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Gurvinder Ghuman and Parminder K. Ghuman v. Wells Fargo Bank

February 12, 2013




Defendant Wells Fargo Bank ("Defendant") has filed a motion to dismiss the First Amended Complaint of plaintiffs Gurvinder Ghuman and Parminder K. Ghuman ("Plaintiffs") pursuant to Federal Rule of Civil Procedure 12(b)(6). As to Plaintiffs' third cause of action for violation of California Civil Code Section 2923.5, Defendant seeks a more definite statement of the claim pursuant to Rule 12(e).


On August 29, 2005, Plaintiffs signed a negotiable promissory note ("Note") in the amount of $407,600.00 in favor of Secured Bankers Mortgage Co. ("Lender"). To secure the Note, Plaintiffs also executed a Deed of Trust ("Deed of Trust"), which conveyed a security interest in the real property ("Subject Property") to Lender. The Deed of Trust named T.D. Service Co. as trustee and Mortgage Electronic Registration Systems, Inc. ("MERS") as the original beneficiary. The Deed of Trust states:

MERS, (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property, and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.

The Deed of Trust was recorded on September 2, 2005 in the Official Records of the Recorder of Fresno County, California.

On or about November 30, 2005 ("Closing Date"), Lender sold and transferred its interest in Plaintiffs' Note to the Morgan Stanley Mortgage Loan Trust, a New York mortgage-backed securities trust ("Morgan Stanley Trust"), which was registered with the Securities Exchange Commission ("SEC"). Defendant was named the Master Servicer for the Morgan Stanley Trust, and Deutsche Bank National Trust Company ("Deutsche Bank") was named the trustee. Plaintiffs allege that the Deed of Trust was not transferred to the Morgan Stanley Trust.

On or about December 7, 2007, Lender ceased conducting business. At the time Lender ceased operations, the Note had been transferred to Morgan Stanley Trust, but the Deed of Trust was not transferred. Plaintiffs defaulted on the subject loan in or around December 2008.

On April 29, 2009, NDeX, as "trustee or agent for the beneficiary," recorded a Notice of Default and Election to Sell against the Subject Property. The Notice of Default was signed by Ric Juarez, purportedly an employee of NDeX. MERS recorded an Assignment of the Deed of Trust on May 27, 2009, which conveyed a beneficial interest in the Deed of Trust to Deutsche Bank, the trustee of the Morgan Stanley Trust. Defendant, acting for Deutsche Bank, named NDeX as the new trustee in a substitution recorded on June 29, 2009. NDeX executed an affidavit dated June 15, 2009, stating that a copy of the Substitution of Trustee document was mailed prior to recording in accordance with the California Civil Code Section 2924(b). Plaintiffs allege that such document and affidavit had never been recorded and did not meet the requirements of California Civil Code Section 2924(b).

On September 18, 2009, NDeX recorded a Notice of Trustee's Sale ("NOS") scheduled for October 6, 2009. The sale was later postponed. A copy of the NOS was not signed by any employee of NDeX; subsequent copies were signed by a purported employee of NDeX. A declaration was attached to the Notice of Sale, and Plaintiffs allege that the declaration did not meet the requirements of California Civil Code Section 2923.5. Another Notice of Sale was dated October 28, 2009, setting a new sale date of November 23, 2009. No employee of NDeX signed this Notice of Sale.

On or about December 3, 2010, Defendant sent a letter to Plaintiffs that offered Plaintiffs the opportunity to enter into a Trial Practice Plan ("TPP"). Plaintiffs allege they had to make three trial payments on their mortgage on January 1, February 1, and March 1, 2011. Plaintiffs allege they made the trial payments on time, but their payments were never properly credited to their mortgage loan. Plaintiffs allege that late fees and other charges were also improperly added to the balance of their mortgage loan.

In a letter dated February 9, 2012, Plaintiffs sent Defendants a letter advising them that "litigation of this matter is imminent" and requested several categories of documents from Defendants. Plaintiffs allege such letter was a "qualified written request" pursuant to Section 6 of the Real Estate Settlement Procedures Act ("RESPA"). Defendant responded to the letter, enclosed copies of Plaintiffs' Note and Deed of Trust, and advised Plaintiffs that their "loan is currently under review by our Home Preservation Department for a loan modification."

Defendants allege that on or about March 22, 2012, they sent a letter to Plaintiffs informing them that their loan modification was not approved until a title issue was resolved. Defendant also sent Plaintiffs a letter informing Plaintiffs that they did not qualify for a loan modification because of additional liens on the property.

NDeX commenced foreclosure proceedings against Plaintiffs on or about May 31, 2012. The notice was posted on Plaintiffs' property. NDeX identified itself in the NOS as the trustee; however, the NOS signature page was unsigned. On June 1, 2013, a new NOS with a sale date of June 25, 2012 was recorded. The sale was postponed due to Plaintiffs' filing of the present action.

On August 28, 2012, Plaintiffs filed their first amended complaint ("FAC") asserting causes of action for (1) slander of title (against all Defendants), (2) wrongful foreclosure (against all Defendants), (3) violation of California Civil Code Section 2923.5 (against Defendant Wells Fargo), (4) violation of the Real Estate Settlement Procedures Act (against Defendant Wells Fargo), and (5) violation of the Unfair Business Practices Act Section 17200 (against all Defendants). Defendant filed its motion to dismiss the entire FAC pursuant to Rule 12(b)(6) or for a more definite statement pursuant to Rule 12(e). Plaintiffs did not file a written opposition to Defendant's motion.


A complaint must contain a short and plain statement showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). A court must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party. Id. A party may move to dismiss based on the failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. Parks School Of Business v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995).

In making a 12(b)(6) determination, district courts have followed a two-step approach. Bell Atlantic v. Twombly, 550 U.S. 544, 564-570, 127 S.Ct. 1955, 167 L.Ed.2d 919 (2009). First, district courts should carefully examine the complaint to smoke out any "merely legal conclusions resting on the prior allegations." Id. at 564. If an allegation is deemed "conclusory," it is entitled to no weight in the 12(b)(6) calculus. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1951, 173 L.Ed.2d 868 (2009). Second, district courts should weigh the remaining facts and determine if they are sufficient to "nudge the claims across the line from conceivable to plausible." Bell Atlantic, 550 570. While a complaint "need not contain detailed factual allegations, it must plead enough facts to state a claim of relief that is plausible on its face." Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009).

Plausibility can be met even if a judge disbelieves a complaint's factual allegations. Aschroft, 129 S. Ct. at 1959 (stating that "no matter how skeptical the court may be... 'Rule 12(b)(6) does not countenance ... dismissals based on a judge's disbelief of a complaint's factual allegations.'"). "A claim has facial plausibility," and thus survives a motion to dismiss, "when the pleaded factual content allows the court to draw a reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1940. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than sheer possibility that a defendant acted unlawfully." Id. at 1949. A 12(b)(6) analysis is "not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims" advanced in his or her complaint. Scheuer v. Rhodes, 414 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).


Plaintiffs' First Cause of Action (Slander of Title) - Plaintiffs assert a cause of action for slander of title against all Defendants. Slander of title occurs when a person, "without a privilege to do so, publishes a false statement that disparages title to property and causes the owner thereof some pecuniary loss or damage." Sumner Hill Homeowners' Association, Inc. v. Rio Mesa Holdings, LLC, 205 Cal. App. 4th 999, 1030, 141 Cal. Rptr. 3d 100 (2012). The elements for this tort are 1) a publication 2) without privilege or justification, 3) direct pecuniary loss, and 4) falsity. Truck Ins. Exchange v. Bennett, 53 Cal. App. 4th75, 84, 61 Cal. Rptr. 2d 497 (1997).

Plaintiffs' FAC adequately alleges publication, the first element in a slander of title cause of action. Plaintiffs allege that Defendants effected a publication by recording the Assignment of the Deed of Trust, Substitution of Trustee, and the Notices of Default and Trustee's Sale. Such recording of the documents was an announcement to the world that Defendants had valid title over the subject property. See Seeley v. Seymour, 190 Cal.App.3d 844, 858, 237 Cal.Rptr. 282, 289 (1987) (stating that the recorded instrument "was reasonably understood by third parties as an announcement... to all the world").

Second, Plaintiffs' FAC adequately alleges that the publication was made "without privilege or justification." The California Supreme Court has held that "a rival claimant of property is conditionally privileged to disparage or justified in disparaging another's property in land by an honest and good-faith assertion of an inconsistent legally protected interest in himself." Gudger v. Manton, 21 Cal.2d 537, 545, 134 P.2d 217 (1943) (overruled on other grounds by Albertson v. Raboff, 21 Cal.2d 537 (1943)). However, an "express finding of lack of good faith... would destroy the privilege or justification here discussed." Id. at 546. Plaintiffs allege that Defendants' recording of the documents was "knowingly wrongful," i.e. Defendants' intentional misconduct stripped them of such privilege. ...

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