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Cruz v. Aurora Loan Services LLC

United States District Court, N.D. California, San Francisco Division

May 5, 2015

JOSE CRUZ, et al., Plaintiffs,


LAUREL BEELER, Magistrate Judge.


In this mortgage- and foreclosure-related action, Defendant Aurora Loan Services LLC ("Aurora") moves to dismiss the complaint brought by Plaintiffs Jose Cruz and Blanca Cruz. ( See Complaint, ECF No. 1 at 7-21; Motion, ECF No. 9.[1]) Both sides have consented to the undersigned's jurisdiction. (Aurora's Consent, ECF No. 7; Plaintiffs' Consent, ECF No. 14.) Pursuant to Civil Local Rule 7-1(b), the court found this matter suitable for determination without oral argument and vacated the May 7, 2015 hearing. (5/1/2015 Clerk's Notice, ECF No. 26.) Upon consideration of the papers submitted and the applicable legal authority, and for the reasons stated below, the court grants in part and denies in part Aurora's motion. Plaintiffs may file a first amended complaint by May 26, 2015.



In July 2006, Plaintiffs obtained a loan for $425, 600 from SCME Mortgage Bankers, Inc. and purchased property located at 54 Puffin Circle, Oakley, California 94561 (the "Property"). (Complaint ¶¶ 2, 8, 10; Request for Judicial Notice ("RJN"), Ex. 1, ECF No. 10-1.[2]) That loan was secured by a deed of trust recorded against the Property. (RJN, Ex. 1, ECF No. 10-1.)

In February 2010, after defaulting on their loan, Plaintiffs' loan payments increased from $1, 532 per month to $3, 353 per month. (Complaint ¶ 11; RJN, Ex. 2, ECF No. 10-2.) After making the first increased payment, Plaintiffs contacted Aurora by telephone and told an Aurora representative that they would not be able to make the increased payments in the future. (Complaint ¶ 11.) The Aurora representative said that Aurora would send Plaintiffs a loan modification application packet. ( Id. ) The Aurora representative also told Plaintiffs that they would have to "miss a few monthly payments in order to be considered for" a loan modification. ( Id. )

Plaintiffs thereafter did in fact receive a loan modification application packet from Aurora. ( Id. ¶ 12.) They filled out the application and submitted it, along with financial and other documents, to Aurora the next month, in March 2010. ( Id. ) They also missed "about two" monthly payments, as they were told to do. ( Id. ¶¶ 11, 13.)

Sometime later, in connection with Plaintiffs' loan modification application, "[P]laintiffs were told" that, if they qualified under Aurora's loan modification program[3], their monthly payments would be lowered "based on a lower interest rate." ( Id. ¶ 14.) They were also told that the new interest rate and monthly payment "would become fixed." ( Id. ) "[F]rom the conversations, " Plaintiffs "understood" that their new monthly payments would be "in the range of $1, 500 to $1, 800 per month." ( Id. ) In addition, Plaintiffs "were informed" that, if they qualified for a loan modification, the modification would be conditioned on their making an initial payment of $4, 200 and then timely making three monthly payments of $1, 508.67. ( Id. ¶ 15.)

Plaintiffs say that they subsequently did make the initial payment of $4, 200 and then timely made three monthly payments of $1, 508.67. ( Id. ¶ 16.)

Nevertheless, after making these payments, Aurora told Plaintiffs "that in order to be considered, " and "as a prerequisite, " they "would again have to pay about $4, 200 and again make three monthly payments." ( Id. ¶ 17.) Plaintiffs made these payments, too. ( Id. ¶ 18.)

Plaintiffs allege that they then made "a third set of payments, " but they do not allege why they did or how much the payments were. ( Id. ) They also allege that they "complied with all requests for personal and financial documents." ( Id. )

After all this, Plaintiffs "were informed" in September 2011 that "they did not qualify for a [loan] modification and would not be given a permanent [loan] modification at a reduced monthly rate." ( Id. ¶ 19.) At that time, Plaintiffs believed that Aurora's decision to deny their application on the ground that they did not qualify for a loan modification was legal, and they did not know, and they did not have any reason to know, that they did qualify for loan modification. ( See id. ¶¶ 20-21, 24.) It was not until sometime later-"within a period of time within the statute of limitations for each of" their claims-that Plaintiffs learned that they in fact did qualify for a loan modification under both Aurora's own loan modification program and the federal Home Affordable Modification Program ("HAMP"). ( Id. ¶¶ 22, 24.)

After denying their loan modification, Aurora, through Quality Loan Service Corporation, foreclosed on the Property and took title to it pursuant to a trustee's deed dated October 3, 2011. ( Id. ¶ 26; RJN, Ex. 3-5, ECF Nos. 10-3, 10-4, 10-5.) Aurora evicted Plaintiffs from the Property on December 22, 2011. (Complaint ¶ 27.)


Plaintiffs filed their complaint in Contra Costa County Superior Court on December 19, 2014. ( Id. ) They bring the following claims: (1) intentional misrepresentation; (2) breach of contract; (3) promissory estoppel; (4) breach of the implied covenant of good faith and fair dealing; (5) negligence; (6) misrepresentation based on a false promise; and (7) unfair competition, Cal. Bus. & Prof. Code § 17200. ( Id. )

On February 6, 2015, Aurora removed the action to this court on the basis of diversity jurisdiction. (Notice of Removal, ECF No. 1.) Aurora thereafter filed a motion to dismiss the complaint. (Motion, ECF No. 9.) Plaintiffs filed an opposition, and Aurora filed a reply. (Opposition, ECF No. 13; Reply, ECF No. 15.)



Federal Rule of Civil Procedure 8(a) requires that a complaint contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A complaint must therefore provide a defendant with "fair notice" of the claims against it and the grounds for relief. See Bell ...

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