Carley et al v. Wells Fargo Bank et al

MOTION to Dismiss

N.D. Cal.July 28, 2014

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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 1 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW Regina J. McClendon (State Bar No. 184669) rmcclendon@lockelord.com Stephanie A. Chambers-Wraight (State Bar No. 261025) swraight@lockelord.com LOCKE LORD LLP 44 Montgomery Street, Suite 4100 San Francisco, CA 94104 Telephone: 415-318-8810 Fax: 415-676-5816 Attorneys for Defendant WELLS FARGO BANK, N.A., SUCCESSOR BY MERGER WITH WELLS FARGO BANK SOUTHWEST N.A., FORMERLY KNOWN AS WACHOVIA MORTGAGE FSB, FORMERLY KNOWN AS WORLD SAVINGS BANK FSB UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA CLINT CARLEY; KRISTAL CARLEY, Plaintiffs, vs. WELLS FARGO BANK, Formerly Known As WORLD SAVINGS BANK; CAL-WESTERN RECONVEYANCE, LLC; DOES 1 - 50, Inclusive, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 4:14-cv-03147-JSW NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: September 12, 2014 Time: 9:00 a.m. Courtroom: 5 - 2nd Floor Complaint Filed: June 9, 2014 Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page1 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 2 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW TO THE COURT, ALL PARTIES, AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that on September 12, 2014, at 9:00 a.m., or as soon thereafter as the matter may be heard in the above-entitled Court, defendant Wells Fargo Bank, N.A., successor by merger with Wells Fargo Bank Southwest N.A., formerly known as Wachovia Mortgage FSB, formerly known as World Savings Bank FSB (“Wells Fargo”) (incorrectly sued herein as Wells Fargo Bank, formerly known as World Savings Bank) will bring for hearing, in Courtroom 5 of the United States Courthouse located at 1301 Clay Street, Oakland, California, its Motion to Dismiss the Complaint filed by plaintiffs Clint Carley and Kristal Carley. Wells Fargo seeks dismissal of the Complaint and each of its causes of action pursuant to Federal Rule of Civil Procedure 12(b)(6) on the ground that they fail to state a claim upon which relief can be granted. This Motion is based on this Notice of Motion and Motion, the below Memorandum of Points and Authorities, the concurrently-filed Request for Judicial Notice, the pleadings, papers and records on file in this action, and such oral argument as may be presented at the time of the hearing. Dated: July 28, 2014 Respectfully submitted, LOCKE LORD LLP By: Stephanie A. Chambers-Wraight Regina J. McClendon Stephanie A. Chambers-Wraight Attorneys for Defendant WELLS FARGO BANK, N.A., SUCCESSOR BY MERGER WITH WELLS FARGO BANK SOUTHWEST N.A., FORMERLY KNOWN AS WACHOVIA MORTGAGE FSB, FORMERLY KNOWN AS WORLD SAVINGS BANK FSB Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page2 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 1 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW STATEMENT OF ISSUES TO BE DECIDED The issues to be decided in this motion are: 1. Whether Plaintiffs’ first cause of action for Wrongful Foreclosure states a claim upon which relief can be granted as to Wells Fargo. 2. Whether Plaintiffs’ second cause of action for Promissory Estoppel states a claim upon which relief can be granted as to Wells Fargo. 3. Whether Plaintiffs’ third cause of action for Breach of Covenant of Good Faith and Fair Dealing states a claim upon which relief can be granted as to Wells Fargo. 4. Whether Plaintiffs’ fourth cause of action for Unfair Business Practices states a claim upon which relief can be granted as to Wells Fargo. 5. Whether Plaintiffs’ fifth cause of action for Accounting states a claim upon which relief can be granted as to Wells Fargo. Dated: July 28, 2014 Respectfully submitted, LOCKE LORD LLP By: Stephanie A. Chambers-Wraight Regina J. McClendon Stephanie A. Chambers-Wraight Attorneys for Defendant WELLS FARGO BANK, N.A., SUCCESSOR BY MERGER WITH WELLS FARGO BANK SOUTHWEST N.A., FORMERLY KNOWN AS WACHOVIA MORTGAGE FSB, FORMERLY KNOWN AS WORLD SAVINGS BANK FSB Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page3 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 1 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW SUMMARY OF ARGUMENT Defendant Wells Fargo Bank, N.A., successor by merger with Wells Fargo Bank Southwest N.A., formerly known as Wachovia Mortgage FSB, formerly known as World Savings Bank FSB (“Wells Fargo”) (incorrectly sued herein as Wells Fargo Bank, formerly known as World Savings Bank) moves to dismiss the complaint filed by plaintiffs Clint Carley and Kristal Carley (collectively, “Plaintiffs”) for failure to state a claim. Plaintiffs’ complaint does not satisfy the pleading requirements of Rule 8(a) of the Federal Rules of Civil Procedure, as it consists of mere boilerplate allegations. See Corazon v. Aurora Loan Services, LLC, 2011 WL 1740099, *5 (N.D. Cal. May 5, 2011). Further, each of Plaintiffs’ claims is preempted by the Home Owners’ Loan Act of 1933, 12 U.S.C. §§ 1461, et seq. (“HOLA”). “HOLA’s implementing regulations set forth a list, ‘without limitation,’ of the categories of state laws that are expressly preempted…” Casas v. Wells Fargo Bank N.A., 2012 WL 5877641, *3 (N.D. Cal. 2012). Although “Wells Fargo is not a federal savings bank, as successor-in-interest to World Savings Bank, a federal savings bank and the loan originator, [it] will be treated as such for the purposes of preemption under HOLA.” See Casas, 2012 WL 5877641 at *3. Plaintiffs’ claims directly implicate several preempted categories, including loan servicing and processing under section 560.2(b)(10) and terms of credit and adjustments to loan terms under section 560.2(b)(4), and must be dismissed as preempted by HOLA. See Marquez v. Wells Fargo Bank, N.A., 2013 WL 5141689, *5 (N.D. Cal. Sept. 13, 2013) (dismissing HBOR, UCL, and breach of implied covenant claims premised on allegations that Wells Fargo improperly evaluated the plaintiff for a loan modification on the basis of preemption). And Plaintiffs’ claims would fail even if they were not preempted. Plaintiffs’ first cause of action for various alleged violations of HBOR must fail for the additional reason that Plaintiffs fail to allege that Wells Fargo is not in compliance with the consent judgment entered in United States of America et al. v. Bank of America Corporation et al. Further, Plaintiffs fail to allege facts sufficient to show that Wells Fargo violated any of the statutory provisions enumerated in the complaint. Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page4 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 2 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW Plaintiffs also fail to assert a valid claim for promissory estoppel, as they fatally fail to identify a “clear promise” that is attributable to Wells Fargo. See Melegrito v. CitiMortgage Inc., 2011 WL 2197534, *13 (N.D. Cal. June 6, 2011) Nor do Plaintiffs assert a valid claim for breach of the implied covenant of good faith and fair dealing, as they fail to point to any provision on their loan documents that would somehow entitle them to receive a loan modification. See Racine & Laramie, Ltd. v. Dep’t of Parks and Recreation, 11 Cal.App.4th 1031, 1032 (1992). Plaintiffs’ claim for violations of California’s Business and Professions Code section 17200 (the “UCL”) fails to demonstrate that Wells Fargo engaged in unlawful, unfair, or fraudulent behavior. See Krantz v. BT Visual Images, LLC, 89 Cal.App.4th 164, 178 (2001); Scripps Clinic v. Superior Court, 108 Cal.App.4th 917, 940 (2003); Khoury v. Maly’s of Cal., Inc., 14 Cal.App.4th 612, 619 (1993). Plaintiffs also lack standing under the UCL because they do not allege that they have lost any money or property to Wells Fargo. DeLeon v. Wells Fargo Bank, N.A., 2011 WL 311376, *7 (N.D. Cal. Jan. 28, 2011). Finally, Plaintiffs’ claim for accounting must fail, as they have not pled the existence of a special relationship with Wells Fargo. See Kritzer v. Lancaster, 96 Cal.App.2d 1, 6 (1950). Nor have Plaintiffs alleged that “some balance is due [to them]” from Wells Fargo. Id. For all of these reasons, Wells Fargo’s motion to dismiss should be granted in its entirety. Dated: July 28, 2014 Respectfully submitted, LOCKE LORD LLP By: Stephanie A. Chambers-Wraight Regina J. McClendon Stephanie A. Chambers-Wraight Attorneys for Defendant WELLS FARGO BANK, N.A., SUCCESSOR BY MERGER WITH WELLS FARGO BANK SOUTHWEST N.A., FORMERLY KNOWN AS WACHOVIA MORTGAGE FSB, FORMERLY KNOWN AS WORLD SAVINGS BANK FSB Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page5 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 i MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW TABLE OF CONTENTS I. INTRODUCTION .....................................................................................................................1 II. STATEMENT OF FACTS ........................................................................................................1 III. LEGAL ARGUMENT...............................................................................................................2 A. Plaintiffs’ Complaint Does Not Satisfy Rule 8(a) .........................................................2 B. Plaintiffs’ Claims Against Wells Fargo Are Preempted ................................................2 1. HOLA preempts various categories of state law claims asserted against Wells Fargo, as successor-in-interest to World Savings Bank ..........................3 2. Plaintiffs’ specific claims are preempted by HOLA..........................................5 C. Plaintiffs’ First Cause Of Action For Wrongful Foreclosure Fails To State A Claim..............................................................................................................................6 1. Plaintiffs fail to allege a lack of compliance with the consent judgment ..........6 2. Plaintiffs’ first cause of action fails for additional reasons................................7 D. Plaintiffs’ Second Cause Of Action For Promissory Estoppel Fails To State A Claim............................................................................................................................10 E. Plaintiffs’ Third Cause Of Action For Breach Of The Covenant Of Good Faith And Fair Dealing Fails To State A Claim....................................................................12 F. Plaintiffs’ Fourth Cause Of Action For Unfair Business Practices Fails To State A Claim...............................................................................................................13 G. Plaintiffs’ Fifth Cause Of Action For Accounting Fails To State A Claim.................15 IV. CONCLUSION........................................................................................................................15 Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page6 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 ii MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW TABLE OF AUTHORITIES Page(s) CASES Agosta v. Astor, 120 Cal. App. 4th 596 (2004) ..................................................................................................12 Akopyan v. Wells Fargo Home Mortgage, Inc., 215 Cal.App.4th 120 (2013) ......................................................................................................4 Alperin v. Vatican Bank, 410 F.3d 532 (9th Cir. 2005) .....................................................................................................1 Ambers v. Wells Fargo Bank, N.A., 2014 WL 883752 (N.D. Cal. March 3, 2014)............................................................................3 Appling v. Wachovia Mortg., FSB, 745 F.Supp.2d 961 (N.D. Cal. 2010) .........................................................................................4 Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009)................................................................................................................2 Auer v. Robbins, 519 U.S. 452 (1997)...................................................................................................................5 Babb v. Wachovia Mortg., FSB, 2013 WL 3985001 (C.D. Cal. July 26, 2013)............................................................................4 Bell Atlantic Co. v. Twombly, 550 U.S. 544 (2007).............................................................................................................2, 10 Benham v. Aurora Loan Services, 2009 WL 2880232 (N.D. Cal. Sept. 1, 2009) ..........................................................................12 Bernardo v. Planned Parenthood Fed. of America, 115 Cal.App.4th 322 (2004) ....................................................................................................13 Bionghi v. Metro Water Dist., 70 Cal.App.4th 1358 (1999) ....................................................................................................13 Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal.App.3d 1371 (1990) ...................................................................................................13 Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal.4th 342 (1992) ................................................................................................................12 Casas v. Wells Fargo Bank N.A., 2012 WL 5877641 (N.D. Cal. 2012) .........................................................................................3 Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page7 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 iii MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW Chroma Lighting v. GTE Products Corp., 111 F.3d 137, 1997 WL 175062 (9th Cir. 1997) .....................................................................12 Cleveland v. Aurora Loan Services, LLC, 2011 WL 2020565 (N.D. Cal. May 24, 2011) ...........................................................................7 Daro v. Superior Court, 151 Cal. App. 4th 1079 (2007) ................................................................................................14 DeLeon v. Wells Fargo Bank, N.A., 2011 WL 311376 (N.D. Cal. Jan. 28, 2011) ............................................................................14 Dooms v. Federal Home Loan Mortg. Corp., 2011 WL 1232989 (E.D. Cal. Mar. 31, 2011) .........................................................................11 Ehlert v. America’s Servicing Co., 2011 WL 4862426 (S.D. Cal. Oct. 12, 2011) ..........................................................................11 Flowers v. Wells Fargo Bank, N.A., 2011 WL 2748650 (N.D. Cal. July 13, 2011)..........................................................................15 Hayes v. Wells Fargo Bank, N.A., 2014 WL 3014906 (S.D. Cal. July 3, 2014) ..............................................................................3 Hoffman v. Bank of America, N.A., 2010 WL 2635773 (N.D. Cal. June 30, 2010) ...........................................................................7 Khoury v. Maly’s of Cal., Inc., 14 Cal.App.4th 612 (1993) ......................................................................................................14 Krantz v. BT Visual Images, LLC, 89 Cal.App.4th 164 (2001) ......................................................................................................14 Kritzer v. Lancaster, 96 Cal.App.2d 1 (1950) ...........................................................................................................15 Lal v. American Home Mortg. Servicing, Inc., 2009 WL 3126450 (E.D. Cal. Sept. 24, 2009).........................................................................13 Leids v. Metlife Home Loans, 2009 WL 4894991 (C.D. Cal. Dec. 7, 2009) ...........................................................................13 Lindberg v. Wells Fargo Bank N.A., 2013 WL 1736785 (N.D. Cal. Apr. 22, 2013) ...........................................................................8 Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007)...................................................................................................................5 Marquez v. Wells Fargo Bank, N.A., 2013 WL 5141689 (N.D. Cal. Sept. 13, 2013) ......................................................................4, 6 Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page8 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 iv MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW Marshall v. Wells Fargo Bank, 2013 WL 3287687 (N.D. Cal. June 27, 2013) ...........................................................................6 Melegrito v. CitiMortgage Inc., 2011 WL 2197534 (N.D. Cal. June 6, 2011) ...........................................................................11 Metzger v. Wells Fargo Bank, N.A., 2014 WL 1689278 (C.D. Cal. Apr. 28, 2014) ...................................................................4, 5, 6 Mir v. Little Co. of Mary Hosp., 844 F.2d 646 (9th Cir. 1988) .....................................................................................................1 Mitchell v. Wells Fargo Bank, N.A., 2014 U.S. Dist. LEXIS 7803 (N.D. Cal. Jan. 21, 2014) ............................................................7 Nastrom v. JPMorgan Chase Bank, N.A., 2012 WL 5522795 (E.D. Cal. Nov. 14, 2012)...........................................................................8 Oaks Management Corporation. v. Superior Court 145 Cal.App.4th 453 (2006) 466 .............................................................................................15 Omega v. Wells Fargo & Co., 2011 WL 4345046 (N.D. Cal. Sept. 14, 2011) ..........................................................................5 Ortiz v. Accredited Home Lenders, Inc., 639 F.Supp.2d 1159 (S.D. Cal. 2009)........................................................................................7 Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177 (N.D. Cal. 2009) .....................................................................................14 Pareto v. F.D.I.C., 139 F.3d 696 (9th Cir. 1998) .....................................................................................................1 Pension Trust Fund v. Federal Ins. Co., 307 F.3d 944 (9th Cir. 2002) ...................................................................................................13 Perez v. Wells Fargo Bank, N.A., 2011 WL 3809808 (N.D. Cal. Aug, 29, 2011) ........................................................................14 Quintero Family Trust v. OneWest Bank, F.S.B., 2010 WL 392312 (S.D. Cal. Jan. 27, 2010)...............................................................................7 Racine & Laramie, Ltd. v. Dep’t of Parks and Recreation, 11 Cal. App. 4th 1031 (1992) ..................................................................................................12 Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F.Supp.2d 952 (N.D. Cal. 2010) .........................................................................................8 Roussel v. Wells Fargo Bank, 2012 WL 5301909 (N.D. Cal. October 25, 2012) ...................................................................12 Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page9 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 v MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW Scripps Clinic v. Superior Court, 108 Cal. App. 4th 917 (2003) ..................................................................................................14 Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001 (9th Cir. 2008) ...............................................................................................3, 5 Taguinod v. World Sav. Bank, FSB, 755 F.Supp.2d 1064 (C.D. Cal. 2010) .......................................................................................5 US Ecology, Inc. v. State of California, 129 Cal.App.4th 887 (2005) ....................................................................................................11 Williams v. Wells Fargo Bank, NA, 2013 WL 2047000 (C.D. Cal. May 13, 2013) ...........................................................................4 STATUTES 12 U.S.C. § 1461.................................................................................................................... passim 12 U.S.C. § 5553..............................................................................................................................4 Cal. Bus. & Prof. Code § 17200 ............................................................................................ passim Cal. Bus. & Prof. Code § 17204 ....................................................................................................13 Cal. Civ. Code § 2923.5...........................................................................................................5, 7, 8 Cal. Civ. Code § 2923.6.....................................................................................................7, 8, 9, 10 Cal. Civ. Code § 2923.7...................................................................................................................9 Cal. Civ. Code § 2924.11.................................................................................................................9 Cal. Civ. Code § 2924.12.................................................................................................................6 Cal. Civ. Code § 2924.17...........................................................................................................9, 10 Cal. Civ. Code § 2924.18...............................................................................................................10 FEDERAL REGULATIONS 12 C.F.R. § 560. ...............................................................................................................................2 12 C.F.R. § 560.2 .....................................................................................................................3, 5, 6 Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page10 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 1 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Defendant Wells Fargo Bank, N.A., successor by merger with Wells Fargo Bank Southwest N.A., formerly known as Wachovia Mortgage FSB, formerly known as World Savings Bank FSB (“Wells Fargo”) (incorrectly sued herein as Wells Fargo Bank, formerly known as World Savings Bank) moves to dismiss the complaint filed by plaintiffs Clint Carley and Kristal Carley (collectively, “Plaintiffs”) for failure to state a claim. II. STATEMENT OF FACTS On a motion to dismiss, the Court accepts as true the facts properly pleaded in the complaint, but not conclusions of law. Alperin v. Vatican Bank, 410 F.3d 532, 541 (9th Cir. 2005). In resolving a motion to dismiss, the Court generally accepts as true all material allegations in the complaint, as well as reasonable inferences to be drawn from them. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998). “It is proper for the district court to ‘take judicial notice of matters of public record outside the pleadings’ and consider them for purposes of the motion to dismiss.” Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988). Thus without conceding for any other purpose the truth of Plaintiffs’ allegations, Wells Fargo sets forth the facts pertinent to this motion. Plaintiffs, along with non-parties Rickey Carley and Lucinda Carley (the “Co-Borrowers”) obtained a loan from World Savings Bank, FSB (“World Savings”) in the original amount of $731,250.00. This loan was secured by a deed of trust recorded against the real property located at 1055 King Ridge Road, Ukiah, California (the “Property”) on February 16, 2007. Compl., ¶¶ 1 - 2, 15; Request for Judicial Notice [“RJN”], Exh. A. The deed of trust provided that the lender and beneficiary was World Savings and the trustee was Golden West Savings Association Service, Co. RJN, Exh. A. World Savings was a federal savings bank chartered under the Home Owner’s Loan Act and regulated by the Treasury Department’s Office of Thrift Supervision. RJN, Exh. B. Effective December 31, 2007, World Savings changed its name to Wachovia Mortgage, FSB. RJN, Exh. C. Wachovia remained a federal savings bank until November 1, 2009, when it changed its name to Wells Fargo Bank Southwest, N.A. and merged into Wells Fargo Bank, N.A. RJN, Exhs D - E. Cal-Western Reconveyance LLC was later named the substitute trustee of the deed, of trust, Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page11 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 2 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW and a substitution of trustee was recorded on March 19, 2014. RJN, Exh. F. As a result of Plaintiffs’ default, a notice of default was recorded against the Property on March 19, 2014. Compl., ¶ 9; RJN, Exh. G. This document reflects a default of over $74,000 as of March 2014. RJN, Exh. G. Plaintiffs allege that Plaintiffs submitted a loan modification application to Wells Fargo in December of 2011. Compl., ¶ 15. They claim that Wells Fargo advised the Co-Borrowers to quitclaim their interest in the Property to Plaintiffs to allow the modification review to proceed only as to Plaintiffs in 2013. Compl., ¶ 16. Plaintiffs complain that Wells Fargo engaged in various violations of the Homeowners’ Bill of Rights and failed to offer Plaintiffs a loan modification. III. LEGAL ARGUMENT A. Plaintiffs’ Complaint Does Not Satisfy Rule 8(a) As the Supreme Court has reiterated, Rule 8(a) “demands more than an unadorned, the- defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). A complaint cannot simply “le[ave] open the possibility that a plaintiff might later establish some ‘set of undisclosed facts’ to support recovery.” Bell Atlantic Co. v. Twombly, 550 U.S. 544, 561 (2007). To avoid dismissal under Rule 8(a), a plaintiff must plead sufficient facts “to provide the ‘grounds’ of his ‘entitle[ment] to relief,’ [which] requires more than labels and conclusions, and [for which] a formulaic recitation of the elements of a cause of action will not do.” Id. at 555 (citations omitted). Plaintiffs’ allegations fall far short of alleging facts to state any claim that is plausible against Wells Fargo. Their complaint lacks the basic factual support necessary to substantiate their claims. Plaintiffs’ allegations are nothing more than bald legal conclusions absent any supporting facts. As none of Plaintiffs’ causes of action allege sufficient facts to state claims for relief against Wells Fargo, the entire complaint should be dismissed for failure to comply with Fed. R. Civ. P. 8(a)(2). B. Plaintiffs’ Claims Against Wells Fargo Are Preempted Wells Fargo’s motion to dismiss should be granted in its entirety because Plaintiffs’ causes of action are preempted by the Home Owners’ Loan Act of 1933, 12 U.S.C. §§ 1461, et seq. (“HOLA”) and its implementing regulations promulgated by the Treasury Department’s Office of Thrift Supervision (“OTS”), 12 C.F.R. §§ 560, et seq. Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page12 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 3 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW 1. HOLA preempts various categories of state law claims asserted against Wells Fargo, as successor-in-interest to World Savings Bank HOLA was enacted “to charter savings associations under federal law….” Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001, 1004 (9th Cir. 2008). “To achieve this purpose, Congress authorized the OTS to promulgate regulations governing federal savings associations.” Casas v. Wells Fargo Bank N.A., 2012 WL 5877641, *3 (N.D. Cal. 2012) (citing 12 U.S.C. § 1464; Silvas, 514 F.3d at 1005). “OTS occupies the entire field in that regard.” Id. (citing 12 C.F.R. § 560.2(a)). “HOLA’s implementing regulations set forth a list, ‘without limitation,’ of the categories of state laws that are expressly preempted…” Casas, 2012 WL 5877641 at *3. Those categories include: “The terms of credit, including … adjustments to the interest rate, balance, payments due, or term to maturity of the loan,” “the circumstances under which a loan may be called due and payable upon the passage of time or a specified event external to the loan,” “Loan-related fees, including without limitation, initial charges, late charges, prepayment penalties, servicing fees, and overlimit fees,” “Security property,” “Disclosure and advertising,” and “Processing, origination, servicing, sale or purchase of, or investment or participation in, mortgages.” 12 C.F.R. § 560.2(b)(4)-(5), (b)(7), (b)(9)-(10). “HOLA and its related regulations have been described as ‘so pervasive as to leave no room for state regulatory control.’” Casas, 2012 WL 5877641 at *3 (quoting Conference of Fed. Sav. & Loan Ass’ns v. Stein, 604 F.2d 1256, 1260 (9th Cir.1979), aff’d, 445 U.S. 921 (1980)). “HOLA applies to federal savings associations, including federal savings banks.” Casas, 2012 WL 5877641 at *3 (citing 12 U.S.C. § 1464). And, here, just as in Casas, the loan at issue was originated by World Savings Bank, Wells Fargo’s predecessor-in-interest. See RJN Exhs. A, B. Although “Wells Fargo is not a federal savings bank, as successor-in-interest to World Savings Bank, a federal savings bank and the loan originator, [it] will be treated as such for the purposes of preemption under HOLA.” See Casas, 2012 WL 5877641 at *3; accord: Hayes v. Wells Fargo Bank, N.A., 2014 WL 3014906, *4 (S.D. Cal. July 3, 2014) (holding that HOLA preemption applies to Wells Fargo as successor to World Savings); Ambers v. Wells Fargo Bank, N.A., 2014 WL 883752, *6 (N.D. Cal. March 3, 2014) (“HOLA applies to this case even though Wells Fargo is not a federal savings association because Brent Ambers’s loan originated with World Savings Bank, Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page13 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 4 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW which was a federally chartered savings association regulated by the OTS”); Williams v. Wells Fargo Bank, NA, 2013 WL 2047000, *3 (C.D. Cal. May 13, 2013); Appling v. Wachovia Mortg., FSB, 745 F.Supp.2d 961, 971 (N.D. Cal. 2010). “The fact that World Savings Bank changed its name to Wachovia Mortgage, FSB, and subsequently merged into Wells Fargo does not render HOLA inapplicable.” Marquez v. Wells Fargo Bank, N.A., 2013 WL 5141689, *4 (N.D. Cal. Sept. 13, 2013). Further, a number of courts have held that HOLA preemption attaches to the loan itself based on provisions in the loan documents. See Babb v. Wachovia Mortg., FSB, 2013 WL 3985001, *4 (C.D. Cal. July 26, 2013); Marquez, 2013 WL 5141689 at *4. Here, in signing the deed of trust, Plaintiffs expressly agreed that the loan would be governed by HOLA: “This Security Instrument and the Secured Notes shall be governed by and construed under federal law and federal rules and regulations, including those for federally chartered savings institutions.” RJN Exh. A p. 9 ¶ 15; see also Metzger v. Wells Fargo Bank, N.A., 2014 WL 1689278, *4 (C.D. Cal. Apr. 28, 2014) (relying on identical provision in subject deed of trust). Importantly, the OTS and its predecessor have long held that HOLA preemption attaches to thrift-originated loans even when the loans have been sold or transferred to a non-thrift entity. See OTS Op. Letter No. P-2003-5, 2003 OTS LEXIS 6, at *13 (OTS July 22, 2003); Op. Gen. Counsel, FHLBB, 1985 FHLBB LEXIS 178 at *5 (FHLBB Aug. 13, 1985); Metzger, 2014 WL 1689278 at *4 (explaining that “[t]he OTS has adopted a ‘general principle that loan terms should not change simply because an originator entitled to federal preemption may sell or assign a loan to an investor that is not entitled to federal preemption.’”) (quoting the July 22, 2003 OTS letter); Akopyan v. Wells Fargo Home Mortgage, Inc., 215 Cal.App.4th 120, 143, 148 (2013) (“[T]he OTS intended to occupy the field of lending regulation as to both federal thrifts and their loans.”).1 And courts must give 1 Copies of these OTS and Federal Home Loan Bank Board (“FHLBB”) opinion letters are attached hereto as Exhibits 1 and 2 for the Court’s convenience. Notably, that the OTS has now merged into the OCC under the Dodd-Frank Act does not retroactively alter the HOLA preemption analysis to Plaintiff’s loan. 12 U.S.C. § 5553 (“shall not be construed to alter or affect the applicability of any regulation, order, guidance, or interpretation prescribed, issued, and established by the Comptroller of the Currency or the Director of the Office of Thrift Supervision regarding the applicability of State law under Federal banking law to any contract entered into on or before July 21, 2010…”). Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page14 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 5 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW deference to a federal agency’s reasonable interpretation of its own regulations. Auer v. Robbins, 519 U.S. 452, 461 (1997). An agency’s interpretation controls unless it is plainly erroneous or inconsistent with the regulations. Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 170-171 (2007). Thus, the OTS’ interpretation of 12 C.F.R. § 560.2, as expressed in its interpretive letters, “must be given controlling weight.” Silvas, 514 F.3d at 1005. 2. Plaintiffs’ specific claims are preempted by HOLA All of Plaintiffs’ causes of action relate to Plaintiffs’ default and alleged efforts to seek a loan modification. More specifically, Plaintiffs contend that Wells Fargo engaged in various violations of the Homeowner’s Bill of Rights (“HBOR”) in connection with the pending foreclosure of the Property. Because such claims relate to the “processing” and “servicing” of mortgages, they are necessarily preempted by HOLA. See Metzger, 2014 WL 1689278 at *6-8; see also Omega v. Wells Fargo & Co., 2011 WL 4345046, *5 (N.D. Cal. Sept. 14, 2011) (“[C]ourts within this and neighboring districts, both before and after Mabry, have concluded that claims based on violations of Section 2923.5 are preempted as applied, because such claims relate to the “processing, origination, servicing [or] sale of ... mortgages ...” and, thus, fall within 12 C.F.R. § 560.2(b)(10).”). This is true even when such claims are couched as claims for breach of the implied covenant of good faith and fair dealing or for violations of Business and Professions Code section 17200 (the “UCL”). “[W]hen plaintiffs rely on state laws of general application, their claims are preempted if the state laws, as applied to federal savings and loans, require affirmative action by the federal savings and loans association or other behavior specific to savings and loans activity.” Metzger, 2014 WL 1689278 at * 7 (citations omitted). Because these claims relate to the servicing of Plaintiffs’ loan; they are preempted as a result. See Taguinod v. World Sav. Bank, FSB, 755 F.Supp.2d 1064, 1072 (C.D. Cal. 2010) (“HOLA preempts any state law claim relating to good faith and fair dealing in lending.”); Metzger, 2014 WL 1689278 at * 8 (“Plaintiffs’ ability to ‘plead a viable claim under [Section] 17200 depends on [their] being able to plead some underlying fraud or unfair practice that is not preempted by HOLA.’ ”) (citations omitted). Plaintiffs also allege that Wells Fargo made various representations concerning their receipt of a loan modification which were false. But these claims again relate directly to the servicing of Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page15 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 6 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW Plaintiffs’ loan. Once again for purposes of preemption analysis, it is of no consequence that such claims are titled as claims for promissory estoppel or violations of the UCL. See Metzger, 2014 WL 1689278 at *7. Plaintiffs’ claims directly implicate several preempted categories, including loan servicing and processing under section 560.2(b)(10) and terms of credit and adjustments to loan terms under section 560.2(b)(4), and must be dismissed as preempted by HOLA. See Marquez, 2013 WL 5141689 at *5 (dismissing HBOR, UCL, and breach of implied covenant claims premised on allegations that Wells Fargo improperly evaluated the plaintiff for a loan modification on the basis of preemption); Metzger, 2014 WL 1689278 at *6-8 (dismissing HBOR, negligence, breach of implied covenant, and UCL claims based on allegations that Wells Fargo improperly evaluated the plaintiff for a loan modification on the basis of preemption); see also Marshall v. Wells Fargo Bank, 2013 WL 3287687, *6 (N.D. Cal. June 27, 2013). Thus, Wells Fargo’s motion should be granted and the entire complaint should be dismissed because all of Plaintiffs’ causes of action are preempted. C. Plaintiffs’ First Cause Of Action For Wrongful Foreclosure Fails To State A Claim 1. Plaintiffs fail to allege a lack of compliance with the consent judgment Plaintiffs’ first cause of action for various alleged violations of HBOR must fail for the additional reason that Plaintiffs fail to allege that Wells Fargo is not in compliance with the consent judgment entered in United States of America et al. v. Bank of America Corporation et al. Plaintiffs allege that Wells Fargo violated California Civil Code sections 2923.5, 2923.6, 2923.7, 2924.11, and 2924.17. Civil Code section 2924.12 is the provision of the HBOR that provides the remedies for violations of these sections. See Civ. Code § 2924.12. Section 2924.12(g) expressly provides that “[a] signatory to a consent judgment entered in the case entitled United States of America et al. v. Bank of America Corporation et al., filed in the United States District Court for the District of Columbia, case number 1:12-cv-00361 RMC, that is in compliance with the relevant terms of the Settlement Term Sheet of that consent judgment with respect to the borrower who brought an action pursuant to this section while the consent judgment is in effect shall have no liability for a violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page16 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 7 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW 2924.11, or 2924.17.” Wells Fargo is a signatory to that consent judgment. RJN Exh. H. Moreover, the consent judgment was entered on April 4, 2012 and is effective for three and a half years from that date. Id. pp. 6. Accordingly, Plaintiffs’ claim fails because Plaintiffs have failed to allege that Wells Fargo is not in compliance with the relevant terms of the Settlement Term Sheet. See, e.g. Mitchell v. Wells Fargo Bank, N.A., 2014 U.S. Dist. LEXIS 7803 (N.D. Cal. Jan. 21, 2014) (granting motion to dismiss HBOR claims, explaining that “Wells Fargo is a signatory to the National Mortgage Settlement Agreement (NMSA) in Bank of America Corporation et al., such that compliance with the Settlement Terms Sheet insulates Wells Fargo from liability for any violation of section 2923.6.”).2 Thus, Plaintiffs’ claim for alleged HBOR violations must be dismissed on this basis as well. 2. Plaintiffs’ first cause of action fails for additional reasons Even setting aside those issues discussed above, Plaintiffs’ first cause of action still fails as a matter of law. Plaintiffs claim that they qualified for a loan modification under HAMP and that Wells Fargo “violated” HAMP by failing to inform them whether their modification application was denied, scheduling the foreclosure sale of the Property, and sending Plaintiffs a new loan modification application. Compl., ¶ 23. However, a borrower has no private right of action to sue lenders or loan services for alleged violations of HAMP guidelines. See, Cleveland v. Aurora Loan Services, LLC, 2011 WL 2020565, *3-4 (N.D. Cal. May 24, 2011) (collecting authority); Hoffman v. Bank of America, N.A., 2010 WL 2635773, at *3 (N.D. Cal. June 30, 2010) (collecting authority). Plaintiffs also allege that Wells Fargo violated Civil Code section 2923.5, which requires a lender to “assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” Compl., ¶ 24. However, section 2923.5 “does not require a lender to actually modify a defaulting borrower’s loan.” Ortiz v. Accredited Home Lenders, Inc., 639 F.Supp.2d 1159, 1166 (S.D. Cal. 2009). Instead, “[a]ll that the statute requires is for Defendants to contact or attempt to contact Plaintiffs in a good faith effort to avoid foreclosure.” Quintero Family Trust v. OneWest Bank, F.S.B., 2010 WL 392312, *14 (S.D. Cal. Jan. 27, 2010). Here, Plaintiffs’ admission that they 2 Indeed, the monitor appointed by the court found that Wells Fargo was in compliance with the consent judgment between May 2, 2013 and December 31, 2013. RJN. Ex. I, pp. 7, 18 - 20. Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page17 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 8 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW were in negotiations concerning a potential loan modification before the notice of default was recorded demonstrates that Wells Fargo did not fail to explore loan modification options. See Compl., ¶¶ 15 - 16; see also Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F.Supp.2d 952, 962 (N.D. Cal. 2010) (dismissing section 2923.5 claim where plaintiff alleged that defendant had not contacted him in compliance with the statute while also alleging that plaintiff and defendant’s representatives had had repeated phone conversations about the possibility of a loan modification). Additionally, Plaintiffs claim that Wells Fargo violated section 2923.6 which allegedly sets forth “the mortgage lender’s obligation to offer the borrower a loan modification.” Compl., ¶ 25. Contrary to Plaintiffs’ characterization of section 2923.6, it does not require any lender to give a borrower loan modification.3 Instead, it states that “If a borrower submits a complete application for a first lien loan modification offered by, or through, the borrower’s mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale, while the complete first lien loan modification application is pending.” Cal. Civ. Code § 2923.6(c) (emphasis added). Section 2923.6(h) further explains that “an application shall be deemed ‘complete’ when a borrower has supplied the mortgage servicer with all documents required by the mortgage servicer within the reasonable timeframes specified by the mortgage servicer.” Cal. Civ. Code § 2923.6(h). Finally, Section 2923.6(c) provides a that “complete” loan modification application prohibits further steps towards foreclosure only if certain other acts have not occurred. See Cal. Civ. Code § 2923.6(c)(1)-(3). Here Plaintiffs do not adequately allege that they submitted a “complete” loan modification application as that term is defined in Section 2923.6(h). See Lindberg v. Wells Fargo Bank N.A., 2013 WL 1736785, *3 (N.D. Cal. Apr. 22, 2013) (“Section 2923.6 provides only that a lender may not foreclose if the borrower ‘submits a complete application for loan modification.’ Because plaintiff cannot establish that she submitted a completed modification application, this argument 3 Indeed, “[i]n California, lenders do not have a statutory duty to agree to a mortgage loan modification.” Nastrom v. JPMorgan Chase Bank, N.A., 2012 WL 5522795, *6 (E.D. Cal. Nov. 14, 2012) (emphasis added) (citing Hamilton v. Greenwich Investors XXVI, LLC, 195 Cal.App.4th 1602, 1617 (2010)). Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page18 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 9 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW fails.”). Nor was Wells Fargo under any obligation to review what was admittedly Plaintiffs’ second loan modification application. See Compl., ¶ 18; see also Cal. Civ. Code § 2923.6(g). Plaintiffs’ contention that Wells Fargo violated section 2924c(a)(1) fares no better. Section 2924c, which relates to the legal requirements for conducting foreclosure, does not require an accounting to be provided prior to foreclosure, or at any other time. Rather, section 2924c merely allows borrowers to reinstate their loans after defaulting by paying all arrearages, including late fees and interest and all other accrued amounts. Plaintiffs do not allege that Wells Fargo failed to state the amount of arrearages due and owing in the notice of default at the time it was issued. Indeed, the notice of default clearly states that the amount of Plaintiffs’ default was $74,111.97 as of March 17, 2014. RJN, Exh. G. And Plaintiffs fail to adequately allege that Wells Fargo did not provide them with a single point of contact concerning their loan modification in violation of Civil Code section 2923.7 Section 2923.7 defines a “single point of contact” as “an individual or team of personnel each of whom has the ability and authority to perform the responsibilities described in subdivisions (b) to (d), inclusive. The mortgage servicer shall ensure that each member of the team is knowledgeable about the borrower's situation and current status in the alternatives to foreclosure process.” Civ. Code § 2923.7(e) (emphasis added). Plaintiffs do not allege that the individuals with whom they spoke concerning their 2013 loan modification application did not meet these requirements. Further, section 2924.11(a) provides that a notice of default may not be recorded if “a foreclosure prevention alternative is approved in writing prior to the recordation of a notice of default” and “[t]he borrower is in compliance with the terms of a written trial or permanent loan modification, forbearance, or repayment plan” or “proof of funds or financing has been provided to the servicer.” Civ. Code § 2924.11(a). Here, Plaintiffs do not allege that any foreclosure prevention alternative was approved in writing by Wells Fargo prior to the recording of the notice of default. Nor do they allege that they were in compliance with its terms or provided proof of funds showing their ability to comply with its terms. And contrary to Plaintiffs’ characterization of this statute, section 2924.17(a) states in pertinent part that “a notice of default, notice of sale, assignment of a deed of trust, or substitution of Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page19 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 10 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW trustee recorded by or on behalf of a mortgage servicer in connection with a foreclosure subject to the requirements of Section 2924 … shall be accurate and complete and supported by competent and reliable evidence.” Civ. Code § 2924.17(a). Section 2924.17(b) then states that “[b]efore recording or filing any of the documents described in subdivision (a), a mortgage servicer shall ensure that it has reviewed competent and reliable evidence to substantiate the borrower's default and the right to foreclose, including the borrower's loan status and loan information.” Civ. Code § 2924.17(b). Plaintiffs plead no facts indicating that the notice of default recorded against the Property was not “accurate and complete and supported by competent and reliable evidence” that substantiated “the borrower’s default and the right to foreclose.” Cal. Civ. Code § 2924.17(a)-(b). Indeed, Plaintiffs do not deny that they were in default on their loan obligations. Plaintiffs’ claim that Wells Fargo violated section 2924.18 is misplaced. Section 2923.18 only governs small volume lenders and servicers. See Civ. Code § 2924.18(b) (“This section shall apply only to a depository institution ... that, during its immediately preceding annual reporting period ... foreclosed on 175 or fewer residential real properties....”); cf. Civ. Code § 2923.6 (applying to large volume servicers and providing additional requirements to those set forth in Section 2924.18). Plaintiffs do not (and cannot) plead facts showing that Wells Fargo is such an institution. Finally, as discussed above, Plaintiffs’ threadbare allegations are insufficient to state a claim against Wells Fargo. Plaintiffs assert no facts in support of their allegations. Instead, it appears that Plaintiffs merely recite the various ways in which a defendant might violate the Homeowner’s Bill of Rights. See Twombly, 550 U.S. at 555 (A plaintiff must plead sufficient facts “to provide the ‘grounds’ of his ‘entitle[ment] to relief,’ [which] requires more than labels and conclusions, and [for which] a formulaic recitation of the elements of a cause of action will not do.”). For all of these reasons, Plaintiffs’ first cause of action must be dismissed. D. Plaintiffs’ Second Cause Of Action For Promissory Estoppel Fails To State A Claim Even were it not preempted, Plaintiffs’ second cause of action still fails as a matter of law, as it is inadequately pled. Under California law, “[t]he elements of promissory estoppel are: ‘(1) a clear promise; (2) reasonable reliance; (3) substantial detriment; and (4) damages ‘measured by the extent Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page20 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 11 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW of the obligation assumed and not performed.’” Melegrito v. CitiMortgage Inc., 2011 WL 2197534, *13 (N.D. Cal. June 6, 2011) (citations omitted). The alleged promise must be “clear and unambiguous in its terms” and the plaintiff’s “reliance must be both reasonable and foreseeable.” US Ecology, Inc. v. State of California, 129 Cal.App.4th 887, 905 (2005). Furthermore, a plaintiff must allege facts for the proposition that the defendant’s alleged conduct caused his or her damages. Id. at 907-908. Here a “clear promise” has not been pled. Plaintiffs plead that Wells Fargo either “promised” them (1) that they would be approved for a modification if the “co-borrowers” quitclaimed their interest in the Property to Plaintiffs (Compl., ¶ 41); (2) that Plaintiffs qualified for a modification (Compl., ¶ 42); (3) that Plaintiffs would be considered for a modification (Compl., ¶ 43); or (4) that a modification program was available (Compl., ¶ 44). Thus the exact nature of the alleged “promise” is far from clear. Further, allegations that a defendant “agree[d] to a loan modification with unspecified terms at some point in the unspecified future are insufficient to permit the court to reasonably infer that [a defendant] made a clear promise to modify [the] loan.” See Melegrito, 2011 WL 2197534 at *13. Plaintiffs’ vague allegations concerning a “promise” to provide them with a loan modification (or that they would be considered for a modification, or that there was a modification program that may be available) is therefore insufficient to support a promissory estoppel claim. See Dooms v. Federal Home Loan Mortg. Corp., 2011 WL 1232989, *10 (E.D. Cal. Mar. 31, 2011) (dismissing a promissory estoppel claim where the plaintiff failed to specify the terms of the loan modification); Ehlert v. America’s Servicing Co., 2011 WL 4862426, *2 (S.D. Cal. Oct. 12, 2011) (finding that “[p]laintiffs have failed to allege a clear and unambiguous promise and the first element of a claim for promissory estoppel is therefore missing” where “[t]he alleged oral agreement contains none of the terms of the future loan modification”). Wells Fargo’s motion to dismiss that claim should be granted on this basis as well. Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page21 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 12 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW E. Plaintiffs’ Third Cause Of Action For Breach Of The Covenant Of Good Faith And Fair Dealing Fails To State A Claim Plaintiffs’ third cause of action purports to assert a claim for breach of the covenant of good faith and fair dealing. This claim is based entirely on those alleged HBOR violations discussed above and Wells Fargo’s failure to grant Plaintiffs a loan modification. Compl., ¶¶ 52 - 53. Even were this claim not preempted, “[u]nder California law, the implied covenant of good faith protects only the express promises of the contract.” Chroma Lighting v. GTE Products Corp., 111 F.3d 137, 1997 WL 175062, *4 (9th Cir. 1997) (citations omitted). It “rests upon the existence of some specific contractual obligation.” Racine & Laramie, Ltd. v. Dep’t of Parks and Recreation, 11 Cal. App. 4th 1031, 1032 (1992) (emphasis added). “The covenant ‘cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.’” Agosta v. Astor, 120 Cal. App. 4th 596, 607 (2004) (emphasis added) (quoting Guz v. Bechtel National, Inc., 24 Cal.4th 317, 349-50 (2000)). Here, the only contract that Plaintiffs identify is the “mortgage loan agreement.” Compl., ¶ 51. Presumably, Plaintiffs are referring to their deed of trust. However, the deed of trust allows the exact conduct Plaintiffs take issue with: initiating foreclosure upon default. RJN, Exh. A. The covenant of good faith and fair dealing cannot “be read to prohibit a party from doing that which is expressly permitted by an agreement.” Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal.4th 342, 374 (1992); see, e.g., Benham v. Aurora Loan Services, 2009 WL 2880232, *3 (N.D. Cal. Sept. 1, 2009) (dismissing breach of implied covenant claim because defendant held “legal title to the interests granted by Plaintiff in the Deed of Trust, and had the right to foreclose and sell the property if Plaintiff defaulted on her loan”). And Plaintiffs point to no provision in the deed of trust which provides that they were entitled to receive a loan modification. See Roussel v. Wells Fargo Bank, 2012 WL 5301909, *7 (N.D. Cal. October 25, 2012) (“Plaintiff points to no clause in his loan agreement that gives him the right to be considered for or receive a loan modification, or that obliges Defendant to consider him for a loan modification. Since Defendant had no duty to consider Plaintiff’s loan modification, Defendant’s failure to properly consider Plaintiff's loan modification Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page22 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 13 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW application was not the cause of the imminent foreclosure of Plaintiff’s home; rather, Plaintiff’s default on his mortgage caused the imminent foreclosure.”) Moreover, Plaintiffs do not identify any failure by Wells Fargo to discharge its contractual obligations. Thus, Plaintiffs fail to allege that “the conduct of the defendant…demonstrates a failure or refusal to discharge [the defendant’s] contractual responsibilities…which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” See Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal.App.3d 1371, 1395 (1990) (emphasis added). Finally, “tort recovery for breach of the covenant of [good faith and fair dealing] is available only in limited circumstances, generally involving a special relationship between the contracting parties….” Bionghi v. Metro Water Dist., 70 Cal.App.4th 1358, 1370 (1999). The “implied covenant tort is not available to parties of an ordinary commercial transaction where the parties deal at arms’ length.” Pension Trust Fund v. Federal Ins. Co., 307 F.3d 944, 955 (9th Cir. 2002); see also Lal v. American Home Mortg. Servicing, Inc., 2009 WL 3126450, *4 (E.D. Cal. Sept. 24, 2009) (“California has rejected a rule that would apply tort recovery for breach of the implied covenant in ‘normal commercial banking transactions.’”). Here Plaintiffs have “pled no facts establishing a ‘special relationship’ between” themselves” and Wells Fargo. See Leids v. Metlife Home Loans, 2009 WL 4894991, *3 (C.D. Cal. Dec. 7, 2009). Thus, to the extent they seek tort damages for their breach of the implied covenant claim, Plaintiffs’ claim must fail. Plaintiffs’ third cause of action should be dismissed in its entirety. F. Plaintiffs’ Fourth Cause Of Action For Unfair Business Practices Fails To State A Claim In their fourth cause of action, Plaintiffs purport to assert a claim for violations of the UCL. Setting aside the preemption issues discussed above, to state a claim under the UCL, a plaintiff must allege that a given defendant engaged in an “unlawful, unfair or fraudulent business act or practice” which caused the plaintiff to suffer “injury in fact” and “lost money or property.” See Bus. & Prof. Code § 17204; Bernardo v. Planned Parenthood Fed. of America, 115 Cal.App.4th 322 (2004). In doing so, “[a] plaintiff must state with reasonable particularity the facts supporting the statutory Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page23 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 14 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW elements of the violation.” Khoury v. Maly’s of Cal., Inc., 14 Cal.App.4th 612, 619 (1993). Initially, Plaintiffs have not alleged the existence of any “unlawful, unfair or fraudulent business act or practice.” To the extent this claim is brought under the “unlawful” prong of the UCL, it fails because Plaintiffs fail to properly allege the violation of any other law. See Krantz v. BT Visual Images, LLC, 89 Cal.App.4th 164, 178 (2001) (“unlawful” prong requires underlying violation of law); Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177, 1190-91 (N.D. Cal. 2009) (“[S]ince the Court has dismissed all of the Plaintiff’s predicate violations, Plaintiff cannot state a claim under the unlawful business practice prong of the UCL.”). To whatever extent Plaintiffs attempt to bring this claim under the UCL’s “unfair” or “fraudulent” prong, this claim is inadequately pled. An “unfair” practice must be “tethered” to specific “constitutional, statutory, or regulatory provisions.” Scripps Clinic v. Superior Court, 108 Cal. App. 4th 917, 940 (2003). Because Plaintiffs fail to plead, with particularity, that Wells Fargo engaged in such “unfair” practices, they fail to state a claim under the “unfair” prong of the UCL. See Khoury, 14 Cal.App.4th at 619 (UCL claims must be pled with particularity). Further, “to state a claim under the UCL based on fraudulent conduct, a plaintiff must allege, with particularity, facts sufficient to establish that the public would likely be deceived by Defendants’ conduct.” Perez v. Wells Fargo Bank, N.A., 2011 WL 3809808, *16 (N.D. Cal. Aug, 29, 2011). No such conduct is alleged here. See id. at *16 (dismissing UCL claim explaining that “Plaintiffs have not met this standard because they have not identified specific deceptive statements or omissions … or alleged facts showing why those specific statements or omissions would be likely to deceive the public.”). Finally, Plaintiffs lack standing to bring a UCL claim against Wells Fargo at all. “To bring a claim under the UCL, … [a plaintiff] must have suffered an injury in fact and lost money or property as a result of [the] alleged unfair or fraudulent practices.” DeLeon v. Wells Fargo Bank, N.A., 2011 WL 311376, *7 (N.D. Cal. Jan. 28, 2011) (citing Cal. Bus. & Prof. Code § 17204). “That causal connection is broken when a complaining party would suffer the same harm whether or not a defendant complied with the law.” Daro v. Superior Court, 151 Cal. App. 4th 1079, 1099 (2007). In this case, Plaintiffs do not allege that they paid Wells Fargo any money other than that due and Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page24 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 15 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW owing on their loan. Further, the Property has not yet sold at foreclosure sale. And even if it had, such sale would be the result of Plaintiffs’ default on the mortgage loan, not any wrongful conduct by Wells Fargo.4 Plaintiffs lack standing to assert a UCL claim against Wells Fargo as a result. For these additional reasons, Plaintiffs’ fourth cause of action must be dismissed. G. Plaintiffs’ Fifth Cause Of Action For Accounting Fails To State A Claim Plaintiffs claim that they require an accounting so that they might determine “[t]he amount of money due to Defendants from Plaintiffs.” Compl., ¶ 65. However, “[t]o state a cause of action for an accounting, a plaintiff must allege [1] a fiduciary relationship or other circumstances appropriate to the remedy; and [2] a balance due from the defendant to the plaintiff that can only be ascertained by an accounting.” Flowers v. Wells Fargo Bank, N.A., 2011 WL 2748650, *7-8 (N.D. Cal. July 13, 2011). Plaintiffs’ claim for accounting must fail, as they have not pled the existence of a special relationship with Wells Fargo. See Kritzer v. Lancaster, 96 Cal.App.2d 1, 6 (1950) (an accounting frequently “presents a fiduciary relation between the parties in the nature of a trust which brings it especially within equitable remedies”); Oaks Management Corporation. v. Superior Court (Ayyad), 145 Cal.App.4th 453 (2006) 466 (“Absent ‘special circumstances’ a loan transaction ‘is at arms- length and there is no fiduciary relationship between the borrower and lender.’”). Further, Plaintiffs fail to allege facts sufficient to show that “some balance is due [to them]” from Wells Fargo. See Kritzer, 96 Cal.App.2d at 6. Plaintiffs contend that an accounting is necessary so that they can determine the amount of their own indebtedness on the loan. See Compl., ¶ 65. As such, they are not entitled to an accounting, and this claim must fail. IV. CONCLUSION For all of these reasons, Wells Fargo respectfully requests that this Court grant this motion and dismiss Plaintiffs’ complaint in its entirety. 4 Notably, while the allegations of the complaint do not reflect that Plaintiffs lost any property, they do allege that Plaintiffs actually obtained property: Plaintiffs claim that the Co-Borrowers deeded their interest in the Property to Plaintiffs. Compl., ¶ 17. Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page25 of 26 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 L oc k e L or d L L P 4 4 M o n tg om er y S tr ee t, S u it e 41 0 0 S a n F ra n ci sc o , C A 94 10 4 16 MOTION TO DISMISS COMPLAINT FOR FAILURE TO STATE A CLAIM Carley v. Wells Fargo Bank, et al.; Case No. 4:14-cv-03147-JSW Dated: July 28, 2014 Respectfully submitted, LOCKE LORD LLP By: Stephanie A. Chambers-Wraight Regina J. McClendon Stephanie A. Chambers-Wraight Attorneys for Defendant WELLS FARGO BANK, N.A., SUCCESSOR BY MERGER WITH WELLS FARGO BANK SOUTHWEST N.A., FORMERLY KNOWN AS WACHOVIA MORTGAGE FSB, FORMERLY KNOWN AS WORLD SAVINGS BANK FSB Case4:14-cv-03147-JSW Document16 Filed07/28/14 Page26 of 26