Greene v. Wells Fargo Bank, N.A.
Filing
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ORDER GRANTING, IN PART, AND DENYING, IN PART 48 Motion to Dismiss Second Amended Complaint. Amended Pleadings due by 8/19/2015. Signed by Judge Jeffrey S. White on July 28, 2015. (jswlc3, COURT STAFF) (Filed on 7/28/2015)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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ROSEMARY GREENE,
Plaintiff,
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For the Northern District of California
United States District Court
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No. C 15-00048 JSW
v.
WELLS FARGO BANK, N.A.,
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ORDER REGARDING MOTION
TO DISMISS SECOND AMENDED
COMPLAINT
Defendant.
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Now before the Court is the motion to dismiss filed by Defendant Wells Fargo Bank
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(“Defendant”). The Court has considered the parties’ papers, relevant legal authority, and the
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record in this case. It finds the motion suitable for disposition without oral argument, and
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therefore VACATES the hearing scheduled for July 31, 2015. See Civil L.R. 7-1(b). For the
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reasons that follow, the Court hereby grants in part and denies in part Defendant’s motion.1
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BACKGROUND
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The following facts are drawn from the complaint, and from judicially noticeable
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documents. Plaintiff Rosemary Greene (“Plaintiff”) owns a home at 8000 Hansom Drive in
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Oakland, California (the “Property”), subject to a loan from Defendant. (Second Amended
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Compl. (“SAC”), ¶ 1.) Beginning in 2009, Plaintiff struggled with her mortgage payments.
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(3:13-cv-02774-WHA, ECF No. 1 ¶ 12 (“Greene I Compl.”).) Due to her loss in income,
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Plaintiff fell behind on her monthly mortgage payments. (SAC, ¶ 2.)
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201(b).
The Court GRANTS Defendant’s request for judicial notice. See Fed R. Evid.
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Plaintiff submitted a loan modification application. (Greene I Compl., ¶ 15.) From
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2010 until 2013, Defendant continued to request additional documents and Plaintiff continued
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to supply them. (Id.) In 2013, Plaintiff’s loan modification request was denied on the basis that
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“the amount due could not fit the 31% of gross income guideline provided under HAMP.” (Id.
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¶ 16.) On August 28, 2013, Wells Fargo recorded a notice of default on the Property. (SAC, ¶
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2.)
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During September and October 2014, Plaintiff spoke to several representatives from
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Defendant. (Id., ¶ 3.) During these telephone conversations, Plaintiff requested a foreclosure
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prevention strategy and that she be assigned to a single point of contact. (Id.) She explained
that she had experienced a change in her financial circumstances that warranted another review
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For the Northern District of California
United States District Court
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for a loan modification. (Id.) On October 20, 2014, Plaintiff submitted “a complete first lien
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loan modification application which included substantial evidence of her change in material
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financial circumstances.” (Id., ¶ 4.)
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On November 5, 2014, Defendant’s representative, Tamara Harris, orally requested
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additional information, which Plaintiff promptly sent. (Id., ¶ 5.) On November 13, 2014, Ms.
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Harris told Plaintiff that her complete application had been forwarded to the underwriting
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department for consideration. (Id., ¶ 6.) Ms. Harris also sent Plaintiff a letter dated November
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7, 2014, stating that the loan modification process had started. (Id.)
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On November 7, 2014, Defendant recorded a notice of trustee’s sale. In a letter dated
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November 13, 2014, Defendant asked for additional information from Plaintiff, which Plaintiff
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sent before the deadline set by Defendant. (Id.) The trustee’s sale was initially set for January
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7, 2015, but has been continued in thirty day increments. (Id.) Defendants have agreed to
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postpone the trustee’s sale pending the Court’s consideration of Plaintiff’s motion for a
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preliminary injunction.
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In her SAC, Plaintiff brings the following claims: (1) violation of California Civil Code
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section 2923.6; (2) violation of California Civil Code section 2923.7; (3) violation of
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California’s Unfair Business Law (“UCL”), California Business and Professions Code sections
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17200 et seq.; and (4) negligence. Defendant only moves to dismiss Plaintiff’s UCL and
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negligence claims.
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The Court shall address additional facts as necessary in the remainder of this Order.
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ANALYSIS
A.
Legal Standard for Motion to Dismiss.
A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the
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complaint fails to state a claim upon which relief can be granted. The Court’s “inquiry is
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limited to the allegations in the complaint, which are accepted as true and construed in the light
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most favorable to the plaintiff.” Lazy Y Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir.
2008). Even under the liberal pleadings standard of Federal Rule of Civil Procedure 8(a)(2), “a
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For the Northern District of California
United States District Court
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plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than
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labels and conclusions, and a formulaic recitation of the elements of a cause of action will not
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do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S.
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265, 286 (1986)).
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Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but
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must allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. “A
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claim has facial plausibility when the Plaintiff pleads factual content that allows the court to
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draw the reasonable inference that the Defendant is liable for the misconduct alleged.” Ashcroft
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v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). If the allegations are
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insufficient to state a claim, a court should grant leave to amend, unless amendment would be
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futile. See, e.g., Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990); Cook, Perkiss
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& Lieche, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246-47 (9th Cir. 1990).
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As a general rule, “a district court may not consider material beyond the pleadings in
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ruling on a Rule 12(b)(6) motion.” Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994),
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overruled on other grounds, Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002)
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(citation omitted). However, documents subject to judicial notice, such as matters of public
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record, may be considered on a motion to dismiss. See Harris, 682 F.3d at 1132. In doing so,
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the Court does not convert a motion to dismiss to one for summary judgment. See Mack v. S.
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Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986), overruled on other grounds by Astoria
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Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104 (1991).
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B.
Defendant’s Motion.
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1.
Plaintiff’s UCL Claim.
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Defendant moves to dismiss Plaintiff’s UCL claim on the grounds, inter alia, that she
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fails to allege facts sufficient to establish standing. In order to have standing under the UCL, a
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plaintiff must show that he or she has “suffered injury in fact and [] lost money or property as a
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result of the unfair competition.” Cal. Bus. & Prof. Code § 17204. This provision requires a
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plaintiff to sufficiently allege: (1) he or she has “lost ‘money or property’ sufficient to constitute
an ‘injury in fact’ under Article III of the Constitution” and (2) there is a “causal connection”
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For the Northern District of California
United States District Court
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between the defendant’s alleged UCL violation and the plaintiff’s injury in fact. Rubio v.
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Capital One Bank, 613 F.3d 1195, 1203-04 (9th Cir. 2010) (citations omitted).
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The Court dismissed this claim because Plaintiff had not alleged facts sufficient to
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support a finding that she lost money or property as a result of Defendant’s conduct. In
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particular, the Court noted that it was not clear whether the trustee’s sale occurred or was
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pending. Plaintiff has now alleged that the trustee’s sale is pending. Defendant has agreed to
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continue the sale, pending the Court’s consideration of the motion for a preliminary injunction.
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However, Plaintiff has not alleged any facts which, if true, would be sufficient to demonstrate a
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causal link between the pending foreclosure and Defendant’s alleged misconduct.
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Courts have held that a plaintiff cannot allege the threshold standing requirement of
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causation when the plaintiff was already in default before the alleged misconduct was
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committed. Any economic injury due to the foreclosure would be caused by the plaintiff’s
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default and not by the defendant’s conduct. See, e.g., Jenkins v. JP Morgan Chase Bank, N.A.,
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216 Cal. App. 4th 497, 523 (2013) (finding that because the plaintiff’s “home was subject to
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nonjudicial foreclosure because of [her] default on her loan, which occurred before Defendants’
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alleged wrongful acts, [the plaintiff] cannot assert the impending foreclosure of her home (i.e.,
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her alleged economic injury) was caused by Defendants’ wrongful actions.”); Maomanivong v.
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Nat’l. City Mortgage Co., 2014 WL 4623873, at *18-19 (N.D. Cal. Sept. 15, 2014) (“Plaintiff
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has pointed the court to no other cases, and the court has found none in its own research, in
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which a court has found that a homeowner has standing to bring a UCL claim against a lender
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for the lender’s allegedly unlawful, unfair, or fraudulent conduct occurring after the
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homeowner’s default, where the default was not induced by the conduct of the lender and where
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the conduct has not yet led to a foreclosure sale.”).
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Here, Plaintiff merely alleges in a conclusory fashion that she has been deprived of the
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opportunity to obtain a loan modification and, alternatively, has been deprived of the
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opportunity to seek relief elsewhere. Plaintiff appears to argue that the alleged violations of the
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Homeowner Bill of Rights are sufficient to show the requisite causal link. (Opp. at 2.) She fails
to allege that there was a reasonable likelihood that her loan modification application would
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For the Northern District of California
United States District Court
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have been approved absent Defendant’s purported misconduct. Moreover, Plaintiff has not
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alleged any facts to show that even if a foreclosure sale did occur, the sale would be the result
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of Defendant’s alleged misconduct, as opposed to Plaintiff’s default. Accordingly, the Court
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grants the motion to dismiss as to Plaintiff’s UCL claim. The Court will provide Plaintiff with
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one more opportunity to allege sufficient facts to state a UCL claim. Plaintiff may file an
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amended UCL claim if she can, in good faith and in compliance with her obligations under
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Federal Rule of Civil Procedure 11, allege facts to show that she suffered an economic injury
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that was caused by Defendant’s purported misconduct.
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2.
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Defendant also moves to dismiss Plaintiff’s negligence claim. The Court already
Plaintiff’s Negligence Claim.
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dismissed Plaintiff’s negligence claim, based on her failure to allege facts sufficient to show a
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breach of a legal duty that proximately caused any damages or injuries. Plaintiff failed to
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remedy this defect.
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To state a negligence claim, Plaintiff must allege damages that were proximately caused
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by Defendant’s breach of a duty of care. Lueras v. BAC Home Loans Servicing, LP, 221 Cal.
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App. 4th 49, 62 (2013). In the absence of facts sufficient to show that a defendant’s alleged
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misconduct caused the plaintiff to foreclose or suffer other damages, courts have dismissed the
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negligence claims. See Hernandez v. Select Portfolio, Inc., 2015 WL 3914741, *22 (C.D. Cal.
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June 25, 2015) (dismissing negligence claim because the plaintiff failed to plead facts
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suggesting there was a reasonable likelihood that her loan modification application would have
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been approved absent the defendants’ purported negligence); Garcia v. PNC Mortgage, 2015
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WL 534395, *10 (N.D. Cal. Feb. 9, 2015) (finding that the plaintiff failed to allege any “facts
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showing that, but for the alleged negligence, plaintiff would have obtained a loan modification
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or otherwise have been able to avoid foreclosure”); Stiles v. Wells Fargo Bank, 2014 WL
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7146950, *7 (N.D. Cal. Dec. 15, 2014) (dismissing a negligence claim where, inter alia,
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plaintiff did “not adequately allege[ ] that she suffered damages as a result of any negligence on
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Defendant’s part”).
As noted above, Plaintiff alleges that she defaulted due to her own financial troubles,
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United States District Court
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before any alleged misconduct by Defendant. Plaintiff does not plead facts suggesting that
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there was a reasonable likelihood that her loan modification application would have been
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approved absent Defendant’s alleged misconduct. Moreover, she only conclusorily alleges that
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“she was deprived of the opportunity to seek relief elsewhere.” (SAC, ¶ 23.) Plaintiff fails to
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allege any facts to demonstrate that there was alternative relief that she could have obtained or
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how Defendant’s alleged misconduct prevented her from seeking such relief. Therefore, even
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assuming arguendo that Defendant owed her a legal duty, she has not alleged any damages that
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were caused by Defendant’s breach of that duty.
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Moreover, although the issue of whether a lender owes a duty of care to a borrower in
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the loan modification context is relatively unsettled, the Court noted that in cases finding a legal
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duty, the defendants mishandled documents, or otherwise alleged misconduct beyond a
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procedural violation of the Homeowners Bill of Rights. See, e.g., Alvarez v. BAC Home Loans
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Servicing, 228 Cal. App. 4th 941, 945 (2014) (the plaintiffs alleged that defendants relied on
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incorrect information to deny plaintiffs’ applications for a loan modification); Rijhwani v. Wells
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Fargo Home Mortgage, Inc., 2014 WL 890016, at *17 (N.D Cal. Mar. 3, 2014) (the plaintiffs
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alleged that the defendant tricked them into defaulting on a loan and instructed them to ignore
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notices, while the defendant sold their home at a foreclosure sale); Lueras, 221 Cal. App. 4th at
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68 (“a lender does owe a duty to a borrower to not make material misrepresentations about the
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status of an application for a loan modification or about the date, time, or status of a foreclosure
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sale.”). Even if under certain circumstances a lender may owe a duty of care to a borrower in
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connection with an application for a loan modification, Plaintiff has not alleged facts which
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would be sufficient to show that Defendant owed her a legal duty.
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The Court will provide Plaintiff with one last opportunity to amend her negligence
compliance with her obligations under Rule 11, allege facts to show that Defendant mishandled
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her loan modification in a manner sufficiently similar to the misconduct alleged in Alvarez or
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Rijhwani. Moreover, Plaintiff may only amend her negligence claim if she can allege facts in
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good faith that show she incurred damages that were caused by Defendant’s breach of a legal
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For the Northern District of California
claim. Plaintiff may file an amended negligence claim if she can, in good faith and in
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United States District Court
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duty.
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CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant’s motion to dismiss Plaintiff’s
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UCL and negligence claims. Because this Court cannot say that it would be an act of futility to
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amend the dismissed claims, Plaintiff may file an amended complaint to cure the defects
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addressed in this Order by no later than August 19, 2015. Defendant shall answer or otherwise
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respond by no later than September 9, 2015.
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IT IS SO ORDERED.
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Dated: July 28, 2015
JEFFREY S. WHITE
UNITED STATES DISTRICT JUDGE
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