Padma Vanjani v. U.S. Bank, N.A. et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.July 5, 2017

1 Case No. 2:16-cv-04805-JAK-KS NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT 929871.1 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 McGLINCHEY STAFFORD Brian A. Paino (SBN 251243) Hassan Elrakabawy (SBN 248146) Allison O. Chua (SBN 284680) 18201 Von Karman Avenue, Suite 350 Irvine, California 92612 Telephone: (949) 381-5900 Facsimile: (949) 271-4040 Email: bpaino@mcglinchey.com helrakabawy@mcglinchey.com achua@mcglinchey.com Attorneys for Defendants SELECT PORTFOLIO SERVICING, INC. and U.S. BANK, N.A., SUCCESSOR TRUSTEE TO BANK OF AMERICA, N.A., SUCCESSOR TO LASALLE BANK N.A., AS TRUSTEE, FOR THE WAMU MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-AR3 (erroneously sued as U.S. Bank, N.A.) UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA - WESTERN DIVISION PADMA VANJANI, an individual, Plaintiff, v. U.S. BANK N.A., a National Association; SELECT PORTFOLIO SERVICING, INC., a Utah Corporation; GUITY PARSI, an individual; PARSI GROUP REALTORS INC., a California Corporation; SUSANN ALTON, an individual; and DOES 1 THROUGH 20, INCLUSIVE, Defendants. Case No.: 2:16-cv-04805-JAK-KS Hon. John A. Kronstadt DEFENDANTS SELECT PORTFOLIO SERVICING, INC. AND U.S. BANK, N.A., SUCCESSOR TRUSTEE’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED; MEMORANDUM OF POINTS AND AUTHORITIES [Filed concurrently with Request for Judicial Notice and [Proposed] Order] DATE: September 25, 2017 TIME: 8:30 a.m. CRTM.: 10B State Court Case No. BC621965 Action Filed: May 27, 2016 Trial Date: July 18, 2017 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on September 25, 2017, at 8:30 a.m., or as soon thereafter as the matter may be heard in Courtroom 10B of the above-entitled Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 1 of 28 Page ID #:630 2 Case No. 2:16-cv-04805-JAK-KS NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT 929871.1 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 court, located at 350 W. First Street, Los Angeles, California 90012, Defendants SELECT PORTFOLIO SERVICING, INC. (“SPS”) and U.S. BANK, N.A., SUCCESSOR TRUSTEE TO BANK OF AMERICA, N.A., SUCCESSOR TO LASALLE BANK N.A., AS TRUSTEE, FOR THE WAMU MORTGAGE PASS- THROUGH CERTIFICATES, SERIES 2005-AR3 (erroneously sued as U.S. Bank, N.A.) (“U.S. Bank,” and collectively with SPS, the “Defendants”) will, and hereby do, move the Court to dismiss this action pursuant to Federal Rule of Civil Procedure Rule 12(b)(6). As set forth more fully in the accompanying Memorandum of Points and Authorities (the “Memorandum”), this motion is made on the ground that the First Amended Complaint (the “FAC”) of Plaintiff PADMA VANJANI (“Plaintiff”) fails to state a claim against Defendants upon which relief can be granted. This motion is based on the attached Memorandum, the pleadings and papers on file herein, and upon such oral and documentary evidence as may be presented by the parties at the hearing. DATED: July 5, 2017 McGLINCHEY STAFFORD By: /s/ Allison O. Chua ALLISON O. CHUA BRIAN A. PAINO HASSAN ELRAKABAWY Attorneys for Defendants SELECT PORTFOLIO SERVICING, INC. and U.S. BANK, N.A., SUCCESSOR TRUSTEE TO BANK OF AMERICA, N.A., SUCCESSOR TO LASALLE BANK N.A., AS TRUSTEE, FOR THE WAMU MORTGAGE PASS- THROUGH CERTIFICATES, SERIES 2005-AR3 (erroneously sued as U.S. Bank, N.A.) Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 2 of 28 Page ID #:631 3 Case No. 2:16-cv-04805-JAK-KS NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT 929871.1 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 LOCAL CIVIL RULE 7-3 CERTIFICATION This motion is made following the conference of counsel pursuant to L.R. 7-3. As of the date of this filing, the parties have not reached a resolution which eliminates the necessit for this motion. Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 3 of 28 Page ID #:632 i Case No. 2:16-cv-04805-JAK-KS TABLE OF CONTENTS 719095.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS I. INTRODUCTION ................................................................................................ 1 II. FACTUAL BACKGROUND .............................................................................. 2 A. THE LOAN ................................................................................................ 2 B. THE FORECLOSURE PROCEEDINGS .................................................. 2 C. THE PRIOR LAWSUIT ............................................................................ 3 D. THE UNLAWFUL DETAINER ACTION AND THE BANKRUPTCY ......................................................................................... 3 E. THE CURRENT LAWSUIT ..................................................................... 4 III. LEGAL AUTHORITY ......................................................................................... 4 IV. ANALYSIS .......................................................................................................... 6 A. PLAINTIFF DOES NOT HAVE STANDING TO RAISE A POST-FORECLOSURE SALE CHALLENGE ........................................ 6 1. No Allegation of Tender .................................................................. 6 2. No Exceptions Apply ....................................................................... 6 B. PLAINTIFF FAILS TO STATE A CLAIM FOR VIOLATIONS OF CALIFORNIA CIVIL CODE SECTION 2923.6 ................................ 7 1. Incomplete Application .................................................................... 7 2. Lack of Materiality .......................................................................... 8 C. PLAINTIFF’S FRAUD-BASED CLAIMS ARE INSUFFICIENTLY PLED ........................................................................ 9 1. No Misrepresentation Identified .................................................... 10 2. Remaining Elements ...................................................................... 10 D. PLAINTIFF FAILS TO STATE A CLAIM FOR VIOLATIONS OF BUSINESS AND PROFESSIONS CODE SECTIONS 17200, ET SEQ. .................................................................................................... 11 1. Plaintiff Lacks Standing................................................................. 11 2. Unlawful, Unfair or Fraudulent Business Practices ...................... 12 E. PLAINTIFF FAILS TO STATE A CLAIM FOR BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING ................................................................................................ 13 F. PLAINTIFF FAILS TO STATE A CLAIM FOR NEGLIGENCE ......... 14 Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 4 of 28 Page ID #:633 ii Case No. 2:16-cv-04805-JAK-KS TABLE OF CONTENTS 719095.1 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 1. No Duty Of Care ............................................................................ 15 2. The Remaining Elements ............................................................... 16 V. CONCLUSION .................................................................................................. 17 Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 5 of 28 Page ID #:634 iii Case No. 2:16-cv-04805-JAK-KS TABLE OF AUTHORITIES 719095.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Federal Cases Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................................................................................... 5 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696 (9th Cir. 1990) ....................................................................................... 5 Bell Atlantic v. Twombly, 550 U.S. 544 (2007) ............................................................................................ 4, 5, 8 Cornejo v. Ocwen Loan Servicing, LLC, 151 F.Supp.3d 1102 (E.D. Cal. 2015) ......................................................................... 8 Emrich v. Touche Ross & Company, 846 F.2d 1190 (9th Cir. 1988) ..................................................................................... 5 Gilmore v. Wells Fargo Bank N.A., 75 F.Supp.3d 1255 (N.D. Cal. 2014) .......................................................................... 9 In re Facebook PPC Advertising Litigation, 2010 WL 3341062 (N.D.Cal. 2010) .......................................................................... 12 Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) ................................................................................... 12 Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580 (9th Cir. 2008) ....................................................................................... 5 Leadsinger, Inc. v BMG Music Publ’g, 512 F.3d 522 (9th Cir. 2008) ....................................................................................... 5 Love v. United States, 915 F.2d 1242 (9th Cir. 1990) ..................................................................................... 5 Marsu B.V. v. Walt Disney Co., 185 F.3d 932 (9th Cir. 1999) ..................................................................................... 13 Moore v. Kayport Package Express, Inc., 885 F.2d 531 (9th Cir. 1989) ..................................................................................... 13 Neilson v. Union Bank of Cal., N.A., 290 F.Supp.2d 1101 (C.D. Cal. 2003) ......................................................................... 9 Penermon v. Wells Fargo Bank, N.A., 47 F.Supp.3d 982 (N.D. Cal. 2014) ............................................................................ 8 R Power Biofuels, LLC v. Chemex LLC, 2016 WL 6663002 (N.D. Cal. 2016) ......................................................................... 10 Saldate v. Wilshire Credit Corp., 268 F.R.D. 87 (E.D. Cal. 2010) ................................................................................. 10 Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 6 of 28 Page ID #:635 iv Case No. 2:16-cv-04805-JAK-KS TABLE OF AUTHORITIES 719095.1 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 Stokes v. CitiMortgage, Inc., 2014 WL 4359193 (C.D. Cal. 2014) ....................................................................... 7, 8 Swartz v. KPMG LLP, 476 F.3d 756 (9th Cir. 2007) ..................................................................................... 13 Vess v. Ciba-Geigy Corp., USA, 317 F.3d 1097 (9th Cir. 2003) ..................................................................................... 9 State Cases Ann M. v. Pacific Plaza Shopping Center, 6 Cal.4th 666 (1993) .................................................................................................. 14 Arnolds Management Corp. v. Eischen, 158 Cal.App.3d 575 (1984) ......................................................................................... 6 Berryman v. Merit Prop. Mgmt., Inc., 152 Cal.App.4th 1544 (2007) .................................................................................... 12 Biakanja v. Irving, 49 Cal.2d 647 (1958) ................................................................................................. 15 Buckland v. Threshold Enterprises, Ltd., 155 Cal.App.4th 798 (2007) ...................................................................................... 11 Carma Developers (Cal.), Inc. v. Marathon Development California, Inc., 2 Cal.4th 342 (1992) ............................................................................................ 13, 14 Cel-Tech Comms., Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (1999) ................................................................................................ 11 Daro v. Superior Court, 151 Cal.App.4th 1079 (2007) .................................................................................... 11 Exxon Corp. v. Superior Court, 51 Cal.App.4th 1672 (1997) ...................................................................................... 13 Fox v. Pollack, 181 Cal.App.3d 954 (1986) ......................................................................................... 9 Kane v. Hartford Accident & Indem. Co., 98 Cal.App.3d 350 ..................................................................................................... 16 Karlsen v. American Savings & Loan Association, 15 Cal.App.3d 112 (1971) ........................................................................................... 6 Krantz v. BT Visual Images, 89 Cal.App.4th 164 (2001) ........................................................................................ 12 Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (2011) ................................................................................................ 11 Lona v. Citibank, N.A., 202 Cal.App.4th 89 (2011) .......................................................................................... 6 Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 7 of 28 Page ID #:636 v Case No. 2:16-cv-04805-JAK-KS TABLE OF AUTHORITIES 719095.1 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 Los Angeles Equestrian Ctr., Inc. v. City of Los Angeles, 17 Cal.App.4th 432 (1993) ........................................................................................ 13 Lueras v. BAC Home Loans Servicing, LP, 221 Cal.App.4th 49 (2013) ......................................................................................... 16 McKell v. Washington Mutual, Inc., 142 Cal.App.4th 1457 (2006) .................................................................................... 12 Multani v. Witkin & Neal, 215 Cal.App.4th 1428 (2013) ...................................................................................... 6 Nein v. HostPro, Inc., 174 Cal.App.4th 833 (2009) ...................................................................................... 13 Nymark v. Heart Fed. Savings & Loan Ass’n, 231 Cal.App.3d 1089 (1991) ..................................................................................... 15 Ortega v. Kmart Corp., 26 Cal.4th 1200 (2001) ........................................................................................ 14, 16 Pasadena Live, LLC v. City of Pasadena, 114 Cal.App.4th 1089 (2004) .................................................................................... 14 Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979 (2004) .................................................................................................. 9 Scripps Clinic v. Superior Court, 108 Cal.App.4th 917 (2003) ................................................................................ 12, 13 Vasquez v. Residential Investments, Inc., 118 Cal.App.4th 269 (2004) ...................................................................................... 15 Federal Statutes 11 U.S.C. § 101 ............................................................................................................... 3 State Statutes Cal. Bus. & Prof. Code § 17200 ......................................................................... 4, 11, 12 Cal. Bus. & Prof. Code § 17204 ................................................................................... 11 Cal. Civ. Code § 338(d) ................................................................................................ 10 Cal. Civ. Code § 2923.6(c) ............................................................................................. 8 Cal. Civ. Code § 2923.6(h) ............................................................................................. 8 Cal. Civ. Code § 2923.55 ................................................................................................ 4 Cal. Civ. Code § 2923.67 .................................................................................... 1, 4, 7, 8 Cal. Civ. Code § 2924(a)(5) ............................................................................................ 4 Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 8 of 28 Page ID #:637 vi Case No. 2:16-cv-04805-JAK-KS TABLE OF AUTHORITIES 719095.1 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 Cal. Civ. Code § 2924.12(a) ........................................................................................... 7 Cal. Civ. Code § 2924.12(b) ........................................................................................... 7 Federal Rules Fed. R. Civ. P. 8 .......................................................................................................... 4, 8 Fed. R. Civ. P. 8(a)(2) ..................................................................................................... 4 Fed. R. Civ. P. 9 ............................................................................................................ 10 Fed. R. Civ. P. 9(b) ................................................................................................... 9, 12 Fed. R. Civ. P. 12(b)(6) .............................................................................................. 2, 5 Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 9 of 28 Page ID #:638 1 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Plaintiff’s FAC suffers from the same fatal defects that Defendants identified in their prior motion to dismiss. Instead of addressing these defects, Plaintiff’s FAC reasserts the same baseless legal theories as the original Complaint and adds a new cause of action for negligence that similarly lacks merit. Ultimately, the FAC presents no new factual allegations that would entitle Plaintiff to any of the relief that she seeks. To start, Plaintiff lacks standing to challenge the foreclosure sale of her residence. This is because she has not tendered (or offered to tender) the outstanding balance due under the subject loan. Due to her failure to allege a valid tender, Plaintiff cannot challenge any aspect of the foreclosure of her property. Moreover, Plaintiff’s claim for violation of California Civil Code section 2923.6 fails because the Complaint does not plausibly establish that Plaintiff had a complete loan modification application pending at the time of the foreclosure sale at issue. Nor does the FAC establish that Defendants’ purported violation of Section 2923.6 was material. Plaintiff also improperly raises claims for intentional and negligent misrepresentation without pleading with requisite specificity the alleged misrepresentations made by Defendants. Plaintiff also lacks standing to allege violations of California’s unfair competition law (defined below). Even if she had standing, her claim lacks merit in the absence of a viable, antecedent cause of action. Further, Plaintiff’s cause of action for breach of the implied covenant of good faith and fair dealing fails because she cannot impute any contractual obligation on Defendants to modify her loan or to consider her for foreclosure avoidance alternatives. Lastly, Plaintiff is unable to maintain her claim for negligence because: (1) Defendants did not owe her a duty of care as a matter of law; and (2) her damages were proximately caused by a third party’s criminal act. Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 10 of 28 Page ID #:639 2 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 The foregoing defects in Plaintiff’s FAC cannot be remedied through an amendment. Accordingly, all of Plaintiff’s causes of action should be dismissed without leave to amend. II. FACTUAL BACKGROUND A. THE LOAN On or about December 30, 2004, Plaintiff obtained a mortgage loan (the “Loan”) from Washington Mutual Bank, FA in the original principal sum of $1,000,000.00, which was reflected in a promissory note (the “Note”) secured by a deed of trust (the “Deed of Trust”) encumbering the real property located at 11566 Vimy Road, Granada Hills, California 91344 (the “Property”). (See FAC, ¶ 17; Request for Judicial Notice (“RJN”), Exhibit 1). As memorialized in an Assignment of Deed of Trust (the “Assignment”), U.S. Bank is the beneficiary of record under the Deed of Trust, as successor trustee to Bank of America, N.A., successor to LaSalle Bank, N.A., as trustee, for the WaMu Mortgage Pass-Through Certificates, Series 2005-AR3. (See FAC, ¶ 2; RJN, Exhibit 2). SPS services the Loan on behalf of U.S. Bank. (See FAC, ¶ 3). B. THE FORECLOSURE PROCEEDINGS As a result of Plaintiff’s default under the Loan, on May 28, 2008, a Notice of Default and Election to Sell Under Deed of Trust (“Notice of Default”) was recorded against the Property. (See FAC, ¶ 24; RJN, Exhibit 3). Subsequently, on December 31, 2008, a Notice of Trustee’s Sale (the “First Notice of Sale”) was recorded against the Property. (See RJN, Exhibit 4). Thereafter, on April 7, 2015, a second Notice of Trustee’s Sale (the “Second Notice of Sale”) was recorded against the Property, which put interested parties on notice that the Property would be sold at a public auction on May 1, 2015. (See FAC, ¶ 25; RJN, Exhibit 5). Pursuant to a Trustee’s Deed Upon Sale (the “TDUS”) recorded on October 26, 2015, all right, title, and interest in the Property was transferred to U.S. Bank following a non-judicial foreclosure sale of the Property. (See RJN, Exhibit 6). Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 11 of 28 Page ID #:640 3 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 C. THE PRIOR LAWSUIT On June 29, 2015, Plaintiff’s spouse, Chandu Vanjani (“Chandu”) commenced an action (the “Prior Action”) by filing a Complaint in the Los Angeles County Superior Court. (See RJN, Exhibit 7). Shortly thereafter, on July 9, 2015, Chandu filed a First Amended Complaint, which named SPS, JPMorgan Chase Bank, N.A. (“Chase”), and Quality Loan Service Corporation as defendants. (See RJN, Exhibit 8). Chase then removed the Prior Action to this Court on September 1, 2015. (See RJN, Exhibit 9). Ultimately, on July 15, 2016, the Court granted a stipulation to dismiss the prior action without prejudice. (See id.) D. THE UNLAWFUL DETAINER ACTION AND THE BANKRUPTCY On January 26, 2016, U.S. Bank filed an Unlawful Detainer Complaint (the “UD Complaint”) against Plaintiff in the Los Angeles County Superior Court (the “UD Action”). (See RJN, Exhibit 10). As a result of Plaintiff’s failure to respond to the UD Complaint, on March 28, 2016, the Court entered a default judgment against her and issued a writ of possession (the “Writ”). (See id., Exhibits 11-12). Thereafter, on June 3, 2016, the County of Los Angeles Sheriff’s Department (“LASD”) posted a Notice to Vacate the Premises (the “Notice to Vacate”) at the Property. (See FAC, ¶ 40, Exhibit D). The Notice to Vacate ordered Plaintiff to vacate the Property by June 8, 2016. (See id.) Instead of vacating the Property, on June 7, 2016, Chandu filed a voluntary petition for relief (the “Bankruptcy”) under chapter 13 of Title 11 of the United States Code, 11 U.S.C. § 101, et seq. (See RJN, Exhibit 13). Consequently, on July 5, 2016, U.S. Bank filed a Motion for Relief from the Automatic Stay (the “Motion for Relief”) in the Bankruptcy in order to proceed with the eviction lockout. (See RJN, Exhibit 14). The bankruptcy court granted the Motion for Relief on July 19, 2016. (See RJN, Exhibit 15). Plaintiff was subsequently evicted from the Property on August 3, 2016. (See FAC, ¶¶ 41-42). Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 12 of 28 Page ID #:641 4 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 E. THE CURRENT LAWSUIT On May 27, 2016, Plaintiff initiated this action by filing a Complaint in the Los Angeles County Superior Court. The Complaint alleged claims for: (1) violations of California Civil Code section 2923.55; (2) violations of California Civil Code section 2923.6; (3) violations of California Civil Code section 2924(a)(5); (4) violations of California Business and Professions Code section 17200; (5) negligent misrepresentation; (6) intentional misrepresentation; (7) wrongful foreclosure; and (8) breach of the implied covenant of good faith and fair dealing. Defendants filed an Answer to the Complaint on June 27, 2016, and subsequently removed the action to this Court on June 30, 2016. On September 27, 2016, Defendants filed a Motion for Judgment on the Pleadings (the “MJOP”). Plaintiff filed a Motion for Leave to File an Amended Complaint (the “Motion for Leave”) on November 21, 2016. Subsequently, on June 7, 2017, the Court granted the MJOP with prejudice as to the first cause of action for violations of California Civil Code section 2923.55 and third cause of action for violations of California Civil Code section 2924(a)(5), and without prejudice as to the remaining causes of action. The Court also granted the Motion for Leave on the same day. Thereafter, on June 21, 2017, Plaintiff filed the FAC. III. LEGAL AUTHORITY Pursuant to Federal Rule of Civil Procedure 8, a complaint “must contain a short and plain statement of the claim showing that the pleader is entitled to relief…” Fed. R. Civ. P. 8(a)(2). While the Federal Rules adopt a flexible pleading policy, every complaint must, at a minimum, “give the defendant fair notice of what the…claim is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). Although a complaint does not need detailed factual allegations, “a plaintiff’s obligation to provide the ‘grounds’ for his ‘entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id.at 555 (citation omitted). Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 13 of 28 Page ID #:642 5 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 Indeed, 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, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 570). The Supreme Court has held that: The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’” Id. (citations omitted). Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” See Fed. R. Civ. P. 12(b)(6). A complaint may be dismissed as a matter of law for failure to state a claim for two reasons: (1) lack of a cognizable legal theory; or (2) insufficient facts under a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). In determining whether the complaint states a claim on which relief may be granted, its allegations of material fact must be taken as true and construed in the light most favorable to plaintiffs. See Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1990); see also Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008). The court may properly look beyond the complaint only to items in the record of the case or to matters of general public record. Emrich v. Touche Ross & Company, 846 F.2d 1190, 1198 (9th Cir. 1988). If the factual allegations in a complaint dot not raise the “right to relief above the speculative level,” the complaint may be dismissed for failure to state a claim under Rule 12(b)(6). Twombly, 550 U.S. at 555. Finally, where amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the moving party has acted in bad faith, leave to amend should be denied. Leadsinger, Inc. v BMG Music Publ’g, 512 F.3d 522, 532 (9th Cir. 2008). /// /// /// /// Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 14 of 28 Page ID #:643 6 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 IV. ANALYSIS A. PLAINTIFF DOES NOT HAVE STANDING TO RAISE A POST- FORECLOSURE SALE CHALLENGE Under California law, the “tender rule” requires that an action to set aside a sale “for irregularities in sale notice or procedure” must be “accompanied by an offer to pay the full amount of the debt for which the property was security.” Arnolds Management Corp. v. Eischen, 158 Cal.App.3d 575, 578 (1984) (citing Karlsen v. American Savings & Loan Association, 15 Cal.App.3d 112, 117 (1971)). Thus, any “cause of action ‘implicitly integrated’ with the irregular sale fails unless the trustor can allege and establish a valid tender.” Arnolds Management Corp., 158 Cal.App.3d at 579 (citing Karlsen, 15 Cal.App.3d at 121). “The rationale behind the rule is that if the borrower could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the borrower.” Lona v. Citibank, N.A., 202 Cal.App.4th 89, 112 (2011) (citation omitted). 1. No Allegation of Tender Pursuant to the FAC, Plaintiff seeks to challenge the validity of the foreclosure sale of the Property. As a result, the tender requirement applies in this case. The FAC fails to allege that Plaintiff attempted to tender, has tendered, or has the ability to tender the full amount due on the Loan. Absent a valid tender, Plaintiff lacks standing to challenge any aspect of the foreclosure sale. It follows that Plaintiff cannot state a claim for wrongful foreclosure. 2. No Exceptions Apply Admittedly, California courts have recognized exceptions to the tender rule where: (1) the validity of the underlying debt is in dispute; (2) the plaintiff has a counter-claim or setoff against the foreclosing party; (3) it would be inequitable to apply the tender rule; or (4) the trustee’s deed is void on its face. See Multani v. Witkin & Neal, 215 Cal.App.4th 1428, 1454-55 (2013). None of these exceptions apply in this case. On the contrary, Plaintiff does not dispute the validity of the Loan, thereby Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 15 of 28 Page ID #:644 7 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 rendering the first exception inapplicable. As explained herein, none of the allegations in the FAC establish that Plaintiff has a counter-claim or setoff right against Defendants. Thus, the second exception does not apply. Given Plaintiff’s indisputable default under the Loan, it would hardly be inequitable to impose the tender requirement. Finally, as set forth below, there are no valid grounds identified in the FAC for concluding that the TDUS is void. B. PLAINTIFF FAILS TO STATE A CLAIM FOR VIOLATIONS OF CALIFORNIA CIVIL CODE SECTION 2923.6 Section 2923.6 provides that, “[i]f a borrower submits a complete application for a first lien 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 is pending.” Cal. Civ. Code § 2923.6. Courts have recognized that a claim under Section 2923.6 must be supported by robust factual allegations. See Stokes v. CitiMortgage, Inc., 2014 WL 4359193, at *7 (C.D. Cal. 2014). Notably, only material violations of Section 2923.6 are actionable. See Cal. Civ. Code §§ 2924.12(a)-(b). Pursuant to the Complaint, Plaintiff alleges that Defendants violated Civil Code section 2923.6 when they conducted a foreclosure sale of the Property while she had an application for a modification of the Loan pending review. (See FAC, ¶¶ 31-35, 66- 71). For the reasons discussed below, Plaintiff has not stated a viable claim under Section 2923.6. 1. Incomplete Application The FAC does not plausibly establish that Plaintiff submitted a complete loan modification application to Defendants at the time of the foreclosure sale of the Property. While Plaintiff alleges in the FAC that she submitted a complete loan modification application to Defendants on an unspecified date (see FAC, ¶¶ 33, 68), she does not allege any facts establishing that her applications were actually Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 16 of 28 Page ID #:645 8 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 “complete,” as that term is defined under Section 2923.6. Importantly, “[a] bald allegation that a party submitted ‘complete’ loan modification applications - without sufficient supporting factual allegations - is a conclusory statement.” Stokes, 2014 WL 4359193, at *7; see also Penermon v. Wells Fargo Bank, N.A., 47 F.Supp.3d 982, 998-99 (N.D. Cal. 2014) (finding that absent an allegation that she submitted a complete first lien loan modification application, mortgagor failed to state a claim for violation of California statute prohibiting dual tracking). Simply put, the term “complete” is a legal term of art under Section 2923.6. See Cal. Civ. Code § 2923.6(h). As such, Plaintiff’s bald assertion that she submitted a “complete” application does not satisfy her obligations under Rule 8.1 See Twombly, 550 U.S. at 555. 2. Lack of Materiality Furthermore, Plaintiff is only afforded remedies under Section 2923.6 for “material” violations. See Cal. Civ. Code § 2924.12(b) (“a mortgage servicer…shall be liable to a borrower for actual economic damages…resulting from a material violation of Section…2923.6…”). “Courts have interpreted the term “material” to refer to whether the alleged violation affected a plaintiff’s obligations or the modification process.” Cornejo v. Ocwen Loan Servicing, LLC, 151 F.Supp.3d 1102, 1113 (E.D. Cal. 2015). The FAC contains insufficient allegations to plausibly establish that the purported violation of Section 2923.6 was material. For example, Plaintiff does not allege that she would have qualified for a modification had Defendants reviewed her application.2 For the foregoing reasons, this claim should be dismissed. 1 Ultimately, Plaintiff was required to allege that she submitted all of the documents required by SPS within the timeframes specified by SPS. See Cal. Civ. Code §2923.6(h). She falls woefully short of meeting this requirement. Indeed, she does not identify what documents SPS required, what timeframes SPS specified, or when she submitted her application. 2 Not only does Plaintiff allege that she submitted a “complete” loan modification application, but she contends that she also submitted an application for approval of a short sale. Notably, the dual-tracking protections of Section 2923.6 apply only to first lien loan modification applications, not applications for short sale approval. See Cal. Civ. Code § 2923.6(c). Thus, Plaintiff’s short sale application does not give rise to liability under Section 2923.6. Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 17 of 28 Page ID #:646 9 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 C. PLAINTIFF’S FRAUD-BASED CLAIMS ARE INSUFFICIENTLY PLED Plaintiff’s causes of action for negligent misrepresentation and intentional misrepresentation fail because the FAC does not allege facts sufficient to meet the heightened pleading standards for fraud. Under California law, the elements for a cause of action for negligent misrepresentation consist of: (1) a misrepresentation of a past or existing material fact; (2) without reasonable grounds for believing it to be true; (3) with intent to induce another’s reliance on the fact misrepresented; (4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed; and (5) damages. See Fox v. Pollack, 181 Cal.App.3d 954, 962 (1986). Similarly, the elements of fraud or intentional misrepresentation are: (1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage. See Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979, 990 (2004). It is well-established that claims for negligent misrepresentation and fraud must meet the heightened pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure. See Neilson v. Union Bank of Cal., N.A., 290 F.Supp.2d 1101, 1141 (C.D. Cal. 2003); Vess v. Ciba-Geigy Corp., USA, 317 F.3d 1097, 1103-04 (9th Cir. 2003); Gilmore v. Wells Fargo Bank N.A., 75 F.Supp.3d 1255, 1270 (N.D. Cal. 2014). To meet this standard, a plaintiff must specify: (1) “the time, place and specific content of the fraudulent representation;” (2) “the identity of the person engaged in the fraud;” and (3) “the circumstances indicating falseness or the manner in which the representations were false and misleading.” See id. at 1270. /// /// /// /// Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 18 of 28 Page ID #:647 10 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 1. No Misrepresentation Identified Plaintiff’s fraud-based claims appear to be premised on her contention that Defendants induced her to default under the Loan3 and represented that the foreclosure sale would be postponed until the review of her loan modification application was completed. (See FAC, ¶¶ 80-81; 93-94). As an initial matter, Plaintiff’s claim is deficient due to her failure to identify the name of the individual (or individuals) who allegedly made the representations at issue. Indeed, to satisfy Rule 9, Plaintiff was required to “allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” See Saldate v. Wilshire Credit Corp., 268 F.R.D. 87, 102 (E.D. Cal. 2010). For this reason alone, the claim should be dismissed. 2. Remaining Elements Furthermore, the FAC is devoid of any allegations establishing the remaining elements of a claim for intentional or negligent misrepresentation. As Plaintiff has failed to demonstrate how the representations made to her were false, she cannot allege that Defendants had knowledge of such falsity. Nor does she allege sufficient facts to establish that Defendants intended to defraud her. Moreover, Plaintiff fails to identify with specificity how she has justifiably relied on Defendants’ alleged misrepresentations to her detriment. This defect is incurable as any claimed detriment or damages relating to Plaintiff’s loss of the Property are the result of her failure to make her Loan payments, not any conduct by Defendants. Plainly stated, the FAC falls well short of establishing with the requisite particularity the necessary elements of a claim for intentional or negligent misrepresentation. Accordingly, Plaintiff’s fraud-based causes of action should be dismissed. 3 To the extent Plaintiff’s misrepresentation claims are premised on a representation that caused her to default, it is clearly time-barred as judicially noticeable facts reflect that she has been in default since at least May of 2008. (See RJN, Exhibit 3; see also FAC, ¶ 24). Since this action was not filed within three years of Plaintiff’s purported default, her misrepresentation claim is time-barred insofar as it is premised on misrepresentations that led her to default on the Loan. See R Power Biofuels, LLC v. Chemex LLC, 2016 WL 6663002, at *12 (N.D. Cal. 2016) (recognizing that negligent misrepresentation claim is subject to either a two-year or three-year limitations period depending on the underlying theory of recovery); Cal. Civ. Proc. Code § 338(d). Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 19 of 28 Page ID #:648 11 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 D. PLAINTIFF FAILS TO STATE A CLAIM FOR VIOLATIONS OF BUSINESS AND PROFESSIONS CODE SECTIONS 17200, ET SEQ. California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq., prohibits any unlawful, unfair or fraudulent business act or practice. See Cal. Bus. & Prof. Code § 17200. When analyzing a UCL claim, courts consider each of the three prongs to determine whether a practice is unlawful, unfair, or fraudulent. See Cel-Tech Comms., Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 180 (1999). While the scope of the conduct covered by the UCL is broad, the remedies are limited. See Buckland v. Threshold Enterprises, Ltd., 155 Cal.App.4th 798, 812 (2007). Generally, a plaintiff is limited to injunctive relief and restitution, not monetary damages. See id. 1. Plaintiff Lacks Standing A claim for unfair competition under the UCL may be brought “by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” Cal. Bus. & Prof. Code § 17204. To establish standing under the UCL, a plaintiff must: (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact (i.e., economic injury); and (2) show that that economic injury was the result of (i.e., caused by) the unfair business practice that is the gravamen of the claim. See Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 337 (2011). There is no causation “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). As an initial matter, Plaintiff lacks standing to assert a claim under the UCL because she has not suffered any economic injury caused by the alleged unfair competition. Plaintiff alleges that she has “los[t] title to, and interest in, the Property,” was evicted from the Property, and “los[t] her equity in the home.” (See FAC, ¶ 115). Aside from these conclusory allegations, the FAC is devoid of sufficient facts to Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 20 of 28 Page ID #:649 12 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 establish a causal relationship between these purported damages and Defendants’ allegedly unfair business practices. This is likely because the record reflects that any such damage was directly attributable to Plaintiff, not Defendants. Indeed, Plaintiff failed to timely tender the payments due on the Loan. It was this failure that resulted in Plaintiff incurring the damages alleged in the FAC and exposed the Property to the risk of foreclosure. Because Plaintiff would have suffered this same harm irrespective of Defendants’ actions, Plaintiff cannot rely on this harm to establish the requisite damages for a UCL claim. Accordingly, she lacks standing under the UCL. 2. Unlawful, Unfair or Fraudulent Business Practices A violation of another law is a predicate for stating a cause of action under the UCL’s “unlawful” prong. See Berryman v. Merit Prop. Mgmt., Inc., 152 Cal.App.4th 1544, 1554 (2007). A claim for violation of the UCL stands or falls depending on the fate of antecedent substantive causes of action. See Krantz v. BT Visual Images, 89 Cal.App.4th 164, 178 (2001). “Unfair” conduct has been defined as conduct that “offends an established public policy or…is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” Scripps Clinic v. Superior Court, 108 Cal.App.4th 917, 939 (2003) (citation and internal quotations omitted). A UCL claim based on public policy must be “tethered” to a specific constitutional, statutory or regulatory provision to provide an objective basis for determining whether the alleged conduct is unfair. See id. at 940. Finally, a business practice is “fraudulent” within the meaning of section 17200 if it is “likely to deceive the public.” McKell v. Washington Mutual, Inc., 142 Cal.App.4th 1457, 1471 (2006). Claims under the fraudulent prong of the UCL must be pleaded with particularity under Federal Rule of Civil Procedure 9(b). See Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th Cir. 2009). Therefore, a plaintiff “must include a description of the ‘time, place, and specific content of the false representations as well as the parties to the misrepresentations.’” In re Facebook PPC Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 21 of 28 Page ID #:650 13 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 Advertising Litigation, 2010 WL 3341062, at *9 (N.D.Cal. 2010) (quoting Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007)). In the context of a fraud suit involving multiple defendants, a plaintiff must, at a minimum, “identif[y] the role of [each] defendant[ ] in the alleged fraudulent scheme.” Moore v. Kayport Package Express, Inc., 885 F.2d 531, 541 (9th Cir. 1989). Plaintiff’s claim for a violation of the UCL fails simply because she has not pled a viable antecedent claim. As discussed herein, every one of Plaintiff’s claims is legally deficient and fails to constitute a cause of action against Defendants. Absent a viable antecedent claim, Plaintiff cannot state a separate claim under the unlawful prong of the UCL. Nor can she identify any “constitutional, statutory or regulatory provision” to which to relate a claim under the “unfair” prong. See Scripps Clinic, 108 Cal.App.4th at 940. She likewise fails to establish that Defendants’ conduct was immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers. Finally, Plaintiff has not pled with any degree of specificity the misrepresentation that Defendants are alleged to have made, much less that the representation was likely to deceive the public. It follows that Plaintiff’s FAC fails to state a claim under the UCL. E. PLAINTIFF FAILS TO STATE A CLAIM FOR BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING California law implies a covenant of good faith and fair dealing in every contract. See Carma Developers (Cal.), Inc. v. Marathon Development California, Inc., 2 Cal.4th 342, 371 (1992). The covenant is implied “to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenant) frustrates the other party’s rights [to] the benefits of the contract.” Marsu B.V. v. Walt Disney Co., 185 F.3d 932, 938 (9th Cir. 1999) (citing Los Angeles Equestrian Ctr., Inc. v. City of Los Angeles, 17 Cal.App.4th 432, 447 (1993)). It is “well established that an implied covenant cannot create an obligation inconsistent with an express term of the [contract].” Nein v. HostPro, Inc., 174 Cal.App.4th 833, 852 (2009) (citing Exxon Corp. v. Superior Court, 51 Cal.App.4th 1672, 1688 Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 22 of 28 Page ID #:651 14 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 (1997)). Ultimately, the “implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.” Pasadena Live, LLC v. City of Pasadena, 114 Cal.App.4th 1089, 1093-94 (2004)). Plaintiff’s claim for breach of the implied covenant fails to identify any provision of the Note or Deed of Trust that Defendants are alleged to have violated, either directly or indirectly. (See FAC, ¶¶ 119-25). Rather than being based on the actual terms of the contract at issue, Plaintiff’s claim appears to be premised on her contention that Defendants promised that they would not proceed with a foreclosure sale of the Property while her loan modification application was pending. (See FAC, ¶ 121). However, as set forth above, the FAC does not plausibly allege that Plaintiff submitted a complete loan modification application to Defendants. Importantly, there can be no dispute that Defendants were not contractually or legally required to offer Plaintiff a loan modification or other foreclosure avoidance alternatives. Indeed, it would be inconsistent with the express terms of the Loan to require Defendants to renegotiate the terms upon Plaintiff’s default. Such a variance in terms is an impermissible use of the implied covenant. See Carma Developers (Cal.), Inc., 2 Cal.4th at 374 (“We are aware of no reported case in which a court has held the covenant of good faith may be read to prohibit a party from doing that which is expressly permitted by an agreement. On the contrary, as a general matter, implied terms should never be read to vary express terms.”). Accordingly, Plaintiff’s breach of the implied covenant claim fails as a matter of law. F. PLAINTIFF FAILS TO STATE A CLAIM FOR NEGLIGENCE In order to establish liability on a negligence theory, a plaintiff must establish the following elements: (1) the defendant owed the plaintiff a legal duty; (2) the defendant breached the duty; (3) causation; and (4) the plaintiff’s damages or injuries. See Ortega v. Kmart Corp., 26 Cal.4th 1200, 1205 (2001); Ann M. v. Pacific Plaza Shopping Center, 6 Cal.4th 666, 673 (1993). Generally, “a financial institution owes Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 23 of 28 Page ID #:652 15 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.” Nymark v. Heart Fed. Savings & Loan Ass’n, 231 Cal.App.3d 1089, 1096 (1991). “The existence of a legal duty to use reasonable care in a particular factual situation is a question of law for the court to decide.” Vasquez v. Residential Investments, Inc., 118 Cal.App.4th 269, 278 (2004) (citation omitted). 1. No Duty Of Care Plaintiff cannot establish that Defendants exceeded the traditional role of a mere lender of money. At bottom, Plaintiff’s claim is premised on Defendants’ conduct with respect to their handling of Plaintiff’s personal property after the eviction lockout. In determining whether to impose a duty of care on a lender, courts examine the following factors: (1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to him, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct, and (6) the policy of preventing future harm. See Biakanja v. Irving, 49 Cal.2d 647, 650 (1958). The application of these factors to the circumstances herein confirms that Defendants did not owe a duty of care to Plaintiff with respect to the handling of her personal property following the eviction lockout. While Plaintiff alleges that she was harmed by Defendants’ conduct, the record reflects that it was the criminal activity of a third party (i.e., the burglary) that resulted in Plaintiff’s alleged injuries. Accordingly, Plaintiff cannot establish a foreseeability of harm, a degree of certainty that she suffered injury, or a causal connection to the harm suffered. Moreover, Plaintiff cannot attribute any “moral blame” to Defendants. On the contrary, Plaintiff admits to receiving the Notice to Vacate, which provided her until June 8, 2017, to vacate the Property. (See FAC, ¶ 40, Exhibit D). Instead of vacating the Property, on June 7, 2017, Plaintiff’s husband, Chandu, filed the Bankruptcy. (See Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 24 of 28 Page ID #:653 16 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 RJN, Exhibit 13). Plaintiff was aware that U.S. Bank intended to proceed with the eviction lockout because it subsequently filed the Motion for Relief, which the Bankruptcy court granted on July 19, 2016. (See RJN, Exhibits 14-15). Despite receiving notice of the Bankruptcy court’s order, Plaintiff decided to remain at the Property until the eviction lockout on August 3, 2016. Therefore, Plaintiff cannot establish that the imposition of a duty of care in this case will advance the policy of preventing future harm as Plaintiff had the ability to prevent her damages by simply vacating the Property. Defendants did not otherwise have any control over the intervening criminal act that resulted in Plaintiff’s claimed damages. Based on the foregoing, Plaintiff cannot demonstrate that Defendants exceeded the traditional role of a mere lender of money. It follows that she cannot establish that Defendants owed her a legal duty of care. See Lueras, 221 Cal.App.4th at 67. 2. The Remaining Elements Even if Plaintiff were able to establish a duty upon Defendants, Plaintiff’s claim for negligence fails for her inability to allege facts to support the remaining elements of causality and injury. See Ortega, 26 Cal.4th at 1205. Assuming arguendo that Defendants owed Plaintiff a duty of care, she cannot establish that Defendants breached this duty. This is because Defendants were entitled to proceed with the lockout as a result of Plaintiff’s failure to comply with the Notice to Vacate. More critically, Plaintiff cannot establish that her alleged damages were proximately caused by Defendants. Under California law, “[t]he act of a third person in committing an intentional tort or crime is a superseding cause of harm to another resulting therefrom, although the actor’s negligent conduct created a situation which afforded an opportunity to the third person to commit such a tort or crime, unless the actor at the time of his negligent conduct realized or should have realized the likelihood that such a situation might be created, and that a third person might avail himself of the opportunity to commit such a tort or crime.” Kane v. Hartford Accident & Indem. Co., 98 Cal.App.3d 350, 359. By Plaintiff’s own admission, it was the Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 25 of 28 Page ID #:654 17 Case No. 2:16-cv-04805-JAK-KS MEMORANDUM OF POINTS AND AUTHORITIES 719095.1 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 criminal activity of a third party (i.e., the burglary) that ultimately caused Plaintiff’s damages, not any act on the part of Defendants. Significantly, there are insufficient allegations in the FAC to establish that Defendants should have realized that their actions would have facilitated the burglary. As a result, the general superseding cause rule applies in this case, thereby preventing Plaintiff from establishing liability against Defendants based on the criminal act of a third party. In light of the foregoing, the FAC fails to state a claim for negligence against Defendants and, thus, this claim should be dismissed. V. CONCLUSION For the reasons set forth herein, Plaintiff’s FAC should be dismissed without leave to amend. DATED: July 5, 2017 McGLINCHEY STAFFORD By: /s/ Allison O. Chua ALLISON O. CHUA BRIAN A. PAINO HASSAN ELRAKABAWY Attorneys for Defendants SELECT PORTFOLIO SERVICING, INC. and U.S. BANK, N.A., SUCCESSOR TRUSTEE TO BANK OF AMERICA, N.A., SUCCESSOR TO LASALLE BANK N.A., AS TRUSTEE Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 26 of 28 Page ID #:655 733488.1 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 PROOF OF SERVICE STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) I, Stephanie Elizondo, declare: I am employed in the County of Orange, State of California. I am over the age of 18 and not a party to the within action. My business address is 18201 Von Karman Ave., Suite 350, Irvine, California 92612. On July 5, 2017, I served the document(s) described as DEFENDANTS SELECT PORTFOLIO SERVICING, INC. AND U.S. BANK, N.A., SUCCESSOR TRUSTEE’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED; MEMORANDUM OF POINTS AND AUTHORITIES as follows: BY MAIL: As follows: FEDERAL - I deposited such envelope in the U.S. mail at Irvine, California, with postage thereon fully prepaid, BY CM/ECF NOTICE OF ELECTRONIC FILING: I caused said document(s) to be served by means of this Court’s Electronic transmission of the Notice of Electronic Filing through the Court’s transmission facilities, to the parties and/or counsel who are registered CM/ECF users set forth in the service list obtained from this Court. Pursuant to Electronic Filing Court Order, I hereby certify that the above documents(s) was uploaded to the website and will be posted on the website by the close of the next business day and the webmaster will give e-mail notification to all parties. FEDERAL: I declare that I employed in the office of a member of the State Bar of this Court at whose direction the service was made. Executed on July 5, 2017, at Irvine, California. Stephanie Elizondo Stephanie Elizondo Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 27 of 28 Page ID #:656 733488.1 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 SERVICE LIST U.S. District Court, Central District Case No. 2:16-cv-04805-JAK-KS PADMA VANJANI v. U.S. BANK N.A., et al. File # 104823.0262 Aaron Berger, Esq. LAW OFFICES OF AARON BERGER 4338 1/2 Laurel Canyon Blvd. Studio City, CA 91604 Attorney for Plaintiff PADMA VANJANI Tel: (818) 942-0228 Case 2:16-cv-04805-JAK-KS Document 51 Filed 07/05/17 Page 28 of 28 Page ID #:657 1 Case No. 2:16-cv-04805-JAK-KS [PROPOSED] ORDER GRANTING MOTION TO DISMISS 930172.1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA - WESTERN DIVISION PADMA VANJANI, an individual, Plaintiff, v. U.S. BANK N.A., a National Association; SELECT PORTFOLIO SERVICING, INC., a Utah Corporation; GUITY PARSI, an individual; PARSI GROUP REALTORS INC., a California Corporation; SUSANN ALTON, an individual; and DOES 1 THROUGH 20, INCLUSIVE, Defendants. Case No.: 2:16-cv-04805-JAK-KS Hon. John A. Kronstadt [PROPOSED] ORDER GRANTING DEFENDANTS SELECT PORTFOLIO SERVICING, INC. AND U.S. BANK, N.A., SUCCESSOR TRUSTEE’S MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED DATE: September 25, 2017 TIME: 8:30 a.m. CRTM.: 10B State Court Case No. BC621965 Action Filed: May 27, 2016 Trial Date: NA The motion of Defendants SELECT PORTFOLIO SERVICING, INC. (“SPS”) and U.S. BANK, N.A., SUCCESSOR TRUSTEE TO BANK OF AMERICA, N.A., SUCCESSOR TO LASALLE BANK N.A., AS TRUSTEE, FOR THE WAMU MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-AR3 (erroneously sued as U.S. Bank, N.A.) (“U.S. Bank,” and collectively with SPS, the “Defendants”) to dismiss the First Amended Complaint for Plaintiff PADMA VANJANI’s Case 2:16-cv-04805-JAK-KS Document 51-1 Filed 07/05/17 Page 1 of 4 Page ID #:658 2 Case No. 2:16-cv-04805-JAK-KS [PROPOSED] ORDER GRANTING MOTION TO DISMISS 930172.1 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 (“Plaintiff”) failure to state a claim against Defendants upon which relief can be granted (the “Motion”) came on regularly for hearing before the Honorable John A. Kronstadt at the date and time set forth above. After having considered the moving papers, opposition papers, reply papers, and oral argument, if any, and GOOD CAUSE APPEARING THEREFOR, IT IS ORDERED THAT the Motion is GRANTED. IT IS FURTHER ORDERED THAT Defendants are hereby dismissed from this action with prejudice. IT IS SO ORDERED. Dated: _________________________ _________________________________ HON. JOHN A. KRONSTADT UNITED STATES DISTRICT JUDGE Case 2:16-cv-04805-JAK-KS Document 51-1 Filed 07/05/17 Page 2 of 4 Page ID #:659 733488.1 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 PROOF OF SERVICE STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) I, Stephanie Elizondo, declare: I am employed in the County of Orange, State of California. I am over the age of 18 and not a party to the within action. My business address is 18201 Von Karman Ave., Suite 350, Irvine, California 92612. On July 5, 2017, I served the document(s) described as [PROPOSED] ORDER GRANTING DEFENDANTS SELECT PORTFOLIO SERVICING, INC. AND U.S. BANK, N.A., SUCCESSOR TRUSTEE’S MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED as follows: BY MAIL: As follows: FEDERAL - I deposited such envelope in the U.S. mail at Irvine, California, with postage thereon fully prepaid, BY CM/ECF NOTICE OF ELECTRONIC FILING: I caused said document(s) to be served by means of this Court’s Electronic transmission of the Notice of Electronic Filing through the Court’s transmission facilities, to the parties and/or counsel who are registered CM/ECF users set forth in the service list obtained from this Court. Pursuant to Electronic Filing Court Order, I hereby certify that the above documents(s) was uploaded to the website and will be posted on the website by the close of the next business day and the webmaster will give e-mail notification to all parties. FEDERAL: I declare that I employed in the office of a member of the State Bar of this Court at whose direction the service was made. Executed on July 5, 2017, at Irvine, California. Stephanie Elizondo Stephanie Elizondo Case 2:16-cv-04805-JAK-KS Document 51-1 Filed 07/05/17 Page 3 of 4 Page ID #:660 733488.1 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 SERVICE LIST U.S. District Court, Central District Case No. 2:16-cv-04805-JAK-KS PADMA VANJANI v. U.S. BANK N.A., et al. File # 104823.0262 Aaron Berger, Esq. LAW OFFICES OF AARON BERGER 4338 1/2 Laurel Canyon Blvd. Studio City, CA 91604 Attorney for Plaintiff PADMA VANJANI Tel: (818) 942-0228 Case 2:16-cv-04805-JAK-KS Document 51-1 Filed 07/05/17 Page 4 of 4 Page ID #:661