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Ward v. Wells Fargo Home Mortgage, Inc.

United States District Court, Northern District of California, San Francisco Division

November 29, 2014

DAWN M. WARD, Trustee of the Al-Pheus Ward Trust Dated 4/3/2010, Plaintiff,
WELLS FARGO HOME MORTGAGE, INC., and Does 1 through XXX, Defendants.


Nathanael M. Cousins, United States Magistrate Judge

Before the Court is Wells Fargo’s motion to dismiss plaintiff Dawn Ward’s First Amended Complaint. Plaintiff alleges wrongdoing by Wells Fargo in contracting with Al-Pheus Ward, who is now deceased, for a mortgage. Because plaintiff has not cured certain deficiencies in her prior complaint and fails to sufficiently allege new causes of action, the Court grants Wells Fargo’s motion to dismiss with prejudice as to plaintiff’s claims for predatory lending, violation of California Civil Code § 2923.5, intentional infliction of emotional distress, and negligence.

The Court also dismisses plaintiff’s other claims for declaratory relief, breach of the implied covenant of good faith and fair dealing, and constructive and promissory fraud. As the deficiencies in these remaining claims may be cured by the allegation of other facts, the Court dismisses them with leave to amend.


Plaintiff alleges that Al-Pheus Ward entered into a contract for a mortgage with Wells Fargo Home Mortgage in 2007. Dkt. No. 46 at ¶¶ 5-9. Plaintiff alleges that at the time of contracting for the $285, 000 mortgage, Ward made less than $30, 000 per year and “was suffering from a psychiatric disability which ultimately led to his involuntary confinement in a locked psychiatric ward.” Id. at ¶ 7. Plaintiff further alleges that the mortgage was “a negative amortization loan characterized by an Option ARM with a very high, above-market interest rate.” Id. at ¶ 9.

Plaintiff alleges that on April 3, 2010, Ward transferred title to the property from himself to the Al-Pheus Ward Living Trust, and named Dawn M. Ward as Successor Trustee upon his death. Id. at ¶ 10. Ward also “executed a Third Party Authorization directing the lender and its agents” to cooperate with plaintiff in matters related to the mortgage. Id. at ¶ 11. Ward died on January 5, 2012. Id. at ¶ 12. Plaintiff alleges that she repeatedly informed Wells Fargo “that Al-Pheus Ward was deceased and that plaintiff, as the Successor Trustee, was now the party to whom any communications related to the real property should be directed.” Id. at ¶ 16. Despite this, plaintiff alleges that neither Ward nor plaintiff Trustee ever received any notice of default from Wells Fargo. Id. at ¶ 19.

After Ward’s death, plaintiff alleges that she repeatedly requested information from Wells Fargo regarding the mortgage and “was fully prepared to and sought to make any payments due on this mortgage . . . .” Id. at ¶ 20. Plaintiff alleges that she had a string of communications with various Wells Fargo employees who gave her conflicting information about the status of the mortgage, and “continued to rebuff all of [plaintiff’s] inquiries” into how she could make payments on the mortgage. See Id. at ¶ 24.

Eventually, plaintiff paid Wells Fargo the amount of money it demanded to reinstate the mortgage and to void the move to foreclose the property by auction. Id. at ¶ 53.

Plaintiff filed this lawsuit on December 20, 2013, in California state court. Dkt. No. 1 at 17. On February 6, 2014, Wells Fargo removed the action to federal court based on diversity and federal question jurisdiction. Dkt. No. 1. Both plaintiff and Wells Fargo consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636(c). Dkt. Nos. 12, 21. The Court granted in part Wells Fargo’s motion to dismiss plaintiff’s initial complaint. Wells Fargo now moves to dismiss with prejudice plaintiff’s First Amended Complaint.


A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the non-movant. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The Court, however, need not accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Although a complaint need not allege detailed factual allegations, it must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

If a court grants a motion to dismiss, leave to amend should be granted unless the pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).


A. Declaratory Relief

In its prior order, this Court denied plaintiff’s declaratory relief claim because it addressed past wrongs and not future rights related to the subject property. Dkt. No. 44 at 6-7. Indeed, “[d]eclaratory relief operates prospectively to declare future rights, rather than to redress past wrongs.” Canova v. Trs. of Imperial Irrigation Dist. Emp. Pension Plan, 150 Cal.App.4th 1487, 1497 (2007). Still, the Court gave plaintiff leave to amend the claim to “clarify that she seeks a declaration regarding the parties’ respective rights to the subject property going forward, rather than to declare that Wells Fargo has committed past wrongs.” Dkt. No.44 at 7.

Nevertheless, plaintiff’s claim for declaratory relief in the First Amended Complaint is identical—word for word—to the declaratory relief claim in the initial complaint. Compare Dkt. No. 1, Ex. A, at ¶¶ 39-42 with Dkt. No. 46 at ¶¶ 55-58. In her opposition brief, plaintiff apologizes to the Court for “erroneously submit[ing] an unrevised/unedited version of this claim” and seeks leave to amend the claim to conform to the Court’s earlier ruling. Dkt. No. 51 at 4.

Because the Court has not determined that this cause of action “could not possibly be cured by the allegation of other facts, ” the Court grants Wells Fargo’s motion to dismiss plaintiff’s declaratory relief claim with leave to amend. See Lopez, 203 F.3d at 1127. Plaintiff must amend this claim in accordance with the Court’s prior order granting Wells Fargo’s motion to dismiss plaintiff’s initial complaint. See Dkt. No. 44.

B. Breach of Implied Covenant of Good Faith and Fair Dealing

The duty of good faith and fair dealing is implied by law into every contract, functioning “as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.” Gonzalez v. JP Morgan Chase Bank, N.A., No. 14-cv-2558 EMC, 2014 U.S. Dist. LEXIS 152674, *19-20 (N.D. Cal. Oct. 28, 2014) (quoting Thrifty Payless, Inc. v. Americana at Brand, LLC, 218 Cal.App.4th 1230, 1244 (2013)).

Put differently, the implied covenant protects only the “express terms of the agreement, ” and “cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” Id. (citing McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784, 806 (2008). Still, a “breach of a specific provision of the contract is not a necessary prerequisite” to a breach of an implied covenant of good faith and fair dealing.” Marsu, B.V. v. Walt ...

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