Avila v. Bank of America et al

Filing 65

ORDER by Judge Haywood S. Gilliam, Jr. MOTIONS TO DISMISS.(Granting 32 , 35 , 39 Motions to Dismiss). Amended Pleadings due by 10/11/2017. (ndrS, COURT STAFF) (Filed on 9/20/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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MIGUEL AVILA,
Plaintiff,

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v.

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ORDER RE MOTIONS TO DISMISS
Re: Dkt. Nos. 32, 35, 39

BANK OF AMERICA, et al.,
Defendants.

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United States District Court
Northern District of California

Case No. 17-cv-00222-HSG

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Pending before the Court are the motions to dismiss filed by Defendants Bank of America,

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N.A., Ocwen Loan Servicing, LLC, Caliber Home Loans, Inc., and U.S. Bank Trust, N.A,

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respectively. The Court finds this matter appropriate for disposition without oral argument and

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the matter is deemed submitted. See Civil L.R. 7-1(b). For the reasons detailed below, the

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motions are GRANTED.

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I.

ALLEGATIONS
Plaintiff Miguel Avila alleges that in 2008 he purchased a neighbor’s property located at

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36823 Olive Street, Newark, California, 94560 (the “Property”), that was in foreclosure, with the

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intention of assuming the mortgage loan and obtaining possession of and title to the Property.

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Dkt. No. 30 (“FAC”) ¶¶ 13–16. He contacted the then-mortgage owner, Countrywide Home

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Loans, who said that to do so, Plaintiff would have to assume his neighbor’s mortgage on the

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Property or obtain a new one. Id. ¶ 15. Countrywide informed Plaintiff that before he could do

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either, he had to reinstate the mortgage loan. Id. In June 2008, Plaintiff states that he tendered the

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money necessary to reinstate the loan and moved into the Property. Id. ¶ 16. Plaintiff never

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received the assumption or new loan documents from Countrywide, though he paid the monthly

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mortgage payments in the interim. Id. ¶¶ 17–18.

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In early 2009, Plaintiff learned that Defendant Bank of America (“BANA”) had taken over

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the mortgage. Id. ¶ 19. Plaintiff contacted BANA and a representative told him to continue

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making payments and BANA would send the requisite paperwork. Id. ¶¶ 20–21. When months

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went by and Plaintiff did not receive paperwork to either assume or refinance the loan, he

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contacted BANA again, who told him to keep making payments and it would send him the

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paperwork. Id.¶¶ 22–23. At one point, having grown frustrated with the delay, Plaintiff told

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BANA that “he would be getting an attorney to help him remedy the situation.” Id. ¶ 25.

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According to Plaintiff, “almost immediately in response to this” in August 2012, BANA

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transferred servicing of the loan to Defendant Ocwen. Id. ¶ 25. Plaintiff then informed Ocwen

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that he would not wait for it to remedy the loan modification issue and “would seek legal
representation.” Id. ¶ 27. In response, Ocwen informed Plaintiff that “its records showed the loan

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Northern District of California

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account had not been paid since 2008.” Id. Thereafter, Ocwen sent Plaintiff’s mortgage payments

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back because they were insufficient to satisfy the outstanding debt. Id.
Servicing of the loan “eventually” transferred to Defendant Caliber, and in October 2015,

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BANA transferred its interest in the Deed of Trust to Defendant U.S. Bank with the help of

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Caliber. Id. ¶¶ 28–29. Around this time, Plaintiff contacted Caliber about applying for a loan

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modification. Id. ¶ 30. Plaintiff provided the requisite loan modification documents, but in late

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November or early December 2015, Caliber said it had never received the application. Id. In

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December 2015, Caliber recorded a Notice of Default on the Property. Id.

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II.

LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), the Court must dismiss a complaint if it

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fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to

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dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its

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face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard

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requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant

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has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although courts do not

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require “heightened fact pleading of specifics,” Twombly, 550 U.S. at 570, a plaintiff must provide

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“more than labels and conclusions, and a formulaic recitation of the elements of a cause of action

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will not do,” id. at 555. Rather, the plaintiff must allege facts sufficient to “raise a right to relief
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above the speculative level.” Id.

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III.

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DISCUSSION
Plaintiff asserts numerous claims against the four Defendants in this action based on his

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inability to assume or refinance the mortgage loan on the Property. The Court addresses the

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claims against each Defendant separately.1

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A.

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Bank of America
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Statute of Limitations (Claims I–III, & VII)

BANA argues that Plaintiff’s fraud, negligent misrepresentation, conversion, and Unlawful

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Competition Law (“UCL”) claims against it are time-barred. The Court agrees. The factual basis

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for all four claims against BANA is that it told Plaintiff he could assume or refinance the loan, that

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Northern District of California

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he should continue making monthly mortgage payments, and BANA accepted those payments

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without sending Plaintiff the requisite paperwork. See FAC ¶¶ 42–50, 65–72, 82–91, 128.

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According to Plaintiff’s complaint, however, BANA transferred servicing of the loan to Ocwen

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“in or around August 2012.” Id. ¶ 26. At that time, Plaintiff still had not received any paperwork,

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despite having made mortgage payments on the Property for several years. Id. ¶¶ 17–18, 20–23.

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Moreover, Ocwen informed Plaintiff that according to its records, the loan had not been paid since

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2008. Id. ¶ 27.
By then, Plaintiff’s causes of action against BANA had accrued. See Fox v. Ethicon Endo-

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Surgery, Inc., 35 Cal. 4th 797, 806 (Cal. 2005) (“[A] cause of action accrues at the time when the

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cause of action is complete with all of its elements.”) (quotation omitted). Even putting aside

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whether Plaintiff should have been on notice of his claims during the several years in which he

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made monthly mortgage payments but did not receive any paperwork from BANA, Plaintiff was

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undoubtedly put on notice once Ocwen told him that its records showed that the loan had not been

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paid since 2008. FAC ¶¶ 22–26; cf. Fox, 35 Cal. 4th at 807 (“[W]e look to whether the plaintiffs

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have reason to at least suspect that a type of wrongdoing has injured them.”); Norgart v. Upjohn

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Because the Court does not rely on any of the exhibits attached to the parties’ Requests for
Judicial Notice in its analysis, see Dkt. Nos. 33, 35-1, 40, 43, 45-1, 46-1, the Court DENIES the
requests as moot.
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Co., 21 Cal. 4th 383, 398 (Cal. 1999) (“[A plaintiff] has reason to suspect [wrongdoing] when he

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has notice or information of circumstances to put a reasonable person on inquiry.”) (quotation

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omitted). Yet Plaintiff did not file his initial complaint until December 19, 2016, over four years

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after this correspondence with Ocwen. Dkt. No. 1-1. All four claims are therefore barred by the

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applicable statute of limitations. See Cal. Code Civ. P. § 338(d) (three-year limitation for fraud),

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Cal. Code Civ. Proc., § 339(1) (two-year limitation for negligence and three-year for fraud); Cal.

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Code Civ. Proc., § 338(c) (three-year limitation for conversion); Cal. Bus. & Prof. Code § 17208

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(four-year limitation for UCL violation).

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Plaintiff’s contention that the discovery rule, the fraudulent concealment doctrine, and the
continuous accrual doctrine should toll these statutes of limitations is unavailing. The discovery

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Northern District of California

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rule “postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover,

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the cause of action.” Fox, 35 Cal. 4th at 807. Consequently, “the plaintiff must plead that, despite

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diligent investigation of the circumstances of the injury, he or she could not have reasonably

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discovered facts supporting the cause of action within the applicable statute of limitations period.”

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Id. at 809. Relatedly, under the fraudulent concealment doctrine, “[a] defendant’s fraud in

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concealing a cause of action against him tolls the applicable statute of limitations, but only for that

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period during which the claim is undiscovered by plaintiff or until such time as plaintiff, by the

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exercise of reasonable diligence, should have discovered it.” Bernson v. Browning-Ferris Indus.,

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7 Cal. 4th 926, 931 (Cal. 1994) (en banc) (quotation omitted). The continuous accrual doctrine

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does not toll a statute of limitations, but a court will view a “series of wrongs or injuries . . . as

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each triggering its own limitations period, such that a suit for relief may be partially time-barred as

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to older events but timely as to those within the applicable limitations period.” Aryeh v. Canon

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Bus. Sols., Inc., 55 Cal. 4th 1185, 1192 (Cal. 2013).

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As discussed above, Plaintiff was put on notice as of August 2012 that the loan had not

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been reassigned and his payments had not been applied to the existing loan. Plaintiff does not

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allege that BANA committed any additional fraudulent or unlawful acts after 2012 that would

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extend the statutes of limitations for these claims. Plaintiff does not allege that he had any further

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correspondence with BANA or that he sent it further mortgage payments following the transfer to
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Ocwen in August 2012. Cf. FAC ¶ 42 (“For years, between 2008 and 2012, Plaintiff was

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informed by [BANA] representatives that he should continue paying the loan and await the

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assumption or application paperwork . . . .”). Plaintiff states that in August 2012, he began

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sending monthly payments to Ocwen, which returned them as insufficient. FAC ¶ 27. Even if

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BANA had tried to conceal its misrepresentations, Ocwen informed Plaintiff about the state of the

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loan.
Plaintiff’s suggestion that the continuous accrual doctrine renders BANA’s failure to send

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paperwork to Plaintiff actionable until October 2015 when it transferred its interest in the Deed of

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Trust to U.S. Bank is similarly unpersuasive. BANA’s allegedly wrongful conduct occurred

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between 2008 and 2012 when BANA representatives told Plaintiff to pay the loan and await

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Northern District of California

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paperwork to assume or refinance the loan. See, e.g., FAC ¶¶ 42, 65, 82. And Plaintiff’s resulting

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injury — the loss of the mortgage payments and the specter of foreclosure — has remained

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constant since that time. Plaintiff could have filed suit upon learning from Ocwen that the loan

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was unpaid since 2008. These claims are accordingly DISMISSED.

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ii.

Fraudulent Transfer (Claim VI)

Plaintiff alleges that BANA transferred its interest in the Property’s Deed of Trust to U.S.

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Bank in October 2015 “with actual intent to hinder, delay, or defraud Plaintiff,” in violation of

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California’s Uniform Voidable Transactions Act (“UVTA”). See FAC ¶¶ 117–25; see also Cal.

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Civil Code § 3439.04. Under UVTA, “[a] transfer made or obligation incurred by a debtor is

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voidable as to a creditor, whether the creditor’s claim arose before or after the transfer was made

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or the obligation was incurred, if the debtor made the transfer or incurred the obligation . . . [w]ith

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actual intent to hinder, delay, or defraud any creditor of the debtor.” Cal. Civ. Code

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§ 3439.04(a)(1). In order to state a claim, however, it is not enough to plead “[m]ere intent to

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delay or defraud.” Mehrtash v. Mehrtash, 93 Cal. App. 4th 75, 80 (Cal. Ct. App. 2001). Rather,

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“injury to the creditor must be shown affirmatively. In other words, prejudice to the plaintiff is

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essential.” Id. Injury in this context means “the transfer puts beyond [Plaintiff’s] reach property

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[he] otherwise would be able to subject to the payment of [his] debt.” Id.

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According to Plaintiff, he was a creditor of BANA’s at the time BANA transferred its
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interest in the Deed of Trust because he “had a contingent claim for damages against [BANA]”

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based on this pending action and his claims for fraud, negligent misrepresentation, and conversion.

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FAC ¶ 115. Plaintiff has failed to establish an essential element of his claim — that the allegedly

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fraudulent conveyance injured him. Here, Plaintiff is only seeking monetary damages. See id.

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¶¶ 124–25 (seeking actual and punitive damages). Plaintiff has not alleged that the transfer made

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BANA insolvent or otherwise unable to pay Plaintiff any damages to which he may be found

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entitled. Consequently, even if the Court assumes Plaintiff may be able to overcome the statute of

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limitations issues discussed above and state a claim for fraud, misrepresentation or conversion in

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an amended complaint, Plaintiff could still recover monetary damages against BANA, despite the

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transfer of interest in the Deed of Trust to U.S. Bank. See Mehrtash, 93 Cal. App. 4th at 80. The

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United States District Court
Northern District of California

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claim is accordingly DISMISSED.

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B.

Ocwen
i.

Statute of Limitations (Claim V)

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Like BANA, Ocwen argues that Plaintiff’s claim against it for intentional interference with

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prospective economic relations is barred by the two-year statute of limitations. See Cal. Code Civ.

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P. § 339. Although Plaintiff does not clearly identify the factual basis for this claim in the

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complaint, it appears from Plaintiff’s opposition to the motion to dismiss, that Ocwen allegedly

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interfered with Plaintiff’s prospective relationship with BANA by assuming the servicing of the

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loan and not accepting Plaintiff’s mortgage payments. See FAC ¶¶ 108–10; Dkt. No. 44 at 7.

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Both events occurred in August 2012. See FAC ¶¶ 26–27.

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Plaintiff attempts to overcome this timeline by arguing that each time Ocwen rejected a

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payment, a separate statute of limitations was triggered under the continuous accrual doctrine. Yet

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Plaintiff has not cited — nor could the Court identify — a single instance in which a California

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court applied the continuous accrual doctrine to an intentional interference claim. Accord DC

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Comics v. Pac. Pictures Corp., 938 F. Supp. 2d 941, 949 (C.D. Cal. 2013); Boon Rawd Trading

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Int’l Co. v. Paleewong Trading Co., 688 F. Supp. 2d 940, 952 (N.D. Cal. 2010).

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Moreover, Plaintiff’s complaint contains only vague, at times even contradictory,
allegations of “continuous” interference with economic relationships. First, Plaintiff has not
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alleged any duty or obligation for Ocwen to accept payment from Plaintiff. See Aryeh v. Canon

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Bus. Sols., Inc., 55 Cal. 4th 1185, 1199 (Cal. 2013) (“[A]ccrual applies whenever there is a

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continuing or recurring obligation.”). Rather, according to Plaintiff’s own account, he had not

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been able to assume or modify the loan and Ocwen said its records showed that the account had

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not been paid since 2008. See FAC ¶¶ 23–27. Second, Plaintiff does not allege that Plaintiff

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attempted to pay Ocwen within the two-year statute of limitations. Plaintiff’s vague assertion that

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“Ocwen began sending Plaintiff’s payments back” is insufficient to invoke the continuous accrual

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doctrine. The Court finds that this claim is barred by the statute of limitations and is therefore

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DISMISSED.

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Northern District of California

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ii.

UCL (Claim VII)

Plaintiff’s UCL claim, brought against “all Defendants,” is premised on “Defendants’

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fraud in violation of Civil Code [] § 1709, negligent misrepresentations to Plaintiff in violation of

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California Civil Code § 1710(2), fraudulent transfer of the Deed of Trust secured by Plaintiff’s

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property in violation of California Civil Code § 3439, and Defendants’ conversion of Plaintiff’s

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money.” FAC ¶ 128. Yet Plaintiff does not allege that Ocwen engaged in fraud, negligent

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misrepresentation, fraudulent transfer, or conversion. Plaintiff cannot rewrite its complaint now in

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its opposition to the motion to dismiss to clarify that the UCL claim against Ocwen is actually

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based on the intentional interference claim. Cf. Van Buskirk v. Cable News Network, Inc., 284

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F.3d 977, 980 (9th Cir. 2002) (“Ordinarily, a court may look only at the face of the complaint to

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decide a motion to dismiss.”). The Court further cautions Plaintiff that for an intentional

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interference claim to support a UCL claim, Plaintiff must clearly allege the factual basis for each

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element, including what unlawful conduct Ocwen engaged in that interfered with Plaintiff’s

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relationship with BANA. See San Jose Construction, Inc. v. S.B.C.C., Inc., 155 Cal. App. 4th

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1528, 1544–1545 (Cal. Ct. App. 2007) (“[A]n act is independently wrongful if it is unlawful, that

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is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other

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determinable legal standard . . . [A]n act must be wrongful by some legal measure, rather than

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merely a product of an improper, but lawful, purpose or motive.”) (quotation omitted). Plaintiff’s

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UCL claim against Ocwen is DISMISSED.
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C.

U.S. Bank and Caliber
i.

Fraudulent Transfer (Claim VI)

Plaintiff also brings an UVTA claim against U.S. Bank and Caliber. Plaintiff alleges that

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U.S. Bank and BANA have “an ongoing and continuing relationship” and Caliber acted as

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BANA’s agent as part of this “fraudulent transaction.” FAC ¶¶ 12, 120, 123. Consequently,

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Plaintiff suggests that U.S. Bank and Caliber were “co-conspirator[s] and/or joint venturer[s].”

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See id. ¶¶ 120, 123.
As discussed above in Section III.A.ii, this claim fails because Plaintiff does not identify

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an injury from the transfer to U.S. Bank. This claim fails for the additional reason that Plaintiff

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has not adequately alleged that U.S. Bank and Caliber acted as co-conspirators or joint venturers

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Northern District of California

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with BANA. To allege a conspiracy, a plaintiff must plead: “(1) formation and operation of the

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conspiracy and (2) damage resulting to plaintiff (3) from a wrongful act done in furtherance of the

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common design.” Rusheen v. Cohen, 37 Cal. 4th 1048, 1062 (Cal. 2006). And a joint venture

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requires: (1) an intent to become partners; (2) a community of interest in the undertaking; (3) an

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understanding to share profits and losses; and (4) equal authority and right to direct and control the

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conduct of all co-venturers with respect to the joint venture. See 580 Folsom Associates v.

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Prometheus Development Co., 223 Cal. App. 3d 1, 18 (Cal. Ct. App. 1990).

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Here, Plaintiff merely alleges that BANA had an interest in the mortgage at issue, BANA

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then assigned that interest to U.S. Bank in 2015, Caliber recorded the assignment on behalf of

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BANA and U.S. Bank, and Caliber is the current servicer of the mortgage. FAC ¶¶ 7–10, 29.

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This is insufficient to hold either U.S. Bank or Caliber liable as co-conspirators or joint venturers

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to the allegedly fraudulent transfer. The complaint is devoid of any factual allegations that the

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parties agreed to deceive Plaintiff by transferring BANA’s interest in the loan or that they engaged

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in any wrongful act in furtherance of that agreement. It is not, contrary to Plaintiff’s urging, “a

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logical inference” that Caliber “knew of the misrepresentations at hand, the threatened litigation,

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and Bank of America’s intent to avoid liability for its misconduct” simply because it was the loan

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servicer at the time of the transfer. See Dkt. No. 45 at 7. Plaintiff must provide “more than labels

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and conclusions” that the transfer was the result of a conspiracy rather than standard business
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practices in order to survive the motion to dismiss stage. Twombly, 550 U.S. at 555; Kearns v.

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Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (“[W]hen fraud is alleged, ‘a party must

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state with particularity the circumstances constituting fraud . . . .’”) (quoting Fed. R. Civ. P. 9(b)).

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Moreover, Plaintiff’s assertion of agency liability against Caliber fails because Plaintiff has not

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alleged that Caliber acted on its own behalf in transferring BANA’s interest in the Property such

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that the agent’s immunity rule does not apply. See Everest Inv’rs 8 v. Whitehall Real Estate Ltd.

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P’ship XI, 100 Cal. App. 4th 1102, 1107 (Cal. Ct. App. 2002) (“[U]nder the long standing ‘agent’s

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immunity rule,’ absent allegations that the agent was acting on its own behalf, it cannot be held

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liable for conspiring with its own principal.”). This claim against U.S. Bank and Caliber is

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Northern District of California

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DISMISSED.
ii.

UCL (VII)

To the extent that Plaintiff’s UCL claim against U.S. Bank and Caliber is derivative of the

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UVTA fraudulent transfer claim, see FAC ¶¶ 126–33, it fails for the same reasons the UVTA

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claim fails as discussed above. Although the complaint does not specifically allege additional

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grounds for Plaintiff’s UCL claim, in Plaintiff’s opposition to the motion to dismiss, he suggests

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that his UCL claim is also premised on U.S. Bank’s alleged representations that Plaintiff could

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modify the mortgage loan. See Dkt. No. 45 at 8–9. He states that it was unfair and fraudulent for

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them to “ignore the application materials submitted and instead foreclose on the property.” Id. at

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9. Again, Plaintiff cannot amend his complaint with arguments made in his opposition brief, but

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regardless, the Court finds that Plaintiff’s UCL claim still falls short.

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The complaint merely alleges that Caliber informed Plaintiff of the documents necessary to

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apply for a home retention option and that it later “denied receiving [Plaintiff’s] application.”

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FAC ¶ 30. The complaint does not allege that Caliber ignored a valid application. Indeed Plaintiff

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concedes that he did not provide all the requisite information for home retention. Id. More

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fundamentally, Plaintiff alleges that because of Countrywide and BANA’s delay, he never actually

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assumed or otherwise modified the loan on the Property. Plaintiff does not explain how Caliber

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could approve a home retention option for Plaintiff under these circumstances. The claim is

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therefore DISMISSED.
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iii.

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Declaratory Relief (IV)

Lastly, Plaintiff asserts a claim for declaratory relief against U.S. Bank and Caliber

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preventing them from foreclosing on the Property based on a loan amount that does not account

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for Plaintiff’s recurring payments made from 2008 to 2012. See FAC ¶¶ 94–99.

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As an initial matter, the Court notes this issue may be moot as the Court denied Plaintiff’s

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ex parte application for a temporary restraining order enjoining the foreclosure sale scheduled for

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August 10, 2017. See Dkt. No. 64. Regardless, declaratory relief is not a stand-alone claim, but

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rather requires Plaintiff to state some other substantive basis for liability. See Cal. Code Civ. P.

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§ 1060 (a court may grant declaratory relief to “[a]ny person . . . who desires a declaration of his
or her rights or duties with respect to another . . . in cases of actual controversy relating to the legal

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Northern District of California

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rights and duties of the respective parties.”). The Court has already concluded that the complaint

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does not adequately allege that U.S. Bank or Caliber were aware of or otherwise responsible for

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BANA’s conduct. Because the Court has dismissed Plaintiff’s other claims, the Court must also

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dismiss his declaratory relief claim. See City of Cotati v. Cashman, 29 Cal. 4th 69, 79 (Cal. 2002)

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(“The fundamental basis of declaratory relief is the existence of an actual, present controversy

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over a proper subject.”). This claim is thus DISMISSED.

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IV.

CONCLUSION

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Accordingly, the Court GRANTS Defendants’ motions to dismiss in their entirety. Plaintiff

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has 21 days to file an amended complaint if he can do so consistent with his Rule 11 obligations.

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Plaintiff may not add any additional Defendants or new claims.

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IT IS SO ORDERED.
Dated: 9/20/2017
______________________________________
HAYWOOD S. GILLIAM, JR.
United States District Judge

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