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Alicia G. Atienza and Cloudaldo A. Atienza v. Wells Fargo Bank

March 7, 2011


The opinion of the court was delivered by: Richard Seeborg United States District Judge

*E-Filed 3/7/11*

United States District Court For the Northern District of California



Plaintiffs Alicia and Cloudaldo Atienza filed suit against defendants Wells Fargo Bank, N.A. (Wells Fargo) and Regional Trustee Service Corporation (RTSC) seeking to enjoin the potential 23 foreclosure sale of their home. They allege that defendants failed to comply with the requirements 24 of California's non-judicial foreclosure statutes governing the substitution of trustees and notice of 25 substitution. On January 4, 2011, the Court granted defendants' motion to dismiss plaintiff's first 26 amended complaint for failure to state a claim.*fn1 Plaintiffs were granted leave to file a second 27 amended complaint (SAC). Wells Fargo now moves to dismiss the SAC and RTSC joins in the 28 motion. Pursuant to Civil Local Rule 7-1(b), the matter is suitable for disposition without oral 2 argument. For the reasons stated below, defendants' motion to dismiss is granted without leave to 3 amend.

subsequently recorded a notice of default (NOD). Although plaintiffs' SAC and Opposition state 6 that RTSC issued a NOD on June 1, 2010, the NOD attached to their complaint and referenced 7 therein shows a date of February 16, 2010. Moreover, consistent with their first amended 8 complaint, plaintiffs' SAC complains that the NOD was recorded six days prior to the substitution 9 of trustee, which was executed by Wells Fargo on February 22, 2010.*fn2 Thereafter, plaintiffs 10 received notice of the substitution of trustee, but they contend that it did not include an affidavit attesting that it was properly served on all parties as required by statute. On May 17, 2010, RTSC recorded a notice of sale (NOS). Based on these allegations, plaintiffs advance two claims for relief: 13 negligence per se and violation of California's Unfair Competition Law (UCL). 14

A complaint must present "a short and plain statement of the claim" demonstrating that the plaintiff is entitled to relief. Fed. R. Civ. P. 8(a)(2). If this standard is not met, the defendant may 17 move to dismiss for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Under Rule 12(b)(6), dismissal is appropriate if either the claimant does not raise a 19 cognizable legal theory or otherwise fails to allege sufficient facts to support a cognizable claim.

Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). Thus, while a legally 21 sufficient complaint does not require "detailed factual allegations," it must contain more than 22

129 S. Ct. 1937, 1949 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In 24 evaluating a Rule 12(b)(6) motion to dismiss, all material allegations in the complaint are accepted 25 as true and construed in the light most favorable to the non-moving party. Pareto v. FDIC, 139 F.3d 26 696, 699 (9th Cir. 1998). While leave to amend is generally granted liberally, if amendment would

According to the SAC, plaintiffs fell behind on their mortgage loan during 2009 and RTSC


"unadorned" assertions of harm or bare legal conclusions without factual support. Ashcroft v. Iqbal, be futile, then dismissal without leave to amend is within the court's discretion. See, e.g., Saul v. United States, 928 F.2d 828, 843 (9th Cir. 1991).

In their first claim, plaintiffs contend that defendants' violations of California Civil Code sections 2924, 2934a(c) and 2934a(d) constitute negligence per se. Section 2934a(c) requires that a 5 notice of substitution of trustee that is executed after a NOD and before a NOS must be mailed on or 6 before the recording of the NOS. The mailing of the notice of substitution must include an affidavit 7 stating that it was mailed to all persons to whom the NOD must be sent as provided in section 2924b. See Cal. Civ. Code § 2924a(c). In this case, plaintiffs claim that defendants violated section 2924a(c) by failing to mail the required affidavit. They do not dispute defendants' contention that 10 the recorded substitution includes an affidavit; they claim only that the affidavit was not included in what they received. Furthermore, section 2924a(d) provides that a trustee named in a substitution is deemed authorized to act as of the date of substitution, so long as it is recorded. According to 13 plaintiffs, defendants' alleged failure to attach the affidavit in the copy sent to them renders the 14 substitution of trustee invalid. They claim, therefore, that RTSC is not authorized to act and the NOS recorded by it is void.

Plaintiffs' negligence per se claim was previously dismissed because they failed to specify the particular conduct that allegedly violated provisions governing substitution of trustees. At this 18 point, plaintiffs have clarified that their claim relates to an allegation that the notice of substitution 19 they received did not include the required affidavit. In its prior Order, however, the Court also 20 indicated that "most significantly" plaintiffs failed to aver that they suffered any injury from the 21 alleged defects in the substitution of trustee or notice of substitution. Atienza, 2011 U.S. Dist. 22 LEXIS 1738, at *12. While a statutory violation may constitute evidence of a breach of due care, a 23 plaintiff alleging negligence per se still must aver injury proximately caused by the violation. See Lawther v. Onewest Bank, No. C 10-0054 RS, 2010 U.S. Dist. LEXIS 131090, at *9 (N.D. Cal. Nov. 30, 2010). Despite being granted leave to amend, plaintiffs have added no allegations that 26 defendants' purported statutory violations, as opposed to the potential foreclosure itself, is the cause 27 of any injury. For ...

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