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Judan v. Wells Fargo Bank, National Association

United States District Court, N.D. California

July 21, 2017

MANUEL A. JUDAN, et al., Plaintiffs,


          HAYWOOD S. GILLIAM, JR.United States District Judge

         This 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.


         The 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 (“Supp. RJN”).

         “Generally, 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 complaint.” Id.

         Defendant 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).

         Additionally, 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 public records).

         Defendant 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.

         Finally, 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).

         Accordingly, 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.[1]


         In assessing the motion to dismiss, the Court takes the following facts as true.

         On or 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.

         Defendant 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.

         At all 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.

         Plaintiffs 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.

         In or 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.

         On May 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. Id.


         A.Rule 12(b)(6)

         Federal 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).

         In 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 ...

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