United States District Court, N.D. California, San Francisco Division
[Copyrighted Material Omitted]
For Yin Kuen Cheung, Marina Cheung Yiu, Plaintiffs: Mark Whitney Lapham, LEAD ATTORNEY, Law Offices of Mark W. Lapham, Danville, CA.
For Wells Fargo Bank, N.A., Defendant: Josi Kennon Swonetz, Allen Matkins et al, San Diego, CA.
RICHARD SEEBORG, UNITED STATES DISTRICT JUDGE.
ORDER DENYING IN PART AND GRANTING IN PART DEFENDANT'S MOTION TO DISMISS
This matter arises from the foreclosure of the real property located at 1003 Cottage Lane in Hercules, California. The First Amended Complaint (" FAC" ) asserts ten claims for relief. Defendant Wells Fargo moves to dismiss for lack of standing, failure to state a claim upon which relief can be granted, federal preemption, and under the applicable statutes of limitations. For the following reasons, defendant's motion to dismiss is granted in parted and denied in part, with leave to amend.
World Savings Bank financed a mortgage on Plaintiff Yin Kuen Cheung's (" Cheung" ) home at 1003 Cottage Lane. World Savings Bank then attempted to securitize that loan into a trust in order to receive tax benefits and pool the risk from that mortgage with other mortgages. World Savings Bank was subsequently acquired by Wachovia Bank, which was later acquired by defendant Wells Fargo Bank, N.A.
Plaintiff Marina Cheung Yiu (" Yiu" ) is Cheung's sister. While Cheung was the legal owner of the house until 2007, Yiu made the down payment and all of the monthly mortgage payments. In 2007, Chueng deeded title to the property to Yiu. In 2012, Wells Fargo and Cal-Western initiated a non-judicial foreclosure of plaintiffs' property under California Civil Code sections 2924 through 2924k. The property was foreclosed on March 22, 2012 and then sold to Home Reserves LLC.
Plaintiffs base this suit on the assertion that Wells Fargo never became the beneficiary of their mortgage with World Savings Bank and thus lacked authority to foreclose plaintiffs' property. Plaintiffs allege that World Savings Bank extinguished its interest in the loan through a failed attempt to sell and securitize it into a mortgage-backed security trust held by the Bank of New York as trustee. According to the plaintiffs, this sale and securitization did not close by the deadline in the securitization agreement and therefore the mortgage was never transferred to the trust. Plaintiffs argue the result of this failed sale and securitization is that the mortgage neither remained with World Savings Bank nor transferred to the Bank of New York, but instead became the property of an unknown beneficiary. Plaintiffs then conclude that because World Savings Bank lost its interest in the loan, Wells Fargo did not obtain the mortgage when it succeeded World Savings Bank. Similarly, plaintiffs assert Bank of New York, the trustee to whom World Savings Bank intended to transfer the mortgage, never acquired any interest in the loan and likewise had no interest to transfer to Wells Fargo.
Plaintiffs advance claims for: (1) wrongful foreclosure; (2) quasi contract; (3) violation of 12 U.S.C. § 2605; (4) violation of 15 U.S.C. § 1692; (5) cancellation of instruments; (6) declaratory relief; (7) negligence; (8) violation of the Truth in Lending Act; (9) violation of California's Unfair Competition Law (" UCL" ), California Business and Professions Code § § 17200, et seq .;
and (10) accounting.
III. LEGAL STANDARD
A complaint must contain " a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). " Pleadings must be so construed so as to do justice." Fed.R.Civ.P. 8(e). While " detailed factual allegations are not required," a complaint must have sufficient factual allegations to " state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atlantic v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A claim is facially plausible " when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. This standard asks for " more than a sheer possibility that a defendant acted unlawfully." Id. This determination is a context-specific task requiring the court " to draw in its judicial experience and common sense." Id. at 1950.
A motion to dismiss a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims alleged in the complaint. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal under Rule 12(b)(6) may be based on either the " lack of a cognizable legal theory" or on " 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). When evaluating such a motion, the court must accept all material allegations in the complaint as true, even if doubtful, and construe them in the light most favorable to the non-moving party. Twombly, 550 U.S. at 570. " [C]onclusory allegations of law and unwarranted inferences," however, " are insufficient to defeat a motion to dismiss for failure to state a claim." Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 ...