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Rothman v. U.S. Bank National Association

United States District Court, N.D. California

April 24, 2014



MAXINE M. CHESNEY, District Judge.

Before the Court is defendant U.S. Bank National Association's ("U.S. Bank") motion, filed September 11, 2013, to dismiss plaintiff Marshal Rothman's ("Rothman") Amended Complaint ("AC"). Rothman has filed opposition, to which U.S. Bank has replied. Having read and considered the papers filed in support of and in opposition to the motion, the Court deems the matter suitable for determination on the parties' respective written submissions, and hereby rules as follows.[1]


The following facts are taken from the AC and from three documents, specifically, the Adjustable Rate Note ("Note"), Deed of Trust ("DOT"), and Notice of Default and Election to Sell Under Deed of Trust ("Notice of Default"), referenced therein.[2]

On February 21, 2007, Rothman, a real estate developer, purchased a house at 18 Sheridan Court in Mill Valley, California ("the Property") and entered into a mortgage in the amount of $2, 802, 500.00 with Downey Savings and Loan Association. F.A. ("Downey"). (See AC ¶¶ 6, 13.) By the terms of the Note and DOT, he was to make initial monthly payments in the amount of $12, 260.94. (See U.S. Bank Request for Judicial Notice ("RJN") Ex. 1 at Ex. A.) The Office of Thrift Supervision subsequently closed Downey and appointed the Federal Deposit Insurance Corporation as Receiver, after which Rothman's mortgage was assigned to U.S. Bank. (See AC ¶ 14.)

In or around May 2011, Rothman submitted a loan modification application to U.S. Bank. ( Id. ¶ 15.) In February 2012, having received no response, Rothman "became delinquent on his mortgage payments" in an effort to cause U.S. Bank to "respond to his loan modification application in a more timely fashion." (See id. ¶ 16.) After approximately two months, in April 2012, U.S. Bank informed Rothman of its intent to foreclose upon the Property and appointed one of its employees, Christopher Parrish ("Parrish"), to be Rothman's "point of contact" with the bank. (See id. ¶¶ 17-18.)

On or around April 11, 2012, Parrish informed Rothman he should "not worry" about the bank's threat to foreclose because foreclosure proceedings "took a long time" and because Rothman had a pending loan modification application. ( Id. ¶ 19.) Parrish did not inform Rothman during that conversation that U.S. Bank, during the time the loan modification application was pending, would continue to assess late charges against Rothman's account for delinquency, would impose "various other fees and charges, " including property preservation fees and foreclosure attorney's fees, and would levy compounding interest charges against Rothman's total delinquency. ( Id. ¶¶ 20-21.)

Approximately four months later, on or around August 28, 2012, Rothman called U.S. Bank's foreclosure department and spoke with an employee named Maria Carlos ("Carlos"). (See id. ¶ 22.) Rothman asked Carlos "what amount he needed to pay to cure his delinquent mortgage and reinstate his loan." ( Id. ¶ 22.) Carlos told Rothman that "paying $74, 643.23 would make him current on his mortgage and halt the foreclosure proceedings." ( Id. ¶ 23.) Several days later, Rothman paid $74, 643.23 to U.S. Bank. ( Id. ¶ 24.)

Shortly thereafter, in September 2012, U.S. Bank "declared [Rothman] to be in default on the mortgage and note." (See id. ¶ 37.) Rothman later learned this was due to the addition by U.S. Bank of an "escrow' charge of nearly $60, 000 to [his] delinquency" (id. ¶ 26), which he alleges represented an "accelerated... balance of his monthly escrow payments" for property insurance and property taxes (see id. ¶ 30). As of August 28, 2012, however, Rothman had been current on his property insurance and property taxes, which payments were made by U.S. Bank out of monies paid by Rothman into his escrow account and not from any funds advanced by the bank. ( Id. ¶¶ 27-29.)

When Rothman learned his $74, 643.23 payment had not cured his indebtedness, he asked Parrish for an explanation. ( Id. ¶ 33.) Parrish told him he would look into the matter, and Rothman waited for him to respond. ( Id. ¶¶ 33-35). Beginning in December 2012, Rothman "repeatedly" asked U.S. Bank for a "complete and accurate accounting so that he could pay off his indebtedness and reinstate his mortgage." ( Id. ¶ 38.) "In addition, " Rothman sent a Qualified Written Request ("QWR") to U.S. Bank pursuant to the Real Estate Settlement Procedures Act ("RESPA"). (See AC ¶ 39);[3] see also 12 U.S.C. § 2605(e). The bank did not make any corrections to Rothman's account in response to his QWR (see AC ¶ 89), and the accounting he ultimately received "after months of requests" comprised "incomprehensible printouts taken directly from U.S. Bank's computer systems" that "employ[ed] jargon particular to U.S. Bank's mortgage servicing operations and use[d] a peculiar formatting that is difficult for non-U.S. Bank mortgage servicing employees to understand" (see id. ¶ 44).

On May 16, 2013, a Notice of Default was recorded against the Property (see id. ¶ 48; U.S. Bank RJN Ex. 2), which stated that Rothman, as of May 15, 2013, owed $213, 774.53 in "past due payments plus permitted costs and expenses." (See U.S. Bank RJN Ex. 2.)

Rothman alleges the amount U.S. Bank claims is due and owing is "noticeably incorrect" as he "has missed only ten or so monthly payments of about $14, 000 each" (id. ¶ 45), and U.S. Bank "has done nothing to actually preserve the property in any way" (id. ¶ 46).


Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. See Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1990). Rule 8(a)(2), however, "requires only a short and plain statement of the claim showing that the pleader is entitled to relief.'" See Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007) (quoting Fed.R.Civ.P. 8(a)(2)). Consequently, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations." See id. Nonetheless, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." See id. (internal quotation, citation, and alteration omitted).

In analyzing a motion to dismiss, a district court must accept as true all material allegations in the complaint, and construe them in the light most favorable to the nonmoving party. See NL Industries, Inc. v. Kaplan , 792 F.2d 896, 898 (9th Cir. 1986). "To survive a motion to dismiss, a complaint must contain sufficient factual material, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quoting Twombly , 550 U.S. at 570). "Factual allegations must be enough to raise a right to relief above the speculative level[.]" Twombly , 550 U.S. at 555. Courts "are not bound to accept as true a legal conclusion couched as a factual allegation." See Iqbal , 556 U.S. at 678 (internal quotation and citation omitted).


In the AC, Rothman alleges nine causes of action: (1) "Wrongful Foreclosure"; (2) "Negligent Misrepresentation"; (3) "Breach of Contract"; (4) "Breach of the Implied Covenant of Good Faith and Fair Dealing"; (5) "RESPA-12 U.S.C. §§ 2601, et seq."; (6) "Cal. Civil Code § 2924.12"; (7) "Promissory Estoppel"; (8) "Accounting"; and (9) "Cal. Bus. & Prof. Code §§ 17200, et seq." As to each, U.S. Bank argues Rothman fails to state a claim upon which relief can be granted.

A. First Cause of Action: Wrongful Foreclosure

Rothman's First Cause of Action is based on the above-referenced Notice of Default, which, Rothman alleges, is based upon "a wildly inflated total indebtedness figure that is the result of [U.S. Bank's] adding in erroneous or illegal charges and fees, as well as compounded late fees and interest resulting from [U.S. Bank's] purposefully dilatory conduct." (See AC ¶ 60.)

"A lender or foreclosure trustee may only be liable to the mortgagor or trustor for wrongful foreclosure if the property was fraudulently or illegally sold under a power of sale contained in a mortgage or deed of trust." Rosenfeld v. J.P. Morgan Chase Bank, N.A. , 732 F.Supp.2d 952, 961 (Aug. 9, 2010). Consequently, a cause of action for wrongful foreclosure is "premature" where no foreclosure sale has taken place. Id . Here, no foreclosure sale has taken place.[4] The Court thus finds Rothman's claim premature based ...

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