Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-02063/USCOURTS-caed-2_09-cv-02063-2/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1442 Petition for Removal

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28 This matter is deemed to be suitable for decision without oral *

argument. E.D. Cal. R. 230(g).

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

PATRICIA AHMADYAR, an individual, )

AHMAD AHMADYAR, an individual, )

 ) 2:09-cv-02063-GEB-EFB

Plaintiffs, )

) ORDER GRANTING FIRST

v. ) HORIZON’S MOTION TO DISMISS

) AND MOTION TO EXPUNGE*

FIRST HORIZON HOME LOANS, a Texas )

corporation and a division of First)

Tennessee Bank National )

Association, )

)

Defendant. )

)

First Horizon Home Loans (“First Horizon”) filed a motion

under Federal Rule of Civil Procedure 12(b)(6), in which it seeks to

dismiss all of Plaintiffs’ claims except for Plaintiffs’ RESPA

allegations. (Docket No. 29.) First Horizon also filed a motion to

expunge the lis pendens recorded on the property at issue in this

case, which includes a request for attorneys’ fees under California

Civil Code section 405.38. (Docket No. 33.) Plaintiffs did not file

an opposition to either First Horizon’s motion to dismiss or motion to

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expunge. For the reasons stated below, First Horizon’s motions are

GRANTED.

I. LEGAL STANDARD

A. Motion to Dismiss

A Rule 12(b)(6) motion “challenges a complaint’s compliance

with . . . pleading requirements.” Champlaie v. BAC Home Loans

Servicing, LP, No. S-09-1316 LKK/DAD, 2009 WL 3429622, at *1 (E.D.

Cal. Oct. 22, 2009). A pleading 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). The complaint must “give the

defendant fair notice of what the [plaintiff’s] claim is and the

grounds upon which relief rests . . . .” Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007). Further, “[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.” 

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). 

To avoid dismissal, the plaintiff must allege “only enough

facts to state a claim to relief that is plausible on its face.” 

Twombly, 550 U.S. at 547. “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, 129 S. Ct. at 1949. Plausibility, however, requires

more than “a sheer possibility that a defendant has acted unlawfully.” 

Id. “When a complaint pleads facts that are merely consistent with a

defendant’s liability, it stops short of the line between possibility

and plausibility of entitlement to relief.” Id. (quotations and

citation omitted).

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In evaluating a dismissal motion under Rule 12(b)(6), the

court “accept[s] as true all facts alleged in the complaint, and

draw[s] all reasonable inferences in favor of the plaintiff.” Al-Kidd

v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). However, neither

conclusory statements nor legal conclusions are entitled to a

presumption of truth. See Iqbal, 129 S. Ct. at 1949-50.

First Horizon’s dismissal motion is accompanied by a request

for judicial notice of certain documents related to Plaintiffs’ loan

transaction and the subsequent sale of Plaintiffs’ property at a

trustee’s sale. Specifically, First Horizon requests that judicial

notice be taken of the following six documents: a Deed of Trust

executed October 27, 2004, a Substitution of Trustee executed on

January 12, 2009, an Assignment of Deed of Trust executed April 2,

2009, a Notice of Default executed January 12, 2009, a Notice of

Trustee’s Sale executed April 24, 2009 and a Trustee’s Deed Upon Sale

executed May 23, 2009. (Request for Judicial Notice (“RJN”) A-F.) 

First Horizon’s motion to expunge also includes a request that

judicial notice be taken of a Notice of Lis Pendens recorded with the

Sacramento County Recorder’s Office on June 23, 2009.

“[A]s a general rule, a district court may not consider

materials not originally included in the pleadings in deciding a Rule

12 motion . . . . [However,] [the court] may take judicial notice of

matters of public record and may consider them without converting a

Rule 12 motion into one for summary judgment.” United States v. 14.02

Acres of Land, 547 F.3d 943, 955 (9th Cir. 2008) (quotations and

citations omitted). Facts that are “generally known within the

territorial jurisdiction of the trial court” or “capable of accurate

and ready determination by resort to sources whose accuracy cannot

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reasonably be questioned” are appropriate for judicial notice. Fed.

R. Evid. 201(b). The six documents that First Horizon requests be

judicially noticed are publically recorded with the Sacramento County

Recorder’s Office, and therefore, may be judicially noticed. 

Therefore, First Horizon’s requests for judicial notice are granted.

B. Motion to Expunge Lis Pendens

“A lis pendens is recorded by someone asserting a real

property claim, to give notice that a lawsuit has been filed which

may, if that person prevails, affect title to or possession of the

real property described in the notice.” Fed. Deposit Ins. Corp. v.

Charlton, 17 Cal. App. 4th 1066, 1069 (1993) (citing Cal. Code Civ.

Pro. §§ 405.2, 405.4, 405.20). “Once a lis pendens is filed, it

clouds the title and effectively prevents the property's transfer

until the litigation is resolved or the lis pendens is expunged.” BGJ

Associates, LLC v. Superior Court, 75 Cal. App. 4th 952, 966-67

(1999).

“A motion for expungement may be brought at any time after

notice of pendency has been recorded. The party who recorded the

notice of lis pendens bears the burden of proof in opposing

expungement.” Balagapo v. GMAC Mortg., LLC, 2:09-cv-00405-JAM-GGH,

2010 WL 144108, at *1 (E.D. Cal. Jan. 8, 2010) (citing Cal. Code Civ.

Pro. § 405.30). The lis pendens must be expunged “if the claimant has

not established by a preponderance of the evidence the probable

validity of the real property claim.” Orange County v. Hongkong and

Shanghai Banking Corp. Ltd., 52 F.3d 821, 823-24 (9th Cir. 1995)

(quoting Cal Code Civ. Pro. § 405.32). “To constitute a ‘real

property claim’ the cause of action, if meritorious, must affect the

right of possession of specific real property or affect the title to

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the specific real property.” Logan v. Resmae Mortgage Corp.,

2:09-cv-01632-MCE-GGH, 2009 WL 5206716, at *1 (E.D. Cal. Dec. 24,

2009) (quoting Cal. Code Civ. Pro. § 405.4). To establish the

“probable validity” of a “real property claim,” the party who recorded

the lis pendens must demonstrate “that it is more likely than not that

the[y] . . . will obtain a judgment against the defendant . . . .” 

Orange County, 52 F.3d at 824 (quoting Cal Code Civ. Pro. § 405.32).

II. BACKGROUND

On October 27, 2004, Plaintiffs executed a Deed of Trust on

their property located at 4609 Careyback Avenue in Elk Grove,

California, to secure a loan from First Horizon in the amount of

$290,000.00. (RJN Ex. A; Compl. ¶¶ 8-9.) The Deed of Trust

identifies First Horizon as the lender and trustee, and Mortgage

Electronic Registration Systems, Inc. (“MERS”), as the beneficiary and 

nominee for the lender and the lender’s successors and assigns. (RJN

Ex. A.) Plaintiffs allege that the “loan was originated based upon

Plaintiffs’ stated rather than verified income and ability to repay

the loan.” (Compl. ¶ 10.)

On January 12, 2009, First Horizon executed a Substitution

of Trustee, naming Quality Loan Service Corporation (“Quality”) as the

trustee under the Deed of Trust in the place of the original trustee,

First Horizon. (RJN Ex. B.) The Substitution of Trustee was recorded

on February 24, 2009. (Id.) Also on January 12, 2009, MERS executed

an Assignment of Deed of Trust, assigning all beneficial interest

under the Deed of Trust to First Horizon. (RJN Ex. C.) The

Assignment of Deed of Trust was recorded on April 17, 2009. (Id.)

Plaintiffs were unable to make their monthly payments

required under their loan, and on January 12, 2009, Quality, as the

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agent for the beneficiary, executed a Notice of Default. (RJN Ex. D.) 

On April 24, 2009, Quality executed a Notice of Trustee’s Sale that

was recorded on May 2, 2009. (RJN Ex. E.) The Notice of Trustee’s

Sale stated that Quality intended to sell Plaintiffs’ property at a

trustee’s sale to be held on May 21, 2009. (Id.) The Notice of

Trustee’s Sale also states that the amount of unpaid balance and other

charges owed by Plaintiffs totaled $303,289.58. (Id.) Quality sold

Plaintiffs’ property at a trustee’s sale, held on May 21, 2009, to

First Horizon for $157,250.00. (RJN Ex. F.)

After the trustee’s sale, Plaintiffs filed a complaint in

the Sacramento County Superior Court on June 19, 2009, alleging ten

claims under state and federal law against First Horizon, Quality and

one hundred “Doe” defendants. Plaintiffs allege their “loan agreement

is void based upon defendants’ violations of disclosure requirements”

and that the “non-judicial foreclosure sale was improper in that

defendants are not holders of the original note.” (Compl. ¶ 56.) 

Further, Plaintiffs contend that since defendants did not provide them

“with full disclosure of the loan in the Farsi language” “the entire

loan transaction . . . is subject to rescission.” (Id.) Plaintiffs

also recorded a Notice of Pendency of Action (Lis Pendens) in the

Sacramento County Recorder’s Office on June 23, 2009.

First Horizon removed this case to federal court based upon

federal question jurisdiction on July 27, 2009. Following removal, a

Joint Status Report was filed on October 30, 2009, in which Plaintiffs

consented to the dismissal of Quality; therefore, Quality was

dismissed from the action in a Scheduling Order filed on November 12,

2009. The Scheduling Order also dismissed the “Doe” defendants. As a

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result of these dismissals, First Horizon is the sole remaining

defendant.

III. DISCUSSION

A. First Horizon’s Dismissal Motion

1. Quiet Title

First Horizon argues Plaintiffs’ quiet title claim should be

dismissed since Plaintiffs’ have not verified the claim as required by

California Code of Civil Procedure section 760.020.

“California Code of Civil Procedure section 760.020 provides

for an action ‘to establish title against adverse claims to real or

personal property or any interest therein.’ Section 761.020 mandates

a ‘verified’ complaint for a quiet title action to include: (1) a

legal description and street address of the subject real property; (2)

the title of plaintiff as to which 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.” Feliciano v. Washington Mutual Bank, FA, No. 2:09-CV-01304

FCD KJM, 2009 WL 2390842, at *6 (E.D. Cal. Aug. 3, 2009) (citing

Cities Serv. Oil Co. v. Dunlap, 308 U.S. 208, 212 (1939) for the

proposition that when a state rule “relating to an action to quiet

title” is substantive, it applies in federal court). As recognized in

Feliciano, California’s verification requirement is applicable to a

quiet title claim brought in federal court. Id. Since Plaintiffs’

quiet title claim is not verified, their claim is dismissed.

//

//

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2. “Rescission Based on Fraud”

First Horizon also argues that Plaintiffs’ second claim

labeled as “rescission based on fraud,” should be dismissed since it

does not satisfy the heightened pleading requirements of Federal Rule

of Civil Procedure 9(b).

Under California law, the elements of a fraud claim are: (1)

misrepresentation (including, false representation, concealment, or

nondisclosure); (2) knowledge of falsity; (3) intent to induce

reliance; (4) justifiable reliance; and (5) resulting damage. Lazar

v. Superior Court, 12 Cal. 4th 631, 638 (1996). However, a state

fraud claim pled in federal court must satisfy Federal Rule of Civil

Procedure 9(b)’s “particularity” requirements. Vess v. Ciba-Geigy

Corp., 317 F.3d 1097, 1103 (9th Cir. 2003); see also Fed. R. Civ. P.

9(b) (requiring that “[i]n alleging fraud . . ., a party must state

with particularity the circumstances constituting fraud”). Therefore,

“[a]verments of fraud must be accompanied by ‘the who, what, when,

where and how’ of the misconduct charged.” Vess, 317 F.3d at 1106

(citation omitted). Further, “[t]he plaintiff must set forth what is

false or misleading about a statement, and why it is false.” Id.

(citation omitted). Lastly, “Rule 9(b) does not allow a complaint to

merely lump multiple defendants together but requires plaintiffs to

differentiate their allegations when suing more than one defendant and

inform each defendant separately of the allegations surrounding his

alleged participation in the fraud.” Swartz v. KPMG LLP, 476 F.3d

756, 764-65 (9th Cir. 2007) (quotations and citations omitted).

Plaintiffs allege that when they applied for their loan,

“defendants failed to disclose to [them] that their income would be

insufficient to repay the loan.” (Compl. ¶ 20.) Plaintiffs allege

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that this non-disclosure was intentional and material and induced

reliance. (Id. ¶¶ 21, 22.) Plaintiffs further allege that

“defendants proceeded toward a Trustee’s sale . . . when the true

facts are that defendants have no present right to initiate

foreclosure under the security instrument.” (Id. ¶ 22.) 

These allegations, however, are insufficient to satisfy the

heightened pleading requirements imposed by Federal Rule of Civil

Procedure 9(b). Plaintiffs have not differentiated First Horizons’

alleged fraudulent conduct, nor have Plaintiffs explained why First

Horizon’s alleged non-disclosures were false or misleading. Since

Plaintiffs’ fraud claim does not satisfy the heightened pleading

requirements of Federal Rule of Civil Procedure 9(b), it is dismissed.

3. “Unfair Debt Collection Practices”

First Horizon also seeks dismissal of Plaintiffs’ third

claim for “unfair debt collection practices.” First Horizon argues

this claim should be dismissed since it is not a debt collector under

either the Fair Debt Collection Practices Act (“FDCPA”) or

California’s Rosenthal Act.

Plaintiffs’ “unfair debt collection practices” claim

incorporates by reference the allegations in paragraphs 1 through 25

of the complaint. Plaintiffs allege “defendants, and each of them, in

the taking of the actions aforementioned, have violated provisions of

California’s Rosenthal Fair Debt Collection Practices Act, including

but not limited to § 1788 (e) and (f) of the California Civil Code,

and the Federal Fair Debt Collections Act, 15 U.S.C., Title 41,

Subchap. V, §§ 1692 et seq., and the Real [Estate] Settlement

Procedures Act (RESPA), 12 U.S.C. §§ 2601 to 2617.” (Compl. ¶ 27.)

(emphasis omitted). Plaintiffs also allege that “[o]n March 2, 2009,

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[they] sent to Defendant First Horizon a Qualified Written Request per

RESPA . . . and TILA . . . requesting that [First Horizon] Postpone

any sale until they complied with said Qualified Written Request

 . . . .” (Id. ¶ 12.) Plaintiffs further allege “Defendants failed

to respond at all to said statutory request, thus violating RESPA and

TILA statutes as referenced herein.” (Id.) Plaintiffs attached to

their complaint the letter they sent to First Horizon that they

contend constitutes a qualified written request (“QWR”) under RESPA. 

The FDCPA and California’s Rosenthal Act seek to prohibit

debt collectors from engaging in abusive, unfair, or deceptive

practices in the collection of consumer debts. Both statutes,

however, only govern the conduct of a “debt collector,” which is

defined under both statutes. See 15 U.S.C. § 1692f (“A debt collector

may not use unfair or unconscionable means to collect or attempt to

collect any debt.”); Cal. Civ. Code § 1788.10 (“No debt collector

shall collect or attempt to collect a consumer debt by means of”

certain prohibited conduct). A debt collector is defined under the

FDCPA as “any person who uses any instrumentality of interstate

commerce or the mails in any business the principal purpose of which

is the collection of any debts, or who regularly collects or attempts

to collect, directly or indirectly, debts owed or due . . . .” 15

U.S.C. § 1692a(6). The definition of a “debt collector” under the

Rosenthal Act is similar. Cal. Civ. Code § 1788.2(c) (defining “debt

collector” as “any person who, in the ordinary course of business,

regularly . . . engages in debt collection.”).

Plaintiffs have not alleged that First Horizon is a debt

collector within the meaning of either the FDCPA or the Rosenthal Act

or pled facts suggesting that First Horizon is a “debt collector” as

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defined by either statute. Therefore, Plaintiffs’ “unfair debt

collections practices” claims based upon violations of the FDCPA and

Rosenthal Act fail to state a claim and are dismissed.

4. Unfair Business Practices

First Horizon argues Plaintiffs’ claim under California

Business and Professions Code § 17200 (the “UCL”) should be dismissed

since Plaintiffs lack standing to sue. Specifically, First Horizon

argues Plaintiffs “have suffered no damages as they are delinquent on

their mortgage, and continue to live rent-free . . . .” (Mot. to

Dismiss 9:18-19.) Further, First Horizon argues Plaintiffs’ UCL claim

fails since Plaintiffs have not alleged a viable cause of action.

“To bring a UCL claim, a plaintiff must show either an (1)

unlawful, unfair or fraudulent business act or practice, or (2)

unfair, deceptive, untrue or misleading advertising. Because section

17200 is written in the disjunctive, it establishes three varieties of

unfair competition - acts or practices which are unlawful, or unfair

or fraudulent. A practice is prohibited as unfair or deceptive even

if not unlawful or vice versa.” Lippitt v. Raymond James Fin. Servs.

Inc., 340 F.3d 1033, 1043 (9th Cir. 2003) (quotations and citations

omitted). “[A]n action based on [the UCL] to redress an unlawful

business practice ‘borrows’ violations of other laws and treats these

violations . . . as unlawful practices, independently actionable under

section 17200 et seq. and subject to the distinct remedies provided

thereunder.” Farmers Ins. Exchange v. Superior Court, 2 Cal. 4th 377,

383 (1992) (quotations and citations omitted). “Violation of almost

any federal, state, or local law may serve as the basis for a [UCL]

claim.” Brewer v. Indymac Bank, 609 F. Supp. 2d 1104, 1122 (E.D. Cal.

2009) (quoting Plascencia v. Lending 1st Mortgage, 583 F. Supp. 2d

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1090, 1098 (N.D. Cal. 2008)). “A complaint based on an unfair

business practice may be predicated on a single act; the statute does

not require a pattern of unlawful conduct.” Id. (quoting United Farm

Workers of Am., AFL-CIO v. Dutra Farms, 83 Cal. App. 4th 1146, 1163

(2000)).

However, standing to sue is a prerequisite to maintaining a

UCL claim, and is satisfied only if the plaintiff has suffered “an

injury in fact,” having lost either money or property as a result of

the alleged unfair competition. Branick v. Downey Sav. & Loan Assn.,

39 Cal. 4th 235, 241 (2006) (stating that “[a]fter Proposition 64,

only those private persons who have suffered injury in fact and have

lost money or property may sue to enforce the unfair competition and

false advertising laws.” (quotations and citations omitted)); see also

Cal. Civ. Code § 17204 (stating that a UCL claim may only be

maintained by “a person who has suffered injury in fact and has lost

money or property as a result of the unfair competition.”).

Plaintiffs allege that “the statutory violations and

unlawful practices and acts of defendants . . . constitute unlawful

business acts and/or practices within the meaning of California

Business & Professions Code . . . .” (Compl. ¶ 31.) Further,

Plaintiffs specify that the “predicate unlawful business acts and/or

practices” giving rise to their UCL claim include “defendants’ failure

to comply with the disclosure requirements of California Civil Code §

1632, California’s Rosenthal Act, . . ., and the Federal Fair Debt

Collections Act . . . and RESPA . . . .” (Id.) Plaintiffs also

allege that as a result of “defendants’ unlawful conduct . . . [they]

have lost hundreds of thousands of dollars in equity in their home,

and have suffered injury in fact . . . .” (Id. ¶ 35.) 

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California Civil Code section 1632.

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“Plaintiffs’ unfair business practices claim can be

predicated upon [First Horizon’s alleged] RESPA violation.” Brewer,

609 F. Supp. 2d at 1122. However, Plaintiffs have not alleged enough 1

facts to demonstrate that they have standing to sue. While Plaintiffs

allege that they “lost hundreds of thousands of dollars in equity in

their home,” they have not pled facts demonstrating that First

Horizon’s alleged failure to respond to Plaintiffs’ QWR caused their

injury in fact. Cf. Brewer, 609 F. Supp. 2d at 1123 (finding that

plaintiffs had standing to bring a UCL claim predicated upon an

alleged RESPA violation where “reading the complaint liberally and as

a whole, [plaintiffs alleged] defendants fraudulently transferred

plaintiffs’ loans to [defendant and] [d]ue to defendants’ actions,

plaintiffs were allegedly compelled to pay a higher interest rate on

their loans, and were thus deprived of money”). Even when Plaintiffs’

complaint is construed liberally, they have not demonstrated that they

have suffered an injury in fact resulting from First Horizon’s alleged

RESPA violation. According, Plaintiffs have not shown they have

standing to bring a UCL claim, and their UCL claim is dismissed.

5. Breach of Fiduciary Duty

First Horizon further argues that Plaintiffs’ breach of

fiduciary duty claim should be dismissed since a lender does not owe a

borrower a fiduciary duty. 

To state a breach of fiduciary duty claim, a plaintiff must

show: (1) the existence of a fiduciary relationship; (2) the breach of

that relationship; and (3) damage proximately caused by the breach. 

Roberts v. Lomanto, 112 Cal. App. 4th 1553, 1562 (2003). However,

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“[a]bsent special circumstances . . . a loan transaction is [an] at

arms-length [transaction] and there is no fiduciary relationship

between the borrower and lender.” Oaks Mgmt. Corp. v. Superior Court,

145 Cal. App. 4th 453, 466 (2006). “A commercial lender is entitled

to pursue its economic interest in a loan transaction. This right is

inconsistent with the obligations of a fiduciary, which require that

the fiduciary knowingly agree to subordinate its interests to act on

behalf of and for the benefit of another.” Gonzalez v First Franklin

Loan Servs., No. 1:09-cv-00941 AWI-GSA, 2010 WL 144862, at *13 (E.D.

Cal. Jan. 11, 2010). Further, “a lender owes no duty of care to the

borrowers in approving a loan.” Id. (quoting Wagner v. Benson, 101

Cal. App. 3d 27, 35 (1980)).

Plaintiffs allege that “defendants . . . as the lender,

trustee and mortgage broker, had, and have a fiduciary duty to

Plaintiff to advise them and place them on notice of all disclosures

that are required by law, especially in a real estate loan

transaction, and to provide Plaintiff[s] with facts from which

Plaintiff[s] could make a determination as to the need to either

refinance . . . or to be able to qualify for the loan . . . .” 

(Compl. ¶ 38.) Plaintiffs further allege that each defendant

“breached their duty . . . by failing to provide Plaintiff with the

disclosure notices required pursuant to § 1632 of the California Civil

Code.” (Id. ¶ 39.)

Plaintiffs, however, have not pled facts demonstrating that

First Horizon, as Plaintiffs’ lender, owed Plaintiffs a fiduciary

duty. Plaintiffs’ complaint is devoid of any facts suggesting that

First Horizon acted as anything other than a typical lender. 

Plaintiffs, therefore, have not pled facts showing that any “special

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circumstances” justify imposing fiduciary obligations upon First

Horizon. Accordingly, Plaintiffs’ breach of fiduciary duty claim is

dismissed.

6. Plaintiffs’ Sixth Claim

First Horizon also seeks dismissal of Plaintiffs’ sixth

claim, which First Horizon construes as alleging a violation of

California Civil Code section 1632(b). First Horizon argues this

claim should be dismissed since Farsi is not a language included in

California Civil Code section 1632(b), and further, any claim under

section 1632(b) would be barred by the applicable statute of

limitations.

Plaintiffs’ sixth claim, like their fifth claim, is labeled

as a “breach of fiduciary duty” claim. However, Plaintiffs’

allegations suggest this claim is improperly labeled. Plaintiffs

allege in this claim: “Defendants did not inform Plaintiffs that they

had a statutory duty to provide Plaintiffs with a Farsi language

translation of the loan documents, which constituted, and constitute

the entire Contract, and failed to provide Plaintiffs with the Farsi

language transaction of the loan documents. This failure to disclose,

was and is, a breach of the Contract by defendants.” (Compl. ¶ 44.) 

This claim, however, is deficient since Plaintiffs have not

provided First Horizon with “fair notice of what [their] . . . claim

is and the grounds upon which relief rests . . . .” Twombly, 550 U.S.

at 555. Plaintiffs have not identified any statute or provision in

any contract which requires First Horizon to provide them with a copy

of their loan documents in Farsi. Further, to the extent Plaintiffs’

claim rests upon California Civil Code section 1632(b), it fails as

that provision is only applicable to certain contracts negotiated in

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“Spanish, Chinese, Tagalog, Vietnamese or Korean.” Cal. Civ. Code §

1632(b). Therefore, Plaintiffs’ sixth claim is dismissed.

7. Breach of the Implied Covenant of Good Faith and Fair Dealing

First Horizon argues Plaintiffs’ breach of the implied

covenant of good faith and fair dealing claim should be dismissed

since there is no “special relationship” between Plaintiffs and First

Horizon giving rise to such a claim.

Plaintiffs allege “Defendants breached the implied covenant

of good faith and fair dealing when they used their superior knowledge

in the real estate, lending, and finance industries to intentionally

hide the fact that Defendants[] were obligated to inform Plaintiffs

that Plaintiffs could not qualify for the loan on the basis of his

[sic] stated income only.” (Compl. ¶ 48.) Further, Plaintiffs

“allege that such acts are in complete disregard of their duty thus

breaching the implied covenant of good faith and fair dealing.” (Id.

¶ 49.) Plaintiffs plead that “Defendants breaching conduct has led to

the loss” of their property by foreclosure and “compensatory damages

in a sum not less than $500,000.00.” (Id. ¶ 50.)

“It has long been recognized in California that there is an

implied covenant of good faith and fair dealing in every contract that

neither party will do anything which will injure the right of the

other to receive the benefits of the agreement.” Kransco v. Am.

Empire Surplus Lines Ins. Co., 23 Cal. 4th 390, 400 (2000) (quotations

and citations omitted). According, “[t]he prerequisite for any action

for breach of the implied covenant of good faith and fair dealing is

the existence of a contractual relationship between the parties, since

the covenant is an implied term in the contract.” Smith v. City and

County of San Francisco, 225 Cal. App. 3d 38, 48-49 (1990) (citations

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omitted). “Without a contractual relationship, [plaintiffs] cannot

state a cause of action for breach of the implied covenant.” Id. at

49. 

Plaintiffs have not identified any contract they have with

First Horizon which forms the basis of their claim. Therefore,

Plaintiffs’ complaint “lacks an alleged breach from an identifiable,

enforceable contract.” Lawrence v. Aurora Loan Services LLC, No. CV F

09-1598 LJO DLB, 2010 WL 364276, at *11 (E.D. Cal. Jan. 25, 2010). 

Further, Plaintiffs may not maintain a claim for tortious

breach of the implied covenant of good faith and fair dealing. 

“Generally, no cause of action for the tortious breach of the implied

covenant of good faith and fair dealing can arise unless the parties

are in a special relationship with fiduciary characteristics. Thus,

the implied covenant tort is not available to parties of an ordinary

commercial transaction where the parties deal at arms’ length.” 

Pension Trust Fund for Operating Eng’rs v. Fed. Ins. Co., 307 F.3d

944, 955 (9th Cir. 2002) (applying California law) (quotations and

citations omitted). “California courts do not invoke a special

relationship between a lender and borrower.” Lawrence, 2010 WL

364276, at *12 (citing Kim v. Sumitomo Bank, 17 Cal. App. 4th 974, 979

(1993) & Mitsui Mfrs. Bank v. Superior Court, 212 Cal. App. 3d 726,

729 (1989)). 

Plaintiffs’ complaint alleges no facts establishing a

“special relationship” between Plaintiffs and First Horizon which

could give rise to a breach of the implied covenant of good faith and

fair dealing. Therefore, “[t]he breach of implied covenant of good

faith and fair dealing claim fails in absence of allegations of a

sufficient contractual or special relationship between [First Horizon]

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and [P]laintiffs.” Lawrence, 2010 WL 364276, at *12. Accordingly,

Plaintiffs’ breach of the implied covenant of good faith and fair

dealing claim is dismissed.

8. Home Ownership and Equity Protection Act 

First Horizon argues that Plaintiffs’ Home Ownership and

Equity Protection Act (“HOEPA”) claim should also be dismissed since

Plaintiffs have alleged no facts suggesting that HOEPA is applicable

to their loan. First Horizon also argues that Plaintiffs are not

entitled to rescind their loan under HOEPA since any right to

rescission was extinguished upon the sale of their property.

Plaintiffs allege “Defendants[,] in violation of 15 U.S.C. §

1639(h)[,] proceeded to originate the loan by lowering their own

underwriting standards, and provided funding to Plaintiffs with the

entire indebtedness upon Plaintiff[s’] shoulders, which became

financially unbearable and burdensome, such that Plaintiffs defaulted

on the loan, and lost it to a non-judicial foreclosure sale.” (Compl.

¶ 53.) Plaintiffs further allege “Defendants violations of 15 U.S.C.

§ 1639(h) may be remedied only by the rescission of the loan, and the

payment of compensatory damages to Plaintiffs in a sum to make

Plaintiff[s] whole.” (Id. ¶ 54.)

HOEPA, which is an amendment to the Truth in Lending Act,

provides in pertinent part, “[a] creditor shall not engage in a

pattern or practice of extending credit to consumers under mortgages

 . . . based on the consumers’ collateral without regard to the

consumers’ repayment ability, including the consumers’ current and

expected income, current obligations, and employment.” 15 U.S.C. §

1639(h). However, “[t]he provisions of HOEPA [only] apply to a

mortgage secured by the consumer’s principal dwelling if, the annual

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percentage rate at consummation of the transaction will exceed by more

than 10 percentage points the yield on Treasury securities . . . or

the total points and fees payable by the consumer at or before closing

will exceed the greater of (i) 8 percent of the total loan; or (ii)

$400. Pineda v. Reyes, No. 09-cv-01938-H-WMc, 2009 WL 3388376, at *3

(S.D. Cal. Oct. 20, 2009) (quoting 15 U.S.C. § 1602(aa)). Further,

the right to rescind a loan for failure to provide HOEPA disclosures

expires “upon sale of the property.” 12 C.F.R. § 226.23(a).

Plaintiffs’ HOPEA claim is clearly deficient. First,

Plaintiffs fail to allege any facts suggesting that HOEPA’s

requirements are applicable to their loan. Further, Plaintiffs’

property was sold at a Trustee’s Sale on May 21, 2009, and therefore,

they may no longer maintain a HOEPA claim for rescission. 

Accordingly, Plaintiffs’ HOPEA claim for damages is dismissed and

their HOEPA rescission claim is dismissed with prejudice.

9. Declaratory and Injunctive Relief

First Horizon also argues Plaintiffs’ ninth claim for

“Declaratory and Injunctive Relief” should be dismissed since

Plaintiffs’ complaint fails to present any credible allegations that

the foreclosure was conducted in violation of California law. First

Horizon argues contrary to Plaintiffs’ equitable relief allegations,

California law does not require that they possess the original note to

foreclose under a deed of trust nor was First Horizon required to

provide Plaintiffs with copies of their loan documents in Farsi. 

Lastly, First Horizon argues Plaintiffs cannot state a claim for

“injunctive relief” since injunctive relief is a remedy and not a

cause of action.

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Plaintiffs allege their “loan agreement is void based upon

defendants’ violations of disclosure requirements” and that the “nonjudicial foreclosure sale was improper in that defendants are not

holders of the original note.” (Compl. ¶ 56.) Further, Plaintiffs

contend that since defendants did not provide them “with full

disclosure of the loan in the Farsi language” “the entire loan

transaction” is subject to rescission.” (Id.) Plaintiffs request a

“declaration as to the validity of the Refinance money loan agreement,

loan transactions, and defendants’ right to have proceeded with the

non-judicial foreclosure” and a “preliminary and a permanent

injunction under California Code of Civil Procedure § 527 and

California Rules of Court, Rule 3.1150 . . . as to any future sale of

[their home] . . . to any other and/or third parties and to order the

title of the subject property to be transferred back to Plaintiffs.” 

(Id. ¶ 60.) 

Plaintiffs’ claim for “declaratory and injunctive relief,”

however, “fails for the simple reason that . . . [Plaintiffs’]

‘claims’ [are] a form of relief, not an independent cause of action.” 

Lemieux v. Litton Loan Servicing, LP, 2009 WL 5206641, at *4 (E.D.

Cal. Dec. 22, 2009) (quotations and citations omitted); see also

Santos v. Countrywide Home Loans, No. Civ. 2:09-02642 WBS DAD, 2009 WL

3756337, at *5 (E.D. Cal. Nov. 6, 2009) (stating that “[d]eclaratory

and injunctive relief are not independent claims, rather they are

forms of relief” (citation omitted)). Further, even if Plaintiffs’

complaint is construed as a request for declaratory and injunctive

relief, Plaintiffs have not demonstrated that they are entitled to

either remedy. See Guerra v. Sutton, 783 F.2d 1371, 1376 (9th Cir.

1986) (stating that “[d]eclaratory relief is appropriate (1) when the

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judgment will serve a useful purpose in clarifying and settling the

legal relations in issue, and (2) when it will terminate and afford

relief from uncertainty, insecurity, and controversy giving rise to

the proceeding” (quotations and citations omitted)); Sierra Forest

Legacy v. Rey, 577 F.3d 1015, 1021 (9th Cir. 2009) (stating that

“plaintiffs seeking a preliminary injunction must establish that (1)

they are likely to succeed on the merits; (2) they are likely to

suffer irreparable harm in the absence of preliminary relief; (3) the

balance of equities tips in their favor; and (4) a preliminary

injunction is in the public interest”). Plaintiffs have not shown

that a declaratory judgment will serve a useful purpose nor that they

have adequately pled any of the factors for awarding a preliminary or

permanent injunction. See Gusenkov v. Washington Mut. Bank, No. C 09-

04747 SI, 2010 WL 725815, at *6 (N.D. Cal. Feb. 26, 2010) (dismissing

claim for “declaratory and injunctive relief”). Therefore, this claim

is dismissed.

B. First Horizon’s Motion to Expunge the Lis Pendens

1. Expungement

First Horizon argues that the lis pendens attached to

Plaintiffs’ property should be expunged since Plaintiffs have not

shown a likelihood of prevailing on the merits of their claims. 

Plaintiffs do not oppose First Horizon’s expungement motion, and

therefore, have not satisfied their burden of demonstrating the

“probable validity” of any “real property claim.” Further, only

Plaintiffs’ RESPA claim survives First Horizon’s dismissal motion. 

However, Plaintiffs’ RESPA claim does not affect title or the right to

possession of Plaintiffs’ property, and therefore, is not a “real

property claim.” Since Plaintiffs have not demonstrated the “probable

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validity” of any “real property claim,” First Horizon’s motion to

expunge is GRANTED.

2. Request for Attorneys’ Fees

First Horizon also argues that it is entitled to recover

$962.60 in attorneys’ fees under California Code of Civil Procedure

section 405.38, which provides “[t]he court shall direct that the

party prevailing on any motion [for expungement] . . . be awarded the

reasonable attorney's fees and costs of making or opposing the motion

unless the court finds that the other party acted with substantial

justification or that other circumstances make the imposition of

attorney's fees and costs unjust.” The award of attorneys’ fees “is

mandatory, unless the Court finds that the opposing party acted with

substantial justification, or that other circumstances make the

imposition of attorneys' fees unjust.” Olivier v. NDEX West, LLC, No.

1:09-CV-00099 OWW GSA, 2009 WL 2486314, at *6 (E.D. Cal. Aug. 12,

2009); see also Castro v. Superior Court, 116 Cal. App. 4th 1010, 1118

(2004) (stating that “a prevailing party on a motion to expunge a lis

pendens is entitled to recover attorney fees.” (emphasis in

original)). Since First Horizon has prevailed on its motion to

expunge, it is entitled to recover its reasonable attorneys’ fees.

First Horizon’s counsel, Rachel Opatik, declares that she

spent “one and a half (1.5) hours preparing” the motion to expunge and

request for judicial notice and three (3) hours researching and

preparing the motion, memorandum of points and authorities, her

declaration and the request for judicial notice. (Opatik Decl. ¶ 3.) 

Further, Opatik declares that her “time is billed at the . . . rate of

$175.00 per hour.” (Id. ¶ 4.) Opatik also declares that she

“anticipate[s] that another one (1) hour of [her] time will be

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necessary to review any opposition filed . . . and to prepare for and

attend the hearing in this matter.” (Id. ¶ 5.)

Since Plaintiffs did not file an opposition to First

Horizon’s expungement motion and no hearing was held, First Horizon is

only entitled to recover attorneys’ fees in the amount of $785.50 for

the four and one-half (4.5) hours Opatik spent preparing and

researching the motion. 

IV. CONCLUSION

For the stated reasons, First Horizon’s motion to dismiss is

GRANTED. (Docket No. 29.) Plaintiffs, however, are granted leave to

file an amended complaint curing the deficiencies of any claim not

dismissed with prejudice. Any amended pleading shall be filed within

fourteen (14) days of the date on which this order is filed.

Further, First Horizon’s motion to expunge is GRANTED and 

Plaintiffs shall pay First Horizon $785.50 in attorneys’ fees. 

(Docket No. 33.) The Notice of Lis Pendens recorded on June 23, 2009

with the Sacramento County Recorder’s Office as Instrument 20090623

shall be EXPUNGED.

Dated: March 25, 2010

 

GARLAND E. BURRELL, JR.

United States District Judge

 

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