FINDINGS AND RECOMMENDATIONS
This case came before the court on September 3, 2010, for hearing on motions to dismiss plaintiff's second amended complaint pursuant to Federal Rules of Civil Procedure 8,9 and 12(b)(6), filed on behalf of defendants Wells Fargo Bank, N.A. (hereinafter "Wells Fargo") and First American Loanstar Trustee Services (hereinafter "Loanstar"). (Doc. Nos. 50 and 54). Philip Barilovits, Esq. appeared telephonically for defendant Wells Fargo. Lawrence Harris, Esq. appeared telephonically for defendant Loanstar. Plaintiff Nadeem Ahmad appeared on his own behalf and was allowed to speak in opposition to the pending motions. However, the pro se plaintiff did not file written opposition to the motions to dismiss.*fn1 Upon consideration of all materials filed in connection with the motions, arguments at the hearing, and the entire file, the undersigned recommends that defendants' motions to dismiss be granted with prejudice and that this case be closed.
Plaintiff originally filed his complaint in this action May 1, 2009, along with an application to proceed in forma pauperis. (Doc. Nos. 1 and 2.) On screening, the complaint was dismissed with leave to amend and plaintiff eventually filed an amended complaint on August 18, 2009. On May 21, 2010, motions to dismiss filed by the then-named defendants as well as plaintiff's motion seeking leave to amend yet again came before the court for hearing. Those motions were granted, with plaintiff being allowed a final opportunity to amend his complaint. (Doc. Nos. 40 and 41.) On June 21, 2010, plaintiff filed his second amended complaint in which he named as defendants only Wells Fargo, Loanstar and Mortgage Electronic Registrations Systems, Inc. (MERS).*fn2 (Doc. No. 45) On July 13, 2010, defendants Wells Fargo filed its motion to dismiss. On July 20, 2010, defendant Loanstar filed its motion to dismiss. As indicated above, plaintiff did not file any written opposition to those motions.*fn3
In his rambling thirty-one page second amended complaint, plaintiff alleges as follows. He is the owner of the subject residential property located in Elk Grove, California.
(Second Amended Complaint (hereinafter "SAC") (Doc. No. 45) at 2, ¶ 1.)*fn4 On February 7, 2007, plaintiff obtained an adjustable rate mortgage loan in the amount of $520,000, which defendant Wells Fargo eventually came to service. (Id. at ¶ 11.) The mortgage loan was secured by a deed of trust recorded on the subject property. (Id.) By October of 2007, plaintiff had already defaulted on the mortgage. (Id. at ¶ 18.) Accordingly, on January 7, 2008 defendant Loanstar issued and recorded a Notice of Default on the subject property. (Id. at ¶ 19.) On February 11, 2008, defendant Loanstar recorded a Substitution of Trustee substituting itself as the trustee on the subject property with the Sacramento County Recorder's Office. (Id. at ¶ 19.)
Defendants advise that because plaintiff failed to cure the default, on April 10, 2008, a Notice of Trustee Sale with respect to the subject property was recorded. On May 1, 2008, the sale was carried out with the property passing to defendant Wells Fargo. On January 2, 2009, defendant Wells Fargo filed a quitclaim deed on the property in favor of EMC Mortgage Corporation. Another individual subsequently acquired the subject property.
In his second amended complaint plaintiff also alleges as follows. The mortgage transaction he entered into with the original lender, American Brokers Conduit, was a "predatory" loan which he could not pay back. (SAC at ¶ 11.) Plaintiff qualified for a prime rate loan but was forced into an adjustable/high rate, sub prime loan so that brokers and lenders could charge higher rates and fees, including illegal charges. (Id. at ¶¶ 11, 15.) He was not provided with disclosures required by TILA and RESPA with respect to the loan. (Id. at ¶ 12, 16.) At closing, he was not provided an adequate explanation of the transaction. (Id. at ¶ 17.) When he defaulted, plaintiff was refused accommodation or a loan modification. (Id. at ¶ 20-21.) The Notice of Default recorded on the subject property was defective because defendant Loanstar was not substituted in as the trustee until after the Notice of Default was recorded and therefore had no standing to proceed with foreclosure. (Id. at ¶¶ 22-24, 26.) In addition, the individual who notarized the Substitution of Trustee was not commissioned to do so until several days after the document was notarized. (Id. at ¶ 25.)
Based on these allegations, plaintiff assert claims for relief under (or seeking to): Set Aside the Trustee's Sale; the Truth in Lending Act (TILA), 15 U.S.C. § 1601, et seq.; Breach of Contract; and Fraud. (Id. at 8-29.) In terms of relief, plaintiff essentially seeks an order setting aside the Trustee's Sale and canceling the Trustee's Deed based on wrongful foreclosure and expunging all records in connection therewith, rescission of his mortgage loan, the award of compensatory and punitive damages and costs, damages and fees. (Id. at 29-31.)
Defendants Wells Fargo and Loanstar seek dismissal of plaintiff's complaint pursuant to Federal Rules of Civil Procedure 8, 9 and 12(b)(6) on the grounds that plaintiff has failed to provide a short and plain statement of his claim against each defendant and has failed to state any cognizable claim for relief. Specifically, defendants advance the following arguments. Plaintiff's action to set aside the foreclosure fails because he has not tendered the amount owed, because his arguments regarding alleged defects in the timing of the Notice of Default and Substitution of Trustee are meritless as a matter of law and because he cannot allege prejudice resulting from any alleged technical violations or procedural errors. In addition, plaintiff's TILA claims for damages and for rescission are time-barred, the latter because the foreclosure sale has already taken place. Plaintiff's TILA claims also fail because he has not tendered the borrowed funds and has failed to allege a violation of any provision of the TILA. Plaintiff's Breach of Contract claim is subject to dismissal because he fails to allege a breach by defendants or performance on his part. Finally, plaintiff's fraud claim must be dismissed because he has not alleged fraud with the particularity required under Federal Rule of Civil Procedure 9(b) and state law. Defendant Loanstar also contends that all of its actions in its capacity as trustee are privileged as a matter of California law.
LEGAL STANDARDS APPLICABLE TO DEFENDANTS' MOTIONS
The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal sufficiency of the complaint. N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Thus, a defendant's Rule 12(b)(6) motion challenges the court's ability to grant any relief on the plaintiff's claims, even if the plaintiff's allegations are true.
In determining whether a complaint states a claim on which relief may be granted, the court accepts as true the allegations in the complaint and construes the allegations in the light most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1989). In general, pro se complaints are held to less stringent standards than formal pleadings drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520-21 (1972). However, the court need not assume the truth of legal conclusions cast in the form of factual allegations. W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).
Although the Federal Rules of Civil Procedure adopt a flexible pleading policy, a complaint must give the defendant fair notice of the plaintiff's claims and must allege facts that state the elements of each claim plainly and succinctly. Fed. R. Civ. P. 8(a)(2); Jones v. Community Redev. Agency, 733 F.2d 646, 649 (9th Cir. 1984). "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of cause of action will not do.' Nor does a complaint suffice if it tenders 'naked assertions' devoid of 'further factual enhancements.'" Ashcroft v. Iqbal, ___U.S.___, ___,129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 555, 557. The plaintiff must allege with at least some degree of particularity overt acts which the defendants engaged in that support the plaintiff's claims. Jones, 733 F.2d at 649. A complaint must also contain "a short and plain statement of the grounds for the court's jurisdiction" and "a demand for the relief sought." Fed. R. Civ. P. 8(a)(1) & 8(a)(3).
With regard to claims of fraud, "the circumstances constituting fraud . . . shall be stated with particularity." Fed. R. Civ. P. 9(b). "Rule 9(b) serves not only to give notice to defendants of the specific fraudulent conduct against which they must defend, but also 'to deter the filing of complaints as a pretext for the discovery of unknown wrongs, to protect [defendants] from the harm that comes from being subject to fraud charges, and to prohibit plaintiffs from unilaterally imposing upon the court, the parties and society enormous social and economic costs absent some factual basis.'" Bly-Magee v. California, 236 F.3d 1014, 1018 (9th Cir. 2001) (quoting In re Stac Elec. Sec. Litig., 89 F.3d 1399, 1405 (9th Cir. 1996)). Pursuant to Rule 9(b), a plaintiff alleging fraud at a minimum must plead evidentiary facts such as the time, place, persons, statements and explanations of why allegedly misleading statements are misleading. In re GlenFed, Inc. Sec. Litig., 42 F. 3d 1541, 1547 n.7 (9th Cir. 1994); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003); Fecht v. Price Co., 70 F.3d 1078, 1082 (9th Cir. ...