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Hines v. Wells Fargo Home Mortgage, Inc.

United States District Court, E.D. California

October 17, 2014

TRISHA HINES, Plaintiff,
WELLS FARGO HOME MORTGAGE, INC., a division of Wells Fargo Bank N.A., Defendant.


JOHN A. MENDEZ, District Judge.

Defendant Wells Fargo Bank ("Defendant") moves to dismiss Plaintiff Trisha Hines's ("Plaintiff") Complaint for failure to state a claim pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). Plaintiff opposes the motion. For the following reasons, Defendant's motion is granted with leave to amend.[1]


Plaintiff secured a mortgage for her home in October 2003. Compl. ¶¶ 6-7. Unable to keep up with the monthly payments, Plaintiff sought refinancing in 2006. Compl. ¶ 8. In 2009, she alleges that she entered into a further loan modification through "West Coast Financial, " a company that "worked closely with" and "act[ed] as an agent" for Defendant Wells Fargo. Compl. ¶¶ 2, 9.

The terms of Plaintiff's loan modification included monthly payments starting at $791.08, increasing annually from September 2009 to September 2014. Compl. ¶ 11; Defendant's Request for Judicial Notice ("RJN") Exh. G. The interest rate started at 2.500% and increased annually by 0.500% throughout the same five-year period. Compl. ¶ 11. Thereafter, the monthly payments and interest rates were, according to Plaintiff, "set to skyrocket to $2, 221.58 with an interest rate of 6.148%." Compl. ¶ 12. Defendant has submitted a copy of a document it claims to be the Loan Modification Agreement signed by Plaintiff on July 6, 2009. See RJN at 3; id. at Exh. G.

Plaintiff alleges that Defendant's agent "steered [her] into [this] high-cost, high-risk loan modification" by concealing and misrepresenting important facts about the agreement. Compl. ¶ 13. She asserts that Defendant's agent "fail[ed] to disclose substantial negative information regarding Defendant's loan products, " including that the payments would increase substantially at the end of the five-year period. Compl. ¶ 20. The agent further misinformed her that the loan modification included a fixed interest rate, whereas the true terms included the annually-increasing rate described above. Compl. ¶ 11. Defendant also allegedly concealed the "risks" and the "predatory nature" of the loan, and failed to provide "NOTICE of the new terms, " "a written contract, " or "a chance to accept or refuse the new terms." Compl. ¶¶ 22, 30, 46.

Due to the loan modification's "usurious and continuously escalating interest rate, " Plaintiff has been unable to keep up with the payments. Compl. ¶ 14. As of the date of filing her complaint, Plaintiff was in default on her mortgage, but remained in her home. See Compl. ¶ 15; id. Exh. B.

Plaintiff filed suit against Defendant in Sacramento County Superior Court on May 1, 2014. Plaintiff did not name West Coast Financial as a defendant, because she alleges it is no longer in existence. Compl. ¶ 5. The Complaint contains the following seven causes of action: (1) Fraud in the Inducement, (2) Fraud in the Concealment, (3) Unfair Business Practices (Violation of Cal. Bus. & Prof. Code § 17200 et seq.), (4) Violation of the Covenant of Good Faith and Fair Dealing, (5) Negligence, (6) Promissory Estoppel, and (7) Intentional Misrepresentation. Defendant removed the case to federal court on June 9, 2014, see Notice of Removal (Doc. #1), and subsequently filed this motion to dismiss.


A. Legal Standard

To survive a motion to dismiss, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 547 (2007). In considering a motion to dismiss, a district court must accept all the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes , 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer , 468 U.S. 183 (1984); Cruz v. Beto , 405 U.S. 319, 322 (1972). "[T]he factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Starr v. Baca , 652 F.3d 1202, 1216 (9th Cir. 2011). Assertions that are mere "legal conclusions" are therefore not entitled to the presumption of truth. Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (citing Twombly , 550 U.S. at 555).

Upon granting a motion to dismiss for failure to state a claim, a district court has discretion to allow leave to amend the complaint pursuant to Federal Rule of Civil Procedure 15(a). A court should freely grant leave to amend. Fed. R. Civ. Pro. 15(a)(2). A court "is generally required to grant the plaintiff leave to amend, even if no request to amend the pleading was made, unless amendment would be futile." Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc. , 911 F.2d 242, 246-47 (9th Cir. 1990). Amendment is not futile if the plaintiff could "cure the defect requiring dismissal without contradicting any of the allegations of [the] original complaint.'" Plascencia v. Lending 1st Mortgage , 583 F.Supp.2d 1090, 1095 (N.D. Cal. 2008) (quoting Reddy v. Litton Indus., Inc. , 912 F.2d 291, 296 (9th Cir. 1990)).

B. Judicial Notice

As an initial matter, Defendant requests that this Court take judicial notice of eight documents, detailed below. Plaintiff has not objected to the request nor disputed the documents' authenticity.

Generally, the Court may not consider material beyond the pleadings in ruling on a motion to dismiss. However, the Court may take judicial notice of matters of public record, provided that they are not subject to reasonable dispute. Fed.R.Evid. 201; see Santa Monica Food Not Bombs v. City of Santa Monica , 450 F.3d 1022, 1025 n.2 (9th Cir. 2006); Lee v. City of Los Angeles , 250 F.3d 662, 689 (9th Cir. 2001).

Moreover, under the doctrine of incorporation by reference, the Court may consider a document that a plaintiff "necessarily" relied on in the complaint if "(1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion." Marder v. Lopez , 450 F.3d 445, 448 (9th Cir. 2006). "The defendant may offer such a document, and the district court may treat such a document as part of the complaint, and thus may assume that its ...

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