Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_14-cv-03543/USCOURTS-cand-4_14-cv-03543-2/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Petition for Removal

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DAVID P. GARCIA,

Plaintiff,

v.

PNC MORTGAGE,

Defendant.

Case No. 14-cv-3543-PJH 

ORDER GRANTING MOTION TO 

DISMISS

Defendant’s motion for an order dismissing the second amended complaint 

(“SAC”) pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim 

came on for hearing before this court on May 13, 2015. Plaintiff appeared by his counsel 

Marie G. Quashnock, and defendant PNC Mortgage (“PNC”) appeared by its counsel L. 

Scott Bruggemann. 

The court deferred ruling on the motion to allow the parties to come to some other 

resolution of the case. Specifically, plaintiff was given an opportunity to submit a new 

complete loan modification application in accordance with PNC’s instructions, and to 

appeal any denial of the application. Plaintiff submitted the application, and, following 

PNC’s denial of the appeal, the parties filed a status statement indicating that they 

remained at an impasse. 

Following further discussion at a case management conference held on 

September 10, 2015, the court advised that it would issue a written decision on the 

motion. Having read the parties’ papers and carefully considered their arguments and 

the relevant legal authority, the court hereby GRANTS the motion as follows.

Case 4:14-cv-03543-PJH Document 61 Filed 09/16/15 Page 1 of 7
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DISCUSSION

A. Legal Standard

A complaint may be dismissed under Rule 12(b)(6) for failure to state a claim if the 

plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to 

support a cognizable legal theory. Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 

2013). While the court is to accept as true all the factual allegations in the complaint, 

legally conclusory statements, not supported by actual factual allegations, need not be 

accepted. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); see also In re Gilead Scis. 

Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

The allegations in the complaint "must be enough to raise a right to relief above 

the speculative level[,]" and a motion to dismiss should be granted if the complaint does 

not proffer enough facts to state a claim for relief that is plausible on its face. Bell Atlantic 

Corp. v. Twombly, 550 U.S. 544, 555, 558-59 (2007) (citations and quotations omitted). 

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 (citation omitted). "[W]here the well-pleaded facts do not 

permit the court to infer more than the mere possibility of misconduct, the complaint has 

alleged – but it has not ‘show[n]' – ‘that the pleader is entitled to relief.'" Id. at 679. 

B. Defendant’s Motion

The general factual background of this mortgage case is as set forth in the 

February 9, 2015 order granting PNC’s motion to dismiss the first amended complaint. 

PNC now seeks an order dismissing all four causes of action alleged in the SAC. 

1. Claim under § 2923.5 

In the first cause of action, plaintiff alleges that PNC failed to contact him in person 

or by telephone at least 30 days before filing the Notice of Default (“NOD”) to explore 

options for avoiding foreclosure, in violation of California Civil Code § 2923.5. 

Under the framework set forth in the Civil Code regarding nonjudicial foreclosure, 

the lender must first record an NOD; once three months have elapsed, the lender must 

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give notice of the planned foreclosure sale. Cal. Civ. Code § 2924. Section 2923.5 

concerns the NOD. It requires the “mortgagee, trustee, beneficiary, or authorized agent” 

seeking to file a notice of default to first 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.” Cal. Civ. Code § 2923.5(a)(2). The NOD may not be filed until 

thirty days after this initial contact or after the statute's due diligence requirements are 

satisfied. Id. § 2923.5(a)(1). 

Further, the NOD must include a declaration that the mortgagee, beneficiary, or 

authorized agent has contacted the borrower. Id. § 2923.5(b). During this initial contact, 

the party seeking to file an NOD must advise the borrower that he or she has the right to 

request a subsequent meeting and, if requested, schedule the meeting within fourteen 

days. Id. § 2923.5(a)(2). The sole remedy available under § 2923.5 is the postponement 

of a foreclosure sale until the requirements of the statute have been fulfilled. Mabry v. 

Superior Ct., 185 Cal. App. 4th 208, 213 (2010); see also Argueta v. J.P. Morgan Chase, 

787 F.Supp. 2d 1099, 1107 (E.D. Cal. 2011).

Here, the facts alleged show that PNC was in contact with plaintiff, although 

plaintiff asserts that the contact was not entirely in conformance with § 2923.5. However, 

no foreclosure sale is pending. Thus, to the extent that there was at any point a failure to 

comply with the statute, there is no a pending sale that could be postponed. Thus, the 

only question with regard to this claim is whether the NOD must be rescinded, as 

demanded by plaintiff in the SAC. 

Plaintiff asserts that the court should "issue an order setting aside the defective 

NOD." SAC ¶ 90. He adds that "[a] failure to comply with Section 2923.5 renders the 

Notice of Default invalid, and a secured creditor must rescind the Notice of Default and 

not cause a non-judicial foreclosure sale to transpire until substantively complying with 

Section 2923.35

1

"’and recording a new Notice of Default in the wake thereof.’" SAC ¶ 90

 

1

 Thus in SAC. However, there is no § 2923.35 in the Civil Code. The court assumes 

that plaintiff intended a reference to § 2923.5.

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(quoting Mabry, 185 Cal. App. 4th at 236-37). He asserts that “correcting and remedying 

a HBOR violation” should require rescinding any improperly recorded NOD or NTS. Id.

(citing Diamos v. Specialized Loan Servicing LLC, 2014 WL 3362259 at *5 (N.D. Cal. July 

7, 2014)).

The court in Mabry stated in the conclusion of the opinion that where a lender or 

servicer has failed to comply with § 2923.5, the foreclosure sale should be "postponed 

until [the lender or servicer] has filed a new notice of default in the wake of substantive 

compliance with section 2923.5." Mabry, 185 Cal. App. 4th at 237. However, that is not 

the same as rescinding an NOD. Moreover, the discussion in Diamos did not involve 

§ 2923.5, but rather a claim of dual tracking under § 2923.6(c) (unlawful to record an 

NOD while borrower’s complete first loan modification is pending), and other sections of 

HBOR more generally. 

Plaintiff cites four cases in support of this argument in his opposition to the motion 

– Castillo v. Bank of America, 2014 WL 4290703 at *5 (N.D. Cal. Aug. 29, 2014); 

Woodring v. Ocwen Loan Servicing, LLC, 2014 WL 3558716 at *3-4 (C.D. Cal. July 18, 

2014); Mungai v. Wells Fargo Bank, 2014 WL 2508090 at *10-11 (N.D. Cal. June 3, 

2014); and Skov v. U.S. Bank N.A., 207 Cal. App. 4th 690, 696 (2012). However, none 

of these cases imposes a requirement regarding the rescission of an NOD. The court

thus finds no support for plaintiff's argument that PNC should be compelled to rescind the 

DOD.

In short, a lack of a pending foreclosure sale precludes the court from granting a 

borrower any effective remedy under § 2923.5. In re Sandri, 501 B.R. 369, 378 (Bkrtcy, 

N.D. Cal. 2013). The most recent NOD was recorded on August 9, 2013 (Exh. F to 

SAC), and the most recent Notice of Trustee's Sale was recorded on March 3, 2014 (Exh. 

G to SAC) and set a sale date of March 27, 2014. The Notice of Sale provides that the 

sale "may be postponed one or more times by the mortgagee, beneficiary, trustee, or a 

court, pursuant to section 2924g of the California Civil Code." However, since more than 

365 days have elapsed since the date previously set for the trustee sale (March 2014), 

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and no sale has occurred, the trustee is required (per Civil Code § 2924g(c)(2)) to record 

a new notice of sale as required under § 2924f (requirements re posting and notice of 

sale). Thus, the previous notice of sale is no longer operative or capable of further 

postponement. 

As far as whether plaintiff can still state a claim under § 2923.5, “foreclosure 

prevention alternative” is defined as a “first lien loan modification or another available loss 

mitigation option.” Cal. Civ. Code § 2920.5. Both sides appear to agree that there has 

now been a full opportunity for plaintiff to seek a loan modification and thus for the parties 

to exchange information regarding foreclosure prevention alternatives. Accordingly, the 

court finds that the § 2923.5 cause of action must be dismissed. 

2. Claims under § 2923.7, 2924.10, 2923.6

In the second cause of action, plaintiff alleges that PNC violated various provisions 

of HBOR – § 2923.7 (failure to appoint single point of contact or “SPOC”) and failure of 

the “contact” to perform certain duties set forth in § 2923(b)(1)-(5); § 2924.10 (failure to 

provide written acknowledgment of receipt of third and fourth applications within 5 

business days); and § 2923.6 (improperly engaging in "dual tracking").

With regard to the § 2923.7 claim, plaintiff previously conceded that an SPOC was 

appointed, and that the only question was whether the SPOC (or the team) complied with 

the disclosure duties set forth in § 2923.7(b)(1)-(5). The court finds that the claim of 

violation of § 2923.7 must be dismissed, with leave to amend to state facts clearly 

supporting the assertion that the SPOC designated by PNC failed to comply with the 

disclosure duties in § 2923.7(b). 

Both the § 2924.10 claim and the § 2923.6 claim depend on a finding that the 

applications were "complete." Under § 2924.12, borrowers may bring an action under a 

number of HBOR sections, including § 2923.6, § 2923.7, and § 2924.10, but the 

remedies depend upon whether a trustee's deed of sale has or has not been recorded. 

See Cal. Civ. Code § 2924.12(a), (b). Here, no trustee's deed upon sale has been 

recorded, so plaintiff would be limited to seeking an order enjoining a "material violation" 

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of the statute. Id. § 2924.12(a)(1). Thus, given that the parties agree that plaintiff has 

now submitted a “complete” application, any argument regarding the completeness of the 

prior applications is moot, and these claims must therefore be dismissed.

3. Claim of negligence

In the third cause of action, plaintiff alleges a claim of negligence based on PNC's 

handling of "mortgage assistance and foreclosure prevention services" for his loan, 

including the handling of the loan modification applications. The dispute here is as to 

whether a loan servicer owes a duty of care to a borrower. There is a split of authority in 

the California Court of Appeal. See Lueras v. BAC Home Loans Servicing LP, 221 Cal. 

App. 4th 49, 67-78 (2013) (no duty of care); Alvarez v. BAC Home Loans Servicing, 228 

Cal. App. 4th 941, 945-50 (2014) (duty of care).

In the absence of some guidance from the Ninth Circuit, this court finds the 

reasoning in the Lueras decision to be more persuasive, and finds that a servicer, as any 

financial institution, owes no duty of care to a borrower in the provision of ordinary 

financial services such as loan modifications. 

4. Claim for declaratory relief

In the fourth cause of action, plaintiff seeks relief under both federal law (28 U.S.C. 

§ 2801 – which does not exist – plaintiff apparently intended to refer to 28 U.S.C. § 2201) 

and state law (Cal. Civ. P. Code § 1060). She seeks a judicial declaration as to the rights 

and duties of the parties – specifically, a declaration that PNC has no legal right to 

institute foreclosure proceedings.

This cause of action appears to be duplicative, and does not seek a determination 

of prospective rights. The court agrees with PNC that this claim should be dismissed.

CONCLUSION

In accordance with the foregoing, the court hereby GRANTS the motion. The 

motion to dismiss the first cause of action for violation of Civil Code § 2923.5, the claims 

asserted in the second cause of action for violation of Civil Code §§ 2924.10 and 2923.6, 

the third cause of action for negligence, and the fourth cause of action for declaratory 

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relief is GRANTED. The dismissal is WITH PREJUDICE. The motion to dismiss the 

§ 2923.7 claim asserted in the second cause of action is GRANTED, with leave to amend

as set forth above. 

Any amended complaint shall be filed no later than October 15, 2015. No new 

claims or parties may be added without leave of court or agreement of the defendant. 

The court will conduct a telephonic case management conference on September 

24, 2015, at 1:45 p.m. Counsel shall initiate the call. 

IT IS SO ORDERED.

Dated: September 16, 2015

__________________________________

PHYLLIS J. HAMILTON

United States District Judge

Case 4:14-cv-03543-PJH Document 61 Filed 09/16/15 Page 7 of 7