United States District Court, E.D. California
ORDER AND MEMORANDUM DECISION GRANTING IN PART
DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S COMPLAINT
LAWRENCE J. O'NEILL, UNITED STATES CHIEF DISTRICT JUDGE
before the Court is Defendant Nationstar Mortgage LLC and
Nationstar Mortgage Holdings, Inc.'s (collectively,
"Nationstar") motion to dismiss Plaintiff Sean
Daniel Powell's ("Plaintiff") complaint with
prejudice pursuant to Federal Rule of Civil Procedure
12(b)(6). (Doc. 6.) Plaintiff did not file an opposition
brief, the matter was taken under submission pursuant to
Local Rule 230(g), and the hearing set for March 14, 2017,
was vacated. For the reasons set forth below,
Nationstar's motion to dismiss is GRANTED in part. With
the exception of Plaintiff's claim for injunctive relief,
which is dismissed with prejudice, Plaintiff's claims are
dismissed without prejudice and with leave to amend.
Plaintiff may file an amended complaint within 21 days if,
and only if, he is able to cure the deficiencies discussed
PROCEDURAL AND FACTUAL BACKGROUND
somewhat difficult to understand, Plaintiff's complaint
pertains to a mortgage he obtained on his personal residence
in 2008, which was refinanced in 2009. Plaintiff claims the
lender concealed the actual value of the residential property
at issue, inflated Plaintiff's household income, and
altered Plaintiff's credit score in order to underwrite
the mortgage. (Cmplt., ¶ 56.) Given Plaintiff's
actual reported income, his "lender" knew it would be
impossible for Plaintiff to make the loan payments. (Cmplt.,
¶ 59.) In 2011, Plaintiff suffered a physical injury,
took an extended disability leave of absence from his work,
and experienced "extreme difficulty" in maintaining
his mortgage payment. (Cmplt., ¶ 19.)
2016, Plaintiff contacted his lender about his financial
hardships, and the lender "dragged Plaintiff along
through a slow, confusing, contradictory, redundant and
fraudulent modification process." (Cmplt., ¶ 22.)
The lender continued to ask for "piecemeal and
duplicative" paperwork, gave inconsistent answers about
the status of the modification request to extract full
mortgage payments from Plaintiff, and eventually denied the
modification plan. (Cmplt., ¶ 24.) Plaintiff alleges the
lender told him a modification would be considered and
granted if Plaintiff paid the mortgage amount on time and in
full, which Plaintiff alleges he did, but the payments were
recorded as insufficient. (Cmplt., ¶ 33.) Plaintiff also
alleges, contradictorily, the lender refused to discuss
modification with him unless he fell behind on his mortgage.
(Cmplt., ¶ 51.) Although Plaintiff suggests the lender
has threatened foreclosure of the property under the 2009
Deed of Trust, it is unclear whether a Notice of Default or
Notice of Trustee's Sale has been recorded.
September 29, 2016, Plaintiff filed suit against Defendants
Nationstar Mortgage LLC and Nationstar Mortgage Holdings,
in Kern County Superior Court for fraud, deceit, and
negligent misrepresentation; negligence; violation of
California Business & Professions Code § 17200;
breach of the implied covenant of good faith and fair
dealing; injunctive relief, and reformation of the contract.
Plaintiff attempted to serve Nationstar with the complaint on
December 14, 2016, and on January 11, 2017, Nationstar
removed the case to federal court asserting removal
jurisdiction predicated on diversity of the parties. On
February 9, 2017, Nationstar filed a motion to dismiss. (Doc.
6.) Plaintiff did not file an opposition brief.
motion to dismiss pursuant to Rule 12(b)(6) is a challenge to
the sufficiency of the allegations set forth in the
complaint. Dismissal under Rule 12(b)(6) is proper where
there is either a "lack of a cognizable legal
theory" or "the absence of sufficient facts alleged
under a cognizable legal theory." Balisteri v.
Pacifica Police Dep't., 901 F.2d 696, 699 (9th Cir.
1990). In considering a motion to dismiss for failure to
state a claim, the court generally accepts as true the
allegations in the complaint, construes the pleading in the
light most favorable to the party opposing the motion, and
resolves all doubts in the pleader's favor. Lazy Y.
Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).
survive a 12(b)(6) motion to dismiss, the plaintiff must
allege "enough facts to state a claim to relief that is
plausible on its face." Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). "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."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
"The plausibility standard is not akin to a
'probability requirement, ' but it asks for more than
a sheer possibility that a defendant has acted
unlawfully." Id. (quoting Twombly, 550
U.S. at 556). "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.”
Twombly, 550 U.S. at 555 (internal citations
omitted). Thus, "bare assertions . . . amount[ing] to
nothing more than a 'formulaic recitation of the
elements'. . . are not entitled to be assumed true."
Iqbal, 556 U.S. at 681. "[T]o be entitled to
the presumption of truth, allegations in a complaint . . .
must contain sufficient allegations of underlying facts to
give fair notice and to enable the opposing party to defend
itself effectively." Starr v. Baca, 652 F.3d
1202, 1216 (9th Cir. 2011). In practice, "a complaint .
. . must contain either direct or inferential allegations
respecting all the material elements necessary to sustain
recovery under some viable legal theory."
Twombly, 550 U.S. at 562. To the extent that the
pleadings can be cured by the allegation of additional facts,
a plaintiff should be afforded leave to amend. Cook,
Perkiss and Liehe, Inc. v. N. Cal. Collection Serv.,
Inc., 911 F.2d 242, 247 (9th Cir. 1990) (citations
Claims for Fraud, Deceit, and Negligent Misrepresentation Are
argues Plaintiff's claims for fraud and negligent
misrepresentation are insufficiently pled and must be
The Original Lender is Not Named as a Defendant
asserts that, to the extent Plaintiff's claims pertain to
conduct occurring in 2008 or 2009, they are unrelated to
Nationstar and must be dismissed.
Nationstar Mortgage LLC and Nationstar Mortgage Holdings,
Inc. are the only named Defendants in this action, but
neither was the original lender or servicer of the mortgage
Plaintiff obtained in 2008 and refinanced in 2009. In 2008,
Plaintiff signed a Deed of Trust which identifies Netmore
America, Inc. as the lender and purports to encumber real
property on Firebaugh Street in Bakersfield, California (the
"subject property"). (Doc. 7, p. 5.) On June 17, 2009,
the subject property was refinanced and a new Deed of Trust
in the amount of $154, 894 was recorded identifying
Metropolitan Home Mortgage, Inc. ("Metropolitan")
as the lender and Mortgage Electronic Registration Systems,
Inc. ("MERS") acting as nominee for Metropolitan.
(Doc. 7, p. 16.) On July 13, 2009, MERS recorded and
substituted Wells Fargo Bank, N.A. as trustee under the Deed
of Trust. (Doc. 7, p. 26.) On April 21, 2015, MERS, on behalf
of Metropolitan, transferred and assigned all its interest
under the 2009 Deed of Trust to Nationstar Mortgage, LLC.
(Doc. 7, p. 29.) On August 11, 2015, a second lien Deed of
Trust was recorded on the Property in favor of CalHFA
Mortgage Assistance Corporation in the amount of $22, 183.74.
(Doc. 7, pp. 33-34.)
alleges that "at various times throughout the
origination and servicing of his mortgage loan, " the
"lender" knowingly misrepresented the nature and
terms of the loan, grossly inflated the value of the property
to justify the loan, and held out the loan as a good
financial decision for Plaintiff. Plaintiff maintains his
"lender" knew it was unlikely Plaintiff would be
able to pay off the loan, but Plaintiff's
"desperation and desire to stay in the Subject
Property" led him to justifiably rely on the
lender's misrepresentations about the terms of the loan,
Plaintiff's ability to afford the loan, and the value of
the subject property.
2008 and 2009 Deeds of Trust demonstrate Nationstar was
neither the lender nor the servicer at the time these
documents were signed. Nationstar was not assigned any
interest in the 2009 Deed of Trust until 2015. Thus,
Plaintiff's allegations pertaining to conduct of his
"lender" in 2008 and 2009 inducing him to agree to
these mortgages bear no relation to Nationstar. Moreover,
Plaintiff has not alleged how Nationstar is liable for
actions of the lenders in 2008 or 2009 under any theory of
successor liability. As currently pled, any claim against
Plaintiff's "lender" that relates to execution
of the 2008 or 2009 Deeds of Trust is not viable as to
The Claims Against the 2008 and 2009 Lenders Appear
assuming the lenders associated with the execution of the
2008 and 2009 Deeds of Trust were properly identified and
served, the claims against such lenders appear untimely.
Under California law, the statute of limitations on claims
for fraud or negligent misrepresentation is three years from
the discovery "of the facts constituting the fraud or
mistake." Cal. Code Civ. Proc. § 338(d). "The
statute of limitations begins to run when the plaintiff has
information which would put a reasonable person on
inquiry." Kline v. Turner, 87 Cal.App.4th 1369,
1374 (2001). It is unclear exactly when Plaintiff reasonably
should have become aware of the alleged fraud and
misrepresentations of the 2008 and/or 2009 lenders, but based
on the allegations of the complaint, the statute of
limitations would have commenced in 2009 at the latest, and
expired no later than the end of 2012. The claims for fraud
or misrepresentation pertaining to the execution of the 2008
or 2009 Deeds of Trust are untimely.
The Claims for Fraud and Misrepresentation are Not Pled with