United States District Court, E.D. California
GRANTING IN PART AND DENYING IN PART
DEFENDANT’S MOTION TO DISMISS
Troy
L. Nunley United States District Judge.
This
matter is before the Court pursuant to Defendant Bank of
America, N.A.’s (“Defendant BANA” or
“BANA”) motion to dismiss[1]Plaintiff’s first
amended complaint (“FAC”). (ECF No. 13.)
Plaintiff Calvin Mountjoy (“Plaintiff”) filed an
opposition to Defendant BANA’s motion. (ECF No. 15.)
Defendant BANA filed a reply. (ECF No. 18.) The Court has
carefully considered the arguments raised in Defendant
BANA’s motion and reply, as well as Plaintiff’s
opposition. For the reasons set forth below, Defendant
BANA’s Motion to Dismiss is GRANTED in part and DENIED
in part.
I.
Factual Background
At all
relevant times, Plaintiff has owned and occupied the dwelling
located at 8647 Adamstown Way, Elk Grove, County of
Sacramento, California (the “Subject Property”).
(Pl.’s FAC, ECF No. 10 at 5.) Defendant BANA was the
Beneficiary of Plaintiff’s Deed of Trust by virtue of
assignment on the Subject Property. (Def.’s Req. for
Jud. Not., ECF No. 14-1 at 2.)[2]
On May
6, 2009, Defendant BANA recorded a Notice of Default in the
County of Sacramento on the Subject Property. (ECF No. 14-1
at 2.) On April 11, 2011, Defendant BANA foreclosed on the
Subject property and sold it on April 12, 2011. (ECF No. 14-1
at 2.) However, Defendant BANA executed the foreclosure in
error due to its failure to communicate timely with Plaintiff
about conditions which would have warranted cancelation of
the foreclosure sale. (ECF No. 14-1 at 2.) As a result, on
June 5, 2012, Defendant BANA executed a rescission, which
Plaintiff and Defendant BANA agree removed all force and
effect of the foreclosure. (ECF No. 14-1 at 3.)
In or
around 2012, Plaintiff filed a lawsuit in the Superior Court
of California, County of Sacramento against Defendant BANA
regarding the April 11, 2011, foreclosure of the Subject
Property. (ECF No. 13-1 at 3.) On January 29, 2014, the
parties entered a settlement agreement concerning the
aforementioned lawsuit. (ECF No. 13-1 at 3.) The settlement
agreement provided that Defendant BANA had to pay Plaintiff
$395, 000. (ECF No. 14-2 at 2.) Plaintiff also alleges that
the settlement agreement provided that Defendant BANA
“assist in any and all reviews of the home loan”
and “to correct negative credit references to their
credit.” (ECF No. 10 at ¶ 4.) Throughout the
settlement negotiations, Plaintiff continued to live at the
Subject Property and alleges that the parties were never able
to successfully negotiate a rental payment. (ECF No. 10 at
¶ 3.)
Sometime
thereafter, Plaintiff’s counsel and Defendant
BANA’s counsel began to work together to attempt to
modify Plaintiff’s home loan. (ECF No. 10 at ¶ 8.)
At some point thereafter, Defendant BANA “provided a
contact person” for Plaintiff to communicate with
during the loan modification process. (ECF No. 10 at ¶
9; ECF No. 15 at 2.) However, Plaintiff alleges that
Defendant BANA’s counsel, Mr. Mark Wraight, stated that
Plaintiff and his counsel should only communicate with Mr.
Wraight. (ECF No. 10 at ¶ 10.) “Yet Mr. Wraight
took the position that he had no reason to speak with
[Plaintiff’s] counsel, who was assisting him with the
home loan modification process.” (ECF No. 10 at ¶
10.)
During
the home loan modification process, Plaintiff alleges that
Defendant BANA would tell Plaintiff that: he did not provide
all documents; he did not sign the documents; or he did not
send them in the correct manner. (ECF No. 10 at ¶ 21.)
Plaintiff alleges on March 23, 2015, Mr. Wraight stopped all
assistance with Plaintiff’s home loan modification
process. (ECF No. 10 at ¶ 12.) Sometime thereafter,
Plaintiff states that Defendant BANA denied Plaintiff’s
attempted home loan modification. (ECF No. 10 at ¶ 20.)
Plaintiff
further alleges that, sometime after settlement of the
lawsuit, Defendant BANA sent Plaintiff a mortgage statement
“alleging that he owed [on his loan] for time the title
of the home had been taken out of his name, ”
specifically during the time Plaintiff’s home was in
foreclosure. (ECF No. 10 at ¶ 13.) Defendant BANA
alleges that Plaintiff owes approximately $100, 000 in
monthly mortgage payments, which “accrued between the
time when the [Subject Property] was sold at foreclosure
(April 12, 2011) and when the sale was rescinded (June 5,
2012).” (ECF No. 13-1 at 3-4.) Plaintiff alleges that
the amount Defendant BANA claims he owes on the mortgage is
incorrect and “[Defendant BANA] failed to clarify a
correct pay off amount to Plaintiff” to this date. (ECF
No. 10 at ¶ 3.)
Subsequently,
Defendant BANA transferred servicing of Plaintiff’s
loan to Defendant Seterus. (ECF No. 10 at ¶ 23.)
Likewise, Plaintiff’s “home loan was sold to
Federal National Mortgage Association”
(“FNMA”). (ECF No. 10 at ¶ 25.)
Subsequently, FNMA filed an unlawful detainer against
Plaintiff and sought to evict him. (ECF No. 10 at ¶26.)
Finally, Plaintiff alleges in his opposition that Defendant
Seterus has foreclosed on the Subject Property for an
improper amount.[3] (ECF No. 15 at 2.)
Plaintiff
brings this suit against Defendants BANA, Seterus, Inc.
(“Seterus”), Federal National Mortgage
Association (“FNMA”), and Recontrust for: 1)
Violation of the California Homeowners Bill of Rights
(“CHBR”); 2) Fraud; 3) Fraudulent
Misrepresentation; 4) Negligence; 5) Negligent
Misrepresentation; 6) Violation of California Business and
Professions Code § 17200; and 7) Violation of the
Rosenthal Fair Debt Collection Practices Act
(“RFDCPA”). (ECF No. 10.)
II.
Standard of Law
A
motion to dismiss for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6) tests the legal sufficiency
of a complaint. Navarro v. Block, 250 F.3d 729, 732
(9th Cir. 2001). Federal Rule of Civil Procedure 8(a)
requires that a pleading contain “a short and plain
statement of the claim showing that the pleader is entitled
to relief.” See Ashcroft v. Iqbal, 556 U.S.
662, 678-79 (2009). Under notice pleading in federal court,
the complaint must “give the defendant fair notice of
what the claim . . . is and the grounds upon which it
rests.” Bell Atlantic v. Twombly, 550 U.S.
544, 555 (2007) (internal quotations omitted). “This
simplified notice pleading standard relies on liberal
discovery rules and summary judgment motions to define
disputed facts and issues and to dispose of unmeritorious
claims.” Swierkiewicz v. Sorema N.A., 534 U.S.
506, 512 (2002).
On a
motion to dismiss, the factual allegations of the complaint
must be accepted as true. Cruz v. Beto, 405 U.S.
319, 322 (1972). A court is bound to give plaintiff the
benefit of every reasonable inference to be drawn from the
“well-pleaded” allegations of the complaint.
Retail Clerks Int’l Ass’n v.
Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff
need not allege “‘specific facts’ beyond
those necessary to state his claim and the grounds showing
entitlement to relief.” Twombly, 550 U.S. at
570. “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S.
at 678 (citing Twombly, 550 U.S. at 556 (2007)).
Nevertheless,
a court “need not assume the truth of legal conclusions
cast in the form of factual allegations.” United
States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2
(9th Cir. 1986). While Rule 8(a) does not require detailed
factual allegations, “it demands more than an
unadorned, the defendant-unlawfully-harmed-me
accusation.” Iqbal, 556 U.S. at 678. A
pleading is insufficient if it offers mere “labels and
conclusions” or “a formulaic recitation of the
elements of a cause of action.” Twombly, 550
U.S. at 555; see also Iqbal, 556 U.S. at 678
(“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice”). Moreover, it is inappropriate to assume that
the plaintiff “can prove facts that it has not alleged
or that the defendants have violated the . . . laws in ways
that have not been alleged[.]” Associated Gen.
Contractors of Cal., Inc. v. Cal. State Council of
Carpenters, 459 U.S. 519, 526 (1983).
Ultimately,
a court may not dismiss a complaint in which the plaintiff
has alleged “enough facts to state a claim to relief
that is plausible on its face.” Iqbal, 556
U.S. at 697 (quoting Twombly, 550 U.S. at 570). Only
where a plaintiff fails to “nudge[] [his or her] claims
… across the line from conceivable to plausible[,
]” is the complaint properly dismissed. Id. at
680. While the plausibility requirement is not akin to a
probability requirement, it demands more than “a sheer
possibility that a defendant has acted unlawfully.”
Id. at 678. This plausibility inquiry is “a
context-specific task that requires the reviewing court to
draw on its judicial experience and common sense.”
Id. at 679.
In
ruling upon a motion to dismiss, the court may consider only
the complaint, any exhibits thereto, and matters which may be
judicially noticed pursuant to Federal Rule of Evidence 201.
See Mir v. Little Co. of Mary Hosp., 844 F.2d 646,
649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union
of United States, Inc., 12 F.Supp.2d 1035, 1042 (C.D.
Cal. 1998).
If a
complaint fails to state a plausible claim, “[a]
district court should grant leave to amend even if no request
to amend the pleading was made, unless it determines that the
pleading could not possibly be cured by the allegation of
other facts.” Lopez v. Smith, 203 F.3d 1122,
1130 (9th Cir. 2000) (en banc) (quoting Doe v. United
States, 58 F.3d 484, 497 (9th Cir. 1995)); see also
Gardner v. Marino, 563 F.3d 981, 990 (9th Cir. 2009)
(finding no abuse of discretion in denying leave to amend
when amendment would be futile). Although a district court
should freely give leave to amend when justice so requires
under Rule 15(a)(2), “the court’s discretion to
deny such leave is ‘particularly broad’ where the
plaintiff has previously amended its complaint[.]”
Ecological Rights Found. v. Pac. Gas & Elec.
Co., 713 F.3d 502, 520 (9th Cir. 2013) (quoting
Miller v. Yokohama Tire Corp., 358 F.3d 616, 622
(9th Cir. 2004)).
III.
Analysis
A.
Count I: Violation of the California Homeowners Bill of
Rights
Plaintiff
alleges Count I against all Defendants, stating that
Defendants violated their obligations under the California
Homeowners Bill of Rights (“CHBR”) to work with
Plaintiff to modify his home loan by failing to provide him
with an accurate accounting of the amount owed. (ECF No. 10
at ¶ 45.) Plaintiff also alleges that Defendants did not
properly communicate with Plaintiff about the loan
modification process, also in violation of the CHBR. (ECF No.
10 at ¶¶ 46, 49.) However, the CHBR contains
multiple different causes of action and Plaintiff does not
specify in his complaint under which subset of the law he
brings his claim. In his opposition, Plaintiff further states
that Defendant BANA specifically violated California Civil
Code Section 2923.7(a) of the CHBR by failing to provide
Plaintiff with a single point of contact to discuss
foreclosure preventative alternatives. (ECF No. 15 at 6.)
Plaintiff’s opposition does not specify any other
allegations as to the other Defendants. (ECF No. 15 at 5-6.)
Defendant
BANA argues that Plaintiff’s CHBR claim is insufficient
because the complaint does not identify which statute was
allegedly violated or how those statutory provisions were
violated. (ECF No. 13-1 at 5.) Defendant BANA also argues
that, even if the Court accepts Plaintiff’s contention
in his opposition that Defendant BANA violated section 2923.7
by not providing a contact person, Plaintiff did not provide
a factual basis to support this claim. (ECF No. 18 at 3.)
To
state a claim pursuant to the California Homeowners Bill of
Rights, a plaintiff must plead “(1) a material
violation of one of the enumerated code sections; (2) by a
mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent; (3) that causes actual economic
damages.” Heflebower v. JPMorgan Chase Bank,
NA, No. 1:12-CV-1671, 2014 WL 897352, at *12 (E.D.Cal. March
6, 2014) (citing Rockridge Trust v. Wells Fargo,
N.A., 985 F.Supp.2d 1110, 1149 (N.D. Cal. 2013)). Statutory
damages may be awarded for “material” violations
of Cal. Civ. Code Section 2923.7 where the violation is
“intentional or reckless, or resulted from willful
misconduct by a mortgage servicer.” Ortiz v.
Seterus, Inc., No. LA CV 16-01110 JAK (JEMx), 2016 WL
2968007, at *5 (C.D. Cal. May 18, 2016) (citing Cal. Civ.
Code § 2924.12(b)).
With
respect to the first element, although Plaintiff alleges that
Defendants have “materially violated their obligations,
” Plaintiff fails to stipulate which enumerated code
section he is referring to in the CHBR. (ECF No. 10 at
¶¶ 44-52.) In light of the fact that
Plaintiff’s FAC does not specify which provision
Defendants allegedly ...