United States District Court, S.D. California
ORDER OF DISMISSAL [DKT. 3]
HONORABLE LARRY ALAN BURNS UNITED STATES DISTRICT JUDGE
decade ago, Robert Vaughn borrowed $245, 000 to buy a house.
In 2011, Vaughn entered a loan modification agreement with
Wells Fargo. Soon after, he defaulted. In 2017, Wells Fargo
started foreclosure proceedings. Vaughn sent the Bank two
letters asking for documents proving Wells Fargo had standing
to foreclose. He says Wells Fargo responded with too little,
too late. Vaughn invoked this Court's diversity
jurisdiction and filed suit. Wells Fargo moved to dismiss,
and Judge Benitez recused.
complaint raises two issues. First, he alleges Wells
Fargo's response to his 2017 letters was inadequate.
Second, he alleges the 2011 loan modification was defective
because it omitted important details, like the proposed
interest rate. He says these two miscues entitle him to an
injunction halting foreclosure proceedings, money for
emotional distress, and punitive damages to punish Wells
Fargo. The Court disagrees. Because he's failed to state
a claim that entitles him to relief for either issue, Wells
Fargo's motion to dismiss is granted. Fed.R.Civ.P.
Qualified Written Request (2017)
the Real Estate Settlement Procedures Act § 2605,
servicers like Wells Fargo must respond to qualified written
requests, otherwise they're liable to the borrower for
any actual damages as a result of not responding. 12 U.S.C.
§ 2605(e), (f). Vaughn says Wells Fargo violated this
section by failing to answer his letters from early 2017 on
time and with sufficient information. But the Bank's
failure to answer Vaughn's 2017 letters didn't cause
him any actual damages. Vaughn's opposition concedes as
much: Wells Fargo has now produced the documents he wanted a
year ago-none of this paperwork would have changed Wells
Fargo's ability to foreclose on him last year.
maintains he's “incurred court fees.” But he
can't establish the requisite financial damages for his
underlying claim by bringing a lawsuit. “If such were
the case, every RESPA suit would inherently have a claim for
damages built in.” Lal v. Am. Home Servicing,
Inc., 680 F.Supp.2d 1218, 1223 (E.D. Cal. 2010). Vaughn
also says he “suffered slander” because the Bank
notified “credit reporting agencies” about the
“illegitimate foreclosure proceedings.” But he
hasn't explained why the foreclosure is illegitimate, and
it's not enough for him to generally allege his credit
took a dive-he needs to show a causal connection between the
failure to respond to the written request and the harm.
See, e.g., Durland v. Fieldstone Mortg.
Co., 2011 WL 805924, at *3 (S.D. Cal. Mar. 1, 2011)
(“Plaintiff does not allege any causal link between the
reduction in his credit rating and [the] failure to
adequately respond to his QWRs.”). Finally, Vaughn
alleges Wells Fargo was unjustly enriched by not providing
this information. How so?
hasn't alleged any plausible allegations that Wells
Fargo's failure to answer his written request caused him
pecuniary damages. See, e.g., Molina v.
Washington Mutual Bank, 2010 WL 431439, at *7 (S.D. Cal.
Jan. 29, 2010). This claim is dismissed.
Loan Modification (2011)
state claims turn on his argument that Wells Fargo's 2011
loan modification failed to include his loan balance,
interest rate, and amortization schedule. He's wrong
about two of the three: The modification agreement Vaughn
filed does provide a loan balance ($246, 604.29) and
proposed interest rates (4.7% to 5.875%). The only item
missing is a traditional amortization schedule laying out
future payments. Vaughn hasn't offered plausible
allegations that explain how this missing schedule entitles
him to an order preventing Wells Fargo from foreclosing, or
to emotional distress damages, six years later.
Cal. Civ. Code § 2920.5
argues Wells Fargo's failure to include the amortization
schedule with the loan modification agreement violated
California's Homeowner's Bill of Rights. But the
California legislature enacted the Bill in 2013. Vaughn
alleges the defective loan modification happened in 2011.
Since the Bill doesn't apply retroactively, he can't
sue Wells Fargo for failing to comply with a law passed two
years after their agreement. See Sabherwal v. Bank of New
York Mellon, 2013 WL 4833940, at *10 (S.D. Cal. Sept.
10, 2013). This claim is dismissed.
also argues the missing amortization schedule amounts to
fraud. The Court acknowledges that some courts have allowed
fraud claims for omitting details of negative amortization to
survive motions to dismiss. See, e.g., Boschma
v. Home Loan Ctr., Inc., 198 Cal.App.4th 230 (2011). But
here, Vaughn hasn't pled a plausible fraud claim under
Rule 8 or 9. The closest he gets is saying Wells Fargo
entered the loan modification “with the intent to
deceive Plaintiff into entering an agreement for which they
did not understand the terms.” That's not good
enough. Among other problems, Vaughn hasn't plausibly
alleged justifiable reliance or damages. Stated another way:
how did the missing amortization schedule cause him to
default on his loan? This claim is dismissed.
Cal. Bus. & Prof. ...