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Postlewaite v. Wells Fargo Bank N.A.

United States District Court, N.D. California

September 24, 2014

MARILYN POSTLEWAITE and PAMELA POSTLEWAITE, Plaintiffs,
v.
WELLS FARGO BANK N.A., NDEX WEST, LLC, Defendants.

ORDER GRANTING IN PART AND DENYING IN PART THE MOTION FOR JUDGMENT ON THE PLEADINGS OF DEFENDANT WELLS FARGO BANK N.A.

YVONNE GONZALEZ ROGERS, District Judge.

I. INTRODUCTION

In October 2011, defendant Wells Fargo Bank N.A. ("Wells Fargo") allegedly promised to postpone the foreclosure sale of plaintiffs' home if plaintiffs, among other things, paid by a date certain approximately $45, 000 in arrearages on a mortgage of which Wells Fargo was the beneficiary. Allegedly, before the agreed-upon date came, Wells Fargo unexpectedly sold the subject property at public auction, resulting in plaintiffs' loss of their familial home.

Plaintiffs' First Amended Complaint asserts four claims against both Wells Fargo and foreclosure trustee NDeX West, LLC ("NDeX"): (1) to set aside sale, (2) to cancel trustee's deed, (3) to quiet title, and (4) to get an accounting. (Dkt. No. 27 ("FAC").) Now before the Court is Wells Fargo's motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). (Dkt. No. 67 ("Motion").) In the Motion, Wells Fargo asserts affirmative defenses of res judicata, litigation privilege, and common interest privilege. The Motion is fully briefed and NDeX joins the Motion. (Dkt. Nos. 71 ("Opp'n"), 73 ("Reply"), 74 ("Joinder").) Having fully considered the arguments of the parties, the pleadings, and documents properly incorporated by reference or subject to judicial notice, and for the reasons set forth herein, the Motion is GRANTED IN PART AND DENIED IN PART. The Court dismisses plaintiffs' fourth claim, for an accounting, but otherwise denies the Motion.[1]

II. BACKGROUND

A. TRANSFERS OF INTEREST IN THE SUBJECT PROPERTY

In the procedural posture of this case, the Court takes as true all the factual allegations of the FAC. The subject property is a home in San Mateo, California, built in 1951 for Philomena F. Mitchell, the mother of plaintiff Marilyn Postlewaite and grandmother of plaintiff Pamela Postlewaite, and thereafter lived in continually by plaintiffs' family. (¶¶ 1, 8.)[2] In 1993, Mitchell created The Philomena F. Mitchell Living Trust ("Trust") and named plaintiffs as the beneficiaries and successor trustees. (¶¶ 1, 12; Ex. H.)

On August 1, 2006, when Mitchell was 99 years old, Wells Fargo provided her with a negatively amortizing home mortgage loan in the amount of $585, 000 secured against the subject property. (¶¶ 2, 9.) The FAC suggests, somewhat unclearly, that a conservatorship matter pertaining to Mitchell's estate was ongoing at the time, though no conservator had yet been appointed. ( See ¶¶ 4, 11.)[3] A few weeks later, on August 26, 2006, the subject property was conveyed to the Trust, with Mitchell as trustee. (¶ 10.) Marilyn was thereafter designated successor trustee. (¶ 10.) However, the conservatorship matter prompted Marilyn to agree on December 21, 2006 to have the San Mateo Public Guardian act as temporary conservator and successor trustee of the Trust. (¶ 11.) A few days later, on December 28 and 29, 2006, a conservator for Mitchell's estate was appointed and letters of conservatorship were recorded. (¶ 11; Ex. G.)

On June 21, 2007, Mitchell died. (¶ 4; Ex. B, ¶ 3.) Title to the subject property, now encumbered with the mortgage, passed to the conservator as successor trustee. ( See ¶ 13; Exs. G, H.) On September 10, 2007, the California Superior Court for San Mateo County appointed third party Western National Trust Company ("Western National") to serve as successor trustee. (Ex. B, ¶ 4.) On March 12, 2008, the conservator executed a trust transfer deed transferring her interest in the subject property to Western National as successor trustee. (¶ 13; Ex. I.)

On June 3, 2010, the Superior Court ordered the subject property transferred to plaintiffs as tenants-in-common, each with a 50 percent undivided interest. (¶ 14; Ex. B.) On June 24, 2010, Western National quitclaimed the property to plaintiffs. (¶ 15; Ex. C.) The quitclaim deed was recorded on June 29, 2010. (Ex. C.)

B. FORECLOSURE PROCEEDINGS

In January and again in March of 2011, Wells Fargo and NDeX recorded notices of default and elections to sell the subject property. However, they sent these notices to Western National, not plaintiffs, despite plaintiffs' interests having been recorded the previous June. (¶ 16; Exs. J, K.) On April 18, 2011, Wells Fargo substituted NDeX as trustee of the mortgage. (¶ 16; Ex. L.)

On June 30, 2011, Wells Fargo and NDeX sent notice of their intent to sell the subject property at public auction, but, again, sent notice to Western National, not plaintiffs. (¶ 16.) A week later, on July 6, 2011, Western National notified defendants by letter that they had sent notice to the wrong party, copying both plaintiffs on the letter. (¶ 17; Ex. M.)

On July 14, 2011, plaintiffs learned that a trustee's sale had been noticed for a week later, July 21. They contacted Wells Fargo, whose representative stated that Wells Fargo would send a loan modification package and that the July 21 sale "was discontinued[, ]' which plaintiff understood to be stopped." (¶ 18.) However, "approximately three weeks later, " i.e., in early August, plaintiffs received notice of a trustee's sale set for August 19, 2011. (¶ 19.) This time, calls to Wells Fargo did not result in a discontinuation of the sale. (¶ 19.) Wells Fargo refused an offer to "pay the arrearages" and stated that it could not discontinue the August 19 sale date. (¶ 19.)

C. FILING OF THE FIRST LAWSUIT

On August 17, 2011, two days before the planned sale, Pamela (but not Marilyn) instituted a civil action against Wells Fargo and NDeX in the California Superior Court for San Francisco County, wherein Pamela asserted six causes of action: (1) breach of contract, (2) fraud, (3) negligence, (4) "intentional tort, " (5) "California Foreclosure Prevention Act, " and (6) declaratory and injunctive relief. (¶ 20; RJN, Ex. F ("2011 Complaint").)[4] Notably, Pamela filed the 2011 Complaint through counsel, attorney Jonathan Adriel Fried, of whom more shall be said shortly.

Wells Fargo removed the 2011 Complaint from state court to this Court on September 14, 2011. (¶ 20; N.D. Cal. Case No. 11-cv-04563-PJH (the "2011 Action"), Dkt. No. 1.)[5] Two days later, on September 16, 2011, Pamela's then-counsel Fried contacted counsel for Wells Fargo, Yaw-Jiun "Gene" Wu of Anglin, Flewelling, Rasmussen, Campbell, & Trytten, LLP (which firm, the Court notes, continues to represent Wells Fargo in the action now at bar, though Wu has entered no appearance). Though the FAC is not overly clear about certain details, it makes plain enough that Fried told Wu that his client had on hand the sum required to reinstate the loan, and that Fried and Wu worked out a deal to do so. They agreed that Wells Fargo would continue the foreclosure sale date from September 23, 2011 to October 21, 2011 and would reinstate the loan, and that in exchange plaintiffs would tender the reinstatement amount of $44, 813.49 before the sale date and refrain from pursuing further litigation or declaring bankruptcy. ( See ¶¶ 21-22; see also Dkt. No. 33 at 4-6 (denying Wells Fargo's motion to dismiss the FAC on the basis it failed to allege a valid agreement between plaintiffs and Wells Fargo).)

On September 20, 2011, Wells Fargo, through its counsel at the Anglin Flewelling firm, filed a motion to dismiss the 2011 Action. (RJN, Ex. G.) Wu signed the motion himself. ( Id. at 13.) The FAC is silent as to whether this motion practice was contemplated at the time of Fried and Wu's apparent settlement of the underlying dispute.[6] In any event, Pamela's opposition to Wells Fargo's motion was due October 4, 2011, and, after reassignment of the ...


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