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Schrupp v. Wells Fargo Bank, N.A.

United States District Court, E.D. California

July 13, 2016

PAUL SCHRUPP, Plaintiff,
WELLS FARGO BANK, N.A.; NDEX WEST, LLC; and DOES 1-20, inclusive, Defendants.



         Plaintiff Paul Schrupp initiated this action against defendants Wells Fargo Bank, N.A. (“Wells Fargo”) and NDEX West, LLC, alleging several causes of action based upon Wells Fargo’s failure to provide plaintiff a permanent loan modification prior to foreclosing on his property. Presently before the court is Wells Fargo’s motion to dismiss plaintiff’s Complaint for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). (Docket No. 6.) Defendant NDEX West, LLC, the agent for the beneficiary and trustee under the deed of trust against plaintiff’s home, joins Wells Fargo’s motion to dismiss. (Docket No. 7.)

         I. Factual and Procedural History

         On December 12, 2005, plaintiff borrowed $520, 000 from World Savings Bank secured by a deed of trust on his home. (Req. for Judicial Notice (“RJN”) Ex. A (Docket No. 6-1).) World Savings Bank later changed its name to Wachovia Mortgage, FSB before eventually becoming Wells Fargo Bank, N.A. (Id. Ex. F.) Plaintiff defaulted on his loan in December 2009 and Wells Fargo caused a Notice of Default to be recorded in the Yolo County Recorder’s Office on March 26, 2010. (Id. Ex. G.)

         On August 10, 2010, plaintiff filed a Chapter 13 bankruptcy petition in the Eastern District of California bankruptcy court. (Id. Ex. H.) The bankruptcy court confirmed plaintiff’s Chapter 13 plan on February 2, 2011, requiring plaintiff to pay monthly installments of $2, 899.24 to Wells Fargo. (Id. Ex. I.)

         In May 2011, Wells Fargo invited plaintiff to participate in a Home Affordable Modification Program (“HAMP”) Trial Period Plan (“TPP”), promising to offer plaintiff a permanent loan modification if he made three timely monthly payments of $1, 500.01 and submitted the required documents. (Id. Ex. J.) The bankruptcy court approved plaintiff’s trial loan modification with Wells Fargo on June 21, 2011. (Id. Ex. O.) The bankruptcy court noted, however, that it was approving the trial modification despite plaintiff’s failure to comply with the requirements of the Federal Rules of Bankruptcy Procedure and that plaintiff would be “well served to ensure that future filings comply.” (Id.) Plaintiff alleges he began making the modified trial payments on May 26, 2011. (Id. Ex. L.)

         On June 23, 2011, plaintiff moved to confirm his modified Chapter 13 plan, which incorporated the terms of Wells Fargo’s loan modification. (Id. Ex. K.) On August 2, 2011, however, the bankruptcy court denied plaintiff’s motion to confirm the modified plan without prejudice due to plaintiff’s procedural errors. (Id.) The bankruptcy court found that plaintiff had “failed to meet the burden of proving the requirements of confirmation” and explained the type of evidence that a debtor must submit. (Id.)

         Plaintiff defaulted on his bankruptcy payment plan and the bankruptcy trustee filed a motion to dismiss the bankruptcy case on October 13, 2011. (Id. Ex. L.) On November 23, 2011, the bankruptcy court found that plaintiff had failed to cure the default and dismissed the case. (Id.)

         Plaintiff alleges that he made the three trial payments and continued to make modified payments of $1, 500.01 to Wells Fargo for two months after the bankruptcy court denied his amended Chapter 13 plan and two more months after his bankruptcy case was dismissed. (Compl. ¶ 25; see also RJN Ex. L.) Wells Fargo accepted these payments until January 20, 2012, when a branch employee allegedly refused to accept the payment. (Compl. ¶ 25.) Plaintiff alleges that Wells Fargo gave him contradictory information over the next several years--first informing him that it would investigate and correct the error the branch employee made when he or she refused to accept payment, later refusing to correct the error, and then again agreeing to correct the error. (Id. ¶ 26.) Wells Fargo later refused to communicate with plaintiff because he was represented by counsel. (Id. ¶ 27.) Throughout this time, Wells Fargo sent monthly mortgage statements to plaintiff demanding the higher amount due under the original mortgage. (Id. ¶ 29.)

         On November 10, 2015, NDEX West, LLC, at the direction of Wells Fargo, recorded a notice of trustee’s sale. (Id. ¶ 30.) NDEX West, LLC conducted a foreclosure sale of plaintiff’s home on December 3, 2015 and Wells Fargo took title to the property. (Id. ¶ 31; Wells Fargo’s Mot. to Dismiss (“Mot. to Dismiss”) at 3 (Docket No. 6).) Plaintiff owed $722, 059.93 on his loan at the time of the foreclosure sale. (RJN Ex. M.)

         Plaintiff alleges five causes of action against Wells Fargo for: 1) breach of contract; 2) promissory estoppel; 3) violations of California’s Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”), Cal. Civ. Code § 1788; 4) violations of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691(d); and 5) violations of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq. Plaintiff also asserts a wrongful foreclosure claim against both Wells Fargo and NDEX West, LLC. Plaintiff seeks to set aside the foreclosure sale, specific performance of the alleged contractual obligations, statutory damages, actual damages, restitution, and attorney’s fees. (Compl. at 13-14.)

         II. Legal Standard

         A. Motion To Dismiss

         On a motion to dismiss under Rule 12(b)(6), the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a motion to dismiss, a plaintiff must plead “only enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “plausibility standard, ” however, “asks for more than a sheer possibility that a defendant has acted unlawfully, ” and where a complaint pleads facts that are “merely consistent with a defendant’s liability, ” it “stops short of the line between possibility and plausibility.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557).

         “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 ‘entitle[ment] to relief’ requires more than labels and conclusions . . . .” Twombly, 550 U.S. at 555 (alteration in original) (citations omitted). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678; see also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”).

         B. Judicial Notice

         In general, a court may not consider items outside the pleadings when deciding a motion to dismiss, but it may consider items of which it can take judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). A court may take judicial notice of facts “not subject to reasonable dispute” because they are either “(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201; see Castillo-Villagra v. INS, 972 F.2d 1017, 1026 (9th Cir. 1992). Plaintiff does not oppose Wells Fargo’s requests for judicial notice.

         The court will thus take judicial notice of the documents related to the deed of trust, notice of default, and the trustee’s sale in exhibits A, G, M, and N. (RJN Exs. A, G, M, N.) These are publicly recorded documents appropriate for judicial notice. See Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (noting that a court may take judicial notice of matters of public record); see also Hopkins v. Wells Fargo Bank, N.A., Civ. No. 2:13-444 WBS JFM, 2013 WL 2253837, at *1 (E.D. Cal. May 22, 2013) (taking judicial notice of a deed of trust, notice of default and election to sell under deed of trust, notice of trustee’s sale, and trustee’s deed upon sale).

         The court will also judicially notice the United States Department of Treasury documents in exhibits B through F related to the charter and certification of World Savings Bank and its renaming as Wells Fargo. (RJN Exs. B-F.) These documents are readily verifiable and undisputed. See Ferguson v. Wells Fargo Bank, N.A., Civ. No. 2:12-2944 WBS GGH, 2013 WL 504709, at *3 (E.D. Cal. Feb. 8, 2013) (taking judicial notice of similar documents reflecting official acts of the executive branch of the United States that were readily verifiable and undisputed).

         Finally, the court will take judicial notice of the bankruptcy court documents within exhibits H, J, K, L, O, and P, (RJN Exs. H, J, K, L, O; Suppl. RJN Ex. P (Docket No. 14)), because “the authenticity and existence of a particular order, motion, pleading or judicial proceeding, which is a matter of public record, is judicially noticeable.” United States v. S. Cal. Edison Co., 300 F.Supp.2d 964, 974 (E.D. Cal. 2004); see also Lane v. Vitek Real Estate Indus. Grp., 713 F.Supp.2d 1092, 1097 (E.D. Cal. 2010) (taking judicial notice of court documents relating to plaintiff’s bankruptcy proceedings); Lee, 250 F.3d at 690 (finding a court may take judicial notice of another court’s opinion, but not of the truth of the facts recited therein).

         III. Discussion

         A. ...

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