Wang v. US Bank, NA et al
Filing
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ORDER Granting 13 Motion to Dismiss. Signed by Judge Kent J. Dawson on 6/6/11. (Copies have been distributed pursuant to the NEF - ASB)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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GRACE WANG,
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Plaintiff,
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v.
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Case No. 2:10-CV-01741-KJD-PAL
U.S. BANK, NA, as TRUSTEE for CCB
LIBOR SERIES 2005-1 TRUST, et al.,
ORDER
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Defendants.
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Currently before the Court is Defendants’ Motion to Dismiss (#13). Plaintiff filed a
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Response (#15),1 to which Defendants filed a Reply (#16). Defendants have also filed a Request for
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Judicial Notice with the Court (#14).
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I. Background
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On or about October 18, 2004, Grace Wang (“Wang”) entered into a loan for $532,000 with
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Mega Capital Funding, Inc. (“Mega Capital”) secured by a Deed of Trust on property located at 1560
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Windhaven Circle, Las Vegas, Nevada (“the Property”). On March 15, 2005, an Assignment of
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Plaintiff’s Response makes reference to facts alleged in Plaintiff’s Ex-Parte Application for Temporary
Restraining Order and Preliminary Injunction and/or Stay Order (#1 Exhibit B). Defendants filed a Response in
Opposition (#6), to which Plaintiff filed a Reply (#10). Because this Court grants Defendants’ Motion to Dismiss,
Plaintiff’s Application is moot.
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Deed of Trust was recorded which transferred all beneficial interest under the Deed of Trust from
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Mega Capital to Chevy Chase Bank F.S.B. (“CCB”). Wang made mortgage payments to trustee U.S.
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Bank, NA (“USB”) under notice from CCB and USB (“Defendants”). Wang stopped making
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mortgage payments, and a Notice of Default and Election to Sell was recorded on January 12, 2010.
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Wang was informed that the Property would be placed for auction on May 3, 2010. On that
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day, Wang contacted USB and spoke with Roger Fountain (“Fountain”), who allegedly told her that
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the loan would be reinstated if Wang wired $34,000 to USB. Wang wired $34,000 to USB two
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hours prior to the scheduled time of the auction. The auction still occurred, however, and the
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Property was repurchased by Defendants. Defendants subsequently returned the $34,000 to Wang
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via wire transfer on May 11, 2010.
On July 21, 2010, Wang filed the present Complaint against Defendants in Nevada state court
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and then filed an Ex-Parte Application for a Temporary Restraining Order and a Preliminary
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Injunction and/or Stay Order with that court on August 25, 2010. Defendants then removed the case
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to this Court on October 7, 2010 on diversity grounds.
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II. Legal Standard
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In considering a motion to dismiss, “all well-pleaded allegations of material fact are taken as
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true and construed in a light most favorable to the non-moving party.” Wyler Summit Partnership v.
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Turner Broadcasting System, Inc., 135 F.3d 658, 661 (9th Cir. 1998) (citation omitted).
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Consequently, there is a strong presumption against dismissing an action for failure to state a claim.
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Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997).
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“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted
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as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937,
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1949, 173 L. Ed. 2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct.
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1955, 167 L. Ed. 2d 929 (2007)). Plausibility, in the context of a motion to dismiss, means that the
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plaintiff has pleaded facts which allow “the court to draw the reasonable inference that the defendant
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is liable for the misconduct alleged.” Id. The Court therefore began its analysis in both Twombly
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and Iqbal by discussing the necessary legal elements of the misconduct alleged. Id. at 1947.
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Under Iqbal, the Court then examines the actual complaint, first identifying “the allegations
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in the complaint that are not entitled to the assumption of truth,” that is, those allegations which are
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legal conclusions, bare assertions, or merely conclusory. Id. at 1949-51. Second, the Court considers
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the factual allegations “to determine if they plausibly suggest an entitlement to relief.” Id. at 1951. If
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the allegations support plausible claims for relief, such claims survive the motion to dismiss. Id. at
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1950.
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III. Judicial Notice of Documents
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Defendants ask the Court to take judicial notice of six documents, or in the alternative, to
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treat their Motion to Dismiss as a Motion for Summary Judgment. (Motion to Dismiss 5-6.) The
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documents include the Adjustable Rate Note, Deed of Trust, Second Home Rider, Corporation
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Assignment of Deed of Trust, Notice of Assignment, and Notice of Default and Election to Sell
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Under Deed of Trust.
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Under the Federal Rules of Evidence, a court may take judicial notice of documents that are
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either “generally known within the territorial jurisdiction of the trial court,” or “capable of accurate
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and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.
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R. Evid. 201(b). Such documents generally include matters of public record. See, e.g., Lee v. City
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of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). Nevertheless, the Court may not take notice of
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disputed facts, even if those facts appear in documents of public record. See id. at 690.
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Here, Defendants note that the six documents are all recorded with the Clark County
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Recorder, and Wang has not disputed the accuracy of any of Defendants’ documents. This Court
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will therefore take judicial notice of the documents.
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IV. Analysis
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Even when all of the facts alleged by Wang are presumed to be true, the Complaint fails to
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state a claim because each of her five claims suffers from fatal impediments, including a bar under
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the statute of frauds, a lack of damages stemming from Defendants’ actions and other issues.
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A. Statute of Frauds
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Before addressing Wang’s claims individually, this Court notes that under the Nevada statute
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of frauds, “[n]o interest in lands shall be surrendered unless by conveyance in writing subscribed by
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the party surrendering the same or by his lawful agent thereunto authorized in writing.” Summa
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Corp. v. Greenspun, 96 Nev. 247, 251-52 (Nev. 1980) (citing Nev. Rev. Stat. § 111.205). Notes
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secured by a deed of trust are covered by the statute of frauds, In re Desert Enterprises, 87 B.R. 631,
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634 (Bankr. D. Nev. 1988), so this Court has found that oral agreements to modify such notes are
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generally disallowed, Tomax v. Wells Fargo Home Mortg., 2011 WL 1157285, at *2 (D. Nev. Mar.
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29, 2011). Insofar as all of Wang’s claims are based on the theory that her interest in the Property
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was materially altered by her conversation with Fountain, which created an alteration to the existing
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agreements or a new agreement binding upon Defendants, all of the claims are barred by the statute
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of frauds. In addition, each claim also fails for the specific reasons noted below.
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B. Fraud and Misrepresentation
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Wang’s first claim against Defendants involves fraud and misrepresentation. Under Nevada
law, the elements of fraud are as follows:
1. A false representation made by the defendant;
2. Defendant's knowledge or belief that the representation is false (or insufficient basis
for making the representation);
3. Defendant's intention to induce the plaintiff to act or to refrain from acting in
reliance upon the misrepresentation;
4. Plaintiff's justifiable reliance upon the misrepresentation; and
5. Damage to the plaintiff resulting from such reliance.
Bulbman, Inc. v. Nevada Bell, 108 Nev. 105, 111 (Nev. 1992).
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Defendants communicated to Wang through their authorized representative that if Wang
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wired $34,000 the auction would be averted; Defendants still held the auction, though, even after
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Wang wired the money. The facts alleged therefore can plausibly meet the first requirement, and
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may also be taken to meet the second, third, and fourth requirements. However, Wang admits that
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the foreclosure auction was the result of her own failure to make the mortgage payments, a fault
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which occurred independently from and in advance of the discussion with Fountain. The damages
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claimed by Wang, such as the impending loss of her house, do not therefore result from her reliance
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on Fountain’s statement, but rather from her failure to make her payments. Since the Complaint does
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not allege facts showing that the damage to Wang resulted from her reliance on Fountain’s statement,
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the first claim must be dismissed.
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C. Breach of the Covenant to Act in Good Faith
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Wang claims next that Defendants had an obligation to act in good faith toward her under
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N.R.S. § 104.1304, the Nevada codification of the Uniform Commercial Code, and that their actions
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violate this obligation. Wang therefore asks for the remedies provided for under N.R.S. § 104.9625.
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However, as this Court has noted previously, the remedies available under N.R.S. § 104.9625
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“apply to secured transactions, not real estate transactions.” Alexander v. Aurora Loan Services, No.
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2:09-CV-1790, 2010 WL 2773796, at *4 (D.Nev. July 8, 2010). Article 9 of the Nevada U.C.C.
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expressly “does not apply to . . . the creation or transfer of an interest in or lien on real property . . . .”
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N.R.S. § 104.9109(4)(k). In fact, the U.C.C. generally does not apply to real property. In re Seaway
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Express Corp., 912 F.2d 1125, 1127 (9th Cir. 1990). The remedies requested by Wang are therefore
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inapplicable to this case and the second claim must be dismissed.
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D. Preliminary and Permanent Injunctive Relief
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Wang’s third claim against Defendants, for preliminary and permanent injunctive relief, is
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actually a remedy and not an independent cause of action. The third claim is therefore also
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dismissed.
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E. Unlawful Foreclosure and Declaratory Relief
The first portion of Wang’s fourth claim against Defendants is for unlawful foreclosure.
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Under Nevada law, “wrongful foreclosure will lie if . . . at the time the power of sale was exercised
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or the foreclosure occurred, no breach of condition or failure of performance existed on the
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mortgagor's or trustor's part which would have authorized the foreclosure or exercise of the power of
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sale.” Collins v. Union Fed. Sav. & Loan Ass’n, 99 Nev. 284, 304 (Nev. 1983). However, Wang
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admits that the foreclosure auction was the result of her own failure to make the mortgage payments.
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Since Wang’s only argument that her default on the loan was cured stems from her oral agreement
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with Fountain and is therefore barred by the statute of frauds, as discussed above, the first part of the
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claim must be dismissed.
The second portion of Wang’s fourth claim against Defendants, for declaratory relief, is
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actually a remedy and not an independent cause of action. The second portion of the fourth claim is
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therefore dismissed.
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F. Negligence
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Under Nevada law, a negligence claim must establish four elements: “(1) the existence of a
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duty of care, (2) breach of that duty, (3) legal causation, and (4) damages.” Sanchez v. Wal-Mart
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Stores, Inc., 221 P.3d 1276, 1280 (Nev. 2009). Wang claims that Defendants owed a duty to place
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her interest above their own and to “deal honestly, directly, and accurately” with her, but does not
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explain the source of that duty. (Complaint 9.) This Court has previously held that while “[a] lender
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generally owes no duty of care to its borrower,” that is only true in the lender’s capacity as a mere
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lender of money, and that specific statutes governing foreclosure provide the duty of care necessary
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in that context. Weingartner v. Chase Home Fin., LLC, 702 F. Supp. 2d 1276, 1290 (D. Nev. 2010).
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In Nevada the specific statutes are sections 107.080-.100 of the Nevada Revised Statutes,
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covering deeds of trust and in cases of default and sale. These sections dictate that the foreclosure
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process begin with the recording of a notice of default and election to sell by the trustee. NRS §
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107.080(3). After the notice of default is recorded, the grantor has 35 days or, in the case of
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owner-occupied housing, up to 5 days before the foreclosure sale, in which to cure the deficiency in
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payment. Three months after recording the notice of default, a foreclosure sale may be conducted.
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NRS § 107.080(2)(d). However, the trustee must first give notice of the time and place of the sale.
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NRS § 107.080(4). At the appointed time and place, a sale is conducted, monies are bid, and a
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trustee’s deed is issued.
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Although the Complaint does not specify when and how the foreclosure process occurred,
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documents in the public record indicate that the notice of default was recorded on January 12, 2010.
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The Complaint does specify that the sale was conducted on May 3, 2010, and that Wang did not
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attempt to cure the deficiency in payment until immediately prior to the sale on that same day. These
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facts indicate that Defendants followed their duty of care under the foreclosure statutes, and Wang
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does not make any specific allegations to the contrary. Although the Complaint may be construed to
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be arguing that Wang cured the deficiency in payment by upholding her part of the oral agreement
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with Fountain, that argument does not comply with the time frame to cure allowed by the foreclosure
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statutes. The argument also suffers from the same impediments discussed above related to the statute
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of frauds and the causation of damages. The Complaint therefore fails to state a claim for
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negligence, and that claim is dismissed as well.
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V. Conclusion
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Accordingly, IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss (#13) is
GRANTED.
DATED this 6th day of June 2011.
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_____________________________
Kent J. Dawson
United States District Judge
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