Permito v. Wells Fargo Bank, N.A.
| Decision Date | 20 April 2012 |
| Docket Number | Case No.: C-12-00545 YGR |
| Parties | MARIA ELENA PERMITO, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant. |
| Court | U.S. District Court — Northern District of California |
Plaintiff Maria Elena Permito filed this wrongful foreclosure action to stop the eviction process, set aside the foreclosure proceedings, and recover damages. Her Complaint alleges three causes of action: (1) Wrongful Foreclosure; (2) Slander of Title; and (3) Injunctive Relief.
Defendant Wells Fargo Bank, N.A. ("Wells Fargo") has filed a motion to dismiss on the grounds that judicially noticeable documents discredit any claim that there was a defect in the foreclosure proceedings.
Having carefully considered the papers submitted and the pleadings in this action, and for the reasons set forth below, the Court hereby GRANTS the Motion to Dismiss WITH LEAVE TO AMEND.1
In July 2006, Plaintiff executed an Adjustable Rate Mortgage Note ("Note") and Deed of Trust ("Deed of Trust") in the amount of $543,750.00 in favor of World Savings Bank, FSB ("World Savings"). The Deed of Trust names Golden West Savings Association Savings Co. ("Golden West") as Trustee and grants World Savings a security interest in the residential property located at 3918 Chatham Court, South San Francisco, California 94080 ("Property").Dkt. No. 1 ("Complaint") ¶¶ 3, 9-10. Plaintiff alleges that on or about August 15, 2006, World Savings securitized the Note and Deed of Trust into a mortgage-backed security and sold them to a real estate investment conduit trust ("Real Estate Trust"), with Deutsche Bank National Trust Company as Trustee and World Savings as servicer. Id. ¶ 11. Plaintiff alleges that as a result of the sale of the Note and Deed of Trust, World Savings no longer had any beneficial interest in the Note or the Deed of Trust. Id. ¶ 22.2
Sometime thereafter, Wachovia Bank merged with World Savings,3 and effective January 1, 2008, World Savings changed its name to Wachovia Mortgage, FSB. Dkt. No. 20, Defendant's Request for Judicial Notice in Support of Motion to Dismiss ("RJN"), Ex. B. Also thereafter, on December 31, 2008, Wells Fargo Bank, N.A. acquired Wachovia Bank in a stock-for-stock merger.4 RJN, Exs. C & D; Complaint ¶ 4. Plaintiff alleges that the assets Wachovia acquired from World Savings, and that Wells Fargo acquired from Wachovia did not include either the Note or the Deed of Trust. Id. ¶ 12.5
On December 29, 2010, LPS Default Title Closing filed a notice of default ("Notice of Default") on behalf of Regional Service Corporation ("Regional Service") as Trustee under the Deed of Trust. Id. ¶ 13. The Notice of Default indicates that Plaintiff stopped making her payments on the Note in August 2009. Dkt. No. 5-2, Ex. F. On March 31, 2011, Wells Fargo recorded a Notice of Substitution of Trustee naming Regional Service as the Trustee under the Deed of Trust. Complaint ¶ 14. Concurrent with recording the Notice of Substitution of Trustee,and also on March 31, 2011, Wells Fargo recorded a Notice of Trustee's Sale of the Property. Id. ¶ 15. On September 26, 2011, Wells Fargo purchased the Property at the Trustee's Sale, and on or about September 28, 2011, Wells Fargo recorded a Trustee's Deed on the Property. Dkt. No. 5-2, Ex. H ("Trustee's Deed"); Complaint ¶ 16.
Following the Trustee's Sale, Wells Fargo brought an unlawful detainer action to evict Plaintiff from the Property. RJN, Ex. K; Dkt. No. 5-2, Ex. I. Wells Fargo gained right of possession to the Property through a default judgment entered on December 22, 2011. RJN, Ex. K. On January 10, 2012, Plaintiff filed for Chapter 11 bankruptcy. RJN, Ex. L. Wells Fargo successfully moved to lift the automatic stay, and on February 9, 2012, the stay was lifted. RJN, Ex. M.
On February 2, 2012, Plaintiff initiated this federal diversity action seeking to enjoin the eviction, and alleging various irregularities in the foreclosure proceedings. She alleges the foreclosure mechanics were flawed because the substitution of trustee was recorded after the notice of default was recorded, Complaint ¶¶ 19-20; "there is no recorded assignment of the Deed of Trust naming Wells Fargo as beneficiary [of this security instrument]," id. ¶ 23; and Wells Fargo lacked standing to conduct the foreclosure, id.¶¶ 11, 22. Further, she alleges that Wells Fargo slandered the title to the Property by recording false documents during the foreclosure process.
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, Inc., 349 F.3d 1191, 1199-1200 (9th Cir. 2003). All allegations of material fact are taken as true. Erickson v. Pardus, 551 U.S. 89, 94 (2007). However, legally conclusory statements, not supported by actual factual allegations, need not be accepted. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A plaintiff's obligation to provide the grounds of her entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and quotations omitted). Rather, the allegations in the complaint "must be enough to raise a right to relief above the speculative level." Id.
Review generally is limited to the contents of the complaint and documents attached thereto. Allarcom Pay Television. Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 385 (9th Cir. 1995). Additionally, the Court may consider matter that is properly the subject of judicial notice - such as court filings and matters of public record - without converting a motion to dismiss into one for summary judgment. Lee v. Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). The Court finds that the documents submitted by Wells Fargo are properly the subject of judicial notice. Fed. R. Evid. 201(b)(2). All are documents issued by a legislative or executive department of the United States, public records pertaining to the Property,6 or court filings. The Court will take judicial notice of the dates, parties, and legally operative language of these documents, but not the truth of various factual representations made in the documents. See Lee, supra, 250 F.3d at 690.
In California, nonjudicial foreclosure sales are governed by a "comprehensive" statutory scheme found in California Civil Code Sections 2924 through 2924k. Knapp v. Doherty, 123 Cal. App. 4th 76, 86 (Cal. Ct. App. 2004). Upon default on the loan by the homeowner, the beneficiary to the Deed of Trust may declare a default and proceed with a nonjudicial foreclosure sale. Cal. Civ. Code § 2924. The foreclosure process commences by recording the notice of default and election to sell. Id. The trustee or beneficiary must then wait three months before proceeding with any nonjudicial foreclosure sale. Id. § 2924(b). After three months has elapsed, a notice of sale must be published, posted, mailed and recorded. Id. § 2924f. The property then must be sold at public auction to the highest bidder. Id. § 2924g(a).
A nonjudicial foreclosure sale is presumed to have been conducted regularly and fairly. Nguyen v. Calhoun, 105 Cal. App. 4th 428, 444 (Cal. Ct. App. 2003) (). To state a cause of action for wrongful foreclosure, the Plaintiff must plead "(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgageor deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering." Lona v. Citibank, N.A., 202 Cal. App. 4th 89, 104 (Cal. Ct. App. 2011).
The first element for a wrongful foreclosure claim is that the property was illegally or fraudulently sold under a power of sale in a deed of trust. Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952, 961 (N.D. Cal. 2010) (citing Munger v. Moore, 11 Cal. App. 3d 1, 7 (Cal. Ct. App. 1970)). In addition, Plaintiff also must allege that the imperfection in the nonjudicial foreclosure process of which she complains harmed or prejudiced her interests. See Debrunner v. Deutsche Bank Nat'l Trust Co., 204 Cal. App. 4th 433, 443 (Cal. Ct. App. 2012) (). Plaintiff asserts that the sale was illegal or fraudulent because the Notice of Default was invalid and the foreclosing entity did not have a beneficial interest in the Note or Deed of Trust, but she does not allege her interests were harmed or prejudiced.
Only the trustee, mortgagee, or beneficiary, or an authorized agent may record a Notice of Default. Cal. Civ. Code § 2924(a)(1). The Notice of Default must identify the trustee, provide the instrument number under which the Deed of Trust was recorded, inform the borrower of the amount in arrears, and notify borrower of the election to sell under first Deed of Trust. Id. § 2924; Rosenfeld, supra, 732 F. Supp. 2d at 963. The primary purpose of the Notice of Default is to notify the homeowner that a default has occurred, the amount required to cure that default, and that a foreclosure sale is imminent. See Knapp, supra, 123 Cal. App. 4th at 88, 99.
The first basis for Plaintiff's claim for wrongful foreclosure is that Wells Fargo did not comply with the provisions of California Civil Code Section 2934a, relating to the procedure forsubstitution of trustee, before it...
To continue reading
Request your trial