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Harris v. Wells Fargo Bank, N.A.

United States District Court, C.D. California

June 15, 2016


          Present: The Honorable CHRISTINA A. SNYDER JUDGE.



         The Court finds this motion appropriate for decision without oral argument. See Fed. R. Civ. P. 78; C.D. Cal. Local Rule 7-15. Accordingly, the hearing date of June 20, 2016, is vacated, and the matter is hereby taken under submission.


         On March 8, 2016, plaintiffs Stephen Harris and Ozelia Harris (collectively, “plaintiffs”) initiated this action in the San Bernadino Superior Court against defendants Wells Fargo Bank, N.A. (“Wells Fargo”) and Does 1 through 100. Dkt. 1, Notice of Removal, at 3. On April 8, 2016, Wells Fargo removed this action to this court on the basis of diversity jurisdiction. Id. Thereafter, on April 29, 2016, plaintiffs filed a First Amended Complaint (“FAC”) against Wells Fargo, NBS Default Services (“NBS”), and Does 1 through 100 (collectively, “defendants”). Dkt. 11. In the FAC, plaintiffs assert claims against defendants for (1) violation of California Civil Code § 2923.6 of the Homeowner’s Bill of Rights (“HBOR”); (2) violation of California Business and Professions Code § 17200, et. seq (“the UCL”); (3) promissory estoppel; and (4) negligence. Id. The gravamen of plaintiffs’ action is that defendant Wells Fargo invited plaintiffs to submit an application for a loan modification and, while plaintiffs’ application was still pending, proceeded to initiate foreclosure proceedings on plaintiffs’ residence.

         On May 16, 2016, Wells Fargo filed a motion to dismiss the FAC pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. 16. On May 30, 2016, plaintiffs filed an opposition, Dkt. 22, and on June 2, 2016, Wells Fargo filed a reply, Dkt. 25. Having carefully considered the parties’ arguments, the Court finds and concludes as follows.


         On or about April 12, 2016, plaintiffs obtained a loan of $393, 750 from World Savings Bank, FSB (“World Savings”) in order to purchase real property located at 7284 Abigail Place, Fontana, California 92336 (the “Subject Property”). Request for Judicial Notice (“RJN”), Ex. A, Adjustable Rate Mortgage Note (“Note”).[1] This loan was memorialized in a note and secured by a deed of trust, both of which were recorded in the official records of the County of San Bernadino. RJN, Ex. A Note, Ex. B. Deed of Trust.

         On or around January 1, 2008, World Savings was renamed Wachovia Mortgage, FSB. RJN, Ex. C, at 2, World Saving Bank Notice of Amendment. Thereafter, in November 2009, Wachovia Mortgage, FSB changed its name to Wells Fargo Bank Southwest, N.A. and subsequently merged into defendant Wells Fargo. Id., at 6, FDIC Profile of Wachovia Mortgage, FSB.

         According to plaintiffs, on July 9, 2015, a Wells Fargo representative approached plaintiffs to inquire whether they were interested in applying for a loan modification with respect to the Subject Property. FAC ¶ 11. Plaintiffs state that they completed a loan modification application, which they submitted to Wells Fargo on August 10, 2015. Id. ¶ 12. Nevertheless, plaintiffs allege that, on December 10, 2015, prior to completing its review of plaintiffs’ loan modification application, Wells Fargo, through its authorized agent NBS, recorded a Notice of Default against the Subject Property, thus placing plaintiffs at risk of losing their home at a trustee’s sale. Id. ¶ 14. Plaintiffs contend that they were not informed of any determination with respect to their loan modification application, and were in fact informed on March 3, 2016 by a representative for Wells Fargo that review of their application had not been completed. FAC ¶ 15-16.

         Plaintiffs now bring the instant action asserting, in brief, that defendants acted unlawfully when they recorded a Notice of Default against the Subject Property prior to completing their review of plaintiffs’ loan modification application. FAC ¶ 17-18.


         A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in a complaint. Under this Rule, a district court properly dismisses a claim if “there is a ‘lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.’” Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988)). “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 U.S. 544, 555 (2007). “[F]actual allegations must be enough to raise a right to relief above the speculative level.” Id.

         In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all material allegations in the complaint, as well as all reasonable inferences to be drawn from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be read in the light most favorable to the nonmoving party. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the non-conclusory ‘factual content, ’ and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately, “[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.

         Unless a court converts a Rule 12(b)(6) motion into a motion for summary judgment, a court cannot consider material outside of the complaint (e.g., facts presented in briefs, affidavits, or discovery materials). In re American Cont’l Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on other grounds sub nom Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court may, however, consider exhibits submitted with or alleged in the complaint and matters that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).

         As a general rule, leave to amend a complaint which has been dismissed should be freely granted. Fed.R.Civ.P. 15(a). However, leave to amend may be denied when “the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture ...

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