Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-07715/USCOURTS-cand-3_18-cv-07715-2/pdf.json

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

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ORDER – No. 18-cv-07715-LB

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

San Francisco Division

MURAD REED,

Plaintiff,

v.

CLEAR RECON CORP., and 

CITIMORTGAGE, INC. erroneously sued 

as CITIBANK, N.A.,

Defendants.

Case No. 18-cv-07715-LB

ORDER GRANTING IN PART AND 

DENYING IN PART CITIBANK, N.A.’S 

MOTION TO DISMISS

Re: ECF No. 39

INTRODUCTION

In 2018, the plaintiff Murad Reed, who is proceeding pro se, defaulted on a mortgage loan, 

and the loan servicer, CitiMortgage, Inc., initiated foreclosure proceedings by recording a Notice 

of Default and a Notice of Trustee’s Sale.

1 The plaintiff sued Citibank, N.A., claiming in part that 

Citibank filed the Notice of Default without contacting him to explore alternatives to foreclosure 

at least 30 days before filing the Notice, in violation of the California Homeowner Bill of Rights

(“HBOR”).

2 CitiMortgage (saying that it was sued erroneously as Citibank) removed the case to 

 

1 First Amended Complaint (“FAC”) – ECF No. 38 at 4–5 (¶¶ 15–17). Citations refer to material in the 

Electronic Case File (“ECF”); pinpoint citations are to the ECF-generated page numbers at the top of 

documents.

2 FAC – ECF No. 38 at 5 (¶ 17).

Case 3:18-cv-07715-LB Document 45 Filed 05/09/19 Page 1 of 10
ORDER – No. 18-cv-07715-LB 2

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federal court and moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6)

on the grounds that (1) there was no HBOR violation because the plaintiff’s loan modifications in 

2010 and 2014 showed his knowledge of his loan-modification options in 2018, and (2) the 

plaintiff did not plausibly plead his remaining claims.

3 The court denied the motion to dismiss the 

HBOR claim (and claims predicated on it) and dismissed the other claims, some with prejudice 

and others with leave to amend.4 The plaintiff filed an amended complaint, and Citibank (not 

CitiMortgage) moved to dismiss it because the plaintiff (1) named Citibank as the defendant

(requiring dismissal of all claims) and (2) did not cure the deficiencies in his complaint for the 

non-HBOR claims.

5 The court can decide the motion without oral argument under Civil Local 

Rule 7-1(b).6 The court denies the motion to dismiss on ground 1 (leaving the HBOR claims) and 

grants the motion to dismiss the non-HBOR claims with prejudice. 

STATEMENT7

In October 2006, the plaintiff bought a home in Oakland, California, with a $405,000 loan 

from Argent Mortgage Company, secured by a first deed of trust on the property.8 The deed was 

assigned initially to Mortgage Electronic Registration Systems, Inc. (MERS) and then to 

CitiMortgage.

9 The plaintiff defaulted on the loan and received a permanent loan modification 

 

3 Notice of Removal – ECF No. 1; Mot. – ECF No. 11.

4 Order – ECF No. 34 at 2.

5 FAC – ECF No. 39; Mot. – ECF No. 39.

6 All parties, including nominal defendant Clear Recon Corp., consented to the undersigned’s 

jurisdiction. Consent Forms – ECF Nos. 10, 19, 22; Notice of Removal – ECF No. 1 at 5 (¶ 11).

7 The facts are from the allegations in the first amended complaint, documents attached to the 

complaint, and documents submitted by Citi in its declarations attached to the prior motion to dismiss 

and in its request for judicial notice. The court considers the loan documents under the incorporationby-reference doctrine and takes judicial notice of the public records. Knievel v. ESPN, 393 F.3d 1068, 

1076–77 (9th Cir. 2005); Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001).

8 FAC – ECF No. 38 at 2–3 (¶ 3), 4–5 (¶ 15); Deed of Trust, Ex. 1 to RJN– ECF No. 12 at 6–24; Grant 

Deed, Ex. 2 to RJN – ECF No. 12 at 26–27.

9 Assignments of Deeds of Trusts, Exs. 3–6 to RJN – ECF No. 12 at 29–38. In 2014, the deed of trust 

was assigned to Citigroup Mortgage Loan Trust, Inc. Asset-Backed Pass-Through Certificates, Series 

Case 3:18-cv-07715-LB Document 45 Filed 05/09/19 Page 2 of 10
ORDER – No. 18-cv-07715-LB 3

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from CitiMortgage in 2010.10 He defaulted again, and a Notice of Default was recorded on 

December 15, 2014.11 In 2015, CitiMortgage approved a second loan modification under the 

Home Affordable Modification Program and rescinded the 2014 Notice of Default.12

The plaintiff defaulted again.

13 On March 15, 2018, Clear Recon Corp. recorded a Notice of 

Default, and on August 9, 2018, it recorded a Notice of Trustee’s Sale.14 The property has not 

been sold.15

The plaintiff alleges that “[t]he Notice of Default is false in that[] it fails to properly credit 

Plaintiff for the payments that Plaintiff made toward the mortgage and therefore overstates the 

amount of the plaintiff’s default if any.”16 The Notice of Trustee’s Sale similarly is “false” because 

it does not credit him for payments that he made and thus overstates the amount of his default.17

The Notice of Default “is defected and is of no force and effect because, in spite of their 

declaration, prior to recording the notice of default, neither the loan servicer nor the lender 

contacted Plaintiff in person or by telephone to discuss options of avoiding foreclosure as required 

by the California Homeowner Bill of Rights.”18 The assignments of the mortgage note and deed of 

trust were defective, “resulting in imperfect security interests and claims.”19

 

2007-AMC2, U.S. Bank National Association as trustee, the current beneficiary. Assignment, Ex. 7 to 

RJN – ECF No. 12 at 39–40. 

10 Modification Agreement, Ex. A to Dempsey Decl. – ECF No. 11-1 at 5–10. 

11 Notice of Default, Ex. 8 to RJN – ECF No. 12 at 42–45.

12 HAMP Modification Agreement, Ex. B to Dempsey Decl. – ECF No. 11-1 at 12–25; Notice of 

Rescission, Ex. 9 to RJN – ECF No. 12 at 47.

13 Mot. – ECF No. 11 at 9; Compl. – ECF No. 1 at 14 (¶ 16).

14 Mot. – ECF No. 39 at 9; FAC – ECF No. 38 at 5 (¶¶ 16–17); Notice of Default, Ex. B to FAC – ECF 

No. 38 at 53–57 and Ex. 10 to RJN – ECF No. 12 at 49–51; Notice of Trustee’s Sale, Ex. C to FAC –

ECF No. 38 at 56–57 and Ex. 11 to RJN – ECF No. 12 at 54–55.

15 Mot. – ECF No. 39 at 9.

16 FAC – ECF No. 38 at 5 (¶ 16).

17 Id. (¶ 17). 

18 Id.

19 Id.

Case 3:18-cv-07715-LB Document 45 Filed 05/09/19 Page 3 of 10
ORDER – No. 18-cv-07715-LB 4

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The plaintiff filed his complaint in state court, and CitiMortgage removed it to federal court 

based on diversity jurisdiction and moved to dismiss it for failure to state a claim under Federal 

Rule of Civil Procedure 12(b)(6).20 The court denied the motion to dismiss the HBOR claim

because, while a borrower’s knowledge of loan-modification options can mean that a violation of 

HBOR is not material, Foote v. Wells Fargo Bank, N.S., No. 15-CV-04465-EMC, 2016 WL 

2851627, at *5–6 (N.D. Cal. May 16, 2016), no case supports the conclusion as a matter of law 

that a borrower’s compliance with HBOR is excused because years earlier, a borrower obtained a 

loan modification. Instead, the cases finding non-material violations all involve ongoing loanmodification efforts.21 See, e.g., id. The court granted the motion to dismiss the non-HBOR claims 

for cancellation of instruments, negligence, constructive fraud, intentional infliction of emotional 

distress, declaratory relief, and a violation of § 17200 and gave leave to amend.22

The plaintiff filed an amended complaint.23 The complaint has 10 claims: 

(1) a violation of HBOR based on Citibank’s failure to (a) contact the plaintiff 30 days before 

recording the Notice of Default to discuss options for avoiding foreclosure, (b) notify him of his 

right to request a meeting in 14 days or provide him with a toll-free number to locate a HUDcertified counseling agency, and (c) notify him of his options for applying for a foreclosure 

alternative; 

(2) a violation of Cal. Civ. Code § 2923.5 by failing to give him notice and options to avoid 

foreclosure (essentially, the same claim as claim 1); 

(3) cancellation of instruments (the Notice of Default and the Notice of Trustee’s Sale) on the 

ground that they are invalid because (a) they fail to credit payments and overstate his default, (b) 

Citibank did not contact him 30 days before recording the Notice of Default to discuss foreclosure 

 

20 Notice of Removal – ECF No. 1 at 1–8; Mot. – ECF No. 11. 

21 Amend. Order – ECF No. 34 at 2.

22 Id. The court also dismissed the plaintiff’s slander-of-title claim with prejudice because the plaintiff 

could not cure the claim’s deficiencies and dismissed the plaintiff’s claims for HBOR treble damages 

and injunctive relief because they were not stand-alone claims but instead were remedies. Id. at 18–19.

23 FAC – ECF No. 38.

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ORDER – No. 18-cv-07715-LB 5

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options, in violation of HBOR, and (c) Citibank cannot show proper assignment of his note and 

trust, resulting in an imperfect security interest;

(4) negligence based on Citibank’s (a) failure to maintain accurate loan records that reflected 

the payments that the plaintiff made, (b) breach of its duty ensure that it did not defraud him, and 

(c) foreclosure without legal authority and proper documentation;

(5) constructive fraud based on the recording of false and fraudulent real-estate documents 

(meaning, the Notice of Default and Notice of Trustee’s Sale); 

(6) intentional infliction of emotional distress based on Citibank’s foreclosure proceedings;

(7) quiet title to enjoin Citibank from asserting any adverse claim to the plaintiff’s property 

interest; 

(8) declaratory relief regarding the validity of the assignments of the deeds of trust, the validity 

of the Notice of Default, and the parties’ property interests; 

(9) a violation of California’s unfair competition law, Cal. Bus. & Prof. Code § 17200, based 

on Citibank’s deceptive business practices of (a) improperly characterizing his accounts as in 

default, (b) misapplying his payments, (c) failing to provide him with adequate monthly statement 

information, (d) instituting improper or premature foreclosure proceedings, (e) collecting improper 

costs that are not legally due under the mortgage or California law, (f) charging him late fees for 

late payments (after failing to credit his actual payment), (g) failing to disclose the fees allowable 

under the mortgage contract, (h) ignoring grace periods, (i) executing and recording false and 

misleading documents, and (j) acting as beneficiaries and trustees without the legal authority to do 

so; and 

(10) injunctive relief to prevent foreclosure.24

 

24 Id. at 6–29 (¶¶ 20–127). The plaintiff seeks remand to the state court on the ground that there is no 

diversity jurisdiction, but — as the court held previously — there is diversity jurisdiction because the 

plaintiff is a citizen of California, CitiMortgage (which is incorporated New York and has its principal 

place of business in Missouri) is not, and the amount in controversy exceeds $75,000 because the loan 

balance is over $500,000. Notice of Removal – ECF No. 1 at 2–3 (¶¶ 5–7), 5 (¶ 13). Clear Recon Corp.

is a nominal party. Id. at 5 (¶ 11).

Case 3:18-cv-07715-LB Document 45 Filed 05/09/19 Page 5 of 10
ORDER – No. 18-cv-07715-LB 6

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Citibank moved to dismiss the complaint for failure to state a claim under Federal Rule of 

Civil Procedure 12(b)(1).25 The plaintiff opposed the motion.26

STANDARD OF REVIEW

1. Rule 12(b)(6) Standard for Motions to Dismiss

A complaint must contain a “short and plain statement of the claim showing that the pleader is 

entitled to relief” to give the defendant “fair notice” of what the claims are and the grounds upon 

which they rest. Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A 

complaint does not need detailed factual allegations, but “a plaintiff’s obligation to provide the 

‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic 

recitation of the elements of a cause of action will not do. Factual allegations must be enough to 

raise a claim for relief above the speculative level. . . .” Twombly, 550 U.S. at 555 (internal 

citations omitted). 

To survive a motion to dismiss, a complaint must contain sufficient factual allegations, which 

when accepted as true, “‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 

U.S. 662, 678 (2009) (quoting 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.” Id. “The plausibility standard is not akin to a 

‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted 

unlawfully.” Id. (quoting Twombly, 550 U.S. at 557). “Where a complaint pleads facts that are 

merely consistent with a defendant’s liability, it stops short of the line between possibility and 

plausibility of ‘entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557) (internal quotations 

omitted).

 

25 Mot. – ECF No. 39.

26 Opp. – ECF No. 43.

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ORDER – No. 18-cv-07715-LB 7

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If a court dismisses a complaint, it must give leave to amend unless the “pleading could not 

possibly be cured by the allegation of other facts.” Cook, Perkiss and Liehe, Inc. v. Northern 

California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990).

2. Rule 9(b) Standard for Pleading Fraud 

“In alleging fraud . . ., a party must state with particularity the circumstances constituting 

fraud. . . . Malice, intent, knowledge, and other conditions of a person’s mind may be alleged 

generally.” Fed. R. Civ. P. 9(b). This means that “[a]verments of fraud must be accompanied by 

the ‘who, what, when, where, and how’ of the misconduct charged.” Vess v. Ciba–Geigy Corp. 

USA, 317 F.3d 1097, 1106 (9th Cir. 2003). Like the basic “notice pleading” demands of Rule 8, a 

driving concern of Rule 9(b) is that defendants be given fair notice of the charges against them. In 

re Lui, 646 Fed. App’x 571, 573 (9th Cir. 2016) (“Rule 9(b) demands that allegations of fraud be 

specific enough to give defendants notice of the particular misconduct . . . so that they can defend 

against the charge and not just deny that they have done anything wrong.”) (quotation omitted); 

Odom v. Microsoft Corp., 486 F.3d 541, 553 (9th Cir. 2007) (Rule 9(b) requires particularity “so 

that the defendant can prepare an adequate answer”).

3. Pro Se Pleadings

“The Supreme Court has instructed the federal courts to liberally construe the inartful pleading 

of pro se litigants. It is settled that the allegations [in a pro se complaint,] however inartfully 

pleaded[,] are held to less stringent standards than formal pleadings drafted by lawyers.” Eldridge 

v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987) (internal citations and quotations omitted); see 

Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam); Resnick v. Hayes, 213 F.3d 443, 447 (9th 

Cir. 2000); Boag v. MacDougall, 454 U.S. 364, 365 (1982) (per curiam); Haines v. Kerner, 404 

U.S. 519, 520 (1972) (per curiam); Hamilton v. Brown, 630 F.3d 889, 893 (9th Cir. 2011).

Case 3:18-cv-07715-LB Document 45 Filed 05/09/19 Page 7 of 10
ORDER – No. 18-cv-07715-LB 8

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ANALYSIS

Citibank contends that the court should dismiss the complaint for two reasons: (1) all claims 

fail, including the HBOR claims that the court let stand previously, because the plaintiff sued 

Citibank despite knowing that the proper defendant is CitiMortgage, and (2) the plaintiff did not 

cure the deficiencies that the court identified when it dismissed the non-HBOR claims with leave 

to amend.27 The court denies the motion to dismiss on ground 1, which leaves the HBOR claims in 

place, and grants the motion to dismiss on ground 2, with prejudice and without leave to amend.

1. Failure to Name CitiMortgage

In his original and amended complaints, the plaintiff named Citibank, not CitiMortgage, as the

defendant.

28 CitiMortgage removed the case, noting that it was “erroneously sued as Citibank, 

N.A.”29 In its motion to dismiss, citing loan documents showing CitiMortgage as the loan servicer, 

CitiMortgage moved to dismiss the complaint under Rule 12(b)(6), noting at the end of the motion 

that it was the proper defendant, not Citibank.

30 After the plaintiff filed the amended complaint, 

Citibank (not CitiMortgage) moved to dismiss all claims on the ground that the plaintiff named 

Citibank, not CitiMortgage.31 The court denies the motion to dismiss on this ground.

As discussed in the Standard of Review, the court construes pro se pleadings liberally.

Eldridge, 832 F.2d at 1137. Also, if a court dismisses a complaint for failure to state a claim, it 

must give leave to amend unless the “pleading could not possibly be cured by the allegation of 

other facts.” Cook, 911 F.2d at 247.

Here, the court did not understand CitiMortgage’s statement — that it, not Citibank, was the 

proper defendant — to be an argument for dismissal for failure to name the proper defendant and 

 

27 Mot. – ECF No. 39 at 9.

28 Compl. – ECF No. 1; FAC – ECF No. 38.

29 Notice of Removal – ECF No. 1.

30 Mot. to Dismiss – ECF No. 11 at 21; see Ex. A to Compl. – ECF No. 1 at 40; Exs. A & B to 

Dempsey Decl. – ECF No. 11-1 at 5–25; Exs. 5–7 to RJN – ECF No. 4 at 33–40.

31 Id.

Case 3:18-cv-07715-LB Document 45 Filed 05/09/19 Page 8 of 10
ORDER – No. 18-cv-07715-LB 9

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instead read it as merely as a statement of fact. In any event, it did not order the plaintiff to amend 

to name CitiMortgage instead of Citibank. There is no utility in ordering amendment now. Instead,

liberally construing the complaint, the documents attached to it, and the documents that the court 

has judicially noticed, the court construes the complaint to be against CitiMortgage.32 See Munoz

v. United States, No. 10cv1003-MMA (NLS), 2011 WL 7146176, at *1 (S.D. Cal. Oct. 24, 2011)

(rejecting the defendant’s argument that the pro se plaintiff’s naming the United States of 

America, and not the Commissioner of the Social Security Administration, required dismissal of 

the case; the court instead liberally construed the complaint as naming the proper defendant) 

(collecting cases). Like the defendants in Munoz and the cases it collects, there is no prejudice to 

CitiMortgage. The docket already reflects that CitiMortgage is the defendant and that it was 

erroneously sued as Citibank.

Because the court denies the motion to dismiss on this ground, the HBOR claims stand for the 

reasons set forth in the court’s earlier order.33

2. Dismissal of Non-HBOR Claims

The plaintiff did not address the deficiencies that the court identified in its earlier order for the 

remaining, non-HBOR claims.34 The plaintiff’s new allegations — about performing his loan 

obligations, tender, the defendant’s exceeding the scope of lending activity, and the duty of care 

— are conclusory and do not change the court’s previous analysis.35 Because the court previously 

gave leave to amend, and the plaintiff did not cure the deficiencies, the court dismisses the nonHBOR claims with prejudice. 

CONCLUSION

The court denies the motion to dismiss the HBOR claim and (to the extent that they are 

predicated on the HBOR claim, the § 17200 claim and the claim for declaratory relief). For the 

 

32 The plaintiff refers to CitiMortgage as a defendant. See, e.g., Opp. – ECF No. 44 at 1.

33 Order – ECF No. 34 at 8–11.

34 Id. at 18.

35 See FAC – ECF No. 38 at 13 (¶ 46), 14 (¶ 49), 15 (¶¶ 54–55), and 16 (¶ 61).

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ORDER – No. 18-cv-07715-LB 10

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reasons set forth in its earlier order dismissing the non-HBOR claims with leave to amend, the 

court grants the motion to dismiss the non-HBOR claims and dismisses the claims for cancellation 

of instruments, quiet title, negligence, constructive fraud, intentional infliction of emotional 

distress, declaratory relief (to the extent that it is predicated on the non-HBOR claims), and a 

violation of § 17200 (to the extent that it is predicated on the non-HBOR claims). The dismissal is 

with prejudice.

Going forward, the court is amenable to an early summary-judgment motion on the issue of 

whether the HBOR violation was material.

This disposes of ECF No. 39.

IT IS SO ORDERED.

Dated: May 9, 2019

______________________________________

LAUREL BEELER

United States Magistrate Judge

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