Mountjoy v. Bank of America Home Loans

          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 ...