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Owen Couture v. Wells Fargo Bank

August 9, 2011

OWEN COUTURE,
PLAINTIFF,
v.
WELLS FARGO BANK, N.A.;
WESTERN CORP.; AND DOES 1 THROUGH 50, INCLUSIVE,
DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief JudgeUnited States District Court

ORDER (1) GRANTING IN PART WELLS FARGO'S MOTION TO CAL- DISMISS AND (2)REMANDING RECONVEYANCE ACTION TO STATE COURT FOR FURTHER PROCEEDINGS [Doc. No. 3]

Presently before the Court is Defendant Wells Fargo Bank's motion to dismiss Plaintiff Owen Couture's complaint. This motion is suitable for disposition without oral argument pursuant to Local Civil Rule 7.1(d)(1). For the reasons stated below, the Court GRANTS IN PART the motion to dismiss and REMANDS this action to the California Superior Court for San Diego County.

BACKGROUND

In July 2007, Plaintiff Owen Couture obtained a loan in the amount of $352,000 from Defendant Wells Fargo Bank, N.A. ("Wells Fargo"), to purchase the real property located at 14361 Old Highway 80, El Cajon, California 92021. [Compl., Doc. No. 1-1, at ¶¶ 1, 6, 26 & Ex. A (Deed of *fn1 ] The loan was secured by a Deed of Trust dated July 23, 2007, which identifies Defendant Wells Fargo as the lender and beneficiary, and Fidelity National Title Insurance Company as the trustee. [Id., Ex. A.] Plaintiff alleges he was not provided various disclosures regarding the loan as mandated by federal and state law. Wells Fargo later substituted in Cal-Western Reconveyance Corporation ("Cal-Western") as successor trustee. [Def.'s Mot. to Dism., Doc. No. 3, at 2 & Ex. 3 (Substitution of Trustee).]

On March 12, 2010, Couture defaulted on the loan, in the amount of $19,859.26. [Compl., ¶ 7 & Ex. B (Notice of Default).] Couture failed to cure the default. [Def.'s Mot., at 2; see generally Compl. (not alleging any attempt to cure the default).] On June 17, 2010, Cal-Western recorded a Notice of Trustee's Sale, setting the foreclosure sale to occur on July 7, 2010. [Compl., Ex. C (Notice of Trustee's Sale).] Couture alleges that, in initiating the non-judicial foreclosure sale, Defendants failed to follow the procedures required under California law. The sale has been postponed and has not yet occurred. [Def.'s Mot., at 2.]

On April 12, 2011, Couture filed a complaint in the California Superior Court for San Diego County, case number 37-2011-00067000-CU-OR-EC, against Defendants Wells Fargo and Cal-Western. The complaint alleges seven causes of action: (1) violation of California Civil Code § 2923.5; (2) fraud; (3) intentional misrepresentation; (4) violation of California Civil Code § 2923.6; (5) violation of California Civil Code § 1572; (6) violation of California's Unfair Competition Law ("UCL"), California Business & Professions Code § 17200 et seq.; and (7) violation of the federal Truth In Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. Claims one through six arise under California law and are alleged against all Defendants. Claim seven arises under federal law and is alleged only against Cal-Western.

Defendant Wells Fargo removed this action on May 19, 2011, and filed this motion to dismiss Plaintiff's complaint seven days later. [Doc. Nos. 1 & 3.]

LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). "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 Dept., 901 F.2d 696, 699 (9th Cir. 1990) (citation omitted). Leave to amend should be granted unless the defect is not curable by amendment. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1108 (9th Cir. 2003).

The Court must accept all factual allegations pleaded in the complaint as true and construe them and draw all reasonable inferences in favor of the nonmoving party. See Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The Court need not, however, accept "legal conclusions" as true. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). "[A] plaintiff's obligation to provide the 'grounds' of 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." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). The complaint must contain "enough facts to state a claim to relief that is plausible on its face." Id. at 570. "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1940.

DISCUSSION

Removal Jurisdiction

A defendant may remove an action to federal court when the complaint "contains a cause of action that is within the original jurisdiction of the district court," whether based on federal question or diversity jurisdiction. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (internal quotation marks and citations omitted). A district court has "a duty to establish subject matter jurisdiction over the removed action sua sponte." United Investors Life Ins. Co. v. Waddell & Reed, 360 F.3d 960, 967 (9th Cir. 2004). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). "The 'strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper,' and that the court resolves all ambiguity in favor of remand to state court." Hunter, 582 F.3d at 1042 (quoting Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)). Thus, "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus, 980 F.2d at 566 (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979)).

While removal may be based on federal question or diversity jurisdiction, the proper treatment of a plaintiff's state law claims may shift significantly depending on the particular basis for removal. Where removal is based on federal question jurisdiction, the Court has supplemental jurisdiction over a plaintiff's related claims under state law. In such a case, when a court dismisses the plaintiff's federal claims, it has full discretion to decide whether or not to exercise supplemental jurisdiction. 28 U.S.C. ยง 1367(c)(3); Lacey v. Maricopa Cnty., ---F.3d---, 2011 WL 2276198, at *14 (9th Cir. 2011). Under those circumstances, the balance of relevant factors usually tips in favor of declining to exercise supplemental jurisdiction. Acri v. Varian Assocs., 114 F.3d 999, 1001 (9th Cir. 1997) (quoting Carnegie-Mellon Univ. v. ...


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