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Bernard F. Clark v. Countrywide Home Loans


December 2, 2010


The opinion of the court was delivered by: Oliver W. Wanger United States District Judge



Plaintiff Bernard F. Clark proceeds pro se with an action for damages against Defendants Countrywide Home Loans and Bank of America.

Defendant filed the original complaint in this action in state court on August 24, 2009. (Doc. 1). Defendants removed Plaintiff's action to federal court on November 12, 2009. Plaintiff subsequently filed a first amended complaint ("FAC").

On August 9, 2010, the court issued a Memorandum Decision dismissing the majority of Plaintiff's FAC with prejudice. (Doc. 45). Plaintiff was only given leave to amend his complaint in order to plead a fraud claim and a breach of contract claim. (Id.). Plaintiff filed a second amended complaint ("SAC") on September 9, 2010. (Doc. 47).

Defendants filed a Motion to Dismiss the SAC and Motion to Expunge Lis Pendens on September 27, 2010. (Docs. 50, 52). Plaintiff filed opposition to Defendants' motions on October 25, 2010. (Docs. 55, 56). Defendants filed a reply on November 15, 2010. (Doc. 57).


On or about July 26, 2007, Plaintiff financed the purchase of a residential property located at 12689 Mt. Jefferson Street, Groveland, California ("Subject Property") through a promissory note secured by a deed of trust. The SAC alleges that before loan closing, the lender orally assured Plaintiff that if he was unable to satisfy his mortgage obligation, he would receive a loan modification based on his income.

In 2008, Plaintiff defaulted on his mortgage and called Countrywide Home Loans ("Countrywide") to discuss a possible solution. Countrywide orally told Plaintiff that if he brought his loan current, Countrywide would enter into a loan modification agreement with him. On or about June 16, 2008, Plaintiff borrowed money and brought his loan current, but Countrywide refused to enter into a loan modification agreement.


Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks sufficient facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1990). To sufficiently state a claim to relief and survive a 12(b) (6) motion, the pleading "does not need detailed factual allegations" but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Mere "labels and conclusions" or a "formulaic recitation of the elements of a cause of action will not do." Id. Rather, there must be "enough facts to state a claim to relief that is plausible on its face." Id. at 570. In other words, the "complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted).

The Ninth Circuit has summarized the governing standard, in light of Twombly and Iqbal, as follows: "In sum, for a complaint to survive a motion to dismiss, the nonconclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.2009) (internal quotation marks omitted). Apart from factual insufficiency, a complaint is also subject to dismissal under Rule 12(b)(6) where it lacks a cognizable legal theory, Balistreri, 901 F.2d at 699, or where the allegations on their face "show that relief is barred" for some legal reason, Jones v. Bock, 549 U.S. 199, 215, 127 S.Ct. 910, 166 L.Ed.2d 798 (2007).

In deciding whether to grant a motion to dismiss, the court must accept as true all "well-pleaded factual allegations" in the pleading under attack. Iqbal, 129 S.Ct. at 1950. A court is not, however, "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001). "When ruling on a Rule 12(b)(6) motion to dismiss, if a district court considers evidence outside the pleadings, it must normally convert the 12(b)(6) motion into a Rule 56 motion for summary judgment, and it must give the nonmoving party an opportunity to respond." United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). "A court may, however, consider certain materials-documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion to dismiss into a motion for summary judgment." Id. at 908.


Although the Memorandum Decision specifically advised Plaintiff that he was granted leave to amend the complaint only to state a cause of action for fraud, the SAC asserts a cause of action for "breach of loan modification and contract." The breach of contract claim advanced in the SAC is indistinguishable from the claim dismissed in the Memorandum Decision. The Memorandum Decision provides:

Certain types of contracts are invalid unless memorialized by a written document signed by the party against whom the contract is being enforced. Cal. Civ. Code § 1624. Mortgages and the statute of frauds. v. Sec. Nat?l Mortg. subject Secrest deeds of trust are Loan to Trust 2002-2, 167 Cal. App. 4th 544, 552 (2008). "An agreement to modify a contract that is subject to the statute of frauds is also subject to the statute of frauds" Basham Group at 553; also v. and Pac. must be in writing. Id. see Funding , 2010 WL 2902368 (E.D. Cal. July 22, 2010)(dismissing a claim that defendant breached an oral contract to provide plaintiffs with a loan modification because, under the statute of frauds, "absent a writing, there breach of contract."); Bancorp, et al.a Justo can be v. Indymac no contract, much less, 2010 WL 623715 (E.D. Cal. Feb. 19, 2010)(plaintiff"s claim that defendants breached an oral contract to modify his loan and cancel the foreclosure sale was barred by the statute of frauds). A written contract may not be modified by an oral agreement, unless that oral agreement is memorialized in writing and signed by the parties. Cal. Civ. Code § 1698.

Here, the alleged promise for a loan modification is subject to the statute of frauds. Absent a written agreement to modify the loan, any claim based upon an oral contract to modify the loan is barred by the statute of frauds. See Secrest, 167 Cal. App. 4th at 552.

At oral argument, Plaintiff claimed that Countrywide promised him that if he brought the loan current, they would modify his loan. Plaintiff further claims that, in reliance on this promise, he obtained money (approximately $8,000) to bring the loan current, but Countrywide refused the loan modification. Although Plaintiff cannot state a breach of contract claim based upon this conduct, he may be able to state a claim for fraud. In California, the elements for a claim of fraud are: (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud;

(4) justifiable reliance; resulting damage. v. Fritz Companies, Inc. and (5), 30 Cal. 4th 167, 173 (2003). Upon removal to federal court, all claims for fraud must be pled with sufficient particularity to satisfy Federal Rule of Civil Procedure Rule 9(b).

Small (Memorandum Decision at 7-8). Despite the guidance provided to Plaintiff in the Memorandum Decision, the SAC fails to allege that any Defendant made any knowingly false representation with the intent to defraud Plaintiff and has not complied with the particularity requirements of Rule 9 by alleging the who, what where, and inducement requirements. Under well-established principles, a contract cannot be enforced when there is no consideration. A promise to perform a pre-existing obligation does not constitute consideration and there is no right to enforce such an alleged promise. Plaintiff has had multiple opportunities to amend his complaint and has failed to state any cognizable claim. Accordingly, the SAC is dismissed, with prejudice. Further, as Plaintiff has not asserted any claim that implicates title to the property underlying the Subject Loan, Defendants' motion to expunge lis pendens is GRANTED.


For the reasons stated, IT IS ORDERED;

1) Plaintiff's SAC is DISMISSED, without prejudice, Defendant will have one more opportunity to amend the complaint;

2) Defendants Motion to Expunge Lis Pendens is GRANTED, and 3)Defendants shall submit a form of order consistent with this Memorandum Decision within five (5) days following electronic service of this decision.





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