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Alvarez v. Nationstar Mortgage LLC

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

July 29, 2016




         Plaintiff Rosalio Alvarez (“Alvarez”) brings this action against Defendant Nationstar Mortgage, LLC (“Nationstar”). This matter comes before the Court upon Nationstar’s motion to dismiss Plaintiffs’ first amended complaint (“FAC”), pursuant to Fed.R.Civ.P. 12(b)(6). Mot., ECF 17. For the reasons discussed below, Nationstar’s motion to dismiss is GRANTED WITH LEAVE TO AMEND.

         I. BACKGROUND

         The following facts are taken from Alvarez’s FAC. Alvarez owns and occupies a seven-bedroom duplex at 121 Topeka Avenue and 123 Topeka Avenue in San Jose, California. FAC ¶¶ 1, 4. In order to purchase this property, Alvarez obtained a loan from Bank of America for approximately $622, 000. Id. at ¶ 6. He made payments on this loan for several years before falling behind in 2012. Id. at ¶¶ 8, 13.

         Alvarez alleges that around December 2012, Bank of America improperly attempted to foreclose on the property. Id. at ¶ 14. His counsel was able to stop the foreclosure and allegedly got Bank of America to admit wrongdoing, id. at ¶ 17, and in January 2014, Bank of America sold Alvarez’s loan to Nationstar, id. at ¶ 18.

         In April 2014, Alvarez sought a loan modification from Nationstar. Id. at ¶ 19. During the following several months, he submitted a complete loan modification, id. at ¶¶ 20, 29, and remained in contact with Nationstar regarding the status of his application, id. at ¶ 26. During this time, Nationstar told Alvarez his single point of contact for his application would be Michael Smith. Id. at ¶ 28. However, during the month of May, Alvarez and his representatives had to speak with at least six different individuals at Nationstar regarding his loan modification. Id. at ¶¶ 30-32.[1] Each Nationstar representative gave Alvarez different information regarding the status of his loan modification. Id. at ¶ 33. For example, on May 20, 2014, he was told that his modification application was complete and under review, id. at ¶ 34, but a few weeks later, on June 6, 2014, a different Nationstar representative told Alvarez his loan modification application was missing information, id. at ¶36, and on June 14, 2014, another Nationstar representative claimed the application was missing more information, id. at ¶ 37. This cycle of being told conflicting and inconsistent information continued through 2014. Id. at ¶¶ 38-53.

         In December 2014, Nationstar sent Alvarez a letter stating it was denying his modification. Id. at ¶ 53. Alvarez alleges that due to the “suspicious circumstances surrounding his denial, ” Nationstar offered him another loan modification in January and February of 2015. Id. at ¶ 55. On April 19, 2015, Nationstar sent Alvarez a letter stating that it was assigning him a new loan specialist as a single point of contact. Id. at ¶ 59. Despite entering a new application process with Nationstar, on April 21, 2015, Alvarez was given a notice of default. Id. at ¶ 56. This notice of default was served without any prior notice stating that his new application had been denied. Id. at ¶ 57.

         As a result of the above allegations, Alvarez is suing Nationstar for breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, fraudulent misrepresentation, wrongful foreclosure in violation of Cal. Civ. Code § 2923.5, dual tracking in violation of Cal. Civ. Code § 2923.6, violating Cal. Civ. Code § 2923.7, violating the California Unfair Competition Law, and violating the Rosenthal Fair Debt Collection Practices Act.


         A. Rule 12(b)(6)

         A motion to dismiss under Rule 12(b)(6) concerns what facts a plaintiff must plead on the face of the complaint. Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Any complaint that does not meet this requirement can be dismissed pursuant to Rule 12(b)(6). A “short and plain statement” demands that a plaintiff plead “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), which requires that “the plaintiff plead 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, 678 (2009). The Court must “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

         B. Leave to Amend

         Under Rule 15(a), a court should grant leave to amend “when justice so requires, ” because “the purpose of Rule 15…[is] to facilitate decision on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc). A court may deny leave to amend for several reasons, including “undue delay, bad faith, . . . [and] futility of amendment.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).


         As an initial matter, the Court notes that Alvarez’s opposition to the motion to dismiss uses the plural form of plaintiff and refers to allegations not contained in the FAC, arguments not made by Nationstar, exhibits not attached to the FAC, and defendants that are not defendants in this action. While the Court is giving Alvarez leave to amend, in part because of the confusing nature of his FAC and opposition brief, the Court expects all parties to carefully review any future filings to reduce such confusion. Further, any unexplained mismatches or ambiguities between any amended pleadings and Alvarez’s briefing will not be grounds for leave to amend in the future.

         A. Breach of Contract (First Cause of Action)

         Nationstar argues that Alvarez’s breach of contract claim is not sufficiently pled because he has not adequately alleged the contract terms, his performance under the contract, or Nationstar’s breach of the contract. Mot. 3, ECF 17. Alvarez responds that he has sufficiently alleged a breach of contract since he pled the legal effect and substance of the loan agreement and attached a copy of the contract to the FAC. Opp. 7, ECF 19.

         The Court finds that Alvarez has not adequately alleged a claim for breach of contract. “A cause of action for breach of contract requires proof of the following elements: (1) existence of the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach.” Miles v. Deutsche Bank National Trust Co., 236 Cal.App.4th 394, 402 (2015) (quoting CDF Firefighters v. Maldonado, 158 Cal.App.4th 1226, 1239 (2008)). In order to sufficiently allege the existence of a contract, (1) “the terms must be set out verbatim in the body of the complaint[, (2)] a copy of the written instrument must be attached…, ” or (3) “a plaintiff may plead the legal effect of the contract rather than its precise language.” Id. at ¶ 402; see also 4 Witkin, Cal. Procedure, Pleading § 519 (“The other method of pleading a written contract is according to its legal effect, by alleging the making, and then proceeding to allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions, and it involves the danger of variance where the instrument proved differs from that alleged. Nevertheless, it is an established method, although infrequently employed.”). Here, Alvarez has not set forth verbatim the terms of the contract in the FAC and contrary to his statements in his opposition brief, he has not attached the contract to the FAC. Furthermore, Alvarez has not sufficiently pled the legal effect of the contract. In the FAC, Alvarez alleges that the contract required Nationstar to follow California law and that by violating law, Nationstar breached the contract. See, e.g., FAC ¶¶ 86, 87, 93, 94. But in his opposition brief, Alvarez refers to a “breach of the Trial Payment Agreement, ” an agreement that is not mentioned in the FAC. Alvarez’s non-existent allegations regarding a “Trial Payment Agreement” are not sufficient to show the existence of the contract. His failure to adequately allege the existence of a contract is fatal to his breach of contract claim and accordingly, the Court GRANTS Nationstar’s motion to dismiss with leave to amend.

         B. Breach of the Covenant of Good Faith and Fair Dealing ...

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