Santana v. BSI Fin. Servs., Inc., Case No.: 20cv1577-GPC(WVG)

CourtUnited States District Courts. 9th Circuit. United States District Court (Southern District of California)
Citation495 F.Supp.3d 926
Docket NumberCase No.: 20cv1577-GPC(WVG)
Parties Irma SANTANA and Rafael Santana, Plaintiffs, v. BSI FINANCIAL SERVICES, INC.; U.S. Bank Trust N.A. as Trustee of the SCIG Series III Trust; and, Does 1 Through 10 Inclusive, Defendants.
Decision Date20 October 2020

495 F.Supp.3d 926

Irma SANTANA and Rafael Santana, Plaintiffs,
BSI FINANCIAL SERVICES, INC.; U.S. Bank Trust N.A. as Trustee of the SCIG Series III Trust; and, Does 1 Through 10 Inclusive, Defendants.

Case No.: 20cv1577-GPC(WVG)

United States District Court, S.D. California.

Signed October 20, 2020

495 F.Supp.3d 933

Irma Santana, Lemon Grove, CA, pro se.

Rafael Santana, Lemon Grove, CA, pro se.

Cuong M. Nguyen, Ghidoti Berger, LLP, Santa Ana, CA, for Defendants.


[Dkt. No. 3.]

Gonzalo P. Curiel, United States District Judge

Before the Court is Defendants’ motion to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 3.) Plaintiffs filed an opposition on September 24, 2020. (Dkt. No. 6.) Defendants filed a reply on October 9, 2020. (Dkt. No. 7.) Based on the reasoning below, the Court GRANTS in part and DENIES in part Defendants’ motion to dismiss with leave to amend.


On June 15, 2020, Plaintiffs Irma Santana and Rafael Santana, (collectively "Plaintiffs"), proceeding pro se, filed a Complaint in San Diego County Superior Court against Defendant BSI Financial Services, Inc. ("BSI"),1 and U.S. Bank Trust National Association, as Trustee of The SCIG Series III Trust ("U.S. Bank") (collectively "Defendants") alleging eighteen causes of action arising from an alleged wrongful foreclosure of their home. (Dkt. No. 1-2, Compl.) The Complaint was removed to this Court on August 14, 2020. (Dkt. No. 1, Not. of Removal.)

According to the Complaint, Plaintiffs were the owners of residential real property located at 8489 Adams Street, Lemon Grove, CA. (Dkt. No. 1-2, Compl. ¶ 8.) In February 2006, Plaintiffs obtained a loan in the amount of $375,000 secured by a deed of trust on the property that was recorded on February 13, 2006. (Id. ¶ 10(a); id. , Ex. A.)

Around April 16, 2019, Briana Young, an authorized representative, executed a notice of default ("NOD") which was recorded on April 17, 2019. (Id. ¶ 10(b); id. , Ex. B.) Around July 19, 2019, Briana Young executed a Notice of Trustee's Sale ("NTS") which was recorded on July 22, 2019. (Id. ¶ 10(c); id. , Ex. C.) Around April 8, 2020, Michele Ghidoti, an authorized representative, executed a Trustee's Deed Upon Sale ("TDUS"), indicating that the property was sold at an auction on March 30, 2020 to Defendant U.S. Bank and the TDUS was recorded on April 10, 2020. (Id. ¶ 10(d); id. , Ex. D.)

Plaintiffs allege that they applied for a loan modification in early January 2020. (Id. ¶¶ 11(a); 11(d).) They never received

495 F.Supp.3d 934

written confirmation that the application was received or denied. (Id. ¶¶ 11(a); 11(d).) Several times during mid-January and the end of February, Plaintiffs called and emailed Defendant BSI's Financial Services Loss Mitigation Specialist and designated single point of contact ("SPOC") Patty Vera ("Vera"), to get a status update but was never able to reach her. (Id. ¶¶ 11(a); 11(b); 11(d).) In late February, Vera finally responded to Plaintiffs’ calls and told them to write a letter appealing the loan modification denial. (Id. ¶¶ 11(a); 11(d).) She informed them they had twenty days to provide additional income and a letter stating when Irma Santana would start working again along with her expected income. (Id. ¶¶ 11(a); 11(d).) Vera stated this would be sufficient to reverse the denial. (Id. ¶ 11(d).) Despite never having received any written confirmation of a denial of the loan modification application, within the 20-day period, in late February or early March, Plaintiffs submitted the required information but again did not receive an answer in writing. (Id. ¶ 11(a).) Irma Santana found a job that she was supposed to start on March 15, 2020; however due to COVID-19, she was unable to start work on that day. (Id. ¶ 11(d).)

Plaintiffs again called Vera several times with no responses between late February and early March and when they finally reached her in mid-March, Vera suggested they submit a new loan modification application showing more income but were never told their prior loan modification application was denied. (Id. ¶¶ 11(a), (d).) On the advice of Vera, on March 25, 2020, Plaintiffs submitted a full loan modification application with the additional information. (Id. ¶¶ 11(a); 11(d).) Plaintiffs then reached out to Vera daily after submitting the application leaving several voicemails, but were unable to reach her and finally reached a different BSI representative on March 29, 2020 who told them that the application had been denied and BSI was going to go forward with the foreclosure. (Id. ¶¶ 11(a); 11(d).) Plaintiffs never received a written notice of the denial and the sale took place the next day on March 30, 2020. (Id. ¶¶ 11(a); 11(d).) Plaintiffs allege the foreclosure sale was in violation of HBOR; therefore, the trustee sale was invalid. (Id. ¶¶ 11(d); 12.)

Plaintiffs claim they were provided with two SPOCs who were not responsive. (Id. ¶ 11(b).) Irma Gutierrez was assigned in December 2019 and Patty Vera was assigned on January 15, 2020. (Id. )

On September 4, 2016, Plaintiffs filed for Chapter 13 Bankruptcy. At that time, Wells Fargo was the servicer of the loan and at the end of 2016, Rushmore Lending replaced Wells Fargo as the loan servicer. (Id. ¶ 11(d)). In August 2018, during the second year of the bankruptcy, the loan was sold to Defendant BSI. (Id. ) Before BSI, there was no noted late payments on the mortgage. (Id. ) Despite that, BSI filed a motion for relief from the automatic stay in the Bankruptcy Court and provided conflicting numbers and accounting of payments while Plaintiffs provided evidence that there was only one missing payment from September 2018. (Id. ) These court proceedings caused additional expenses and financial hardship on Plaintiffs especially since Irma Santana had recently lost her job. (Id. ) In January 2019, when Plaintiffs did not have any further funds to continue with the bankruptcy litigation, they had no option but to concede with Defendants’ false and fraudulent calculations in order to save the property. (Id. ) Since they had borrowed money and used all their savings during the litigation, Plaintiffs were unable to comply with their financial obligations and make extra payments. (Id. ) The Bankruptcy Trustee dismissed the case on February 2, 2019. (Id. ) Plaintiffs were able to refile in August

495 F.Supp.3d 935

2019 but the payments were too high and Irma Santana had not yet found employment. (Id. ) Therefore, their last option was to submit a loan modification request in January 2020. (Id. ) However, Plaintiffs never received a letter stating that their loan modification application was complete and never received a written denial. (Id. )

In the motion, Defendants2 move to dismiss seventeen causes of action for failure to state a claim which is fully briefed.3 (Dkt. Nos. 3, 6, 7.)


A. Legal Standard on Federal Rule of Civil Procedure 12(b)(6)

Federal Rule of Civil Procedure ("Rule") 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't., 901 F.2d 696, 699 (9th Cir. 1990). Under Federal Rule of Civil Procedure 8(a)(2), the plaintiff is required only to set forth a "short and plain statement of the claim showing that the pleader is entitled to relief," and "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

A complaint may survive a motion to dismiss only if, taking all well-pleaded factual allegations as true, it contains enough facts to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). "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." Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted). In reviewing a Rule 12(b)(6) motion, the Court accepts as true all facts alleged in the complaint, and draws all reasonable inferences in favor of the plaintiff. al-Kidd v. Ashcroft , 580 F.3d 949, 956 (9th Cir. 2009).

Where a motion to dismiss is granted, "leave to amend should be granted ‘unless the court determines that the allegation of other facts...

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