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Thanh Nguyen v. Pennymac Loan Services

December 5, 2012


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




Plaintiff Thanh Nguyen ("Plaintiff") brought this action against PennyMac Loan Services, LLC ("Pennymac"), PMC Bancorp ("PMCB"), Federal National Mortgage Association ("Fannie Mae"), Mortgage Electronic Registration Systems, Inc. ("MERS"), and MTC Financial, Inc. (collectively, "Defendants") in connection with the foreclosure and sale of the property located at 1556 West Sumac Lane, Anaheim, CA 92802 (the "Property").

Plaintiff alleges that on October 7, 2009, he obtained a loan from PMCB in order to purchase the Property. (Dkt. No. 1, Exh. A ["Compl."] ¶ 13.) In the process of obtaining the loan, PMCB agents and employees did not disclose the terms and conditions of the repayment of the loan, gave no explanation of the loan terms, and were unaware of Plaintiff's actual income. (Id.) They allegedly represented that they would be able to work around Plaintiff's poor credit history to get Plaintiff approved for the loan. (Id. ¶ 14.) Plaintiff later discovered that the loan payments exceeded his "entire spendable income." (Id.) Plaintiff also alleges that Defendants "charged and obtained improper fees for the placement of his loan as 'sub-prime' when he qualified for a prime rate mortgage." (Id. ¶ 15.)

On December 1, 2010, Plaintiff defaulted on the loan, and Defendants recorded a Notice of Default. (Id. ¶ 24.) Plaintiff alleges that he defaulted on the loan because of the high payments, structure of the loan, and interest rate. (Id.) Additionally, Pennymac allegedly told Plaintiff to stop making mortgage payments so that he might qualify for a loan modification. (Id.) On September 23, 2011, Defendants recorded a Notice of Trustee's Sale on the Property. (Id. ¶ 25.) On March 12, 2012, the Property was sold at a foreclosure sale from Trustee Corps to Fannie Mae. ( Id. ¶ 26.)

Plaintiff's Complaint contains twelve causes of action: (1) violation of California Unfair Competition Law ("UCL"), (2) negligent infliction of emotional distress ("NIED"), (3) breach of the covenant of good faith and fair dealing, (4) injunctive relief, (5) violation of California Civil Code § 1572, (6) fraud, (7) declaratory relief, (8) intentional misrepresentation, (9) quiet title to set aside a defective and wrongful foreclosure, (10) violation of federal and state fair debt collection practices acts, (11) violation of federal and state anti-trust statutes, and (12) promissory estoppel. On September 27, 2012, the Court issued an order to show cause why this case should not be dismissed for failure to state a claim. (Dkt. No. 8.) On October 12, 2012, Plaintiff filed his opposition to the order. (Dkt. No. 10.) On October 18, 2012, Defendants filed a memorandum in support of the Court's order to show cause. (Dkt. No. 12.) For the following reasons, the Court DISMISSES Plaintiff's Complaint without leave to amend.


The legal standard in deciding whether Plaintiff has 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). Rule 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. In considering whether to dismiss a case for failure to state a claim, the issue before the Court 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).

A plaintiff alleging fraud or mistake must "state with particularity the circumstances constituting fraud or mistake," Fed. R. Civ. P. 9(b), including the "who, what, when, where, and how" of the alleged fraud. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). "To allege fraud with particularity, a plaintiff . . . must set forth what is false or misleading about a statement, and why it is false." Glen Holly Entm't, Inc. v. Tektronix, Inc., 100 F. Supp. 2d 1086, 1094 (C.D. Cal. 1999). Where "the entire complaint against a particular defendant alleges a unified course of fraudulent conduct, it is 'grounded in fraud,' and Rule 9(b) applies to the whole of that complaint." Vess, 317 F.3d at 1108; Kearns v. Ford Motor Co., 567 F.3d 1120, 1122 (9th Cir. 2009).

"If insufficiently pled averments of fraud are disregarded, as they must be, in a complaint or claim grounded in fraud, there is effectively nothing left of the complaint." Vess, 317 F.3d at 1107.

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) (finding that amendment would be futile where plaintiff was granted leave to amend once and the amended complaint contained the same defects as the prior complaint).

Plaintiff sets out a number of general allegations that are common to all of his causes of action. For the reasons discussed below, Plaintiff has not sufficiently pleaded a claim for relief based on any of these allegations. Plaintiff's first general allegation is that Defendants are not "holders in due course" of the loan instruments due to "fraud in factum" related to the process of obtaining the mortgage. (Compl. ¶¶ 43--56.) In support of the allegation of fraud, Plaintiff alleges that Defendants never explained the terms of the loan, including certain fees, never made a determination of whether he would be able to make the payments under the loan, never verified his income , and rushed Plaintiff into signing the loan documents. These allegations fail to meet the heightened pleading requirements of Rule 9(b). Specifically, Plaintiff has failed to state who made the allegedly fraudulent misrepresentations, when they were made, and how they were false.

Plaintiff additionally alleges that the endorsement of the promissory note was ineffective. (Compl. ΒΆ 56.) Plaintiff gives very little explanation for this allegation, other than stating that the Promissory Note contained sufficient space for an endorsement, and "any assignment by allonge is ineffective pursuant to Pribus v. Bush, 118 Cal. App. 3d 1003 (May 12, 1981)." ...

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