United States District Court, E.D. California
Robert Miller and June Miller allege defendants improperly
sold their property in a November 18, 2016 non-judicial
foreclosure sale. Defendants Select Portfolio Servicing, Inc.
and DLJ Mortgage Capital, Inc. move to dismiss
plaintiffs' complaint. As explained below, the court
GRANTS the motion.
January 19, 2010, plaintiffs borrowed $244, 356.00 to
purchase real property at 2180 Calder Place in Fairfield,
California. First Am. Compl. (“FAC”), ECF No. 17,
¶¶ II.a-b. The loan was secured by a deed of trust
recorded on January 19, 2010, which named Executive Trustee
Services as trustee for beneficiary Mortgage Electronic
Registration Systems, Inc. (“MERS”) on behalf of
lender Ally Bank Corp. f/k/a GMAC Bank. Id. ¶
II.b.; see Defs.' Req. Judicial Notice
(“RJN”),  ECF No. 19-1, Ex. A (deed of trust
recorded Jan. 19, 2010). On May 14, 2012, MERS assigned all
beneficial interest under the deed of trust to GMAC Mortgage,
LLC (“GMAC”). RJN Ex. B (assignment of deed of
trust recorded May 22, 2012). In April 2016, GMAC, by its
attorney in fact Select Portfolio Servicing, Inc.
(“SPS”), assigned its interest under the deed of
trust to DLJ Mortgage Capital, Inc. (“DLJ”). RJN
Ex. C (assignment of deed of trust recorded April 21, 2016);
see FAC ¶ II.b (alleging DLJ held the mortgage
and SPS “processed the collection of funds” at
the time of the foreclosure sale).
10, 2016, a notice of default and election to sell under deed
of trust was recorded, indicating plaintiffs were $21, 230.80
in arrears as of June 8, 2016. RJN Ex. D. DLJ's
declaration of compliance with California Civil Code section
2923.55(c) was attached to this notice. Id. The
declaration was signed by an SPS “Document Control
Officer” on April 19, 2016 and indicated that on March
21, 2016, SPS contacted “the borrower to assess the
borrower's financial situation and explore options for
the borrower to avoid foreclosure as required by California
Civil Code § 2923.55(b)(2).” Id.
unspecified date, plaintiffs entered into loan modification
discussions with SPS. FAC ¶ II.c. On June 17, 2016,
plaintiffs submitted a loan modification package to SPS and
submitted a package again on September 17, 2016. Id. On
September 21, 2016, a notice of trustee's sale was
recorded, indicating plaintiffs' property would be sold
on October 13, 2016. RJN Ex. E. SPS sent plaintiffs a letter
dated October 14, 2016, indicating plaintiffs' loan
modification application was incomplete and requesting
additional documentation. Mot., Ex. 1. Plaintiffs timely
complied with SPS's requests for forms and documents in
support of their modification application. FAC ¶ II.e.
November 18, 2016, while the modification process was
ongoing, without notice to plaintiffs, and despite their
timely responses to SPS's requests for documents, SPS
conducted a foreclosure sale of plaintiffs' property. FAC
¶¶ II.d-e. The trustee's deed upon sale was
executed on November 23, 2016 and recorded on November 28,
2016. Id. ¶ d; RJN Ex. F (trustee's deed
upon sale indicating property sold Nov. 18, 2016 in public
auction). Despite having sold plaintiffs' property, SPS
continued to communicate with plaintiffs about the status of
their loan modification application, informing plaintiffs in
a November 21, 2016 letter that SPS required additional
documentation. FAC ¶ II.e; Mot. Ex. 2 (Nov. 21, 2016 SPS
request for additional information supporting plaintiffs'
modification application, noting, “[t]ime is of the
essence!”). Plaintiffs learned their home had been sold
in a foreclosure sale only when the new owner notified them
of the sale. FAC ¶ II.f.
filed this suit on October 30, 2018, alleging conversion,
breach of contract, fraud, “material intentional
reckless [sic] violation of Claifornia [sic] civil
code” and negligence. Compl., ECF No. 1, ¶¶
V-VIII. Defendants moved to dismiss the complaint, ECF No. 5,
plaintiffs opposed, ECF No. 11, and defendants filed a reply,
ECF No. 14. After hearing argument on defendants' motion,
the court advised it would issue a written order granting the
motion in full and indicating the extent to which plaintiffs
would be permitted to amend. ECF No. 16 (Mar. 8, 2019 hearing
minutes). On March 25, 2019, without leave and before the
court issued an order on defendants' motion to dismiss,
plaintiffs filed a first amended complaint. See FAC.
Plaintiffs added certain factual allegations not included in
their original complaint and abandoned their conversion
claim. See Id. Defendants then moved to dismiss
plaintiffs' first amended complaint, which plaintiffs did
not oppose. Mot., ECF No. 18. Because plaintiffs' amended
complaint responds, at least in part, to defendants'
prior motion to dismiss, and in the absence of any objection
from defendants, the court DENIES defendants' earlier
motion to dismiss as MOOT, treats plaintiffs' first
amended complaint as the operative complaint and resolves
defendants' second motion to dismiss. See Fed.
R. Civ. P. 1 (“[The Federal Rules of Civil Procedure]
should be construed, administered, and employed by the court
and the parties to secure the just, speedy, and inexpensive
determination of every action and proceeding.”).
Accordingly, after submitting defendants' motion without
oral argument, ECF No. 21, the court resolves it here.
Rule 12(b)(6) of the Federal Rules of Civil Procedure, a
party may move to dismiss a complaint for “failure to
state a claim upon which relief can be granted.” A
court may dismiss “based on the lack of cognizable
legal theory or the absence of sufficient facts alleged under
a cognizable legal theory.” Balistreri v. Pacifica
Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990)
(citing Robertson v. Dean Witter Reynolds, Inc., 749
F.2d 530, 533-34 (9th Cir.1984)).
a complaint need contain only “a short and plain
statement of the claim showing that the pleader is entitled
to relief, ” Fed.R.Civ.P. 8(a)(2), in order to survive
a motion to dismiss this short and plain statement
“must contain sufficient factual matter . . . to
‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A complaint must include something
more than “an unadorned,
the-defendant-unlawfully-harmed-me accusation” or
“‘labels and conclusions' or ‘a
formulaic recitation of the elements of a cause of
action.'” Id. (quoting Twombly,
550 U.S. at 555). Determining whether a complaint will
survive a motion to dismiss for failure to state a claim is a
“context-specific task that requires the reviewing
court to draw on its judicial experience and common
sense.” Id. at 679. Ultimately, the inquiry
focuses on the interplay between the factual allegations of
the complaint and the dispositive issues of law in the
action. See Hishon v. King & Spalding, 467 U.S.
69, 73 (1984).
making this context-specific evaluation, this court must
construe the complaint in the light most favorable to the
plaintiff and accept as true the factual allegations of the
complaint. Erickson v. Pardus, 551 U.S. 89, 93-94
(2007). This rule does not apply to “‘a legal
conclusion couched as a factual allegation, '”
Papasan v. Allain, 478 U.S. 265, 286 (1986)
quoted in Twombly, 550 U.S. at 555, nor to
“allegations that contradict matters properly subject
to judicial notice” or to material attached to or
incorporated by reference into the complaint. Sprewell v.
Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir.
2001). A court's consideration of documents attached to a
complaint or incorporated by reference or matter of judicial
notice will not convert a motion to dismiss into a motion for
summary judgment. United States v. Ritchie, 342 F.3d
903, 907-08 (9th Cir. 2003); Parks Sch. of Bus. v.
Symington, 51 F.3d 1480, 1484 ...