Cruz et al v. JP Morgan Chase Bank, National Association et al

Filing 41

ORDER by Judge Claudia Wilken GRANTING IN PART AND DENYING IN PART DEFENDANTS 34 MOTION TO DISMISS (Docket No. 34) AND SETTING A CASE MANAGEMENT CONFERENCE.(ndr, COURT STAFF) (Filed on 10/17/2012)

1

IN THE UNITED STATES DISTRICT COURT

2

FOR THE NORTHERN DISTRICT OF CALIFORNIA

3
4
5

ARMIE CUA CRUZ; and FLORO LORENZO
CRUZ, JR.,

8
9

United States District Court
For the Northern District of California

10
11

v.
JP MORGAN CHASE BANK, NATIONAL
ASSOCIATION, as successor in
interest to WASHINGTON MUTUAL
BANK F.A.; QUALITY LOAN SERVICE
CORPORATION; CALIFORNIA
RECONVEYANCE COMPANY; and DOES
1-100,
Defendants.

12
13
14
15
16
17
18
19
20

________________________________/
Defendants JPMorgan Chase Bank, N.A. (Chase) and California
Conveyance Company (CRC) move to dismiss the first amended
complaint (1AC) of Plaintiffs Armie Cua Cruz and Floro Lorenzo
Cruz, Jr.1

23
24

Plaintiffs oppose the motion.

motion under submission on the papers.

The Court took the

Having considered the

papers submitted by the parties, the Court GRANTS Defendants’
motion in part and DENIES it in part.
BACKGROUND

21
22

ORDER GRANTING IN
PART AND DENYING
IN PART
DEFENDANTS’ MOTION
TO DISMISS (Docket
No. 34) AND
SETTING A CASE
MANAGEMENT
CONFERENCE

Plaintiffs,

6
7

No. C 12-3219 CW

The following allegations are taken from Plaintiffs’ 1AC and
documents of which Defendants ask the Court to take judicial
notice, which Plaintiffs do not oppose.

25
26
27
28

1

In their original complaint, Plaintiffs named Chase, CRC
and Quality Loan Service Corporations as Defendants. In their
1AC, they renamed only Chase. Accordingly, Plaintiffs have
voluntarily dismissed their claims against the other two
Defendants.

1

On or about October 29, 2005, Plaintiffs entered into a loan

2

agreement with Washington Mutual Bank, N.A. in connection with the

3

refinancing of their home, located at 23 Pinnacle Street in South

4

San Francisco, California.

5

subsequently acquired Washington Mutual’s interest in the loan.

6

RJN, Ex. A; 1AC ¶ 10.

Chase

In February 2009, Mr. Cruz was hospitalized for blood clots

7

in his brain and, as a result of his health condition, was forced

8

to stop working.

9

feel the pressure of living on one income.

1AC ¶ 11.

In March 2009, Plaintiffs began to
Id. at ¶ 12.

After

United States District Court
For the Northern District of California

10

making their March 2009 payment, Plaintiffs contacted Chase to

11

inquire about a potential loan modification or other alternative

12

to foreclosure.

13

alternatives available and refused to consider them for a loan

14

modification or any other foreclosure alternatives.

15

14.

Chase told Plaintiffs that there were no

Id. at ¶¶ 13-

Plaintiffs were heartbroken at Chase’s refusal.

16
17

Id.

Id. at ¶ 13.

Due to their medical emergencies, Plaintiffs missed a few of
their $4,500 monthly mortgage payments.

18

Id. at ¶ 14.

On July 2, 2009, Plaintiffs received a Notice of Default

19

stating that their account was in arrears for $22,870.71.

20

¶ 15.

21

March 2009, the Notice of Default stated that “payment has not

22

been made of,” among other things, “the 01/01/2009 installment of

23

principal and interest and all subsequent monthly installments of

24

principal and interest.”

25

recorded the Notice of Default on July 3, 2008.

26
27

Id. at

Despite the fact that Plaintiffs made their last payment in

RJN, Ex. C; 1AC ¶ 22.

Defendants
RJN, Ex. C.

Plaintiffs were shocked at the overestimation of the amount
that Chase claimed they were in arrears.

28
2

1AC ¶ 16.

However, they

1

began to pool money in order to reinstate their loan prior to any

2

trustee’s sale.

3

1AC ¶ 17.

On October 7, 2009, Defendants recorded a Notice of Trustee’s

4

Sale of Plaintiffs’ home.

5

the notice on Plaintiffs’ door or anywhere on the property.

6

¶ 17.

7

later.”

8
9

RJN, EX. D.

Defendants did not post

Plaintiffs “only received the notice in the mail sometime
Id.

On October 26, 2009, the property was sold in a Trustee’s
Sale to Chase.

RJN, Ex. E.

Plaintiffs “were ready, willing, and

10
United States District Court
For the Northern District of California

1AC

able to tender payment to reinstate the loan prior to the

11

Trustee’s Sale.”

12

1AC ¶ 1.

Plaintiffs initiated the instant lawsuit on June 20, 2012,

13

asserting eleven claims against Defendants.

14

Plaintiffs also requested a temporary restraining order on June

15

20, 2012, seeking to prevent Chase from enforcing a writ of

16

possession the following day.

17

Docket No. 1.

Docket No. 3.

On June 21, 2012, the Court found that Plaintiffs had not

18

made a sufficient showing to obtain an ex parte temporary

19

restraining order because, among other reasons, Plaintiffs had not

20

submitted evidence that such a writ existed or that Chase intended

21

to enforce it on that date.

22

briefing schedule for the motion, requiring Chase to file a

23

response to Plaintiffs’ motion for a temporary restraining order

24

by 12:00 p.m. three court days after it has been served with

25

certain documents and permitting Plaintiffs to file a reply by

26

12:00 p.m. the following court day.

27
28

Docket No. 7.

The Court set a

On June 29, 2012, Chase and CRC filed an opposition to
Plaintiffs’ motion for a temporary restraining order.
3

Docket No.

1

13.

2

moot because Chase had obtained possession of the property.

3

They argued, among other things, that Plaintiffs’ motion was

Plaintiffs did not file a reply in further support of their

4

application for a temporary restraining order or otherwise

5

challenge the argument that their motion was moot.

6

2012, the Court denied as moot Plaintiffs’ application for a

7

temporary restraining order.

8
9

Docket No. 17.

On July 16, 2012, Defendants moved to dismiss Plaintiffs’
original complaint.

10
United States District Court
For the Northern District of California

On July 5,

Docket No. 18.

On August 1, 2012, Plaintiffs filed their 1AC.

Docket No.

11

25.

12

(1) wrongful foreclosure based on the inaccuracy in the Notice of

13

Default and the failure to post the Notice of Trustee’s Sale on

14

Plaintiffs’ door; (2) breach of contract for taking away

15

Plaintiffs’ right to reinstate the loan up until five days before

16

the Trustee’s sale by not apprising them of the date of the sale;

17

(3) invasion of privacy by placing Plaintiffs in a false light

18

based on Chase’s representation to the credit bureaus that

19

Plaintiffs were behind on their mortgage in January 2009 and

20

thereafter; and (4) violation of California’s Unfair Competition

21

Law (UCL), California Business and Professions Code §§ 17200, et

22

seq.

23

In their 1AC, Plaintiffs bring four claims against Chase:

On August 6, 2012, the Court found Defendants’ first motion

24

to dismiss to be moot.

25

filed the instant motion to dismiss the 1AC.

26
27
28

Docket No. 26.

Thereafter, Defendants
Docket No. 34.

LEGAL STANDARD
A complaint must contain a “short and plain statement of the
claim showing that the pleader is entitled to relief.”
4

Fed. R.

1

Civ. P. 8(a).

2

state a claim, dismissal is appropriate only when the complaint

3

does not give the defendant fair notice of a legally cognizable

4

claim and the grounds on which it rests.

5

Twombly, 550 U.S. 544, 555 (2007).

6

complaint is sufficient to state a claim, the court will take all

7

material allegations as true and construe them in the light most

8

favorable to the plaintiff.

9

896, 898 (9th Cir. 1986).

On a motion under Rule 12(b)(6) for failure to

Bell Atl. Corp. v.

In considering whether the

NL Indus., Inc. v. Kaplan, 792 F.2d

However, this principle is inapplicable

United States District Court
For the Northern District of California

10

to legal conclusions; “threadbare recitals of the elements of a

11

cause of action, supported by mere conclusory statements,” are not

12

taken as true.

13

(citing Twombly, 550 U.S. at 555).

14

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

When granting a motion to dismiss, the court is generally

15

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

16

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

17

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

18

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

19

amendment would be futile, the court examines whether the

20

complaint could be amended to cure the defect requiring dismissal

21

“without contradicting any of the allegations of [the] original

22

complaint.”

23

Cir. 1990).

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

24
25
26

In determining whether

DISCUSSION
I.

Wrongful foreclosure
Defendants argue that Plaintiffs’ claim for wrongful

27

foreclosure in violation of California Civil Code section 2924, et

28

seq., fails because Plaintiffs have not alleged sufficiently that
5

1

they were prejudiced by any such violation.

2

contend that Plaintiffs have not sufficiently alleged tender.

Defendants also

3

In response, Plaintiffs argue that they have sufficiently

4

plead that Chase violated the statutory procedures for nonjudicial

5

foreclosures and that they were harmed, because they were ready,

6

willing and able to reinstate their loan had they been provided

7

sufficient notice.

8

tender properly.

9

Plaintiffs also argue that they have alleged

“A nonjudicial foreclosure sale is presumed to have been

United States District Court
For the Northern District of California

10

conducted regularly and fairly, and a wrongful foreclosure claim

11

must allege with sufficient facts that (1) proper procedure under

12

§§ 2924 to 2924k was not followed; and (2) the plaintiff was

13

prejudiced as a result.”

14

2012 U.S. Dist. LEXIS 122436, at *10 (E.D. Cal.) (citing Knapp v.

15

Doherty, 123 Cal. App. 4th 76 (2004)); see also Lona v. Citibank,

16

N.A., 202 Cal. App. 4th 89, 104 (2011).

Garcia v. Fed. Home Loan Mortg. Corp.,

17

A. Prejudice

18

In the 1AC, Plaintiffs allege that Chase did not follow the

19

proper statutory procedures for nonjudicial foreclosures because

20

of inaccuracies in the Notice of Default and a failure to post the

21

Notice of Default on the property.

22

opposition, Plaintiffs also state that Chase violated the

23

statutory procedures by proceeding with a Trustee’s sale less than

24

twenty days after the Notice of Trustee’s Sale was recorded, in

25

violation of California Civil Code sections 2924b and 2924f;

26

Plaintiffs request leave to amend to add this allegation.

27

1.

28

alleged that the nonjudicial foreclosure procedures were violated.

1AC ¶¶ 22-23.

In their

Opp. at

Defendants do not contest that Plaintiffs have sufficiently

6

1

Instead, Defendants argue that Plaintiffs have not

2

sufficiently alleged that they were prejudiced as a result of

3

these procedural irregularities.

4

“prejudice or harm is not established unless Plaintiffs

5

demonstrate that the foreclosure would have been averted but for

6

the alleged deficiencies.”

7

U.S. Dist. LEXIS 142070, at *22 (N.D. Cal.) (internal quotation

8

marks, citations and formatting omitted).

9

In a wrongful foreclosure case,

Christiansen v. Wells Fargo Bank, 2012

Because Plaintiffs alleged that they were able and willing to

United States District Court
For the Northern District of California

10

reinstate prior to the Trustee’s sale but were denied the

11

opportunity to do so by Chase’s alleged failure to post the notice

12

as required by law, they have sufficiently alleged prejudice.

13

Under state law, defaulted borrowers have a right to reinstate

14

their obligation “at any time within the period commencing with

15

the date of recordation of the notice of default until five

16

business days prior to the date of sale set forth in the initial

17

recorded notice of sale.”

18

argue that Plaintiffs “merely claim that they were attempting to

19

gather the money to reinstate, but have not conclusively alleged

20

that even if they had notice, they would have been able to

21

reinstate.”

22

they “were ready, willing and able to tender payment to reinstate

23

the loan prior to the Trustee’s Sale,” 1AC ¶ 1, and that, because

24

Chase failed to post the Notice of Trustee’s Sale on their

25

property, they were not told when the Trustee’s sale would

26

actually take place and thus when the time period for their right

27

to reinstate would expire, id. at ¶ 17.

28

that Plaintiffs have not plead prejudice because they admit that

Reply at 2.

Cal. Civ. Code § 2924c(e).

Defendants

However, Plaintiffs in fact alleged that

7

Defendants further argue

1

they had actual notice of the Notice of Trustee’s Sale, having

2

received it in the mail, and thus could have reinstated prior to

3

the sale.

4

received the notice “in the mail sometime later.”

5

have not admitted that they received this notice prior to the

6

Trustee’s sale.

7

Mot. at 5.

In fact, Plaintiffs alleged that they
1AC ¶ 17.

They

Finally, Defendants contend that Plaintiffs had notice that
nonjudicial foreclosure proceedings were underway because they

9

received the Notice of Default in July 2009 and that Plaintiffs

10
United States District Court
For the Northern District of California

8

had never tried to reinstate during the time period after they

11

received that notice and the foreclosure sale.

12

Notice of Default, however, did not tell Plaintiffs when their

13

right to reinstate expired.

14

Trustee’s Sale, Plaintiffs were not aware that they had to

15

exercise this right by a particular date or lose the opportunity

16

to do so.

17

before the Trustee’s sale.

18

reinstate prior to this time does not mean that they would not

19

have exercised this right by the expiration date had they been

20

told of it, and they have alleged that they were willing and able

21

to do so.

22

Mot. at 5.

The

Without being served the Notice of

They had a statutory right to reinstate until five days
That Plaintiffs did not attempt to

However, Plaintiffs have not alleged sufficiently any

23

prejudice that they suffered from the claimed inaccuracies on the

24

Notice of Default.

25

2009 and Plaintiffs admit that they made their last $4,500 monthly

26

payment in March 2009; thus, when the Notice was sent, Plaintiffs

27

had missed a minimum of three payments, for April, May and June

28

2009, totaling at least $13,500.

The Notice of Default was issued on July 2,

As a result, the errors alleged
8

1

in the Notice of Default consist of an incorrect amount of

2

arrearages and an incorrect date of their first missed

3

installment, and do not include the fact that they were in

4

default.

5

deadline for reinstatement, they could have reinstated by

6

proffering the amount that they believed was correct.

7

Miller & Starr, Cal. Real Est. § 10:188 (3d ed.) (“When the

8

beneficiary fails or refuses to inform the trustor or other person

9

seeking reinstatement of the amount necessary to cure the default,

If Plaintiffs had been given proper notice of the

See 4

United States District Court
For the Northern District of California

10

or the person seeking reinstatement believes that the

11

beneficiary’s demand is excessive, reinstatement can be made by a

12

tender of the amount which the person reinstating believes to be

13

the proper amount.”).

14

Plaintiffs have not plead sufficiently how the foreclosure would

15

have been averted but for the deficiencies in the Notice of

16

Default.

Thus, absent additional allegations,

17

B. Tender

18

“Under California law, in an action to set aside a trustee’s

19

sale, a plaintiff must demonstrate that he has made a ‘valid and

20

viable tender [offer] of payment of the indebtedness.’”

21

v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1183-1184

22

(N.D. Cal. 2009) (quoting Karlsen v. American Sav. & Loan Assn, 15

23

Cal. App. 3d 112, 117 (1971), and Arnolds Mgmt. Corp. v. Eischen,

24

158 Cal. App. 3d 575, 578 (1984) (“[A]n action to set aside a

25

trustee’s sale for irregularities in sale notice or procedure

26

should be accompanied by an offer to pay the full amount of the

27

debt for which the property was security.”)).

28

district courts apply the tender rule in examining wrongful
9

Pantoja

“California

1

foreclosure claims.”

2

Dist. LEXIS 19921, at *6 (N.D. Cal.) (citations omitted).

3

tender rule “is premised upon the equitable maxim that a court of

4

equity will not order that a useless act be performed.”

5

Management Corp. v. Eischen, 158 Cal. App. 3d 575, 579 (1984).

6

The rationale is that, “without tender, a plaintiff cannot redeem

7

the property and so unwinding a completed foreclosure sale would

8

be ‘useless.’”

9

38642, at *16 (C.D. Cal.).

Dubin v. BAC Home Loans Servicing, 2011 U.S.
The

Arnolds

Tang v. Bank of Am., N.A., 2012 U.S. Dist. LEXIS
“A plaintiff must (1) demonstrate a

United States District Court
For the Northern District of California

10

willingness to pay and (2) show the ability to pay.”

11

F. Supp. 2d at 1184 (citing In re Worcester, 811 F.2d 1224, 1231

12

(9th Cir. 1987)).

13

plaintiff’s ability to pay back what the plaintiff has received

14

less interest and finance charges.”

15

“However, an offer to pay debt may not be required where it is

16

inequitable.”

17

Pantoja, 640

“A valid and viable tender offer is the

Id. (citation omitted).

Id.

Plaintiffs do not dispute that tender is required.

Instead,

18

they argue that they sufficiently alleged tender.

19

Plaintiffs alleged that they were ready, willing and able to

20

tender the amount required to reinstate the loan, not the full

21

amount of the indebtedness.

22

In the 1AC,

See 1AC ¶¶ 1, 17.

In Solomon v. Aurora Loan Servs. LLC, 2012 U.S. Dist. LEXIS

23

92368 (E.D. Cal.), the plaintiff alleged that “she had sufficient

24

funds to pay all of her arrearage at the time that the foreclosure

25

sale occurred” and that she “offers to pay all amounts due and

26

owing so that the claimed default may be cured and Plaintiff may

27

be reinstated to all former rights and privileges under the

28

subject deed of trust.”

Id. at *26.
10

The court found that, in

1

light of these allegations and those that her default was due to

2

the defendant’s misrepresentations, it did “not appear that it

3

would be useless to set aside the foreclosure sale and reinstate

4

plaintiff’s loan.”

5

Id.

Similarly, here, Plaintiffs have alleged that they were ready

6

and willing to tender the payment required to reinstate the loan

7

prior to the Trustee’s sale but that they were unable to do so

8

because of Chase’s failure to tell them the date of the sale.

9

Under these circumstances, it appears at this stage of the

United States District Court
For the Northern District of California

10

litigation that it would not be useless to set aside the

11

foreclosure sale and reinstate Plaintiffs’ loan.

12

allegation of full tender is not required.

Thus, an

13

C. Summary

14

For the reasons set forth above, the Court GRANTS in part

15

Defendants’ motion to dismiss this claim and dismisses this claim

16

to the extent it is premised on claimed inaccuracies on the Notice

17

of Default.

18

the extent it is premised on Chase’s alleged failure to post the

19

notice as required by law.

20

The Court DENIES the motion to dismiss the claim to

Plaintiffs are granted leave to amend to plead prejudice from

21

the incorrect Notice of Default.

22

leave to plead that the Trustee’s sale improperly took place less

23

than twenty days after the recording of the Notice of Trustee’s

24

Sale if they can truthfully plead that they were prejudiced by

25

this deficiency.

26

II.

27
28

Plaintiffs are also granted

Breach of Contract
Section 19 of the Deed of Trust provides that the borrower

has the right to reinstate the loan after acceleration until five
11

1

days before the sale of the property pursuant to the power of sale

2

in the deed.

3

breached this section by not apprising them of the date of

4

Trustee’s sale.

RJN, Ex. A ¶ 19.

Plaintiffs allege that Chase

1AC ¶ 28.

5

To assert a cause of action for breach of contract, a

6

plaintiff must plead: (1) the existence of a contract; (2) the

7

plaintiff’s performance or excuse for non-performance; (3) the

8

defendant’s breach; and (4) damages to the plaintiff as a result

9

of the breach.

United States District Court
For the Northern District of California

10
11

Armstrong Petrol. Corp. v. Tri-Valley Oil & Gas

Co., 116 Cal. App. 4th 1375, 1391 n.6 (2004).
Defendants argue that this claim is deficient for several

12

reasons.

13

breach of contract claim because they failed to perform their

14

obligations under the contract when they defaulted on the loan.

15

Mot. at 7.

16

Plaintiffs have defaulted on their payments and sets forth

17

bargained-for provisions governing the parties’ conduct in the

18

event of such a breach.

19

unless Plaintiffs were in default, Defendants cannot rely on

20

Plaintiffs’ default to escape their obligations under this section

21

regarding their conduct in the event of default.

22

First, they contend that Plaintiffs cannot assert a

However, this section of the deed presumes that

Because this section cannot be invoked

Second, Defendants argue that Plaintiffs have not alleged

23

sufficiently that there was a breach because Plaintiffs were not

24

precluded from exercising their rights under this section simply

25

because Chase did not post the Notice of Default on their

26

property.

27

them notice of the date of the sale deprived them of their right

28

to reinstate within five days before that date.

Again, Plaintiffs respond that Chase’s failure to give

12

1

Although Chase may not have explicitly denied Plaintiffs

2

their right to reinstate, Plaintiffs have sufficiently alleged

3

that Chase interfered with their exercise of this right and failed

4

to provide the notice that they needed to enable them to do so.

5

“There is implied in every contract a covenant by each party not

6

to do anything which will deprive the other parties thereto of the

7

benefits of the contract.”

8

417 (1960).

9

of either an express provision of the contract or on the implied

Harm v. Frasher, 181 Cal. App. 2d 405,

“A breach of contract may be established on the basis

United States District Court
For the Northern District of California

10

covenant of good faith and fair dealing.”

11

Morgan Chase Bank, N.A., 2012 U.S. Dist. LEXIS 40989, at *63 (N.D.

12

Cal.) (citing Storek & Storek, Inc. v. Citicorp Real Estate, Inc.,

13

100 Cal. App. 4th 44, 55 (2002)).

14

upon each contracting party the duty to refrain from doing

15

anything which would render performance of the contract impossible

16

by any act of his own, but also the duty to do everything that the

17

contract presupposes that he will do to accomplish its purpose.”

18

Harm, 181 Cal. App. 2d at 417.

19

express terms of a contract” and “cannot impose substantive duties

20

or limits on the contracting parties beyond those incorporated in

21

the specific terms of the parties’ agreement.”

22

2012 U.S. Dist. LEXIS 40989, at *64 (internal quotation marks,

23

citations and formatting omitted).

24

McNeary-Calloway v. JP

“This covenant not only imposes

However, it “cannot contradict the

McNeary-Calloway,

As explained above, Plaintiffs have alleged sufficiently that

25

Chase interfered with their ability to obtain the benefits of

26

section 19 of the Deed of Trust by failing to tell them of the

27

date of the Trustee’s sale.

28

Defendants’ motion to dismiss this claim.

Accordingly, the Court denies

13

1
2

III. False Light Invasion of Privacy
Plaintiffs allege that Chase invaded their privacy by placing

3

them in a false light when it reported to the credit bureaus that

4

they were behind on their mortgage in January 2009, although they

5

made their last payment two months later in March 2009.

6

Defendants move to dismiss this claim on the basis that,

7

because the claim arose in 2009 and the statute of limitations for

8

the claim is two years, Plaintiffs were required to file suit by

9

2011 and their claim is now barred.

Defendants also argue that

United States District Court
For the Northern District of California

10

Plaintiffs cannot rely on the delayed discovery rule to extend the

11

statute of limitations because they could have easily discovered

12

the credit reports earlier with reasonable diligence and should

13

have known that there would have been an adverse entry as of at

14

least April 2009 when they admittedly stopped making their

15

mortgage payments.

16

Plaintiffs do not deny that the statute of limitations has

17

run on this claim based on the face of the 1AC, but request leave

18

to amend to plead that they only learned of the wrongdoing

19

“sometime after” it occurred.

20

“Under the discovery rule, the statute of limitations begins

21

to run when the plaintiff suspects or should suspect that her

22

injury was caused by wrongdoing, that someone has done something

23

wrong to her.”

24

(1988); see also Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th

25

797, 807 (2005) (“An important exception to the general rule of

26

accrual is the ‘discovery rule,’ which postpones accrual of a

27

cause of action until the plaintiff discovers, or has reason to

28

discover, the cause of action.”).

Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1110

14

“In order to rely on the

1

discovery rule for delayed accrual of a cause of action, ‘[a]

2

plaintiff whose complaint shows on its face that his claim would

3

be barred without the benefit of the discovery rule must

4

specifically plead facts to show (1) the time and manner of

5

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

6

despite reasonable diligence.’”

7

Id. at 808 (citation omitted).

This case was filed on June 20, 2012.

Thus, for the

8

discovery rule to help Plaintiffs, they would need to show that

9

they did not discover or have reason to discover the erroneous

United States District Court
For the Northern District of California

10

entry on their credit reports until at least June 20, 2010.

11

Plaintiffs need not make this showing through the date of filing

12

of this action, as Defendants suggest.

13

credit reports would have been made by 2009 and this case was not

14

filed until June 2012.

15

circumstances under which it would be reasonable for someone not

16

to check their credit for three and a half years.”).

17

Court declines to find that, as a matter of law, the failure to

18

check one’s credit report for approximately a year and a half is

19

per se unreasonable.2

See Reply at 5 (“the

There is no conceivable set of

Further, the

20

Accordingly, the Court GRANTS Defendants’ motion to dismiss

21

this claim and grants Plaintiffs leave to amend to show the time

22
23
24
25
26
27
28

2

For example, the Fair Credit Reporting Act (FCRA) statute
of limitations provides that claims under that statute must be
brought “not later than the earlier of--(1) 2 years after the date
of discovery by the plaintiff of the violation that is the basis
for such liability; or (2) 5 years after the date on which the
violation that is the basis for such liability occurs.” 15 U.S.C.
§ 1681p. Thus, the FCRA appears to contemplate as reasonable that
individuals may not check their credit reports for up to three
years.
15

1

and manner of their discovery of this violation and that such a

2

delay was reasonable.

3

IV.

4

Violation of the UCL
California’s UCL prohibits any “unlawful, unfair or

5

fraudulent business act or practice.”

6

§ 17200.

7

those laws as unlawful business practices independently actionable

8

under state law.

9

F.3d 1042, 1048 (9th Cir. 2000).

Cal. Bus. & Prof. Code

The UCL incorporates other laws and treats violations of

Chabner v. United of Omaha Life Ins. Co., 225
Violation of almost any federal,

United States District Court
For the Northern District of California

10

state or local law may serve as the basis for a UCL claim premised

11

on unlawful business acts or practices.

12

Court, 27 Cal. App. 4th 832, 838-39 (1994).

13

business practice may be “unfair or fraudulent in violation of the

14

UCL even if the practice does not violate any law.”

15

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

16

Saunders v. Superior
In addition, a

Olszewski v.

Defendants move to dismiss Plaintiffs’ UCL claim under the

17

unlawful, unfair and fraudulent prongs.

18

the sufficiency of their allegations under the unlawful prong.

19

Plaintiffs defend only

Because Plaintiffs have alleged sufficiently claims for

20

wrongful foreclosure and breach of contract as discussed above,

21

they have also alleged sufficiently a claim for violation of the

22

UCL based on unlawful business acts or practices.

23

DENIES Defendants’ motion to dismiss the UCL claim under the

24

unlawful prong.

25

Defendants’ motion to dismiss the UCL claim to the extent it

26

arises under the unfair or fraudulent prong.

Thus, the Court

However, the Court GRANTS as unopposed

27
28
16

1

CONCLUSION

2

For the reasons set forth above, the Court GRANTS in part

3

Defendants’ motion to dismiss and DENIES it in part (Docket No.

4

34).

5

for wrongful foreclosure based on the alleged failure to post the

6

notice, breach of contract and violation of the UCL under the

7

unlawful prong.

8

the claims for wrongful foreclosure based on the alleged

9

deficiencies in the Notice of Default, false light invasion of

The Court DENIES Defendants’ motion to dismiss the claims

The Court GRANTS Defendants’ motion to dismiss

United States District Court
For the Northern District of California

10

privacy and violation of the UCL under the unfair and fraudulent

11

prongs.

12

Within fourteen days of the date of this Order, Plaintiffs

13

may file a second amended complaint to remedy the deficiencies

14

identified above in their claims for wrongful foreclosure and

15

false light invasion of privacy.

16

allegations that the Trustee’s sale improperly took place less

17

than twenty days after the recording of the Notice of Trustee’s

18

Sale and how they were harmed by this deficiency.

19

not add further claims or allegations not authorized by this

20

Order.

21

Plaintiffs also may add

Plaintiffs may

If Plaintiffs file a second amended complaint, Chase shall

22

respond to it within fourteen days after it is filed.

23

moves to dismiss the second amended complaint, Plaintiffs shall

24

respond to the motion within fourteen days after it is filed.

25

Chase’s reply, if necessary, shall be due seven days thereafter.

26

Any motion to dismiss will be decided on the papers.

27
28
17

If Chase

1
2
3

The Court SETS a case management conference for Thursday,
January 10, 2013 at 2:00 p.m.
IT IS SO ORDERED.

4
5
6

Dated:

10/17/2012

CLAUDIA WILKEN
United States District Judge

7
8
9

United States District Court
For the Northern District of California

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
18