Howl v. Bank of America, N.A. et al

Filing 36

ORDER GRANTING DEFENDANTS 20 MOTION TO DISMISS. Case Management Statement due by 11/15/2011. Case Management Conference set for 11/22/2011 02:00 PM. Signed by Judge Claudia Wilken on 8/17/2011. (ndr, COURT STAFF) (Filed on 8/17/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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MICHAEL A. HOWL,
Plaintiff,

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No. C 11-0887 CW
ORDER GRANTING
DEFENDANTS’
MOTION TO DISMISS
(Docket No. 20)

v.
BANK OF AMERICA, N.A.; BAC HOME LOANS
SERVICING, LP; PRLAP, INC.; and
RECONTRUST COMPANY, N.A.,
Defendants.

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/

United States District Court
For the Northern District of California

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Pro se Plaintiff Michael A. Howl alleges that Defendants Bank

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of America, N.A.; BAC Home Loans Servicing, LP; PRLAP, Inc.; and

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ReconTrust Company, N.A., committed fraud with respect to a loan he

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obtained.

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Plaintiff opposes the motion.

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papers.

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Court GRANTS Defendants’ motion to dismiss.

Defendants move to dismiss Plaintiff’s claims.

Having considered the papers submitted by the parties, the

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The motion was decided on the

BACKGROUND
On or about August 25, 2007, Plaintiff allegedly obtained a

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loan for $1.5 million to purchase property located at 288 Love Lane

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in Danville, California.

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allegedly failed to explain clearly the terms of his promissory

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note and deed of trust, but nevertheless asked him to sign these

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documents.

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by the lack of explanations.”

Bank of America, Plaintiff’s lender,

Plaintiff maintains that he was “confused and puzzled
Compl. ¶ 18.1

Thereafter, during

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Plaintiff’s complaint is nearly identical to the complaints
filed in Gilbert v. World Savings Bank, Case No. 10-05162 WHA (N.D.
Cal.) and Miller v. Washington Mutual Bank FA, Case No. 10-5787 WHA

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the life of the loan, Defendants allegedly “failed to properly

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credit payments made, incorrectly calculated interest on the

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accounts, and have failed to accurately debit fees.”

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Plaintiff also alleges that there has been “a severance of the

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ownership and possession of the original Note and Deed of Trust.”

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Id. ¶ 26.

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Id. ¶ 37.

Plaintiff asserts claims for “misrepresentation and fraud;”
“rescission and restitution of voidable cognovit note;” “injunction

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against wrongful foreclosure based on cognovit note;” violation of

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United States District Court
For the Northern District of California

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California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code

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§§ 17200, et seq.; and violation of the federal Racketeer

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Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C.

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§ 1962(c).

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January 21, 2011.

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Servicing, L.P.; and ReconTrust Company, N.A. removed Plaintiff’s

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action to federal court on February 24, 2011.

He filed his action in Contra Costa Superior Court on

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Defendants Bank of America, N.A.; BAC Home Loans

LEGAL STANDARD
A complaint must contain a “short and plain statement of the

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claim showing that the pleader is entitled to relief.”

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Civ. P. 8(a).

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12(b)(6) for failure to state a claim, dismissal is appropriate

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only when the complaint does not give the defendant fair notice of

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a legally cognizable claim and the grounds on which it rests.

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

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considering whether the complaint is sufficient to state a claim,

Fed. R.

When considering a motion to dismiss under Rule

In

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(N.D. Cal.).
Miller.

His opposition brief resembles the one filed in
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the court will take all material allegations as true and construe

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them in the light most favorable to the plaintiff.

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v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

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principle is inapplicable to legal conclusions; “threadbare

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recitals of the elements of a cause of action, supported by mere

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conclusory statements,” are not taken as true.

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129 S. Ct. 1937, 1949-50 (2009) (citing Twombly, 550 U.S. at 555).

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When granting a motion to dismiss, the court is generally

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required to grant the plaintiff leave to amend, even if no request

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United States District Court
For the Northern District of California

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to amend the pleading was made, unless amendment would be futile.

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Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

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F.2d 242, 246-47 (9th Cir. 1990).

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would be futile, the court examines whether the complaint could be

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amended to cure the defect requiring dismissal "without

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contradicting any of the allegations of [the] original complaint."

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Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990).

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NL Indus., Inc.

However, this

Ashcroft v. Iqbal,

In determining whether amendment

DISCUSSION
Defendants first argue that Plaintiff’s claims that challenge

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the impending foreclosure sale are subject to California’s so-

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called tender rule.

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challenge the lawfulness of a foreclosure sale must first allege

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tender of the amount of the secured indebtedness.

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United Sav. Bank, 43 Cal. App. 4th 1101, 1109 (1996) (citing FPCI

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RE-HAB 01 v. E & G Investments, Ltd., 207 Cal. App. 3d 1018, 1021-

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22 (1989)); Smith v. Wachovia, 2009 WL 1948829, at *3 (N.D. Cal.).

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Without pleading tender or the ability to offer tender, a plaintiff

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cannot state a cause of action related to challenging a foreclosure

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Under the rule, a plaintiff seeking to

Abdallah v.

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sale.

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(1971) (citing Copsey v. Sacramento Bank, 133 Cal. 659, 662

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(1901)); Smith, 2009 WL 1948829, at *3 (citing Karlsen).

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foreclosure sale has not yet occurred.

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authority requiring Plaintiff, under these circumstances, to allege

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tender to assert his claims in such circumstances.

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Pearson v. BAC Home Loans Servicing, LP, 2011 WL 2633406, at *2

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(N.D. Cal.) (rejecting defendants’ argument that tender rule

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applied to plaintiff’s claims in the absence of a foreclosure

Karlsen v. Am. Sav. & Loan Ass’n, 15 Cal. App. 3d 112, 117

Here, a

Defendants identify no

See Silva-

United States District Court
For the Northern District of California

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sale).

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not support Defendants’ position.

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had occurred before the plaintiff brought suit.

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the tender rule does not require dismissal of Plaintiff’s claims.

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Defendants’ remaining arguments are considered below.

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I.

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Alicea v. GE Money Bank, 2009 WL 2136969 (N.D. Cal.), does
In that case, a foreclosure sale
Id. at *1.

Thus,

Misrepresentation and Fraud Claim
Plaintiff brings claims for misrepresentation and fraud based

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on Bank of America’s conduct at the time he executed his loan

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documents in August 2007.

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the loan, Defendants committed fraud by improperly crediting

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payments he made and incorrectly calculating the interest applied

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to his loan.

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He also alleges that, during the life of

Defendants argue that this claim is time-barred.

They cite

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California Code of Civil Procedure section 338(d), which imposes a

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three-year limitations period on claims based “on the ground of

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fraud or mistake,” except that such claims are “not deemed to have

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accrued until the discovery, by the aggrieved party, of the facts

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constituting the fraud or mistake.”

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Much of the conduct of which

Plaintiff complains occurred in August 2007, outside of the

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limitations period.

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seek liability for this alleged misconduct because he did not

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discover it until June 2009.

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explaining his discovery.

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Plaintiff must “specifically plead facts to show (1) the time and

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manner of discovery and (2) the inability to have made earlier

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discovery despite reasonable diligence.”

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Accountants, Inc. Servs., 153 Cal. App. 4th 1308, 1324 (2007)

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United States District Court
For the Northern District of California

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(emphasis in original; citation and internal quotation marks

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omitted).

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and fraud claim is based on conduct that occurred outside of the

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limitations period, it must be dismissed.

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amend to plead facts supporting application of the delayed

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discovery rule.

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Plaintiff insists that he nevertheless may

However, he fails to plead any facts

To invoke the delayed discovery rule,

E-Fab, Inc. v.

Thus, to the extent that Plaintiff’s misrepresentation

He is granted leave to

Additionally, this claim must be dismissed because Plaintiff

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fails to plead facts with particularity, as required by Federal

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Rule of Civil Procedure 9(b).

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elements of fraud, which gives rise to the tort action for deceit,

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are (a) misrepresentation (false representation, concealment, or

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nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c)

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intent to defraud, i.e., to induce reliance; (d) justifiable

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reliance; and (e) resulting damage.”

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Cal. 4th 167, 173 (2003) (quoting Lazar v. Superior Court, 12 Cal.

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4th 631, 638 (1996)).

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circumstances constituting fraud or mistake shall be stated with

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particularity.”

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Under California law, “[t]he

Small v. Fritz Cos., Inc., 30

“In all averments of fraud or mistake, the

Fed. R. Civ. Proc. 9(b).
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The allegations must be

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“specific enough to give defendants notice of the particular

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misconduct which is alleged to constitute the fraud charged so that

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they can defend against the charge and not just deny that they have

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done anything wrong.”

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Cir. 1985).

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alleged fraudulent activities are sufficient, id. at 735, provided

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the plaintiff sets forth “what is false or misleading about a

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statement, and why it is false.”

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Litig., 42 F.3d 1541, 1548 (9th Cir. 1994).

Semegen v. Weidner, 780 F.2d 727, 731 (9th

Statements of the time, place and nature of the

In re GlenFed, Inc., Secs.
Scienter may be

United States District Court
For the Northern District of California

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averred generally, simply by saying that it existed.

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see Fed. R. Civ. Proc. 9(b) (“Malice, intent, knowledge, and other

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condition of mind of a person may be averred generally”).

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Allegations of fraud based on information and belief usually do not

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satisfy the particularity requirements of Rule 9(b); however, as to

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matters peculiarly within the opposing party’s knowledge,

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allegations based on information and belief may satisfy Rule 9(b)

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if they also state the facts upon which the belief is founded.

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Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1439 (9th Cir.

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1987).

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Id. at 1547;

Plaintiff argues that he is entitled to a relaxed application

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of Rule 9(b) because Defendants have his original loan documents.

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This argument is not persuasive.

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Defendants’ alleged concealment of material information regarding

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his loan’s terms.

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that apparently bear his signature.

Part of his claim rests on

These terms, however, are discussed in documents

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See, e.g., Defs.’ Request for

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Judicial Notice (RJN), Ex. B at 14.2

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knowledge as to how Defendants obfuscated or prevented him from

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discovering this information at the time he executed his loan

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documents; however, he fails to plead how they did so.

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claim is also based in part on Defendants’ alleged fraudulent

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conduct with respect to the application of his loan payments and

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the interest they charged.

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statements made by Defendants that form the basis of this fraud.

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It is within Plaintiff’s

Plaintiff’s

He does not, however, plead any

Accordingly, Plaintiff’s misrepresentation and fraud claim is

United States District Court
For the Northern District of California

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dismissed with leave to amend.

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must allege facts that support application of the delayed discovery

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rule.

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how” of Defendants’ purported fraudulent concealment of his loan’s

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terms, which appeared on documents he apparently signed, and of

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Defendants’ alleged fraud concerning the application of his

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payments and calculation of interest.

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USA, 317 F.3d 1097, 1106 (9th Cir. 2003).

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II.

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In any amended pleading, Plaintiff

Additionally, he must aver “the who, what, when, where, and

Vess v. Ciba-Geigy Corp.

Claim for Rescission and Restitution
Plaintiff brings a claim for “rescission and restitution of

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Plaintiff opposes Defendants’ request for judicial notice,
asserting that Defendants have failed to submit originals of the
documents. There is no requirement that Defendants proffer
originals in order to obtain judicial notice. Plaintiff also
asserts that the documents “could have been altered or changed”
without his knowledge. Opp’n at 2:4. He does not contend,
however, that there are any actual changes to the documents, nor
does he contest that his signature appears on some of them.
Accordingly, the Court takes judicial notice of the fact that the
adjustable rate note and deed of trust for Plaintiff’s August 2007
loan bear a signature that appears above a line intended for
Plaintiff’s signature. See Fed. R. Evid. 201.
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voidable cognovit note.”3

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appears that Plaintiff seeks rescission of his loan agreement

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because it contained cognovit clauses that Defendants did not

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disclose and for which Defendants did not provide adequate

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consideration.

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seeks restitution of monies paid under the loan agreement.

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Although not altogether clear, it

Based upon this rescission, Plaintiff apparently

Defendants argue that California Code of Civil Procedure

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section 338(d) also bars this claim.

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Civil Procedure section 337(3), not section 338(d), applies.

However, California Code of

United States District Court
For the Northern District of California

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Section 337(3) imposes a four-year limitations period on an “action

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based upon the rescission of a contract in writing.”

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also contains a delayed discovery provision, stating that where

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“the ground for rescission is fraud or mistake, the time does not

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begin to run until the discovery by the aggrieved party of the

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facts constituting the fraud or mistake.”

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§ 337(3).

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concern rescission based on fraud or address section 337(3), and

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does not support Defendants’ position.

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asserted within the four-year limitations period, it is not time-

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barred.

This section

Cal. Civ. Proc. Code

Hatch v. Collins, 225 Cal. App. 3d 1104 (1990), does not

Because this claim was

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Plaintiff, however, does not adequately state this claim.

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fraud allegations on which it is based, as explained above, do not

The

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A “cognovit note” contains provisions that attempt, in
advance of any legal controversy, to authorize the entering of
judgment without notice and hearing. Isbell v. Cnty. of Sonoma, 21
Cal. 3d 61, 76 (1978). Without factual support, Plaintiff’s
assertion that his deed of trust was a cognovit note is a legal
conclusion that need not be taken as true. See Iqbal, 129 S. Ct.
at 1949-50.

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satisfy Rule 9(b)’s pleading requirements.

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not identify the provisions he contends are cognovit clauses.

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Indeed, Plaintiff does

Thus, for the reasons stated above, this claim must be

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dismissed.

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III. Claim for Injunctive Relief

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Plaintiff brings a claim for injunctive relief against a

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wrongful foreclosure, which he bases on a litany of state causes of

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action and federal statutes.

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not yet been sold at a foreclosure sale, this appears to be a

Because the Love Lane property has

United States District Court
For the Northern District of California

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request for a preliminary injunction.

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Plaintiff fails to make the showing necessary to obtain preliminary

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injunctive relief.

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Defendants argue that

“A plaintiff seeking a preliminary injunction must establish

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that he is likely to succeed on the merits, that he is likely to

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suffer irreparable harm in the absence of preliminary relief, that

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the balance of equities tips in his favor, and that an injunction

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is in the public interest.”

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Inc., 129 S. Ct. 365, 374 (2008).

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injunction could issue where the likelihood of success is such that

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serious questions going to the merits were raised and the balance

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of hardships tips sharply in plaintiff’s favor,” so long as the

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plaintiff demonstrates irreparable harm and shows that the

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injunction is in the public interest.

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Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (citation

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and internal quotation and editing marks omitted).

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not respond to Defendants’ argument that he did not meet the

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requirements set forth by Winter and its progeny.

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Winter v. Natural Res. Def. Council,
Alternatively, “a preliminary

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Alliance for the Wild

Plaintiff did

Accordingly,

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Plaintiff’s request for a preliminary injunction is denied.

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IV.

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UCL Claim
California’s Unfair Competition Law (UCL) prohibits any

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“unlawful, unfair or fraudulent business act or practice.”

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Bus. & Prof. Code § 17200.

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treats violations of those laws as unlawful business practices

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independently actionable under state law.

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Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000).

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Violation of almost any federal, state or local law may serve as

Cal.

The UCL incorporates other laws and

Chabner v. United of

United States District Court
For the Northern District of California

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the basis for a UCL claim.

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App. 4th 832, 838-39 (1994).

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be “unfair or fraudulent in violation of the UCL even if the

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practice does not violate any law.”

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30 Cal. 4th 798, 827 (2003).

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“within four years after the cause of action accrued.”

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Prof. Code § 17208.

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Saunders v. Superior Court, 27 Cal.
In addition, a business practice may

Olszewski v. Scripps Health,

Claims under the UCL must be brought
Cal. Bus. &

Plaintiff’s UCL claim is based on Defendants’ alleged

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fraudulent conduct.

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fraud with sufficient particularity.

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claim is dismissed with leave to amend.

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V.

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As already stated, Plaintiff fails to allege
Accordingly, Plaintiff’s UCL

RICO Claim
“To state a claim under § 1962(c), a plaintiff must allege

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‘(1) conduct (2) of an enterprise (3) through a pattern (4) of

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racketeering activity.’”

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547 (9th Cir. 2007) (quoting Sedima, S.P.R.L. v. Imrex Co., 473

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U.S. 479, 496 (1985)).

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allege a RICO enterprise and a pattern of racketeering.

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Odom v. Microsoft Corp., 486 F.3d 541,

Defendants argue that Plaintiff fails to

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Plaintiff

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did not respond to Defendants’ argument.

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RICO claim is dismissed with leave to amend to plead facts

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demonstrating a RICO enterprise and a pattern of racketeering

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activity.

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Accordingly, Plaintiff’s

CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants’ motion

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to dismiss.

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as follows:

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1.

(Docket No. 20.)

The Court’s holdings are summarized

Plaintiff’s misrepresentation and fraud claim is

United States District Court
For the Northern District of California

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dismissed for failure to plead in accordance with Rule

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9(b).

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of the limitations period, it is dismissed as time-

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barred.

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specific facts concerning the alleged fraud and that

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support the application of the delayed discovery rule.

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2.

To the extent the claim concerns conduct outside

Plaintiff is granted leave to amend to plead

Plaintiff’s claim for rescission and restitution is

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dismissed for failure to plead in accordance with Rule

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9(b).

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facts concerning Defendants’ purported fraud.

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3.

He is granted leave to amend to allege specific

Plaintiff’s apparent request for preliminary injunctive

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relief is denied based on his failure to meet the

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requirements set forth in Winter and its progeny.

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4.

Plaintiff’s UCL claim, which is based on Defendants’

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alleged fraudulent conduct, is dismissed with leave to

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amend to plead facts in accordance with Rule 9(b).

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5.

Plaintiff’s RICO claim is dismissed with leave to amend
to allege facts showing a RICO enterprise and a pattern
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of racketeering activity.
If Plaintiff intends to file an amended complaint, he shall do

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so within fourteen days of the date of this Order.

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files an amended complaint, Defendants shall respond to it fourteen

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days after it is filed.

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complaint, Plaintiff shall respond to Defendants’ motion within

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fourteen days after it is filed.

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shall be due seven days after Plaintiff files his response.

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motion to dismiss will be decided on the papers.

If Plaintiff

If Defendants move to dismiss the

Defendants’ reply, if necessary,
Any

Plaintiff’s

United States District Court
For the Northern District of California

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failure to comply with this Order will result in the dismissal of

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his claims for failure to prosecute.

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Pursuant to Civil L.R. 16-8 and ADR L.R. 2-3, the Court refers

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this foreclosure-related action to the Alternative Dispute

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Resolution (ADR) Unit to assess this case’s suitability for

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mediation or a settlement conference.

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counsel shall participate in a telephone conference, to be

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scheduled by the ADR Unit on a date before September 14, 2011.

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Plaintiff and Defendants’

Plaintiff and Defendants’ counsel shall be prepared to discuss

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the following subjects:

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(1)

Identification and description of claims and alleged
defects in loan documents.

(2)

Prospects for loan modification.

(3)

Prospects for settlement.

(4)

Any other matters that may be conducive to the just,
efficient and economical determination of the
action.

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The parties need not submit written materials to the ADR Unit for
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the telephone conference.
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In preparation for the telephone conference, Plaintiff shall
do the following:

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(1)

Review relevant loan documents and conduct a brief
investigation of claims to determine whether the
claims in this action have merit.

(2)

If Plaintiff is seeking a loan modification to
resolve all or some of his claims, he shall prepare
a current, accurate financial statement and gather
all of the information and documents customarily
needed to support a loan modification request.
Further, Plaintiff shall immediately notify
Defendants’ counsel of his request for a loan
modification.

(3)

Provide counsel for Defendants with information
necessary to evaluate the prospects for loan
modification. The general and financial information
provided to Defendants may be in the form of a
financial statement, worksheet or application
customarily used by financial institutions.

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United States District Court
For the Northern District of California

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In preparation for the telephone conference, counsel for
Defendants shall do the following.

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(1)

If Defendants are unable or unwilling to do a loan
modification after receiving notice of Plaintiff’s
request, counsel for Defendants shall promptly
notify Plaintiff to that effect.

(2)

Arrange for a representative of each Defendant with
full settlement authority to participate in the
telephone conference.

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The ADR Unit will provide the parties with additional
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information regarding the telephone conference, including the date
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it will be held.

After the telephone conference has been held, the

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ADR Unit will advise the Court of its recommendation for further
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ADR proceedings.
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//
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//
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//
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A case management conference will be held on November 22, 2011
at 2:00 p.m.
IT IS SO ORDERED.

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Dated: 8/17/2011
CLAUDIA WILKEN
United States District Judge

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United States District Court
For the Northern District of California

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cc:ADR

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UNITED STATES DISTRICT COURT
FOR THE
NORTHERN DISTRICT OF CALIFORNIA

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MICHAEL A HOWL,

Case Number: CV11-00887 CW

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Plaintiff,

CERTIFICATE OF SERVICE

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v.
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BANK OF AMERICA NA et al,
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Defendant.
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United States District Court
For the Northern District of California

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/

I, the undersigned, hereby certify that I am an employee in the Office of the Clerk, U.S. District Court,
Northern District of California.
That on August 17, 2011, I SERVED a true and correct copy(ies) of the attached, by placing said
copy(ies) in a postage paid envelope addressed to the person(s) hereinafter listed, by depositing said
envelope in the U.S. Mail, or by placing said copy(ies) into an inter-office delivery receptacle located
in the Clerk's office.

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Michael A. Howl
PO Box 916
Danville, CA 94526
Dated: August 17, 2011
Richard W. Wieking, Clerk
By: Nikki Riley, Deputy Clerk

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