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Robinson v. Wells Fargo Home Mortgage

United States District Court, N.D. California

April 13, 2017

John Edward Robinson, et al., Plaintiffs,
v.
Wells Fargo Home Mortgage, et al., Defendants.

          ORDER GRANTING MOTION TO DISMISS RE: DKT. NO. 58

          YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE

         Plaintiffs John Edward Robinson and Janice Walsh bring this action pro se[1] against defendant Wells Fargo Bank, N.A. (erroneously sued separately as “Wells Fargo Home Mortgage” and “Americas' Servicing Company”) in relation to allegedly wrongful foreclosure actions on plaintiffs' home located at 2106 Bridgeport Loop, Discovery Bay, County of Contra Costa (the “Subject Property”). (Dkt. No. 54, “FAC.”) The Court previously dismissed plaintiffs' claims both on statute of limitations grounds and because plaintiffs failed to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).[2] Plaintiffs filed an amended complaint on January 4, 2017, raising the following causes of action: (i) Count One, breach of the implied duty of good faith and fair dealing; (ii) Count Two, breach of written contract; (iii) Count Three, fraudulent concealment; (iv) Count Four, fraud and negligent misrepresentation; and (v) Count Five, fraud by concealment.

         Now before the Court is Wells Fargo's motion to dismiss plaintiffs' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 58.)[3] Having carefully reviewed the pleadings and the papers submitted on this motion, [4] the Court Grants Wells Fargo's motion as follows: The Court Dismisses with Prejudice Counts One, Two, and Five, and Count Three to the extent that it relies on allegations relating to the origination of the loan agreement and the terms therein. The Court Dismisses without Prejudice Count Three to the extent it relates to plaintiffs' loan modification attempts and Count Four.[5]

         I. Factual Allegations and Summary of Judicially Noticeable Facts

         This action concerns a loan for $448, 000 executed in October 2004 between plaintiff and Wells Fargo's predecessor, World Savings Bank. (RJN Exs. A.) Such loan was issued to secure a Deed of Trust on the Subject Property. (RJN Ex. B.) Additionally, on January 6, 2006, plaintiffs obtained a $33, 600 equity line of credit from World Savings Bank. (RJN Exs. C & D.)

         On June 17, 2011, Wells Fargo and plaintiffs entered into a loan modification agreement, altering the terms of the October 2004 loan, purportedly due to plaintiffs' financial hardships. (RJN Ex. J.) Plaintiffs defaulted on such loan, and on December 30, 2015, Wells Fargo recorded a Notice of Default, informing plaintiffs that as of December 29, 2015, a sum of $67, 730.73 was overdue. (RJN Ex. K.) On April 29, 2016, CCR, as the trustee, recorded a Notice of Trustee's Sale on the Subject Property, notifying plaintiffs that a sale would occur on June 8, 2016. (RJN Ex. M.) As of the FAC, it does not appear that such sale has been perfected. (See FAC ¶ 19 (alleging that plaintiffs are facing the “imminent loss of their home through foreclosure”).)

         The following allegations relate to plaintiffs' claims that certain aspects of the loan and Wells Fargo's recording of a Notice of Default and Notice of Sale were improper:

         Plaintiffs allege that they have brought this action because of Wells Fargo's “unlawful conduct with respect to the servicing” of the loan, which it has serviced since January 2005. (Id. at ¶ 7.) Specifically, plaintiffs allege that from January 2005 to December 2014, plaintiffs have paid $4, 352.46 in late fees and $5, 706.82 in service fees, which they argue Wells Fargo did not have a right to collect under the loan agreement. (Id. at ¶ 54.) Due to this and other issues involving interest payments under the “Pick-A-Payment” loan entered into by plaintiffs, plaintiffs allege that their loan amount has ballooned to $561, 000, an amount larger than their original loan. (Id. at ¶ 66.) On such bases, plaintiffs allege that defendants have “failed to follow the terms set forth in the” agreements and have “breached these agreements by accepting monthly payments, ” which include unauthorized fees. (Id. at ¶¶ 101-02, 107-08, 116, 134-37.)

         Additionally, plaintiffs allege that Wells Fargo fraudulently induced them into defaulting on their loans to apply for a loan modification. (Id. at ¶¶ 117-20; 123-32.) Plaintiffs allege that during their 2013 loan modification application, a Wells Fargo employee, Javier Mateo, informed them that a loan modification would be in their “best interest” but that their status as being “current” on their loans would “indicate or suggest that their current monthly payment was affordable.” (Id. at ¶ 14.) Plaintiffs allege that they applied for such a loan modification, which was subsequently denied in February 2014. (Id. at ¶ 17.)

         II. Discussion

         A. Claim Preclusion Stemming from Prior Class Action Settlement

         Wells Fargo argues that several of plaintiffs' allegations relate to the terms of the loan agreements between plaintiffs and Wells Fargo, and, as such, are barred by the doctrine of claim preclusion, previously referred to as res judicata, because such claims were the subject of a class action settlement. (RJN, Ex. W.) In particular, Wells Fargo argues that Claims One through Three and Five specifically complain about the concealment of certain terms set forth in the loan service agreement and related documents, which were the subject of a class action settlement finalized on May 17, 2011. (FAC ¶¶ 99-102; 106-08; 116; 134-37.)

         1. Legal Framework

         The doctrine of claim preclusion operates to bar litigation in a subsequent action where a plaintiff raised, or could have raised, the same claims in a prior action that resulted in a final judgment on the merits. See Garity v. APWU Nat'l Labor Org., 828 F.3d 848, 854-55 (9th Cir. 2016) (claim preclusion, or res judicata, applies where there is an identity of claims, final judgment on the merits, and identity or privity between the parties); W. Radio Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997); Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001). “A court-approved class action settlement bars new claims by members of the class that were released as part of that settlement. Otherwise, ‘restricting the [preclusive] effect of class action settlement would lessen a defendant's incentive to settle.'” Adams v. Wells Fargo Bank, N.A., No. 13-CV-5164-YGR, 2015 WL 1434599, at *2 (N.D. Cal. Mar. 30, 2015) (quoting Durkin v. Shea & Gould, 92 F.3d 1510, 1518 (9th Cir. 1996)); see also TBK Partners, Ltd. v. W. Union Corp., 675 F.2d 456, 460 (2d Cir. 1982) (“[I]n order to achieve a comprehensive settlement that would ...


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