Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-01254/USCOURTS-cand-3_18-cv-01254-5/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-(Citizenship)

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

DAVID FOWLER, et al.,

Plaintiffs,

v.

WELLS FARGO BANK, N.A.,

Defendant.

Case No. 18-cv-01254-MMC 

ORDER GRANTING DEFERRED 

PORTION OF MOTION FOR RELIEF 

FROM JUDGMENT; SETTING ASIDE 

JUDGMENT; AFFORDING 

PLAINTIFFS LEAVE TO AMEND

Re: Dkt. No. 56

By order filed January 18, 2019, the Court denied in part and deferred in part 

ruling on plaintiffs "Motion for Relief from Judgment and Order Granting Defendant's 

Motion to Dismiss Plaintiffs' Complaint." Specifically, the Court denied the motion to the 

extent plaintiffs argued they were entitled to an order vacating the judgment for purposes 

of setting aside the Court's order dismissing the First Cause of Action alleged in the 

Complaint; the Court deferred ruling on plaintiffs' alternative request that the judgment be 

vacated for purposes of affording plaintiffs leave to amend to assert new claims, and 

afforded plaintiffs leave to file a proposed amended complaint.

Now before the Court is plaintiffs' Proposed First Amended Complaint ("Proposed 

FAC"), along with plaintiffs' supplemental brief in support thereof, as well as defendant's 

supplemental opposition. Having read and considered the parties' respective filings, the 

Court rules as follows.

Plaintiffs seek relief under Rule 60(b)(1) of the Federal Rules of Civil Procedure, 

which provides that a court, upon a showing of "excusable neglect," may "relieve a party

. . . from a final judgment." See Fed. R. Civ. P. 60(b). "Neglect," as used in Rule 

60(b)(1), means "negligence, carelessness [or] inadvertent mistake." See Briones v. 

Riviera Hotel & Casino, 116 F.3d 379, 381 (9th Cir. 1997). In this instance, the Court 

Case 3:18-cv-01254-MMC Document 63 Filed 03/26/19 Page 1 of 6
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

finds the failure of plaintiffs' counsel to request leave to amend to assert new claims, as 

part of their opposition to defendant's motion to dismiss, was the result of inadvertent 

mistake or carelessness. The Court next turns to the issue of whether such neglect is 

excusable.

The determination of whether a party’s neglect is "excusable" is "at bottom an 

equitable one, taking account of all relevant circumstances surrounding the party's 

omission." See Pioneer Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 

380, 395 (1993). In that regard, a district court must consider "the danger of prejudice to 

the [non-moving party], the length of the delay [caused by the movant's neglect] and its 

potential impact on judicial proceedings, the reason for the delay, including whether it 

was within the reasonable control of the movant, and whether the movant acted in good 

faith." See id.

Here, there is no showing as to bad faith, and the length of the delay is short;

accordingly, these two factors weigh in support of affording plaintiffs relief. Although, as 

defendant points out, plaintiffs do not expressly explain the reason for the delay, this 

factor weighs only slightly against affording plaintiffs relief, due to the short length of time, 

one month, between the Court's dismissal of the complaint and the filing of the instant 

motion. As to the danger of prejudice, however, the Court agrees with defendant that if a 

proposed amendment would be futile, affording plaintiffs relief from the judgment would 

needlessly prolong the litigation. Consequently, the remaining issue is whether the 

amendment proposed here would be futile. See Kilaita v. Wells Fargo Home Mortgage, 

2012 WL 3309661, at *2 (N.D. Cal. August 13, 2012) (stating, where plaintiffs seeking 

leave to reopen case for purposes of amendment failed to identify viable claim, "[t]he 

court is not inclined to allow pointless litigation which does nothing more than result in 

unnecessary expenses"). As to that remaining issue, the Court, for the reasons set forth 

below, finds the claims alleged in plaintiffs' Proposed FAC are deficient, but that plaintiffs

may be able to cure the deficiencies.

In the Proposed FAC, plaintiffs allege they applied for a loan modification that was 

Case 3:18-cv-01254-MMC Document 63 Filed 03/26/19 Page 2 of 6
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

denied on October 6, 2017, the denial being "based in part, on [defendant's] belief that 

[p]laintiffs' property was worth $540,000." (See Proposed FAC ¶¶ 2-3.) Plaintiffs further 

allege the denial, in addition to stating plaintiffs "were eligible for a short sale or deed in 

lieu," advised plaintiffs they could submit, no later than November 11, 2017, an appeal. 

(See Proposed FAC ¶ 3.) According to plaintiffs, they submitted a timely appeal in which 

they "indicated their belief that the property was worth only $400,000." (See Proposed 

FAC ¶ 4.)

Plaintiffs allege that, thereafter, they received three letters from defendant. The 

first letter, dated November 14, 2017, stated the appeal had been "sent to [d]efendant's 

underwriting team" and that "a decision on the appeal" would be made by December 9, 

2017. (See Proposed FAC ¶ 5.) The second, also dated November 14, 2017, stated 

defendant had "conducted a preliminary review . . . based on the estimated value" 

plaintiffs had provided, that its "preliminary test show[ed] the result may be positive if the 

property value [plaintiffs] provided [was] accurate," that a "new appraisal" was necessary, 

and that plaintiffs needed to "send a $200.00 deposit towards the cost of the appraisal 

within 15 calendar days." (See Proposed FAC ¶ 6.) The third letter, dated November 16, 

2017, i.e., just two days later, stated that, "[a]fter carefully reviewing the information 

[defendant] currently [had]," defendant "determined [plaintiffs] still [did] not meet the 

requirements for a loan modification." (See Proposed FAC ¶ 8.) Plaintiffs allege they 

were "perplexed by the inconsistencies" of the last two of the above-referenced letters, 

that they attempted without success to "reach their single point of contact," and that the 

employees they were able to contact all stated plaintiffs could not submit a modification 

application "unless their monthly income had changed." (See Proposed FAC ¶ 8.) 

Thereafter, according to plaintiffs, defendant, on January 5, 2018, "caused a Notice of 

Trustee's Sale to be recorded." (See Proposed FAC ¶ 9.)1

Based on the allegations set forth above, plaintiffs propose to assert four causes 

 

1Plaintiffs do not allege a Trustee's Sale has been conducted.

Case 3:18-cv-01254-MMC Document 63 Filed 03/26/19 Page 3 of 6
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

of action, titled, respectively, "Promissory Estoppel," "Intentional Misrepresentation," 

"Negligent Misrepresentation," and "Unfair Business Practices Under Cal. Bus. & Prof. 

Code § 17200, et seq."

Turning first to plaintiffs' proposed fraud claims, i.e., their claims for intentional and 

negligent misrepresentation,

2

the Court finds the claims, as proposed in the FAC, are 

deficient for two reasons.

First, the claims do not comply with Rule 9(b) of the Federal Rules of Civil 

Procedure, which requires a party alleging "fraud" to "state with particularity the 

circumstances constituting fraud." See Fed. R. Civ. P. 9(b). Here, in the Proposed FAC, 

plaintiffs fail to allege the "specific content" of the representations on which they rely. 

See Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (holding Rule 9(b) "requires 

. . . an account of the time, place, and specific content of the false representations"). 

Rather, plaintiffs rely on what is, at best, paraphrasing of statements allegedly made. 

See Wenger v. Lumisys, Inc., 2 Fed. Supp. 2nd 1231, 1246-47 (N.D. Cal. 1998) (holding 

allegations "paraphras[ing]" statements asserted to be fraudulent "lack[ ] the specificity 

required by Rule 9(b)" (citing cases)).

3

 Plaintiffs also fail to allege facts to support a 

finding that any representation was false at the time it was made, or facts to support a 

finding that defendant, at the time it made any alleged promise, did not intend to keep it. 

See United States ex rel. Swoben v. United Healthcare Ins. Co., 848 F.3d 1161, 1180 

 

2Under California law, negligent misrepresentation is a species of fraud, and, as 

such, is subject to Rule 9(b). See Kelley v. Rambus, Inc., 384 Fed. Appx. 570, 573 (9th 

Cir. 2010); see also Cal. Civil Code § 1710 (defining "deceit" as, inter alia, "assertion, as 

a fact, of that which is not true, by one who has no reasonable ground for believing it to 

be true").

3Although plaintiffs allege the letter dated October 6, 2017, contained a 

"misrepresentation" that defendant "would consider [p]laintiffs' appeal" (see Proposed 

FAC ¶ 17), said letter includes no such statement nor does it contain the word "consider"

(see McFadden Decl., filed February 27, 2018, Ex. A). Further, although plaintiffs allege 

that one of the letters dated November 14, 2017, contained a "misrepresentation" that 

defendant "would reevaluate [p]laintiffs' loan modification application based on a new 

property value" (see Proposed FAC ¶ 18), neither letter dated November 14, 2017 

contains such a statement (see McFadden Decl. ¶¶ D, E).

Case 3:18-cv-01254-MMC Document 63 Filed 03/26/19 Page 4 of 6
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

(9th Cir. 2016) (holding Rule 9(b) requires allegations specifying "what is false or 

misleading about a statement, and why it is false"); Fecht v. Price Co., 70 F.3d 1078, 

1082 (9th Cir. 1995) (holding plaintiff must "plead evidentiary facts" that establish 

"statement was untrue or misleading when made").

4

Additionally, plaintiffs fail to sufficiently plead reliance. Although plaintiffs, in 

conclusory fashion, allege that, "[i]n choosing to appeal the decision, [p]laintiffs gave up 

their ability to apply for a short sale or deed in lieu" (see Proposed FAC ¶ 4), plaintiffs fail 

to allege facts to support such assertion. Moreover, the last of the above-referenced 

letters states that "[i]f [plaintiffs] were already approved to participate in a short sale," 

such option was "still available to [plaintiffs]." (See McFadden Decl. Ex. E.)

Plaintiffs' claim alleging promissory estoppel is deficient for similar reasons. 

Although a promissory estoppel claim is not subject to Rule 9(b), as such claim does not 

require a showing that the "promisor [knew] of the falsity when making the promise," see

Aceves v. U.S. Bank, N.A., 192 Cal. App. 4th 218, 231 (2011), plaintiffs are required to 

allege facts to support a finding that "a promise clear and unambiguous in its terms" was 

made and that plaintiffs "reasonably relied" thereon, see Flintco Pacific, Inc. v. TEC 

Management Consultants, Inc., 1 Cal. App. 5th 727, 734 (2016) (setting forth elements of 

promissory estoppel claim). Plaintiffs, by the use of paraphrasing, have failed to 

sufficiently allege defendant made a clear and unambiguous promise or promises, and, 

as discussed above, plaintiffs have failed to sufficiently allege reliance thereon.

Lastly, plaintiffs' proposed § 17200 claim is deficient. To the extent the claim is 

derivative of the proposed fraud and promissory estoppel claims (see Proposed FAC

¶¶ 29-30), it is deficient for the reasons stated above. To the extent the claim is based on 

 

4To the extent plaintiffs are relying solely on nonperformance, such reliance is 

unavailing, as the failure to keep a promise, without more, is insufficient as a matter of 

law. See Tenzer v. Superscope, Inc., 39 Cal. 3d 18, 30 (1985) (rejecting argument that 

"subsequent failure to perform as promised warrants the inference that defendant did not 

intend to perform when [it] made the promise"; holding "something more than 

nonperformance is required").

Case 3:18-cv-01254-MMC Document 63 Filed 03/26/19 Page 5 of 6
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

alleged violations of the California Homeowner Bill of Rights ("HBOR") and § 2924 of the 

California Civil Code (see Proposed FAC ¶¶ 31-33), it is deficient for the reasons stated 

in the Court's orders of November 14, 2018, and January 18, 2019, specifically, that said 

claims are preempted by the Home Owner's Loan Act and, as to the § 2924 claim, 

subject to dismissal without leave to amend on additional grounds.

As, with one exception,5the deficiencies identified above are, at least potentially,

curable and defendant has not shown that allowing plaintiffs an opportunity to do so 

would result in cognizable prejudice, see Kilaita, 2012 WL 3309661, at *2 (finding "time 

and expense associated with continued litigation" carry little weight in prejudice analysis), 

the Court will set aside the judgment for purposes of allowing plaintiffs to file an FAC that 

does not contain said deficiencies. See Cook, Perkiss & Liehe, Inc. v. Northern California 

Collection Service Inc., 911 F.2d 242, 247 (9th Cir. 1990) (holding "district court should 

grant leave to amend even if no request is made, unless it determines that the pleading 

could not possibly be cured by the allegations of other facts"); see also TCI Group Life 

Ins. Plan v. Koebber, 244 F.3d 691, 701 (9th Cir. 2001) (holding, for purposes of Rule 

60(b)(1), delay, "to be considered prejudicial, ... must result in tangible harm such as loss 

of evidence, increased difficulties of discovery, or greater opportunity for fraud or 

collusion") (internal quotation and citation omitted).

CONCLUSION

For the reasons stated above, plaintiffs' motion to set aside the judgment is hereby 

GRANTED, and plaintiffs are hereby afforded leave to file, no later than April 19, 2019, a 

Revised First Amended Complaint.

IT IS SO ORDERED.

Dated: March 26, 2019

MAXINE M. CHESNEY

United States District Judge

 

5To the extent the proposed § 17200 claim is based on violations of HBOR and 

§ 2924, any amendment thereto would be futile.

Case 3:18-cv-01254-MMC Document 63 Filed 03/26/19 Page 6 of 6