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Valencia v. Wells Fargo Home Mortgage Inc.

United States District Court, Northern District of California

November 7, 2014

HERMELINDA VALENCIA and EMELITA DEGUZMAN, Plaintiffs,
v.
WELLS FARGO HOME MORTGAGE INC., and DOES 1-10, Inclusive, Defendants

For Hermelinda Valencia, Emelita DeGuzman, Plaintiffs: Arasto Farsad, LEAD ATTORNEY, Farsad Law Offices, Santa Clara, CA.

For Wells Fargo Home Mortgage Inc, Defendant: Dean Allen Reeves, Anglin Flewelling Rasmussen Cambel and Trytten, LLP, Pasadena, CA.

ORDER GRANTING MOTION TO DISMISS (DOCKET NO. 24)

CLAUDIA WILKEN, United States District Judge.

Plaintiffs Hermelinda Valencia and Emelita DeGuzman assert various mortgage-related claims against Defendant Wells Fargo Home Mortgage Inc. (Wells Fargo). Defendant now moves to dismiss the first amended complaint. The Court took the motion under submission on the papers. Having considered the arguments presented by the parties, the Court GRANTS the motion and grants Plaintiffs leave to amend.

BACKGROUND

I. Facts

The following facts are taken from the first amended complaint and from certain documents of which the Court takes judicial notice.[1]

Plaintiffs own real property consisting of a single-family residence located at 1469 Southgate Avenue, Daly City, San Mateo County, California (the property), which they acquired in August 2003. 1AC ¶ ¶ 1, 18 (Docket No. 22). Plaintiffs refinanced the property through Wells Fargo's predecessor in interest, World Savings Bank, FSB, [2] in July 2005; [3] however, they allege that they " were not advised of the pertinent terms of this loan" and were not provided with the required truth-in-lending documents. Id. ¶ 19. They stopped making payments and defaulted on their mortgage in early 2009, [4] and a Notice of Default and Election to Sell under Deed of Trust was recorded in San Mateo County on July 1, 2009. Id. ¶ 20; Def.'s Ex. C.

Plaintiffs allege that they contacted Defendant on an unspecified date in 2011 to request a loan modification review, at which time Defendant advised them that if they qualified for the federal Home Affordable Modification Program (HAMP), Defendant would offer them a Trial Payment Plain (TPP), followed by a modification of their loan. 1AC ¶ 21. However, although Plaintiffs qualified for a HAMP modification, Defendant never offered them one.

Plaintiffs sued in California state court, filing their complaint on or about June 22, 2014. Notice of Removal, Ex. 1 (Docket No. 1-1). Defendant removed on July 24, 2014. Notice of Removal (Docket No. 1). A week later, Defendant made its first motion to dismiss. (Docket No. 9). Plaintiffs filed the present First Amended Complaint (1AC) on August 13, 2014, rendering moot the initial motion to dismiss.

LEGAL STANDARD

A complaint must contain a " short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). The plaintiff must proffer " enough facts to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). On a motion under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. Twombly, 550 U.S. at 555. A claim is facially plausible " when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.

In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008). The court's review is limited to the face of the complaint, materials incorporated into the complaint by reference, and facts of which the court may take judicial notice. Id. at 1061. However, the court need not accept legal conclusions, including " threadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).

When granting a motion to dismiss, the 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). In determining whether amendment would be futile, the court examines whether the complaint could be amended to cure the defect requiring dismissal " without contradicting any of the allegations of [the] original complaint." Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990).

DISCUSSION

I. First Cause of Action: Negligent Misrepresentation

Plaintiffs allege that, by failing to offer them a TPP and HAMP loan modification, Defendant engaged in negligent misrepresentation.

The elements of negligent misrepresentation are " (1) misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the misrepresentation, (4) ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed, and (5) resulting damage." Lincoln Alameda Creek v. Cooper Indus., Inc., 829 F.Supp. 325, 330 (N.D. Cal. 1992). " The elements of negligent misrepresentation are similar to intentional fraud except for the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true." Charnay v. Cobert, 145 Cal.App.4th 170, 184-85, 51 Cal.Rptr.3d 471 (2006) (citing Bily v. Arthur Young & Co., 3 Cal.4th 370, 407-08, 11 Cal.Rptr.2d 51, 834 P.2d 745 (1992)); see also Alliance ...


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