Shepardson v. U.S. Bank Trust National Association, as Trustee for Bungalow Series IV Trust et al

Filing 46

ORDER GRANTING Defendants' Motion to Dismiss the Second Amended Complaint. Re: Dkt. Nos. 38 , 39 , 41 . Plaintiff must file an amended complaint or a notice that he will not be amending the SAC by 7/19/2024. Signed by Judge Nathanael M. Cousins. (lmh, COURT STAFF) (Filed on 7/3/2024)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 10 JOHN SHEPARDSON, Plaintiff, United States District Court Northern District of California 11 v. 12 13 14 15 U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE FOR BUNGALOW SERIES IV TRUST, et al., Case No. 23-cv-05497-NC ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS THE SECOND AMENDED COMPLAINT Re: Dkt. Nos. 38, 39, 41 Defendants. 16 17 Defendants U.S. Bank Trust National Association (US Bank) and SN Servicing 18 Corporation (SN) move to dismiss Plaintiff John Shepardson’s second amended complaint 19 (SAC). Like Plaintiff’s previous complaint, the SAC alleges thirteen causes of action 20 centered around Defendants’ allegedly wrongful collection of a balloon payment loan. 21 These claims rely on an alleged mutual agreement between the parties and promise by US 22 Bank not to collect on the balloon payment in lieu of monthly payments. 23 Because the SAC fails to allege sufficient facts to state a claim under any cause of 24 action, the Court GRANTS Defendants’ motion to dismiss the SAC. The Court dismisses 25 without leave to amend those claims for which it previously provided clear guidance 26 (breach of contract, estoppel, RICO, and conspiracy to commit RICO) and for which 27 amendment would be futile (concealment). All other claims are dismissed with leave to 28 amend. United States District Court Northern District of California 1 I. BACKGROUND 2 In 2007, Plaintiff entered into a note and second deed of trust secured by his 3 personal residence. SAC 1, 3 ¶ 13.1 The loan was a “balloon note” with a maturity date of 4 May 1, 2017. SAC ¶ 14, Ex. A (Note).2 The Note required Plaintiff to make monthly 5 payments and any remaining principal/interest would be due in full on the maturity date. 6 SAC, Ex. A. Plaintiff alleges the “lenders, including U.S. Bank through SN, waived the 7 maturity amount due date and did not bring foreclose [sic] proceedings for approximately 8 another five years” after the maturity date. SAC ¶ 15 (emphasis in original). Instead, US 9 Bank, through SN, allegedly sent invoice statements to Plaintiff “indicating if the monthly 10 payments were timely and properly made, the loan would be current and would not call 11 due and payable the entire loan balance.” SAC ¶ 16. Plaintiff alleges US Bank filed a 12 notice of default on April 3, 2023, SAC ¶ 42, and “wrongfully foreclosed” on his personal 13 residence, SAC 1, despite Plaintiff’s “timely and properly” monthly payments, SAC ¶ 148. 14 The Court dismissed Plaintiff’s initial complaint and first amended complaint 15 (FAC). ECF 18, 32. Plaintiff filed the SAC. ECF 33. Defendants filed a motion to 16 dismiss the SAC under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim 17 or, in the alternative, for a more definite statement. ECF 38 (Mot.). Plaintiff opposed the 18 motion. ECF 39 (Opp’n). Defendants filed a reply. ECF 41 (Reply). All parties have 19 consented to magistrate judge jurisdiction under 28 U.S.C. § 636(c). ECF 8, 9. 20 II. 21 LEGAL STANDARD A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal 22 sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “To 23 survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as 24 true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 25 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When 26 27 28 1 Plaintiff repeats nearly identical general allegations under each of his thirteen causes of action. The Court will only cite to the first statement of a general allegation. 2 Plaintiff filed the exhibits to his SAC separately. See ECF 34. 2 United States District Court Northern District of California 1 reviewing a 12(b)(6) motion, a court “must accept as true all factual allegations in the 2 complaint and draw all reasonable inferences in favor of the non-moving party.” Retail 3 Prop. Trust v. United Bd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 4 2014). A court, however, need not accept as true “allegations that are merely conclusory, 5 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. 6 Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). A claim is facially plausible when it “allows 7 the court to draw the reasonable inference that the defendant is liable for the misconduct 8 alleged.” Id. If a court grants a motion to dismiss, leave to amend should be granted 9 unless the pleading could not possibly be cured by the allegation of other facts. Lopez v. 10 Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). Although courts “afford leeway to pro se 11 parties” at the pleading stage, pro se litigants who are also licensed attorneys are not 12 afforded the same liberal pleading standard. Huffman v. Lindgren, 81 F.4th 1016, 1020–21 13 (9th Cir. 2023). 14 III. 15 DISCUSSION A. Plaintiff Has Not Cured the Defects in His Breach of Contract and Estoppel Claims 16 17 The Court previously addressed the shortfalls of Plaintiff’s Second Cause of Action 18 for breach of contract and Fifth Cause of Action for estoppel. ECF 32. Plaintiff’s SAC 19 has not cured these insufficiencies because the Court still “cannot discern Defendants’ 20 alleged promise not to collect the balloon amount.” See ECF 32 at 5. 21 The elements for breach of contract are: “(1) the existence of the contract, (2) 22 plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the 23 resulting damages to the plaintiff.” Oasis W. Realty, LLC v. Goldman, 51 Cal. 4th 811, 24 821 (2011). “To state a cause of action for breach of contract, it is absolutely essential to 25 plead the terms of the contract either in haec verba or according to legal effect.” Langan v. 26 United Servs. Auto. Ass’n, 69 F. Supp. 3d 965, 979 (N.D. Cal. 2014) (quoting Twaite v. 27 Allstate Ins. Co., 216 Cal. App. 3d 239, 252 (1989)). The plaintiff need not “allege the 28 terms of the alleged contract with precision,” but the court must be able to discern the 3 1 “material obligation of the contract the defendant allegedly breached.” Langan, 69 F. 2 Supp. 3d at 979. United States District Court Northern District of California 3 As Defendants note, Plaintiff for a second time does not clarify whether he intends 4 to allege a claim of equitable estoppel or promissory estoppel. See Mot. 15. This 5 omission, in itself, poses a challenge to the adequacy of Plaintiff’s claim. But for the 6 purposes of this motion, the Court will again assume Plaintiff alleges a claim of 7 promissory estoppel because equitable estoppel is not an independent cause of action under 8 California law. Torliatt v. Ocwen Loan Servicing LLC, No. 18-cv-1516- JSC, 2018 WL 9 2197689, at *4 (N.D. Cal. May 14, 2018); Behnke v. State Farm Gen. Ins. Co., 196 Cal. 10 App. 4th 1443, 1463 (2011). To succeed on a promissory estoppel claim, a plaintiff must 11 show: “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom 12 the promise is made; (3) the reliance must be both reasonable and foreseeable; and (4) the 13 party asserting the estoppel must be injured by his reliance.” O’Brien v. Caliber Home 14 Loans, Inc., No. 15-cv-2623-JST, 2016 WL 324284, at *5 (N.D. Cal. Jan. 27, 2016) 15 (quoting Jones v. Wachovia Bank, 230 Cal. App. 4th 935, 945 (2014)). 16 Plaintiff alleges “U.S. Bank’s predecessors waived and failed and refused to call the 17 balloon payment due.” SAC ¶ 60. As a result, Plaintiff alleges “U.S. Bank was barred on 18 the basis of waiver, estoppel and/or mutual contract modification from arbitrarily enforcing 19 the balloon payment clause whenever it desired given the note language and its repeated 20 representations in writing that payment of the monthly amount brought the loan current, to 21 which John consented and agreed to, and performed on, making the requested monthly 22 payments, which U.S. Bank accepted, thus by its conduct ratifying and approving of the 23 contract.” SAC ¶ 100. 24 Plaintiff’s allegations lack sufficient factual matter for the Court to discern the 25 obligations of a contract or clear and unambiguous promise by US Bank. It is unclear if 26 Plaintiff is alleging that his payment obligations under the Note, as an initial contract, were 27 waived by the failure of US Bank’s predecessors to enforce a default on May 1, 2017, or 28 were modified by a pattern of monthly statements and payments. See SAC ¶¶ 88, 100. It 4 1 is also unclear if Plaintiff is alleging the pattern of monthly statements and payments 2 constituted one new contract, or a series of new contracts. See SAC ¶¶ 88, 100. United States District Court Northern District of California 3 Moreover, Plaintiff’s allegations are undermined by the Note, Deed of Trust, and 4 monthly statements attached to and incorporated by reference into the SAC. See Groves v. 5 Kaiser Found. Health Plan Inc., 32 F. Supp. 3d 1074, 1079 n.4 (N.D. Cal. 2014) (noting a 6 court need not treat the facts in a complaint as true when they are contradicted by 7 documents attached to or incorporated by reference into the complaint). The terms of both 8 the Note and the Deed of Trust for Plaintiff’s property state that Plaintiff must repay the 9 entire remaining balance and unpaid interest on the loan by the maturity date of May 1, 10 2017. SAC, Ex. A, Note 1, ¶ 3, Deed of Trust 2. The Note and Deed of Trust also include 11 non-waiver provisions: “Even if, at a time when I am in default, the Note Holder does not 12 require me to pay immediately in full as described above, the Note Holder will still have 13 the right to do so if I am in default at a later time.” SAC, Ex. A, Note ¶ 6(D); see Ex. A, 14 Deed of Trust ¶¶ 1, 12 (“Lender may accept any payment or partial payment insufficient to 15 bring the Loan current without waiver of any rights hereunder . . . Extension of the time for 16 payment or modification of amortization of the sums . . . shall not operate to release the 17 liability of Borrower . . .”). 18 As to the monthly statements Plaintiff received from US Bank, each statement 19 attached to the SAC includes the amount of Plaintiff’s “Outstanding Principal” and, under 20 a heading titled “Important Messages,” states, “Loan Matured on 05/01/2017. Payoff 21 figures are subject to change.” SAC, Ex. B. Later statements included a “Delinquency 22 Notice” that further indicated, “You are late on your mortgage payment. Failure to bring 23 your loan current may result in fees and foreclosure . . . $973.28 due by 02/01/2023 to 24 bring your account current.” SAC, Ex. B. Nothing in the monthly statements lends 25 support to Plaintiff’s allegations, and instead indicate US Bank did not waive its right to 26 foreclose under the Note. Plaintiff therefore fails to articulate facts under which he can 27 plausibly establish the existence of a contract or clear and unambiguous promise by US 28 Bank to waive collection of the balloon payment. 5 United States District Court Northern District of California 1 Finally, even if Plaintiff succeeded in alleging the existence of a contract for his 2 breach of contract claim, he fails to plausibly allege his own performance or excuse for 3 nonperformance of the contract. Plaintiff acknowledges that the “balloon payment 4 maturity date was May 1, 2017.” SAC ¶ 14. Nowhere does Plaintiff allege he paid the 5 balloon payment by the maturity date. Instead, Plaintiff alleges he “was not in breach for 6 not making the balloon payment because the then lender did not claim the sum was due. 7 No demand, no breach. Waiver.” SAC ¶ 61 (emphasis added). Plaintiff does not explain 8 how the lack of a demand by the lender affected his own obligations under the initial Note 9 such that he was not in breach, and the terms of the Note do not support such an assertion. 10 Moreover, it is unclear if Plaintiff breached the alleged new or modified contract(s) with 11 US Bank. He alleges he “made the necessary payments to keep the loan current” and 12 “timely and properly paid the loan amounts due.” SAC ¶¶ 36, 148. However, he attaches 13 and incorporates by reference monthly statements and notices from Defendants indicating 14 he failed to timely make a monthly payment that was due on July 1, 2022. See, e.g., Ex. B, 15 C. As a result, Plaintiff does not adequately allege that he performed his obligations under 16 the terms of the original Note or the alleged new or modified contract(s). 17 18 19 20 Because Plaintiff fails to state a claim for breach of contract or estoppel, the Second and Fifth Causes of Action are dismissed without leave to amend. B. Plaintiff’s Defamation Claim Fails Plaintiff’s Third Cause of Action alleges defamation against US Bank. To plead 21 defamation, a plaintiff must show “(1) an intentional publication, (2) that is false, (3) 22 defamatory, and (4) unprivileged, and (5) that has a natural tendency to injure or that 23 causes special damage.” Cook v. Ministries, No. 21-cv-0160-LB, 2021 WL 681256, at *3 24 (N.D. Cal. Feb. 22, 2021) (quoting Taus v. Loftus, 40 Cal. 4th 683, 720 (2007)). 25 Plaintiff alleges US Bank intentionally published notices about Plaintiff’s default 26 that were false because “they affirmatively stated that he was not current on his payments 27 to U.S. Bank when in fact he was current on his payment on the agreement the parties 28 entered int[o].” SAC ¶ 146; see SAC ¶¶ 145, 147–52. Plaintiff also alleges the statements 6 1 were not protected or privileged. SAC ¶ 152. Although Plaintiff’s allegations reference 2 multiple “public notices,” SAC ¶¶ 145–47, the Court interprets Plaintiff’s defamation 3 claim to apply to the recorded Notice of Default and Election to Sell Under Deed of Trust 4 dated March 30, 2023 (Notice of Default). SAC, Ex. F. United States District Court Northern District of California 5 Plaintiff fails to adequately allege that the Notice of Default was false. Although 6 the Notice of Default includes generic reference to Plaintiff being “behind in your 7 payments,” it specifically states that a breach of Plaintiff’s obligations under the Note 8 “occurred in that payment has not been made of: The entire balance of unpaid principal 9 and interest which became due on 5/1/2017, along with late charges, foreclosure fees and 10 costs any legal fees or advances that have become due.” SAC, Ex. F. Plaintiff does not 11 allege that he paid the balloon payment by or on the maturity date of May 1, 2017. To the 12 extent the Notice of Default indicates Plaintiff is behind on his monthly installments, 13 Plaintiff also does not sufficiently allege that he timely paid every monthly payment, 14 particularly for the payment due July 1, 2022. See supra III(A). 15 Because Plaintiff has not plausibly alleged that the Notice of Default contained false 16 statements, the Court does not address whether the Notice of Default is privileged. 17 Plaintiff’s Third Cause of Action is dismissed with leave to amend. 18 19 C. Plaintiff’s TILA Claim Fails Plaintiff’s Eleventh Cause of Action alleges US Bank violated the Truth in Lending 20 Act (TILA) (1) “by failing to timely and properly credit John’s account with payments 21 made;” (2) “by repeatedly failing to provide accurate payoff statements;” and (3) by 22 “repeatedly failing to timely respond to his complaints about billing errors.” SAC ¶ 543. 23 Although Plaintiff’s references to statutory sections are incomplete, Plaintiff appears to 24 allege specific violations of 15 U.S.C. §§ 1639f and 1666, and 12 C.F.R. 1026.41. SAC ¶¶ 25 538–41. 26 The Court cannot reasonably infer from Plaintiff’s allegations that Defendants are 27 liable under the TILA. Plaintiff does not identify which payments US Bank did not timely 28 and properly credit to his balance, or which monthly statements were inaccurate. To the 7 1 extent Plaintiff is alleging the monthly statements were inaccurate because they included 2 an outstanding balance on his principal or stated he was delinquent on a monthly payment, 3 the Court has already concluded Plaintiff’s factual allegations fail to support these 4 contentions. The Court also cannot discern repeated failures by US Bank to respond to 5 complaints from Plaintiff about billing errors. Plaintiff attaches one letter to SN Bank to 6 the SAC, but the letter does not identify a billing error. See SAC, Ex. C(1). 7 8 9 United States District Court Northern District of California 10 Plaintiff’s Eleventh Cause of Action is therefore dismissed with leave to amend. D. Plaintiff’s Fraud-Based Claims Fail to Meet Rule 9(b)’s Heightened Pleading Standard Federal Rule of Civil Procedure 9(b) requires a party to “state with particularity the 11 circumstances constituting fraud or mistake,” though “[m]alice, intent, knowledge, and 12 other conditions of a person’s mind may be alleged generally.” The allegations must be 13 “specific enough to give defendants notice of the particular misconduct . . . so that they can 14 defend against the charge.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 15 2003). Fraud allegations must therefore “identify the who, what, when, where, and how of 16 the misconduct charged, as well as what is false or misleading about the purportedly 17 fraudulent statement, and why it is false.” Davidson v. Kimberly-Clark Corp., 889 F.3d 18 956, 964 (9th Cir. 2018). 19 Rule 9(b) applies to allegations under California’s consumer protection statutes, 20 including California’s Unfair Competition Law (UCL) and False Advertising Law (FAL). 21 Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). Because Plaintiff’s 22 claims for negligence and negligent misrepresentation are grounded in fraud, they are also 23 subject to Rule 9(b). U.S. Cap. Partners, LLC v. AHMSA Int’l, Inc., No. 12-cv-6520-JSC, 24 2013 WL 594285, at *3 (N.D. Cal. Feb. 14, 2013); see Sheahan v. State Farm Gen. Ins. 25 Co., 442 F. Supp. 3d 1178, 1186, 1191 (N.D. Cal. 2020) (applying Rule 9(b) pleading 26 standard to negligent misrepresentation and negligence claims). 27 28 None of Plaintiff’s fraud-based claims meet the particularity requirements of Rule 9(b), especially as to how Defendants’ actions were false, misleading, or tortious. 8 1 United States District Court Northern District of California 2 1. § 17200 and § 17500 Plaintiff’s First Cause of Action alleges US Bank violated California’s Business and 3 Professions Code §§ 17200 and 17500. The UCL at § 17200 prohibits “any unlawful, 4 unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading 5 advertising.” Cal. Bus. & Prof. Code § 17200. The FAL at § 17500 “makes it unlawful 6 for a business to disseminate any statement” that it knows or should know “is untrue or 7 misleading” as part of the sale of goods and services. Sperling v. Stein Mart, Inc., 291 F. 8 Supp. 3d 1076, 1083 (C.D. Cal. 2018); Cal. Bus. & Prof. Code § 17500. To establish a 9 claim under the FAL and UCL a plaintiff must show “that the defendant’s claimed 10 misrepresentations are likely to deceive a reasonable consumer.” Stein Mart, 291 F. Supp. 11 3d at 1084 (citing Williams v. Gerber Products Co., 552 F.3d 934, 938 (9th Cir. 2008)). 12 Plaintiff alleges US Bank violated the UCL because it (1) represented in monthly 13 statements that if Plaintiff “timely and properly paid the monthly payment claimed due that 14 the loan would be current, and thus the loan would not be foreclosed on;” (2) brought 15 “foreclosure actions against similarly situated borrowers;” (3) wrongfully imposed costs, 16 fees, and interest to his balance; and (4) kept more of a payment on his principal balance 17 than was due. SAC ¶¶ 50, 55, 56. The Court will address each contention in order. 18 First, as addressed above, Plaintiff failed to plausibly allege a promise by US Bank 19 that it would not pursue default and foreclosure on Plaintiff’s property. The claim 20 therefore fails here under a heightened pleading standard. Second, Plaintiff’s allegation 21 that US Bank took comparable actions against similarly situated borrowers fails under 22 Rule 9(b) because it is made only “on information and belief.” SAC ¶ 55. Third, Plaintiff 23 fails to provide any explanation for how the imposition of costs, late fees, and interest to 24 the balance of his principal loan was wrongful. Fourth, the Notice of Default states the 25 amount due on Plaintiff’s principal balance as of March 30, 2023, was $39,756.29, but 26 “would increase until your account becomes current.” SAC, Ex. F. Although Plaintiff 27 alleges US Bank wrongfully retained his entire $40,000 payment, he does not provide any 28 details as to what date he made this payment and what amount he owed on his principal at 9 1 that time. See SAC ¶ 56. Without this information, it is reasonable to infer the amount he 2 owed had increased to $40,000 or more by the time of his payment. United States District Court Northern District of California 3 Plaintiff alleges US Bank violated the FAL (1) by making untrue or misleading 4 statements related to the administration of the Note and when the balloon payment was 5 due, and (2) by failing to act in good faith to avoid foreclosure. SAC ¶¶ 52–54. 6 Specifically, Plaintiff’s first allegation under the FAL is that US Bank, through SN, made 7 or disseminated, or caused to be made or disseminated, “before the public in this State, 8 untrue or misleading statements in connection with the note and administration of it and 9 second deed of trust and knew or should have know[n] the statements were untrue or 10 misleading, including but not limited to, the note indicating payment of the monthly 11 invoices kept the note and deed of trust current.” SAC ¶ 52. The Court cannot discern 12 from these facts what specific statements Plaintiff refers to. Relatedly, Plaintiff alleges US 13 Bank made untrue or misleading statements as to when Plaintiff’s balloon payment was 14 due in violation of the Note and California Civil Code § 2966. SAC ¶¶ 51, 53. However, 15 Plaintiff does not identify the specific notices sent by either SN or US Bank that allegedly 16 failed to provide the requisite amount of notice. Plaintiff therefore does not allege with 17 particularity the “who, what, when, where, and how” US Bank violated the FAL. See 18 Davidson, 889 F.3d at 964. 19 Plaintiff’s second allegation that US Bank failed to make a good faith effort to 20 avoid foreclosure makes no reference to a “statement,” which is an element required to 21 state a claim under the FAL. SAC ¶ 54; see Cal. Bus. & Prof. Code § 17500. 22 23 24 25 Accordingly, Plaintiff’s First Cause of Action is dismissed with leave to amend. 2. Intentional Misrepresentation, Negligent Misrepresentation, and Promise Without Intention of Performing Plaintiff’s Sixth, Eighth, and Ninth Causes of Action allege intentional 26 misrepresentation, promise without intention of performing, and negligent 27 misrepresentation against US Bank. To state a cause of action for intentional 28 misrepresentation under California law, a plaintiff must allege: “(1) misrepresentation 10 United States District Court Northern District of California 1 (false representation, concealment, or nondisclosure); (2) knowledge of falsity; (3) intent 2 to induce reliance; (4) justifiable reliance; and (5) resulting damage.” Moody v. Hot Topic, 3 Inc., No. 23-cv-0447, 2023 WL 9511159, at *6 (C.D. Cal. Nov. 15, 2023) (citations 4 omitted). “[F]or negligent misrepresentation, it is sufficient to allege the defendant lacked 5 reasonable grounds to believe the representation was true,” rather than alleging knowledge 6 of falsity. Real v. Y.M.I. Jeanswear, Inc., No. 17-cv-0870-JGB (DTBx), 2017 WL 7 11675686, at *5 (C.D. Cal. Sept. 1, 2017). To establish a claim of promise without intent 8 to perform, a plaintiff must show that the defendant “made a promise about a material 9 matter, with no intention of honoring that promise, that induced her to take action she 10 otherwise would not have taken.” Melanson v. United Air Lines, Inc., 931 F.2d 558, 563 11 (9th Cir. 1991); see Cal. Civ. Code § 1710; Cicone v. URS Corp., 183 Cal. App. 3d 194, 12 203 (1986). Plaintiff fails to state a claim with particularity for intentional misrepresentation, 13 14 negligent misrepresentation, or promise without intent to perform because, as discussed, 15 Plaintiff has not plausibly alleged that US Bank represented or promised that monthly 16 payments would bring Plaintiff’s loan current such that it would not foreclose on the 17 property. See SAC ¶ 293–94, 391–92, 439–40; supra III(A). Plaintiff’s Sixth, Eighth, and Ninth Causes of Action are dismissed with leave to 18 19 amend. 20 3. Negligence Plaintiff’s Fourth Cause of Action alleges negligence by US Bank. Under 21 22 California law, the “elements of a cause of action for negligence are (1) a legal duty to use 23 reasonable care, (2) breach of that duty, and (3) proximate cause between the breach and 24 (4) the plaintiff’s injury.” Patera v. Citibank, N.A., 79 F. Supp. 3d 1074, 1086 (N.D. Cal. 25 2015). 26 Plaintiff alleges US Bank “had a duty to timely and properly administer the loan” 27 and “provide proper statutory notice of any balloon payments due.” SAC ¶ 198; see SAC 28 ¶ 184. US Bank allegedly breached these duties “by claiming the balloon payment was 11 1 due” despite Plaintiff’s monthly payments, and “by failing to provide proper note and 2 statutory notice that” the balloon payment was due. SAC ¶ 199; see SAC ¶ 185. 3 4 breach of duty and Plaintiff’s injuries. In particular, the Court agrees with Defendants that, 5 on the face of the SAC, “Plaintiff’s nonpayment of the loan [by] the maturity date is the 6 cause of Plaintiff’s damages.” Mot. 15. The Court also cannot reasonably infer US Bank 7 breached its duty to provide proper notice that the balloon payment was due because, as 8 discussed, Plaintiff fails to identify the notices in which US Bank allegedly committed this 9 breach. The Court therefore declines to reach the question of US Bank’s duty of care. 10 11 United States District Court Northern District of California Plaintiff’s allegations fail to establish proximate cause between US Bank’s alleged 12 Plaintiff’s Fourth Cause of Action is dismissed with leave to amend. 4. Concealment Plaintiff’s Seventh Cause of Action alleges concealment against US Bank. “To 13 state a claim for fraudulent concealment, a plaintiff must allege (1) concealment or 14 suppression of a material fact; (2) a duty to disclose; (3) intentional concealment with the 15 intent to defraud; (4) actual, justifiable reliance; and (5) resulting damages.” Rosal v. First 16 Fed’n Bank of Cal, 671 F. Supp. 2d 1111, 1132 (N.D. Cal. 2009) (citing Blickman Turkus, 17 LP v. MF Downtown Sunnyvale, LLC, 162 Cal. App. 4th 858, 868 (2008)). 18 Plaintiff alleges US Bank, through SN, “intentionally concealed material facts by 19 issuing monthly statements affirmatively stating that if the claimed monthly amount due 20 was timely paid the loan would be current and thus [the] loan would not be foreclosed on.” 21 SAC ¶ 342. For Plaintiff’s claim to survive on this theory, he must plausibly allege that 22 (1) US Bank affirmatively represented that it would not pursue default and foreclosure on 23 his 2017 balloon payment, then (2) concealed to him that it did in fact intend to pursue 24 default and foreclosure. As previously discussed, Plaintiff has failed to adequately allege 25 that US Bank represented it would not pursue default and foreclosure on the balloon 26 payment. And, as Defendants observe, Plaintiff has not specified how US Bank concealed 27 the material fact that it may pursue default based on Plaintiff’s failure to make the balloon 28 payment in 2017 when Plaintiff himself has attached the terms of the Note and monthly 12 1 statements indicating when the balloon payment came due and his outstanding principal 2 balance. See Mot. 19–20. 3 4 concealment, amendment would be futile. Plaintiff’s Seventh Cause of Action is 5 dismissed without leave to amend. 6 United States District Court Northern District of California Because the exhibits Plaintiff incorporates into the SAC contradict his allegations of 5. RICO Claims 7 Plaintiff’s Twelfth and Thirteenth Causes of Action alleged a violation of RICO and 8 conspiracy to violate RICO by US Bank. To state a claim under § 1962(c), a plaintiff must 9 allege “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” 10 Odom v. Microsoft Corp., 486 F.3d 541, 547 (9th Cir. 2007) (quoting Sedima, S.P.R.L. v. 11 Imrex Co., 473 U.S. 479, 496 (1985)). The last element, racketeering activity, is also 12 referred to as “predicate acts.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 13 1393, 1400 (9th Cir. 1986) (citations omitted). Plaintiff alleges US Bank violated RICO 14 by committing the predicate acts of wire fraud and mail fraud in violation of 18 U.S.C. §§ 15 1341 and 1343. SAC ¶ 592. “The elements of mail fraud and wire fraud are essentially 16 identical.” United States v. Brugnara, 856 F.3d 1198, 1207 (9th Cir. 2017). The plaintiff 17 must show “(1) a scheme to defraud, (2) the use of either the mail or wire, radio, or 18 television to further the scheme, and (3) the specific intent to defraud.” Id. 19 The Court previously identified deficiencies in Plaintiff’s RICO claims. ECF 32. 20 Namely, that Plaintiff’s allegations of predicate acts “fall short of the specificity required 21 under Rule 9(b).” ECF 32 at 6. Plaintiff’s allegations of US Bank’s predicate acts in the 22 SAC are identical to the previously insufficient allegations: “repeatedly providing false 23 and misleading monthly invoice statements indicating payment brought the loan current 24 and not subject to foreclosure.” FAC ¶ 104; SAC ¶ 592. Although Plaintiff lengthens his 25 allegations as to the other elements of a RICO claim, see SAC ¶¶ 589–91, the added 26 statements are equally vague and insubstantial such that the claim is not pleaded with 27 particularity. As a result, Plaintiff’s RICO claim and related claim for conspiracy to 28 violate RICO fail. See Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364, 367 n.8 (9th 13 1 Cir. 1992). (“Because we find that [plaintiff] has failed to allege the requisite substantive 2 elements of RICO, the conspiracy cause of action cannot stand.”) 3 4 5 United States District Court Northern District of California 6 Plaintiff’s Twelfth and Thirteenth Causes of Action are dismissed without leave to amend. 6. Aiding and Abetting Plaintiff’s Tenth Cause of Action alleges US Bank aided and abetted SN in 7 committing “the wrongs herein alleged, including, to violate Civil Code section 2966, 8 TILA, RICO and engage in unfair, fraudulent and/or illegal business practices.” SAC ¶ 9 485. Plaintiff also alleges US Bank aided and abetted the commission of “intentional 10 misconduct, negligent misconduct and statutory violations” of the Federal Fair Debt 11 Collection Practices Act and California Civil Code § 2924. SAC ¶¶ 487–89. 12 A party may be liable for aiding and abetting another when it either “(a) knows the 13 other’s conduct constitutes a breach of duty and gives substantial assistance or 14 encouragement to the other to so act or (b) gives substantial assistance to the other in 15 accomplishing a tortious result and the person’s own conduct, separately considered, 16 constitutes a breach of duty to the third person.” Neilson v. Union Bank of Cal., N.A., 290 17 F. Supp. 2d 1101, 1118 (C.D. Cal. 2003); In re First Alliance Mortg. Co., 471 F.3d 977, 18 993 (9th Cir. 2006). Under the first test, “to satisfy the knowledge prong, the defendant 19 must have ‘actual knowledge of the specific primary wrong the defendant substantially 20 assisted.’” In re First Alliance, 471 F.3d at 993. “[W]hen a claim alleges the aiding and 21 abetting of a fraud, substantial assistance must be pled in accordance with Rule 9(b)’s 22 heightened specificity requirements.” Neilson, 290 F. Supp. 2d at 1130 & n.81. 23 Because the Court has concluded all of Plaintiff’s other claims, on which the claim 24 for aiding and abetting is based, fail to state claim, Plaintiff’s aiding and abetting claim 25 necessarily fails. Plaintiff also does not allege facts relating to a violation of Federal Fair 26 Debt Collection Practices Act and California Civil Code § 2924 anywhere else in the SAC. 27 In addition, the Court notes that Plaintiff’s allegations regarding US Bank’s substantial 28 assistance to SN are conclusory and amount to recitations of the legal elements, falling 14 1 short of the particularity required by Rule 9(b). See SAC 489. The Tenth Cause of Action is dismissed with leave to amend. 2 3 4 CONCLUSION For these reasons, Plaintiff’s Second, Fifth, Seventh, Twelfth, and Thirteenth 5 Causes of Action are dismissed without leave to amend. Plaintiff’s First, Third, Fourth, 6 Sixth, Eighth, Ninth, Tenth, and Eleventh Causes of Action are dismissed with leave to 7 amend. Plaintiff must file an amended complaint or a notice that he will not be amending 8 the SAC by July 19, 2024. Plaintiff’s amended complaint may not exceed 25 pages, and 9 Plaintiff must seek leave of court to add claims or parties. 10 United States District Court Northern District of California IV. Because the Court GRANTS Defendants’ motion to dismiss, the Court DENIES as 11 moot Defendants’ motion for a more definite statement, which was brought in the 12 alternative. Defendants’ Request for Judicial Notice is also DENIED because the Court 13 relied only on the documents attached to the SAC in deciding the motion to dismiss, and 14 not on the documents submitted with the Request for Judicial Notice. 15 IT IS SO ORDERED. 16 17 18 Dated: July 3, 2024 _____________________________________ NATHANAEL M. COUSINS United States Magistrate Judge 19 20 21 22 23 24 25 26 27 28 15

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