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Wyman v. First American Title Insurance Co.

United States District Court, N.D. California

April 27, 2017

FIRST AMERICAN TITLE INSURANCE COMPANY, WELLS FARGO BANK, N.A., as Trustee for Wells Fargo Asset Securities Corporation, Mortgage-Pass Through Certificates, Series 2006-AR18, WELLS FARGO BANK, N.A., and DOES 1 through 35, inclusive, Defendants.




         In this wrongful foreclosure action, a bank defendant moves to dismiss all claims asserted against it in pro se plaintiffs' amended complaint. For the reasons stated below, the motion is Granted.


         In 2006, pro se plaintiffs Joseph Wyman and Lisa Wyman recorded a mortgage loan in the amount of $704, 000 from defendant Wells Fargo Bank secured by a deed of trust on real property in Oakland (RJN, Exhs. A, B). The deed as recorded identified Wells Fargo as the beneficiary, third-party Fidelity National Title Insurance Company as the trustee, and plaintiffs as the borrowers (RJN, Exh. B).

         In April 2011, Wells Fargo recorded an assignment of the deed of trust to transfer and convey the beneficial interest in the residence to third-party HSBC Bank USA, N.A., in its capacity as trustee of a securitized trust. Wells Fargo remained the servicing agent (RJN, Exh. C).

         In 2012, Wells Fargo recorded a modification to plaintiffs' loan (RJN, Exh. D). On May 17, 2016, Wells Fargo recorded a substitution of trustee that changed the trustee for the loan from Fidelity to First American Title Insurance Company (RJN, Exh. E). On May 20, 2016, a notice of default was recorded, the rescission of which was recorded shortly after (RJN, Exhs. F, G).

         On November 17, 2016, Wells Fargo recorded a substitution of trustee, substituting Clear Recon Corporation for First American (RJN, Exh. H). On the same day, Clear Recon, in its capacity as the appointed substituted trustee, recorded a new notice of default noting plaintiffs' default on the loan in the amount of $45, 791.84 as of November 14, 2016 (RJN, Exh. I).

         To date, no trustee's sale has occurred. Plaintiffs have not indicated that they are ready to tender the unpaid portion of the loan.

         In November 2016, before Wells Fargo substituted Clear Recon as trustee (but after First American rescinded the first notice of default), plaintiffs commenced this action in Alameda County Superior Court. Plaintiffs' theory was and remains that Wells Fargo lacks beneficial interest in the deed. In December 2016, defendant Wells Fargo removed the action to federal court here in San Francisco based on diversity jurisdiction (Dkt. No. 1). Following oral argument, this Court granted Wells Fargo's motion to dismiss, holding that plaintiffs lacked standing to challenge Wells Fargo's right to foreclose and that plaintiffs' claims are moot. The Court allowed plaintiffs to amend the complaint, requesting a redlined copy to highlight the changes (Dkt. No. 26). Plaintiffs filed their first amended complaint, but failed to provide the requested redlined copy (Dkt. No. 28).

         Wells Fargo now moves to dismiss the amended complaint (Dkt. No. 29). This order follows full briefing and oral argument.


         Plaintiffs seek to rescind “the loan and all accompanying loan documents” and to permanently prevent the foreclosure of the subject property by challenging Well Fargo's standing to foreclose (Amd. Compl. ¶¶ 50-52, 148, 164). In addition, plaintiffs assert claims for predatory lending, violations of the Homeowner's Bill of Rights and the Business and Professions Code Section 17200 for unfair, unlawful and fraudulent business practices, constructive fraud, fraud in concealment and fraud in the inducement all relating to Wells Fargo's alleged securitization of the loan. In their initial complaint, plaintiffs' anchored their claims in the allegation that the March 2011 assignment of the deed of trust to HSBC Bank was unlawfully recorded so that it therefore was “void and of no force and effect, ” that the May 2016 substitution of trustee from Fidelity to First American was void, and that the May 2016 notice of default was “unlawfully recorded” (Compl. ¶¶ 13-16). In their amended complaint, plaintiffs shift gears and contend that the gravamen of their claim to set aside any notice of trustee's sale is predicated on the alleged violation of the California Homeowner Bill of Rights (Amd. Compl. ¶ 3).

         To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim is facially plausible when there are sufficient factual allegations to draw a reasonable inference that the defendant is liable for the conduct alleged. While a court “must take all of the factual allegations in the complaint as true, ” it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Id. at 1949-50 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)) (internal quotation marks omitted). “[C]onclusory allegations of law and ...

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