Nissim v. Wells Fargo Bank, N.A.

Filing 47


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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 JACK A. NISSIM, 5 6 7 No. C 12-1201 CW Plaintiff, v. 8 WELLS FARGO BANK, N.A.; FIRST AMERICAN TITLE COMPANY; ATLANTIC BANCORP; and NICHOLAS DUDUM, 9 Defendants. 10 United States District Court For the Northern District of California ORDER GRANTING MOTIONS TO DISMISS (Docket Nos. 17, 37 and 39), GRANTING LEAVE TO AMEND AND SETTING CASE MANAGEMENT CONFERENCE 11 ________________________________/ Plaintiff Jack A. Nissim asserts various mortgage-related 12 claims against Defendants Wells Fargo Bank, N.A. and First 13 American Title Company.1 14 dismiss Plaintiff’s first amended complaint (1AC). 15 opposes their motions. 16 submission on the papers. 17 presented by the parties, the Court GRANTS the motions to dismiss 18 and GRANTS Plaintiff leave to amend. Wells Fargo and First American move to Plaintiff The Court took the motions under Having considered the arguments 19 20 21 22 23 24 25 26 27 1 28 Plaintiff has voluntarily dismissed his claims against Defendants Atlantic Bancorp and Nicholas Dudum. 1 2 3 4 5 BACKGROUND I. Facts The following summary is taken from the 1AC and certain documents of which the Court takes judicial notice.2 In December 2004, Plaintiff entered into a loan transaction 6 with Wells Fargo for the purchase of property located at 1438 28th 7 Avenue in San Francisco, California. 8 originally sought a loan with a fixed interest rate but was 9 induced into entering into a loan with an adjustable interest rate 1AC ¶ 15. Plaintiff United States District Court For the Northern District of California 10 based on promises that Plaintiff could later refinance the 11 property with a fixed interest rate. 12 penalty for early refinancing if he refinanced the property within 13 three years. 14 Id. The loan included a Id. In approximately December 2005, Plaintiff was assisted by 15 Atlantic Bancorp, a real estate broker, and its representative, 16 Dudum, in investigating loan options to purchase property in New 17 Mexico. 18 Id. at ¶¶ 16, 45. “Plaintiff was making regular mortgage payments under his 19 original loan when he began receiving statements with higher 20 payment amounts.” 21 2006, when Plaintiff received his monthly mortgage bill, he “was 22 completely shocked” to notice that the payment amount had 1AC ¶ 53. Specifically, in approximately March 23 24 25 26 27 28 2 Wells Fargo and First American ask, and Plaintiff does not oppose, that the Court take judicial notice of (1) the 2005 loan agreement with Plaintiff’s purported signature, to which the 1AC refers; (2) recorded documents associated with the foreclosure sale, including the deed of trust, notice of default, substitution of trustee and notice of trustee’s sale; and (3) documents that show that World Savings Bank became Wachovia Mortgage, FSB and then subsequently merged into Wells Fargo Bank, N.A. The Court GRANTS Defendants’ request. 2 1 increased and that the “total amount due on the loan was much 2 higher since it was inflated with penalties.” 3 this moment, Plaintiff discovered that instead of merely exploring 4 financing options for property in New Mexico, Atlantic Bancorp and 5 Dudum had actually refinanced Plaintiff’s Property without his 6 knowledge.” 7 F.S.B.,” predecessor-in-interest to Wells Fargo. 8 See also RJN, Ex. A (copy of an Adjustable Rate Mortgage Note 9 dated December 16, 2005). Id. Id. at ¶ 17. “The refinance loan was with World Savings Bank, Id. at ¶ 21. Plaintiff alleges that Wells Fargo “is 10 United States District Court For the Northern District of California “At believed to be the current owner of the loan at issue.” 11 ¶ 7. 12 Id. at The “loan documents were signed and notarized using 13 Plaintiff’s name, but Plaintiff never signed said documents” and 14 Atlantic Bancorp and Dudum “executed forged documents on 15 Plaintiff’s behalf” for the refinancing. 16 Although he alleges that he never signed the loan documents, 17 Plaintiff also alleges that he was “wrongfully induced” into 18 “entering into a refinancing agreement.” 19 further alleges that, although he had not signed the documents, 20 they “were apparently notarized” by First American’s subsidiary, 21 Alliance Title Company. 22 American, “as the parent corporation of Alliance Title Company, 23 insured the genuineness of the documents that were closed in Id. at ¶ 18. 1AC ¶¶ 34, 73.3 Id. at ¶ 64. Plaintiff He alleges that First 24 25 26 27 28 3 Although in the 1AC Plaintiff specifically identifies Atlantic Bancorp and Dudum as the ones who executed the forged document on his behalf, in his opposition to Wells Fargo’s motion to dismiss, Plaintiff states that “the exact source of the forgery is unknown.” Opp. to Wells Fargo’s Mot. 9. 3 1 escrow in the loan transaction between Plaintiff and Wells Fargo.” 2 Id. at ¶ 8. 3 The “terms of the new loan were worse than the original 4 loan.” 5 rate on the forged note was worse than the original note.” 6 “The interest of the second loan [was] also excessive.” 7 monthly payments that he “was asked to make under the new loan 8 were . . . less than the monthly interest accumulations.” 9 “Paying this amount caused Plaintiff to amass arrears on every Id. at ¶ 19. Specifically, the “principal and interest United States District Court For the Northern District of California 10 payment he made.” 11 the early refinancing clause of his original loan.” 12 Id. Id. Id. The Id. Further, he “was penalized for violating Id. at ¶ 18. The “actual terms of the ‘forged note’” were “concealed from 13 and never released to Plaintiff.” 14 Plaintiff tried to “arrange . . . terms that would have been 15 acceptable and was unable to do so.” 16 Id. at ¶ 19. Nevertheless, Id. When Plaintiff realized “that loan refinancing documents had 17 been forged” in 2006, he “brought suit immediately,” asserting the 18 same causes of action as in the instant case. 19 original lawsuit was filed in 2006.” 20 to Bankruptcy court where it resided for some time until it was 21 dismissed without prejudice when the Bankruptcy was dismissed.” 22 Id. 23 asserts that he “re-filed in a timely fashion.” 24 25 Id.4 Id. at ¶ 25. “This That suit “was removed Plaintiff does not allege when the case was dismissed, but Id. On November 1, 2011, NDEX West, as agent for the beneficiary, Wells Fargo, recorded a notice of default and election to sell, 26 27 28 4 However, in his opposition to Wells Fargo’s first motion to dismiss, Plaintiff states that he brought the suit in state court in 2007. Opp. to Wells Fargo Mot. at 8. 4 1 stating that Plaintiff was in default of the December 2005 note. 2 RJN, Ex. H. 3 On December 5, 2011, a substitution of trustee was recorded, 4 substituting NDEX West in place of the original trustee. 5 I. 6 RJN, Ex. On January 31, 2012, NDEX West recorded a notice of trustee’s 7 sale, stating that the property would be sold at a trustee’s sale 8 on February 22, 2012 at 2:00 p.m. 9 RJN, Ex. J. Plaintiff further alleges that, on February 22, 2012, his United States District Court For the Northern District of California 10 house was foreclosed on and his “property was sold at a trustee’s 11 sale.” 12 suggests that the trustee’s sale has not yet taken place: 13 Plaintiff alleges that “Defendants are now seeking to wrongfully 14 foreclose on Plaintiff’s Property” and that they “should be 15 precluded from 16 sale.” 17 this point there has been no completed foreclosure sale”). 18 II. 19 1AC ¶ 29. However, elsewhere in the 1AC, Plaintiff . . . selling Plaintiff’s Property at a trustee’s Id. at ¶ 58. See also Opp. to First American Mot. 7 (“at Procedural history Plaintiff initiated this case on February 7, 2012 in San 20 Francisco Superior Court, naming Wells Fargo as the only 21 Defendant. 22 federal court. 23 24 On March 9, 2012, Wells Fargo removed the action to Docket No. 1. On March 16, 2012, Wells Fargo filed a motion to dismiss Plaintiff’s complaint. 25 Docket No. 6. On April 6, 2012, Plaintiff filed his 1AC, adding as 26 Defendants First American, Atlantic Bancorp and Dudum. 27 11. 28 title; (2) reformation of contract; (3) wrongful foreclosure in Docket No. The 1AC asserts five claims against all Defendants: (1) quiet 5 1 violation of California Civil Code § 2924, et seq.; (4) slander of 2 title; and (5) equitable indemnity. 3 4 5 6 7 On April 20, 2012, Wells Fargo filed its first motion to dismiss the 1AC. Docket No. 17. On May 2, 2012, the Court found the motion to dismiss the original complaint to be moot. Docket No. 23. After the parties stipulated twice to continue the hearing on Wells Fargo’s motion to dismiss and the case management 9 conference, Docket Nos. 26, 30, the Court vacated the hearing and 10 United States District Court For the Northern District of California 8 conference to be reset if appropriate and directed the parties to 11 participate in alternative dispute resolution (ADR) with the 12 assistance of the Court’s ADR Unit, Docket No. 31. 13 On November 7, 2012, the court-appointed mediator filed a 14 certificate stating that the mediation process was complete and 15 that the parties had not reached a settlement. Docket No. 36. 16 On November 28, 2012, First American filed a motion to 17 dismiss the 1AC, and Wells Fargo filed a second motion to dismiss 18 the 1AC. 19 Docket Nos. 37 and 39. On November 30, 2012, the Court issued an order addressing 20 the newly filed motions to dismiss and service upon Atlantic 21 Bancorp and Dudum. 22 that Wells Fargo’s first motion to dismiss was fully briefed and 23 that further briefing on Wells Fargo’s second motion was not 24 required, and vacated the briefing schedule on that motion. 25 Court maintained the briefing schedule on First American’s motion 26 and stated that Plaintiff need not repeat the same arguments 27 already made in opposition to Wells Fargo’s first motion. Docket No. 42. 28 6 In that order, the Court noted The The 1 Court also directed Plaintiff to file proof of timely service upon 2 Atlantic Bancorp or a motion for extension of time for service. 3 On December 12, 2012, Plaintiff filed a notice of voluntary 4 dismissal of Atlantic Bancorp and Dudum, which this Court granted 5 on December 13, 2012. See Docket Nos. 43 and 45. 6 7 LEGAL STANDARD A complaint must contain a “short and plain statement of the 8 claim showing that the pleader is entitled to relief.” 9 Civ. P. 8(a). Fed. R. On a motion under Rule 12(b)(6) for failure to United States District Court For the Northern District of California 10 state a claim, dismissal is appropriate only when the complaint 11 does not give the defendant fair notice of a legally cognizable 12 claim and the grounds on which it rests. 13 Twombly, 550 U.S. 544, 555 (2007). 14 complaint is sufficient to state a claim, the court will take all 15 material allegations as true and construe them in the light most 16 favorable to the plaintiff. 17 896, 898 (9th Cir. 1986). 18 to legal conclusions; “threadbare recitals of the elements of a 19 cause of action, supported by mere conclusory statements,” are not 20 taken as true. 21 (citing Twombly, 550 U.S. at 555). 22 Bell Atl. Corp. v. In considering whether the NL Indus., Inc. v. Kaplan, 792 F.2d However, this principle is inapplicable Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) A statute of limitations defense may be raised by a motion to 23 dismiss if the running of the relevant statute of limitations is 24 apparent on the face of the complaint. 25 Produce, Inc., 816 F.2d 482, 484 n.1 (9th Cir. 1987). 26 motion to dismiss is based on the running of a statute of 27 limitations, the motion can be granted “only if the assertions of 28 the complaint, read with the required liberality, would not permit 7 Ledesma v. Jack Stewart When a 1 the plaintiff to prove that the statute was tolled.” 2 Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980) (citation 3 omitted). Jablon v. 4 When granting a motion to dismiss, the court is generally 5 required to grant the plaintiff leave to amend, even if no request 6 to amend the pleading was made, unless amendment would be futile. 7 Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 8 F.2d 242, 246-47 (9th Cir. 1990). 9 amendment would be futile, the court examines whether the In determining whether United States District Court For the Northern District of California 10 complaint could be amended to cure the defect requiring dismissal 11 “without contradicting any of the allegations of [the] original 12 complaint.” 13 Cir. 1990). Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th 14 15 16 DISCUSSION I. Liability of First American First American contends that Plaintiff has not properly plead 17 any basis for imposing liability upon it. 18 he alleged that First American “insured the genuineness of the 19 documents that were closed in escrow in the alleged loan refinance 20 transaction between Plaintiff and Wells Fargo,” and that he 21 specifically alleged “the wrongdoing of the notary since that 22 individual declared under penalty of perjury that the forged 23 promissory note and deed of trust were signed by Plaintiff in 24 their presence when in fact they were not.” 25 American Mot. 6. Plaintiff responds that Opp. to First 26 As First American points out, in the 1AC, Plaintiff alleges 27 that it can be held liable because it is “the parent corporation 28 of Alliance Title Company” and Alliance Title Company is its 8 1 subsidiary. 2 additional allegations about First American. 3 Id. at ¶¶ 8, 18. Plaintiff does not make any “It is a general principle of corporate law deeply ‘ingrained 4 in our economic and legal systems’ that a parent corporation (so- 5 called because of control through ownership of another 6 corporation’s stock) is not liable for the acts of its 7 subsidiaries.” 8 (quoting Douglas & Shanks, Insulation from Liability Through 9 Subsidiary Corporations, 39 Yale L.J. 193 (1929)). United States v. Bestfoods, 524 U.S. 51, 61 (1998) However, United States District Court For the Northern District of California 10 California courts may nonetheless pierce the corporate veil and 11 impose alter ego liability where a subsidiary and the parent are 12 “not really separate entities” and where they find “(1) that there 13 is such unity of interest and ownership that the separate 14 personalities [of the two entities] no longer exist and (2) that 15 failure to disregard [their separate identities] would result in 16 fraud or injustice.” 17 Cir. 2001) (internal quotation marks and citations omitted, 18 brackets in original). 19 alternately been stated as requiring a showing that the parent 20 controls the subsidiary ‘to such a degree as to render the latter 21 the mere instrumentality of the former.’” 22 see also Holak v. Kmart Corp., 2012 U.S. Dist. LEXIS 176331, at 23 *10-11 (E.D. Cal.) 24 facts to give rise to a plausible basis for piercing the corporate 25 veil”). Doe v. Unocal Corp., 248 F.3d 915, 926 (9th “The first prong of this test has Id. (citation omitted); (granting leave to amend to allege “sufficient 26 Thus, simply alleging that First American is the parent 27 company of Alliance Title Company, its subsidiary, is insufficient 28 to plead a basis for liability against First American. 9 1 Further, as First American argues, Plaintiff has not alleged 2 sufficiently any breach of duty by the notary. 3 alleges that his signature on the documents was forged, Plaintiff 4 has not plead that the notary knew or had any reason to know this 5 or that the notary failed to verify the identity of the signer. 6 Although Plaintiff Accordingly, the Court GRANTS First American’s motion to 7 dismiss Plaintiff’s claims against it. 8 to amend to remedy these deficiencies identified above. 9 II. United States District Court For the Northern District of California 10 Plaintiff is granted leave Quiet Title “The purpose of a quiet title action is to finally settle and 11 determine, as between the parties, all conflicting claims to the 12 property in controversy, and to decree to each such interest or 13 estate therein as he may be entitled to.” 14 Chase Bank, N.A., 732 F. Supp. 2d 952, 974 (N.D. Cal. 2010) 15 (internal quotation marks and citations omitted). 16 action must include in a verified complaint: “(1) a description of 17 the property in question; (2) the basis for plaintiff’s title; and 18 (3) the adverse claims to plaintiff’s title.” 19 Loan Servs., LLC, 2012 U.S. Dist. LEXIS 132489, at *9-10 (N.D. 20 Cal.); Cal. Civ. Proc. Code § 760.020. Rosenfeld v. JPMorgan A quiet title Ananiev v. Aurora 21 “In order to satisfy the second requirement, plaintiff must 22 allege that he has discharged his debt, regardless to whom it is 23 owed.” 24 642 F. Supp. 2d 1048, 1057 (N.D. Cal. 2009)); see also Miller v. 25 Provost, 26 Cal. App. 4th 1703, 1707 (1994) (“This rule was based 26 on the equitable principle that a mortgagor of real property 27 cannot, without paying his debt, quiet his title against the 28 mortgagee.”). Id. (citing Kelley v. Mort. Elec. Registration Sys., Inc., “That is, to state a claim, Plaintiff must allege a 10 1 valid and viable offer of tender.” 2 N.A., 2012 U.S. Dist. LEXIS 168198, at *4-5 (N.D. Cal.) (citing 3 Chancellor v. OneWest Bank, 2012 U.S. Dist. LEXIS 125249, at *10 4 (N.D. Cal.)). 5 Sowinski v. Wells Fargo Bank, Defendants argue that Plaintiff has failed to state a claim 6 to quiet title because he has failed to allege tender 7 sufficiently. 8 offers to tender any amount proper and necessary to effectuate 9 rescission of the void contract.” In the 1AC, Plaintiff has plead that he “hereby 1AC ¶ 28. Plaintiff argues United States District Court For the Northern District of California 10 that this is a sufficient allegation of tender because his 11 complaint attacks the validity of the underlying debt, he is not 12 in default under the forged note and it would be inequitable to 13 require him to tender the full amount of his indebtedness. 14 Plaintiff also argues that he received nothing under the 2005 15 forged note and thus “has nothing to tender in exchange for 16 reformation or rescission of the forged note.” 17 Plaintiff appears to base his arguments that he should not be 18 required to make a full tender on the understanding that he seeks 19 to restore the 2004 mortgage agreement and challenges only the 20 validity of the forged refinancing agreement. 21 quiet title claim, Plaintiff seeks to remove all clouds from his 22 title and requests a determination that he holds title to the 23 property, free from all claims of Defendants, apparently including 24 the original promissory note and deed of trust. 25 (“Plaintiff seeks to quiet title against the claims of Defendants, 26 and each of them. . . . Defendants and each of them, has no valid, 27 lawful, or equitable title, estate, lien or interest in the 28 Property. However, in his See 1AC ¶¶ 36, 37 Defendants do not . . . own or have a legal interest in 11 1 the pertinent notes secured by the corresponding deeds of 2 trust.”). 3 of the original loan, Plaintiff has not stated a claim to quiet 4 title. 5 Without an allegation that he has paid the full amount In addition, Plaintiff has not alleged any adverse claim to 6 his title that is held or asserted by First American that creates 7 a present controversy between him and First American to be 8 resolved by a judgment quieting title. 9 v. Blasius, 78 Cal. App. 4th 810, 831 (2000) (“there is no See Friends of the Trails United States District Court For the Northern District of California 10 entitlement to a judgment quieting title insofar as there is no 11 antagonistic property interest”). 12 Defendants also argue that this claim is time-barred because 13 Plaintiff failed to bring it within three years of December 2005 14 when the loan refinancing papers were filed. 15 statute of limitations governing quiet title actions as such, it 16 is ordinarily necessary to refer to the underlying theory of 17 relief to determine which statute applies.” 18 63 Cal. 2d 558, 560 (1965). 19 statute of limitations is three years after the fraud or mistake 20 has been discovered. 21 based on rescission of a contract in writing where the ground is 22 fraud or mistake, the statute of limitations is four years after 23 the fraud or mistake has been discovered. 24 § 337(3). 25 plaintiff seeking to quiet title while he is in possession of the 26 property.’” 27 LEXIS 71337, at *16. (S.D. Cal.) (quoting Muktarian, 63 Cal. 2d at 28 560). “Since there is no Muktarian v. Barmby, In the case of fraud or mistake, the Cal. Civ. Proc. Code § 338(d). In actions Cal. Civ. Proc. Code “However, ‘no statute of limitations runs against a Espinoza v. Recontrust Co., N.A., 2010 U.S. Dist. Thus, because Plaintiff is still in possession of the 12 1 property, his quiet title claim is not barred by the statute of 2 limitations. 3 Accordingly, the Court GRANTS Defendants’ motions to dismiss 4 Plaintiff’s claim seeking to quiet title. 5 leave to amend to address the deficiencies identified above. 6 III. Reformation of Contract 7 Plaintiff is granted In this claim, Plaintiff contends that, because the “refinancing loan was fabricated through the forgery of 9 Plaintiff’s signature” and the only real agreement that he entered 10 United States District Court For the Northern District of California 8 into was the original mortgage signed in 2004, his loan “should be 11 reformed to reflect the terms of the original obligation and not 12 the terms of the refinancing agreement.” 13 1AC ¶ 41. Wells Fargo argues that Plaintiff has failed to plead any 14 element of a cause of action for reformation of contract. 15 state a claim for reformation under California law, a plaintiff 16 must plead that ‘by reason of fraud practiced by one of the 17 parties, or of the mutual mistake of the parties or of a mistake 18 of one of them, which the other at the time knew or suspected, 19 there were omitted from the instrument certain material terms and 20 conditions. 21 failed, for some reason, to express the intention of the 22 parties.’” 23 LEXIS 3037 (S.D. Cal.) (quoting Pascoe v. Morrison, 219 Cal. 54, 24 56 (1933)); see also Cal. Civ. Code § 3399 (setting forth when a 25 contract may be revised). 26 contract should allege what the real agreement was, what the 27 agreement as reduced to writing was, and where the writing fails 28 to embody the real agreement. “To In other words, that the language of the writing Leisher v. Wachovia Mortg., Inc., 2011 U.S. Dist. “A complaint for the reformation of a It is also necessary to aver facts 13 1 showing how the mistake was made, whose mistake it was and what 2 brought it about, so that mutuality may appear.” 3 172 Cal. App. 2d 302, 309 (1959) (quoting Johnson v. Sun Realty 4 Co., 138 Cal. App. 296, 300 (1934)). 5 for reformation is a showing of a definite intention or agreement 6 on which the minds of the parties had met which pre-existed and 7 conflicted with the instrument in question.” 8 v. McDonnell Douglas Corp., 214 Cal. App. 3d 1, 21 (1989) 9 (internal quotation marks, formatting and citation omitted). United States District Court For the Northern District of California 10 Lane v. Davis, “Basic to a cause of action Appalachian Ins. Co. Wells Fargo argues that Plaintiff has not plead sufficiently 11 that the parties actually entered into a contract that the 2005 12 agreement failed to accurately reflect, or what the terms of such 13 contract was. 14 Court to make an entirely new contract reflecting the terms of the 15 2004, preferred loan agreement.” 16 is correct that Plaintiff has not alleged that the parties 17 actually had a meeting of the minds in 2005 that the purportedly 18 fraudulent agreement fails to reflect. 19 Wells Fargo claims that Plaintiff instead asks “the Wells Fargo Mot. 8. Wells Fargo First American also contends that it is not properly named as 20 a Defendant for this claim. 21 that First American is a party to any contract or agreement with 22 him. 23 Court could reform between him and First American. 24 In the 1AC, Plaintiff has not alleged Thus, Plaintiff has not identified any agreement that the Defendants also argue that reformation requires fraud or 25 mistake, which Plaintiff has not plead sufficiently. 26 opposition to Wells Fargo’s motion to dismiss, Plaintiff states 27 that he seeks reformation on the grounds of “a forgery, or 28 presumably fraud,” not mistake. In his Wells Fargo is correct that 14 1 Plaintiff has not plead that it has directly engaged in any fraud 2 or forgery. 3 Further, Plaintiff has not properly plead an agency 4 relationship between Wells Fargo and Atlantic Bancorp, Dudum or 5 any others, such that their purported forgery or other malfeasance 6 could be imputed to Wells Fargo. 7 alleged that “each Defendants [sic] was acting as the agent, 8 servant, employee, partner, co-conspirator, and/or joint venture 9 of each remaining Defendants [sic].” Plaintiff has only conclusorily 1AC ¶ 13. Plaintiff is United States District Court For the Northern District of California 10 required to make more than conclusory allegations, especially 11 “when normally, as a matter of law, a broker is the agent of the 12 borrower not the lender.” 13 Dist. LEXIS 28125, at *19 (N.D. Cal.) (citing Montoya v. McLeod, 14 176 Cal. App. 3d 57, 64 (1985)). 15 Abels v. Bank of Am., N.A., 2012 U.S. Plaintiff has also not plead sufficiently that Atlantic 16 Bancorp, Dudum, Alliance or First American acted with the 17 ostensible authority of Wells Fargo. 18 ostensible agency exists “when the principal intentionally, or by 19 want of ordinary care, causes a third person to believe another to 20 be his agent who is not really employed by him.” 21 § 2300. 22 done something that caused Plaintiff to believe that these others 23 were its agents. 24 Plaintiff points to in support of his argument regarding 25 ostensible authority is that Wells Fargo has recently instituted 26 foreclosure proceedings to enforce the 2005 deed of trust and 27 promissory note. Under California law, Cal. Civ. Code Thus, Plaintiff must plead that Wells Fargo itself has The only action taken by Wells Fargo that This does not suggest that the actions of 28 15 1 Atlantic, Dudum or Alliance Title in 2005 were taken on behalf of 2 Wells Fargo. 3 In addition, Defendants argue that, on the face of the 1AC, 4 this claim is barred by the four year statute of limitations for 5 the rescission of a written contract. 6 § 337(3). 7 began running in December 2005, the date of the execution of the 8 forged contract, this is incorrect. 9 period began to run in March 2006, when Plaintiff alleges that he Cal. Code Civ. Proc. To the extent that Defendants state that the statute Instead, the four year time United States District Court For the Northern District of California 10 discovered the fraud. 11 not filed until February 2012, this claim is time-barred, unless 12 the statute of limitations was tolled for at least twenty-three 13 months. 14 because he brought it promptly after discovering Wells Fargo’s 15 claim of title and “again immediately after his original suit was 16 dismissed without prejudice.” 17 Id. Nevertheless, because the action was Plaintiff contends that this claim was timely asserted Opp. at 8. “California equitably tolls the statute of limitations during 18 the pendency of an earlier action if there is ‘timely notice, and 19 lack of prejudice to the defendant, and reasonable and good faith 20 conduct on the part of the plaintiff.’” 21 648 v. Hub Pharmacy, Inc., 707 F.2d 1030, 1033 (9th Cir. 1983). 22 California courts have found that three requirements must be 23 present for this rule of equitable tolling may apply: “(1) the 24 plaintiff must have diligently pursued his or her claim; (2) the 25 fact that the plaintiff is left without a judicial forum for 26 resolution of the claim must be attributable to forces outside the 27 control of the plaintiff; and (3) the defendant must not be 28 prejudiced by application of the doctrine (which is normally not a 16 Retail Clerks Union Local 1 factor since the defendant will have had notice of the first 2 action).” 3 App. 4th 1328, 1336 (1994). 4 Diego Police Dep’t, 2012 U.S. Dist. LEXIS 38461, at *12 (S.D. 5 Cal.) (equitable tolling may apply “to prevent unjust technical 6 forfeiture of certain claims”) (internal quotations omitted). 7 While this rule ordinarily does not allow a party to “deduct the 8 time consumed by the pendency of an action if it was later 9 dismissed without prejudice,” Prettyman, 2012 U.S. Dist. LEXIS Hull v. Central Pathology Serv. Med. Clinic, 28 Cal. See also Prettyman v. City of San United States District Court For the Northern District of California 10 38461, at *12-13, that bar normally applies to prevent the 11 voluntary dismissal of actions by the plaintiff, because of 12 courts’ concern that “an indefinite extension of the statutory 13 period -- through successive filings and dismissals -- might well 14 result,” Wood v. Elling Corp., 20 Cal. 353, 359-60 (1977). 15 Here, Plaintiff has alleged that his earlier action was 16 dismissed without prejudice by the bankruptcy court when it 17 dismissed his bankruptcy case, not that he voluntarily dismissed 18 the action. 19 he filed the earlier action or on which the bankruptcy court 20 dismissed it, and has not alleged facts that could support a 21 finding that Defendants would not be prejudiced by application of 22 this doctrine. 23 facts to establish that the statute was tolled for a duration 24 sufficient to have made his claims timely. However, Plaintiff has not plead the dates on which Accordingly, Plaintiff has not sufficiently plead 25 26 27 28 17 1 Accordingly, the Court grants Defendants’ motion to dismiss 2 this claim.5 3 deficiencies identified above. 4 he filed the state court action and on which the bankruptcy court 5 dismissed it, and identify the case numbers and courts for those 6 proceedings. 7 IV. 8 Plaintiff is granted leave to amend to remedy the He must plead the dates on which Wrongful Foreclosure Plaintiff alleges that Defendants’ foreclosure of his property violated California Civil Code section 2924, because the 10 United States District Court For the Northern District of California 9 notice of default did not specify the accurate amount of arrears 11 due to its inclusion of penalties and fees related to the forged 12 refinancing agreement. 13 Defendants argue that Plaintiff’s claim for wrongful 14 foreclosure is insufficiently plead for several reasons. 15 Defendants argue that Plaintiff has not “plead with certainty the 16 first essential element of a wrongful foreclosure sale, i.e., a 17 completed trustee’s sale.” 18 Fargo Mot. 8. 19 is not required for this claim because the “primary remedy” sought 20 for this claim is injunctive relief to “prevent the wrongful 21 foreclosure” of the property. 22 authority in support of his argument. 23 seeking to stop the foreclosure process, Plaintiff requests that First, First American Mot. 14; see also Wells Plaintiff responds that a completed trustee’s sale Plaintiff fails to provide any However, in addition to 24 25 5 26 27 28 The Court notes that, in his opposition to Wells Fargo’s motion to dismiss, Plaintiff refers several times to rescission of the 2005 document, as opposed to reformation. See, e.g., Opp. to Wells Fargo Mot. 6. In amending his complaint, Plaintiff may plead a claim for rescission or cancellation of the 2005 contract instead of attempting to re-plead his claim for reformation. 18 1 he be awarded “actual damages” that he suffered from the 2 purportedly wrongful foreclosure. 3 1AC ¶ 59. In the 1AC, Plaintiff has made contradictory allegations both 4 that a trustee’s sale has been completed and that the property is 5 “in danger of being sold” but has not yet been sold. 6 29; see also id. at ¶ 58 (“Defendants are now seeking to 7 wrongfully foreclose on Plaintiff’s Property . . . Defendants 8 should be precluded from foreclosing on Plaintiff’s Property and 9 from selling Plaintiff’s Property at a trustee’s sale.”). 1AC ¶¶ 22, In his United States District Court For the Northern District of California 10 responses to the motions to dismiss, Plaintiff consistently 11 asserts that “Plaintiff’s Property has not yet been sold at a 12 scheduled trustee’s sale.” 13 Opp. to First American Mot. 7. Under California law, a “lender or foreclosure trustee may 14 only be liable to the mortgagor or trustor for wrongful 15 foreclosure if the property was wrongfully or illegally sold under 16 a power of sale contained in a mortgage or deed of trust.” 17 Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952, 961 18 (N.D. Cal. 2010) (citing Munger v. Moore, 11 Cal. App. 3d 1, 7 19 (1970)). 20 Dist. LEXIS 55977, at *9 (N.D. Cal.) (“The first element for a 21 wrongful foreclosure claim is that the property was illegally or 22 fraudulently sold under a power of sale in a deed of trust.”); 23 Chancellor v. OneWest Bank, 2012 U.S. Dist. LEXIS 71992, at *24-26 24 (N.D. Cal.) (dismissing without prejudice a wrongful foreclosure 25 claim as “premature” where the plaintiff alleged that a 26 foreclosure sale was scheduled but not that it had already 27 occurred). See also Permito v. Wells Fargo Bank, N.A., 2012 U.S. Accordingly, if a trustee’s sale has not yet taken 28 19 1 place, Plaintiff’s claim for damages as a result of the wrongful 2 foreclosure is premature. 3 Defendants also argue that Plaintiff has not specified the 4 specific part of section 2924 that he asserts Defendants have 5 violated. 6 that Defendant violated Civil Code § 2924 for not recording a 7 Notice of Default with accurate amounts of arrears and as such, 8 the nature of the breach was not known to the Plaintiff.” 9 Wells Fargo Mot. to Dismiss 12. Plaintiff responds that he “specifically identifies Opp. to He acknowledges that the 1AC United States District Court For the Northern District of California 10 “fails to specifically identify the actual section” that was 11 purportedly violated but avers that “this deficiency can easily be 12 cured by allowing leave to amend in order to state that Defendant 13 specifically violated Civil Code § 2924(a)(1)(C).” Id.6 14 In addition, Defendants argue that Plaintiff’s wrongful 15 foreclosure claim fails because he has inadequately alleged tender 16 of the indebtedness. 17 a completed trustee’s sale, if Plaintiff seeks equitable relief to 18 postpone or prevent the sale, many “courts have refused to extend 19 the tender rule to cases where the foreclosure sale has not yet 20 occurred.” 21 38642, at *14 (C.D. Cal.); see also Howl v. Bank of Am., N.A., 22 2011 U.S. Dist. LEXIS 91698, at *5 (N.D. Cal.); Silva-Pearson v. 23 BAC Home Loans Servicing, LP, 2011 U.S. Dist. LEXIS 71639, at *5-6 Although tender may be required to set aside Tang v. Bank of Am., N.A., 2012 U.S. Dist. LEXIS 24 25 26 27 28 6 California Civil Code section 2924(a)(1)(C) requires that the notice of default include a “statement setting forth the nature of each breach actually known to the beneficiary and of his or her election to sell or cause to be sold the property to satisfy that obligation and any other obligation secured by the deed of trust or mortgage that is in default.” 20 1 (N.D. Cal.); Dubin v. BAC Home Loans Servicing, 2011 U.S. Dist. 2 LEXIS 19921, at *7 (N.D. Cal.). 3 Where a foreclosure sale has taken place, without pleading 4 tender or the ability to offer tender, a plaintiff cannot state a 5 cause of action challenging a foreclosure. 6 & Loan Ass’n, 15 Cal. App. 3d 112, 117 (1971) (citing Copsey v. 7 Sacramento Bank, 133 Cal. 659, 662 (1901)); Smith v. Wachovia, 8 2009 U.S. Dist. LEXIS 57553, at *8 (N.D. Cal.) (citing Karlsen, 15 9 Cal. App. 3d at 117). Karlsen v. Am. Savings “An exception to the tender rule may apply, United States District Court For the Northern District of California 10 however, where it would be inequitable to require tender.” 11 v. Am. Mortg. Network, Inc., 2012 U.S. Dist. LEXIS 80044 (C.D. 12 Cal.) (citing Onofrio v. Rice, 55 Cal. App. 4th 413, 424 (1997)). 13 Further, “if the action attacks the validity of the underlying 14 debt, a tender is not required since it would constitute an 15 affirmative of the debt.” 16 (citation omitted). 17 district has declined to impose a tender requirement when the 18 plaintiffs challenged the validity of the underlying debt, “by 19 alleging forgery and fraud in the consummation of the underlying 20 security.” 21 Dist. LEXIS 75401, at *1-2 (N.D. Cal.). 22 foreclosure sale has taken place, it would be inequitable to 23 require Plaintiff to tender the full amount secured by the 2005 24 note because he alleges that he never agreed to that debt and his 25 name was forged on the refinancing papers. 26 Bowe Onofrio, 55 Cal. App. 4th at 424 On this basis, at least one court in this See Kurek v. America’s Wholesale Lender, 2010 U.S. Similarly, here, if a Although full tender is not required, under the circumstances 27 present here, Plaintiff’s current allegation of tender is 28 insufficient. Plaintiff does not challenge the validity of the 21 1 debt incurred through the 2004 mortgage agreement and instead 2 seeks rescission of the 2005 agreement in order to have the 2004 3 agreement reinstated. 4 equitable maxim that a court of equity will not order that a 5 useless act be performed.” 6 158 Cal. App. 3d 575, 579 (1984). 7 tender, a plaintiff cannot redeem the property and so unwinding a 8 completed foreclosure sale would be ‘useless.’” 9 Am., N.A., 2012 U.S. Dist. LEXIS 38642 (C.D. Cal.). The tender rule “is premised upon the Arnolds Management Corp. v. Eischen, The rationale is that, “without Tang v. Bank of Plaintiff has United States District Court For the Northern District of California 10 alleged an offer “to tender any amount proper and necessary to 11 effectuate rescission of the void contract.” 12 must at least also allege an offer to pay the amounts due for the 13 monthly payments under the original loan, including any fees and 14 interest incurred due to the late payment. 15 to make such an allegation truthfully, it appears that it would 16 not be useless to set aside a foreclosure sale and reinstate the 17 original loan. 18 1AC ¶ 28. Plaintiff If Plaintiff is able Accordingly, the Court grants Defendants’ motions to dismiss 19 the claim for wrongful foreclosure. 20 amend to plead whether or not a trustee’s sale has been completed, 21 to identify the particular subsection of section 2924 that he 22 alleges Defendants have violated and, if a trustee’s sale has 23 taken place, to plead tender adequately. 24 V. 25 Plaintiff is granted leave to Slander of Title Plaintiff alleges that “the Defendants have recorded a notice 26 of default on a void note which was manufactured by the 27 Defendants’ own wrongdoing” and that, as a result, he has suffered 28 22 1 damage to his credit, an inflated premium, accrual of arreages, 2 attorneys’ fees and foreclosure. 1AC ¶¶ 64-69. 3 The elements of a claim for slander of title under California 4 law are (1) publication, (2) falsity, (3) absence of privilege and 5 (4) “‘disparagement of another’s land which is relied upon by a 6 third party and which results in a pecuniary loss.’” 7 Commonwealth Land Title Ins. Co., 177 Cal. App. 3d 625, 630 (1986) 8 (quoting Appel v. Burman, 159 Cal. App. 3d 1209, 1214 (1984)). 9 Because, under California law, the “mailing, publication, and Smith v. United States District Court For the Northern District of California 10 delivery of notices” required as part of the nonjudicial 11 foreclosure process are considered privileged communications, see 12 Cal. Civ. Code § 2924(d)(1), Plaintiffs must also allege that the 13 recording was done with malice, that is, it “was motivated by 14 hatred or ill will” or “the defendant lacked reasonable grounds 15 for belief in the truth of the publication and therefore acted in 16 reckless disregard of the plaintiff’s rights.” 17 Markowitz, 168 Cal. App. 4th 316, 336 (2008) (internal quotations 18 omitted). 19 Kachlon v. Defendants argue that Plaintiff has not sufficiently alleged 20 that he was damaged by any false publication because “the 21 proximate cause of loss is due solely to Plaintiff’s default on 22 the loan.” 23 Plaintiff has alleged that the second forged agreement had 24 significantly less favorable terms than the original loan, which 25 caused his monthly payments to increase, and that “his inability 26 to make monthly mortgage payments, as well as the total amount of 27 arrearages, was a direct result of the forged second note and the 28 false [notice of default].” Wells Fargo Mot. 10; First American Mot. 16. 1AC ¶¶ 17, 19, 69. 23 However, Thus, Plaintiff 1 has alleged adequately that he suffered a loss because of the 2 purported fraud and void note. 3 However, Plaintiff has made only conclusory allegations that 4 Wells Fargo and First American acted with malice. 5 specifically alleged that Atlantic Bancorp and Dudum--against whom 6 Plaintiff is no longer pursuing claims--forged his signature. 7 has not alleged that either Wells Fargo or First American knew of 8 the forgery or that they acted out of hatred or ill will toward 9 him. Plaintiff has He Although Plaintiff asserts in his response to First United States District Court For the Northern District of California 10 American’s motion that “the notary authenticating Plaintiff’s 11 forged signatures knew that the signatures were not genuine,” Opp. 12 to First American Mot. 7-8, Plaintiff did not allege in the 1AC 13 that the notary had such knowledge. 14 Plaintiff has not alleged sufficiently any basis to assign 15 liability to First American for the notary’s actions. 16 Accordingly, Plaintiff has failed to allege this claim adequately 17 against either remaining Defendant. 18 Further, as explained above, Thus, the Court GRANTS Defendants’ motions to dismiss this 19 claim. 20 identified above. 21 VI. 22 Plaintiff is granted leave to remedy the deficiencies Equitable Indemnity Both Defendants argue that Plaintiff’s claim for equitable 23 indemnification is misplaced because that doctrine applies only to 24 apportion liability among various defendants who are jointly and 25 severally liable to a plaintiff. 26 Plaintiff did not respond to Wells Fargo’s argument. 27 Accordingly, the Court GRANTS Wells Fargo’s motion to dismiss this 28 claim. 24 1 In his opposition to First American’s motion, Plaintiff 2 states that he “seeks equitable indemnity from Defendant First 3 American for their alleged misconduct in creating the initial 4 controversy.” 5 allegations that, “as a result of the forged documents, Plaintiff 6 suffers from ‘overcharges of fees, incurred attorneys’ fees, 7 etc. . .’” and states that, to the extent “Wells Fargo seeks such 8 sums from Plaintiff, First American is liable for equitable 9 indemnity.” United States District Court For the Northern District of California 10 Opp. to First American Mot. 8. He points to his Id. “At the heart of the doctrine of equitable indemnity is 11 apportionment based on fault. 12 requires a determination of fault on the part of the alleged 13 indemnitor.” 14 Co., 155 Cal. App. 4th 339, 348 (2007) (internal quotation marks, 15 citations and formatting omitted). 16 there can be no indemnity without liability. 17 unless the prospective indemnitor and indemnitee are jointly and 18 severally liable to the plaintiff there is no basis for 19 indemnity.” 20 formatting omitted). At a minimum equitable indemnity Heritage Oaks Partners v. First American Title Ins. “One point stands clear: In other words, Id. (internal quotation marks, citations and 21 Thus, to state a cause of action for equitable indemnity, 22 Plaintiff must allege that he was jointly and severally liable 23 with First American to Wells Fargo. 24 Accordingly, the Court GRANTS, with leave to amend, First 25 American’s motion to dismiss this claim. 26 27 28 Plaintiff has not done so. CONCLUSION For the reasons set forth above, the Court GRANTS Defendants’ motions to dismiss (Docket Nos. 17, 37 and 39). 25 Within fourteen 1 days of the date of this Order, Plaintiff may file a second 2 amended complaint to remedy the deficiencies identified above. 3 may not add further claims or allegations not authorized by this 4 Order. 5 He If Plaintiff files a second amended complaint, Defendants 6 shall respond to it within fourteen days after it is filed. 7 Defendants move to dismiss the second amended complaint, to the 8 extent possible, Defendants, who share counsel, shall file a joint 9 motion. Plaintiff shall respond to the motion within fourteen 10 United States District Court For the Northern District of California If days after it is filed. 11 due seven days thereafter. 12 on the papers. 13 14 15 Defendants’ reply, if necessary, shall be Any motion to dismiss will be decided The Court sets a case management conference for April 17, 2013 at 2:00 p.m. IT IS SO ORDERED. 16 17 18 Dated: 1/17/2013 CLAUDIA WILKEN United States District Judge 19 20 21 22 23 24 25 26 27 28 26

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