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Randall Bond; Trini Bond v. Cal Western Reconveyance Corp

June 12, 2012


The opinion of the court was delivered by: Howard R. Lloyd United States Magistrate Judge

** E-filed June 12, 2012 **


United States District Cour For the Northern District of California


This action arises out of foreclosure proceedings. Plaintiffs Randall and Trini Bond sued Wells Fargo Bank, N.A. ("Wells Fargo"), the servicer of a consumer loan they obtained from World 20 Savings Bank to refinance their residential mortgage, in state court. Dkt. No. 1 ("Notice of 21 Removal"); Dkt. No. 1, Exh. A ¶ 15 ("Complaint"). Plaintiffs also sued LSI Title Company ("LSI") 22 as "agent for the . . . beneficiary [Wells Fargo]" and Cal-Western Reconveyance Corp. ("Cal 23 Western") as the trustee of the Deed of Trust. Id. ¶ 17. Neither LSI nor Cal Western have joined in 24 Wells Fargo's removal of the action to federal court. Plaintiff states 14 claims for relief: (1) breach 25 of oral contract; (2) breach of written contract; (3) wrongful foreclosure; (4) quiet title; (5) slander 26 of title; (6) cancellation of instruments; (7) promissory estoppel; (8) negligence; (9) negligent 27 misrepresentation; (10) fraud; (11) violation of the Rosenthal Fair Debt Collection Practices Act; 28 (12) unfair business practices under Cal. Bus & Prof. Code § 17200, et seq.; (13) declaratory relief; 2 and (14) injunctive relief. 3

Wells Fargo moves to dismiss the complaint and requests judicial notice of five documents 4 in support of its motion. Dkt. No. 9. Plaintiffs have not opposed the motion. Plaintiffs have moved 5 for a preliminary injunction to halt the foreclosure sale. Dkt. No. 12. Wells Fargo opposed the 6 motion, and requests judicial notice of additional documents in support of its opposition. Dkt. Nos. 7 13, 14. Plaintiffs have not filed any reply. This court held a hearing on the motions to dismiss and 8 for a preliminary injunction on May 15, 2012. Plaintiffs made no appearance. All parties who have 9 been served have consented to the undersigned's jurisdiction pursuant to 28 U.S.C. § 636(c). Based 10 on the moving papers, the arguments presented at hearing, and all applicable authority, the court rules as follows.

did not join in the removal and have not been served in this action, are fraudulent defendants whose 15 presence is not required for removal and whose citizenship*fn1 should not be allowed to destroy 16 diversity jurisdiction over this action. Notice of Removal. Plaintiffs have raised no opposition to 17

Wells Fargo's claim in any papers filed in this court. In their complaint, plaintiffs refer to 18 defendants Cal Western and LSI collectively as the "Sale Trustee." Plaintiffs include the sale trustee 19 in the following claims: (1) wrongful foreclosure; (2) slander of title; (3) cancellation of instrument; 20 (4) negligence; (5) violations of Cal. Bus. & Prof. Code § 17200; (6) declaratory relief; and (7) 21 injunctive relief. 22 Wells Fargo Bank, N.A., 2010 U.S. Dist. LEXIS 131890, *2 (C.D. Cal. Nov. 22, 2010) (quoting 24

I.Whether Defendants LSI and Cal-Western Are Fraudulent Defendants Wells Fargo argues in its Notice of Removal that co-defendants LSI and Cal Western, who "[F]raudulently joined defendants will not defeat removal on diversity grounds." Nong v. Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). Joinder of a non-diverse 25 defendant is fraudulent if "the plaintiff fails to state a cause of action against the [non-diverse] 26 defendant, and the failure is obvious according to the settled rules of the state." Hamilton Materials, 27 Inc. v. Dow Chemical Co., 494 F.3d 1203, 1206 (9th Cir. 2007). "Fraudulent joinder must be proven 2 by clear and convincing evidence, [and] there is a general presumption against fraudulent joinder." 3

Id. "The defendant must demonstrate that there is no possibility that the plaintiff will be able to 4 establish a cause of action in State court against the alleged sham defendant." Good v. Prudential 5

Ins. Co. of Am., 5 F. Supp. 2d 804, 807 (N.D. Cal. 1998) (citing Dodson, 951 F.2d at 42). But, "[i]t 6 is well established that, unless an agent or employee acts as a dual agent . . . [it] cannot be held 7 individually liable as a defendant unless [it] acts for [its] own personal advantage." Nong, 2010 U.S. 8

In this action, plaintiffs assert that LSI and Cal Western acted as "agent" and "trustee," 10 respectively, of Wells Fargo when they executed the Notice of Default. Complaint ¶ 17. Plaintiffs make no allegation that either LSI or Cal Western acted as a "dual agent" or for personal advantage.

In Nong, the court held that a title company (LSI, in fact) was merely an "agent" and fraudulently 13 joined defendant when it recorded the Notice of Default and did not act as a "dual agent" or for 14 personal advantage. 2010 U.S. Dist. LEXIS 131890 at *4-5. In addition, foreclosure trustees have 15 been held to be "agents" of the lien holder, and not separately liable for violations of statutory 16 foreclosure notice requirements. See Cisneros v. Instant Capital Funding Group, Inc., 263 FRD 595 17 "trustee," respectively. Plaintiffs only allege that LSI and Cal Western violated statutory notice 19 requirements, which, as Cisneros held, does not create separate liability for agents or trustees. 20 21 settled rules of California law. Accordingly, LSI and Cal Western are fraudulent defendants whose 22 citizenship shall not destroy diversity jurisdiction over this action. Wells Fargo also asserts that LSI 23 and Cal Western are nominal parties. Notice of Removal ¶ 9. The court does not find it necessary to 24 reach this argument because it has found that the defendants are fraudulently joined. 25

legal sufficiency of the claims in the complaint. "Dismissal can be based on the lack of a cognizable Dist. LEXIS 131890 at *4 (quoting Mercado v. Allstate Ins. Co., 340 F.3d 824, 826 (9th Cir. 2003)). 9

(E.D. Cal. 2009). As in Nong, the plaintiffs allege that LSI and Cal Western were an "agent" and a 18 Plaintiffs have failed to state a claim for relief against LSI or Cal Western accordingly to the

II.Wells Fargo's Motion to Dismiss

Legal Standard

A motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) tests the legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. 2 Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). In such a motion, all material allegations in 3 the complaint must be taken as true and construed in the light most favorable to the claimant. See 4 Balistreri, 901 F.2d at 699. However, "[t]hreadbare recitals of the elements of a cause of action, 5 supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 6 (2009). Moreover, "the court is not required to accept legal conclusions cast in the form of factual 7 allegations if those conclusions cannot reasonably be drawn from the facts alleged." Clegg v. Cult 8 Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). Documents which properly are the 9 subject of judicial notice may be considered along with the complaint when deciding a Fed. R. Civ. 10 F.2d 500, 504 (9th Cir. 1986).

Federal Rule of Civil Procedure 8(a)(2) requires "a short and plain statement of the claim 13 showing that the pleader is entitled to relief," meaning that the "[f]actual allegations must be enough 14 to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 15

("[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss."). 17

However, a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual 18 allegations and "heightened fact pleading of specifics" is not required to survive a motion to 19 dismiss. Bell Atlantic Corp., 550 U.S. at 570. Rather, the complaint need only give "enough facts to 20 state a claim to relief that is plausible on its face." Id. But, claims for fraud must be pled "with 21 particularity." Fed. R. Civ. P. 9(b). 22

A. Defendant's Request for Judicial Notice

Wells Fargo requests that the court take judicial notice of five documents in support of its 25 motion to dismiss: (1) a Deed of Trust signed by plaintiffs and recorded with the Santa Clara County 26 recorder on April 26, 2005; (2) a letter dated November 17, 2007 from the Office of Thrift 27 Supervision to the Vice President and Assistant General Counsel of Wachovia Corp.; (3) a letter 28 dated November 9, 2009 from the Comptroller of Currency to the Vice President of Wells Fargo P. 12(b)(6) motion for failure to state a claim for relief. ...

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