United States District Court, N.D. California, San Jose Division
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITHOUT LEAVE TO AMEND
LUCY H. KOH, District Judge.
Plaintiffs Todd Sharp and Maria Sharp ("Plaintiffs") allege that Defendants Nationstar Mortgage, LLC ("Nationstar") and Aurora Commercial Corp. ("Aurora") (collectively, "Defendants") engaged in predatory lending practices to Plaintiffs' detriment. Before the Court is Defendants' Motion to Dismiss. ECF No. 21 ("Mot."). Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS Defendants' Motion to Dismiss without leave to amend.
A. Factual Background
On or around September 27, 2006, Plaintiffs took out a $997, 500.00 loan from Blue Adobe Financial Services, Inc. secured by a deed of trust against real property located at 25011 Hidden Mesa Court, Monterey, California 93940 (the "Property"). ECF No. 18, Third Amended Complaint ("TAC") ¶¶ 1, 13-14.
1. Foreclosure Timeline
Due to Plaintiffs' failure to stay current on the loan, Cal-Western Reconveyance recorded a notice of default on June 17, 2009. TAC ¶¶ 18-19. On November 15, 2010, the deed of trust was assigned to Aurora. ECF No. 22-5. After Plaintiffs failed to cure the delinquency, a notice of trustee's sale was recorded on December 15, 2010, setting a sale date of January 4, 2011. ECF No. 22-4. The sale did not proceed, however, and on June 28, 2012, Aurora assigned the deed of trust to Nationstar. ECF No. 22-6; TAC ¶ 38.
A second notice of trustee's sale was recorded on December 18, 2012, setting a sale date of January 15, 2013. ECF No. 22-7. The Property was eventually sold at public auction on March 5, 2013, at which time it reverted to Nationstar. ECF No. 22-8.
After purchasing the Property, Nationstar filed an unlawful detainer action against Plaintiffs in Monterey County Superior Court on March 28, 2013. ECF No. 22-9; TAC ¶ 42. On July 2, 2013, the state court entered judgment against Plaintiffs and in favor of Nationstar, and issued a writ of possession. ECF No. 22-10; ECF No. 22-11.
2. Plaintiffs' Allegations
Plaintiffs allege that sometime prior to February 2009 Plaintiffs contacted Aurora and requested an alternative to foreclosure. TAC ¶¶ 24. On February 17, 2009, following a series of "workout agreements" written on Aurora letterhead, Plaintiffs began making payments to Aurora to avoid foreclosure and to help Plaintiffs earn the right to refinance. Id. ¶¶ 26-27. Plaintiffs allege that these written agreements were intended as foreclosure prevention alternatives. Id. ¶ 31. Plaintiffs allege further that in return for these payments, Aurora promised to modify Plaintiffs' loan. Id. ¶ 32.
On November 24, 2010, Aurora returned Plaintiffs' most recent payment, notifying Plaintiffs that their payment did not make the loan current, that Plaintiffs had no arrangement with Aurora to bring the loan current, and that the loan would be referred to foreclosure as a result. TAC ¶ 33.
On this basis, Plaintiffs assert six causes of action against Defendants: (1) intentional misrepresentation; (2) negligent misrepresentation; (3) breach of contract; (4) breach of the implied covenant of good faith and fair dealing; (5) promissory estoppel; and (6) negligence. TAC ¶¶ 59-75, 91-121. Plaintiffs bring two additional causes of action against Aurora only concerning the foreclosure postponement payments: (1) conversion; and (2) embezzlement. Id. ¶¶ 76-90.
3. Plaintiffs' Bankruptcy Petitions
Plaintiffs have collectively submitted four bankruptcy petitions and received a series of automatic stays from any act to obtain possession of property of the estate until the time of dismissal or discharge of the bankruptcy proceedings. See, e.g., ECF No. 22-25 at 7 (noting that the court lifted ...