Grant v. Aurora Loan Serv., Inc.

• Decision Date: 10 September 2010
• Docket Number: Case No. CV 09-08174 MM(CTx)
• Citation: 736 F.Supp.2d 1257
• Parties: Darren GRANT, an individual; Plaintiff, v. AURORA LOAN SERVICES, INC, a Delaware Corporation; Quality Loan Service Corporation; a California Corporation; and Does 1-10, inclusive, Defendants.
• Court: U.S. District Court — Central District of California

736 F.Supp.2d 1257

Darren GRANT, an individual; Plaintiff,

v.AURORA LOAN SERVICES, INC, a Delaware Corporation; Quality Loan Service Corporation; a California Corporation; and Does 1-10, inclusive, Defendants.

Case No. CV 09-08174 MM(CTx).

United States District Court,

C.D. California.

Sept. 10, 2010.

Dana Milmeister, Smith & Grant, Los Angeles, CA, for Plaintiff.

Justin D. Balser, Akerman Senterfitt LLP, Los Angeles, CA and Denver, CO, for Defendant, Aurora Loan Services LLC.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

MARGARET M. MORROW, District Judge.

On October 7, 2009, Darren Grant filed an action against Aurora Loan Services, Inc.¹ in the Los Angeles Superior Court, alleging various claims related to the sale at foreclosure of a residential rental propertyin San Francisco, California, and a residential property in Woodland Hills, California.² Aurora removed the case to federal court on November 6, 2009, invoking the court's diversity jurisdiction under 28 U.S.C. § 1332.³ Thereafter, plaintiff filed a first amended complaint. ⁴ On May 24, 2010, Aurora filed a motion seeking to dismiss certain claims in the amended complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, and a motion to strike plaintiff's punitive damages prayer under Rule 12(f).⁵ Plaintiff has opposed defendant's motions. ⁶

Defendant's motion is currently on calendar for hearing on September 13, 2010. Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the court finds the matter appropriate for decision without oral argument and vacates the hearing scheduled for September 13, 2010.

I. FACTUAL BACKGROUND

In July 2005, Darren Grant refinanced the mortgage on his primary residence, located in Woodland Hills, California, taking out an adjustable rate mortgage of $1,000,000.⁷ Thereafter, Aurora assumed the loan and became the lender listed on the title.⁸ In late 2008, plaintiff defaulted on his mortgage and Aurora commenced foreclosure proceedings.⁹ Plaintiff requested that Aurora approve a "short sale" ¹⁰ of the property, but was unable to conclude a sale allegedly because Aurora delayed responding to his submission of five purportedly qualified buyers, and refused plaintiff's reasonable market-rate offers.¹¹

Plaintiff contends that Aurora intentionally engages in a business practice of delaying its response to requests for short sale so that the sales cannot be completed prior to foreclosure.¹² Specifically, plaintiff asserts that Aurora does not allow borrowers to contact employees in charge of approving short sales by direct email or fax.¹³ Instead, Aurora requires that all paperwork be sent to a single general fax number. Plaintiff alleges that, as a consequence, when he attempted to negotiate a short sale, Aurora "often lost or misplaced submissions, thereby requiring resubmission(re-faxing) of the same documentation three and four times." ¹⁴ He contends that this practice caused delays that resulted in all of his agreements with interested buyers "falling out of escrow." ¹⁵ When this happened, plaintiff purportedly had to "re-submit an entirely new short sale request, [and] get assigned to a new [Aurora] negotiator." Because "the process would again take weeks and weeks," ¹⁶ he asserts that closing a short sale was impossible.

Plaintiff relies on a purported "trade custom and usage ... that short sale offers a few percentage points [the] below then-current market value of the property would be accepted by the lender," so long as the mortgagor could document and prove that he was unable to continue making full payments on the existing mortgage.¹⁷

In a letter dated June 18, 2009, sent regular mail, Aurora advised plaintiff of its intention to hold a foreclosure sale of the Woodland Hills property on June 23, 2009. Aurora's letter stated that the foreclosure sale would proceed "if it did not receive the requested documentation ¹⁸ at least five business days before the foreclosure sale." ¹⁹ Since Aurora's letter was dated "three business days" prior to the date of the sale, ²⁰ plaintiff contends that it was "impossible" to comply with Aurora's condition and forestall foreclosure.²¹ He also asserts that he had already "submitted the [required] documentation via fax to Aurora's general fax number." ²²

Plaintiff did not submit additional documentation to Aurora following receipt of the June 18, 2009 letter. On June 23, 2009, Aurora sold plaintiff's home at foreclosure. He contends that Aurora has denied numerous verbal and written requests that it rescind the sale.²³

Plaintiff suffers from a congenital heart valve problem that was surgically corrected twenty-four years ago.²⁴ He asserts that, as a result of stress associated with foreclosure on his home, he has developed an aneurysm on his aorta, which "[has] expand[ed] at and unexpected and alarming rate in a short period of time." ²⁵ Plaintiff underwent open heart surgery to address this problem in early September 2009.²⁶

Plaintiff's amended complaint pleads eight claims, the first of which relates to the foreclosure sale of his San Francisco rental property, and the remainder of which relate to the foreclosure sale of his Woodland Hills primary residence. Plaintiff pleads claims for breach of contract based on the sale at foreclosure of his San Francisco rental property; breach of oral contract; breach of implied contract; breach of the covenant of good faith andfair dealing; set aside of the foreclosure of his residence; fraud; fraudulent concealment; and unfair business practices. Plaintiff asserts each claim against Aurora and certain fictitiously named defendants who were allegedly responsible as agents, principals, alter egos, co-conspirators or otherwise for his damages.²⁷ He seeks actual damages, medical and related expenses, past and future lost earnings, punitive damages, and declaratory relief.

On May 24, 2010, Aurora filed a motion seeking dismissal of plaintiff's second through eighth causes of action under Rule 12(b)(6), and a motion to strike plaintiff's prayer for punitive damages under Rule 12(f). Plaintiff opposes defendant's motion.

II. DISCUSSION

A. Aurora's Requests for Judicial Notice

With its motion to dismiss, Aurora filed a request asking that the court take judicial notice of documents allegedly related to plaintiff's claims.²⁸ In deciding a Rule 12(b)(6) motion, the court generally looks only to the face of the complaint and documents attached thereto. Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir.2002); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n. 19 (9th Cir.1990). It may, however, consider documents that are proper subjects of judicial notice. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 991 (9th Cir.2009) (court may consider "matters of which [it] may take judicial notice" in deciding motion to dismiss); Intri-Plex Technologies, Inc. v. Crest Group, Inc., 499 F.3d 1048, 1052 (9th Cir.2007) ("[a] court may take judicial notice of matters of public record without converting a motion to dismiss into a motion for summary judgment, as long as the facts noticed are not subject to reasonable dispute," quoting Lee v. City of Los Angeles, 250 F.3d 668, 677 (9th Cir.2001)).

Aurora requests that the court take judicial notice of the following documents: the trustee's deed on sale for the Woodland Hills property, ²⁹ the Federal Stock Charter for Lehman Brothers Bank FSB,³⁰ the Office of Thrift Supervision's Order Approving Aurora Loan Services as an Operating Subsidiary of Lehman Brothers Bank,³¹ the Secretary's Certificate attesting that Lehman Brothers Bank FSB changed its name to Aurora Bank FSB,³² a certification by the Delaware Secretary of the State authenticating the certificate of incorporation for Aurora Loan Services Inc., filed May 15, 1997,³³ Aurora's certificate of conversion from a corporation to an LLC,³⁴ and a certificate of amendment changing Aurora's Certificate of Formation to reflect its designation as a limited liability company.³⁵

"Judicial notice is appropriate for records and 'reports of administrative bodies.' "United States v. 14.02 Acres of Land More or Less in Fresno County, 547 F.3d 943, 955 (9th Cir.2008) (quoting Interstate Natural Gas Co. v. Southern California Gas Co., 209 F.2d 380, 385 (9th Cir.1954)). The trustee's deed on the sale of the Woodland Hills property ³⁶ is a document recorded by the Los Angeles County Recorder's Office. Aurora has provided a reference number for the document, showing that it was in fact recorded; this demonstrates that it is a public record. See Fimbres v. Chapel Mortgage Corp., No. 09-CV-0886-IEG (POR), 2009 WL 4163332, *3 (S.D.Cal. Nov. 20, 2009) (taking judicial notice of a deed of trust, notice of default, notice of trustee's sale, assignment of deed of trust, and substitution of trustee, as each was a public record); Maguca v. Aurora Loan Services, No. SACV 09-1086 JVS (ANx), 2009 WL 3467750, *2 n. 2 (C.D.Cal. Oct. 28, 2009) ("The Court takes judicial notice of the notice of default, as it is a public record"); Angulo v. Countrywide Home Loans, Inc., No. 1:09-CV-877-AWI-SMS, 2009 WL 3427179, *3 n. 3 (E.D.Cal. Oct. 26, 2009) ("The Deed of Trust and Notice of Default are matters of public record. As such, this court may consider these foreclosure documents"); Distor v. U.S. Bank NA, No. C 09-02086 SI, 2009 WL 3429700, *2 (N.D.Cal. Oct. 22, 2009) (finding that a deed of trust, notice of default and election to sell under deed of trust, and notice of trustee's sale were matters of public record and thus proper subjects of judicial notice); Hutson v. American Home Mortgage Servicing, Inc., No. C 09-1951 PJH, 2009 WL 3353312, *3-4 (N.D.Cal. Oct. 16, 2009) (taking judicial notice of a deed of trust, notice of default and election to sell under deed of trust, notice of trustee's sale, and trustee's deed of sale, as the documents had been recorded by the Contra Costa County Recorder's Office); Heuslein v....