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Balbir Singh v. Wells Fargo Bank N.A.


May 26, 2011



This matter is before the court on defendant Wells Fargo Bank N.A. dba Wells Fargo Home Mortgage's ("Wells Fargo's") February 23, 2011 filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and February 23, 2011 motion for more definite statement. On February 25, 2011, defendant Provident Savings Bank ("Provident") filed a joinder to both motions. Upon review of the motions and the documents in support and opposition, and good cause appearing therefor, THE COURT FINDS AS FOLLOWS:


This matter arises from foreclosure proceedings initiated against real property owned by plaintiff and his wife, Swaran Kaur ("Kaur")*fn1 , as joint tenants, and located at 17765 Daffodil Hill Street, Lathrop, CA 95330 ("the Property)." Before the court is the second judicial action concerning the Property. The first action, filed solely by Kaur in the San Joaquin County Superior Court, was dismissed following the state court's order sustaining Wells Fargo's demurrer. Both actions are discussed more fully infra.

1. The State Court Action*fn2

On March 29, 2010, Kaur, proceeding with counsel, filed a complaint in the San Joaquin County Superior Court ("the state court action") against Wells Fargo, Cal-Western Reconveyance ("Cal-Western")*fn3 , and Shane L. Hart and Michelle G. Hart Revocable Family Trust ("the Hart Family Trust")*fn4 . See Motion to Dismiss ("MTD"), Ex. 5. Kaur's complaint was premised on claims of wrongful foreclosure proceedings initiated against the Property, which was secured by a home mortgage loan in the amount of $159,600.00 ("the mortgage) obtained on March 13, 2009. Id. at 2, 4. The Promissory Note identifies Kaur as the sole Borrower and Provident as the lender. Id. at 4. Kaur and plaintiff, joint tenants, were listed as "Borrowers" on the Deed of Trust. Id.

On November 17, 2009, a Notice of Default ("NOD") was recorded in San Joaquin County. MTD, Ex. 5 at 5. Kaur contacted Wells Fargo via telephone upon receipt of the NOD and was informed that she could cure the default by submitting a payment in the amount of $5,628.01. Id. Kaur mailed a check in that amount to Wells Fargo, who promptly returned it for Kaur's failure to include attorneys' fees. Id. Kaur, who contends that she was not advised of attorneys' fees during the initial telephone call with Wells Fargo, contacted Wells Fargo again, who stated that $7,493.79 would be sufficient to cover all payment charges, attorneys' fees and miscellaneous fees. Id. On December 28, 2009, Kaur submitted a cashier's check for that amount, which Wells Fargo accepted. Id.

On February 4, 2010, Kaur received a notice regarding a short sale of the Property. MTD, Ex. 5 at 6. Kaur immediately contacted Wells Fargo, who stated that the short sale notice was sent in error and that Wells Fargo's internal departments were experiencing communication problems. Id. On February 18, 2010, Cal-Western, who was substituted as trustee on January 26, 2010, recorded a Notice of Trustee's Sale. Id. at 7. On March 18, 2010, the Property was sold to the Hart Family Trust. Id.

Kaur's March 29, 2010 complaint set forth twelve causes of action: (1) breach of contract; (2) promissory estoppel; (3) equitable estoppel; (4) waiver; (5) breach of covenant of good faith and fair dealing; (6) violation of Cal. Civ. Code §§ 2923.5 and 2923.6; (7) violation of Cal. Bus. & Prof. Code § 17200; (8) unjust enrichment; (9) accounting; (10) set aside the trustee's sale; (11) cancellation of trustee's deed; and (12) quiet title. See MTD, Ex. 4.

On April 18, 2010, Kaur filed a first amended complaint alleging fourteen causes of action; in addition to those set forth in the complaint, Kaur added violation of Cal. Civil Code § 2934 and injunctive relief / temporary restraining order. MTD, Ex. 5. Wells Fargo filed a demurrer to the first amended complaint, which was sustained on July 26, 2010 with leave to amend. Id., Ex. 6.

On August 4, 2010, Kaur filed a second amended complaint setting forth ten causes of action: (1) breach of contract; (2) promissory estoppel; (3) equitable estoppel; (4) waiver; (5) breach of covenant of good faith and fair dealing; (6) violation of Cal. Civ. Code §§ 2923.5 and 2923.6; (7) violation of Cal. Civil Code § 2934; (8) violation of Cal. Bus. & Prof. Code § 17200; (9) unjust enrichment; and (10) accounting. MTD, Ex. 7.

On January 4, 2011, Wells Fargo's second demurrer was sustained without leave to amend. Id., Ex. 8. Judgment was entered in favor of Wells Fargo on January 14, 2011*fn5 , and the state action filed by Kaur was dismissed. Id., Exs. 9-10.

2. The Instant Action

On January 21, 2011, plaintiff, proceeding pro se, filed a complaint in the San Joaquin County Superior Court. On January 26, 2011, plaintiff filed the operative first amended complaint ("FAC"), which was removed to this court by Wells Fargo on February 11, 2011. The FAC -- a 221-page, 843-paragraph document -- is premised upon the following causes of action: (1) declaratory relief; (2) fraud and deceit; (3) fraud misrepresentation; (4) breach of contract; (5) breach of oral contract; (6) promissory estoppel; (7) equitable estoppel; (8) set aside foreclosure; (9) the security first rule; (10) conspiracy; (11) accounting; (12) breach of covenant of good faith and fair dealing; (13) breach of fiduciary duty; (14) intentional infliction of emotional distress; (15) negligent infliction of emotional distress; (16) violation of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601-2617; (17) violation of California Business and Professions Code § 17500; (18) violation of California Business and Professions Code § 17200; and (19) violation of California Civil Code § 1788.17.*fn6

In the FAC, plaintiff contends that he obtained a loan in the amount of $159,600.00 ("the mortgage") from Provident on March 13, 2009, which was secured by a deed of trust on the Property.*fn7 See FAC at 6, 9. Plaintiff supplements his FAC with certain exhibits, including a grant deed, which he references in the FAC as evidence that he entered into this mortgage.*fn8 See Doc. No. 23. The grant deed does, indeed, list plaintiff and Kaur as borrowers to hold the Property as joint tenants. Id. The Promissory Note submitted by Wells Fargo, however, evidences that the mortgage was obtained solely by Kaur; plaintiff is not listed as a borrower on that document. See MTD, Ex. 2. Plaintiff's allegations in the FAC are practically identical to those alleged by Kaur in the state court action.


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, 555, 127 S. Ct. 1955, 1974 (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).

The court is permitted to consider material properly submitted as part of the complaint, documents not physically attached to the complaint if their authenticity is not contested and the 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). Matters of public record include pleadings and other papers filed with a court. Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986). The court need not accept as true conclusory allegations, unreasonable inferences, or unwarranted deductions of fact. Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).

DISCUSSION 1. Federal Jurisdiction

In light of the initial state court action filed by Kaur, defendants seek dismissal of the FAC on res judicata grounds. Alternatively, they seek dismissal of all causes of action for failure to state a claim. Review of the FAC reveals that plaintiff's only federal cause of action arises under RESPA. For the reasons set forth below, the undersigned finds that the court lacks jurisdiction over plaintiff's FAC.

Examination of the FAC reveals that, procedurally, plaintiff's RESPA claim fails. Although plaintiff's sixteenth cause of action is brought pursuant to 12 U.S.C. § 2607(b), plaintiff vaguely states that "Defendants, and each of them, as will be set forth herein violated both the terms and spirit of sections 12 U.S.C. § 2601, et seq., as more particularly alleged in this complaint." FAC at 209, ¶ 798. This statement fails the pleading requirements of the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 8(a)(1) ("a short and plain statement of the claim showing that the pleader is entitled to relief").

Substantively, plaintiff's claim also fails. Congress enacted RESPA to control real estate settlement costs by "insur[ing] that consumers throughout the Nation are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country." 12 U.S.C. § 2601(a). To effectuate these objectives, RESPA requires advance disclosure of settlement costs, the elimination of kickbacks or referral fees, and a reduction of the amount that buyers are required to place in escrow accounts for taxes and insurance. Id. § 2601(b).

Section 2605 of RESPA relates to the disclosures and communications required regarding the servicing of mortgage loans, and provides that loan servicers have a duty to respond to Qualified Written Requests ("QWRs") from borrowers asking for information relating to the servicing of their loan. 12 U.S.C. § 2605(e). Under RESPA, lenders of federally related mortgage loans must disclose whether servicing of a loan may be assigned, sold or transferred to loan applicants. 12 U.S.C. § 2605(a). Additionally, borrowers may send QWRs under RESPA to loan servicers for information relating to the servicing of their loan. 12 U.S.C. § 2605(e)(1). Loan servicers have 60 days after the receipt of a QWR to respond to the borrower inquiry. 12 U.S.C. § 2605(e)(2). Further, Section 8 of RESPA, 12 U.S.C. § 2607, the section pursuant to which the FAC is brought, is the anti-kickback provision. This section applies only to settlement services and prohibits kickbacks which are "incident to or a part of a real estate settlement service...." Id. § 2607(a). Section 8 also prohibits fee splitting "of any charge made or received for the rendering of a real estate settlement service." 26 U.S.C. § 2607(b).

Regardless of the particular section identified by plaintiff, the RESPA claim must fail because he is not a borrower on the loan. See, e.g., Wilson v. JPMorgan Chase Bank, N.A., 2010 WL 2574032 (E.D. Cal. 2010). Insofar as plaintiff contends there were RESPA violations at the time of the origination of the loan, plaintiff lacks standing as he did not sign the Promissory Note. See id. To the extent plaintiff argues that he submitted a QWR to Wells Fargo, Wells Fargo only had the duty to respond to QWRs sent "from the borrower" -- in this case, Kaur. Wells Fargo was under no obligation to respond to any requests sent by plaintiff.

See 12 U.S.C. § 2605(e)(1)(A). Because plaintiff's RESPA claim fails as a matter of law, the court lacks federal subject matter jurisdiction.

2. Leave to Amend

Having carefully considered the allegations in the FAC, the parties' briefs and relevant legal authority, the undersigned concludes that it does not appear plaintiff can cure the deficiencies noted in a second amended complaint. In his opposition, plaintiff appears to assert a new claim under the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f. Although this is procedurally improper, the court, faced with the question of whether plaintiff should be granted leave to amend the FAC, should decline to extend the opportunity. The FAC and the judicially noticed exhibits unequivocally demonstrate that Kaur was the sole borrower of the mortgage, that plaintiff did not receive any loan proceeds, and that he only signed the Deed of Trust to perfect the security instrument. Assuming that plaintiff's allegations are true, plaintiff has no standing to request rescission or damages under TILA because he was not a party to the loan contract and therefore is not an "obligor" or "consumer" with the right to rescind under TILA. See Johnson v. First Fed. Bank of Cal., 2008 WL 2705090, at *5 (N.D. Cal. Jul.8, 2008) (holding a party who was not named in the loan papers was not a "consumer" under TILA and therefore had no standing to bring a TILA claim). Accordingly, leave to amend should not be granted. See McHenry v. Renne, 84 F.3d 1172, 1174, 1179-80 (9th Cir. 1996) (affirming dismissal of amended complaint where it failed to satisfy Rule 8's pleading requirements).

3. Supplemental Jurisdiction

Since only plaintiff's state law claims remain, the court may consider whether to continue exercising supplemental jurisdiction. See Acri v. Varian Assocs., Inc., 114 F.3d 999, 1000 (9th Cir. 1997) (en banc) (suggesting that a district court may, but need not, sua sponte decide whether to continue exercising supplemental jurisdiction under 28 U.S.C. § 1367(c)(3) after all federal law claims have been dismissed). Under 28 U.S.C. § 1367(c)(3), a district court "may decline to exercise supplemental jurisdiction over a [state law] claim" when "all claims over which it has original jurisdiction" have been dismissed. "While discretion to decline supplemental jurisdiction over state law claims is triggered by the presence of one of the conditions in § 1367(c)(3), it is informed by the . . . values of economy, convenience, fairness, and comity." Acri, 114 F.3d at 1001. "[I]n the usual case in which all federal-law claims are eliminated before trial, the balance of [the] factors to be considered . . . will point toward declining to exercise jurisdiction over the remaining state-law claims." Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988). "Further, primary responsibility for developing and applying state law rests with the state courts." Curiel v. Barclays Capital Real Estate Inc., 2010 WL 729499, at *1 (E.D. Cal. 2010).

Here, considerations of comity weigh heavily in favor of declining supplemental jurisdiction since all remaining claims arise under state law. "Needless decisions of state law should be avoided ...." Gibbs v. United Mine Workers of Am., 383 U.S. 715, 726 (1966). Further, federal judicial economy is promoted by declining to exercise supplemental jurisdiction. See Otto v. Heckler, 802 F.2d 337, 338 (9th Cir. Cir.1986) (stating that "[t]he district court, of course, has the discretion to determine whether its investment of judicial energy justifies retention of jurisdiction"). Here, "[t]here is no prevailing reason for this court to maintain jurisdiction to preserve judicial economy." Meza v. Matrix Serv., 2010 WL 366623, at *4 (E.D. Cal. 2010). Finally, considerations of convenience also weigh against exercising supplemental jurisdiction since the Superior Court of California, County of San Joaquin is located in close proximity to this federal court and was where this matter was initially filed. See id. (finding that convenience weighed against the exercise of supplemental jurisdiction where "the state and federal fora are located in Sacramento, only blocks from one another, making both equally convenient for the parties."). Accordingly, the pertinent factors do not weigh in favor of the continued exercise of jurisdiction, and the court declines to exercise supplemental jurisdiction over plaintiff's remaining state law claims. Therefore, those claims should be remanded under 28 U.S.C. § 1367(c)(3).

Accordingly, IT IS HEREBY ORDERED that:

1. The August 4, 2011 hearing on this matter is vacated;

2. The September 8, 2011 initial scheduling conference is vacated; and IT IS HEREBY RECOMMENDED THAT:

1. Wells Fargo's February 23, 2011 motion to dismiss be partially granted;

2. Wells Fargo's February 23, 2011 motion for more definite statement be denied without prejudice to its renewal in state court; and

3. This matter be remanded to the San Joaquin County Superior Court for further proceedings.

These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).


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