Kathleen Angel Einsenberg v. Citibank N.A.

          Present: Honorable CHRISTINA A. SNYDER

          IN CHAMBERS MOTION TO DISMISS CASE (DOCKET #25, FILED MAY 29, 2013) APPLICATION TO REMAND (Docket #14, filed April 8, 2013)

          CHRISTINA A. SNYDER JUDGE

         I. INTRODUCTION

         Plaintiff filed the instant action in Los Angeles County Superior Court, and on March 13, 2013, defendants removed the case to this Court. Plaintiff’s complaint seeks to recover damages and prevent the foreclosure of her home.

         Before this case was removed, plaintiff requested a temporary restraining order and preliminary injunction preventing defendants from foreclosing on plaintiff’s home. The state court held a hearing on the requests on February 25, 2013, at which no appearance was made on behalf of defendants. The state court issued the requested preliminary injunction at the hearing, subject to plaintiff posting an undertaking in the amount of $50, 000 by March 11, 2013. Dkt. #1 at 62 - 63.

         On April 15, 2013, the Court dismissed plaintiff’s complaint without prejudice pursuant to Federal Rule of Civil Procedure 8. Dkt. #17. On May 28, 2013, plaintiff filed a First Amended Complaint (“FAC”), which alleges claims for rescission, breach of contract, unfair business practices pursuant to California’s Unfair Competition Law (“UCL”), California Business and Professions Code § 17200, and declaratory relief. Plaintiff’s FAC seeks damages in excess of $50, 000, and an injunction preventing defendants from continuing with a foreclosure of her home.

         On May 29, 2013, defendants filed a motion to dismiss the FAC. Plaintiff filed an opposition on June 14, 2013, and defendants replied on June 18, 2013. The Court heard oral argument on July 1, 2013. At that time, the parties agreed to attempt to mediate this dispute. Those efforts were unsuccessful. Therefore, after considering the parties’ arguments, the Court finds and concludes as follows.

         II. BACKGROUND

         This case arises out of defendants’ attempts to foreclose on real property located at 25431 Prado Las Fresas in Calabasas, California (“the property”). FAC ¶ 1. On July 27, 2006, plaintiff executed a note in favor of non-party American Home Mortgage (“AHM”), which was secured by a deed of trust to the property. Id. ¶ 9. At some subsequent point in time, Citibank, N.A. (“Citibank”) acquired AHM’s interest in the note. Id.

         Plaintiff alleges that prior to executing the note, none of AHM’s agents disclosed certain material and misleading aspects of the note. Id. ¶¶ 11 - 12. Specifically, plaintiff alleges that her note was a negative amortization loan with a variable interest rate, and that none of AHM’s agents disclosed the fact that her monthly payments would therefore increase drastically increase over the course of her loan. Id. ¶¶ 13 - 14. While plaintiff admits that the terms of the loan documents disclosed information regarding the possible fluctuations in her loan payments, she claims that due to the confusing, vague, and contradictory language in the documents, she was unable to comprehend the documents she executed. Id. ¶¶ 12 - 15. Plaintiff alleges that AHM’s agents intentionally failed to disclose the changes in interest rates and monthly payments with intent to deceive plaintiff and induce her to execute the note. Id. ¶ 15.

         At some point before August 7, 2012, plaintiff defaulted on the note. On August 7, 2012, plaintiff and defendant Citibank entered into a Forbearance Agreement. FAC ¶ 20, Ex. 3. The terms of this agreement provided that plaintiff would make three monthly payments to Citibank in the amount of $14, 033.38, and that in exchange, Citibank would not initiate a trustee’s sale during the months covered by the agreement. Id. ¶ 21. Additionally, the Forbearance Agreement provides that if plaintiff is unable to cure her default prior to the expiration of the agreement, plaintiff will be considered for a loan modification. FAC ¶ 21, Ex. 3. Plaintiff alleges that she timely made the first two monthly payments under the Forbearance Agreement, but that contrary to the terms of the agreement, Citibank conducted a trustee’s sale in September 2012. Id. ¶ 23. After the sale was conducted, Citibank allegedly refused to accept the third monthly payment due under the Forbearance Agreement. Id. ¶ 24. While Citibank rescinded the trustee’s sale on September 28, 2012, plaintiff alleges that they still refused to accept payment following the rescission. Id. Additionally, plaintiff alleges that Citibank will not attempt in good faith to offer her a reasonable loan modification. Id. ¶ 26.

         III. LEGAL STANDARD

         A. Motion to Dismiss

         A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a complaint. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 ...