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Rhoda Y. Solomon v. Aurora Loan Services LLC

July 2, 2012



Plaintiff Rhoda Y. Solomon brings this action against defendant Aurora Loan Services LLC ("Aurora"), arising from defendant's allegedly wrongful conduct related to a residential loan. Aurora now moves to dismiss the First Amended Complaint ("FAC") for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). (Def.'s Mot. to Dismiss (Docket No. 16).) \\\

I. Factual and Procedural Background In December of 2007, plaintiff obtained a loan from

American Broker's Conduit ("ABC"), secured by her residence at 1558 Tamarisk Lane in Tracy, California ("Tamarisk Lane property"). (FAC ¶¶ 1, 6.) Defendant was the servicer of ABC's loan. (FAC ¶ 9.) According to plaintiff, on or about January 2010, she was experiencing economic hardship and, for the first time, missed a payment due on this loan. (Id. ¶ 7.)

Later that month, plaintiff alleges that she applied for a Home Affordable Modification Program ("HAMP") loan modification with defendant, (id. ¶ 8), and engaged Financial Hope for America ("FHFA") to assist her in the application process, (id. ¶ 10, Ex. C). Over the next several months, plaintiff further alleges that defendant repeatedly told her that her application was incomplete and requested that she submit additional documents in connection with her application. (Id. ¶¶ 9, 11-14, Exs. E-G.) Plaintiff alleges that despite the fact that she had already submitted these documents, she submitted additional copies of the requested documents. (Id.)

According to plaintiff, in August 2010, defendant informed her in a letter that her request for a HAMP modification was denied because she had not provided the required documents within the specified time frame. (Id. ¶ 15, Ex. H.) Approximately one week later, defendant allegedly sent plaintiff another letter informing her that she may be eligible for a HAMP modification. (Id. ¶ 16, Ex. I.) Plaintiff alleges that she then reapplied for a HAMP modification. (Id. ¶ 17.)

Defendant again notified plaintiff that her application for a HAMP modification had been denied, this time for excessive forbearance. (Id. ¶ 19.) The letter explained that defendant was "unable to create an affordable payment equal to 31% of your reported monthly gross income without changing the terms of your loan beyond the requirements of the program." (Id. ¶ 19, Ex. K.) According to plaintiff, this statement was false. (Id. ¶ 20.)

A month later, plaintiff alleges that she received a second letter rejecting her August 2010 application for a HAMP modification, this time on the ground that her monthly debt to income ratio was too high. (Id. ¶ 21, Ex. M.) She further alleges that this is not a valid reason to deny a HAMP application. (Id. ¶ 22.)

According to plaintiff, she submitted a third application for a HAMP modification in December 2010. (Id. ¶

23.) In January 2011, plaintiff alleges that she received a letter from defendant indicating that several documents were missing from her application package when those documents in fact had already been submitted in a timely manner. (Id. ¶ 24, Ex. N.)

On February 22, 2011, ABC assigned the Deed of Trust on plaintiff's property to defendant. (Id. ¶ 25, Ex. O.) On March 2, 2011, defendant filed a Substitution of Trustee naming Quality Loan Service Corporation ("Quality") as trustee under the Deed of Trust. (Id. ¶ 26, Ex. P.) Several days later, Quality recorded a Notice of Default listing a past-due balance of $20,802.84. (Id. ¶ 27, Ex. Q.) On June 10, 2011, Quality recorded a Notice of Trustee's Sale, which indicated that a sale would be held on July 5, 2011, and that the total outstanding balance on the loan was $567,089.94. (Id. ¶ 28, Ex. R.)

Plaintiff alleges that she contacted defendant on June 15, 2011, and spoke with Rebecca. (Id. ¶ 29.) She further alleges that when she explained that she had been wrongfully denied for a HAMP modification twice in the past, Rebecca informed her that she could either pay defendant the entirety of her arrearage on the loan or obtain a loan workout under HAMP. (Id.)

Plaintiff claims that after discussing these options with her mother and brother, who were living with her at the time, she called defendant back the next day and spoke with Maytal. (Id. ¶ 30.) According to plaintiff, when she explained to Maytal that she wanted to reinstate her loan so as to avoid foreclosure and that she was hoping defendant would reduce the principal balance on her home, Maytal told her that she could reinstate her loan by paying the amount past due, but that the only way to reduce the principal would be to obtain a loan workout. (Id.) According to plaintiff, she had sufficient funds available and offered to pay the amount past due. Maytal then told her to wait until defendant informed her of the results of her HAMP application. (Id.) Maytal allegedly informed plaintiff that defendant filed the Notice of Sale "as a matter of course, but that [defendant] could not foreclose on her property until and unless they reject her application." (Id.)

Approximately two weeks later, on June 29, 2011, plaintiff claims that she sent defendant a letter in which she explained that she was experiencing financial hardship due, in part, to the loss of her job and disability and requested a loan modification. (Id. ¶ 31, Ex. S.) She also submitted a fourth HAMP modification application. (Id.)

On August 11, 2011, defendant foreclosed on the Tamarisk Lane property, which was sold to defendant for $215,100. (Id. ¶ 32, Ex. T.) On or about October 3, 2011, defendant filed an unlawful detainer action against plaintiff. (Id. ¶ 33, Ex. U.)

On January 11, 2012, plaintiff filed suit in state court. (Notice of Removal ("Compl.") Ex. 1 (Docket No. 1).) Defendant removed the proceeding to this court two weeks later. (Docket No. 1.) In her first complaint, plaintiff alleged nine claims. (Id.) Defendant moved to dismiss plaintiff's complaint in its entirety for failure to state a claim. (Docket No. 7). Plaintiff filed her non-opposition and this court granted defendant's motion to dismiss with leave to amend within twenty days.

Plaintiff filed her FAC alleging claims against defendant for: (1) negligence, (2) promissory estoppel, (3) violation of California's Unfair Competition Law, Bus. & Prof. Code § 17200 et seq., (4) preliminary and permanent injunction, (5) declaratory relief, (6) set aside of the trustee's deed upon sale, (7) cancellation of the trustee's deed upon sale, and (8) quiet title. Defendant now moves to dismiss plaintiff's FAC in its entirety for failure to state a claim.

II. Request for Judicial Notice In general, a court may not consider items outside the pleadings upon deciding a motion to dismiss, but may consider items of which it can take judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). A court may take judicial notice of facts not subject to reasonable dispute because they are either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201. The court may take judicial notice of matters of public record or of documents whose contents are alleged in the complaint and whose authenticity is not questioned. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001).

Defendant has filed a request for judicial notice of plaintiff's bankruptcy application and order dismissing her application, along with a publicly filed Consent Order that plaintiff relies on in her FAC. (Docket No. 16-1.) The court will take judicial notice of the two bankruptcy documents as they are matters of public record whose accuracy cannot be questioned. See Lane v. Vitek Real Estate Indus. Group, 713 F. Supp. 2d 1092, 1097 (E.D. Cal. 2010) (taking judicial notice of documents from plaintiff's bankruptcy proceedings). The court will also take judicial notice of the Consent Order as it was referenced in the FAC and its authenticity has not been questioned. See No. 84 Employer-Teamster Joint Council Pension Trust Fund v. Am. W. Holding Corp., 320 F.3d 920, 925 n.2 (9th Cir. 2003).

III. Discussion

On a motion to dismiss, the court must ...

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