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Villegas v. Wells Fargo Bank, N.A.

United States District Court, N.D. California

May 25, 2018

EZEQUIEL VILLEGAS, Plaintiff,
v.
WELLS FARGO BANK, N.A., Defendant.

          ORDER RE: DKT., 7

          PHYLLIS J. HAMILTON UNITED STATES DISTRICT JUDGE

         Defendant Wells Fargo Bank, N.A.'s (“Wells Fargo”) motion to dismiss came on for hearing before this court on April 25, 2018. Plaintiff Ezequiel Villegas appeared through Samuel Pooler, who appeared on behalf of his counsel, Laleh Ensafi. Defendant appeared through its counsel, Le Duong. Having read the papers filed by the parties and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby rules as follows.

         BACKGROUND

         The case concerns Wells Fargo's foreclosure on Villegas's home mortgage. Plaintiff filed this case on December 28, 2017 in the Superior Court of California, County of Mendocino. Dkt. 1. Defendant removed the case to this court based on both diversity and federal question jurisdiction. Id.

         On January 19, 2006, Villegas took out a mortgage in the amount of $280, 000 on his home, located at 224 Margie Drive, Willits, CA 95490 (the “Property”), with Resmae Mortgage Corporation. Dkt. 19-1 (“Compl.”) at 2, 6; Dkt. 7 (“Mot.”) at 1. The mortgage is made up of a loan (the “Note”, Ex. B[1]) and a deed of trust (“DOT”, Ex. A). Mot. at 1. Villegas alleges that the mortgage was then sold or assigned to an unknown securitized trust that it will identify through discovery. Compl. at 6.

         In 2008 Villegas failed to make mortgage payments, and he defaulted in 2009. Id. at 7. The loan servicer, America's Servicing Company, recorded a notice of default on January 14, 2009. Id. Villegas alleges a number of entities owned or acted as trustee of the mortgage from 2009-2012. Id. at 8-9. Sometime in 2012, Wells Fargo had acquired the servicing of the mortgage while the debt was in default. Id. at 8.

         Villegas alleges that he entered into a modified loan agreement on July 23, 2013 with Wilmington Trust National Association (“Wilmington”), and that Wells Fargo acted as attorney-in-fact in that transaction, during which time Wells Fargo misrepresented the character and legal status of the debt obligation. Id. at 9, Ex. F. Plaintiff also alleges that he entered into a modified loan agreement with the alleged owner of the debt obligation in August 2013 to avoid foreclosure. Id. at 7. Villegas alleges that Wells Fargo had no authority to collect on the debt, service the debt, or proceed with a non-judicial foreclosure to enforce the security interest. Id.

         On May 8, 2017, Wells Fargo executed and recorded a Substitution of Trustee, which purported to make Quality Loan Service Corporation the new trustee. Id. at 9-10, Ex. G. Then, on May 8, 2017, Wells Fargo recorded a notice of default on plaintiff's Property, stating that Wilmington was acting as trustee of a trust that was the beneficiary of the debt. Id. at 10, Ex. H. Plaintiff argues that Wells Fargo and the supposed debt beneficiary are in fact “debt collectors” instead of beneficiaries, so they cannot enforce a security interest or attempt to collect any payments from Villegas. Id. at 11.

         Plaintiff sent Wells Fargo a letter asking about the ownership of the debt obligation, and Wells Fargo replied on July 26, 2017, stating that a trust owns the debt, with Wilmington acting as trustee. Id. at 7, Ex. C. Plaintiff alleges that letter falsely represented the character and legal status of the alleged debt. Id. at 7. On August 25, 2017, a notice of trustee's sale was executed and recorded against the Property. Id. at 10, Ex. I. At the hearing, plaintiff's counsel did not know whether the home had been sold, but defendant's counsel represented that the house has not been sold and that plaintiff continues to live in the house.

         Plaintiff seeks compensatory, special, and general damages of no less than $750, 000; punitive damages; injunctive relief compelling Wells Fargo to remove any instrument that could be construed as a cloud upon plaintiff's title to the Property; declaratory judgment that defendant does not have any rights as to plaintiff, the Property, or plaintiff's debt; a restraining order to prevent Wells Fargo from undertaking any action against the Property; costs of the suit; attorneys' fees; and any other relief the court deems proper.

         Defendant now moves to dismiss the case.

         DISCUSSION

         A. Legal Standard

         Federal Rule of Civil Procedure 12(b)(6) tests for the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, 349 F.3d 1191, 1199-1200 (9th Cir. 2003). Under the minimal notice pleading requirements of Federal Rule of Civil Procedure 8, which requires that a complaint include a “short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), a complaint may be dismissed under Rule 12(b)(6) if the plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to support a cognizable legal theory. Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013).

         While the court must accept as true all the factual allegations in the complaint, legally conclusory statements, not supported by actual factual allegations, need not be accepted. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). The complaint must proffer sufficient facts to state a claim for relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 558-59 (2007).

         “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citation omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679. Where dismissal is warranted, it is generally without prejudice, unless it is clear the complaint cannot be saved by any amendment. Sparling v. Daou, 411 F.3d 1006, 1013 (9th Cir. 2005).

         Review is generally limited to the contents of the complaint, although the court can also consider a document on which the complaint relies if the document is central to the claims asserted in the complaint, and no party questions the authenticity of the document. See Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007). The court may consider matters that are properly the subject of judicial notice (Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Lee v. City of L.A., 250 F.3d 668, 688-89 (9th Cir. 2001)), exhibits attached to the complaint (see Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989)), documents referenced extensively in the complaint, and documents that form the basis of a the plaintiff's claims (see No. 84 Emp'r-Teamster Jt. Counsel Pension Tr. Fund v. Am. W. Holding Corp., 320 F.3d 920, 925 n.2 (9th Cir. 2003)).

         B. Analysis

         Wells Fargo moves to dismiss each of Villegas's five claims: (1) violation of 15 U.S.C. § 1692f(6), the Fair Debt Collection Practices Act (“FDCPA”); (2) violation of California Homeowner's Bill of Rights (“HBOR”), California Civil Code §§ 2924(a)(6) & 2924.17; (3) violation of HBOR § 2934a(a)(1)(A)(C); (4) negligent representation; and (5) violation of Cal. Bus. Prof. Code § 17200 (“UCL”).

         1. 15 U.S.C. § 1692f(6)-FDCPA

         15 U.S.C. § 1692f(6) provides:

         A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

         [. . . .]

         (6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if-

(A) there is no present right to possession of the property claimed as collateral through an enforceable ...

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