Powell v. Wells Fargo Home Mortg., Case No. 14-cv-04248-MEJ
| Decision Date | 07 August 2015 |
| Docket Number | Case No. 14-cv-04248-MEJ |
| Parties | KAYODE POWELL, Plaintiff, v. WELLS FARGO HOME MORTGAGE, et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Pro se Plaintiff Kayode Powell brings this case against Wells Fargo Bank, N.A. ("Wells Fargo"), HSBC USA, N.A. ("HSBC"), and First American Trustee Servicing Solutions, LLC ("First American") (collectively "Defendants"), challenging the foreclosure on real property located at 4770-4776 Tompkins Avenue, Oakland, California 94619 (the "Property"). Compl., Dkt. Nos. 1-1 and 1-2.1 Pending before the Court is Wells Fargo and HSBC's Motion to Dismiss pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). Dkt. No. 12 ("WF Mot."). Plaintiff filed an Opposition (Dkt. No. 42),2 and Wells Fargo and HSBC filed a Reply (Dkt. No. 45). First American also filed a Motion to Dismiss under Rule 12(b)(6) (Dkt. No. 8, "FA Mot."), to which Plaintiff filed an Opposition (Dkt. No. 41), and First American filed a Reply (Dkt. No.43). The Court held a hearing on the matters on April 30, 2015. Dkt. No. 50. The Court subsequently ordered supplemental briefing related to Defendants' argument that judicial estoppel barred Plaintiff's claims. Dkt. Nos. 53, 69. Now having reviewed those responses and considered the parties' positions, the relevant legal authority, and the record in this case, the Court GRANTS IN PART and DENIES IN PART Defendants' Motions for the reasons stated below.
Around October 17, 2005, Plaintiff obtained a loan from Wells Fargo in the amount of $473,400.00 (the "Loan"). Compl. ¶ 13. The Loan was secured by a deed of trust ("Deed of Trust"), which was secured by the Property. WF Req. for Judicial Notice, Ex. A, Dkt. No. 13 ("WF RJN"); FA Req. for Judicial Notice, Ex. A, Dkt. No. 9 ("FA RJN").3 Fidelity National Title Insurance Company was the original trustee, but First American was appointed the successor trustee under the Deed of Trust pursuant to a Substitution of Trustee recorded on January 6, 2009. FA RJN, Ex. C. Wells Fargo assigned the Deed of Trust to HSBC on January 9, 2009, which was recorded in the real estate records of Alameda County on January 14, 2009. WF RJN, Ex. B; FA RJN, Ex. B. Wells Fargo remained as the servicer of the Loan. Compl. ¶¶ 36, 36.
On December 3, 2008, First American recorded a notice of default as Plaintiff was behind on his payments. WF RJN, Ex. C; FA RJN, Ex. D. This notice of default led to a foreclosure on March 25, 2010, but on the same day, Plaintiff filed for bankruptcy; consequently, First American rescinded the trustee's sale and trustee's deed on April 21, 2010. See WF RJN, Ex. D (Notice of Recession) & Ex. J (Bankruptcy Docket). First American recorded a second notice of default on December 1, 2010, indicating Plaintiff was in default as of February 1, 2008. Id., Ex. E. Notices of sale were then recorded on March 2, 2011, July 2, 2012, and May 20, 2014. Id., Exs. F, G, H.
Plaintiff has filed five bankruptcy petitions: a Chapter 7 bankruptcy on June 5, 2008; a Chapter 7 bankruptcy on March 25, 2010; a Chapter 13 bankruptcy on May 23, 2011; a Chapter 13 bankruptcy on August 23, 2011; and a Chapter 13 bankruptcy on December 2, 2011. Id., Exs. I-M. At the hearing, Plaintiff confirmed that all these bankruptcy filings were dismissed forfailure to file required information. See id. (all); Dkt. No. 50.
More recently, First American issued a notice of trustee sale, which was recorded in the Alameda County real estate records on May 20, 2014. WF RJN, Ex. H. On June 10, 2014, First American sent Plaintiff a Notice of Postponement of Trustee's Sale, which was postponed until September 8, 2014. Dkt. No. 1-4 at 4.
Plaintiff filed this action in Alameda Superior Court around September 2, 2014, seeking "equitable relief and damages precipitated by the events and acts of Defendants resulting in an imminent threat of wrongful foreclosure." Compl. ¶ 1. Plaintiff brings 17 claims: (1) Negligence; (2) Declaratory Relief; (3) Temporary Restraining Order and Preliminary Injunction; (4) Intentional Infliction of Emotional Distress ("IIED"); (5) Breach of Good Faith and Fair Dealing; (6) Quiet Title; (7) Accounting; (8) violation of California's Rosenthal Act; (9) Fraud; (10) Specific Performance by Promissory or Equitable Estoppel; (11) Breach of Written and Oral Contract; (12) Quia Timet; (13) Racketeering Influenced Corrupt Organizations Act; (14) Rescission of Note and Deed of Trust and Restitution; (15) violation of California Civil Code section 789.3; (16) violation of the Fair Credit Reporting Act; and (17) Discrimination. Plaintiff simultaneously filed an ex parte motion for a temporary restraining order ("TRO"), and on September 3, 2014, the Superior Court held a hearing on Plaintiff's request. Dkt. No. 1-1 at 2-22. The Superior Court subsequently issued the TRO, enjoining various defendants, including Wells Fargo, HSBC, and First American, from foreclosing on the Property. Dkt. No. 1-4 at 16-20.4 Additionally, the court issued an order to show cause, requiring defendants to show cause as to why they should not be enjoined from proceeding with the trustee's sale of the Property. Id.
On September 19, 2014, Wells Fargo and HSBC removed the action to this Court. Not. of Removal, Dkt. No. 1. Since then, the parties have attended several ADR mediation phone conferences, but have been unable to resolve their disputes.
Wells Fargo and HSBC bring their Motion to Dismiss challenging Plaintiff's 17 claims onvarious grounds. WF Mot. at 1. In particular, they contend that judicial estoppel bars Plaintiff's maintenance of this action because Plaintiff previously failed to disclose his claims against Defendants in all five of his bankruptcy cases and as required in his bankruptcy schedule of assets. Id. Wells Fargo and HSBC argue Plaintiff benefitted from automatic stays granted with the filing of his bankruptcy petitions, which postponed their foreclosure on the Property. Id. at 3. They contend that because Plaintiff failed to disclose the claims he had against Defendants in his bankruptcy petitions, the doctrine of judicial estoppel now prevents Plaintiff from asserting them in this action. Id. at 3-5. First American did not challenge Plaintiff's claims on judicial estoppel grounds, but rather argues there are other problems with Plaintiff's 17 claims. See generally FA Mot. Nonetheless, Wells Fargo and HSBC's judicial estoppel arguments similarly apply to First American as it was impacted by Plaintiff's bankruptcy proceedings.
Following the hearing, the Court ordered supplemental briefing on the judicial estoppel issue, requiring the parties to explain whether the bankruptcy court imposed a stay on Plaintiff's creditors in his last bankruptcy proceeding, commenced on December 5, 2011, and if so, whether it was an automatic stay or whether Plaintiff was required to demonstrate good cause or meet some other prerequisite before the stay was entered. See Dkt. No. 53. First American timely responded (Dkt. No. 55), as did Wells Fargo and HSBC (Dkt. No. 58). They contend there was an automatic stay, but Plaintiff disagrees, noting "[a]n automatic stay was NOT imposed on the creditors of Plaintiff after his filing a bankruptcy case on December 2, 2011 . . . due to operation of law relative to filing more than two within a twelve (12) month period." Pl.'s Suppl. Resp. at 2, Dkt. No. 68 (citing 11 U.S.C. § 362(c)(4)). As the December 2011 filing was his "third filing within a twelve month period, the automatic stay was not in place." Id. It is not clear from the bankruptcy docket whether the court ordered the stay, but it does reveal that Plaintiff's creditors sought relief from a stay in January 2012. Dkt. No. 13-1 at 84. Defendants submitted the bankruptcy court's order granting creditors' request for relief from a stay. See Dkt. No. 59-1.5
On June 29, 2015, the Court issued an order deferring its ruling on Defendants' Motionspending resolution of the judicial estoppel issue. Dkt. No. 69. Specifically, the Court ordered Plaintiff to file a declaration explaining why he failed to disclose claims against Defendants in his bankruptcy petitions. Id. at 17.
Plaintiff filed his Declaration on July 14, 2015. Dkt. No. 70. He explains that he "did not understand the [bankruptcy] forms to be asking [him] to list as property anything related to a future recovery on a claim, notwithstanding I did not even realize that any existed." Id. ¶ 3. He states he "did not understand that there could be any potential damages or claims, or anything that could be considered an asset of [his], relating to the lock out(s), nor to the unmaterialized loan modification anticipated post [his and his wife's] compliance with the Trial Period Plan." Id. ¶ 4. Plaintiff "assumed that through direct negotiations with Wells Fargo, [he and his wife] would receive a loan modification, and not that [he] could potentially sue Wells Fargo." Id. ¶ 5. Plaintiff asserts his "failure to identify claims against Wells Fargo was due to my unintentional mistake and inadvertence in not realizing that my concerns with getting a loan modification and being locked out of my house were actually 'property' in the bankruptcy." Id. ¶ 9. Finally, Plaintiff states that in his latest bankruptcy case, the court never issued a ruling on his Motion to Impose a Stay, there was no stay in place, and that his creditors sought relief from the a stay as a "comfort order" to "safeguard against potentially violating the Bankruptcy Code or due to the Local Rules." Id. ¶ 10.
Under Rule 12(b)(6), a party may file a motion to dismiss based on the failure to state a claim upon which relief may be granted. A Rule 12(b)(6) motion challenges the sufficiency of a complaint as failing to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombl...
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