United States District Court, C.D. California
WALTER H. HACKETT, III ET AL.
WELLS FARGO BANK, N.A.
Present: The Honorable CHRISTINA A. SNYDER
CIVIL MINUTES - GENERAL
DEFENDANT'S MOTION TO DISMISS (Dkt. 11, filed January 22,
October 6, 2017, plaintiffs Walter H. Hackett, III and
Lorinda D. Hackett filed the instant action against
defendants Wells Fargo Bank, N.A. (“defendant”),
and Does 1 through 10 inclusive. Dkt. 1
(“Compl.”). The gravamen of the complaint is that
Wells Fargo failed to properly review plaintiffs'
requests for loan modifications. Plaintiffs assert claims for
(1) violations of the Equal Credit Opportunity Act, 15 U.S.C.
§ 1691(d)(1); (2) violations of the Real Estate
Settlement Procedures Act, 12 U.S.C. § 2605(f), 12
C.F.R. §§ 1024.41, 1024.35, 1024.36; (3) negligence
in violation of Cal. Civ. Code § 1714; and (4) unfair
business practices in violation of Cal. Bus. & Prof. Code
§ 17200. See Compl.
January 22, 2018, Wells Fargo filed a motion to dismiss, dkt.
11 (“Motion”), and a request for judicial notice
of plaintiffs' deed of trust and the docket in
plaintiffs' Chapter 13 case, dkt. 12. On February 12,
2018, plaintiffs filed an opposition, dkt. 15
(“Opp'n”), in addition to objections to Wells
Fargo's request for judicial notice, dkt. 16
(“Objection”). On February 20, 2018, Wells Fargo
filed a reply. Dkt. 18 (“Reply”). On March 2,
2018, plaintiffs filed a response to Wells Fargo's
reply. Dkt. 19 (“Response”).
March 5, 2018, the Court held oral argument. Having carefully
considered the parties' arguments, the Court finds and
concludes as follows.
allege the following facts.
maintain their principal and family residence at the real
property located at 3316 East Hiltonia Drive, West Covina,
California 91792 (the “Subject Property”). Compl
¶¶ 6-7. Wells Fargo is the current servicer of
plaintiffs' mortgage with respect to the Subject
Property. Id. ¶ 8.
obtained a loan (“Subject Loan”) with respect to
the Subject Property.Beginning in the summer of 2006, plaintiffs
allege that W. Hackett was “summarily terminated”
by his employer and thereafter sought various types of work
as a banking consultant and as an attorney. Id.
¶ 26. Due to a significant reduction in income,
plaintiffs sought bankruptcy protection and filed a Chapter
13 petition in July 2010. Id. Plaintiffs'
petition was dismissed. Id. ¶ 29. Plaintiff
filed a second Chapter 13 petition in the fall of 2010-which
was also dismissed-and plaintiff filed a third and final
Chapter 13 petition in May 2012. Id.
assert that they contacted Wells Fargo in 2013 and requested
review for a loan modification. Id. ¶ 34. Wells
Fargo offered plaintiffs a temporary modification, but
plaintiffs informed them telephonically and in writing that
they would need the loan to be permanently modified in order
to keep the loan current. Id.
January 2013, plaintiffs allegedly sought a permanent
modification of the subject loan with assistance from their
bankruptcy attorney. Id. ¶ 35. Wells Fargo
allegedly failed to respond in writing within thirty days
after receipt of the application. Id. In a letter
dated October 3, 2013, plaintiffs allege that Wells Fargo
advised plaintiffs that its investor would not permit
permanent modification of loans. Id. ¶ 36.
Plaintiffs believe that this representation is false, and
that there is no investor restriction on loan modification.
separate October 3, 2013 letter, Wells Fargo allegedly
offered a “Forbearance Agreement, ” which called
for three payments of $1, 543.77 beginning November 14, 2013.
Id. ¶ 37. Plaintiffs executed this agreement
and allege that they made all payments in accordance with the
Forbearance Agreement. Id. In April 2014, Wells
Fargo allegedly offered a six-month temporary loan
modification, and plaintiffs allege that they made timely
payments. Id. ¶ 38.
2015, plaintiffs again requested a permanent loan
modification because W. Hackett allegedly suffered brain
damage and was unable to work as an attorney or as a banker.
Id. ¶ 39. In July 2015, plaintiffs submitted
all information requested by Wells Fargo to determine whether
they qualified for a loan modification-yet plaintiffs allege
that Wells Fargo failed to respond. Id. ¶ 40.
Furthermore, plaintiffs allege that Wells Fargo failed to
evaluate and make a determination of plaintiffs' loan
modification applications-or, “applications for
credit” as defined by 15 U.S.C. section 1691a(d)-
within 30 calendar days. Id. ¶¶ 56-58, 76.
allege that they sent a request for information
(“RFI”) to Wells Fargo on January 29, 2016, that
Wells Fargo received the request on February 1, 2016, and
that in a February 5, 2016 letter, Wells Fargo “failed
to acknowledge receipt” of the RFI. Id.
¶¶ 41-43, 86. In the RFI, plaintiffs allegedly
requested the documents that Wells Fargo relied on in
reaching its determination that no error occurred in its
denial of plaintiffs' request for a loan modification.
Id. ¶ 86. On February 15, 2016, Wells Fargo
allegedly responded to plaintiffs' RFI, yet plaintiffs
assert that it failed to provide a complete response and
failed to provide answers concerning investor restrictions
preventing loan modification within thirty days of
plaintiffs' RFI. Id. ¶¶ 45-46, 87-88.
In an October 2016 letter, Wells Fargo allegedly stated that
it needed additional time. Id. ¶ 48.
allege that they have been attempting to obtain a fair review
for loan modification from defendants for almost four years,
yet Wells Fargo has reacted with “disdain, inaction,
obfuscation, and apathy.” Id. ¶ 49.
motion pursuant to Federal Rule of Civil Procedure 12(b)(6)
tests the legal sufficiency of the claims asserted in a
complaint. Under this Rule, a district court properly
dismisses a claim if “there is a ‘lack of a
cognizable legal theory or the absence of sufficient facts
alleged under a cognizable legal theory.' ”
Conservation Force v. Salazar, 646 F.3d 1240, 1242
(9th Cir. 2011) (quoting Balisteri v. Pacifica Police
Dep't, 901 F.2d 696, 699 (9th Cir. 1988)).
“While a complaint attacked by a Rule 12(b)(6) motion
to dismiss does not need detailed factual allegations, a
plaintiff's obligation to provide the ‘grounds'
of his ‘entitlement to relief' requires more than
labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
“[F]actual allegations must be enough to raise a right
to relief above the speculative level.” Id.
considering a motion pursuant to Rule 12(b)(6), a court must
accept as true all material allegations in the complaint, as
well as all reasonable inferences to be drawn from them.
Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).
The complaint must be read in the light most favorable to the
nonmoving party. Sprewell v. Golden State Warriors,
266 F.3d 979, 988 (9th Cir. 2001). However, “a court
considering a motion to dismiss can choose to begin by
identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth.
While legal conclusions can provide the framework of a
complaint, they must be supported by factual
allegations.” Ashcroft v. Iqbal, 556 U.S. 662,
679 (2009); see Moss v. United States Secret
Service, 572 F.3d 962, 969 (9th Cir. 2009) (“[F]or
a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content, ' and reasonable
inferences from that content, must be plausibly suggestive of
a claim entitling the plaintiff to relief.”).
Ultimately, “[d]etermining whether a complaint states a
plausible claim for relief will . . . be a context-specific
task that requires the reviewing court to draw on its
judicial experience and common sense.” Iqbal,
556 U.S. at 679.
general rule, leave to amend a complaint which has been
dismissed should be freely granted. Fed.R.Civ.P. 15(a). This
policy is applied with “extreme liberality.”
Morongo Band of Mission Indians v. Rose, 893 F.2d
1074, 1079 (9th Cir. 1990); Moss v. Secret Serv.,
572 F.3d 962, 972 (9th Cir. 2009). However, leave to amend
may be denied when “the court determines that the
allegation of other facts consistent with the challenged
pleading could not possibly cure the deficiency.”
Schreiber Distrib. Co. v. Serv-Well Furniture Co.,
806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v.
Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).
Fargo contends that plaintiffs' claims should be
dismissed with prejudice, as no state or federal law affords
plaintiff any relief to “second-guess” Wells
Fargo's business decisions. Motion at 1.
Plaintiffs' Claims for Violation of 15 U.S.C §
allege that they provided Wells Fargo with completed loan
modification applications in January 2013 and July 2015, and
that Wells Fargo failed to evaluate plaintiffs'
applications and failed to respond to plaintiffs in writing
within 30 calendar days in violation of the Equal Credit
Opportunity Act (“ECOA”). Compl. ¶¶
Fargo argues that plaintiff's claim under ECOA fails
because the claim is (1) time-barred and (2) plaintiffs fail
to demonstrate eligibility for ECOA protection because they
fail to allege the essential elements of a discrimination
claim under ECOA. Id. at 2.
“makes it illegal ‘for any creditor to
discriminate against any applicant, with respect to any
aspect of a credit transaction...on the basis of race, color,
religion, national origin, sex or marital status or age.'
” Schlegel v. Wells Fargo Bank, 720 F.3d 1204,
1210 (9th Cir. 2013) (quoting 15 U.S.C. § 1691(a)(1)).
As relevant here, ECOA requires that when a creditor takes
adverse action, “[w]ithin thirty days … after
receipt of a completed application for credit,  a creditor shall
notify the applicant of its action on the application.”
15 U.S.C. § 1691(d)(1). Moreover, “[e]ach
applicant against whom adverse action is taken shall be
entitled to a statement of reasons for such action from the
creditor.” 15 U.S.C. § 1691(d)(2). An
“adverse action” is a “denial or revocation
of credit, a change in the terms of existing credit
arrangement, or a refusal to grant credit in substantially
the amount or on substantially the terms requested. Such term
does not include a refusal to extend additional credit under
an existing credit arrangement where the applicant is
delinquent or otherwise in default ….” 15 U.S.C.
§ 1691(d)(6). When a creditor fails to give the required
notice of taking an adverse action, the applicant may sue for
a violation of ECOA. Schlegel, 720 F.3d at 1210.
argue that they are bringing a notice claim-not a
discrimination claim- under ECOA. Opp'n at 5. The Court
observes that numerous district courts have found that
failure to comply with ECOA's notice provisions gives
rise to a distinct notice claim under the statute. See
Errico v. Pac. Capital Bank, N.A., 753 F.Supp.2d 1034,
1042 (N.D. Cal. 2010) (citing Dufay v. Bank of
America, 94 F.3d 561 (9th Cir. 1996)); Vasquez v.
Bank of Am., N.A., No. 13-CV-02902-JST, 2013 WL 6001924,
at *11 (N.D. Cal. Nov. 12, 2013) (“The Federal Reserve
regulations implementing ECOA appear to have two distinct
requirements: a bar on discrimination in lending and ...