United States District Court, N.D. California, San Jose Division
ORDER GRANTING DEFENDANT CIT BANK, N.A.'S MOTION
TO DISMISS WITHOUT LEAVE TO AMEND; AND DISSOLVING ORDER TO
SHOW CAUSE [RE: ECF 29, 47]
LABSON FREEMAN UNITED STATES DISTRICT JUDGE.
Jorge Rocha and Anna Rocha bring this action against CIT
Bank, N.A., fka OneWest Bank FSB, NBS Default Services, LLC,
IndyMac Bank FSB, and OneWest Bank FSB. The action was
initiated in state court and removed to this District based
on diversity jurisdiction. Notice of Removal, ECF
On September 22, 2017, Plaintiffs voluntarily filed a First
Amended Complaint (“FAC”). FAC, ECF 24. Before
the Court is Defendant CIT Bank, N.A.'s (“CIT
Bank”) motion to dismiss the FAC. Mot., ECF 30.
Court attempted to hold a hearing on CIT Bank's motion to
dismiss on February 8, 2018. Counsel for CIT Bank appeared
but counsel for Plaintiffs failed to appear and did not
inform the Court why an appearance was not possible.
See ECF 45. The Court issued an Order to Show Cause
why Attorney Patricia Renee Rodriguez should not be
sanctioned for her failure to appear at the hearing. ECF 47.
Ms. Rodriguez timely filed a declaration stating that she had
experienced a medical emergency and had instructed her
associate to set up an appearance attorney to appear at the
hearing. ECF 50. However, her associate miscommunicated the
location of the hearing to the appearance attorney.
Id. Thus, no one appeared on behalf of Plaintiffs.
In light of Ms. Rodriguez's statements, the Court hereby
DISSOLVES the Order to Show Cause. The Court reminds the
parties that it does not allow “appearance
attorneys” not associated with lead counsel to make a
to Civil Local Rule 7-1(b), the Court takes this matter under
submission without oral argument. Upon consideration of the
briefing, and for the reasons set forth below, the Court
GRANTS CIT Bank's motion to dismiss without leave to
purchased a home in 2007 by taking out a loan from IndyMac
Bank FSB (“IndyMac”). FAC ¶ 11. The Deed of
Trust was recorded in the Official Records of Santa Clara
County on June 18, 2007. Id. ¶ 12; Ex. A to
Request for Judicial Notice (“RJN”), ECF
40.Thereafter, a Corporate Assignment of Deed
of Trust was recorded on June 21, 2010, under which the FDIC
as receiver for IndyMac assigned all interest under the Deed
of Trust to OneWest Bank FSB (“OneWest Bank”).
Ex. B to RJN, ECF 40. OneWest Bank later became CIT Bank.
See FAC ¶ 4. As for the chain of substitution
for trustees, IndyMac substituted Quality Loan Service Corp.
as the trustee on June 9, 2009. Ex. C to RJN, ECF 40.
Thereafter, on December 21, 2016, OneWest Bank substituted
NBS Default Services, LLC (“NBS”), which remains
as the trustee. Ex. D to RJN, ECF 40.
filed this action in state court around April 25, 2017
alleging that Defendants attempted to wrongfully foreclose
Plaintiffs' property. Notice of Removal 1. CIT Bank was
served with the summons and complaint on August 2, 2017.
Id. On August 25, 2017, Plaintiffs sought an ex
parte temporary restraining order (“TRO”)
against the foreclosure sale of Plaintiffs' property.
Id. The state court issued the TRO and an order to
show cause (“OSC”) why a preliminary injunction
should not be issued. Id. at 1-2. On August 31,
2017, CIT Bank removed this action to this District with
NBS' consent. Id. at 1; ECF 4. On October 3,
2017, Plaintiffs filed a declaration to withdraw the OSC for
preliminary injunction. Rodriguez Decl., ECF 26. The
declaration provides that CIT Bank sent a letter stating that
it had received a complete loan modification application and
would “review the application for mortgage
this action was removed, Plaintiffs filed their FAC on
September 22, 2017. The FAC alleges the following.
Plaintiffs' deed of trust was securitized and a pooling
and servicing (“PSA”) agreement for the trust was
filed with the SEC. FAC ¶¶ 18-21, 63. The purported
securitization of the loan caused a splitting of the interest
in Plaintiffs' note and deed of trust. Id.
¶ 30. Due to this splitting of interest, the transfer of
the deed of trust to Defendants did not occur and thus
Defendants have no right to take any action against
Plaintiffs' property. Id. ¶¶ 25-30,
67, 69-75. Although Defendants have no interest in the deed
of trust, they unlawfully attempted to foreclose
Plaintiffs' property. Id. ¶¶ 17,
further alleges that Plaintiffs “applied for a loan
modification on August 2, 2017, by submitting a complete
application to [CIT Bank].” Id. ¶ 119.
According to the FAC, CIT Bank sent a letter dated August 22,
2017 denying Plaintiffs' August 2, 2017 application due
to an “imminent foreclosure sale” scheduled on
August 28, 2017 and engaged in dual tracking. See
id. ¶¶ 115-26.
on the above allegations, the FAC asserts six causes of
action: (1) wrongful foreclosure; (2) violation of California
Civil Code § 2924(a)(6); (3) declaratory relief; (4)
violation of California Business and Professions Code §
17200, (5) breach of the covenant of good faith and fair
dealing; (6) violation of California Civil Code §
2923.6. Id. ¶¶ 62-126.
survive a Rule 12(b)(6) motion to dismiss, a 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 Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). When considering a
motion to dismiss, the Court “accept[s] factual
allegations in the complaint as true and construe[s] 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). However, the
Court need not accept as true “allegations that are
merely conclusory, unwarranted deductions of fact, or
unreasonable inferences.” In re Gilead Scis. Sec.
Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).
Request for Judicial Notice
connection with its motion to dismiss, CIT Bank filed a
Request for Judicial Notice (“RJN”) of a (1) Deed
of Trust for the property at issue recorded on June 18, 2007;
(2) Corporate Assignment of Deed of Trust recorded on June
11, 2010; (3) Substitution of Trustee recorded on June 9,
2009; (4) Substitution of Trustee recorded on December 21,
2016; (5) Modification Agreement executed on December 10,
2011 and recorded on January 27, 2011; and (6) Notice of
Default and Election to Sell Under Deed of Trust recorded on
March 10, 2017. See ECF 30-1; ECF 40. All of these
documents are recorded in the Official Records of Santa Clara
County. ECF 30-1. These documents are properly subject to
judicial notice because they are either incorporated by
reference into the FAC or they are official public records.
See Fed. R. Evid. 201(b)(2); see also Gamboa v.
Trustee Corps & Cent. Mortgage Loan Servicing Co.,
2009 WL 656285, at *3 (N.D. Cal. Mar. 12, 2009) (taking
judicial notice of recorded documents related to a
foreclosure sale, including grant deed and deed of trust
because “[t]hese documents are central to
Plaintiffs' allegations that Defendants were not entitled
to initiate a foreclosure sale of their property. These
documents are also part of the public record and are easily
verifiable.”) Accordingly, CIT Bank's RJN is
Court now turns to CIT Bank's motion to dismiss each
claim asserted in the FAC under Rule 12(b)(6). For the
reasons that follow, CIT Bank's motion to dismiss the FAC
is GRANTED without leave to amend.
First Cause of Action: Wrongful Foreclosure
the first cause of action, Plaintiffs allege that
Defendants' attempt to foreclose the property at issue
was unlawful because the interest in Plaintiffs' loan was
not transferred to Defendants due to securitization of the
loan. FAC ¶¶ 62-77. CIT Bank argues that Plaintiffs
lack standing to challenge the purported securitization of
their loan because no foreclosure has occurred. Mot. 6.
Plaintiffs respond that they have a proper cause of action in
light of Yvanova v. New Century Mortg. Corp., 62
Cal.4th 919 (2016). Opp'n 5-7, ECF 36.
Yvanova, the California Supreme Court held that
“a home loan borrower has standing to claim a
nonjudicial foreclosure was wrongful because an assignment by
which the foreclosing party purportedly took a beneficial
interest in the deed of trust was not merely voidable but
void, depriving the foreclosing party of any legitimate
authority to order a trustee's sale.”
Yvanova, 62 Cal.4th at 942-43. That holding is of no
help to Plaintiffs, as they failed to allege that a
nonjudicial foreclosure sale took place. Under California
law, a borrower lacks standing to file a lawsuit to preempt a
nonjudicial foreclosure. Saterbak v. JPMorgan Chase Bank,
N.A., 245 Cal.App.4th 808, 814-15 (Ct. App. 2016).
Nothing in Yvanova suggests that a borrower may
bring a preemptive claim for wrongful foreclosure. To the
contrary, the California Supreme Court expressly limited the
reach of its holding: “We do not hold or suggest that a
borrower may attempt to preempt a threatened nonjudicial
foreclosure by a suit questioning the foreclosing party's
right to proceed.” Yvanova, 62 Cal.4th at 924.
In fact, Keshtgar v. U.S. Bank, N.A., a case cited
by Plaintiffs, expressly holds that Yvanova did not
change California law that prohibits a borrower from filing
an action to preempt foreclosure. 2016 Cal.App. Unpub. LEXIS
5822, *7-8 (August 8, 2016).
Plaintiffs lack standing to pursue the first cause of action
as they do not plead that a foreclosure sale took place. CIT
Bank represents that no foreclosure occurred and that it has
been postponed, Mot. 2, and Plaintiffs do not argue otherwise
in their opposition. Plaintiffs' lack of standing cannot
be cured by an amendment. In re Turner, 859 F.3d
1145, 1151 (9th Cir. 2017) (affirming the district
court's dismissal of the wrongful foreclosure claim
because any amendment would have been futile). The Court
therefore GRANTS CIT Bank's motion to dismiss the first
cause of action without leave to amend.
Second Cause of Action: Violation of California Civil ...