Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-04223/USCOURTS-cand-3_16-cv-04223-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Fraud

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

PHYLLIS SPARKS-MAGDALUYO,

Plaintiff,

v.

NEW PENN FINANCIAL, LLC,

Defendant.

Case No. 16-cv-04223-MEJ 

ORDER RE: MOTION TO DISMISS

Re: Dkt. No. 8

INTRODUCTION

Pending before the Court is Defendant New Penn Financial, LLC d/b/a Shellpoint 

Mortgage Servicing‘s (―Defendant‖) Motion to Dismiss pursuant to Federal Rules of Civil 

Procedure 12(b)(6) and 12(b)(7). Plaintiff filed an Opposition (Dkt. No. 13), but Defendant did 

not file a reply. The Court previously found this matter suitable for disposition without oral 

argument, but ordered supplemental briefing. Order, Dkt. No. 8. Both parties timely submitted 

supplemental responses. See Def.‘s Suppl. Resp., Dkt. No. 16; Pl.‘s Suppl. Resp., Dkt. No. 17. 

Having considered the parties‘ positions, the relevant legal authority, and the record in this case, 

the Court GRANTS Defendant‘s Motion for the following reasons.

BACKGROUND

The following factual background is taken from Plaintiff‘s Complaint (Dkt. No. 1) and is

taken as true for purposes of this Motion. See Brown v. Elec. Arts, Inc., 724 F.3d 1235, 1247 (9th 

Cir. 2013).1 On or about March 22, 2005, Plaintiff obtained a $377,000 loan (the ―Loan‖) from 

 

1

The Court acknowledges that the parties present vastly different descriptions of the events. 

While Plaintiff only alleges the existence of one Loan dated March 22, 2005, Defendant contends 

Plaintiff obtained two loans—the first in March 2005 and the second in September 2006—and that 

she conflates the events concerning them. See Mot. at 2-3; see also RJN, Exs. A (Deed of Trust 

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Quick Loan Funding, Inc. (―Quick Loan‖). Compl. ¶ 9. The Loan was secured by a deed of trust 

encumbering real property located at 216 Bridgeview Drive, San Francisco, California 94590 (the 

―Property‖). Id.; see also id. ¶ 3. 

On or about April 15, 2008, the Property was sold at a public auction to Robert T. Dunn 

and the Dunn Family Trust (―Dunn‖) for $112,475.12. Id. ¶ 10. On or about April 28, 2008, FCI 

National Lender Services, Inc. (―FCI‖), the purported trustee of the loan, recorded with the San 

Francisco County Recorder a Trustee‘s Deed Upon Sale. Id. ¶ 11. According to this document, 

FCI served as a trustor for a deed of trust securing the Property dated September 13, 2006 and 

executed by Plaintiff. Id. The Deed Upon Sale further provided that FCI granted its rights and 

interests to the Property to Robert T. Dunn and the Dunn Family Trust (―Dunn‖) and to 

Homesavers, a California Corporation. Id. Dunn received a 99% undivided interest and 

Homesavers received a 1% undivided interest. Id. The Deed Upon Sale states the Deed of Trust 

was recorded on June 29, 2006. Id. Plaintiff asserts ―the purported conveyance date of the deed 

of trust dated September 13, 2006 is claimed to have taken place more than three months prior to 

the deed of trust‘s recording date.‖ Id. 

Between 2012 and 2015, the Loan was assigned to various entities. On or about April 17, 

2012, Quick Loan assigned the Deed of Trust to The Bank of New York Mellon, formerly known 

as The Bank of New York, as trustee for the Certificateholders of CWABS, Inc., Asset-Backed 

Certificates, Series 2005-SD2. Id. ¶ 12. ―At some point subsequent to the Loan‘s origination, 

Bank of America, N.A. purported to be the servicer of the Loan.‖ Id.¶ 13. On or about February 

15, 2014, Resurgent Capital Services became the Loan‘s servicer. Id. ¶ 14. Defendant became the 

 

dated March 22, 2005) & G (Deed of Trust dated Sept. 13, 2006), Dkt. No. 9. Defendant contends 

the fraudulent conduct stems from the September 2006 loan in which Defendant has no 

involvement. Whether or not there were two loans and the extent of Defendant‘s involvement in 

the second loan, if any, is a factual dispute the Court cannot resolve at a motion to dismiss. See, 

e.g., Skinner v. Mountain Lion Acquisitions, Inc., 2014 WL 3853424, at *3 (N.D. Cal. Aug. 1, 

2014) (declining to resolve factual dispute in Rule 12(b)(6) motion to dismiss). For purposes of 

this Motion, the Court must accept the allegations in Plaintiff‘s Complaint as true. See In re 

Tracht Gut, LLC, 836 F.3d 1146, 1150 (9th Cir. 2016) (―At the motion to dismiss phase, the trial 

court must accept as true all facts alleged in the complaint and draw all reasonable inferences in 

favor of the plaintiff.‖). 

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servicer on or about March 1, 2014 and subsequently began foreclosure proceedings against the 

Property. Id. ¶ 15. Defendant and its alleged agent, the Law Offices of Les Zieve, have also 

represented ―that an owner of the [L]oan is Homesavers, a California Corporation.‖ Id. ¶ 18. 

On or about October 26, 2015, Plaintiff sent Defendant ― ̳qualified written request‘ in an 

attempt to determine whether or not [Defendant] had the proper authority to foreclose against the 

[] Property pursuant to the Loan and its accompanying deed of trust.‖ Id. ¶ 16. In so doing, 

Plaintiff requested ―pertinent documents pertaining to the loan‘s origination,‖ assignments, and 

transfers of the Loan. Id. Defendant failed to provide evidence of (1) updated assignments of 

ownership, (2) its custodial servicing obligations to the Loan, (3) proof of purchases, (4) affidavits 

of sale, or (5) documentation detailing the restructuring of assignments of the Deed of Trust. Id. 

(citing id., Ex. 3 (screenshot of internet website showing ―Business Search – Results‖ of search for 

―Homesavers‖ dated May 19, 2016)). Despite its failure ―to provide documentation legitimizing 

its ability to foreclose on the [] Property[,]‖ Defendant, through Zieve, scheduled trustee sales for 

November 9, 2015 and December 9 and 22, 2015. Id. ¶ 17 (citing id., Ex. 2 (two ―Notice[s] of 

Postponement of Trustee‘s Sale‖ dated November 9 and December 8, 2015)). Plaintiff does not 

allege the Property has in fact been sold. See Compl.

Plaintiff initiated this action on July 26, 2016. See id. She asserts claims of fraud and 

quiet title, as well as claims for violations of the Federal Trade Commission (―FTC‖) Act, 15 

U.S.C. § 45(a), and the Real Estate Settlement Procedures Act (―RESPA‖), 12 U.S.C. § 2605. Id.

¶¶ 19-57. 

LEGAL STANDARD

A. Rule 12(b)(6)

Rule 8(a) requires that a complaint contain a ―short and plain statement of the claim 

showing that the pleader is entitled to relief.‖ Fed. R. Civ. P. 8(a)(2). A complaint must therefore 

provide a defendant with ―fair notice‖ of the claims against it and the grounds for relief. Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations and citation omitted).

A court may dismiss a complaint under Rule 12(b)(6) when it does not contain enough 

facts to state a claim to relief that is plausible on its face. Id. at 570. ―A claim has facial 

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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 defendant has acted unlawfully.‖ Id. (quoting Twombly, 550 

U.S. at 557). ―While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need 

detailed factual allegations, 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. Factual allegations must be enough to raise a right to relief above the 

speculative level.‖ Twombly, 550 U.S. at 555 (internal citations and parentheticals omitted).

In considering a motion to dismiss, a court must accept all of the plaintiff‘s allegations as 

true and construe them in the light most favorable to the plaintiff. Id. at 550; Erickson v. Pardus, 

551 U.S. 89, 93-94 (2007); Vasquez v. Los Angeles Cty., 487 F.3d 1246, 1249 (9th Cir. 2007). In 

addition, courts may consider documents attached to the complaint. Parks Sch. of Bus., Inc. v. 

Symington, 51 F.3d 1480, 1484 (9th Cir. 1995) (citation omitted). 

If a Rule 12(b)(6) motion is granted, the ―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.‖ Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en 

banc) (internal quotations and citations omitted). However, the Court may deny leave to amend 

for a number of reasons, including ―undue delay, bad faith or dilatory motive on the part of the 

movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice 

to the opposing party by virtue of allowance of the amendment, [and] futility of amendment.‖

Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (citing Foman v. 

Davis, 371 U.S. 178, 182 (1962)).

B. Rule 12(b)(7)

A party may move to dismiss a complaint for ―failure to join a party under Rule 19.‖ Fed. 

R. Civ. P. 12(b)(7). Rule 19 requires a three-step inquiry. Salt River Project Agr. Imp. & Power 

Dist. v. Lee, 672 F.3d 1176, 1179 (9th Cir. 2012). It ―is a practical, fact-specific one, designed to 

avoid the harsh results of rigid application.‖ Dawavendewa v. Salt River Project Agr. Imp. & 

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Power Dist., 276 F.3d 1150, 1154 (9th Cir. 2002). The court must first ―determine whether a 

nonparty should be joined under Rule 19(a) . . . as a  ̳person required to be joined if feasible.‘‖ 

E.E.O.C. v. Peabody W. Coal Co., 610 F.3d 1070, 1078 (9th Cir. 2010) (―Peabody II‖). If so, the 

court next determines ―whether it is feasible to order that the absentee be joined.‖ Id. (internal 

quotation marks omitted). Finally, ―if joinder is not feasible, the court must determine at the third 

stage whether the case can proceed without the absentee or whether the action must be dismissed.‖ 

Id. (internal quotation marks omitted). ―Rule 19 is designed to protect the interests of absent 

parties, as well as those ordered before the court, from multiple litigation, inconsistent judicial 

determinations or the impairment of interests or rights.‖ CP Nat’l Corp. v. Bonneville Power 

Admin., 928 F.2d 905, 911 (9th Cir. 1991).

REQUEST FOR JUDICIAL NOTICE

Before turning to the parties‘ substantive arguments, the Court first addresses Defendant‘s 

Request for Judicial Notice. Under Federal Rule of Evidence 201(b), ―[t]he court may judicially 

notice a fact that is not subject to reasonable dispute because it: (1) is generally known within the 

trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources 

whose accuracy cannot reasonably be questioned.‖ Courts ―may take judicial notice of court 

filings and other matters of public record.‖ Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 

741, 746 n.6 (9th Cir. 2006); see Rees v. PNC Bank, N.A., 308 F.R.D. 266, 271 (N.D. Cal. 2015) 

(taking judicial notice of recorded deed of trust, recorded assignments of deed of trust, recorded 

notice of default, and recorded notice of trustee‘s sale). But while courts may take judicial notice 

of undisputed matters of public record, they may not judicially notice ―disputed facts stated in 

public records.‖ Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001) (emphasis in 

original). 

Additionally, ―[w]hen ruling on a Rule 12(b)(6) motion to dismiss, if a district court 

considers evidence outside the pleadings, it must normally convert the 12(b)(6) motion into a Rule 

56 motion for summary judgment, and it must give the nonmoving party an opportunity to 

respond.‖ United States v. Ritchie, 342 F.3d 903, 907–08 (9th Cir. 2003). ―A court may, 

however, consider certain materials—documents attached to the complaint, documents 

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incorporated by reference in the complaint, or matters of judicial notice—without converting the 

motion to dismiss into a motion for summary judgment.‖ Id. 

Defendant requests the Court take judicial notice of the following documents: 

1. Exhibit A: Deed of Trust dated March 2, 2005 and recorded in the official records 

of San Francisco Recorder‘s Office on March 30, 2005 as instrument number 2005-

H92955500.

2. Exhibit B: Assignment Deed of Trust dated April 9, 2012, and recorded in the 

official records of San Francisco Recorder‘s Office on August 19, 2013 as instrument 

number 2012-J39396000.

3. Exhibit C: Loan Modification Agreement, dated July 17, 2013, and recorded in the 

official records of San Francisco Recorder‘s Office on August 19, 2013 as instrument 

number 2013-J73201900.

4. Exhibit D: Notice of Default dated March 30, 2015 and recorded in the official 

records of San Francisco Recorder‘s Office on April 2, 2015 as instrument number 2015-

K04166600.

5. Exhibit E: Substitution of Trustee dated November 4, 2015, and recorded in the 

official records of San Francisco Recorder‘s Office on November 12, 2015 as instrument 

number 2015-K15529000.

6. Exhibit F: Notice of Trustee‘s Sale dated July 19, 2016, and recorded in the official 

records of San Francisco Recorder‘s Office on July 21, 2016 as instrument number 2016-

K29122300.

7. Exhibit G: Long Form Deed of Trust and Assignment of Rents for Home Equity 

Revolving Line of Credit dated September 14, 2006, and recorded in the official records of 

San Francisco Recorder‘s Office on September 29, 2006 as instrument number 2006-

I26381400.

8. Exhibit H: Assignment Deed of Trust dated October 3, 2006, and recorded in the 

official records of San Francisco Recorder‘s Office on October 13, 2006 as instrument 

number 2006-I26996300.

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9. Exhibit I: Notice of Default dated March 6, 2007, and recorded in the official 

records of San Francisco Recorder‘s Office on March 8, 2007 as instrument number 2007-

I3491800.

10. Exhibit J: Trustee‘s Deed Upon Sale dated April 15, 2008, and recorded in the 

official records of San Francisco Recorder‘s Office on April 28, 2008 as instrument 

number 2008- I57355600.

See RJN. Plaintiff does not object to Defendant‘s request. As Defendant seeks judicial notice of 

documents that are in the public record, the Court finds it appropriate to take judicial notice of 

these documents under Rule 201(b) and GRANTS Defendant‘s request.

DISCUSSION

Because a determination that Plaintiff failed to join a necessary party could lead to the 

dismissal of the action in its entirety, the Court then addresses Defendant‘s arguments under Rule 

12(b)(7) before turning to its arguments under Rule 12(b)(6). 

A. Rule 12(b)(7)

Defendant argues Plaintiff‘s failure to join her husband, Melecio, in the lawsuit is grounds 

for dismissal, as both his and Plaintiff‘s names appear on the deed of trust. See Mot. at 4-5. 

Plaintiff asserts she and Melecio are no longer married and no longer share common title. Opp‘n 

at 6; see id., Ex. 1 (Notice of Entry of Judgment). On July 29, 2015, Melecio conveyed ―all right, 

title, and interest‖ he had in the Property to Plaintiff as Plaintiff‘s ―sole and separate property.‖ 

Id.; id., Ex. 2 (Interspousal Grant Deed). She contends that because Melecio no longer has any 

rights in the Property, he cannot bring a duplicate action and is therefore not an indispensable 

party. Id. Defendants point out, however, that even if Melecio‘s name has been removed from the 

title, Plaintiff does not allege or provide evidence that his name has been taken off the deed of 

trust or that Plaintiff has assumed the responsibilities of the Loan in its entirety. Def.‘s Suppl. 

Resp. at 3. 

―A real property loan generally involves two documents, a promissory note and a security 

instrument.‖ Nguyen v. Calhoun, 105 Cal. App. 4th 428, 438 (2003) (internal quotation marks 

omitted). The security instrument secures the promissory note and entitles the lender to reach 

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some asset of the debtor if the note is not paid. Id. ―In California, the security instrument is most 

commonly a deed of trust (with the debtor and creditor known as trustor and beneficiary and a 

neutral third party known as trustee).‖ Id. (internal quotation marks omitted). In other words, 

―[u]nder California law, a  ̳deed of trust‘ creates a lien on the property in favor of the creditor.‖ St. 

Angelo v. Victoria Farms, Inc., 38 F.3d 1525, 1534 (9th Cir. 1994), amended, 46 F.3d 969 (9th 

Cir. 1995) (citing Monterey S.P. P’ship v. W.L. Bangham, Inc., 49 Cal. 3d 454, 460 (Cal. 1989) 

(en banc)). But ―a lien does not result in assignment of ownership; ―a lien . . . transfers no title to 

the property subject to the lien.‘‖ BNY Midwest Tr. Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 

Penn., 213 F. App‘x 563, 566–67 (9th Cir. 2006) (quoting Cal. Civ. Code § 2888) (edits in 

original). 

―Real property is transferable even though the title is subject to a mortgage or deed of trust, 

but the transfer will not eliminate the existence of that encumbrance.‖ Nguyen, 105 Cal. App. 4th 

438. ―Thus, the grantee takes title to the property subject to all deeds of trust and other 

encumbrances, whether or not the deed so provides.‖ Id. But while 

―[u]pon the transfer of real property covered by a mortgage or deed 

of trust as security for an indebtedness, the property remains subject 

to the secured indebtedness[,] . . . the grantee is not personally liable 

for the indebtedness or to perform any of the obligations of the 

mortgage or trust deed unless his agreement to pay the indebtedness, 

or some note or memorandum thereof, is in writing and subscribed 

by him or his agent or his assumption of the indebtedness is 

specifically provided for in the conveyance.‖

Secrest v. Sec. Nat’l Mortg. Loan Tr. 2002-2, 167 Cal. App. 4th 544, 554 (2008), as modified on 

denial of reh’g (Nov. 3, 2008) (quoting Cornelison v. Kornbluth, 15 Cal. 3d 590, 596-97 (1975) 

(en banc)). 

Plaintiff does not dispute that both she and Melecio signed the deed of trust. See Opp‘n; 

RJN, Ex. A at ECF p.14. But the Interspousal Grant Deed in which Melecio transferred his 

interest in the Property to Plaintiff does not specifically provide that Plaintiff assumes Melecio‘s 

obligations under the deed of trust. See Opp‘n, Ex. 2. Nor does Plaintiff offer or allege the 

existence of another writing that transfers Melecio‘s obligations to Plaintiff. Thus, at this point, it 

appears Melecio remains personally liable for the Loan. As such, the Court next considers 

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whether Melecio is a necessary party. 

1. Necessary Party

A person who should be ―joined if feasible‖ is a necessary party. Disabled Rights Action 

Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 867 n.5 (9th Cir. 2004) (―The term[]  ̳necessary‘ . 

. . [is a] term[] of art in Rule 19 jurisprudence:  ̳Necessary‘ refers to a party who should be  ̳joined 

if feasible.‘‖ (citing Fed. R. Civ. P. 19(a); Dawavendewa, 276 F.3d at 1154–55) (brackets 

omitted)). A person is necessary to the action if (1) ―in his absence, the court cannot accord 

complete relief among existing parties in his absence‖; (2) ―he has an interest in the action and 

resolving the action in his absence may as a practical matter impair or impede his ability to protect 

that interest,‖ or (3) ―he has an interest in the action and resolving the action in his absence may 

leave an existing party subject to inconsistent obligations because of that interest.‖ Lee, 672 F.3d 

at 1179 (citing Fed. R. Civ. P. 19(a)(1)(A), (a)(1)(B)(i), (a)(1)(B)(ii)). 

Defendant argues Melecio is a necessary party to this action because his absence creates a 

significant risk of multiple lawsuits. Mot. at 4; Def.‘s Suppl. Resp. at 4. Defendant specifically 

refers to Plaintiff‘s RESPA and quiet title claims, as these particular claims carry the risk of 

multiple litigation or could affect Melecio‘s rights if he is not joined. Def.‘s Suppl. Resp. at 4.

Plaintiff alleges Defendant failed to respond to Plaintiff‘s qualified written request 

(―QWR‖) in violation of 12 U.S.C. § 2605(e). Compl. ¶¶ 50-57. Melecio, as a signatory to the 

deed of trust, could also bring claims against Defendant for conduct arising from Defendant‘s 

servicing of the Loan. Cf. McClain v. First Mortg. Corp., 2015 WL 11199074, at *2 (C.D. Cal. 

Mar. 16, 2015) (―It is well established . . . that a person who is not a party to a contract does not 

have standing either to seek its enforcement or to bring tort claims based on the contractual 

relationship.‖). Accordingly, Plaintiff‘s failure to join Melecio runs the risk of duplicative 

litigation. 

2. Whether Joinder is Feasible

―If an absentee is a necessary party under Rule 19(a), the second stage is for the court to 

determine whether it is feasible to order that the absentee be joined.‖ E.E.O.C. v. Peabody W. 

Coal Co., 400 F.3d 774, 779 (9th Cir. 2005) (―Peabody I‖). There are three instances where 

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joinder is not feasible: ―when venue is improper, when the absentee is not subject to personal 

jurisdiction, and when joinder would destroy subject matter jurisdiction.‖ Id.; see Fed. R. Civ. P. 

19(a)(1), (3). 

Defendant does not contest the feasibility of Melecio‘s joinder, but it nevertheless urges 

the Court to dismiss the action. Mot. at 5 (―[T]here is nothing that would make joining [Melecio] 

in the lawsuit not feasible especially since Plaintiff is bringing forth this lawsuit based on federal 

claims[.]‖); id. (―[T]he action should not continue unless Mr. Magdaluyo is involved[.]‖). The 

Court declines to do so. Dismissal is appropriate where a necessary party cannot be joined. Fed. 

R. Civ. P. 19(b); see also Standish v. Encore Credit Corp., 2014 WL 232021, at *1 (D. Ariz. Jan. 

22, 2014) (―To justify dismissal of a case for failure to join an indispensable party, . . . joinder of 

the party must not be feasible.‖). Indeed, there are no facts before the Court which suggest that 

venue is improper or that Melecio is not subject to the Court‘s personal jurisdiction. Nor would 

joinder destroy subject matter jurisdiction when Plaintiff asserts federal claims under RESPA and 

the FTC Act. See Compl. ¶¶ 39-57; Cement Masons Health & Welfare Tr. Fund for N. Cal. v. 

Stone, 197 F.3d 1003, 1008 (9th Cir. 1999) (―Any non-frivolous assertion of a federal claim 

suffices to establish federal question jurisdiction[.]‖). Thus, it appears joining Melecio will be 

feasible. 

3. Dismissal of Action

As Melecio is a necessary party, the Court GRANTS Defendant‘s Motion on this ground. 

But given that joinder is feasible, the Court GRANTS Plaintiff LEAVE TO AMEND to add 

Melecio as a co-plaintiff. If Plaintiff does not join Melecio, Rule 19(c) requires a party to plead 

the reasons for nonjoinder by ―stat[ing]: (1) the name, if known, of any person who is required to 

be joined if feasible but is not joined; and (2) the reasons for not joining that person.‖ Fed. R. Civ. 

P. 19(c). 

B. Rule 12(b)(6)

The Court now turns to Defendant‘s argument that Plaintiff‘s Complaint also fails to state 

a claim. 

//

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1. Fraud

Count One of Plaintiff‘s Complaint asserts a claim for fraud. Compl. ¶¶ 19-27. ―The 

elements of a cause of action for fraud in California are:  ̳(a) misrepresentation (false 

representation, concealment, or nondisclosure ); (b) knowledge of falsity (or  ̳scienter‘); (c) intent 

to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.‘‖ Kearns v. 

Ford Motor Co., 567 F.3d 1120, 1126 (9th Cir. 2009) (quoting Engalla v. Permanente Med. Grp., 

Inc., 15 Cal. 4th 951, 974 (Cal. 1997)) (emphasis omitted). 

Rule 9(b) requires a plaintiff alleging fraud or mistake plead ―with particularity the 

circumstances constituting fraud or mistake.‖ Fed. R. Civ. P. 9(b). A plaintiff must establish 

―more than the neutral facts necessary to identify the transaction‖: she ―must set forth what is false 

or misleading about a statement, and why it is false.‖ Vess v. Ciba-Geigy Corp. USA, 317 F.3d 

1097, 1106 (9th Cir. 2003) (internal quotation marks omitted). This ―includ[es] the who, what, 

when, where, and how of the misconduct charged.‖ Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993, 

998 (9th Cir. 2010) (internal quotation marks omitted). This ―give[s] 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.‖ United States v. United 

Healthcare Ins. Co., __ F.3d __, 2016 WL 7378731, at *14 (9th Cir. Aug. 10, 2016) (quoting BlyMagee v. Cal., 236 F.3d 1014, 1019 (9th Cir. 2001)). 

Defendant argues Plaintiff‘s fraud claim should be dismissed on two grounds. First, 

Defendant contends Plaintiff‘s allegations stem from confusion over her Loan and, as a result, 

Plaintiff cannot show Defendant engaged in fraudulent activity in relation to the Loan. Mot. at 6-

7; see id. at 2-3. Second, Defendant argues Plaintiff‘s fraud claim is barred by the statute of 

limitations. Id. at 7. 

a. Rule 9(b) Particularity

At its core, Defendant‘s argument regarding Plaintiff‘s confusion over the Loan concerns 

Plaintiff‘s failure to plead fraud with the requisite particularity. Defendants contend that by 

blurring the events, the Complaint fails to allege specific facts indicating Defendant—and not a 

third party—committed fraud with regard to the Loan. Mot. at 6. 

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The Complaint alleges Defendant made ―affirmative‖ misrepresentations to Plaintiff and 

perpetuated its fraud through (1) FCI‘s April 28, 2008 recording of a Deed Upon Sale for a deed 

of trust, the legitimacy of which ―is called into question since the purported conveyance date of 

the deed of trust dated September 13, 2006 is claimed to have taken place more than three months 

prior to the deed of trust‘s recording date‖; (2) Defendant‘s and Zieve‘s ―alleg[ations] that an 

owner of the [L]oan is Homesavers‖ where ―the California Secretary of State shows no active 

corporation or entity by the name of  ̳Homesavers‘‖; (3) Defendant‘s ―communicat[ions] to 

Plaintiff that i[t] has the authority to collect payments pursuant to the Loan‖ when Defendant2

does not in fact have such authority; (4) Defendant ―communicated to Plaintiff that i[t] has the 

authority to foreclose upon the [] Property on a number of occasions by scheduling trustee sale 

dates . . . including . . . November 9, 2015; December 9, 2015; and December 22, 2015.‖ Id. ¶¶ 

24(a)-(d). Plaintiff asserts that she justifiably relied on and was harmed by Defendant‘s 

misrepresentations. Id. ¶¶ 25-26.

Plaintiff fails to allege particularized facts as required by Rule 9(b). For instance, 

Plaintiff‘s contends that ―FCI . . . recorded a Deed Upon Sale with the San Francisco County 

Recorder‖ and questions the legitimacy of this document. Compl. ¶ 24(a). But she does not 

attribute this conduct to Defendant: there are no allegations that FCI acted upon Defendant‘s 

orders, or that Defendant was otherwise involved or had any interest in the recording of the Deed 

Upon Sale. Plaintiff‘s allegations regarding Defendant‘s fraudulent communications to Plaintiff

are also conclusory and lack specificity. See Compl. ¶ 24(b)-(d). She does not provide the date on 

which Defendant alleged that Homesavers is an owner of the Loan, nor does she allege the manner 

in which Defendant communicated this to her. The same applies to her allegation that Defendant 

stated it has the authority to collect payments under the Loan: Plaintiff does not explain when or 

how Defendant made this assertion. 

 

2

Plaintiff alleges ―Shellpoint has communicated to Plaintiff that is has the authority to collect

payments pursuant the Loan. In actuality, Plaintiff does not have the authority to collect payments 

pursuant the Loan because the Deed Upon Sale is legally impossible and fraudulent.‖ Compl. ¶ 

24(c) (emphasis added). Presumably, Plaintiff means to allege that Defendant does not have the 

authority collect payments pursuant to the Loan. 

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Plaintiff does provide greater detail regarding Zieve‘s alleged communication that it had 

the authority to foreclose on the Property. She attaches to her Complaint two letters from the 

Zeive dated November 9 and December 8, 2015. See Compl., Ex. 2. These letters state that 

trustee‘s sales scheduled for November 9 and December 8, 2015 have been rescheduled for 

December 9 and December 22, 2015, respectively. See id. Plaintiff does not provide a letter 

scheduling the November 9, 2015 trustee‘s sale. Although Plaintiff alleges Zieve—who is not a 

defendant in this action—is Defendant‘s agent, Plaintiff fails to plead the agency relationship with 

particularity as she is required to do. See Morici v. Hashfast Techs. LLC, 2015 WL 906005, at *4 

(N.D. Cal. Feb. 27, 2015) (―[T]he agency relationship must be pleaded with particularity when a 

claim for fraud, brought in federal court, purports to impose liability on such a theory.‖); Jackson 

v. Fischer, 2013 WL 6732872, at *17 (N.D. Cal. Dec. 20, 2013) (―[W]here a plaintiff alleges that 

a defendant is liable for fraud under an agency theory, Rule 9(b) requires that the existence of the 

agency relationship be pled with particularity.‖). Accordingly, the Court finds the Complaint 

lacks the requisite level of detail to satisfy Rule 9(b). 

b. Statute of Limitations

California law imposes a three-year statute of limitations on fraud claims, but it ―is not 

deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the 

fraud or mistake.‖ Cal. Civ. Proc. Code § 338(d). ―The limitations period for fraud thus 

incorporates the  ̳delayed discovery rule.‘‖ Dias v. Nationwide Life Ins. Co., 700 F. Supp. 2d 

1204, 1222 (E.D. Cal. 2010) (citing Broberg v. Guardian Life Ins. Co. of Am., 171 Cal. App. 4th 

912, 920 (2009)). The delayed discovery rule provides that ―a cause of action accrues and the 

statute of limitations begins to run when the plaintiff has reason to suspect an injury and some 

wrongful cause, unless the plaintiff pleads and proves that a reasonable investigation at that time 

would not have revealed a factual basis for that particular cause of action.‖ Fox v. Ethicon EndoSurgery, Inc., 35 Cal. 4th 797, 803 (2005). ―A plaintiff whose complaint shows on its face that his 

claim would be barred without the benefit of the discovery rule must specifically plead facts to 

show (1) the time and manner of discovery and (2) the inability to have made earlier discovery 

despite reasonable diligence.‖ E-Fab, Inc. v. Accountants, Inc. Servs., 153 Cal. App. 4th 1308, 

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1319 (2007). 

Plaintiff alleges that at least some of the fraudulent activity took place in 2008, including 

the sale of the Property and the recording of the Deed Upon Sale. See Compl. ¶¶ 10-11, 24(a). 

Plaintiff fails to plead facts that show how and when she discovered the fraudulent activity and 

why, despite reasonable diligence, she was unable to discover it earlier. Plaintiff initiated this 

action in 2016, approximately eight years after the alleged fraud occurred. Plaintiff thus fails to 

adequately allege the delayed discovery rule applies. And, as discussed above, the Complaint 

does not specify dates for the other allegedly fraudulent acts for the Court to believe that they fall 

within the statute of limitations. 

c. Leave to Amend

As Plaintiff fails to meet the particularity requirements of Rule 9(b) and does not invoke 

the delayed discovery rule, the Court GRANTS Defendant‘s Motion as to Plaintiff‘s fraud claim. 

However, the Court will grant Plaintiff leave to amend, provided that she can allege specific facts 

that connect Defendant to the fraudulent activity and that shows the delayed discovery rule 

applies. 

2. Quiet Title

Count Two of the Complaint asserts a quiet title claim. Compl. ¶¶ 28-38. California Code 

of Civil Procedure section 761.020 governs claims for quiet title. In order to state a quiet title 

claim, a plaintiff must allege the following in a verified complaint: (1) a description of the 

property that is the subject of the action, including, if real property, its legal description and its 

street address or any common designation; (2) the title of the plaintiff as to which a determination 

is sought and the basis of the title; (3) the adverse claims to the title of the plaintiff against which a 

determination is sought; (4) the date as of which the determination is sought; and (5) a prayer for 

the determination of the title of the plaintiff against the adverse claims. See Cal. Civ. Proc. Code 

§ 761.020. Additionally, ―[u]nder California law, the  ̳tender rule‘ requires that as a precondition 

to challenging a foreclosure sale, or any cause of action implicitly integrated to the sale, the 

borrower must make a valid and viable tender of payment of the secured debt.‖ Montoya v. 

Countrywide Bank, F.S.B., 2009 WL 1813973, at *11 (N.D. Cal. June 25, 2009). This rule 

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provides that ―[t]he borrower must make a valid and viable tender of payment of the secured debt 

as a precondition to challenging a foreclosure sale.‖ Roque v. Suntrust Mortg., Inc., 2010 WL 

546896, at *6 (N.D. Cal. Feb. 10, 2010). A plaintiff‘s ―failure to offer tender at the pleading stage 

in a quiet title action is fatal.‖ Chan Tang v. Bank of Am., N.A., 2012 WL 960373, at *14 (C.D. 

Cal. Mar. 19, 2012). 

Defendant argues Plaintiff fails to allege tender and to allege that Defendant‘s rights under 

the Loan are adverse to Plaintiff‘s rights to the Property. Mot. at 7. Plaintiff does not address 

Defendant‘s argument regarding her lack of allegations that Defendant‘s rights are adverse to her 

own. See Opp‘n. Instead, Plaintiff requests leave to amend to ―properly allege Plaintiff‘s offer to 

tender the delinquent amount.‖ Id. at 11. In response to the Court‘s request for ―facts . . . Plaintiff 

ha[s] to support her offer to tender‖ (Order at 2), Plaintiff explains the Loan is entitled to a 

modification of the original terms and that such a ―modification would place the arrears . . . on the 

back of the loan‖ and would eliminate the delinquent amount (Pl.‘s Suppl. Resp. at 2). This would 

thus eliminate the need for a tender offer. Id. She asserts she has the ability to furnish proof of 

her ability to qualify for and her entitlement to a modification. Id. Plaintiff further contends,

without citation, ―Defendant . . . is obligated under federal guidelines to provide Plaintiff with a 

loan modification; thus, no delinquent amount should technically be owed at the moment.‖ Id.

Plaintiff‘s contention that she is entitled to a loan modification diverges from her original 

assertion that she could ―properly allege Plaintiff‘s offer to tender the delinquent amount.‖ Opp‘n 

at 11; see Pl.‘s Suppl. Resp. at 11. Now, it appears Plaintiff does not intend or is unable to allege 

a viable tender of payment; rather, Plaintiff seems to argue that she is not required to pay the full 

amount indebtedness. In any event, that she intends to seek a loan modification suggests she is 

unable to tender the full delinquent payment, much less the full value of the loan. See Thompson 

v. Residential Credit Sols., Inc., 2012 WL 1565688, at *5 (E.D. Cal. May 2, 2012) (―The fact that

plaintiff was seeking approval for loan modification further suggests that she is unable to tender 

her delinquency of over $60,000, . . . much less the full value of the loan.‖ (internal citation 

omitted)). ― ̳Simply put, if the offeror is without the money necessary to make the offer good and 

knows it, the tender is without legal force or effect.‘‖ Flores v. EMC Mortg. Co., 997 F. Supp. 2d 

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1088, 1107 (E.D. Cal. 2014) (quoting Karlsen v. Am. Sav. & Loan Ass’n, 15 Cal. App. 3d 112, 118 

(Ct. App. 1971)). As such, the Court GRANTS Defendant‘s Motion to Dismiss as to Plaintiff‘s 

quiet title claim. As Plaintiff failed to demonstrate in her Supplemental Response that she 

possesses facts necessary to allege an offer of tender, the Court dismisses this claim WITHOUT 

LEAVE TO AMEND. Accordingly, the Court need not address Defendant‘s argument regarding 

Plaintiff‘s failure to allege an adverse interest. 

2. FTC Act Claim

Count Three asserts a violation of section 5(a) of the FTC Act, 15 U.S.C. § 45(a). Compl. 

¶¶ 39-46. Section 5 of the FTC Act prohibits ―[u]nfair methods of competition in or affecting 

commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared 

unlawful.‖ 15 U.S.C. § 45(a)(1). It further provides that ―[t]he Commission is hereby empowered 

and directed to prevent persons, partnerships, or corporations . . . from using unfair methods of 

competition in or affecting commerce and unfair or deceptive acts or practices in or affecting 

commerce.‖

3

 Id. at § 45(a)(2) (emphasis added). ―[P]rivate litigants may not invoke the 

jurisdiction of the federal district courts by alleging that defendants engaged in business practices 

proscribed by s 5(a)(1). The [FTC] Act rests initial remedial power solely in the Federal Trade 

Commission.‖ Dreisbach v. Murphy, 658 F.2d 720, 730 (9th Cir. 1981).

Defendant argues Plaintiff fails to allege facts that establish the FTC Act is applicable to 

her claims. Mot. at 8. In response, Plaintiff contends the Complaint alleges ―Defendant engaged 

in deceptive acts and the mortgage loan industry certainly affects commerce.‖ Opp‘n at 11. 

Further, ―Defendant[] . . . does not explain how the statute fails to apply to its conduct.‖ Id.

Plaintiff lacks standing to assert violations of the FTC Act. Accordingly, the Court 

DISMISSES Plaintiff‘s third claim. Given Plaintiff‘s lack of standing, amendment would be 

futile, and the Court dismisses this claim WITHOUT LEAVE TO AMEND. 

4. RESPA Claim

Court Four asserts a violation of RESPA, 12 U.S.C. § 2605(e). See Compl. ¶¶ 50-57. 

 

3

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RESPA allows a borrower or its agent to submit a QWR to a servicer of a federally related 

mortgage loan ―for information relating to the servicing of such loan.‖ 12 U.S.C. § 2605(e)(1)(A). 

To constitute a QWR, the request must ―(1) reasonably identif[y] the borrower‘s name and 

account, (2) either state[] the borrower‘s  ̳reasons for the belief . . . that the account is in error‘ or 

 ̳provide[] sufficient detail to the servicer regarding other information sought by the borrower,‘ 

and (3) seek[]  ̳information relating to the servicing of the loan.‘‖ Medrano v. Flagstar Bank, 

FSB, 704 F.3d 661, 666 (9th Cir. 2012) (quoting 12 U.S.C. § 2605(e)(1)(A)–(B)) (ellipses in 

original; brackets omitted). 

Servicers must respond to a QWR in one of three ways. First, the servicer may make the 

appropriate corrections to the borrower‘s account. Id. § 2605(e)(2)(A). Second, it may conduct an 

investigation and either provide the borrower with a written explanation as to the reasons the 

servicer believes the borrower‘s account is correct or the requested information or an explanation. 

Id. § 2605(e)(2)(B)(i)-(ii). Third, it may conduct an investigation and provide the borrower with 

the requested information or a written explanation of why the servicer cannot obtain the requested 

information. Id. § 2605(e)(2)(C)(i)-(ii). ―RESPA does not require any magic language before a 

servicer must construe a written communication from a borrower as a qualified written request and 

respond accordingly.‖ Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 666 (9th Cir. 2012) 

(quoting Catalan v. GMAC Mortg. Corp., 629 F.3d 676, 687 (7th Cir. 2011)). 

Defendant argues Plaintiff fails to allege she submitted a QWR as defined by RESPA. 

Mot. at 9; see 12 U.S.C. § 2605(e)(1)(B) (setting forth required contents of QWR). Specifically, 

Defendant contends ―letters challenging only the [L]oan‘s validity are not qualified written 

requests that give rise to a duty to respond under § 2605(e).‖ Mot. at 9. Plaintiff contends that the 

information she seeks falls ―within the scope of servicing the Loan because the servicer of the 

[L]oan is responsible for . . . providing the loan information sought by Plaintiff.‖ Opp‘n at 12. 

As alleged, Plaintiff‘s correspondence does not constitute a QWR. Her allegation that her 

―written requests for information about Plaintiffs account and requests for validation were 

 ̳qualified written requests‘ within the meaning of RESPA‖ (Compl. ¶ 54) is conclusory and does 

not show how her requests complied with the statutory requirements. There is nothing to suggest, 

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for instance, that Plaintiff provided her name and account number or included a statement as to 

why she believed her account was in error. See id. ¶¶ 50-57. 

The Complaint also fails to allege that Plaintiff sought information related to the servicing 

of her Loan. Plaintiff‘s ―correspondence requested pertinent documents pertaining to the loan‘s 

origination, as well as assignments and transfers of the Loan and its accompanying deed of trust.‖ 

Id. ¶ 53. However, Defendant ―has failed to provide evidence of documentation detailing updated

assignments of ownership or necessary proof of its custodial servicing obligations to the Loan‖ 

and ―proof of purchases, affidavits of sale, and proper documentation detailing the restructuring of 

assignments of the deed of trust.‖ Id. 

Section 2605 defines ―servicing‖ as ―receiving any scheduled periodic payments from a 

borrower pursuant to the terms of any loan, including amounts for escrow accounts . . . , and 

making the payments of principal and interest and such other payments[.]‖ 15 U.S.C. § 

2605(i)(3). This definition ―does not include the transactions and circumstances surrounding a 

loan's origination—facts that would be relevant to a challenge to the validity of an underlying debt 

or the terms of a loan agreement.‖ Medrano, 704 F.3d at 666–67. ―Such events precede the 

servicer‘s role in receiving the borrower‘s payments and making payments to the borrower‘s 

creditors.‖ Id. at 667 (emphasis in original). RESPA therefore ―distinguishes between letters that 

relate to borrowers‘ disputes regarding servicing, on the one hand, and those regarding the 

borrower‘s contractual relationship with the lender, on the other.‖ Id. 

Plaintiff‘s correspondence falls into the latter category. She alleges Defendant is the 

Loan‘s servicer (see Compl. ¶ 51), but Plaintiff‘s request for information does not concern 

payments made on the loan. See 12 U.S.C. § 2605(e)(1)(A) (―[A] qualified written request from 

the borrower (or an agent of the borrower) for information [must] relat[e] to the servicing of such 

loan . . . .‖ (emphasis added)). Rather, Plaintiff seeks information regarding the Loan‘s 

origination. As a servicer, Defendant is unlikely to possess information regarding the Loan‘s 

origination. See Medrano, 704 F.3d at 667 (―[O]nly servicers of loans are subject to § 2605(e)‘s 

duty to respond—and they are unlikely to have information regarding those loans‘ originations.‖). 

The Complaint does not contain facts that suggest otherwise. Thus, Plaintiff‘s requests for 

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information, as alleged, do not constitute QWRs that create a duty for Defendant to respond. See 

id. (―[L]etters challenging only a loan‘s validity or its terms are not qualified written requests that 

give rise to a duty to respond under § 2605(e).‖ (footnote omitted)). 

Accordingly, the Court GRANTS Defendant‘s motion to dismiss Plaintiff‘s RESPA claim. 

In an abundance of caution, however, the Court GRANTS Plaintiff leave to amend provided that 

she can allege facts that show her requests to Defendant contained the necessary information set 

forth in 15 U.S.C. § 2605(e)(1)(B) and sought information concerning the servicing of the Loan, 

not its origination. 

CONCLUSION

Based on the foregoing analysis, the Court orders the following:

1. Defendant‘s Motion under Rule 12(b)(7) is GRANTED WITH LEAVE TO 

AMEND. Plaintiff may amend the FAC to add Melecio Magaluyo as a coplaintiff or to state the reasons why he is not joined as a party in accordance 

with Rule 19(c). 

2. Plaintiff‘s fraud and RESPA claims are DISMISSED pursuant to Rule 12(b)(6) 

WITH LEAVE TO AMEND. 

3. Plaintiff‘s quiet title and FTC Act claims are DISMISSED pursuant to Rule 

12(b)(6) WITHOUT LEAVE TO AMEND.

Plaintiff shall file her amended complaint by February 16, 2017. 

IT IS SO ORDERED.

Dated: January 26, 2017

______________________________________

MARIA-ELENA JAMES

United States Magistrate Judge

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