Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-01525/USCOURTS-casd-3_09-cv-01525-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SUSAN E. NEWGENT,

Plaintiff,

CASE NO. 09cv1525 WQH (WMc)

ORDER

vs.

WELLS FARGO BANK, N.A., et al.,

Defendant.

HAYES, Judge:

The matter before the Court is Defendant Wells Fargo Bank, N.A.’s (“Wells Fargo”)

Motion to Dismiss Plaintiff’s First Amended Complaint (Doc. # 9).

BACKGROUND

On March 11, 2009, Plaintiff Susan E. Newgent filed a complaint against Defendants

in California Superior Court for the County of Imperial (Doc. # 1 at 2). On July 14, 2009

Wells Fargo removed to this Court (Doc. # 1). On July 20, 2009, Wells Fargo filed a Motion

to Dismiss (Doc. # 4). On September 4, 2009, Plaintiff filed her First Amended Complaint

(Doc. # 6). The Court dismissed Wells Fargo’s Motion to Dismiss as moot (Doc. # 13). Wells

Fargo filed its Motion to Dismiss Plaintiff’s First Amended Complaint on September 14, 2009

(Doc. # 9). The Court heard oral argument in the case on October 19, 2009.

Case 3:09-cv-01525-WQH-WMC Document 15 Filed 10/20/09 Page 1 of 9
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FACTUAL ALLEGATIONS OF THE COMPLAINT

Plaintiff purchased real property in Imperial County, California (Doc. # 6 at 1).

Plaintiff and her former husband obtained a mortgage from Wells Fargo (Doc. # 6 at 2).

Plaintiff and her former husband divorced on January 1, 2005 and Plaintiff subsequently

acquired title to the property through a quit claim deed (Doc. # 6 at 2). Plaintiff’s former

husband stopped paying child support, leaving Plaintiff unable to pay her mortgage (Doc. #

6 at 2). Plaintiff stopped paying her mortgage in March of 2008 (Doc. # 6 at 2). Plaintiff

attempted to obtain a loan modification, which Wells Fargo denied because she did not have

a job or steady source of income (Doc. # 6 at 2). In October of 2008, after Plaintiff remarried

and her financial situation changed, she contacted Wells Fargo again seeking a loan

modification (Doc. # 6 at 2). However, Defendant denied her application using her income

information from before she had remarried (Doc. # 6 at 3). When Plaintiff informed Wells

Fargo that it had used her old income information instead of taking into consideration her new

circumstances, Wells Fargo denied ever receiving that information (Doc. # 6 at 3). In late

October, Plaintiff received notice that her property would be sold in a Trustee’s Sale (Doc. #

6 at 3). 

On October 23, 2008, Plaintiff contacted Wells Fargo and spoke with “Susie” who told

Plaintiff that if she submitted a payment of $2,500.77, the sale of the property would not take

place (Doc. # 6 at 3). Plaintiff submitted the payment, but Wells Fargo proceeded with the

Trustee’s Sale (Doc. # 6 at 3). Wells Fargo then sued Plaintiff for Unlawful Detainer, which

resulted in Plaintiff being removed from the property (Doc. # 6 at 3).

Plaintiff alleges nine claims for relief: (1) Intentional Misrepresentation; (2)

Conversion; (3) Breach of Fiduciary Duty; (4) Breach of the Covenant of Good Faith and Fair

Dealing; (5) Declaratory Relief; (6) Quiet Title; (7) Equitable and Promissory Estoppel; (8)

Violation of the Equal Credit Opportunity Act; and (9) Violation of the Fair Credit Reporting

Act (“FCRA”).

Wells Fargo moved to dismiss all of Plaintiff’s claims (Doc. # 9). Plaintiff conceded

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in her response that dismissal is appropriate as to her Third Claim for Breach of Fiduciary

Duty, her Fourth Claim for Breach of the Covenant of Good Faith and Fair Dealing, and her

Eight Claim for Violation of the Equal Credit Reporting Act (Doc. # 10 at 2-3). 

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state a claim

upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure

8(a) provides: “A pleading that states a claim for relief must contain ... a short and plain

statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).

Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal

theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police

Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

To sufficiently state a claim to relief and survive a Rule 12(b)(6) motion, a complaint

“does not need detailed factual allegations” but the “[f]actual allegations must be enough to

raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

555 (2007). “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’

requires more than labels and conclusions, and a formulaic recitation of the elements of a cause

of action will not do.” Id. (quoting Fed. R. Civ. P. 8(a)(2)). When considering a motion to

dismiss, a court must accept as true all “well-pleaded factual allegations.” Ashcroft v. Iqbal,

--- U.S. ----, 129 S. Ct. 1937, 1950 (2009). However, a court is not “required to accept as true

allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable

inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see, e.g.,

Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 683 (9th Cir. 2009) (“Plaintiffs’ general

statement that Wal-Mart exercised control over their day-to-day employment is a conclusion,

not a factual allegation stated with any specificity. We need not accept Plaintiffs’ unwarranted

conclusion in reviewing a motion to dismiss.”). “In sum, for a complaint to survive a motion

to dismiss, the non-conclusory factual content, and reasonable inferences from that content,

must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret

Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted).

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ANALYSIS

A. Motion to Dismiss

(1) Intentional Misrepresentation

Plaintiff alleges she sent the check to Wells Fargo for $2,500.77 in reliance on Wells

Fargo’s agent’s representation that it would refinance the property if she made the payment

(Doc. # 6 at 4). She claims Wells Fargo had a fiduciary duty to her to “be truthful and look out

for her best interests” (Doc. # 6 at 4). She alleges she would not have made the payment if she

had known the property would have been sold despite the payment (Doc. # 6 at 4). Plaintiff

alleges she suffered “severe emotional distress in an amount in excess of $500,000” (Doc. #

6 at 5). Plaintiff alleges Wells Fargo’s conduct was “carried out in a despicable, deliberate,

cold, callus and intentional manner thereby entitling Plaintiff to recover punitive damages from

[Wells Fargo] in an amount according to proof” (Doc. # 6 at 5).

Wells Fargo contends Plaintiff’s Claim for Intentional Misrepresentation must be

dismissed because it is barred by the statute of frauds, fails to allege the necessary elements

to state a claim, improperly asserts the existence of a fiduciary duty, and fails to provide the

level of specificity required by Federal Rule of Civil Procedure 9(b). Plaintiff responds that

the statute of frauds is not a defense because “[t]he underlying basis for this lawsuit is the

theory of promissory estoppel contained in the Seventh Claim for relief” (Doc. # 10 at 3). 

To state a claim for fraud under California law, the plaintiff must allege “a

representation, usually of fact, which is false, knowledge of its falsity, intent to defraud,

justifiable reliance on the misrepresentation, and damage resulting from that justifiable

reliance.” Stansfield v. Starkey, 220 Cal. App. 3d 59, 72-23 (1990). Plaintiff has failed to

allege the necessary elements of fraud under California law. Plaintiff alleged that the

representation that Wells Fargo would renegotiate her loan if she made a $2,500.77 payment

was false, but does not allege that “Susie” was aware that it was false nor does she allege intent

to defraud (see Doc. # 6 at 4-5). Plaintiff claims she justifiably relied on Wells Fargo’s agent’s

statement because Wells Fargo had a fiduciary duty to her “to be truthful and look out for her

best interests,” a position contrary to California law (see Doc. # 6 at 4). Under California law,

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“[i]t has long been regarded as axiomatic that the relationship between . . . .a debtor and a

creditor” does not create a fiduciary duty. Price v. Wells Fargo, 213 Cal. App. 3d 465, 476

(1989). Plaintiff also fails to allege facts to support her claim for “damage resulting from” her

reliance on the allegedly fraudulent statement. Plaintiff alleged $500,000 in emotional

damages without providing any explanation of how Wells Fargo’s action caused her emotional

distress (see Doc. # 6 at 4-5). The Court concludes that the Complaint fails to state a claim for

Intentional Misrepresentation against Wells Fargo.

(2) Conversion

Plaintiff alleges she demanded that Wells Fargo return her payment for $2,500.77 when

she learned that the payment would not allow her to negotiate refinancing her mortgage (Doc.

# 6 at 5). Plaintiff alleges she had “a right to the possession” of the payment and that Wells

Fargo wrongfully converted those funds when it cashed the check (Doc. # 6 at 5). Plaintiff

alleges she suffered “economic damages in excess of $500,000” and “severe emotional distress

in an amount in excess of $500,000” (Doc. # 6 at 5). Plaintiff alleges Wells Fargo’s conduct

was “carried out in a despicable, deliberate, cold, callus and intentional manner thereby

entitling Plaintiff to recover punitive damages from [Wells Fargo] in an amount according to

proof” (Doc. # 6 at 6).

Wells Fargo contends Plaintiff’s Claim for Conversion should be dismissed because

Plaintiff concedes that she owed Wells Fargo money (Doc. # 9 at 14). Plaintiff asserts in her

response that the payment was not a mortgage payment, but rather a payment based on a

“separate agreement”with Wells Fargo to pay $2,500.77 in exchange for the opportunity to

stop the Trustee’s Sale and renegotiate the loan (Doc. # 10 at 5). Plaintiff did not allege a

separate agreement in her complaint (see Doc. # 6 at 5-6). 

“To establish a conversion, plaintiff must establish an actual interference with his

ownership or right of possession. . . .” Moore v. Regents of University of California, 51 Cal.

3d 120, 136 (Cal. 1990) (citation omitted). Plaintiff alleges she wrote a check to Wells Fargo

(Doc. # 6 at 1-2). Plaintiff concedes that Wells Fargo was her mortgage lender and that she

owed Wells Fargo additional money to repay her loan (Doc. # 6 at 2). Alleging Wells Fargo

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1

 This claim is plead as if the Trustee’s Sale had not yet taken place, but in fact, it is clear from

other parts of the complaint Plaintiff’s home was sold in a Trustee Sale in late October of 2008 (see

Doc. # 6 at 3).

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accepted a payment yet conceding that Plaintiff owed the payment cannot be the basis of a

conversion claim against Wells Fargo. The Court concludes that the Complaint fails to state

a claim for Conversion against Wells Fargo.

(3) Breach of Fiduciary Duty

Plaintiff has conceded this claim was not properly plead (Doc. # 10 at 1). Therefore,

the Court will not address it.

(4) Breach of the Covenant of Good Faith and Fair Dealing

Plaintiff has conceded this claim was not properly plead (Doc. # 10 at 1-2). Therefore,

the Court will not address it.

(5) Declaratory Relief 

Plaintiff alleges that she is entitled to “retain possessory rights1

 to the property based

on [Wells Fargo’s] promise to cease the sale of the property” and seeks a “judicial

determination and declaration of the rights of the parties” (Doc. # 6 at 8). Wells Fargo

contends Plaintiff’s claim for Declaratory Relief fails to state a claim because she has not

alleged that she offered tender (Doc. # 9 at 16-17). Plaintiff “contends she is able to retain

possessory rights to the property based on Defendant’s promise to cease the sale of the

property” and seeks a judicial determination that she retains such rights. In her response,

Plaintiff concedes that “recision requires tender” but states she is not seeking recision of the

mortgage, only that the sale be set aside (Doc. # 9 at 6). 

Plaintiff’s complaint makes clear that what she seeks is a judicial determination that she

may regain possession of her house, a remedy that would require recision not of her original

mortgage but of the subsequent Trustee’s Sale. Plaintiff is seeking recision and correctly

concedes that she cannot do so without tender. See Arnolds Management Corp. v. Eischen,

158 Cal. App. 3d 575, 578 (Cal. App. 2d Dist. 1984) (“It is settled that an action to set aside

a trustee's sale for irregularities in sale notice or procedure should be accompanied by an offer

to pay the full amount of the debt . . . .”). Because Plaintiff has not alleged that she offered

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tender, the Court concludes that the Complaint fails to state a claim for declaratory relief

against Wells Fargo.

(6) Quiet Title

Plaintiff alleges Wells Fargo’s claim to the property “is void based on [Wells Fargo’s]

purposeful misrepresentation to Plaintiff that by paying $2,500.77 to [Wells Fargo], the

Trustee’s Sale would cease and a loan modification be created” (Doc. # 6 at 9). Plaintiff seeks

to quiet title (Doc. # 6 at 9). 

Wells Fargo contends Plaintiff’s claim for Quiet Title suffers from the same deficiency

as her claim for Declaratory Relief—she failed to allege an offer of tender in a claim which

seeks to set aside the trustee sale. Because Plaintiff has not alleged that she offered tender, the

Court concludes that the Complaint fails to state a claim for quiet title against Wells Fargo.

See Arnolds Management Corp., 158 Cal. App. 3d at 578 (“It is settled that an action to set

aside a trustee's sale for irregularities in sale notice or procedure should be accompanied by an

offer to pay the full amount of the debt . . . .”). 

(7) Equitable and Promissory Estoppel

Plaintiff alleges she reasonably relied on Wells Fargo’s agent’s statement that her

payment would stop the Trustee’s Sale, resulting in her being deprived of the $2,500.77 and

of the property (Doc. # 6 at 9). Plaintiff alleges that she is therefore “entitled to special

damages and general damages” as well as attorney’s fees (Doc. # 6 at 9).

Wells Fargo contends Plaintiff’s Estoppel claims are deficient because Plaintiff fails to

show detrimental reliance, the statute of frauds bars her claim, and her reliance was not

reasonable (Doc. # 9 at 9-11). Plaintiff contends in her response that she “would not have sent

the check” and “did not take any legal action to stop the sale,” which shows detrimental

reliance, that estoppel defeats the statute of frauds, and that reliance was reasonable because

“Susie” is an agent of Wells Fargo (Doc. # 10 at 4-6)

“[D]etrimental reliance is an essential feature of promissory estoppel.” Healy v.

Brewster, 59 Cal. 2d 455, 463 (Cal. 1963). Plaintiff’s only allegation of detrimental reliance

in her complaint is that she sent in a payment for $2,500.77 in reliance on the promise to

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renegotiate her loan (Doc. # 6 at 9). As Wells Fargo points out, Plaintiff was already obligated

to make payments on her mortgage. The reliance was therefore not detrimental. Plaintiff also

fails to properly plead reasonable reliance, another required element of estoppel. See Thomson

v. International Alliance of Theatrical Stage Employees, 232 Cal.2d 446, 454 (1965).

Plaintiff’s only assertion that her reliance was reasonable is that “Plaintiff was justified in her

reliance upon the representation, as WELLS FARGO had a fiduciary duty to her to be truthful

and to look out for her best interests” (Doc. # 6 at 4). However, Wells Fargo does not have a

fiduciary duty to Plaintiff. See Price v. Wells Fargo, 213 Cal. App. 3d 465, 476 (1989).

Because Plaintiff has not alleged detrimental reliance and reasonable reliance, the Court

concludes that the Complaint fails to state a claim for equitable or promissory estoppel against

Wells Fargo.

(8) Violation of the Equal Credit Opportunity Act

Plaintiff has conceded this claim was not properly plead (Doc. # 10 at 1-2). Therefore,

the Court will not address it.

(9) Violation of the Fair Credit Reporting Act

Plaintiff alleges Wells Fargo violated the Fair Credit Reporting Act (“FCRA”), 15

U.S.C. §§ 1681 et seq. (Doc. # 6 at 10). The alleged violations are failure to provide credit

scores, failure to provide Notice to Home Loan Application, failure to provide Notices of

Adverse Action, failure to provide Risk-Based Pricing Notice, and failure to make

Investigative Consumer Report Disclosure (Doc. # 6 at 11). Plaintiff alleges she is entitled to

“rescind the loan transaction” and recover the money previously paid to Wells Fargo (Doc. 6

at 11).

Wells Fargo contends Plaintiff’s claim for violation of the FCRA fails to state a claim

because it fails to offer tender of the money Plaintiff received from Wells Fargo and fails to

allege that Plaintiff notified the credit reporting agencies (Doc. # 9 at 18-20). Plaintiff

concedes that tender would be required in order to get recision, but states that her FCRA claim

does not in fact seek recision (Doc. # 10 at 11). However, this is in fact what Plaintiff

explicitly requests in her FCRA claim: “Plaintiff are informed and believe, and thereon allege,

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that as a result of the conduct of defendants, Plaintiff are entitled to rescind the loan

transaction . . . .” (Doc. # 6 at 11). Plaintiff has conceded that her FCRA claim is defective

because it seeks recision of the loan and “[j]udgment that Plaintiff is the owner in fee simple

of the property and defendants have no interest in the property” without offering tender (see

Docs. # 6 at 12, # 10 at 6). The Court therefore concludes Plaintiff has failed to state a claim

for a violation of the FCRA.

B. Leave to Amend

Plaintiff requests leave to amend to Complaint, “in the event the Motion to Dismiss is

granted” as to all but the Eighth Claim (Doc. # 9 at 1-2). The request for leave to amend is

granted. Plaintiff may file an amended complaint within 14 days.

CONCLUSION

The Motion to Dismiss First Amended Complaint (Doc. # 9) is GRANTED. Plaintiff’s

request for leave to amend is GRANTED. Plaintiff may file an amended complaint with in

14 days of the date of this order.

DATED: October 20, 2009

WILLIAM Q. HAYES

United States District Judge

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