Hernandez v. Aurora Loan Servs. LLC

• Decision Date: 13 December 2011
• Docket Number: Case No. CV 11-00607 AHM (OPx)
• Court: U.S. District Court — Central District of California
• Parties: HERNANDEZ et al. v. AURORA LOAN SERVICES, LLC et al.

HERNANDEZ et al.

v.AURORA LOAN SERVICES, LLC et al.

Case No. CV 11-00607 AHM (OPx)

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Date: December 13, 2011

CIVIL MINUTES - GENERAL

Present: The Honorable A. HOWARD MATZ, U.S. DISTRICT JUDGE

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Attorneys NOT Present for Plaintiffs:

Attorneys NOT Present for Defendants:

Proceedings: IN CHAMBERS (No Proceedings Held)

I. INTRODUCTION

Before the Court is a Motion to Dismiss the complaint filed by Defendant Aurora Loan Services, LLC ("Defendant").¹ Plaintiffs Jaime Hernandez and Fernanda Lozano ("Plaintiffs") filed an opposition to the Motion. For the following reasons, the Court GRANTS in part and DENIES in part Defendant's Motion.

II. BACKGROUND

A. Factual Background

Below is a chronology of events leading up to the current action, as alleged by Plaintiffs, and supplemented with facts from Defendant's Request for Judicial Notice ("RJN"), Dkt. 13.

July 18, 2007: Plaintiffs borrowed money from SCME Mortgage Bankers. Compl. ¶ 9. The promissory note was secured by a Deed of Trust (DOT) on the property in which Mortgage Electronic Registration Systems, Inc. MERS was the beneficiary. Compl. ¶ 9 & Exh A. The amount of the loan was $544,000, with an annual interest percentage rate of 7.5%. Id. Plaintiff alleges that "[s]hortly thereafter, SCME then transferred thepromissory note to [Defendant] Aurora." Compl. | 9. Plaintiffs cite to a Loan Agreement, but neither of the attached documents (Promissory Note and Deed of Trust) mention Aurora. See Compl. ^ 9 (citing Exh. A). It is not clear, therefore, from the documents submitted to this Court, whether prior to the foreclosure sale that is described infra, Aurora was a party to the transactions, and why Plaintiffs communicated with Aurora about their HAMP modification prior to Aurora's supposed involvement in this process.

July 26, 2007: The DOT was recorded in the Official Records of San Bernardino County. Compl. Exh. A. RJN, Exh. 1 (Recorded DOT).

October 14, 2009: LSI Title Company, as agent for Quality Loan Service Corporation, as agent for the beneficiary, issued a Notice of Default and Election to Sell as a result of Plaintiffs' default on the note. RJN, Exh. 2 (Default Notice). MERS substituted Quality Loan Service Corporation as trustee under the DOT. RJN, Exh. 3 (Substitution of Trustee).

October 15, 2009: The Default Notice was recorded in the Official Records of San Bernardino County. RJN, Exh. 2.

January 29, 2010: Plaintiffs submitted a Home Affordable Mortgage Program ("HAMP") loan modification to Aurora. Compl. ¶ 10. Aurora representatives offered Plaintiffs a Special Forbearance agreement ("SFA"). Id. To accept the SFA, Plaintiffs were required to execute the SFA and return it to Aurora with the information requested, financial statements, and initial payment amount of $2,356.22 by February 10, 2010. Id. "Plaintiffs were told by the Aurora representative, that as long as they comply with the SFA, their HAMP review would continue and their home would not be foreclosed upon." Id.

February 1, 2010: Plaintiffs executed the SFA and returned it to Aurora with the requested information. Compl. ¶ 10.

February 9, 2010: Plaintiffs made the initial payment pursuant to the SFA. Compl. ¶ 11.March 2010 - July 2010: Plaintiffs made five payments to Defendant Aurora in the amount of $2356.22. Compl. ¶ 11. Aurora accepted these payments. Id.

July 2010 - December 2010: Plaintiffs were advised by an Aurora representative, whose name is unknown to Plaintiffs, that their loan modification application was still under review, and that they should continue making the same monthly payments in accordance with the SFA pending such review. Compl. ¶ 12. In reliance on these representations, Plaintiffs allege they continued to make payments until December 2010, which Aurora accepted. Id.

January 14, 2011: MERS assigned Defendant Aurora all beneficial interest under the DOT. RJN, Exh. 5.

January 28, 2011: Plaintiffs' home was sold at a foreclosure sale. RJN, Exh. 6. See also Compl. ¶ 13 (incorrectly noting date of sale as January 31, 2011). At the time of the sale, the amount of unpaid debt was $660,110.76. NOR ¶ 8; Compl. Exh. B. The amount paid by Aurora (the grantee) at the trustee's sale was $348,000. Id.

February 3, 2011: The Trustee's Deed Upon Sale was recorded, naming grantee Aurora Loan Services as the foreclosing beneficiary, having paid $348,000 at the trustee sale. RJN Exh. 6. The Deed Upon Sale stated default occurred under the DOT pursuant to the Notice of Breach recorded on October 15, 2009. Id. at 2.

February 4, 2011: Plaintiffs' attorney sent Aurora a rescission request to rescind the January 31, 2011 foreclosure sale, and to cease all eviction proceedings. Compl. ¶ 14. Aurora did not respond to the letter. Id.

February 18, 2011: Defendant filed an unlawful detainer action against Plaintiffs in San Bernardino County Superior Court. Mot. at 4. See also Aurora Loan Services v. Hernandez/Lozano-Rosas, No. UDDS1100872 (docket).

February 22, 2011: Plaintiffs were served with the unlawful detainer action. Compl. ¶ 15. See also Aurora Loan Services v. Hernandez/Lozano-Rosas, No. UDDS1100872 (docket).April 4, 2011: Plaintiffs filed their Complaint in San Bernardino County Superior Court against Defendant Aurora Loan Services, LLC and Does 1-20. Notice of Removal ("NOR") ¶ 1. That same day, Plaintiffs recorded a lis pendens in the Official Records of San Bernardino County. RJN Exh. 7 (Lis Pendens).

May 4, 2011: The state superior court in the unlawful detainer action approved a stipulated judgment which granted judgment to Defendant Aurora but which stayed execution of the writ of possession pending the resolution of the instant action. Mot. at 4. See also Aurora Loan Services v. Hernandez/Lozano-Rosas, No. UDDS1100872 (docket) (May 4, 2011 Minute Order).

May 16, 2011: Plaintiff Fernanda Lozano filed for relief under Chapter 13 in the Central District Bankruptcy Court. See Bankruptcy Petition No. 6:11-bk-26125-CB. Mot. at 4.

June 6, 2011: Plaintiff Lozano's case was dismissed for her "failure to file schedules, statements, and/or plan." See Bankruptcy Petition No. 6:11-bk-26125-CB, Dkt. 9.

B. The Current Action

Defendant timely removed the case to this Court on April 15, 2011, on the basis of diversity jurisdiction. Dkt. 1. Exhibit 1 to the NOR is the current operative complaint.

The Complaint alleges a total of five causes of action for: (1) injunctive relief; (2) promissory estoppel; (3) fraud/intentional misrepresentation; (4) setting aside Trustee's sale; and (5) negligence.

Defendant filed the current Motion on June 6, 2011. Dkt. 9. Plaintiffs filed an Opposition to the current Motion on June 20, 2011, Dkt. 14, and Defendant filed a Reply in Support of the Motion ("Reply") on June 27, 2011. Dkt. 15.

III. LEGAL STANDARD

A complaint may be dismissed for failure to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). "To survive a motion to dismiss, a complaint mustcontain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, — U.S.—, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "[A] plaintiffs obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Twombly, 550 U.S. at 555 (internal quotation marks and ellipsis omitted).

The plausibility standard articulated in Twombly and Iqbal, requires that a complaint plead facts demonstrating "more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Iqbal, 129 S.Ct. at 1949 (internal quotation marks and citation omitted). Determining whether a complaint states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct," the complaint has not shown that the pleader is entitled to relief. Iqbal, 129 S.Ct. at 1950 (internal citation, alteration, and quotation marks omitted); see Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) ("[F]or a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the pleader to relief.") (citing Iqbal, 129 S.Ct. at 1949).

To determine whether a complaint states a claim sufficient to withstand dismissal, a court considers the contents of the complaint and its attached exhibits, documents incorporated into the complaint by reference, and matters properly subject to judicial notice. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322-23 (2007); Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). The court must accept as true all factual allegations contained in the complaint. That principle, however, "is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do...