Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-01407/USCOURTS-casd-3_10-cv-01407-3/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 15:1601 Truth in Lending

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DAVID CARAVANTES, an individual,

Plaintiff,

CASE NO. 10-CV-1407 - IEG (AJB)

ORDER GRANTING IN PART

AND DENYING IN PART

MOTION TO DISMISS

[Doc. No. 53.]

vs.

CALIFORNIA RECONVEYANCE

COMPANY, a California corporation;

WASHINGTON MUTUAL BANK, F.A., a

Federal Savings Bank organized and existing

under the laws of the United States;

JPMORGAN CHASE BANK, N.A., a

National Banking Association organized and

existing under the laws of the United States;

CHASE HOME FINANCE LLC, a Delaware

Limited Liability Company; VREJ

JOUKADARIAN, an individual; CLEMENT

J. DURKIN, an individual; DEBORAH

BRIGNAC, an individual; ANN THORN, an

individual; and DOES 1-20, inclusive,

Defendants.

Presently before the Court is a motion to dismiss Plaintiff David Caravantes (“Plaintiff”)’s

second amended complaint (“SAC”) brought by Defendants California Reconveyance Company

(“CRC”), JP Morgan Chase Bank, N.A. (“JP Morgan”), an acquirer of certain assets and liabilities

of Washington Mutual Bank from the FDIC acting as receiver, and as sucessor by merger to Chase

Home Finance LLC (“Chase”), Deborah Brignac, and Ann Thorn (collectively “Defendants”). 

[Doc. No. 53.] For the reasons described below, the Court GRANTS IN PART and DENIES IN

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PART Defendants’ motion to dismiss.

BACKGROUND

The following allegations are taken from Plaintiff’s SAC. Plaintiff became the owner of

property located at 5189 Argonne Court, San Diego, CA 92117 on or about August 15, 2007. 

[SAC ¶¶ 5, 17.] He acquired the property via a loan from Defendant Washington Mutual Bank,

F.A. (“WaMu”). [Id. ¶ 18.] The corresponding Deed of Trust was recorded in San Diego on

August 27, 2007. [Id.] The Deed of Trust identified Defendant WaMu as the lender and

Defendant CRC as the trustee. [Id.]

Plaintiff appears to have experienced problems in making his loan payments when his

income decreased dramatically in 2008. [SAC ¶ 20.] In September 2008, after Defendant WaMu

closed, Plaintiff alleges he received a form letter stating that Defendant WaMu had become

Defendant JPMorgan. [Id. ¶ 21.] Plaintiff subsequently received statements from Defendant

Chase, and he directed payments to Chase, assuming that Chase was the new servicer of his loan. 

[Id.]

In or around November 2009, Plaintiff received a letter from the Chase Home Ownership

Preservation Office stating that many Americans are experiencing difficulty with their mortgage

payments and that if Plaintiff was experiencing financial difficulty, there were some options

available to him that would assist him with making payments. [SAC ¶ 22, Ex. 1.] Plaintiff

subsequently received several additional letters of the same nature. [Id. ¶ 22] According to

Plaintiff, none of these letters discussed Plaintiff’s actual financial situation. [Id.]

On January 25, 2010, Defendant Chase mailed Plaintiff a letter titled “Notice of Collection

Activity,” alleging Plaintiff was in default under the terms of his loan. [SAC ¶ 23, Ex. 2.] The

letter did not attempt to discuss any options available to Plaintiff to avoid foreclosure other than

paying the full amount allegedly due. [Id.] On March 10, 2010, Defendant CRC recorded a

Notice of Default on Plaintiff’s property. [Id. ¶ 24, Ex. 3.] The Notice of Default was

accompanied by a Declaration of Compliance signed by Defendant Clement Durkin for JPMorgan. 

[Id. ¶ 25, Ex. 3.] The Declaration of Compliance indicates that the “mortgagee, beneficiary or

authorized agent tried with due diligence but was unable to contact the borrower” to discuss the

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borrower’s financial situation and to explore options for the borrower to avoid foreclosure as

required by Cal. Civ. Code § 2923.5, and that more than thirty days had elapsed since due

diligence was completed. [Id. ¶ 26, Ex. 3.] However, except for the generic letters discussed

above, none of the Defendants sent any letters or made any phone calls to Plaintiff concerning his

personal financial situation and options to avoid foreclosure that were specifically available to

him. [Id. ¶ 27.] 

On June 11, 2010, Defendant CRC executed a Notice of Trustee’s Sale signed by

Defendant Brignac, indicating that the sale was scheduled for July 6, 2010 at 10:00 a.m. [Id. ¶¶

33, 34, Ex. 9.] The Notice of Trustee’s Sale was accompanied by a Declaration Pursuant to

California Civil Code Section 2923.54 signed by Defendant Thorn, stating that the undersigned

loan servicer had complied with the requirements of Section 2923.54. [Id. ¶ 35, Ex. 9.] 

On July 6, 2010, Plaintiff filed the present action against Defendants. [Doc. No. 1,

Compl.] Shortly thereafter, the Court issued a temporary restraining order and a preliminary

injunction enjoining Defendants from foreclosing on Plaintiff’s property. [Doc. Nos. 6, 10.] On

October 14, 2010, the Court granted in part and denied in part Defendants’ motion to dismiss and

granted Plaintiff leave to file an amended complaint (“FAC”), which he filed on November 3,

2010. [Doc. Nos. 17-18.] Shortly thereafter, Defendants filed a motion to dismiss Plaintiff’s FAC. 

[Doc. No. 20.] At the hearing on Defendant’s second motion to dismiss, the parties indicated that

their dispute might be resolved through a loan modification. [Doc. Nos. 26, 46.] Accordingly, the

Court directed the parties to discuss loan modification options before the Magistrate Judge. [Id.] 

Subsequently, the Magistrate Judge issued several orders stating that Plaintiff has submitted a

completed application for a loan modification and that his application is currently being reviewed

by Defendants. [Doc. Nos. 34, 41, 43, 45, 48, 50.] The last order was issued on October 17, 2011. 

[Doc. No. 50.]

On August 3, 2011, the Court granted Defendants’ motion to dismiss the FAC and granted

Plaintiff leave to file a second amended complaint, which he filed on October 24, 2011. [Doc.

Nos. 46, 52.] Plaintiff’s SAC alleges four causes of action for: (1) violation of the Truth in

Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq.; (2) violation of the Home Owner and Equity

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Protection Act (“HOEPA”), 15 U.S.C. § 1639 and 12 C.F.R. §§ 226.32 et seq.; (3) violation of

California’s Unfair Competition Law (“UCL”), California Business and Professions Code §§

17200 et seq.; and (4) violation of California Civil Code § 2923.5. [Doc. No. 52, SAC.] By the

present motion, Defendants seek to dismiss Plaintiff’s third and fourth causes of action. [Doc. No.

53.]

DISCUSSION

I. Legal Standards for a Motion to Dismiss

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests

the legal sufficiency of the claims asserted in the complaint. FED. R. CIV. P. 12(b)(6); Navarro v.

Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pled in the

complaint as true, and must construe them and draw all reasonable inferences from them in favor

of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). 

To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations,

rather, it must plead “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). 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.” Ashcroft v. Iqbal, --- U.S. ---, 129 S. Ct. 1937, 1949 (2009)

(citing Twombly, 550 U.S. at 556).

However, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’

requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of

action will not do.” Twombly, 550 U.S. at 555 (citation omitted). A court need not accept “legal

conclusions” as true. Ashcroft v. Iqbal, 129 S. Ct. at 1949.

In addition, factual allegations asserted by pro se plaintiffs, “however inartfully pleaded,”

are held “to less stringent standards than formal pleadings drafted by lawyers.” Haines v. Kerner,

404 U.S. 519-20 (1972). Thus, where a plaintiff appears in propria persona in a civil rights case,

the Court must construe the pleadings liberally and afford plaintiff any benefit of the doubt. See

Karim-Panahi v. Los Angeles Police Dept., 839 F.2d 621, 623 (9th Cir. 1988).

Nevertheless, and in spite of the deference the court is bound to pay to any factual

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allegations made, it is not proper for the court to assume that “the [plaintiff] can prove facts which

[he or she] has not alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of

Carpenters, 459 U.S. 519, 526 (1983). Nor must the court “accept as true allegations that

contradict matters properly subject to judicial notice or by exhibit” or those which are “merely

conclusory,” require “unwarranted deductions” or “unreasonable inferences.” Sprewell v. Golden

State Warriors, 266 F.3d 979, 988 (9th Cir.) (citation omitted), amended on other grounds, 275

F.3d 1187 (9th Cir. 2001); see also Ileto v. Glock Inc., 349 F.3d 1191, 1200 (9th Cir. 2003) (court

need not accept as true unreasonable inferences or conclusions of law cast in the form of factual

allegations).

II. Analysis

A. Violation of California Civil Code § 2923.5

In the SAC, Plaintiff alleges that Defendants CRC and JP Morgan violated California Civil

Code § 2923.5 by failing to contact him by telephone prior to initiating the foreclosure

proceedings on his property. [SAC 69-74.] California Civil Code § 2923.5 provides in relevant

part:

(a)(1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of

default pursuant to Section 2924 until 30 days after initial contact is made as

required by paragraph (2) or 30 days after satisfying the due diligence requirements

as described in subdivision (g).

(2) A mortgagee, beneficiary, or authorized agent shall contact the borrower in

person or by telephone in order to assess the borrower’s financial situation and

explore options for the borrower to avoid foreclosure. During the initial contact,

the mortgagee, beneficiary, or authorized agent shall advise the borrower that he or

she has the right to request a subsequent meeting and, if requested, the mortgagee,

beneficiary, or authorized agent shall schedule the meeting to occur within 14 days.

The assessment of the borrower’s financial situation and discussion of options may

occur during the first contact, or at the subsequent meeting scheduled for that

purpose. In either case, the borrower shall be provided the toll-free telephone

number made available by the United States Department of Housing and Urban

Development (HUD) to find a HUD-certified housing counseling agency. Any

meeting may occur telephonically.

. . . 

(g) A notice of default may be filed pursuant to Section 2924 when a mortgagee,

beneficiary, or authorized agent has not contacted a borrower as required by

paragraph (2) of subdivision (a) provided that the failure to contact the borrower

occurred despite the due diligence of the mortgagee, beneficiary, or authorized

agent. For purposes of this section, “due diligence” shall require and mean all of

the following: [listing the required steps that must be performed by the mortgagee,

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beneficiary, or authorized agent].

As an initial matter, many of the arguments Defendants raise in support of dismissal of this

claim in their current motion to dismiss were previously raised in their prior motion to dismiss

Plaintiff’s original complaint. [Compare Doc. No. 53-1 at 5-6 with Doc. No. 11-1 at 18.] In

addition, the allegations in Plaintiff’s SAC in support of this claim are the same allegations that

were in the original complaint. [Compare SAC ¶¶ 69-74 with Compl. ¶¶ 131-36.] In ruling on

Defendant’s prior motion to dismiss, the Court rejected all of these arguments and declined to

dismiss Plaintiff’s claim for violation of California Civil Code § 2923.5. [Doc. No. 17 at 11-13.]

Therefore, all of these previously raised arguments that Defendants raise in support of dismissal of

this claim in their current motion are barred by the law of the case doctrine. See Manufactured

Home Cmtys., Inc. v. Cnty. of San Diego, 655 F.3d 1171, 1181 (9th Cir. 2011) (“The law of the

case doctrine precludes a court ‘from reconsidering an issue previously decided by the same court,

or a higher court in the identical case.’”).

The only new argument that Defendants appear to set forth in their motion is the argument

that Plaintiff cannot allege a violation of section 2923.5 because Plaintiff has submitted an

application for a loan modification that is currently being reviewed by Defendants. [Doc. No. 53-1

at 6.] California courts have explained that the remedy for a violation of section 2923.5 “is limited

to obtaining a postponement of an impending foreclosure to permit the lender to comply with

section 2923.5.” Mabry v. Superior Court, 185 Cal. App. 4th 208, 214 (2010). Therefore, if the

foreclosure sale is postponed, and a lender later complies with section 2923.5, then there is no

longer a violation of the statute. However, Defendants provide no analysis or argument explaining

how the review of Plaintiff’s loan modification by itself satisfies the requirements of section

2923.5. Section 2923.5 contains a very detailed list of steps that a lender must perform in order to

be in compliance with the statute. See id. at 222-23 (stating that “section 2923.5 requires a

specified course of action”). The mere review of a loan modification application by itself does not

satisfy these requirements. See CAL. CIV. CODE 2923.5(a)(2) (requiring lenders to–in addition to

assessing the borrower’s financial situation and exploring option to avoid foreclosure--initiate

contact with the borrower, inform the borrower that he has the right to request a subsequent

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meeting, and provide the borrower with the toll-free HUD telephone number). Defendants have

not submitted any evidence showing that they have performed all the steps required by section

2923.5 and are now in compliance with the statute, nor could they at the motion to dismiss stage

where the Court’s review is confined to the allegations in Plaintiff’s complaint. See Lee v. City of

Los Angeles, 250 F.3d 668, 688 (“As a general rule, ‘a district court may not consider any material

beyond the pleadings in ruling on a Rule 12(b)(6) motion.’”). Defendants’ arguments appear to be

more appropriately addressed on a motion for summary judgment. Accordingly, the Court

DENIES Defendants’ motion to dismiss Plaintiff’s claim for violation of California Civil Code §

2923.5.

B. Violation of the Unfair Competition Law (“UCL”) 

Plaintiff alleges that Defendants’ conduct violates the UCL. [SAC ¶¶ 57-68.] Section

17200 defines unfair competition as “any unlawful, unfair or fraudulent business act or practice”

and “unfair, deceptive, untrue or misleading advertising.” CAL. BUS. & PROF. CODE § 17200. 

Because the statute is written in the disjunctive, it prohibits three separate types of unfair

competition: (1) unlawful acts or practices, (2) unfair acts or practices, and (3) fraudulent acts or

practices. Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999). In

order to assert a claim under the UCL, a person must have “suffered injury in fact and has lost

money or property as a result of such unfair competition.” CAL. BUS. & PROF. CODE §§ 17204 &

17535. 

Defendants argue that Plaintiff lacks standing to assert a UCL claim because he has not

suffered an “injury in fact.” This same argument was also previously made by Defendants in their

prior motion to dismiss the original complaint and was rejected by the Court. [Doc. No. 17 at 9-

10.] Accordingly, Defendants’ argument that Plaintiff cannot plead a violation of the UCL

because he has not suffered an “injury in fact” is foreclosed by the law of the case doctrine. See

Manufactured Home Cmtys., 655 F.3d at 1181.

Plaintiff alleges that Defendants JP Morgan and Chase violated the unlawful prong of the

UCL by violating California Civil Code § 2923.5. [SAC ¶ 61.] Under the unlawful prong, “the

UCL borrows violations of other laws . . . and makes those unlawful practices actionable under the

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UCL.” Lazar v. Hertz Corp., 69 Cal. App. 4th 1494, 1505, 82 Cal. Rptr. 2d 368 (1999). In the

previous section, the Court concluded that Plaintiff has sufficiently plead a cause of action for

violation of section 2923.5. See supra section II.A. Accordingly, Plaintiff has sufficiently pled a

cause of action under the unlawful prong of the UCL against Defendants JP Morgan and Chase

based on their alleged violation of California Civil Code § 2923.5.

Plaintiff also alleges that Defendants have engaged in fraudulent business practices. [SAC

61, 65-66.] Specifically, Plaintiff alleges Defendants JP Morgan and Chase have engaged in

various fraudulent activities such as “[e]xecuting and recording false and misleading documents”

and “[e]ngaging in the practice known as ‘Robo-signing.’” [Id. ¶ 61.] Plaintiff also alleges that

Defendants Brignac and Thorn “have engaged in giving false and improper declarations in support

of the other Defendants unlawful activities.” [Id. ¶ 65.] Plaintiff also alleges that all the

Defendants “have engaged in fraud with the forged signature on the Notice of Trustee’s Sale.” [Id.

¶ 66.]

Federal Rule of Civil Procedure 9(b)’s heightened pleading standards apply to claims for

violation of the UCL that are grounded in fraud. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125

(9th Cir. 2009). Under Federal Rule of Civil Procedure 9, a Plaintiff must plead fraud with

particularity. “Averments of fraud must be accompanied by ‘the who, what, when, where, and

how’ of the misconduct charged.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir.

2003) (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). “‘[A] plaintiff must set forth

more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what

is false or misleading about a statement, and why it is false.’” Id. at 1106 (quoting In re GlenFed,

Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994)). “While statements of the time, place and

nature of the alleged fraudulent activities are sufficient, mere conclusory allegations of fraud” are

not. Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989).

Plaintiff’s conclusory allegations that the Defendants have engaged in certain fraudulent

conduct fall well short of Rule 9’s heightened pleading standards. In none of the allegations does

Plaintiff provide the necessary who, what, when, where, and how of the allegedly fraudulent

conduct. For example, Plaintiff alleges that Defendants JP Morgan and Chase have executed and

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recorded “false and misleading documents.” [SAC ¶ 61.] However, Plaintiff does not explain in

his allegations what specific documents are false and misleading, how the document are false and

misleading, or when these allegedly false and misleading documents were created and recorded. 

In addition, the Court notes that the allegations against Defendants Brignac and Thorn are the

exact same allegations that were in Plaintiff’s FAC that the Court previously dismissed for failure

plead with sufficient particularity. [Doc. No. 46 at 8.] Accordingly, the Court DISMISSES

Plaintiff’s claims brought under the fraudulent prong of the UCL.

Finally, Plaintiff alleges that Defendant CRC violated the UCL by failing “to conduct a

diligent investigation as to the validity of said foreclosure” and by engaging in unlawful activity

related to the non-judicial foreclosure process. [SAC ¶ 64.] The Court has previously concluded

that these allegations are too vague to state a plausible claim against CRC under any prong of the

UCL. [Doc. No. 46 at 9.] In it prior order, the Court informed Plaintiff that these allegations were

too vague and stated that it would allow Plaintiff to amend his complaint in order to bolster these

allegations. [Id.] However, rather than amend these allegations, Plaintiff has chose to simply replead them. Accordingly, the Court DISMISSES Plaintiff’s UCL claims against Defendant CRC.

In sum, Plaintiff has sufficiently pled a cause of action against Defendants JP Morgan and

Chase for violation of the unlawful prong of the UCL. However, the remaining allegations in

Plaintiff’s SAC are insufficient to support any other cause of action under the UCL. Because this

is now Plaintiff’s third chance to plead a cause of action for violation of the UCL, the Court

DISMISSES Plaintiff’s remaining UCL claims WITH PREJUDICE.

CONCLUSION

For the above reasons, the Court GRANT IN PART and DENIES IN PART Defendants’

motion to dismiss Plaintiff’s second amended complaint. Specifically, the Court:

1. DENIES Defendants’ motion to dismiss Plaintiff’s cause of action for violation of

California Civil Code § 2923.5; and 

2. GRANTS IN PART and DENIES IN PART Defendants motion to dismiss

Plaintiff’s cause of action for violation of the UCL. Plaintiff may proceed on his

claim against Defendants JP Morgan and Chase for violation of the unlawful prong

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of the UCL based on the violation of California Civil Code § 2923.5. The Court

DISMISSES WITH PREJUDICE Plaintiff remaining UCL claims. Because

Plaintiff’s remaining UCL claims are his only claims asserted against Defendants

Brignac and Thorn, the Court DISMISSES WITH PREJUDICE Defendants

Brignac and Thorn.

IT IS SO ORDERED.

DATED: December 22, 2011 ________________________________

IRMA E. GONZALEZ, Chief Judge

United States District Court

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