United States District Court, N.D. California
MANUEL A. JUDAN, et al., Plaintiffs,
WELLS FARGO BANK, NATIONAL ASSOCIATION, AS LENDER, et al., Defendants.
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS FIRST AMENDED
HAYWOOD S. GILLIAM, JR.United States District Judge
case was originally filed in state court on September 30,
2015, and was removed to federal court on November 2, 2015.
Dkt. No. 1 at 2. Plaintiffs Manuel A. Judan and Marylyn
Callejo-Judan filed their first amended complaint on August
22, 2016. Dkt. No. 27 (“FAC”). On September 13,
2016, Defendant Wells Fargo Bank, N.A. filed a motion to
dismiss. Dkt. No. 30 (“Mot.”). On September 27,
2016, Plaintiffs opposed the motion. Dkt. No. 34
(“Opp.”). On October 4, 2016, Defendant replied.
Dkt. No. 35 (“Reply”). On November 17, 2016, the
Court heard arguments regarding the motion. Dkt. No. 39. Upon
careful consideration, the Court GRANTS in part and DENIES in
part the motion to dismiss.
FOR JUDICIAL NOTICE
Court first addresses Defendant's requests for judicial
notice because they are relevant to the facts of the case. On
September 14, 2016, Defendant filed an amended request for
judicial notice, Dkt. No. 32 (“RJN”), which
Plaintiffs opposed on September 27, 2016, Dkt. No. 34-2
(“RJN Opp.”). On October 7, 2016, Defendant filed
a supplemental request for judicial notice. Dkt. No. 36
a district court may not consider any material beyond the
pleadings in ruling on a Rule 12(b)(6) motion.” Hal
Roach Studios, Inc. v. Richard Feiner & Co., 896
F.2d 1542, 1555 n.19 (9th Cir. 1989). “A court may,
however, consider certain materials-documents attached to the
complaint, documents incorporated by reference in the
complaint, or matters of judicial notice-without converting
the motion to dismiss into a motion for summary
judgment.” United States v. Ritchie, 342 F.3d
903, 908 (9th Cir. 2003). Courts may take judicial notice of
facts outside the pleadings on a motion to dismiss. Mack
v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th
Cir. 1986), abrogated on other grounds by Astoria Fed.
Sav. & Loan Ass'n v. Solimino, 501 U.S. 104
(1991). Federal Rule of Evidence 201 allows a court to take
judicial notice of a fact that is “not subject to
reasonable dispute because it: (1) is generally known within
the trial court's jurisdiction; or (2) can be accurately
and readily determined from sources whose accuracy cannot
reasonably be questioned.” A court may judicially
notice “matters of public record outside the
pleadings.” See Mir v. Little Co. of Mary
Hosp., 844 F.2d 646, 649 (9th Cir. 1988) (internal
quotation marks omitted). Furthermore, under the
“incorporation by reference” doctrine, a court
may “take into account documents ‘whose contents
are alleged in a complaint and whose authenticity no party
questions, but which are not physically attached to the
[plaintiff's] pleading.'” Knievel v.
ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). The Ninth
Circuit has extended the doctrine to “situations in
which the plaintiff's claim depends on the contents of a
document, the defendant attaches the document to its motion
to dismiss, and the parties do not dispute the authenticity
of the document, even though the plaintiff does not
explicitly allege the contents of that document in the
requests judicial notice of five documents related to its
corporate status: (1) the Certificate of Corporate Existence,
issued by the Department of Treasury's Office of Thrift
Supervision (“OTS”), certifying that World
Savings Bank, FSB is a federal savings bank, RJN, Ex. A; (2)
a letter from OTS dated November 19, 2007, approving the
request to amend the bank's charter and bylaws to change
its name to Wachovia Mortgage, FSB, id., Ex. B; (3)
the Charter of Wachovia Mortgage, FSB, dated December 31,
2007, reflecting in Section 4 that it is subject to the Home
Owners' Loan Act (“HOLA”) and the orders of
OTS, id., Ex. C; (4) Official Certification of the
Comptroller of the Currency (“OCC”), stating that
effective November 1, 2009, Wachovia Mortgage, FSB converted
to Wells Fargo Bank Southwest, N.A., which then merged with
and into Wells Fargo Bank, N.A., RJN, Ex. D; and (5) a
printout from the Federal Deposit Insurance Corporation
(“FDIC”) website dated December 15, 2010, showing
the history of Wachovia Mortgage, FSB; id., Ex. E.
The Court finds these five documents are properly subject to
judicial notice. Plaintiffs do not dispute the authenticity
of these documents, which are also capable of accurate and
ready determination from sources whose accuracy cannot
reasonably be questioned. See Rule 201(b)(2);
Paralyzed Veterans of Am. v. McPherson, 2008 U.S.
Dist. LEXIS 69542, at *17-18 (N.D. Cal. Sept. 8, 2008)
(taking judicial notice of information on official government
websites); Ibarra v. Loan City, No. 09-CV-02228-IEG
POR, 2010 WL 415284, at *3 (S.D. Cal. Jan. 27, 2010) (taking
judicial notice of documents related to defendant's
status as an operating subsidiary of a federal savings
association); Gens v. Wachovia Mortg. Corp., No.
CV10-01073 JF (HRL), 2010 WL 1924777, at *2 & n.4 (N.D.
Cal. May 12, 2010) (taking judicial notice of a letter issued
by OTS confirming World Savings' request to change its
name to Wachovia); Biggins v. Wells Fargo & Co.,
266 F.R.D. 399, 408 (N.D. Cal. 2009) (taking judicial notice
of an order from OTS as the order is available on the OTS
website and plaintiffs do not dispute its authenticity);
Hammons v. Wells Fargo Bank, N.A., No.
15-CV-04897-RS, 2015 WL 9258092, at *4 (N.D. Cal. Dec. 18,
2015) (taking judicial notice of nearly identical documents,
including bank charter); Hines v. Wells Fargo Home
Mortgage, Inc., No. 14-CV-01386 JAM KJN, 2014 WL
5325470, at *3 (E.D. Cal. Oct. 17, 2014) (taking judicial
notice of similar documents).
Defendant seeks judicial notice of the following real estate
documents: (1) Deed of Trust dated August 25, 2003, and
recorded in the San Mateo County Recorder's Office
(“Recorder's Office”) on August 28, 2003,
RJN, Ex. F; (2) Adjustable Rate Mortgage Note dated August
25, 2003, id., Ex. G; and (3) Notice of Default and
Election to Sell Under Deed of Trust dated April 28, 2016,
and recorded in the Recorder's Office on May 2, 2016,
id., Ex. H. Plaintiffs do not dispute the
authenticity of these documents or oppose taking judicial
notice of them. The Dead of Trust and the Mortgage Note were
both attached to the complaint, so may properly be
considered. See Compl. Exs. A-B; Ritchie,
342 F.3d at 908. Furthermore, the Deed of Trust and 2016
Notice of Default are subject to judicial notice as
publicly-recorded real estate instruments not subject to
reasonable dispute. See, e.g., Laconico v.
Cal-Western Reconveyance Corp., No.17-cv-00698-BLF, 2017
WL 2877098, at *4 (N.D. Cal. 2017); Petrovich v. Ocwen
Loan Servicing, LLC, No. 15-cv-00033-EMC, 2016 WL
555959, at *3 (N.D. Cal. 2016), appeal filed, No.
16-15396 (9th Cir. 2016); Distor v. U.S. Bank NA,
No. C 09-02086 SI, 2009 WL 3429700, at *2 (N.D. Cal. 2009),
abrogated on other grounds by Beaver v. Tarsadia
Hotels, 816 F.3d. 1170, 1180 n. 5 (9th Cir. 2016);
see also Mir, 844 F.2d at 649 (judicial notice of
also seeks judicial notice of the Modification Agreement
dated June 23, 2005. RJN, Ex. I. Plaintiffs oppose judicial
notice of this document. RJN Opp. As Defendant notes with
relation to the Modification Agreement, RJN at 3, the Ninth
Circuit has held that “[a] court may consider evidence
on which the complaint ‘necessarily relies' if: (1)
the complaint refers to the document; (2) the document is
central to the plaintiff's claim; and (3) no party
questions the authenticity of the copy attached to the
12(b)(6) motion.” Marder v. Lopez, 450 F.3d
445, 448 (9th Cir. 2006). However, the Court agrees with
Plaintiffs that the Modification Agreement is not referenced
by the operative complaint and “does not form the basis
of Plaintiffs' claims.” See id.; FAC
¶¶ 10-25 (statement of facts). Moreover, Plaintiffs
contest the validity and authenticity of the Modification
Agreement. RJN Opp. Therefore, the Court does not consider
this document in assessing the motion to dismiss.
Defendant requests judicial of the Notice of Default dated
August 23, 2011, and recorded in the official records of the
Recorder's Office on that same day. Supp. RJN, Ex. J. The
Court declines to take judicial notice of this document
because Defendant's supplemental request for judicial
notice was filed after the briefing on the motion to dismiss
was complete. See Civil L.R. 7-3(d) (stating that
“[o]nce a reply is filed, no additional memoranda,
papers or letters may be filed without prior Court approval[,
]” with two exceptions not relevant here); Torbov
v. Cenlar Agency, Inc., No. 14-CV-00130-BLF, 2015 WL
1940301, at *2 (N.D. Cal. Apr. 29, 2015) (denying request for
judicial notice as untimely under Civil Local rule 7-3(d),
where request was filed after reply brief); see also in
re Atossa Genetics, Inc. Sec. Litig., No. C13-1836 RSM,
2014 WL 4983551, at *4 (W.D. Wash. Oct. 6, 2014) (denying as
untimely request for judicial notice filed after completion
of briefing on motion to dismiss).
in assessing the motion to dismiss, the Court may consider
Exhibits A to H, but not Exhibits I or J. See RJN,
Exs. A-I; Supp. RJN, Ex. J.
assessing the motion to dismiss, the Court takes the
following facts as true.
around August 28, 2003, Plaintiffs purchased the real
property located at 11 Lone Mountain Court, Pacifica, CA
94044 (hereinafter the “Property”). FAC ¶
10. To secure the financing, Plaintiff executed a first-lien
deed of trust and a promissory note in favor of World Savings
Bank, FSB. Id. & Exs. A-B. The loan for the
Property was in the amount of $548, 000. Id., Ex. A
at 2; Ex. B at 1. The Deed of Trust stated that the maximum
aggregate principal balance secured by it was $685, 000 (125%
of the “Note Amount”). Id., Ex. A at 1.
Similarly, the Note stated that Plaintiffs' unpaid
principal balance could never exceed 125% of the principal
originally borrowed. Id., Ex. B at 3.
Wells Fargo Bank, N.A. is the successor in interest to World
Savings Bank, FSB as the beneficiary and servicer of
Plaintiffs' loan. Id. ¶ 10. Specifically,
World Savings Bank changed its name to Wachovia Mortgage, FSB
on December 31, 2007, but remained chartered under the HOLA
and overseen by the OTS. RJN, Exs. A-C. Effective November 1,
2009, Wachovia Mortgage, FSB became a division of Wells Fargo
Bank, N.A., and changed its primary regulatory agency from
OTS to Comptroller of the Currency. RJN, Exs. D-E.
relevant times, the Property has been the Plaintiffs'
principal residence, a single-family home containing only one
dwelling unit. FAC ¶ 12. Plaintiffs appear to have
defaulted on their loan on August 15, 2009. See RJN,
Ex. H at 2-3 (Notice of Default, dated April 28, 2016,
stating that Plaintiffs failed to make the loan payment which
became due on August 15, 2009). In or around 2010, Plaintiffs
experienced a financial hardship and contacted their lender
regarding a loan modification. FAC ¶ 13. Based on their
lender's advice to miss three payments in order to pursue
a loan modification, Plaintiffs missed their mortgage
payments and submitted a loan modification application.
Id. On or around August 23, 2011, Defendant caused
to be recorded a Notice of Default regarding Plaintiffs'
Property. Id. ¶ 14. From 2011 to 2013,
Plaintiffs continued trying to obtain a loan modification
from Defendant. Id. ¶ 15. During this period,
Plaintiffs received no determination on their loan
modification application. Id. Each time Plaintiffs
attempted to contact Defendant regarding the application,
they were told that they had a new processor or that they
needed to submit a new application because the
representatives had no record of their previous application.
Id. In January 2015, Defendant denied Plaintiffs
application for a loan modification because of the net
present value calculation and Defendant's inability to
reduce Plaintiffs' principal and interest payment by 10%
or more. Id. ¶ 16. The calculation used
Plaintiffs' monthly income of $10, 662.13. Id.
subsequently appealed the denial of their loan modification
application within the prescribed appeal period. Id.
¶ 17. On or around January 14, 2015, Defendant
acknowledged the receipt of Plaintiffs' documents, but
requested that Plaintiff provide additional financial
information. Id. Thereafter, Plaintiffs timely
submitted documents requested by Defendant in support of
Plaintiffs' loan modification application. Id.
¶ 18-19. In or around March 2015, Justin Mcgee was
assigned as Plaintiffs' new single point of contact
(“SPOC”). Id. ¶ 19.
around August 2015, still not having received any
determination on their appeal, Plaintiffs timely submitted
another Request for Mortgage Assistance form, documenting an
increase in their monthly income. Id. ¶ 20. On
or around November 27, 2015, Plaintiffs received a letter
from Defendant's representative, Brian Sloan, stating
that the company could not identify or process the request
without the last four digits of the borrower's social
security numbers or tax identification numbers. Id.
¶ 21. On or around December 9, 2015, Plaintiffs sent in
the requested social security numbers for each of the
borrowers, thereby completing their loan modification
application. Id. As of the filing of the operative
complaint, Plaintiffs had yet to receive any determination on
their appeal or on the new Request for Mortgage Assistance
form. Id. ¶ 22.
2, 2016, the Notice of Default and Election to Sell under
Deed of Trust, dated April 28, 2016, was recorded in the
records of the Recorder's Office. RJN, Ex. H. The
document described past due payments in the amount of $381,
218.10. Id. at 1. In or around June 2016, Defendant
informed Plaintiffs that the current loan balance was over
$800, 000. FAC ¶ 23. On or around August 10, 2016,
Defendant caused to be recorded a Notice of Trustee's
Sale regarding Plaintiffs' Property with the San Mateo
County Recorder, with a sale date of August 31, 2016. FAC
¶ 24. The Notice of Trustee's Sale stated that the
total amount of unpaid balance and reasonable costs, expenses
and advances was $848, 721.71 as of August 12, 2016.
Rule of Civil Procedure 8(a) requires that a complaint
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief[.]” A
defendant may move to dismiss a complaint for failing to
state a claim upon which relief can be granted under Federal
Rule of Civil Procedure 12(b)(6). “Dismissal under Rule
12(b)(6) is appropriate only where the complaint lacks a
cognizable legal theory or sufficient facts to support a
cognizable legal theory.” Mendiondo v. Centinela
Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To
survive a Rule 12(b)(6) motion, a plaintiff must plead
“enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim is facially
plausible when a plaintiff pleads “factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
reviewing the plausibility of a complaint, courts
“accept factual allegations in the complaint as true
and construe the pleadings in the light most favorable to the
nonmoving party.” Manzarek v. St. Paul Fire &
Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
Nonetheless, Courts do not “accept as true allegations
that are merely conclusory, unwarranted deductions of fact,
or unreasonable inferences.” In re Gilead Scis.
Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). And
even where facts are accepted as true, “a plaintiff may
plead [him]self out of court” if he “plead[s]
facts which ...