Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_19-cv-01386/USCOURTS-cand-5_19-cv-01386-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1332 Diversity-Petition for Removal

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Case No. 19-CV-01386-LHK 

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ COMPLAINT WITH PREJUDICE 

IN PART AND WITHOUT PREJUDICE IN PART

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Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

RAJAMADAM C. VENKATRAMAN, 

et al.,

Plaintiffs,

v.

THE BANK OF NEW YORK MELLON, 

et al.,

Defendants.

Case No. 19-CV-01386-LHK 

ORDER GRANTING DEFENDANTS’

MOTION TO DISMISS PLAINTIFFS’ 

COMPLAINT WITH PREJUDICE IN 

PART AND WITHOUT PREJUDICE IN 

PART

Re: Dkt. No. 9

Plaintiffs Rajamadam Venkatraman and Radhika Venkatraman (“Plaintiffs”) sue 

Defendants The Bank of New York Mellon (“BONY Mellon”), Accredited Home Lenders, Inc. 

(“Accredited”), Mortgage Electronic Registration Systems, Inc. (“MERS”), Caliber Home Loans 

(“Caliber”), and Barrett Daffin Frappier Treder & Weiss, LLP (“Barrett”) (collectively, 

“Defendants”) for claims arising from a January 2015 foreclosure. Plaintiffs filed their complaint 

pro se, but are now represented by counsel. Before the Court is Defendants’ motion to dismiss 

Plaintiffs’ complaint. Having considered the parties’ submissions, the relevant case law, and the 

record in this case, the Court hereby GRANTS Defendants’ motion to dismiss Plaintiffs’ 

complaint with prejudice in part and without prejudice in part. 

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Case No. 19-CV-01386-LHK 

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ COMPLAINT WITH PREJUDICE 

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I. BACKGROUND

A. Factual Background

Plaintiffs are individuals and the former owners of the property at 1031 Harlan Drive, San 

Jose, CA (“Property”). ECF No. 1-1, Ex. A (“Compl.”), ¶ 1. Plaintiffs acquired title to the 

property on July 31, 1997. Id. ¶ 13. 

On or about December 1, 2006, Plaintiffs refinanced the Property and received an 

$860,000 loan from Defendant Accredited. Id. ¶ 14. The loan was secured by a deed of trust. Id.

The deed of trust lists Defendant MERS as beneficiary for Defendant Accredited and non-party 

Old Republic Title Company as trustee. Id.; see also Compl., Ex. 1 (2006 deed of trust). The 

deed of trust states that if Plaintiffs are in default under the deed of trust, the lender “may invoke 

the power of sale” and that the trustee may record a notice of default. Ex. 1 at 13. 

On March 24, 2010, pursuant to an Assignment of Deed of Trust recorded with the Santa 

Clara County Recorder’s Office, Defendant MERS assigned its interest as beneficiary in the deed 

of trust to Defendant BONY Mellon. ECF No. 10, Ex. B.1 

On April 21, 2014, Defendant Caliber executed a form titled “California Declaration of 

Compliance with (Cal. Civ. Code § 2923.55(C)).” Compl., Ex. 2 at 4. Defendant Caliber checked 

the box that stated the following: “The mortgage servicer has tried with due diligence to contact 

the borrower as required by California Civil Code § 2923.55(f) but has not made contact despite 

such due diligence. The due diligence efforts were satisfied on September 5, 2013.” Id. 

On May 21, 2014, pursuant to a Substitution of Trustee recorded with the Santa Clara 

County Recorder’s Office, the beneficiary Defendant BONY Mellon substituted Defendant Barrett 

 

1 Defendants ask the Court to take judicial notice of six publicly recorded documents. ECF No. 

10. Plaintiffs attached four of the documents to their Complaint, and thus the Court need not 

separately take judicial notice of those documents. Swartz v. KPMG, LLP, 476 F.3d 756, 763 (9th 

Cir. 2007) (holding that on a motion to dismiss, a court may consider “exhibits attached to the 

complaint”). The remaining documents, Exhibits B and C, are a publicly recorded assignment and 

a substitution of trustee, and are thus subject to judicial notice as public records. Lee v. City of Los 

Angeles, 250 F.3d 668, 690 (9th Cir. 2001) (holding that a court may take judicial notice of 

undisputed matters of public record). Moreover, Plaintiffs do not oppose the request for judicial 

notice or dispute any facts in Exhibit B or C. Thus, the Court grants Defendants’ request for 

judicial notice of Exhibits B and C. 

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Case No. 19-CV-01386-LHK 

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ COMPLAINT WITH PREJUDICE 

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as trustee in place of Old Republic Title Company. ECF No. 10, Ex. C. On June 16, 2014, 

Defendant Barrett recorded a notice of default with the Santa Clara County Recorder’s Office and 

began foreclosure proceedings against the Property. Compl. ¶ 15; see id., Ex. 2 (notice of default). 

On November 10, 2014, Defendant Barrett recorded a notice of trustee’s sale with the 

Santa Clara County Recorder’s Office. Compl. ¶ 17; see Compl., Ex. 3 (notice of trustee’s sale). 

The notice stated that a trustee’s sale was scheduled for December 8, 2014. Id. at 1. At the time, 

Plaintiffs’ unpaid loan balance was $936,891.18. Id. 

Plaintiffs allege that on an unspecified occasion, Plaintiffs requested a loan modification. 

Id. ¶ 19. Plaintiffs allege that Defendants “agreed to accept partial payment towards reinstatement 

of the defaulted loan as consideration for postponing the tentative Trustee’s Sale in furtherance of 

a loan modification.” Id. ¶ 21. Plaintiffs allege that on or about January 15, 2015, Plaintiffs made 

a partial payment of $60,000 to Defendant Caliber. Id. ¶ 22. 

On February 2, 2015, Defendant Barrett recorded a trustee’s deed upon sale that indicated 

Skyway Investments, LLC had purchased the Property. ECF No. 1-1, Ex. 4. 

B. Procedural History

On January 16, 2019, Plaintiffs, proceeding pro se, filed a complaint against Defendants in 

California Superior Court for the County of Santa Clara. Compl. at 1. Plaintiffs’ complaint 

alleges four causes of action: (1) violation of California Civil Code § 2923.5 against all 

Defendants; (2) breach of contract against all Defendants; (3) breach of good faith and fair dealing

against all Defendants; and (4) accounting and open book against Defendant Caliber. Id. at ¶¶ 25–

75. Plaintiffs’ complaint attaches several documents, including Plaintiffs’ deed of trust, the notice 

of default under the deed of the trust, and the notice of trustee’s sale of the Property. See id., Exs. 

1–4. 

On February 22, 2019, Defendant Barrett filed a declaration of non-monetary status in state 

court. ECF No. 1-1, Ex. B. Plaintiffs did not object to Defendant Barrett’s declaration of nonmonetary status in state court. ECF No. 1-1, Ex. E. Pursuant to California law, Defendant Barrett 

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is thus a nominal party and is not considered for purposes of removal jurisdiction. Hafiz v. 

Greenpoint Mortg. Funding, Inc., 652 F. Supp. 2d 1050, 1052 (N.D. Cal. 2009) (citing Cal. Civ. 

Code § 2924l(d)). 

On March 14, 2019, Defendants removed the case to federal district court on the basis of 

diversity jurisdiction. ECF No. 1. Defendants explained that Plaintiffs are residents of California, 

as alleged in the Complaint. Id. at 3. Defendant Accredited is a defunct entity that dissolved in 

December 2012. ECF No. 1-1, Ex. C. All other Defendants are incorporated and have their 

principal places of business in states other than California. ECF No. 1 at 4. 

The case was originally assigned to United States Magistrate Judge Nathanael Cousins. 

ECF No. 3. On March 21, 2019, Defendants filed the instant motion to dismiss. ECF No. 9 

(“Mot.”). On April 8, 2019, the case was reassigned to the undersigned after Plaintiffs failed to 

consent or decline magistrate judge jurisdiction by the April 3, 2019 deadline. ECF No. 12. 

On June 25, 2019, Plaintiffs filed an untimely opposition to Defendants’ motion to dismiss. 

ECF No. 17 (“Opp.”). On June 25, 2019, Jonathan Black was substituted in as Plaintiffs’ counsel. 

ECF No. 18. On July 3, 2019, Defendants filed their reply. ECF No. 22 (“Reply”). 

II. LEGAL STANDARD

A. Motion to Dismiss Under Federal Rule of Civil Procedure 12(b)(6)

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to include “a 

short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint 

that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 

12(b)(6). The United States Supreme Court has held that Rule 8(a) requires a plaintiff to plead 

“enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads 

factual content that allows the court to draw the reasonable inference that the defendant is liable 

for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility 

standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a 

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defendant has acted unlawfully.” Id. (internal quotation marks omitted). For purposes of ruling 

on a Rule 12(b)(6) motion, the Court “accept[s] factual allegations in the complaint as true and 

construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. 

Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

The Court, however, need not accept as true allegations contradicted by judicially 

noticeable facts, see Schwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and it “may look 

beyond the plaintiff’s complaint to matters of public record” without converting the Rule 12(b)(6) 

motion into a motion for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir. 

1995). Nor must the Court “assume the truth of legal conclusions merely because they are cast in 

the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per 

curiam) (internal quotation marks omitted). Mere “conclusory allegations of law and unwarranted 

inferences are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 

(9th Cir. 2004).

B. Leave to Amend

If the Court determines that a complaint should be dismissed, it must then decide whether

to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to 

amend “shall be freely given when justice so requires,” bearing in mind “the underlying purpose 

of Rule 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities.” 

Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (alterations and internal quotation 

marks omitted). When dismissing a complaint for failure to state a claim, “a district court should 

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

the pleading could not possibly be cured by the allegation of other facts.” Id. at 1130 (internal 

quotation marks omitted). Accordingly, leave to amend generally shall be denied only if allowing 

amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the 

moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d 522, 532 

(9th Cir. 2008).

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ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ COMPLAINT WITH PREJUDICE 

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III. DISCUSSION

Defendants move to dismiss all four claims in Plaintiffs’ complaint. Defendants also argue 

that the Court should disregard Plaintiffs’ opposition to the instant motion as untimely. Under the 

Northern District of California’s Civil Local Rules, an opposition to a motion “must be filed and 

served not more than 14 days after the motion was filed.” Civ. L.R. 7-3(a). Defendants filed their 

motion to dismiss on March 21, 2019, but Plaintiffs did not file an opposition until June 25, 

2019—96 days after Defendants’ motion and 82 days after the deadline to oppose. Even if the 

Court considers Plaintiffs’ untimely opposition, Plaintiffs’ complaint fails to state a claim. 

Plaintiffs’ untimely opposition offers no argument on certain claims and primarily requests leave 

to amend. See Opp. at 7 (stating that plaintiff “requests leave to amend to assert additional facts 

and correct mistakes as to dates”). The Court addresses each of Plaintiffs’ claims of action in turn. 

A. California Civil Code § 2923.5 

Plaintiffs first allege that Defendants violated California Civil Code § 2923.5. Compl. at 

¶¶ 25–29. Under California Civil Code § 2923.5, a notice of default “shall include a declaration 

that the mortgage servicer has contacted the borrower, has tried with due diligence to contact the 

borrower as required by this section, or that no contact was required because the individual did not 

meet the definition of ‘borrower.’” Cal. Civ. Code § 2923.5(b). Plaintiffs allege that Defendants 

violated Section 2923.5 because no Defendant contacted Plaintiffs “in person or by telephone to 

assess the borrower’s financial situation” and because Defendants included no compliant 

declaration in the notice of default. Compl. at ¶ 27. 

Defendants move to dismiss Plaintiffs’ claim for violation of Section 2923.5 on three 

grounds, including that (1) the statute of limitations bars Plaintiffs’ complaint; (2) Section 2923.5 

provides no post-foreclosure remedy; and (3) Plaintiffs’ complaint fails to set forth facts sufficient 

to allege non-compliance with Section 2923.5. 

Because Defendants’ second argument requires dismissal of Plaintiffs’ Section 2923.5 

claim without leave to amend, the Court does not address Defendants’ other arguments. Without 

exception, California state courts and the Ninth Circuit have held that Section 2923.5 provides a 

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borrower plaintiff a right of action only before foreclosure occurs—and the foreclosure sale of the 

Property occurred more than four years before Plaintiffs filed suit. Specifically, the California 

Court of Appeal has held that a plaintiff’s right of action under § 2923.5 “is limited to obtaining a 

postponement of an impending foreclosure to permit the lender to comply with section 2923.5.” 

Mabry v. Superior Court, 185 Cal. App. 4th 208, 214 (2010); see also Skov v. U.S. Bank Nat’l 

Ass’n, 207 Cal. App. 4th 690, 696 (2012) (explaining that the “only remedy” for noncompliance 

with Section 2923.5 is postponement of foreclosure). Similarly, the Ninth Circuit held in In re 

Turner, 859 F.3d 1145 (9th Cir. 2017), that the borrower plaintiffs lacked a remedy under Section 

2923.5 because the foreclosure sale of the subject property had already occurred. Id. at 1150. 

Per Plaintiffs’ own complaint, Defendants have already “foreclosed on the Subject 

Property.” Compl. at ¶ 24. Moreover, Plaintiffs attach to their complaint the notice of trustee’s 

sale, which indicates that on January 20, 2015, Defendant Barrett sold the Property at foreclosure 

to Skyway Investments, LLC. Id., Ex. 4. Thus, no remedy is available under Section 2923.5, and 

the Court grants Defendants’ motion to dismiss Plaintiffs’ Section 2923.5 claim. 

Because the foreclosure sale occurred more than four years ago, per public records 

attached to Plaintiffs’ complaint, and because Section 2923.5 permits a right of action only prior to 

foreclosure, the Court finds that any amendment would be futile. Leadsinger, Inc., 512 F.3d at 

532. 

The Court also notes that Plaintiffs’ opposition does not even mention Section 2923.5, let 

alone offer argument in response to Defendants’ motion. The Court construes Plaintiffs’ failure to 

oppose Defendants’ motion to dismiss Plaintiffs’ Section 2923.5 claim—even after Plaintiffs 

obtained counsel and Plaintiffs’ counsel filed an opposition to Defendants’ motion more than three 

months after the motion was filed—as Plaintiffs’ abandonment of that claim. See Qureshi v. 

Countrywide Home Loans, Inc., 2010 WL 841669, at *6 n.2 (N.D. Cal. Mar. 10, 2010) (deeming 

plaintiff’s failure to address claims challenged in a motion to dismiss an “abandonment of those 

claims”). Plaintiffs’ abandonment of the Section 2923.5 claim provides another reason to deny 

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leave to amend. Thus, the Court grants Defendants’ motion to dismiss Plaintiffs’ Section 2923.5 

claim with prejudice. 

B. Breach of Contract 

Plaintiffs next allege that Defendants are liable for breach of contract. Compl. ¶¶ 30–40. 

To state a breach of contract claim under California law, a plaintiff must plead “a contract, 

plaintiff’s performance or excuse for failure to perform, defendant’s breach and damage to 

plaintiff resulting therefrom.” McKell v. Wash. Mut., Inc., 142 Cal. App. 4th 1457, 1489 (2006). 

Plaintiffs’ breach of contract claim concerns two separate agreements, which the Court discusses 

in turn. 

1. Breach Based on January 2015 Oral Loan Modification Agreement

Plaintiffs allege that on January 15, 2015, Plaintiffs entered an oral agreement with 

Defendants Caliber and Barrett “to reinstate the defaulted mortgage in installment payments,” but 

that Defendants breached the oral agreement by selling the Property at a January 20, 2015 

foreclosure sale. Compl. ¶ 31. Plaintiffs’ opposition states that Plaintiffs received a loan 

modification on November 6, 2014, rather than January 15, 2015. Opp. at 3. However, the Court 

relies only on the allegations as pled in the complaint, on documents attached to the complaint, 

and on documents properly subject to judicial notice. Swartz, 476 F.3d at 763. Regardless, the 

precise date of the alleged oral agreement is immaterial to the deficiencies with Plaintiffs’ claim. 

Defendants argue that Plaintiffs’ claim for breach of the oral agreement is time-barred. 

The Court agrees. Under California law, the statute of limitations for a claim for breach of an oral 

contract claim is two years. Cal. Civ. Proc. Code § 339 (holding that a plaintiff must initiate 

within two years “[a]n action upon a contract, obligation or liability not founded upon an 

instrument of writing”). Plaintiffs allege that Plaintiffs and Defendant entered an oral agreement 

on January 15, 2015 and that Defendants breached the agreement on January 20, 2015 by selling 

the Property at a foreclosure sale. Compl. ¶ 31. Thus, the statute of limitations expired in January 

2017, two years before Plaintiffs filed their lawsuit on January 16, 2019. 

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Further, as Defendants point out, California’s statute of frauds, Cal. Civ. Code § 1624, bars 

any oral agreement from postponing a scheduled foreclosure sale—precisely the substance of the 

alleged oral agreement between Plaintiffs and Defendants. See Garcia v. World Savings, FSB, 183 

Cal. App. 4th 1031, 1039 (2010) (holding that an “oral promise to postpone a foreclosure sale or 

to allow a borrower to delay monthly mortgage payments is unenforceable”); see also Khan v. 

CitiMortgage, Inc., 975 F. Supp. 2d 1137 (E.D. Cal. 2013) (noting that because mortgages and 

deeds of trust are subject to the statute of frauds, any agreements to modify a mortgage or deed of 

trust is also subject to the statute of frauds). Moreover, “[a] written contract may not be modified 

by an oral agreement, unless that oral agreement is memorialized in writing and signed by the 

parties.” Khan, 975 F. Supp. 2d at 1137 (citing Cal. Civ. Code § 1698(b)). 

In opposition, Plaintiffs make no allegation that Plaintiffs and Defendants reached a 

written loan modification agreement. Plaintiffs argue only that the January 15, 2015 oral 

agreement is subject to an exception to the statute of frauds, but do not specify which exception. 

Opp. at 5. Plaintiffs’ alleged payment of $60,000 is not an exception to the statute of frauds. See 

Secrest v. Sec. Nat’l Mortg. Loan Trust 2002-2, 167 Cal. App. 4th 544, 555 (2008) (“The payment 

of money is not sufficient party performance to take an oral agreement out of the statute of frauds, 

for the party paying money under an invalid contract . . . has an adequate remedy at law.”) 

(internal quotation marks and citations omitted) (alterations in original). Thus, Plaintiffs’ 

complaint fails to allege facts sufficient to state a claim for breach of contract based on the January 

2015 oral agreement. 

Accordingly, the Court dismisses Plaintiffs’ breach of contract claim predicated on the 

January 2015 oral agreement. Because granting Plaintiffs an additional opportunity to amend the 

complaint would not be futile, cause undue delay, or unduly prejudice Defendants, and Plaintiffs 

have not acted in bad faith, the Court grants leave to amend. See Leadsinger, Inc., 512 F.3d at 

532.

2. Breaches of the Deed of Trust 

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Plaintiffs also appear to allege that Defendants breached the deed of trust in two respects: 

(1) by invalidly substituting a trustee who then lacked the authority to foreclose on the Property; 

and (2) by failing to provide Plaintiffs with written notice before acceleration. Defendants

contend that Plaintiffs’ allegations are insufficient to state a claim, and Plaintiffs’ opposition offers 

no argument in response. The Court addresses Plaintiffs’ two theories in turn. 

First, Plaintiffs allege that Defendants breached the deed of trust by foreclosing on the 

Property because Defendant Barrett lacked the authority to foreclose. Compl. at ¶ 34. Relatedly, 

Plaintiffs allege that Defendants failed to validly substitute Defendant Barrett as trustee. Id. ¶ 38. 

However, because, as explained below, Defendant Barrett was validly substituted as trustee and 

thus possessed the authority to foreclose, Plaintiffs’ allegations are insufficient to state a claim for 

breach of contract. 

In this case, the deed of trust contains an express provision that if Plaintiffs are in default 

under the deed, the lender “may invoke the power of sale” and the trustee may record a notice of 

default. Compl., Ex. 1 at 13. Under California law, the “trustee, mortgagee or beneficiary or any 

of their authorized agents” may record a notice of default. Cal. Civ. Code § 2924(a)(1); see also 

Moeller v. Lien, 25 Cal. App. 4th 822, 830 (1994) (explaining how § 2924 and subsequent 

provisions “provide a comprehensive framework for the regulation of a nonjudicial foreclosure 

sale pursuant to a power of sale contained in a deed of trust”). Furthermore, under California Civil 

Code § 2934a, the beneficiary “may make a substitution of trustee . . . to conduct the foreclosure 

and sale.” Kachlon v. Markowitz, 168 Cal. App. 4th 316, 334 (2008); see also Cal. Civ. Code § 

2934a(a)(1) (stating that the trustee “may be substituted by the recording in the county in which 

the property is located of a substitution executed and acknowledged by . . . all of the beneficiaries 

under the trust deed”). 

Here, although Old Republic Title Company was the original trustee empowered to record 

a notice of default, Defendant Barrett was later substituted in as trustee. On May 21, 2014, 

pursuant to a Substitution of Trustee recorded with the Santa Clara County Recorder’s Office, the 

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beneficiary Defendant BONY Mellon substituted Defendant Barrett as trustee in place of Old 

Republic Title Company. ECF No. 10, Ex. C. Thus, because the beneficiary Defendant BONY 

Mellon executed the substitution and recorded the substitution in Santa Clara County, in 

compliance with California Civil Code § 2934a, the substitution of Defendant Barrett as trustee 

was proper. As a result, under the deed of trust, and in accordance with California Civil Code § 

2924, Defendant Barrett was empowered as trustee to invoke the power of sale and record the 

notice of default. See Cal. Civ. Code § 2924(a)(1). 

Second, Plaintiffs allege that Defendants breached the deed of trust by failing to provide 

Plaintiffs written notice prior to acceleration. Compl. ¶ 39. The deed of trust provides that 

“[l]ender shall give notice to Borrower prior to acceleration following Borrower’s breach of any 

covenant or agreement in this Security Instrument.” Compl., Ex. 1 at 13. An acceleration clause 

provides the lender the opportunity to “accelerate” the borrower’s debt, such that the debt becomes 

immediately due and payable. See In re Crystal Props., Ltd., L.P., 268 F.3d 743, 748 (9th Cir. 

2001); see also Thomas v. Fed. Nat’l Mortg. Ass’n, 408 F. App’x 122, 122 (9th Cir. 2011) 

(rejecting claim that lender improperly accelerated borrower’s deed of trust). 

Here, Plaintiffs have failed to allege facts sufficient to state a breach of contract claim 

because Plaintiffs do not even allege that Defendants accelerated Plaintiffs’ debt under the deed of 

trust. The only references to “acceleration” in the complaint are to Defendants’ alleged failure to 

provide notice of acceleration. See Compl. ¶¶ 39, 65. Accordingly, Defendants cannot have 

failed to provide notice to Plaintiffs prior to acceleration if Defendants never accelerated 

Plaintiffs’ debt. Thus, the Court dismisses Plaintiffs’ breach of contract claim predicated on the 

deed of trust. 

Because granting Plaintiffs an additional opportunity to amend the complaint would not be 

futile, cause undue delay, or unduly prejudice Defendants, and Plaintiffs have not acted in bad 

faith, the Court grants leave to amend. See Leadsinger, Inc., 512 F.3d at 532.

C. Breach of the Implied Covenant of Good Faith and Fair Dealing 

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ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ COMPLAINT WITH PREJUDICE 

IN PART AND WITHOUT PREJUDICE IN PART

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Next, Plaintiffs allege that Defendants breached the implied covenant of good faith and fair 

dealing. “It has long been recognized in California that ‘[t]here is an implied covenant of good 

faith and fair dealing in every contract that neither party will do anything which will injure the 

right of the other to receive the benefits of the agreement.’” Kransco v. Am. Empire Surplus Lines 

Ins. Co., 23 Cal. 4th 390, 400 (2000) (quoting Comunale v. Traders & Gen. Ins. Co., 50 Cal. 2d 

654, 658 (1958)). 

Plaintiffs’ allegations related to the implied covenant encompass many paragraphs in the 

complaint. See Compl. ¶¶ 41–66. Plaintiffs primarily include a long narrative alleging that 

Defendants induced Plaintiffs and others “to accept mortgages for which they were not qualified 

based on inflated property valuations and undisclosed disregard of [Defendants’] own 

underwriting standards.” Id. ¶ 46. However, to the extent that Plaintiffs’ implied covenant claim 

is based on events leading to the 2006 deed of trust, Plaintiffs’ implied covenant claim is timebarred. Under California law, the statute of limitations for a claim for breach of the implied 

covenant is either two years (when sounding in tort) or four years (when sounding in contract). 

Love v. Fire Ins. Exch., 221 Cal. App. 3d 1136, 1144 (2012). Under either statute of limitations, 

Plaintiffs’ claims predicated on events leading to the 2006 deed of trust are easily time-barred, as 

the statute of limitations expired in either 2008 or 2010. Plaintiffs filed their complaint in January 

2019—either nine or eleven years too late. 

Plaintiffs state in their opposition that Plaintiffs’ implied covenant claim is premised solely 

on Defendants’ alleged breach of the oral agreement to postpone foreclosure on the Property. 

Opp. at 6 (arguing that Defendants violated the implied covenant “when the Defendants took 

actions to represent to the Plaintiffs that only $60,000 was necessary to prevent the foreclosure on 

the Property, when it [sic] actuality the Defendants intended to foreclosure [sic] on the Property 

whether or not they received said payment”). That breach allegedly occurred in January 2015, 

when Defendants sold the Property at foreclosure. See Compl., Ex. 4 (notice of trustee’s sale 

stating that foreclosure sale occurred January 20, 2015). To the extent that Plaintiffs bring a claim 

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Case No. 19-CV-01386-LHK 

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ COMPLAINT WITH PREJUDICE 

IN PART AND WITHOUT PREJUDICE IN PART

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for tortious breach of the implied covenant, that claim is subject to a two-year statute of 

limitations. See Love, 221 Cal. App. 3d at 1144. Thus, the statute of limitations expired in 

January 2017, two years before Plaintiffs filed their January 16, 2019 complaint. 

Moreover, any claim for breach of the implied covenant sounding in contract fails for the 

same reasons that Plaintiffs’ breach of contract claims fail—Plaintiffs have failed to allege that the 

January 2015 oral loan modification was an enforceable contract. To state a claim for breach of 

the implied covenant sounding in contract, Plaintiffs must allege “(1) the parties entered into a 

contract; (2) the plaintiff fulfilled his obligations under the contract; (3) any conditions precedent 

to the defendant’s performance occurred; (4) the defendant unfairly interfered with the plaintiff’s 

rights to receive the benefits of the contract; and (5) the plaintiff was harmed by the defendant’s 

conduct.” Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. Supp. 2d 952, 968 (N.D. Cal. 2010) 

(internal citation and quotation marks omitted). Here, because Plaintiffs have not alleged the 

existence of an enforceable contract, Plaintiffs’ complaint fails to allege facts sufficient to state a 

claim for breach of the implied covenant. Accordingly, the Court grants Defendants’ motion to 

dismiss Plaintiffs’ claim for breach of the implied covenant. 

Because granting Plaintiffs an additional opportunity to amend the complaint would not be 

futile, cause undue delay, or unduly prejudice Defendants, and Plaintiffs have not acted in bad

faith, the Court grants leave to amend. See Leadsinger, Inc., 512 F.3d at 532.

D. Accounting

Lastly, Plaintiffs bring a claim for accounting against Defendants Caliber and Barrett. To 

state a claim for accounting, Plaintiffs must “allege a fiduciary relationship or other circumstances 

appropriate to the remedy; and a balance due from the defendant to the plaintiff that can only be 

ascertained by an accounting.” Flowers v. Wells Fargo Bank, N.A., 2011 WL 2748650, at *7 

(N.D. Cal. July 13, 2011); accord Teselle v. McLoughlin, 173 Cal. App. 4th 156, 179 (2009). 

Plaintiffs demand an accounting of the $60,000 that Plaintiffs allege they paid to 

Defendants pursuant to the alleged January 2015 oral loan modification agreement. Compl. ¶ 69. 

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Case No. 19-CV-01386-LHK 

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ COMPLAINT WITH PREJUDICE 

IN PART AND WITHOUT PREJUDICE IN PART

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Defendants contend that Plaintiffs have failed to state a claim for accounting because Plaintiffs do 

not allege a special relationship or that Defendants owe Plaintiffs a balance. 

The Court agrees with Defendants that Plaintiffs have failed to allege a fiduciary 

relationship necessary to support an accounting claim. In Flowers, the district court explained that 

“a lender does not owe a borrower or third party any duties beyond those expressed in the loan 

agreement, excepting those imposed due to special circumstance or a finding that a joint venture 

exists,” and is thus not subject to an accounting claim. 2011 WL 2748650, at *8 (quoting 

Resolution Trust Corp. v. BVS Development, Inc., 42 F.3d 1206, 1214 (9th Cir. 1994)); see also 

Perlas v. GMAC Mortg., LLC, 187 Cal. App. 4th 429, 436 (2010) (explaining that absent special 

circumstances, there is no fiduciary relationship between a borrower and a lender); Nymark v. 

Heart Fed. Savings & Loan Ass’n, 231 Cal. App. 3d 1089, 1093 n.1 (1991) (explaining that a 

lender owes a borrower no fiduciary duty because a lender “is entitled to pursue its own economic 

interests in a loan transaction”). 

Plaintiffs’ complaint does not allege that special circumstances existed such that Plaintiffs 

and Defendants entered a relationship beyond that of a lender and borrower. See Compl. ¶¶ 67–

75. Nor do Plaintiffs allege that Plaintiffs and Defendants entered a joint venture. Accordingly, 

because absent allegations of special circumstances, Defendants owe Plaintiffs no obligation to 

provide an accounting, the Court grants Defendants’ motion to dismiss Plaintiffs’ accounting 

claim. 

Further, Plaintiffs’ opposition does not even mention Plaintiffs’ accounting claim, let alone 

offer argument in response. The Court construes Plaintiffs’ failure to oppose Defendants’ motion 

to dismiss Plaintiffs’ accounting claim—even after Plaintiffs obtained counsel and Plaintiffs’ 

counsel filed an opposition to Defendants’ motion more than three months after the motion was 

filed—as Plaintiffs’ abandonment of that claim. See Qureshi, 2010 WL 841669, at *6 n.2 

(deeming plaintiff’s failure to address claims challenged in a motion to dismiss an “abandonment 

of those claims”). Accordingly, the Court dismisses with prejudice Plaintiffs’ abandoned 

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Case No. 19-CV-01386-LHK 

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ COMPLAINT WITH PREJUDICE 

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accounting claim. See Yee v. Select Portfolio, Inc., 2018 WL 6173886, at *6 (N.D. Cal. Nov. 26, 

2018) (dismissing with prejudice borrower plaintiff’s abandoned quiet title claim). 

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS Defendants’ motion to dismiss with 

prejudice in part and without prejudice in part. Plaintiffs’ claims for violation of California Civil 

Code § 2923.5 and accounting are dismissed with prejudice. Plaintiffs’ claims for breach of 

contract and breach of the implied covenant are dismissed with leave to amend. Should Plaintiffs 

elect to file an amended complaint, Plaintiffs shall do so within thirty days of this Order. Failure 

to meet this 30-day deadline will result in dismissal of the challenged claims with prejudice. 

Failure to cure the deficiencies identified in Defendants’ motion to dismiss may result in dismissal 

with prejudice of those challenged claims. Although Plaintiffs’ opposition suggests that Plaintiffs 

wish to add a promissory estoppel claim, Opp. at 8, Plaintiffs may not add new causes of action or 

parties without leave of the Court or stipulation of the parties pursuant to Federal Rule of Civil 

Procedure 15.

IT IS SO ORDERED.

Dated: July 11, 2019

______________________________________

LUCY H. KOH

United States District Judge

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