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Romo v. Wells Fargo Bank, N.A.

United States District Court, N.D. California

June 28, 2016

CHRIS ROMO, et al., Plaintiffs,
v.
WELLS FARGO BANK, N.A., et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS SECOND AMENDED COMPLAINT DOCKET NO. 29

          EDWARD M. CHEN United States District Judge

         Previously, the Court granted in part and denied in part Defendant Wells Fargo Bank, N.A.'s (“Wells”) motion to dismiss Plaintiffs Chris Romo and Maria Dulia Romo's first amended complaint (“FAC”). More specifically, the Court denied the motion with respect to the negligence claim but granted the motion with respect to the claims for negligent misrepresentation and fraudulent misrepresentation. The Court gave Plaintiffs leave to amend both dismissed claims. See Docket No. 26 (order). Thereafter, Plaintiffs filed their second amended complaint (“SAC”). Wells has now moved to dismiss the SAC - not only the misrepresentation-based claims but also the negligence claim which the Court previously allowed to proceed.

         Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby GRANTS in part and DENIES in part Wells's motion to dismiss.

         I. BACKGROUND

         In their SAC, Plaintiffs allege as follows. Plaintiffs are the owners of certain real property located in Healdsburg, California. See SAC ¶¶ 9, 16. In 2004, Plaintiffs refinanced their loan on the property, obtaining a “Pick A Pay” loan from Wachovia Bank (a predecessor of Wells). SAC ¶ 18. “Plaintiffs chose the 'Pick a Pay' loan because they believed that the loan Wachovia agents advised them of was a great loan. The agents made no mention to the Plaintiffs of any fees and unpaid interest that would be added to the loan.” SAC ¶ 24. In addition, agents failed to make proper disclosures to Plaintiffs as required by the Truth In Lending Act, including about the interest rate that would be charged. See SAC ¶ 26.

         In or about July 2009, after experiencing financial difficulties, Plaintiffs contacted Wachovia about refinancing the loan and/or loan modification. See SAC ¶ 28 et seq. Between July 2009 and April 2015, Plaintiffs submitted over nine applications for a loan modification; none were approved. See SAC ¶ 165. Based on Wachovia/Wells's conduct during this period, Plaintiffs assert claims for negligence, negligent misrepresentation, and fraudulent misrepresentation. Plaintiffs' misrepresentation-based claims are based on the following allegations: (1) that Wachovia/Wells misrepresented that Plaintiffs had to stop making payments on their loan in order to be considered for a loan modification, see, e.g., SAC ¶¶ 172, 191; (2) that Wachovia/Wells misrepresented that Plaintiffs would get a HAMP trial loan modification, see, e.g., SAC ¶¶ 173, 186; and (3) that Wachovia/Wells promised that Plaintiffs would get a permanent HAMP loan modification so long as they were qualified (which they were). See, e.g., SAC ¶¶ 174-75, 187.

         II. DISCUSSION

         A. Legal Standard

         Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). In considering such a motion, a court must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although “conclusory allegations of law and unwarranted inferences are insufficient to avoid a Rule 12(b)(6) dismissal.” Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). While “a complaint need not contain detailed factual allegations . . . it must plead enough facts to state a claim to relief that is plausible on its face.” Id. “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 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). “The plausibility standard is not akin to a 'probability requirement' but it asks for more than sheer possibility that a defendant acted unlawfully.” Iqbal, 556 U.S. at 678.

         B. Negligence Claim

         As an initial matter, Wells challenges the negligence claim on the ground that “the SAC does not identify any [HAMP] guideline that required Wells Fargo to grant Plaintiffs a modification. . . . If a guideline requiring Wells Fargo to grant a TPP [Trial Period Plan] exists, Plaintiffs can and must identify it.” Mot. at 6. In response, Plaintiff argues that Wells “raises additional arguments that were not raised in the original motion to dismiss” in violation of Federal Rule of Civil Procedure 12(g)(2). Opp'n at 5.

         Rule 12(g)(2) states that, “[e]xcept as provided in Rule 12(h)(2) or (3), a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion.” Rule 12(h)(2), in turn, provides that arguments which pertain to a plaintiff's “[f]ailure to state a claim upon which relief can be granted . . . may be raised: (A) in any pleading allowed or ordered under Rule 7(a); (B) by a motion under Rule 12(c); or (C) at trial.”[1] To summarize, under Rule 12(g)(2) and Rule 12(h)(2), a party that seeks to assert a defense that was available but omitted from an earlier Rule 12 motion can only do so in a pleading allowed or ordered under Rule 7(a), a Rule 12(c) motion, or at trial. Here, Wells seeks to assert “a defense . . . that was available . . . but omitted from [an] earlier motion” to dismiss. Fed R. Civ. P. 12(g)(2). However, Wells has not asserted this defense in a pleading, a Rule 12(c) motion, or at trial. Instead, Wells has asserted this defense in a motion to dismiss brought under Rule 12(b)(6). Wells is foreclosed from doing so because of Rule 12(g)(2) and Rule 12(h)(2). See Herron v. Best Buy Stores, LP, No. 12-CV-02103-GEB-JFM, 2013 WL 4432019, at *4 (E.D. Cal. Aug. 16, 2013) (refusal to consider argument Toshiba had “failed to squarely raise . . . in its initial dismissal motion”); Fed. Agr. Mortgage Corp. v. It’s A Jungle Out There, Inc., No. C 03-3721 VRW, 2005 WL 3325051, at *5 (N.D. Cal. Dec. 7, 2005) (where the complaint is amended after the defendant has filed a Rule 12(b) motion, the defendant may not thereafter file a second Rule 12(b) motion asserting objections or defenses that could have been asserted in the first motion.”); see also Wright & Miller, 5C Fed. Prac. & Proc. § 1388, 491-95 (3d ed. 2004) (citing additional cases applying Federal Rule 12(g)(2) and Rule 12(h)(2)). Thus, Wells's newly asserted argument about the identification of “any [HAMP] guideline” with respect to Wells Fargo's negligence claim, which it failed to assert in its prior Rule 12(b)(6) motion, may not properly be considered.

         C. Negligent Misrepresentation

         As indicated above, Plaintiffs' claim for negligent misrepresentation (as well as fraudulent misrepresentation) is based on the following allegations: (1) that Wachovia/Wells misrepresented that Plaintiffs had to stop making payments on their loan in order to be considered for a loan modification, see, e.g., SAC ¶ 191; (2) that Wachovia/Wells misrepresented that Plaintiffs would get a HAMP trial loan modification, see, e.g., SAC ¶ 186; and (3) that Wachovia/Wells promised that Plaintiffs would get a permanent HAMP loan modification so long as they were qualified (which they were). See, e.g., SAC ΒΆ 187. In its motion to dismiss, Wells ...


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