MEMORANDUM AND ORDER RE: MOTION TO DISMISS
Plaintiffs Peter Schwartz and Julie Rathbone filed this action against defendants IndyMac Federal Bank ("IndyMac"), First Magnus Financial Corporation ("First Magnus"), Quality Loan Service Corporation ("Quality Loan"), Deutsche Bank National Trust Company ("Deutsche"), Charter Funding ("Charter"), and James Shergill, alleging various state relating to loans they obtained to purchase their home located at 2030 Hardwick Way in Roseville, California. Defendant Deutsche now moves to dismiss plaintiffs' claims against it pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
I. Factual and Procedural Background
Plaintiffs allege that on April 28, 2006, defendant Shergill, a loan officer for defendant Charter, offered plaintiffs a residential mortgage loan. (Compl. ¶ 38.) Shergill allegedly told plaintiffs that he could get them the "best deal" and the "best interest rates" available on the market. (Id. ¶¶ 38-39.) He allegedly informed plaintiffs that he could get them a fixed rate loan for thirty years, but actually sold plaintiffs "a loan with an adjustable rate rider that would negatively amortize with large balloon payments." (Id. ¶ 40.) Plaintiffs aver that although they accurately described their income to Shergill, he nevertheless over stated plaintiffs' income on their loan application. (Id. ¶¶ 40-41.) Plaintiffs also state that Shergill told them that if the loan ever became unaffordable, he would refinance it into an affordable loan. (Id. ¶ 43.)
On May 12, 2006, plaintiffs completed the loan for the subject property. (Id. ¶ 46.) The terms of the loan were memorialized in a Promissory Note, which was secured by a Deed of Trust on the Property. (Id.) The Deed of Trust identified Fidelity National Title Company as Trustee and defendant First Magnus as Lender. (Id.) Mortgage Electronic Registration Systems, Inc. ("MERS") was listed "as nominee for the Lender and Lender's successors and assigns, and the beneficiary." (Id. ¶ 47.) Plaintiffs allege that Citibank and IndyMac at some point acquired unspecified interests in the loan. (Id. ¶ 48.)
Plaintiffs defaulted on their loan, and as a consequence, on June 2, 2009, a Notice of Default was filed in Placer County, California, by Quality Loan. On or about September 3, 2009, Quality Loan noticed the Trustee Sale of the Property. Plaintiffs filed this action against defendants in Placer County Superior Court on December 18, 2009. (Docket No. 2.) The action was removed to this court on March 3, 2010 due to the presence of a federal government defendant after the Federal Deposit Insurance Corporation was added as a party. (Id.) Before the court is defendant Deutsche's motion to dismiss plaintiffs' complaint. (Docket No. 15.) Plaintiffs did not file an opposition to the motion, nor did they file a statement of non-opposition in accordance with Local Rule 230(c).
On a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a motion to dismiss, a plaintiff needs to plead "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 544, 127 S.Ct. 1955, 1974 (2007). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," and where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility." Ashcroft v. Iqbal, 566 U.S. ---, ----, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 556-57).
In California, the essential elements of a claim for fraud are "(a) a misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or 'scienter'); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage." In re Estate of Young, 160 Cal. App. 4th 62, 79 (2008). Under the heightened pleading requirements for claims of fraud under Federal Rule of Civil Procedure 9(b), "a party must state with particularity the circumstances constituting the fraud." Fed. R. Civ. P. 9(b). The plaintiffs must include the "who, what, when, where, and how" of the fraud. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1006 (9th Cir. 2003) (citation 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). "[W]here multiple defendants are asked to respond to allegations of fraud, the complaint must inform each defendant of his alleged participation in the fraud." Ricon v. Recontrust Co., No. 09-937, 2009 U.S. Dist. LEXIS 67807 (S.D. Cal. Aug. 4, 2009) (quoting DiVittorio v. Equidyne Extractive Indus., 822 F.2d 1242, 1247 (2d Cir. 1987)).
Plaintiffs aver that Shergill, Charter, first Magnus and Indymac made false representations to them. (Compl. ¶¶ 63, 68.) However, plaintiffs do not plead any specific representations made by Deutsche to them, nor do they even allege that they have ever communicated with Deutsche. The only allegations that plaintiffs make that involve Deutsche are that Deutsche was appointed Trustee of the IndyMac IMSC Mortgage Loan Trust, (Id. ¶ 25), and that Deutsche failed "to observe the applicable legal requirements for the transfer of a negotiable instrument and interest in real property." (Id. ¶ 29.) These allegations do not indicate what misrepresentations were made by Deutsche, who made misrepresentations, or why they were false. Such allegations fail to meet the requirements of Rule 8, let along the heightened pleading standards of Rule 9. Accordingly, Deutsche's motion to dismiss plaintiffs' fraud claim will be granted.
To prove a cause of action for negligence, plaintiffs must show "(1) a legal duty to use reasonable care; (2) breach of that duty, and (3) proximate [or legal] cause between the breach and (4) the plaintiff[s'] injure[ies]." Mendoza v. City of Los Angeles, 66 Cal. App. 4th 1333, 1339 (1998) (citation omitted). "The existence of a legal duty to use reasonable care in a particular factual situation is a question of law for the court to decide." Vasquez v. Residential Invs., Inc., 118 Cal. App. 4th 269, 278 (2004).
While plaintiffs aver that defendants Shergill, Charter, First Magnus, and IndyMac owed them a duty of care, they have not plead that defendant Deutsche owed them any duty. Plaintiffs state that Deutsche is Trustee of the IndyMac IMSC Mortgage Loan Trust. (Compl. ¶ 25.) "There is no authority for the proposition that a trustee under a deed of trust owes any duties with respect to exercise of the power of the sale beyond those specified in the deed." I.E. Associates v. Safeco Title Ins. Co., 39 Cal.3d 281, 288 (1985). Plaintiffs have failed to specify any provision in deed of trust that creates a duty that Deutsche has allegedly violated.
Plaintiffs have also not adequately plead a causal relationship between a breach of duty by Deutsche and a resulting injury to themselves, nor have they even alleged injury. Their claim that the harm that "plaintiffs [suffered] is directly resulted to the defendants' conduct" and that "as a result of defendants' negligence, plaintiffs suffered and continue to suffer harm" is exactly the type of conclusory statement that fails the pleading standard ...