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

Filing 23

ORDER DISMISSING COMPLAINT 8 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 6/22/11. (Levy may file an Amended Complaint no later than July 12, 2011.) (emt, )CERTIFICATE OF SERVICEParticipants reg istered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
DAVID LEVY,

)
)
Plaintiff,
)
)
vs.
)
)
WELLS FARGO BANK, as Trustee )
for Option One Mortgage Loan )
Trust 2006-1, Asset Backed
)
Certificates, Series 2006-1; )
et al.
)
)
Defendants.
)
_____________________________ )

CIV. NO. 11-00159 SOM/KSC
ORDER DISMISSING COMPLAINT

ORDER DISMISSING COMPLAINT
I.

INTRODUCTION AND FACTUAL BACKGROUND.
On March 11, 2011, David Levy filed the Complaint in

this matter.

Levy alleges that Wells Fargo Bank, as Trustee for

Option One Mortgage Loan Trust 2006-1, Asset Backed Certificates,
Series 2006-1 (“Wells Fargo”), violated state and federal
statutes in connection with a residential mortgage loan.
Because the Complaint lacks sufficient factual detail
to support its claims against Wells Fargo, Well’s Fargo’s motion
to dismiss is granted without a hearing pursuant to Local Rule
7.2(d) and the Complaint is dismissed.
II.

STANDARD.
Under Rule 12(b)(6), review is generally limited to the

contents of the complaint.

Sprewell v. Golden State Warriors,

266 F.3d 979, 988 (9th Cir. 2001); Campanelli v. Bockrath, 100
F.3d 1476, 1479 (9th Cir. 1996).

If matters outside the

pleadings are considered, the Rule 12(b)(6) motion is treated as
one for summary judgment.

See Keams v. Tempe Tech. Inst., Inc.,

110 F.3d 44, 46 (9th Cir. 1997); Anderson v. Angelone, 86 F.3d
932, 934 (9th Cir. 1996).

However, courts may “consider certain

materials--documents attached to the complaint, documents
incorporated by reference in the complaint, or matters of
judicial notice--without converting the motion to dismiss into a
motion for summary judgment.”
903, 908 (9th Cir. 2003).

United States v. Ritchie, 342 F.3d

Documents whose contents are alleged

in a complaint and whose authenticity is not questioned by any
party may also be considered in ruling on a Rule 12(b)(6) motion
to dismiss.

See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir.

2006); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).
On a Rule 12(b)(6) motion to dismiss, all allegations
of material fact are taken as true and construed in the light
most favorable to the nonmoving party.

Fed’n of African Am.

Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir.
1996).

However, conclusory allegations of law, unwarranted

deductions of fact, and unreasonable inferences are insufficient
to defeat a motion to dismiss.

Sprewell, 266 F.3d at 988.

Additionally, the court need not accept as true allegations that
contradict matters properly subject to judicial notice or
allegations contradicting the exhibits attached to the complaint.
Sprewell, 266 F.3d at 988.

Dismissal under Rule 12(b)(6) may be

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based on either: (1) lack of a cognizable legal theory, or
(2) insufficient facts under a cognizable legal theory.
Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.
1988) (citing Robertson v. Dean Witter Reynolds, Inc., 749 F.2d
530, 533-34 (9th Cir. 1984)).
“[T]o survive a Rule 12(b)(6) motion to dismiss,
factual allegations must be enough to raise a right to relief
above the speculative level, on the assumption that all the
allegations in the complaint are true even if doubtful in fact.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)) (internal
quotation marks omitted); accord Ashcroft v. Iqbal, 129 S. Ct.
1937, 1949 (2009) (“the pleading standard Rule 8 announces does
not require ‘detailed factual allegations,’ but it demands more
than an unadorned, the-defendant-unlawfully-harmed-me
accusation”).

“While a complaint attacked by a Rule 12(b)(6)

motion to dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the ‘grounds’ of his
‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.”

Twombly, 550 U.S. at 555.

The

complaint must “state a claim to relief that is plausible on its
face.”

Id. at 570.

“A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw

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the reasonable inference that the defendant is liable for the
misconduct alleged.”
III.

Iqbal, 129 S. Ct. at 1949.

BACKGROUND.
The Complaint contains very few factual details.

It

does not, for example, allege when the loan occurred or provide
any information about the loan.

In fact, the Complaint is

similar to a number of Complaints filed by Levy’s attorney that
have been found wanting by the court.
In this case, Levy essentially alleges that Wells Fargo
was his original lender.

See Complaint ¶¶ 12-17, 19-31, 39-40,

42-46, Mar. 10, 2011, ECF No. 1 (detailing wrongdoing by Wells in
connection with the closing of the loan).

Levy alleges that he

has experienced financial hardship and attempted to negotiate
with Wells Fargo to modify the loan.

Id. ¶¶ 34-37.

Levy accuses

Wells Fargo of failing to provide him with a reasonable
opportunity to modify the terms of his loan.

Id. ¶ 38.

Wells Fargo has moved to dismiss Levy’s Complaint.
ECF No. 8, Apr. 25, 2011.

See

Wells Fargo attaches to its motion

various public record documents establishing that Wells Fargo was
not Levy’s original lender.

For example, on August 25, 2005, a

mortgage was recorded in the State of Hawaii Bureau of
Conveyances.

See Doc. No. 2005-171165, ECF No. 8-3.

This

document, which the court takes judicial notice of, indicates
that, in August 2005, David Levy gave a mortgage to Option One

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Mortgage Corporation to secure a $390,000.00 note.

See Mir v.

Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988)
(providing that, when ruling on a motion to dismiss, a court may
take judicial notice of matters of public record outside the
pleadings and consider those matters when adjudicating the motion
to dismiss).

The court further takes judicial notice that, on

October 4, 2010, Sand Canyon Corporation, formerly known as
Option One Mortgage Corporation, assigned the note and mortgage
to Wells Fargo.

See Doc. No. 2010-148019, Oct. 4, 2010, ECF No.

8-4; Mir, 814 F.2d at 649.
Although Levy disputes the authenticity of these
recorded documents, he admits in his opposition to the motion to
dismiss that his original lender was Option One and claims that
“Wells Fargo has successor liability.”
No. 19.

See Opposition at 2, ECF

However, the Complaint contains no allegations as to why

Wells Fargo should have such “successor liability.”

The court

notes that the opposition violates the court’s local rules in
several respects.

First, it violates Local Rule 7.5(a) or (b) by

exceeding thirty pages or 9,000 words without first obtaining
leave of court.

Second, the Opposition violates Local Rule

7.5(f) by failing to have a table of contents and table of
authorities cited.

Levy’s counsel is warned that, if he violates

these rules again, or if he continues to flout the court’s local
rules, he will be subject to sanctions.

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IV.

ANALYSIS.
Wells Fargo seeks dismissal of the Complaint, arguing

that it fails to sufficiently allege a claim against it.

This

court agrees that Levy’s Complaint fails to satisfy the minimal
pleading standards set forth in Twombley and Iqbal, as it lacks
facial plausibility.

The Complaint essentially seeks damages

from Wells Fargo for actions taken by Option One, the original
lender.

Although Levy’s opposition indicates that he is seeking

to hold Wells Fargo liable under a “successor liability” theory,
the Complaint is devoid of any facts supporting such a claim.
Instead, it appears that Levy, through his counsel, Robin R.
Horner, simply filed a “form complaint” and either did not
realize or did not bother to allege that Wells Fargo was assigned
the original lender’s rights.

In failing to recognize that Wells

Fargo was not the original lender in this case, Levy’s counsel
may have violated Rule 11(b)(2) and (3) of the Federal Rules of
Civil Procedure.

Horner was recently cautioned about complying

with his Rule 11 obligations in connection with filing “form
complaints” that presented deficient arguments previously
rejected on multiple occasions by the court.

See Rey v.

Countrywide Home Loans, Inc., 2011 WL 2160679, *3 (D. Haw., June
1, 2011).

This judge once again cautions Horner to comply with

his Rule 11 obligations in all future filings with this court.
Any future filing that fails to comply with those obligations may

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result in serious repercussions, including but not limited to
substantial financial sanctions.
To the extent the Complaint seeks to hold Wells Fargo
liable for any federal or state violation based on the original
lender’s conduct, the Complaint is dismissed, as it is clear that
Wells Fargo is not the original lender and there are no factual
allegations in the Complaint supporting a claim that Wells Fargo
should be held liable for the original lender’s conduct.
The dismissal of these claims leaves for adjudication
only state-law claims based on Wells Fargo’s alleged refusal to
negotiate a loan modification in good faith.

Because the court

has dismissed the claims giving rise to federal question
jurisdiction under 28 U.S.C. § 1331, and because the Complaint
does not assert diversity jurisdiction under 28 U.S.C. § 1332,
the court declines to exercise supplemental jurisdiction over the
state law claims at this time.
dismissed.

Accordingly, those claims are

See United Mine Workers of Amer. v. Gibbs, 383 U.S.

715, 726 (1966).
Levy is granted leave to file an Amended Complaint no
later than July 12, 2011.
1131 (9th Cir. 2000).

See Lopez v. Smith, 203 F.3d 1122,

In filing any such Amended Complaint, Levy

may, through his counsel, reassert the claims asserted in the
original Complaint, but must ensure that any such Amended
Complaint meets the required minimal pleading standards.

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This

means that, before simply reasserting claims, counsel should
examine the relevant facts and tailor claims based on those
facts.

Having been cautioned against filing unwarranted claims,

see Rey, 2011 WL 2160679, *3, Levy’s counsel should ensure that
no unwarranted claims are asserted in any Amended Complaint.

If,

for example, a claim is barred by the relevant statute of
limitation, it should not be asserted.

If there is legal theory

under which Wells Fargo is liable for Option One’s alleged
actions, the facts supporting that theory should be alleged.
That is, Levy should not simply repeat a conclusion that Wells
Fargo is liable as a successor or trustee.

If there is no legal

justification for holding Wells Fargo liable for another
company’s conduct, a claim against Wells Fargo should not be
asserted.

Finally, because the claims asserted in various “form

complaints” filed by Horner on behalf of his clients have been
rejected numerous times, Levy should consider whether it is
appropriate to assert them in this action at all.

In reminding

counsel about his Rule 11 obligations, this court expresses no
inclination as to the validity of any claim Levy may assert.

The

court is not here prejudging Levy’s possible claims, but merely
requiring any Amended Complaint to assert only potentially valid
claims that have some factual basis supporting them.

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V.

CONCLUSION.
For the foregoing reasons, the court dismisses the

Complaint.

As described above, Levy may file an Amended

Complaint no later than July 12, 2011.

IT IS SO ORDERED.
DATED: Honolulu, Hawaii, June 22, 2011.

/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge
Levy v. Wells Fargo, et al., Civil No. 11-00159 SOM/KSC; ORDER DISMISSING COMPLAINT

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