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Robert R Moreno, Susan A Adcock v. Wells Fargo Home Mortgage

April 12, 2011


The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge


Presently before the Court is Defendant Wells Fargo Bank, N.A.'s motion to dismiss Plaintiffs' first amended complaint. (Doc. No. 14 (Mot. to Dismiss).) Also before the Court are Plaintiffs' opposition (Doc. No. 16 (Opp'n)) and Defendant's reply (Doc. No. 18 (Reply)). After consideration, the Court GRANTS Defendant's motion to dismiss.


In November 2006, Plaintiffs obtained a loan from Defendant Wells Fargo Bank, N.A. (Wells Fargo) secured by a deed of trust on their home. (MTD at 5.) Plaintiffs contacted Wells Fargo in July 2009 regarding a loan modification because Plaintiffs were having difficulty making the monthly payments on their loan. (FAC ¶ 10.) One thing led to another, and Plaintiffs' counsel soon began "a lengthy and ultimately fruitless effort to have a substantive conversation with any Wells Fargo representative regarding the options that may be available for a Loan Modification." (FAC ¶ 12.) After several months passed and many letters exchanged, Wells Fargo recorded a Notice of Default on January 26, 2010. (FAC ¶ 19.) Plaintiffs continued to send letters, attempting to work out a loan modification. (See FAC ¶¶ 20--24.) It was all for naught, as on April 27, 2010, Plaintiffs received a Notice of Trustee's Sale informing them that their home was to be auctioned off. (Id. at ¶ 25.) This was the last straw, and Plaintiffs filed suit-ultimately ending up before this Court.

On December 1, 2010, Plaintiffs filed their FAC, alleging four causes of action: 1) breach of the implied duty of good faith and fair dealing; 2) negligent misrepresentation; 3) fraud and deceit; and 4) declaratory relief. (Doc. No. 12 (FAC).) Faced with these allegations, Wells Fargo responded with the present motion to dismiss. (Doc. No. 14 (Mot. to Dismiss).)


Federal Rule of Civil Procedure 12(b)(6) allows a party to assert by motion the defense that the complaint "fail[s] to state a claim upon which relief can be granted," generally known as a motion to dismiss. The Court evaluates whether a complaint states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil Procedure 8(a), which requires a "short and plain statement of the claim" showing that the pleader is entitled to relief. Although Rule 8 "does not require 'detailed factual allegations,' . . . it [does] demand[] more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, - U.S.- , 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, "a plaintiff's obligation to provide the 'grounds' for 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." Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 557).

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible when the facts pleaded "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556). That is not to say that the claim must be probable, but there must be "more than a sheer possibility that a defendant has acted unlawfully." Id. Facts "'merely consistent with' a defendant's liability" fall short of a plausible entitlement to relief. Id. (quoting Twombly, 550 U.S. at 557). Further, the Court need not accept as true "legal conclusions" contained in the complaint. Id. This review requires context-specific analysis involving the Court's "judicial experience and common sense." Id. at 1950. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged- but it has not 'show[n]'- 'that the pleader is entitled to relief.'" Id.

When a motion to dismiss is granted, "leave to amend should be granted 'unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.'" DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). In other words, the Court may deny leave to amend if amendment would be futile. See id.; Schreiber Distrib., 806 F.2d at 1401.


1. Breach of the Implied Covenant of Good Faith and Fair Dealing

Plaintiffs' first cause of action alleges that Wells Fargo breached the implied covenant of good faith and fair dealing by failing to comply with California Civil Code § 2923.5. (FAC ¶ 34.) Section 2923.5 requires several things, many of which Wells Fargo allegedly failed to do. For instance, Plaintiffs allege that Wells Fargo failed to "contact or attempt to contact Plaintiffs in a good faith effort to avoid foreclosure." (FAC ¶ 34.) This claim fails, however, as the asserted portions of § 2923.5 have been preempted by the Home Owners' Loan Act of 1933, 12 U.S.C. § 1461 et seq. See Quintero Family Trust v. OneWest Bank, F.S.B., 2010 WL 2618729, at *6 (S.D. Cal. June 25, 2010); see also Giordano v. Wachovia Mortg., F.S.B., 2010 WL 5148428, at *2 (N.D. Cal. Dec. 14, 2010). As a result, this claim is DISMISSED WITH PREJUDICE insofar as it is based on alleged violations of § 2923.5.

2. Negligent Misrepresentation of Facts

Plaintiffs' second cause of action alleges negligent misrepresentation of facts by Defendants Wells Fargo and LoanStar. Under California law, plaintiffs asserting negligent misrepresentation claims must establish, among other things, that defendants misrepresented a past or existing material fact. DeLeon v. Wells Fargo Bank, N.A., 2011 WL 311376, at *9 (N.D. Cal. Jan. 28, 2011) (citing Nat'l Union Fire Ins. Co. v. Cambridge Integrated Servs., ...

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