UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA
August 3, 2009
RONALD RUIZ, PLAINTIFF,
MORTGAGE ELECTRONIC REGISTRATION SYSTEM, INC.; GREENPOINT MORTGAGE FUNDING INC.; TRIPLE E LENDING, LLC; GMAC MORTGAGE, LLC; EXECUTIVE TRUSTEE SERVICES, LLC; DOES IX, INCLUSIVE, DEFENDANTS.
The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge
MEMORANDUM AND ORDER
This matter is before the court on defendants Greenpoint Mortgage Funding, Inc.'s ("Greenpoint") and GMAC Mortgage's ("GMAC") (collectively, "defendants") motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6),*fn1 or in the alternative, motions for a more definite statement pursuant to Rule 12(e) (Docket #s 7, 10), and GMAC's motion to strike pursuant to Rule 12(f) (Docket # 12).*fn2 Plaintiff opposes the motions.*fn3
For the reasons set forth below, defendants' motions to dismiss pursuant to Rule 12(b)(6) are GRANTED with prejudice; plaintiff is not permitted leave to amend. Because the court grants defendants' motions to dismiss, it is unnecessary to consider defendants' alternative motions for a more definite statement and to strike.
On or about February 24, 2006, plaintiff financed and obtained a loan through Triple E, a mortgage broker, who obtained concurrent funding through Greenpoint. The first deed of trust was for $504,000. (Pl.'s Compl., filed March 19, 2009 [Docket # 2], ¶ 9.) Plaintiff used the loan proceeds to purchase a parcel of real property known as "9471 McKenna Drive, Elk Grove, California, 95757" (the "Property"). (Id. at ¶ 1.) Executive Trustee Services, LLC obtained compensation through points, and when the loan was sold, plaintiff alleges it failed to disclose the range of points on the Truth In Lending Disclosure Statement Form, as mandated by the Real Estate Settlement Procedures Act ("RESPA"). (Id. at ¶ 10.)
Plaintiff alleges generally that defendants entered into a fraudulent scheme, for the purpose of making loans to plaintiff that plaintiff could not afford, at a cost "far exceeding" the market rate, and falsely represented to plaintiff that he could not qualify for any other financing. (Id. at ¶ 11.) Plaintiff further alleges that this scheme was devised to extract illegal and undisclosed compensation from plaintiff through an undisclosed yield spread premium of which defendants shared in some unknown percentage. (Id.)
Plaintiff acknowledges that defendants allege he "defaulted" on his loan, but claims that this was due to the high payments and structure of the loan and interest rate. (Id. at ¶ 13.) Plaintiff claims that he did not "default"; rather, because of the alleged prior breach of the terms of the notes by defendants, plaintiff claims his own performance was excused. (Id.) Plaintiff also alleges that after his loans were originated and funded, they were sold on multiple occasions, bundled into a group of trust deeds and subsequently sold to investors, so that none of the defendants owned the loan, and therefore, none had the right to declare a default, to cause notices of default to issue or be recorded, or to foreclose on plaintiff's interest in the Property. (Id. at ¶ 14.)
Plaintiff further alleges that the foreclosure sale of the Property was not executed in accordance with the requirements of California Civil Code sections 1624 and 2932.5 and Commercial Code section 3302 et seq. (Id. at ¶ 17.) Plaintiff states that although California Civil Code section 1624 requires an agency relationship to be in written form, the trustee here, acting as the agent of the principal, did not have written authorization to act for the principal. (Id. at ¶ 18.) Plaintiff contends that California Civil Code section 2924 et seq. are being unlawfully applied against plaintiff because the party acting as the trustee proceeded with the foreclosure of the Property without possession of the original Note. (Id. at ¶ 20.) Because of this alleged violation of Section 2924, plaintiff contends that the foreclosure of the Property is void as a matter of law. (Id. at ¶ 22.)
Plaintiff's first cause of action against all defendants is for a judicial determination of defendants' rights, obligations and duties, and a declaration of the current owner of the Property. (Id. at ¶ 28.) Plaintiff claims that a controversy exists concerning plaintiff and defendants' rights, obligations and duties as they relate to the Property, specifically because plaintiff contends that defendants were not holders in due course of the Note and Deed of Trust executed by plaintiff, that defendants had no right to foreclose on plaintiff's Deed of Trust and Note, that their application of Civil Code section 2924 is unlawful, and that defendants utilized an electronic recording system, the Mortgage Electronic Registration System, to further their alleged scheme to defraud plaintiff. (Id. at ¶ 27.)
Plaintiff's second cause of action is for fraud against defendants Triple E and Greenpoint. (Id. at ¶ 30.) Plaintiff alleges that on or about February 24, 2006, defendants were engaged in an illegal scheme to execute loans secured by real property in order to make commissions, kickbacks, illegal undisclosed yield spread premiums, and undisclosed profits. (Id.) Plaintiff claims that defendants represented to plaintiff and others that they were the owners of the Deed of Trust and Note for plaintiff's Property, caused a Notice of Default to be issued and recorded, and subsequently executed a foreclosure that permanently affected plaintiff's right, title and interest in the Property. (Id.)
Plaintiff alleges the promissory notes were assigned in violation of Civil Code section 2932.5 et seq., as the assignment was not recorded, and thus, the promissory note was rendered non-negotiable and no power of sale was conveyed with the note at the time of assignment. (Id.) Plaintiff alleges that defendants falsely told plaintiff they were experts in obtaining affordable loans and would only offer plaintiff loans in his best interest, given his credit history, financial needs and limitations. (Id. at ¶ 31.) Plaintiff further alleges: (1) the loans provided by defendants contained excessive financing; (2) defendants failed to utilize due diligence regarding plaintiff's ability to repay the loan; (3) defendants intentionally gave plaintiff a "sub-prime loan" in order to benefit themselves with high interest rates; (4) defendants failed to provide federally mandated disclosures; and (5) defendants employed coercive tactics to force plaintiff to sign the loan documents. (Id. at ¶ 32.)
Plaintiff further asserts that defendants were secretly compensated for the loan in violation of RESPA, 12 U.S.C. section 2607, which requires that fees be paid in accordance with the value of the work performed. (Id. at ¶ 36.) Plaintiff claims that defendant Greenpoint paid the other defendants fees exceeding the value of the services performed, constituting an illegal kickback. (Id. at ¶ 37.) Plaintiff also claims that Executive Trustee Services, LLC had an undisclosed agency relationship with Greenpoint, which was contrary to plaintiff's interests. (Id. at ¶ 39.) Plaintiff alleges that (unnamed) defendants paid other (unnamed) defendants a yield spread premium to make the loan more favorable to defendants by providing plaintiff with higher interest rates, for the overall purpose of increasing the value of the loan for Greenpoint and subsequent purchasers. (Id.) Plaintiff further alleges that at the time the Note and Deed of Trust were assigned to Greenpoint, the Note was no longer negotiable, and thus, the power of sale was not conveyed through the assignment. (Id. at ¶ 48.) Plaintiff contends that defendants were not the legal owners of the Note and Deed of Trust when they issued notices of foreclosure and commenced the foreclosure process, and that defendants intentionally and fraudulently converted plaintiff's right, title and interest in his property. (Id. at ¶ 49.)
Plaintiff contends that due to his reliance on defendants' representations, he was damaged in an amount exceeding $1,000,000, with additional costs relating to his relocation.
(Id. at ¶ 52.) Plaintiff also claims that he suffered severe emotional distress, mortification, anxiety and humiliation in an amount that has not yet been ascertained, but which exceeds the jurisdictional limitations of this court. (Id. at ¶ 53.) Plaintiff also contends that defendants' conduct was intentional, oppressive, fraudulent, and malicious, thereby justifying an award of punitive damages. (Id. at ¶ 54.)
Plaintiff's third cause of action is for violation of RESPA, 12 U.S.C. section 2607(b), by Greenpoint. (Id. at ¶ 64.) Plaintiff claims that Greenpoint paid Triple E compensation outside of escrow to place plaintiff in a less desirable loan, and also paid Triple E an undisclosed point spread outside of escrow. (Id. at ¶ 60.) Plaintiff also claims that defendants "structured" an undisclosed, unknown percentage of the loan for servicing the loan and failed to disclose this information on the HUD1 statement. (Id.) Plaintiff alleges that these fees and kickbacks were illegal under Section 2607(b), and that plaintiff is accordingly entitled to treble damages in a sum subject to proof at trial. (Id. at ¶ 64.) Plaintiff also claims that GMAC purchased the note from Greenpoint and paid defendants' fees after closing based on the interest rate of the loan, without disclosing the fees nor the effect on the loan, and seeks damages accordingly. (Id. at ¶ 65.)
Plaintiff's fourth cause of action is against defendants Executive Trustee Services, LLC, Greenpoint and GMAC and asks the court to set aside the foreclosure. (Id. at ¶ 69.) Plaintiff claims that defendants created a "special relationship" with him in which defendants voluntarily assumed a "special duty" to plaintiff not to offer, expose or execute a loan which was not within plaintiff's financial needs and limitations. (Id. at ¶ 70.) Plaintiff alleges that defendants breached this "special duty" through the following: (1) by offering plaintiff a loan he could not afford; (2) by executing a loan which defendants knew plaintiff could not afford; (3) by failing to disclose the true cost of originating the loan; (4) by negligently failing to comply with the disclosure requirements of the Truth In Lending Act; (5) by negligently failing to comply with RESPA by charging and failing to disclose an excessive yield spread premium; (6) by negligently executing a foreclosure based upon a void promissory note; (7) by negligently executing a foreclosure without possession of the original promissory note; and (8) by negligently making the loan in an unsafe and unsound manner that increased plaintiff's risk of defaulting on the loan. (Id. at ¶ 71.) Plaintiff thus alleges that he actually and proximately suffered damages in an amount which has not yet been fully ascertained, but which exceeds the jurisdictional limitations of the court. (Id. at ¶ 74.)
On a motion to dismiss, the allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). The court is bound to give the plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). Thus, the plaintiff need not necessarily plead a particular fact if that fact is a reasonable inference from facts properly alleged. See id.
Nevertheless, it is inappropriate to assume that the plaintiff "can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged." Associated Gen. Contractors of Calif., Inc. v. Calif. State Council of Carpenters, 459 U.S. 519, 526 (1983). Moreover, the court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). Indeed, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)(citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
In ruling upon a motion to dismiss, the court may consider only the complaint, any exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. of Mary Hospital, 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of United States, Inc., 12 F. Supp.2d 1035, 1042 (C.D. Cal. 1998).
Ultimately, the court may not dismiss a complaint in which the plaintiff alleged enough facts to "state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Only where a plaintiff has failed to "nudge [his or her] claims across the line from conceivable to plausible," is the complaint properly dismissed. Id. at 1952. When there are well-pleaded factual allegations, "a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 1950.
A. Declaratory Relief
Plaintiff's first cause of action alleges that an "actual controversy" exists between himself and defendants as to their respective rights, obligations and duties with regard to the foreclosure, including the ownership rights in the Property and the validity of the foreclosure proceedings.
Defendants GMAC and Greenpoint each move to dismiss this claim. GMAC contends the claim must be dismissed for failure to state a claim, specifically because: (1) plaintiff fails to properly allege any instrument pursuant to which plaintiff seeks to have his rights or duties declared; (2) plaintiff fails to allege any agreement between plaintiff and GMAC; (3) plaintiff fails to allege that GMAC has any relation to the Note and Deed of Trust; and (4) the Note and Deed of Trust are no longer operative due to the alleged trustee's sale that occurred on the Property.
Similarly, Greenpoint contends that plaintiff's declaratory relief claim fails for the following reasons: (1) there is no actual controversy between the parties; (2) possession of the original promissory note is not a prerequisite to non-judicial foreclosure; and (3) recording an assignment of the promissory note is not a prerequisite to non-judicial foreclosure.
An action for declaratory relief requires the plaintiff to demonstrate the existence of an actual controversy regarding the legal rights of the parties. McClain v. Octagon Plaza, LLC, 159 Cal. App. 4th 784, 800 (2008). Where there is an accrued cause of action for a past breach of contract or other wrong, declaratory relief is inappropriate. See Canova v. Trs. of Imperial Irrigation Dist. Employee Pension Plan, 150 Cal. App. 4th 1487, 1497 (2007) (stating "declaratory relief operates prospectively to declare future rights, rather than to redress past wrongs"). The purpose of a declaratory judgment is to set controversies at rest before they cause harm to the plaintiff, not to remedy harms that have already occurred. County of San Diego v. State, 164 Cal. App. 4th 580, 607-08 (2008); see also Societe de Conditionnement v. Hunter Eng. Co., Inc., 655 F.2d 938, 943 (9th Cir. 1981) (stating a declaratory relief action "brings to the present a litigable controversy, which otherwise might only be tried in the future"). If a party has a "fully matured cause of action for money," the party must seek damages rather than declaratory relief. Canova, 150 Cal. App. 4th at 1497.
In Edejer v. DHI Mortgage Co., the court held that the plaintiff's declaratory relief claim, relating to a foreclosure of her real property, failed because she sought to redress past wrongs rather than a declaration as to future rights. Edejer v. DHI Mortgage Co., No. C 09-1302 PJH, 2009 U.S. Dist. LEXIS 52900, *31 (N.D. Cal. June 12, 2009); see also Metcalf v. Drexel Lending Group, No. 08-CV-00731 W POR, 2008 U.S. Dist. LEXIS 87420, *15-16 (S.D. Cal. Oct. 29, 2008) (holding that because the foreclosure had already taken place, the claimed invasion of rights had already occurred, and accordingly the proper avenue for the plaintiff to seek redress was through a claim for money damages, not declaratory relief). In Edejer, the plaintiff alleged that a dispute existed between herself and the defendants as to their respective duties and obligations with regard to the loan foreclosure, including the ownership rights in the property and validity of the foreclosure proceedings. Edejer, 2009 U.S. Dist. LEXIS 52900, at *31. In dismissing the claim, the court held that the foreclosure sale had already taken place, and therefore the claimed invasion of rights had already occurred. Id. at *32. The court further held that "[t]o the extent this cause of action can be construed to seek to challenge the validity of the foreclosure sale on the basis that the loan documents or Deed of Trust are void or voidable, 'it is settled that an action to set aside a trustee's sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security.'" Id. (citing Arnolds Mgmt. Corp. v. Eischen 158 Cal. App. 3d 575, 578 (1984)). Thus, because the foreclosure sale had already taken place, and because the plaintiff did not allege that she was prepared to tender the loan proceeds, the court dismissed her claim for declaratory relief. Id. at *33.
Similarly here, plaintiff alleges that an "actual controversy" exists between plaintiff and defendants concerning their respective rights, obligations and duties as to the Property, and asks the court to make a judicial determination of the parties' respective rights, including the ownership rights in the Property and validity of the foreclosure proceedings. (See Compl. at ¶¶ 25-28.) Plaintiff alleges that the trustee "could not have lawfully proceeded with the foreclosure sale," and accordingly seeks a declaration as to "who owns plaintiff's subject property." Id. Plaintiff attempts to clarify the alleged controversy in his opposition, arguing this claim seeks to determine "who has the superior right to possession of the subject property." (See Pl.'s Resp. to Def. Greenpoint's Motion to Dismiss at 6.) This query, however, does not change the nature of the alleged controversy. Furthermore, nowhere in the complaint does plaintiff allege he is prepared to tender the loan proceeds, which is "essential to an action to cancel a voidable sale under a deed of trust." See Karlsen v. American Sav. & Loan Assn., 15 Cal. App. 3d 112, 117 (1971). Because plaintiff seeks to redress past wrongs--the foreclosure sale having already taken place--and fails to allege he is prepared to tender the loan proceeds, plaintiff's first cause of action must be dismissed for failure to state a claim upon which relief can be granted.
For the foregoing reasons, defendants' motions to dismiss plaintiff's claim for declaratory relief are GRANTED.
Greenpoint moves to dismiss plaintiff's cause of action for fraud for failure to satisfy Rule 9(b)'s heightened pleading requirements. Plaintiff's second cause of action alleges the following: (1) on or about February 24, 2006, defendants intentionally and fraudulently made false representations to plaintiff and others that they were the owners of the Note and Deed of Trust as either the trustee or beneficiary for plaintiff's real property; (2) based on this representation, defendants caused a Notice of Default to be issued and recorded; (3) thereafter, defendants executed a foreclosure, which permanently affected plaintiff's right, title and interest in the Property; (4) the promissory note forming the basis of a security interest in the Property was assigned in violation of Civil Code section 2932.5 et seq. because the assignment was not recorded; (5) accordingly, the promissory note was rendered non-negotiable and no power of sale was conveyed at the time of assignment; (6) as a result thereof, defendants had no lawful security interest in the Property; (7) defendants were secretly compensated for the loan; (8) in violation of RESPA, the value of the work performed was less than the cost of the yield spread premium or other undisclosed compensation; (9) plaintiff suffered damages in an amount exceeding $1,000,000, including severe emotional distress; and (10) defendants' conduct was intentional, oppressive, fraudulent and malicious, thereby justifying an award of punitive damages.
Under California law, the elements of common law fraud are "misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damages." Gil v. Bank of Am., Nat'l Ass'n, 138 Cal. App. 4th 1371, 1381 (2006). A court may dismiss a claim grounded in fraud when its allegations fail to satisfy Rule 9(b)'s heightened pleading requirements. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). This means that plaintiff "must state with particularity the circumstances constituting fraud." Fed. R. Civ. P. 9(b). In other words, the plaintiff must include "the who, what, when, where, and how" of the fraud. Id. at 1106 (citations omitted). "The plaintiff must set forth what is false or misleading about a statement, and why it is false." Decker v. Glenfed, Inc., 42 F.3d 1541, 1548 (9th Cir. 1994). Furthermore, "Rule 9(b) does not allow a complaint to merely lump multiple defendants together but require[s] plaintiffs to differentiate their allegations when suing more than one defendant . . . and inform each defendant separately of the allegations surrounding his alleged participation in the fraud." Swartz v. KPMG LLP, 476 F.3d 756, 765-66 (9th Cir. 2007). The purpose of Rule 9(b) is to ensure that defendants accused of the conduct specified have adequate notice of what they are alleged to have done, so that they may defend against the accusations. Concha v. London, 62 F.3d 1493, 1502 (9th Cir. 1995). "Without such specificity, defendants in these cases would be put to an unfair advantage, since at the early stages of the proceedings they could do no more than generally deny any wrongdoing." Id. (citing Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985).
In Edejer, the court found that the plaintiff's fraud claim failed because it did not satisfy the heightened pleading requirements of Rule 9(b). Edejer, 2009 U.S. Dist. LEXIS 52900 at *36; see also Spencer v. DHI Mortg. Co., No. CV F 09-0925 LJO DLB, 2009 U.S. Dist. LEXIS 55191, *17-18 (E.D. Cal. June 30, 2009) (dismissing the plaintiff's fraud claim without leave to amend because it failed to satisfy Rule 9(b)'s "'who, what, when, where and how' requirements" and was so deficient as to "suggest no potential improvement from an attempt to amend"). In so holding, the court in Edejer noted that the plaintiff did not allege any misrepresentation or false statements made by the defendants; did not allege the names of the persons who made the allegedly fraudulent representations and their authority to speak; and did not allege with sufficient particularity or clarity what was false or misleading about the statements. Id.
As such, the court found that the plaintiff's allegations were insufficient to satisfy the purpose of Rule 9(b), which is to ensure that defendants accused of the conduct specified have adequate notice of what they are alleged to have done, so that they may defend against the accusations. Id. at *37.
In this case, plaintiff likewise fails to satisfy the heightened pleading requirements of Rule 9(b). Plaintiff fails to allege the names of the persons from defendants Triple E or Greenpoint who made the allegedly fraudulent representations and their authority to speak on behalf of the respective defendants. Indeed, plaintiff utterly fails to differentiate between defendants, which is essential to give each defendant adequate notice of the allegations surrounding their alleged participation in the fraud. Nor does plaintiff allege with any particularity, much less clarity, what is false or misleading about the claimed statements. Accordingly, plaintiff's second cause of action must be dismissed for failure to state a claim upon which relief may be granted. See Edejer, 2009 U.S. Dist. LEXIS 52900, at *36; Spencer, 2009 U.S. Dist. LEXIS 55191, at *17-18.
For the foregoing reasons, defendant's motion to dismiss plaintiff's second cause of action is GRANTED.
C. Violation of RESPA
Plaintiff's third cause of action alleges a statutory violation of RESPA. Specifically, plaintiff alleges that Greenpoint violated 12 U.S.C. section 2607(b) by receiving illegal kickbacks and failing to disclose them.*fn5
Greenpoint and GMAC move to dismiss this cause of action as time barred by the one year statute of limitations for Section 2607 claims.
RESPA provides a one year statute of limitations for Section 2607 claims. 12 U.S.C. § 2614; see also Valasquez v. Mortgage Elec. Registration Sys., No. C 08-3818 PJH, 2008 U.S. Dist. LEXIS 93502, *8 (N.D. Cal. Nov. 17, 2008). Here, plaintiff alleges he obtained the subject loan on February 24, 2006. (Compl. at 6.) Plaintiff did not file his complaint until December 15, 2008, more than one year after the consummation of the loan. (See Notice of Removal filed by Def. Greenpoint at 1 [Docket # 2].) Accordingly, plaintiff's RESPA claim is time barred.
For the foregoing reasons, defendants' motions to dismiss plaintiff's RESPA claim as time barred are GRANTED.
D. Cause of Action to Set Aside Foreclosure
Plaintiff alleges that defendants Executive Trustee Services, LLC, Greenpoint and GMAC breached their "special duty to plaintiff not to offer, expose or execute a loan which was not within plaintiff's financial needs and limitations," and accordingly moves to set aside the foreclosure.
Greenpoint moves to dismiss this claim because (1) plaintiff has not satisfied the pre-foreclosure tender requirement, (2) to the extent plaintiff raises a fraud claim with respect to this claim, plaintiff fails to satisfy the strict pleading requirements of Rule 9(b), and (3) to the extent plaintiff intends to state a claim for breach of fiduciary duty, defendant Greenpoint does not owe a fiduciary duty to plaintiff. GMAC also moves to dismiss this claim on the ground that plaintiff fails to allege sufficient facts to state such a claim against GMAC.
As an initial matter, the court notes that plaintiff's claim to set aside the foreclosure does not satisfy the minimal notice pleading requirements of Rule 8. See Fed. R. Civ. P. 8. Even construing the complaint liberally, plaintiff has failed to allege any authority giving rise to any duty that defendants owed to plaintiff. Such pleading does not give defendants fair notice of the claim against them and the grounds upon which the claims rest. Vague allegations and mere labels and conclusions are insufficient to withstand a motion to dismiss. See Twombly, 127 S.Ct. at 1964-65.
However, to the extent that this claim can be construed as attempting to plead a breach of fiduciary duty, plaintiff's claim must also fail. "[T]o plead a cause of action for breach of fiduciary duty, there must be shown the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. The absence of any one of these elements is fatal to the cause of action." Pierce v. Lyman, 1 Cal. App. 4th 1093, 1101 (1991). "The relationship between a lending institution and its borrower-client is not fiduciary in nature." Nymark v. Heart Fed. Sav. & Loan Ass'n, 231 Cal. App. 3d 1089, 1093 (1991) (citing Price v. Wells Fargo Bank, 213 Cal. App. 3d 465, 476-78 (1989)). "A commercial lender is entitled to pursue its own economic interests in a loan transaction." Spencer v. DHI Mortgage Co., No. CV F 09-0925 LJO DLB, 2009 U.S. Dist. LEXIS 55191, *12 (E.D. Cal. June 30, 2009) (citing Nymark, 231 Cal. App. 3d at 1093). "Absent 'special circumstances' a loan transaction is 'at arms-length and there is no fiduciary relationship between the borrower and lender.'" Id. In the absence of alleged special circumstances and a legal duty owed by defendants, the breach of fiduciary duty claim must fail. Plaintiff has not alleged any facts suggesting the existence of special circumstances such that a fiduciary relationship between himself and defendants was created.
Accordingly, defendants' motions to dismiss plaintiff's fourth cause of action to set aside the foreclosure are GRANTED.
E. Leave to Amend
Plaintiff asks that should the court grant defendants' motions to dismiss, the court give plaintiff the opportunity to amend his complaint. "Valid reasons for denying leave to amend include undue delay, bad faith, prejudice, and futility." Cal. Architectural Building Prods. v. Franciscan Ceramics, 818 F.2d 1466, 1472 (9th Cir. 1988). While leave to amend must be freely given, the court is not required to allow futile amendments. Klamath-Lake Pharm. Ass'n v. Klamath Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983); see also Reddy v. Litton Indus., Inc., 912 F.2d 291, 296-97 (9th Cir. 1990); Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir. 1987).
For the following reasons, plaintiff's first, third, and fourth causes of action are dismissed with prejudice. Plaintiff's first cause of action for declaratory relief is dismissed without leave to amend because where there is an accrued cause of action for a past wrong, declaratory relief is inappropriate as a matter of law. See Canova, 150 Cal. App. 4th at 1797. Plaintiff's third cause of action for a statutory violation of RESPA is dismissed without leave to amend because it is time barred by the one year statute of limitations for Section 2607 claims. 12 U.S.C. § 2614. Plaintiff's fourth cause of action, insofar as it alleges a breach of a fiduciary duty, is dismissed without leave to amend because there is no fiduciary relationship between a lending institution and a borrower as a matter of law. See Nymark, 231 Cal. App. 3d at 1093.
Plaintiff's second cause of action for fraud is dismissed without leave to amend because the claims' deficiencies are so severe as to suggest no potential improvement from an attempt to amend. See Spencer, 2009 U.S. Dist. LEXIS 55191, at *17-18; see also Aspenlind v. America's Servicing Co., No. CIV S-07-0768 GEB EFB PS, 2008 U.S. Dist. LEXIS 11530, *12-13 (E.D. Cal. Feb. 15, 2008) (dismissing plaintiff's fraud claim without leave to amend because in light of the complaint and opposition papers, which were "vague, confusing, and largely unintelligible," amendment would be futile). Indeed, while a fraud claim must allege the "who, what, when, where and how" of the alleged fraud under Rule 9(b), plaintiff's complaint completely fails to target particular defendants or plead specific facts relating to defendants' alleged fraudulent conduct. Instead, plaintiff broadly alleges that defendants "fraudulently" portrayed themselves to plaintiff and concealed facts relevant to the Property, but fails to state any factual basis for how he knew defendants "intentionally and fraudulently converted" plaintiff's interests in the Property. Further, though plaintiff alleges defendants were not the owners of the Trust Deed and Note, plaintiff fails to allege how any of the defendants were not the actual owners. In short, the allegations are so vague and confusing that it is impossible to discern the basic facts surrounding the purported fraud. Moreover, plaintiff has also failed to clarify his allegations in his opposition papers, which as indicated above are largely inapposite and are barely intelligible. In light of plaintiff's conclusory allegations and failure to allege the requisite elements of fraud, plaintiff's claim must be dismissed with prejudice.
Therefore, all of plaintiff's claims are dismissed without leave to amend.
For the foregoing reasons, defendants' motions to dismiss pursuant to Rule 12(b)(6) are GRANTED. Plaintiff is denied leave to amend. The Clerk of the Court is directed to close this file.
IT IS SO ORDERED.