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Castillo v. Wells Fargo Bank, N.A.

United States District Court, C.D. California

April 23, 2014

WELLS FARGO BANK, N.A. and DOES 1-10, inclusive, Defendants.


OTIS D. WRIGHT, II, District Judge.


Before the Court are Defendant Wells Fargo Bank, N.A.'s Motion to Dismiss Plaintiffs' First Amended Complaint ("FAC") and Motion to Strike Portions of the FAC. (ECF Nos. 16, 18.) Plaintiffs Fidel Castillo and Olga O. Castillo executed a deed of trust against their home property in December 2007. After Plaintiffs were denied a loan modification under the Home Affordable Modification Program ("HAMP"), they filed suit against Wells Fargo alleging claims of fraud, intentional and negligent misrepresentation, breach of contract, breach of good faith and fair dealing, and violation of California's Unfair Competition Law. For the reasons discussed below, the Court GRANTS Defendant's Motion to Dismiss and DENIES AS MOOT Defendant's Motion to Strike.[1]


On December 18, 2007, Plaintiffs secured a $365, 000 loan from World Savings Bank, FSB's Quick Qualifying Loan Program. (FAC ¶¶ 7-8.) The loan was secured by a deed of trust against their home property located at 1126 Raymond Avenue, Glendale, California 91201. (FAC ¶¶ 1, 7.) Plaintiffs' loan was an Option Adjustable Rate Mortgage ("Option ARM") loan, also known as a "Pick-A-Payment" loan. (FAC ¶ 9.)

Wells Fargo acquired World Savings in 2008 through a series of transactions. (Def.'s Req. for Judicial Notice ("RJN"), Ex. 6.) After Wells Fargo began overseeing Plaintiffs' mortgage, Plaintiffs fell into default when the maximum aggregate principal balance of their loan negatively amortized to $456, 250.00 and their monthly repayments increased to $3, 800.00.[2] (FAC ¶ 11.) Plaintiffs subsequently contacted Wells Fargo to apply for a loan modification under HAMP, but the loan modification was denied. (Mot. 3:8-9.)

On October 30, 2013, Plaintiffs commenced this action in Los Angeles County Superior Court. (Not. of Removal 2:3-5.) Wells Fargo removed the case to federal district court on December 4, 2013. (ECF No. 1.) Plaintiffs filed the FAC on January 17, 2014, and Wells Fargo subsequently filed this Motion to Dismiss on February 21, 2014. (ECF Nos. 12, 16.) Plaintiffs timely opposed. (ECF No. 19.)

Plaintiffs raise six claims in the FAC: (1) fraudulent concealment; (2) intentional misrepresentation; (3) negligent misrepresentation; (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; and (6) violation of California's Unfair Competition Law ("UCL") under California Business and Professions Code section 17200. (ECF No. 12.) Plaintiffs allege that Wells Fargo failed to disclose the certainty of negative amortization if Plaintiffs followed the payment schedule contained in their loan documents. ( See FAC ¶¶ 16-17.) In addition, Plaintiffs contend that they were unaware of the terms of the loan at the time that they agreed to sign the loan documents. (FAC ¶ 21.) Defendant now moves to dismiss the entire FAC. (ECF No. 16.)


A court may dismiss a complaint under Rule 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). To survive a dismissal motion, a complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement of the claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual "allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). That is, the complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

The determination whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. A court is generally limited to the pleadings and must construe all "factual allegations set forth in the complaint... as true and... in the light most favorable" to the plaintiff. Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). But a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

As a general rule, a court should freely give leave to amend a complaint that has been dismissed. Fed.R.Civ.P. 15(a). But a court may deny leave to amend when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir.1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).


Wells Fargo moves to dismiss Plaintiffs' entire action because Plaintiffs' federal claims are barred by the doctrine of res judicata and time-barred by the statute of limitations. (Mot. 2-3.) In their Opposition, Plaintiffs do not address the merits of Wells Fargo's res judicata argument. But Plaintiffs do assert that their claims are not ...

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