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Townsend v. Wells Fargo Bank, N.A.

United States District Court, N.D. California

August 30, 2019

RONNIE L TOWNSEND, et al., Plaintiffs,
WELLS FARGO BANK, N.A., Defendant.



         Defendant Wells Fargo Bank moves to dismiss plaintiffs Ronnie L. Townsend and Iris Townsend's third amended complaint. See Dkt. No. 51. Because the Court previously dismissed Plaintiffs' complaint and they have been unable to cure their complaint's deficiencies, the Court GRANTS the motion to dismiss without leave to amend.

         I. Allegations in the Third Amended Complaint

         Plaintiffs purchased a house in San Jose in 2007 with a loan originally held by World Savings Bank and now held by Wells Fargo. See Dkt. No. 50 (“TAC”) ¶¶ 4, 7, 10. That loan originally featured escalating payments, increasing to over $4, 000 per month within the first three years of the loan. Id. ¶ 10. In 2009, after suffering a financial hardship, Plaintiffs approached Wells Fargo to apply for a loan modification. Id. ¶ 11. That modification changed the maturity date of the loan from 2037 to 2049 and increased the total amount to be paid over the life of the loan. See Id. ¶¶ 11-12.

         In July 2016, Plaintiffs again applied for a loan modification. See Id. ¶ 15. Wells Fargo advised Plaintiffs to include both Ronnie and Iris's income on their application despite the fact that Iris's income was sporadic. Id. Later that year, Wells Fargo gave Plaintiffs contradictory advice regarding whether to continue to make payments on their loans. Id. ¶¶ 16-17. By November 2016, Wells Fargo denied their loan modification application, stating that Plaintiffs' combined income was too high. Id. ¶¶ 15, 18. Plaintiffs appealed Wells Fargo's decision, but their appeal was also denied. Id. ¶ 20.

         In April 2017, Plaintiffs secured conditional approval of a third-party loan for up to 65% of their property value in an attempt to refinance their mortgage. Id. ¶ 21. The third-party loan was conditioned on Plaintiffs reducing the principal on their mortgage by about $20, 000. Id. Plaintiffs petitioned Wells Fargo to accept a $20, 000 payment in conjunction with the conditional loan. Id. Wells Fargo rejected Plaintiffs' proposal. Id.

         Plaintiffs again applied for loan modification in April 2017. Id. ¶ 22. After Wells Fargo denied their application, Plaintiffs filed for bankruptcy in June 2017 to stave off foreclosure, which was pushed to February 2018. Id.

         As the sale date drew near, Plaintiffs again filed for bankruptcy and sought additional funding with another lender. Id. ¶ 23. The third-party lender refused to give final approval while Plaintiffs' property was in active foreclosure. Id. Plaintiffs asked Wells Fargo to remove the property from active foreclosure, but Wells Fargo refused. Id. Because Plaintiffs' second bankruptcy filing did not include an automatic stay, Plaintiffs' property was sold at public auction on May 10, 2018. Id.

         II. Procedural History

         Plaintiffs filed their third amended complaint on June 24, 2019, alleging (1) violations of the Truth In Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq.; (2) violation of California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq.; (3) quiet title; and (4) violations of the California Homeowner Bill of Rights (“HBOR”), Cal. Civ. Code §§ 2923.6, 2923.7. See Id. Wells Fargo now moves to dismiss the third amended complaint. See Dkt. No. 51.

         Wells Fargo also requests judicial notice of a loan modification agreement. See Dkt. No. 52. Courts may take judicial notice of documents if they are matters of public record or if the complaint necessarily relies on them. See Lee v. City of Los Angeles, 240 F.3d 754, 774 (9th Cir. 2001); see also Fed. R. Evid. 201(b)(2). The Court declines to take judicial notice of the loan modification agreement. Townsend disputes the authenticity of that document and contends that it is not publicly available. See Dkt. No. 55 at 2-3.

         III. Legal Standard

         A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the non-movant. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337- 38 (9th Cir. 1996). The Court, however, need not accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Although a complaint need not allege detailed factual allegations, it must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         If a court grants a motion to dismiss, leave to amend should be granted unless the pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000); see also Fed. R. Civ. P. 15(a) (“The court should freely give leave [to amend] when justice so requires.”).

         IV. ...

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