Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-05042/USCOURTS-cand-3_15-cv-05042-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1345 Foreclosure

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CARL RENOWITZKY, et al.,

Plaintiffs,

v.

WELLS FARGO BANK N.A, et al.,

Defendants.

Case No. 15-cv-05042-JCS 

ORDER GRANTING MOTIONS TO 

DISMISS

Re: Dkt. Nos. 28, 31

I. INTRODUCTION

Plaintiffs Carl Renowitzky and Pauline Gallegos bring this action alleging that Defendants 

Wells Fargo Bank, N.A. (―Wells Fargo‖) and NDeX West, LLC (―NDeX‖) wrongfully foreclosed 

on property that Plaintiffs resided at or owned. Defendants each move to dismiss Plaintiffs‘ First 

Amended Complaint. The Court held a hearing on June 3, 2016. For the reasons discussed below, 

Defendants‘ Motions are GRANTED, and the First Amended Complaint is DISMISSED with 

leave to amend. Plaintiffs may file a second amended complaint addressing the deficiencies 

discussed in this Order no later than July 13, 2016.

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II. BACKGROUND

A. Allegations of the First Amended Complaint

Plaintiffs filed an initial Complaint pro se, but later obtained counsel and filed their 

operative First Amended Complaint (―FAC,‖ dkt. 7). The First Amended Complaint alleges that 

Plaintiffs owned and/or resided at property located at 26473 Palomares Road, Castro Valley, 

California (the ―Property‖), which was subject to a first-lien mortgage serviced by Wells Fargo. 

FAC ¶¶ 10, 11. On April 17, 2015, Wells Fargo‘s attorney Dean Reeves informed Plaintiffs that 

 

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The parties have consented to the jurisdiction of the undersigned magistrate judge for all 

purposes pursuant to 28 U.S.C. § 636(c).

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Plaintiffs‘ application for a modification of their mortgage was under review. Id. ¶ 12. Three 

days later, however, NDeX sold the Property at a foreclosure sale. Id. ¶ 15. NDeX ―discouraged 

or prevented competitive bidding on the Property, causing the Property to be sold for less than its 

market value and stripping Plaintiffs of their equity in the Property.‖ Id. ¶ 17. Wells Fargo 

acquired the Property at the foreclosure sale as the foreclosing beneficiary. Id. ¶ 18.

Neither NDeX nor Wells Fargo gave Plaintiffs notice that the Property would be sold on 

the date that it was. Id. ¶¶ 14, 15. If Plaintiffs had received such notice, they allege that they 

would have raised the funds necessary to reinstate their mortgage and avoid the foreclosure sale. 

Id. ¶ 16.

The First Amended Complaint includes four claims: (1) deceit; (2) a claim to set aside the 

foreclosure sale for violations of California Civil Code sections 2924, 2924f, 2924g, and 2924h; 

(3) wrongful foreclosure; and (4) unlawful and unfair business practices under California‘s Unfair 

Competition Law (―UCL‖). See id. ¶¶ 19−40. Plaintiffs seek to set aside the trustee‘s sale of their 

property, recover the property as restitution, and recover compensatory and exemplary damages 

(including for emotional distress), attorneys‘ fees, and costs. Id. at 6−7 (prayer for relief).

B. Facts Subject to Judicial Notice

Both Defendants request judicial notice of a number of documents on the basis that they 

are public records not reasonably subject to dispute, among other theories. See generally NDeX 

RJN (dkt. 29); Wells Fargo RJN (dkt. 32). Such documents purport to show, for example, that 

Renowitzky and his then-wife Michelle Renowitzky transferred to Property to Gallegos in 2007, 

NDeX RJN Ex. 2, that NDeX provided initial notice of a foreclosure sale to take place nearly one 

year before the sale actually occurred, id. Ex. 5, that Gallegos filed two bankruptcy actions that 

were subsequently dismissed, id. Exs. 7−11, and that Plaintiffs filed a previous action against 

Defendants in state court that was eventually dismissed with prejudice, id. Exs. 12−15. See also 

Wells Fargo RJN Exs. J, L−P.

Plaintiffs object to the Court taking judicial notice of the truth of public records, rather 

than their mere existence, and argue that Gallegos‘s bankruptcy records are irrelevant. Opp‘n to 

NDeX (dkt. 37) at 3−4, 9; Opp‘n to Wells Fargo (dkt. 26) at 3. NDeX responds that the Court 

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may take notice of a document‘s ―legally operative language‖ and ―adjudicative facts‖ under both 

California and federal law, and that Gallegos‘s purported bad faith in previously obtaining 

bankruptcy stays is ―certainly relevant‖ to her equitable claims under state law. NDeX Reply (dkt. 

38) at 2−4. As is relevant to the present Motions, the Court takes judicial notice that Plaintiffs 

filed an action related to the Property against Defendants in state court on July 21, 2014 (NDeX 

RJN Ex. 12), that Plaintiffs filed an amended complaint in that action on December 10, 2014, (id.

Ex. 13; Wells Fargo RJN Ex. L), and that a judgment of dismissal with prejudice was entered on 

May 27, 2015 (NDeX RJN Ex. 15; Wells Fargo RJN Ex. P). See Harris v. County of Orange, 682 

F.3d 1126, 1131−32 (9th Cir. 2012).

C. NDeX’s Motion to Dismiss

NDeX moves to dismiss Plaintiffs‘ claims against it on four grounds: (1) as a successor 

mortgage trustee, its duties and potential liabilities are strictly limited, and do not give rise to 

Plaintiffs‘ claims, NDeX Mot. (dkt. 28) at 11–12; (2) Plaintiffs‘ claims are barred by res judicata

as a result of the state court action, id. at 12–14; (3) Plaintiffs‘ claims for deceit and unlawful or 

unfair business practices do not allege fraudulent or other wrongful conduct by NDeX, and do not 

satisfy the heightened pleading standard of Rule 9(b), id. at 15–17; and (4) Plaintiffs‘ claims for 

wrongful foreclosure and to set aside the trustee sale must be dismissed because Plaintiffs have not 

adequately alleged either defects in the sale or prejudice, and because Plaintiffs have not tendered 

the amount due, id. at 17–19. NDeX requests judicial notice of various documents related to the 

mortgage and the foreclosure sale, as well as records from Gallegos‘s bankruptcy proceedings and 

the state court action. See generally NDeX RJN.

Plaintiffs respond that res judicata does not apply here because their claims in this case 

arose after they filed the state court action. Opp‘n to NDeX (dkt. 37) at 4. They argue that NDeX 

had a statutory duty—although the Opposition fails to specify any statute—to notify Plaintiffs of 

the foreclosure sale date, and that its failure to do so gives rise to a claim for deceit or fraud. Id. at 

4−5. Plaintiffs contend that they have adequately alleged prejudice because they claim that they 

would have raised funds to reinstate their mortgage if they had known when the sale was 

occurring. Id. at 6 (citing FAC ¶¶ 16, 17). They also argue that they were excused from any 

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requirement to tender the amount due because NDeX‘s failure to give notice of the sale date 

rendered the sale void, and that, regardless, their claim for wrongful foreclosure (as opposed to the 

separate claim to set aside the foreclosure) does not require any tender. Id. at 5−7 (citing, e.g., 

Ram v. OneWest Bank, FSB, 234 Cal. App. 4th 1, 11 (2015)). As for their UCL claim, Plaintiffs 

argue that they have adequately alleged: (1) that NDeX ―violated a number of [its] statutory 

obligations‖; (2) that Plaintiffs ―were in fact deceived‖ by NDeX‘s failure to notify them of the 

foreclosure sale; and (3) that NDeX‘s conduct violated the ―unfair‖ prong of the statute regardless 

of which test the Court applies. Id. at 7−8. Plaintiffs also argue that NDeX is a necessary party, 

and that if the Court grants NDeX‘s Motion, it should also grant Plaintiffs leave to amend. Id. at 

8.

NDeX concedes in its Reply that the state court judgment has no preclusive effect because 

the facts alleged here arose after Plaintiffs filed that action. NDeX Reply (dkt. 38) at 9. NDeX 

argues, however, that it did, in fact, provide notice of the initial date of the foreclosure sale, which 

was set for April 28, 2014. Id. at 4 (citing NDeX RJN Ex. 5 (Notice of Trustee‘s Sale)). 

According to NDeX, Plaintiffs‘ claim is based on alleged lack of notice that the sale had been 

rescheduled to April 20, 2015—nearly a year after the initial date—and although California Civil 

Code section 2924(a)(5) provides that such notice is required under some circumstances, that 

statute makes clear that failure to provide notice is no basis to invalidate a sale. Id. at 4−5. NDeX 

contends that this distinction prevents Plaintiffs from invoking the void sale exception to the 

requirement that they tender the amount due. Id. at 7−8. NDeX also argues that Plaintiffs have 

not alleged that NDeX had exclusive knowledge of the postponed sale date, that Plaintiffs could 

not have learned of the date through reasonable diligence, or that NDeX benefited from failing to 

disclose the date. Id. at 6−7. Finally, NDeX contends that Plaintiffs inappropriately conflate 

NDeX‘s and Wells Fargo‘s conduct, and that any allegations of NDeX‘s misconduct in conducting 

the foreclosure sale are too conclusory to sustain a claim. Id. at 8−9.

D. Wells Fargo’s Motion to Dismiss

Wells Fargo contends as a starting point that Renowitzky cannot bring any of the claims in 

this action because Gallegos, not Renowitzky, was the sole borrower on the deed of trust for the 

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Property, and the only allegation as to Renowitzky‘s interest is that both Plaintiffs were ―owners 

and/or residents‖ of the Property. Wells Fargo Mot. at 3. Like NDeX, Wells Fargo also moves to 

dismiss based on res judicata arising from the state court action. Id. at 4−6. Wells Fargo goes on 

to argue that both the litigation privilege and the common-interest privilege bar Plaintiffs‘ claims 

under California law. Id. at 7−10. 

Turning to Plaintiffs‘ specific claims, Wells Fargo contends that Plaintiffs have not 

satisfied Rule 9(b)‘s heightened pleading standard with respect to their claim for deceit, and ―do 

not even allege that the representation about their application for loan modification‖—i.e., that it 

was under review—―was not true.‖ Id. at 10−11. According to Wells Fargo, the allegations of the 

First Amended Complaint do not give rise to any duty to disclose the sale date, and Plaintiffs have 

not adequately alleged their justifiable reliance on Wells Fargo‘s purportedly misleading 

representation or omission. Id. at 11−13. Wells Fargo argues that Plaintiffs‘ claim to set aside the 

trustee‘s sale must be dismissed for failure to tender the amount due and failure to allege 

prejudice, and because the language of the trustee‘s deed serves as prima facie evidence of 

compliance with California law (see Wells Fargo RJN Ex. K) and the statute at issue does not 

provide for invalidation of an otherwise proper sale. Id. at 13−15. Wells Fargo also argues that 

Plaintiffs have not alleged that the postponement exceeded ten days, as would be required to 

trigger a notification requirement under Civil Code section 2924(a)(5), and that Plaintiffs‘ 

allegations regarding the manner in which the sale was conducted are conclusory. Id. at 14. Wells 

Fargo contends that the claim for wrongful foreclosure lacks specificity and again fails to allege 

that Plaintiffs tendered the amount due. Id. at 15−16. As for Plaintiffs‘ UCL claim, Wells Fargo 

argues that Plaintiffs have not adequately alleged a predicate fraudulent or unlawful act, and that 

Plaintiffs lack standing because any harm that Plaintiffs suffered was caused by their own failure 

to pay their mortgage, not by Wells Fargo‘s conduct. Id. at 18−19.

Plaintiffs contend that Renowitzky is a proper plaintiff because they allege that both he and 

Gallegos ―were owners and/or residents of the property and that they lost equity and possession of 

the property as a result of the foreclosure.‖ Opp‘n to Wells Fargo (dkt. 36) at 3. They also argue 

that there is no ―admitted evidence‖ to show that Gallegos was the only borrower on the mortgage, 

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and even if that were so, Renowitzky could conceivably still bring a claim as a successor to the 

borrower. Id. at 4. 

As in their Opposition to NDeX‘s Motion, Plaintiffs argue that res judicata does not apply 

here because the operative facts arose after they filed their state court action. Id. They contend 

that the litigation privilege does not apply because it is not apparent from the allegations of the 

Complaint that Wells Fargo‘s attorney Reeves‘s statement regarding their modification application 

being under review was made in the context of litigation, and also argue that, regardless, the 

litigation privilege would not encompass a claim based on Wells Fargo‘s statutory duty to notify 

them of the sale date. Id. at 5. Plaintiffs contend that the common interest privilege does not 

apply because their claims are not based on Wells Fargo‘s ― ̳mailing, publication, and delivery of 

notices in nonjudicial foreclosure,‘‖ but instead on its failure to provide such notice. Id. (quoting 

Kachlon v. Markowitz, 168 Cal. App. 4th 316, 313 (2008)).

Plaintiffs argue that they adequately allege that Reeves‘s statement on behalf of Wells 

Fargo was misleading for failure to disclose that Wells Fargo and NDeX intended to sell the 

property three days later, and gave rise to a duty to disclose that fact, in addition to Wells Fargo‘s 

statutory duty under section 2924(a). Id. at 6−7. They also argue that their allegation of 

reliance—that they would have raised funds to pay off the mortgage if they had known of the 

impending sale—is sufficient, and that their claim for deceit should therefore be allowed to 

proceed. Id. at 7.

Plaintiffs contend that they should be excused from the requirement to tender their 

indebtedness as a prerequisite to setting aside the trustee‘s sale because they did not receive notice 

of the sale, and also contend that any presumption of reliance based on the trustee‘s deed is 

rebuttable where, as here, the purchaser is an interested party. Id. at 7−8. For their wrongful 

foreclosure claim, Plaintiffs argue that there is no requirement to tender the amount owed and that 

they have adequately stated a claim for damages. Id. at 8−9. Plaintiffs also argue that the 

purported fraudulent acts and statutory violations underlying their first three claims also give rise 

to liability under the ―fraudulent,‖ ―unlawful,‖ and ―unfair‖ prongs of the UCL. Id. at 9−10. 

Plaintiffs‘ Opposition fails to address the Rule 9(b) pleading standard for claims grounded in 

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fraud.

In its Reply, Wells Fargo maintains that Renowitzky is not a proper plaintiff because 

Plaintiffs have not alleged that he had any ownership interest in the property. Wells Fargo Reply 

(dkt. 39) at 1−2. Wells Fargo argues that Reeves‘s statement can be inferred to fall within the 

litigation privilege because the First Amended Complaint identifies him as Wells Fargo‘s attorney 

and alleges that he made the statement on April 17, 2015, at which time the state court action was 

pending (as shown by documents subject to judicial notice). Id. at 2−3. Wells Fargo also argues 

that Plaintiffs have not adequately alleged various elements of their fraud claim, including 

Reeves‘s authority to act on Wells Fargo‘s behalf and Plaintiffs‘ reliance and ability to reinstate 

the mortgage, with the particularity demanded by Rule 9(b). Id. at 2−4. Wells Fargo contends 

that Plaintiffs have not provided authority showing that they should be excused from tendering the 

amount owed, and that failure to do so bars any claim to set aside the sale. Id. at 4−5. According 

to Wells Fargo, even if Plaintiffs could avoid the requirement of tender, neither Reeves‘s alleged 

statement nor NDeX‘s failure to provide notice of the postponed sale date constitutes the sort of 

illegal or fraudulent conduct sufficient to state a claim for wrongful foreclosure against Wells 

Fargo. Id. at 5. Wells Fargo‘s Reply does not address its original arguments regarding res 

judicata and the common interest privilege.

III. ANALYSIS

A. Legal Standard

A complaint may be dismissed for failure to state a claim on which relief can be granted 

under Rule 12(b)(6) of the Federal Rules of Civil Procedure. ―The purpose of a motion to dismiss 

under Rule 12(b)(6) is to test the legal sufficiency of the complaint.‖ N. Star Int’l v. Ariz. Corp.

Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). Generally, a plaintiff‘s burden at the pleading stage 

is relatively light. Rule 8(a) of the Federal Rules of Civil Procedure states that ―[a] pleading 

which sets forth a claim for relief . . . shall contain . . . a short and plain statement of the claim 

showing that the pleader is entitled to relief.‖ Fed. R. Civ. P. 8(a).

In ruling on a motion to dismiss under Rule 12(b)(6), the court analyzes the complaint and 

takes ―all allegations of material fact as true and construe[s] them in the light most favorable to the 

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non-moving party.‖ Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). 

Dismissal may be based on a lack of a cognizable legal theory or on the absence of facts that 

would support a valid theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 

1990). A complaint must ―contain either direct or inferential allegations respecting all the material 

elements necessary to sustain recovery under some viable legal theory.‖ Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 562 (2007) (citing Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 

1106 (7th Cir. 1984)). ―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). ―Nor does a complaint suffice if it tenders  ̳naked 

assertion[s]‘ devoid of  ̳further factual enhancement.‘‖ Id. (quoting Twombly, 550 U.S. at 557). 

Rather, the claim must be ― ̳plausible on its face,‘‖ meaning that the plaintiff must plead sufficient 

factual allegations to ―allow[] the court to draw the reasonable inference that the defendant is 

liable for the misconduct alleged.‖ Id. (quoting Twombly, 550 U.S. at 570).2

Rule 9(b) of the Federal Rules of Civil Procedure sets a heightened pleading standard for 

claims based on fraud. ―In alleging fraud or mistake, a party must state with particularity the 

circumstances constituting fraud or mistake.‖ Fed. R. Civ. P. 9(b). The Ninth Circuit has held 

that in order to meet this standard, a ―complaint must specify such facts as the times, dates, places, 

benefits received, and other details of the alleged fraudulent activity.‖ Neubronner v. Milken, 6 

F.3d 666, 672 (9th Cir. 1993); see also McMaster v. United States, 731 F.3d 881, 897 (9th Cir. 

2013). ―[C]laims of fraud or mistake . . . must, in addition to pleading with particularity, also 

plead plausible allegations.‖ United States ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 

F.3d 1047, 1055 (9th Cir. 2011). The heightened standard does not apply to ―[m]alice, intent, 

 

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Plaintiffs‘ Oppositions suggest that the plausibility standard set forth in Iqbal and Twombly is 

limited to ―complex commercial cases and . . . one case against high-level executive branch 

officials related to September 11th.‖ Opp‘n to NDeX at 2−3; Opp‘n to Wells Fargo at 2. 

Although the Ninth Circuit has recognized tension between those cases and the notice pleading 

standard previously applied, Plaintiffs‘ argument is contrary to authority. See Starr v. Baca, 652 

F.3d 1202, 1216 (9th Cir. 2011) (acknowledging tension but holding in a § 1983 case that ―the 

factual allegations that are taken as true must plausibly suggest an entitlement to relief); see also, 

e.g., Johnson v. Fed. Home Loan Mortg. Corp., 793 F.3d 1005, 1007 (9th Cir. 2015); Landers v. 

Quality Commc’ns, Inc., 771 F.3d 638, 640−41 (9th Cir. 2014).

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knowledge, and other conditions of a person‘s mind.‖ Fed. R. Civ. P. 9(b).

―[T]he assertion of an affirmative defense may be considered properly on a motion to 

dismiss where the  ̳allegations in the complaint suffice to establish‘ the defense.‖ Sams v. Yahoo! 

Inc., 713 F.3d 1175, 1179 (9th Cir. 2013) (quoting Jones v. Bock, 549 U.S. 199, 215 (2007)).

B. Abandoned and Conceded Claims

NDeX explicitly concedes that res judicata does not apply to this case because the alleged 

material facts arose after Plaintiffs filed their state court action. NDeX Reply at 9. Wells Fargo‘s 

Reply declines to address the arguments raised in its Motion regarding res judicata and the 

common interest privilege. See generally Wells Fargo Reply. Wells Fargo also did not raise those 

issues at the hearing. The Court deems these arguments abandoned and does not address them 

further. 

C. Renowitzky’s Standing

Wells Fargo is correct that the First Amended Complaint does not allege that Renowitzky 

has any ownership interest in the Property, because Plaintiffs plead only that he is either an owner 

or a resident. See FAC ¶ 10. The parties dispute whether that precludes Renowitzky from 

bringing this action.3

Plaintiffs cite Miles v. Deutsche Bank National Trust Company, 236 Cal. App. 4th 394 

(2015), for the proposition that a non-owner resident can bring a wrongful foreclosure claim based 

on loss of possession of property. Opp‘n to Wells Fargo at 3. In that case, a California appellate 

court reversed a trial court‘s grant of summary judgment on the basis that the foreclosed-upon 

plaintiff owed more than the home was worth—in other words, the loan was underwater—and 

therefore lacked any equity that could give rise to damages. Miles, 236 Cal. App. 4th at 407, 410. 

The appellate court held that the tort of wrongful foreclosure could give rise to other harms 

besides a loss of equity, such as moving expenses, lost rental income, and damage to credit, all of 

which could be cognizable as damages. Id. at 409−10. But Miles concerned an owner who simply 

owed more than the lender recovered in the sale—the court did not discuss the rights of non-owner 

 

3 Although the First Amended Complaint is equally vague as to Gallegos‘s ownership status, 

neither party disputes that Gallegos is an appropriate plaintiff.

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residents. See Miles, 236 Cal. App. 4th at 409−10. When the Court raised this issue at the 

hearing, Plaintiffs failed to provide any authority for the proposition that a mere resident has 

standing to challenge a foreclosure.

On the other hand, Wells Fargo cites no authority holding that a person residing at the 

property with permission of the owner may not bring a claim for wrongful foreclosure based on 

damages associated with loss of possession. The only case that Wells Fargo cites for its argument 

on this point concerned complex corporate relationships involved in the rental of U-Haul trucks 

and trailers, and does not clearly speak to the issue at hand. See generally U-Haul Int’l v. Jartran, 

Inc., 793 F.2d 1034 (9th Cir. 1986). Because Plaintiffs‘ claims must be dismissed for other 

reasons discussed below, and because Renowitzky‘s ability to bring these claims has no bearing 

on whether leave to amend should be granted at least to Gallegos, the Court declines to resolve on 

the present Motions the question of Renowitzky‘s interest. The parties should be prepared to 

address this issue in more detail if Plaintiffs file a second amended complaint, and Plaintiffs 

should, at the very least, allege whether Renowitzky is in fact an owner or merely an occupant.4

D. Plaintiffs’ Allegations of Fraud and Omission Do Not Meet the Rule 9(b) 

Pleading Standard

Much of Plaintiffs‘ First Amended Complaint is based on the premise that Defendants 

misled them as to the postponed sale date, and but for such misrepresentation or failure to provide 

notice, Plaintiffs would have raised funds to reinstate the mortgage. Because this theory is 

grounded in fraud, all of the claims arising from it are subject to the heightened pleading standard 

of Rule 9(b). For the reasons discussed below, the First Amended Complaint fails to plead with 

the requisite particularity that Defendants had a statutory duty to notify Plaintiffs of the postponed 

date, that Wells Fargo‘s attorney Reeves misled Plaintiffs as to the sale date on behalf of Wells 

Fargo, or that relied to their detriment on any deception as to that date. 

 

4 At the hearing, Plaintiffs‘ counsel acknowledged that Renowitzky has no recorded interest in the 

property. Plaintiffs note that a successor to a borrower may bring a claim for wrongful 

foreclosure, but have not alleged that Renowitzky is in fact such a successor. See Opp‘n to Wells 

Fargo at 4. If they wish to pursue such a theory, they must include allegations to support it in a 

second amended complaint.

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1. Statutory Notice Requirement

The only statute that Plaintiffs cite that would give rise to an affirmative duty for 

Defendants to provide notice of the postponed sale date is section 2924(a)(5). That provision 

states in relevant part that ―whenever a sale is postponed for a period of at least 10 business days 

pursuant to Section 2924g, a mortgagee, beneficiary,5or authorized agent shall provide written 

notice to a borrower regarding the new sale date and time.‖ Cal. Civ. Code § 2924(a)(5). As 

Wells Fargo correctly observes, see Wells Fargo Mot. at 14, the First Amended Complaint does 

not allege the date from which the sale was postponed. Given that the sale was originally 

scheduled for nearly a year before it actually occurred, see NDeX RJN Ex. 5, it might be 

reasonable to presume that the postponement was for more than ten days. On the other hand, even 

taking Plaintiffs‘ allegations as true, it is also possible that the final postponement—for which 

Defendants allegedly failed to provide notice—was merely the last of a series of delays, and was 

for shorter than ten days. If that is true, Defendants might have properly notified Plaintiffs of any 

earlier delays.

The Court need not decide whether it would be reasonable to infer that section 2924(a)(5) 

applies here under the lenient pleading standard of Rule 8(a). Because Plaintiffs‘ claims of lack of 

notice sound in fraud, Rule 9(b) applies requires Plaintiffs to allege with particularity Defendants‘ 

duty of disclosure. To the extent that Plaintiffs claims rest on section 2924(a)(5), they are 

DISMISSED with leave to amend if Plaintiffs can allege that the postponement was for at least ten 

business days.

Defendants are correct that section 2924(a)(5) also explicitly states that failure to provide 

notice of a postponement ―shall not invalidate any sale that would otherwise be valid under 

Section 2924f.‖ Cal. Civ. Code § 2924(a)(5). Plaintiffs therefore cannot base a claim to set aside 

the trustee‘s sale on a violation of section 2924(a)(5). Moreover, to the extent that Plaintiffs base 

their request to set aside the sale on other legal theories, but argue that failure to provide notice 

 

5 Wells Fargo‘s briefs could be construed as suggesting that this duty applies only to NDeX. See, 

e.g., Reply at 5 (distancing Wells Fargo from ―the alleged failure by the trustee to provide 

notice‖). There appears to be no dispute that Wells Fargo is the beneficiary of the deed of trust in 

this case; accordingly, the plain language of the statute imposes a duty on Wells Fargo. 

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should excuse the normal requirement that Plaintiffs tender the amount owed, the Court agrees 

with Defendants that failure to provide notice of an extension under section 2924(a)(5) does not 

excuse the tender requirement. See, e.g., Dimock v. Emerald Props. LLC, 81 Cal. App. 4th 868, 

877−78 (2000) (discussing the standard requirement that ―in the context of overcoming a voidable 

sale, the debtor must tender any amounts due under the deed of trust‖). If Plaintiffs wish to pursue 

such relief, they must either tender the amount due or present some other exception to that 

requirement. Defendants have not, however, presented any authority that would prevent Plaintiffs 

from pursuing other relief, such as damages, for an alleged violation of section 2924(a)(5) if they 

are able to allege such a violation with the requisite particularity in an amended complaint.

2. Reeves’s Alleged Misleading Statement and the Litigation Privilege

The other basis for Plaintiffs‘ claims regarding their lack of knowledge of the sale is 

Reeves‘s alleged representation that Plaintiffs‘ application for modification of the loan was under 

consideration. That allegation reads, in full, as follows:

On or about April 17, 2015, Wells Fargo told Plaintiffs that their 

application for a modification of the Mortgage was still under 

review. Wells Fargo‘s attorney Dean Reeves, acting within the 

course and scope of his authority for Wells Fargo, told Plaintiffs that 

the modification of the mortgage was still under review.

FAC ¶ 12. Plaintiffs do not allege that the statement was actually false, but rather claim that it was 

misleading for failure to disclose that Wells Fargo and NDeX intended to sell the Property three 

days later, and gave rise to a duty to disclose that fact. See id. ¶¶ 13−16; Opp‘n to Wells Fargo at 

6−7.6 Whether Reeves‘s representation is actionable, however, depends in part on whether it falls 

within the scope of California‘s litigation privilege.

Section 47(b) of the California Civil Code creates a privilege barring tort liability for 

communications made in connection with litigation. ―The usual formulation is that the privilege 

applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or 

other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that [has] 

 

6 At the hearing, Plaintiffs‘ counsel conceded that there is no basis to attribute Reeves‘s statement 

to NDeX, and that any claim arising from the statement would therefore apply only to Wells 

Fargo.

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some connection or logical relation to the action.‖ Action Apartment Ass’n, Inc. v. City of Santa 

Monica, 41 Cal.4th 1232, 1241 (2007) (quoting Silberg v. Anderson, 50 Cal. 3d 205, 212 (1990)). 

The privilege ―has been given broad application,‖ such that it is ―applicable to any 

communication, whether or not it amounts to a publication . . . and all torts except malicious 

prosecution.‖ Silberg, 50 Cal. 3d at 211−12. ―[I]t applies to any publication required or permitted 

by law in the course of a judicial proceeding to achieve the objects of the litigation, even though 

the publication is made outside the courtroom and no function of the court or its officers is 

involved.‖ Id. at 212.

Under Rule 9(b), a ―complaint must specify such facts as the times, dates, places, benefits 

received, and other details of the alleged fraudulent activity.‖ Neubronner v. Milken, 6 F.3d 666, 

672 (9th Cir. 1993). In other words, Plaintiffs must plead ―the who, what, when, where, and how 

of the misconduct charged.‖ Salameh v. Tarsadia Hotel, 726 F.3d 1124, 1133 (9th Cir. 2013) 

(citation omitted). The allegation at issue here covers the ―who,‖ ―what,‖ and ―when,‖ of the 

allegedly misleading statement, but comes up short on the ―how‖ for failure to discuss the 

circumstances in which Reeves allegedly made his statement. 

Plaintiffs specifically allege that Reeves was acting as Wells Fargo‘s attorney at the time, 

see FAC ¶ 12, and acknowledge that the statement occurred after Plaintiffs had filed their state 

court action, see Opp‘n to Wells Fargo at 4 (―The operative complaint in the prior action was filed 

much earlier, on December 10, 2014.‖ (citing Wells Fargo RJN Ex. L)). The Court takes judicial 

notice that the state court action was pending at the time of Reeves‘s alleged statement. See

NDeX RJN Exs. 12−15; Wells Fargo RJN Exs. L−O. At the hearing, the parties stipulated that 

Reeves was Wells Fargo‘s counsel of record in that litigation. There is therefore reason to believe 

from the face of the First Amended Complaint and materials subject to judicial notice that 

Reeves‘s statement might be protected by the litigation privilege. Taking into account that there 

would be no purpose in proceeding to discovery on this issue if, even under Plaintiffs‘ theory of 

the facts, the statement was protected, the Court holds that under these circumstances Rule 9(b) 

requires Plaintiffs to plead facts sufficient to determine whether Reeves made his statement in the 

context of the state court litigation such that it would fall within the scope of the litigation 

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privilege. To the extent that Plaintiffs‘ claims are based on Reeves‘s alleged statement, they are 

therefore DISMISSED for failure to satisfy the Rule 9(b) pleading standard, with leave to amend.

3. Reliance and Causation

Although Plaintiffs‘ failure to plead a fraudulent statement or omission with sufficient 

particularity is enough reason to dismiss their fraud-based claims, the Court also addresses the 

issues of reliance and causation. As with all other elements of a claim based on fraud, a complaint 

must plead reliance and causation with particularity. Fed. R. Civ. P. 9(b); see, e.g., In re Van 

Wagoner Funds, Inc. Secs. Litig., 382 F. Supp. 2d 1173, 1187−88 (N.D. Cal. 2004). For claims 

based on wrongful foreclosure, a plaintiff must allege that he or she could have stopped the 

foreclosure or otherwise avoided harm but for the alleged wrongful conduct. Here, Plaintiffs 

allege only that ―[h]ad they received notice of the sale, they would have taken action to avoid the 

foreclosure sale, including, but not limited to, raising funds to reinstate the Mortgage.‖ FAC ¶ 16. 

Given that Plaintiffs were apparently unable to meet their mortgage payments for an extended 

period leading up to the foreclosure, the conclusory allegation that a few days‘ notice would have 

allowed Plaintiffs to raise sufficient funds to repay the amount owed does not meet the requisite 

standards of plausibility and particularity. See Cafasso, 637 F.3d at 1055 (holding that claims 

based on fraud must meet both the plausibility and particularity standards). It is conceivable that 

Plaintiffs could have acquired the funds to reinstate the mortgage, but if so, they must allege more 

specifically how they would have done so. 

E. Claims Based on Conduct of the Sale

Plaintiffs allege that Defendants ―violated Civil Code sections 2924f, 2924g, and 2924h by 

conducting the sale in a manner that discouraged or prevented competitive bidding.‖ FAC ¶ 29; 

see also id. ¶ 17. Plaintiffs have not, however, alleged any facts regarding the manner in which 

Defendants conducted the sale. Even under the normal pleading standard of Rule 8(a), mere 

― ̳labels and conclusions‘ or  ̳a formulaic recitation of the elements of a cause of action will not 

do.‘‖ Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Here, Plaintiffs have not 

alleged even the bare elements of these purported violations. Accordingly, to the extent that 

Plaintiffs‘ claims are based on the manner in which Defendants conducted the sale, they are 

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DISMISSED with leave to amend.

F. Other Statutory Theories 

Plaintiffs assert without meaningful explanation that Defendants violated section 2924g, 

which requires in relevant part that a trustee postpone a foreclosure sale if the borrower and lender 

reach a ―mutual agreement‖ to do so. See FAC ¶ 28; Opp‘n to NDeX at 6 & n.2; Opp‘n to Wells 

Fargo at 8 & n.2; Cal. Civ. Code § 2924g(c)(1)(C). Although Plaintiffs could perhaps have been 

misled by Reeves‘s statement regarding Wells Fargo‘s review of their modification request, the 

First Amended Complaint does not plausibly allege any ―mutual agreement‖ between Plaintiffs 

and Wells Fargo to postpone the sale. Any claim based on section 2924g is therefore 

DISMISSED. If Plaintiffs are aware of additional facts supporting such a claim, they may include 

them in a second amended complaint.

Contrary to Plaintiffs‘ assertion in the First Amended Complaint, section 2924g does not 

by its terms require a trustee or beneficiary to postpone a sale to review a modification application. 

See FAC ¶ 28; Cal. Civ. Code § 2924g. Wells Fargo concedes, however, in its Reply that ―the 

alleged statement by Mr. Reeves, along with the subsequent sale of the property, might constitute 

 ̳dual-tracking‘ as prohibited by Civil Code § 2923.6‖—a statute Plaintiffs have not addressed in 

any way—which would not warrant setting aside the sale but could give rise to damages. Wells 

Fargo Reply at 4 (also citing Cal. Civ. Code § 2924.12). Plaintiffs have not asserted such a claim 

in their First Amended Complaint or in either of their Oppositions, and the Court declines to read 

it into their pleading. If Plaintiffs are aware of facts sufficient to assert a dual-tracking claim, they 

may do so in their second amended complaint. 

IV. CONCLUSION

For the reasons stated above, Defendants‘ Motions to Dismiss are GRANTED, and 

Plaintiffs‘ First Amended Complaint is DISMISSED with leave to amend. Plaintiffs may file a 

second amended complaint resolving the deficiencies discussed above no later than July 13, 2016.

The Court has separately granted Plaintiffs‘ counsel permission to withdraw. See dkt. 49. 

If Plaintiffs are not able to retain new counsel and wish to proceed pro se, they are encouraged to 

consult with the Federal Pro Bono Project‘s Legal Help Center in either of the Oakland or San 

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Francisco federal courthouses for assistance. The San Francisco Legal Help Center office is 

located in Room 2796 on the 15th floor at 450 Golden Gate Avenue, San Francisco, CA 94102. 

The Oakland office is located in Room 470-S on the 4th floor at 1301 Clay Street, Oakland, CA 

94612. Appointments can be made by calling (415) 782-8982 or signing up in the appointment 

book located outside either office, and telephone appointments are available. Lawyers at the Legal 

Help Center can provide basic assistance to parties representing themselves but cannot provide 

legal representation.

IT IS SO ORDERED.

Dated: June 15, 2016

______________________________________

JOSEPH C. SPERO

Chief Magistrate Judge

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