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Feathers v. Bank of America, N.A.

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

July 19, 2017

BANK OF AMERICA, N.A., et al., Defendants.


          EDWARD J. DAVILA United States District Judge.


         Plaintiff Mark Feathers (“Plaintiff”) brings this action against Bank of America, N.A., “Wells Fargo Bank through its wholly owned subsidiary Wells Fargo Home Mortgage, ” and NBS Default Services, LLC (collectively “Defendants”) for alleged irregularities in the processing and servicing of the loan he obtained to purchase a home in Los Altos, California.

         Defendant Bank of America, N.A., and Wells Fargo Bank, N.A. (wrongly sued as Wells Fargo Bank Through Its Wholly Owned Subsidiary Wells Fargo Home Mortgage) filed a Motion to Dismiss, and Defendant NBS Default Services, LLC filed a Joinder to the Motion to Dismiss. The Court finds it appropriate to take the motion under submission for decision without oral argument pursuant to Civil Local Rule 7-1(b). Having considered the Defendants' Motion, Plaintiff's Reply and Defendants' Reply briefs, and for the reasons set forth below, the Court grants in part and denies in part Defendants' Motion to Dismiss.


         On or about February 27, 2006, Plaintiff Mark Feathers (“Plaintiff”) and non-party Natalie Feathers executed a Deed of Trust secured by a promissory note for $1.875 million dollars in favor of Wells Fargo Bank, N.A. in order to purchase certain real property located in Los Altos, California. See “Addenda to Amended Complaint, ” Docket Item No. 16, at Ex. A. Plaintiff alleges in a “Verified Amended Complaint for Damages” (“Amended Complaint”) that he stopped making payments required by the Deed of Trust in July, 2012, after his business was placed into receivership and he and his spouse lost their income.

         The receivership referenced by Plaintiff was ordered as part of another action pending in this Court, Securities and Exchange Commission v. Small Business Capital Corp., Case No. 5:12-cv-03237-EJD (the “SEC Action”), in which Plaintiff was named as a defendant. The stipulated order appointing the receiver, filed on July 10, 2012, included the following provision imposing an injunction (“the SEC Injunction”), among others:

IT IS FURTHER ORDERED that, except by leave of this Court, during the pendency of this receivership, all clients, investors, trust beneficiaries, note holders, creditors, claimants, lessors and all other persons or entities seeking relief of any kind, in law or in equity, from [Plaintiff] . . . and all persons acting on behalf of any such investor, trust beneficiary, note holder, creditor, claimant, lessor, consultant group or other person, including sheriffs, marshals, servants, agents, employees and attorneys, are hereby restrained and enjoined from, directly or indirectly, with respect to these persons and entities. . . commencing, prosecuting, continuing or enforcing any suit or proceeding (other than the present action by the Commission or any other action by the government) against any of them. . . .

         Plaintiff alleges that Wells Fargo sold his loan to Bank of America after its origination, but still services the loan on behalf of Bank of America. Plaintiff alleges that he has applied to Wells Fargo several times for a loan modification, but has been unsuccessful. Plaintiff attributes this lack of progress to Wells Fargo's internal operations, which he alleges resulted in an ever-changing list of loan representatives assigned to his account.

         A Notice of Trustee's Sale was recorded against the Los Altos property on December 30, 2015, which notified Plaintiff that a trustee's sale was scheduled for January 21, 2016. See Amended Complaint, Ex. 1. Plaintiff initiated this action against Defendants, the alleged current noteholder, loan servicer and trustee and asserts sixteen causes of action. Under the current state of the pleadings, federal jurisdiction arises pursuant to 28 U.S.C. § 1331.[1]


         A motion to dismiss under Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of claims alleged in the complaint. Parks Sch. of Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Dismissal “is proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The 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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

         Pro se pleadings must be construed liberally. Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). The Court “need not give a plaintiff the benefit of every conceivable doubt” but “is required only to draw every reasonable or warranted factual inference in the plaintiff's favor.” McKinney v. De Bord, 507 F.2d 501, 504 (9th Cir. 1974). The Court “should use common sense in interpreting the frequently diffuse pleadings of pro se complainants.” Id. A pro se complaint should not be dismissed unless the court finds it “beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Haines v. Kerner, 404 U.S. 519, 521 (1972).


         A. First Cause of Action for Violation of Injunction

         In the First Cause of Action, Plaintiff alleges that Defendants violated the SEC Injunction which, as detailed above, contained a provision restraining Plaintiff's creditors from pursuing claims during the pendency of the receivership. Defendants contend that Plaintiff lacks standing to assert the First Cause of Action.

         Standing to sue is a doctrine rooted in the Constitution that limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong. Spokeo, Inc. v. Robins, 578 U.S. ___ (2016). There are three requirements for standing. Specifically, a plaintiff must allege: (1) that he suffered an injury in fact; (2) that the injury is fairly traceable to the challenged conduct of the defendant(s); and (3) that the injury is likely to be redressed by a favorable judicial decision. Id.

         Plaintiff does not satisfy the requirements for standing to assert a claim for violation of the SEC Injunction. As the Court previously observed in the context of Plaintiff's request for injunctive relief, the purpose of the SEC Injunction was to preserve assets for the benefit of the injured investors, and not to protect Plaintiff. Thus, even assuming -without actually finding - that Defendants' actions violated the SEC Injunction, the investors, and not Plaintiff, were the injured parties with standing to seek redress. Therefore, the First Cause of Action is dismissed with prejudice.

         B. Second Cause of Action for Violation of the Homeowner's Bill of Rights

         In Plaintiff's Second Cause of Action, Plaintiff alleges that Defendants violated the Homeowner's Bill of Rights, citing to Cal. Civil Code §§2923.6(c) and 2923.7(a), (b)(1), (2) and (3), by proceeding with a trustee's sale while his application for a loan modification was pending; failing to provide a single point of contact and to provide one or more direct means of communications with the single point of contact; failing to provide current and timely information; and engaging in dual tracking. Plaintiff seeks damages, injunctive relief and attorney's fees and costs pursuant to Cal. Civil Code §2924. Defendants contend that Plaintiff has failed to state sufficient facts to support a claim under the Homeowner's Bill of Rights.

         California Civil Code Section 2923.6(c), which provides protection against “dual tracking, ” states as follows:

If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower's mortgage servicer, a mortgage service, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee's sale, while the complete first lien loan modification application is pending.

         Plaintiff alleges in his complaint that he submitted a “Making Home Affordable Program” application (“HAMP”) in November of 2013 (Am. Compl., ¶16); that “Wells Fargo corresponded with [Plaintiff] ‘acknowledging documentation supporting your request for mortgage assistance' was received, ...

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