Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_19-cv-00015/USCOURTS-casd-3_19-cv-00015-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332nr Diversity-Notice of Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DANNY NAJOR and LINDA NAJOR,

Plaintiffs,

v.

WELLS FARGO BANK, N.A.,

Defendant.

Case No.: 3:19-cv-00015-H-AGS

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANT’S

MOTION TO DISMISS WITHOUT 

LEAVE TO AMEND

On March 22, 2019, Defendant Wells Fargo Bank N.A. (“Defendant”) filed a motion 

to dismiss Plaintiff Danny Najor’s and Plaintiff Linda Najor’s (collectively, “Plaintiffs”)

first amended complaint. (Doc. No. 11.) On April 5, 2019, Plaintiffs filed a response. 

(Doc. No. 15.) On April 12, 2019, Defendant filed a reply. (Doc. No. 16.) Also on April 

12, 2019, the Court submitted the motion on the parties’ papers and vacated the scheduled 

hearing. (Doc. No. 17.) For the reasons below, the Court grants in part and denies in part

the motion to dismiss without leave to amend. 

/ / /

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Background

The following facts are taken from the allegations in Plaintiffs’ first amended 

complaint. (Doc. No. 11.) Plaintiffs owned a home at Solana Beach. (Id. ¶ 7.) Defendant 

serviced the Plaintiffs’ home mortgage. (Id.) After Plaintiffs fell behind on payments, 

Defendant initiated foreclosure proceedings. (Id.) Plaintiffs filed a lawsuit against 

Defendant contending that Defendant violated the law during the forfeiture proceedings.

(Id. ¶ 8.) The parties settled. (Id.) Plaintiffs allege that as part of the settlement agreement, 

Defendant “agreed to forbear on any foreclosure efforts until November 15, 2018 to allow 

[Plaintiffs] to sell the house.” (Id.)

Plaintiffs received an all-cash $2.8 million offer for the house that was due to release 

contingencies on August 4, 2018. (Id. ¶ 9.) On August 1, 2018, Defendant posted a notice 

of trustee sale on the property, set for September 10, 2018. (Id.) Plaintiffs received a $3.1 

million offer on August 6, 2018, with a finance contingency. (Id.) Knowing that the buyer 

could not satisfy the finance contingency due to the notice of sale, Plaintiffs accepted the 

$2.8 million offer. (Id.)

Discussion

I. Legal Standards

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal 

sufficiency of the pleadings and allows a court to dismiss a complaint if the plaintiff has 

failed to state a claim upon which relief can be granted. See Conservation Force v. Salazar, 

646 F.3d 1240, 1241 (9th Cir. 2011). The Federal Rule of Civil Procedure 8(a)(2)’s 

plausibility standard governs Plaintiff’s claims. The Supreme Court has explained Rule 

8(a)(2) as follows:

Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a short and plain statement of the claim showing that the pleader is entitled to relief. 

As the Court held in [Bell Atlantic Corp. v. Twombley, 550 U.S. 544 (2007)], the pleading standard Rule 8 announces does not require detailed factual allegations, but it demands more than an unadorned, the-defendant- unlawfully-harmed-me accusation. A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will 

not do. Nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.

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Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009) (citations, quotation marks, and brackets 

omitted).

However, Federal Rule of Civil Procedure 9(b)’s particularity standard governs 

Plaintiffs’ fraud claim. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 

2003); Eidson v. Medtronic, Inc., 40 F. Supp. 3d 1202, 1235 (N.D. Cal. 2014). The Ninth 

Circuit has explained that:

Under Rule 9(b), a plaintiff must state with particularity the circumstances 

constituting fraud. This means the plaintiff must allege the who, what, when, 

where, and how of the misconduct charged, including what is false or misleading about a statement, and why it is false. Knowledge, however, may be pled generally.

Under [Ninth Circuit] case law, Rule 9(b) serves two principal purposes. First, allegations of fraud must be specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged 

so that they can defend against the charge and not just deny that they have done anything wrong. Thus, perhaps the most basic consideration for a federal court in making a judgment as to the sufficiency of a pleading for purposes 

of Rule 9(b) is the determination of how much detail is necessary to give adequate notice to an adverse party and enable that party to prepare a responsive pleading.

Second, the rule serves to deter the filing of complaints as a pretext for the discovery of unknown wrongs, to protect defendants from the harm that 

comes from being subject to fraud charges, and to prohibit plaintiffs from 

unilaterally imposing upon the court, the parties and society enormous social 

and economic costs absent some factual basis. By requiring some factual basis for the claims, the rule protects against false or unsubstantiated charges.

Consistent with these requirements, mere conclusory allegations of fraud are 

insufficient. Broad allegations that include no particularized supporting detail do not suffice, but statements of the time, place and nature of the alleged fraudulent activities are sufficient. Because this standard does not require absolute particularity or a recital of the evidence, a complaint need not allege a precise time frame, describe in detail a single specific transaction or identify the precise method used to carry out the fraud. 

United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1180 (9th Cir. 2016) (citations, 

quotation marks, alterations, and footnote omitted).

In reviewing a Rule 12(b)(6) motion to dismiss, “[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. 

“Factual allegations must be enough to raise a right to relief above the speculative level.” 

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Twombly, 550 U.S. at 555 (citation omitted). In addition, a court need not accept legal 

conclusions as true. Iqbal, 556 U.S. at 678. Further, it is improper for a court to assume 

that the plaintiff “can prove facts which it has not alleged or that the defendants have 

violated the . . . laws in ways that have not been alleged.” Assoc. Gen. Contractors of Cal., 

Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). Finally, a court may 

consider documents incorporated into the complaint by reference and items that are proper

subjects of judicial notice. See Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th 

Cir. 2010).

If the court dismisses a complaint for failure to state a claim, it must then determine 

whether to grant leave to amend. See Doe v. United States, 58 F.3d 494, 497 (9th Cir. 

1995). “A district court may deny a plaintiff leave to amend if it determines that allegation 

of other facts consistent with the challenged pleading could not possibly cure the 

deficiency, or if the plaintiff had several opportunities to amend its complaint and 

repeatedly failed to cure deficiencies.” Telesaurus VPC, LLC v. Power, 623 F.3d 998, 

1003 (9th Cir. 2010) (internal quotation marks and citations omitted).

II. Analysis

A. Breach of Contract Claim

Plaintiffs allege that Defendant breached the settlement agreement when it posted 

the notice of trustee sale. (Doc. No. 11 ¶¶ 10–14.) Plaintiffs argue that Defendant’s posting 

of the notice of trustee sale on August 1, 2018 constituted a repudiation of the contract. 

(Doc. No. 15 at 2.) Defendant argues that it did not breach any express term of the contract

in posting or recording the notice, that Plaintiffs’ allegations are vague and brief, and that 

Plaintiffs have not plausibly alleged damages. (Doc. No. 13-1 at 4–10.) The Court 

concludes that this issue is better addressed at a later stage in the proceedings when the 

record is more fully developed.

An “[a]nticipatory breach occurs when one of the parties to a bilateral contract 

repudiates the contract. The repudiation may be express or implied. An express 

repudiation is a clear, positive, unequivocal refusal to perform[.] . . . [A]n implied 

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repudiation results from conduct where the promisor puts it out of his power to perform so 

as to make substantial performance of his promise impossible[.]” Taylor v. Johnston, 15 

Cal. 3d 130, 137, 539 P.2d 425, 430 (1975) (internal citations omitted). If an anticipatory 

repudiation occurs, the injured party may either sue when the repudiation occurs or wait 

for performance under the contract. See id.; Inamed Corp. v. Kuzmak, 275 F. Supp. 2d 

1100, 1131 (C.D. Cal. 2002). 

Here, Plaintiffs argue that the public recordation of the notice of trustee sale 

constituted an anticipatory repudiation of the contract. (Doc. No. 15 at 2.) According to 

Plaintiffs, on August 1, 2018, Defendant posted a notice of trustee sale set for September 

10, 2018 (rather than the agreed upon November 15, 2018 date). (Doc. No. 11 ¶ 9.) The 

Court concludes that, under these circumstances, Plaintiffs have plausibly alleged an 

anticipatory repudiation by Defendant.

Defendant argues further that Plaintiff’s allegations are vague and brief, and that 

Plaintiffs have not plausibly alleged damages. (Doc. No. 13-1 at 4–10.) According to 

Plaintiffs, the notice of sale prevented another buyer from purchasing the home because of 

a finance contingency. (Doc. No. 11 ¶ 9.) After Defendant’s alleged repudiation, Plaintiffs 

sold the property before a foreclosure sale occurred. (See id.) They then sued for breach 

of contract arising from the posting of a notice of a trustee sale and its recordation, among 

other claims. (See Doc. No. 11.) They allege that they sold the property at a $300,000 loss 

as a result of the notice of trustee sale. The Court concludes that the issues raised by 

Defendant are better addressed at a later stage in the proceedings when the record is more 

fully developed. Specifically, the issue of whether the notice of trustee sale caused 

Plaintiffs’ damages is better decided once the finance contingency at issue is a part of the 

record. Moreover, Defendant’s argument that it quickly remedied the purported breach is 

also better addressed when the record is more fully developed. Accordingly, the Court 

declines to dismiss Plaintiffs’ breach of contract claim.

/ / /

/ / /

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B. Fraud Claim

Plaintiffs assert a claim for fraud. (Doc. No. 11 ¶¶ 15–20.) Defendant argues that 

Plaintiffs cannot convert their breach of contract claim into a tort claim, that Plaintiffs’ 

allegations do not satisfy the Rule 9(b) heightened pleading standard, and that Plaintiffs 

have failed to plead reliance and damages. (Doc. No. 13-1 at 10–13.) Plaintiffs argue that 

they have alleged all the necessary elements and supporting facts to maintain a fraud claim. 

(Doc. No. 15 at 4–5.) The Court concludes that Plaintiffs may assert a fraud claim and that 

Defendant’s remaining contentions are better addressed at a later stage in the proceedings 

when the record is more fully developed.

Preliminarily, the Court concludes that Plaintiffs may assert a fraud claim. Under 

California law, “a breach of contract is tortious only when some independent duty arising 

from tort law is violated.” Robinson Helicopter Co. v. Dana Corp., 34 Cal. 4th 979, 990, 

102 P.3d 268, 274 (2004). “[A] tortious breach of contract . . . may be found when . . . the 

breach is accompanied by a traditional common law tort, such as fraud or conversion[.]” 

Id. (citing Erlich v. Menezes, 21 Cal. 4th 543, 553–554 (1999)).

Under California law, “[t]he elements of fraud . . . are (1) a misrepresentation, (2) 

with knowledge of its falsity, (3) with the intent to induce another’s reliance on the 

misrepresentation, (4) justifiable reliance, and (5) resulting damage.” Conroy v. Regents 

of Univ. of California, 45 Cal. 4th 1244, 1255 (2009). As noted above, Rule 9(b)’s 

particularity standard governs Plaintiff’s fraud claim. See Vess, 317 F.3d at 1105; Eidson, 

40 F. Supp. 3d at 1235.

Defendant argues that Plaintiffs’ allegations do not satisfy the Rule 9(b) heightened 

pleading standard. (Doc. No. 13-1 at 10–13.) Plaintiffs contend that the Defendant 

misrepresented that it intended to resolve all the foreclosure actions in the agreement to 

settle Plaintiffs’ lawsuit because Defendant subsequently posted a notice foreclosure sale 

three months later. (Doc. No. 11 ¶ 15–20; Doc. No. 15 at 5.) According to Plaintiffs, the 

posting and recordation of the notice of trustee sale after the parties settled provides factual 

support for their allegation that Defendant intended to induce Plaintiffs’ reliance on the 

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misrepresentation. (Doc. No. 15 at 5.) Plaintiffs also add that they pled reliance and 

damages because they relied on the misrepresentation in settling the lawsuit and incurred 

damages by selling the property at a $300,000 loss. (Id. at 4–5.) Defendants contend that 

Plaintiffs have not provided sufficient factual support as to Defendant’s intent. (Doc. No. 

13-1 at 12.) As with the damages issue discussed above, the Court concludes that this issue 

is better addressed at a later stage in the proceedings when the record is more fully 

developed. Based on these allegations, the Court declines to dismiss Plaintiffs’ fraud 

claim.

C. Covenant of Good Faith and Fair Dealing Claim

Plaintiffs argue that, by recording the notice, Defendant interfered with their ability 

to benefit from the bargain and thereby breached the covenant of good faith and fair 

dealing. (Doc. No. 15 at 2.) Plaintiffs contend that the agreement expressly provides that 

Defendant was to forbear from conducting a foreclosure sale before November 15, 2018, 

in order to allow Plaintiffs the opportunity to conduct a private sale of the property. (Doc. 

No. 15 at 3.) By recording a notice of foreclosure sale, Plaintiffs continue, Defendant 

hampered Plaintiffs’ ability to conduct a private sale. (Id.) Defendant argues that Plaintiffs 

cannot cite a provision of the agreement that Defendant violated, and that Plaintiffs have 

not alleged how the posting and recordation of the notice of trustee sale interfered with the 

sale of the property. (Doc. No. 13-1 at 5–10.) The Court declines to dismiss Plaintiffs’ 

claim for breach of the covenant of good faith and fair dealing.

Under California law, a covenant of good faith and fair dealing is implied into every 

contract, unless the contract expressly provides otherwise. Kelly v. Skytel Commc’ns, Inc., 

32 F. App’x 283, 285 (9th Cir. 2002) (citing Carma Developers (Cal.), Inc. v. Marathon 

Dev. Cal., Inc., 2 Cal. 4th 342, 371 (1992) (In Bank)). The covenant of good faith and fair 

dealing “requires each party to do all things reasonably contemplated by the contract’s 

terms to accomplish its goals, and to refrain from doing anything that would destroy or 

injure another party’s right to receive the fruits of the contract.” Id. (citing Kendall v. 

Ernest Pestana, Inc., 40 Cal.3d 500 (1985) (In Bank); Ocean Servs. Corp. v. Ventura Port 

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Dist., 15 Cal. App. 4th 1762, 1780–81 (1993)).

Here, according to the agreement, Defendant was to forbear on conducting a 

foreclosure sale to allow Plaintiffs an opportunity to list, obtain and offer for, and sell the 

property: 

3.2 If Plaintiffs timely and fully comply with their obligations in 

Section 3.1 of this Agreement, Defendants agree to:

(a) Forbear from conducting a foreclosure sale of the Property 

for a period of six (6) months from May 15, 2018, such that no trustee’s 

sale of the Property will occur sooner than November 15, 2018, in order 

to allow Plaintiffs an opportunity to list, obtain an offer for, and

consummate a private sale of the Property. . . .

(Doc. 11 at 7.) If, as Plaintiffs allege, the foreclosure notice prevented the private sale from 

occurring, that notice arguably hampered Plaintiffs’ “opportunity to list, obtain an offer 

for, and consummate a private sale of the Property.” In other words, the recordation 

potentially could have interfered with Plaintiffs’ ability to benefit from the bargain. 

Accordingly, Plaintiffs have alleged a claim for beach of the covenant of good faith and 

fair dealing.

D. Nuisance Claim

Plaintiffs argue that the recordation of the notice of trustee sale constituted a private 

nuisance. (Doc. No. 11 ¶¶ 24–30.) Defendant argues that the allegations do not constitute 

a nuisance claim. (Doc. No. 13-1 at 14–15.) The Court agrees with Defendant.

Under California law, a nuisance is defined as, in part, “[a]nything which is injurious 

to health . . . or is indecent or offensive to the senses, or an obstruction to the free use of 

property, so as to interfere with the comfortable enjoyment of life or property. . . .” Cal. 

Civ. Code § 3479. Further, “[t]o qualify as a nuisance ‘the interference must be both 

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substantial and unreasonable.’” Redevelopment Agency of City of Stockton v. BNSF Ry. 

Co., 643 F.3d 668, 673 (9th Cir. 2011) (citations and emphasis omitted).

Here, Plaintiffs have not met their threshold burden in alleging “an obstruction to 

the free use of property.” Cal. Civ. Code § 3479. Plaintiffs allege that “Defendant created 

a condition that was an obstruction to the free use of the property by clouding the title by 

recording a notice of a September 10, 2018 foreclosure sale.” (Doc. No. 11 ¶ 26.) Plaintiffs 

provide no authority for the proposition that the recordation of a notice of trustee sale 

constitutes a nuisance. Nor could the Court find any such authority. To the contrary, courts 

have dismissed similar nuisance claims in cases challenging actions taken to facilitate a 

foreclosure. See, e.g., Boles v. Merscorp, Inc., No. CV 08-1989 PSG (EX), 2009 WL 

734133, at *7 (C.D. Cal. Mar. 18, 2009) (“While the institution of foreclosure proceedings 

touches upon Plaintiff’s interest in his land, it does not interfere with his ‘use and 

enjoyment of the land’ as that term is understood in nuisance law.” (citing 13 Witkin on 

California Law §§ 133–52 (10th ed. 2005)); Dumas v. Saxon Mortg. Servs., Inc., No. 1:12-

CV-00382-AWI, 2012 WL 1801694, at *4 (E.D. Cal. May 16, 2012) (holding that while

multiple, middle-of-the-night telephone calls concerning a foreclosure were “perhaps a 

‘nuisance’ in the ordinary sense of the word,” they did not constitute an interference with 

the use and enjoyment of land and thus were not “a legal nuisance.”). Accordingly, the 

Court dismisses Plaintiffs’ nuisance claim. Given the absence of case law supporting a 

nuisance claim on these facts, the Court concludes that Plaintiffs cannot cure the deficiency 

in their nuisance claim and denies leave to amend, absent further order of the Court.1

 See

Telesaurus, 623 F.3d at 1003 (“A district court may deny a plaintiff leave to amend if it 

determines that allegation of other facts consistent with the challenged pleading could not 

possibly cure the deficiency[.]” (internal quotation marks and citations omitted)).

/ / /

 

1 If Plaintiffs believe they can allege additional facts supporting their nuisance claim, they may file a 

motion for reconsideration alleging the additional facts and supporting case law. However, the Court 

notes that this would cause delay of the Early Neutral Evaluation conference and other proceedings. 

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Conclusion

For the foregoing reasons, the Court grants in part and denies in part Defendant’s

motion to dismiss. The Court orders Defendant to file a response to the first amended 

complaint on or before May 24, 2019.

IT IS SO ORDERED.

DATED: April 24, 2019

 

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

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