United States District Court, N.D. California
ORDER RE: MOTION TO DISMISS Re: Dkt. No. 19
MARIA-ELENA JAMES, Magistrate Judge.
Pending before the Court is Defendant Wells Fargo Bank N.A.'s Motion to Dismiss Plaintiff Laurence Faulks' First Amended Complaint ("FAC") pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Dkt. No. 19. Plaintiff filed an Opposition (Dkt. No. 25) and Wells Fargo filed a Reply (Dkt. No. 28). The Court finds this motion suitable for disposition without oral argument. Civ. L.R. 7-1(b). Having considered the parties' papers, relevant legal authority, and the record in this case, the Court GRANTS IN PART and DENIES IN PART Wells Fargo's Motion for the reasons set forth below.
On July 3, 2007, Plaintiff borrowed $525, 000.00 from World Savings Bank, FSB, secured by a deed of trust recorded against 25 Cameo Way, San Francisco, California 94131 (the "Property"). Req. for Jud. Not. ("RJN") Ex. A, Dkt. No. 20. In January 2008, World Savings Bank, FSB changed its name to Wachovia Mortgage, FSB, and later changed its name to Wells Fargo Bank Southwest, N.A., before merging into Wells Fargo Bank, N.A. in November 2009. RJN Exs. B-F.
Plaintiff alleges that at some time in 2010 he was unable to make the monthly payments on his loan because he suffered a serious illness and lost his job. FAC ¶ 3. He requested a loan modification through the federal Home Affordable Mortgage Program ("HAMP") from Wells Fargo starting in 2010 up to and including May 17, 2012. Id. Plaintiff alleges that Wells Fargo promised that so long as it was considering a loan modification, no foreclosure sale would take place. Id. ¶ 4. On October 10, 2011, Wells Fargo provided a letter to Plaintiff informing him that "no foreclosure sale will be conducted and you will not lose your home while the loan is evaluated for HAMP." Id. The letter also indicated that Plaintiff would be informed in writing of a denial and given thirty days thereafter before the property would be foreclosed. Id.
From early 2010 until May 2012, Plaintiff repeatedly sent documents as requested by Wells Fargo, often multiple times, but on more than one occasion it sent him written notice that his application for a loan modification was deemed withdrawn because he "did not provide the documents requested." Id. ¶ 5. Wells Fargo also sent letters (February 25, 2010, April 27, 2010, and October 11, 2011) stating his loan application had been denied for lack of financial qualification. Id. However, he alleges that Wells Fargo never told him that his application had been finally denied or that a sale would take place. Id. The last letter stating his loan modification request was considered "withdrawn" was February 9, 2012. Id. On February 13, 2012, Wells Fargo wrote Plaintiff and suggested several alternatives to foreclosure if he contacted them by March 14, 2012. Id. Plaintiff called Wells Fargo several times, but had to leave messages because no person who could help in any way answered. Id.
Plaintiff also sought the assistance of Consumer Credit Counseling Service of San Francisco ("CCC") because he was advised by Justin Saavedra, a Wells Fargo Homeowner Preservation Specialist, to use CCC to communicate with Wells Fargo using the services of CCC. Id. On February 20, 2012, Mr. Saavedra informed Plaintiff that he understood he was having trouble contacting Wells Fargo but that he would help in "getting the ball rolling on the process" of getting Plaintiff's loan modification application "reinstated." Id. ¶ 7. On March 5, CCC emailed a "complete modification docs package" to Wells Fargo because Wells Fargo was actively considering Plaintiff's loan modification and needed the documents again. Id. As late as May 15, 2012 a Wells Fargo employee specifically asked CCC for additional documents to help evaluate Plaintiff's loan modification request. Id. ¶ 10. Plaintiff alleges that Mr. Saavedra's representations led him to believe that Wells Fargo was still considering a HAMP loan modification, and Wells Fargo's conduct led him to believe that it was still considering the HAMP modification request up to and including May 17, 2012. Id. ¶ 7.
Plaintiff defaulted on the loan and a notice of default was recorded with the San Francisco Assessor-Recorder on August 22, 2011. RJN Ex. G. A notice of trustee's sale was recorded on March 28, 2012, scheduling the foreclosure sale for April 16, 2012. Id. Ex. H. The property was sold to a third party at a public auction on May 17, 2012. Id. Ex. I.
Plaintiff filed his initial Complaint on June 21, 2013 (Dkt. No. 1), and filed his FAC on August 29, 2013. He alleges that he lost at least $500, 000 in profits that he would have made had Wells Fargo complied with its alleged promises and representations. FAC ¶ 12. He also incurred moving expenses and legal expenses defending against his eviction. Id. Based on these allegations, Plaintiff asserts four state law claims: (1) promissory estoppel; (2) fraud; (3) negligent misrepresentation; and (4) breach of contract. Id. ¶¶ 13-26. He seeks damages of at least $600, 000 and attorneys' fees and costs.
Under Federal Rule of Civil Procedure ("Rule") 12(b)(6), a party may file a motion to dismiss based on the failure to state a claim upon which relief may be granted. A Rule 12(b)(6) motion challenges the sufficiency of a complaint as failing to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A facial plausibility standard is not a "probability requirement" but mandates "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted). For purposes of ruling on a Rule 12(b)(6) motion, the court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the non-moving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). "[D]ismissal may be based on either a lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008) (internal quotations and citations omitted); see also Neitzke v. Williams, 490 U.S. 319, 326 (1989) ("Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law").
Even under the liberal pleading standard of Rule 8(a)(2), under which a party is only required to make "a short and plain statement of the claim showing that the pleader is entitled to relief, " a "pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555.) "[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); see also Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) ("[A]llegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively"). The court must be able to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 663. "Determining whether a complaint states a plausible claim for relief... [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 663-64.
If a Rule 12(b)(6) motion is granted, the "court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation marks and citations omitted).
A. Preemption under the Home Owners Loan Act ("HOLA"), 12 ...