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George A. Brown v. Bank of America N.A.

March 31, 2011



On May 28, 2010, plaintiff, proceeding pro se, filed a complaint for damages in Placer County Superior Court. On July 8, 2010, Bank of America, N.A., the only defendant named in the complaint, removed the case to the above-captioned district court. The case was referred to the undersigned pursuant to Local Rule 302(c)(21).

On July 15, 2010, defendant filed a motion to dismiss plaintiff's claims with prejudice pursuant to Federal Rules of Civil Procedure 8(a) and 12(b)(6) on the grounds that plaintiff's complaint fails to satisfy the notice requirements of Rule 8(a) and fails to state any legally cognizable claim upon which relief may be granted. The record reflects that defendant's motion was properly served on the pro se plaintiff. On August 27, 2010, the case came before the court for hearing on defendant's properly noticed motion. Brett B. Goodman, Esq. appeared telephonically for the defendant. No appearance was made by or on behalf of plaintiff.

Upon consideration of all written materials filed in connection with the motion and the entire file, the undersigned recommends that defendant's motion to dismiss be granted and this action be dismissed with prejudice.

LEGAL STANDARDS APPLICABLE TO MOTIONS TO DISMISS 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). The court is permitted to consider material which is properly submitted as part of the complaint, documents not physically attached to the complaint if their authenticity is not contested and the plaintiff's complaint necessarily relies on them, and matters of public record. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001).

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). The plaintiff must allege with at least some degree of particularity overt acts which the defendants engaged in that support the plaintiff's claims. 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)). Thus, 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. 1995).*fn1


The title of plaintiff's complaint reveals that the action arises from mortgage foreclosure proceedings. The following eleven claims are enumerated in the caption of the pleading: vacate and set aside foreclosure sale; intentional misrepresentation and deceit or fraud; predatory lending practices; breach of fiduciary duty; intentional violation of California Civil Code §§ 1916.7, 1920, and 1921; demand for accounting; unfair business practices; breach of covenant of good faith and fair dealing; declaratory relief; quiet title; and injunctive relief. (Compl. (Doc. No. 1 at 13-32) at 1.)

In his complaint plaintiff alleges as follows: the property at issue is residential real property located in Auburn in Placer County; defendant Bank of America was engaged in making and selling risky loans when plaintiff refinanced his property; defendant engaged in negligent lending practices in areas of Placer County primarily populated by minority races for the purpose of generating as many sub-prime loans as possible for sale to investors; defendant enticed minority borrowers to obtain loans they would not have qualified for under conventional loan practices; plaintiff was a victim of defendant's improper sales efforts; defendant paid a broker a fee to steer plaintiff into a higher rate loan; plaintiff was assured that the amount of the proposed loan would not exceed $129,500, but defendant paid an appraiser to appraise the property at an amount greater than its actual value; plaintiff discovered after loan closing that he had been misled; plaintiff was fraudulently induced by defendant Bank of America into refinancing his property through this tainted loan; in March 2008 plaintiff defaulted on his loan payments; between March 2008 and May 2010 plaintiff was deceived into believing that defendant would make a reasonable and fair loan modification; defendant did not qualify plaintiff for a loan modification agreement and did not offer to reduce the loan amount due; defendant commenced a non-judicial foreclosure proceeding and held a foreclosure sale with respect to the subject property on May 24, 2010. (Compl. ¶¶ 1-19 & 25.)

Plaintiff seeks rescission of the loan, compensatory and special damages, punitive and exemplary damages, an order reconveying the property to him, a declaration deeming defendant's actions to be unfair and deceptive business practices and deeming defendant to have no interest in the subject property, an accounting, an order requiring defendant to produce the original loan documents, an order quieting title, a preliminary injunction prohibiting defendant from selling or interfering with plaintiff's possession of the property pending resolution of this action, and costs of suit. (Compl. at 28-31.)

PLAINTIFF'S FAILURE TO OPPOSE DEFENDANT'S MOTION As noted, defendant filed its motion to dismiss on July 15, 2010. Plaintiff did not file timely written opposition to the motion, did not appear at the hearing held on August 27, 2010, and did not file any written opposition subsequent to the hearing. The court's docket for this case reflects that plaintiff has filed nothing in this action since it was removed from state court. Plaintiff's failure to appear at the properly noticed hearing on defendant's motion to dismiss may, in the discretion of the court, be deemed a statement of no opposition to the granting of the motion. See Local Rule 230(i). An inference of non-opposition in the present case is supported by plaintiff's failure to file written opposition combined with his failure to appear at the hearing. See Local Rule 230(c) ("No party will be entitled to be heard in opposition to a motion at oral arguments if opposition to the motion has not been timely filed by that party.").


The undersigned finds that plaintiff's failure to file written opposition and failure to appear at the hearing on defendant's motion to dismiss, considered together with plaintiff's failure to participate in this action since its removal to federal court, should be deemed a statement of no opposition to the granting of defendant's motion. Nonetheless, in light of plaintiff's pro se status, the undersigned has reviewed defendant's arguments in support of dismissal and finds them to be well taken with respect to each of plaintiff's claims.

At the outset, in connection with the pending motion defendant has requested judicial notice of two documents related to matters at issue. (Doc. No. 6.) Defendant's request for judicial notice will be granted pursuant to Federal Rule of Evidence 201. See Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001) (on a motion to dismiss, court may consider matters of public record); MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986) (on a motion to dismiss, the court may take judicial notice of matters of public record outside the pleadings). Accordingly, the undersigned takes judicial notice of plaintiff's Deed of Trust recorded October 4, 2005, and the California Department of Corporations' List of Licensees showing that Bank of America, N.A. is permanently exempted from compliance with Civil Code § 2923.52(a). (Def't's Req. for Judicial Notice in Supp. of Mot. to Dismiss, Exs. A & B.)

I. Wrongful Foreclosure/Rescission

In his first cause of action, plaintiff seeks to vacate and set aside the foreclosure sale of the subject property on the ground that the sale conducted was in violation of California Civil Code §§ 2923.5a and 2924. However, there does not appear to be a private right of action under California Civil Code § 2923.5. See Zendejas v. GMAC Wholesale Mortgage Co., No. 1:10-CV-00184 OWW GSA, 2010 WL 2629899, at *4-5 (E.D. Cal. June 29, 2010); Gaitan v. Mortgage Elec. Registration Sys., No. EDCV 09-1009 VAP (MANx), 2009 WL 3244729, at *9 (C.D. Cal. Oct. 5, 2009); Yulaeva v. Greenpoint Mortgage Funding, Inc., No. CIV. S-09-1504 LKK/KJM, 2009 WL 2880393, at *10-11 (E.D. Cal. Sept. 3, 2009). Moreover, plaintiff merely accuses defendant of "illegal recording of the Notice of Default" but fails to allege that the notice of default was improper in any way and fails to allege violation of any specific provision of California Civil Code § 2923.5(a) or § 2924. Finally, to the extent that § 2924 requires compliance with § 2923.52, defendant Bank of America is exempted from the compliance provisions.

The court also notes that to the extent plaintiff seeks an order declaring the foreclosure proceedings to have been in violation of state law and/or for the rescission of his mortgage loan agreement, his claim fails because he has not alleged the ability to tender the entire amount due on the mortgage loan to defendant.

"A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust." Karlsen v. American Sav. & Loan Assn., 15 Cal. App.3d 112,117 (Cal. App.2d Dist.1971). The overwhelming majority of California district courts utilize the Karlsen rationale in examining wrongful foreclosure claims. Anaya v. Advisors Lending Group, 2009 U.S. Dist. LEXIS 68373, 2009 WL 2424037 (E.D. Cal. August 3, 2009) ("Plaintiff offers nothing to indicate that she is able to tender her debt to warrant disruption of non-judicial foreclosure"); Alicea v. GE Money Bank, 2009 U.S. Dist. LEXIS 60813, 2009 WL 2136969 (N.D. Cal. July 16, 2009) ("When a debtor is in default of a home mortgage loan, and a foreclosure is either pending or has taken place, the debtor must allege a credible tender of the amount of the secured debt to maintain any cause of action for foreclosure."); Montoya v. Countrywide Bank, 2009 U.S. Dist. LEXIS 53920, 2009 WL 1813973 (N.D. Cal. June 25, 2009) ("Under California law, the "tender rule" requires that as a precondition to challenging a foreclosure sale, or any cause of action implicitly integrated to the sale, the borrower must make a valid and viable tender of payment of the secured debt"). The application of the "tender rule" prevents "a court from uselessly setting aside a foreclosure sale on a technical ground when the party making the challenge has not established his ability to purchase the property." Williams v. Countrywide Home Loans, 1999 U.S. Dist. LEXIS 14550, 1999 WL 740375 (N.D. Cal. Sept. 15, 1999).

Somera v. Indymac Federal Bank, FSB, No. 2:09-cv-1947-FCD-DAD, 2010 WL 761221, at *8 (E.D. Cal. Mar. 3, 2010). See also Yamamoto v. Bank of New York, 329 F.3d 1167, 1171 (9th Cir. 2003) (holding that rescission "should be conditioned on repayment of the amounts advanced by the lender" and explaining that, because rescission is a remedy that restores the status quo ante, a borrower seeking rescission is required to allege ability to tender the loan proceeds).

For all of these reasons, defendant's motion to dismiss plaintiff's first cause of action should be granted.

II. Intentional Misrepresentation, Deceit and Fraud

In his second cause of action, plaintiff seeks damages for alleged intentional misrepresentation, deceit and fraud. In California, an action for relief on the ground of fraud or mistake must be brought within three years after the aggrieved party discovers the facts constituting fraud or learns facts sufficient to make a reasonably prudent person suspicious of fraud. Cal. Code of Civ. Proc. ยง 338(d); Platt Elec. Supply, Inc. v. EOFF Elec., Inc., 522 F.3d 1049, 1054 (9th Cir. 2008). Plaintiff alleges that he was fraudulently induced to refinance his property on September 28, 2005, and discovered the fraud immediately after loan origination. Plaintiff alleges that he then made payments on the loan for three ...

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