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Mohammad H. Shapouri, An Individual v. Citimortgage

October 22, 2012


The opinion of the court was delivered by: Jeffrey T. Miller United State District Judge



Plaintiffs Mohammad and Rona Shapouri filed a complaint against CitiMortgage ("Citi") in California Superior Court for San Diego County on April 2, 2012, alleging ten causes of action based on Defendants' alleged misrepresentations concerning a mortgage loan and its handling of a loan modification plan. Citi removed the case to this court on May 9, 2012 and subsequently filed a motion to dismiss for failure to state a claim, which this court granted on August 1, 2012. Plaintiffs filed an amended complaint ("FAC") on August 10, 2012. Citi moved to dismiss the amended complaint on August 23, 2012. For the reasons that follow, this court GRANTS Citi's motion to dismiss.


In March of 2004, Plaintiffs obtained a 30-year loan in the amount of $1,160,000 from "doe defunct Defendant 'SILVERGATE'" ("Silvergate"). FAC ¶ 11. Plaintiffs allege that agents and/or employees of Silvergate engaged in deception and misrepresentation concerning the loan's details by overstating Plaintiffs' income (from $15,000 per month to $27,867 per month) on the loan application. Id. ¶ 12. Citi "is apparently the successor-in-interest" to Silvergate. Id. ¶ 26. Plaintiffs also allege that Silvergate and Citi "had no financial stake . . . in the transaction and no interest other than obtaining Plaintiffs' signature on the loan that could never be repaid, contrary to representations and assurances from the conspiring participants in this scheme." Id. ¶ 13. They allege that Silvergate's sole purpose was "to collect fees, rebates, kickbacks and profits that were never disclosed to Plaintiffs and were only discovered in 2010 by the Plaintiffs through consultation with experts in securitization of residential mortgage loans, and diligent research . . . ." Id. Plaintiffs assert that they relied on the representations of these professionals and were induced into signing the documentation through oral misrepresentations concerning the terms of the contracts. Id. ¶¶ 14, 16.

On September 20, 2010, CR Title Services, Inc. recorded a Notice of Default against Plaintiffs. Id. ¶ 39. Plaintiffs allege that on March 22, 2011, Citi "agreed to a repayment plan and sent Plaintiffs a contract for 12 payments of $13,346.06 starting on April 20, 2011." Id.

¶ 27. Though Plaintiffs sent a $10,000 payment on March 24 along with the signed contract, Citi called Plaintiffs on April 11, 2011 and cancelled the contract without stating a reason. Id. Plaintiffs sent one more check for $13,346.06, which Citi cashed despite the agreement's cancellation. Id. The complaint alleges a sale date was scheduled for April 13, 2012. Id.1

Based on these allegations, Plaintiffs filed their original complaint on April 2, 2012 alleging ten causes of action. After this court dismissed three of Plaintiffs' claims2 and granted leave to amend other claims, Plaintiffs filed their FAC on August 10, 2012. The FAC states the following eight causes of action: (1) breach of contract; (2) declaratory relief; (3) demand for accounting; (4) rescission/cancellation; (5) quiet title; (6) injunctive relief; (7) negligent misrepresentation; and (8) violation of Cal. Civ. Code § 2923.5. Citi has moved for dismissal of all eight causes of action. For the following reasons, Citi's motion is granted for all eight causes of action.


A. Legal Standard

For Plaintiffs to overcome this 12(b)(6) motion, their "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In evaluating the motion, the court must construe the pleadings in the light most favorable to the non-moving party, accepting as true all material allegations in the complaint and any reasonable inferences drawn therefrom. See, e.g., Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003). The court should grant 12(b)(6) relief only if the complaint lacks either a "cognizable legal theory" or facts sufficient to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

B. Breach of Contract

Plaintiffs allege that Citi entered into a contract under the Commitment to Purchase Financial Instrument and Servicer Participation Agreement for the Home Affordable Modification Program ("HAMP") with Fannie Mae, thereby agreeing "to perform certain loan modification and foreclosure prevention services for eligible loans." FAC ¶ 42. Plaintiffs claim that Citi breached this contract by failing to perform a loan modification for Plaintiffs, who were intended beneficiaries of the contract. Id. ¶¶ 44, 46. Citi counters that Plaintiffs were not HAMP's intended beneficiaries.

Courts in this district have previously examined similar claims. In Escobedo v. Countrywide Home Loans, Inc., 2009 WL 4981618 (S.D. Cal. 2009), the court found that the plaintiff could not sue for a HAMP violation because he was not an intended third-party beneficiary to the contract. The ...

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