Del Rosario et al v. Wells Fargo Bank, National Association et al

Filing 20

ORDER granting Defendants' 13 Motion to Dismiss Plaintiffs' First Amended Complaint for Failure to State a Claim. Plaintiffs may file a second amended complaint no later than fourteen (14) days after the signature date of this Order. Signed by Judge Roger T. Benitez on 4/5/2017. (All non-registered users served via U.S. Mail Service) (fth)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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AMOR MEDINA DEL ROSARIO AND
ELVIE CANLAS DEL ROSARIO,
Plaintiffs,

Case No.: 3:16-cv-00649-BEN-NLS
ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS
PLAINTIFFS’ FIRST AMENDED
COMPLAINT

v.
WELLS FARGO BANK, NATIONAL
ASSOCIATION, AS TRUSTEE FOR
THE MERRILL LYNCH MORTGAGE
INVESTORS TRUST, SERIES 2006-F1.;
PNC MORTGAGE, INC., FKA
NATIONAL CITY MORTGAGE
COMPANY,
Defendants.

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Defendants Wells Fargo Bank, National Association, as Trustee for the Merrill

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Lynch Mortgage Investors Trust, Series 2006-F1, and PNC Bank, N.A. (erroneously sued

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as PNC Mortgage, Inc., FKA National City Mortgage Company) (“Defendants”) have

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filed a Motion to Dismiss Plaintiffs Amor Medina Del Rosario and Elvie Canlas Del

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Rosario’s (“Plaintiffs”) First Amended Complaint. (Mot., ECF No. 13.) For the reasons

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discussed below, the Motion is GRANTED.
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3:16-cv-00649-BEN-NLS

BACKGROUND1

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Plaintiffs, proceeding pro se, have filed a complaint, seeking to avoid nonjudicial

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foreclosure on a piece of residential property at 10685 Brookhollow Court, San Diego,

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California (the “Subject Property”) that they own and occupy. On October 20, 2016, this

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Court granted Defendants’ motion to dismiss Plaintiffs’ original complaint on several

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grounds. Plaintiffs thereafter filed a First Amended Complaint. (FAC, ECF No. 12.)

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The First Amended Complaint repeats the allegations of the initial complaint.

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On or about December 29, 2005, Plaintiffs executed a promissory note in the

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amount of $499,000 for the Subject Property, secured by a deed of trust. (FAC ¶ 14;

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Defs.’ Request for Judicial Notice (“RJN”) Ex. C.)2 The lender and beneficiary of the

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deed of trust was National City Mortgage, a division of National City Bank of Indiana,

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and now known as PNC Mortgage Inc. (Id. ¶¶ 15, 17; RJN Ex. C.) National City Bank

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of Indiana was the named trustee on the note and deed of trust. (Id. ¶ 16; RJN Ex. C.)

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Plaintiffs allege that there has been “no documented assignment of the Note.” (FAC ¶

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24.)

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Plaintiffs fell behind on their payments. On August 6, 2009, Cal-Western

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Reconveyance Company (“Cal-Western”) recorded a Notice of Default. (Id. ¶ 76 & Ex.

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F.) The Notice states that Cal-Western is “either the original trustee, the duly appointed

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substituted trustee, or acting as agent for the trustee or beneficiary under [the] deed of

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The Court is not making any findings of fact, but rather, summarizing the relevant
allegations of the Complaint for purposes of evaluating Defendants’ Motion to Dismiss.
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Defendants ask this Court to take judicial notice of the following documents: (1)
Complaint in San Diego Superior Court Case No. 37-2010-00089465; (2) Complaint in
San Diego Superior Court Case No. 37-2013-00034612; (3) Deed of Trust, recorded in
San Diego Recorder’s Office as Document No. 2006-0012709. Pursuant to Federal Rule
of Evidence 201, the Court takes judicial notice of these documents as they are matters of
public record. See, e.g., Valasquez v. Mortg. Elec. Registration Sys., Inc., No. C 08-3818
PJH, 2008 WL 4938162, *2-3 (N.D. Cal. Nov. 17, 2008) (taking judicial notice of
documents in county public record).
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trust.” (Id. Ex. F) Plaintiffs claim that Cal-Western acted ultra vires and was never

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substituted as trustee or authorized to act as an agent. (Id. ¶ 80.)

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The Notice of Default further states that “the mortgagee, beneficiary or the

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mortgagee’s or beneficiary’s authorized agent has either contacted the borrower or tried

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with due diligence to contact the borrower as required by California Civil Code 2923.5.”

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(Id.) But Plaintiffs allege that they were never contacted prior to the recording of the

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Notice of Default. (Id. ¶ 79.) They claim that Defendants “did not review Plaintiffs’

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financial situation and further did not advise them of all options available to avoid

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foreclosure.” (Id. ¶ 81, 83-84, 90-91.) Plaintiffs contend these and other failures violated

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California law, thereby nullifying Defendants’ authority to foreclose. (Id. ¶ 82.)
In 2010, Plaintiffs sued PNC Bank, Cal-Western, and Pacific Data Mortgage in

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California state court to stop foreclosure on the home. (Id. ¶ 49 & Ex. C.) In that

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lawsuit, Plaintiffs alleged that the defendants fraudulently induced them to enter the loan

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agreement on inferior terms and wrongfully sought to foreclose on Plaintiffs when they

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were not in default. (See id. Ex. C.) Plaintiffs allege that “both parties agreed to settle

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the manner by PNC agreeing to provide Plaintiffs with an acceptable loan modification,

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in exchange for Plaintiffs’ agreement to voluntarily dismiss the lawsuit.” (Id. ¶ 52.)

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However, Plaintiffs contend that “PNC reneged on the agreement, and failed to provide

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Plaintiffs with the loan modification they were promised.” (Id. ¶ 54.) Plaintiffs claim

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that this conduct by PNC constitutes fraud. (See id. ¶¶ 55-61.)

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On or about May 9, 2012, Cal-Western Reconveyance Company recorded a Notice

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of Trustee Sale, bearing instrument number 2012-0273037. (Id. ¶ 97 & Ex. G.) Plaintiffs

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again contend that Cal-Western acted without authority (id. ¶ 99-100), and that

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Defendants did not review Plaintiffs’ financial situation or advise them of their options to

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avoid foreclosure (id. ¶¶ 101-02). Plaintiffs once more claim these failures nullify

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Defendants’ authority to foreclose. (Id. ¶ 101.)

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At some point, “Plaintiffs’ loan was . . . sold into a securitized Trust, entitled the
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Merrill Lynch Mortgage Investors Inc., 2006-F1.” (Id. ¶ 23.) The trust had a “cut-off

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date” of April 1, 2006, and a “closing date” of April 28, 2006. (Id. ¶¶ 23, 29, 38.)

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“Plaintiffs’ note and loan were not transferred to the Merrill Lynch Securitized Trust

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prior to its closing date.” (Id. ¶ 29.)

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On September 25, 2015, PNC Bank recorded an Assignment of Deed of Trust to

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“Wells Fargo Bank, N.A., as Trustee, for Merrill Lynch Mortgage Investors Trust, Series

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MLMI 2006-F1” (“Wells Fargo”). (Id. ¶ 70, Ex. E.) The assignment made Wells Fargo

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the beneficiary of the deed of trust. (Id. Ex. E.) Plaintiffs allege that the assignment of

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the deed of trust was ineffective, invalid, and void because it occurred after the closing

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date of the Merrill Lynch securitized trust. (See id. ¶ 29-30, 34-35.) They also contend

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that because “there has been no documented assignment of the Note, . . . the [deed of

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trust] and note were not properly transferred together, which consequently has bifurcated

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the [deed of trust] and note, rendering them unenforceable.” (Id. ¶ 24.)

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On November 25, 2015, Wells Fargo, as beneficiary under the deed of trust,

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recorded a Notice of Rescission of Notice of Default, bearing instrument number 2015-

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0613850. (Id. ¶ 103 & Ex. H.) The Notice states that Wells Fargo “does hereby rescind,

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cancel and withdraw said Declaration of Default and Demand for Sale and said Notice of

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Breach and Election to Cause Sale.” (Id. Ex. H.) The Notice is signed by Bernis M.

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Gonyea of Clear Recon Corp. (Id.) Plaintiffs allege that Clear Recon Corp. is “the new

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foreclosing trustee” but there is no “evidence of a recorded Substitution of Trustee

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document authorizing Clear Recon. Corp. to be substituted as trustee.” (Id. ¶ 104.)

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On April 29, 2016, PNC denied Plaintiffs hardship assistance on their loan. (Id. ¶

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63 & Ex. D.) The letter from PNC states that Plaintiffs’ “loan on the related property has

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received the maximum number of foreclosure alternative options that are permitted by the

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assignee or mortgage owner of your loan.” (Id. Ex. D.) Challenging this decision,

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Plaintiffs contend that they made “the requisite 3 trial payments which should have

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resulted in a full and final modification.” (Id. ¶ 63.)
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Plaintiffs bring three claims for relief. The first claim for relief alleges wrongful

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foreclosure. The second claim for relief alleges negligence. The third claim for relief

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alleges fraud.

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LEGAL STANDARD
“[A] complaint must contain sufficient factual matter, accepted as true, to state a

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claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 677-78

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(2009). “A claim is facially plausible ‘when the plaintiff pleads factual content that

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allows the court to draw the reasonable inference that the defendant is liable for the

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misconduct alleged.’” Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013) (quoting

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Iqbal, 556 U.S. at 678). When considering a Rule 12(b)(6) motion, the court must

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“accept as true facts alleged and draw inferences from them in the light most favorable to

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the plaintiff.” Stacy v. Rederite Otto Danielsen, 609 F.3d 1033, 1035 (9th Cir. 2010)

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(citing Barker v. Riverside Cnty. Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009)).

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“Threadbare recitals of the elements of a cause of action, supported by mere conclusory

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statements, do not suffice.” Iqbal, 556 U.S. at 678.

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DISCUSSION
Like Plaintiffs’ original complaint, their First Amended Complaint fails to plead

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sufficient facts to state plausible claims.

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1. Wrongful Foreclosure Claim

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Plaintiffs allege wrongful foreclosure “due to the void [deed of trust] assignment,

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and the promissory fraud committed [by PNC], pursuant to the voluntary dismissal of the

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2010 action resulting in the acceleration of the Note.” (FAC ¶ 115.) A wrongful

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foreclosure is a common law tort claim to set aside a foreclosure sale, or an action for

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damages resulting from the sale, on the basis that the foreclosure was improper.

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Sciarratta v. U.S. Bank Nat’l Ass’n, 247 Cal. App. 4th 552, 561 (2016). As an initial

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matter, Plaintiffs’ claim fails because they have not alleged that a foreclosure sale has

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occurred.
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Furthermore, as explained in the Court’s order granting Defendants’ motion to

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dismiss Plaintiffs’ original complaint, Plaintiffs lack standing to challenge the assignment

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under Saterbak v. JPMorgan Chase Bank, N.A., 245 Cal. App. 4th 808 (2016). Saterbak

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explained that plaintiffs who bring pre-foreclosure lawsuits challenging defendants’

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authority to foreclose lack standing to bring such preemptive suits. Id. at 814. Likewise

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here, to the extent Plaintiffs challenge Defendants’ authority to foreclose, such claims fail

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because Plaintiffs lack standing. See Tjaden v. HSBC Bank USA, __ F. App’x __, 2017

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WL 943943, at *1 (9th Cir. Mar. 10, 2017) (holding that plaintiffs’ pre-foreclosure action

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to challenge the foreclosing entity’s right to initiate a nonjudicial foreclosure fails under

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Saterbak).

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To the extent that Plaintiffs bring a wrongful foreclosure claim based on alleged

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fraud that occurred in 2010, Federal Rule of Civil Procedure 9(b) requires Plaintiffs to

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

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Plaintiffs fail to meet this standard. Rather, they rely on conclusory allegations that PNC

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reneged on an agreement to offer Plaintiffs a loan modification. Plaintiffs further fail to

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explain how PNC’s actions in 2010 led to Plaintiffs’ apparent present inability to pay.

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The wrongful foreclosure claim is DISMISSED.

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2. Negligence

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Plaintiffs allege that “PNC, acting as Plaintiffs’ alleged lender and/or servicer, had

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a duty to exercise reasonable care and skill to maintain proper and accurate loan records

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and to discharge and fulfill the other incidents attendant to the maintenance, accounting,

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and servicing of loan records.” (FAC ¶ 122.) “PNC further had a duty to Plaintiffs to

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disclose its true interest in the Subject Property and communicate with and provide

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Plaintiffs with proof of who owned or had any liens on the Subject Property, refraining

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from taking any action against Plaintiffs outside its legal authority, not charging any

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improper fees and/or charges on Plaintiffs’ account, accurately crediting payments made

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by Plaintiffs and providing all relevant and accurate information regarding Plaintiffs’
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loan accounts to Plaintiffs.” (Id. ¶ 123.)

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To state a cause of action for negligence, a plaintiff must allege: (1) the defendant

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owed the plaintiff a duty of care; (2) the defendant breached that duty, and (3) the breach

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proximately caused the plaintiff’s damages or injuries. Lueras v. BAC Home Loans

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Servicing, LP, 221 Cal. App. 4th 49, 62 (2013). Under California law, “as a general rule,

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a financial institution owes no duty of care to a borrower when the institution’s

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involvement in the loan transaction does not exceed the scope of its conventional role as

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a mere lender of money.” Nymark v. Heart Fed. Savings & Loan Ass’n, 231 Cal. App. 3d

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1089, 1096 (1991). “Liability to a borrower for negligence arises only when the lender

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‘actively participates’ in the financed enterprise ‘beyond the domain of the usual money

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lender.’” Id. (internal citation omitted). Here, Plaintiffs make only conclusory

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allegations that Defendants exceeded the scope of a traditional lender’s responsibility.

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See Barcarse v. Central Mortg. Co., 661 F. App’x 905, 907 (9th Cir. 2016) (affirming

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dismissal where plaintiffs failed to plead facts showing that defendants exceeded the

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scope of a lender’s conventional role).

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The negligence claim is DISMISSED.

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3. Fraud

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Plaintiffs allege that “PNC fraudulently misrepresented to Plaintiffs the nature of

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its scheme to sell bearer notes into securitization, submitted fraudulent documents in the

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record, in an attempt to commit fraud upon the Court, in its attempt to commit wrongful

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foreclosure, and committed promissory fraud when it failed to honor an agreement to

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provide Plaintiffs’ [sic] with an acceptable loan modification in lieu of the voluntary

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dismissal of the 2010 lawsuit, and induced Plaintiffs’ [sic] to rely on Defendant PNC’s

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prior reputation as a traditional ‘loan to hold’ lender, and Plaintiffs justifiably relied on

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said misrepresentation.” (FAC ¶ 131.)

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Allegations of fraud must be stated with particularity. Fed. R. Civ. P. 9(b). “In
order to plead fraud with particularity, the complaint must allege the time, place, and
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content of the fraudulent representation; conclusory allegations, do not suffice.” Shroyer

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v. New Cingular Wireless Serv., Inc., 622 F.3d 1035, 1042 (9th Cir. 2010) (citing Moore

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v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989)); Kearns v. Ford

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Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (requiring plaintiffs plead who, what,

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when, where, and how). “Rule 9(b) does not allow a complaint to merely lump multiple

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defendants together, but ‘requires plaintiffs to differentiate their allegations when suing

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more than one defendant . . . and to inform each defendant separately of the allegations

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surrounding his alleged participation in the fraud.” Swartz v. KPMG LLP, 476 F.3d 759,

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765 (9th Cir. 2007) (quoting Haskin v. R.J. Reynolds Tobacco Co., 995 F. Supp. 1437,

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1439 (M.D. Fla. 1998)). “[G]eneral allegations that the ‘defendants’ engaged in

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fraudulent conduct,” with only specific allegations as to some, “patently fail[s] to comply

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with Rule 9(b).” Id. at 765.

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Here, Plaintiffs do not meet these heightened pleading requirements. The First

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Amended Complaint fails to include the specific details of the alleged misrepresentations

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and, instead, relies on conclusory assertions. Moreover, Plaintiffs’ allegations only speak

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to Defendant PNC, but they seek to hold each Defendant liable for fraud. (See FAC ¶

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135.)

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The fraud claim is DISMISSED.
CONCLUSION

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For the above reasons, the Court GRANTS the Motion to Dismiss.

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The Court will grant Plaintiffs leave to file a second amended complaint that

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corrects the deficiencies noted by the Court and Defendants. See Fed. R. Civ. P. 15

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(“The court should freely give leave [to amend] when justice so requires.”) Plaintiffs

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may file a second amended complaint no later than fourteen (14) days after the signature

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date of this Order. An amended complaint must clearly set out the facts, Plaintiffs’

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theory of the case, and what claims are asserted. Plaintiffs must attempt to address the

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pleading deficiencies identified in this Order and the Court’s previous order granting
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Defendants’ motion to dismiss Plaintiffs’ original complaint.
IT IS SO ORDERED.
Dated: April 5, 2017

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