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Jack E. Whatley v. Bank of America


July 13, 2012


The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge


Plaintiff Jack E. Whatley ("Plaintiff") initiated this action seeking damages and injunctive relief against Defendants Bank of America, N.A. ("BofA"), BAC Home Loans Servicing, LP ("BAC"), U.S. Bank National Association, as Trustee for the benefit of Harborview 2005-2 Trust Fund, and Mortgage Electronic Registration Systems, Inc., (collectively "Defendants") as a result of Defendants' conduct arising out of a loan issued to Plaintiff in connection with the purchase of his residence.

Presently before the Court is Defendants' Motion to Dismiss ("Motion") Plaintiff's Complaint in its entirety. For the reasons set forth below, Defendants' Motion is GRANTED.*fn1


In approximately February of 2005, Plaintiff obtained a $560,000 loan to purchase a piece of residential property. Defendants' Request for Judicial Notice ("RJN"), Exh. 1.*fn3

Plaintiff executed a promissory note and Deed of Trust ("DOT") in connection with that loan. Id., Exhs. 1, 2. Defendants BofA and BAC were, at all relevant times, the loan servicers.

Plaintiff alleges that, a few years after origination of the loan, in approximately January of 2009, he contacted BofA by telephone via the entity's customer service number and that the BofA representative with whom he spoke indicated Plaintiff "was not far enough behind [on his mortgage payments] to qualify for a loan modification." Complaint, ¶ 20.

That representative purportedly advised Plaintiff that once he was far enough behind on his payments, he would qualify. According to Plaintiff, he was also told by someone "that he would receive a modification if he became seriously delinquent and that BofA would give him a modification" because BofA would then receive related subsidies from the government. Id., ¶ 55. As a result, Plaintiff stopped making his mortgage payments.

Over the next nine months, Plaintiff was repeatedly advised by BofA that he was not far enough behind on his mortgage payments to apply for a loan modification. Plaintiff was further advised that he should continue calling back to inquire as to whether he was sufficiently behind in making his payments so that he could apply for the sought-after modification. Eventually, Plaintiff received a letter from BofA stating he was pre-approved for a modification pursuant to the Home Affordable Modification Program. Plaintiff thereafter submitted and re-submitted multiple application packages and requested documents. Plaintiff was subsequently advised his modification was being processed, but, ultimately, he was notified that, to the contrary, his application had been closed and his property was going to be sold at a trustee's sale.

Plaintiff thus initiated this action in Sacramento County Superior Court alleging causes of action against all Defendants for: 1) deceit; 2) promissory estoppel; 3) wrongful foreclosure; and 4) violation of California's Unfair Competition Law, Business and Professions Code §§ 17200, et seq. ("UCL").

Defendants thereafter removed the action to this Court and filed the instant Motion to Dismiss. For the following reasons, Defendants' Motion is GRANTED with leave to amend.


On a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6),*fn4 all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) "requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the...claim is and the grounds upon which it rests.'" Bell. Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require detailed factual allegations. Id. However, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (internal citations and quotations omitted). A court is not required to accept as true a "legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555).

The Court also is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Sciences Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal citations and quotations omitted). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555.

Furthermore, "Rule 8(a)(2)...requires a 'showing,' rather than a blanket assertion, of entitlement to relief." Twombly, 550 U.S. at 556 n.3 (internal citations and quotations omitted). "Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirements of providing not only 'fair notice' of the nature of the claim, but also 'grounds' on which the claim rests." Id. (citation omitted). A pleading must contain "only enough facts to state a claim to relief that is plausible on its face." Id. at 570. If the "plaintiffs...have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed."

Id. However, "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and 'that a recovery is very remote and unlikely.'" Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

Under Rule 9(b), however, a party alleging fraud or intentional misrepresentation must satisfy a heightened pleading standard by stating with particularity the circumstances constituting fraud. Fed. R. Civ. P. 9(b). Specifically, "[a]verments of fraud must be accompanied by 'the who, what, when, where, and how' of the misconduct charged."

Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). Further, "a plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false." Id. (quoting Decker v. GlenFed, Inc., 42 F.3d 1541, 1548 (9th Cir. 1994).

A court granting a motion to dismiss a complaint must then decide whether to grant a leave to amend. Leave to amend should be "freely given" where there is no "undue delay, bad faith or dilatory motive on the part of the movant,...undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment...." Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to be considered when deciding whether to grant leave to amend). Dismissal without leave to amend is proper only if it is clear that "the complaint could not be saved by any amendment." IntriPlex Techs., Inc. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (internal citations and quotations omitted).


A. of Action for Deceit.

Defendants' Motion to Dismiss Plaintiff's First Cause

Plaintiff contends in his first cause of action that Defendants BofA and BAC fraudulently induced him to fall behind in making his mortgage payments "because they wanted Plaintiff to become seriously delinquent on his mortgage so that Plaintiff could not retain his home through bankruptcy protection and because Defendants wanted to from the federal government for managing the 'troubled asset.'" Complaint, ¶ 66.*fn5

"The elements of fraud, which gives rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or 'scienter'); (c) intent to defraud, i.e., to induce reliance;

(d) justifiable reliance; and (e) resulting damage." Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996) (internal quotations and citations omitted). This cause of action must be pled with the particularity required by Rule 9(b), meaning Plaintiff is required to plead "the 'who, what, when, where, and how' of the misconduct charged." Vess, 317 F.3d at 1106. Plaintiff has wholly failed to do so here.

First, the only allegations Plaintiff has pled with any detail are those as to the statements made on some undisclosed date by some unnamed BofA representative indicating that Plaintiff "would qualify" for a modification if he became delinquent in making his mortgage payments. Not only are these allegations lacking the requisite particularity under Rule 9(b), there is also no indication in the Complaint that these statements were false. Indeed, the Complaint makes clear that Plaintiff would not qualify for a modification if his payments were timely and that to even be considered for a modification his payments needed to be in arrears. Plaintiff's further assertions that someone at BofA told him he "would receive" a modification so that Defendants could capitalize on available government funding is even more sparsely pled. Accordingly, given the lack of particularity supporting Plaintiff's allegations of fraud, Defendants' Motion to Dismiss Plaintiff's first cause of action is GRANTED with leave to amend.

B. of Action for Promissory Estoppel Defendants' Motion to Dismiss Plaintiff's Second Cause.

Plaintiff's second cause of action for promissory estoppel is based on the premise that Defendants promised him a loan modification and that he relied on this promise to his detriment. To properly allege a cause of action for promissory estoppel, Plaintiff must adequately plead:

"(1) a promise that is clear and unambiguous in its terms;

(2) reliance by the party to whom the promise is made; (3) the reliance must be reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his or her reliance." Boon Rawd Trading Intern. Co., Ltd. v. Paleewong Trading Co., Inc., 688 F. Supp. 2d 940, 953 (N.D. Cal. 2010). As pled, Plaintiff's instant claim is flawed for multiple reasons, though the Court need address only one here. More specifically, Plaintiff's only allegation that he "would receive" some sort of modification is connected to the requirement that Plaintiff become "seriously delinquent" or "delinquent" in making his mortgage payments. These vague delinquency requirements render any purported modification promise neither clear nor unambiguous. Moreover, Plaintiff alleges no facts as to who promised Plaintiff a modification and when such a promise was made. Plaintiff's promissory estoppel claim thus fails at the threshold requirement that a clear and unambiguous promise be alleged. See Melegrito v. CitiMortgage Inc., 2011 WL 2197534, *13 (N.D. Cal.) (allegations that some unspecified individual agreed to modify a plaintiff's loan on unspecified terms at an unspecified point in the future insufficient to state a cause of action for promissory estoppel); see also Dooms v. Federal Home Loan Mortg. Corp., 2011 WL 1232989, *10 (E.D. Cal.). Accordingly, Defendants' Motion to Dismiss Plaintiff's second cause of action is GRANTED with leave to amend.

C. Defendants' Motion to Dismiss Plaintiff's Third Cause of Action for Wrongful Foreclosure.

Defendants move to dismiss Plaintiff's third cause of action for wrongful foreclosure on the basis that, among other things, Plaintiff failed to allege an unconditional offer to tender the amount of the secured indebtedness. "A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust." Karlsen v. Am. Sav. & Loan Ass'n, 15 Cal. App. 3d 112, 117 (1971). A plaintiff must "tender the obligation in full as a prerequisite to challenge of the foreclosure sale." U.S. Cold Storage v. Great W. Sav. & Loan Ass'n, 165 Cal. App. 3d 1214, 1222 (1985). Indeed, "[i]t would be futile to set aside a foreclosure sale on [] technical ground[s], if the party making the challenge did not first make full tender and thereby establish his ability to purchase the property." Id. at 1225. "For an offer of tender to be valid, it must be unconditional." Christopher v. First Franklin Financial Corp., 2010 WL 3895351, *3 (S.D. Cal.) (citing Karlsen, 15 Cal. App. 3d at 118-20). Given the conditional manner in which Plaintiff has attempted to plead his ability to tender, Defendant's Motion is now GRANTED with leave to amend.

More specifically, Plaintiff alleges in the Complaint that he "unconditionally offers to tender to the extent required by law any amount due and owing after offset for damages for wrongful foreclosure on the Subject Property, to the true beneficiary under the deed of trust or holder of the note in due course." Complaint, ¶ 97.

That "unconditional" promise is actually conditioned on a variety of speculative findings as to who Plaintiff believes is owed his payments and what damages Plaintiff believes he has sustained to offset the amount owed. That offer is thus insufficient to survive the instant Motion.*fn6 See Christopher, 2010 WL 3895351 (concluding that plaintiffs' allegation that they are "willing and able to tender any amounts to the real and true owners of the original promissory note upon proof that the note is in the lawful possession of the true...owners and upon any credits paid by insurance in the event of a default" was insufficient to unconditionally allege a tender offer); see also Halajian v. Ndex West, L.L.C., 2012 WL 1969131, *6-7 (E.D. Cal.); McFadden v. Deutsche Bank Nat. Trust Co., 2011 WL 3606797, *14 (E.D. Cal.). Defendant's Motion to Dismiss Plaintiff's third cause of action is thus GRANTED with leave to amend.

D. of Action for Violation of California's UCL. Defendants' Motion to Dismiss Plaintiff's Fourth Cause

Finally, Plaintiff failed to state a claim for violation of California's UCL as well. The UCL makes actionable "any unlawful, unfair or fraudulent business act." Cal. Bus & Prof. Code § 17200. "An act can be alleged to violate any or all of the three prongs of the UCL-unlawful, unfair, or fraudulent."

Berryman v. Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1554 (2007). Causes of action arising out of the "unlawful" prong "borrow[] violations of other laws and treat[] them as unlawful practices that the unfair competition law makes independently actionable." Cal-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999). "A UCL claim predicated on unfair business practices may be grounded upon a violation of a statute or be a standalone claim based on an alleged act that violates established public policy or if it is immoral, unethical, oppressive, or unscrupulous and causes injury to consumers which outweighs its benefits." Hovsepian v. Apple, Inc., 2009 WL 5069144, *4 (N.D. Cal.) (internal citations and quotations omitted). "A claim based upon the fraud prong may be brought based upon conduct akin to common-law fraud or an alleged course of conduct that is likely to deceive the public." Id.

To the extent Plaintiff's UCL claim is based on Defendants' purportedly unlawful or fraudulent acts, it is entirely derivative of Plaintiff's above causes of action and thus fails for those reasons already stated. Plaintiff nonetheless also argues in Opposition that he has stated a claim under the UCL's "unfair" prong because "Defendants deceived Plaintiff, like so many others, by promising them that they would receive help with their mortgages, including receiving a loan modification, if they became delinquent." Opp'n, 12:25-27.

Even assuming this argument is not encompassed within Plaintiff's above causes of action, which it is, none of Plaintiff's allegations are sufficient to point this Court to any "alleged act that violates established public policy" or that "is immoral, unethical, oppressive, or unscrupulous and causes injury to consumers which outweighs its benefits." Hovsepian, 2009 WL 5069144, *4 (internal citations and quotations omitted); see also Sosa v. Bank of New York Mellon Trust, 2012 WL 2568188, *3 (N.D. Cal.). Moreover, even if some of Plaintiff's allegations are construed as supporting a violation of the UCL's unfairness prong, none of those facts has been pled with nearly the requisite particularity. See Kearns v. Ford Motor Co., 567 F.3d 1120, 1124-25 (9th Cir. 2009) (applying Rule 9(b) to CLRA and UCL claims predicated on alleged misrepresentations). No other bases for liability under the UCL have been alleged or argued by Plaintiff. As such, Defendants' Motion to Dismiss Plaintiff's fourth cause of action is GRANTED with leave to amend.


For the reasons stated above, Defendants' Motion to Dismiss is GRANTED with leave to amend. Not later than twenty (20) days following the date this Memorandum and Order is electronically filed, Plaintiff may (but is not required to) file an amended complaint.

If no amended complaint is filed within said twenty (20)-day period, without further notice to the parties, the causes of action dismissed by virtue of this Memorandum and Order will be dismissed with prejudice.


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