Villalvazo v. America's Servicing Co.
| Decision Date | 23 July 2012 |
| Docket Number | Case No. CV 11-4868 CAS (MANx) |
| Court | U.S. District Court — Central District of California |
| Parties | VILLALVAZO v. AMERICA'S SERVICING COMPANY; ET AL. |
CIVIL MINUTES - GENERAL
Attorneys Present for Plaintiffs:
Not Present
Attorneys Present for Defendants:
Not Present
Proceedings: (In Chambers:) DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT (filed 6/18/2012)
The Court finds this motion appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing date of July 30, 2012 is vacated, and the matter is hereby taken under submission.
On April 11, 201, plaintiff Efren Villalvazo filed the instant action in the Los Angeles County Superior Court against America's Servicing Company, Wells Fargo Bank, Cal-Western Reconveyance Corporation, Federal Home Loan Mortgage Corporation and Does 1 through 500, inclusive, asserting four claims for relief: (1) breach of contract based on a Home Affordable Modification Program Loan Trial Period plan ("HAMP trial plan"); (2) fraud; (3) wrongful foreclosure; and (4) cancellation of instrument. The gravamen of plaintiff's complaint is that his real property, located at 13580 Rangoon Street, Arleta, CA 91331 ("Property"), was unlawfully foreclosed upon after defendants breached the allegedly binding HAMP trial plan by refusing to grant a permanent loan modification. On June 8, 2011, defendants removed the case to this Court on the basis of diversity jurisdiction.
By order dated May 10, 2012, the Court granted defendants' motion for judgment on the pleadings. Dkt. No. 28. First, the Court found that the HAMP trial plan is not a contract as a matter of law. Second, plaintiff's complaint failed to plead the "who, what, when, where, and how" pursuant to Rule 9(b) in sufficient detail to maintain a fraud claim. Third, the Court found that defendants complied with the non-judicial foreclosureprocess pursuant to Cal. Civ. Code §§ 2294 et seq. Finally, the Court held that because the foreclosure was executed properly, plaintiff's claims failed because he had not tendered the full amount due.
On May 31, 2012, plaintiff filed a first amended complaint ("FAC"). Plaintiff's FAC asserts the same four claims as the original complaint. On June 18, 2012, defendants filed a motion to dismiss the FAC. Plaintiff filed an opposition on July 9, 2012. Defendants' filed their reply on July 18, 2012. After considering the arguments set forth by both parties, the Court finds and concludes as follows.
Plaintiff purchased the Property on December 2, 2005, with loans from Ownit Mortgage Solutions, Inc., in the amounts of $333,750 and $111,250, secured by first and second deeds of trust, respectively. Plaintiff refinanced the Property with loans from Mortgageit and The CIT GroupConsumer Finance, Inc., in the amounts of $417,000 and $86,000.
Plaintiff defaulted on his loan in 2007. Accordingly, The CIT GroupConsumer Finance, Inc. recorded a notice of default against the Property on June 1, 2007. See Def. RJN Exh. 2.1 On July 20, 2009, a substitution of trustee was recorded reflecting that Cal-Western Reconveyance Corporation ("Cal-Western") was substituted as trustee under the deed of trust. Id. Exh. 3. Because plaintiff failed to cure his default, Cal-Western recorded a notice of trustee's sale on September 8, 2009. Id. Exh. 4. On October 29, 2009, an assignment of the deed of trust was recorded reflecting that Mortgage Electronic Registration Systems, Inc. ("MERS") assigned all beneficial interest in the note and deed of trust to Wells Fargo, d/b/a America's Servicing. Id. Exh. 5. On December 1, 2009, plaintiff entered into a HAMP trial plan and made certain reduced payments under the plan. FAC ¶ 24, Exh. A. Plaintiff was not granted a permanent modification.
Plaintiff failed to cure his default. Accordingly, Cal-Western recorded a second notice of trustee's sale on October 6, 2010. RJN Exh. 6. On November 8, 2010, an assignment of the deed of trust was recorded reflecting that Wells Fargo assigned all beneficial interest in the note and deed of trust to Freddie Mac. Id. Exh. 7. On the same day, a trustee's deed upon sale was recorded, reflecting that the foreclosure sale took place on October 28, 2010. Id. Exh. 8.
A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a complaint. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his '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 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). "[F]actual allegations must be enough to raise a right to relief above the speculative level." Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all material allegations in the complaint, as well as all reasonable inferences to be drawn from them. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998). The complaint must beread in the light most favorable to the nonmoving party. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). However, Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950 (2009); Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) () (citing Twombly and Iqbal); Sprewell, 266 F.3d at 988; W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). Ultimately, "[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950.
Furthermore, unless a court converts a Rule 12(b)(6) motion into a motion for summary judgment, a court cannot consider material outside of the complaint (e.g., facts presented in briefs, affidavits, or discovery materials). In re American Cont'l Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev'd on other grounds sub nom Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court may, however, consider exhibits submitted with or alleged in the complaint and matters that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).
For all of these reasons, it is only under extraordinary circumstances that dismissal is proper under Rule 12(b)(6). United States v. City of Redwood City, 640 F.2d 963, 966 (9th Cir. 1981).
As a general rule, leave to amend a complaint which has been dismissed should be freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).
Rule 9(b) requires that the circumstances constituting a claim for fraud be pled with particularity. Federal Rule of Civil Procedure 9(b) applies not just where a complaint specifically alleges fraud as an essential element of a claim, but also where the claim is "grounded in fraud" or "[sounds] in fraud." Vess v. Ciba-Geigy Corp. U.S.A., 317 F.3d 1097, 1103-04 (9th Cir. 2003). A claim is said to be "grounded in fraud" or "'sounds in fraud'" where a plaintiff alleges that defendant engaged in fraudulent conduct and relies on solely on that conduct to prove a claim. Id. "In that event, . . . the pleading of that claim as a whole must satisfy the particularity requirement of [Fed. R. Civ. P.] 9(b)." Id. However, where a plaintiff alleges claims grounded in fraudulent and non fraudulent conduct, only the allegations of fraud are subject to heightened pleading requirements. Id. at 1104.
A pleading is sufficient under Rule. 9(b) if it "[identifies] the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations." Walling v. Beverly Enters., 476 F.2d 393, 397 (9th Cir. 1973). This requires that a false statement must be alleged, and that "circumstances indicating falseness" must be set forth. In re GlenFed Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994). Thus, Rule 9(b) requires a plaintiff to "identify the 'who, what, when, where and how of the misconduct charged,' as well as 'what is false or misleading about [the purportedly fraudulent conduct], and why it is false." Cafasso, ex rel. United States v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (quoting Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010)).
When a party pleads fraud against a corporation, the already heightened pleading standard is further heightened. "The requirement of specificity in a fraud action against a...
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