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Larry anderson and Michele Camp anderson v. Phh Mortgage

September 28, 2012


The opinion of the court was delivered by: Cormac J. Carney United States District Judge



Plaintiffs Larry Anderson and Michele Camp Anderson (together, "the Andersons") brought this action against Defendants PHH Mortgage ("PHH") and NDEX West, LLC (together, "Defendants") in the Superior Court of California for the County of Orange on June 22, 2012. (See Dkt. No. 1 Exh. 1 ["Compl."].) On July 23, 2012, Defendants removed this action to federal court based on diversity jurisdiction. (Dkt. No. 1.) The Andersons' Complaint alleges causes of action for negligence, breach of contract, promissory estoppel, accounting, and violations of California's Unfair Competition Law ("UCL"). On August 14, 2012, the Court issued an order to show cause ("OSC") why this case should not be dismissed for failure to state a claim upon which relief can be granted. (Dkt. No. 5.) The Andersons filed their opposition to the OSC on August 29, 2012. (Dkt. No. 6.) Defendants filed their response on September 9, 2012. (Dkt. No. 7.) Having considered the papers submitted by the parties, the Court DISMISSES the Andersons' Complaint WITHOUT LEAVE TO AMEND.


The Andersons' Complaint concerns property located at 31322 Paseo Cadiz, San Juan Capistrano, CA 92675 ("Subject Property"). Though not explicitly pleaded in the Complaint, the Andersons apparently obtained a mortgage loan from PHH to purchase the Subject Property. The Andersons allege that in 2009, they suffered a temporary financial setback, and were unable to make the entire payment on the loan. (Compl. ¶¶ 43--44.) They allege that during telephone calls with PHH representatives, the Andersons were told they could apply for a loan modification under the Home Affordable Refinance Program ("HAMP") or another in-house modification program. (Id. ¶ 45.) The Andersons also allege they were told by PHH representatives "don't worry about the sale.[w]e'll get the loan modification," and that there would be no trustee sale during the review of their loan modification application. (Id. ¶ 47.) While making these representations, PHH was allegedly preparing to sell their home in a trustee sale scheduled for July 5, 2012. (Id. ¶ 46.) The sale was subsequently postponed until September 5, 2012. (Dkt. No. 8 at 2.) On September 4, 2012, the Andersons moved for a temporary restraining order to prevent the trustee sale. (Dkt. No. 8.) The Court denied their motion on September 6, 2012, because they had failed to show a likelihood of success on the merits. (Dkt. No. 9.) The Court is unaware of whether the sale actually took place on September 5, 2012 as scheduled.


The legal standard in deciding whether the Andersons have stated a claim on which relief may be granted is the same as for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). The issue on a 12(b)(6) motion is not whether the claimant will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims asserted. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997). When evaluating a Rule 12(b)(6) motion, the district court must accept all material allegations in the complaint as true and construe them in the light most favorable to the non-moving party. Moyo v. Gomez, 32 F.3d 1382, 1384 (9th Cir. 1994). Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only a short and plain statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). Dismissal of a complaint for failure to state a claim is not proper where a plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although the district court should grant the plaintiff leave to amend if the complaint can possibly be cured by additional factual allegations, Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995), the district court need not grant leave to amend if amendment of the complaint would be futile. See Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1051--52 (9th Cir. 2008).

A. Tender Rule

The Andersons' claims are premised on what they allege was the wrongful non-judicial foreclosure and sale process commenced on the Subject Property by Defendants. However, the Andersons have failed to tender the amount due on their loan. "Under California law, the 'tender rule' requires that as a precondition to . . . any cause of action implicitly integrated to the [foreclosure] sale, the borrower must make a valid and viable tender of payment of the secured debt." Johnson v. Mortg. Elec. Registration Sys., 2011 U.S. Dist. LEXIS 154341, No. CV 11-08038, at *5 (C.D. Cal. Nov. 3, 2011) (quoting Montoya v. Countrywide Bank, F.S.B., No. CV 09-00641, 2009 WL 1813973, at *11 (N.D. Cal. June 25, 2009)); see Karlsen v. Am. Sav. & Loan Ass'n, 15 Cal. App. 3d 112, 117 (1971); Arnolds Mgmt. Corp. v. Eischen, 158 Cal. App. 3d 575, 578 (1984). Since the Andersons have not alleged that they have tendered, or could tender, the outstanding amount due on the defaulted loan, their claims for relief that are related to, or derive from, the foreclosure proceedings on the Subject Property must be dismissed. The Andersons' claims also suffer from other deficiencies that the Court now addresses.

B. Negligence

The Andersons' first cause of action is for negligence. They allege that PHH owed them a duty to "exercise reasonable care and skill to maintain proper and accurate loan records and to discharge and fulfill the other incidents attendant to the maintenance, accounting and servicing of loan records . . . ." (Compl. ¶ 57.) They allege an additional duty to properly implement "loan modification programs and [follow] the existing governmental orders against it." (Id. ¶ 58.) Contrary to the Andersons' allegations, PHH owed them no such duties. See Nymark v. Heart Fed. Savings & Loan Ass'n, 231 Cal. App. 3d 1089, 1096 (1991) ("[A]s a general rule, a financial institution owes no duty of care to a borrower when the institution's involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money."); see also Das v. Bank of Am., N.A., 186 Cal. App. 4th 727, 741 (2010) (explaining that a bank generally owes no duty of care to borrowers but "may be liable in negligence if it fails to discharge its contractual duties with reasonable care"). Although the Andersons allege that PHH "stepped outside their normal duties as lenders and servicers and assumed additional responsibility when they undertook efforts to modify loans", id., this conclusory allegation does not demonstrate a relationship exceeding PHH's conventional role as a lender and servicer.*fn1

C. Breach of Contract

The Andersons also assert a claim for breach of contract. They allege that Defendants breached a Federal Consent Judgment ("Judgment"), which prohibited Defendants from reviewing loan modification applications while simultaneously moving to sell homes in foreclosure sales, and from assuring debtors that they would obtain loan modifications. (Compl. ΒΆ 72.) The Andersons are not a party to the Judgment, and they have not ...

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