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Laconico v. Cal-Western Reconveyance Corp.

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

July 6, 2017



          BETH LABSON FREEMAN United States District Judge

         Plaintiff Purisima Laconico (“Laconico”) brings various causes of action against Wells Fargo, N.A. (“Wells Fargo”), World Savings Bank (“WSB”), and Cal-Western Reconveyance Corporation (“Cal-Western”). Laconico alleges that the defendants failed to deal with her and her mortgage fairly, and failed to follow the proper procedures when conducting a non-judicial foreclosure sale of Laconico's home. See generally Ex. A to Notice of Removal (“Compl.”), ¶¶ 50-52, 89, 42-44, 81, 121-122, ECF 1. Before the Court is Wells Fargo's unopposed motion to dismiss Laconico's complaint. Mot. to Dismiss (“MTD”), ECF 7. Pursuant to Civ. L.R. 7-1(b), the Court finds Wells Fargo's motion to dismiss suitable for submission without oral argument and hereby VACATES the hearing scheduled for July 27, 2017. For reasons discussed below, the Court GRANTS Wells Fargo's motion to dismiss.

         I. BACKGROUND

         Laconico filed the instant action (“Current Action”), in Santa Clara Superior Court on December 30, 2016. See generally, Compl. Laconico names as defendants: Cal-Western Conveyance Corporation, Wells Fargo Bank, N.A., and World Savings Bank, FSB. Id.

         Wells Fargo removed this case to this Court on February 10, 2017. See generally, Notice of Removal, ECF 1.

         The complaint concerns real property located at 875 Plaza Drive, San Jose, CA 95125 (“Property”). Compl. ¶ 8. In September 2006, Laconico obtained a loan for $925, 000 (“Loan”) from World Savings Bank, FSB. See Ex. F to Request for Judicial Notice (“RJN”), (“Deed”), ECF 8. The loan was for the purchase of, and was secured by, the Property. WSB memorialized and secured the loan with a promissory note and a deed of trust. Deed; Ex. G to RJN (“Note”). The Deed states that “World Savings Bank, FSB, its successors and assignees” are the Loan's beneficiaries. Deed 1-2. Similarly, the Note specifies that “World Savings Bank, FSB, a federal savings bank, its successors and assignees” are the Loan's lenders. Note 1.

         Laconico went into default on the Loan in October of 2008. See Ex. H to Request for Judicial Notice (Notice of default references failure to make October 15, 2008 payment). Since 2009, Laconico has filed twenty-five bankruptcy actions. Ex. J to RJN. Every action was dismissed for failure to file the schedules necessary for the bankruptcy to proceed. Id. Because Laconico remained in default, Wells Fargo recorded a notice of default of March 12, 2010, and a notice of sale on November 10, 2014. Exs. H and I to RJN.

         Laconico's claims can be summarized as the following. First, she claims that the process of securitization destroyed defendants' right to foreclose her home. See Compl. ¶¶ 29, 42-44, 49, 73, 81, 104, 114, 121-122, 140. Second, she claims that Defendants fraudulently misled her about her mortgage, Compl. ¶¶ 50-52, 89, and that Defendants' attempted foreclosure is not procedurally sound, Compl. ¶¶ 16-18, 25, 26, 28, 70-71. Laconico asserts eleven causes of action based on these claims: (1) “Homeowner's Bill of Rights, ” (2) “violation of California Business and Professions Code Sections 17200 Et Seq, ” (3) “Negligence, ” (4) “Declaratory Relief, ” (5) “Fraud in the Concealment, ” (6) “Intentional Infliction of Emotional Distress, ” (7) “slander of tile, ” (8) “quiet title, ” (9) “recession, ” (10) “injunctive relief, ” (11) “predatory lending practices.” See generally Compl.

         All the named defendants besides Wells Fargo are defunct organizations. In 2006, when Laconico obtained her mortgage, WSB was a federal savings bank overseen by the Office of Thrift Supervision (“OTS”). See Exs. A and C to RJN. WSB changed its name to Wachovia Mortgage, FSB on December 31 2007, Ex. B to RJN, but remained chartered under the Homeowner's Loan Act (HOLA) and overseen by the OTS. Ex. C to RJN. On November 1, 2009, Wachovia Mortgage later merged and became part of Wells Fargo Bank, N.A. Ex. D to RJN. As to Cal-Western Conveyance, it petitioned for bankruptcy on June 25, 2013 and has filed a notice of bankruptcy in the instant action. Notice of Bankruptcy and Permanent Injunction 2, ECF 3. On December 19, 2013, the Bankruptcy Court for the District of Delaware permanently enjoined all but a small subset of claims against Cal-Western. Id.

         A. The Prior Action

         The Court also recounts a prior suit filed by Laconico concerning the Property because it will be relevant to Wells Fargo's motion to dismiss. Laconico filed suit against Wells Fargo Home Mortgage in state court on April 13, 2015. Ex. A to Notice of Removal (“Prior Action Compl.”), Laconico v. Wells Fargo Home Mortgage (“Prior Action”), No. 5:15-cv-02364-EJD (N.D. Cal. May 27, 2017), ECF 1. In that case, Laconico's complaint made three main claims. The first was that Wells Fargo Home Mortgage had intentionally misled her about the costs of her mortgage. See Prior Action Compl. ¶¶ 28-35, 82, 128, 162, 196, 212. The second was that Wells Fargo Home Mortgage could not foreclose her property because it lacked the original note or deed of trust since the Loan was converted into a mortgage-backed security. See Prior Action Compl. ¶¶ 26, 46, 49-53, 60, 93-94, 104-07, 124, 144, 172. Finally, Laconico claimed that Wells Fargo Home Mortgage failed to properly follow California's non-judicial foreclosure procedure. See Prior Action Compl. ¶¶ 12, 17, 61. Based on these claims, Laconico brought ten causes of action: (1) “declaratory relief, ” (2) “fraud, ” (3) “Tortious Violation of Statute, ” (4) “quiet title, ” (5) “reformation, ” (6) “violations of business and profesions [sic] code §17200, ” (7) “violation of CA Civ. Code §2923.6, ” (8) “violation of CA Civ. Code §1788.17, ” (9) “violation of CA Civ. Code §1572, ” and (10) “injunctive relief.” See generally Prior Action Compl. On May 27, 2015, the defendant timely removed the case to the Northern District of California where the Prior Action was assigned Case Number No. 5:15-cv-02364-EJD. Notice of Removal, Prior Action, ECF 1. On September 23, 2015, the Court dismissed the Prior Action with prejudice for failure to prosecute under Federal Civil Procedure Rule 41. Ex. I to RJN (“41(b) dismissal”).


         Wells Fargo is a citizen of South Dakota. Notice of Removal, 3, ECF 1. Since WSB is a predecessor of Wachovia Mortgage, which eventually merged into Wells Fargo, the Court need not consider its citizenship. Exs. C and D to RJN; e.g., Breitman v. May Co. California, 37 F.3d 562, 564 (9th Cir. 1994) (noting that divisions of corporations lack “the formal separateness” to be relevant to citizenship determination for diversity jurisdiction). Wells Fargo acknowledges that Cal-Western is a citizen of California. Notice of Removal, 2, ECF 1. However, Wells Fargo argues that this Court may still exercise jurisdiction over this matter because Cal-Western is fraudulently joined. Notice of Removal, 4.

         Wells Fargo provides three arguments in support of finding fraudulent joinder. Wells Fargo first argues that many other courts have found Cal-Western to be fraudulently joined under similar circumstances. Notice of Removal 4:10-17. Wells Fargo then avers that because Cal-Western is merely a former trustee of Laconico's mortgage, it does not bear a close enough relationship to the controversy to be a proper plaintiff. Id. at 4:17-20. Wells Fargo also argues that all of Laconico's claims against Cal-Western ...

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