Atikur R. Khan et al v. Phh Mortgage Corporation et al

NOTICE OF MOTION AND MOTION to Dismiss First and Sixth Causes of Action of the Third Amended Complaint

C.D. Cal.May 15, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ALAN S. PETLAK (SBN 179362) petlaka@ballardspahr.com DAVID J. REED (SBN 206338) reedd@ballardspahr.com TANYA M. TAYLOR (SBN 312881) taylortm@ballardspahr.com BALLARD SPAHR LLP 2029 Century Park East, Suite 800 Los Angeles, California 90067-2909 Telephone: 424.204.4400 Facsimile: 424.204.4350 Attorneys for Defendants PHH Mortgage Corporation and Citibank National Association, as Trustee for GSAA Home Equity Trust 2007-9 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA – WESTERN DIVISION ATIKUR R. KHAN, et al., PLAINTIFFS, vs. PHH MORTGAGE CORPORATION, a New Jersey Corporation, et al., DEFENDANTS. Case No. 2:15-CV-03213-BRO-E [Assigned to the Hon. Beverly Reid O’Connell] NOTICE OF MOTION AND MOTION TO DISMISS THE FIRST AND SIXTH CAUSES OF ACTION OF THE THIRD AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION [Fed. R. Civ. P. 12(b)(6)] [Filed concurrently with Request for Judicial Notice; [Proposed] Order] Date: June 26, 2017 Time: 1:30 p.m. Ctrm: 7C DMEAST #28503624 v1 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 1 of 14 Page ID #:858 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO PLAINTIFFS AND THEIR ATTORNEYS: Please take notice that, on June 26, 2017 at 1:30 p.m. before the Honorable Beverly Reid O’Connell in Courtroom 7C of the United States Courthouse, 350 West 1st Street, Los Angeles, CA 90012, Defendants PHH Mortgage Corporation and Citibank National Association, as Trustee for GSAA Home Equity Trust 2007-9 (collectively “Defendants”), will move to dismiss the first cause of action for wrongful foreclosure and sixth cause of action for negligent misrepresentation in Plaintiffs’ Third Amended Complaint (“TAC”) pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted on the grounds that: (1) Plaintiffs have failed to plead the requisite facts to support their causes of action; and (2) Plaintiffs’ causes of action fail as a matter of law. This Motion is based upon this Notice, the Memorandum of Points and Authorities, Defendants’ Request for Judicial Notice (“RJN”), the argument of counsel at the hearing, if any, and any further matters as this Court deems proper to consider. This Motion is also brought following a conference of counsel pursuant to L.R. 7-3 which took place on May 8, 2017. An informal resolution was not reached, thus, necessitating the filing of this Motion. DATED: May 15, 2017 ALAN S. PETLAK DAVID J. REED TANYA M. TAYLOR BALLARD SPAHR LLP /s/ Tanya M. Taylor Tanya M. Taylor Attorneys for Defendants PHH Mortgage Corporation and Citibank National Association, as Trustee for GSAA Home Equity Trust 2007-9 DMEAST #28503624 v1 2 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 2 of 14 Page ID #:859 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page(s) I. INTRODUCTION ........................................................................................... 1 II. STATEMENT OF FACTS AND PROCEDURAL HISTORY ...................... 1 III. ARGUMENT .................................................................................................. 3 A. Applicable Legal Standard .................................................................... 3 B. The Court Should Dismiss Plaintiffs’ First and Sixth Causes of Action .................................................................................................... 4 1. Plaintiffs’ First Cause of Action under Civil Code Section 2923.6 Fails as a Matter of Law because Plaintiffs Defaulted under a Prior Modification. ........................................ 4 2. Plaintiffs’ Sixth Cause of Action for Negligent Misrepresentation Fails as a Matter of Law. .............................. 6 IV. CONCLUSION ............................................................................................... 9 DMEAST #28503624 v1 i NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 3 of 14 Page ID #:860 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 137 (2009) ........................................................................ 4 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007) ............................................................................................. 4 Deschaine v. IndyMac Mortg. Servs., 617 Fed. Appx. 690 (9th Cir. 2015) ......................................................................... 5 Duran v. World Sav. Bank, FSB, 2016 U.S. Dist. LEXIS 67280 (C.D. Cal. Apr. 29, 2016) ....................................... 5 Lovelace v. Software Spectrum Inc., 78 F.3d 1015 (5th Cir. 1996) .................................................................................... 4 Maib v. F.D.I.C., 771 F. Supp. 2d 14 (D. D.C. 2011) .......................................................................... 4 Missud v. Oakland Coliseum Joint Venture, 2013 U.S. Dist. LEXIS 29915 (N.D. Cal. Mar. 5, 2013) ......................................... 3 N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578 (9th Cir. 1983) .................................................................................... 4 National Union Fire Ins. Co. of Pittsburgh, PA, 171 Cal. App. 4th at 50 (2009) ................................................................................. 7 Office Depot Inc. v. AIG Specialty Insurance Company, 2016 WL 6106408 (C. D. Cal. June 6, 2016) .......................................................... 7 Richard P. v. Vista Del Mar Child Care Service, 106 Cal. App. 3d 860 (1980) .................................................................................... 8 Sears, Roebuck & Co. v. Metropolitan Engravers, Limited, 245 F.2d 67 (9th Cir. 1956) ...................................................................................... 4 Tarmann v. State Farm Mut. Auto Ins. Co., 2 Cal. App. 4th 153 (1991) ....................................................................................... 8 Wood v. Kalbaugh, 39 Cal. App. 3d 926 (1974) ...................................................................................... 7 Statutes Cal. Civil Code § 2923.6 ................................................................................. 1, 4, 5, 6 Cal. Civil Code § 2923.6(c) ......................................................................................... 5 Cal. Civil Code § 2923.6(c)(1) .................................................................................... 5 Cal. Civil Code § 2923.6(c)(2) .................................................................................... 5 Cal. Civil Code § 2923.6(c)(3) .................................................................................... 5 Cal. Civil Code § 2924.12(g) ....................................................................................... 6 Other Authorities 5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 678 p. 779 ............................................................................ 8 DMEAST #28503624 v1 ii NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 4 of 14 Page ID #:861 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Rules Fed. R. Civ. P. 12(b)(6) ............................................................................................... 3 Fed. R. Evid. 201(d) .................................................................................................... 4 Federal Rule of Appellate Procedure 32.1(a) .............................................................. 5 DMEAST #28503624 v1 iii NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 5 of 14 Page ID #:862 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION This motion seeks dismissal with prejudice of two causes of action, Plaintiffs’ first cause of action under § 2923.6 and Plaintiffs’ second cause of action for negligent misrepresentation. This Court previously dismissed Plaintiffs’ section 2923.6 cause of action with leave to amend, and dismissed Plaintiffs’ negligence cause of action with prejudice. Plaintiffs have attempted to plead their § 2923.6 cause of action again and have replaced their negligence cause of action with a negligent misrepresentation cause of action, but their amendment and replacement fail. Plaintiffs have failed to state a claim for violation of Cal. Civil Code § 2923.6 because that statute does not apply to borrowers who have breached previously modified loans. Plaintiffs have failed to state a cause of action for negligent misrepresentation based on Defendants’ purported promise that their loan modification application was complete and that their modification review process would be complete in several weeks. See TAC ¶¶ 170 & 173. This allegation does not constitute a material fact and Plaintiffs have not sufficiently alleged reliance, intent, or causation. Further, a negligent misrepresentation cause of action may not be based on a future promise such as this one. For these reasons, the first and sixth causes of action should be dismissed with prejudice. II. STATEMENT OF FACTS AND PROCEDURAL HISTORY On May 25, 2007, Plaintiffs obtained a loan in the amount of $750,000.00 from Banco Popular, N.A. (the “Loan”). See TAC at Exhibit ‘A’. The Loan was secured by a deed of trust executed by Plaintiffs on May 25, 2007, and recorded on June 1, 2007 in the Office of the Recorder of Deeds for Los Angeles County as Document No. 20071329880 (the “Deed of Trust”), which secured repayment of the Loan with real property located at 816206 Alpine Place, La Mirada, CA 90638 (the “Property”). See id. Pursuant to the terms of the Deed of Trust, Banco Popular, N.A. was named as the lender, Mortgage Electronic Registration Systems, Inc. (“MERS”) was named as the beneficiary, solely as nominee for the lender and the DMEAST #28503624 v1 1 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 6 of 14 Page ID #:863 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 lender’s successors and assigns, and First American Title (“First American”) was named as the trustee. See id. Plaintiffs agreed to grant and convey the Property to First American, as trustee, and agreed that the trustee would have the power to sell the Property upon default. See id. Soon thereafter, Plaintiffs defaulted and sought a loan modification from PHH. Plaintiffs entered into a loan modification agreement, which was recorded on July 20, 2010 as Document No. 20100992715. See Request for Judicial Notice (“RJN”), Ex. 1. In 2012, Plaintiffs submitted an application to PHH in pursuit of a second loan modification (the “First Application”). See TAC at ¶ 17. PHH reviewed Plaintiffs for a loan modification, and on July 25, 2012 issued a denial letter, advising Plaintiffs that they were not eligible for a loan modification because their income was insufficient to cover their monthly expenses. See TAC at ¶ 19. On August 6, 2012, almost immediately after receiving the denial letter, Plaintiffs submitted a new request for a loan modification (the “Second Application”). See TAC at ¶ 20. Subsequently, Plaintiffs again defaulted on the Loan by failing to make the required monthly payment due May 1, 2013 and each month thereafter. See TAC at ¶ 22, & Exhibit ‘D.’ Defendant Aztec Foreclosure Corporation (“Aztec”) was substituted as trustee under the Deed of Trust, see TAC at ¶ 6, and on October 1, 2013, Aztec recorded a Notice of Default (“NOD”), commencing the non-judicial foreclosure proceedings against the Property. See TAC at ¶ 23 & Exhibit ‘D’. Effective September 5, 2013, MERS assigned the beneficial interest under the Deed of Trust to Citibank, and an Assignment of Deed of Trust (the “Assignment”) was recorded on September 17, 2013 in the Office of the Recorder of Deeds for Los Angeles County as Document Number 20131353676. See TAC at ¶ 5 & Exhibit ‘B.’ Plaintiffs failed to cure the default and on January 2, 2014, Aztec proceeded to schedule a foreclosure sale for January 23, 2014 by recording a Notice of DMEAST #28503624 v1 2 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 7 of 14 Page ID #:864 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Trustee’s Sale (the “Notice of Sale”) in the Office of the Recorder of Deeds for Los Angeles County as Document 20140001195. See TAC ¶ 6 & Exhibit ‘C’. The sale was subsequently postponed, and on October 22, 2014 Plaintiffs submitted another application for a loan modification to PHH. See TAC at ¶¶ 26 - 27. Plaintiffs submitted an additional application in February 2015. See TAC at ¶ 55. On March 2, 2015, Plaintiffs submitted additional documents requested by PHH. See TAC at ¶ 57. A second Notice of Trustee’s Sale was recorded on March 5, 2015, setting a sale date of March 26, 2015. See TAC at ¶ 58. On March 19, 2015, Plaintiffs filed a complaint in the Superior Court of California for Los Angeles County, case number VC064664, commencing this action. The complaint was removed to this Court on April 29, 2015, and the Parties stipulated to a stay of the action to pursue settlement discussions. See Docket Nos. 13 & 17. During the stay, PHH conducted yet another review for a potential loan modification, and ultimately, reached the same conclusion, that the Plaintiffs do not qualify for a loan modification because their income is insufficient to cover their monthly expenses. Plaintiffs were informed of the denial of their application “on or around June 9, 2015.” See TAC, ¶ 60. Plaintiffs objected to this determination, and asked for yet another review. During that review Plaintiffs left the country and Plaintiffs’ counsel moved offices. As a result, the review stopped and had to restart after Plaintiffs’ return. See Docket No. 35. PHH approved Plaintiffs for a trial period plan on March 21, 2017. See TAC ¶ 74. III. ARGUMENT A. Applicable Legal Standard A complaint may be dismissed for failure to state a claim for which relief can be granted under Fed. R. Civ. P. 12(b)(6) of the Federal Rules of Civil Procedure. The purpose of a motion to dismiss under Fed. R. Civ. P. 12(b)(6) is to test the legal sufficiency of the complaint. Missud v. Oakland Coliseum Joint Venture, 2013 U.S. Dist. LEXIS 29915 at *37 (N.D. Cal. Mar. 5, 2013) (citing N. Star Int’l v. Ariz. DMEAST #28503624 v1 3 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 8 of 14 Page ID #:865 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 1983)). In two decisions in the last eight years – Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 137 (2009) – the Supreme Court established more rigorous standards for complaints to survive motions to dismiss. Thus, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of a cause of action’s elements will not do.” Twombly, 127 S. Ct. at 1964-65. In order to defeat a dismissal motion, a plaintiff must allege facts that are sufficient to raise his right to relief “above the speculative level.” Twombly, 127 S. Ct. at 1965. In sum, a plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Twombly, 127 S. Ct. at 1974; Iqbal, 129 S. Ct. at 1949. In deciding a motion to dismiss for failure to state a claim upon which relief can be granted, courts may consider matters of which they may take judicial notice, in addition to considering the complaint and documents attached to or incorporated in the complaint. Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1017-18 (5th Cir. 1996). “The court may take judicial notice at any stage of the proceeding.” Fed. R. Evid. 201(d). “[J]udicial notice may be taken of a fact to show that a complaint does not state a cause of action.” Sears, Roebuck & Co. v. Metropolitan Engravers, Limited, 245 F.2d 67, 70 (9th Cir. 1956). Also, a court may review documents outside of the complaint if it was relied upon by the plaintiff’s complaint. Maib v. F.D.I.C., 771 F. Supp. 2d 14, 17 (D. D.C. 2011). B. The Court Should Dismiss Plaintiffs’ First and Sixth Causes of Action 1. Plaintiffs’ First Cause of Action under Civil Code Section 2923.6 Fails as a Matter of Law because Plaintiffs Defaulted under a Prior Modification. Plaintiffs’ first cause of action should be dismissed again because Cal. Civil Code §2923.6 does not apply where a borrower obtains, and then defaults under, a DMEAST #28503624 v1 4 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 9 of 14 Page ID #:866 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 loan modification. Generally, section 2923.6 prohibits dual tracking, by prohibiting a servicer from taking certain affirmative steps to advance the foreclosure process if a borrower has submitted “a complete loss mitigation application.” Cal. Civil Code § 2923.6(c). Specifically, the Section provides that if a borrower has submitted a complete loss mitigation application, the servicer shall not record a notice of default or notice of sale, or conduct a sale, until the servicer makes a written determination that the borrower is not eligible and any appeal period has expired, the borrower fails to accept a modification offer, or the borrower accepts and then defaults on a modification offer. Cal. Civ. Code §§ 2923.6(c)(1)-(3). After a borrower defaults on a loan that was modified prior to January 1, 2013, the provisions under section 2923.6 do not apply and the lender is free to proceed with foreclosure. Cal. Civ. Code § 2923.6(c)(3); Duran v. World Sav. Bank, FSB, 2016 U.S. Dist. LEXIS 67280, at *8 (C.D. Cal. Apr. 29, 2016) (“a lender may file notice of default, notice of sale, or commence a foreclosure sale upon a subject property if the mortgagor defaults on a previously modified first lien loan.”); Deschaine v. IndyMac Mortg. Servs., 617 Fed. Appx. 690, 693 (9th Cir. 2015) (because of Deschaine’s multiple defaults, Deschaine did not have a statutory right to appeal subsequent loan modification application denials.”).1 Here, Plaintiffs allege that their loan was modified in 2009 and that they defaulted under the modified payments. See TAC, ¶¶ 14, 22. Accordingly, subsection (c)(3) applies to this case, and the dual-tracking provisions do not. This Court already ruled that Plaintiffs failed to allege any material change in their financial circumstances prior to August 2015. See Docket No. 58 at p. 9-10 (Order on Motion to Dismiss Second Amended Complaint). Further, any alleged violation after August 2015 was cured when Defendants offered Plaintiffs a trial loan modification on March 21, 2017. 1 Although Deschaine is unpublished, pursuant to Federal Rule of Appellate Procedure 32.1(a), citations to unpublished orders by the Ninth Circuit are permitted, although such decisions are non-precedential. DMEAST #28503624 v1 5 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 10 of 14 Page ID #:867 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TAC, ¶ 74 & Exhibit ‘E.’ Cal. Civil Code § 2924.12(g) states that a servicer is not liable for anything cured before the sale. Thus, Plaintiffs’ section 2923.6 cause of action fails, and the Court should dismiss the first cause of action with prejudice. 2. Plaintiffs’ Sixth Cause of Action for Negligent Misrepresentation Fails as a Matter of Law. Plaintiffs amended their Complaint to introduce, for the first time, a negligent misrepresentation cause of action (see TAC ¶¶ 166–184), but the cause of action fails for numerous reasons. This Court previously dismissed Plaintiffs’ negligence cause of action twice, finding that Plaintiffs’ FAC and SAC failed adequately to allege the third requirement for a negligence cause of action: causation. See Docket No. 49 at p. 17 and Docket No. 58 at p. 19 (Order on Motion to Dismiss First Amended Complaint and Order on Motion to Dismiss Second Amended Complaint). Plaintiffs’ negligent misrepresentation cause of action fails for five reasons: first Plaintiffs do not allege a material fact that PHH made a misrepresentation of; second Plaintiffs’ cannot allege reasonable reliance; third Plaintiffs do not allege that PHH intended that they rely on any purported misrepresentation; fourth Plaintiffs’ causation allegations fail as a matter of law; and fifth Plaintiffs do not allege a statement regarding past or existing material facts and statements as to future actions are not actionable under a negligent misrepresentation claim. Plaintiffs allege that Defendants misrepresented to them that their application was complete and that no further documents were needed and that the modification review process would be complete in several weeks. (See TAC ¶¶ 170 & 173). Plaintiffs have not alleged the misrepresentation of a material fact. A cause of action for negligent misrepresentation requires: (1) the misrepresentation of a material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage. National Union Fire Ins. Co. of DMEAST #28503624 v1 6 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 11 of 14 Page ID #:868 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pittsburgh, PA v. Cambridge Integrated Services Group, Inc.,171 Cal. App. 4th 35, 50 (2009) ; Office Depot Inc. v. AIG Specialty Insurance Company, Case No. 2:15- cv-02416-SVW-JPR, 2016 WL 6106408, at *6 (C. D. Cal. June 6, 2016). A fact is material if it is likely to affect the conduct of a reasonable person with reference to the transaction in question. Wood v. Kalbaugh, 39 Cal. App. 3d 926, 931 (1974). The supposed misrepresentation alleged by Plaintiffs was not of a material fact. It was only an estimate of when the review process would be completed. The estimate of how long the review process could take would not affect the conduct of a reasonable person in the Plaintiffs’ circumstances here: Plaintiffs could not apply for a modification from another lender and Plaintiffs could not declare bankruptcy. See TAC ¶ 25. Accordingly, Defendants’ alleged statement regarding when they would complete the review does not rise to the level of materiality, and Plaintiffs’ sixth cause of action fails for this reason alone. Even if Plaintiffs can prove that the alleged statement were material, Plaintiffs still cannot allege that they reasonably relied on the alleged misrepresentation to their detriment. The element of reliance must be pleaded with specificity. National Union Fire Ins. Co. of Pittsburgh, PA, 171 Cal. App. 4th at 50. Here, Plaintiffs do not allege facts showing that they changed their position in reliance on any alleged misrepresentation. Further, Plaintiffs do not allege the element of intent. A negligent misrepresentation cause of action requires that the defendant intended to induce another’s reliance on the fact misrepresented. See National Union Fire Ins. Co., 171 Cal. App. 4h at 50. Here, Defendants did not and could not have had the requisite intent. Plaintiffs’ tenacious, repeated applications for a modification demonstrated their determination to obtain a modification. Nothing PHH said about how long the review might take was intended to deter Plaintiffs from applying for a loan modification. Moreover, Plaintiffs cannot prove that Defendants are the cause of their DMEAST #28503624 v1 7 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 12 of 14 Page ID #:869 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 alleged resulting damage. Even though Plaintiffs assert that Defendants’ alleged delays were the cause of increase of their modified loan payment, it is Plaintiffs’ own failure to make a single payment since May 1, 2013, that gave rise to Plaintiffs’ increased payment. Plaintiffs’ current modified loan payments are an accurate reflection of the accumulation of interest as a result of Plaintiffs’ long term failure to pay on their loan. Had Plaintiffs made timely payments as required by the loan agreement, Plaintiffs’ payments would have remained the same. Thus, Plaintiffs’ own conduct was the cause of Plaintiffs’ alleged injury. Further, the status reports filed by Plaintiffs prove that Plaintiffs were the cause of their alleged resulting damage. In the status report filed by Plaintiffs’ counsel on April 1, 2016, Plaintiffs admit that they were the cause of a 90-day delay. See Docket No. 35 at 2 (“Plaintiffs were out of the country and therefore could not immediately provide the requested documents. At the same time, Plaintiffs’ counsel were unexpectedly forced to relocate offices and as a result, again delaying the transmission of the requested documents . . . the Parties expect that it will take an additional ninety (90) days, approximately, for the loan modification review to be completed.”) Since Plaintiffs admit that they were a substantial cause of the delay, they cannot allege that they relied on an alleged statement previously made by Defendants regarding how long the review would take. Finally, Plaintiffs’ negligent misrepresentation cause of action fails because it is based on an alleged future fact. “To be actionable, a negligent misrepresentation must be as to past or existing material facts. ‘[P]redictions as to future events, or statements as to future action by some third party, are deemed opinions, and not actionable fraud.’” Tarmann v. State Farm Mut. Auto Ins. Co., 2 Cal. App. 4th 153, 158 (1991) (citing 5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 678 pp. 779-789; Richard P. v. Vista Del Mar Child Care Service, 106 Cal. App. 3d 860, 865 (1980)). As discussed above, Plaintiffs allege that Defendants misrepresented that the modification review process would be complete in several weeks. This DMEAST #28503624 v1 8 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 13 of 14 Page ID #:870 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 alleged misrepresentation regarding the timing of the modification review is not actionable, because it is an opinion based on something that will happen in the future. Therefore, Plaintiffs’ sixth cause of action should be dismissed with prejudice. IV. CONCLUSION For the foregoing reasons, Defendants PHH Mortgage Corporation and Citibank National Association, as Trustee for GSAA Home Equity Trust 2007-9 respectfully request that the Court grant its Motion and dismiss the first and sixth causes of action in Plaintiffs’ TAC with prejudice. DATED: May 15, 2017 ALAN S. PETLAK DAVID J. REED TANYA M. TAYLOR BALLARD SPAHR LLP /s/ Tanya M. Taylor Tanya M. Taylor Attorneys for Defendants PHH Mortgage Corporation and Citibank National Association, as Trustee for GSAA Home Equity Trust 2007-9 DMEAST #28503624 v1 9 NOTICE OF MOTION AND MOTION TO DISMISS THIRD AMENDED COMPLAINT Case 2:15-cv-03213-BRO-E Document 60 Filed 05/15/17 Page 14 of 14 Page ID #:871 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA – WESTERN DIVISION ATIKUR R. KHAN, et al., PLAINTIFFS, vs. PHH MORTGAGE CORPORATION, a New Jersey Corporation, et al., DEFENDANTS. Case No. 2:15-CV-03213-BRO-E [Assigned to the Hon. Beverly Reid O’Connell] [PROPOSED] ORDER GRANTING MOTION TO DISMISS THE FIRST AND SIXTH CAUSES OF ACTION OF THE THIRD AMENDED COMPLAINT Date: June 26, 2017 Time: 1:30 p.m. Ctrm: 7C Case 2:15-cv-03213-BRO-E Document 60-1 Filed 05/15/17 Page 1 of 2 Page ID #:872 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Having considered the Motion to Dismiss filed by Defendants PHH Mortgage Corporation; Citibank, National Association, as Trustee for GSAA Home Equity Trust 2007, and any response thereto, this Court hereby grants the Motion, and the first and sixth causes of actions of Plaintiffs’ Third Amended Complaint are DISMISSED WITH PREJUDICE. IT IS SO ORDERED. DATED: ____________________________________ The Honorable Beverly Reid O’Connell United States District Judge 2 Case 2:15-cv-03213-BRO-E Document 60-1 Filed 05/15/17 Page 2 of 2 Page ID #:873