Nathan Terry et al v. Wells Fargo Bank NA et al

MOTION to Dismiss The Complaint, or in the Alternative, for a More Definite Statement; Memorandum of Points and Authorities in Support Thereof

N.D. Cal.April 18, 2016

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 55000.1564/4071076.1 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES MARK D. LONERGAN (State Bar No. 143622) THOMAS N. ABBOTT (State Bar No. 245568) JASON M. JULIAN (State Bar No. 215342) jmj@severson.com SEVERSON & WERSON A Professional Corporation One Embarcadero Center, Suite 2600 San Francisco, California 94111 Telephone: (415) 398-3344 Facsimile: (415) 956-0439 Attorneys for Defendants WELLS FARGO BANK, N.A.; and U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION MORTGAGE LOAN TRUST 2007-WF1 (erroneously sued as “U.S. BANK, N.A.”) UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA - SAN FRANCISCO DIVISION NATHAN TERRY, an individual; GERALDINE TERRY, an individual, Plaintiffs, vs. WELLS FARGO BANK, N.A., a business entity; U.S. BANK, N.A., a business entity; and DOES 1-50, inclusive, Defendants. Case No. 3:15-cv-01483-WHA DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS THE COMPLAINT, OR IN THE ALTER- NATIVE, FOR A MORE DEFINITE STATEMENT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: May 26, 2016 Time: 8:00 a.m. Crtrm.: 8, 19th Floor Judge: Honorable William Alsup 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 55000.1564/4071076.1 1 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT PLEASE TAKE NOTICE that on May 26, 2016, at 8:00 a.m., or as soon thereafter as counsel may be heard, in Courtroom 8 of the above-entitled Court, located at 450 Golden Gate Avenue, San Francisco, California 94102, before the Honorable William Alsup, defendants WELLS FARGO BANK, N.A.; and U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION MORTGAGE LOAN TRUST 2007-WF1, erroneously sued as “U.S. BANK, N.A.,” (“Defendants”), will, and hereby do, move to dismiss the Complaint filed by plaintiffs Nathan Terry and Geraldine Terry (“Plaintiffs”), based on Federal Rule of Civil Procedure 12(b)(6) on grounds that the Complaint fails to assert a claim upon which relief may be granted against Defendants. Defendants will also move and hereby do move, in the alternative, for a more definite statement of claims pursuant to Rule 12(e). This motion is based on this notice, the accompanying memorandum of points and authorities, the concurrently filed request for judicial notice, the pleadings and records on file in this action, and any further briefs, evidence, authorities, or argument presented before or at the hearing of this motion. Defendants respectfully request an order dismissing the first, second, third, and fourth causes of action in Plaintiffs’ Complaint with prejudice. DATED: April 15, 2016 SEVERSON & WERSON A Professional Corporation By: /s/ Jason M. Julian Jason M. Julian Attorneys for Defendants WELLS FARGO BANK, N.A.; and U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION MORTGAGE LOAN TRUST 2007- WF1 (erroneously sued as “U.S. BANK, N.A.”) 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 55000.1564/4071076.1 i 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES TABLE OF CONTENTS Page I. INTRODUCTION ......................................................................................................................... 1 II. APPLICABLE LAW AND PERTINENT FACTS...................................................................... 1 III. LEGAL ARGUMENT ................................................................................................................ 3 A. Plaintiffs’ Breach of Contract Claim Fails. ............................................................... 3 B. Plaintiffs’ Violation of Cal. Civ. Code § 2923.6 Claim Fails. .................................. 6 C. Plaintiffs’ Violation of Cal. Civ. Code § 2923.7 Claim Fails. .................................. 7 D. Plaintiffs’ Violation of Cal. Civ. Code § 2924.17 Claim Fails. ................................ 8 E. Plaintiffs’ Violation of Cal. Civ. Code § 2924.10 Claim Fails. ................................ 9 F. Plaintiffs’ UCL Claim Fails. ..................................................................................... 9 IV. ALTERNATIVE MOTION FOR A MORE DEFINITE STATEMENT OF CLAIMS........... 11 V. CONCLUSION .......................................................................................................................... 11 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 55000.1564/4071076.1 ii 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES TABLE OF AUTHORITIES Page(s) CASES A.G. Edwards & Sons, Inc. v. Smith, 736 F.Supp. 1030 (D. Ariz. 1989)..............................................................................................11 Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) ..................................................................................................................1 Associated General Contractors of Cal., Inc. v. California State Council of Carpenters, 459 U.S. 519 (1983) .....................................................................................................................1 Beall v. Quality Loan Serv. Corp., 2011 WL 1044148 (S.D. Cal. Mar. 21, 2011)............................................................................10 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) .............................................................................................................1 Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep’t of Health & Human Res., 532 U.S. 598 (2001) .....................................................................................................................6 Cargill, Inc. v. Souza, 201 Cal.App.4th 962 (2011).........................................................................................................6 Cel-Tech Commc’ns, Inc. v. LA Cellular Tel. Co., 20 Cal.4th 163 (1999)...................................................................................................................9 Committee on Children’s Television, Inc. v. General Foods Corp., 35 Cal.3d 197 (1983)..................................................................................................................10 Cooper v. Pickett, 137 F.3d 616 (9th Cir. 1997)........................................................................................................6 Day v. AT&T Corp. 63 Cal.App.4th 325 (1998) ........................................................................................................10 Gilmore v. Lycoming Fire Ins. Co., 55 Cal. 123 (1880)........................................................................................................................3 Grimes v. New Century Mortg. Corp., 340 F.3d 1007 (9th Cir. 2003)......................................................................................................5 Heritage Pac. Fin., LLC v. Monroy, 215 Cal.App.4th 972 (2013).........................................................................................................4 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 55000.1564/4071076.1 iii 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES Hutson v. American Home Mortg. Servicing, Inc., 2009 WL 3353312 (N.D. Cal. 2009)..........................................................................................10 In re Tobacco II Cases 46 Cal.4th 298 (2009)...................................................................................................................9 Jackson v. Grant, 890 F.2d 118 (9th Cir. 1989)........................................................................................................5 Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal.App.4th 497 (2013).........................................................................................................9 Khoury v. Maly’s of Cal. 14 Cal.App.4th 612 (1993) ........................................................................................................10 Knievel v. ESPN, 393 F.3d 1068 (9th Cir. 2005)......................................................................................................6 Korea Supply Co. v. Lockheed Martin Corp. 29 Cal.4th 1144 (2003) ..............................................................................................................10 Ladas v. California State Auto. Ass’n, 19 Cal.App.4th 761 (1993)...........................................................................................................5 Madrid v. Perot Systems Corp. 130 Cal.App.4th 440 (2005) ......................................................................................................10 Marder v. Lopez, 450 F.3d 445 (9th Cir. 2006)........................................................................................................7 Marquez v. Wells Fargo Bank, N.A. 2013 WL 5141689 (N.D. Cal., Sept. 13, 2013) ...........................................................................8 McKell v. Washington Mut., Inc., 142 Cal.App.4th 1457 (2006)...................................................................................................3, 4 Metzger v. Wells Fargo Bank, N.A. 2014 WL 1689278 (C.D. Cal., Apr. 28, 2014) ............................................................................8 Moss v. U.S. Secret Serv., 572 F.3d 962 (9th Cir. 2009)........................................................................................................1 Mullis v. United States Bankr. Ct., 828 F.2d 1385 (9th Cir. 1987)......................................................................................................2 Otworth v. Southern Pac. Transp. Co., 166 Cal.App.3d 452 (1985)..........................................................................................................4 Peterson Dev. Co. v. Torrey Pines Bank, 233 Cal.App.3d 103 (1991)..........................................................................................................5 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 55000.1564/4071076.1 iv 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES Price v. Wells Fargo Bank, 213 Cal.App.3d 465 (1989)..........................................................................................................5 Progressive West Ins. Co. v. Superior Ct., 135 Cal.App.4th 263 (2005).........................................................................................................3 Rockridge Trust v. Wells Fargo, N.A., 2013 WL 5428722 (N.D. Cal. 2013)............................................................................................7 Rosenfeld v. Nationstar Mortg., LLC, 2013 WL 4479008 (C.D. Cal. 2013)............................................................................................7 Secrest v. Security Nat’l Mortg. Loan Trust 2002-2, 167 Cal.App.4th 544 (2008).........................................................................................................4 Sheet Metal Workers’ Int’l Ass’n Local Union No. 359 v. Madison Indus., Inc., 84 F.3d 1186 (9th Cir. 1996)........................................................................................................6 Singh v. Wells Fargo Bank, N.A., 2009 WL 2365881 (N.D. Cal. 2009)..........................................................................................10 Sprewell v. Golden State Warriors, 266 F.3d 979 (9th Cir. 2001)........................................................................................................2 Trope v. Katz, 11 Cal.4th 274, 278 (1995)...........................................................................................................6 United States v. Ritchie, 342 F.3d 903 (9th Cir. 2003)........................................................................................................7 Wall St. Network, Ltd. v. New York Times Co., 164 Cal.App.4th 1171 (2008).......................................................................................................3 Wise v. Southern Pac. Co., 223 Cal.App.2d 50, 59 (1963)......................................................................................................4 STATUTES Cal. Business & Professions Code § 17200...................................................................................................................................9, 10 § 17204.........................................................................................................................................9 Cal. Civil Code § 1624...........................................................................................................................................4 § 2923.6................................................................................................................................1, 6, 7 § 2923.7....................................................................................................................................1, 7 § 2924...........................................................................................................................................8 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 55000.1564/4071076.1 v 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES Cal. Civil Code § 2924.10..................................................................................................................................1, 9 § 2924.12......................................................................................................................................8 § 2924.17..................................................................................................................................1, 8 Cal. Code of Civil Procedure § 430.10........................................................................................................................................3 RULES Federal Rule of Civil Procedure Rule 12 ...................................................................................................................................1, 11 OTHER AUTHORITIES 4 Witkin, Cal. Procedure, Pleading, §§ 518-520 (5th ed. 2008) ........................................................4 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 55000.1564/4071076.1 1 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Plaintiffs Nathan Terry and Geraldine Terry (“Plaintiff”) defaulted on their mortgage obligations in November 2013. After Plaintiffs’ admitted default, their lenders worked with them to evaluate possible foreclosure avoidance options. Now, Plaintiffs seek to find fault with those good faith efforts and this lawsuit as a negotiating tool against their lenders. The Complaint asserts six claims: (1) for breach of contract; (2) for violation of Cal. Civ. Code § 2923.6; (3) for violation of Cal. Civ. Code § 2923.7; (4) for violation of Cal. Civ. Code § 2924.17; (4) for violation of Cal. Civ. Code § 2924.10; and (6) for violation of California’s Unfair Competition Law (“UCL”). Plaintiffs do not deny their default. The Complaint focuses on an alleged Trial Period Plan (“TPP”), the loan modification application and review process under the California Homeowner Bill of Rights (“HBOR”) and common law. First, Plaintiffs allege that the TPP obligated Defendants to modify Plaintiffs’ loan. Further, Plaintiffs allege that Defendants raised issues with respect to subordination of other liens on the subject real property located at 40135 Margery Court, Fremont, California 94538 ( the “Property”) to deny and delay loan modification review. Neither of these allegations are supported by the judicially noticeable facts, or relevant law. II. APPLICABLE LAW AND PERTINENT FACTS “To survive a motion to dismiss [under Federal Rule of Civil Procedure 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Fed. R. Civ. P. 12(b)(6). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949; see also Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). While the Court accepts as true the well-pleaded facts of a complaint when deciding a motion to dismiss, this presumption does not apply to naked assertions devoid of further factual enhancement or conclusory allegations of law. See Iqbal, 129 S.Ct. at 1949-50; Moss, 572 F.3d at 969. And on a motion to dismiss, courts will not assume that “the [plaintiff] can prove facts which [he or she] has not alleged.” Associated 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 55000.1564/4071076.1 2 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES General Contractors of Cal., Inc. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983). Finally, facts subject to judicial notice may be considered on a motion to dismiss and these facts trump conclusory allegations to the contrary. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Mullis v. United States Bankr. Ct., 828 F.2d 1385, 1388 (9th Cir. 1987). The alleged and judicially noticeable facts are stated below. Defendants do not concede the truth of any of the facts alleged in the Complaint. In 2006, Plaintiffs obtained a $463,960.00 mortgage loan from Wells Fargo Bank, N.A. (the “Loan”). They secured the loan with a trust deed on the Property. (Request for Judicial Notice (“RJN”), Ex. 1.) On November 13, 2006, Plaintiffs further encumbered the Property with a $115,990.00 Second Mortgage. (RJN, Ex. 2.) On April 15, 2011, Plaintiffs further encumbered the Property with a $13,034.28 lien. (RJN, Ex. 3.) The Deed of Trust was assigned to U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION MORTGAGE LOAN TRUST 2007-WF1 on July 26, 2007. (RJN, Ex. 4.) The Deed of Trust was assigned to U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION MORTGAGE LOAN TRUST 2007-WF1 on November 17, 2011. (RJN, Ex. 5.) Plaintiffs defaulted on their Loan obligations. A notice of default was recorded in June 2009, followed by a notice of trustee’s sale in September 2009. (RJN, Exs. 6, 7.) On March 17, 2014, a satisfaction of the $13,034.28 lien was recorded. (RJN, Ex. 8.) The Deed of Trust was assigned to Nationstar Mortgage, LLC on April 30, 2014. (RJN, Ex. 9.) Plaintiffs’ Complaint avers the following, facts, which Defendants do not concede and list for illustrative purposes in this Motion only. “[O]n or around October 24, 2012, WELLS FARGO approved Plaintiffs for a Trial Period Plan.” (Compl. ¶ 11.) “The Trial Period Plan Terms and 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 55000.1564/4071076.1 3 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES Conditions stated, “Upon successful completion of these payments, we will offer you a mortgage modification.’” (Compl. ¶ 11.) Plaintiffs allege they made all timely payments under the alleged TPP. (RJN, Ex.¶ 12.) Regarding a workout review, Plaintiffs allege that “[o]n or around December 12, 2012, WELLS FARGO sent to Plaintiffs a letter, which stated that the subject mortgage loan was not in first lien position and requested signed subordination agreements from each lien holder on the Property.” (Compl., ¶ 13.) Next, Plaintiffs allege that “[o]n or around March 26, 2013, Defendants sent to Plaintiffs a letter which stated that Plaintiffs do not meet the requirements of mortgage assistance program without any basis for the denial.” (Compl., ¶ 19.) From this, Plaintiffs erroneously conclude on “information and belief” that “Defendant WELLS FARGO used the subordination issue as a false pretense in order to delay Plaintiffs’ loan modification review … .” (Compl., ¶ 20.) III. LEGAL ARGUMENT A. Plaintiffs’ Breach of Contract Claim Fails. The standard elements for a breach of contract claim are “(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom.” Wall St. Network, Ltd. v. New York Times Co., 164 Cal.App.4th 1171, 1178 (2008) (citation omitted); see also McKell v. Washington Mut., Inc., 142 Cal.App.4th 1457, 1489 (2006). Plaintiff’s breach of contract action is purportedly based upon a TPP Agreement with Defendants in 2012. (Compl. ¶ 29.) However, no such Agreement is attached to the Complaint. Further, Plaintiffs fail to even set out this all of this agreement’s relevant provisions in their pleading. Their contract claim based on the TPP Agreement is therefore insufficiently pleaded. An action founded on contract must state whether the contract is written, oral, or implied by conduct. See Cal. Code Civ. Proc. § 430.10(g). Furthermore, “[t]o state a cause of action for breach of contract, it is absolutely essential to plead the terms of the contract either in haec verba or according to legal effect.” Progressive West Ins. Co. v. Superior Ct., 135 Cal.App.4th 263, 270 n.1 (2005); see also Gilmore v. Lycoming Fire Ins. Co., 55 Cal. 123, 124 (1880) (“Where a party relies upon a contract in writing, and it affirmatively appears that all the terms of the contract are 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 55000.1564/4071076.1 4 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES not set forth in haec verba, nor stated in their legal effect, but that a portion which may be material has been omitted, the complaint is insufficient.”); Heritage Pac. Fin., LLC v. Monroy, 215 Cal.App.4th 972, 993 (2013); 4 Witkin, Cal. Procedure, Pleading, §§ 518-520, pp. 650-51 (5th ed. 2008). If the plaintiff chooses the in haec verba alternative, “the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.” Otworth v. Southern Pac. Transp. Co., 166 Cal.App.3d 452, 458 (1985) (citing Wise v. Southern Pac. Co., 223 Cal.App.2d 50, 59 (1963)). Otherwise, the contract must be pleaded by its legal effect, but “[t]his is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.” McKell, 142 Cal.App.4th at 1489. Plaintiff alleges a written agreement, but neither attaches it nor sets out its terms verbatim. Since an agreement to modify the terms of a loan secured by real property must be in writing, Plaintiffs must produce a copy of the written enforceable contract. See Cal. Civ. Code § 1624(a)(6); Secrest v. Security Nat’l Mortg. Loan Trust 2002-2, 167 Cal.App.4th 544, 555 (2008). Because the agreement is not attached, no written agreement is properly pleaded in haec verba or pleaded by its legal effect. Plaintiff merely alleges in conclusory fashion that “Defendants breached the Trial Period Plan by failing to provide Plaintiffs with a permanent modification following Plaintiffs performance under the Trial Period Plan.” (Compl. ¶ 31.) They do not set out in their complaint “a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.” With no allegations setting out any terms of the agreement that were breached, Plaintiffs does not properly plead a breach of contract. Plaintiffs’ skeletal pleading leads to a related problem. It appears they contend that they are entitled to a loan modification agreement as a matter of right. They have no breach of contract claim because They have not alleged even a single term of a loan modification agreement. A loan contract requires terms such as the amount, repayment schedule, and interest rate. Absent these required terms, no breach of contract claim will lie. 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 55000.1564/4071076.1 5 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES A contract is void and unenforceable where it is so uncertain and indefinite that the intention of the parties on material questions cannot be ascertained. See Ladas v. California State Auto. Ass’n, 19 Cal.App.4th 761, 770 (1993); see also Price v. Wells Fargo Bank, 213 Cal.App.3d 465, 483 (1989), overruled on other grounds in Riverisland Cold Storage, Inc. v. Fresno-Madera Prod. Credit Ass’n, 55 Cal.4th 1169, 1182 (2013) (in order to constitute a legal contract, a loan agreement must embody definite terms that are capable of enforcement). “Under the law of California, … no loan contract is formed if an essential element is missing.” Grimes v. New Century Mortg. Corp., 340 F.3d 1007, 1010 (9th Cir. 2003); see also Jackson v. Grant, 890 F.2d 118, 120 (9th Cir. 1989). To be sufficiently definite to be enforceable, a loan contract should include the identity of the lender and borrower, the loan amount, and repayment terms. See Peterson Dev. Co. v. Torrey Pines Bank, 233 Cal.App.3d 103, 115 (1991). The interest rate is another essential element to a loan contract. See Grimes, 340 F.3d at 1010. Other than the identity of the parties, Plaintiffs do not allege or demonstrate a single term essential to the creation of an enforceable loan modification contract. Plaintiffs do not show that the supposed modified loan is for any particular amount. They do not aver that there is a particular term or number of repayments or that the parties agreed on loan repayments of any given amount. They do not allege a specific interest rate. Most of the essential terms are absent. A supposed loan modification agreement so lacking in essential terms is unenforceable. See Price, 213 Cal.App.3d at 483. Damages are another element necessary for a breach of contract claim. Plaintiffs’ primary alleged injury is the initiation of the non-judicial foreclosure process on the Property after Plaintiffs’ admitted default. However, they do not factually allege that they were qualified for any loan modification or other type of workout, or that their financial circumstances that led to default has in any way changed. As such, they cannot allege any damages as a result of the pending foreclosure of the Property. It should also be noted that, to the extent Plaintiff seeks attorneys’ fees, attorney fees are not cognizable damages under the “American rule.” Parties bear their own attorneys’ fees unless 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 55000.1564/4071076.1 6 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES they agree or a statute says otherwise. See, e.g., Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep’t of Health & Human Res., 532 U.S. 598, 602 (2001); Sheet Metal Workers’ Int’l Ass’n Local Union No. 359 v. Madison Indus., Inc., 84 F.3d 1186, 1192 (9th Cir. 1996); Trope v. Katz, 11 Cal.4th 274, 278 (1995) (“California follows what is commonly referred to as the American rule, which provides that each party to a lawsuit must ordinary pay his own attorney fees.”); Cargill, Inc. v. Souza, 201 Cal.App.4th 962, 966 (2011) (“Each party to a lawsuit must pay his or her own attorney fees except where a statute or contract provides otherwise.”). As far as alleged damage to their credit, Plaintiffs do not aver facts showing any damage to her credit by Defendants. Plaintiffs do not deny defaulting on their loan. Any resulting credit damage was caused by their own default, not Defendants. Plaintiff does not attach the referenced TPP Agreement nor plead its terms verbatim. They therefore cannot allege any provision of that agreement that Defendants breached. They do not aver the existence of terms making any loan modification contract enforceable. And they do not allege any cognizable damages. The breach of contract claim should be dismissed. B. Plaintiffs’ Violation of Cal. Civ. Code § 2923.6 Claim Fails. Civil Code § 2923.6(g) provides that “the mortgage servicer shall not be obligated to evaluate applications from borrowers who have already been evaluated or afforded a fair opportunity to be evaluated for a first lien loan modification prior to January 1, 2013, or who have been evaluated or afforded a fair opportunity to be evaluated consistent with the requirements of this section,” unless there has been a material change in the borrower’s financial circumstances. The allegations in the Complaint show that Plaintiffs did indeed have a full and fair opportunity to be reviewed for a loan modification. In 2012, Plaintiffs allege that they received a Trial Period Plan. (Compl. ¶ 11.) Indeed, Plaintiffs themselves admit that they were advised that their application had been rejected in March 2013. (Compl. ¶ 19.) It is important to note that Plaintiffs have failed to attach the alleged denial letter to their Complaint. As with the omission of the TPP Agreement, this omission is critical. A document is not considered outside the complaint if it is “incorporated by reference.” See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Cooper v. Pickett, 137 F.3d 616, 622-23 (9th Cir. 1997). A 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 55000.1564/4071076.1 7 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES document is incorporated by reference if the plaintiff “refers extensively to the document or the document forms the basis of plaintiff’s claims.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003); see also Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). Because the alleged denial letter forms the basis for Plaintiffs’ claims, its omission renders the Complaint defective. Plaintiffs make no claim that their financial circumstances have changed. As a result, section 2923.6(g)’s exemption applies. See Rockridge Trust v. Wells Fargo, N.A., 2013 WL 5428722, at *26 (N.D. Cal. 2013) (rejecting “dual tracking” claim where borrower initiated loan modification negotiations in March 2013 because he “was evaluated for a loan modification prior to January 1, 2013” and he alleged no change in his financial circumstances); Rosenfeld v. Nationstar Mortg., LLC, 2013 WL 4479008, at *4 (C.D. Cal. 2013) (“section 2923.6(g) of the Civil Code does not bar defendants from pursuing a foreclosure after evaluating plaintiffs’ first application for a loan modification.”). C. Plaintiffs’ Violation of Cal. Civ. Code § 2923.7 Claim Fails. Plaintiffs allege that Defendants violated California Civil Code § 2923.7. This claim is based upon the same allegations discussed above. As with the 2923.6 claim, it is important to note that Plaintiffs do not attach the purported denial letter, nor do they attach the letter allegedly sent on December 13, 2012 (Compl., ¶ 50). Plaintiffs admit that they were given a decision on their loan modification application, denying that application. (Compl., ¶ 55.) The Complaint appears to deliberately omit the relevant documents which are incorporated by reference in the Complaint. Indeed, the judicially noticeable documents and the allegations clearly show why the third lien on the Property remained an issue with respect to a loan modification. In order for any loan modification to be implemented, any other liens would necessarily need to be subordinated. The lien held by Keep Your Home California was recorded on April 15, 2011. (RJN, Ex. 3.) It was not satisfied until March 17, 2014. (RJN, Ex. 8.) Plaintiffs appear to argue erroneously that the original Deed of Trust was in first position. However, that ignores the rather simply that any modification agreement would potentially lose that first position. Plaintiffs fail to address that issue, and their allegations make no logical sense. 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 55000.1564/4071076.1 8 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES Thus, Wells Fargo did in fact communicate with Plaintiffs and did in fact render a decision. After reviewing the application, and determining Plaintiffs did not qualify for a loan modification, Defendants notified them in writing. D. Plaintiffs’ Violation of Cal. Civ. Code § 2924.17 Claim Fails. Plaintiffs allege Wells Fargo violated California Civil Code section 2924.) (Compl., ¶¶ 60- 65.) As noted above, the private right of action under the HBOR is limited. Section 2924.17 requires foreclosure notices be “accurate and complete and supported by competent and reliable evidence.” (Cal. Civ. Code, § 2924.17.) Violations of this statute are expressly punishable by a civil fine imposed by certain government bodies. (Id. at subd. (c).) Plaintiffs base their claim upon the Notice of Default. (Compl., ¶ 64.) However, Plaintiffs have not alleged any facts from which the Court could conclude the recorded title documents were not “accurate and complete and supported by competent and reliable evidence.” (Cal. Civ. Code, § 2924.17.) The Notice of Default was recorded eight months after Plaintiffs admit they received a loan modification denial letter. (RJN, Ex. 6.) Plaintiffs do not dispute their default or contend any defendant was a stranger to the loan or foreclosure. Furthermore, section “2924.17 provides for liability only for ‘multiple and repeated uncorrected violations’ of recording and filing requirements listed in [section] 2924.17(a), but does not provide a private right of action for a single violation.” (Marquez v. Wells Fargo Bank, N.A. (N.D. Cal., Sept. 13, 2013, C 13-2819 PJH) 2013 WL 5141689 citing Cal. Civ.Code § 2924.17(c)); and (4) section 2924.17 is preempted by the Home Owners Loan Act (“HOLA”) because it imposes requirements on the processing and servicing of mortgages. (Id; see also Metzger v. Wells Fargo Bank, N.A. (C.D. Cal., Apr. 28, 2014, LA CV14-00526 JAK SS) 2014 WL 1689278.) Plaintiffs lack personal knowledge and has not pled a foundation for any reasonable belief that the notice of default and notice of sale were not “accurate and complete and supported by competent and reliable evidence” and they therefore fail to show Defendants “materially” violated section 2924.17. (Cal. Civ. Code, § 2924.12.) For these reasons, the demurrer to the fourth cause of action should be sustained. 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 55000.1564/4071076.1 9 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES E. Plaintiffs’ Violation of Cal. Civ. Code § 2924.10 Claim Fails. The Complaint avers that Defendants recorded a Notice of Trustee’s Sale on February 21, 2014. (Compl., ¶ 70.) However, Plaintiffs admit they received a denial letter in December 2012. (Compl., ¶ 13.) As noted above, there is no obligation under HBOR to review a borrower who has already had an opportunity to be reviewed. This claim fails. F. Plaintiffs’ UCL Claim Fails. Plaintiffs’ claim for violation of California Business Professions Code Section 17200 (“Section 17200”) fails because Plaintiffs lack standing to sue under the statute and have not identified an unfair, unlawful, or fraudulent business practice committed by the Defendants. Moreover, Plaintiffs have not alleged facts supporting entitlement to relief under Section 17200. 1. Plaintiffs Do Not Have Standing Because They Suffered No Injury In Fact A plaintiff only has standing to challenge a business practice under the UCL if they have (1) “suffered injury in fact,” and (2) “lost money or property as a result of” the unfair competition they challenge. Cal. Bus. & Prof. Code § 17204; Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal.App.4th 497, 521 (2013). Absent such a showing, a plaintiff lacks standing to sue under the UCL. See In re Tobacco II Cases, 46 Cal.4th 298, 327-29 (2009).) Plaintiffs claim that as a result of all the allegations, they were denied a loan modification they conclude they were entitled to. However, the Plaintiffs’ alleged harms - non-judicial foreclosure proceedings - occurred as a result of their default on the Loan, not the alleged conduct of Defendants. Jenkins, 216 Cal.App.4th at 523. Plaintiffs have not alleged any lost money or property resulting from the purportedly unfair practices alleged in the Complaint. 2. Plaintiffs’ UCL Claim Fails Because Plaintiffs Have Not Identified an Unlawful, Unfair, or Fraudulent Business Practice In order to satisfy the pleading requirements for a UCL claim, Plaintiffs must allege that Defendants committed an unlawful act, an unfair business practice, or a fraudulent business prac- tice. Cel-Tech Commc’ns, Inc. v. LA Cellular Tel. Co., 20 Cal.4th 163, 180 (1999).) An act is “unlawful” under the UCL if it violates an underlying state or federal statute or common law. (Id.) An act is “unfair” if the act “threatens an incipient violation of an antitrust law, or violates the 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 55000.1564/4071076.1 10 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law.” Id. at 187. A practice is “fraudulent” if members of the public are likely to be deceived. Committee on Children’s Television, Inc. v. General Foods Corp., 35 Cal.3d 197, 211 (1983). Plaintiffs’ Section 17200 claim is merely a reassertion of all of their other claims alleged in the Complaint. As explained herein, all of Plaintiffs’ claims fail. Where the underlying claims are deficient, the Section 17200 claim must also fail. Singh v. Wells Fargo Bank, N.A., 2009 WL 2365881, *5 (N.D. Cal. 2009) (dismissing a mortgage borrower’s claim under the UCL where that claim was derivative of a deficient fraud claim that was also dismissed); Hutson v. American Home Mortg. Servicing, Inc., 2009 WL 3353312, *15-*16 (N.D. Cal. 2009) (dismissing a UCL claim predicated on other failed claims); Beall v. Quality Loan Serv. Corp., 2011 WL 1044148, at *5 (S.D. Cal. Mar. 21, 2011) (same). Because Plaintiffs fail to plead any unfair, unlawful or fraudulent practice, the demurrer to the Section 17200 cause of action must be sustained. 3. Plaintiffs Have Not Alleged Facts Supporting Entitlement to Relief. A demurrer to claims under the UCL are properly sustained where the complaint fails to allege the facts supporting entitlement to relief. (Khoury v. Maly’s of Cal. (1993) 14 Cal.App.4th 612, 619-20.) “[Section 17200] limits the remedies available for violations to restitution and injunctive relief….” (Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440, 452.) “[I]t is well established that individuals may not recover damages” under the UCL. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1144, 1150.) Under the Section 17200 claim, Plaintiffs seek “restitution [and] disgorgement of sums wrongfully obtained.” However, for restitution to be available, the “offending party must have obtained something to which it was not entitled and the victim must have given up something which he or she was entitled to keep.” (Day v. AT&T Corp., 63 Cal.App.4th 325, 340 (1998).) Here, Plaintiffs have not alleged any moneys paid by them, wrongfully obtained by Defendants. Because Plaintiffs fail to plead entitlement to the requested relief, the demurrer must be sustained. 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 55000.1564/4071076.1 11 3:15-cv-01483-WHA MOTION TO DISMISS THE COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IV. ALTERNATIVE MOTION FOR A MORE DEFINITE STATEMENT OF CLAIMS Should any of Plaintiffs’ claims survive the Rule 12(b)(6) challenge, Defendants request, in the alternative, that the Court require a more definite statement of their claims against them pur- suant to Federal Rule of Civil Procedure 12(e). Such a motion is appropriate when a defendant is unable to determine from the complaint what issues it must address or a complaint “is so vague or ambiguous that the party cannot reasonably prepare a response.” See Fed. R. Civ. P. 12(e); see also A.G. Edwards & Sons, Inc. v. Smith, 736 F.Supp. 1030, 1032 (D. Ariz. 1989). V. CONCLUSION For the reasons set forth herein, Defendants respectfully request that this Motion to Dismiss be granted as to the first, second, third, fourth, fifth and sixth causes of action with prejudice. In the alternative, Defendants respectfully request that the Court require a more definite statement of Plaintiff’s claims pursuant to Federal Rule of Civil Procedure 12(e). DATED: April 15, 2016 SEVERSON & WERSON A Professional Corporation By: /s/ Jason M. Julian Jason M. Julian Attorneys for Defendants WELLS FARGO BANK, N.A.; and U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION MORTGAGE LOAN TRUST 2007- WF1 (erroneously sued as “U.S. BANK, N.A.”)