Perez v. Wells Fargo Bank, NA, Case No. C-11-02279 JCS

• Decision Date: 29 August 2011
• Docket Number: Case No. C-11-02279 JCS
• Court: U.S. District Court — Northern District of California
• Parties: EUGENE & HERENIA B. PEREZ, Plaintiffs, v. WELLS FARGO BANK, N.A., ET AL., Defendants.

EUGENE & HERENIA B. PEREZ, Plaintiffs, v. WELLS FARGO BANK, N.A., ET AL., Defendants.

Case No. C-11-02279 JCS

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

Dated: August 29, 2011

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS AND DISMISSING COMPLAINT WITH LEAVE TO AMEND [Docket Nos. 5, 10]

I. INTRODUCTION

Plaintiffs initiated this action in the Superior Court of the County of San Mateo on April 6, 2011, bringing claims challenging the foreclosure sale of the property located at 95 Monterey Drive, Daley City, CA. Plaintiffs named as Defendants Wells Fargo Bank, N.A. and Wells Fargo Home Mortgage (hereinafter, referred to collectively as "Wells Fargo"), as well as First American Loanstar Trustee Services LLC ("Loanstar"). Wells Fargo removed to federal court on the basis of federal question jurisdiction pursuant to 28 U.S.C. § 1331. Wells Fargo and Loanstar have filed motions to dismiss Plaintiffs' complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (referred to individually as "Wells Fargo Motion" and "Loanstar Motion" and collectively as the "Motions"). The parties have consented to the jurisdiction of the undersigned magistrate judge pursuant to 28 U.S.C. § 636(c). A hearing on the Motions was held on Friday, August 26, 2011. For the reasons stated below, the Motions are GRANTED.

II. REQUESTS FOR JUDICIAL NOTICE

Wells Fargo and Loanstar have each filed a request for judicial notice of various documents that they assert are either matters of public record or directly referenced in Plaintiffs' complaint ("Complaint"). See Docket Nos. 6 & 11 (hereinafter, "Wells Fargo RJN" and "Loanstar RJN"). Plaintiffs have not objected to Defendants' requests or challenged the authenticity of any of theattached documents. However, two of the documents offered by Wells Fargo are neither public records nor referenced in the Complaint: the February 5, 2009 and May 7, 2009 letters from Wells Fargo to Plaintiffs. See Wells Fargo RJN, Exs. D & E. Wells Fargo states in its request for judicial notice that these documents are referenced in the Complaint and identifies specific paragraphs that purportedly reference the two letters. See Wells Fargo RJN at 3 (stating that February 5, 2009 letter is referenced in paragraphs 39-41 of the Complaint and that the May 7, 2009 Letter is referenced in paragraphs 41-43 of the Complaint). Contrary to Wells Fargo's assertions, neither letter is referenced in the cited paragraphs. Neither are these documents public records. Accordingly, the Court takes judicial notice of all of the records offered in Defendants' requests for judicial notice, pursuant to Rule 201 of the Federal Rule of Evidence, except Exhibits D & E of the Wells Fargo RJN. The Court may consider the documents of which it takes judicial notice, along with the allegations in Plaintiff's Complaint, on a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Evidence. See Catholic League for Religious and Civil Rights v. City and County of San Francisco, 464 F.Supp.2d 938, 941 (N.D.Cal.2006).

II. BACKGROUND

A. Factual Background¹

On August 17, 2007, the Perezes borrowed $525,000 from Wells Fargo. Complaint, ¶ 34; Request for Judicial Notice in Support of Defendant Wells Fargo's Notice of Motion and Motion to Dismiss Complaint ("Wells Fargo RJN"), Ex. B (Deed of Trust dated 8/17/07) ("Loan" or "Loan Agreement"). The Loan was secured by a deed of trust on property located at 95 Monterey Drive, Daly City, California. Id. at 3. The deed of trust contained an "Initial Interest Adjustable Rate Rider" signed by both Eugene and Herenia Perez that provided for an initial interest rate of 8.5%, switching to an adjustable rate after the first three years of the loan. Id. As of October 2008, the Perezes were "having difficulties making their monthly mortgage payments" and "attempted to obtain a loan modification with the Defendants." Complaint, ¶ 37.

In November 2008, Plaintiffs entered into a Special Forbearance Agreement ("Special Forbearance Agreement") with Wells Fargo. Complaint, ¶ 38; Wells Fargo RJN, Ex. C. The Special Forbearance Agreement included a cover letter and a page containing terms and conditions. Wells Fargo RJN, Ex. C. The cover letter states, in part, as follows:

Thank you for contacting us regarding your financial hardship on the loan mentioned above. Our goal is simple. We want to ensure that you have every opportunity to retain your home. Based on our telephone conversation and the financial information you provided, we would like to offer you a Special Forbearance Plan to Loan Modification review.

Currently, your loan is due for 1 installments, from October 01, 2008 through October 01, 2008. As agreed, you have promised to pay the amounts shown below by the dates indicated with the understanding the final delinquent balloon payment will be added back into the loan balance if approved for the loan modification. Also enclosed are the terms and conditions of this forbearance. Please sign the enclosed agreement and return it with the first installment. This is not a waiver of the accrued or future payments that become due, but a period for you to determine how you will be able to resolve your financial hardship. Any payments received as scheduled will be applied to the delinquent payments on the loan.

Id. at 1. The Terms and Conditions state, in part, as follows:

1. Currently, your loan is due for 1 installments, from October 01, 2008 through October 01, 2008. The indebtedness of the referenced loan is in default and in consideration of extending forbearance for a period of time, it is necessary that you indicate your understanding and acceptance of the terms of the forbearance agreement by immediately signing and returning this agreement.

2. Step One: Payment must be made strictly in accordance with the enclosed payment schedule and forbearance agreement conditions, this plan will take care of some of your delinquency. This plan is an agreement to temporarily accept reduced payments or maintain regular monthly payments during the plan specified below, please note the final delinquent balloon payment will be added back into the loan balance if approved for the loan modification. Step two: Upon successful completion of the outlined payments, your loan will be reviewed for a loan modification. Step Three: Your loan will be modified, unless your income or financial situation has changed. This may satisfy the remaining past due amount on your loan by changing one or more terms of your loan.

3. The lender is under no obligation to enter into any further agreement, and this forbearance shall not constitute a waiver of the lendder's right to insist upon strict performance in the future.

4. All of the provisions of the note and security instrument, except as herein provided, shall remain in full force and effect. Any breach of any provision of this agreement or non-compliance with this agreement, shall render the forbearance null and void, and at the option of the lender without further notice to you may terminate this agreement. The lender, at its option, may institute foreclosure proceedings according to the terms of the note and security instrument without additional expenses of attorney's fees and foreclosure costs.

5. Each payment must be remitted according to the schedule below.

+---------------------------------------------+
                ¦PLAN¦DATE    ¦AMT     ¦PLAN¦DATE    ¦AMT     ¦
                +----+--------+--------+----+--------+--------¦
                ¦01  ¦11/30/09¦4,917.59¦02  ¦12/30/08¦4,917.59¦
                +----+--------+--------+----+--------+--------¦
                ¦03  ¦01/30/09¦4,917.59¦04  ¦02/28/09¦8,432.94¦
                +---------------------------------------------+
                

The final delinquent balloon payment will be added back into the loan balance if approved for the loan modification.

6. There is no "grace period" allowance in this agreement. All payments must be received on or before the agreed due date. If any payment is not received on or before the due date, the agreement will be void and the total delinquency, including fees, will be due immediately.

7. The total amount indicated on each payment of the payment schedule must be remitted. In the event the total amount due of each payment is not received, this agreement will be rendered null and void.

Wells Fargo RJN, Ex. C (emphasis added).

Plaintiffs allege that "with the help of family members and friends, [they] were able to make the Forbearance Agreement payments [and that Wells Fargo] accepted these payments." Complaint ¶ 40. Nonetheless, Wells Fargo ultimately rejected Plaintiffs' loan modification request and recorded a Notice of Default on March 16, 2009. Id., ¶ 46; see also Wells Fargo RJN, Ex. F. The property was sold to Wells Fargo at a foreclosure sale on June 28, 2010. Wells Fargo RJN, Ex. G (Trustee's Deed Upon Sale), at 2. Wells Fargo sold the property to Yu Yim and Lai Ngor Ma in March 2011. Wells Fargo RJN, Ex. H (Grant Deed) at 1.2.

In 2009 and 2010, Plaintiffs filed a series of bankruptcy petitions, two jointly and one by Herenia Perez on her own. See Wells Fargo RJN, Exs. J, K & L. All of the bankruptcy cases were dismissed after the Perezes failed to provide necessary documentation and/or appear at court mandated hearings. Id. At the time Plaintiffs initiated the three bankruptcy actions they were proceeding in pro se, though in one of the bankruptcy actions, filed by Herenia Perez on her own, counsel was retained by the petitioner approximately two weeks after the petition had been filed. See id., Ex. L.

In March 2011, Herenia Perez filed a pro se civil action against Wells Fargo and Loanstar in San Mateo Superior Court. Wells Fargo RJN, Ex. M (Complaint for Monetary Damages, Statutory Damages, Punitive Damages, Injunctive Relief, and Declaratory Relief). That action, which iscurrently pending in state court, includes many of the same causes of action as the instant case.²

Finally, Plaintiffs filed the instant action in San Mateo Superior Court in April 2011. In the Complaint, ...