United States District Court, E.D. California
GILBERT S. ESCALANTE, JR. and LISA E. ESCALANTE, Plaintiffs,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION; WELLS FARGO BANK, N.A.; BARRETT DAFFIN FRAPPIER TREDER & WEISS, LLP; and DOES 1 through 100, Inclusive, Defendants.
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 ...