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Sunil Wadhwa and Lynn Lori Wadhwa v. Aurora Loan Services

February 8, 2013

SUNIL WADHWA AND LYNN LORI WADHWA, PLAINTIFF,
v.
AURORA LOAN SERVICES, LLC, ET AL., DEFENDANTS.



ORDER

On March 8, 2012, this court dismissed with prejudice plaintiffs' causes of action for breach of fiduciary duty and unjust enrichment as to defendants Aurora Loan Services, LLC (Aurora) and Mortgage Electronic Registration Services, Inc. (MERS). Plaintiffs' remaining causes of action were dismissed with leave to amend. On March 28, 2012, plaintiffs filed their First Amended Complaint (FAC). On April 16, 2012, defendants filed a motion to dismiss and on June 8, 2012, plaintiffs filed an opposition motion. On June 18, 2012, the court issued a minute order directing defendants' motion to be submitted without oral argument. As discussed below, defendants' motion to dismiss all causes of action is GRANTED.

I. Facts and Procedural History

On July 6, 2011, plaintiffs filed a complaint against Aurora, Capitol One Mortgage Corporation (Capital One) and MERS, alleging causes of action for fraudulent misrepresentation, breach of fiduciary duty, unjust enrichment, civil conspiracy, quiet title, usury and fraud, wrongful foreclosure and breach of security instrument, all stemming from the purchase of and foreclosure on the real property located at 3055 Orbetello Way, El Dorado Hills, California. ECF No. 1 at 60-61.

On July 7, 2011, plaintiffs filed a motion for a temporary restraining order, seeking to restrain the defendants from evicting them should they succeed in the unlawful detainer action scheduled to be heard in El Dorado County Superior Court on July 11, 2011. ECF No. 6-2 at 1. The court granted the request, but directed plaintiffs to post a $25,000 bond, which the court was prepared to accept as the tender required in a challenge to a foreclosure. ECF No. 9 at 9-10. Plaintiffs did not post the bond, but rather provided copies of two bonds, totaling $25,000, which had been posted in El Dorado County Superior Court. ECF Nos. 12 & 13. The court issued a minute order noting that the copies of the two bonds did not satisfy its order. ECF No. 14. When plaintiffs did not post a satisfactory bond by the deadline, the court vacated the temporary restraining order. ECF No. 15.

On July 26, 2011, plaintiffs filed a second request for issuance of a temporary restraining order, noting that the trial on the unlawful detainer action had been moved to August 1. ECF No. 20-2 ¶ 2. The court issued a minute order later on July 26, directing counsel to file information about the proposed bond that was at issue in the first restraining order. ECF No. 23. Counsel did not respond, and the application for the temporary restraining order was denied. ECF Nos. 23 & 24. On August 2, 2011, plaintiffs noticed a motion for a preliminary injunction, once again seeking to restrain defendants from proceeding with an unlawful detainer action, at that point rescheduled for November 7, 2011. This motion was denied. ECF No. 34.

Defendants filed a motion to dismiss on August 15, 2011. ECF No. 26. Plaintiffs filed an opposition, ECF No. 31, and in support of their opposition, plaintiffs also filed a request for judicial notice of certain matters. ECF No. 32. On March 8, 2012, the court granted defendant's motion to dismiss. ECF No. 39. Plaintiffs' causes of action for breach of fiduciary duty and unjust enrichment as to Aurora and MERS were dismissed with prejudice. Id. at 34. The remaining causes of action were dismissed with leave to amend. Id.

On March 28, 2012, plaintiffs filed their First Amended Complaint (FAC), re-alleging the remaining causes of action for fraudulent misrepresentation, civil conspiracy, quiet title, usury and fraud, wrongful foreclosure and breach of security instrument. ECF No. 40. On April 16, 2012, defendants filed a motion to dismiss, ECF No. 43, which plaintiffs have opposed. ECF No. 46. On the court's own motion and as provided by Local Rule 230(g), defendants' motion to dismiss was submitted without oral argument.

II. Standard for a Motion to Dismiss

Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to dismiss a complaint for "failure to state a claim upon which relief can be granted." A court may dismiss "based on the lack of cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A motion to dismiss under this rule may also challenge the sufficiency of fraud allegations under the more particularized standard of Rule 9(b) of the Federal Rules of Civil Procedure. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003).

Although a complaint need contain only "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), in order to survive a motion to dismiss this short and plain statement "must contain sufficient factual matter . . . to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must include something more than "an unadorned, the-defendant-unlawfully-harmed-me accusation" or "'labels and conclusions'" or "'a formulaic recitation of the elements of a cause of action.'" Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555). Determining whether a complaint will survive a motion to dismiss for failure to state a claim is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950. Ultimately, the inquiry focuses on the interplay between the factual allegations of the complaint and the dispositive issues of law in the action. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984).

In making this context-specific evaluation, this court must construe the complaint in the light most favorable to the plaintiff and accept as true the factual allegations of the complaint. Erickson v. Pardus, 551 U.S. 89, 93--94 (2007). This rule does not apply to "'a legal conclusion couched as a factual allegation,'" Papasan v. Allain, 478 U.S. 265, 286 (1986) (quoted in Twombly, 550 U.S. at 555), nor to "allegations that contradict matters properly subject to judicial notice" or to material attached to or incorporated by reference into the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir. 2001). A court's consideration of documents attached to a complaint or incorporated by reference or matter subject to judicial notice will not convert a motion to dismiss into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003); Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995); Van Buskirk v. CNN, 284 F.3d 977, 980 (9th Cir. 2002) (noting that even though court may look beyond pleadings on motion to dismiss, generally court is limited to face of the complaint on 12(b)(6) motion).

III. Analysis

Plaintiff's first amended complaint (ECF No. 40) is nearly indistinguishable from the original complaint (ECF No. 1).*fn1 The court therefore finds no reason to alter the conclusions reached in its March 8, 2012 order (ECF No. 39) dismissing all causes of action.

With respect to the cause of action for fraud, the court had noted the need for plaintiffs to differentiate their allegations as to specific defendants, in accordance with the heightened pleading requirements of Rule 9(b). ECF No. 39 at 8. Plaintiffs now claim generally that, "Defendants collectively did misrepresent to Plaintiffs that they were the true source or origin of funds loaned to Plaintiffs, that Defendants had the right to carry out a foreclosure and sale of Plaintiffs' home as properly assigned or substituted parties of interest." Pls.' Opp'n to Defs.' Mot. to Dismiss First Amended ...


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