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Kenery v. Wells Fargo, N.A.

United States District Court, Ninth Circuit

January 14, 2014

ILLUMINDADA KENERY, an individual, Plaintiff,
WELLS FARGO, N.A., a National Association, WELLS FARGO HOME MORTGAGE, INC., NDEX WEST, LLC, and DOES 1 through 50 inclusive, Defendants.


EDWARD J. DAVILA, District Judge.

Presently before the Court is Defendant Wells Fargo Bank, N.A.'s ("Defendant") Motion to Dismiss Plaintiff Illumindada Kenery's Complaint. See Docket No. 7. The Court found these matters appropriate for decision without oral argument pursuant to Local Civil Rule 7-1(b), and previously vacated the corresponding hearing date. Having carefully reviewed the parties' submissions, the Court GRANTS Defendant's Motion to Dismiss.


The following facts are taken from Plaintiff's Complaint and regarded as true for the purposes of this motion. In or around April 2008, Plaintiff went to an entity known as Wachovia Mortgage, FSB ("Wachovia") in order to obtain a loan for the refinance of a residential property located in San Jose, CA ("the property"). Docket No. 1, Ex. A, Complaint ¶¶ 7-9. In or around April 2008, Plaintiff entered into a consumer credit transaction with Wachovia by obtaining an approximately $587, 000 mortgage loan ("Note") secured by a First Deed of Trust on the property in favor of Wachovia. Id . ¶ 10. The Note was transferred from Wachovia through various entities, and throughout the years, various entities identified themselves to Plaintiff as "servicers." Id . Defendant now claims to be the note holder, the lender, and the beneficiary, but Plaintiff alleges that neither Wells Fargo Bank, N.A., nor any of the other Defendants named in the suit, have any estate, right, title, lien, or interest in the property. Id.

In or around February 2012, Plaintiff suffered economic hardship as a result of the faltering economy, resulting in Plaintiff falling behind on the Note. Id . ¶ 11. Plaintiff submitted a loan modification application to Defendant but was denied, despite allegedly being qualified. Id . Defendant initiated foreclosure proceedings against the property. Id . ¶ 12. Plaintiff filed the instant action in the Superior Court of the State of California for the County of Santa Clara, which Defendant subsequently removed to the Northern District of California.


a. Motion to Dismiss

Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007) (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr. , 521 F.3d 1097, 1104 (9th Cir. 2008). Moreover, the factual allegations "must be enough to raise a right to relief above the speculative level" such that the claim "is plausible on its face." Twombly , 550 U.S. at 556-57.

When deciding whether to grant a motion to dismiss, the court generally "may not consider any material beyond the pleadings." Hal Roach Studios, Inc. v. Richard Feiner & Co. , 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990). The court must generally accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal , 556 U.S. 662 (2009). The court must also construe the alleged facts in the light most favorable to the plaintiff. Love v. United States , 915 F.2d 1242, 1245 (9th Cir. 1988). However, the court may consider material submitted as part of the complaint or relied upon in the complaint, and may also consider material subject to judicial notice. See Lee v. City of Los Angeles , 250 F.3d 668, 688-69 (9th Cir. 2001).

b. Preemption under HOLA

The federal preemption doctrine stems from the Supremacy Clause, U.S. Const. art. VI, cl. 2, and the "fundamental principle of the Constitution [ ] that Congress has the power to preempt state law." Crosby v. Nat'l Foreign Trade Council , 530 U.S. 363, 372 (2000).

Generally, "[p]reemption analysis start[s] with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.'" City of Columbus v. Ours Garage & Wrecking Service, Inc. , 536 U.S. 424, 438 (2002) (quoting Medtronic, Inc. v. Lohr , 518 U.S. 470, 485 (1996)). Congressional intent is therefore the "ultimate touchstone" of preemption inquiry. Medtronic , 518 U.S. at 485. Such intent may be "explicitly stated in the statute's language or implicitly contained in its structure and purpose." Fidelity Federal Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 152-53 (1982). State law may also be preempted by federal regulations. Id. at 153. "Where Congress has directed an administrator to exercise his discretion, his judgments are subject to judicial review only to determine whether he has exceeded his statutory authority or acted arbitrarily." Id . If these conditions are met, "the statutorily authorized regulations of an agency will pre-empt any state or local law that conflicts with such regulations or frustrates the purposes thereof." New York v. Fed. Commc'ns Comm'n , 486 U.S. 57, 64 (1988).

There are times when the traditional presumption against preemption does not apply. Indeed, the presumption is "not triggered when the State regulates in an area where there has been a history of significant federal presence." United States v. Locke , 529 U.S. 89, 108 (2000). As relevant here, "Congress has legislated in the field of banking from the days of McCulloch v. Maryland , 17 U.S. 316, 325-26 (1819), creating an extensive federal statutory and regulatory scheme." Bank of Am. v. City & County of San Francisco , 309 F.3d 551, 558 (9th Cir. 2002). The Home Owners' Loan Act ("HOLA") was enacted "to charter savings associations under federal law, at a time when record numbers of home loans were in default and a staggering number of state-chartered savings associations were insolvent." Silvas v. E*Trade Mortg. Corp. , 514 F.3d 1001, 1004 (9th Cir. 2008). One of HOLA's central purposes was to restore public confidence in the banking system by consolidating the regulation of savings and loan associations with the federal government. Id . To achieve this purpose, Congress authorized the Office of Thrift Supervision ("OTS") to promulgate regulations governing federal savings associations. 12 U.S.C. § 1464; Silvas , 514 F.3d at 1005. OTS occupies the entire field in that regard. 12 C.F.R. § 560.2(a).

HOLA's implementing regulations set forth a list, "without limitation, " of the categories of state laws that are expressly preempted:

The terms of credit, including amortization of loans and the deferral and capitalization of interest and adjustments to the interest rate, balance, payments due, or term to maturity of the loan, including the circumstances under which a loan may be called due and payable ...

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