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Laura Gens v. Wachovia Mortgage Corp.

May 10, 2011


The opinion of the court was delivered by: Lucy H. Koh United States District Judge


United States District Court For the Northern District of California

In the TAC, Plaintiff reasserts various federal claims in connection with the default and foreclosure 21 proceedings on property located at 4141 Old Trace Road, Palo Alto, California. Defendants are 22 FSB; Wachovia Mortgage, FSB; Golden West Savings Association Co; and Financial Title 24

Motion to Dismiss [dkt. #66] and Motion to Strike [dkt. #67] Plaintiff's TAC. Pursuant to Civil 26 Local Rule 7-1(b), the Court deems Defendants' motions appropriate for resolution without oral 27 argument, and vacates the May 12, 2011 motion hearing. For the reasons discussed below, 28

On January 3, 2011, the Court granted Defendants' motion to dismiss the Second Amended Complaint (SAC) in part with prejudice and in part with leave to amend. See January 3, 2011 18 Laura Gens, proceeding pro se, filed a timely Third Amended Complaint ("TAC"). See Dkt. #65. 20 Wachovia Mortgage Corporation; Cal-Western Reconveyance Corporation; World Savings Bank, 23 Company (collectively "Defendants"). Presently before the Court are two motions: Defendants' 25


A.Procedural History

Plaintiff filed the instant action in Santa Clara County Superior Court on February 26, 2010.

Defendants removed the action to federal court on March 12, 2010. On March 18, 2010, Plaintiff 7 filed an ex parte application for a temporary restraining order to prevent a Trustee's Sale on the 8 Property scheduled for March 22, 2010. The Honorable Jeremy Fogel granted Plaintiff's 9 application for a temporary restraining order on March 19, 2010. See Dkt. #18. Plaintiff then filed 10 the SAC on March 25, 2010. After an unsuccessful settlement conference in April 2010, Judge

Order by Judge Jeremy Fogel Denying Prelim. Inj. [dkt. #46] ("May 12, 2010 Order"). The May 14 12, 2010 Order was based upon Plaintiff's First Amended Complaint, but also noted that the "new 15 facts alleged by Plaintiff in the SAC would not alter the determination of the instant motion." See 16 id. at 3. On May 21, 2010, Plaintiff filed for Chapter 11 bankruptcy in the United States 17 Bankruptcy Court for the Northern District of California (Case No. 10-55305). The bankruptcy 18 code provides for an automatic stay of any judicial or administrative proceeding against a debtor, 19 but Judge Fogel ruled that the automatic stay provision did not apply to this action because this 20 case involves "a claim by, not against, the debtor." See June 7, 2010 Order by Judge Jeremy Fogel 21

August 2, 2010. 23

24 dismiss in part with prejudice and in part with leave to amend. The Court identified serious 25 deficiencies in Plaintiff's SAC, but allowed Plaintiff an additional opportunity to allege facts 26 sufficient to state a claim with respect to certain federal claims. However, the Court expressly 27 28

Fogel denied a preliminary injunction on the ground that Plaintiff did not establish a likelihood of success on the merits on any of the claims in her First Amended Complaint. See May 12, 2010 13

Re: Wachovia's Application for Instructions [dkt. #48]. This case was reassigned to this Court on 22 As noted above, in the January 3, 2011 Order, this Court granted Defendants' motion to warned Plaintiff that failure to remedy the serious deficiencies in her complaint would result in 2 dismissal of her remaining claims with prejudice. 3

Now before the Court are Defendants' motions to dismiss the TAC and to strike portions of 4 the TAC. Plaintiff has filed an opposition to both motions, and Defendants have filed a reply. 5 surrounding Plaintiff's loan and eventual default. Because most of that factual background has not 8 changed, the Court will only highlight the facts necessary to the determination of the instant 9 motions. 10

B.Factual Allegations in Plaintiff's TAC

The May 12, 2010 Order and the January 3, 2011 Order set forth the factual background

On November 17, 2006, Plaintiff obtained a $1.62 million adjustable rate mortgage (ARM)

loan from Defendant World Savings Bank. TAC ¶ 10. The loan was secured by a Deed of Trust 12 against the property at 4141 Old Trace Road, Palo Alto, California (the "Property"). According to 13 $1.56 million. Id. Plaintiff alleges that the $1.62 million was made "without proper due diligence" 15 and without verification of the borrower's income, thus creating an "illegal loan." Id. at ¶ 18. 16

17 in the SAC itself, that although she signed closing documents for the loan, Defendants gave her a 18 packet of closing documents for "another transaction, not hers." Id. at ¶ 12. However, Plaintiff 19 continues, "This fact was not discovered for some time. There was no need to review the 20 documents contained in the Financial Title packet until the latter half of 2009 when Wachovia / 21

Wells Fargo set in motion a non-judicial foreclosure sale and sheriff's sale under yet a new 22 business name." Id. 23 24 monthly payments and other clerical errors. Id. at ¶ 17. Plaintiff alleges that Defendants did not 25 provide her "with accurate material disclosures required until TILA," Id. at ¶ 33, and also notes 26 that "the notices given at closing [were] incomprehensible." Id. at ¶ 34. However, Defendants 27 submit with their opposition papers a Federal Truth in Lending Disclosure Statement ("TILDS") 28 Plaintiff, the new $1.62 million loan paid off a prior loan she had from Washington Mutual for 14

Plaintiff further alleges, as she did in her opposition the motion to dismiss the SAC but not

Plaintiff also alleges a "litany of errors" in servicing the loan, including errors in calculating and Notice of Right to Cancel ("NRC"), both of which are acknowledged and signed as received 2 by Plaintiff as of November 2006. See Defs.' Request for Judicial Notice ("RJN"), Exh. 7 (TILDS 3 signed by Plaintiff) and Exh. 8 (NRC signed by Plaintiff). 4

5 assignment of the loan from World Savings, nor a copy of the Notice of Default." TAC ¶ 24. 6

However, Defendants seek judicial notice of evidence that Wachovia did not substitute as 7 beneficiary, but rather World Savings Bank changed its name to Wachovia effective December 31, 8

In April 2008, a Notice of Default was recorded against the Property by the trustee Golden

West Savings Association Service Company. On November 4, 2008, a Notice of Trustee's Sale 11 was recorded, which identified a total amount owed of approximately $1.85 million. On November 18, 2008, Plaintiff paid Wachovia $80,000. TAC ΒΆ 25. Plaintiff contends that this 13 payment to Wachovia was "to formally reinstate the loan and make modifications to the loan to 14 correct errors in the loan servicing." Id. Plaintiff, however, does not allege ...

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