United States District Court, E.D. California
Ray Palma attempted to modify the terms of the mortgage loan
he had with his lender to prevent losing his home. He did not
succeed and then brought suit against defendants, alleging
they acted improperly during the loan modification
application process, and as a result, he now faces
foreclosure. This matter is before the court on
defendants' motion to dismiss Mr. Palma's First
Amended Complaint. Mot., ECF No. 19. Mr. Palma opposed the
motion, Opp'n, ECF No. 24, and defendants replied, Reply,
ECF No. 30. At hearing, Stanley Berman appeared for Mr. Palma
and Bryan Hawkins appeared for defendants. ECF No. 32. As
discussed below, defendants' motion is DENIED IN PART and
GRANTED IN PART.
February 22, 2016, Mr. Palma filed suit in the Superior Court
for the County of Sacramento. ECF No. 2. After defendants
removed the case to this court, id, Mr. Palma filed
the operative First Amended Complaint, FAC, ECF No. 16,
naming as defendants Select Portfolio Services, Inc. (SPS)
and National Default Servicing Corporation (National
Default), Wells Fargo Bank (Wells Fargo).
Palma alleges defendants (1) violated California Civil Code
§ 2923.6 (prohibiting "dual tracking"); (2)
violated California Civil Code § 2923.7 (requiring a
"single point of contact"); (3) were negligent in
servicing Mr. Palma's loan modification application; and
(4) violated California Business and Professions Code §
17200, et seq., by engaging in unfair business
practices. FAC ¶¶ 27-56. Mr. Palma also files
claims to (5) quiet title on the subject Property,
id. ¶¶ 57-62, and (6) to cancel the
trustee's deed upon sale on the subject Property,
id. ¶¶ 63-68.
Palma lives on Riding Trail Drive in the County of Sacramento
(the "Property"). FAC ¶ 1. On or about July
18, 2006, he refinanced his home, and as evidence of this
loan, executed a promissory note and a deed of trust as
security for the note. Id. ¶ 17. The deed of
trust was recorded in the "Official Records" of the
Sacramento County Recorder's Office. Id. The
named trustee in the deed of trust was "American General
Financial Services, " and the named lender in the deed
of trust was "Countrywide Financial Corporation."
Id. SPS was the servicer of Mr. Palma's loan,
Wells Fargo was the beneficiary, and National Default was the
foreclosure trustee. Id. ¶ 19.
2013, Mr. Palma found himself in financial distress.
Id. ¶ 20. As a result, he submitted a complete
first lien loan modification application to SPS in or about
October 2013. Id. ¶ 21. SPS remained in contact
with Mr. Palma to service his loan modification application
by informing him of the supplemental documents needed to
review the application. Id. ¶ 24. However, when
Mr. Palma contacted SPS to inquire about the status of the
loan modification application, Mr. Palma did not speak with
the same person, or team of persons, as to the
application's status. Id. ¶ 38.
April 1, 2014, without issuing a written letter either
approving or denying Mr. Palma's loan modification
application, defendants recorded a Notice of Default (NOD)
against the Property. Id. ¶ 21. Defendants then
recorded a Notice of Trustee's Sale on November 12, 2014.
Id. ¶ 22. On or about September 2, 2015,
defendants foreclosed on the Property. Id. ¶23.
foreclosure auction, after nobody appeared to purchase the
Property, the Property reverted to the loan's
beneficiary, Wells Fargo, and a Trustee's Deed upon Sale
was recorded. Id. Mr. Palma alleges Wells Fargo then
"moved" to evict him, but does not clarify how.
Id. ¶ 25. In any event, Mr. Palma alleges he
now faces the loss of possession of the Property, which he
considers his home. Id.
Palma alleges, because of defendants' conduct, he did not
get the benefit of a permanent modification and his loan
balance has increased with arrears, penalties, and fees.
Id. ¶ 26.
request the court take judicial notice of Mr. Palma's
Complaint, First Amended Complaint, and Summons filed in
Ray Palma v. Bank of America, N.A., et al, No. 34-
2015-00180154 (Cal. Super. Ct. Sacramento filed June 5,
2015). Defs.' Req. J. Notice (RJN), ECF No. 20. In the
state case, Mr. Palma filed suit against Bank of America and
SPS. See Defs.' RJN Ex. A at 4 (Complaint), ECF
No. 20-1. On February 2, 2016, the state court dismissed Mr.
Palma's suit against SPS with prejudice. Ray Palma v.
Bank of America, N.A., et al, No. 34-2015-00180154 (Dkt.
Nos. 33-36), and Mr. Palma has otherwise requested dismissal
of the entire state suit. Id. (Dkt. No. 47).
also request the court judicially notice the following
statements made in Mr. Palma's state court complaint:
• On or about November 27, 2012, SPS offered Plaintiff a
loan modification with respect to the Loan. State Court
Compl. ¶ 11.
• On or about March 3, 2014, SPS contacted Plaintiff and
informed him that he prequalified for a repayment plan that
would enable him to become current on the Loan. SPS's
approval of the repayment was contingent upon Plaintiff
submitting certain financial-related documents. Id.
• On or about September 2014, SPS informed Plaintiff
that his repayment plan was being dissolved and that
Plaintiff would instead be reviewed for another loan
modification. Plaintiff submitted the necessary documents in
order to be reviewed for SPS' proposed loan modification.
Id. ¶ 24.
• On or about October 21, 2014, SPS advised Plaintiff
that it had not received the documentation needed for SPS to
review Plaintiff for its proposed loan modification. Id.
• On or about November 7, 2014, Plaintiff resent all of
the documentation needed for SPS to review Plaintiff for its
proposed loan modification. Id. ¶ 26.
• On or about November 11, 2014, SPS denied Plaintiffs
request for a loan modification without providing a reason.
Id. ¶ 27.
Defs.' RJN Ex. A at 4-8; Mot. at 8.
court generally confines itself to the four corners of a
complaint in ruling on a Rule 12(b)(6) motion. See Swartz
v. KPMGLLP, 476 F.3d 756, 763 (9th Cir. 2007) ("[A]
court may generally consider only allegations contained in
the pleadings."). However, the court can consider
documents incorporated into the complaint by reference, as
well as any relevant matters subject to judicial notice.
Perkins v. Linked In Corp., 53 F.Supp.3d 1190,
1203-04 (N.D. Cal. 2014). A court may take judicial notice of
an adjudicative fact if requested by a party and
"supplied with the necessary information."
"may take judicial notice of matters of public record,
including duly recorded documents, and court records
available to the public through the PACER
system via the internet." Peviani v.
Hostess Brands, Inc., 750 F.Supp.2d 1111, 1116 (CD. Cal.
2010) (citing C.B. v. Sonora Sch. Dist., 691
F.Supp.2d 1123, 1138 (E.D. Cal. 2009) (internal citations
omitted)). Documents are judicially noticeable, however, only
for the purpose of determining what statements are contained
therein, not to prove the truth of the contents or any
party's assertion of what the contents mean. United
States v. S. Cal. Edison Co., 300 F.Supp.2d 964, 975
(E.D. Cal. 2004).
party requests judicial notice of the existence of certain
statements, and not the accuracy of such statements, judicial
notice of the statements' existence is appropriate.
In re Seracare Life Scis., Inc., No. 05-2335, 2007
WL 935583, at *3 (S.D. Cal. Mar. 19, 2007). To the extent
defendants seek judicial notice of the veracity or
authenticity of any arguments or conclusions of fact or law
contained in documents, the request should be denied. See
S. Cal. Edison Co., 300 F.Supp.2d at 976 (judicially
noticing the existence of a document entitled "Forest
Service Handbook" but not conclusions of fact or law
to the extent defendants seek judicial notice of the veracity
or authenticity of any arguments or conclusions of fact or
law contained in the state court documents, the request is
denied. See Id. However, the fact that the state
court complaint, First Amended Complaint and summons exist,
and that plaintiff made certain statements in the complaint,
can and will be judicially noticed. See id.
may move to dismiss for "failure to state a claim upon
which relief can be granted." Fed.R.Civ.P. 12(b)(6). The
motion may be granted only if the complaint lacks a
"cognizable legal theory" or if its factual
allegations do not support a cognizable legal theory.
Hartmann v. Cal. Dep 't o/Corr. & Rehab.,
707 F.3d 1114, 1122 (9th Cir. 2013). The court assumes these
factual allegations are true and draws reasonable inferences
from them. Ashcroft v. Iqbal, 556 U.S. 662, 678
complaint need contain only a "short and plain statement
of the claim showing that the pleader is entitled to relief,
" Fed.R.Civ.P. 8(a)(2), not "detailed factual
allegations, " BellAtl. Corp. v. Twombly, 550
U.S. 544, 555 (2007). But this rule demands more than
unadorned accusations; "sufficient factual matter"
must make the claim at least plausible. Iqbal, 556
U.S. at 678. Accordingly, conclusory or formulaic recitations
of a cause's elements do not alone suffice. Id.
(quoting Twombly, 550 U.S. at 555).
under Rule 12(b)(6) is a context-specific task drawing on
"judicial experience and common sense."
Id. at 679. Aside from the complaint, and
information judicially noticed, district courts have
discretion to examine documents incorporated by reference.
Davis v. HSBC Bank Nevada, N.A.,691 F.3d 1152, 1160
(9th Cir. 2012); W. Radio Servs. Co. v. Qwest Corp.,678 F.3d 970, 976 (9th Cir. 2012). The court need not accept
as true allegations that contradict matters properly ...