Warren v. Wells Fargo & Co.

• Decision Date: 27 October 2017
• Docket Number: Case No.: 3:16-cv-2872-CAB-(NLS)
• Citation: Warren v. Wells Fargo & Co., Case No.: 3:16-cv-2872-CAB-(NLS) (S.D. Cal. Oct 27, 2017)
• Court: U.S. District Court — Southern District of California
• Parties: MARK WARREN, Plaintiff, v. WELLS FARGO & CO., WELLS FARGO BANK, N.A., et al. Defendants.

MARK WARREN, Plaintiff, v. WELLS FARGO & CO., WELLS FARGO BANK, N.A., et al. Defendants.

Case No.: 3:16-cv-2872-CAB-(NLS)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

October 27, 2017

ORDER ON MOTIONS TO DISMISS FIRST AMENDED COMPLAINT

[Doc. No. 24, 43-1]

This matter comes before the Court on the motion to dismiss filed by Defendants Wells Fargo Bank, N.A., and Wells Fargo & Company (collectively "Wells Fargo") [Doc. No. 24] and Defendant Clear Recon Corp's ("CRC") motion to dismiss¹ [Doc. No. 43-1, 43-2]. The Wells Fargo motion has been fully briefed. As to CRCS's motion, because CRC is a nominal defendant and the motion contains substantially similar arguments to those of Wells Fargo, the Court has interpreted CRC's motion as joining that of Wells Fargo's. Accordingly, the Court has determined that it does not need a separate opposition from Plaintiff. The Court finds the motion suitable for submission on the papers andwithout oral argument in accordance with Civil Local Rule 7.1(d)(1). For the following reasons, Wells Fargo's motion is granted as set forth below.

I. BACKGROUND

On October 27, 2016, Plaintiff Mark Warren filed suit in the Superior Court of the State of California against Wells Fargo alleging a myriad of claims stemming from a mortgage on a property located in San Diego. The complaint included allegations of violations of the Truth in Lending Act ("TILA"), the Home Ownership and Equal Protection Act ("HOEPA"), 15 U.S.C. § 1601 et seq., and the Real Estate Settlement Procedures Act ("RESPA"), 1 U.S.C. § 2601 et seq. [Doc No. 1-2² ("the complaint").]

On November 22, 2016, Wells Fargo removed the action to this Court pursuant to the provisions of 28 U.S.C. §§ 1332 and 1441(b). [Doc. No. 1.]

In mid-January 2017, Plaintiff received two separate Notices of Sale, one setting January 19, 2017 as the date of the public auction of the Property, the second setting January 31, 2017 as the auction date. [Doc. No. 10-3 at 39, 41-51.] In response to the notices Plaintiff filed an Ex Parte Application for a Temporary Restraining Order and Preliminary Injunction³ and Attorney Fees. [Doc. No. 10.] A hearing on Plaintiff's TRO Application was held on February 16, 2017, and Defendants were enjoined from selling the Property for 120 days.⁴ [Doc. No. 19.]

On March 22, 2017, Plaintiff requested and was granted leave to file an amended complaint. [Doc. Nos. 20, 21]. On March 30, 2017, the Amended Complaint ("FAC") was filed adding CRC as a Defendant. [Doc. No. 22.]

The FAC alleges that in 1999, Plaintiff obtained a $225,000 mortgage from an unidentified source to purchase 5934 Portobello Court, San Diego, CA 92124 (the "Property"). [Doc. No. 22 at ¶ 35.] In 2002, Plaintiff obtained a new negative amortization mortgage loan on the property from Countrywide Home Loan. Inc. [Id.]

In 2009, Plaintiff obtained a loan modification from Wachovia⁵ that reduced the mortgage loan amount by $50,000.00 and allowed Plaintiff to make interest-only monthly loan payments at 3.978%, increasing in rate annually until May 2016 when both principal and interest payments at 4.978% would become due. [Id. at ¶ 36.]⁶

In January 2013, Plaintiff underwent heart surgery and was unable to work for several months. [Id. at ¶ 37.] As a result of his health issues and resulting limited ability to work, Plaintiff sought a loan modification with Wells Fargo. [Id. at ¶¶ 37-38.]

Without providing a reason, Wells Fargo notified Plaintiff that his request for a loan modification was being turned down but informed Plaintiff that he would be eligible for an "in house" "proprietary" loan modification. [Id. at ¶¶ 40, 41.] Plaintiff was informed that under the terms of this modification "that the interest was 2.5% for the life of the loan and that he had to complete a 3 month trial period." [Id. at ¶ 42.] Plaintiff was also told and led to believe the monthly payment for the life of the loan, not just limited to the trialperiod, would be $1,863.56 inclusive of property taxes. [Id.] Without memorializing the terms, Plaintiff and Wells Fargo entered into the trial period. [Id. at ¶¶ 43-44.]

After successfully completing the trial period, Plaintiff received the loan modification papers from Wells Fargo. [Id. at ¶ 45.] However, the loan modification contained terms different for what Plaintiff understood the parties had agreed. [Id.] The modification Wells Fargo offered Plaintiff would have resulted in a monthly payment of $1,486.95, interest rate of 2.728 % for years 1-5 of the loan; a monthly payment of $1,715.22, interest rate of 3.728 % for year 6 of the loan; a monthly payment of $1,954.60, interest rate of 4.728 % of year 7; a monthly payment of $2,203.27 at an interest rate of 5.728%; culminating in a monthly payment of $2,367.78, interest rate of 6.375% for years 9-40. [Id. at ¶ 46.] Having not been offered a 2.5 per cent fixed rate loan with monthly payments of $1,863.56, Plaintiff refused the modification. [Id. at ¶ 49.]

Following his refusal of the loan modification, Wells Fargo began a pattern of harassment against Plaintiff, that continued even after Wells Fargo was sent a cease and desist letter by Plaintiff's counsel [Id. at ¶¶ 49, 51] The harassment took the form of phone calls informing Plaintiff he had missed a mortgage payment after his mortgage check had cleared his bank account, incorrectly increasing the amount to be placed in escrow to cover the property taxes on the Property, and changing the name on the mortgage statement to that of Plaintiff's counsel, Mr. Reed. [Id. at ¶ 51.]

Subsequently in 2016, Plaintiff completed another loan modification application. [Id. at ¶ 52.] Wells Fargo refused the request on the grounds that it had determined that Plaintiff's monthly income of $1,700.00 was insufficient to cover the mortgage payment. [Id. at ¶ 53.] Plaintiff maintains that the monthly income calculation was determined arbitrarily and contrary to proof. [Id.] Plaintiff "was never told he could appeal the decision nor that he may obtain all of the inputs used in the net present value calculation upon written request to the Defendant." [Id.]

After the second attempt at modifying the loan failed, Wells Fargo "amped up" its harassment of Plaintiff. [Id. at ¶ 55.] Wells Fargo repeatedly called Plaintiff and sent himletters, refused to credit mortgage payments that Plaintiff made, did not credit "the payments made as to Mr. Warren being in arrears (falsely)," sent a notice of deficiency for over $15,000.00 and filed a Notice of Default against the Property ("NOD"). [Id. at 58.] As a result of Defendants' action, the title of the Property has been clouded "making it almost impossible for Mr. Warren to refinance." [Id.]

The FAC alleges 20 separate causes of action against Defendants, namely: (1) breach of the covenant of good faith & fair dealing; (2) violation of the California Civil Code section 2923.6(f); (3) violation of the California Civil Code section 2924.10; (4) violation of the California's Rosenthal Act and Federal Fair Debt Collection Practices Act ("FDCPA"); (5) breach of contract / promissory estoppel; (6) breach of fiduciary duty; (7) fraud; (8) promise without intent to perform under California Civil Code section 1710(4); (9) negligent misrepresentation; (10) quiet title to real property; (11) slander of title; (12) cancellation of instrument; (13) violation of California Business & Professions Code section 17200 et. seq.; (14) violation of the California Deceptive Practices Act, California Civil Code section 1770; (15) accounting; (16) specific performance; (17) declaratory relief; (18) injunctive relief under California Civil Procedure Code section 526(1)(2) ; (19) violation of TILA and HOEPA, 15 U.S.C § 1601, et. seq.; and violation of RESPA, 1 U.S.C. § 2601 et. seq.

On April 7, 2017, Wells Fargo filed a motion to dismiss, seeking dismissal of all 20 causes of action pursuant to Federal Rules of Civil Procedure 12(b)(6). [Doc. No. 24.] Along with its motion for dismissal, Wells Fargo filed a request for Judicial Notice. [Doc. No. 25.] On April 14, 2017, Plaintiff filed his response in opposition [Doc. No. 27] and Wells Fargo filed a reply. [Doc. No. 31.]

On October 26, 2017, the Court granted Defendant CRC's motion to set aside default [Doc. No. 60] and ordered CRC's motion to dismiss, attached to the motion for relief from default [Doc. No. 43-1, 43-2.], filed nunc pro tunc to June 30, 2017. [No. No. 6]

II. LEGAL STANDARD

Under Rule 12(b)(6), a party may bring 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. Twombly, 550 U.S. 544, 570 (2007). Ordinarily, for purposes of ruling on a Rule 12(b)(6) motion, the court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the non-moving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But, a "pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). "Determining whether a complaint states a plausible claim for relief . . . [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

Generally, leave to amend a pleading "shall be freely given when justice so requires. Fed. R. Civ. P. 15 (a)(2). See, e.g., Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) ("This policy is to be applied with extreme liberality.") Dismissal without leave to amend is only appropriate when the court is satisfied that the deficiencies in the complaint could not possibly be cured by amendment. Jackson v. Carey, 353 F.3d 750, 758 (9th Cir. ...