The opinion of the court was delivered by: Honorable Christina A. Snyder
Present: The Honorable CHRISTINA A. SNYDER
CATHERINE JEANG ANNE KIELWASSER N/A Deputy Clerk Court Reporter / Recorder Tape No.
Proceedings: DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(1)(filed 4/19/2012) DEFENDANTS' MOTIONS TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) (filed 4/19/2012)
On August 16, 2011, plaintiffs Jose Luis Rosas et al. filed a putative class action complaint against defendants Carnegie Mortgage ("Carnegie") et al. in the Los Angeles County Superior Court on behalf of themselves and all others similarly situated. On September 16, 2011, defendants removed the action to this Court pursuant to 28 U.S.C. §§ 1331 and 1441(c), asserting federal question jurisdiction based on plaintiffs' claims for breach of contract with a federal agency and violations of due process under the Fifth Amendment to the United States Constitution.
The Court granted plaintiffs leave to file their first amended complaint ("FAC") on August 16, 2011. Dkt. No. 72. The FAC asserted numerous state and federal claims against several national banks including CitiMortgage, Inc. ("Citi"); Washington Mutual Bank, F.A. ("WaMu"); JP Morgan Chase Bank, N.A. ("Chase"); and Bank of America ("BOA"). The FAC also asserted claims against the Federal National Mortgage Association ("Fannie Mae").
On March 12, 2012, the Court dismissed the federal claims in plaintiffs' FAC with prejudice, dismissed the remaining claims against Fannie Mae without prejudice, and declined to exercise jurisdiction over the state claims asserted against the remaining defendants. Dkt. 134 at 11.
Plaintiffs filed their operative second amended complaint ("SAC") on April 3, 2012. The SAC asserts eight claims for relief against Citi, WaMu, Chase, BOA, Fannie Mae, Indymac Bank F.S.B. ("Indymac"); Deutsche Bank National Trust Company ("Duetshe Bank"); Atlantic & Pacific Foreclosure Services ("A&P"); and Wells Fargo Bank, N.A. ("Wells Fargo"). Specifically the SAC asserts claims for: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) violation of California Civil Code Section § 2923.5; (4) wrongful foreclosure; (5) quiet title; (6) quasi-contract; (7) no-contract; and (8) declaratory and injunctive relief.
On April 19, 2012, Citi, Chase, BOA, Fannie Mae, and Wells Fargo filed the instant motions to dismiss, in which Deutsche Bank joined.*fn1 Dkt. Nos. 148--160. On April 30, 2012, plaintiffs filed separate oppositions to each motion. Dkt. Nos. 162--167. On February 27, 2012, defendants filed their replies. Dkt. Nos. 168--173. The Court heard oral argument on May 21, 2012. After considering the parties' arguments, the Court finds and concludes as follows.
Plaintiffs are California homeowners who obtained mortgage loans from defendants, defaulted on their loans, and have either lost their homes or are in the process of losing their homes through foreclosure. SAC at 21--28. Plaintiffs' allegations arise primarily out of defendants' purported obligations under the Home Affordable Modification Program ("HAMP").
Plaintiffs allege that they attempted to obtain loan modifications through HAMP but were denied. Plaintiffs allege that they are eligible for HAMP loan modifications but that defendants "summarily have refused" to modify plaintiffs' loans under HAMP and have failed to provide written notice or details explaining the denials.
Plaintiffs assert that the defendants other than Fannie Mae "have a pattern and practice of failing to properly determine whether non-GSE mortgagors whose loans it services meet minimum HAMP eligibility requirements and may therefore qualify for a HAMP mortgage modification."*fn2 SAC at 27--28.
Plaintiffs also allege that defendants other than Fannie Mae have wrongfully foreclosed or are in the process of wrongfully foreclosing on their homes. SAC at 55-58.
The U.S. Treasury Department created HAMP in 2009, under the Emergency Economic Stabilization Act of 2008 ("EESA"), in an effort to assist homeowners facing foreclosure. Dkt. No. 83, Ex. 3 at 13 (Making Home Affordable Program, Handbook for Servicers of Non-GSE Mortgages describing HAMP and its eligibility requirements, hereinafter referred to as "MHA Handbook"). HAMP offers homeowners an opportunity to modify their mortgages. MHA Handbook at 13.
Specifically, HAMP provides financial incentives to loan servicers and investors in the form of compensation for successful loan modifications. Id. at 105. HAMP's potential benefits to homeowners include: (1) a reduction in borrowers' monthly payments toward principal, interest, taxes, and insurance to 31% of their gross income; (2) the prevention of foreclosures for borrowers who meet the HAMP minimum eligibility requirements; and (3) the protection of homeowners from having a loan modification conditioned upon waiver of rights. Id. at 52, 63--66, 78--79.
Private lenders can voluntarily enroll in HAMP by executing a Servicer Participation Agreement ("SPA") with Fannie Mae, which acts as a financial agent of the United States. Id. at 12, 19.
In order to qualify for a HAMP loan modification, a borrower must meet the following minimum criteria:
(1) the borrower's mortgage is a first lien originated before January 1, 2009;
(2) the mortgage has not been previously modified under HAMP;
(3) the borrower has defaulted (i.e., is 60 days or more delinquent) or default is reasonably foreseeable;
(4) the mortgage is secured by a one- to four-unit property (including a cooperative or condominium), one unit of which is ...