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Alvarez v. Nationstar Mortgage LLC

United States District Court, N.D. California, San Jose Division

March 28, 2017




         Plaintiff Rosalio Alvarez (“Alvarez”) brings this action against Defendant Nationstar Mortgage, LLC (“Nationstar”) in connection with his properties and his loan modification applications. Before the Court is Nationstar's motion to dismiss Plaintiffs' second amended complaint (“SAC”), pursuant to Fed.R.Civ.P. 12(b)(6). Mot., ECF 29. Having considered the papers filed in conjunction with the motion and the parties' oral argument at the hearing on January 26, 2017, the Court GRANTS Nationstar's motion to dismiss for the reasons set forth below.

         I. BACKGROUND

         A. Factual Background

         The following facts are taken from Alvarez's SAC. Alvarez owns and occupies a seven-bedroom duplex at 121 Topeka Avenue and 123 Topeka Avenue in San Jose, California. SAC ¶¶ 1, 4. In order to purchase this property, Alvarez obtained a loan from Bank of America for approximately $622, 000. Id. ¶ 6. He made payments on this loan for several years before falling behind in 2012. Id. ¶¶ 8, 13.

         Alvarez alleges that on or before December 2012, Bank of America improperly attempted to foreclose on the property. Id. ¶ 14. His counsel was able to stop the foreclosure and allegedly got Bank of America to admit wrongdoing. Id. ¶ 17. In January 2014, Bank of America sold Alvarez's loan to Nationstar. Id. ¶ 18.

         In April 2014, Alvarez sought a loan modification from Nationstar. Id. ¶ 19. During the following several months, he submitted a complete loan modification application. Id. ¶¶ 20, 29. Alvarez remained in contact with Nationstar regarding the status of his application. Id. ¶ 26. During this time, Nationstar told Alvarez his single point of contact (“SPOC”) for his application would be Michael Smith. Id. ¶ 28. However, during the month of May, Alvarez and his representatives had to speak with at least six different individuals at Nationstar regarding his loan modification. Id. ¶¶ 30-32. Each Nationstar representative gave Alvarez different information regarding the status of his loan modification. Id. ¶ 33. For example, on May 20, 2014, he was told that his modification application was complete and under review, id. ¶ 34, but a few weeks later, on June 6, 2014, a different Nationstar representative told Alvarez his loan modification application was missing information, id. ¶36, and on June 14, 2014, another Nationstar representative claimed the application was missing more information, id. ¶ 37. This cycle of being told conflicting and inconsistent information continued throughout 2014. Id. ¶¶ 38-53.

         In December 2014, Nationstar sent Alvarez a letter stating it was denying his loan modification application. Id. ¶ 53. Alvarez alleges that Nationstar offered him another review of his loan modification if he provided a complete loan modification application. Id. ¶ 55. Alvarez then provided a complete loan modification application to Nationstar in January of 2015. Id. ¶ 56. Despite entering a new application process with Nationstar, Alvarez was given a notice of default on April 21 of 2015. Id. ¶ 57. This notice of default was served without any prior notice stating that his new application had been denied. Id. ¶ 58. Alvarez further alleges that Nationstar did not properly notify Alvarez that he had a right to appeal this denial. Id. ¶ 59. The only document received by Alvarez prior to this notice of default was Nationstar's letter dated April 19, 2015, in which it merely notified Alvarez that it was assigning him a new loan specialist, Andrew Harrison, as his SPOC.

         Based on the allegations set forth in the SAC, Alvarez is suing Nationstar for breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, fraudulent misrepresentation, wrongful foreclosure in violation of California Civil Code § 2923.5, violating California Civil Code § 2923.6, violating California Civil Code § 2923.7, violating the California Business and Professional Code § 17200, and violating the Rosenthal Fair Debt Collection Practices Act.

         B. Procedural History

         On August 11, 2015, Alvarez brought this action against Nationstar in Santa Clara County Superior Court, alleging several causes of actions arising out of Alvarez's loan modification applications with Nationstar. The case was later removed to this Court based on diversity of citizenship pursuant to 28 U.S.C. §§ 1441 and 1332. On September 22, 2015, Nationstar moved to dismiss Alvarez's complaint. ECF 7. Alvarez subsequently amended his complaint mooting Nationstar's motion to dismiss. ECF 15. Nationstar then moved to dismiss Alvarez's first amended complaint on January 27, 2016. ECF 17. On July 29, 2016, the Court granted Nationstar's motion to dismiss Alvarez's first amended complaint with leave to amend. ECF 26.

         Alvarez then filed his second amended complaint (“SAC”) on August 29, 2016, which Nationstar now moves to dismiss. ECF 28; Mot. On January 26, 2017, the Court held a hearing on Nationstar's motion to dismiss Alvarez's second amended complaint. ECF 36. For the reasons set forth below, the Court rules as follows.


         A motion to dismiss under Rule 12(b)(6) concerns what facts a plaintiff must plead on the face of the complaint. Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Any complaint that does not meet this requirement can be dismissed pursuant to Rule 12(b)(6). A “short and plain statement” demands that a plaintiff plead “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), which requires that “the plaintiff plead 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 Court must “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).


         C. Breach of Contract (First Cause of Action)

         Alvarez brings a breach of contract claim against Nationstar for “breaching its contractual obligations in unlawfully violating existing California law and loan procedures in contradiction to its responsibilities and obligation under contract.” SAC ¶ 63. Nationstar argues that Alvarez's breach of contract claim is not sufficiently pled because Alvarez fails to allege the existence of the contract at issue. Specifically, Nationstar argues that Alvarez has not adequately alleged the contract terms, his performance under the contract, or Nationstar's breach of the contract. Mot. 3.

         “A cause of action for breach of contract requires proof of the following elements: (1) existence of the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach.” Miles v. Deutsche Bank National Trust Co., 236 Cal.App.4th 394, 402 (2015) (quoting CDF Firefighters v. Maldonado, 158 Cal.App.4th 1226, 1239 (2008)). To sufficiently allege the existence of a contract, “the terms [of the contract] must be set out verbatim in the body of the complaint, ” “a copy of the written instrument must be attached and incorporated by reference, ” or “a plaintiff may plead the legal effect of the contract rather than its precise language.” Id.

         The Court finds that Alvarez has not adequately alleged a claim for breach of contract. Alvarez conclusorily alleges that he was provided an opportunity to pursue a loan modification application by Nationstar, and Nationstar failed to meet its obligations under the Homeowner's Bill of Rights (“HBOR”) by improperly reviewing Alvarez's loan modification application. However, Alvarez has not set forth the terms of the contract in the SAC or any of his prior complaints, nor has he attached a copy of the alleged contract to the complaint. Alvarez also has not sufficiently pled the legal effect of the contract. In fact, the alleged contract and its terms have never been identified by Alvarez. Alvarez's failure to allege the existence of a contract is thus fatal to his breach of contract claim against Nationstar. Alvarez did not dispute at the motion hearing that the breach of contract claim suffers this failure.

         Moreover, Alvarez has failed to allege facts supporting the other basic elements of the claim. He has not alleged his own performance, and in fact, he admits he has failed to pay his mortgage since 2012, and makes no attempt to allege excuse. SAC ¶¶ 13, 68, 101-02, 112. He also fails to allege what portion of the unidentified contract Nationstar violated. The above-described deficiencies are identical to those pointed out by the Court in its order granting Nationstar's motion to dismiss the first amended complaint. ECF 26. Accordingly, the Court GRANTS Nationstar's motion to dismiss this breach of contract claim.

         D. Breach of the Covenant of Good Faith and Fair Dealing (Second Cause of Action)

         The SAC alleges that Nationstar was “required to conduct a good faith review” of Alvarez's application packet in accordance with California statutes and by failing that obligation, Nationstar breached the covenant of good faith and fair dealing. SAC ¶¶ 109, 111, 129, 131. Nationstar argues that Alvarez ...

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