Vogan v Wells Fargo US Bank as trustee for WSMBS - USDC Eastern District Calif -granting in part/denying in part motion to dismiss

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Case 2:11-cv-02098-JAM -KJN Document 30 Filed 11/17/11 Page 1 of 17

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8 UNITED STATES DISTRICT COURT

9 EASTERN DISTRICT OF CALIFORNIA

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11 BILLI VOGAN and HAROLD TRAUPEL,i nd iv idua l s ,

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P l a i n t i f f s ,13

v.14

15 WELLS FARGO BANK, N.A.; US BANK

NATIONAL ASSOCIATION, AS TRUSTEE16 FOR WFMBS 2005-AR12; WELLS FARGO

HOME MORTGAGE; and FIRST

17 AMERICAN TRUSTEE SERVICINGSOLUTIONS FORMERLY KNOWN AS

18 FIRST AMERICAN LOANSTAR TRUSTEESERVICES, LLC; and Does 1-100,

19 i nc lus ive ,

Defendants .20

Case No. 2:11-CV-02098-JAM-KJN

ORDER GRANTING IN PART AND

DENYING IN PART MOTION TO

DISMISS PLAINTIFFS' COMPLAINTPURSUANT TO FEDERAL RULE OF

CIVIL PROCEDURE 12 (B) (6 ) .

21 This mat t e r i s befo re th e Cour t on Wells Fargo Bank, N.A.

22 ("Wells Fargo") and U.S. Bank, N.A. as Trus tee fo r WFMBS 2005-

23 AR12's ("U.S. Bank") Motion to Dismiss P l a i n t i f f s ' Complaint

24 pursuan t to Federa l Rule of Civ i l Procedure 12 (B) (6 ) ("MTD") (Doc.

25 #10) . The motion i s jo ined by Defendant F i r s t American Trus tee

2 6 Serv ic ing Solu t ions ( "F i r s t American") (Doc. #12) (Wells Fargo and

27 U.S. Bank a re co l l e c t i v e ly r e fe r red to as "Defendan ts" ) .

28 Defendants a lso submi t t ed a Reques t fo r Jud i c i a l Notice (Doc .# l l ) .

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1 Pl a i n t i f f s B i l l i Vogan and Harold Traupel (co l lec t ive ly

2 "Pla in t i f f s " ) oppose the motion ("Opposit ion"} (Doc. #16).

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4 1. PROCEDURAL BACKGROUND AND FACTUAL ALLEGATIONS

5 This act ion i s predicated on the non-judic ia l forec losure of

6 Pla in t i f f s ' home, located a t 20066 Wildwood West Drive, Penn

7 Valley, Cal i forn ia ("the Proper ty") , by Defendants . Wells Fargo as

8 the successor to Wells Fargo Home Mortgage was the or ig ina l lender

9 and was se rv ice r fo r the loan a t a l l re levant t imes . The loan

10 or ig inated on June 29; 2004. MTD, a t 1. Pla in t i f f s were current

11 on t he i r payments up un t i l a t l ea s t August 2010. Pla in t i f f s

12 stopped paying t he i r mortgage sometime a f t e r tha t , and Fi r s t

13 American, act ing on Wells Fargo's behal f , recorded a not ice of

14 defaul t on the proper ty on December 14, 2010. MTD, a t 1. Wells

15 Fargo did not subs t i tu te F i rs t American as t rus tee un t i l January 4,

16 2011, which was a f t e r Fi r s t American f i l ed the Notice of Default

17 agains t the proper ty . MTD, a t 1.

18 Prior to defaul t ing on t he i r loan, Pla in t i f f s al lege t ha t they

19 attempted to con tac t Wells Fargo to obta in a modif ica t ion in August

20 2010. Compl., a t 16. Fi r s t , Wells Fargo a l leged ly to ld Pla in t i f f s

21 tha t they qua l i f i ed fo r a modif ica t ion, so long as they were in

22 defaul t fo r a t l ea s t three months. Id . I t was only a f t e r they

23 defaul ted in order to qual i fy t ha t Wells Fargo al legedly informed

24 them t ha t t h e i r loan was owned by an inves tor t ha t did not engage

25 in mortgage modif ica t ion . Id . Pla in t i f f s then asked Wells Fargo

26 to ver i fy the note associa ted with t h e i r mortgage, and the

27 documentation produced by Wells Fargo ind ica ted t ha t Wells Fargo

28 still owned the loan. CompI., Ex. B.

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Case 2: 11-cv-02098-JAM -KJN Document 30 Filed 11/17/11 Page 3 of 17

1 The pa r t i e s dispute what occurred as fa r as ownership of the

2 loan . Pl a i n t i f f s claim t ha t the loan was sold to someone who i s

3 not yet i de n t i f i e d a t an unknown t ime. Opp., a t 2-3. Defendants

4 claimt ha t

the loanwas

soldto

u.s.Bank

ast r u s t e e o f

a mortgage

5 backed secur i ty ("MBS") named WFMBS 2005-AR12 on January 11, 2011.

6 MTD, a t 1-2. Pl a i n t i f f s respond with the a l l ega t ion t ha t WFMBS

7 2005-AR12 has a clos ing date of June 16, 2005, which according to

8 the Pooled Secur i ty Agreement ("PSA") governing adminis t ra t ion of

9 the secur i ty i s the cut -of f date fo r adding addi t ional proper ty to

10 the WFMBS 2005-AR12 t r u s t . Opp., a t 2-3. Pla in t i f f s also a l lege

11 t ha t the of f i ce r who executed the assignment to u.s. Bank on beha l f

12 of Wells Fargo was ac tua l ly a Fi r s t American employee. Compl., a t

13 11. Pla in t i f f s fu r the r a l lege , r e ly ing on the c los ing date for the

14 MBS, t ha t the loan was never ac tua l ly sold to u.s. Bank as t rus tee

15 fo r WFMBS 2005-AR12, and tha t the assignment of i n t e r e s t recorded

16 on January 11, 2011 was recorded to deceive Pla in t i f f s as to who

17 owned t he i r loan and who was author ized to foreclose . Opp. , a t 3.

18 Pla in t i f f s f i l ed t h i s f edera l complain t a f t e r t h e i r s t a t e

19 cour t complain t was twice dismissed pursuant to Defendants '

20 demurrers. Pla in t i f f s claim t ha t they only discovered t ha t

21 Defendants vio la ted federa l law j u s t p r i o r to f i l ing t h e i r federa l

22 complaint , which i s why they dismissed the s t a t e cour t complaint

23 and r e - f i l ed in the Eas tern Di s t r i c t . Opp., a t 1.

24 P l a i n t i f f s ' Complaint br ings ten causes of act ion aga ins t

25 various defendants : (1) Declaratory r e l i e f as to the r i gh t s and

26 ob l iga t ions of Pla in t i f f s and a l l defendants with regard to the

27 Property and P l a i n t i f f s ' mortgage; (2) Negligence aga ins t a l l

28 defendants ; (3) Quasi-Contrac t aga ins t Wells Fargo and u.s. Bank;

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1 (4) Unfair Competit ion under Cal i fo rn ia Business & Professions Code

2 § 17200 agains t a l l defendants ; (5} vio la t ion of the Truth in

3 Lending Act ("TILA"), 15 U.S.C. § 1641(g) agains t U.s. Bank;

4 (6 ) Accounting agains t Wells Fargo and u.s . Bank; (7) Construct ive

5 t r u s t aga ins t Wells Fargo and U.s. Bank; (8) Wrongful foreclosure

6 seeking to se t as ide Trus tee ' s Sale aga ins t a l l defendants ; (9) To

7 void or cancel t r u s t e e ' s deed upon sa le agains t U.s. Bank and Fi r s t

8 American; and (10) Quiet Ti t l e aga ins t U.s. Bank and Wells Fargo.

9 The Court has ju r i sd ic t ion over the TILA claim agains t U.s.

10 Bank pursuant to 28 U.S.C. § 1331. The Court has j u r i sd i c t i on in

11 i t s disc re t ion over the remaining s t a t e law claims if they are

12 pendent from the federa l TILA claim pursuan t to 28 U.S.C. § 1367.

13 The Court held a hearing on t h i s motion on November 2, 2011.

14 At t ha t hear ing, the Court granted F i r s t American 's motion to

15 dismiss with prejudice .

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18 A. Legal Standard

I I . OPINION

19 A party may move to dismiss an act ion fo r fa i lu re to s t a t e a

20 claim upon which r e l i e f can be granted pursuant to Federal Rule of

21 Civ i l Procedure 12(b) (6). In consider ing a motion to dismiss, the

22 cour t must accept the a l l ega t ions in the complaint as t rue and draw

23 a l l reasonable inferences in favor of the p la in t i f f . Scheuer v.

24 Rhodes, 416 U.s . 232, 236 (1974), overruled on o ther grounds by

25 Davis v. Scherer , 468 U.s. 183 (1984); Cruz v. Beto, 405 u . s . 319,

26 322 (1972). Asser t ions tha t are mere " lega l conclus ions ," however,

27 are not en t i t l ed to the assumption of t ru th . Ashcroft v. Iqba l ,

28 129 S. c t . 1937, 1950 (2009) (c i t ing Bel l Atl . Corp. v. Twombly,

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1 550 U.S. 544, 555 (2007)). To surv ive a motion to dismiss , a

2 p l a i n t i f f needs to plead "enough f ac t s to s t a t e a claim to r e l i e f

3 t h a t i s plaus ib l e on i t s face ." Twombly, 550 U.S. a t 570.

4Dismissal i s appropr i a t e where the p l a i n t i f f fa i l s to s t a t e

acla im

5 s uppor t ab l e ' bya cognizable l e ga l t heo ry . B al i s t r e r i v. Pac i f i ca

6 Police Dep ' t , 901 F.2d 696, 699 (9th Cir . 1990) .

7 Upon grant ing a motion to dismiss fo r fa i lu re to s t a t e a

8 cla im, the cour t has d i s c r e t i on to al low leave to amend the

9 complain t pursuant to Federa l Rule o f Civi l Procedure 15(a) .

10 "Dismissa l with pre judice and without leave to amend i s not

11 appropr ia te unless it i s c l ea r . . . t h a t the complaint could not

12 be saved by amendment." Eminence Capi ta l , L.L.C. v. Aspeon, Inc . ,

13 316 F.3d 1048, 1052 (9th Ci r . 2003).

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B. Reques t fo r J ud i c i a l Notice

Defendants f i l ed a Request fo r J ud i c i a l Notice . They ask the

16 Court to take j u d i c i a l not ice o f 12 publ i c ly recorded o r f i l ed

17 documents r e la ted to the non- jud ic ia l foreclosure process on

18 P l a i n t i f f ' s proper ty and the r esu l t ing s t a t e cour t lawsui t . RJN,

19 a t 2-3 . Pla in t i f f s oppose the motion only to the ex ten t t h a t it

20 asks the Court to accept the contents of the documents as t rue .

21 Opp. , a t 4.

22 General ly , a cour t may not cons ider mater ia l beyond the

23 pleadings i n ru l ing on a motion to dismiss for f a i lu re to s t a t e a

24 cla im. The except ions are mate r ia l a t tached to , o r r e l i ed on by,

25 the complain t so long as au then t ic i ty i s not disputed , or m at ters

26 of publ ic record , provided t ha t they are not subjec t to reasonable

27 dispute . E .g . , Sherman v. Stryker Corp. , 2009 WL 2241664 a t *2

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1 (C.D. Cal. Mar. 30, 2009) (c i t ing Lee v. Ci ty o f Los Angeles, 25()

2 F.3d 668, 688 (9th Cir . 2001) and Fed. R. Evid. 201).

3 In t h i s case , the i tems provided by Defendants are the proper

4 sub jec t o f j ud i c i a l no t ice so long as they are not reasonably

5 sub jec t t o d i spu te . Based on the above di scuss ion , the con ten t s o f

6 two o f the exh ib i t s are in di spu te : (1) Subs t i tu t ion of Trustee

7 dated January 4, 2011 (RJN Ex. C), and (2) Assignment o f Deed of

8 T ru s t dated January 6, 2011 (RJN Ex. D). It i s appropr i a t e to take

9 Jud ic ia l Notice of the o the r exh ib i t s , and Defendants ' reques t is

10 GRANTED with respec t to those exh ib i t s . Due to the reasonable

11 di spu te as to the contents of Exhib i t s C and D, Defendants ' reques t

12 fo r j ud i c i a l no t ice o f those tw o exh ib i t s i s DENIED.

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C. Motion to Dismiss

1 . Th e TILA Claim Agains t U.S. Bank

15 P l a i n t i f f s ' so le f edera l cla im i s aga ins t U.S. Bank fo r

16 a l leged ly v io la t ing a provis ion of TILA, 15 U.S.C. § 1641(g) . U.S.

17 Bank seeks dismissa l of t h i s claim on th e grounds t ha t as a t rus t ee

18 fo r a mortgage backed secur i ty , TILA does not apply to it.

19 Defendants also seek di smissa l by arguing t h a t P l a i n t i f f s fa i l ed to

20 plead damages a r i s i n g from a v io la t ion o f 15 U.S.C. § 1641(g) . For

21 the following reasons , the Court f inds t ha t U.S. Bank as t r u s t e e

22 fo r WFMBS 2005-AR12 may be subjec t to l i a b i l i t y a r i s ing from a

23 v io la t ion of 15 U.S.C. § 1641(g) and the re fo re Defendants ' motion

24 to dismiss t h i s claim must be denied .

25 15 U.S.C. § 1641(g) , t i t l ed " L ia b i l i t y of Ass ignees , " requ i re s

26 t h a t when an en t i t y purchases o r i s ass igned the b e n e f i c i a l

27 i n t e r e s t in a loan on a proper ty , it must no t i fy the borrower in

28 wri t ing within 30 days o f when the loan i s t rans fe r red . 15 U.S.C.

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1 § 1641(g). Subsection (g) l i s t s the par t i cu l a r informat ion t ha t

2 the ass ignee ' s not ice must conta in. This subsect ion only appl ies

3 to the "new owner or assignee of the debt . 15 U.S.C. § 1641(g).

4 15 U.S.C. § 1640 author izes a c i v i l act ion fo r v io la t ions of § 1641

5 fo r (1) actual damages, or (2) s ta tu tory damages tha t may included

6 (a) damages equal to twice the amount of any finance charge or

7 (b ) fo r a c red i t t ransac t ion secured by rea l property an amount not

8 l ess than $400 and not grea te r than $4000. 15 U.S.C. § 1640(a) .

9 a) Applicat ion of 15 U.S.C. § 1641(g) to Trustees

10 U.S. Bank argues t ha t as a genera l ru le , t rus tees are not

11 subjec t to TILA in Cal i forn ia because t rus tees have l imi ted

12 l i a b i l i t y in Ca l i fo rn i a ' s non- jud ic ia l foreclosure process .

13 Pla in t i f f s respond t ha t U.S. Bank cannot both foreclose on t he i r

14 home, thereby claiming a benef i c i a l i n t e r e s t in the note secur ing

15 P la in t i f f s ' loan, and simultaneously claim t ha t it i s not a

16 c re d i to r subject to TILA's provis ions .

17 Under Cal i forn ia law, the t rus tee of a deed of t r u s t has no

18 benef ic ia l i n t e r e s t in the mortgage as soc ia ted with the deed of

19 t r u s t . Heri tage Oaks Par tners v. Fi r s t Am. Ti t l e Ins. Co., 66 Cal .

20 Rptr . 3d 510, 514 (Ct. App. 2007). The t rus tee for a deed of t r u s t

21 has only two du t i es : (1) to foreclose the deed of t r u s t upon

22 defaul t , or (2) when the secured debt i s sa t i s f i ed to convey the

23 deed of t r u s t to the borrower. Id . Due to the l imi ted dut ies and

24 lack of benef ic ia l i n t e r e s t assigned to the t rus tee of a deed of

25 t r u s t , federa l cour ts in Cali forn ia hold t ha t TILA does not apply

26 to the t rus tee of a deed of t r u s t . Guerrero v. Ci t i Res iden t ia l

27 Lending, Inc . , No. CV F 08-1878 LJO GSA, 2009 WL 926973, a t *4

28 (E.D. Cal. Apr. 3, 2009) (holding t ha t TILA does not apply to the

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1 t rus tee of a deed of t r u s t and explaining t ha t the l imi ted ro le of

2 such a t rus tee under Cal i forn ia law prec ludes TILA l i ab i l i ty ) .

3 U.S. Bank's argument conf la tes the t rus tee of a deed of t r u s t

4 with other types o f t ru s t ees . To support t he i r pos i t ion , U.S. Bank

5 c i t e s Wilson v. Wells Fargo Bank, No. C 11-03394 CRB, 2011 WL

6 3443635, a t *2 (N.D. Cal. Aug. 5, 2011). Wilson does support U.S.

7 Bank's posi t ion but i s without c i t a t ion to any Ninth Circui t

8 author i ty . Id . (c i t ing Hargis v. Wash. Mut. Bank, No. C 10-02341

9 CRB, 2011 WL 724390 (N.D. Cal. Feb. 22, 2011)) . The Hargis case

10 c i t ed by the Wilson cour t involves the t rus tee of a deed of t r u s t ,

11 not a t rad i t iona l t rus tee or as in t h i s case the t rus tee of a

12 mortgage backed secur i ty . Hargis, 2011 WL 724390, a t *2. I t

13 appears tha t the Wilson cour t fa i led to note the dis t inc t ion

14 between a t rus tee of a deed of t r u s t and the t rus tee of a mortgage

15 backed secur i ty , as well as the basis fo r the ru le exempting the

16 t rus tee of a deed of t r u s t from TILA. The t rus tee of a deed of

17 t r u s t i s exempt from TILA because of i t s l imi ted ro le under

18 Cal i forn ia law, bu t there i s no analogous reason to exempt o ther

19 types of t rus tees from TILA's provis ions .

20 The po te n t i a l breadth of U.S. Bank's posi t ion i s eas i ly

21 i l l u s t r a t ed by hypothet ica l ly grant ing l imi ted l i ab i l i t y to a

22 common la w t ru s t ee . Under the common law of t r u s t s , a " t rus tee i s

23 subjec t to persona l l i a b i l i t y to th i rd persons on obl igat ions

24 incurred in the adminis t ra t ion of the t r u s t to the same extent t ha t

25 he would be l i ab le if he held the property free of t r u s t . "

26 Restatement (2d) of Trus ts § 261. This common law ru le shows a

27 s ta rk cont ras t between the du t ies of the t rus tee of a deed of

28 t ru s t , as l imi ted by Cal i forn ia law, and those of a common law

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1 t r u s t e e . A t r ad i t i ona l t rus t ee holds title to t r u s t proper ty and

2 i s respons ib le for omissions re l a t ed to the adminis t ra t ion of t h a t

3 proper ty . Exempting a l l t rus t ees from TILA would permit t ru s t s

4 ac t ing as l enders to complete ly evade TILA's provis ions .

5 Fur ther , as P l a i n t i f f s poin t out , u.s. Bank was assigned the

6 ownership i n t e r e s t in the loan by the January 11, 2011 assignment ,

7 meaning t ha t u.s. Bank i s Wells Fargo ' s purpor ted ass ignee . MTD,

8 a t 2. As an ass ignee , u.s. Bank f a l l s square ly with in 15 U.S.C. §

9 1641(g), which crea tes l i ab i l i t y for the ass ignees of the loan ' s

10 or ig ina l c red i to r if the assignee f a i l s to no t i fy the borrower of

11 the acqu is i t ion . 15 U.S.C. § 1641(g) .

12 The Cour t dec l ines to fol low the Wilson cour t ' s dec is ion with

13 respec t to TILA l i a b i l i t y of t r u s t e e s . The t rus t ee of a deed of

14 t r u s t enjoys l imi ted l i ab i l i t y because it only has tw o du t ies in

15 the Cal i fo rn ia s t a tu to ry forec losure process , but the re i s no l ega l

16 bas i s to suppor t a hold ing t ha t l imi t s th e l i a b i l i t y of a l l

17 t rus t ees in t h i s manner. Accordingly, th e Court f inds t ha t

18 Pl a i n t i f f s have proper ly a l leged t ha t u.s. Bank as t r u s t e e fo r

19 WFMBS 2005-AR12, a mortgage-backed-secur i ty , i s l i a b l e fo r

20 v io l a t i o n s of TILA.

21 b) Damages Pleaded by P l a i n t i f f s

22 U.S. Bank argues t ha t Pl a i n t i f f s must plead ac tua l damages to

23 s t a t e a cla im, and t ha t the ac tua l damages pleaded in the complain t

24 do not meet the appropr ia te pleading s tandard . MTD, a t 2-3.

25 Pl a i n t i f f s respond t h a t a 1641(g) c la imant may recover ac tu a l

26 damages, s t a t u t o ry damages, and a t to rneys ' fees and t ha t they

27 appropr i a t e ly pleaded a l l three types o f damages. Opp., a t 8.

28 15 U.S.C. § 1640(a) author izes cla ims for ac tua l damages,

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1 s ta tu tory damages, and at torneys fees fo r v io la t ions of 15 U.S.C.

2 § 1641(g) . Russel l v. Mortgage Solut ions Mgmt., - I n c . , No. CV 08-

3 1092-PK, 2010 WL 3945117, a t *6-*7 (D. Or. Apr. 6, 2010)

4 (acknowledging a l l three types of damages are author ized by § 1640

5 aga ins t or ig ina l c red i to r ' s ass ignee) .

6 In t h i s case, Pla in t i f f s pleaded t ha t U.S. Bank's vio la t ion of

7 § 1641(g) caused t he i r home to be foreclosed, presumably because

8 they were unable to contact t he i r actual c redi tor to negot ia te a

9 modif ica t ion of t he i r loan as they explained in another par t of

10 t he i r complaint . Compl., a t 28. They also pleaded t ha t they had

11 to h i re an at torney in order to determine who held t he i r loan. Id .

12 Fina l ly , Pla in t i f f s pleaded tha t u .S . Bank i s sub jec t to s ta tu tory

13 damages and fees. Id . The Court notes t ha t desp i te pleading a l l

14 of these damages, Pla in t i f f s have not pleaded a causal connection

15 between the al leged § 1641(g) vio la t ion and t he i r ac tua l damages

16 because the event prec ip i ta t ing the foreclosure was t he i r defaul t ,

17 not a lack of not ice as to who owned the loan. Pla in t i f f s admit

18 t ha t they were unable to make the required payments on the loan

19 without receiv ing a modif ica t ion, and they do not plead t h a t a

20 modif ica t ion i s lega l ly required . Compl., a t 16. Even if

21 p la in t i f f s are not ent i t l ed to ac tua l damages based on the

22 a l lega t ions in t he i r Complaint, they did adequately plead t ha t they

23 are en t i t l ed to a t to rneys ' fees and s ta tu tory damages.

24 Pla in t i f f s pleaded a claim a r i s ing out of u.S. Bank's al leged

25 vio la t ion of 15 U.S.C. § 1641(g) and damages associa ted with t ha t

26 claim, making dismissal a t t h i s s tage improper. As a r e su l t , U.S.

27 Bank's motion to dismiss th i s claim i s DENIED.

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2 . P l a i n t i f f s ' Sta te Law Claims

a) Ju r i sd ic t ion

Defendants argue t h a t th e Court does not have fede ra l ques t ion

j u r i s d i c t i on pursuan t to 28 U.S.C.§

1331 because P l a i n t i f f s '

fede ra l TILA claim i s not a va l id c la im. Pl a i n t i f f s respond t h a t

the Cour t does have j u r i s d i c t i on pursuan t to 28 U.S.C. 1331 over

the fede ra l TILA cla im and j u r i s d i c t i on pursuan t to 28 U.S.C.

§ 1367 over the pendant s t a t e law c la ims.

As discussed above, P l a i n t i f f s did plead a va l id fede ra l claim

giving th e Cour t j u r i s d i c t i on over t h a t claim pursuan t to 28 U.S.C.

§ 1331. Th e Court may, in i t s d i sc re t ion , exe rc i se j u r i s d i c t i on

over pendant s t a t e law cla ims pursuan t to 28 U.S.C. 1367.

The Court f inds t h a t the remaining s t a t e law cla ims are a l l

pendant from t he fede ra l TILA c la im. The s t a t e law cla ims a r i s e

out of th e o r ig in a t i o n , s a l e , d e f au l t , and forec losure of th e note

securing th e loan used to purchase th e Proper ty . Accordingly , th e

Cour t a s se r t s j u r i s d i c t i on over the s t a t e law cla ims and decides

Defendants ' motion to dismiss those cla ims as fo l lows .

b) Negligence Agains t A ll Defendants

Defendants argue t h a t Pl a i n t i f f s fa i l ed to adequately p lead a

negl igence cause of ac t ion . MTD, a t 7-8 . S p ec i f i c a l l y , they claim

t h a t no defendan t owes P l a i n t i f f s a l eg a l duty , which i s th e second

element in a prima f ac ie negl igence case . Id . Addi t iona l ly ,

24 Defendants argue t h a t Cal i fo rn ia does not permi t recovery in

25 negl igence absen t a p h y s i ca l in ju ry to person o r prope r ty . Id . a t

26 8.

27 P l a i n t i f f s do not respond to Defendants ' arguments in t h e i r

28 Opposi t ion . The Cour t i n t e rp re t s P l a i n t i f f s ' fa i lure to respond as

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Case 2: 11-cv-02098-JAM -KJN Document 30 Filed 11/17111 Page 12 of 17

1 a concession to Defendants ' arguments concerning t h i s cla im.

2 Accordingly , th e Court GRANTS Defendants ' motion to dismiss

3 P l a i n t i f f s ' negligence c la im with pre jud ice .

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c) Viola t ion o f Business and Profess ions Code

§ 17200, e t seq. Against A ll Defendants

Defendants argue t ha t P l a i n t i f f s fa i led to plead t h a t any

conduct i s "unlawful , unfa i r , or f raudulent" as requi red for

v io la t ions of the § 17200 unfa i r compet i t ion law ("DCL"). MTD, a t

8-9. P l a i n t i f f s respond t h a t they adequa te ly pleaded v io la t ions

su f f i c i en t to sa t i s fy each of the th ree va r i e t i e s o f DCL cla ims

with respect to Wells Fargo and D.S. Bank.

"The purpose of the DCL i s to p ro t e c t both consumers and

compet i to r s by promoting f a i r compet i t ion in commercial markets fo r

goods and se rv i c e s . " Drum v. San Fernando Valley Bar Ass 'n , 106

Cal . Rptr . 3d 46, 49 (Ct. App. 2010) ( in t e rna l c i t a t i ons omit ted) .

"The Cal i fo rn ia Supreme Court held t h a t the DCL es tab l i shes three

var i e t i e s of unfa i r compet i t ion-ac ts or prac t i ces which are

[1 ] unlawful , or [2 ] unfa i r , or [3 ] f r audu len t . " Id . a t 50. Since

the DCL i s wri t t en in the d i s junc t ive , a bus iness ac t o r p ra c t i c e

may be a l leged to be a l l o r any of the three var i e t i e s . Berryman

v. Merit Prop. Mgmt., In c . , 62 Cal. Rptr . 3d 177, 185 (Ct. App.

2007). In order to s t a t e a cla im under the unlawful prong, a

p l a i n t i f f must a l lege fac t s t ha t show t h a t anything t h a t can

reasonably be charac te r ized as a bus iness prac t i ce i s also a

v io la t ion of law. Cal i fo rn ia v. McKale, 25 Cal.3d 626, 632 (1979).

To show a v io la t ion under the f raudulent prong, a p l a i n t i f f must

show t ha t members of the publ ic a re l i ke l y to be deceived by the

prac t ice . Weinsta t v. Dentsply I n t ' l , Inc . , 103 Cal . Rptr . 3d 614,

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1 622 n. 8 (Ct. App. 2010)-. "A p l a i n t i f f ' s burden thus i s to

2 demonstrate t ha t the r ep resen ta t ions or nondisc losures in quest ion

3 would l ike ly be misleading to a reasonable consumer." Id .

4 Final ly , under the u n fa i r prong, three d i f f e r e n t t e s t s are

5 cur ren t ly used by Cal i forn ia cour t s to determine if a pract ice i s

6 unfa i r . Drum, 106 Cal. Rptr . 3d a t 53.

7 In t h i s case, Pla in t i f f s pleaded t ha t U.S. Bank fa i l ed to

8 comply with TILA § 1641(g) , as discussed above. Pleading tha t U.S.

9 Bank vio la ted TILA i s su f f i c i en t to main ta in a UCL claim agains t

10 U.S. Bank under the unlawful aspect of the UCL.

11 Pla in t i f f s also pleaded t ha t Wells Fargo recorded a fabr ica ted

12 assignment o f deed of t r u s t ass igning i n t e r e s t in Pla in t i f f s ' loan

13 to U.S. Bank. Compl., a t 14-16. As discussed above, Pl a i n t i f f s

14 al leged t ha t the recorded assignment was executed well a f t e r the

15 c los ing da te o f the MBS to which it was al legedly so ld , giving r i se

16 to a p laus ib le infe rence t ha t a t l ea s t some p a r t o f the recorded

17 assignment was f ab r ica ted . Pl a i n t i f f s a l l ege t h a t such conduct, if

18 proven, cons t i tu te s a vio la t ion of Cal. Penal Code § 532f(a) (4) .

19 Compl., a t 24. That sec t ion p roh ib i t s any person from f i l ing a

20 document re la ted to a mortgage loan t ransac t ion with the county

21 recorder ' s of f ice tha t i s known to be fa l se , with the in ten t to

22 defraud. Cal. Penal Code § 532f(a) (4) .

23 Accordingly, the Court DENIES Wells Fargo and U.S. Bank's

24 motion to dismiss t h i s cla im.

25 III

26 III

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Case 2:11-cv-02098-JAM -KJ N Document 30 Filed 11/17/11 Page 14 of 17

d ) The Requirement to Plead Tender with Respect to

the Following Claims: Claim 3) Quasi-Contract ,Claim 7) Cons t ruc t ive Trus t , Claim 8) WrongfulForeclosure and to Set Aside Trus tee ' s Sale ,Claim 9) Voiding th e Trustee ' s Deed, Claim 10)Quiet Ti t l e

5 Defendants argue t ha t any claim re la ted to a foreclosure t ha t

6 a r i ses in equi ty must be accompanied by P l a i n t i f f s ' credib le

7 a l l ega t ion of t ender . MTD, a t 10. Pla in t i f f s respond t ha t they

8 must only a l l ege t ender , which they claim to have done, and t ha t

9 t ender i s not requi red when the va l i d i t y of the underlying debt i s

10 at tacked. Opp. , a t 11.

11 A p l a i n t i f f i s requi red to a l l ege t ender of the f u l l

12 outs tanding loan amount in order to maintain any cause o f act ion

13 for i r r egu l a r i t y in the non- jud ic ia l forec losure sa le procedure.

14 Abdallah v. United Sav. Bank, 43 Cal.App.4th 1101, 1109 (1996).

15 "[T]he t ender ru le i s not absolute , and a t ender may not be

16 requi red where it i s inequi table to do so . " Sacchi v. Mortgage

17 Elec. Regis t r a t ion Sys . , Inc . , No. CV 11-1658 ARM (CWx) , 2011 WL

18 2533029, a t *10 (C.D. Cal. June 24, 2011) (c i t ing Onofrio v. Rice ,

19 55 Cal.App.4th 413, 424, 64 Cal .Rpt r .2d 74 (1997)). "Also, if the

20 ac t ion at tacks the val id i ty of the underlying debt , a tender i s not

21 requi red s ince it would cons t i tu t e an aff i rmat ive of the deb t . "

22 Onofrio , 64 Cal. Rptr . 2d 74.

23 Pla in t i f f s do not adequate ly plead fu l l t ender as required to

24 a t t ack an i r r egu la r i t y in the foreclosure process . They only plead

25 t ha t they were wil l ing to make modif ied payments on t h e i r loan .

26 Compl., a t 16.

27 On the o ther hand, Pl a i n t i f f s al lege t ha t Wells Fargo

28 represented i t s e l f as the owner of P l a i n t i f f s ' mortgage, but then

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1 represented t ha t it had a l ready sold the loan to a t h i rd par ty .

2 Compl. , a t 16. Then, Pla in t i f f s al lege , Wells Fargo recorded an

3 assignment of t h e i r loan to an MBS t ha t was prohib i ted from

4 accep t ingit

because i t s clos ing date was over 5 years p r i o r to the

5 assignment. Compl. , a t 17. Further , on May 26, 2011, Pla in t i f f s

6 a l l ege tha t Wells Fargo as the se rv ice r repor ted to Pla in t i f f s t ha t

7 it still owned the loan , even though U.S. Bank was foreclos ing and

8 Wells Fargo previous ly recorded an assignment to U.S. Bank.

9 Compl., Ex. B. Based on these al leged fac t s , Pla in t i f f s claim t ha t

10 U.S. Bank does no t own t he i r loan, desp i te the f a c t t ha t U.S. Bank

11 ac ted as the fo rec los ing benef ic ia ry under the deed of t r u s t .

12 Pla in t i f f s are no t saying t ha t U.S. Bank fa i led to follow the

13 l e t t e r of Ca l i fo rn i a ' s s ta tu tory forec losure law; they are cla iming

14 t ha t U.S. Bank d id not have s tanding to forec lose in the f i r s t

15 p lace . Thus, r e ly ing on Onofrio , requir ing Pla in t i f f s to t ender

16 the fu l l amount o f the indebtedness to an e n t i t y , U.S. Bank, t ha t

17 i s al legedly not the benef ic ia ry to the deed of t r u s t in orde r to

18 pro t e c t Pla in t i f f s ' i n t e r e s t in the Property would be inequi tab le .

19 Defendants U.S. Bank and Wells Fargo ' s only ground fo r seeking

20 dismissal on these causes o f act ion i s the t ender requirement . The

21 Court holds t ha t th e t ender requirement does not apply to t h i s case

22 because Pla in t i f f s are chal lenging the benef ic ia l i n t e r e s t held by

23 U.S. Bank in the deed of t r u s t , not the procedura l su f f i c i ency of

24 the forec losure i t s e l f . For th i s reason, U.S. Bank and Wells

25 Fargo ' s motion to dismiss these claims because Pla in t i f f s fa i led to

26 plead tender i s DENIED.

27 I I I28 I I I

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e) Defendants ' Motion to Dismiss The RemainingCauses of Action: Claim 1) Declaratory Relief

Against A ll Defendants and Claim 6) AccountingAgainst u.s. Bank and Wells Fargo

4 Defendants argue t ha t both remaining causes of ac t ion are

5 dup l ica t ive of the o ther causes of act ion because they are remedial

6 in nature , and are not su f f i c i en t to be s tandalone causes of

7 ac t ion . MTD, a t 12. Pla in t i f f s do not address the accounting

8 cause of ac t ion , but general ly argue t h a t the declara tory r e l i e f

9 claim i s su f f i c i en t because deciding it w i l l c l a r i fy and s e t t l e the

10 dispute and re l i eve uncer ta in ty . Opp., a t 13.

11 (1) Declaratory Rel ie f

12 A claim for declara tory r e l i e f i s dup l ica t ive and unnecessary

13 when it i s commensurate with the r e l i e f sought through other causes

14 of act ion . Mangindin v. Wash. Mut. Bank, 637 F. Supp. 2d 700, 707-

15 708 (N.D. Cal . 2009).

16 In t h i s case , Pla in t i f f s put forward o ther cla ims, t ha t if

17 decided, wil l resolve the remaining controvers ies between the

18 par t i e s and re l i eve any uncer ta in ty r e l a t e d to the Property .

19 Pla in t i f f s only argument in suppor t of the claim fo r dec la ra to ry

20 r e l i e f i s t ha t Defendants claim an i n t e r e s t in the proper ty and

21 wil l s e l l the horne to another par ty . Opp., a t 13. I f the Wrongful

22 Foreclosure and Quiet Ti t l e claims are decided, however,

23 Defendants ' i n t e r e s t in the proper ty w i l l be resolved.

24 For th i s reason, the claim fo r declara tory r e l i e f i s

25 dupl ica t ive of the o ther cla ims asse r t ed , and Defendants ' motion to

26 dismiss it i s GRANTED with pre jud ice .

27 (2) Accounting

28 Defendants seek dismissa l of t h i s cause of act ion on the

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1 grounds t h a t the claim i s merely remedia l as pleaded and t he re fo re

2 d u p l i c a t i v e of P l a i n t i f f s ' o t h e r c la ims . P l a i n t i f f s do n o t respond

3 to t h i s argument in t h e i r Oppos i t ion . Accordingly , Defendants '

4motion to di smiss t h i s claim i s

GRANTEDwith pre jud ice .

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6 I I I . ORDER

7 A f t e r ca r e f u l l y consider ing th e papers submi t t ed in t h i s

8 mat t e r and the argument o f counse l a t the hear ing on t h i s motion,

9 it i s hereby ordered t h a t Defendant ' s Motion to Dismiss i s GRANTED

10 i n p a r t , as fo l lows:

11 1 . P l a i n t i f f s ' claim fo r neg l igence aga ins t Defendants i s

12 dismissed with pre jud ice ;

13 2. P l a i n t i f f s ' cla ims fo r dec la ra to ry r e l i e f and an

14 account ing ag a i n s t Defendants are dismissed with pre jud ice ; and

15 3. The Co u r t ' s prev ious Order dismiss ing with p re j u d i c e a l l

16 remaining cla ims aga ins t F i r s t American i s reaf f i rmed .

17 Defendants ' motion to di smiss P l a i n t i f f s ' remaining c la ims i s

18 DENIED. Defendants s h a l l f i l e t h e i r answers to P l a i n t i f f s '

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Complain t with in twenty (20) days o f t h i s Order .

IT IS SO ORDERED.

Dated: November 16, 2011

17

OHN A. MENDEZ,

UNITED STATES



7

Attorneys for the Appellant, Brian W Davies

1 Gary Harre, ES~ (Bar No. 86938~2 Diane Beall, ES . (Bar No. 86877JohnH.BauerE O. (BarNo. 914 1)

3 1198 Pacific Coastl-l\yy, Suite 362DSeal Beach, CA 90740Phone:( 646)-415-79804Email: nh'-'f",'Cc;r'+((yl0"''' ' ' ',01':j ' ('1''1''',• ~~:-iJL~~·JL\g;;~1_Jt1t;:A~-,1 o~~!!;

5 A1:!0ms~yfor Appellant,6 Bnan W Davies

8 UNITED STATES BANKRUPTCY APPELLATE PANEL

9 OF THE NINTH CIRCUIT

John H. Bauer (Bar No. 91471)

Diane Beall (Bar No. 86877)

Gary Harre (Bar No. 86938)

10

11

12 lnre:BRIAN W DAVIES,

13 Debtor.

14BRIAN W DAVIES

15 Plaintiff and Appellant,vs.

16 DEUTSCHEBANKNATIONALTRUST COMPANY AS TRUSTEE

17 OF THE RESIDENTIAL ASSET

SECUITIZATION TRUST 2007-A5,18 MORTGAGEPASSTHROUGH

SERIES 2007-E, UNDER THE19 POOLING AND SERVICING

AGREEMENT DATED MARCH 1,20 2007, ITS ASSIGNS AND/OR

SUCCESSORS IN INTEREST; et. a1.;

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Defendants and Appellee.

I I

Chapter 7

Bk Case No. 6:10-bk-37900

Ap Case No. 6:11-ap-OlOOl

Bap Case No. CC-11-1221

APPELLANT'S NOTICE TO COURTOF EASTERN DISTRICT COURT

OF CALIFORNIA ORDER IN CASENO.2:110CV002098

[CERTIFICATE OF SERVICE]

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Attorneys for the Appellee

DEUTSCHE BANK NATIONAL TRUST COMPANY as Trustee of the

Residential Asset Securitization Trust 2007-A5, Mortgage Pass Through Series

2007-E, under the Pooling and Servicing Agreement Dated March 1,2007.

Andrew E. Miller (Bar No. 213504)Loraine L Pedowitz (Bar No. 120614)

Sarina Saluja (Bar No. 253781)

515 South Figueroa Street, Ninth Floor

Los Angeles, California 90071-3309

I, George Pursley, declare as follows:

I am a citizen of the United States of America, over the age of 18 years and not a

party to the within action. My business address is 248 Redondo Avenue Long Beach,

California 90803. On this date, I caused to be served the following:

APPELLANT'S NOTICE TO COURT OF EASTERN DISTRICT OFCALIFORNIA CASE NO. 2:11-CV-02098 ORDER FILED NOV. 17,2011

by mailing a true and correct copy of the above-mentioned documents with postage

fully pre-paid, addressed to:

Executed this 8th day of December, 2011, at Long Beach, California 90740.

Dated: December 8, 2011

2

Documents

Vogan v Wells Fargo US Bank as trustee for WSMBS - USDC Eastern District Calif -granting in part/denying in part motion to dismiss