ORDER ON MOTIONS TO DISMISS FIRST AMENDED COMPLAINT [Doc. No. 24, 43-1]

3:16-cv-2872-CAB-(NLS)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MARK WARREN,

Plaintiff,

WELLS FARGO & CO., WELLS

FARGO BANK, N.A., et al.

Defendants.

Case No.: 3:16-cv-2872-CAB-(NLS)

ORDER ON MOTIONS TO DISMISS

FIRST AMENDED COMPLAINT

[Doc. No. 24, 43-1]

This matter comes before the Court on the motion to dismiss filed by Defendants

Wells Fargo Bank, N.A., and Wells Fargo & Company (collectively “Wells Fargo”) [Doc.

No. 24] and Defendant Clear Recon Corp’s (“CRC”) motion to dismiss

[Doc. No. 43-1,

43-2]. The Wells Fargo motion has been fully briefed. As to CRCS’s motion, because

CRC is a nominal defendant and the motion contains substantially similar arguments to

those of Wells Fargo, the Court has interpreted CRC’s motion as joining that of Wells

Fargo’s. Accordingly, the Court has determined that it does not need a separate opposition

from Plaintiff. The Court finds the motion suitable for submission on the papers and

CRC’s motion to dismiss was attached as an exhibit to its motion for relief from default, filed on June

30, 2017.

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without oral argument in accordance with Civil Local Rule 7.1(d)(1). For the following

reasons, Wells Fargo’s motion is granted as set forth below.

I. BACKGROUND

On October 27, 2016, Plaintiff Mark Warren filed suit in the Superior Court of the

State of California against Wells Fargo alleging a myriad of claims stemming from a

mortgage on a property located in San Diego. The complaint included allegations of

violations of the Truth in Lending Act (“TILA”), the Home Ownership and Equal

Protection Act (“HOEPA”), 15 U.S.C. § 1601 et seq., and the Real Estate Settlement

Procedures Act (“RESPA”), 1 U.S.C. § 2601 et seq. [Doc No. 1-2

(“the complaint”).]

On November 22, 2016, Wells Fargo removed the action to this Court pursuant to

the provisions of 28 U.S.C. §§ 1332 and 1441(b). [Doc. No. 1.]

In mid-January 2017, Plaintiff received two separate Notices of Sale, one setting

January 19, 2017 as the date of the public auction of the Property, the second setting

January 31, 2017 as the auction date. [Doc. No. 10-3 at 39, 41-51.] In response to the

notices Plaintiff filed an Ex Parte Application for a Temporary Restraining Order and

Preliminary Injunction

and Attorney Fees. [Doc. No. 10.] A hearing on Plaintiff’s TRO

Application was held on February 16, 2017, and Defendants were enjoined from selling

the Property for 120 days.

[Doc. No. 19.]

Document numbers and page references are to those assigned by CM/ECF for the docket entry.

On May 2, 2017, the Court issued an Order to Show Cause regarding the Request for Preliminary

Injunction and setting a June 8, 2017, hearing date. [Doc. No. 30.] Wells Fargo submitted their response

in opposition [Doc. No. 34] and Plaintiff filed his reply. [Doc. No. 36.] At the June 8, 2017 hearing

Plaintiff was represented by Mackenzie Colt and Fred Hickman appeared for Wells Fargo. Neither

counsel had actual or detailed knowledge of the case. The lead attorneys on the case, David Newman and

Mark Reed were not present. [Doc. No. 38.] On October 11, 2017, Plaintiff’s Request for Preliminary

Injunction was denied. [Doc. No. 59.]

Subsequently, the TRO was extended three times until its expiration on September 27, 2017. [Doc. No.

40, 46, 52.]

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On March 22, 2017, Plaintiff requested and was granted leave to file an amended

complaint. [Doc. Nos. 20, 21]. On March 30, 2017, the Amended Complaint (“FAC”)

was filed adding CRC as a Defendant. [Doc. No. 22.]

The FAC alleges that in 1999, Plaintiff obtained a $225,000 mortgage from an

unidentified source to purchase 5934 Portobello Court, San Diego, CA 92124 (the

“Property”). [Doc. No. 22 at ¶ 35.] In 2002, Plaintiff obtained a new negative amortization

mortgage loan on the property from Countrywide Home Loan. Inc. [Id.]

In 2009, Plaintiff obtained a loan modification from Wachovia

that reduced the

mortgage loan amount by $50,000.00 and allowed Plaintiff to make interest-only monthly

loan payments at 3.978%, increasing in rate annually until May 2016 when both principal

and interest payments at 4.978% would become due. [Id. at ¶ 36.]

In January 2013, Plaintiff underwent heart surgery and was unable to work for

several months. [Id. at ¶ 37.] As a result of his health issues and resulting limited ability

to work, Plaintiff sought a loan modification with Wells Fargo. [Id. at ¶¶ 37-38.]

Without providing a reason, Wells Fargo notified Plaintiff that his request for a loan

modification was being turned down but informed Plaintiff that he would be eligible for an

“in house” “proprietary” loan modification. [Id. at ¶¶ 40, 41.] Plaintiff was informed that

under the terms of this modification “that the interest was 2.5% for the life of the loan and

that he had to complete a 3 month trial period.” [Id. at ¶ 42.] Plaintiff was also told and

led to believe the monthly payment for the life of the loan, not just limited to the trial

On December 31, 2007, World Savings Bank changed its name to Wachovia Mortgage, FSB. [Doc. No.

34-1 at 10-13.] On November 1, 2009, Wachovia merged into and became a division of Wells Fargo

Bank, Southwest, N.A. Following its merger with Wachovia, Wells Fargo Bank, Southwest, N.A. took

over the mortgage on the Property. Wells Fargo Bank, N.A., in turn became successor by merger with

Wells Fargo Bank Southwest. N.A. [Doc. No. 34-1 at 10-16.]

Prior to the mortgage with Wachovia Plaintiff and World Savings Bank, a Federal Savings Bank, entered

into an Adjustable Rate Mortgage Note, Pick-a-Payment Loan on the Property for $456,000. [Doc. Nos.

10-3 at 12-26; 34-1 at 18-23.]

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period, would be $1,863.56 inclusive of property taxes. [Id.] Without memorializing the

terms, Plaintiff and Wells Fargo entered into the trial period. [Id. at ¶¶ 43-44.]

After successfully completing the trial period, Plaintiff received the loan

modification papers from Wells Fargo. [Id. at ¶ 45.] However, the loan modification

contained terms different for what Plaintiff understood the parties had agreed. [Id.] The

modification Wells Fargo offered Plaintiff would have resulted in a monthly payment of

$1,486.95, interest rate of 2.728 % for years 1-5 of the loan; a monthly payment of

$1,715.22, interest rate of 3.728 % for year 6 of the loan; a monthly payment of $1,954.60,

interest rate of 4.728 % of year 7; a monthly payment of $2,203.27 at an interest rate of

5.728%; culminating in a monthly payment of $2,367.78, interest rate of 6.375% for years

9-40.

[Id. at ¶ 46.] Having not been offered a 2.5 per cent fixed rate loan with monthly

payments of $1,863.56, Plaintiff refused the modification. [Id. at ¶ 49.]

Following his refusal of the loan modification, Wells Fargo began a pattern of

harassment against Plaintiff, that continued even after Wells Fargo was sent a cease and

desist letter by Plaintiff’s counsel [Id. at ¶¶ 49, 51] The harassment took the form of phone

calls informing Plaintiff he had missed a mortgage payment after his mortgage check had

cleared his bank account, incorrectly increasing the amount to be placed in escrow to cover

the property taxes on the Property, and changing the name on the mortgage statement to

that of Plaintiff’s counsel, Mr. Reed. [Id. at ¶ 51.]

Subsequently in 2016, Plaintiff completed another loan modification application.

[Id. at ¶ 52.] Wells Fargo refused the request on the grounds that it had determined that

Plaintiff’s monthly income of $1,700.00 was insufficient to cover the mortgage payment.

[Id. at ¶ 53.] Plaintiff maintains that the monthly income calculation was determined

arbitrarily and contrary to proof. [Id.] Plaintiff “was never told he could appeal the

decision nor that he may obtain all of the inputs used in the net present value calculation

upon written request to the Defendant.” [Id.]

After the second attempt at modifying the loan failed, Wells Fargo “amped up” its

harassment of Plaintiff. [Id. at ¶ 55.] Wells Fargo repeatedly called Plaintiff and sent him

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letters, refused to credit mortgage payments that Plaintiff made, did not credit “the

payments made as to Mr. Warren being in arrears (falsely),” sent a notice of deficiency for

over $15,000.00 and filed a Notice of Default against the Property (“NOD”). [Id. at 58.]

As a result of Defendants’ action, the title of the Property has been clouded “making it

almost impossible for Mr. Warren to refinance.” [Id.]

The FAC alleges 20 separate causes of action against Defendants, namely: (1) breach

of the covenant of good faith & fair dealing; (2) violation of the California Civil Code

section 2923.6(f); (3) violation of the California Civil Code section 2924.10; (4) violation

of the California’s Rosenthal Act and Federal Fair Debt Collection Practices Act

(“FDCPA”); (5) breach of contract / promissory estoppel; (6) breach of fiduciary duty; (7)

fraud; (8) promise without intent to perform under California Civil Code section 1710(4);

(9) negligent misrepresentation; (10) quiet title to real property; (11) slander of title; (12)

cancellation of instrument; (13) violation of California Business & Professions Code

section 17200 et. seq.; (14) violation of the California Deceptive Practices Act, California

Civil Code section 1770; (15) accounting; (16) specific performance; (17) declaratory

relief; (18) injunctive relief under California Civil Procedure Code section 526(1)(2) ; (19)

violation of TILA and HOEPA, 15 U.S.C § 1601, et. seq.; and violation of RESPA, 1

U.S.C. § 2601 et. seq.

On April 7, 2017, Wells Fargo filed a motion to dismiss, seeking dismissal of all 20

causes of action pursuant to Federal Rules of Civil Procedure 12(b)(6). [Doc. No. 24.]

Along with its motion for dismissal, Wells Fargo filed a request for Judicial Notice. [Doc.

No. 25.] On April 14, 2017, Plaintiff filed his response in opposition [Doc. No. 27] and

Wells Fargo filed a reply. [Doc. No. 31.]

On October 26, 2017, the Court granted Defendant CRC’s motion to set aside default

[Doc. No. 60] and ordered CRC’s motion to dismiss, attached to the motion for relief from

default [Doc. No. 43-1, 43-2.], filed nunc pro tunc to June 30, 2017. [No. No. 6]

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II. LEGAL STANDARD

Under Rule 12(b)(6), a party may bring a motion to dismiss based on the failure to

state a claim upon which relief may be granted. A Rule 12(b)(6) motion challenges the

sufficiency of a complaint as failing to allege “enough facts to state a claim to relief that is

plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Ordinarily,

for purposes of ruling on a Rule 12(b)(6) motion, the court “accept[s] factual allegations in

the complaint as true and construe[s] the pleadings in the light most favorable to the non-

moving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th

Cir. 2008). But, a “pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation

of the elements of a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (quoting Twombly, 550 U.S. at 555). “Determining whether a complaint states a

plausible claim for relief . . . [is] a context-specific task that requires the reviewing court

to draw on its judicial experience and common sense.” Id. at 679.

Generally, leave to amend a pleading “shall be freely given when justice so requires.

Fed. R. Civ. P. 15 (a)(2). See, e.g., Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048,

1051 (9th Cir. 2003) (“This policy is to be applied with extreme liberality.”) Dismissal

without leave to amend is only appropriate when the court is satisfied that the deficiencies

in the complaint could not possibly be cured by amendment. Jackson v. Carey, 353 F.3d

750, 758 (9th Cir. 2003); Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (holding that

dismissal with leave to amend should be granted even if no request to amend was made).

III. JUDICIAL NOTICE

At the motion to dismiss stage a court may consider materials incorporated into the

complaint or matters of public record, without converting the motion to dismiss into a

motion for summary judgment. Coto Settlement v. Eisenberg. 593 F.3d 1031, 1038 (9th

Cir. 2010) (citation omitted); United States v. Ritchie, 432 F.3d 903, 908 (9th Cir. 2003)

(“The defendant may offer such a document, and the district court may treat such a

document as part of the complaint, and thus may assume that its contents are true for

purposes of a motion to dismiss under Rule 12(b)(6).”). The Ninth Circuit has extended

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the “incorporation by reference” doctrine to take into account documents “whose contents

are alleged in a complaint and whose authenticity no party questions, but which are not

physically attached to the [plaintiff’s] pleading.” Id.; See Knievel v. ESPN, 393 F.3d 1068,

1076 (9th Cir. 2005); see also Van Buskirk v. CNN, 284 F.3d 977, 980 (9th Cir. 2002);

Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998). The court may disregard

allegations in a complaint that are contradicted by matters properly subject to judicial

notice. Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010).

Here, Wells Fargo requested the Court take judicial notice of: (1) the Certificate of

Corporate Existence certifying World Savings Bank, FSB as a federal savings bank; (2) a

letter from the Office of Thrift Supervision, Department of the Treasury (“OTS”)

authorizing Worlds Savings Bank, FSB to change its name to Wachovia Mortgage, FSB;

(3) the charter of Wachovia Mortgage, FSB, that reflects in Section 4 that Wachovia was

subject to the Home Owners’ Loan Act and the OTS; (4) certification of the Comptroller

of the Currency stating that effective November 1, 2009, Wachovia converted to Wells

Fargo Bank Southwest, N.A., which then merged with and into Wells Fargo Bank, N.A.;

(5) a printout from the website of the Federal Deposit Insurance Corporation, showing the

history of World Savings Bank, FSB; (6) Deed of Trust, dated November 13, 2006, and

recorded in the official records of the San Diego County Recorder’s Office on November

20, 2006 as Document Number 2006-0835264; (7) Notice of Default, dated September 28,

2016, and recorded in the official records of the San Diego County Recorder’s Office on

October 3, 2016 as Document Number 2016,-0525770. [Doc. No. 25.]

Wells Fargo moves for judicial notice under Federal Rule of Evidence 201(b)

because the first five documents, attached as Exhibit A, reflect official acts of the executive

branch of the United States. Additionally, Wells Fargo seeks judicial notice of the Deed

of Trust, attached as Exhibit B, and Notice of Default, attached as Exhibit C, on the grounds

that the documents are true and correct copies of official records of the San Diego County

Recorder’s Office and therefore their authenticity is not subject to reasonable dispute and

their accuracy cannot reasonably be questioned. Plaintiff has not opposed the use of these

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documents or challenged their authenticity. Accordingly, the Court takes judicial notice of

Exhibits A, B and C filed in support of the motion to dismiss. [Doc. No. 25.]

Furthermore, given the unique posture of the case, the Court has determined that it

would be appropriate to look beyond the pleadings and consider the evidentiary record as

a whole. In relation to the preliminary injunction application, Plaintiff submitted over 100

pages of additional documentation and Wells Fargo filed 56 pages of documents in

response. [Doc. Nos. 10-2, 10-3, 16.] The documents submitted are specifically mentioned

in the complaint or are pertinent to the allegations contained within it, and the authenticity

of which no party contested in their preliminary injunction briefing. Accordingly, the

Court will take them into account when determining the motion to dismiss.

IV. DISCUSSION

Wells Fargo move to dismiss all of Plaintiff’s causes of action for failure to state a

claim. Fed. R. Civ. P. 12(b)(6). The arguments for dismissal primarily concern the

defectiveness of Plaintiff’s pleadings, failure to timely bring some of the causes of action

and assert that many of the state law claims are preempted by HOLA. CRC’s motion raises

similar lack of particularity arguments regarding a majority of the causes of action. CRC’s

motion focuses on the debt collection practices act claims, asserting that as a duly

authorized trustee or substitute trustee it is not a debt collector within the meaning of the

federal act and that its actions regarding the sale of the Property are privileged under the

California Civil Code.

Notably, the FAC does not distinguish between Defendants, so the Court will

presume each cause of action is being alleged against both the Wells Fargo and CRC. The

Court will consider each cause of action in turn, grouping them together wherever it deems

appropriate.

A. Breach of Covenant of Good Faith and Fair Dealing and Breach of

Contract / Promissory Estoppel Claims.

Plaintiff alleges he and Wells Fargo entered into an oral contract that reduced the

interest rate of the mortgage on the Property to 2.5 percent for the life of the loan and fixed

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the monthly payment at $1,863.56. Plaintiff contends that, by not offering him a loan

modification that reflected these terms, Wells Fargo breached the oral contract between the

parties. Relatedly, Plaintiff alleges that, by not honoring the terms of the oral contract,

Wells Fargo breached the covenant of good faith and fair dealing implicit in the contract.

Simultaneously, Plaintiff makes similar allegations related to the 2009 Wachovia Mortgage

Loan assumed by Wells Fargo that the oral contract purportedly modified. Wells Fargo

contend that Plaintiff fails to state a valid claim under either of these causes of action

because (1) they are barred by the statute of limitations, (2) there is no breach of any

agreement, and (3) Plaintiff does not allege an unambiguous promise or detrimental

reliance.

In order to state a breach of contract claim, Plaintiff must allege: (1) the existence of

a contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s

breach, and (4) the resulting damages to plaintiff. Careau & Co. v. Sec. Pac. Bus. Credit,

Inc., 222 Cal. App. 3d 1371, 1388 (1990). Within California, actions for violation of an

oral contract must be brought within two years of the discovery of the loss or damage

suffered by the aggrieved party. CAL. CIV. PROC. CODE § 339. In contrast, contract claims

based on a written contract are subject to a four year statute of limitations. Id. at § 337(1).

To sufficiently plead a promissory estoppel claim, Plaintiff must allege: “(1) a

promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise

is made; (3) the reliance must be reasonable and foreseeable; and (4) the party asserting the

estoppel must be injured by his reliance.” Laks v. Coast Fed. Sav & Loan Ass’n, 60 Cal.

App. 3d 885, 890 (1976) (promissory estoppel cannot create a right to a loan from a

conditional loan commitment letter). If the promissory estoppel claim is premised on an

oral agreement then it is subject to a two year statute of limitations; if it is premised on a

written contract then it subject to a four year statute of limitations. CAL. CIV. PROC. CODE

§§ 337(1), 339(1); Krieger v. Nick Alexander Imports, Inc., 234 Cal. App. 3d 205, 220-221

(1991)

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To successfully state a breach of covenant of good faith and fair dealing claim

Plaintiff must allege something beyond breach of the contractual duty itself; that being

plaintiff must allege that defendant unfairly interfered with the plaintiff’s right to receive

the benefits of a contract. Trinity Hotel Inv., LLC v. Sunstone OP Props., LLC, No. SA

CV 07-1356 AHS (MLGx), 2009 WL 303330, at *11 (C.D. Cal. Feb. 5, 2009).

If the

action for breach of the covenant of good faith and fair dealing sounds in a written contact

then the four-year statute of limitations governing written contracts applies. CAL. CIV.

PROC. CODE §§ 337(1), Krieger, 234 Cal. App. 3d at 221. For actions being pursued under

an oral contract theory the two year statute of limitations will apply. CAL. CIV. PROC. CODE

§ 339(1).

Plaintiff provides no details regarding when he and Wells Fargo communicated

regarding the first loan modification he sought from them. The complaint indicates that in

January 2013 Plaintiff underwent heart surgery, after which: “making the mortgage

payments became increasingly difficult and knowing that he may not be able to afford his

mortgage payments he contacted Wells Fargo to try to work out a loan modification.”

[Doc. No. ¶ 38.] In his response in opposition, Plaintiff acknowledges that he purposely

did not include specific dates as to when the alleged “oral contract” between Wells Fargo

and Plaintiff was made because “[i]t is well settled law that a Motion to Dismiss at the

pleading stage must be taken from the “four corners” of the complaint, not from extrinsic

evidence.” [Doc. No. 27 at 5.] However, Plaintiff’s tactical decision to omit facts in an

attempt to avoid the applicable statute of limitations fails.

“Every contract imposes on each party a duty of good faith and fair dealing in each performance and in

its enforcement. Careau & Co, 222 Cal. App. 3d at 1393 (citation omitted). Performance in good faith

necessitates “that neither party will do anything that will injure the right of the other to receive the benefits

of the agreement.” Id. However, “if the allegations do not go beyond the statement of a mere contract

breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed

in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is

actually stated.” Id. at 1395.

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From the evidence in the record related to the Request for Preliminary Injunction,

the Court is aware that Wells Fargo sent Plaintiff a letter “based on [their] telephone

conversation” regarding the loan modification on November 6, 2013. [Doc. No. 34-1 at

25-28.] The trial payment amounts contained in the terms and conditions page attached to

this letter are identical to the $1863.56 Plaintiff asserts he was offered in the oral contract

and paid during the trial period. [Id. at 27.] Additionally, a letter enclosing the Loan

Modification Agreement that Plaintiff declined to sign is dated March 20, 2014. [Doc. No.

34-1 at 30-41.]

Plaintiff states in the FAC that he completed the trial payment period and

then “waited until he received the official loan modification papers” which, the evidence

shows, was sent on March 20, 2014. [Doc. No. 22 at ¶ 14.] Furthermore, a September 29,

2015 letter sent by Mr. Reed, states that “[i]n or about October 2013 my client was

approved for a proprietary in house loan modification.” [Doc. No. 10-2 at 8-11.]

Therefore, the Court concludes that the alleged oral contract between the parties was

entered into in October 2013, and Plaintiff received the paperwork that memorialized the

alleged breach when he received the March 20, 2014, Loan Modification Agreement. That

is, once Plaintiff received the written Loan Modification Agreement, he was on notice that

it did not contain the terms the parties had purportedly agreed to. But, Plaintiff waited until

October 27, 2016, two and one half years after discovery of the alleged breach, to bring

these breach of oral contract claims. This is outside of the two year statute of limitations

time period. Therefore, Plaintiff’s breach of oral contract claims are time barred.

Accordingly, the Court GRANTS Defendants’ motion to dismiss these claims (Counts 1

& 5). Plaintiff’s claims that stem from the oral contract are DISMISSED WITH

PREJUDICE as to all Defendants.

The payment schedule under this loan agreement mirrors the terms Plaintiff asserts were offered to him.

Having determined that these claims are barred by the statute of limitations, the Court declines to address

the other arguments Defendants make in support of dismissal of these causes of action.

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Plaintiff also makes the same Breach of Covenant of Good Faith and Fair Dealing

and Breach of Contract / Promissory Estoppel claims regarding the 2009 Wachovia

Mortgage Loan that was assumed by Wells Fargo. Because these claims are premised on

a written agreement they are subject to a four year statute of limitation. However, Plaintiff

claims the original contract was subsequently modified by an oral agreement, while

simultaneously claiming breach of the original contract. But, Plaintiff cannot have it both

ways, he has asserted that the parties entered into an oral contract that superseded the

written contract, therefore, Plaintiff cannot subsequently claim that the original contract

was still binding on the parties and was breached. As a consequence, the Court GRANTS

Defendants’ motion to dismiss the breach of written contact claims (Counts 1 & 5).

Plaintiff’s claims arising from the written contract are DISMISSED WITH PREJUDICE

as to all Defendants.

B. Violations of California Civil Code Sections 2923.6 and 2924.10 Claims

Plaintiff alleges that Defendants improperly foreclosed on the Property in violation

the Homeowners’ Bill of Rights (“HBOR”), California Civil Code sections 2923.6

and

2924.10.

Wells Fargo argues that Plaintiff’s claims regarding violation of HBOR are

preempted by the federal Home Owners Loan Act (“HOLA”) and do not contain

allegations that the violations were “material.” CRC contend these claims are not pled with

the requisite specificity.

Federal Savings Banks are subject to HOLA and are regulated by the OTS. 12 U.S.C

§ 1464; Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1005 (9th Cir. 2008). OTS

Regulation 560.2(b) preempts state regulation of federal thrift activities related to terms of

credit, loan-related fees, servicing fees, disclosure with advertising, loan processing, loan

Section 2923.6(f) provides that “following the denial of a first lien loan modification application, the

mortgage servicer shall send a written notice to the borrower identifying the reasons for denial.” CAL.

CIV. CODE § 2923.6(f).

Section 2924 enumerates the requirements that need to be followed for filing an NOD, including what

information must appear in the NOD itself. CAL. CIV. CODE § 2924(a)-(c).

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origination, and servicing of mortgages. 12 C.F.R. § 560.20(b). As a consequence federal

courts in California have held that HBOR section 2923.6 and 2924.10 claims are pre-

empted by HOLA. See, e.g., Osorio v. Wachovia Mortg., FSB, No. 12-cv-663-IEG (BGS),

2012 WL 1610110, at *3 (S.D. Cal. May 8, 2012) (holding that HBOR section 2923.6 and

section 2924 violation claims related to a mortgage issued by Wachovia Mortgage, FSB,

were preempted by HOLA); Sato v. Wachovia Mortg., FSB, No. 5:11-cv-00810 EJD

(PSG), 2011 WL 2784567 (N.D. Cal. Jul. 13, 2011) (plaintiff’s claim that lender violated

California Civil Code § 2923.6 by failing to modify her loan “clearly falls under the

preemption provision for ‘processing, origination, sale or purchase of . . . mortgages’”);

Thus, Plaintiff’s HBOR section 2923.6 and 2924.10 claims will be pre-empted by HOLA

if the mortgage loan at issue was issued by a federal savings bank (“FSB”).

Here, Plaintiff takes the position that since the 1999 loan was not originated by Wells

Fargo it is not subject to HOLA. In support of his position Plaintiff points to the 2002

negative amortization loan issued by Countrywide. However, Countrywide was not the

company that issued the first mortgage on the Property and the identity of the 1999

mortgage issuer remains a mystery. In 2006, Plaintiff obtained a new mortgage loan on

the Property from World Savings Bank, an FSB. [Doc. No. 25, at 15-31.] This mortgage

was subject to a loan modification from Wachovia in 2009. [Doc. No. 22 at ¶ 36.]

Subsequently, the modified mortgage loan was subsumed by Wells Fargo, a national

banking association, following its merger with Wachovia Mortgage, FSB. [Doc. No. 25 at

6-13.] The Court will base its determination regarding the applicability of HOLA on the

2009 Wachovia mortgage because: (1) it is the mortgage to which Wells Fargo is now the

successor-in-interest; and (2) is also the mortgage at issue in this case and the subject of

the alleged oral modification.

“[T]here is a growing divide in the district courts” on whether HOLA preemption

follows a loan throughout its lifetime. Kenery v. Wells Fargo Bank, N.A., Case No.:5:13-

CV-02411-EJD, 2014 WL 129262, at *4 (N.D. Cal. Jan. 14, 2014). Courts within the Ninth

Circuit have adopted three distinct positions on the issue choosing to find either: HOLA

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pre-emption applies to all conduct relating to the loan; HOLA preemption does not apply

if the mortgage loan is held by successors to a federal savings association; or HOLA

preemption applies after a loan has been transferred to a successor to a federal savings

association, but only to the claims arising from actions taken by the federal savings

association. See generally, Romero v. Wells Fargo Bank, N.A., Case No. LA CV15-04707

JAK (JEMx), 2015 WL 12781210, at * 4 (C.D. Cal. Dec. 22, 2015) (collecting cases). This

Court joins with others within this circuit who have found that “HOLA preemption

continues to apply to conduct related to loans originated by a federally-chartered savings

association even after those banks are merged into national banking associations.” Campos

v. Wells Fargo Bank, N.A., Case No. EDCV 15-1200 JVS (DTBx), 2015 WL 5145520, at

*5 (C.D. Cal. Aug. 31, 2015) (citation omitted). See also Caovilla v. Wells Fargo Bank,

N.A., No. 13-cv-1003 JSC, 2013 WL 2153855, at *6 (N.D. Cal. May 16, 2013) (collecting

cases where courts have held that claims regarding foreclosures occurring post-merger are

generally covered by HOLA when the loan itself originated from a pre-merger FSB);

Rodriguez v. JP Morgan Chase & Co., 809 F. Supp. 2d 1291, 1295 n.1 (S.D. Cal. 2011)

(“Although Defendants themselves are not federally chartered savings banks, HOLA still

applies because Washington Mutual was a federally chartered savings bank at the time the

loan originated.”). Accordingly, the Court finds Plaintiff’s HBOR claims are preempted

by HOLA, and therefore GRANTS Defendants’ motion to dismiss these claims (Counts 2

and 3). Plaintiff’s California Civil Code section 2924.10 and 2940.10 claims are

DISMISSED WITH PREJUDICE.

C. Unfair Debt Collection Claims

Plaintiff alleges that Wells Fargo is a “debt collector” that violated the FDCPA and

Rosenthal Act by contacting Plaintiff numerous times about the mortgage loan on the

Property after being notified that Plaintiff was represented by an attorney and that all

Because the Court finds that Plaintiff’s HBOR claims are preempted by HOLA, it declines to reach

Defendants’ alternative reasons for dismissal.

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communications were to go through his attorney. Further, Plaintiff complains that CRC

also violated the FDCPA and Rosenthal Act by failing to validate the alleged debt after

being specifically requested to do so. Defendants contend that both acts are not applicable

to creditors and that residential mortgage loans are not subject to the Rosenthal Act.

The FDCPA only imposes liability when an entity is attempting to collect a debt. 15

U.S.C. § 1692(e). “For purposes of the FDCPA, the word ‘debt’ is synonymous with

‘money.’” Vien-Phuong Thi Ho v. ReconTrust Co., NA, 858 F.3d 568, 571 (9th Cir. 2016)

(citing 15 U.S.C. 1692a(5)). Because California law does not allow for deficiency

judgment following non-judicial foreclosure and merely results in the sale of property

subject to a deed of trust, “sending the notice of default and notice of sale, are not attempts

to collect ‘debt’ as that term is defined by the FDCPA.” Id. at 571-572. As the Court of

Appeals explained “giving notice of a foreclosure sale to a consumer as required by the

[California] Civil Code does not constitute debt collection activity under the FDCPA.” Id.

at 574 (quoting Pfeifer v. Countrywide Home Loans, Inc., 211 Cal. App. 4th 1250 (2012)).

Here, Plaintiff entered into a mortgage on the Property with World Savings Bank in

2006. The deed of trust identifies Plaintiff as the borrower, World Savings Bank, FSB, as

the lender and Golden West Savings Association Service Co., as the trustee. [Doc. No. 25

at 15-31.] Through a merger with Wachovia, Wells Fargo became successor in interest to

the mortgage at issue. [Doc. No. 25 at 11-13.] After Plaintiff began missing loan

payments, Clear Recon, as “either the original trustee, the duly appointed substituted

trustee or the designated agent of the holder of the beneficial interest under a deed of trust

dated 11/13/2006,” initiated a non-judicial foreclosure by mailing a notice of default to

Plaintiff. [Doc. No. 25 at 33-36.]

Although Plaintiff alleges that Wells Fargo and CRC are debt collectors under the

act, “actions taken to facilitate a non-judicial foreclosure, such as sending the notice of

default and notice of sale, are not attempts to collect ‘debt’ as that term is defined by the

FDCPA.” Ho, 858 F.3d at 572. Therefore, Plaintiff’s allegations fail as a matter of law

because “creditors, mortgagors, and mortgage servicing companies are not debt collectors

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and are statutorily exempt from liability under the FDCPA.” Shetty v. Lewis, No. 16-cv-

03112 BLC, 2017 WL 1177993, at *6 (N.D. Cal. Mar. 30, 2017). See also Aguirre v. Cal-

W. Reconveyance Corp., No. 11-cv-06911 CAS (AGRx), 2012 WL 273753, at *7 (C.D.

Cal. Jan. 30, 2012) (“[t]he law is well settled . . . that creditors, mortgagors, and mortgage

servicing companies are not debt collectors and are statutorily exempt from liability under

the FDCPA.”) (internal citations omitted) (emphasis in original). Moreover, the fact that

the pre-foreclosure notice contained the language “we are attempting to collect a debt,”

“does not convert the non-judicial foreclosure into an attempt to collect a debt under the

FDCPA.” Carbone v. Caliber Home Loans, Inc., 15-CV-5190(JS)(GRB), 2017 WL

4157265, at * 2 (E.D.N.Y. Sept. 19, 2017) (quoting Evlabobo v. Aldridge Pite, LLP, No.

16-CV-0539, 2016 WEL 7379021, at *5 (D. Nev. Dec. 20, 2016)).

“The definition of the ‘debt collector’ under the [Rosenthal Act] is broader than

under the FDCPA and includes any person who, ‘in the ordinary course of business,’

collects a debt on behalf of himself or others.’” Horton v. Cal. Credit Corp. Ret. Plan, 835

F. Supp. 2d 879, 890 (S.D. Cal. 2011) (citing CAL. CIV. CODE § 1788.2(c)).

Notwithstanding this broader definition, numerous California district courts have

concluded that foreclosing on a property pursuant to a deed of trust does not constitute debt

collection under the Rosenthal Act. See, e.g., Baldain v. Am. Home Mortg. Servicing, Inc.,

No. CIV. S-09-0931 LKK/GHH, 2010 WL 56143, at *4 (E.D. Cal. Jan. 5, 2010); Walker

v. Equity 1 Lenders Grp., No. 09cv325 WQH (AJB), 2009 WL 1364430, at *7 (S.D. Cal.

May 14, 2009) (“The “activity of foreclosing on [a] property pursuant to a deed of trust is

not the collection of a debt within the meaning of the” FDCPA or the [Rosenthal Act].”

(citations omitted)); Izenberg v. ETS Servs., LLC, 589 F.Supp.2d 1193, 1199 (C.D. Cal.

2008) (“[F]oreclosure does not constitute debt collection under the [Rosenthal Act] ....”).

This is because “[t]he Rosenthal Act does in fact mirror in the FDCPA, their intentions

were the same and exclusive, and, as such, a loan servicer is not a debt collector under

these facts.” Mannello v. Residential Credit Solutions, Case No. 2:15-cv-07674-CAS-

AJW, 2016 WL 94236, at *4. (C.D. Cal. Jan. 7, 2016). As alleged, the FAC supports the

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conclusion that Defendants were foreclosing on the Property, which is not the collection of

debt within the meaning of the Rosenthal Act. Therefore, the Rosenthal Act claim also

fails.

Accordingly, the Court GRANTS Defendants’ motion to dismiss the FDCPA and

Rosenthal Act Claims (Count 4). Because the Court finds that leave to amend would be

futile, Plaintiff’s claim is DISMISSED WITH PREJUDICE as to all Defendants.

See

Izenberg, 589 F. Supp. 2d at 1999 (concluding that because foreclosure does not constitute

debt collection under the Rosenthal Act or the FDCPA, plaintiff cannot cure the deficiency,

making dismissal with prejudice appropriate).

D. Breach of Fiduciary Duty Claim

Plaintiff alleges that Defendants breached the fiduciary duty they owed to him by

acting and continuing to act in their own benefit and to the detriment of Plaintiff. Wells

Fargo counter that lenders and loan servicers do not owe fiduciary duties to borrowers and

CRC contends that the claim is not pled with the required specificity.

“[A]bsent special circumstances . . . a loan transaction is at arm’s length and there is

no fiduciary relationship between the borrower and the lender.” Oaks Mgmt. Corp. v.

Superior Court, 145 Cal. App. 4th 453 (2006) (collecting cases). See also Leisher v.

Wachovia Mortg. Inc., No. 10cv2294-WQH-POR, 2011 WL 98575, at *6 (S.D. Cal. Jan.

12, 2011) (noting the existence of “the general rule in California that there is no fiduciary

relationship between a borrower and lender.”) Plaintiff has pled that “in deciding to

provide loan modification services and advice and direction, Defendant has exceed the

traditional lender/borrower role…” [Doc. No. 22 at ¶ 128.] Further Plaintiff alleges that

Defendants had a duty to keep him accurately informed on all issues regarding his loan,

provide a good faith review of his loan modification or other loss mitigation options; Wells

Having found that Defendants are not attempting to collect a debt as defined by the statutes, the Court

need not decide whether Defendants conduct related to the Property foreclosure violated any other sections

of the acts

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Fargo also accepted loan payments without crediting his account and failed to protect his

rights. [Doc. No. 22 at ¶¶ 129, 130.] The allegations seem to be directly mostly at Wells

Fargo with the FAC remaining silent regarding any duty owed by CRC. Regardless, these

allegations do not establish the existence of any special circumstances that would have

created a fiduciary relationship between Plaintiff and Wells Fargo or Plaintiff and CRC

and are simply conclusory. Accordingly, the Court GRANTS Defendants’ motion to

dismiss this claim (Count 6). Plaintiff’s breach of fiduciary duty claim is DISMISSED

WITH LEAVE TO AMEND.

E. Fraud, Promise Without Intent to Perform, Negligent Misrepresentation,

and Violation of California Civil Code Section 1770 Claims

Plaintiff alleges that when he contacted Wells Fargo about modifying his mortgage

loan following his heart surgery in 2013, Wells Fargo misrepresented orally and in writing

that he would receive a loan modification the terms of which would reduce the interest rate

to 2.5 percent for the life of the loan, with monthly payments being fixed at $1,863.56.

Further, Plaintiff alleges that he was informed that all he had to do to secure these loan

modification terms was successfully complete the three month trial period. As a result of

the misrepresentations Plaintiff has brought claims for fraud, promise without intent to

perform, negligent misrepresentation, and violation of California Civil Code section 1770.

Both CRC and Wells Fargo seek dismissal of these claims asserting are not plead with the

necessary specificity. Further Wells Fargo contends that the claims are barred by the

applicable statute of limitations, do not allege the requisite intent, rely on the existence of

a duty of care that is absent in this case, and fail because Plaintiff cannot convert a contract

claim into a tort claim.

To successfully state a claim for fraud, a plaintiff must allege “a representation,

usually of fact, which is false, knowledge of falsity, intent to defraud, justifiable reliance

on the misrepresentation, and damage resulting from that justifiable reliance.” Stansfield

v. Starkey, 220 Cal. App. 3d 59, 72-73 (1990). “‘Promissory fraud’” is a subspecies of the

action for fraud and deceit. A promise to do something necessarily implies the intention

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to perform; hence, where a promise is made without such intention, there is an implied

misrepresentation of fact that may be actionable.” Lazar v. Superior Court, 12 Cal. 4th

631, 638 (1996) (citing Union Flower Market, Ltd. v. S. Cal. Flower Market, Inc., 10 Cal.

2d 671, 676 (1938); CAL. CIV. CODE § 1710). The elements of negligent misrepresentation

are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable

grounds for believing it to be true, (3) made with the intent to induce another’s reliance on

the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting

damage. Ragland v. U.S. Bank Nat. Assn., 209 Cal. App. 4th 182, 196 (2012).

In California and under Federal Rule of Civil Procedure 9(b) “in alleging fraud or

mistake, a party must state with particularity the circumstances constituting fraud or

mistake.” Fed. R. Civ. P. 9(b); CAL. CIV. CODE § 1710. The pleader must state the time,

place and specific content of the false representation as well as the identities of the parties

to the misrepresentation. Id.; Sebastian Int’l, Inc., v. Russolillo, 128 F. Supp. 2d 630, 634-

35 (C.D. Cal. 2001). Within California, actions for fraud must be brought within three

years of the date of the misrepresentation. CAL. CIV. CODE § 338(d).

The complaint provides bare allegations regarding when the false representations

were made. All that is known is that the misrepresentation was made, by an unidentified

individual, sometime after Plaintiff underwent heart surgery in January 2013. [Doc. No.

22 at ¶ 38.] From the evidence in the record, the Court has been able to surmise that the

conversation and resulting alleged oral contract was likely entered into in October 2013,

but the exact date of the misrepresentation has not been pinpointed. [See Doc. Nos. 34-1

at 25-28; No. 34-1 at 30-41; Doc. No. 10-2 at 8-11.] Regardless of the Court’s supposition,

the lumping of all of the Defendants together, along with the scant details provided in the

complaint concerning the “who, what, when, where and how” of the alleged fraud are not

sufficient to satisfy Rule 9(b)’s specificity requirements. See Kearns v. Ford Motor Co.,

567 F.3d 1120, 1124 (9th Cir. 2009) (quoting Vess v. Ciba-Geigy Corp. USA, 317 F.3d

1097, 1106 (9th Cir. 2003)) (emphasis added; internal quotation marks omitted)

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(“Averments of fraud must be accompanied by the who, what, when, where, and how of

the misconduct charged.”)

Even assuming that Plaintiff has satisfied the first elements of the claims, the Court

finds that Plaintiff has failed to adequately allege fraudulent intent, justifiable reliance or

damages. For example, the FAC alleges that “when Defendant made these representations,

it knew them to be false and made them with the intention to deceive, to defraud, and to

induce Plaintiff to act in reliance on these representations in the manner alleged, or with

the expectation that Plaintiff would so act.” [Doc. No. 22 at ¶ 138.] But, such allegations

simply recite the element of the claim and are conclusory. Similarly, Plaintiff’s allegations

that he has been damaged in an amount to be proven at trial, has had to retain legal counsel,

incur costs related to this suit, and has been unable to take other steps to move on with his

life, such as refinancing or finding other means to avoid default and foreclosure by paying

off the purported arrearage owed, do not adequately prove reliance or damage. [Doc. No.

22 at ¶¶ 142, 143, 152, 153, 158, 160, 161,194-197.] Because, “[i]n the mortgage context,

a plaintiff’s allegations that he declined to ‘explore other options’ as a result of a lender’s

false representations are generally not sufficient to withstand a motion to dismiss because

they simply ‘re-state the element of the claim.’” Deschaine v. IndyMac Mortg. Services,

No. CIV. 2:13-1991 WBS CKD, 2013 WL 6054456, at *3 (E.D. Cal. Nov. 15, 2013).

Furthermore, Plaintiff’s allegations do not show that any damages he suffered were

the result of Wells Fargo’s conduct, rather than his own failure to make mortgage

payments. Wells Fargo sent multiple mortgage statements to Plaintiff noting the amount

he was in arrears along with notices of default. [Doc. No. 10-2 at 20, 22-27, 34-37; Doc

No. 34-1 at 57-62; Doc. No. 36-1 at 37, 54-55]. Additionally, in the Preliminary Injunction

briefing, Wells Fargo submitted a declaration from Mr. Brandon McNeal, Vice President

Loan Documentation, Wells Fargo Bank N.A., attests that “as of May 16, 2017 there is an

outstanding principal balance of $435,974.53, plus interest, fees, and other recoverable

amounts due and owing on the Loan.” [Doc. No. 34-1 at ¶ 20.] Notwithstanding the

allegations in the complaint, the facts show that Plaintiff is facing foreclosure because he

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has not submitted checks for the correct monthly mortgage payments and lacks the

financial resources to cure the resulting default. See, e.g., DeLeon v. Wells Fargo Bank,

N.A., 10–CV–10390–LHK, 2011 WL 311376, at *7 (N.D. Cal. Jan.28, 2011) (“Without

some factual basis suggesting that Plaintiffs could have cured the default ... the Court

cannot reasonably infer that Wells Fargo's alleged misrepresentations resulted in the loss

of plaintiff's home. The facts alleged suggest that Plaintiffs lost their home because they

became unable to keep up with monthly payments and lacked the financial resources to

cure the default.”).

Accordingly, the Court GRANTS Defendants’ motion to dismiss these claims

(Counts 7, 8, 9, and 14).

Plaintiff’s fraud, promise without intent to perform, negligent

misrepresentation and violation of the California Deceptive Practices Act claims are

DISMISSED WITH LEAVE TO AMEND.

F. Quiet Title Claim

Plaintiff seeks to quiet title to the Property, alleging that Defendants are without any

right, title, ownership or interest in the Property, notwithstanding the foreclosure process.

Defendants contend that the claim as pled fails to allege the necessary elements. Further

Wells Fargo asserts that Plaintiff’s claim fails because he has not paid or offered to pay the

amount astounding on the Deed of Trust.

To state a claim for quiet time, a complaint must be verified and include: “(1) a legal

description of the property and its street address or common designation, (2) the title of the

plaintiff and the basis of the title, (3) the adverse claims to the title of the plaintiff, (4) the

date as of which the determination is sought and (5) a prayer for the determination of the

Because the Court finds that Plaintiff’s Fraud, Promise Without Intent to Perform, Negligent

Misrepresentation, and Violation of California Civil Code Section 1770 claims are not made with the

requisite specificity and do not allege necessary elements of the claims, the Court need declines to address

the additional arguments Defendants make in favor of dismissal of these claims. In addition, the Court

notes that because it has been unable to ascertain when the alleged fraud occurred, a ruling regarding the

timeliness of the fraud claim is not appropriate at this stage.

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title of the plaintiff against the adverse claims.” Walker 2009 WL 1364430, at *9 (citing

CAL. CIV. PROC. CODE § 761.020). “A basic requirement of an action to quiet title is an

allegation that plaintiffs are the rightful owners of the property, i.e., that they have satisfied

their obligations under the Deed of Trust.” Williams v. Bank of America, N.A., 15-cv-00792

LHK, 2015 WL 6602403, at *7 (N.D. Cal. Oct. 30, 2015), aff'd sub nom. Williams v. Bank

of America, No. 15-17335, 2017 WL 2983055 (9th Cir. July 13, 2017) (citations and

quotations marks omitted). “Therefore, a borrower may not assert quiet title against a

mortgagee without first paying the outstanding debt on the property.” Fenton v. Wells

Fargo Home Mortg., Case No. 17-cv-0113 DMS (WVG), 2017 WL 1346672, at *4 (S.D.

Cal. Apr. 12, 2107) (internal quotations marks and citations omitted).

Here, Plaintiff alleges that “defendant is without any right, title, ownership or

interest whatsoever” in the Property and that “any alleged title obtained by the within

defendant was obtained through breach of contract, by wrongful acts, unconscionable and

inequitable practices and breach of fiduciary duties.” [Doc. No. 22 at ¶ 164.] Further, it is

alleged that “despite making his monthly mortgage payments to Wells Fargo, Defendant

has refuse[d] to properly credit them to his account, which is artificially putting his account

in default.” [Id.] Plaintiff seeks to quiet title as of the date of the filing of this lawsuit. [Id.

at 166.] In addition, the FAC has met the verified requirement.

However, Plaintiff has failed to establish that he is the “rightful owner of the

property, i.e., that [he] has satisfied [his] obligation under the Deed of Trust.” Williams,

2015 WL 6602403, at *7. Neither does the FAC contain an allegation that Plaintiff has or

is willing and able to make a viable tender offer. See Ibarro Ramos v. Federal Home Loan

Mortgage Corp., 2013 WL 12097567, at *6 (S.D. Cal. Jan 8, 2013) (dismissing quiet title

claim where plaintiff failed to allege he made a valid and viable tender offer). Additionally,

the evidentiary record demonstrates that Plaintiff has not satisfied his obligation, is

experiencing difficulties in making his monthly mortgage payments, and has not made a

mortgage payment in months. [See Doc. No. 10-2 at 20, 22-27, 34-37; Doc No. 34-1 at

57-62; Doc. No. 36-1 at 37, 54-55]. The declaration from Wells Fargo’s Vice President of

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Loan Documentation, Wells Fargo Bank N.A., also provides further evidence that the debt

has not been satisfied attesting, “as of May 16, 2017 there is an outstanding principal

balance of $435,974.53, plus interest, fees, and other recoverable amounts due and owing

on the Loan.” [Doc. No. 34-1 at ¶ 20.] Regardless of the allegations in the FAC, these

facts do not support a conclusion that Plaintiff has tendered, or even has the ability to

tender, any outstanding debt on the subject property. Therefore, the Court concludes that

Plaintiff cannot sustain a quiet title action because “[i]t is settled in California that a

mortgagor cannot quiet his title against the mortgagee without paying the debt secured.”

Accordingly, the Court GRANTS Defendants’ motion to dismiss this claim (Count 10).

Plaintiff’s quite title claim is DISMISSED WITH LEAVE TO AMEND.

G. Slander of Title Claim

Plaintiff alleges Defendants slandered Plaintiff’s title to the Property by purposefully

causing Plaintiff to default on the mortgage loan and improperly filing a Notice of Default

on the Property. Wells Fargo contends Plaintiff has failed to allege several of the necessary

elements of the claim and it should, therefore, be dismissed. CRC argues that its action

regarding the filing of the Notice of Default are protected by privilege and are therefore

not actionable.

“The recordation of an instrument facially valid but without underlying merit will

give rise to an action for slander of title.” Ogilvie v. Select Portfolio Servicing, 12-CV-

1654, 2012 WL 3010986, at *4 (N.D. Cal., July 23, 3012) (citations omitted). To

successfully state a claim for slander of title, a plaintiff must allege: “(1) a publication, (2)

without privilege or justification, (3) falsity, and (4) direct pecuniary loss.” .” Summer

Hill Homeowners’ Ass’n, Inc. v. Rio Mesa Holdings, LLC, 205 Cal. App. 4th 999, 1030

(2012) (citations omitted). However, absent factual allegations of malice, “the statutorily

required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the

performance of statutorily nonjudicial foreclosure procedures, [are] privileged

communication[s] . . . .” Kachlon v. Markowitz, 168 Cal. App. 4th 316, 333 (2008); see

also Ogilvie 2012 WL 3010986, at *4 (collecting cases). Malice requires the publication

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be “motivated by hatred or ill will towards the plaintiff or by a showing that the defendant

lacked reasonable ground for belief in the truth of the publication and therefore acted in

reckless disregard of the plaintiff’s rights.” Kachlon, 168 Cal. App. 4th at 336 (emphasis

and internal citations omitted).

The FAC allegations related to the slander of title claim do not contain sufficiently

pled allegations regarding the falsity of the notice of default at issue or the pecuniary loss

element. Rather, Plaintiff simply alleges that he has “incurred and will continue to incur

attorney fee and costs.” [Doc. No. 22 at ¶ 172] However, “in an action for slander of title

fees incurred to quiet title are recoverable and fees incurred prosecuting the slander of title

are not.” Ogilvie, 2012 WL 3010986, at *4 (quoting Ryan v. Editions, Ltd W., Inc., No. C-

06-4812-PVT, 2007 WL 4577867, at *14 n. 13 (N.D. Cal. Dec. 27, 2007)). Therefore the

allegations fail to establish pecuniary loss.

The California Civil Code provides that actions taken to comply with its statutory

provisions regarding nonjudicial foreclosure sales of properties are privileged

communications. Here, the allegations are premised on actions taken and communications

filed in furtherance of the nonjudicial foreclosure sale of the Property, which are therefore

subject to privilege, unless Plaintiff can establish Defendants acted maliciously. See CAL

CIV CODE § 2924(d); Diunugala v. JP Morgan Chase Bank, N.A., CASE NO. 12cv2106-

WQH-NLS, 2013 WL 12096449, at *7 (S.D. Cal. Jan 18, 2013). While the FAC alleges

that the publication was “not privileged” and done “wrongly,” [Doc. No. 22 at ¶¶ 168, 169],

such an allegation is not sufficient to overcome the privilege. Accordingly, the Court

GRANTS Defendants’ motion to dismiss this claim (Count 11). Plaintiff’s slander of title

claim is DISMISSED WITH LEAVE TO AMEND.

H. Cancellation of Instrument Claim

Plaintiff seeks to cancel the NOD on the Property, yet fails to indicate under what

statutory provision relief is being sought. Wells Fargo contends that Plaintiff has not

shown a valid ground for cancelling the NOD. CRC contends that the claim has not been

pled with the requisite particularity.

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Under California Civil Code § 3412 a court may order cancellation of a written

instrument where “there is reasonable apprehension that if left outstanding it may cause

serious injury to a person against whom it is void or voidable.” CAL. CIV. CODE § 3412.

Assuming Plaintiff is suing under this provision, he has failed to plead facts sufficient to

show that the notice of default should be cancelled.

Plaintiff alleges that “[t]here is a reasonable apprehension that should this

instruments [sic] remain filed” against the Property it may cause serious injury because the

“instrument clouds Plaintiff’s title . . . in a fundamental manner and impair the

marketability and value of Plaintiff’s.” [Doc. No. 22 at ¶ 176.] Further, Plaintiff alleges

that if the NOD remains in place he may not be able to refinance the property or obtain a

loan modification and that if it remains filed Defendants may be allowed to foreclose on

the property. [Doc. No. 22 at ¶¶ 177, 178.] But, nothing about the notice of default has

altered Plaintiff’s payment obligations under the mortgage loan or the substantive rights

that may be asserted against him after a default. See Johnson v. PNC Mortg., 80 F. Supp.

3d 980, 989 (N.D. Cal. 2015). Furthermore, from the evidentiary record in this case, the

Court has determined that Plaintiff is in default with regards to the Property and has not

attempted to cure the default. As a consequence of the default, Wells Fargo is entitled to

proceed with the foreclosure of the Property, which includes the filing of the notice of

default. Therefore, it cannot be said that the notice of default is “void or voidable” against

Plaintiff. Moreover, it is Plaintiff’s default that has caused the injury, i.e. clouded the title

of the Property. Accordingly, the Court GRANTS Defendants’ motion to dismiss this

claim (Count 12). Plaintiff’s cancellation of instrument claim is DISMISSED WITHOUT

LEAVE TO AMEND as to all Defendants.

I. Violation of California Business & Prof Code Section 17200 Claim

Plaintiff alleges that Defendants have violated the California Business &

Professional Code by not agreeing or implementing a modification of the mortgage loan

and by not providing written acknowledgment of receipt of Plaintiff’s first lien

modification application. Wells Fargo contends that because Plaintiff has not stated a

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claim under his other claims, he has failed to tether his Business & Professional Code

section 17200 (“UCL”) claim to any provision, statute, or regulation. CRC contends that

the claim has not been pled with the requisite particularity.

The UCL prohibits “any unlawful, unfair or fraudulent business act or practice and

unfair, deceptive, untrue or misleading advertising and any act prohibited by [the false

advertising law (§ 17500 et seq.)].” CAL. BUS. & PROF. CODE § 17200. The statute

establishes three varieties of unfair competition - acts or practices which are (1) unlawful,

(2) unfair, or (3) fraudulent. Cel-Tech Communications, Inc. v. L.A. Cellular Tel. Co., 20

Cal. 4th 163, 180 (1999). To successfully state a claim based on an unlawful business act

or practice, a plaintiff must allege facts sufficient to show a violation of some underlying

law. People v. McKale, 25 Cal. 3d 626 635 (1979).

Here, Plaintiff’s UCL claim is predicated on violations of California Civil Code

sections 2923.6 and 2924.10. Section 2923.6 imposes several requirements on mortgage

servicer if a borrower submits a loan modification or workout plan. Section 2924.10

provides that upon submission of a complete first lien modification application a mortgage

servicer shall provide written acknowledgment of the receipt of the documentation that

must include certain information.

As explained above, Plaintiff’s claims for violation of sections 2923.6 and 2924.10

are preempted by HOLA. Because Plaintiff’s UCL claim is based solely on the sections

of the Civil Code the Court has determined are preempted, it follows that the UCL claim

is also preempted. See Lane v. Suntrust Mortg., Inc., No. 14-cv-01367-BAS(WVG), 2015

WL 419834, *5 (S.D. Cal. Jan. 28, 2015) (“Since Plaintiffs fail to state a cause of action

under the HBOR, the second and third causes of action for unfair business practices in

violation of the UCL and for declaratory and injunctive relief must also be dismissed.”);

Sato, 2012 WL 1110054, at *7 (holding Plaintiff's UCL claims preempted where borrowed

from other preempted claims); Osorio, 2012 WL 1610110, at *5 (finding that since section

2923.5 claim was preempted by HOLA, Plaintiff’s UCL claim based on violation of section

2923.5 was also preempted.). Accordingly, the Court GRANTS Defendants’ motion to

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dismiss this claim (Count 13).

Plaintiff’s Violation of California Business & Prof Code

Section 17200 claim is DISMISSED WITH PREJUDICE insofar as it seeks to bring a

UCL claim premised on sections 2923.6 and 2924.10 of the Civil Code as to all Defendants.

However, this ruling does not preclude Plaintiff from amending the FAC to plead this cause

of action as a derivative of some other alleged illegal conduct or fraud committed by

Defendants.

J. Request for Accounting

Plaintiff alleges that Defendants have failed to produce a proper or accurate

accounting and requests Defendants furnish him with one. Defendants contend that

Plaintiff has not satisfied the necessary elements for an accounting claim. Additionally,

CRC contends that the claim has not been pled with the requisite particularity.

Accountings are “equitable in nature, designed to prevent unjust enrichment.”

Brosious v. JP Morgan Chase Bank, N.A., No. 12-03996 JCS, 2015 WL 5173063, at *3

(E.D. Cal. Sep. 2, 2015) (citations omitted). Ordinarily, to bring a successful claim for an

accounting a plaintiff must demonstrate the existence of a relationship which requires an

accounting and that some balance is due the plaintiff. Kritzer v. Lancaster, 96 Cal. App.

2d 1 (1950). “The right to an accounting can arise from the possession by the defendant

of money or property which, because of the defendant’s relationship with the plaintiff, the

defendant is obligated to surrender.” Ware v. Bayview Loan Servicing, LLC, No. 13-CV-

1310 JLS (NLS), 2013 WL 6247236, at *10 (S.D. Cal. Oct. 29, 2013) (quotation omitted).

But, “[a] suit for an accounting will not lie where it appears from the complaint that none

is necessary or that there is an adequate remedy at law.” St. James Church of Christ

Holiness v. Superior Court, 135 Cal. App. 2d 352, 359 (1955).

Because Plaintiff explicitly tied his UCL claims to the California Civil Code sections 2923.6 and

2924.10 claims which the Court has found are preempted by HOLA, it declines to reach Defendants’

alternative reasons for dismissal of this claim.

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Plaintiff has not alleged the existence of a relationship that requires an accounting

or that Defendants owe him money. Rather he alleges that he cannot ascertain how much

money he owes Defendants. [Doc. No. 22 at 208.] Neither has Plaintiff alleged that the

account is so complicated that the Court must perform an accounting. Not knowing the

amount Plaintiff’s owes is not sufficient to state an accounting claim and could easily be

ascertained through discovery in this action. See, e.g., Mendez v. Wells Fargo Home

Mortg., No. 12-CV-02457-W, 2013 WL 1773881, at *6 (S.D. Cal. Apr. 25, 2013).

Additionally, Plaintiff has not pled any of the extraordinary situations which might

otherwise substantiate an assertion of equity jurisdiction. See Hafiz v. Greenpoint Mortg.

Funding, Inc., 652 F. Supp. 2d 1039, 1043 (N.D. Cal. 2009). Accordingly, the Court

GRANTS Defendants’ motion to dismiss this claim (Count 15). Plaintiff’s accounting

claim is DISMISSED WITH LEAVE TO AMEND

K. Request for Specific Performance

Plaintiff seeks specific performance of the alleged oral agreement, wherein

Plaintiff’s mortgage would be modified to reflect an interest rate of 2.5 percent for the life

of the loan with month payments fixed at $1,863.56. Wells Fargo contend that the claim

fails because there is no enforceable contract between the parties. CRC contends that the

claim has not been pled with the requisite particularity.

To successfully state a claim for specific performance a plaintiff must allege: (1) a

contract sufficiently definite and certain in its terms to be enforced, (2) that the contract

was just and reasonable, (3) that the plaintiff has performed his side of the bargain, (4) that

the promisor has failed to perform, (5) that the contract was supported by adequate

consideration, and (6) the remedy at law is inadequate. Porporato v. Devincenzi, 261 Cal.

App. 2d 670, 675 (1968). It has long been recognized that “specific performance will be

granted only where the legal remedy is inadequate.” Eagle Rock Entm’t, Inc. v. Coming

Home Prods., Inc., No. CV 03-571 FMC(AJWx), 2004 WL 5642002 at *17 (C.D. Cal.

Sept. 1, 2004) (citation omitted). The fact that damages may be difficult to prove or

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ascertain does not require that specific performance be granted. Wooley v. Embassy Suites,

227 Cal. App. 3d 1520, 1535 (1991).

Here, not only does the FAC fail to allege all of the necessary elements of the claim,

the Court does not consider monetary damages inadequate to compensate Plaintiff for the

potential loss of the Property. [See generally, Doc. No. 59 at 10-11.] Furthermore, the

Court is unaware of any binding precedent that would allow it to compel Wells Fargo to

modify Plaintiff’s mortgage to reflect the interest rate and monthly payment Plaintiff

desires. Even section 2923.6 of the California Civil Code, upon which Plaintiff relies, does

not create rights or obligations, or require loan servicers to modify loans. It “merely

expresses the hope that lenders will offer loan modifications on certain terms.” Ibarro

Ramos, 2013 WL 12097567, at *6 (quoting Mabry v. Superior Court, 185 Cal. App. 4th

208, 222 (2010)). Accordingly, the Court GRANTS Defendants’ motion to dismiss this

claim (Count 16). Plaintiff’s claim for specific performance is DENIED WITHOUT

LEAVE TO AMEND as to all Defendants.

L. Declaratory and Injunctive Relief Requests

Plaintiff seeks injunctive relief to prevent Defendants from enforcing the mortgage

loan and conducting a foreclosure sale. [Doc. No. 22 at ¶ 224.] Additionally, Plaintiff

seeks declaratory relief that he is “entitled to have all instruments filed against the Property

cancelled and removed as well as to receive a set off of any alleged mortgage payments

owed and attorney fees against the amount Defendant allegedly owed Plaintiff as well as

other remedies he is requesting.” [Id. at ¶ 220.]

However, “[i]njunctive relief is a remedy and not, in itself, a cause of action, and a

cause of action must exist before injunctive relief may be granted.” Shell Oil Co. v. Richter,

52 Cal. App. 2d 164, 168 (1942). A cause of action for declaratory relief is ultimately a

request for relief - in order to weigh it, the court must look to its underlying claims. Boeing

Co. v. Cascade Corp., 207 F.3d 1177, 1192 (9th Cir. 2000). “A case is ripe where the

essential facts establishing the right to declaratory relief have already occurred.” Id.

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The FAC does not successfully plead a substantive claim that would entitle Plaintiff

to either injunctive or declaratory relief, and neither do the circumstances of this case

warrant the issuance of a declaratory judgment. Accordingly, the Court GRANTS

Defendants’ motion to dismiss these claim (counts 17 and 18). Plaintiff’s request for

declaratory and injunctive relief claim is DISMISSED WITHOUT LEAVE TO AMEND

insofar as it seeks to obtain declaratory and injunctive relief independent of any of

Plaintiff’s other claims. However, this ruling does not preclude Plaintiff from amending

the FAC to plead injunctive and declaratory relief as a remedy for other viable claims.

M. Violations of TILA and HOEPA Claims

Plaintiff alleges that Defendants violated the Truth in Lending Act (“TILA”) and

Home Ownership and Equity Protection Act (“HOEPA”) because the 2009 loan

modification he obtained from Wachovia did not contain accurate material disclosures

regarding the pros and cons of adjustable rate mortgages or offer other loan products.

Plaintiff does not specify if he is requesting damages, rescission or both under TILA and

HOEPA. Wells Fargo argue that Plaintiff’s TILA claim is barred by the applicable statute

of limitations and HOEPA does not apply. CRC contends that the claim has not been pled

with the requisite particularity.

TILA and HOEPA are part of the same statutory scheme that was enacted by

Congress to combat predatory lending, with HOEPA applying only to “certain high risks

loans involving higher interest rates and costs.” Runaj v. Wells Fargo Bank, 667 F. Supp.

2d 1199, 1208 (S.D. Cal. 2009). TILA requires that consumer loan documents contain

detailed disclosures. Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 703-

04 (9th Cir. 1986) (citations omitted). In order to insure that the consumer is protected,

TILA is strictly enforced with the right of rescission attaching regardless of whether the

violation is technical, minor or major. Id. “HOEPA is an amendment of TILA, and

therefore is governed by the same remedial scheme and statutes of limitation as TILA.”

Monreal v. Deutsche Bank Nat. Trust Co., 2013 WL 5727565, at *7 (S.D. Cal. Oct. 22,

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2013) (quoting Hamilton v. Bank of Blue Valley, 746 F. Supp. 2d 1160, 1179 (E.D. Cal.

2010)).

Under 15 U.S.C. § 1635, claims for rescission have a three-year statute of

limitations. See McOmie-Gray v. Bank of Am. Home Loans, 667 F.3d 1325 (9th Cir. 2012).

The Ninth Circuit has held that as a statute of repose, section 1635, “represents an ‘absolute

limitation on rescission actions’ which bars any claims filed more than three years after the

consummation of the transaction.” Miguel v. Country Funding Corp., 309 F.3d 1161, 1164

(9th Cir. 2002) (citing King v. California, 784 F.2d 910, 913 (9th Cir. 1986)). Requests

for damages under TILA are subject to a one-year statute of limitations that typically runs

from the date of loan execution. See 15 U.S.C § 1640(e) (any claim under this provision

must be made “within one year from the date of the occurrence of the violation.”). The

one-year statute of limitations for damages arising under TILA may be subject to equitable

tolling if a plaintiff can prove “fraudulent conduct by the defendant resulting in

concealment of the operative facts, failure of the plaintiff to discover the operative facts

that are the basis of its cause of action within the limitations period, and due diligence by

the plaintiff until discovery of those facts.” Fed. Election Com’n v. Williams, 104 F.3d

237, 240-241 (9th Cir. 1996). As HOEPA is an amendment of TILA, it is therefore

governed by the same remedial scheme and statutes of limitation as TILA. Monreal v.

Deutsche Bank Nat. Trust Co., Civil Case No. 13cv00743AJB(NLS), 2013 WL 5727565,

at *7 (S.D. Cal. Oct. 22, 2013) (quoting Hamilton v. Bank of Blue Valley, 746 F. Supp. 2d

1160, 1179 (E.D. Cal. 2010)).

Because Section 1635(f) is a statute of repose, it extinguished Plaintiff’s right to

rescission on April 13, 2012, three years after the mortgage loan modification was entered

into. [Doc. No. 10-3 at 10-11.] Plaintiff did not file his rescission claim until October 27,

2016, making it untimely. Similarly, TILA’s one-year statute of limitations for claims for

damages bars the TILA damages claim because the loan modification agreement was

entered into on April 13, 2009. [Id.] The FAC does not allege any facts that would explain

how Plaintiff was prevented from discovering, in the exercise of due diligence, the

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information necessary to bring his damages claim within the one-year limitations period.

See, e.g., Meyer v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir. 2003). Because the

same statute of limitations applies, it follows that Plaintiff’s HOEPA claim also falls

outside the statute of limitations periods. Accordingly, the Court GRANTS Defendants’

motion to dismiss this claim (Count 19). To the extent Plaintiff’s Violation of the

TILA/HOEPA claim is one for rescission it is DISMISSED WITH PREJUDICE as to

all Defendants. Plaintiff’s damages claims under TILA and HOEPA are DISMISSED

WITH LEAVE TO AMEND to allege facts that support equitable tolling and that

HOEPA covers the mortgage loan at issue.

N. Violation of RESPA Claim

Finally, Plaintiff alleges that “Defendants violated RESPA because the payments

between the Defendants were misleading and designed to create a windfall. These actions

were deceptive, fraudulent and self-serving.” [Doc. No. 22 at ¶ 242.] Aside from this

vague allegation Plaintiff does not specify what section of REPSA he believes Defendants

violated. Defendants contend that the allegation fails to state a claim. The Court agrees

with Defendants. Accordingly, the Court GRANTS Defendants’ motion to dismiss this

claim (Count 20). Plaintiff’s violation of RESPA claim is DENIED WITH LEAVE TO

AMEND.

V. CONCLUSION

For the foregoing reasons, the Court GRANTS Defendants’ motions to dismiss

[Doc. Nos. 24, 43-1] and ORDERS as follows:

1. The breach of the covenant of faith and fair dealing claim is DISMISSED WITH

PREJUDICE;

2. The violation of California Civil Code section 2923.6 claim is DISMISSED WITH

PREJUDICE;

3. The violation of California Civil Code section 2924.10 is DISMISSED WITH

PREJUDICE;

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4. The violation of the California and Federal Fair Debt Collection Acts claims are

DISMISSED WITH PREJUDICE;

5. The breach of contract claim/promissory estoppel claim is DISMISSED WITH

PREJUDICE;

6. The breach of fiduciary duty claim is DISMISSED WITH LEAVE TO AMEND;

7. The fraud claim is DISMISSED WITH LEAVE TO AMEND;

8. The promise without intent to perform claim is DISMISSED WITH LEAVE TO

AMEND;

9. The negligent misrepresentation claim is DIMISSED WITH LEAVE TO AMEND;

10. The quiet title claim is DISMISSED WITH LEAVE TO AMEND;

11. The slander of title claim is DISMISSED WITH PREJUDICE;

12. The cancellation of instrument claim is DISMISSED WITH PREJUDICE;

13. The violation of business and professions code section 17200, et seq. claim is

DISMISSED WITH LEAVE TO AMEND;

14. The violation of the California Deceptive Practices Act claim is DISMISSED

WITH LEAVE TO AMEND;

15. The accounting claim is DISMISSED WITH LEAVE TO AMEND;

16. The specific performance claim is DISMISSED WITH PREJUDICE;

17. The declaratory relief claim is DISMISSED;

18. The injunctive relief claim is DISMISSED WITH PREJUDICE;

19. The violation of TILA & HOEPA claims are DISMISSED WITH LEAVE TO

AMEND insofar as they seek damages; and

20. The violation of RESPA claim is DISMISSED WITH LEAVE TO AMEND.

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If Plaintiff chooses to file an amended complaint, he must do so no later than

November 13, 2017. Plaintiff must identify all claims he asserts against Defendants and

clearly set forth the necessary factual allegations to support the elements of each claim as

against each Defendant.

It is SO ORDERED.

Dated: October 27, 2017

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