Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-03708/USCOURTS-cand-3_15-cv-03708-9/pdf.json

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

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United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CHRIS ROMO, et al.,

Plaintiffs,

v.

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

Defendants.

Case No. 15-cv-03708-EMC 

ORDER DENYING PLAINITFFS’

MOTION FOR LEAVE TO FILE THIRD 

AMENDED COMPLAINT

Docket No. 62

For the reasons stated on the record during the November 10, 2016 hearing, the Court 

DENIES Plaintiffs‟ motion for leave to file third amended complaint (Docket No. 62). This order 

is intended to memorialize and supplement that ruling. 

Courts in the Ninth Circuit grant leave with “extreme liberality.” Owens v. Kaiser Found. 

Health Plan, Inc., 244 F.3d 708, 712 (9th Cir.2001) (quoting Morongo Band of Mission Indians v. 

Rose, 893 F.2d 1074, 1079 (9th Cir.1990)). However, district courts may decline to grant leave 

where the amendment: (1) would cause undue delay; (2) would prejudice the opposing party; (3) is 

sought in bad faith; or (4) would be futile. Loehr v. Ventura Cnty. Cmty. Coll. Dist., 743 F.2d 

1310, 1319-20 (9th Cir. 1984). A proposed amendment may be deemed futile if no new set of 

facts can be proved under the amendment, which would constitute a valid claim or defense. Miller 

v. Rykoff–Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988); Vincent v. Trend Western Technical 

Corp., 828 F.2d 563 (9th Cir. 1987) (“[W]e held that a court did not abuse its discretion in 

denying a motion to amend a complaint . . . when the movant presented no new facts but only 

„new theories‟ and „provided no satisfactory explanation for his failure to fully develop his 

contentions originally.‟” (quoting Stein v. United Artists Corp., 691 F.2d 885, 898 (9th Cir. 

1982)). The Court finds that Plaintiffs‟ proposed amendments are futile for the following reasons. 

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United States District Court

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First, Plaintiffs‟ new cause of action for violation of California Civil Code § 2924.17(a) is 

legally insufficient. Plaintiffs argue that Wells Fargo violated Code § 2924.17 by recording a 

Notice of Default on their second position lien securing a HELOC loan. Docket No. 62 (Proposed 

third amended complaint) at ¶¶ 175-179. However, the Court finds that Plaintiffs failed to provide 

new facts showing that the Notice of Default was inaccurate or unsupported in violation of § 

2924.17. Neither party disputed during the oral hearing that Plaintiffs defaulted on the amount of 

$10,500 owed to Wells Fargo on their HELOC loan secured by the second lien. 

Second, Plaintiffs‟ new cause of action for violation of § 2924.17(b) is legally insufficient. 

Plaintiffs failed to allege new facts showing that Wells Fargo failed to review evidence to 

substantiate its right to foreclose on the HELOC loan in violation of § 2924.17(b). Their only 

assertion in this regard is that Wells Fargo violated the statute in regard to Plaintiffs‟ HELOC loan 

by failing to modify the first mortgage as set forth in this and earlier complaints and as previously 

addressed by this Court. But this theory – focusing on Wells Fargo‟s alleged failure vis-à-vis the 

first loan – does not establish that Wells Fargo failed to review evidence on the second loan. 

There is no direct or cognizable nexus between the two loans. To hold otherwise and accept 

Plaintiffs‟ theory would impose upon banks an obligation to re-examine any alleged failure earlier 

to grant modification of prior unrelated loans, failures which may have occurred years before. 

Such an obligation would impose an unreasonable burden on banks. Nothing in the statute 

suggests an intent to impose such a burden. Indeed, a California appellate court recently held that 

§ 2924.17 does “not create a burden on the foreclosing party to prove anything in court, other than 

that the declaration required by section 2923.55, subdivision (c) was filed, and that necessary steps 

were taken before filing it.” Lucioni v. Bank of America, 3 Cal. App. 5th 150, 163 (2016). 

Third, Plaintiffs‟ § 2924.17 claim based on the alleged violation of HAMP Supplemental 

Directive 09-05 fails. For HAMP Directive to apply to Wells Fargo, its predicate – “a borrower‟s 

first lien is modified” – should be satisfied. Supplemental Directive 09-05 Revised (“Only second 

liens with corresponding first liens that have been modified under HAMP are eligible for a 

modification or extinguishment under 2MP.”). Here, it is undisputed that Plaintiffs‟ first loan has 

not been modified. It is an actual modification of the first loan, not a potential modification or a 

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United States District Court

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wrongful failure to render a modification, that satisfies the predicate to the Directive. Thus, Wells 

Fargo‟s obligation under HAMP Supplemental Directive 09-05 was never triggered, and its 

alleged non-compliance cannot be the basis of Plaintiffs‟ statutory claim.

Lastly, Plaintiffs‟ proposed amendment to the negligence claim based on the alleged 

violation of HAMP Directive is futile. As discussed above, HAMP Supplemental Directive 09-05 

does not apply to Wells Fargo and thus cannot form the basis of Plaintiffs‟ negligence claim.

Given the motion is for leave to file a third amended complaint, as well as the fact that the 

newly asserted claims are entirely meritless as a matter of law, the motion is denied. No further 

amendments to the complaint shall be allowed.

This order disposes of Docket No. 62. 

IT IS SO ORDERED.

Dated: November 16, 2016

______________________________________

EDWARD M. CHEN

United States District Judge

Case 3:15-cv-03708-EMC Document 70 Filed 11/16/16 Page 3 of 3