Gallegos v. Wells Fargo Bank, N.A., 1:13-CV-608 AWI MJS
| Decision Date | 18 June 2013 |
| Docket Number | 1:13-CV-608 AWI MJS |
| Parties | BLANCA GALLEGOS, Plaintiff, v. WELLS FARGO BANK, N.A., et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
ORDER ON DEFENDANTS'
MOTIONS TO DISMISS
This is a mortgage/deed of trust case brought by Plaintiff Blanca Gallegos ("Gallegos"). This matter was removed from the Merced County Superior Court. The active complaint is the First Amended Complaint ("FAC"). Defendant Wells Fargo Bank, N.A. ("Wells Fargo") has filed a motion to dismiss all claims alleged against it. Gallegos filed no opposition or response of any kind. For the reasons that follow, the motion to dismiss will be granted.
From the FAC and the Wells Fargo's Request for Judicial Notice ("RJN"),1 in December 2005, Gallegos obtained a loan in the amount of $364,000 from World Savings Bank, FSB ("World Savings"). See RJN Ex. B. The promissory note for the loan was secured by a written deed of trust on real property located at 710 Cabernet Street, Los Banos, California. See id. The deed of trust identified World Savings as the beneficiary and Golden West Savings Association Service Co. as the trustee. See id.
World Savings changed its name to Wachovia Mortgage, FSB in January 2008. See RJN Ex. A. Wachovia Mortgage, FSB subsequently changed its name to Wells Fargo Bank Southwest, N.A., before merging with Wells Fargo in November 2009. See id.
On October 5, 2012, Wells Fargo recorded a Notice of Default in the Merced County Recorder's Office. See RJN Ex. C. The Notice stated that Gallegos was $5,706.92 in arrears. See id.
On January 8, 2013, Wells Fargo recorded a Notice of Trustee's Sale in the Merced County Recorder's Office. See RJN Ex. D. The Notice of Trustee's Sale identified the full amount owing on the loan as $314,090.71. See id.
On March 1, 2013, Gallegos filed suit in the Merced County Superior Court. See Doc. No. 1.
On April 25, 2013, Wells Fargo removed the case to this Court. See id.
Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient facts alleged under a cognizable legal theory. Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011); Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th Cir. 2008). In reviewing a complaint under Rule 12(b)(6), all allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Faulkner v. ADT Sec. Servs., 706 F.3d 1017, 1019 (9th Cir. 2013); Johnson, 534 F.3d at 1121. However, the Court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1145 n. 4 (9th Cir. 2012); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). To "avoid a Rule 12(b)(6) dismissal, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009); see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570(2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. The Ninth Circuit has distilled the following principles from Iqbal and Twombly:
First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.
Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). In deciding whether to dismiss a claim under Rule 12(b)(6), the Court is generally limited to reviewing only the complaint, but it may take judicial notice of public records outside the pleadings, review materials which are properly submitted as part of the complaint, and review documents that are incorporated by reference in the Complaint if no party questions authenticity. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). If a motion to dismiss is granted, "[the] district court should grant leave to amend even if no request to amend the pleading was made . . . ." Henry A. v. Willden, 678 F.3d 991, 1005 (9th Cir. 2012). However, leave to amend need not be granted if amendment would be futile or if the plaintiff has failed to cure deficiencies despite repeated opportunities. See Mueller v. Aulker, 700 F.3d 1180, 1191 (9th Cir. 2012); Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010).
This cause of action is based on the allegation that Defendants have misrepresented that they have the right to payment under the note and that they can conduct a non-judicial foreclosure sale. The FAC alleges that Defendants do not have possession of the note, are not entitled to payment on the note, and are not entitled to foreclose due to violations of the Uniform Commercial Code regarding transfer of securities.
Wells Fargo make numerous arguments against this cause of action, including that the RJN establishes Wells Fargo's authority to foreclose.
The Court agrees that dismissal of this cause of action is appropriate for many reasons. However, the Court will dispose of this claim by reference to the RJN. The RJN exhibits establish that, pursuant to the name changes and mergers, Wells Fargo succeeded the original lender World Savings, and now is the beneficiary under the deed of trust. See RJN Exs. A, B, C. There are no transfers of the loan or deed of trust apparent. Therefore, as the beneficiary and lender, Wells Fargo has the authority to demand payment and to foreclose on the property. See Armstrong v. Chevy Chase Bank, FSB, 2012 U.S. Dist. LEXIS 144125, *14 (N.D. Cal. Oct. 3, 2012); Cuaresma v. Duetsche Bank Nat'l Co., 2011 U.S. Dist. LEXIS 116507, *10-*11 (N.D. Cal. Oct. 7, 2011); Tiqui v. First Nat'l Bank of AZ, 2010 U.S. Dist. LEXIS 33326, *16 (S.D. Cal. Apr. 5, 2010). Since the judicially noticed documents show that Wells Fargo has this authority, there is no misrepresentation. Dismissal of this claim without leave to amend is appropriate.2
This cause of action is based on the alleged failure by Defendants to verify Gallegos's ability to repay the loan.3
Wells Fargo argues inter alia that this cause of action is time barred, fails to meet the Rule 9(b) pleading standard, and there was no duty to verify Gallegos's ability to repay the loan.
The Court agrees with Wells Fargo's arguments.
First, all claims that are grounded in fraud must meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). See Fed. R. Civ. P. 9(b); Kearns v. Ford Motor Co., 567 F.3d 1120, 1125-27 (9th Cir. 2009). To meet this standard, a plaintiff must plead the who, what, when, where, and how of the fraud, explain what makes the misrepresentations false, and explain each defendant's role in the fraud. See Swartz v. KPMG, LLP, 476 F.3d 756, 764-65 (9th Cir. 2007); Vess v. Ciba-Geigy Corp., USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Here, the FAC does not plead the who, what, when, where or how of the fraud, and thus does not pass Rule 9(b).
Second, the statute of limitations in California for claims based on fraud is three years. See Cal. Code Civ. P. § 338(d); Platt Elec. Supply, Inc. v. EOFF Elec., Inc., 522 F.3d 1049, 1054 (9th Cir. 2008); Hatch v. Collins, 225 Cal.App.3d 1104, 1110 (1990). The fraudulent conduct identified in the FAC would have occurred at the latest in December 2005 when the loan was made. This means that Gallegos had until December 2008 to file a lawsuit. However, this lawsuit was not filed until March 2013, which is well beyond the limitations period.
Finally, under California law, a "lender is under no duty to determine the borrower's ability to repay the loan" because the "lender's efforts to determine the creditworthiness and ability to repay by a borrower are for the lender's protection, not the borrower's." Perlas v. GMAC Mortgage, LLC, 187 Cal.App.4th 429, 436 (2010). Thus, Gallegos cannot bring a state law fraud claim based on the failure of Defendants to verify her ability to repay the loan. See Bonyadi v. Citimortgage Bank, 2013 U.S. Dist. LEXIS 33302, *8-*13 (C.D. Cal. Mar. 8, 2013); Davidson v. Countrywide Home Loans, Inc., 2011 U.S. Dist. LEXIS 33404, *15-*16 (S.D. Cal. Mar. 29, 2011); Perlas, 187 Cal.App.4th at 436.
In the absence of an opposition that addresses the reasoning of Perlas, it is unknown how amendment could cure the deficiencies. Dismissal of this claim will be without leave to amend.
This cause of action is based on two failures by Defendants: the failure to allegedly verify Gallegos's debt and the failure to respond to written inquiries about the debt after Defendants sent Gallegos a Notice of Default, i.e. after the foreclosure proceedings had been initiated. The FAC alleges that the failure to verify Gallegos's debt violated California Civil Code § 1788 (the Rosenthal Fair Debt Collections Practices Act ("RFDCPA")), and 15 U.S.C. § 1692 (the...
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