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holding that there was no contract for a loan modification because a letter from defendant to plaintiff stated that if the plaintiff qualified, he may be offered a TPP
Summary of this case from Arroyo v. PHH Mortg. Corp.Opinion
NO. CIV 2:13-00958
2013-10-09
FAIZ SHOLIAY, Plaintiff, v. FEDERAL NATIONAL MORTGAGE ASSOCIATION A/K/A FANNIE MAE, U.S. BANK N.A., and DOES 1 through 50, inclusive Defendants.
MEMORANDUM AND ORDER RE: MOTION
TO DISMISS FIRST AMENDMED
COMPLAINT
Plaintiff Faiz Sholiay brought this action against defendants Federal National Mortgage Association ("Fannie Mae") and U.S. Bank N.A. ("U.S. Bank") arising from the foreclosure of his home. After the court granted defendants' motion to dismiss the original Complaint, plaintiff timely filed a First Amended Complaint ("FAC"). (Docket No. 14.) Defendants now move to dismiss the FAC for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (Docket No. 15-1.)
I. Factual & Procedural History
The factual background of this case is described in detail in the court's July 17, 2013 order granting defendants' motion to dismiss. (Jul. 17, 2013 Order (Docket No. 13).) In short, plaintiff he ceased making mortgage payments to U.S. Bank in June 2011 after he was informed that his monthly mortgage payment would increase from $1,000 to $1,400 per month. (FAC ¶¶ 7, 14.) After he failed to make payments from June to October 2011, National Default Servicing Corporation ("National") , an agent of U.S. Bank Home Mortgage, initiated foreclosure proceedings by issuing and recording a Notice of Default on October 31, 2011. (Id. ¶¶ 9, 15, Ex. 3.)
Prior to the issuance of the Notice of Default, plaintiff sought a loan modification through the Home Affordable Modification Program ("HAMP"). (FAC ¶ 16.) Plaintiff allegedly submitted the required documentation (the "Initial Package") to U.S. Bank in September 2011. (Id.) On September 28, 2011, plaintiff received a letter from U.S. Bank acknowledging receipt of the Initial Package. (Id.) In relevant part, this letter stated:
HAMP is a program initiated the Treasury Department in 2009 "to incentivize banks to refinance mortgages of distressed homeowners so they could stay in their homes." Corvello v. Wells Fargo Bank, N.A., --- F.3d ----, 2013 WL 4017279, at *1 (9th Cir. 2013). The mechanics of obtaining a loan modification, as well as the applicable eligibility guidelines, are set forth in Treasury Supplemental Directive 09-01. See U.S. Treas., HAMP Supplemental Directive 09-01 (Apr. 6, 2009).
If your package is complete, we will determine your eligibility within 30 calendar days from the date we receive the information needed to complete your Package. If you are(Def's Req. for Judicial Notice ("RJN") Ex. A, at 47 (Docket No. 16-1).) Plaintiff alleges that he remained in contact with U.S. Bank through the remainder of 2011 and all of 2012 and provided U.S. Bank with all requested documentation. (FAC ¶ 17.) Plaintiff also alleges that U.S. Bank regularly requested additional documentation from him and voluntarily postponed the trustee's sale multiple times in 2012. (Id.)
ineligible, we will provide you with a written Non-Approval Notice of the reason for your ineligibility. If you are eligible, we will process the Package to determine if you qualify . . . If you qualify for a loss mitigation foreclosure alternative, you may be offered a trial period plan ("TPP"), depending on the alternative.
On September 13, 2012, U.S. Bank sent plaintiff a letter denying his request for a temporary loan modification. (FAC ¶ 18; RJN Ex. A, at 50.) This letter stated that plaintiff was ineligible for a loan modification because he did not provide U.S. Bank with all of the information necessary to process his application. (RJN Ex. A, at 50.) Plaintiff alleges that he did provide this information to U.S. Bank, (FAC ¶ 19), and that he was qualified for a loan modification. (Id. ¶ 20.)
On October 10, 2012, U.S. Bank sent plaintiff a letter listing the additional documents it needed in order to verify his eligibility for a loan modification. (RJN Ex. A, at 54.) Plaintiff alleges that he provided these documents to U.S. Bank, but that U.S. Bank nonetheless refused to offer him a loan modification. (FAC ¶¶ 22-23.) On January 31, 2013, plaintiff's property was sold at a trustee's sale. (Id. ¶ 12.) In February 2013, National issued and recorded a Trustee's Deed Upon Sale, which transferred the property to Fannie Mae. (Id. ¶ 13; RJN Ex. A, at 44-45.)
Plaintiff filed this action in Sutter County Superior Court on April 18, 2013. (Docket No. 1-1.) Plaintiff brought claims for: (1) wrongful foreclosure; (2) fraud; (3) negligent misrepresentation; and (4) violation of the California Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq. U.S. Bank removed the complaint to this court under its diversity jurisdiction pursuant to 28 U.S.C. 1332(a). (Docket No. 1.)
U.S. Bank then moved to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim on which relief can be granted. (Docket No. 7.) The court granted U.S. Bank's motion to dismiss on July 17, 2013 and granted plaintiff leave to file an amended complaint consistent with that Order. (Docket No. 13.) Plaintiff filed a First Amended Complaint, and U.S. Bank now moves to dismiss that complaint for failure to state a claim.
II. Request for Judicial Notice
Although a court is usually "confined to reviewing the body of [the] complaint" on a motion to dismiss, it may "consider documents that were not physically attached to the complaint where the documents' authenticity is not contested, and the plaintiff's complaint necessarily relies on them." Sams v. Yahoo! Inc., 713 F.3d 1175, 1179 (9th Cir. 2013) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001)).
Both U.S. Bank and plaintiff have submitted exhibits consisting, in relevant part, of three letters sent to plaintiff by U.S. Bank on September 28, 2011, September 13, 2012, and October 10, 2012, and the Trustee's Deed Upon Sale. (See RJN 44-55; Compl. Exs. 6-8 (Docket No. 1-1).) Although plaintiff failed to attach these documents to his amended complaint, plaintiff frequently references them and submitted them as exhibits alongside his initial complaint. (See id.) Neither party has contested the authenticity of these documents. The court may therefore consider these documents for purposes of this motion to dismiss. See Lee, 250 F.3d at 688.
The parties have requested judicial notice of various other documents and facts. Because it is not necessary for the court to rely on these sources to resolve this motion, it declines to rule on the parties' requests regarding them.
III. Legal Standard
On a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a motion to dismiss, a plaintiff needs to plead "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," and where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556-57).
IV. Discussion
A. Wrongful Foreclosure
While plaintiff labels his first claim "wrongful foreclosure," his amended claim essentially alleges a breach of contract. Plaintiff alleges that U.S. Bank's agreement to consider plaintiff for a loan modification constituted a promise to offer him a loan modification if he was found eligible under the HAMP guidelines. (FAC ¶ 38.) Plaintiff then alleges that U.S. Bank breached this promise by refusing to offer him a trial loan modification even though he satisfied these guidelines. (Id. ¶¶ 38-41.)
Although plaintiff summarily alleges that "the trustee's sale was wrongful and must be set aside," (see FAC ¶ 36), most of his allegations relevant to his wrongful foreclosure claim sound in contract. (See, e.g., id. ¶ 34 ("A borrower may assert state law claims, such as breach of contract, based directly on a TPP agreement . . . ."); id. ¶ 41 ("This created an implied in law contract enforc[eable] in state court . . . .").)
The court is "focus[ed] on the substance of the plaintiff['s] claims, not the plaintiff['s] labels," and will therefore construe plaintiff's wrongful foreclosure claim as a breach of contract claim. Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 782 (9th Cir. 2012).
Plaintiff also alleges that Fannie Mae is liable for all of the wrongful acts committed by U.S. Bank because it is U.S. Bank's successor. (FAC ¶ 2.) As explained below, plaintiff fails to allege any claim against U.S. Bank, and therefore fails to do so against Fannie Mae.
"To state a claim for breach of contract, a plaintiff must show the following: (1) a contract existed; (2) the plaintiff performed his duties or was excused from performing his duties under the contract; (3) the defendant breached the contract; and (4) the plaintiff suffered damages as a result of that breach." Graybill v. Wells Fargo Bank, N.A., --- F. Supp. 2d ----, 2013 WL 2949587, at *10 (N.D. Cal. Jun. 14, 2013) (citing First Commercial Mortg. Co. v. Reece, 89 Cal. App. 4th 731, 745 (2d Dist. 2001)). In order for a contract "to be enforceable, a promise must be definite enough that a court can determine the scope of the duty and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages." Bustamante v. Intuit, Inc., 141 Cal. App. 4th 199, 205 (6th Dist. 2006) (citation and internal quotation marks omitted). "The [c]ourt cannot enforce a contract unbounded by specific expectations for performance." Banaga v. Taylor Bean Mortg. Co., No. 11-4007 (JSC), 2011 WL 5056985, at *4 (N.D. Cal. Oct. 24, 2011).
Plaintiff alleges, as he did in his initial Complaint, that U.S. Bank sent him a letter on September 28, 2011 that "specifically state[d] that if plaintiff qualified for a 'loss mitigation foreclosure alternative' he would be 'offered a trial period plan (TPP)' by which he would make trial payments." (FAC ¶ 39.) The court cannot take plaintiff's allegation as true insofar as they continue to mischaracterize the contents of this letter. See Dent v. Cox Commc'ns Las Vegas, Inc., 502 F.3d 1141, 1143 (9th Cir. 2007) (holding that a district court need not accept as true allegations that are contradicted by documents properly incorporated in the complaint).
The letter plaintiff references actually states that U.S. Bank would determine plaintiff's eligibility for a loan modification, and, if it did find him eligible, would determine whether he qualified for a loan modification based on his income, property value, creditworthiness, and other data. (RJN Ex. A, at 47.) The letter then states that "if [plaintiff] qualif[ied] for a loss mitigation foreclosure alternative, [plaintiff] may be offered a trial period plan ("TPP"), depending on the alternative." (Id. (emphasis added).)
At no point in this letter did U.S. Bank promise to grant plaintiff a loan modification. Rather, U.S. Bank stated that plaintiff "may" be offered a loan modification if he was eligible and qualified for one. (See id.) Although plaintiff alleges that the use of the word "'may' did not allow [U.S. Bank] to subjectively deny a modification," (FAC ¶ 40), this reading defies conventional usage. See, e.g., Woodbury v. Brown-Dempsey, 108 Cal. App. 4th 421, 433 (4th Dist. 2003) ("Ordinarily, the word 'may' connotes a discretionary or permissive act; the word 'shall' connotes a mandatory or directory duty."); accord United States v. Rodgers, 461 U.S. 677, 706 (1983) ("The word 'may' . . . usually implies some degree of discretion."). To the extent that plaintiff alleges that this letter promised him a loan modification, he cannot state a breach of contract claim because this letter "is plainly not a promise to provide plaintiff with a loan modification." (July 17 Order 7-8.)
Nor can plaintiff state a claim that U.S. Bank breached a promise to "evaluat[e] the modification application." (FAC ¶ 40.) The September 28, 2011 letter made no such promise; rather, it was "merely a description of the HAMP loan modification process." Graybill, 2013 WL 2949587, at *11. Although that letter stated that U.S. Bank would determine plaintiff's eligibility and qualifications for a loan modification, (see RJN Ex. A, at 47), this statement is insufficiently definite to constitute an enforceable promise. While U.S. Bank noted what information it would consider, it did not state how it would ultimately use that information to determine whether plaintiff was eligible and qualified for a loan modification. (See id.) As a result, this letter provides no basis on which the court could conclude that U.S. Bank complied — or failed to comply — with its promise to consider plaintiff's application. See Reed v. Wells Fargo Bank, No. C-11-00194 JSW, 2011 WL 4802542, at *7 (N.D. Cal. Oct. 11, 2011) (holding that an alleged promise to "fairly consider" plaintiff for a loan modification was insufficiently definite because the court "would not be able to ascertain whether Wells Fargo complied with this term.").
Plaintiff's allegations that U.S. Bank promised to process his application "under the HAMP guidelines", (FAC ¶ 38), do not fare any better. See, e.g., Reed, 2011 WL 4802542, at *7 (holding that an alleged promise to "consider a loan modification 'pursuant to defined standards Wells Fargo had established through its regulatory overseers'" was "uncertain" and could not establish an enforceable promise); Banaga, 2011 WL 5056985, at *4 (holding that defendants' alleged promise "to review Plaintiffs for a loan modification under HAMP and/or MHA" was insufficiently definite to form a contract).
Even if U.S. Bank's letter had promised to consider plaintiff for a loan modification, plaintiff has not alleged any facts showing that U.S. Bank violated that promise. Plaintiff's own exhibits, (see Def.'s RJN Ex. A, at 50), show that U.S. Bank did exactly what it stated it would do: it determined that plaintiff was ineligible for a loan modification and notified him of its reasons for doing so. See Trew v. Int'l Game Fish Ass'n, Inc., 404 F. Supp. 2d 1173, 1178 (N.D. Cal. 2005) (holding that defendant's determination that it could not verify plaintiff's claim that he was eligible for a world record did not breach a promise to award plaintiff that record if eligible).
Although plaintiff alleges that he provided all documents requested by U.S. Bank, (FAC ¶¶ 17, 19), he alleges no facts showing that he was in fact eligible or that U.S. Bank failed to consider his application. Cf. Phipps v. Wells Fargo Bank, N.A., No. CV 10-2025 LJO SKO, 2011 WL 302803, at *11 (E.D. Cal. Jan. 27, 2011) ("The obligations . . . which [plaintiff] seeks to assign to defendants are contingent on HAMP eligibility. The complaint merely lists eligibility criteria, not facts that [plaintiff] met them."). As a result, plaintiff cannot show either that U.S. Bank promised to consider his application for a loan modification or that it breached that promise.
After the court issued its earlier Order on July 17, 2013, the Ninth Circuit decided a case involving a promise to extend a permanent loan modification to HAMP participants. Corvello v. Wells Fargo Bank, N.A., --- F.3d ----, 2013 WL 4017279 (9th Cir. Aug. 8, 2013). The Ninth Circuit held that if a borrower "fulfilled all of [his] obligations under the TPP, and the loan servicer has failed to offer a permanent modification, the borrower ha[s] valid claims for breach of the TPP agreement." Id. at *5 (citing West v. JPMorgan Chase Bank, N.A., 214 Cal. App. 4th 780 (4th Dist. 2013)).
While Corvello admittedly qualifies the court's earlier statement that "HAMP does not require a lender or servicer to give a borrower a HAMP modification even if the borrower meets all of HAMP's eligibility requirements," (July 17 Order at 6), it does not compel a different result in this case. Unlike the plaintiffs in Corvello, who had entered into a TPP with Wells Fargo, see 2013 WL 4017279, at *2, plaintiff here never entered into a TPP agreement with U.S. Bank. And unlike Wells Fargo, which promised that it "will" provide a permanent loan modification to any borrower who satisfied the applicable requirements, see id., U.S. Bank stated only that it "may" offer plaintiff a TPP if it determined that he was eligible and qualified for one. (See Def.'s RJN Ex. A, at 47.)
Plaintiff also contends that there was an "implied in law agreement" to place plaintiff into a TPP because U.S. Bank's Servicer Participation Agreement ("SPA") required it to follow the loan approval guidelines set forth by the Treasury Department. (FAC ¶ 41.) Even if U.S. Bank had agreed to follow these guidelines, this "was an agreement between the Bank and the Treasury, an agreement to which [plaintiff is] not a party and which [plaintiff has] no authority to enforce." Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 777 (4th Cir. 2013); see also Gutierrez v. PNC Mortg., Civ. No. 10CV01770 AJB, 2012 WL 1033063, at *12 (S.D. Cal. Mar. 26, 2012) ("[A]greements under the HAMP do not provide . . . [a] private right of action for borrowers as third party beneficiaries."); Hoffman v. Bank of Am., N.A., C 10-2171 SI, 2010 WL 2635773, at *3 (N.D. Cal. Jun. 30, 2010) (noting that "numerous district courts . . . have come to the conclusion that a borrower is not a third party beneficiary" and collecting cases). Even if plaintiff is correct that U.S. Bank's SPA was designed to benefit distressed borrowers, those borrowers "are generally assumed to be incidental beneficiaries, and may not enforce the contract absent a clear intent to the contrary." Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206, 1211 (9th Cir. 1999) (citing Restatement (Second) of Contracts § 313(2)).
Despite plaintiff's frequent assertions to the contrary, the California Court of Appeal's decision in West v. JPMorgan Chase Bank, N.A., 214 Cal. App 4th 780 (4th Dist. 2013), is consistent with this reasoning. As in Corvello, the issue in West was whether the representations in the plaintiff's TPP agreement amounted to a promise of a permanent loan modification, not whether a loan servicer has an obligation to extend a TPP agreement to a borrower in the first place. See 214 Cal. App. 4th at 796-97.
In addition to Corvello and West, defendants cite two other cases in support of their contention that the letter sent by U.S. Bank created an enforceable contract to offer a temporary loan modification. See Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012); Chavez v. Indymac Mortg. Servs., D061997, 2013 WL 5273741 (Cal. Ct. App. 4th Dist. Sep. 19, 2013). Like Corvello and West, these cases are inapposite here because they concern whether a borrower who has entered into a TPP is contractually entitled to a permanent loan modification, rather than whether an applicant is entitled to a temporary loan modification in the first place. See id., 2013 WL 5273741 at *1-2; Wigod, 673 F.3d at 557-558.
More importantly, West did not hold that a borrower who was denied a loan modification could sue as a third-party beneficiary of an agreement between the loan servicer and the Treasury Department. Rather, West relied on the HAMP guidelines to determine "the reasonable expectations of the parties" and to guide its interpretation of the TPP agreement. See id. at 798. Because plaintiff fails to allege that there was an enforceable agreement between himself and U.S. Bank in the first instance, the court need not determine whether the HAMP guidelines informed the parties' understanding of their obligations under any such agreement.
Plaintiff's allegations provide no basis for finding that there was a contract between plaintiff and U.S. Bank to provide plaintiff with a loan modification. Nor do they provide a basis for finding that plaintiff was an intended third party beneficiary of any agreement between U.S. Bank and the Treasury Department to offer a temporary loan modification to qualified borrowers. Accordingly, the court must dismiss plaintiff's wrongful foreclosure claim.
B. Negligent Misrepresentation and Fraud
Like his wrongful foreclosure claim, plaintiff's claims of negligent misrepresentation and fraud are premised on the allegation that plaintiff "was promised . . . that he would be placed into a trial plan program" and that no foreclosure sale would occur during the loan modification process. (FAC ¶ 47.) However, "[a] person may not ordinarily recover in tort for breaches of duties that merely restate contractual obligations." Aas v. Superior Court, 24 Cal. 4th 627, 643 (2000); see also United Guar. Mortg. Indem. Co v. Countrywide Fin. Corp., 660 F. Supp. 2d 1163, 1180 (CD. Cal. 2009) (noting that California law "generally bars tort claims for contract breaches"). "Conduct amounting to a breach of contract becomes tortious only when it violates an independent duty arising from principles of tort law." Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 515 (1994).
Plaintiff does not allege that U.S. Bank made false statements or omissions of fact in order to induce the formation of a contract. See, e.g., Robinson Helicopter Co. v. Dana Corp., 34 Cal. 4th 979, 990-91 (2004) (holding that economic loss rule did not bar plaintiff's claim that defendant fraudulently induced agreement by providing false certificates of conformance); cf. Yost v. Nationstar Mortg., LLC, CIV. NO. 1:13-00745 AWI SAB, 2013 WL 4828590, at *7 (E.D. Cal. Sept. 9, 2013) (noting that the economic loss rule would not bar a fraud claim arising out of a promise to provide a loan modification "if Plaintiffs could show that Defendants' misrepresentations constitute fraud in inducement rather than a mere failure to perform contractual obligations"). Nor does plaintiff allege that U.S. Bank committed any sort of "fraud extraneous to the contract." Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 880 (9th Cir. 2007) (citations and internal quotation marks omitted)).
Rather, the alleged misrepresentation and fraud - U.S. Bank's failure to extend plaintiff a loan modification or to forego a trustee's sale despite its representations that it would do so - "amount[] to nothing more than a failure to perform a promise contained in a contract." Id. at 876; see also Morgan v. Aurora Loan Svcs., LLC, No. CV 12-4350-CAS (MRWx), 2013 WL 3448552, at *6 n.6 (C.D. Cal. Jul. 9, 2013) ("What plaintiff is alleging is that defendants failed to review whether she would qualify for a permanent loan modification . . . despite representing to plaintiff that [they] would do so. Her claim is subsumed within the terms of the parties' agreement.")
Because plaintiff's negligent misrepresentation and fraud claims are based solely on U.S. Bank's alleged "failure to perform [its] contractual obligations, [he] can recover only in contract for the economic losses due to [his] disappointed contractual expectations." Butler-Rupp v. Lourdeaux, 134 Cal. App. 4th 1220, 1229 (1st Dist. 2005). Accordingly, the court must dismiss plaintiff's fraud and negligent misrepresentation claims.
C. California Business & Professions Code Section 17200
California's Unfair Competition Law ("UCL") prohibits unfair competition, which includes "any unlawful, unfair, or fraudulent business act or practice." Cal. Bus. & Prof. Code § 17200. In order to have standing to bring a claim under the UCL, a plaintiff must have "suffered injury in fact and [have] lost money or property as a result." Cal. Bus. & Prof. Code § 17204. This requires the plaintiff to: "(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that economic injury was the result of, i.e., caused by, the unfair business practice . . . that is the gravamen of the claim." Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 322 (2011). There is no causation "when a complaining party would suffer the same harm whether or not a defendant has complied with the law." Daro v. Superior Court, 151 Cal. App. 4th 1079, 1099 (1st Dist. 2007).
Plaintiff's amended complaint reiterates his assertion that U.S. Bank violated the UCL by engaging in a practice of denying loan modifications, misrepresenting his right to challenge the bank's calculation of the Net Present Value of his home, misrepresenting whether a foreclosure sale would occur, and wrongfully conducting a trustee's sale. (FAC ¶ 66.)
Like his initial claim, plaintiff's amended claim fails to allege that this conduct was the cause of his injury. Plaintiff admittedly defaulted on his loan prior to any alleged misconduct by U.S. Bank, (see FAC ¶ 14-15), and his "allegations indicate that plaintiff lost [his] home because [he] defaulted on the loan, not because of defendants' alleged representations that defendants would approve plaintiff for a loan modification." Ortiz v. Am.'s Servicing Co., No. EDCV 12-191 CAS (SPx), 2012 WL 2160953, at *8 (CD. Cal. Jun. 11, 2012); see also DeLeon v. Wells Fargo Bank, N.A., 10-CV-10390-LHK, 2011 WL 311376, at *7 (N.D. Cal. Jan. 28, 2011) ("Without some factual basis suggesting that Plaintiffs could have cured the default . . . the Court cannot reasonably infer that Wells Fargo's alleged misrepresentations resulted in the loss of plaintiff's home. Rather, the facts alleged suggest that Plaintiffs lost their home because they became unable to keep up with monthly payments and lacked the financial resources to cure the default."). As a result, "the alleged post-default misrepresentations could not have caused plaintiff's default, [and] plaintiff lacks standing to bring [his] UCL claim." Ortiz, 2012 WL 2160953, at *8. Accordingly, the court must dismiss plaintiff's UCL claim. D. Leave to Amend
Although plaintiff's UCL claim is entirely bereft of allegations relating to causation, plaintiff does allege elsewhere that U.S. Bank's conduct caused the foreclosure because, "[h]ad plaintiff been informed a sale was going to take place[,] he would . . . have been able to obtain an injunction to enjoin the trustee's sale." (FAC ¶ 50.)
To the extent that this injunction would have been based on U.S. Bank's alleged promise to offer plaintiff a loan modification, (see id.), the court has found that plaintiff's underlying claim lacks merit. Plaintiff identifies no other basis on which he could have enjoined or otherwise prevented the trustee's sale, and this allegation therefore fails to state a plausible claim under the UCL.
While leave to amend must be freely given, the court is not required to permit futile amendments. See DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Because the court has already permitted plaintiffs to amend their pleadings and it appears that plaintiffs are unable to state a viable claim against defendants, all claims will be dismissed with prejudice and without leave to amend.
IT IS THEREFORE ORDERED THAT U.S. Bank's motion to dismiss plaintiff's first amended complaint be, and the same hereby is, GRANTED.
The Clerk of the Court is directed to enter a judgment of dismissal in accordance with this Order and close the file.
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WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE