Escalante v. Federal National Mortgage Association

          ORDER DENYING PLAINTIFFS’ MOTION TO REMAND, DENYING PLAINTIFFS’ MOTION FOR SANCTIONS, AND GRANTING DEFENDANTS’ MOTION TO DISMISS

          JOHN A. MENDEZ, UNITED STATES DISTRICT JUDGE

         This case arises from a lawsuit filed by plaintiffs Gilbert S. Escalante and Lisa E. Escalante (“the Escalantes”) alleging various state statutory and common law violations in connection with the foreclosure of their home. Defendants Federal National Mortgage Association (“FNMA”), Wells Fargo Bank, N.A. (“WFB”), Barrett Daffin Frappier Treder & Weiss, LLP (“Barrett Daffin”) (collectively “Defendants”) removed the case to federal court. The Escalantes now move to remand the case back to state court and request that the Court impose sanctions against Defendants. Defendants move to dismiss all causes of action. For the reasons stated below, the Court denies the motion to remand and the motion for sanctions and grants the motion to dismiss.^[1]

         I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

         The Escalantes are the owners and residents of the real property at 10055 Berryessa Drive, Stockton, California 95219 (“the Subject Property”). Compl. ¶ 2. In connection with their purchase of the Subject Property, the Escalantes executed a promissory note in the amount of $269, 200 and a deed of trust in favor of Ohio Savings Bank. Id. ¶ 13. WFB subsequently purchased the promissory note from Ohio Savings Bank and became the assigned beneficiary under the deed of trust. Id. ¶¶ 14-16. On August 12, 2013, the Escalantes applied and received a Home Affordable Modification Agreement in the amount of $278, 278.93. Id. ¶ 15. WFB recorded a Notice of Default on January 16, 2015. Id. ¶ 16. A notice of sale was issued by WFB on September 29, 2015, with a sale of the Subject Property scheduled for October 22, 2015. Id. ¶ 17. Barret Daffin was appointed trustee for the sale. Id.

         After notice of default was issued, the Escalantes conferred with CalHFA Mortgage Assistance Corporation under its “Keep Your Home California” program. Id. ¶ 18. The Escalantes submitted to WFB two “Request for Assistance” forms provided by CalFHA, one on April 22, 2015, and another on September 1, 2015. Id. ¶¶ 18-19. After both of the submissions were ignored, the Escalantes called WFB and spoke to an authorized WFB representative. Id. ¶ 20. This representative allegedly told the Escalantes that the foreclosure sale would be postponed if the Escalantes completed a uniform borrower assistance package and paid a lien for past due homeowner’s association fees. Id. ¶¶ 20-21. On October 18, 2015, the Escalantes paid the lien. Id. ¶ 21. And on October 21, 2015, the Escalantes transmitted a borrower assistance package to WFB. Id. ¶ 22. Despite complying with WFB’s requests, Barret Daffin conducted a trustee’s sale of the Subject Property on October 22, 2015, for $289, 576.17, to FNMA. Id. ¶ 24. The Subject Property allegedly had an estimated market value of $340, 000. Id. ¶ 25.

         Following the foreclosure sale, the Escalantes filed for bankruptcy in the United States Bankruptcy Court for the Eastern District of California. Id. ¶ 26. The Escalantes did not list this lawsuit as an asset of the bankruptcy estate. Motion to Dismiss (“MTD”) (Doc. #12) at 3; Defendants’ Request for Judicial Notice (“D RJN”) (Doc. #13), Ex. B. Defendants thereafter filed a motion for relief from bankruptcy stay, which the bankruptcy court granted on February 25, 2016. Compl. ¶ 26; MTD Opp. (Doc. #20) at 7.

         The Escalantes initially filed this case in San Joaquin County Superior Court on January 25, 2016. Removal (Doc. #1), Exh. 2. The Escalantes allege the following nine causes of action: (1) to set aside trustee’s sale; (2) to cancel trustee’s deed under California Civil Code (“CCC”) 3412; (3) to quiet title; (4) breach of contract; (5) breach of the covenant of good faith and fair dealing; (6) violation of California Business and Professions Code section 17200; (7) intentional infliction of emotional distress (“IIED”); (8) negligent infliction of emotional distress (“NIED”); and (9) declaratory relief. The first, second, and sixth through ninth causes of action are asserted against all defendants. The third cause of action is asserted against FNMA and DOEs 1 through 100. The fourth and fifth causes of action are asserted against WFB only.

         Defendants removed the case to federal court on February 29, 2016, on the basis of federal question jurisdiction, 28 U.S.C. § 1331. Following removal, FNMA and Wells Fargo filed the pending motion to dismiss all causes of action (Doc. #11). Defendant Barrett Daffin joined the motion (Doc. #21), which was opposed by the Escalantes (Doc. #20). After Defendants’ motion to dismiss was filed, the Escalantes filed a motion to remand the case back to state court (Doc. #16). The remand motion is opposed by FNMA and WFB (Doc. #22). As part of their remand motion, the Escalantes request that the Court impose sanctions on Defendants. Motion to Remand (“MTR”) at 8-9. FNMA has also commenced eviction proceedings via an unlawful detainer action filed in California state court on April 19, 2016. MTR at 2.

         II. OPINION

         A. Judicial Notice

         In support of their motion to dismiss, Defendants request that the Court take judicial notice of the follow four exhibits: (A) Trustee’s Deed Upon Sale recorded in the Official Records of San Joaquin County on November 5, 2015, as Document No. 2015-133273; (B) Gilbert S. Escalante, Jr. and Lisa E. Escalante’s Summary of Schedules and Statements of Affairs as filed in the United States Bankruptcy Court Eastern District of California Case NO. 15-28717; (C) Assignment of Deed of Trust recorded in the Official Records of San Joaquin County on March 8, 2012, as Document No. 2012-028897; and (D) Gilbert S. Escalante, Jr. and Lisa E. Escalante’s Motion to Convert Case from Chapter 13 to Chapter 7 as filed in the United States Bankruptcy Court Eastern District of California Case No. 15-28717 (Doc. #13). The Escalantes request that the Court take judicial notice of “statistical summary of schedules and Schedule A listing property as home at 10055 Berryessa Drive, Stockton CA 95219, value $340, 000” that was apparently filed in the United States Bankruptcy Court Eastern District of California Case No. 15-28717 (Doc. #25). Neither party opposes taking judicial notice of any exhibit.

         A court may take judicial notice of a fact that is not reasonably disputed if it “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b)(2). “[M]atters of public record” are appropriate for judicial notice. Northstar Fin. Advisors Inc. v. Schwab Investments, 779 F.3d 1036, 1042 (9th Cir. 2015). All of the exhibits submitted for judicial notice are not subject to reasonable dispute and are matters of public record. The Court therefore grants the motion for judicial notice of Defendants’ Exhibits A, B, C, and D, and the Escalantes’ Exhibit 1.

         B. Joinder

         Barrett Daffin filed a motion of joinder to join defendants FNMA and WFB’s motion to dismiss (Doc. #21). Barrett Daffin requests that the Court allow Barrett Daffin to join in the motion to dismiss filed by FNMA and Wells Fargo so as to promote judicial economy and conserve judicial resources. The Court will consider Barrett Daffin to have joined in FNMA and WFB’s motion to dismiss in its entirety. However, Barrett Daffin makes additional arguments in its joinder motion regarding why dismissal is appropriate as to Barrett Daffin. These arguments are procedurally defective because they do not properly notice a hearing and are untimely for the hearing scheduled on June 28, 2016. In fact, they were filed with the Court on the same day that the Escalantes filed their opposition (Doc. #20) to FNMA and WFB’s motion to ...