Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_18-cv-07382/USCOURTS-cand-5_18-cv-07382-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

RONNIE L TOWNSEND, et al.,

Plaintiffs,

v.

WELLS FARGO BANK, N.A.,

Defendant.

Case No. 18-cv-07382-NC 

ORDER GRANTING 

DEFENDANT’S MOTION TO 

DISMISS WITHOUT LEAVE 

TO AMEND

Re: Dkt. No. 51

Defendant Wells Fargo Bank moves to dismiss plaintiffs Ronnie L. Townsend and 

Iris Townsend’s third amended complaint. See Dkt. No. 51. Because the Court previously 

dismissed Plaintiffs’ complaint and they have been unable to cure their complaint’s 

deficiencies, the Court GRANTS the motion to dismiss without leave to amend.

I. Allegations in the Third Amended Complaint

Plaintiffs purchased a house in San Jose in 2007 with a loan originally held by 

World Savings Bank and now held by Wells Fargo. See Dkt. No. 50 (“TAC”) ¶¶ 4, 7, 10. 

That loan originally featured escalating payments, increasing to over $4,000 per month 

within the first three years of the loan. Id. ¶ 10. In 2009, after suffering a financial 

hardship, Plaintiffs approached Wells Fargo to apply for a loan modification. Id. ¶ 11. 

That modification changed the maturity date of the loan from 2037 to 2049 and increased

the total amount to be paid over the life of the loan. See id. ¶¶ 11–12. 

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In July 2016, Plaintiffs again applied for a loan modification. See id. ¶ 15. Wells 

Fargo advised Plaintiffs to include both Ronnie and Iris’s income on their application 

despite the fact that Iris’s income was sporadic. Id. Later that year, Wells Fargo gave 

Plaintiffs contradictory advice regarding whether to continue to make payments on their 

loans. Id. ¶¶ 16–17. By November 2016, Wells Fargo denied their loan modification 

application, stating that Plaintiffs’ combined income was too high. Id. ¶¶ 15, 18. Plaintiffs 

appealed Wells Fargo’s decision, but their appeal was also denied. Id. ¶ 20.

In April 2017, Plaintiffs secured conditional approval of a third-party loan for up to 

65% of their property value in an attempt to refinance their mortgage. Id. ¶ 21. The thirdparty loan was conditioned on Plaintiffs reducing the principal on their mortgage by about 

$20,000. Id. Plaintiffs petitioned Wells Fargo to accept a $20,000 payment in conjunction 

with the conditional loan. Id. Wells Fargo rejected Plaintiffs’ proposal. Id.

Plaintiffs again applied for loan modification in April 2017. Id. ¶ 22. After Wells 

Fargo denied their application, Plaintiffs filed for bankruptcy in June 2017 to stave off 

foreclosure, which was pushed to February 2018. Id.

As the sale date drew near, Plaintiffs again filed for bankruptcy and sought 

additional funding with another lender. Id. ¶ 23. The third-party lender refused to give 

final approval while Plaintiffs’ property was in active foreclosure. Id. Plaintiffs asked 

Wells Fargo to remove the property from active foreclosure, but Wells Fargo refused. Id. 

Because Plaintiffs’ second bankruptcy filing did not include an automatic stay, Plaintiffs’ 

property was sold at public auction on May 10, 2018. Id.

II. Procedural History

Plaintiffs filed their third amended complaint on June 24, 2019, alleging (1) 

violations of the Truth In Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq.; (2) violation 

of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et 

seq.; (3) quiet title; and (4) violations of the California Homeowner Bill of Rights 

(“HBOR”), Cal. Civ. Code §§ 2923.6, 2923.7. See id. Wells Fargo now moves to dismiss 

the third amended complaint. See Dkt. No. 51.

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Wells Fargo also requests judicial notice of a loan modification agreement. See

Dkt. No. 52. Courts may take judicial notice of documents if they are matters of public 

record or if the complaint necessarily relies on them. See Lee v. City of Los Angeles, 240 

F.3d 754, 774 (9th Cir. 2001); see also Fed. R. Evid. 201(b)(2). The Court declines to take 

judicial notice of the loan modification agreement. Townsend disputes the authenticity of

that document and contends that it is not publicly available. See Dkt. No. 55 at 2–3.

III. Legal Standard

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal 

sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a 

motion to dismiss, all allegations of material fact are taken as true and construed in the 

light most favorable to the non-movant. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–

38 (9th Cir. 1996). The Court, however, need not accept as true “allegations that are 

merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re 

Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Although a complaint need 

not allege detailed factual allegations, it must contain sufficient factual matter, accepted as 

true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 

550 U.S. 544, 570 (2007). A claim is facially plausible when it “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). 

If a court grants a motion to dismiss, leave to amend should be granted unless the 

pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 

F.3d 1122, 1127 (9th Cir. 2000); see also Fed. R. Civ. P. 15(a) (“The court should freely 

give leave [to amend] when justice so requires.”).

IV. Discussion

A. California HBOR

In the Court’s June 4, 2019, order granting Wells Fargo’s motion to dismiss, the 

Court dismissed Plaintiffs’ HBOR claims with prejudice because those claims were 

preempted by the Home Owners’ Loan Act of 1933 (“HOLA”), 12 U.S.C. § 1465. See

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Dkt. No. 49 at 6. Plaintiffs assert that they repeated their HBOR claims for the factual 

allegations contained within to provide context. See Dkt. No. 55 at 2. The Court will 

consider those allegations, but again GRANTS Wells Fargo’s motion to dismiss Plaintiffs’ 

HBOR claims.1

B. Truth In Lending Act

The TILA obligates lenders to make certain disclosures to the borrower relating to 

finance charges. 15 U.S.C. §§ 1632, 1638. In 2010, the Dodd-Frank Wall Street Reform 

Act and Consumer Protection Act of 2010 (“Dodd-Frank”), 124 Stat. 1376 (2010), 

amended the TILA to require lenders to adhere to certain “minimum standards” for 

residential mortgage loans. See 15 U.S.C. § 1639c; cf. Weller v. HSBC Mortg. Servs., Inc., 

971 F. Supp. 2d 1072, 1077 (D. Colo. 2013) (“T]he effective date of the Dodd-Frank 

amendment[s] is July 21, 2010 . . . .”).

Plaintiffs allege three TILA violations. First, Plaintiffs allege that World Savings 

Bank acted deceitfully when it issued a mortgage loan featuring an escalating payment. 

See TAC ¶ 10. That payment was deceitful, according to Plaintiffs, because it would 

escalate to over 60% of Plaintiffs’ net monthly income. Id. The second TILA violation 

occurred during the first loan modification process in 2009 to 2010. Id. ¶ 13. During this 

modification, Plaintiffs allege that Wells Fargo failed to disclose that the maturity date on 

their loan had been extended from 2037 to 2049. Id. ¶¶ 12–13. Plaintiffs also allege that 

Wells Fargo did not provide an amortization schedule. Finally, the third TILA violation 

consists of Wells Fargo’s multiple failures to properly apply Plaintiffs’ mortgage payments 

from 2011 to 2016. Id. ¶ 26.

Plaintiffs’ first TILA claim fails because World Savings Bank issued their mortgage 

in 2007, three years before the Dodd-Frank amendments took effect. There is no 

indication that the minimum standards requirement Dodd-Frank amendments were 

intended to apply retroactively. See also Arzamendi v. Wells Fargo Bank, N.A., No. 17-cv-

 

1 To the extent Plaintiffs merely repeat their HBOR claims for its factual allegations (see 

Dkt. No. 55 at 2), the Court will consider those allegations.

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01485-LJO (SKO), 2018 U.S. Dist. LEXIS 109383, at *10 (E.D. Cal. June 29, 2018)

(“Plaintiff has made no argument that [§ 1639c] has retroactive effect”); cf. Weller, 971 F. 

Supp. 2d at 1077–79 (rejecting retroactivity for Dodd-Frank’s restrictions on arbitration).

Next, a damages claim for a TILA violation must be brought “within one year from 

the date of the occurrence of the violation.” Id. § 1640(e). The statutory period generally 

runs from the date the loan agreement was executed. Meyer v. Ameriquest Mortg. Co., 342 

F.3d 899, 902 (9th Cir. 2003) (“The failure to make the required disclosures occurred, if at 

all, at the time the loan documents were signed.”).

However, “the doctrine of equitable tolling may, in the appropriate circumstances, 

suspend the limitations period until the borrower discovers or had reasonable opportunity 

to discover the fraud or nondisclosures that form the basis of the TILA action.” King v. 

State of Cal., 784 F.2d 910, 915 (9th Cir. 1986). “The fact that Plaintiff may not have been 

aware of the relevant TILA provisions is non-dispositive; rather, the touchstone is whether 

Plaintiff made some cognizable attempt to inquire into the details of her loan and whether 

Defendant actively rebuffed her efforts through fraudulent concealment of facts.” Pfitzer 

v. Beneficial Cal., Inc., No. 09-cv-02634-MCE (GGH), 2010 WL 3220132, at *3 (E.D. 

Cal. Aug. 13, 2010). “[D]ismissal is proper where a plaintiff fails to allege any facts 

demonstrating that he . . . could not have discovered the alleged violations by exercise of 

due diligence . . . .” Thomas v. Bank of Am. Home Loans, No. 11-cv-01832-JST (VBKx), 

2012 WL 3029667, at *3 (C.D. Cal. July 24, 2012) (citation and quotation marks omitted).

On their face, Plaintiffs’ second TILA claim is time-barred because none of them 

were brought within one year. See 15 U.S.C. § 1640(e). Plaintiffs assert that equitable 

tolling applies because Wells Fargo did not record the loan modification with the county 

clerk and did not include those changes in the loan modification letter. See TAC ¶ 14. 

These allegations, however, are undercut by Plaintiffs admissions that they in fact 

discovered the maturity date extension “some years after the modification was agreed 

to[,]” but fail to specify when that occurred. Id. ¶ 13. And, by 2016, Plaintiffs applied for 

a further loan modification—it is reasonable to infer that Plaintiffs were aware of the 

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actual terms of their loan by that point. See Reyes v. WMC Mortg. Corp., No. 11-cv01988-CW, 2012 WL 1067560, at *3 (N.D. Cal. Mar. 28, 2012). Likewise, “the failure to 

disclose the appraisal would be apparent with due diligence at the time the loan was 

executed.” Das v. WMC Mortg. Corp., 831 F. Supp. 2d 1147, 1157 (N.D. Cal. 2011).

Finally, Plaintiffs’ third TILA claim is time-barred for the same reason. They fail to 

allege any facts showing that they had made some attempt to discover their claim but were 

prevented from doing so by Wells Fargo. Indeed, Plaintiffs allege that their February 2014 

statement showed that Wells Fargo had refused to credit certain payments. See TAC ¶ 26.

Accordingly, the Court GRANTS Wells Fargo’s motion to dismiss Plaintiffs’ TILA 

claims. Because Plaintiffs failed to cure the deficiencies in their complaint, dismissal is 

without leave to amend. See Dkt. No. 49 at 17.

C. Unfair Competition Law

Plaintiffs allege that Wells Fargo violated the UCL by improperly reporting their 

loan status to credit reporting bureaus during their bankruptcy period. See TAC ¶ 27. 

According to Plaintiffs, the improper reporting hurt their credit rating. Id. ¶¶ 27–28.

The UCL prohibits any “unlawful, unfair, or fraudulent business act or practice.” 

Cal. Bus. & Prof. Code § 17200. “It thereby ‘borrows’ violations from other laws by 

making them independently actionable as unfair competitive practices.” AT & T Mobility 

LLC v. AU Optronics Corp., 707 F.3d 1106, 1107 n.1 (9th Cir. 2013) (citation and 

quotation marks omitted).

Wells Fargo first argues that Plaintiffs’ UCL claim is preempted by the Fair Credit 

Reporting Act (“FCRA”), 15 U.S.C. § 1681t. See Dkt. No. 51 at 15. The FCRA, however, 

does not completely preempt all state-law credit reporting claims. See Carvalho v. Equifax 

Info. Servs., LLC, 629 F.3d 876, 888 (9th Cir. 2010). In particular, the Ninth Circuit held 

in Carvalho that claims derived from Cal. Civ. Code § 1785.25 are not preempted by the 

FCRA. Id.; see also Mortimer v. JP Morgan Chase Bank, N.A., No. 12-cv-01936-CW, 

2012 WL 3155563, at *5–6. Because Plaintiffs’ UCL claim could reasonably be read as 

alleging violations of Cal. Civ. Code § 1785.25, it is not preempted by the FCRA.

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Nonetheless, Plaintiffs fail to state a UCL claim because they fail to establish UCL 

standing. To bring a claim under the UCL, Plaintiffs must “ha[ve] suffered an injury in 

fact and ha[ve] lost money or property as a result of the unfair competition.” Cal. Bus. & 

Prof. Code § 17204. “This provision requires [plaintiffs] to show that [they] ha[ve] lost 

‘money or property’ sufficient to constitute an ‘injury in fact’ under Article III of the 

Constitution . . . and also requires a causal connection between [the] alleged UCL violation 

and [the] injury in fact.” Rubio v. Capital One Bank, 613 F.3d 1195, 1203–04 (9th Cir. 

2010) (citations and quotation marks omitted).

While diminished credit ratings alone can confer UCL standing (see Rex v. Chase 

Home Fin., LLC, 905 F. Supp. 2d 1111, 1147 (C.D. Cal. 2012) (citing Rubio, 613 F.3d at 

1204)), Plaintiffs fail to establish the requisite causal connection between Wells Fargo’s 

alleged improper reporting and their diminished credit rating. Their complaint alleged that 

they declared Chapter 13 bankruptcy on at least two occasions and Wells Fargo’s alleged 

improper reporting occurred during one of their bankruptcy periods. See TAC ¶¶ 22–23, 

27. Plaintiffs alleged no facts suggesting that it was Wells Fargo’s reporting, not their 

bankruptcy, that hurt their credit rating. Indeed, Plaintiffs do not even explain how Wells 

Fargo’s reporting was improper.

Accordingly, the Court GRANTS Wells Fargo’s motion to dismiss Plaintiffs’ UCL 

claim. As with their TILA claim, dismissal is without leave to amend.

D. Quiet Title

A claim to quiet title requires: “(1) a description of the property in question; (2) the 

basis for Plaintiffs’ title; (3) the adverse claims to Plaintiffs’ title; (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.” Williams v. Bank of Am. Nat’l Ass’n, No. 15-cv00792-LHK, 2015 WL 6602403, at *5 (N.D. Cal. Oct. 30, 2015) (citing Cal. Code Civ. 

Proc. § 761.020). To satisfy the second element—the basis for Plaintiffs’ title—Plaintiffs 

must allege that they have satisfied their obligations under the Deed of Trust. Kelley v. 

Mortg. Elec. Reg. Sys., Inc., 642 F. Supp. 2d 1048, 1057 (N.D. Cal. 2009). Under 

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California law, this means Plaintiffs must allege tender, i.e., that they have paid or offered 

to pay the outstanding debt on their home. Williams, 2015 WL 6602403, at *7 (citing 

Miller v. Provost, 26 Cal. App. 4th 1703, 1707 (1994)).

Here, Plaintiffs again have not alleged that they have paid or offered to pay the 

outstanding debt on their home. The tender requirement requires more than a willingness 

to pay off part of the loan or enter into a payment plan. “Tender must be (1) in full, (2) 

unconditional, and (3) made in good faith, and a plaintiff alleging an offer of tender must 

additionally possess the ability to perform.” Ford v. Lehman Bros. Bank, FSB, No. 12-cv00842-CRB, 2012 WL 2343898, at *12 (N.D. Cal. June 20, 2012) (citing Cal. Civ. Code 

§§ 1493–95) (emphasis added). Plaintiffs only allege that they had conditional loans that 

would pay off only part of their mortgage. See TAC ¶ 21.

Accordingly, the Court GRANTS Wells Fargo’s motion to dismiss Plaintiffs’ quiet 

title claim. Because Plaintiffs have not been able to cure their pleading deficiencies, 

dismissal is without leave to amend.

E. Real Estate Settlement Procedures Act

Plaintiffs allege an unnumbered claim for violation of the Real Estate Settlement 

Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq., for failing to provide status updates 

during the modification review. See TAC ¶¶ 33–36.

To state a claim under RESPA, plaintiffs must allege facts showing both the 

defendant’s failure to comply with RESPA and “actual damages to the borrower as a result 

of the failure.” Lal v. Am. Home Serv., Inc., 680 F. Supp. 2d 1218, 1223 (E.D. Cal. 2010);

see also Tamburri v. Suntrust Mortg., Inc., 875 F. Supp. 2d 1009, 1014 (N.D. Cal.2012). 

For example, in Johnson v. HSBC Bank USA, No. 11-cv-02091-JM (WVG), 2012 WL 

928433, at *6 (S.D. Cal. Mar. 19, 2012), a homeowner requested verification of his debt, 

but the bank failed to give a substantive response. As a result, the homeowner continued 

to pay incorrect amounts on his loan, causing harm to his credit. Id.

By contrast, here, Plaintiffs fail to allege damage as a result of Wells Fargo’s 

alleged failure to respond to their April 2017 request for information. Indeed, Plaintiffs 

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allege that they eventually received a response in August 2017 (see Dkt. No. 55 at 6) and 

had received other responses telephonically (see TAC ¶ 22). Moreover, Plaintiffs 

defaulted on their loan in March 2017 (see Dkt. No. 10-2)2 before they contacted Wells 

Fargo. See Banares v. Wells Fargo Bank, N.A., 681 Fed. Appx. 638, 641 (9th Cir. 2017) 

(“[Even] if Wells Fargo had responded to [the plaintiff’s] QWR with more information . . . 

[she] would still have been in default and subject to foreclosure.”).

Accordingly, the Court GRANTS Wells Fargo’s motion to dismiss Plaintiffs’ 

RESPA claim. As with their other claims, dismissal is without leave to amend.

F. Leave to Amend

As noted in this order, the Court denies further leave to amend. Further amendment 

is futile because Plaintiff is unable to fix the factual deficiencies in his complaints. Lopez, 

203 F.3d at 1127. Plaintiff has amended his complaint three times, the Court previously 

dismissed his claims, and the parties had participated in a settlement conference. In 

addition, at the August 14, 2019, hearing on Wells Fargo’s motion, Plaintiff was given 

leave to file a supplemental declaration describing potential amendments. See Dkt. Nos. 

57, 58. Plaintiff did not file a supplemental declaration.

V. Conclusion

The Court GRANTS Wells Fargo’s motion to dismiss without leave to amend.

IT IS SO ORDERED.

Dated: August 30, 2019 _____________________________________

NATHANAEL M. COUSINS

United States Magistrate Judge

 

2 Defendants previously requested judicial notice of the notice of default. See Dkt. No. 10-

1. As this document is a matter of public record and its authenticity is not disputed, the 

Court again takes judicial notice of this document. See Lee, 240 F.3d at 774.

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