Thomas et al v. Wells Fargo Bank, N.A. et al

Filing 40

ORDER Granting 34 Defendant's Request for Judgment on the Pleadings. Signed by Judge Gonzalo P. Curiel on 12/6/16. (dlg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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Everett L. Thomas; Martha A. Thomas,

Case No.: 3:15-cv-02344-GPC-JMA

Plaintiffs,

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ORDER GRANTING DEFENDANT’S
REQUEST FOR JUDGMENT ON
THE PLEADINGS

v.
Wells Fargo Bank, N. A.; Wells Fargo
Bank Home Mortgage; Barrett Daffin
Frappier & Weiss, LLP; Soutland
Mortgage II, LLC; and DOES 1 through
10, INCLUSIVE,

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[Dkt. No. 34]

Defendants.

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Before the Court is Defendant Southland Home Mortgage II, LLC’s (“Southland”)

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motion for judgment on the pleadings. Dkt. No. 34. Plaintiffs filed a tardy response1 on

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December 2, 2016. Dkt. No. 39.

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The Court-ordered briefing schedule stated that Plaintiffs’ response to Defendant Southland’s motion
was due by November 18, 2016. Dkt. No. 35. Plaintiffs give no reason for they delay.
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BACKGROUND
The facts underlying this case have been reviewed in depth in previous orders. See
Dkt. Nos. 15 & 23. An overview of the salient facts are reproduced here.
This case arises out of a $695,000 home loan obtained by Plaintiffs in June 2007

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from World Savings Bank, FSB (“WSB”), the predecessor-in-interest of Defendant Wells

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Fargo Bank N.A. (“Wells Fargo”). Pls.’ Verified Second Amended Compl. (“SAC”)

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¶ 18. In 2009, Plaintiffs obtained a modification on the loan, reducing the principal

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balance from $724,920.30 to $579,936.25. Id. at ¶ 19. In October 2013, Plaintiffs

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contacted Defendant Wells Fargo in order to secure a new loan modification. Id. at ¶ 28.

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In response, Defendant Wells Fargo indicated that they should stop paying their mortgage

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in order to be eligible for a loan modification. Id. at ¶ 29. Months later, on or around

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January 14, 2014, Plaintiffs provided Defendant Wells Fargo with a complete loan

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modification request. Id. at ¶ 31. A notice of default was entered against Plaintiffs in

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June 2015. Id. at ¶ 32. Plaintiffs provided Defendant Wells Fargo with a renewed loan

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modification package on September 9, 2015, and Defendant later acknowledged receipt

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of the application. Id. at ¶¶ 42. This lawsuit followed.

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In their SAC, Plaintiffs allege that Defendant Wells Fargo violated 12 C.F.R.

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§§ 1024.41(b) & (c) by failing to respond to the September 9, 2015 loan modification

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application. Id. at ¶ 43. Plaintiff also alleges that Defendant Wells Fargo, along with

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Defendant Southland colluded with one another in order to sell Plaintiffs’ home to

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Southland, thereby “wiping out $150,000 in equity which served to unjustly enrich

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Defendant Southland, and served as an inequitable forfeiture of Plaintiff’s (sic) equitable

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interest in the property.” Id. at ¶ 45 (emphases omitted). Such collusion, Plaintiffs

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allege, amounted to a violation of the Racketeer Influenced and Corrupt Organizations

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Act, 18 U.S.C. §§ 1961 et seq. (RICO). Id. at ¶ 67.

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Defendant Wells Fargo filed a motion to dismiss all three causes of action in

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Plaintiffs’ SAC on February 24, 2016. Dkt. No. 18-1 at 2. On March 11, 2016,

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Defendant Southland moved the Court to join in the motions filed by its co-defendant,
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Dkt. No. 20 at 2, and the Court subsequently granted the motion, Dkt. No. 24. On April

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28, 2016, the Court denied Defendant Wells Fargo’s motion to dismiss Plaintiffs’

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12 C.F.R. §§ 1024.41(b) and (c) claims, but granted the motion as to Plaintiffs’ RICO

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claim. Id. at 10, 12.

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LEGAL STANDARD
Under Federal Rule of Civil Procedure (“Rule”) 12(c), “[a]fter the pleadings are

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closed but within such time as not to delay the trial, any party may move for judgment on

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the pleadings.” Fed. R. Civ. P. 12(c).

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The principal difference between motions filed pursuant to Rule 12(b) and Rule

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12(c) is the time of filing — a motion for judgment on the pleadings is typically brought

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after an answer has been filed whereas a motion to dismiss is typically brought before an

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answer has been filed. See Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th

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Cir. 1989). Because the motions are functionally identical, the same standard of review

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applicable to a Rule 12(b) motion applies to its Rule 12(c) analog. Id.; see also Chavez v.

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United States, 683 F.3d 1102, 1108 (9th Cir. 2012) (“Analysis under Rule 12(c) is

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‘substantially identical’ to analysis under Rule 12(b)(6), because, under both rules, a

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court must determine whether the facts alleged in the complaint, taken as true, entitle the

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plaintiff to a legal remedy.”) (internal quotations and citation omitted). Thus, when

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deciding a Rule 12(c) motion, “the allegations of the non-moving party must be accepted

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as true, while the allegations of the moving party which have been denied are assumed to

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be false.” Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1550

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(9th Cir. 1989) (citing Doleman v. Meiji Mut. Life Ins. Co., 727 F.2d 1480, 1482 (9th Cir.

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1984); Austad v. United States, 386 F.2d 147, 149 (9th Cir. 1967)). In other words, the

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court construes all material allegations in the light most favorable to the non-moving

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party. Deveraturda v. Globe Aviation Sec. Servs., 454 F.3d 1043, 1046 (9th Cir. 2006).

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DISCUSSION
Defendant Southland argues that Plaintiffs do not state a cause of action against
Southland under 12 C.F.R. § 1024.41(b) or § 1024.41(c). Dkt. No. 34-1 at 2. The only
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allegations made against Southland, Defendant notes, are those pertaining to Plaintiffs’

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alleged RICO violations, which have already been dismissed by the Court. Id.

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Accordingly, Defendant Southland argues that it is entitled to judgment on the pleadings

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as to Plaintiffs’ remaining claims. Id.

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1. 12 C.F.R. §§ 1024.41(b) & (c)
12 C.F.R. § 1024.41, also known as “Regulation X,” became effective on

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January 10, 2014 and specifies loss mitigation procedures that a borrower may

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enforce against a loan servicer pursuant to section 6(f) of the Real Estate Settlement

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Procedures Act (“RESPA”), 12 U.S.C. § 2605(f).

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The Court agrees with Defendant that Plaintiffs have failed to state a cause of

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action under 12 C.F.R. §§ 1024.41(b) or (c) against Southland. All but one of the factual

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allegations asserted against Southland pertain to the alleged “concerted enterprise”

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between the co-defendants to foreclose on Plaintiffs’ property. See SAC ¶ 45, (“the

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Defendant undertook to dual track the foreclosure of the Plaintiff’s family home, and on

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November 6, 2016, colluding with Defendant Southland Mortgage . . . sold the Plaintiff’s

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family home to Southland . . . which served to unjustly enrich Southland”) (emphases

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omitted); ¶ 47 (“Defendant’s collusion as between Wells Fargo Bank and Southland

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Mortgage amounts to an enterprise as defined under RICO statutes . . .”; see also ¶¶ 68-

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78 (referencing Southland in factual allegations under “Count Three: Violation of 18

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U.S.C. § 1961 et seq”) (emphases omitted). Because Plaintiffs’ factual allegations

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against Southland focus exclusively on Plaintiffs’ RICO claim, Plaintiffs SAC is

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insufficient to state a claim against Southland under 12 C.F.R. §§ 1024.41(b) or (c).2

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The only allegation attributed to Southland that did not pertain to Plaintiffs’ RICO cause of action was
as follows: “Defendant Southland thereafter filed an unlawful detainer against Plaintiffs seeking their
removal from the subject property.” Id. at ¶ 46. Plaintiffs do not, however, explain the relevance of the
“unlawful detainer” to any of their causes of action, nor bring a cause of action based upon that
allegedly unlawful conduct. Accordingly, this fact also fails to state any claim against Southland.
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Plaintiffs, for example, do not allege that Defendant Southland is a loan servicer or that

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Southland and Plaintiffs entered into an loan agreement. Put simply, there are no facts

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implicating Defendant Southland under Regulation X.

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Plaintiffs’ opposition brief does not meaningfully respond to Defendant

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Southland’s arguments. Plaintiffs state that Defendant’s motion is “fatally flawed

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because it is predicated upon the false narrative that” Southland is a “bona fide purchaser

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without notice.” Dkt. No. 39 at 1 (internal quotations and capitalization omitted). This

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line of argument, however, misses the mark entirely. For one, Southland never alleged,

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either in its answer or in the instant motion, that it enjoyed the protections of a bona fide

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purchaser. See Def.’s Answer, Dkt. No. 30; Dkt. No. 34-1. Moreover, Plaintiffs’

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argument does nothing to refute or undermine Southland’s argument that the complaint

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does not contain any factual allegations accusing Southland of violating 12 C.F.R.

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§§ 1024.41(b) or (c). Such an omission is fatal to Plaintiffs’ claims and Plaintiffs offers

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no persuasive argument to the contrary.

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Because the complaint raises no issue of fact as to Southland’s liability under

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Regulation X, granting judgment on the pleadings is proper. See Hal Roach Studios, 896

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F.2d at 1550 (“Judgment on the pleadings is proper when the moving party clearly

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establishes on the face of the pleadings that no material issue of fact remains to be

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resolved and that it is entitled to judgment as a matter of law.” ); see also Gen.

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Conference Corp. of Seventh-Day Adventists v. Seventh-Day Adventist Congregational

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Church, 887 F.2d 228, 230 (9th Cir. 1989) (“judgment on the pleadings in favor of a

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defendant is not appropriate if the complaint raises issues of fact that, if proved, would

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support the plaintiff’s legal theory.”).

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CONCLUSION
For these reasons, the Court GRANTS Defendant Southland’s motion for
judgment on the pleadings.
IT IS SO ORDERED.

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Dated: December 6, 2016

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