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Heagler v. Wells Fargo Bank, N.A.

United States District Court, E.D. California

March 30, 2017

WELLS FARGO BANK, N.A.; CLEAR RECON CORP.; and DOES 1-10, Inclusive, Defendants.



         Plaintiff Orastine Heagler filed this action against Wells Fargo Bank (“Defendant”)[1]alleging negligent misrepresentation, negligence in the handling of her loan modification application, and violations of two provisions of California's Homeowner Bill of Rights (“HBOR”). Before the Court is Defendant's Motion to Dismiss (“Motion”) each claim pursuant to Federal Rule of Civil Procedure 12(b)(6), primarily on the grounds that each claim is preempted by the Home Owner's Loan Act (“HOLA”).[2] Defs.' Mot., ECF No. 3, at 1-2. For the reasons set forth below, Defendants' Motion to Dismiss is GRANTED.[3]


         Defendant submits a Request for Judicial Notice (“RJN”), ECF No. 3-1, in support of its motion. Many of the documents explain how Defendant became the successor-in-interest to World Savings Bank (“WSB”) federal savings bank (“FSB”), later renamed Wachovia Mortgage (“Wachovia”) FSB, through a sequence of mergers and acquisitions. Plaintiff does not oppose these requests. The Court may take judicial notice of documents in the public record if the facts are not “subject to reasonable dispute.” Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001), overruled on other grounds, Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119, 1125 (9th Cir. 2002); see also Fed.R.Evid. 201(b). Therefore, the Court GRANTS Defendant's RJN.


         Plaintiff owns the residence at 4689 Windsong Street, Sacramento, California (“Subject Property”). Defendant services Plaintiff's loan on the Subject Property and is the beneficiary under the relevant Deed of Trust securing the loan.

         In March 2006, Plaintiff and her now late husband refinanced their loan with WSB.[5] Since refinancing, Plaintiff received two loan modifications: first with Wachovia in June 2009 (RJN, Ex. C, ECF No. 3-2, at 1-2), and then a Home Affordable Modification Program (“HAMP”) agreement with Wells Fargo in August 2011. RJN, Ex. D, ECF No. 3-2, at 1-2. Plaintiff experienced financial difficulties after her husband died, and started missing mortgage payments on January 1, 2014. Plaintiff notified Defendant of her husband's passing, and expressed concerns about her financial situation. Nevertheless, a Notice of Default was recorded on the Subject Property on November 18, 2015. RJN, Ex. E, ECF No. 3-2, at 1; Compl. ¶ 13. In January 2016, Defendant allegedly verbally “invited” Plaintiff to submit a loan modification application. Plaintiff then submitted loan modification documents to Defendant, but alleges that Defendant refused to acknowledge receipt. On February 29, 2016, Defendant recorded a Notice of Trustee's Sale, setting March 24, 2016 as the sale date. RJN, Ex. F, ECF No. 3-2, at 1; Compl. ¶ 16.

         Plaintiff provides that during this time, she also sought assistance from Keep Your Home California (“KYHC”). Plaintiff claims that on March 9, 2016, KYHC granted her an award of approximately $81, 000 to bring her loan out of arrears, but Plaintiff was allegedly advised by Defendant of its internal policy prohibiting consideration of both a loan modification request and a request for KYHC funds simultaneously. Plaintiff claims that she closed her loan modification application to seek Defendant's approval for the KYHC funds, but that Defendant afterwards refused to accept the KYHC funds without explanation.[6] Nevertheless, Defendant supposedly postponed the March 24 Trustee Sale to conduct an evaluation of Plaintiff's loan modification application. Soon thereafter, Plaintiff received a letter from Defendant, dated March 28, 2016, inviting her to submit a new loan modification application. Plaintiff claims that she promptly submitted the new application, but on April 18, 2016, Defendant informed Plaintiff that additional documents were still required. Plaintiff submitted the requested documents and completed her application.

         Thereafter, Plaintiff received a letter from Defendant, dated April 28, 2016, denying her request for a third loan modification because of her previous modifications, and because her gross monthly income was inadequate. RJN, Ex. G, ECF No. 3-2, at 1; Compl. ¶ 28; Pl.'s Opp., ECF No. 4, at 4:11-15. Yet Plaintiff claims that in May or June 2016, members of her family moved into the Subject Property, which provided her additional income. She also claims that after contacting Defendant to request reevaluation of her application, she was told to submit documents from the non-borrower contributors. Plaintiff submitted these additional documents on July 5, 2016, two days before the newly scheduled July 7 Trustee Sale was set to commence. Plaintiff claims that she immediately attempted to confirm receipt of the recently submitted documents, but to no avail, and on July 7, 2016, she filed an emergency Bankruptcy petition with the Eastern District of California Bankruptcy Court.

         During a July 13, 2016 follow-up phone call, Defendant allegedly told Plaintiff that her loan modification application had been closed at her husband's request, however, Plaintiff's husband had been deceased for several years at the time. Plaintiff subsequently filed the present lawsuit in the Sacramento County Superior Court on July 18, 2016, and Defendant removed the action to this Court on August 18, 2016.


         On a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require detailed factual allegations. However, “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.” Id. (internal citations and quotations omitted). A court is not required to accept as true a “legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009) (quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) (stating that the pleading must contain something more than “a statement of facts that merely creates a suspicion [of] a legally cognizable right of action.”)).

         Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket assertion, of entitlement to relief.” Twombly, 550 U.S. at 556 n.3 (internal citations and quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirements of providing not only ‘fair notice' of the nature of the claim, but also ‘grounds' on which the claim rests.” Id. (citing 5 Charles Alan Wright & Arthur R. Miller, supra, at § 1202). A pleading must contain “only enough facts to state a claim to relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.” Id. However, “[a] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.'” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

         A court granting a motion to dismiss a complaint must then decide whether to grant leave to amend. Leave to amend should be “freely given” where there is no “undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to be considered when deciding whether to grant leave to amend). Not all of these factors merit equal weight. Rather, “the consideration of prejudice to the opposing party . . . carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that “the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) ...

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