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Aleem v. Bank of America

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


February 9, 2010

OZZIE ALEEM AND ROSE PEGUES, PLAINTIFFS,
v.
BANK OF AMERICA, NATIONAL ASSOCIATION; COUNTRYWIDE HOME LOANS, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC; RECONTRUST COMPANY, N.A.; AND DOES 1-10, DEFENDANTS.

The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge

[Motion to Remand filed on December 21, 2009; Motion to Dismiss filed on December 24, 2009]

ORDER (1) GRANTING MOTION TO DISMISS, IN PART; AND (2) GRANTING MOTION TO REMAND

The Court has received and considered all papers filed in support of, and opposition to, Plaintiffs Ozzie Aleem's and Rose Pegues's Motion to Remand Removed Action ("Motion to Remand") and Defendants Bank of America, Countrywide Home Loans, Inc., and Recontrust Company, N.A.'s Motion to Dismiss Plaintiffs' First Amended Complaint ("Motion to Dismiss"). The Motions are appropriate for resolution without a hearing. L.R. 7-15.

For the reasons set forth below, the Court: (1) GRANTS Defendants' Motion to Dismiss with prejudice as to Plaintiffs' federal claims, and (2) GRANTS Plaintiffs' Motion for Remand.

I. BACKGROUND

On August 24, 2009, Plaintiffs Ozzie Aleem and Rose Pegues (collectively, "Plaintiffs") filed a Complaint in California Superior Court, Riverside County against Defendants Bank of American National Association ("Bank of America"), Countrywide Home Loans, Inc. ("Countrywide"), Mortgage Electronic Registration Systems, Inc. ("MERS"), Recontrust Company, N.A. ("Recontrust"), and DOES 1 through 10. Plaintiffs alleged the following causes of action: (1) violations of Cal. Civ. Code §2923.5; (2) violations of Cal. Civ. Code §2923.53; (3) violations of Cal. Civ. Code §2926.6; (4) negligent servicing; (5) wrongful foreclosure; (6) breach of contract - third party beneficiary; (7) unfair debt collection practices; (8) violations of Cal. Bus. & Prof. Code §17200; (9) violations of Cal. Bus. & Prof. Code §17500; (10) cancellation of instrument; (11) quiet title; (12) breach of fiduciary duty; (13) unconscionability; (14) rescission in equity; (15) accounting; and (16) unjust enrichment/double dipping.

Defendants removed the action to this Court on September 25, 2009, on the basis of federal question jurisdiction. On December 7, 2009, Plaintiffs filed a First Amended Complaint ("FAC"), in which they removed MERS as a defendant and eliminated twelve causes of action. Plaintiffs' remaining four causes of action are as follows: (1) violations of Cal. Bus. & Prof. Code §17200; (2) violations of Cal. Bus. & Prof. Code §17500; (3) breach of fiduciary duty; and (4) unjust enrichment.

On December 21, 2009, Plaintiffs filed a Motion to Remand. On December 24, 2009, Defendants filed the Motion to Dismiss and Request for Judicial Notice ("Motion to Dismiss RJN"). On January 7, 2010, Defendants filed Opposition to the Motion to Remand ("Remand Opp'n") and Request for Judicial Notice ("Remand Opp'n RJN"). On January 11, 2010, Plaintiffs filed Opposition to the Motion to Dismiss ("MTD Opp'n"). On January 14, 2010, Defendants filed a Reply in support of the Motion to Dismiss ("MTD Reply"). On January 18, 2010, Plaintiffs filed a Reply in support of the Motion to Remand ("Remand Reply").

II. LEGAL STANDARDS

A. Removal

Removal jurisdiction is governed by statute. See 28 U.S.C. § 1441, et seq. The Ninth Circuit applies a strong presumption against removal jurisdiction, ensuring "the defendant always has the burden of establishing that removal is proper." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992), citing Nishimoto v. FedermanBachrach & Assocs., 903 F.2d 709, 712 n.3 (9th Cir. 1990); see also In re Ford Motor Co./Citibank (South Dakota), N.A., 264 F.3d 952, 957 (9th Cir. 2001) ("The party asserting federal jurisdiction bears the burden of proving the case is properly in federal court.").

Removal is improper when the district court would not have original jurisdiction over the case. See 28 U.S.C. § 1441(a). A case shall be remanded when the court lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c).

B. Motion to Dismiss

Rule 12(b)(6) allows a party to bring a motion to dismiss for failure to state a claim upon which relief can be granted. As a general matter, the Federal Rules require only that a plaintiff provide "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed. R. Civ. P. 8(a)(2)); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In addition, the Court must accept all material allegations in the complaint -- as well as any reasonable inferences to be drawn from them -- as true. See Doe v. United States, 419 F.3d 1058, 1062 (9th Cir. 2005); ARC Ecology v. U.S. Dep't of Air Force, 411 F.3d 1092, 1096 (9th Cir. 2005).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic, 550 U.S. at 555 (citations omitted). Rather, the allegations in the complaint "must be enough to raise a right to relief above the speculative level." Id.

In other words, the allegations must be plausible on the face of the complaint. See Ashcroft v. Iqbal, 556 U.S. ___, 129 S.Ct. 1937, 1949 (2009). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of 'entitlement to relief.'" Id. (citations and internal quotations omitted).

Although the scope of review is limited to the contents of the complaint, the Court may also consider exhibits submitted with the complaint, Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990), and "take judicial notice of matters of public record outside the pleadings," Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988).

III. DISCUSSION

Plaintiffs argue that remand is proper because their remaining claims are based on California state law, not federal law. (Mot. at 3-4.) Defendant responds that some of Plaintiff's claims "implicate" federal law and others "arise under" federal law, making jurisdiction proper under 28 U.S.C. § 1331. (Remand Opp'n at 2-3, 4-5.)

A claim arises under federal law within the meaning of 28 U.S.C. § 1331 if: (1) federal law creates the claim asserted; (2) under the artful pleading doctrine, the cause of action should be recharacterized as a federal claim, either because it omits federal law essential to the cause of action or because the state law cause of action is completely pre-empted by federal law; or (3) the claim necessarily turns on the construction of a substantial, disputed federal question. See Rains v. Criterion Sys., Inc., 80 F.3d 339, 343--46 (9th Cir. 1996). "When a claim can be supported by alternative and independent theories -- one of which is a state law theory and one of which is a federal law theory --federal question jurisdiction does not attach because federal law is not a necessary element of the claim."

Id. at 346; see also Christianson v. Colt Inds. Operating Corp., 486 U.S. 800, 810 (1988).

Here, none of Plaintiffs' four claims is created by federal law, as they allege causes of action either arising from California common law or California statutes. Defendants do not argue that any of Plaintiffs' causes of action are pre-empted by federal law, or that Plaintiffs omit federal law essential to any cause of action from the FAC. Accordingly, for the Court to exercise federal question jurisdiction, at least one cause of action must necessarily turn on the construction of a substantial, disputed federal question.

Plaintiffs refer to violations of federal law in two claims: (1) violations of Cal. Bus. & Prof. Code §17200 (FAC ¶¶ 82, 91-97, 110); and (2) unjust enrichment (FAC ¶¶ 129, 131, 135). The Court accordingly examines whether or not these claims necessarily turn on the construction of a substantial, disputed federal question.

B. Violations of Cal. Bus. & Prof. Code § 17200

In order to demonstrate Defendants have engaged in unfair business practices in violation of Section 17200 of the California Business and Professions Code ("UCL"), Plaintiffs must show that Defendants engaged in a business practice that is unlawful, unfair, or fraudulent. Cal. Bus. & Prof. Code § 17200.

Here, Plaintiffs argue Defendants violated Section 17200 by: (1) failing to contact Plaintiffs in person or by telephone to assess their financial situation and explore options for the borrower to avoid foreclosure prior to recording a notice of default, as required by Cal. Civ. Code § 2923.5(a)(2) (FAC ¶¶ 78-80); (2) failing to advise Plaintiffs of their right to request a subsequent meeting "that must occur, if requested, within 14 days," pursuant to Cal. Civ. Code § 2923.5(a)(2) (FAC ¶ 81); (3) failing to provide Plaintiffs "the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency in the required in person meeting or telephone call" (FAC ¶ 82); (4) failing to meet the requirements of Cal. Civ. Code § 2923 when recording the Notice of Default against Plaintiffs (FAC ¶¶ 83-86);(5) failing to offer Plaintiffs a loan modification, pursuant to Cal. Civ. Code 2923.6 ; (6) failing, refusing, or neglecting "to evaluate Plaintiffs for a loan modification or other foreclosure prevention alternatives," pursuant to Cal. Civ. Code 2923.52 (FAC ¶¶ 89-90); (7) failing to comply with the National Housing Act "in that [Defendants] did not advise Plaintiffs of any home ownership counseling offered by them together with information about counseling offered by the U.S. Department of Housing and Urban Development" (FAC ¶¶ 91-93); (8) failing to determine Plaintiffs' "eligibility for the [HAMP]" (FAC ¶ 98); (9) failing to temporarily suspend any foreclosure action while considering Plaintiffs for alternative foreclosure prevention options (FAC ¶ 99).

The UCL cannot create a private right of action where none exists under the federal statute. Summit Tech., Inc. v. High-Line Med. Instruments Co., Inc., 922 F. Supp. 299, 316 (C.D. Cal. 1996). Though Plaintiffs mention the National Housing Act and the HAMP, they fail to allege any elements related to violations of these statutes, nor do they provide a basis for concluding that a private right of action exists under these statutes. See Baker v. Northland Morg. Co., 344 F. Supp. 1385, 1386 (D.C. Ill. 1972) (the National Housing Act does not provide a private right of action); Delgadillo v. Countrywide Home Loans, Inc., No. CV 09-7435 AHM (PLAx), 2009 WL 5064943, at *1-2 (C.D. Cal. Dec. 23, 2009) (remanding, for lack of federal jurisdiction, state law claims predicated in part on defendants' failure to comply with HAMP loan modification guidelines, and noting that HAMP "does not mandate federal jurisdiction").

Thus, to the extent Plaintiffs' UCL claim is based upon the National Housing Act or HAMP, Plaintiffs have failed to state a claim.

Furthermore, Plaintiffs rely on federal law for only three of the nine theories of liability under which they seek to establish violations of Section 17200. Liability, therefore, does not necessarily turn on the construction of a substantial, disputed federal question, because any of the nine theories may independently support liability. See Rains, 80 F.3d at 346.

Thus, this cause of action does not necessarily turn on the construction of a substantial, disputed federal question because Plaintiffs have alleged no basis for a federal claim. The Court therefore DISMISSES with prejudice Plaintiffs' claim for violations of Cal. Bus. & Prof. Code § 17200, to the extent it is based upon violations of the National Housing Act and HAMP. To the extent their claim is predicated on violations of state law, the Court declines to reach the merits state law claims.

B. Unjust Enrichment

The elements of an unjust enrichment claim are receipt of a benefit and unjust retention of the benefit at the expense of another. Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000). Plaintiffs allege that Bank of America "has received billions $52.5 Billion [sic] in TARP funds, under the Economic Stabilization Act of 2008, which were meant to relieve banks of their 'troubled assets' including Notes and Mortgages which are in foreclosure." (FAC ¶ 129.) Further, Plaintiffs allege that Defendants violated their Participation Agreement under the "Home Affordable Modification [P]rogram" ("HAMP") by refusing to determine Plaintiffs' eligibility for loan modification. (FAC ¶ 131.)

Finally, Plaintiffs allege Defendants violated California Civil Code Sections 2923.5, 2923.53, and 2923.6, and California Business & Professions Code Sections 17200 and 172500, which "unjustly enriched Defendants, to the determent of the Plaintiffs, by causing Defendants to receive monetary payments from Plaintiffs." (FAC ¶ 132.)

Plaintiffs' federal allegations regarding unjust enrichment appear to be an attempt at enforcing a private right of action under TARP and HAMP. There is no express or implied right to sue fund recipients, however, under TARP or HAMP. See Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1187 (N.D. Cal. 2009); Ung v. GMAC Mortg., No. EDCV 09--893-VAP, 2009 LEXIS 115900, at *9-11 (C.D. Cal. Sept. 4, 2009) (dismissing, with prejudice, TARP-based claims pled as the basis for state law claims); Gonzales v. First Franklin Loan Svcs., No. 1:09-CV099941 AWI-GSA, 2010 WL 144862, at *18 (E.D. Cal. Jan. 11, 2010) (there is no private right of action under TARP or the Emergency Economic Stabilization Act ("EESA")); Delgadillo v. Countrywide Home Loans, Inc., No. CV 09-7435 AHM (PLAx), 2009 WL 5064943, at *1-2 (C.D. Cal. Dec. 23, 2009) (HAMP "does not mandate federal jurisdiction").

Thus, this cause of action does not necessarily turn on the construction of a substantial, disputed federal question because Plaintiffs have alleged no basis for a federal claim. The Court DISMISSES with prejudice Plaintiffs' claim for unjust enrichment, to the extent it is based upon violations of TARP and HAMP. To the extent the claim is predicated on violations of state law, the Court declines to reach the merits of state law claim.

IV. CONCLUSION

For the foregoing reasons, the Court DISMISSES with prejudice Plaintiffs' first claim for violations of Cal. Bus. & Prof. § 17200, to the extent it is based on violations of the National Housing Act and HAMP, and Plaintiff's fourth claim with prejudice, to the extent it is based upon violations of TARP and HAMP. As none of the remaining causes of action asserted in the FAC presents a federal question under 28 U.S.C. § 1331, the Court REMANDS the action to the Superior Court of California, Riverside County.

IT IS SO ORDERED.

20100209

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