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Peterson v. Wells Fargo Bank

United States District Court, N.D. California

May 13, 2014

MICHAEL PETERSON, et al., Plaintiffs,
WELLS FARGO BANK, N.A., Defendant.


MARIA-ELENA JAMES, Magistrate Judge.


Pending before the Court is the motion by Defendant Wells Fargo Bank N.A., successor by merger with Wells Fargo Bank Southwest, N.A., formerly known as Wachovia Mortgage FSB, formerly known as World Savings Bank, FSB ("Wells Fargo") to dismiss Plaintiffs Michael and Toni Peterson's Complaint. Plaintiffs have filed an Opposition (Dkt. No. 11) and Wells Fargo has filed a Reply (Dkt. No. 15). 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 December 21, 2007, Plaintiffs borrowed $900, 000.00 from World Savings Bank, FSB secured by a deed of trust recorded against 4442 Arlington Ave, Santa Rosa, California (the "Property"). Compl. ¶ 13, Not. of Rem., Ex. A, Dkt. No. 1; Req. for Jud. Not ("RJN") Ex. A, Dkt. No. 7.[1] Subsequently, 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.

Around July of 2009, Plaintiffs obtained a loan modification from Wells Fargo. Compl. ¶ 14. Although the monthly payment for this modification was set to increase every year from 2009 to 2015, Plaintiffs allege that Wells Fargo represented that it would provide them with a new modification in one year to avoid a payment increase. Id. ¶¶ 15-16. This second loan modification would also have lower payments. Id. ¶ 17. According to the Complaint, Plaintiffs accepted the first loan modification based upon Wells Fargo's promise that they would receive a second loan modification a year later. Id. ¶ 18. Wells Fargo, however, did not perform a second modification of Plaintiffs' loan. Id. ¶ 19.

Although Plaintiffs state that Wells Fargo modified their loan, they also allege that Wells Fargo "falsely represent[ed] that it is the beneficial owner of the Subject Loan...." Id. ¶ 25. Plaintiffs allege that World Savings sold its interest in the loan "shortly after the loan origination in 2007." Id.

Based on these allegations, Plaintiffs assert four state law claims: (1) fraud; (2) promissory estoppel; (3) negligent misrepresentation; and (4) violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200. Id. ¶¶ 27-63. Plaintiffs seek damages, attorney fees, declaratory and injunctive relief, and restoration of their credit score.


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 ...

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