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Manson v. Guaranty Bank

United States District Court, S.D. California

March 22, 2017

RUSSELL C. MANSON, Plaintiff,
v.
GUARANTY BANK, et al., Defendants.

          ORDER GRANTING DEFENDANT GUARANTY BANK'S MOTION TO DISMISS [DOC. NO. 3]

          HON. MICHAEL M. ANELLO, United States District Judge

         Plaintiff Russell C. Manson brings suit against Defendant Guaranty Bank alleging violation of California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200-17210, and negligence. Defendant moves to dismiss Plaintiff's complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6). See Doc. No. 3. Plaintiff filed an opposition, to which Defendant replied. See Doc. Nos. 4, 5. The Court took the motion under submission on the papers and without oral argument pursuant to Civil Local Rule 7.1(d)(1). See Doc. No. 6. For the reasons set forth below, the Court GRANTS Defendant's motion to dismiss.

         Background[1]

         This action arises out of events related to the non-judicial foreclosure and sale of Plaintiff's home, located at 13070 Texana Street, San Diego, California, 92129 (“the property”). In 2005, Plaintiff entered into a written loan agreement and obtained a home equity line of credit (“HELOC”) loan in the amount of $95, 000, secured by the property through a Deed of Trust, recorded on October 28, 2005. Plaintiff suffered a significant financial setback due to the economy. As such, Plaintiff contacted Defendant to inquire about a loan modification. Defendant promised that if Plaintiff submitted a complete application for a loan modification, it would not initiate foreclosure proceedings while Plaintiff's loan modification application was in review. Plaintiff submitted a complete loan modification application as instructed. Defendant did not provide any written acknowledgement of the documents submitted by Plaintiff in connection with his request for a loan modification.

         On January 28, 2016, Defendant recorded a Notice of Default against the property. Plaintiff did not believe that Defendant was reviewing Plaintiff's loan modification application in good faith. On or around May 6, 2016, Defendant recorded a Notice of Trustee Sale against the property. On or around June 1, 2016, Defendant sold the property, and initiated action to take possession of the property and to evict Plaintiff from his home. Plaintiff alleges that Defendant wrongfully delayed the processing of Plaintiff's loan modification application.

         Based on these allegations, Plaintiff alleges causes of action for violation of California's UCL, negligence, and cancellation of instrument.

         Legal Standard

         A Rule 12(b)(6) motion to dismiss challenges the legal sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations, brackets, and citations omitted).

         In reviewing the motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations, and construe them in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). However, “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss, ” Pareto v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998), and it is improper for a court to assume a plaintiff “can prove facts that [he or she] has not alleged, ” see Assoc. Gen. Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983).

         Federal Rule of Civil Procedure 9(b) sets forth a heightened pleading standard for allegations of fraud, requiring parties to “state with particularity the circumstances constituting fraud or mistake.” In general, fraud allegations must be “specific enough to give defendants notice of the particular misconduct … so that they can defend against the charge and not just deny that they have done anything wrong.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)). Specifically, plaintiffs are required to supplement allegations of fraud with the “who, what, when, where, and how” of the purported misconduct, in addition to why the statement or conduct is false or misleading. Id. Failure to satisfy this heightened pleading standard can result in dismissal of the claim. Id. at 1107.

         Discussion

         A. Request for Judicial Notice

         Defendant requests that the Court take judicial notice of certain public records relating to Plaintiffs' complaint. See Doc. No. 3-3. These records include: (1) Deed of Trust, recorded on March 1, 2005; (2) Deed of Trust, recorded on October 28, 2005; (3) Assignment of Deed of Trust, recorded on January 28, 2016; (4) Substitution of Trustee, recorded on January 28, 2016; (5) Trustee's Deed Upon Sale, recorded June 15, 2016; and (6) Full Reconveyance, recorded on July 20, 2016.

         Generally, a district court's review on a 12(b)(6) motion to dismiss is limited to the complaint. Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) overruled on other grounds by Galbraith v. Cnty. Of Santa Clara, 307 F.3d 1119 (9th Cir. 2002). However, “a court may take judicial notice of matters of public record, ” id. at 689 (internal quotations and citations omitted), and of “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, ” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith v. Cnty. Of Santa Clara, ...


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