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Luis Rodriguez v. Wells Fargo Bank

July 20, 2011

LUIS RODRIGUEZ,
PLAINTIFF,
v.
WELLS FARGO BANK, N.A.; FIDELITY NATIONAL TITLE INC. COMPANY; FREDDIE MAC; CAL-WESTERN RECONVEYANCE CORP; AND DOES 1 THROUGH 100, INCLUSIVE,
DEFENDANTS.



ORDER GRANTING DEFENDANT‟S MOTION TO DISMISS

This matter comes before the Court on Defendant Wells Fargo Bank, N.A.‟s ("Defendant") Motion to Dismiss (Doc. #4) Plaintiff Luis Rodriguez‟s ("Plaintiff") Complaint (Doc. #1, Exhibit A), pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff *fn1 opposes Defendant‟s Motion to Dismiss (Docs. #7, #8).

Plaintiff‟s opposition was due no later than May 18, 2011. See E.D. Cal. L.R. 230(c) (requiring an opposition to be "served not less than fourteen (14) days preceding the noticed (or continued) hearing date."). On May 24, 2011, Defendant filed a declaration, stating that to date it had not received an opposition, or a statement of non-opposition, to Defendant‟s Motion to Dismiss from the Plaintiff (Doc. # 6). Plaintiff then filed an opposition on May 26, 2011 (Doc. #8). Although Plaintiff‟s opposition is untimely, the Court will consider it and decide Defendant‟s Motion to Dismiss on the merits. However, this Court will impose sanctions on Plaintiff‟s counsel for the late filing.

For the reasons set forth below, Defendant‟s Motion to Dismiss is granted in its entirety.

I. FACTUAL AND PROCEDURAL BACKGROUND

This action arises out of the purchase, foreclosure, and trustee‟s sale, which was scheduled for February 15, 2011, of real property located at 951 Snow Lilly Avenue in Galt, California ("Subject Property"). See Doc. #1, Plaintiff‟s Complaint ("Comp."); Doc. #8. Around October, 2006, Plaintiff successfully applied for a loan from Defendant for the purchase of the Subject Property. Id. Plaintiff seeks relief based on alleged wrongful acts by Defendant in the loan origination process. Id.*fn2

II. OPINION

A. Legal Standard

A party may move to dismiss an action for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). In considering a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). Assertions that are mere "legal conclusions," however, are not entitled to the assumption of truth. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To survive a motion to dismiss, a plaintiff needs to plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Dismissal is appropriate where the plaintiff fails to state a claim supportable by a cognizable legal theory. Balistreri v. Pacifica Police Dep‟t, 901 F.2d 696, 699 (9th Cir. 1990).

Upon granting a motion to dismiss for failure to state a claim, the court has discretion to allow leave to amend the complaint pursuant to Federal Rule of Civil Procedure section 15(a). "Dismissal with prejudice and without leave to amend is not appropriate unless it is clear . . . that the complaint could not be saved by amendment." Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

Generally, the Court may not consider material beyond the pleadings in ruling on a motion to dismiss for failure to state a claim, unless the material is attached to, or relied on by, the complaint, or the court takes judicial notice of matters of public record, provided the facts are not subject to reasonable dispute.

E.g., Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. Mar. 30, 2009). Here, Defendant requests the Court take judicial notice of the Deed of Trust securing the loan, which was recorded in the County of Sacramento. MTD at pg. 21-37. Plaintiff did not dispute the authenticity of this document. See Doc. #8.

B. Claims for Relief

1. Breach of Fiduciary Duty

Plaintiff asserts that a fiduciary relationship existed between the Plaintiff and Defendant, which the Defendant breached by acting for its own benefit. Plaintiff‟s Complaint, Doc. #1 ("Comp.") at ¶¶ 28-31. Defendant argues that Plaintiff did not plead an essential element of this cause of action, and therefore, his claim must be dismissed. Defendant‟s Motion to Dismiss, Doc. #4 ("MTD") at pg. 2-3.

"The elements of a cause of action for breach of fiduciary duty are: 1) the existence of a fiduciary duty; 2) a breach of the fiduciary duty; and 3) resulting damage." Pellegrini v. Weiss, 165 Cal.App.4th 515, 524 (Cal. Ct. App. 6d 2008).

As Defendant points out in its Motion to Dismiss, there is no fiduciary relationship between a debtor and creditor. See, e.g., Price v. Wells Fargo Bank, 213 Cal.App.3d 465, 476 (Cal. Ct. App. 1989) (citing Downey v. Humphreys, 102 Cal.App.2d 323, 332 (Cal. Ct. App. 1951)). Moreover, in the lending context, "a financial institution owes no duty of care to a borrower when the institution‟s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money." Nymark v. Heart Federal Savings & Loan Ass‟n, 231 Cal.App.3d 1089, 1096 (Cal. Ct. App. 3d 1991).

As set forth in Plaintiff‟s complaint, the relationship 4 between Plaintiff and Defendant is that of a debtor-creditor, 5 which does not create a fiduciary relationship between the 6 parties. Cf. Comp. with Price v. Wells Fargo Bank, 213 Cal.App.3d 465 (Cal. Ct. App. 1989). Accordingly, without this essential element, Plaintiff‟s cause of action for breach of fiduciary duty cannot stand and is, therefore, dismissed with prejudice. See Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). Allowing Plaintiff leave to amend this claim would be futile; Plaintiff‟s attorneys have previously pled causes of action for breach of fiduciary duty under similar circumstances, which were all dismissed when the defendant lending institution raised the same issue, and it is clear that there is no relationship between Plaintiff and Defendant in this case beyond that of a typical debtor-creditor relationship. Compare Madrid v. J.P. Morgan Chase, 2009 WL 3255880, 09-cv-00731 JAM-GGH, Docs. #1, 23, 25; see also Dyachishin v. America‟s Wholesale Lenders, 2010 WL 1525703 at *4 (E.D. Cal. April 15, 2010).

2. Breach of Covenant of Good Faith and Fair Dealing Plaintiff alleges that Defendant breached the covenant of good faith and fair dealing "represented by the terms of the 30 yr loan, Note, and Deed of Trust," by failing to provide certain loan documents or disclosures, in English and Spanish, failing to verify Plaintiff‟s income, and placing Plaintiff in an improper loan transaction. Comp. at ¶¶ 36-38.

In general, "[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement." Marsu, B.V. v. Walt Disney Co., 185 F.3d 932, 937 (9th Cir. 1999) (citations and internal quotations omitted).

Liability can arise when one party does something to "injure the right of the other [party] to receive the benefits of the agreement." Andrews v. Mobile Aire Estates, 125 Cal.App.4th 578, 589 (Cal. Ct. App. 2005). Importantly, "the implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated in the contract." Racine & Laramie, Ltd. V. Department of Parks & Recreation, 11 Cal.App.4th 1026, 1032 (Cal. Ct. App. 1992) (emphasis added).

As argued by the Defendant, Plaintiff has failed to allege the Defendant interfered with any of Plaintiff‟s rights under the express terms of the contract. MTD at pg. 3-5. Indeed, Plaintiff fails to point to any terms of the contract that were affected by the Defendant. See Comp. at ¶¶ 36-38. Because Plaintiff fails to provide facts substantiating his claim for breach of the implied covenant of good faith and fair dealing, Defendant‟s Motion to Dismiss this claim is granted.

Additionally, Plaintiff‟s attorneys have made similar claims in previous cases, all of which have been dismissed because they do not relate to obligations under the contract, an essential requirement to maintain a cause of action for breach of the implied covenant of good faith and fair dealing. See, e.g., Madrid v. J.P. Morgan Chase Bank, N.A., 2009 WL 3255880 (E.D. Cal. Oct. 8, 2009), 09-cv-00731 JAM-GGH, Docs. #1, 23, 25, 30, 40, 42, 43, 51; Bezverkhov v. Cal-Western Reconveyance Corp., 2009 WL 4895581 at *6-7 (E.D. Cal. Dec. 11, 2009). In light of the dearth of facts in Plaintiff‟s complaint, and Plaintiff‟s attorneys‟ knowledge that identical claims pled as they were in Plaintiff‟s complaint have repeatedly failed as a matter of law, allowing leave to amend would be futile. Accordingly, Plaintiff‟s cause of action for breach of the implied covenant of good faith and fair dealing is dismissed with prejudice.

3. Deceit, California Civil Code §§ 1709-10 Plaintiff alleges Defendant made misrepresentations to him, which caused Plaintiff to "pay more for his loan than the amount Plaintiff could have qualified for." Comp. at ¶ 44-45.

Deceit is defined as the "suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact." Cal. Civ. Code § 1710. In essence, deceit is a fraud claim. See, e.g., Diaz v. Federal Express Corp., 373 F.Supp.2d 1034, 1066-1067 (C.D. 2005) (treating a claim under Section 1709 as a fraud claim).

Accordingly, the heightened pleading standards of Federal Rule of Civil Procedure 9(b) apply. Id.; see also FED. R. CIV. P. 9(b)

(requiring a party to "state with particularity the circumstances constituting fraud or mistake").

Plaintiff‟s claims are identical to those plead in other complaints under "Fraud" sections. Cf., e.g., Madrid v. J.P. Morgan Chase Bank, N.A., 2009 WL 3255880 (E.D. Cal. Oct. 8, 2009), 09-cv-00731 JAM-GGH, Doc. #1 at ¶¶ 60, 64-66, 68. Defendant‟s Motion to Dismiss points out that Plaintiff‟s complaint is completely devoid of facts to substantiate his claim for "Deceit." MTD at pg. 5-6. As made clear by this Court, and others in the

Northern and Eastern Districts of California, Plaintiff‟s allegations are insufficient to state a claim under the heightened pleading requirements. Madrid, 2009 WL 3255880 (E.D. Cal. Oct. 8, 2009). Accordingly, ...


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