Pantoja v. Countrywide Home Loans, Inc.

• Court: U.S. District Court — Northern District of California
• Writing for the Court: James Ware
• Citation: Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177 (N.D. Cal. 2009)
• Decision Date: 09 July 2009
• Docket Number: No. C 09-01615 JW.,C 09-01615 JW.
• Parties: Cornelio PANTOJA, Plaintiff, v. COUNTRYWIDE HOME LOANS, INC., et al., Defendant.

640 F.Supp.2d 1177

Cornelio PANTOJA, Plaintiff, v. COUNTRYWIDE HOME LOANS, INC., et al., Defendant.

No. C 09-01615 JW.

United States District Court, N.D. California, San Jose Division.

July 9, 2009.

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Thomas John Spielbauer, The Spielbauer Law Firm, Sunnyvale, CA, for Plaintiff.

Kalama M. Lui-Kwan, Sunny S. Huo, Severson & Werson a Professional Corporation, San Francisco, CA, for Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITH LEAVE TO AMEND

JAMES WARE, District Judge.

I. INTRODUCTION

Cornelio Pantoja ("Plaintiff") brings this action against Countrywide Home Loans, Inc. ("Countrywide"), Bank of America Corp. ("Bank of America"), Old Republic Default Management Services, and Old Republic National Title Company ("Old Republic") (collectively, "Defendants"), alleging, inter alia, wrongful foreclosure and unfair business practices under pursuant to Cal. Bus. Prof.Code §§ 17200, 17500 et. seq. Plaintiff alleges that Defendants failed to disclose pertinent information concerning Plaintiff's loan at the signing, in violation of federal and state laws, and failed to abide by requirements for notice of default and notice of trustee sale in violation of California law.

Presently before the Court is Defendants' Motion to Dismiss Complaint.¹ (hereafter, "Motion," Docket Item No. 20.) The Court conducted a hearing on June 8, 2009. Based on the papers submitted to date and oral argument, the Court GRANTS Defendants' Motion to Dismiss with leave to amend.

II. BACKGROUND

A. Factual Allegations

In a Complaint filed on March 30, 2009,² Plaintiff alleges as follows:

Plaintiff is a resident of Santa Clara County, California.³ Defendant Countrywide is a business entity in the state of California. (Id. ¶ 2.) Defendant Bank of America is a national banking entity that does business throughout the United States and in the state of California. (Id. ¶ 3.) Defendant Old Republic is a business entity that conducts business in Santa Clara County, California. (Id. ¶ 4.)

On June 27, 2006, Plaintiff secured a loan from Greenpoint Mortgage Lending, Inc. ("Greenpoint") for $514,400 to purchase a home at 580 La Sabre Court, Morgan Hill, California 95037 ("the Property").⁴ (Complaint ¶ 16.) Greenpoint secured the loan by a deed of trust on the Property and was the beneficiary. (Id.) The note initially granted to Plaintiff a 7.125% interest rate for the first three years. (Id. ¶ 23.) After the first three years, the interest rate could go up to 12.125%, and six months later, the interest rate could cap at 13.125%. (Id.)

Prior to signing the loan, Plaintiff was promised that his monthly payment would be $3,054 per month, with an additional promise that his mortgage would be refinanced in six months to a fixed rate mortgage. (Complaint ¶ 17.) Further, Plaintiff was promised that his payments would always be $3,054 for the thirty year term of the mortgage. (Id.) At the time of the signing, not all copies of the loan documents were given to Plaintiff, and no explanations nor discussions occurred concerning the loan itself. (Id. ¶¶ 24-25.)

In June 2008, Plaintiff became delinquent on his mortgage payments. (Complaint ¶ 26.) On October 16, 2008, Old Republic recorded a Notice of Default upon Plaintiff's home. (Id. ¶ 30; Notice of Default.) The appointed trustee was Marin Conveyancing Corporation, but, in fact, Old Republic was the entity acting as trustee for the Notice of Default and the Notice of Trustee Sale. (Complaint ¶ 31.) The Notice of Default listed two beneficiaries: Greenpoint and Mortgage Electronic Registration Systems, Inc. ("MERS"). (Id. ¶ 32; Notice of Default.)

On December 9, 2008, Countrywide notified Plaintiff that the servicing of his mortgage had been assigned to Countrywide. On January 30, 2009, the Notice of Trustee Sale was recorded against the property. (Complaint ¶ 35; Id., Ex. 2, Notice of Trustee Sale, hereafter, "Notice of Sale.") The Notice of Trustee Sale listed MERS as the beneficiary, but did not provide the name, address, and telephone number of MERS on the Notice. (Complaint ¶ 37; Notice of Sale.) The Notice of Sale initially set the date of February 26, 2009 as the date of the sale, but the sale date was postponed to April 1, 2009. (Complaint ¶ 37.) Countrywide is now attempting to foreclose Plaintiff's home, listing MERS as the beneficiary, although neither Countrywide nor MERS has possession of the original promissory note. (Id. ¶ 45.)

In March 2009, Plaintiff submitted to Countrywide the documents which Countrywide requested of him. (Complaint ¶ 61.) Yet, Countrywide refused to postpone the foreclosure sale set for April 1, 2009, and refused a viable loan modification agreement or a workout plan. (Id.)

On the basis of the allegations outlined above, Plaintiff alleges five causes of action: (1) Request for Declaratory Relief; (2) Wrongful Foreclosure; (3) Unfair Business Practices; (4) Equitable Estoppel; and (5) Accounting. (Complaint ¶¶ 15-22.)

B. Procedural History

On March 30, 2009, Plaintiff filed this action in state court. Plaintiff's Complaint contained a request for a temporary restraining order to enjoin Defendants from conducting a foreclosure sale on his home. (Notice of Removal and Removal, Ex. A, Ex Parte Application of Cornelio Pantoja for a Temporary Restraining Order, Docket Item No. 1.) The state court granted the Temporary Restraining Order on the same day. (Id.) The Temporary Restraining Order remains in full force until a preliminary injunction hearing is held. The hearing was scheduled for April 21, 2009 before Judge William Elfving. (Notice of Removal and Removal, Ex. A, Order To Show Cause and Temporary Restraining Order.)

On April 13, 2009, Defendant removed the action to this Court on the basis of federal question jurisdiction.⁵ (Notice of Removal ¶ 3.) On April 15, 2009, Plaintiff filed an Ex Parte Motion to Remand the case back to state court. (Docket Item No. 8.) On May 12, 2009, the Court denied Plaintiff's Motion on the ground that Plaintiff's equitable relief hinges on Defendants' compliance with federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and Home Equity and Protection Act ("HOEPA"), 15 U.S.C. § 1637 et seq. (Order Denying Plaintiff's Ex Parte Motion for Remand, Docket Item No. 30.)

Presently before the Court is Defendants' Motion to Dismiss.

III. STANDARDS

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint may be dismissed against a defendant for failure to state a claim upon which relief may be granted against that defendant. Dismissal may be based on either the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1990); Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-534 (9th Cir.1984). For purposes of evaluating a motion to dismiss, the court "must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the nonmoving party." Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir.1987). Any existing ambiguities must be resolved in favor of the pleading. Walling v. Beverly Enters., 476 F.2d 393, 396 (9th Cir. 1973).

However, mere conclusions couched in factual allegations are not sufficient to state a cause of action. Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986); see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir.1988). The complaint must plead "enough facts to state a claim for relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Courts may dismiss a case without leave to amend if the plaintiff is unable to cure the defect by amendment. Lopez v. Smith, 203 F.3d 1122, 1129 (9th Cir.2000).

IV. DISCUSSION

Defendants move to dismiss Plaintiff's Complaint in its entirety and on several grounds. The Court considers them in turn.

A. Standing to Sue

Defendants move to dismiss Plaintiff's Complaint on the ground that Plaintiff lacks standing due to his failure to allege that he tendered or attempted to tender full payment of the loan amount. (Motion at 4-5.)

Under California law, in an action to set aside a trustee's sale, a plaintiff must demonstrate that he has made a "valid and viable tender [offer] of payment of the indebtedness." Karlsen v. American Sav. & Loan Assn., 15 Cal.App.3d 112, 92 Cal.Rptr. 851, 854 (Ct.App.1971); Arnolds Mgmt. Corp. v. Eischen, 158 Cal. App.3d 575, 578, 205 Cal.Rptr. 15 (Ct.App. 1984) ("[A]n action to set aside a trustee's sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security.")⁶ A plaintiff must (1) demonstrate a willingness to pay and (2) show the ability to pay. In re Worcester, 811 F.2d 1224, 1231 (9th Cir.1987). A valid and viable tender offer is the plaintiff's ability to pay back what the plaintiff has received less interest and finance charges. Alcaraz v. Wachovia Mortg. FSB, 592 F.Supp.2d 1296, 1304 (E.D.Cal.2009) (citation omitted). However, an offer to pay debt may not be required where it is inequitable. See Humboldt Sav. Bank v. McCleverty, 161 Cal. 285, 291, 119 P. 82 (1911); Rodriguez v. Litton Loan Servicing LP, No. 09-cv-0029 2009 WL 1326339, at *6 (E.D.Cal. May 12, 2009); Stephens, Partain & Cunningham v. Hollis, 196 Cal.App.3d 948, 242 Cal. Rptr. 251, 255 (Ct.App.1987).⁷

Here, as a preliminary matter, Plaintiff contends that the "tender rule" is inapplicable to his action because he is an original lienholder.⁸ However, courts have held that the "tender rule" does apply to original lienholders. See Sitanggang v. Indymac Bank, FSB, No. CV F 09-0367, 2009 WL 1286484, at *2 (E.D.Cal. May 6, 2009); Alcaraz, 592 F.Supp.2d at 1304. Thus, the Court finds that the "tender rule" is applicable to...