Marino v. U.S. Bank, N.A.

Filing 26

Order judicially noticing public records; order denying in part and granting in part 9 motion to dismiss. Signed by Magistrate Judge Howard R. Lloyd. (hrllc1, COURT STAFF) (Filed on 10/8/2015) Modified on 10/8/2015 (hrllc1, COURT STAFF).

E-Filed 10/8/15

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SALVATORE MARINO,

Case No. 15-cv-02935-HRL

Plaintiff,
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v.

ORDER JUDICIALLY NOTICING
PUBLIC RECORDS

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U.S. BANK, N.A.,

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ORDER DENYING IN PART AND
GRANTING IN PART DEFENDANT'S
MOTION TO DISMISS

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Re: Dkt. Nos. 9, 10

United States District Court
Northern District of California

Defendant.

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Salvatore Marino (“Marino”) sues U.S. Bank, N.A. (“USBA”) with two claims: (1) USBA

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committed “dual tracking” in violation of California’s Homeowner Bill of Rights (“HBOR”) by

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proceeding with a foreclosure process while simultaneously renegotiating the terms of Marino’s

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mortgage, Cal. Civ. Code § 2923.6; and (2) USBA’s dual-tracking business practices violate

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California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §17200 et seq. Dkt. No.

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1-1 at 36-39. Marino alleges that he applied to USBA for a loan modification, that he timely

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submitted supplemental documents for several months whenever requested by USBA, and that

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USBA recorded a notice of trustee’s sale without first granting or denying his pending loan

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modification application.

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Marino sued USBA in California’s Superior Court for an injunction against the sale. The

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Superior Court granted a temporary restraining order against USBA and also ordered USBA to

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show cause why a preliminary injunction should not be issued. USBA removed the case to this

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court, moved to dismiss under Federal Rule of Civil Procedure (“FRCP”) 12(b)(6) for failure to

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state a claim, and requested judicial notice of relevant public records. Dkt. Nos. 1, 9, 10.

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The parties have expressly consented to magistrate jurisdiction. The court has considered

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the arguments in the parties’ briefs and the arguments heard on September 8, 2015. The court

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judicially notices the public records. USBA’s motion to dismiss is denied in part and granted in

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part.
Judicial Notice

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Federal Rule of Evidence 201(b) generally permits a court to judicially notice county

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records as facts that can be accurately and readily determined from sources whose accuracy cannot

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reasonably be questioned. See, e.g., Rosal v. First Federal Bank of California, 671 F.Supp.2d

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1111, 1121 (N.D. Cal. 2009). USBA requests judicial notice of four documents from the Santa

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Clara County Recorder’s office that relate to Marino’s property: (1) the deed of trust, document

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United States District Court
Northern District of California

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number 19402100; (2) the assignment of the deed of trust, document number 21347471; (3) the

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notice of default and election to sell under deed of trust, document number 22598786; and (4) the

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notice of trustee’s sale, document number 22880821. The court grants the request for judicial

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notice of these county records.

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Motion to Dismiss

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A motion to dismiss under FRCP 12(b)(6) tests the legal sufficiency of the claims in the

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complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is appropriate where

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there is no cognizable legal theory or there are insufficient facts alleged to support a cognizable

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legal theory. Id. (citing Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)).

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The court assumes the truth of factual allegations and construes them in the light most favorable to

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the claimant. Id. But the court may disregard conclusions not supported by underlying factual

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allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). The court then draws upon its

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“experience and common sense” to answer a “context-specific” question: do the alleged facts

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support a plausible claim on which relief might be granted? Id. at 679.

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HBOR prohibits a lender from recording a notice of sale while a complete loan

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modification application is pending, Cal. Civ. Code § 2923.6, but HBOR provides this protection

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only with respect to “first lien mortgages or deeds of trust that are secured by owner-occupied

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residential real property[.]” Cal. Civ. Code § 2924.15(a). A plaintiff may sue under HBOR to
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enjoin an impending sale that was noticed while a complete loan application was pending, but a

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plaintiff is not entitled to economic damages until the home has been sold. Cal. Civ. Code §

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2924.12.

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The UCL applies when the claimant is harmed by business practices that are also illegal

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acts. See Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163,

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180 (1999).
USBA argues Marino’s dual-tracking claim fails “as a matter of law” for three independent

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reasons: Marino failed to plausibly allege he is an owner-occupant of the property that secures the

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deed of trust, he failed to plausibly allege the submission of a complete loan modification

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application, and he asks for damages that cannot be awarded if the home has not been sold.

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United States District Court
Northern District of California

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USBA also argues Marino lacks standing under the UCL and that, as well, the UCL claim is not

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adequately “tether[ed]” to plausible allegations of predicate illegal or deceptive conduct. Dkt. No.

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9 at 8-9.

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A court may consider judicially noticed “matters of public record” in its analysis of a

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12(b)(6) motion. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). The first page

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of the deed of trust lists Marino’s address as 1679 Dry Creek Road, San Jose CA, 95125. Dkt. No.

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10-1 at 2. The third page lists the address of the property that secures the loan—also 1679 Dry

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Creek Road in San Jose. Id. at 4. And Marino’s complaint alleges he resides in San Jose,

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California. Dkt. No. 1-1 at 34. Marino’s alleged residence in San Jose and the deed of trust,

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together, plausibly show Marino is an owner-occupant entitled to protection against dual tracking

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under HBOR.

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USBA relies on Woodring v. Ocwen Loan Servicing, LLC, No. CV 14-03416 BRO, 2014

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WL 3558716 (C.D. Cal., July 18, 2014), to argue Marino has not alleged sufficiently “robust

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factual allegations” to plausibly show he ever submitted a completed application. Dkt. No. 9 at 7.

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But Woodring cited the allegations in Flores v. Nationstar Mortg. LLC, No. CV 13-3898 PLA,

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2014 WL 304766 (C.D. Cal., Jan. 6, 2014), as an example of sufficiently “robust” allegations: the

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homeowner submitted a loan modification application; the loan servicer requested additional

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documents over the course of two months; the homeowner timely submitted every document
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requested; and then the lender instituted a foreclosure sale without either granting or denying the

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homeowner’s pending modification application. Flores, 2014 WL 304766 at *3-4. Marino has

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alleged facts substantially similar to the allegations in Flores: he applied for a loan modification;

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he timely submitted each supplemental document requested by USBA from July 2014 to May

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2015; and USBA nevertheless recorded a notice of trustee’s sale without either granting or

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denying his pending application. Dkt. No. 1-1 at 36-37. The court finds Marino has plausibly

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alleged the submission of a complete loan modification application and that he has therefore

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plausibly alleged a dual tracking claim upon which relief might be granted.
USBA is correct, though, that HBOR entitles a homeowner to an injunction, rather than the

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general and special damages requested in the complaint, when the home has not yet been sold.

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United States District Court
Northern District of California

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The court dismisses the HBOR claim for relief because it improperly requests general and special

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damages. Plaintiff may have 10 days leave to amend to request injunctive relief.
Marino’s UCL claim is plausible because an illegal business practice, dual tracking, has

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been plausibly alleged as a sufficient predicate.

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A plaintiff has standing to bring a UCL claim when he “has suffered injury in fact and has

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lost money or property.” Cal. Bus. & Prof. Code § 17204. A plaintiff has suffered sufficient

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economic injury when the alleged UCL violation caused the plaintiff to “enter into a transaction,

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costing money or property, that would otherwise have been unnecessary.” Kwikset Corp. v.

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Superior Court, 51 Cal. 4th 310, 323 (2011). Marino argues he suffered sufficient injury to give

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him UCL standing when an allegedly illegal foreclosure notice caused him to hire a lawyer and

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seek an injunction. Dkt. No. 15 at 5. USBA does not dispute that Marino has plausibly suffered a

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sufficient degree of economic injury, but argues instead that USBA did not plausibly cause the

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injury with illegal acts. Dkt. No. 16 at 4. The court finds Marino plausibly alleges USBA caused

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economic injury to him with illegal business practices. Marino therefore has standing for his UCL

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claim.

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Conclusion
The request for judicial notice is granted. The court dismisses the first claim for relief with

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leave to amend and denies the motion as to the second claim for relief.
IT IS SO ORDERED.
Dated: 10/8/15

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________________________
HOWARD R. LLOYD
United States Magistrate Judge

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United States District Court
Northern District of California

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