Nugent v. Fed. Home Loan Corp.

• Court: U.S. District Court — Eastern District of California
• Writing for the Court: Troy L. Nunley United States District Judge
• Decision Date: 30 September 2014
• Docket Number: No. 2:12-CV-0091-TLN-EFB,2:12-CV-0091-TLN-EFB
• Citation: Nugent v. Fed. Home Loan Corp., No. 2:12-CV-0091-TLN-EFB (E.D. Cal. Sep 30, 2014)
• Parties: AQUILA P. NUGENT, ET AL., Plaintiffs, v. FEDERAL HOME LOAN CORP., ET AL., Defendants.

AQUILA P. NUGENT, ET AL., Plaintiffs, v. FEDERAL HOME LOAN CORP., ET AL., Defendants.

No. 2:12-CV-0091-TLN-EFB

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

September 30, 2014

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

This matter is before the Court pursuant to Defendants Wells Fargo Bank, N. A. ("Wells Fargo") and Federal Home Loan Mortgage Corporation's ("Freddie Mac") (collectively referred to as "Defendants") motion to dismiss Plaintiffs Aquila P. Nugent ("Plaintiff") and Andrew Nugent's ("Co-Plaintiff") (collectively referred to as "Plaintiffs") Third Amended Complaint ("TAC"). (See ECF No. 61.) Plaintiffs have filed an opposition. (See ECF No. 63.) The Court has carefully considered the arguments raised by both parties and for the reasons stated below hereby GRANTS Defendants' motion to dismiss.¹

I. FACTUAL BACKGROUND²

In April 2004, Plaintiff and his wife Carla Nugent obtained a $300,000 home loan from Wells Fargo. (ECF No. 62-1, Ex. 1.) The loan was secured by a deed of trust that encumbered the property and granted Wells Fargo the right to accelerate the loan should "all or any part of the Property or any interest in the Property [be] sold or transferred . . . without [Wells Fargo's] prior written consent." (ECF No. 62-1, Ex. 1 at ¶ 18.) In 2006, Plaintiff and Carla Nugent transferred an undivided 50% interest in the property to Plaintiff's brother, Co-Plaintiff. (ECF No. 62-1, Ex. 2.) The TAC is silent as to whether Wells Fargo's consent was obtained prior to this transfer.

In October 2009, a notice of default was recorded in connection with the deed of trust. (ECF No. 62-1, Ex. 3.) Around December 2009, Plaintiff attempted to obtain a loan modification. On January 4, 2010, a notice of trustee's sale of the property was recorded, announcing a sale of the property on January 25, 2010. (ECF No. 62-1, Ex. 5.) The trustee's sale did not go forward on that date, and in February 2010, after providing Wells Fargo with financial documentation, Plaintiff and his wife received a letter from Wells Fargo. (TAC, ECF No. 59 at ¶¶ 41-42, Ex. A.)³ The letter states: "You did it! By entering into a Home Affordable Modification Trial Period Plan you have taken the first step toward making your payment more affordable." (ECF No. 59 at 30.) It also states: "As long as you comply with the terms of the Trial Period Plan, we will not start foreclosure proceedings or conduct a foreclosure sale if foreclosure proceedings have started." (ECF No. 59 at 35.) The letter states that to comply with their Home Affordable Modification Program ("HAMP") Trial Period Plan ("TPP"), Plaintiff andhis wife had to make three TPP payments, sign and return the TPP and other required documentation, and certify that "[t]here has been no change in the ownership of the Property since I signed the Loan Documents." (ECF No. 59 at 36.) Plaintiff alleges that he "executed the required documents," "returned the completed application to Defendant Wells Fargo," and "timely made each of the payments required by the TPP Agreement." (ECF No. 59 at ¶¶ 43, 52.) Andrew Nugent also "submitted proof of income and agreed to be a cosigner on the loan modification." (ECF No. 59 at ¶ 48.) Plaintiffs allege that "despite their compliance in all respects with the terms of the TPP Agreement, the Defendants have not honored either the temporary or the permanent Loan Modification Agreements under the HAMP Program guidelines to date."⁴ (ECF No. 59 at ¶ 53.) Plaintiffs allege that on May 19, 2010, a foreclosure sale was conducted and Freddie Mac acquired title to the property without their knowledge. (ECF No. 59 at ¶ 54.) Freddie Mac thereafter filed an unlawful detainer complaint against Plaintiffs and obtained a judgment on August 24, 2010.⁵ (ECF No. 59 at ¶ 55.) Freddie Mac thereafter evicted Plaintiffs. (ECF No. 59 at ¶ 62.) Plaintiffs filed a complaint on July 29, 2011 in Solano County Superior Court alleging wrongful foreclosure and other causes of action. (ECF No. 59 at ¶ 63.) Freddie Mac removed this case from Solano County Superior Court to federal court on January 12, 2012. (ECF No. 59 at ¶ 65.) On March 28, 2012, Freddie Mac granted the property to a third party. (ECF No. 62-1, Ex. 8.)

The instant complaint alleges the following causes of action: Count One, Breach of Contract; Count Two, Breach of Implied Covenant of Good Faith and Fair Dealing; Count Three, Promissory Estoppel; Count Four, Wrongful Foreclosure; Count Five, To Set Aside Trustee's Sale; Count Six, Declaratory Relief; Count Seven, Violations of Civil Code § 1572; Count Eight, Intentional and/or Negligent Infliction of Emotional Distress; Count Nine, Negligence; and Count Ten, Unfair Competition in Violation of California Business & Professional Code § 17200 et seq.(See ECF No. 59.) Defendants have moved this Court to dismiss all counts with prejudice.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 8(a) requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). Under notice pleading in federal court, the complaint must "give the defendant fair notice of what the claim . . . is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). "This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the "well-pleaded" allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege '"specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief." Twombly, 550 U.S. at 570. "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." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. 544, 556 (2007)).

Nevertheless, a court "need not assume the truth of legal conclusions cast in the form of factual allegations." United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, "it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice"). Moreover, it is inappropriate to assume that the plaintiff "can prove facts that it has not alleged or that the defendants have violated the . . . laws in ways that have notbeen alleged[.]" Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 697 (quoting Twombly, 550 U.S. at 570). Only where a plaintiff has failed to "nudge[] [his or her] claims . . . across the line from conceivable to plausible[,]" is the complaint properly dismissed. Id. at 680. While the plausibility requirement is not akin to a probability requirement, it demands more than "a sheer possibility that a defendant has acted unlawfully." Id. at 678. This plausibility inquiry is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

If a complaint fails to state a plausible claim, "'[a] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.'" Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 484, 497 (9th Cir. 1995)); see also Gardner v. Marino, 563 F.3d 981, 990 (9th Cir. 2009) (finding no abuse of discretion in denying leave to amend when amendment would be futile). Although a district court should freely give leave to amend when justice so requires under Rule 15(a)(2), "the court's discretion to deny such leave is 'particularly broad' where the plaintiff has previously amended its complaint[.]" Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (quotingMiller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)).

III. ANALYSIS

The Court addresses each of Plaintiffs' claims separately below.

A. Count One: Breach of Contract

Plaintiffs allege that Defendants breached the TPP Agreement in two ways: first, by foreclosing without notice; and second, by failing to provide them with a permanent loan modification. (ECF No. 59 at ¶¶ 80-81.) As to Plaintiffs' claim that they were foreclosed on without notice, it is unclear as to whether Plaintiffs, in fact, argue that they never received any notice or whether Plaintiffs believed that the TPP stopped the foreclosure procedure that wasalready in place. Either way, the Court finds that this argument fails.⁶

Before a mortgagee may foreclose on a property after a breach of the obligation for which that property is a security, the mortgagee or any of its authorized agents must file a notice of default in the office of the recorder of each county wherein the mortgaged or trust property or some part or parcel thereof is situated. Cal. Civ. Code § 2924(a)(1) (West). Furthermore, the mortgagee may not...