United States District Court, E.D. California
KATHERINE E. LAVARIAS, an individual and borrower, Plaintiff,
WELLS FARGO HOME MORTGAGE, a business entity; and DOES 1 through 10 inclusive, Defendants.
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS
A. MENDEZ UNITED STATES DISTRICT JUDGE.
Wells Fargo Home Mortgage ("Wells Fargo") moves to
dismiss Plaintiff Katherine E. Lavarias's
("Plaintiff's") Complaint for failure to state
a claim pursuant to Federal Rules of Civil Procedure
("Rules") 12(b)(6) and 9(b). Plaintiff opposes the
motion in part. For the following reasons, the Court GRANTS
in part and DENIES in part Wells Fargo's
FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
Court takes the following facts as true for purposes of this
resides at 3021 Simms Lane, Tracy, California 95377. Compl.
¶ 13. She alleges Wells Fargo "may be the current
servicer of [her] loan." Id. ¶ 5. In 2014,
Plaintiff called Wells Fargo to inquire about a loan
modification because her income had decreased. Id.
¶ 14. "Agents of Wells Fargo told Plaintiff to
default and to send in all loan documents." Id.
¶ 15. Thereafter, Plaintiff submitted "documents
and was put in a loan modification review with Wells
Fargo." Id. ¶ 16. Wells Fargo demanded
additional documents, which Plaintiff sent via fax.
Id. ¶ 20. Wells Fargo denied receiving the
documents, and consequently, Plaintiff expended time and
money resending them. Id. Despite assurances from
Wells Fargo that the Property "would not go to
foreclosure sale while" her file was under review for a
loan modification, Plaintiff received a Notice of Default.
Id. ¶¶ 33-34.
December 2015, Plaintiff sued Wells Fargo in San Joaquin
County. Her complaint for damages and equitable relief
asserts four causes of action: (1) violation of California
Business and Professions Code section 17200 (the "UCL
cause of action"); (2) violation of the covenant of good
faith and fair dealing; (3) breach of fiduciary duty; and (4)
actual fraud (Doc. #1-1). Wells Fargo removed the case on the
basis of diversity (Doc. #1) and has now moved to dismiss
(Doc. #3). Plaintiff opposes (Doc. #6). Although Plaintiff
references a "First Amended Complaint" in her
opposition, the operative complaint is the Complaint attached
as Exhibit A to Wells Fargo's Notice of Removal. Wells
Fargo has filed a reply (Doc. #7).
Fargo requests the Court take judicial notice of numerous
exhibits in support of its motion to dismiss (Doc. #4).
the Court may not consider material beyond the pleadings in
ruling on a motion to dismiss for failure to state a claim.
The exceptions are material attached to or relied on by the
complaint so long as authenticity is not disputed, or matters
of public record, provided that they are not subject to
reasonable dispute. E.g., Sherman v. Stryker
Corp., No. SACV 09-224JVS(ANx), 2009 WL 2241664, at *2
(CD. Cal. Mar. 30, 2009) (citing Fed.R.Evid. 201; Lee v.
City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001))
Court takes judicial notice of Wells Fargo's exhibits as
they are all either public or court records not subject to
reasonable dispute, information obtained from government
websites, or documents reflecting official acts of the
executive branch of the United States. Fed.R.Evid. 201;
Hines v. Wells Fargo Home Mortq., Inc., No.
2:14-CV-0138 6-JAM-KJN, 2014 WL 5325470, at *2-3 (E.D. Cal.
Oct. 17, 2014); Williams v. Wells Fargo Bank, NA,
No. SA CV 13-0303-DOC, 2013 WL 2047000, at *1 n.3 (CD. Cal.
May 13, 2013) .
First Cause of Action: Violation of California Business
and Professions Code
Fargo seeks dismissal of Plaintiff's UCL cause of action
on multiple grounds, discussed below.
Fargo argues Plaintiff lacks standing because she has not
alleged economic injury, lost money or property, or
causation. Def. Wells Fargo's Notice of Mot. & Mot.
to Dismiss Compl.; Mem. of P. & A. ("Mot.")
standing to bring a UCL cause of action, a plaintiff must:
"(1) establish a loss or deprivation of money or
property sufficient to qualify as injury in fact, i.e.,
economic injury, and (2) show that that economic
injury was the result of, i.e., caused by, the
unfair business practice or false advertising that is the
gravamen of the claim." Kwikset Corp. v. Superior
Court, 51 Cal.4th 310, 322 (2011). "At the pleading
stage, general factual allegations of injury resulting from
the defendant's conduct may suffice, for on a motion to
dismiss we 'presum[e] that general allegations embrace
those specific facts that are necessary to support the
claim.'" Lujan v. Defs. of Wildlife, 504
U.S. 555, 561 (1992) (alteration in original) (quoting
Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871,
has sufficiently pleaded an economic injury. Here, Plaintiff
alleges she suffered damages in the form of
loss of Plaintiff's equity, costs and expenses related to
protecting Plaintiff's Residence, reduced credit score,
unavailability of credit, increased costs of credit, reduced
availability of goods and services tied to credit ratings,
increased costs of those services, as well as fees and costs,
including . . . attorneys' fees and costs and damages for
the inability to get credit.
Compl. ¶ 55; see Rizk v. Residential Credit Sols.,
Inc., No. CV 14-9371-MWFJCX, 2015 WL 573944, at *8 (CD.
Cal. Feb. 10, 2015) (finding "alleg[ations] that
[borrower] suffered damages in the form of overpayment of
interest on his mortgage, reduction in credit limits,
increased credit card rates, rejection of car loan and credit
card applications, and attorney's fees" sufficient
to give borrower standing to bring his UCL claims); see
also Hines, 2015 WL 351818, at *5 (collecting cases).
causation, Wells Fargo argues Plaintiff cannot assert Wells
Fargo's alleged wrongful actions in 2014 caused her
economic injury because Plaintiff was already in default in
2011. E.g., Mot. 8:25-26.
Wells Fargo has not shown Plaintiff failed to cure
pre-petition arrears as provided for in her Chapter 13 plan.
Chapter 13 bankruptcy "allows a homeowner in default to
reinstate the original loan payments, pay the arrearages over
time, avoid foreclosure, and retain the home."
Aceves v. U.S. Bank, N.A., 192 Cal.App.4th 218, 223,
as modified (Feb. 9, 2011); 2 Bankruptcy Law
Manual § 13:3 (5th ed. 2016) (citing 11 U.S.C.
§ 1322(b)(3), (5)) ("A Chapter 13 plan can provide
for the cure of a default on a home mortgage.").
Plaintiff's Chapter 13 plan provided for the "cure
[of] all pre-petition arrears" over a three-year
commitment period. Ex. I, at 90 § III.C.3.09; Ex. H, at
80. Plaintiff alleges "Plaintiff would have been current
on the mortgage save for conversations with agents of Wells
Fargo, " which suggests Plaintiff cured pre-petition
arrears and was current on her mortgage payments when she
contacted Wells Fargo. Compl. ¶ 27. Wells Fargo has not
controverted these allegations with judicially-noticed facts.
Fargo's reliance on Jenkins v. JP Morgan Chase Bank,
N.A., 216 Cal.App.4th 497 (2013), as modified
(June 12, 2013) disapproved of by Yvanova v. New Century
Mortg. Corp., 62 Cal.4th 919 (2016), is misplaced.
Unlike Jenkins, where plaintiff's second amended
complaint "and opening brief acknowledge[d] her default
occurred prior to the six unlawful or unfair acts
she allege[d] as the basis of her UCL action, "
id. at 523, here ...