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Pulley v. Wells Fargo Bank, N.A.

United States District Court, N.D. California

March 26, 2015



NATHANAEL M. COUSINS, Magistrate Judge.

Plaintiff Richard Pulley brings this action against Wells Fargo and U.S. Bank as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Passthrough Certificates, Series 2006-AR-2, alleging that he is the victim of a fraudulent loan modification process that has left him facing a wrongful foreclosure. Defendants now move to dismiss each cause of action in the first amended complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Because the Court finds that Pulley has sufficiently stated a claim for fraud, negligent misrepresentation, intentional infliction of emotional distress, and violation of the Business and Professions Code § 17200, the motion is DENIED as to these claims. As to the cause of action for wrongful foreclosure under California Civil Code § 2924, the motion is GRANTED WITH LEAVE TO AMEND.


A. The Allegations of the Operative Complaint

In analyzing claims under Federal Rule of Civil Procedure 12(b)(6), the Court assumes that all material facts alleged in the complaint are true. Coal. For ICANN Transparency, Inc. v. Verisign, Inc., 611 F.3d 495, 501 (9th Cir. 2010). The operative, first amended complaint alleges that Pulley took out a loan secured by a property at 401 Nova Albion Way, San Rafael, California (the "property") from Wells Fargo in 2005. Dkt. No. 37 ¶¶ 2, 7. The complaint further alleges that in February and March 2009, Pulley spoke to several representatives of Wells Fargo and informed them that he was not able to make his monthly mortgage payment. Id. ¶¶ 8-11. The Wells Fargo representatives told Pulley that there were no options available to him to resolve this issue. Id. Pulley started receiving calls from the Wells Fargo Collections Department requesting payment of the past due amounts. Id. ¶¶ 10-11, 13. During this time, Pulley was attempting to obtain the necessary resources to bring his loan current and intended to reinstate his loan. Id. ¶ 12.

On April 18, 2009, Pulley received a call from a representative of Wells Fargo's Collections Department who identified herself as "Mary" who informed him that "unless he was in default for 6 months on the loan there was nothing WELLS could do to assist" but if he "stayed in default for the six (6) month period, WELLS would provide [Pulley] with a modification of his loan." Id. ¶ 13.

On May 19, 2009, Pulley received a call from another representative of the Collections Department who identified herself as "Jane, " who advised Pulley that "because he was delinquent in so many payments that the loan once it reached six (6) months, that he would receive a modification of his loan." Id. ¶ 14. On July 28, 2009, Pulley called Wells Fargo and spoke with an authorized representative who identified herself as "Emily" and who informed him that "he would receive a Loan Modification and such would resolve this issue." Id. ¶ 15. On the same day, Pulley spoke to "Amy, " a Wells Fargo customer service representative in the Loss Mitigation Department who provided him with the information of what documentation was required to begin processing Pulley's "promised loan modification." Id. ¶ 16. Pulley provided the requested loan modification documentation to Wells Fargo. Id. ¶ 17. On August 1, 2009, while Pulley's "promised loan modification was pending, " he was placed on a three-month Forbearance Plan by Wells Fargo. Id. ¶ 18.

On November 18, 2009, Pulley received a letter from Wells Fargo stating they would not adjust the terms of the mortgage due to not receiving payments within the time frame required pursuant to the Forbearance Plan. Id. ¶ 19. Pulley alleges that he responded to Wells Fargo, demonstrating that he did make the payments and met the terms of the Forbearance Plan. Id. ¶¶ 20-21. On December 15, 2009, Pulley resumed making his full monthly mortgage payments. Id. ¶ 22.

The complaint further alleges that, on April 26, 2010, Pulley attended a Wells Fargo Home Preservation Workshop at the Oakland Convention Center in Oakland. Id. ¶ 23. At this workshop, Pulley was informed that Wells Fargo was only the servicer of the loan and that Pulley's loan was owned by an entity that Wells Fargo would not disclose. Id. Also at this time, Wells Fargo offered Pulley a plan which did not reduce the monthly payment and would put the arrearages on the back of the loan. Id. While Pulley "was unhappy that there was no reduction in the monthly mortgage payment, [he] requested that the paperwork for this loan modification plan be forwarded to him for signature." Id.

Between May 2010 and February 2012, Wells Fargo denied loan modification requests made by Pulley and he continued submitting supporting documentation requested by Wells Fargo. Id. ¶¶ 24-32.

On October 19, 2012, Pulley received a letter from Wells Fargo stating that his mortgage has been referred to foreclosure. Id. ¶ 33. On November 14, 2012, Pulley's monthly mortgage payment was refused. Id. ¶ 34. Pulley had been making his resumed monthly mortgage payments since December 15, 2009. Id.

On December 3, 2012, Plaintiff received a telephone call from Wells Fargo in which he was informed for the first time that he was not in the loan modification review process and that past documentation sent in by him was incorrect. Id. ¶ 36. At this time, Pulley had submitted approximately twelve complete loan modification packages to Wells Fargo. Id.

On December 7, 2012, Pulley had a telephone conversation with a Wells Fargo representative, Joshua Johnson. Id. ¶ 39. Pulley was informed that his mortgage was owned by a Mortgage Backed Securities Group that did not participate in HAMP or any government loan modification programs. Id. Johnson requested that Pulley provide a new loan modification package, which Pulley did. Id.

On December 11, 2012, a notice of default for the property was recorded in Marin County. Id. ¶ 40. In December 2012 and January 2013, Pulley was informed by Wells Fargo that his loan was with an underwriter in a review process and he submitted additional information requested by Wells Fargo. Id. ¶¶ 41-44. After that, Pulley's request for loan modification was again denied, he was encouraged to reapply, and he did so through his representative, submitting additional documentation. Id. ¶¶ 45-48.

The complaint alleges that "[r]ecently, Pulley received written correspondence from [Wells Fargo] stating that his loan will not be permanently modified as [Wells Fargo] lacks the contractual authority' to modify his loan." Id. ¶ 49.

B. Procedural History

Pulley initially filed this action in the Superior Court of the State of California for the County of Marin on November 7, 2013. Dkt. No. 1-1 at 8. On December 19, 2013, Wells Fargo and U.S. Bank removed this action to federal court on the basis of diversity jurisdiction, 28 U.S.C. § 1332(a), and then moved to dismiss the complaint. Dkt. Nos. 1, 33. Instead of opposing the motion, Pulley filed the first amended complaint. Dkt. No. 37.

In his first amended complaint, Pulley brings five claims against Wells Fargo for: (1) fraud; (2) negligent misrepresentation; (3) intentional infliction of emotional distress; (4) wrongful foreclosure in violation of California Civil Code § 2924 et seq.; and (5) violations of the Business and Professions Code § 17200 et seq. Dkt. No. 37.

On January 7, 2015, Wells Fargo and U.S. Bank moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the first amended complaint for ...

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