Valencia v. Wells Fargo Bank, N.A.

Filing 32

ORDER by Judge Claudia Wilken GRANTING 24 MOTION TO DISMISS. (ndr, COURT STAFF) (Filed on 11/7/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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HERMELINDA VALENCIA and EMELITA
DEGUZMAN,
Plaintiffs,

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v.

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Defendants.

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United States District Court
For the Northern District of California

ORDER GRANTING
MOTION TO DISMISS
(DOCKET NO. 24)

WELLS FARGO HOME MORTGAGE INC.,
and DOES 1-10, Inclusive,

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No. C 14-3354 CW

________________________________/

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Plaintiffs Hermelinda Valencia and Emelita DeGuzman assert

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various mortgage-related claims against Defendant Wells Fargo Home
Mortgage Inc. (Wells Fargo).
first amended complaint.

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The Court took the motion under

submission on the papers.

Having considered the arguments

presented by the parties, the Court GRANTS the motion and grants
Plaintiffs leave to amend.
BACKGROUND

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Defendant now moves to dismiss the

I.

Facts
The following facts are taken from the first amended

complaint and from certain documents of which the Court takes
judicial notice.1
Defendant asks, and there is no record of Plaintiffs
opposing, that the Court take judicial notice of various recorded
documents associated with Plaintiffs' purchase of the property,
the refinancing loan secured by a deed of trust, and subsequent
appointment of trustees and beneficiaries: (A) July 12, 2005
Adjustable Rate Mortgage Note; (B) July 12, 2005 Deed of Trust;
(C) June 30, 2009 Notice of Default and Election to Sell under
Deed of Trust; (D) August 14, 2009 Substitution of Trustee;
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Plaintiffs own real property consisting of a single-family

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residence located at 1469 Southgate Avenue, Daly City, San Mateo

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County, California (the property), which they acquired in August

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2003.

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property through Wells Fargo's predecessor in interest, World

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Savings Bank, FSB,2 in July 2005;3 however, they allege that they

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"were not advised of the pertinent terms of this loan" and were

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not provided with the required truth-in-lending documents.

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Id. ¶ 19.

United States District Court
For the Northern District of California

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Plaintiffs refinanced the

They stopped making payments and defaulted on their

//

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1AC ¶¶ 1, 18 (Docket No. 22).

//

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(E) November 27, 2013 Notice of Trustee's Sale; (F) April 21, 2006
Certificate of Corporate Existence; (G) November 19, 2007 Letter
from the U.S. Department of Treasury, Office of Thrift
Supervision; (H) November 1, 2009, Official Certification of the
Comptroller of the Currency. Request for Judicial Notice, Exs. AH (Docket Nos. 25, 25-1). When considering a motion to dismiss
under Rule 12(b)(6), courts "are permitted to consider documents
that were not physically attached to the complaint where the
documents' authenticity is not contested, and the plaintiff's
complaint necessarily relies on them." Sams v. Yahoo! Inc., 713
F.3d 1175, 1179 (9th Cir. 2013). Thus, the Court GRANTS
Defendant's request with regard to its Exhibit A. In addition, "a
court may take judicial notice of 'matters of public record.'"
Sami v. Wells Fargo Bank, 2012 WL 967051, at *4 (N.D. Cal.)
(citation omitted). The Court GRANTS this request with regard to
Defendant's Exhibits B-H.
World Savings Bank was renamed Wachovia Mortgage, FSB, on
December 31, 2007. Def.'s Ex. G. On November 1, 2009, Wachovia
Mortgage was converted into a national bank under the name Wells
Fargo Bank Southwest, N.A., and merged into Wells Fargo Bank, N.A.
Def's. Ex. H.
2

Plaintiffs provide the date as July 18, 2005. 1AC ¶ 19.
However, the Adjustable Rate Mortgage Note is dated July 12, 2005.
Def.'s Ex. A. The precise date is immaterial for purposes of this
motion.
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2

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mortgage in early 2009,4 and a Notice of Default and Election to

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Sell under Deed of Trust was recorded in San Mateo County on July

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1, 2009.

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Id. ¶ 20; Def.'s Ex. C.

Plaintiffs allege that they contacted Defendant on an

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unspecified date in 2011 to request a loan modification review, at

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which time Defendant advised them that if they qualified for the

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federal Home Affordable Modification Program (HAMP), Defendant

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would offer them a Trial Payment Plain (TPP), followed by a

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modification of their loan.

1AC ¶ 21.

However, although

United States District Court
For the Northern District of California

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Plaintiffs qualified for a HAMP modification, Defendant never

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offered them one.

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Plaintiffs sued in California state court, filing their

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complaint on or about June 22, 2014.

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(Docket No. 1-1).

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Removal (Docket No. 1).

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motion to dismiss.

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First Amended Complaint (1AC) on August 13, 2014, rendering moot

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the initial motion to dismiss.

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20

Notice of Removal, Ex. 1

Defendant removed on July 24, 2014.

Notice of

A week later, Defendant made its first

(Docket No. 9).

Plaintiffs filed the present

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

21

claim showing that the pleader is entitled to relief."

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Civ. P. 8(a).

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claim to relief that is plausible on its face."

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Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Fed. R.

The plaintiff must proffer "enough facts to state a
Ashcroft v.

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26
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Plaintiffs provide the month of default as March 2009. 1AC
¶ 20. Defendant asserts that Plaintiffs defaulted in February
2009; however, it provides no evidence to support this assertion.
Mot. Dismiss 1 (Docket No. 24).
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3

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Twombly, 550 U.S. 544, 570 (2007)).

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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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Twombly, 550 U.S. at 555.

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plaintiff pleads factual content that allows the court to draw the

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reasonable inference that the defendant is liable for the

8

misconduct alleged."

9

On a motion under Rule

A claim is facially plausible "when the

Iqbal, 556 U.S. at 678.

In considering whether the complaint is sufficient to state a

United States District Court
For the Northern District of California

10

claim, the court will take all material allegations as true and

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construe them in the light most favorable to the plaintiff.

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Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061

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(9th Cir. 2008).

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complaint, materials incorporated into the complaint by reference,

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and facts of which the court may take judicial notice.

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1061.

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including "threadbare recitals of the elements of a cause of

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action, supported by mere conclusory statements."

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at 678 (citing Twombly, 550 U.S. at 555).

The court's review is limited to the face of the

Id. at

However, the court need not accept legal conclusions,

Iqbal, 556 U.S.

20

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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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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amendment would be futile, the court examines whether the

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complaint could be amended to cure the defect requiring dismissal

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

In determining whether

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4

1

complaint."

2

Cir. 1990).

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

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4

DISCUSSION
I.

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First Cause of Action: Negligent Misrepresentation
Plaintiffs allege that, by failing to offer them a TPP and

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HAMP loan modification, Defendant engaged in negligent

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misrepresentation.

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The elements of negligent misrepresentation are
"(1) misrepresentation of a past or existing material fact,

United States District Court
For the Northern District of California

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(2) without reasonable ground for believing it to be true,

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(3) with intent to induce another's reliance on the

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misrepresentation, (4) ignorance of the truth and justifiable

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reliance on the misrepresentation by the party to whom it was

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directed, and (5) resulting damage."

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Cooper Indus., Inc., 829 F. Supp. 325, 330 (N.D. Cal. 1992).

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elements of negligent misrepresentation are similar to intentional

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fraud except for the requirement of scienter; in a claim for

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negligent misrepresentation, the plaintiff need not allege the

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defendant made an intentionally false statement, but simply one as

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to which he or she lacked any reasonable ground for believing the

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statement to be true."

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184-85 (2006) (citing Bily v. Arthur Young & Co., 3 Cal. 4th 370,

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407-08 (1992)); see also Alliance Mortg. Co. v. Rothwell, 10 Cal.

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4th 1226, 1239 fn. 4 (1995) (negligent misrepresentation is a

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species of the tort of deceit and, like fraud, requires a

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misrepresentation, justifiable reliance and damage).

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//

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//

Lincoln Alameda Creek v.
"The

Charnay v. Colbert, 145 Cal. App. 4th 170,

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1
2
3

A.

Rule 9(b)
1.

Application of Rule 9(b)

"The Ninth Circuit has not yet decided whether Rule 9(b)'s

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heightened pleading standard applies to a claim for negligent

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misrepresentation, but most district courts in California hold

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that it does."

7

4097747, at *7 (N.D. Cal.); see, e.g., Errico v. Pac. Capital

8

Bank, N.A., 753 F. Supp. 2d 1034, 1049 (N.D. Cal. 2010)

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("[N]egligent misrepresentation 'sounds in fraud' and is subject

Villegas v. Wells Fargo Bank, N.A., 2012 WL

United States District Court
For the Northern District of California

10

to Rule 9(b)'s heightened pleading standard"); In re Easysaver

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Rewards Litig., 737 F. Supp. 2d 1159, 1176 (S.D. Cal. 2010);

12

Neilson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 1101, 1141

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(C.D. Cal. 2003); but see Petersen v. Allstate Indem. Co., 281

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F.R.D. 413 (C.D. Cal. 2012) (finding that Rule 9(b) does not apply

15

to negligent misrepresentation claims); Howard v. First Horizon

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Home Loan Corp., 2013 WL 6174920, at *5 (N.D. Cal.) ("negligent

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misrepresentation requires a showing that a defendant failed to

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use reasonable care -- 'an objective standard [that] does not

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result in the kind of harm that Rule 9(b) was designed to

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prevent'" (quoting Petersen, 281 F.R.D. at 417-18); Bernstein v.

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Vocus, Inc., 2014 WL 3673307, at *5 (N.D. Cal.) ("The Court finds

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the reasoning of [Petersen and Howard] persuasive, and joins in

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their holdings that negligent misrepresentation claims are not

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subject to the heightened pleading standards of Rule 9(b).").

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Here, Plaintiffs acknowledge that they must meet the

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heightened pleading requirements of Rule 9(b).

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(Docket No. 26) (citing, among others, Harvey v. Bank of Am.,

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N.A., 906 F. Supp. 2d 982, 995 (N.D. Cal. 2012)).
6

Pls.' Opp. at 11

1

2.

Rule 9(b) Standard

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"In all averments of fraud or mistake, the circumstances

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constituting fraud or mistake shall be stated with particularity."

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Fed. R. Civ. P. 9(b).

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law, while a district court will rely on state law to ascertain

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the elements of fraud that a party must plead, it will follow Rule

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9(b) in requiring that the circumstances of the fraud be pleaded

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with particularity."

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992, 996 (N.D. Cal. 2009); see also Kearns v. Ford Motor Co., 567

"Therefore, in an action based on state

Marolda v. Symantec Corp., 672 F. Supp. 2d

United States District Court
For the Northern District of California

10

F.3d 1120, 1125 (9th Cir. 2009).

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in fraud,' the pleading of that claim as a whole is subject to

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Rule 9(b)'s particularity requirement."

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at 997 (citing Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1104

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(9th Cir. 2003)).

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who, what, when, where, and how" of the alleged fraudulent

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conduct.

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plaintiff must describe the alleged fraud in specific enough terms

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"to give defendants notice of the particular misconduct so that

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they can defend against the charge."

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Rule 9(b) requires a plaintiff to allege "the who, what, when,

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where, and how" of the alleged fraudulent conduct.

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Pickett, 137 F.3d 616, 627 (9th Cir. 1997).

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specificity in a fraud action against a corporation requires the

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plaintiff to allege the names of the persons who made the

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allegedly fraudulent representations, their authority to speak, to

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whom they spoke, what they said or wrote, and when it was said or

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written."

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4th 153, 157 (1991).

"[W]hen the claim is 'grounded

Marolda, 672 F. Supp. 2d

Rule 9(b) requires the plaintiff to allege "the

Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997).

A

Kearns, 567 F.3d at 1124.

Cooper v.

"The requirement of

Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App.

7

1
2

B.

Plaintiffs failed sufficiently to plead negligent
misrepresentation
1.

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4

Plaintiffs failed to meet the heightened Rule 9(b)
pleading standard

Plaintiffs only generally allege that at some time during

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2011 they contacted Defendant concerning a possible loan

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modification and were told by Defendant that a loan modification

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was possible if they qualified.

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(1) the name or any other information that would identify the

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person to whom they spoke; (2) what, precisely, that person told

Plaintiffs fail to specify

United States District Court
For the Northern District of California

10

them (verbally or in writing); or (3) the date (or dates) on which

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they spoke with that person.

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to state with particularity facts sufficient to sustain their

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negligent misrepresentation claim.

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2.

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Accordingly, Plaintiffs have failed

Plaintiffs' allegations are insufficient even to
survive Rule 8 review

Even if their claim was not subject to the heightened Rule
9(b) pleading standard, Plaintiffs have not plead facts sufficient
to sustain their negligent misrepresentation claim.

In

particular, a claim for negligent misrepresentation must allege,
among other elements, that the defendant made a misrepresentation
of a past or existing material fact, that the plaintiff
justifiably relied upon that misrepresentation, and that the
plaintiff suffered damages as a result.
829 F. Supp. at 330.

Lincoln Alameda Creek,

Plaintiffs' amended complaint alleges no

such facts.
First, Plaintiffs fail to allege a misrepresentation of a
past or existing material fact.

In Tarmann, the court found that

a promise to pay money in the future was not actionable as
8

1

negligence because it was a misrepresentation of intention rather

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than a misrepresentation of fact.

3

Here, Plaintiffs allege that Defendant promised to offer them a

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TPP and a loan modification if they qualified, and then failed to

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follow through on that promise.

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actionable past or existing material fact.

2 Cal. App. 4th at 158-59.

Such a promise is not an

7

In addition, even if Plaintiffs' claim that Defendant reneged

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on its promise was sufficient, they fail to allege any action that

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they took in justifiable reliance on that claim.

"California

United States District Court
For the Northern District of California

10

courts have recognized that, to establish liability for negligent

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misrepresentation, the plaintiff must make a showing of 'actual

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reliance' on the defendant's misrepresentation."

13

2013 U.S. Dist. LEXIS 31848, at *13 (N.D. Cal.) (citing Mirkin v.

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Wasserman, 5 Cal. 4th 1082, 1088 (1993) (citing, in turn, Garcia

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v. Superior Court, 50 Cal. 3d 728, 737 (1990))).

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occurs when a misrepresentation is an immediate cause of [a

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plaintiff's] conduct, which alters his legal relations, and when,

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absent such representation, he would not, in all reasonable

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probability, have entered into the contract or other transaction."

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Conroy v. Regents of Univ. of Calif., 45 Cal. 4th 1244, 1256

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(2009) (internal quotations omitted).

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complaint makes no such allegation specific to Defendant; instead,

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it merely cites national statistics concerning the low number of

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HAMP applicants who actually received loan modifications.

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31, n.4.5

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27
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FDIC v. Warren,

"Actual reliance

Plaintiffs' amended

1AC ¶

In their Opposition brief, Plaintiffs argue that they
"(1) worked diligently and tirelessly to satisfy Wells Fargo's
repetitive and redundant document requests; (2) they spent
countless hours negotiating with Wells Fargo; and (3) Plaintiffs
5

9

1

Finally, Plaintiffs generally allege, "As a direct and

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proximate result of Defendants' Negligent Misrepresentation,

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Plaintiffs have suffered three years of unnecessary mortgage

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arrears, late fees, penalties and damage to their credit."

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32.

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damages they articulate are the result of Defendant's actions, as

7

opposed to being merely the result of their default.

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9

United States District Court
For the Northern District of California

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Id. ¶

However, Plaintiffs allege no facts to suggest that the

For these reasons, the motion to dismiss Plaintiffs' first
cause of action, negligent misrepresentation, is GRANTED.
II.

Second Cause of Action: Promissory Estoppel
Relying on the same facts that they asserted in their first

cause of action, Plaintiffs make a claim for promissory estoppel.
"The purpose of [promissory estoppel] is to make a promise

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that lacks consideration (in the usual sense of something

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bargained for and given in exchange) binding under certain

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circumstances."

17

3830048, at *4 (N.D. Cal.) (citation omitted).

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estoppel requires: (1) a promise that is clear and unambiguous in

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its terms; (2) reliance by the party to whom the promise is made;

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(3) the reliance must be reasonable and foreseeable; and (4) the

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party asserting the estoppel must be injured by his or her

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reliance."

Id.

Cockrell v. Wells Fargo Bank, N.A., 2013 WL
"Promissory

"Under this doctrine a promisor is bound when he

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lost the opportunity to pursue other methods to avoid
foreclosure." Pls.' Opp. at 12-13. However, the amended
complaint contains no allegations whatsoever concerning burdensome
document production or any negotiations with Defendant, and merely
states in a conclusory manner that Plaintiffs might have filed for
bankruptcy in 2011, but that now bankruptcy would be impractical.
1AC ¶ 42.
10

1

should reasonably expect a substantial change of position, either

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by act or forbearance, in reliance on his promise, if injustice

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can be avoided only by its enforcement."

4

Mortg., LLC, 2013 WL 2252112, at *4 (N.D. Cal.) (citation

5

omitted).

6

Panaszewicz v. GMAC

As plead, the alleged promise to provide a TPP and a HAMP

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loan modification if Plaintiffs qualified does not constitute a

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"clear and unambiguous" promise.

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as a promise if the qualifications for a loan modification in

Such a statement might qualify

United States District Court
For the Northern District of California

10

Plaintiffs' circumstances were so clear and unambiguous that

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Plaintiffs could plead specific facts demonstrating the

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qualifications and their ability to meet them given the loan

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amount, their income, and arrears.

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estoppel claim fails for other reasons as well.

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forth above, Plaintiffs have not alleged any facts that would tend

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to demonstrate their reliance on such a promise.

17

Bushell v. JP Morgan Chase Bank, N.A., 220 Cal. App. 4th 915, 930

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(2013), for the proposition that plaintiffs who "alleged that they

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repeatedly contacted defendant, repeatedly prepared documents at

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defendant's request, discontinued efforts to pursue a refinance

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from other financial institutions, or to pursue other means of

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avoiding disclosure, and lost their home," had sufficiently

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alleged detrimental reliance.

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However, Plaintiffs' amended complaint contains no such factual

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allegations.

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Plaintiffs' promissory
First, as set

Plaintiffs cite

Pls.' Opp. at 16 (citing Bushell).

Even if it did, Plaintiffs' damage claim is insufficient.

27

Plaintiffs allege that they "incurred three additional years of

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loan arrears, late fees, penalties, credit damage, and [are]
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1

facing imminent foreclosure of their home," and that they might

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have avoided these damages had they filed for bankruptcy in 2011

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instead of pursuing a HAMP loan modification.

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Again, as above, Plaintiffs fail to articulate why any loan

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arrears, late fees, penalties, and credit damage are the result of

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any promise made by Defendant, and not the result of Plaintiffs'

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default.

8

have received more favorable treatment had they applied for

9

bankruptcy in 2011, they allege no specific facts to suggest that

1AC ¶¶ 41-43.

In addition, although Plaintiffs suggest that they might

United States District Court
For the Northern District of California

10

they would have filed for bankruptcy and obtained a favorable

11

outcome but for Defendant's alleged promises.

12

Wells Fargo Bank, N.A., 2013 U.S. Dist. LEXIS 107744, at *6 (S.D.

13

Cal.) (plaintiffs' claim that "they gave up opportunities to

14

obtain an alternative loan with more favorable terms . . . is a

15

hypothetical injury, since the FAC provides no details of other

16

loans available to them, whether they sought quotes from other

17

lenders, or whether other lenders had offered more favorable loan

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terms to borrowers with credit ratings similar to Plaintiffs'.").

19

See Gerbery v.

Accordingly, the Court GRANTS Defendant's motion to dismiss

20

Plaintiffs' promissory estoppel claim.

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III. Third Cause of Action: Violation of California Business and
Professions Code Section 17200 et seq. (the Unfair
Competition Law, or UCL)

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Plaintiffs allege that Defendant's "practice of deliberately
refusing to provide qualified borrowers such as Plaintiffs with
HAMP TPP's is an 'unfair' business practice under the UCL.
Furthermore, issuing the subject toxic loan without the requisite

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1

Truth-in-Lending / RESPA disclosures is unfair as well."

2

¶ 47.

3

1AC

The UCL prohibits "any unlawful, unfair or fraudulent

4

business act."

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only allege an "unfair business practice" claim.

6

¶¶ 47-49.

7

Cal. Bus. & Prof. Code § 17200 et seq.

Plaintiffs

1st Am. Compl.

The California Supreme Court has not established a definitive

8

test to determine whether a business practice is unfair under the

9

UCL.

See Cel-Tech Commc'ns, Inc. v. L.A. Cellular Tel. Co., 20

United States District Court
For the Northern District of California

10

Cal 4th 163, 187 n.12 (1999) (stating that the test for unfairness

11

in cases involving business competitors is "limited to that

12

context" and does not "relate[] to actions by consumers").

13

California courts of appeal have applied three different tests to

14

evaluate claims by consumers under the UCL's unfair practices

15

prong.

16

247, 256 (2010).

Drum v. San Fernando Valley Bar Ass'n, 182 Cal. App. 4th

17

Under one test, a consumer must allege a "violation or

18

incipient violation of any statutory or regulatory provision, or

19

any significant harm to competition."

20

which is a predicate to a consumer unfair competition action under

21

the 'unfair prong' of the UCL must be tethered to specific

22

constitutional, statutory, or regulatory provisions."

23

Id.

The "public policy

Id.

Under the second test, the "unfair prong" requires a consumer

24

to plead that (1) a defendant's conduct "is immoral, unethical,

25

oppressive, unscrupulous or substantially injurious to customers,"

26

and (2) "the utility of the defendant's conduct" is outweighed by

27

"the gravity of the harm to the alleged victim."

28
13

Id. at 257

1

(citing Smith v. State Farm Mut. Auto. Ins. Co., 93 Cal. App. 4th

2

700, 718-19 (2001)).

3

The third test, which is based on the Federal Trade

4

Commission's definition of unfair business practices, requires

5

that, as a result of unfair conduct, "(1) the consumer injury must

6

be substantial; (2) the injury must not be outweighed by any

7

countervailing benefits to consumers or competition; and (3) it

8

must be an injury that consumers themselves could not have

9

reasonably avoided."

United States District Court
For the Northern District of California

10
11

Id. (citation and internal quotation marks

omitted).
In Lozano v. AT&T Wireless Serv., Inc., 504 F.3d 718, 736

12

(9th Cir. 2007), the Ninth Circuit endorsed the tethering test or

13

the balancing test and declined "to apply the FTC standard in the

14

absence of a clear holding from the California Supreme Court."

15

See also Ferrington v. McAfee, Inc., 2010 WL 2910169, at *12 (N.D.

16

Cal.) ("[p]ending resolution of this issue by the California

17

Supreme Court, the Ninth Circuit has approved the use of either

18

the balancing or tethering tests in consumer actions, but has

19

rejected the FTC test") (citation omitted); I.B. ex rel. Fife v.

20

Facebook, Inc., 905 F. Supp. 2d 989, 1010-11 (N.D. Cal. 2012).

21

Under either the tethering test or the balancing test,

22

Plaintiffs fail to plead sufficient facts to support a claim under

23

the unfairness prong of the UCL.

24

"tethered" their UCL claim to any "specific constitutional,

25

statutory, or regulatory provisions."

26

to show how Defendant's actions were "immoral, unethical,

27

oppressive, unscrupulous or substantially injurious to consumers,"

28

especially because, as set forth above, they to allege sufficient

Plaintiffs have not sufficiently

14

Plaintiffs also have failed

1

facts to support the allegation that they were harmed due to

2

reliance upon Defendant's alleged promises.

3

brief, Plaintiffs expressly state that their UCL claim has its

4

grounds in their negligent misrepresentation and promissory

5

estoppel claims.

6

determined that those claims must be dismissed, and, therefore,

7

they cannot serve as the grounds for a UCL claim.

8
9

Pls.' Opp. at 18-19.

In their opposition

The Court has already

In addition, to the extent that Plaintiffs' claim arises from
the alleged failure of Defendant's predecessor-in-interest to

United States District Court
For the Northern District of California

10

provide required truth-in-lending forms,6 such a claim would be

11

time-barred.

A UCL claim is subject to a four-year statute of

12

limitations.

Cal. Bus. & Prof. Code § 17208.

13

the loan at issue in July 2005, but did not bring the present

14

action until June 2014, almost nine years later.

15

not argue that the statute of limitations is subject to tolling,

16

and they have plead no facts that would warrant such tolling.

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They appear to concede that their claims are not based on the 2005

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loan.

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required paperwork in 2005 cannot give rise to their present UCL

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claim.

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Plaintiffs obtained

Plaintiffs do

Consequently, any failure to provide Plaintiffs with

Consequently, with regard to Plaintiffs' UCL claim,

22

Defendant's motion to dismiss is GRANTED.

23

//

24

//

25

//

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27
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See 1AC ¶ 47 ("[I]ssuing the subject toxic loan without the
requisite Truth-in-Lending / RESPA disclosures is unfair as
well.").
6

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1
2

IV.

Fourth Cause of Action: Negligence
Plaintiffs claim that Defendant owed them a duty of care to

3

offer them a TPP and HAMP loan modification,7 that its failure to

4

do so was a breach of that duty, and that they suffered damages as

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a consequence of that breach.

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1AC ¶¶ 63-65.

A cause of action for negligence must allege (1) the

7

defendant's legal duty of care to the plaintiff; (2) the

8

defendant's breach of that duty; (3) injury to the plaintiff as a

9

result of the breach; and (4) damage to the plaintiff.

Hoyem v.

United States District Court
For the Northern District of California

10

Manhattan Beach City Sch. Dist., 22 Cal. 3d 508, 513 (1978).

11

legal duty of care may be of two general types: (a) the duty of a

12

person to use ordinary care in activities from which harm might

13

reasonably be anticipated, or (b) an affirmative duty where the

14

person occupies a particular relationship to others."

15

v. Bay Area Rapid Transit Dist., 57 Cal. App. 4th 1011, 1016-17

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(1997).

17

"The

McGettigan

"[A]s a general rule, a financial institution owes no duty of

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care to a borrower when the institution's involvement in the loan

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transaction does not exceed the scope of its conventional role as

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Plaintiffs also claim, albeit in a parenthetical, that
Defendant breached its duty to Plaintiffs by "issuing the subject
loan." 1AC ¶ 64. Even assuming for the sake of argument that
Defendant had a duty to Plaintiffs when issuing the subject loan,
such a claim is time-barred. As noted above, the subject loan was
issued in July 2005. The statute of limitations for a negligence
claim is two years. Cal. Civ. Proc. Code § 339. Thus, the
deadline for Plaintiffs to bring a negligence claim arising from
the subject loan passed in July 2007. Plaintiffs did not bring
the current action until June 2014, more than seven years after
the statute of limitations passed, and they neither argue nor
assert facts that would demonstrate that this deadline has not run
or should be tolled in the present case.
7

16

1

a mere lender of money."

2

Ass'n, 231 Cal. App. 3d 1089, 1095 (1991); see also Kinner v.

3

World Savings & Loan Ass'n, 57 Cal. App. 3d 724, 732 (1976)

4

(holding no duty of care owed by lender to borrower to ensure

5

adequacy of construction loan); Wagner v. Benson, 101 Cal. App. 3d

6

27, 35 (1980) (finding no duty owed by lender to borrower where

7

lender is not involved extensively in borrower's business).

8
9

Nymark v. Heart of Fed. Savings & Loan

Here, Plaintiffs allege no facts that would support a finding
that Defendant owed them a duty of care in considering their

United States District Court
For the Northern District of California

10

application for a HAMP loan modification.

11

Court to follow Alvarez v. BAC Home Loans Servicing, L.P., 228

12

Cal. App. 4th 941 (2014), in which the court held that the lender

13

defendant owed a duty of care to the plaintiffs.

14

However, Alvarez is not applicable in the present case.

15

Alvarez, the plaintiffs alleged that the defendants breached their

16

duty "by (1) failing to review plaintiffs' applications in a

17

timely manner, (2) foreclosing on plaintiffs' properties while

18

they were under consideration for a HAMP modification and

19

(3) mishandling plaintiffs' applications by relying on incorrect

20

information."

21

the present case.8

22

impose a duty of care on Defendant, Defendant had no duty of care

Id. at 945.

Plaintiffs ask the

Id. at 948.
In

No such allegations are at issue in

In the absence of any circumstances that would

23
Plaintiffs do allege that Defendant "t[ook] more than three
years to review something [the HAMP application] that should not
have taken more than six months." 1AC ¶ 29. However, this is a
cursory and conclusory allegation. Plaintiffs do not explain when
they applied, what documentation was requested and when they
provided it, or what other response they received and when.
Further, Plaintiffs allege no specific harm that they suffered as
a result of the alleged delay.
8

24
25
26
27
28

17

1

to Plaintiffs in reviewing their application for a HAMP

2

modification.

3
4

Accordingly, the Court GRANTS Defendant's motion to dismiss
Plaintiffs' negligence claim.

5

CONCLUSION

6

When granting a motion to dismiss, the court is generally

7

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

8

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

9

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

United States District Court
For the Northern District of California

10

F.2d 242, 246–47 (9th Cir. 1990).

11

sought leave to amend if the motion is granted.

12

Here, Plaintiffs have not

Further, Defendant made the same arguments in its first

13

motion to dismiss, and Plaintiffs failed to cure the defects in

14

their amended complaint.

15

Plaintiffs leave further to amend their complaint to remedy these

16

deficiencies if they can do so truthfully and without

17

contradicting the allegations in their prior pleadings.

18

fourteen days of the date of this order, Plaintiffs may file an

19

amended complaint to remedy the deficiencies identified above.

20

They may not add further claims or allegations not authorized by

21

this order.

22

Defendant shall respond without fourteen days after it is filed.

23

If Defendant files a motion to dismiss, Plaintiffs shall respond

24

to the motion within fourteen days after it is filed.

25

reply, if necessary, shall be due seven days thereafter.

26

motion to dismiss will be decided on the papers.

27

//

28

//

Nonetheless, the Court will grant

Within

If Plaintiffs file a second amended complaint,

18

Defendant's
Any

1

For the reasons set forth above, the Court GRANTS Defendant's

2

motion to dismiss (Docket No. 24), and Plaintiffs' complaint is

3

DISMISSED.

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IT IS SO ORDERED.
Dated: November 7, 2014

CLAUDIA WILKEN
United States District Judge

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United States District Court
For the Northern District of California

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