Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_14-cv-01583/USCOURTS-caed-2_14-cv-01583-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

EDGAR GARDNER, III,

Plaintiff,

v.

NATIONSTAR MORTGAGE LLC; 

RSM&A FORECLOSURE SERVICES, 

LLC; & DOES 1–10,

Defendants.

No. 2:14-cv-1583-TLN-CKD

ORDER

The matter is before the Court on Defendants Nationstar Mortgage LLC (“Nationstar”) 

and RSM&A Foreclosure Services LLC’s (“RSM&A”) (“collectively Defendants”) motion to 

dismiss (ECF No. 4) Plaintiff Edgar Gardner, III’s (“Plaintiff”) complaint (ECF No. 1-1, Ex. A). 

For the reasons discussed below, the motion to dismiss is GRANTED IN PART and DENIED IN 

PART. 

I. Facts and Procedural History

Plaintiff has already brought a lawsuit against the same Defendants in federal court, in

Gardner v. RSM&A Foreclosure Services, LLC & Nationstar Mortgage, LLC, 12-cv-2666-JAMAC (E.D. Cal. 2013), which was dismissed with prejudice. That court set forth the relevant 

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factual allegations as follows:

This case arises out of a loan refinance related to Plaintiff’s 

property at 6650 18th Avenue in Sacramento, California (“subject 

property”). [Nationstar] previously moved to dismiss Plaintiff’s 

complaint and that motion was granted with leave to amend. 

According to the FAC, Plaintiff has owned and lived at the subject 

property since 1979, and in 2007, Plaintiff refinanced his mortgage 

and obtained the loan at issue. The loan was secured by the subject 

property and is a payment option adjustable rate mortgage in which 

Plaintiff could initially select the monthly payment amount.

A disclosure statement regarding the loan received by Plaintiff 

indicates that through the plan it is possible the monthly payment 

will be less than the monthly interest, thereby increasing the 

principal amount on the loan (negative amortization). The 

disclosure includes the following language: “In the event your 

balance exceeds your original loan amount by 120.00%, the 

payment amount may change more frequently and you will no 

longer have a minimum payment option.”

The Adjustable Rate Note entered into by the parties reiterates the 

possibility of negative amortization and states that the unpaid 

principal amount “can never exceed a maximum amount equal to 

120.000%” of the principal amount originally borrowed. The Note 

indicates the holder will redetermine the monthly payment amount 

“[i]n the event the unpaid Principal would otherwise exceed that 

120.000% limitation.”

According to the FAC, on May 4, 2011, Aurora Bank 

([Nationstar]’s predecessor), notified Plaintiff that his loan would 

reach the 120% limitation (“negative amortization limit”) on 

August 1, and that his minimum payment would jump from 

$1318.76 to $2531.99. Plaintiff was unable to pay the new monthly 

amount and the loan went into default. [The first] trustee’s sale was 

scheduled for October 10, 2012.

On February 16, 2012, Plaintiff’s Counsel sent a letter to Aurora 

Bank “indicating that [Nationstar and RSM&A] improperly 

increased his monthly loan payment” and “demanding correction of 

the error in payment amount.” Neither Aurora Bank, nor 

[Nationstar], has responded.

(Case No. 12-cv-2666, ECF No. 27.) 

Ultimately, the amended complaint in that case brought five causes of action, which were 

each dismissed with prejudice: 1) breach of contract; 2) negligent misrepresentation; 3) fraudulent 

inducement; 4) a violation of the Real Estate Settlement Procedures Act; and 5) a request for 

declaratory relief. (Case No. 12-cv-2666, ECF No. 21 at 5–11 & ECF No. 27.)

Plaintiff filed the instant complaint in Sacramento County Superior Court on May 28, 

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2014. (ECF No. 1-1, Ex. A.) In the state court action, Plaintiff re-alleges much of the factual 

basis from Case No. 12-cv-2666, and makes the following additional assertions:

 “On May 12, 2012, a Notice of Default was recorded by Aurora Bank FSB c/o 

RSM&A Foreclosure Services, LLC. RSM&A wrongly recorded the Notice of 

Default as they had not been properly substituted as trustee nor are they registered 

to do business in California.” (ECF No. 1-1, Ex. A ¶ 24.)

 “On May 25, 2012, a Corporate Assignment of Deed of Trust was recorded in the 

Official Records of Sacramento County wherein MERS assigns and transfers the 

beneficial interest under the Deed of Trust to Aurora Bank, FSB. The Corporate 

Assignment of Deed of Trust was executed on January 23, 2012, but was not 

recorded for several months.” (ECF No. 1-1, Ex. A ¶ 26.)

 “In June 2012, Plaintiff sent Nationstar a Home Affordable Modification Program 

Packet (HAMP) packet. Plaintiff never heard from Nationstar with regard to the 

paperwork he sent them.” (ECF No. 1-1, Ex. A ¶ 27.)

 “On September 20, 2012, a Substitution of Trustee was recorded in the Official 

Records of Sacramento County whereby Michele Rice, Vice President of Aurora 

Bank substituted RSM&A Foreclosure Services, LLC as trustee of the Deed of 

Trust. The Substitution was dated May 29, 2012, and recorded several months 

later. This fact can be perceived as backdating of documents. RSM&A 

Foreclosure Services, LLC is not registered with the California Secretary of State 

to do business in California.” (ECF No. 1-1, Ex. A ¶ 28.)

 “In July 2013, Plaintiff submitted [a] HAMP modification package to Nationstar. 

Nationstar did not acknowledge receipt at all.” (ECF No. 1-1, Ex. A ¶ 31.)

 “In April 2014, Plaintiff submitted a loan modification package to Nationstar through 

Neighborhood Assistance Corporation of America (NACA) and is still waiting for notice 

that the loan modification was received.” (ECF No. 1-1, Ex. A ¶ 32.)

 “On April 10, 2014, a [second] Notice of Trustee’s Sale was recorded. . . . The Notice of 

Trustee’s Sale is dated August 24, 2012, and by Kimberly Karas of RSM&A . . . The 

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supposed date of execution of the Notice of Trustee’s Sale of August 24, 2012, is 

approximately a year and [a] half before the official recording date.” (ECF No. 1-1, Ex. A 

¶ 35.)

The instant complaint contains nine causes of action: (1) breach of implied covenant of 

good faith; (2) violation of California Civil Code § 2923.5 (against only Defendant RSM&A); (3) 

intentional misrepresentation; (4) unfair and deceptive business practices; (5) violation of 

Business and Professions Code § 17200 (unfair competition); (6) cancellation of instruments; (7) 

violations of California’s Homeowner Bill of Rights; (8) a request for declaratory relief; and (9) a 

request for injunctive relief.1 (ECF No. 1-1, Ex. A.)

In summary, the claims, to varying degrees, rest on two factual threads: (1) that 

Defendants failed to acknowledge or process Plaintiff’s loan applications; and (2) that Defendants 

proceeded with foreclosure without properly recording instruments showing an assignment of 

trustee or beneficiary had taken place. The theory of liability with respect to (2) is stated at 

various points in the complaint, but is summarized in Plaintiff’s assertion that: “Where there is a 

successor Trustee, there can be no valid non-judicial foreclosure where the trustee under the 

original deed of trust is not properly substituted with a “recorded” instrument. To avoid 

confusion and litigation, there cannot be at any given time more than one person with the power 

to conduct a sale under a Deed of Trust. Therefore, failure to execute or record a Substitution of 

Trustee is a substantial defect and impacted a right afforded to Plaintiff.” (ECF No. 1-1, Ex. A ¶ 

63.)

Defendants submitted a motion to dismiss (ECF No. 4) the complaint and a supporting 

request for judicial notice (ECF No. 5) on July 10, 2014. Plaintiff has filed an opposition2(ECF 

 

1 The complaint contains a “any and all” prayer for relief, including a request for a temporary restraining order and a 

preliminary injunction. As Plaintiff does not argue separately for these forms of relief, the Court declines to address 

them on the instant motion. (ECF No. 1-1, Ex. A at 29.) 

2 Generally, Plaintiff’s opposition (ECF No. 9) references facts and causes of action that do not appear in the 

complaint. For example, the opposition states additional, albeit vague details about requests for a single point of 

contact (ECF No. 9 at 8) and Plaintiff’s attempt to contact Nationstar regarding a submitted HAMP packet (ECF No. 

9 at 7); those allegations do not appear to be in the complaint. The opposition references claims for negligent 

misrepresentation and for “dual tracking” under Cal. Civ. Code § 2924.18 (ECF No. 9 at 13 & 17 ) which do not 

appear in the complaint. Plaintiff should include all relevant facts and causes of action in the complaint. 

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No. 9) to the motion to dismiss and Defendants have filed a reply (ECF No. 12) to the opposition. 

This matter was submitted without oral argument, on the Court’s own motion, on September 5, 

2014. 

II. Defendants’ Request for Judicial Notice

Defendants request judicial notice of several instruments referenced by Plaintiff in the 

complaint. (ECF No. 10.) Plaintiff has not opposed the request. Accordingly, the Court takes 

judicial notice, under Fed. R. Evid. 201, of the following publicly recorded documents: 

 A notice of default (the “NOD”), recorded May 25, 2012, by RSM&A. The document 

states RSMA is “either the original trustee, the duly appointed substituted trustee, or 

acting as agent for the trustee or beneficiary.”3 (ECF No. 5, Ex. 1.)

 A notice of trustee’s sale, recorded September 20, 2012, by RSM&A. The document is 

dated August 24, 2012, and states RSM&A is the trustee under the DOT. (ECF No. 5, Ex. 

2.) 

 A notice of trustee’s sale, recorded April 10, 2014, by RSM&A. The document is dated 

August 24, 2012. The document states RSM&A is the trustee under the DOT. (ECF No. 

5, Ex. 3.)

The Court notes the following discrepancies between the instruments attached in 

Defendants’ request for judicial notice, and the complaint: 

 Plaintiff states that on May 12, 2012, a notice of default was recorded and on May 25, 

2012, a corporate assignment deed of trust was recorded. (ECF No. 1-1, Ex. A ¶ 26.) As 

indicated above, the attached instruments by Defendants show a notice of default was 

 

3 The Court also notes that Exhibit 1, together with the NOD, contains a declaration of compliance with Cal. Civ. 

Code § 2923.5 (providing that the beneficiary contact the borrower to assess alternatives to foreclosure). That 

declaration is dated May 7, 2012. It is not clear if that declaration is part of the NOD, which was recorded, or is a 

separate document that was not recorded. At this juncture, the Court notes the contents of this declaration, but does 

not take judicial notice of it. Plaintiff asserts in his first claim that Defendants have not complied with § 2923.5; and 

the document attached by Defendants is simply a piece of paper purporting to show compliance. Hence, the Court 

does not consider the document either to be, or to contain, a fact “not subject to reasonable dispute because it: (1) is 

generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and readily determined from 

sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). 

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recorded on May 25, 2012; and no party has attached a separate corporate assignment 

deed of trust. 

 Plaintiff also asserts: on September 20, 2012, a “Substitution of Trustee” was recorded 

and that document is dated May 29, 2012. (ECF No. 1-1, Ex. A ¶ 28.) As indicated 

above, the filings contain a notice of trustee’s sale recorded on September 20, 2012, and 

dated August 24, 2012; but otherwise, it is not clear which document Plaintiffs are 

referencing. 

Plaintiff is advised to clarify these discrepancies in future filings. 

III. Standard of Review

Federal Rule of Civil Procedure 8(a) requires that a pleading contain “a short and plain 

statement of the claim showing that the pleader is entitled to relief.” On a motion to dismiss, the 

factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 

(1972). A court is bound to give plaintiff the benefit of every reasonable inference to be drawn 

from the “well-pleaded” allegations of the complaint. Retail Clerks Int’l Ass’n v. Schermerhorn, 

373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege “‘specific facts’ beyond those necessary 

to state his claim and the grounds showing entitlement to relief.” Twombly, 550 U.S. at 570. “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.” Iqbal, 556 U.S. 

at 678 (citing Twombly, 550 U.S. at 556). 

Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of 

factual allegations.” United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 

1986). While Rule 8(a) does not require detailed factual allegations, “it demands more than an 

unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A 

pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the 

elements of a cause of action.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 

(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory 

statements, do not suffice.”). Moreover, it is inappropriate to assume that the plaintiff “can prove 

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facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not 

been alleged[.]” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 

459 U.S. 519, 526 (1983).

Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough 

facts to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting 

Twombly, 550 U.S. at 570). Only where a plaintiff has failed to “nudge[] [his or her] claims . . . 

across the line from conceivable to plausible[,]” is the complaint properly dismissed. Id. at 680. 

While the plausibility requirement is not akin to a probability requirement, it demands more than 

“a sheer possibility that a defendant has acted unlawfully.” Id. at 678. This plausibility inquiry is 

“a context-specific task that requires the reviewing court to draw on its judicial experience and 

common sense.” Id. at 679. 

IV. Analysis

A. Collateral estoppel

Defendants move to dismiss the complaint in full on the basis of collateral estoppel. 

Collateral estoppel (i.e. issue preclusion) “prevents relitigation of issues actually litigated and 

necessarily decided, after a full and fair opportunity for litigation, in a prior proceeding.” Shaw v. 

Hahn, 56 F.3d 1128, 1131 (9th Cir. 1995). “Three factors must be considered before applying 

collateral estoppel: (1) the issue at stake must be identical to the one alleged in the prior litigation; 

(2) the issue must have been actually litigated [by the party against whom preclusion is asserted] 

in the prior litigation; and (3) the determination of the issue in the prior litigation must have been 

a critical and necessary part of the judgment in the earlier action.” McQuillion v. 

Schwarzenegger, 369 F.3d 1091, 1096 (9th Cir. 2004) (internal quotations and citations omitted). 

Collateral estoppel does not bar the instant claims. As stated in the order dismissing 

Plaintiff’s suit in Case No. 12-cv-2666, Plaintiff’s causes of action, and that court’s disposition, 

concerned the terms of his 2007 loan refinance, not subsequent attempts to obtain loan 

modifications. (Case No. 12-cv-2666, ECF No. 27.) The Court also does not locate any 

analysis done by the prior court regarding whether the substitution of various entities, and their 

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recording, was properly done. So, at minimum, the prior court did not determine these issues as 

“a critical and necessary part of the judgment.” McQuillon, 368 F.3d at 1096.

B. Res judicata

Defendants also move to dismiss the complaint in full on the basis of res judicata (i.e. 

claim preclusion). The doctrine of res judicata bars “all grounds for recovery which could have 

been asserted, whether they were or not, in a prior suit between the same parties ... on the same 

cause of action, if the prior suit concluded in a final judgment on the merits.” Int'l Union of 

Operating Engineers-Employers Const. Indus. Pension, Welfare & Training Trust Funds v. Karr, 

994 F.2d 1426, 1429 (9th Cir. 1993) (citing Ross v. Int'l Bhd. of Elec. Workers, 634 F.2d 453, 457 

(9th Cir.1980)). Case No. 12-cv-2666 involved the same Plaintiff and Defendants, and that suit 

concluded in a final judgment on the merits. Accordingly, the Court looks to whether Plaintiff’s 

instant claims constitute the same causes of action, which either were, or could have been,

asserted in the prior suit.

“In determining whether successive claims constitute the same cause of action, [courts] 

consider the following: (1) whether rights or interests established in the prior judgment would be 

destroyed or impaired by prosecution of the second action; (2) whether substantially the same 

evidence is presented in the two actions; (3) whether the two suits involve infringement of the 

same right; and (4) whether the two suits arise out of the same transactional nucleus of facts.” 

Constantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir. 1982). “The last of these 

criteria is the most important.” Id. at 1202.

Looking to the four factors enumerated in Constanti, the Court concludes that Plaintiff’s 

claims here are not barred under res judicata. First, (1) No rights or interests established in the 

prior judgment would be impaired in the instant action, because the prior action concerned the 

alleged unlawfulness of Plaintiff’s entry into a negative amortization loan, whereas here, the 

instant case involves subsequent attempts to modify Plaintiff’s loan or allegations regarding 

improper substitution or recording. Secondly, (2) The prior action was dismissed with prejudice 

on a Rule 12(b)(6) motion, so no substantial evidence was presented in that case. Thirdly, (3) The 

present action concerns Plaintiff’s right to modify his loan and have foreclosure occur with the 

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correct entities having been substituted on properly recorded instruments, not Plaintiff’s rights 

under the terms of the loan agreement. 

Lastly, with respect to (4) – whether the instant causes of action arise out of the same 

transactional nucleus of facts – Plaintiff filed the complaint in case No. 12-cv-2666, in September, 

2012, and an amended complaint in April, 2013. (Case No. 12-cv-2666, ECF No. 27 at 3.) By 

virtue of the timeline stated by Plaintiff in the instant complaint, it is unlikely that Plaintiff could 

have brought claims in that suit relating to his loan modification attempt made in July, 2013. 

Plaintiff could not have brought suit based on an April, 2014 modification attempt. Plaintiff 

could, by virtue of timing, have brought a cause of action in the prior suit, with respect to his 

June, 2012 loan modification attempt. However, that loan modification attempt, like the others, 

does not appear to be related to the terms of 2007 loan, or his entry into that loan, which was the 

“transactional nucleus of facts” giving rise that complaint.

In the instant case, Plaintiff also asserts an ongoing pattern of attempts by Defendants to 

foreclose without properly documenting substitutions of beneficiary or trustee. These issues are

not related to the terms of Plaintiff’s 2007 loan, or his entry into that loan, which was the 

transactional nucleus of facts alleged in Case No. 12-cv-2666. 

In summary, Plaintiff’s prior claims involved the terms of, or his entry into, his 2007 

negative amortization loan. The instant claims concern loan modification attempts, allegations 

that Defendants have proceeded with foreclosure without properly substituting various entities, 

and allegations that Defendants have not properly recorded documents relevant to foreclosure. 

Those claims are not barred.

C. Claim 1: Breach of implied covenant of good faith and fair dealing 

Under California law, all contracts contain an implied covenant of good faith and fair 

dealing. This covenant requires each contracting party to refrain from doing anything to injure 

the right of the other to receive the benefits of the agreement. San Jose Prod. Credit Ass'n v. Old 

Republic Life Ins. Co., 723 F.2d 700, 703 (9th Cir. 1984) (citing Egan v. Mutual of Omaha 

Insurance Company, 24 Cal.3d 809, 818 (1979)). “It is universally recognized [that] the scope of 

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conduct prohibited by the covenant of good faith is circumscribed by the purposes and express 

terms of the contract.” Jenkins v. JP Morgan Chase Bank, N.A. 216 Cal. App. 4th 497, 524 

(2013) (citing Carma Developers, Inc. v. Marathon Development Cal. Inc., 2 Cal. 4th 342, 373

(1992)). “Because contracts differ, the nature and extent of the duties owed under the implied 

covenant are also variable and will depend on the contractual purposes.” Id. (citing Love v. Fire 

Ins. Exchange, 221 Cal. App. 3d 1136, 1147 (1990)). 

The Court agrees with Defendants that, at this juncture, the only enforceable contract 

identified by Plaintiff is the loan contract he entered into in 2007. Plaintiff brought a cause of 

action for breach of contract, with respect to that loan, in Case No. 12-cv-2666; that cause of 

action was dismissed with prejudice. 

Plaintiff also alleges under this cause of action as follows: that he submitted loan 

modification applications in June, 2012, July, 2013, and April, 2014, and did not receive 

responses (ECF No. 1-1, Ex. A. ¶¶ 48–53); that a substitution of trustee occurred on May 29, 

2012, but was not recorded until September, 2012 (ECF No. 1-1, Ex. A ¶ 49); that RSM&A is not 

registered to do business in California (ECF No. 1-1, Ex. A ¶ 49); and that Defendants did not 

“record reliable or accurate documents to support a non-judicial foreclosure” (ECF No. 1-1, Ex. A

¶ 54). However, Plaintiff does not show Defendants contracted for a loan modification such that 

Defendants engaged in unfair dealing or a lack of good faith with respect to this contract. 

Therefore, this claim is dismissed with leave to amend. 

D. Claim 2: Cal. Civ. Code § 2923.5

Cal. Civ. Code § 2923.5 provides, generally, that the mortgagee, trustee, beneficiary, or 

authorized agent may not file a notice of default until initial contact has been made with the 

borrower for the purpose of discussing options so that the borrower may avoid foreclosure.4 The 

relevant factual allegations for a claim under § 2923.5, as stated in the complaint, appear to be:

 

4 The relevant time period for this claim appears to be when the NOD was recorded, in May, 2012. Plaintiff does not 

reference any materially different provisions in Cal. Civ. Code § 2923.5 as it stood at the time the NOD was 

recorded, compared to § 2923.5 as it stood following any subsequent amendments. 

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 “On May 12, 2012, a Notice of Default was recorded by Aurora Bank FSB c/o 

RSM&A Foreclosure Services, LLC. RSM&A wrongly recorded the Notice of 

Default as they had not been properly substituted as trustee nor are they registered 

to do business in California.” (ECF No. 1-1, Ex. A ¶ 24.)

 “On May 25, 2012, a Corporate Assignment of Deed of Trust was recorded in the 

Official Records of Sacramento County wherein MERS assigns and transfers the 

beneficial interest under the Deed of Trust to Aurora Bank, FSB. The Corporate 

Assignment of Deed of Trust was executed on January 23, 2012, but was not 

recorded for several months.” (ECF No. 1-1, Ex. A ¶ 26.)

 On September 20, 2012, a Substitution of Trustee was recorded in the Official 

Records of Sacramento County whereby Michele Rice, Vice President of Aurora 

Bank substituted RSM&A Foreclosure Services, LLC as trustee of the Deed of 

Trust. The Substitution was dated May 29, 2012, and recorded several months 

later. This fact can be perceived as backdating of documents. RSM&A 

Foreclosure Services, LLC is not registered with the California Secretary of State 

to do business in California.” (ECF No. 1-1, Ex. A ¶ 28.) 

Liberally construed, Plaintiff’s point may be that the NOD was recorded sometime in 

May, 2012 prior to the substitution of RSM&A for Aurora as beneficiary. However, the NOD 

was signed by an agent for RSM&A, not Aurora. Thus, the argument would be that a properly 

substituted “mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent” never 

complied with the notice requirements (i.e. contacting the borrower) described in § 2923.5, prior 

to recording the notice of default.

Presently, Plaintiff cites no authority for the position that when the substitution of a 

beneficiary is either executed or recorded after a notice of default, but the notice of default was 

recorded by the substituted beneficiary, that those circumstances permit a claim under § 2923.5. 

Further, as stated, supra, Defendants have filed with the Court a document purporting to show 

compliance with section 2923.5, dated May 7, 2012. That document states Aurora Bank is the 

beneficiary and loan servicer, and it appears to be signed by an agent for Aurora. (ECF No. 5, Ex. 

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1.) The Court does not take judicial notice of that document at this juncture, but Plaintiff does not 

appear to dispute that Aurora contacted him, in purported compliance with section 2923.5. Claim 

2 is dismissed with leave to amend if Plaintiff can show different facts or produce legal authority 

showing that this is a plausible claim for relief.5

E. Claim 3: Intentional Misrepresentation

Plaintiff cites the following elements that must be met to prevail on a claim of intentional 

misrepresentation: 

(1) [T]he defendant represented to the plaintiff that an important 

fact was true; (2) that representation was false; (3) the defendant 

knew that the representation was false when the defendant made it, 

or the defendant made the representation recklessly and without 

regard for its truth; (4) the defendant intended that the plaintiff rely 

on the representation; (5) the plaintiff reasonably relied on the 

representation; (6) the plaintiff was harmed; and (7) the plaintiff’s 

reliance on the defendant's representation was a substantial factor in 

causing that harm to the plaintiff.

Manderville v. PCG & S Group, Inc. 146 Cal. App. 4th 1486, 1498 (2007). Plaintiff appears to 

state an intentional misrepresentation occurred: 1) because Defendants have not complied with 

HBOR requirements regarding acknowledging receipt of loan modifications; and 2) Defendants 

wrongfully recorded documents in furtherance of foreclosure. (ECF No. 1-1 ¶¶ 65–75.)

However, allegations of fraud must, under Fed. R. Civ. P. 9(b), “be accompanied by the 

‘who, what, when, where, and how’ of the misconduct charged. Kearns v. Ford Motor Co., 567 

F.3d 1120, 1124 (9th Cir. 2009) (quoting Cooper v. Pickett, 137 F.3d 1120, 1124 (9th Cir. 2009). 

The facts pled (ECF No. 1-1 ¶¶ 65–75) do not meet the pleading requirements for a fraud claim 

under Rule 9(b). Plaintiff does not allege, with any particularity, a statement made by 

Defendants, reasonably relied on by Plaintiff, resulting in harm. This claim is dismissed with 

leave to amend.

/ / /

 

5 The parties do not take a position on whether any applicable portions of Cal. Civ. Code § 2923.5 are federally 

preempted. See e.g. Rodriguez v. JP Morgan Chase & Co. 809 F.Supp.2d 1291, 1295 (S.D. Cal. 2011). 

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F. Claim 4: Unfair And Deceptive Business Act Practices

It is unclear which law Plaintiff is invoking. This cause of action is entitled “Unfair and 

Deceptive Business Act Practices (UDAP) Against All Defendants”, but Plaintiff cites the 

standing requirements for Cal. Bus. & Prof. Code § 17200, et seq., i.e. California’s Unfair 

Competition Law (“UCL”), which forms the basis for Plaintiff’s fifth, and independent, cause of 

action. (ECF No. 1-1 ¶ 77.) 

Defendants construe this cause of action as if Plaintiff tries to state a claim under 15 

U.S.C. § 45, et seq., the Federal Trade Commission (“FTC”) Act, which prohibits “[u]nfair 

methods of competition in commerce, and unfair or deceptive acts or practices in commerce.” 15 

U.S.C. § 45(a)(1). The authority cited by Defendants indicates there is no private right of action 

under the FTC Act. See Izenberg v. ETS Services, LLC, 589 F. Supp. 2d 1193, 1201, n. 20 (C.D. 

Cal. 2008) (“The FTC Act does not provide a private right of action. Fisher v. Coca–Cola 

Bottling Co. of Los Angeles, No. CV 78 0479–F, 1979 WL 1597, *2 (C.D.Cal. Mar. 12, 1979) 

(“There is no private right of action under the Federal Trade Commission Act. Initial remedial 

power lies with the Commission itself,” citing Carlson v. Coca–Cola Company, 483 F.2d 279, 

280 (9th Cir.1973))). 

As it is not presently clear under which law Plaintiff is attempting to state a claim, the 

claim is dismissed with leave to amend. 

G. Claim 5: California’s Unfair Competition Law

California’s UCL, Cal. Bus. & Prof. Code § 17200 et seq., prohibits, and provides civil 

remedies for, unfair competition, which it defines as “any unlawful, unfair or fraudulent business 

act or practice.” Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 320 (2011) (quoting Cal. Bus. 

& Prof. Code § 17200). Its purpose “is to protect both consumers and competitors by promoting 

fair competition in commercial markets for goods and services.” Id. (citing Kasky v. Nike, Inc. 27 

Cal. 4th 939, 949 (2002)). To bring suit under the UCL, a person must “(1) establish a loss or 

deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and 

(2) show that the economic injury was the result of, i.e. caused by, the unfair business practice or 

false advertising that is the gravamen of the claim.” Id. at 322. 

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The relevant allegations that the Court locates in the complaint, specific to the UCL claim, 

are: Defendants have collected mortgage payments and fees for foreclosure related services; 

Plaintiff has suffered a damaged credit score; Plaintiff has “suffered additional interest and a 

pointless loan extension.” (ECF No. 1-1 ¶¶ 101, 102.) Presently, these allegations do not 

constitute “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on 

its face.’” Iqbal, 556 U.S. at 663 (citing Twombly, 550 U.S. at 570). For example, Plaintiff does 

not elaborate any further on how his mortgage payments or related fees, specific to the allegations 

in this complaint, and not the terms of his 2007 negative amortization loan that were at issue in 

Case No. 12-cv-2666, violate the UCL. Claim 5 is dismissed with leave to amend.6 

H. Claim 6: Cancellation of Instruments

Cal. Civ. Code § 3412 states:

A written instrument, in respect to which there is a reasonable 

apprehension that if left outstanding it may cause serious injury to a 

person against whom it is void or voidable, may, upon his 

application, be so adjudged, and ordered to be delivered up or 

canceled.

Plaintiff seeks cancelation of two instruments: the NOD and the 2014 Notice of Trustee's 

Sale. 

Plaintiff's stated basis for seeking cancelation of the NOD is the following assertions: 

 “On May 12, 2012, a Notice of Default was recorded by Aurora Bank FSB c/o RSM&A 

Foreclosure Services, LLC. RSM&A wrongly recorded the Notice of Default as they had 

not been properly submitted as trustee nor are they registered to do business in 

California.” (ECF No. 1-1, Ex. A ¶ 111.)

 “On May 25, 2012, a Corporate Assignment Deed of Trust was recorded in the Official 

Records of Sacramento County wherein MERS assigns and transfers the beneficial 

interest under the Deed of Trust to Aurora Bank, FSB. The Corporate Assignment Deed 

of Trust was executed on January 23, 2012, but was not recorded for several months. This 

 

6 The parties do not brief the Court on other cases—California or federal—in which courts have construed, or 

declined to construe, violations of the HBOR as also forming a cause of action under the UCL. 

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fact can be perceived as backdating of documents.” (ECF No. 1-1, Ex. A ¶ 113.)

 “On September 20, 2012, a Substitution of Trustee was recorded in the Official Records

of Sacramento County whereby Michele Rice, Vice President of Aurora Bank substituted 

RSM&A Foreclosure Services, LLC as trustee of the Deed of Trust. The Substitution was 

dated May 29, 2012, and recorded several months later. This fact can be perceived as 

backdating of documents. RSM&A Foreclosure Services, LLC is not registered with the 

California Secretary of State to do business in California.” (ECF No. 1-1, Ex. A ¶ 115.)

Beyond the lack of clarity discussed, supra, over which instruments Plaintiff is referring 

to in these assertions, Plaintiff has not pled sufficient facts to show how the NOD “if left 

outstanding [] may cause serious injury.” Cal. Civ. Code § 3142. Were the faults alleged by 

Plaintiff cured, it is not apparent that foreclosure, or any of the related injuries, would be 

prevented. Plaintiff asserts again, under this cause of action, that he has not received an 

acknowledgement of his 2013 and 2014 loan modification attempts, but does not explain how the 

alleged flaws in the NOD are relevant to these attempts.

Plaintiff’s stated basis for seeking cancellation of the April, 2014 Notice of Trustee’s Sale 

is the following assertion: “On April 10, 2014, a Notice of Trustee's Sale was recorded in the 

official records of the county recorder. The Notice of Trustee's Sale is dated August 24, 2012, by 

Kimberly Karas of RSM&A Foreclosure Services, LLC. RSM&A are not registered with the 

Secretary of State to do business in California. The supposed date of execution of the Notice of

Trustee's Sale of August 24, 2012, is approximately a year and half before the official recording 

date. The difference between the execution and recording of the Notice of Trustee's Sale shows 

that the document is not reliable.” (ECF No. 1-1, Ex. A ¶ 120, emphasis from original omitted.)

Plaintiff has not pled sufficient facts to show how the NOD “if left outstanding [] may 

cause serious injury.” Cal. Civ. Code § 3142. Were the faults alleged by Plaintiff cured, it is not 

apparent that foreclosure, or any of the asserted injuries, would be prevented. Claim 6 is 

dismissed with leave to amend.

/ / / 

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I. Claim 7: Homeowner Bill of Rights, Cal. Civ. Code §§ 2924.10, 2924.11, 2923.7, 

2924.17, 2924(a)(6)

Claim 7 alleges violations under numerous sections of California’s Homeowner Bill of 

Rights, Cal. Civ. Code §2920 et seq..

a. Section 2924.10

Section 2924.10 provides that, upon submission by the borrower of a loan modification or 

related document, the servicer will provide written acknowledgement within five days of receipt, 

and the acknowledgment will include a description of the loan modification process, relevant 

deadlines, expiration dates for submitted documents, and information on a deficiency in the 

application. Cal. Civ. Code § 2924.10. 

Plaintiff states that in July, 2013, he “submitted [a] HAMP modification package to 

Nationstar. Nationstar did not acknowledge receipt at all. Nationstar did not provide notice of 

information regarding the application process, missing documents, or a deadline for submitting 

documents.” (ECF No. 1-1, Ex. A ¶ 31.) Plaintiff also states, with respect to his April, 2014 loan 

modification submission through NACA, that Nationstar did not acknowledge receipt within five 

days, and “did not give notice providing information about the application process, advising 

Plaintiff of any missing documents needed to make the application complete....” (ECF No. 1-1, 

Ex. A ¶ 70.) 

Plaintiff has alleged sufficient facts, accepted as true, stating that loan modifications 

applications were submitted in July, 2013 and April, 2014, and that he did not receive the 

acknowledgement required under § 2924.10. Plaintiff has stated a claim under Cal. Civ. Code § 

2924.10.

b. Section 2924.11

Section 2924.11 provides, generally, that mortgage servicers may not record a notice of 

default when a foreclosure prevention alternative has been approved in writing, or a foreclosure 

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prevention alternative has been accepted by the borrower. See e.g. § 2924.11(a) (“If a foreclosure 

prevention alternative is approved in writing prior to the recordation of a notice of default, a 

mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice of 

default ...”).

Here, Plaintiff does not allege a foreclosure prevention plan has been approved in writing, 

that he has accepted a foreclosure prevention alternative, or another set of circumstances covered 

by § 2924.11(a)-(g).7 Thus, a claim under § 2924.11 is dismissed with leave to amend. 

c. Section 2923.7

Section 2923.7 provides, in relevant part, that upon request from the borrower, Defendant 

must “promptly establish a single point of contact” with the borrower, in order to facilitate 

communication regarding an “available foreclosure prevention alternative,” such as a loan 

application submitted by Plaintiff. 

Plaintiff references § 2923.7 (ECF No. 1-1 ¶ 128) but otherwise makes no clear 

allegations regarding a failure by Defendants to provide a single point of contact. The claim 

under § 2923.7 is dismissed with leave to amend. 

d. Section 2924.17

Section 2924.17 provides, generally, that instruments recorded in connection with a 

foreclosure (including a notice of default, notice of sale, assignment of a deed of trust, or 

substitution of trustee), and any declaration recorded pursuant to section 2923.5 (attesting to the 

fact that the mortgage servicer has contacted the borrower to discuss options to avoid foreclosure) 

shall be “accurate and complete and supported by competent and reliable evidence.”

The only documents alleged to be wrongly recorded or executed, after January 1, 2013 

when the HBOR went into effect, is the April 10, 2014 Notice of Trustee’s sale.8 The relevant 

 

7

See Cal. Civ. Code § 2924.18.

8

See Sepehry-Fard v. Aurora Bank FSB, 2013 WL 2239820, at *3 (N.D. Cal. 2013); McGough v. Wells Fargo Bank, 

N.A., 2012 WL 5199411, at *5, n. 4 (N.D. Cal. 2012) (“[The HBOR] amendments do not go into effect until Jan. 1, 

2013 and there is no indication that the law is intended to be, or will be, applied retroactively”). 

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factual allegation in support of this claim appears to be: “On April 10, 2014, a Notice of Trustee's 

Sale was recorded in the official records of the county recorder. The Notice of Trustee's Sale is 

dated August 24, 2012, by Kimberly Karas of RSM&A Foreclosure Services, LLC. RSM&A are 

not registered with the Secretary of State to do business in California. The supposed date of 

execution of the Notice of Trustee's Sale of August 24, 2012, is approximately a year and half 

before the official recording date. The difference between the execution and recording of the 

Notice of Trustee's Sale shows that the document is not reliable.” (ECF No. 1-1, Ex. A ¶ 120, 

emphasis from original omitted.)

Without more, Plaintiff does not adequately allege conduct, post-enactment of the HBOR, 

that violates § 2924.17. 

e. Section 2924(a)(6)

Section 2924(a)(6) provides:

No entity shall record or cause a notice of default to be recorded or 

otherwise initiate the foreclosure process unless it is the holder of 

the beneficial interest under the mortgage or deed of trust, the 

original trustee or the substituted trustee under the deed of trust, or 

the designated agent of the holder of the beneficial interest. No 

agent of the holder of the beneficial interest under the mortgage or 

deed of trust, original trustee or substituted trustee under the deed 

of trust may record a notice of default or otherwise commence the 

foreclosure process except when acting within the scope of 

authority designated by the holder of the beneficial interest.

Plaintiff references § 2924(a)(6) (ECF No. 1-1, Ex. A ¶ 129), but otherwise makes no 

clear allegation under this section. As discussed, supra, Plaintiff makes multiple statements 

regarding when various entities were substituted as beneficiaries or trustees, and when documents 

demonstrating the substitution were recorded. At present, it is not possible for the Court to 

comprehend which documents Plaintiff is referring to, and how Plaintiff’s allegations comport 

with the recorded documents attached in Defendants’ (unopposed) request for judicial notice. 

Plaintiff is advised to provide a coherent set of facts and a coherent legal argument to support his 

general assertion that: “Where there is a successor Trustee, there can be no valid non-judicial 

foreclosure where the trustee under the original deed of trust is not properly substituted with a 

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“recorded” instrument. To avoid confusion and litigation, there cannot be at any given time more 

than one person with the power to conduct a sale under a Deed of Trust. Therefore, failure to 

execute or record a Substitution of Trustee is a substantial defect and impacted a right afforded to 

Plaintiff.” (ECF No. 1-1, Ex. A ¶ 63 ). A claim under § 2924(a)(6) is dismissed with leave to 

amend.

J. Claim 8 (Declaratory Relief) and Claim 9 (Injunctive Relief)

Plaintiff’s claims for declaratory and injunctive relief are dismissed on the basis that

“[d]eclaratory and injunctive relief are not independent claims, rather they are forms of relief.” 

Lane v. Vitek Real Estate Indus. Grp., 713 F. Supp. 2d 1092, 1104 (E.D. Cal. 2010). If Plaintiff 

prevails on any other cause of action, and declaratory or injunctive relief are the appropriate 

remedy, then those forms of relief remain available, just as economic damages are available. 

Plaintiff should clarify in any future filing whether there is a basis for separate causes of action 

for declaratory or injunctive relief.

V. Order

 Defendants’ Motion to Dismiss is GRANTED with respect to claim 1 (breach of implied 

covenant of good faith); claim 2 (California Civil Code § 2923.5); claim 3 (intentional 

misrepresentation); claim 4 (unfair and deceptive business practices); claim 5

(California’s UCL); claim 6 (cancellation of instruments); claim 8 (declaratory relief); and 

claim 9 (injunctive relief). Plaintiff is given leave to amend these claims.

 Defendants’ Motion to Dismiss is DENIED with respect to claim 7, to the extent Plaintiff 

states a claim under Cal. Civ. Code § 2924.10. Otherwise, the motion to dismiss is 

GRANTED with respect to Cal. Civ. Code §§ 2924.11, 2923.7, 2924.17, and 2924(a)(6), 

which are also cited in this cause of action. Plaintiff is given leave to amend claim 7.

 Plaintiff shall file and serve a First Amended Complaint within 14 days of entry of this 

Order. The First Amended Complaint should comply with Fed. R. Civ. Proc. 8, which 

requires “a short and plain statement” of Plaintiff’s entitlement to relief.

/ / / 

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 Defendants shall file their responsive pleading within 21 days of service of the First 

Amended Complaint.

Dated: March 25, 2015

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