quasi-contract, without regard to the
22
parties' intent, to avoid unjust enrichment.
23
California courts appear to be split as to whether
Id. at 388.
One view is that unjust
Id.
In
There are at least
In the latter case, the law
Id.
Another view is that a cause of action for unjust enrichment
24
exists and its elements are “receipt of a benefit and unjust
25
retention of the benefit at the expense of another.”
26
v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000); First Nationwide
27
Savings v. Perry, 11 Cal. App. 4th 1657, 1662-63 (1992).
28
11
Lectrodryer
1
Plaintiff has not stated a basis for a restitutionary remedy
against Defendants.
3
“Defendant NCM (or its successor/s in interest) has been unjustly
4
enriched to the detriment of Plaintiff by wrongfully collecting
5
money to which Defendant NCM, in equity, is not entitled.
6
Defendant NCM has retained the amounts wrongfully collected.”
7
Compl. ¶ 157.
8
amounts as the “illegal kickback fees, in the form of the [yield
9
spread premium].”
Pl. Opp. at 17.
10
United States District Court
For the Northern District of California
2
in the Complaint.
Plaintiff’s Twelfth Cause of Action fails to
11
state a claim against Defendants for unjust enrichment.
12
Defendants’ motion to dismiss is granted with leave to amend.
13
V.
Instead, Plaintiff vaguely claims that
In her opposition, Plaintiff identifies these
These allegations do not appear
Unconscionability
14
All Defendants move to dismiss Plaintiff’s Thirteenth Cause of
15
Action on the basis that unconscionability is not a cause of action
16
but a defense to enforcement of a contract.
17
Cause of Action cites California Civil Code §§ 1670.5 and 1770(s).2
18
Compl. ¶ 162.
19
Plaintiff’s Thirteenth
Civil Code § 1670.5 provides a defense to the enforcement of
20
an unconscionable contract rather than an affirmative cause of
21
action.
22
1539 (2003).
23
create an affirmative cause of action for unconscionability in
24
Civil Code §§ 1770(a)(19) and 1780, see Cal. Grocers Ass’n. v. Bank
25
of America, 22 Cal. App. 4th 205, 217-18 (1994), the CLRA does not
See Jones v. Wells Fargo Bank, 112 Cal. App. 4th 1527,
And, although the Consumer Legal Remedies Act does
26
27
28
2
Civil Code § 1770(s) was redesignated § 1770(a)(19) in 1996.
12
1
apply to transactions involving the sale of real property.
2
v. Washington Mut., Inc., 142 Cal. App. 4th 1457, 1488 (2006).
3
Therefore, Plaintiff fails to state a claim for unconscionability,
4
and Defendants’ motion to dismiss the Thirteenth Cause of Action is
5
granted without leave to amend.
6
VI.
7
McKell
Injunctive Relief
Plaintiff’s Fourteenth Cause of Action seeks injunctive relief
8
in the form of a temporary restraining order and a preliminary
9
injunction against the sale of Plaintiff’s property.
“Injunctive
United States District Court
For the Northern District of California
10
relief is a remedy, not a cause of action.”
11
Hearts, LLC, 179 Cal. App. 4th 1177, 1187 (2009) (quoting City of
12
South Pasadena v. Dep’t of Transp., 29 Cal. App. 4th 1280, 1293
13
(1994)).
14
Gallagher, 62 Cal. App. 4th 501, 503 (1998), is not to the
15
contrary.
16
requires Plaintiff to prove “the elements of a cause of action
17
involving the wrongful act sought to be enjoined.”
18
clear that injunctive relief is not itself a separate cause of
19
action.
20
Fourteenth Cause of Action is granted without leave to amend.
21
Plaintiff may seek injunctive relief as a remedy if she is able to
22
state a valid cause of action.
23
VII. Declaratory Relief
24
Guessous v. Chrome
Plaintiff’s citation to San Diego Unified Port Dist. v.
As stated in Gallagher, a claim for injunctive relief
Id.
This makes
Accordingly, Defendants’ motion to dismiss Plaintiff’s
Plaintiff’s First and Second Causes of Action seek
25
declarations that the note, Substitution of Trustee, Notice of
26
Default and Notice of Trustee’s Sale are “void ab initio,” that
27
GMAC cannot collect payments under the note, and that ETS lacks
28
13
1
authority to foreclose on Plaintiff’s property and conduct a
2
trustee’s sale.
3
When a claim for declaratory relief is removed to federal
4
court, the court must conduct its analysis under the Declaratory
5
Judgment Act (DJA).
6
103 F.3d 750, 753 (9th Cir. 1996), overruled on other grounds by
7
Gov’t Emps. Ins. v. Dizol, 133 F.3d 1220 (9th Cir. 1998); see also
8
Gamble v. GMAC Mortgage Corp., 2009 WL 400359, at *2 (N.D. Cal.).
9
The DJA permits a federal court to “declare the rights and other
See Golden Eagle Ins. Co. v. Travelers Cos.,
United States District Court
For the Northern District of California
10
legal relations” of parties to “a case of actual controversy.”
11
U.S.C. § 2201; see Wickland Oil Terminals v. Asarco, Inc., 792 F.2d
12
887, 893 (9th Cir. 1986).
13
the Declaratory Judgment Act is the same as the “case or
14
controversy” requirement of Article III of the United States
15
Constitution.
16
(9th Cir. 1993).
17
28
The “actual controversy” requirement of
American States Ins. Co. v. Kearns, 15 F.3d 142, 143
Defendants argue that there is no “actual controversy”
18
underlying Plaintiff’s claims because they concern past wrongdoing.
19
Plaintiff responds that there is a pending foreclosure sale of her
20
property.
21
requirement for declaratory relief.
22
This appears to satisfy the “actual controversy”
Plaintiff presents four theories underlying her claim for
23
declaratory relief that the pending foreclosure sale is invalid:
24
(1) NCM committed fraud in the origination of her loan; (2) GMAC is
25
not the “holder in due course” of her note; (3) Defendants have not
26
followed the correct procedures to assign GMAC as beneficiary under
27
the deed and to substitute ETS as the trustee of the deed; and
28
14
1
(4) Defendants did not post the Notice of Trustee’s Sale in a
2
public place or publish it in a newspaper of general circulation.
3
Plaintiff alleges that she is entitled to declaratory relief
because the inclusion of a yield spread premium that was not
5
disclosed or explained to her by NCM constituted fraud, rendering
6
the note, Substitution of Trustee, Notice of Default and Notice of
7
Trustee’s Sale illegal and invalid.
8
noted above, Plaintiff’s fraud claims (Sixth and Seventh Causes of
9
Action) are time-barred. “[T]he statute of limitations governing a
10
United States District Court
For the Northern District of California
4
request for declaratory relief is the one applicable to an ordinary
11
legal or equitable action based on the same claim.”
12
Aerojet-General Corp., 230 Cal. App. 3d 1125, 1155 (1991).
13
result, Plaintiff’s declaratory relief causes of action based on
14
fraud are also time-barred.
15
Compl. ¶¶ 56-60.
However, as
Mangini v.
As a
Plaintiff also seeks declaratory relief on the grounds that
16
GMAC is not in physical possession of the original note.
17
48.
18
note can collect payments and initiate a foreclosure of the
19
property.
20
Compl. ¶
Plaintiff argues that only the “holder in due course” of the
Id. ¶¶ 49-50.
“The statutory provisions regulating the nonjudicial
21
foreclosure of deeds of trust are contained in [Civil Code]
22
sections 2924-2924i.
23
exercise of the power of sale contained in a deed of trust.”
24
Assocs. v. Safeco Title Ins. Co., 39 Cal.3d 281, 285 (1985).
25
Importantly, these provisions “contain[] no requirement that the
26
lender produce the original note to initiate the foreclosure
27
process.”
28
These provisions cover every aspect of
I.E.
Gamboc v. Tr. Corps, 2009 WL 656285, at *4 (N.D. Cal.).
15
1
Whether or not GMAC is in possession of Plaintiff’s Note is
2
irrelevant to its authority to collect payments and initiate a non-
3
judicial foreclosure.
4
therefore not sufficient to state a claim for declaratory relief.
5
Plaintiff’s allegations on this point are
Plaintiff next seeks declaratory relief based on her
6
allegations that “Defendant ETS has not been legally and/or
7
properly appointed as substitute/successor trustee.”
8
Plaintiff’s allegations are contradicted by the documents attached
9
to and referred to in Plaintiff’s Complaint.
Compl. ¶ 62.
Plaintiff quotes
United States District Court
For the Northern District of California
10
paragraph 24 of the deed, which provides that the lender may
11
appoint a successor trustee by an instrument which “contain[s] the
12
name of the original Lender, Trustee and Borrower . . . and the
13
name and address of the successor trustee.”
14
for Judicial Notice, Ex. A ¶ 24.3
15
GMAC, the assigned beneficiary of the deed, executed the
16
Substitution of Trustee naming NCB as the original trustee and NCM
17
as the original beneficiary, and provided the name and address of
GMAC and ETS Request
Following these procedures,
18
3
19
20
21
22
23
24
25
26
27
28
GMAC and ETS filed a Request for Judicial Notice of
Plaintiff’s First Deed of Trust. Plaintiff referred to this Deed
of Trust in her Complaint and purported to attach it as Exhibit B,
although she actually attached the Second Deed of Trust. See
Compl. ¶ 16(3) & Ex. B. "Generally, a district court may not
consider any material beyond the pleadings in ruling on a Rule
12(b)(6) motion." Hal Roach Studios, Inc. v. Richard Feiner & Co.,
896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, under the
incorporation by reference doctrine, when a plaintiff alleges in
his or her complaint the contents of documents whose authenticity
is not challenged but does not attach them to the pleadings, such
documents may be introduced by the defendants and may be considered
in ruling on a Rule 12(b)(6) motion. Knievel v. ESPN, 393 F.3d
1068, 1076 (9th Cir. 2005). Because Plaintiff referred to the
document and intended to attach it to the Complaint, the Court will
consider the Deed of Trust incorporated by reference, and denies as
moot the Request for Judicial Notice of GMAC and ETS.
16
1
ETS, the substitute trustee.
2
allegations of improper procedures are plainly contradicted by
3
documents attached to and referred to in her Complaint, she fails
4
to state a claim that ETS was improperly appointed as the trustee
5
under the deed.
6
7
8
9
United States District Court
For the Northern District of California
10
Compl. Ex. C.
Because Plaintiff’s
Finally, Plaintiff seeks declaratory relief on the grounds
that she is
not aware of any fact showing that the Notice of Trustee’s
Sale . . . has been published in a newspaper of general
circulation in the County of San Mateo, State of California,
nor has it been posted in at least one public place in the
City of San Mateo, County of San Mateo, State of California.
11
Compl. ¶ 61.
12
brief, the requirements that a notice of trustee’s sale be
13
published and posted come from California Civil Code § 2924f.
14
However, the notice requirements are waived if actual notice is
15
received.
16
(3d ed.).
17
Although not cited in the Complaint or Plaintiff’s
See 4 Miller & Starr, California Real Estate § 10:199
Plaintiff received the Notice of Trustee’s Sale and attached
18
it to the Complaint.
19
publication requirements have not been satisfied, Plaintiff has
20
received actual notice.
21
therefore waived.
22
state a basis for the declaratory relief she seeks.
23
Compl. ¶ 24 & Ex. E.
Even if the posting and
Any other notice requirements are
Plaintiff’s allegations on this point fail to
Because the allegations underlying Plaintiff’s causes of
24
action for declaratory relief are either time-barred or fail to
25
allege any wrongdoing by Defendants, there is no “actual
26
controversy” existing between Plaintiff and Defendants justifying
27
declaratory relief.
28
Accordingly, Defendants’ motions to dismiss
17
1
Plaintiff’s First and Second Causes of Action are granted with
2
leave to amend to plead a valid basis for declaratory relief.
3
VIII. PNC’s Motion to Strike
4
Because the Court has dismissed all of Plaintiff’s causes of
5
action, PNC’s motion to strike portions of the complaint referring
6
to punitive or exemplary damages and attorneys’ fees is denied as
7
moot.
8
not plead a valid basis for punitive damages or attorneys’ fees.
9
Even if Plaintiff’s underlying claims were valid, she has
Under Federal Rule of Civil Procedure 12(f), the Court may
United States District Court
For the Northern District of California
10
strike from a pleading “any redundant, immaterial, impertinent or
11
scandalous matter.”
12
12(f) motion is to avoid spending time and money litigating
13
spurious issues.
14
(9th Cir. 1993), rev’d on other grounds, 510 U.S. 517 (1994).
15
matter is immaterial if it has no essential or important
16
relationship to the claim for relief plead.
17
impertinent if it does not pertain and is not necessary to the
18
issues in question in the case.
Fed. R. Civ. P. 12(f).
The purpose of a Rule
Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527
Id.
A
A matter is
Id.
19
A.
20
California Civil Code § 3294, which governs the right to
21
22
23
24
25
26
27
28
Punitive Damages
recover punitive damages, provides:
(a) In an action for the breach of an obligation not arising
from contract, where it is proven by clear and convincing
evidence that the defendant has been guilty of oppression,
fraud, or malice, the plaintiff, in addition to the actual
damages, may recover damages for the sake of example and by
way of punishing the defendant.
. . .
(c) As used in this section, the following definitions shall
apply:
(1) “Malice” means conduct which is intended by the defendant
to cause injury to the plaintiff or despicable conduct which
18
1
is carried on by the defendant with a willful and conscious
disregard of the rights or safety of others.
(2) “Oppression” means despicable conduct that subjects a
person to cruel and unjust hardship in conscious disregard of
that person's rights.
(3) “Fraud” means an intentional misrepresentation, deceit, or
concealment of a material fact known to the defendant with the
intention on the part of the defendant of thereby depriving a
person of property or legal rights or otherwise causing
injury.
2
3
4
5
6
Cal. Civ. Code § 3294.
To support a claim for punitive damages, a
7
complaint must allege facts demonstrating “circumstances of
8
oppression, fraud or malice.”
Grieves v. Superior Court, 157 Cal.
9
App. 3d 159, 166 (1984).
United States District Court
For the Northern District of California
10
Plaintiff contends that her allegations regarding Defendants’
11
statutory violations, lack of disclosures and failure to
12
investigate her ability to repay her loans support her prayer for
13
punitive damages.
These allegations do not show “circumstances of
14
oppression, fraud or malice.”
See Grieves, 157 Cal. App. 3d at
15
166.
Plaintiff does not allege that these violations occurred with
16
“intent to cause injury,” or that they constituted “despicable
17
conduct . . . in conscious disregard” of her rights.
Cal. Civil
18
Code § 3294(c).
19
Plaintiff also argues that Defendants “made misrepresentations
20
as to the terms of Plaintiff’s financing.”
Pl. Opp. at 20.
21
Plaintiff’s actual allegations are that NCB failed to explain or
22
disclose the meaning and consequences of the Yield Spread Premium
23
or the Mortgage Broker Fee that were included in her loan.
Compl.
24
¶¶ 18-18.1.
Nowhere does Plaintiff allege that Defendants’ failure
25
to disclose the meaning of these terms was done with the intention
26
of depriving her of property or legal rights.
27
28
19
Cal. Civil Code
1
§ 3294(c)(3).
2
Finally, Plaintiff contends that the Complaint “alleges that
3
Defendants did not allow Plaintiff to review the loan documents,
4
made assurances that were not true, and refused to provide
5
Plaintiff with loan papers after they were requested.”
6
19.
7
malice, none of them actually appears in the Complaint.
8
the Complaint fails to set forth circumstances of oppression, fraud
9
or malice, Plaintiff has not plead an entitlement to punitive
Pl. Opp. at
Although these allegations may show oppression, fraud or
Because
United States District Court
For the Northern District of California
10
damages.
11
amended complaint, she may include a prayer for punitive damages if
12
she is able truthfully to remedy these deficiencies.
If Plaintiff is able to state any valid claims in an
13
B.
14
Attorneys’ fees may be recovered only where provided by
Attorneys’ Fees
15
statute or contract.
16
Photon Dynamics, Inc., 158 Cal. App. 4th 1582, 1601 (2008).
17
Plaintiff argues that she may be entitled to attorneys’ fees under
18
California Code of Civil Procedure § 1021.5, or under the deed of
19
trust, which has a provision for attorneys’ fees.
20
21
22
23
24
25
26
27
28
Cal. Civ. Proc. Code § 1021; Amtower v.
Section 1021.5 provides that a court may award attorneys’ fees
to a successful party
in any action which has resulted in the enforcement of an
important right affecting the public interest if: (a) a
significant benefit, whether pecuniary or nonpecuniary, has
been conferred on the general public or a large class of
persons, (b) the necessity and financial burden of private
enforcement, or of enforcement by one public entity against
another public entity, are such as to make the award
appropriate, and (c) such fees should not in the interest of
justice be paid out of the recovery, if any.
Cal. Civ. Proc. Code § 1021.5.
Plaintiff argues that her “attempts
20
1
to enjoin unlawful and fraudulent foreclosure practices would have
2
a public benefit.”
3
injunctive relief would enjoin only the foreclosure of her home.
4
Plaintiff fails to explain any public benefit to be gained from an
5
injunction against her foreclosure.
6
to plead a basis for an attorneys’ fee award under section 1021.5.
7
Pl. Opp. at 20.
Plaintiff’s prayer for
Therefore, the Complaint fails
Plaintiff also argues that she may be entitled to attorneys’
8
fees under the deed of trust.
9
charge Borrower fees for services performed in connection with
The deed provides: “Lender may
United States District Court
For the Northern District of California
10
Borrower’s default, for purposes of protecting Lender’s interest in
11
the Property and rights under this Security Instrument . . .
12
including, but not limited to, attorneys’ fees . . . .”
13
Plaintiff does not explain how this provision would entitle her to
14
attorneys’ fees against PNC in this action.
15
would invoke California Civil Code § 1717, which makes unilateral
16
fee provisions such as this one applicable to both parties to a
17
contract.
18
(2008).
19
under the deed of trust, PNC is no longer entitled to attorneys’
20
fees under the deed.
21
Plaintiff to attorneys’ fees against PNC under the deed.
22
fails to plead a basis for an attorneys’ fee award against PNC
23
under the deed of trust.
24
deficiencies, she may include a prayer for attorneys’ fees in an
25
amended complaint.
26
27
28
Deed ¶ 14.
Presumably Plaintiff
See Kachlon v. Markowitz, 168 Cal. App. 4th 316, 347
However, following the substitution of GMAC as beneficiary
Therefore, section 1717 does not entitle
Plaintiff
If Plaintiff can remedy these
CONCLUSION
For the foregoing reasons, GMAC and ETS’ (Docket No. 5) and
21
1
PNC’s (Docket No. 8) motions to dismiss are GRANTED.
2
to strike (Docket No. 9) is DENIED as moot.
3
are summarized as follows:
4
1.
PNC’s motion
The Court’s rulings
Plaintiff’s First and Second Causes of Action against all
5
Defendants are dismissed with leave to amend to plead a
6
valid basis for declaratory relief.
7
2.
Plaintiff’s Third, Fourth, Fifth, Sixth, Seventh, Eighth,
8
Ninth, and Twelfth Causes of Action against GMAC and ETS
9
are dismissed with leave to amend to state a claim
United States District Court
For the Northern District of California
10
11
against GMAC and ETS.
3.
Plaintiff’s Third, Fourth, Fifth, Sixth, Seventh, Eighth,
12
Ninth, and Eleventh Causes of Action against all
13
Defendants are dismissed with leave to amend to plead a
14
basis for equitable tolling of the statute of
15
limitations.
16
4.
Plaintiff’s Tenth Cause of Action against all Defendants
17
is dismissed with leave to amend to plead tender of the
18
full loan amount.
19
5.
Plaintiff’s Twelfth Cause of Action against all
20
Defendants is dismissed with leave to amend to plead a
21
basis for a restitutionary remedy.
22
6.
Plaintiff’s Thirteenth and Fourteenth Causes of Action
23
against all Defendants are dismissed without leave to
24
amend.
25
If Plaintiff wishes to file an amended complaint, she must do
26
so within fourteen days of the date of this order.
27
Defendants must respond twenty-one days later.
28
22
If she does,
If they respond
1
with a motion to dismiss, they must notice it for October 6, 2011
2
at 2 P.M.
A case management conference will be held on that date
3
and time.
If Plaintiff does not timely file an amended complaint,
4
the case will be dismissed for failure to prosecute.
5
IT IS SO ORDERED.
6
7
Dated: 7/28/2011
CLAUDIA WILKEN
United States District Judge
8
9
United States District Court
For the Northern District of California
10
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12
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