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Jack E. Whatley v. Bank of America


November 21, 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 Plaintiff's First Amended Complaint. (ECF No. 25.)

For the reasons set forth below, Defendants' Motion to Dismiss is GRANTED without leave to amend.*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 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." (FAC ¶ 20.) That representative purportedly advised Plaintiff that once he was far enough behind on his payments, he would qualify. (Id.) ///

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. ¶ 50.) As a result, Plaintiff stopped making his mortgage payments. (Id. ¶ 51.)

Over the next nine months, BofA repeatedly advised Plaintiff that he was not far enough behind on his mortgage payments to apply for a loan modification. (Id. ¶ 21.) 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. (Id. ¶ 24.) Eventually, Plaintiff received a letter from BofA stating he was pre-approved for a modification pursuant to the Home Affordable Modification Program ("HAMP"). (Id. ¶ 25.) Plaintiff thereafter submitted and re-submitted multiple application packages and requested documents. (Id. ¶ 29.) Plaintiff was subsequently advised his modification was being processed, but, ultimately, he was notified that his application had been closed and his property was going to be sold at a trustee's sale. (Id. ¶¶ 28, 46.)

Plaintiff initiated this lawsuit in Sacramento County Superior Court. (Notice of Removal, ECF No. 1.) Defendants thereafter removed the action to this Court based on the Court's diversity jurisdiction. (Id.) Subsequently, Defendants filed a Motion to Dismiss Plaintiff's Complaint, which the Court granted with leave to amend. (ECF No. 23.)

Plaintiff then filed his FAC on August 1, 2012, alleging the following state-law causes of action: 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"). (ECF No. 24.)


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. 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). However, dismissal without leave to amend is proper if it is clear that "the complaint could not be saved by any amendment." Intri-Plex Techs., Inc. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (internal citations and quotations omitted).


I. Plaintiff's Deceit Claim.

Plaintiff's first cause of action alleges that Defendants BofA and BAC fraudulently induced Plaintiff to fall behind in making his mortgage payments by repeatedly making false statements about Defendant's eligibility for a loan modification. (FAC ¶¶ 55-64.) "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). "Although the court looks to state law to determine if the elements of fraud have been properly pleaded, a plaintiff must still meet the federal standard to plead fraud with particularity." Sato v. Wachovia Mortg., FSB, 2011 WL 2784567, at *9 (N.D. Cal. July 13, 2011). Thus, this cause of action must be pled with the specificity required by Rule 9(b), meaning a plaintiff is required to plead "the 'who, what, when, where, and how' of the misconduct charged." Vess, 317 F.3d at 1106. Furthermore, a plaintiff is obligated to allege "what was false or misleading" about the defendant's statements and "why it was false."

Lyons v. Bank of Am., NA, 2011 WL 3607608, at *7 (N.D. Cal. Aug. 15, 2011).

Here, Plaintiff bases his fraud claim on Defendant's several alleged misrepresentations.*fn5 While Plaintiff reworded and restructured the allegations contained in his initial complaint, the FAC offers essentially the same arguments that the Court previously rejected as insufficient to state a viable fraud claim. (See ECF No. 23, at 8.) In particular, Plaintiff again alleges that he "was informed by a representative of Defendant that he would be approved for a loan modification only if he became sufficiently delinquent on his monthly mortgage payments." (FAC ¶ 57.) However, Plaintiff's FAC is devoid of any details regarding essential provisions of Defendants' alleged promise, such as the delinquency requirements and the terms of the promised modification. Thus, Plaintiff's FAC "lacks precise allegations as to what the moving defendants . . . allegedly promised or represented" and "lacks facts to support fraud elements." See Dooms v. Fed. Home Loan Mortg. Corp., 2011 WL 1303272, *12 (E.D. Cal. Mar. 31, 2011). Additionally, Plaintiff again fails to demonstrate that the statement itself was false. In fact, it seems reasonable for Defendants to require delinquency before modifying a loan.

Finally, Plaintiff is unable to "identify how [Defendants'] representation is fraudulent." See Mays v. U.S. Bank Nat. Ass., 2010 WL 318537, *8 (E.D. Cal. Jan. 20, 2010).

Plaintiff's allegations concerning Defendants' remaining statements fair no better. Plaintiff again fails to specify what specific promises Defendants made and provides no facts demonstrating that Defendants acted with the intent to deceive Plaintiff. Rather than providing supporting details and information, Plaintiff's FAC "relies on mere notions of false advice and promises regarding foreclosure and loan modification and defrauding [Plaintiff] of [his] property." See Dooms, 2011 WL 1303272, at *12.

Therefore, Defendants' Motion to Dismiss Plaintiff's first cause of action is GRANTED.

II. Plaintiff's Promissory Estoppel Claim.

Plaintiff's second cause of action for promissory estoppel is based on the premise that Defendants promised Plaintiff a loan modification, and that he relied on this promise to his detriment. (FAC ¶¶ 65-95.) To properly allege a cause of action for promissory estoppel under California law, 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) (citation omitted). Furthermore, "[e]stoppel cannot be established from . . . preliminary discussions and negotiations." Nat'l Dollar Stores v. Wagnon, 97 Cal. App. 2d 915, 919 (1950).

In this case, Plaintiff fails to "plead a clear and unambiguous promise, as Plaintiff's contentions are themselves unclear and ambiguous." See Penny v. NDeX West LLC, 2012 WL 589639, at *5 (C.D. Cal. Feb. 22, 2012). Plaintiff claims that Defendants' representatives promised "that he would receive a HAMP modification" if his mortgage payments became "sufficiently delinquent." (FAC ¶¶ 67, 94.) However, Plaintiff offers no details regarding the extent of the "promised" loan modification or exactly how delinquent he would need to be in order to receive the modification. Consequently, Plaintiff's vague statements in the FAC fail to provide any insight into the scope and conditions of Defendants' alleged promise. Plaintiff's general allegations that some unspecified individual at the Defendant mortgage company agreed to modify Plaintiff's loan on unspecified terms at an unspecified point in the future are insufficient to state a viable promissory estoppel claim. See Melegrito v. CitiMortgage Inc., 2011 WL 2197534, at *13 (N.D. Cal. June 06, 2011). Because the parties failed to discuss even the most essential terms of the alleged loan modification, Defendants' promise of such a modification is "too indefinite to be enforced." See Kassahun v. JPMorgan Chase Nat. Corporate Services, Inc., 2012 WL 1378659, at *3 (C.D. Cal. Apr. 19, 2012). Accordingly, Defendants' Motion to Dismiss Plaintiff's second cause of action is GRANTED.

C. Plaintiff's Wrongful Foreclosure Claim.

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. (ECF No. 25 at 12-13.) "Under California law, the 'tender rule' requires that as a precondition to challenging a foreclosure sale, or any cause of action implicitly integrated to the sale, the borrower must make a valid and viable tender of payment of the secured debt." Montoya v. Countrywide Bank, F.S.B., 2009 WL 1813973, at *11 (N.D. Cal. June 25, 2009) (citations omitted). Thus, "[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).

Moreover, 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. "The rules which govern tender are strict and are strictly applied." Gaffney v. Downey Sav. & Loan Ass'n, 200 Cal. App. 3d 1154, 1165 (1988). Moreover, "[f]or an offer of tender to be valid, it must be unconditional."

Christopher v. First Franklin Fin. Corp., 2010 WL 3895351, at *3 (S.D. Cal. Sept. 29, 2010) (citing Karlsen, 15 Cal. App. 3d at 118-20).

In his FAC, Plaintiff "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." (FAC ¶ 115.) This tender offer is identical to Plaintiff's previous tender offer, which this Court rejected by its July 13, 2012, Order. (See ECF No. 1 Ex. 1, at 17; ECF No. 23 at 11-12.) The Court specifically explained that, as pled, Plaintiff's tender offer was conditioned on a variety of speculative findings and thus was insufficient to survive Defendants' motion to dismiss. (ECF No. 23 at 11.) Here, Plaintiff again makes his tender offer conditional on the Court's findings as to who Plaintiff believes is owed his payments and what damages Plaintiff believes he has sustained to offset the amount owed. Because Plaintiff has failed to make an unconditional tender offer, his wrongful foreclosure claim fails.*fn6

See Christopher, 2010 WL 3895351, at *3 (concluding that the plaintiffs failed to allege unconditional tender where plaintiffs' alleged that they were "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"); see also Halajian v. Ndex West, L.L.C., 2012 WL 1969131, at *6-7 (E.D. Cal. May 31, 2012); McFadden v. Deutsche Bank Nat. Trust Co., 2011 WL 3606797, at *14 (E.D. Cal. Aug. 16, 2011). Thus, Defendants' Motion to Dismiss Plaintiff's third cause of action is GRANTED.

D. Plaintiff's UCL Claim.

Plaintiff's fourth cause of action alleges that Defendants' unlawful, unfair, and fraudulent business practices violated California's UCL. (FAC ¶¶ 116-122.) 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, at *4 (N.D. Cal. Dec. 17, 2009) (internal citations 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. Additionally, because a UCL cause of action "requires an underlying violation of law, a defense to the predicate claim is a defense to the alleged violation of the UCL claim." Hutson v. Am. Home Mortg. Servicing, Inc., 2009 WL 3353312, at *15 (N.D. Cal. Oct. 16, 2009).

Plaintiff claims that Defendants breached all three of the UCL's prongs. (FAC ¶¶ 117-21.) However, Plaintiff's UCL cause of action does not provide additional details or allegations supporting the claim. As a result, Plaintiff implicitly premises his UCL claim on the FAC's other three causes of action. When a plaintiff's UCL cause of action is derivative of other claims, "[w]here those claims are deficient, Plaintiff's UCL [cause of action] must also fail." Beall v. Quality Loan Serv. Corp., 2011 WL 1044148, at *5 (S.D. Cal. Mar. 21, 2011). Here, the Court has already stated various reasons for dismissing Plaintiff's other causes of action, and, consequently, Plaintiff's UCL claim fails because it suffers from the same deficiencies.

In his Opposition, Plaintiff contends that Defendants engaged in fraudulent and unfair practices when "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." (ECF No. 26, at 13.) The Court's prior Order explained that this argument fails both because it stems from Plaintiff's other three causes of action and because Plaintiff does not provide the requisite particularity. (ECF No. 23 at 13.) Instead of rectifying the highlighted deficiencies, Plaintiff simply repeats his previous arguments, nearly word-for-word. Thus, Plaintiff again fails to provide sufficient "facts supporting the statutory elements of the [UCL] violation," see Khoury v. Maly's of Cal., Inc., 14 Cal. App. 4th 612, 619 (1993), and does not adequately identify Defendants' immoral or unethical act or the public policy that Defendants violated. See McDonald v. Coldwell Banker, 543 F.3d 498, 506 (9th Cir. 2008). Moreover, the FAC's lack of details and information leaves Plaintiff unable to meet Rule 9(b)'s pleading requirements for fraud claims. See Sipe v. Countrywide Bank, 690 F. Supp. 2d. 1141, 1158 (E.D. Cal. 2010).

Therefore, Defendants' Motion to Dismiss Plaintiff's fourth cause of action is GRANTED.


As a matter of law, and for the reasons set forth above, Defendants' Motion to Dismiss is GRANTED. The Court previously provided Plaintiff with the opportunity to rectify the deficiencies of his complaint. However, Plaintiff's FAC fairs no better than Plaintiff's earlier pleading and fails to remedy the numerous deficiencies previously highlighted by the Court. Therefore, the Court finds that any further leave to amend would be futile and dismisses Plaintiff's FAC in its entirety WITHOUT LEAVE TO AMEND. The Clerk of the Court is directed to close the file.


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