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Billi Vogan and Harold Traupel, Individuals v. Wells Fargo Bank

November 16, 2011

BILLI VOGAN AND HAROLD TRAUPEL, INDIVIDUALS, PLAINTIFFS,
v.
WELLS FARGO BANK, N.A.; US BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR WFMBS 2005-AR12; WELLS FARGO HOME MORTGAGE; AND FIRST AMERICAN TRUSTEE SERVICING SOLUTIONS FORMERLY KNOWN AS FIRST AMERICAN LOANSTAR TRUSTEE SERVICES, LLC; AND DOES 1-100, INCLUSIVE, DEFENDANTS.



ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS PLAINTIFFS' COMPLAINT PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6).

This matter is before the Court on Wells Fargo Bank, N.A. ("Wells Fargo") and U.S. Bank, N.A. as Trustee for WFMBS 2005-AR12's ("U.S. Bank") Motion to Dismiss Plaintiffs' Complaint pursuant to Federal Rule of Civil Procedure 12(B)(6) ("MTD") (Doc. #10). The motion is joined by Defendant First American Trustee Servicing Solutions ("First American") (Doc. #12) (Wells Fargo and U.S. Bank are collectively referred to as "Defendants"). Defendants also submitted a Request for Judicial Notice (Doc.#11).

Plaintiffs Billi Vogan and Harold Traupel (collectively 2 "Plaintiffs") oppose the motion ("Opposition") (Doc. #16). 3 4

I. PROCEDURAL BACKGROUND AND FACTUAL ALLEGATIONS

This action is predicated on the non-judicial foreclosure of Plaintiffs' home, located at 20066 Wildwood West Drive, Penn Valley, California ("the Property"), by Defendants. Wells Fargo as 8 the successor to Wells Fargo Home Mortgage was the original lender 9 and was servicer for the loan at all relevant times. The loan originated on June 29, 2004. MTD, at 1. Plaintiffs were current on their payments up until at least August 2010. Plaintiffs stopped paying their mortgage sometime after that, and First American, acting on Wells Fargo's behalf, recorded a notice of default on the property on December 14, 2010. MTD, at 1. Wells Fargo did not substitute First American as trustee until January 4, 2011, which was after First American filed the Notice of Default against the property. MTD, at 1.

Prior to defaulting on their loan, Plaintiffs allege that they attempted to contact Wells Fargo to obtain a modification in August 2010. Compl., at 16. First, Wells Fargo allegedly told Plaintiffs that they qualified for a modification, so long as they were in default for at least three months. Id. It was only after they defaulted in order to qualify that Wells Fargo allegedly informed them that their loan was owned by an investor that did not engage in mortgage modification. Id. Plaintiffs then asked Wells Fargo to verify the note associated with their mortgage, and the documentation produced by Wells Fargo indicated that Wells Fargo still owned the loan. Compl., Ex. B.

The parties dispute what occurred as far as ownership of the 2 loan. Plaintiffs claim that the loan was sold to someone who is 3 not yet identified at an unknown time. Opp., at 2-3. Defendants 4 claim that the loan was sold to U.S. Bank as trustee of a mortgage 5 backed security ("MBS") named WFMBS 2005-AR12 on January 11, 2011.

MTD, at 1-2. Plaintiffs respond with the allegation that WFMBS 7 2005-AR12 has a closing date of June 16, 2005, which according to 8 the Pooled Security Agreement ("PSA") governing administration of 9 the security is the cut-off date for adding additional property to the WFMBS 2005-AR12 trust. Opp., at 2-3. Plaintiffs also allege that the officer who executed the assignment to U.S. Bank on behalf of Wells Fargo was actually a First American employee. Compl., at Plaintiffs further allege, relying on the closing date for the MBS, that the loan was never actually sold to U.S. Bank as trustee for WFMBS 2005-AR12, and that the assignment of interest recorded on January 11, 2011 was recorded to deceive Plaintiffs as to who owned their loan and who was authorized to foreclose. Opp., at 3.

Plaintiffs filed this federal complaint after their state court complaint was twice dismissed pursuant to Defendants' demurrers. Plaintiffs claim that they only discovered that Defendants violated federal law just prior to filing their federal complaint, which is why they dismissed the state court complaint and re-filed in the Eastern District. Opp., at 1.

Plaintiffs' Complaint brings ten causes of action against various defendants: (1) Declaratory relief as to the rights and obligations of Plaintiffs and all defendants with regard to the Property and Plaintiffs' mortgage; (2) Negligence against all defendants; (3) Quasi-Contract against Wells Fargo and U.S. Bank; (4) Unfair Competition under California Business & Professions Code 2 § 17200 against all defendants; (5) violation of the Truth in 3 Lending Act ("TILA"), 15 U.S.C. § 1641(g) against U.S. Bank; (6) Accounting against Wells Fargo and U.S. Bank; (7) Constructive 5 trust against Wells Fargo and U.S. Bank; (8) Wrongful foreclosure 6 seeking to set aside Trustee's Sale against all defendants; (9) To 7 void or cancel trustee's deed upon sale against U.S. Bank and First 8 American; and (10) Quiet Title against U.S. Bank and Wells Fargo. 9

The Court has jurisdiction over the TILA claim against U.S. Bank pursuant to 28 U.S.C. § 1331. The Court has jurisdiction in its discretion over the remaining state law claims if they are pendent from the federal TILA claim pursuant to 28 U.S.C. § 1367.

The Court held a hearing on this motion on November 2, 2011. At that hearing, the Court granted First American's motion to dismiss with prejudice.

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 2 plaintiff needs to plead "enough facts to state a claim to relief 3 that is plausible on its face." Twombly, 550 U.S. at 570. 4

Dismissal is appropriate where the plaintiff fails to state a claim 5 supportable by a cognizable legal theory. Balistreri v. Pacifica 6 Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). 7

Upon granting a motion to dismiss for failure to state a 8 claim, the court has discretion to allow leave to amend the 9 complaint pursuant to Federal Rule of Civil Procedure 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).

B. Request for Judicial Notice

Defendants filed a Request for Judicial Notice. They ask the Court to take judicial notice of 12 publicly recorded or filed documents related to the non-judicial foreclosure process on Plaintiff's property and the resulting state court lawsuit. RJN, at 2-3. Plaintiffs oppose the motion only to the extent that it asks the Court to accept the contents of the documents as true. Opp., at 4.

Generally, a court may not consider material beyond the pleadings in ruling on a motion to dismiss for failure to state a claim. The exceptions are material attached to, or relied on by, the complaint so long as authenticity is not disputed, or matters of public record, provided that they are not subject to reasonable dispute. E.g., Sherman v. Stryker Corp., 2009 WL 2241664 at *2 (C.D. Cal. Mar. 30, 2009) (citing Lee v. City of Los Angeles, 250 2 F.3d 668, 688 (9th Cir. 2001) and Fed. R. Evid. 201). 3

In this case, the items provided by Defendants are the proper 4 subject of judicial notice so long as they are not reasonably 5 subject to dispute. Based on the above discussion, the contents of 6 two of the exhibits are in dispute: (1) Substitution of Trustee 7 dated January 4, 2011 (RJN Ex. C), and (2) Assignment of Deed of 8 Trust dated January 6, 2011 (RJN Ex. D). It is appropriate to take 9 Judicial Notice of the other exhibits, and Defendants' request is GRANTED with respect to those exhibits. Due to the ...


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