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Lane v. Suntrust Mortgage, Inc.

United States District Court, S.D. California

January 28, 2015

JUDY LANE, ET AL., Plaintiffs,


CYNTHIA BASHANT, District Judge.

Plaintiffs Judy Lane and Pepper Lane (collectively "Plaintiffs") commenced this action on May 5, 2014 by filing a complaint in San Diego Superior Court alleging Defendant Suntrust Mortgage, Inc. ("Defendant") violated the California Homeowner's Bill of Rights and California's Unfair Competition Law ("UCL"), California Business and Professions Code §§ 17200, et seq., and seeking declaratory and injunctive relief. Defendant removed this action to federal court on June 4, 2014 on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332. Defendant now moves to dismiss the Complaint in its entirety pursuant to Federal Rule of Procedure 12(b)(6).

The Court finds this motion suitable for determination on the papers submitted and without oral argument. See Civ. L.R. 7.1(d)(1). For the reasons set forth below, this Court GRANTS Defendant's motion to dismiss.


Plaintiffs fell behind in their mortgage payments on the subject property.[1] (ECF No. 1-1 ("Compl." at ¶ 8). They "made multiple attempts to secure a loan modification [from Defendant] in or about the following dates: February 2013; August 16, 2013" and November 7, 2013. ( Id. at ¶¶ 31, 35.) "Defendant denied Plaintiffs a loan modification after each attempt." ( Id. at ¶ 37.) On or about January 14, 2014, Defendant recorded a Notice of Default. ( Id. at ¶ 33.) On or about January 16, 2014, Plaintiffs received a Notice of Trustee Sale, recorded on April 17, 2014, with a sale date set for May 8, 2014. ( Id. at ¶ 34.) Throughout the proceedings, Plaintiffs dealt with Defendant's employee, Marilyn Young. ( Id. at ¶¶ 17, 21, 35, Exhs. B, C and H.) Ms. Young was designated as Defendant's "point of contact." ( Id. ) "Independent review shows that Plaintiffs qualified for a loan modification." ( Id. at ¶ 38.)


A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed.R.Civ.P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court must accept all allegations of material fact pleaded in the complaint as true and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations; rather, it must plead "enough facts 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 has facial plausibility when the plaintiff pleads factual content that 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) (citing Twombly, 550 U.S. at 556). "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. at 678 (quoting Twombly, 550 U.S. at 557) (internal quotations omitted).

"[A] plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). A court need not accept "legal conclusions" as true. Iqbal, 556 U.S. at 678. Despite the deference the court must pay to the plaintiff's allegations, it is not proper for the court to assume that "the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the... laws in ways that have not been alleged." Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Generally, courts may not consider material outside the complaint when ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990); Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994) (overruled on other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119, 1121 (9th Cir. 2002)). "However, material which is properly submitted as part of the complaint may be considered." Hal Roach Studios, Inc., 896 F.2d at 1542 n.19. The court may also consider documents specifically identified in the complaint whose authenticity is not questioned by the parties. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superseded by statute on other grounds); see also Branch, 14 F.3d at 453-54. The court may consider such documents so long as they are referenced in the complaint, even if they are not physically attached to the pleading. Branch, 14 F.3d at 453-54; see also Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998) (extending rule to documents upon which the plaintiff's complaint "necessarily relies" but which are not explicitly incorporated in the complaint). Moreover, the court may consider the full text of those documents even when the complaint quotes only selected portions. Fecht, 70 F.3d at 1080 n.1. The court also considers materials of which it takes judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994).

As a general rule, a court freely grants leave to amend a complaint it dismisses. Fed.R.Civ.P. 15(a); Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). The court may deny leave to amend, however, when "[it] determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co., 806 F.2d at 1401 (citing Bonanno v. Thomas, 309 F.2d 320, 322 (9th Cir. 1962)).


A. The California Homeowner Bill of Rights

1. Background

The California Homeowner Bill of Rights ("HBOR") became effective in California on January 1, 2013. Carroll v. Nationstar Mortg., LLC, No. 13cv4490, 2013 WL 3188725, at *2 (C.D. Cal. June 21, 2013). The purpose of the act was to ensure that borrowers facing foreclosure "are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, if any, offered by or through the borrower's mortgage servicer, such as loan modifications or other alternatives to foreclosure." Cal. Civ. Code § 2923.4(a). It was the intent of the Legislature in passing the HBOR "that the mortgage servicer offer the borrower a loan modification or workout plan if such a modification or plan is consistent with its contractual or other authority." Cal. Civ. Code § 2923.6(b). However, "[n]othing in the act...shall be interpreted to require a particular result of that process." Cal. Civ. Code § 2923.4(a). While California Civil Code section 2923.5 requires a mortgage servicer to contact a borrower "to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure" prior to ...

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