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Kang v. Wells Fargo Bank, N.A.

United States District Court, N.D. California

April 2, 2018

SO YOUNG KANG, Plaintiff,
v.
WELLS FARGO BANK, N.A., et al., Defendants.

          ORDER RE DEFENDANT WELLS FARGO BANK, N.A.'S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT RE: DKT. NO. 54

          DONNA M RYU UNITED STATES MAGISTRATE JUDGE

         Plaintiff So Young Kang filed this action against Defendants Wells Fargo Bank, N.A. (“Wells Fargo”) and Clear Recon Corp (collectively “Defendants”), asserting violations of California's Homeowner's Bill of Rights (“HBOR), specifically California Civil Code Sections 2923.55, 2923.6, 2923.7, and 2924.12, as well as the Unfair Competition Law (“UCL”), California Business & Professions Code Section 17200, et seq. Plaintiff seeks damages, equitable and declaratory relief, and injunctive relief prohibiting the sale of her property. Wells Fargo moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. [Docket No. 54.] Clear Recon Corp joins the motion. [Docket No. 57]. The court held a hearing on the motion on March 22, 2018. For the following reasons, Defendant's motion is granted with leave to amend. Plaintiff shall file a Second Amended Complaint by April 16, 2018.

         I. BACKGROUND

         The following facts are allegations that Plaintiff makes in her[1] complaint, all of which are taken as true solely for purposes of this motion.[2]

         On February 2, 2007, Plaintiff executed a promissory note for $595, 000.00 in favor of World Savings Bank, FSB (“World Savings Bank”), which was secured by a deed of trust on real property located at 327 Ansel Avenue Alameda, California 94501 (“the Property”). (First Amended Complaint (“FAC”) ¶ 18; Def.'s Req. for Judicial Notice (“RJN”) [Docket No. 55], Ex. A (Adjustable Rate Mortgage Note); Ex. B (Deed of Trust)). In November 2007, World Savings Bank became Wachovia Mortgage, FSB (“Wachovia”), and in November 2009, Wachovia merged into Wells Fargo. (RJN Ex. C).

         On or about December 1, 2010, Plaintiff defaulted on the loan. (RJN, Ex. D (Notice of Default) at 2).

         In 2015, Plaintiff requested foreclosure prevention alternatives and assistance in obtaining such alternatives from Defendants. (FAC, ¶ 27). Despite her request, Defendants did not provide her with the name or information of a “single point of contact” or SPOC. (Id., ¶ 28). Plaintiff also asserts that if Defendants did assign her a SPOC, that contact was “either not willing to or was not provided with the ability to help Plaintiff, which [was] tantamount to not having a [SPOC].” (Id.)

         On February 25, 2016, Clear Recon Corp recorded the Notice of Default. (RJN, Ex. D (Notice of Default)). Plaintiff alleges that she was not notified that Clear Recon Corp was substituted as the Trustee on the Deed of Trust, or of any subsequent assignments of her loan, in violation of HBOR section 2937. Attached to the Notice of Default is a Declaration of Compliance signed by Laura Rodriguez on February 2, 2016. (RJN, Ex. D (Notice of Default), Declaration of Compliance). The Declaration attests that the “mortgage servicer [had] contacted the borrower pursuant to [Section] 2923.55(b)(2) to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure. Thirty (30) days, or more, [had] passed since the initial contact was made.” (Id.) Plaintiff alleges that the declaration is a “fabrication” because she was never contacted by Defendants to discuss her financial situation or options for avoiding foreclosure as required under section 2923.55 prior to the recording of the Notice of Default. (FAC, ¶ 23).

         Plaintiff further alleges that she submitted a complete loan modification application to Defendants in May 2016. (FAC, ¶ 30). Plaintiff asserts that Defendants issued her a letter on June 6, 2016, which she received on June 14, 2016, that stated that her loan modification application was in review.[3] (Id.) Defendants then repeatedly asked her to submit duplicate copies of paperwork she had already submitted, and also promised her that the Trustee's sale of the property would not go forward. (Id.)

         Despite the fact that Plaintiff had submitted a complete loan modification application, and Defendants had promised Plaintiff that the sale of the property would not go forward, Defendants recorded a Notice of Trustee's Sale on June 30, 2016. (RJN, Ex. E (Notice of Trustee's Sale))[4].

         On June 27, 2016, Plaintiff filed the instant action in Alameda County Superior Court alleging five claims against Defendants: 1) violation of HBOR section 2923.55; 2) violation of HBOR section 2923.6; 3) violation of HBOR section 2923.7; 4) injunctive relief pursuant to HBOR section 2924.12; and 5) the UCL. (Compl.).

         Following the July 29, 2016 removal to this court, Plaintiff submitted a request for a loan modification to Wells Fargo's counsel on August 15, 2016, which was forwarded to Wells Fargo. (Third Updated Joint Status Report Re: ADR and Motion for Remand [Docket No. 44] at 2). Plaintiff later submitted a complete loan modification application to Wells Fargo's underwriting team. (Id.)

         On September 8, 2016, the court stayed the action at the parties' request pending the review of Plaintiff's loan modification application and the completion of the ADR process. (Order Granting Joint Stipulation to Stay All Proceedings Until Completion of Court Mandated ADR Process [Docket No. 25]). During this review period, Defendants did not conduct any foreclosure sale, and allowed the Notice of Trustee's Sale to expire without re-noticing the sale.

         On June 2, 2017, Wells Fargo denied Plaintiff's loan modification application. (Third Updated Joint Status Report Re: ADR and Motion for Remand at 2). Plaintiff did not appeal the denial. (Id.)

         Because the parties completed the ADR process and the review of Plaintiff's loan modification application, the court lifted the stay on October 19, 2017. (Order on Third Updated Joint ...


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