The opinion of the court was delivered by: Hayes, Judge
The matters before the Court are the Motion to Set Aside Entry of Default filed by Chicago Title Company (ECF No. 38), the Motion to Set Aside Entry of Default filed by Executive Trust Services (ECF No. 45), the Motions for Default Judgment filed by Plaintiffs (ECF Nos. 25, 27, 37), the Motions to Strike filed by Plaintiffs (ECF Nos. 19, 65), the Motion to Dismiss filed by Wells Fargo Bank (ECF No. 11), the Motion for Extension of Time filed by Plaintiffs (ECF No. 44), and the Motion for Leave to File Supplemental Complaint filed by Plaintiffs (ECF No.70).
On July 26, 2010, Plaintiffs Sean M. Park and Michelle Park, proceeding pro se, initiated this action by filing a Complaint. (ECF No. 1). Plaintiffs filed an Amended Complaint on August 11, 2010. (ECF No. 3).
On August 25, 2010, Well Fargo Bank ("Wells Fargo") filed a Motion to Dismiss. (ECF No. 11). Plaintiffs filed an Opposition (ECF No. 31) and Wells Fargo filed a Reply (ECF No. 35).
On August 20, 2010, Plaintiffs filed a Request for Clerk's Entry of Default against all Defendants. (ECF No. 9). The Clerk entered default against Chicago Title Company and Executive Trust Services. (ECF No. 16). Wells Fargo filed an Opposition to Plaintiffs' Request for Clerk's Entry of Default (ECF No. 10), and on September 8, 2010, Plaintiffs filed a Motion to Strike the Opposition. (ECF No. 19).
On September 9, 10, and 20, 2010, Plaintiffs filed three Motions for Default Judgment (ECF Nos. 25, 27, 37) which were opposed by Defendant Chicago Title Company (ECF No. 42). Defendant Chicago Title Company also filed a Motion to Set Aside Entry of Default. (ECF No. 38). Defendant Executive Trustee Services, LLC DBA ETS Services, LLC filed a Motion to Set Aside Entry of Default. (ECF Nos. 45, 59). Plaintiffs filed a Motion to Strike Defendant Executive Trustee Services, LLC's Motion to Set Aside Entry of Default which was opposed. (ECF Nos. 65, 71).
On October 14, 2010, Plaintiffs filed a Motion for Extension of Time Pursuant to New Evidence Filing Deadline and for Leave to File Amended Complaint (ECF No. 44) which was opposed by Wells Fargo (ECF No. 47).
On December 3, 2010, Plaintiffs filed a Motion for Leave to File Supplemental Complaint. (ECF No. 70). On December 14, 2010, Wells Fargo Bank filed an Opposition. (ECF No. 73). On December 29, 2010, Plaintiffs filed a Reply. (ECF No. 75).
I. Motion to Set Aside Clerk's Entry of Default & Motions for Default Judgment
On August 19, 2010, Plaintiffs filed a return of service for Defendant Executive Trust Services in which Sean Park signed the declaration of server. (ECF No. 8 at 2). The return of service indicates that service was completed by delivering a copy of the summons and Complaint via FedEx to the "receptionist/front desk" and was signed for by "A.Kay." Id. at3.
The return of service does not indicate whether "A.Kay" is an officer, manager, or authorized agent for Executive Trust Services. On August 24, 2010, Plaintiffs filed a return of service for Defendant Chicago Title Company in which Sean Park signed the declaration of server. (ECF No. 12 at 2). The return of service indicates that service was completed by delivering a copy of the summons and Complaint via FedEx to the "mailroom" and was signed for by "L.Eweart." Id. at 3. The return of service does not indicate whether "L.Eweart" is an officer, manager, or authorized agent for Chicago Title Company. On September 2, 2010, the Clerk entered default against Chicago Title Company and Executive Trust Services.
Plaintiffs seek entry of default judgment against Chicago Title Company and Executive Trust Services "due to no response." (ECF Nos. 25 at 2; 27 at 2; 37 at 2). Plaintiffs have failed to provide any other legal or factual basis for seeking default judgment.
Chicago Title Company requests the Court set aside the Clerk's entry of default and opposes default judgment on the grounds that service of the summons and Complaint were sent via FedEx, a party to this action attempted to serve process, and Plaintiffs sought Clerk's entry of default 18 days after purportedly completing service rather than the 21 days permitted. Chicago Title Company also contends that it offered to waive service if Plaintiffs would provide a Rule 4 waiver form, but Plaintiffs refused and sought default judgment.
Executive Trust Services requests the Court set aside the Clerk's entry of default and opposes default judgment on the grounds that service of the summons and Complaint were sent via FedEx,a party to this action attempted to serve process, and the summons and Complaint were not addressed to an officer, manager, or authorized agent.
Service of a summons and the complaint may be performed by: "Any person who is at least 18 years old and not a party ...." Fed. R. Civ. P. 4(c)(2) (emphasis added). Service on a corporation, partnership, or association is proper when delivered to "an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process ...." Fed. R. Civ. P. 4(h)(1)(B). "The rules are to be applied in a manner that will best effectuate their purpose of giving the defendant adequate notice." Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, Inc., 840 F.2d 685, 688 (9th Cir. 1988). "Generally, service is sufficient when made upon an individual who stands in such a position as to render it fair, reasonable and just to imply the authority on his part to receive service." Id. (citations and quotations omitted).
Rule 55(a) of the Federal Rules of Civil Procedure requires that the Clerk of the Court enter default "when a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise." Fed. R. Civ. P. 55(a). Rule 55(b)(2) provides that the Court may grant a default judgment after default has been entered by the Clerk of the Court. Rule 55(c) provides that a court may set aside a default for "good cause shown." Fed. R. Civ. P. 55(c).
"The [Rule 55] good cause analysis considers three factors: (1) whether [defendant] engaged in culpable conduct that led to the default; (2) whether [defendant] had a meritorious defense; or (3) whether reopening the default judgment would prejudice [plaintiff]." Franchise Holding II, LLC. v. Huntington Rest. Group, Inc., 375 F.3d 922, 925-26 (9th Cir. 2004) (quotation omitted). In determining whether to enter default judgment, a court considers the three "good cause" factors, as well as the amount of money at stake, the sufficiency of the complaint, the possibility of disputes to any material facts in the case, and the public policy favoring resolutions of cases on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). "[T]he general rule is that default judgments are ordinarily disfavored. Cases should be decided upon their merits whenever reasonably possible." Id. at 1472.
"[A] defendant's conduct is culpable if he has received actual or constructive notice of the filing of the action and intentionally failed to answer." TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir. 2001); see also id. at 698 ("[W]e have typically held that a defendant's conduct was culpable ... where there is no explanation of the default inconsistent with a devious, deliberate, willful, or bad faith failure to respond.").
The Court finds that Defendants did not intentionally fail to answer because service had not been adequately effectuated due to Plaintiff, a party to this action, serving the summons and Complaint on an individual who was not the "officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process." See Fed. R. Civ. P. 4. The Court finds that Defendants did not otherwise engage in culpable conduct which led to the default and Defendants have shown good cause why default should be set aside pursuant to Rule 55(c). Therefore, Chicago Title Company's Motion to Set Aside Entry of Default (ECF No. 38) and Executive Trust Services' Motion to Set Aside Entry of Default (ECF No. 45) are GRANTED. In addition, Plaintiffs seek entry of default judgment against Wells Fargo; however, the Clerk has not entered default against Wells Fargo. Plaintiffs' Motions for Default Judgment against Wells Fargo, Chicago Title Company, and Executive Trust Services (ECF Nos. 25, 27, 37) are DENIED.
II. Motions to Strike filed by Plaintiffs
Plaintiffs ask the Court to strike Well's Fargo's Opposition to Plaintiffs' Request for Default. (ECF No. 19). Plaintiffs also ask the Court to strike Defendant Executive Trustee Services, LLC's Motion to Set Aside Entry of Default and Reply because Plaintiffs contend they never received service of the Motion and Plaintiffs request sanctions pursuant to Fed. R. Civ. P. 37. (ECF No. 65). This Court permitted Plaintiffs additional time to respond to Executive Trustee Services, LLC's Motion. (ECF No. 66). Plaintiffs failed to respond.
"The court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12 (f). There are no grounds to strike the Opposition (ECF No. 19) or Executive Trust Service, LLC's Motion and Reply (ECF Nos. 45, 59). Additionally, sanction pursuant to Fed. R. Civ. P. 37, which governs discovery, is not appropriate. Plaintiffs' requests to strike are DENIED.
III. Motion to Dismiss filed by Wells Fargo*fn1
A. Allegations in the Amended Complaint
Plaintiffs' Amended Complaint asserts the following claims against Wells Fargo, Executive Trust Services, and Chicago Title Company: (1) declaratory relief that Defendants do not have the right to foreclose on the property and the property remains in Plaintiffs' names;
(2) injunctive relief declaring that Defendants do not have the right to foreclose on the property and the property remains in Plaintiffs' names; (3) request to determine the nature, exten[t] and validity of the lien under Cal. Com. Code § 9313; (4) breach of good faith and fair dealing; (5) violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et. seq.; (6) violation of the Real Estate Settlement and Procedures Act ("RESPA"); (7) violation of Cal. Civ. Code § 2932.5; (8) rescission; (9) fraud under Cal. Civ. Code § 1572; (10) unfair and deceptive business practices; (11) breach of fiduciary duty; (12) unconscionability; (13) predatory lending in violation of Cal. Bus. & Prof. Code § 17200; and (14) quiet title.
On March 28, 2008, Plaintiffs "purportedly entered into a loan repayment and security agreement" with Defendant Wells Fargo Bank for $1,080,000. (ECF No. 3 at ¶ 3). Plaintiffs allege that several legal violations occurred while processing the loan including: (1) the underwriter approved the loan based on "a stated income and a medium to high-risk credit score and a belief that the property would continue to increase in value;" (2) Defendants knew Plaintiffs would not be able to make the payments over an extended period of time; (3) "Defendants failed to provide Plaintiff[s] with written notice of furnishing negative credit information to consumer reporting agency;" (4) Defendants knew Plaintiffs would default on this loan and they breached their fiduciary duty by placing Plaintiffs "in harms way;" (5) Defendants promoted a particular loan program to maximize profits with no concern to Plaintiffs' "financial position or livelihood;" (6) Defendants were predatory lenders; (7) "Defendants provided inadequate disclosure of the true costs, risks and, where necessary, appropriateness to the borrower;" (8) "Defendants engaged in unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Id. at ¶¶ 30-38. Plaintiffs allege they have the right to rescind the loan. Id. at¶ 69.
Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides: "A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
To sufficiently state a claim to relief and survive a Rule 12(b)(6) motion, a complaint "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 (2007). "[A] plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (quoting Fed. R. Civ. P. 8(a)(2)). When considering a motion to dismiss, a court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, --- U.S. ----, 129 S. Ct. 1937, 1950 (2009). However, a court is not "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); see, e.g., Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 683 (9th Cir. 2009) ("Plaintiffs' general statement that Wal-Mart exercised control over their day-to-day employment is a conclusion, not a factual allegation stated with any specificity. We need not accept Plaintiffs' unwarranted conclusion in reviewing a motion to dismiss."). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory 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) (quotations omitted).
1. Injunctive Relief - Second Claim
In Plaintiffs' second claim for injunctive relief, Plaintiffs allege that Defendants may foreclose on the property and "[t]he wrongful conduct of Defendants, unless restrained and enjoined by an order of the court, will cause great and irreparable harm to Plaintiff[s]." (ECF No. 3 at ¶¶ 45-46). In Plaintiffs' prayer for relief, Plaintiffs request "an injunction, enjoining any future foreclosure proceeding on the Subject Property." Id. at 17 ¶ 8.
Defendant Wells Fargo seeks to dismiss Plaintiffs' second claim for injunctive relief because an injunction is a remedy, not a separate claim.
"Injunctive relief, like damages, is a remedy requested by the parties, not a separate cause of action." Cox Communications PCS, L.P. v. City of San Marcos, 204 F. Supp. 2d. 1272, 1283 (S.D. Cal. 2002) (dismissing the cause of action for injunctive relief because plaintiff correctly sought an ...