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Delgado v. Nationstar Mortgage LLC

United States District Court, C.D. California

May 21, 2014

ROBERTO DELGADO, Plaintiff,
v.
NATIONSTAR MORTGAGE LLC; DOES 1-10, inclusive, Defendants.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS WITH PARTIAL LEAVE TO AMEND [6]

OTIS D. WRIGHT, II, District Judge.

I. INTRODUCTION

After Defendant Nationstar Mortgage LLC did not approve him for a loan modification, Plaintiff Roberto Delgado filed this action, alleging violations of California's Homeowners' Bill of Rights ("HBOR") and Unfair Competition Law ("UCL"); negligence and negligent infliction of emotional distress; and breach of the implied covenant of good faith and fair dealing. After considering the parties' arguments, the Court finds that Delgado's HBOR, negligence, negligent-infliction-of-emotional-distress, and breach claims fail as a matter of California law. The Court also finds that he failed to adequately plead the other claims. The Court thus GRANTS Nationstar's Motion with partial leave to amend.[1] (ECF No. 6.)

II. FACTUAL BACKGROUND

Delgado owns the residence located at 410 West Elm Street, Compton, California 90220 (the "Property"). (Compl. ¶ 1; RJN Ex. 1.) On February 23, 2007, Delgado borrowed $312, 000.00 from Homefield Financial, Inc. and executed a deed of trust for the benefit of Mortgage Electronic Registration Systems, Inc ("MERS"). (RJN Ex. 1.) Delgado subsequently fell behind on the note by $5, 261.08, and Cal-Western Reconveyance Corporation-the note's last trustee-recorded a Notice of Default on October 13, 2009. ( Id. Ex. 2.) On April 21, 2010, Cal-Western Reconveyance recorded a Notice of Trustee's Sale. ( Id. ¶ 4.) In July 2010, MERS assigned the Deed of Trust to Aurora Loan Services LLC. ( Id. Ex. 5.)

On May 24, 2010, Delgado initiated voluntary Chapter 13 bankruptcy proceedings in the Central District of California. In re Roberto Delgado , No. 2:10-bk-30861-VZ (Bankr. C.D. Cal. pet. filed May 24, 2010); (RJN Ex. 6.) On November 17, 2010, the bankruptcy court confirmed Delgado's Chapter 13 plan. (RJN Ex. 8.) Aurora Loan Services has since transferred its bankruptcy claim to Nationstar. ( Id. Ex. 9.) The petition is still pending.

On August 31, 2012, Cal-Western Reconveyance recorded a Notice of Rescission of the Notice of Default and Election to Sell Under Deed of Trust. ( Id. Ex. 10.)

In 2013, Delgado began negotiating for a loan modification with Nationstar due to financial hardship stemming from reduction in his income. (Compl. ¶ 10.) Delgado alleges that after he submitted a completed application according to Nationstar's instructions, the lender never returned his telephone calls or followed up with him. ( Id. ¶¶ 12-13.) Eventually, Nationstar informed Delgado that they had denied his application for lack of documents.[2] ( Id. ¶ 13.)

On February 26, 2014, Delgado filed suit against Nationstar in Los Angeles County Superior Court, alleging claims for violations of the HBOR, and UCL, Cal. Bus. & Prof. Code § 17200; breach of the implied covenant of good faith and fair dealing; negligence; and negligent infliction of emotional distress. (Not. of Removal Ex. A.) Defendant subsequently removed the action to this Court under diversity jurisdiction. (ECF No. 1.)

Nationstar moved to dismiss Delgado's Complaint under Federal Rule of Civil Procedure 12(b)(6). (ECF No. 6.) Delgado timely opposed. (ECF No. 11.) That Motion is now before the Court for decision.

III. LEGAL STANDARD

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).

IV. DISCUSSION

The Court finds that Delgado's claims under the HBOR and for negligence, negligent infliction of emotional distress, and breach of the implied covenant of good faith and fair dealing fail as a matter of California law. The Court dismisses the remaining claims as inadequately pleaded and grants leave to amend.

A. HBOR

Delgado's first claim against Nationstar is for alleged breach of California's newly enacted HBOR. The HBOR now prohibits several nefarious mortgage practices that ensued after the 2008 housing-market collapse, including, among others, "dual tracking" and failing to communicate with the borrower during ...


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