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Aquila P. Nugent, andrew Nugent v. Federal Home Loan Mortgage Complaint Corporation; Wells Fargo Bank

March 28, 2013

AQUILA P. NUGENT, ANDREW NUGENT,
PLAINTIFFS,
v.
FEDERAL HOME LOAN MORTGAGE COMPLAINT CORPORATION; WELLS FARGO BANK, N.A. D/B/A WELLS FARGO HOME MORTGAGE; AND DOES 1 TO 20, INCLUSIVE,
DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. Senior United States District Judge

ORDER GRANTING MOTIONS TO DISMISS SECOND AMENDED

Defendants Federal Home Loan Mortgage Corporation ("Freddie Mac") and Wells Fargo Bank, N.A. d/b/a Wells Fargo Home Mortgage ("Wells Fargo") (collectively "Defendants") separately move under Federal Rule of Civil Procedure ("Rule") 12(b)(6) for dismissal of all claims in the Second Amended Complaint ("SAC"). Plaintiffs Aquila P. Nugent and Andrew Nugent (collectively "Plaintiffs") allege claims for breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel, wrongful foreclosure, set aside of the trustee's sale, fraud, declaratory relief, and intentional infliction of emotional distress in connection with the foreclosure sale of Plaintiffs' home. Plaintiffs oppose each motion.

I. LEGAL STANDARD

Decision on Defendants' Rule 12(b)(6) dismissal motion requires determination of "whether the complaint's factual allegations, together with all reasonable inferences, state a plausible claim for relief." Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., 637 F.3d 1047, 1054 (9th Cir. 2011) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

When determining the sufficiency of a claim, "[w]e accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the non-moving party[; however, this tenet does not apply to] . . . legal conclusions . . . cast in the form of factual allegations." Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (citation and internal quotation marks omitted). "Therefore, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Id. (citation and internal quotation marks omitted); see also Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555) (stating "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do'").

II. JUDICIAL NOTICE

The parties submitted forty-one requests for judicial notice, including requests for judicial notice of the recorded (1) deed of trust between Aquila and Carla Nugent and Wells Fargo, (Wells Fargo Req. for Judicial Notice ("RJN"), ECF No. 33, Ex. 5); (2) grant deed whereby Aquila and Carla Nugent granted to Andrew Nugent an undivided 50% interest in the property, (RJN Ex. 6); (3) notice of default in connection with the deed of trust, (RJN Ex. 7); (4) notice of trustee's sale of the property, (RJN Ex. 9); (5) assignment of the deed of trust to Freddie Mac, (RJN Ex. 10); (6) trustee's deed upon sale granting the property to Freddie Mac, (RJN Ex. 11); and (7) grant deed whereby Freddie Mac granted the property to a third party. (RJN Ex. 12.)

As a general rule, a district court "'may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion.'" United States v. Corinthian Colls., 655 F.3d 984, 998 (9th Cir. 2011) (quoting Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001)). However, judicial notice may be taken of the existence of matters of public record, which are not subject to reasonable dispute over their authenticity. E.g., Lee, 250 F.3d at 690; Gardner v. Am. Home Mortg. Servicing, Inc., 691 F. Supp. 2d 1192, 1196 (E.D. Cal. 2010). Since the seven documents described here are all publicly recorded, they are proper subjects for judicial notice. Accordingly, Wells Fargo's request for judicial notice of these documents is granted. The remainder of the parties' requests for judicial notice are denied since they "do not alter . . . determination of th[is] case." Ventura Mobilehome Cmtys. Owners Ass'n v. City of San Buenaventura, 371 F.3d 1046, 1052 n.5 (9th Cir. 2004).

III. FACTUAL ALLEGATIONS

The following allegations are drawn from Plaintiffs' SAC and the documents of which judicial notice has been taken. In April 2004, Aquila and Carla Nugent obtained a $300,000 home loan as husband and wife from Wells Fargo. (RJN Ex. 5.) The loan was secured by a deed of trust that encumbered the property and granted Wells Fargo the right to accelerate the loan should "all or any part of the Property or any interest in the Property [be] sold or transferred . . . without [Wells Fargo's] prior written consent." (Id. ¶ 18.) In 2006, Aquila and Carla Nugent transferred an undivided 50% interest in the property to Aquila Nugent's brother, Andrew Nugent. (RJN Ex. 6.) There is no allegation in the SAC that Wells Fargo's consent was obtained prior to this transfer.

In October 2009, a notice of default was recorded in connection with the deed of trust. (RJN Ex. 7.) Around December 2009, Aquila Nugent attempted to obtain a loan modification. (SAC ¶ 11.) On January 4, 2010, a notice of trustee's sale of the property was recorded, announcing a sale date of January 25, 2010. (RJN Ex. 9.) The trustee's sale did not go forward on that date, and in February 2010, after providing Wells Fargo with financial documentation, Aquila and Carla Nugent received a letter from Wells Fargo. (SAC ¶¶ 13-15 & SAC App. ("TPP").) The letter states: "You did it! By entering into a Home Affordable Modification Trial Period Plan you have taken the first step toward making your payment more affordable." (TPP at 1.)*fn1 It also states: "As long as you comply with the terms of the Trial Period Plan, we will not start foreclosure proceedings or conduct a foreclosure sale if foreclosure proceedings have started." (Id. at 6.) According to the letter, to comply with their Home Affordable Modification Program ("HAMP") Trial Period Plan ("TPP"), Aquila and Carla Nugent had to make three TPP payments, sign and return the TPP and other required documentation, and certify that "[t]here has been no change in the ownership of the Property since I signed the Loan Documents." (Id. at 7.) Aquila Nugent "executed the required documents," "returned the completed application to Defendant Wells Fargo," and "timely made each of the payments required by the TPP Agreement." (SAC ¶¶ 16, 25.) Andrew Nugent likewise "submitted proof of income and agreed to be a cosigner on the loan modification." (SAC ¶ 22.) However, since ownership of the property changed two years after the loan documents were signed, neither Aquila nor Andrew Nugent could truthfully certify that "[t]here has been no change in the ownership of the Property since I signed the Loan Documents." (TPP at 7.) Yet when Plaintiffs "met with Jennie Onofre of Freddie Mac," she "concluded that Plaintiff Aquila Nugent qualified for a permanent Home Loan Modification." (SAC ¶¶ 20, 21.)

While Plaintiffs were making payments under the TPP, "[o]n May 19, 2010, un[beknownst] to Plaintiffs, a foreclosure sale was conducted and Defendant Freddie Mac acquired title to the property." (SAC ¶ 27; RJN Exs. 10, 11.)*fn2 Two years later, Freddie Mac sold the property to a third party. (RJN Ex. 12.)

IV. DISCUSSION

A. Breach of ...


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