Raffi Torossian v. Wells Fargo Bank, N.A. et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.April 4, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 55000.2074/10595799.1 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT SUZANNE M. HANKINS (State Bar No. 157837) smh@severson.com JARLATH M. CURRAN, II (State Bar No. 239352) jmc@severson.com ANDREW L. MINEGAR (State Bar No. 280330) alm@severson.com SEVERSON & WERSON, A Professional Corporation The Atrium 19100 Von Karman Avenue, Suite 700 Irvine, California 92612 Telephone: (949) 442-7110 Facsimile: (949) 442-7118 MARK D. LONERGAN (State Bar No. 143622) mdl@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 Defendant WELLS FARGO BANK, N.A. dba AMERICA’S SERVICING COMPANY UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA — WESTERN DIVISION RAFFI TOROSSIAN, an individual, Plaintiff, vs. WELLS FARGO BANK, N.A. dba AMERICA’S SERVICING COMPANY; SPECIALIZED LOAN SERVICING LLC; and DOES 1 through 50, inclusive, Defendants. Case No. 2:17-cv-02163 RGK (PJWx) Hon. R. Gary Klausner Ctrm. 850 – Temple St. NOTICE OF MOTION AND MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: May 15, 2017 Time: 9:00 a.m. Crtrm.: 850 Action Filed: January 13, 2017 Removal Date: March 20, 2017 Trial Date: None Set Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 1 of 21 Page ID #:195 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 55000.2074/10595799.1 i MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT TABLE OF CONTENTS Page I. INTRODUCTION.............................................................................................1 II. STATEMENT OF FACTS................................................................................2 A. Property And Loan Information..............................................................2 B. Plaintiff Defaulted On The Loan, Then Sued Wells Fargo And Concurrently Filed For Bankruptcy ........................................................3 III. PLAINTIFF’S HOMEOWNER BILL OF RIGHTS CLAIMS FAIL ..............4 A. There Is No Basis For Relief As To Wells Fargo...................................5 B. The HBOR Did Not Apply To Plaintiff in April, May, or June of 2015.........................................................................................................5 C. The Individual HBOR Claims Against Wells Fargo Fail For Independent Reasons...............................................................................6 1. The Section 2924.10 and Section 2923.7 Claims Fail .................6 2. Wells Fargo Complied With Section 2923.6(f)............................8 IV. PLAINTIFF’S RESPA CLAIMS FAIL............................................................9 V. THE IMPLIED COVENANT CLAIM FAILS...............................................12 VI. PLAINTIFF’S SECTION 17200 CLAIM FAILS ..........................................13 A. Plaintiff Does Not Have Standing Under The UCL .............................13 B. Plaintiff Is Not Entitled To Any Relief Under The UCL .....................13 C. Plaintiff Has Failed To Establish Unlawful, Fraudulent, Or Unfair Conduct......................................................................................14 VII. CONCLUSION ...............................................................................................15 Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 2 of 21 Page ID #:196 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 55000.2074/10595799.1 ii MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT TABLE OF AUTHORITIES Page(s) CASES Agomuoh v. PNC Financial Services Group WL 657428 (D. Md. 2017)................................................................................... 10 Agosta v. Astor 120 Cal.App.4th 596 (2004)................................................................................. 12 Austerberry v. Wells Fargo Home Mortgage WL 8031857 (E.D. Mich. 2015) .......................................................................... 10 Boring v. Nationstar Mortgage, LLC WL 9270879 (E.D. Cal. Dec. 21, 2015)................................................................. 7 Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. 2 Cal.4th 342 (1992)............................................................................................. 12 Cel-Tech Comm., Inc. v. Los Angeles Cellular Tel. Co. 20 Cal.4th 163 (1999).....................................................................................13, 15 Chabner v. United of Omaha Life Ins. Co. 225 F.3d 1042 (9th Cir. 2000) .............................................................................. 14 Coury v. Caliber Home Loans, Inc., WL 6962882 (N.D. Cal. 2016)........................................................................... 5, 7 Estrada v. Caliber Home Loans, Inc. WL 12661910 (C.D. Cal. 2015) ............................................................................. 7 Gilmore v. Lycoming Fire Ins. Co. 55 Cal. 123 (1880) ................................................................................................ 12 Glenn K. Jackson Inc. v. Roe 273 F.3d 1192 (9th Cir. 2001) .............................................................................. 14 Guz v. Bechtel Nat’l, Inc. 24 Cal.4th 317 (2000)........................................................................................... 12 Jenkins v. JP Morgan Chase Bank, N.A. 216 Cal.App.4th 497 (2013)................................................................................. 13 Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 3 of 21 Page ID #:197 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 55000.2074/10595799.1 iii MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT Jerviss v. Select Portfolio Servicing, Inc. WL 7572130 (E.D. Cal. 2015) .............................................................................. 7 Jones v. Select Portfolio Servicing, Inc. WL 6581279 (N.D. Tex. 2016) ............................................................................ 10 Kwikset Corp. v. Sup.Ct. 51 Cal.4th 310 (2011)........................................................................................... 13 Madrid v. Perot Sys. Corp. 130 Cal.App.4th 440 (2005)...........................................................................13, 14 Martin v. Bank of New York Mellon Corporation WL 7352006 (E.D. Mich. 2015) .......................................................................... 11 Massachusetts Mutual Life Ins. Co. v. Super. Ct. 97 Cal.App.4th 1282 (2002)...........................................................................14, 15 Otworth v. Southern Pacific Transportation Co. 166 Cal.App.3d 452 (1985) .................................................................................. 12 Racine & Laramie, Ltd, v. Department of Parks & Recreation 11 Cal.App.4th 1026 (1992)................................................................................. 12 Rae v. Bank of America, N.A., WL 447306 (C.D. Cal. 2017) ................................................................................. 5 Rodriguez v. Bank of America N.A. WL 4718177 (S.D. Tex. 2016)............................................................................. 11 Shupe v. Nationstar Mortgage LLC, WL 431083 (E.D. Cal. 2017) ............................................................................. 5, 7 Smith v. Nationstar Mortgage WL 7180473 (E.D. Mich. 2015) .......................................................................... 10 Stinson v. Specialized Loan Servicing, LLC, WL 6524864 (E.D. Cal. 2016) ............................................................................... 5 Wentzell v. JPMorgan Chase Bank, Nat. Ass'n 627 Fed.Appx. 314 (5th Cir. 2015) ...................................................................... 10 Winters v. Deutsche Bank National Trust Company WL 5944717 (E.D. Mich. 2016) .......................................................................... 11 Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 4 of 21 Page ID #:198 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 55000.2074/10595799.1 iv MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT STATUTES Title 11 of the United States Code............................................................................... 6 Bus. & Prof. Code § 17200 .......................................................................................................2, 13, 14 Cal. Civ. Code § 2923.6 .................................................................................................................. 7 § 2923.6(f) ......................................................................................................4, 8, 9 § 2923.6(g).............................................................................................................. 3 § 2923.7 ..........................................................................................................4, 5, 6 § 2924.10 ........................................................................................................4, 6, 7 § 2924.12 ........................................................................................................5, 7, 8 § 2924.12(c)............................................................................................................ 7 OTHER AUTHORITIES 12 C.F.R. § 1024.41............................................................................................... 9, 10 12 C.F.R. § 1024.41(i) ................................................................................................. 9 12 C.F.R. § 1024.41(b)(1) ........................................................................................... 9 12 C.F.R. § 1024.41(b)(2)(i)(A) .................................................................................. 9 Bill of Rights............................................................................................................ 1, 4 Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 5 of 21 Page ID #:199 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 55000.2074/10595799.1 1 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT NOTICE OF MOTION PLEASE TAKE NOTICE that on May 15, 2017, at 9:00 a.m. or as soon thereafter as the matter may be heard in Courtroom 850 (8th Floor) of the United States District Court for the Central District of California, located at 255 East Temple Street, Los Angeles, CA 90012, Defendant WELLS FARGO BANK, N.A. dba AMERICA’S SERVICING COMPANY (“Wells Fargo”) will move and hereby does move the Court for an order dismissing Plaintiff RAFFI TOROSSIAN’s (“Plaintiff”) Complaint on the basis that each cause of action alleged in the Complaint fails to state a claim for which relief can be granted against Wells Fargo pursuant to Federal Rule of Civil Procedure 12(b)(6). This Motion is based upon this Notice of Motion and Motion, the following Memorandum of Points and Authorities, all pleadings and papers on file in this action, and some other matters the Court may consider. This Motion is made following a conference of counsel to discuss the pleading deficiencies in Plaintiff’s Complaint on March 1, 2017. DATED: April 4, 2017 SEVERSON & WERSON A Professional Corporation By: /s/ Andrew L. Minegar Andrew L. Minegar Attorneys for Defendant WELLS FARGO BANK, N.A. dba AMERICA’S SERVICING COMPANY Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 6 of 21 Page ID #:200 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 55000.2074/10595799.1 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION In 2007, Plaintiff obtained a $650,000 loan, which was secured by the subject property. Plaintiff defaulted on the loan in 2012. The default went uncured and a Notice of Default and Notice of Trustee’s Sale were recorded in 2013. Two days before the scheduled foreclosure sale, Plaintiff filed a prior lawsuit against Wells Fargo and then filed a Chapter 13 bankruptcy petition the next day in order to stall foreclosure proceedings. The prior lawsuit was disposed of when the Court sustained Wells Fargo’s demurrer to second amended complaint without leave to amend on April 30, 2015. The bankruptcy was voluntarily dismissed in July 2015. Plaintiff’s second lawsuit alleges that, on or about April 30, 2015 (coincidentally the same day the Court sustained Wells Fargo’s demurrer in the prior lawsuit without leave to amend), after already being reviewed for a loan modification, he submitted a letter to Wells Fargo indicating he experienced a material change in financial circumstances because he was no longer incurring a $40 monthly charge for cable. Plaintiff concedes that Wells Fargo ultimately reviewed his application in September of 2015 and Wells Fargo provided him with written denial letters identifying the reasons his loan modification application had been denied. Compl., Exs. B and C. Plaintiff also concedes that Wells Fargo transferred servicing of the Loan to Specialized Loan Servicing LLC; thus, Wells Fargo no longer has any interest in the Loan or the Property. Plaintiff’s Complaint asserts seven causes of action, each of which fail as a matter of law. First, Plaintiff’s first, second, and third causes of action under the Homeowner Bill of Rights fail as there is no basis for injunctive relief as to Wells Fargo, given that Wells Fargo is no longer the servicer of the Loan. In addition, as discussed below, each of those claims fails for independent reasons. Second, Plaintiff’s fourth and fifth causes of action under the Real Estate Settlement Procedures Act (“RESPA”) fail for two reasons. First, the loan Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 7 of 21 Page ID #:201 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 55000.2074/10595799.1 2 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT modification application that Wells Fargo allegedly mishandled in violation of RESPA was admittedly not Plaintiff’s first application with Wells Fargo, and the particular provision of RESPA under which Plaintiff asserts this lawsuit applies only to a borrower’s first loan modification application. Second, Plaintiff fails to plead any actual damages resulting from an alleged RESPA violation. Third, Plaintiff’s sixth cause of action for breach of the implied covenant of good faith and fair dealing fails because Plaintiff cannot identify any contract with which Wells Fargo unfairly interfered, and Plaintiff does not allege any facts identifying any contract that regulates in any way Wells Fargo’s review of Plaintiff’s loan modification application. Finally, Plaintiff’s claim under Business and Professions Code section 17200 fails because Plaintiff lacks standing under that statute, because Plaintiff is not entitled to any relief under that statute, and because Plaintiff cannot identify any unlawful, fraudulent, or unfair conduct. Accordingly, Wells Fargo requests that this Court sustain its demurrer. II. STATEMENT OF FACTS A. Property And Loan Information In 2007, Plaintiff obtained a loan in the principal amount of $650,000 (the “Loan”) from Mylor Financial. Compl., ¶¶3, 10; Request for Judicial Notice (“RJN”), Ex. 1. The Loan was secured by a deed of trust recorded against the property located at 1389 North Sierra Bonita Avenue, Pasadena, California 91104 (the “Property”). Id. The deed of trust was recorded on January 18, 2007. Id. Cal- Western Reconveyance, LLC became the substituted trustee under the deed of trust. RJN, Exs. 2-3. The beneficial interest in the Loan was ultimately assigned to US Bank National Association, as Trustee, successor in interest to Bank of America, National Association, as Trustee (successor by merger to LaSalle Bank National Association) as Trustee for Morgan Stanley Mortgage Loan Trust 2007-8XS (“US Bank”). See Assignments of Deed of Trust, RJN, Exs. 4-5. Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 8 of 21 Page ID #:202 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 55000.2074/10595799.1 3 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT B. Plaintiff Defaulted On The Loan, Then Sued Wells Fargo And Concurrently Filed For Bankruptcy Plaintiff defaulted on the Loan in 2012. Accordingly a Notice of Default was recorded on June 11, 2013, indicating that Plaintiff had failed to make the payments due on July 1, 2012. RJN, Ex. 6. A Notice of Trustee’s Sale was recorded on September 24, 2013, scheduling the foreclosure sale for October 17, 2013. RJN, Ex. 7. Just days before the scheduled foreclosure sale, Plaintiff filed a lawsuit against Wells Fargo on October 15, 2013 (the “First Lawsuit”). See Raffi Torrossian v. Wells Fargo, Los Angeles County Superior Court Case No. BC524487; Complaint, RJN, Ex. 8. On October 16, 2013, Plaintiff also filed a Chapter 13 bankruptcy petition. See In Re Raffi Torrossian, U.S. Bankruptcy Court, Central District of California (Los Angeles), Bankruptcy Petition No. 2:13-bk- 35263-SK; Petition, RJN, Ex. 11. After multiple rounds of demurrers and amended pleadings, Wells Fargo’s demurrer to the Second Amended Complaint in the First Lawsuit was sustained without leave to amend on April 30, 2015.1 Minute Order and Notice of Entry of Judgment, RJN, Exs. 9-10. Plaintiff’s bankruptcy was voluntarily dismissed by Plaintiff on July 30, 2015. RJN, Ex. 12. Prior to the April 30, 2015 ruling on Wells Fargo’ demurrer in the First Lawsuit, Plaintiff had already been reviewed for a modification. Compl., ¶13. Nonetheless, Plaintiff wanted to be reviewed again for a loan modification. And, as Civil Code Section 2923.6(g) provides that a servicer is under no duty to conduct a subsequent modification review absent a “material change in the borrower’s 1 On August 13, 2015, Plaintiff appealed the Judgment obtained by Wells Fargo in the First Lawsuit. On October 28, 2016, the Court of Appeal affirmed the Judgment. (RJN, Ex. 13.) Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 9 of 21 Page ID #:203 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 55000.2074/10595799.1 4 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT financial circumstances,” Plaintiff allegedly submitted documentation of a change in financial circumstances to Wells Fargo on or about April 30, 2015. Compl., ¶14. As seen in Exhibit A to the Complaint, the claimed “material change in financial circumstances” was Plaintiff’s cancellation of his cable service, which equaled a $40 monthly charge. Plaintiff then admits that Wells Fargo actually reviewed his application and denied him for a modification on September 3, 2015, because he had reached the allowable number of modifications. Compl., ¶¶18-19. Plaintiff also admits that, as of December 4, 20152, the servicing of the Loan was transferred to Specialized Loan Servicing LLC (“SLS”). Compl., ¶24. Thus, Wells Fargo presently has no interest in the Loan and Wells Fargo is not involved in any way with any foreclosure proceedings of the Property. Id. III. PLAINTIFF’S HOMEOWNER BILL OF RIGHTS CLAIMS FAIL Plaintiff’s first, second, and third causes of action are for violation of certain provisions of the Homeowner Bill of Rights (“HBOR”). Specifically, Plaintiff asserts that Wells Fargo violated Civil Code Section 2924.103 because Plaintiff never received a written acknowledgment of loan modification documents that were submitted on April 30, 2015. Compl., ¶46. Plaintiff’s then alleges that Wells Fargo violated Section 2923.7 because Wells Fargo refused to provide Plaintiff with a single point of contact. Compl., ¶59. Finally, Plaintiff alleges that Wells Fargo violated Section 2923.6(f) by “arbitrarily” denying Plaintiff’s loan modification application. Each of these claims fails as a matter of law. 2 Plaintiff’s Complaint indicates that the date of this transfer was December 4, 2016, but this appears to be a typographical error, given that Plaintiff alleges that he began applying to SLS for a loan modification in April of 2016. (Compl., ¶¶23-24.) 3 All further statutory references are to the Civil Code, unless noted otherwise. Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 10 of 21 Page ID #:204 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 55000.2074/10595799.1 5 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT A. There Is No Basis For Relief As To Wells Fargo Section 2924.12 of the HBOR provides that, before a Trustee’s Deed Upon Sale has been recorded, a borrower may only bring an action for injunctive relief for violation of the statutes under which Plaintiff brings his first, second, and third causes of action. Cal. Civ. Code § 2924.12. Yet Plaintiff does not even request injunctive relief from Wells Fargo. See Compl. Nor could he even receive injunctive relief from Wells Fargo as he admits that SLS is currently servicing the Loan, not Wells Fargo. Compl., ¶23. Plaintiff does not allege any facts indicating that Wells Fargo is involved in any way with a pending foreclosure sale. Compl. Indeed, there is no pending trustee’s sale, no trustee’s deed upon sale has been recorded, and Plaintiff does not allege any facts to the contrary. Thus, there is no basis for injunctive relief. And, given that there is no basis for injunctive relief as to Wells Fargo, Plaintiff’s HBOR claim fails as a matter of law. See Rae v. Bank of America, N.A., WL 447306, at *4 (C.D. Cal. 2017) (denying HBOR claim because Plaintiff did not state any viable claim for injunctive relief); Shupe v. Nationstar Mortgage LLC, WL 431083, at *3 (E.D. Cal. 2017) (same); Coury v. Caliber Home Loans, Inc., WL 6962882, at *2 (N.D. Cal. 2016) (same); Stinson v. Specialized Loan Servicing, LLC, WL 6524864, at *4 (E.D. Cal. 2016) (“Though Plaintiff has adequately alleged a violation of California Civil Code § 2923.7, he has not alleged that any foreclosure is pending and thus he is not entitled to injunctive relief.”). B. The HBOR Did Not Apply To Plaintiff in April, May, or June of 2015 Plaintiff alleges that Wells Fargo violated the HBOR by failing to send a written acknowledgment of receipt within 5 days of Plaintiff submitting a loan modification application on April 30, 2015, and that Wells Fargo also failed to establish a single point of contact at this point. Compl., ¶¶14-17. Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 11 of 21 Page ID #:205 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 55000.2074/10595799.1 6 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT Yet the legislature has explicitly indicated that the HBOR does not apply to individuals who are debtors in a bankruptcy proceeding. In particular, Section 2920.5 indicates that Sections 2923.6, 2923.7, and 2924.10 of the HBOR do not apply to a borrower “who has filed a case under Chapter 7, 11, 12, or 13 of Title 11 of the United States Code and the bankruptcy court has not entered an order closing or dismissing the bankruptcy case, or granting relief from a stay of foreclosure.” As indicated previously, Plaintiff had filed a Chapter 13 bankruptcy petition on October 16, 2013. RJN, Ex. 11. And that bankruptcy proceeding was not dismissed until July 30, 2015. RJN, Ex. 12. Thus, the HBOR did not apply to Plaintiff in April, May, or June of 2015. Thus, Wells Fargo cannot have violated the HBOR by failing to acknowledge receipt of documentation in May of 2015 Compl., ¶16) or by failing to appoint a single point of contact for Plaintiff at the same time Compl., ¶17). C. The Individual HBOR Claims Against Wells Fargo Fail For Independent Reasons 1. The Section 2924.10 and Section 2923.7 Claims Fail Plaintiff’s first cause of action claims that Wells Fargo violated Section 2924.10 because Plaintiff never received a written acknowledgment of loan modification documents that were submitted on April 30, 2015, within 5 business days, and Plaintiff did not receive a description of the loan modification process, including an estimate of when a decision on the application would be made and any deadlines to submit missing documentation. Compl., ¶¶45-48. Plaintiff’s second cause of action alleges that Wells Fargo violated Section 2923.7 because Wells Fargo refused to provide Plaintiff with a single point of contact after one was requested. Compl., ¶59. Even if Plaintiff’s allegations are true, however, Plaintiff cannot establish a material violation of Sections 2924.10 and 2923.7, and Wells Fargo corrected any potential violation by actually reviewing Plaintiff’s modification application. Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 12 of 21 Page ID #:206 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 55000.2074/10595799.1 7 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT Section 2924.12 provides that a violation of Section 2924.10 is only actionable if the violation is “material” and until a servicer “has corrected and remedied the violation.” Civ. Code §2924.12 (“a borrower may bring an action for injunctive relief to enjoin a material violation of Section … 2924.10.”). Further, the HBOR specifically provides that a servicer may correct or remedy a violation and, if it does so, it “shall not liable for any violation that it has corrected or remedied.” Civ. Code §2924.12. As explained by the Eastern District, “Pursuant to California Civil Code section 2924.12(c), [Defendant’s] review of Plaintiff's loan modification application and the resulting denial on January 22, 2014, corrected and remedied any alleged violation of California Civil Code sections 2923.6 or 2923.7.” Boring v. Nationstar Mortgage, LLC, WL 9270879, at *2 (E.D. Cal. Dec. 21, 2015); see also Jerviss v. Select Portfolio Servicing, Inc., WL 7572130, at *5 (E.D. Cal. 2015) (holding that a servicer remedied any potential violation by completing a modification review after the offending foreclosure notice was recorded). Multiple courts have held that a violation of Section 2924.10 is not material as a matter of law when a servicer later reviews a borrower’s modification application. Shupe v. Nationstar Mortgage LLC, WL 431083, at *4 (E.D. Cal. 2017) (“Plaintiffs have provided no facts that support a finding that any violations of § 2924.10 were material since Plaintiffs' application was evaluated by Defendants.”); Coury v. Caliber Home Loans, Inc., WL 6962882, at *4 (N.D. Cal., Nov. 29, 2016, No. 16- CV-05583-RS) (dismissing Section 2924.10 claim because “Caliber's alleged failure to acknowledge his application materials in writing did not deprive Coury of the opportunity to obtain a loan modification and, as discussed above, there remains nothing for the provisions of HBOR to remedy.”); Estrada v. Caliber Home Loans, Inc., WL 12661910, at *7 (C.D. Cal. 2015) (same). Here, Plaintiff cannot demonstrate that the purported violation of Section 2924.10 in failing to acknowledge receipt of documents in May of 2015 is material. As Plaintiff himself concedes, Wells Fargo ultimately reviewed his loan Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 13 of 21 Page ID #:207 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 55000.2074/10595799.1 8 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT modification application and provided him with a written decision – two written decisions, in fact. Compl., Exs. B and C. On September 3, 2015, Wells Fargo denied his loan modification application because he had reached the allowable number of modifications, and on September 8, 2015, Wells Fargo denied Plaintiff a loan modification under the federal Home Affordable Modification Program (“HAMP”) in part because he had reached the allowable number of modifications, in part because of the results of his net present value (“NPV”) evaluation, and in part because his proposed monthly payment would be more than 42% of his monthly income. Id. Thus, Wells Fargo’s alleged failure to provide an acknowledgment letter is not material as Plaintiff was ultimately reviewed for a modification. For these same reasons, Wells Fargo’s alleged failure to appoint a single point of contact does not constitute a material violation of the HBOR. Moreover, any alleged failure to acknowledge receipt of documents or appoint a SPOC was ultimately remedied by virtue of Wells Fargo’s subsequent review of Plaintiff’s modification application. As such, even if the alleged violations are true, Wells Fargo is not liable for a HBOR violation as those violations were remedied. Civ. Code §2924.12. 2. Wells Fargo Complied With Section 2923.6(f) Plaintiff’s third cause of action alleges that Wells Fargo violated Section 2923.6(f) by “arbitrarily” denying Plaintiff’s loan modification application. Compl., ¶¶70-71. Section 2923.6(f) provides that a loan servicer shall send a written notice to the borrower identifying the reasons for denying a loan modification application, including 1) the amount of time the borrower has to appeal and instructions on how to appeal; 2) if the denial was based on investor disallowance, the specific reasons for the investor disallowance; 3) if the denial is the result of an NPV calculation, the monthly gross income and property value used to calculate the NPV and a statement that the borrower may obtain all NPV inputs used in the NPV calculation upon written request; 4) if applicable, a finding that the borrower was previously offered a Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 14 of 21 Page ID #:208 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 55000.2074/10595799.1 9 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT first lien loan modification and failed to successfully make payments under the terms of the modified loan; and 5) if applicable, a description of other foreclosure prevention alternatives for which the borrower may be eligible, and a list of the steps the borrower must take in order to be considered for those options. Civ. Code § 2923.6(f). Here, Plaintiff attaches to his Complaint the denial letters from Wells Fargo dated September 3, 2015 and September 8, 2015, and these letters comply with Section 2923.6(f). Notably, the letters indicate the amount of time the borrower has to appeal – 30 days. See Compl., Ex. A, pg. 4 and Ex. B at pg. 5 (“We must receive your appeal request, with any additional information (as applicable) within 30 calendar days from the date of this letter.”). The letters also indicate the monthly gross income and that Plaintiff was previously offered a loan modification. Moreover, Plaintiff cannot demonstrate that a violation of Section 2923.6(f) caused Plaintiff harm. In other words, even if there were some technical violation of Section 2923.6(f), such a violation is not material. Thus, the Section 2923.6(f) claim fails as a matter of law. IV. PLAINTIFF’S RESPA CLAIMS FAIL Plaintiff’s fourth cause of action alleges that Wells Fargo violated RESPA, 12 C.F.R. § 1024.41(b)(2)(i)(A), by failing to conduct a prompt review to determine whether Plaintiff’s loan modification application was complete in 2015. Compl., ¶¶84-85. Plaintiff’s fifth cause of action alleges that Wells Fargo violated the RESPA, 12 C.F.R. § 1024.41(b)(1), by failing to exercise reasonable diligence in obtaining documents and information to complete the loan modification application in 2015. Compl., ¶¶88-90. Plaintiff’s claims under 12 C.F.R. § 1024.41 (“Section 1024.41”) fail for two reasons. First, the provisions of RESPA only apply to a borrower’s first loan modification application. 12 C.F.R. § 1024.41(i) (“A servicer is only required to comply with the requirements of this section for a single complete loss mitigation Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 15 of 21 Page ID #:209 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 55000.2074/10595799.1 10 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT application for a borrower's mortgage loan account.”); Wentzell v. JPMorgan Chase Bank, Nat. Ass'n, 627 Fed.Appx. 314, 319 fn. 4 (5th Cir. 2015) (‘The federal restrictions, however, apply only to a borrower's first loss mitigation application”); Agomuoh v. PNC Financial Services Group, WL 657428, at *10 (D. Md. 2017) (denying claim under Section 1024.41 because Plaintiff had previously been reviewed for a loan modification); Jones v. Select Portfolio Servicing, Inc., WL 6581279, at *7 (N.D. Tex. 2016) (“Nothing in Plaintiff's Petition allows the Court to infer that this suit concerns Plaintiff's first loan modification request.”); Austerberry v. Wells Fargo Home Mortgage, WL 8031857, at *6 (E.D. Mich. 2015) (“Any allegations stemming solely from Plaintiff's second loan modification application, submitted in November 2014, are properly dismissed.”); Smith v. Nationstar Mortgage, WL 7180473, at *5 (E.D. Mich. 2015) (dismissing Section 1024.41 claim for same reason). Here, Plaintiff concedes that the loan modification application he allegedly submitted on April 30, 2015 was not his first. Compl., Ex. A, (“Since our client’s last review for a mortgage loan modification and/or any other foreclosure prevention alternatives with your client…”). Because Section 1024.41 only applies to a borrower’s first loan modification application, and because Plaintiff concedes that the application that is the subject of the RESPA claim is not his first loan modification application to be reviewed by Wells Fargo (dba America’s Servicing Company), Plaintiff’s RESPA claim fails. Second, the RESPA claim fails because Plaintiff has not pleaded damages sufficient to state a RESPA claim. Section 2605(f) of RESPA provides that “whoever fails to comply with any provision of [RESPA] shall be liable to the borrower for each such failure in the following amounts: ... (A) any actual damages to the borrower ... and (B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $2,000.” Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 16 of 21 Page ID #:210 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 55000.2074/10595799.1 11 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT Here, in support of each of the RESPA claims, Plaintiff asserts the same boilerplate language to allege that he has been damaged: “Therefore, Defendants are in violation of the Code of Federal Regulations and is in violation of laws which were specifically enacted to protect consumers such as Plaintiffs [sic] from the type of abusive, deceptive, and unfair conduct in which Defendant engaged. Defendants’ unlawful conduct has caused Plaintiffs damages in an amount to be proven at trial.” Compl., ¶¶86, 91. Yet Plaintiff has not alleged with any particularity how he has been damaged by Wells Fargo’s alleged failure to promptly review whether his application was complete and to obtain documents to complete the application in 2015. Id. Indeed, Plaintiff concedes that Wells Fargo actually reviewed his modification application and provided him with a determination on the merits of his application. Compl., Exs. B and C. Courts have routinely held that allegations similar to those asserted by Plaintiff are insufficient for purposes of pleading a RESPA claim. Winters v. Deutsche Bank National Trust Company, WL 5944717, at *2 (E.D. Mich. 2016) (“Winters has failed to allege with sufficient particularity any actual monetary damages, or a pattern or practice of noncompliance on the part of defendants, and thus would not be entitled to those forms of relief even if requested.”); (Rodriguez v. Bank of America N.A., WL 4718177, at *3 (S.D. Tex. 2016) (“Plaintiffs' claim for violation of Section 1024.41(g) also fails as a matter of law because they do not allege actual damages as a result of the violation.”); Martin v. Bank of New York Mellon Corporation, WL 7352006, at *3 (E.D. Mich. 2015) (“Under RESPA, plaintiff may only seek ‘actual damages,’ and—again, as many courts in this district have found under nearly identical circumstances—plaintiff's claim fails because he did not allege that he suffered any actual damages”), internal citation omitted. Plaintiff’s RESPA claims should therefore be dismissed without leave to amend. Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 17 of 21 Page ID #:211 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 55000.2074/10595799.1 12 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT V. THE IMPLIED COVENANT CLAIM FAILS Plaintiff alleges that Defendants breached the implied covenant by failing to “properly review Plaintiff for loss mitigation options and instead arbitrarily denying Plaintiff’s multiple applications over a span of two years.” (Compl., ¶98. As set forth below, Plaintiff’s implied covenant claim fails. “The implied covenant of good faith and fair dealing rests upon the existence of some specific contractual obligation... There is no obligation to deal fairly or in good faith absent an existing contract.” Racine & Laramie, Ltd, v. Department of Parks & Recreation, 11 Cal.App.4th 1026, 1031-1032 (1992). To plead a contract, a plaintiff must plead the essential terms of the contract verbatim or incorporate a copy of the contract. Otworth v. Southern Pacific Transportation Co., 166 Cal.App.3d 452, 459 (1985); see also Gilmore v. Lycoming Fire Ins. Co., 55 Cal. 123, 124 (1880). Here, Plaintiff fails to include a copy of any contract with his Complaint, and also fails to cite verbatim the essential terms of any contract. (See Compl. For that reason alone, Plaintiff’s implied covenant claim fails. Further, “[i]t is universally recognized [that] the scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract.” Carma Developers (Cal.), Inc. v. Marathon Development California, Inc., 2 Cal.4th 342, 373 (1992). The implied covenant “cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” Agosta v. Astor, 120 Cal.App.4th 596, 607 (2004); accord: Guz v. Bechtel Nat’l, Inc., 24 Cal.4th 317, 349-50 (2000). Because Plaintiff pleads no contract, there can be no implied covenant. Insofar as Plaintiff is referring to the Deed of Trust underlying the Loan, there is no provision in that document regarding Wells Fargo’s obligation to process or review Plaintiff’s modification application. RJN, Ex. 1. Thus, Plaintiff’s implied covenant claim should be dismissed without leave to amend. Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 18 of 21 Page ID #:212 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 55000.2074/10595799.1 13 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT VI. PLAINTIFF’S SECTION 17200 CLAIM FAILS Plaintiff’s seventh cause of action is for violation of California’s Unfair Competition Law, Bus. & Prof. Code § 17200, et seq. (“UCL”). Compl., ¶¶100- 104. The UCL defines unfair competition as “any unlawful, unfair or fraudulent business act or practice.” Cel-Tech Comm., Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163, 175 (1999). Plaintiff’s UCL claim fails. A. Plaintiff Does Not Have Standing Under The UCL In order to have standing to bring a UCL claim, a private party must have relied upon the unfair competition and suffered economic injury as a result of the reliance. Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal.App.4th 497, 521-22 (2013); Kwikset Corp. v. Sup.Ct., 51 Cal.4th 310, 326 (2011). Although foreclosure proceedings may amount to an economic injury, a plaintiff does not have standing under the UCL unless he establishes that the foreclosure was caused by the unlawful, unfair or fraudulent business practice. See Jenkins, supra, 216 Cal.App.4th at 521-22 (misconduct that occurs after the plaintiff defaults and foreclosure proceedings are commenced did not cause the foreclosure and cannot be the cause of the economic loss). Here, Plaintiff defaulted on the Loan by failing to make the payment due in July 2012. RJN, Ex. 6. But the conduct alleged in the Complaint relating to Wells Fargo happened after April of 2015, years after Plaintiff defaulted on the Loan. See Compl., ¶¶14-23. Because Plaintiff has not suffered an economic injury caused by Wells Fargo, he does not have standing under the UCL. Jenkins, 216 Cal.App.4th at 521-22; Kwikset, 51 Cal.4th at 326. B. Plaintiff Is Not Entitled To Any Relief Under The UCL “The UCL limits the remedies available for UCL violations to restitution and injunctive relief.” Madrid v. Perot Sys. Corp., 130 Cal.App.4th 440, 452 (2005); see also Cel-Tech Communications, supra, 20 Cal.4th at 179. Plaintiff’s UCL claim fails because he is not entitled to either type of relief. Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 19 of 21 Page ID #:213 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 55000.2074/10595799.1 14 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT While the UCL authorizes injunctive relief, “the general rule is that an injunction may not issue unless the alleged misconduct is ongoing or likely to recur.” Madrid, 130 Cal.App.4th at 464. Here, there is no evidence establishing that Plaintiff is at risk of further harm from Wells Fargo. Indeed, Plaintiff concedes that Wells Fargo is no longer the servicer of the Loan, so Wells Fargo currently has no connection to the Loan or the Property. Compl., ¶23. Thus, there is no basis for injunctive relief. Similarly, Plaintiff is not entitled to restitution. In the context of the UCL, “restitution is limited to the return of property or funds in which the plaintiff has an ownership interest (or is claiming through someone with an ownership interest).” Madrid, supra, 130 Cal.App.4th at 453, citations omitted; see also Korea Supply, supra, 29 Cal.4th at 1149. Plaintiff is not entitled to restitution from Wells Fargo. Plaintiff does not allege any facts indicating that he gave anything to Wells Fargo to which Wells Fargo was not entitled. See Compl. C. Plaintiff Has Failed To Establish Unlawful, Fraudulent, Or Unfair Conduct Courts have made clear that the UCL cannot be used as an end-run around the requirements of other statutes. See Glenn K. Jackson Inc. v. Roe, 273 F.3d 1192, 1203 (9th Cir. 2001). “A court may not allow plaintiff to plead around an absolute bar to relief simply by recasting the cause of action as one for unfair competition.” Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000). As set forth in this Demurrer, Plaintiff fails to state a viable claim against Wells Fargo. For those same reasons, Plaintiff cannot allege a UCL claim by incorporating and referencing these deficient causes of action. See, e.g., Compl. ¶¶100-101. Thus, Plaintiff fails to establish that Wells Fargo engaged in unlawful conduct. Plaintiff also fails to allege fraudulent conduct. A business practice is considered “fraudulent” within the meaning of Section 17200 if the “public is likely to be deceived.” Massachusetts Mutual Life Ins. Co. v. Super. Ct., 97 Cal.App.4th Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 20 of 21 Page ID #:214 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 55000.2074/10595799.1 15 MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF’S COMPLAINT 1282, 1290 (2002). Plaintiff fails to allege any fraudulent conduct on the part of Wells Fargo. See Compl. And the allegations in the complaint have nothing to do with the public at large. Id. Instead, Plaintiff’s Complaint involves a single loan that Plaintiff obtained and details Plaintiff’s repeated efforts to obtain a loan modification. Plaintiff fails to plead fraudulent conduct that is actionable under the UCL. Finally, no unfair conduct is alleged. A business practice is considered “unfair” if it threatens to violate or violates the policy or spirit of an anti-trust law or otherwise significantly threatens or harms competition. Cel-Tech, supra, 20 Cal.4th at 187. Plaintiff fails to plead any facts regarding public policy or threats to the public. Plaintiff’s UCL claim should be dismissed. VII. CONCLUSION Based on the foregoing, Wells Fargo requests that the Court sustain its demurrer to the Complaint. DATED: April 4, 2017 SEVERSON & WERSON A Professional Corporation By: /s/ Andrew L. Minegar Andrew L. Minegar Attorneys for Defendant WELLS FARGO BANK, N.A. dba AMERICA’S SERVICING COMPANY Case 2:17-cv-02163-RGK-PJW Document 11 Filed 04/04/17 Page 21 of 21 Page ID #:215 1 2 a 3 4 5 6 7 8 9 10 11 I2 13 l4 15 t6 T7 18 t9 20 2t 22 23 24 25 26 27 28 PROOF OF SERVICE u5'í3'ðg,, 'Éi#;t At the time of service. I was over 18 years of age and not a party to this action. I am emploved in thê County of Oránge, Statãof California. My business address is The Ätriúm, 19100 Von Karman Aienue, Suite 700, Irvine, CA 92612. On April S-, ZOt7, I served true copies of the following document(s): NOTICE OF MOTION AND MOTION BY DEFENDANT WELLS FARGO BANK. N.A. TO DISMISS PLAII\TIFF'S COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF on the interested parties in this action as follows: SEE ATTACHED SERVICE LIST BY CM/ECF NOTICE OF ELECTRONIC FILING: US àre by S I electronical ly filed the users willnot resistered the coírt rules. I declare under penaltv of periurv under the laws of the United States of America that the foredoine i"s truè añd ðorrect. I declare that I am employed in the òffice of a member oflthe lar of this Court at whose direction the service was made Executed on Apri.ÅJ , 2017, at Irvine, Cali 5 5000.207 4/ t059s7 99.1 MOTION BY DEFENDANT WELLS FARGO BANI(, N.A. TO DISMISS PLAINTIFF'S COMPLAINT Case 2:17-cv-02163-RGK-PJW Document 11-1 Filed 04/04/17 Page 1 of 2 Page ID #:216 I 2 aJ 4 5 6 7 8 9 10 11 I2 I3 t4 15 I6 t7 18 t9 20 2l 22 23 24 25 26 27 28 SERVICE LIST Torossian v. llells Fargo Bønk, N.A., ef al. USDC Case No. 2:17-cv:02163 RGK (PJWx) Patricia Rodrisuez. Esq. Attornevs for Plaintiff Ròonlcu p.zLíw Gnouþ, INc. Renpl Tonosslan 1492 W. Colorado Blvd., Suite 120 Pasadena, CA 91105 Telephone: (ç?ç) 888-5206 Facsimile: (626)282-0522 or o d (ò.attotn evoro d . c om Timothv M. Rvan. Esq. Michael W. St"oltzman, Jr., Esq. TUB RyAN FIRM A Professional Corporation 30 Corporate Park, Suite 3 10 Irvine,'CA 92606' Attornevs for Defendant SpBcnírzpr LoaN SBnvtctNc LLC Telephone: (949)263-1800 Facsimile (919) 872-2211 tr v an(ò.the rv dn fi rm. c om nísto lìZm aí(òthervanfirm . c o m 5 5000.207 4/ r0s9s7 99. I MOTION BY DEFENDANT WELLS FARGO BANK, N.A. TO DISMISS PLAINTIFF'S COMPLAINT Case 2:17-cv-02163-RGK-PJW Document 11-1 Filed 04/04/17 Page 2 of 2 Page ID #:217