Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-06098/USCOURTS-cand-3_18-cv-06098-1/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

EQUANN D. SMITH, et al., 

Plaintiffs, 

v. 

BARRETT, DAFFIN, FRAPPIER, TREDER 

& WEISS, LLP, et al., 

Defendants. 

Case No. 18-cv-06098-RS 

ORDER GRANTING MOTION TO 

DISMISS 

I. INTRODUCTION

Plaintiffs Équaan Smith and Russell Robinson bring suit against Barrett, Daffin, Frappier, 

Treder & Weiss, LLP (“Barrett LLP”) and Wells Fargo Bank, N.A. (“Wells Fargo”) (collectively 

“Defendants”) for eight purported claims for relief relating to a foreclosure sale conducted on May 

31, 2018. Defendants move to dismiss the First Amended Complaint (“FAC”), contending that 

Plaintiffs’ claims fail to state a claim. Pursuant to Civil Local Rule 7-1(b), the motion is suitable 

for disposition without oral argument. For the reasons explained below, Defendants’ motion is 

granted in its entirety with leave to amend as to certain claims for relief, but without leave to 

amend as to others. 

 

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ORDER GRANTING MOTION TO DISMISS

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II. BACKGROUND1

This case is the latest in a tortured history relating to a $629,000 mortgage loan Smith 

received in May 2004 from World Savings Bank, FSB (“World Savings”). The loan was secured 

by a deed of trust recorded against the real property located at 6646 Saroni Drive, Oakland, CA, 

94611. (RJN Ex. F.) Roughly three years later, World Savings changed its name to Wachovia 

Mortgage, FSB (“Wachovia”), and two years after the name change, Wachovia was acquired by 

Wells Fargo.2 In April 2009, Smith and Robinson ceased making payments on the loan. (RJN Ex. 

J at 3.) After a notice of default was entered, Smith (represented by Robinson) brought her first 

lawsuit against Wells Fargo in Alameda County Superior Court in September 2010 for numerous 

state law violations regarding an alleged attempt to modify the loan. (RJN Ex. G.) Smith also 

filed for bankruptcy in 2010. The parties ultimately settled, and in January 2011 the case was 

dismissed. (RJN Ex. H.) 

Years later, in April 2016, the original trustee in the deed of trust, Golden West Savings 

Association Service Co., was replaced by Barrett LLP. (RJN Ex. I.) That same year, Plaintiffs 

requested a loan modification from Wells Fargo. Wells Fargo denied the request, concluding that 

Plaintiffs would be unable to afford a modified loan payment. Another notice of default was 

recorded in December 2016. (RJN Ex. J.) At the time, the loan arrearage stood at $455,218.50. 

(Id.) Subsequently, a notice of trustee’s sale was recorded in March 2017, scheduling a 

foreclosure sale for April 27, 2017, and listing $1,038,074.16 as the total secured debt owed to 

Wells Fargo. (RJN Ex. K.) Before the sale could take place, Smith (represented by Robinson) 

filed her second lawsuit against Wells Fargo (first against Barrett LLP) in Alameda County 

Superior Court for numerous state law violations regarding Wells Fargo’s denial of Smith’s 2016 

 

1

 The factual background is based on the averments in the FAC, which must be taken as true for 

purposes of a motion to dismiss. This section also draws on certain records of which the Court 

takes judicial notice, as discussed below. 

2

 Wachovia Mortgage, FSB was converted to Wells Fargo Bank Southwest, N.A., which then 

became a division of Wells Fargo Bank, N.A. (See Request for Judicial Notice (“RJN”) Exs. AE.) 

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request for a loan modification. (RJN Ex. L.) Wells Fargo then removed this action to the 

Northern District of California (“Northern District”). (RJN Ex. M.) Pursuant to a settlement, the 

parties submitted a joint stipulation of dismissal with prejudice in August 2017. (RJN Ex. N.) 

Plaintiffs contend in the FAC that, as part of this settlement, Wells Fargo promised to 

conduct a good faith loan modification and failed to do so. Another notice of trustee’s sale was 

recorded in January 2018, scheduling a foreclosure sale for February 27, 2018 and listing 

$1,073,828.64 as the total secured debt owed to Wells Fargo. (RJN Ex. O.) When Wells Fargo 

informed Plaintiffs that the amount necessary to reinstate the loan (i.e. to bring the mortgage 

current) was $515,263.03, they requested an accounting with a detailed breakdown of the 

reinstatement amount. The day before the scheduled sale, Smith (represented by Robinson) filed a 

third lawsuit against Wells Fargo (second against Barrett LLP), alleging the same causes of action 

as the second lawsuit, and asserting very similar factual averments, with the exception of pleading 

that Wells Fargo promised to conduct a good faith loan modification pursuant to an agreement in 

the latter half of 2017 and failed to do so.3 (RJN Ex. P.) Wells Fargo again removed the action to 

the Northern District. (RJN Ex. Q.) The parties reached yet another settlement and stipulated to 

dismiss the case with prejudice in April 2018. (RJN Ex. S.) The sale date was continued to 12:30 

PM on May 31, 2018. On May 29, Plaintiffs allege they attempted to tender the “claimed amount 

in arrears” to Wells Fargo, but that “good faith effort went nowhere.” (FAC ¶ 29.) 

At 12:19 PM on the day of the scheduled sale, a grant deed was recorded whereby Smith 

transferred a 4% interest in her property to Robinson. (RJN Ex. T.) At 11:53 AM, Robinson had 

filed for bankruptcy in the Northern District. (RJN Ex. U, V.) Robinson contacted Wells Fargo 

and Barrett LLP to inform them of the bankruptcy filing and produced copies of the filings to the 

auctioneer. The auctioneer, however, could not confirm that the auction had been canceled and 

remained “standing by for instructions.” (FAC ¶ 32.) Robinson then repeatedly called both 

 

3

 As explained below, it appears that this averment, which is duplicated in paragraph 18 of the 

FAC, is referring to the settlement of Smith’s second lawsuit against Wells Fargo. 

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Defendants seeking assurances, with Wells Fargo purportedly assuring him the auction would not 

proceed at 11:53 AM and 1:30 PM, and Barrett LLP assuring him at 11:48 AM, 12:31 PM, and 

1:29 PM. After 1:32 PM, the auctioneer announced the property would be sold that day. 

Robinson subsequently announced to the persons present that the sale was prohibited by law by 

virtue of the automatic stay that takes effect in bankruptcy and that anyone purchasing the 

property would be in violation of that stay. Wells Fargo then bought the property back from 

Barrett LLP, which was recorded on June 6, 2018. (RJN Ex. W.) At the time of the sale, the 

secured debt on the loan had grown to $1,081,942.10. (Id.) 

Plaintiffs aver an unlawful detainer action was filed against them in July 2018, (see Dkt. 1 

Ex. B at 70-71), based on false documents, fake efforts at service, and misleading statements. In 

August 2018, Smith and Robinson brought the current lawsuit in Alameda County Superior Court. 

(Dkt. 1 Ex. A.) They assert eight causes of action allegedly arising out of the May 31, 2018 sale: 

(1) violating the automatic stay of bankruptcy proceedings under 11 U.S.C. § 362(a); (2) 

intentional infliction of emotional distress; (3) quiet title; (4) “foreclosure”; (5) breach of contract 

(as to Wells Fargo only); (6) negligence; (7) violations of California’s Unfair Competition Law 

(“UCL”), California Business and Professions Code sections 17200, et seq.; and (8) 

“intentional/negligent misrepresentation.” 

The next month, they sought an ex parte application for a temporary restraining order 

(“TRO”) to prevent Defendants from selling, attempting to sell, buying or attempting to buy, to 

market, or through other means transferring the property and an order to show cause why a 

preliminary injunction should not issue. (Dkt. 1 Ex. B at 22-33.) The court granted Plaintiffs’ 

application on September 27, 2018 and set a hearing for the order to show cause for November 6, 

2018. (Id. at 80-81.) Wells Fargo then removed the case to the Northern District, which Barrett 

LLP joined, on October 4, 2018. (Dkt. 1, 3.)4

 Wells Fargo represented in its notice that 

 

4

 Wells Fargo represents in its notice that both it and Barrett LLP received service of process on 

September 27, 2018 (the same day the state court issued the TRO). (Dkt. 1 at 3.) Therefore, 

removal was timely under 28 U.S.C. § 1446(b). 

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Robinson’s bankruptcy case was dismissed in July 2018, but that it intended to bring a motion to 

reopen the bankruptcy case and seek retroactive relief from the automatic stay under 11 U.S.C. 

§ 362(d)(2). (Dkt. 1 at 4.) In light of this, Wells Fargo requested in its notice that the case be 

transferred to the bankruptcy court, which apparently was not considered by the prior assigned 

judges and was not part of a subsequent motion by Defendants. After Defendants filed their first 

motion to dismiss, Plaintiffs responded by amending their complaint and filing the FAC. In 

November 2018, the parties filed a notice of settlement in principle, which was later withdrawn 

after the New Year. Wells Fargo renoticed its motion to dismiss the FAC. 

During briefing,5 and before the case was submitted, the bankruptcy court issued an order 

on February 14, 2019 denying Wells Fargo’s motion for annulment of the automatic stay nunc pro 

tunc to the petition filing date (May 31, 2018). (RJN Ex. X.) The court then ordered Wells Fargo 

to unwind the May 31, 2018 sale and concluded that neither Wells Fargo nor Barrett LLP acted in 

bad faith in the sale of the property or warranted sanctions for violation of the automatic stay. 

(Id.) A notice of rescission of trustee’s deed upon sale was recorded on February 21, 2019. (RJN 

Ex. Y.) 

While this motion was pending, Plaintiffs filed an application for a TRO to prevent the sale 

of the property scheduled for June 6, 2019. (Dkt. 66.) The application was denied because 

Plaintiffs failed to raise serious questions going to the merits, let alone a showing of likely success 

 

5

 Plaintiffs’ Opposition was originally due January 23, 2019. Plaintiffs brought their first 

administrative motion to extend this deadline almost two weeks later. (Dkt. 38.) They were 

granted an extension to file no later than February 14, 2019. (Dkt. 40.) On that day, Plaintiffs 

filed their second administrative motion for an extension. (Dkt. 41.) Plaintiffs were again granted 

an extension to file no later than February 17, 2019, and were informed that no further extensions 

would be granted. (Dkt. 43.) Plaintiffs ignored this warning and filed their Opposition almost ten 

days later, on February 25, 2019. (Dkt. 44.) Moreover, Plaintiffs’ failure to follow court-set 

deadlines is reflected elsewhere in the docket, as apparent from Magistrate Judge Westmore’s 

order to show cause demanding Plaintiffs file an opposition or else risk having the case dismissed. 

(Dkt. 20.) Failure to comply with the briefing schedule or this Court’s orders regarding 

extensions is never condoned and Plaintiffs are admonished to familiarize themselves with the 

Court’s local rules and to file all future briefing in a timely fashion. See L.R. 7-3. Failure to do so 

may necessitate consideration of further orders consistent with Rule 11 of the Federal Rules of 

Civil Procedure. Given the preference to decide cases on the merits, and because Defendants were 

granted extensions to file their Reply, Plaintiffs’ Opposition will be considered. 

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on the merits. (Dkt. 68.) Robinson then filed a notice of pending bankruptcy the day before the 

sale, thereby postponing the sale of the property to August 1, 2019.6 (Dkt. 69.) As this motion 

was fully briefed and submitted for decision prior to the purported new bankruptcy filing and as 

the status of that filing is uncertain, this order is being issued without further delay. 

III. LEGAL STANDARD

A complaint 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). While “detailed factual allegations” are not 

required, a complaint must have sufficient factual allegations to state a claim that is “plausible on 

its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. v. Twombly, 550 U.S. 544, 

555, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that 

allows the court to draw the reasonable inference that the defendant is liable for the misconduct 

alleged.” Id. (citing Twombly, 550 U.S. at 556). This standard asks for “more than a sheer 

possibility that a defendant has acted unlawfully.” Id. The determination is a context-specific task 

requiring the court “to draw on its judicial experience and common sense.” Id. at 679. 

Additionally, Plaintiffs’ claims that sound in fraud are subject to a higher standard and the 

circumstances constituting fraud must be pleaded with particularity. Fed. R. Civ. P. 9(b). The 

same is true of state law claims that are grounded in fraud. Vess v. Ciba-Geigy Corp. USA, 317 

F.3d 1097, 1103 (9th Cir. 2003). “To satisfy Rule 9(b), a pleading must identify the who, what, 

when, where, and how of the misconduct charged, as well as what is false or misleading about [the 

purportedly fraudulent] statement, and why it is false.” Cafasso, U.S. ex rel. v. Gen. Dynamics C4 

Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks omitted). “[T]he 

circumstances constituting the alleged fraud [must] be specific enough to give defendants notice of 

the particular misconduct . . . so that they can defend against the charge and not just deny that they 

have done anything wrong.” Vess, 317 F.3d at 1106 (internal quotation marks omitted). 

 

6

 On the same day, Robinson filed a request to terminate representation and that both Plaintiffs 

proceed pro se, in light of the State Bar of California placing him on inactive (involuntary) status 

effective June 7, 2019. (Dkt. 70.) 

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A motion to dismiss a complaint under Rule 12(b)(6) of the Federal Rules of Civil 

Procedure tests the legal sufficiency of the claims alleged in the complaint. See Conservation 

Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011). Dismissal under Rule 12(b)(6) may be 

based on either the “lack of a cognizable legal theory” or on “the absence of sufficient facts 

alleged under a cognizable legal theory.” Id. at 1242 (internal quotation marks omitted). When an 

entire complaint is grounded in fraud and its allegations fail to satisfy the heightened pleading 

requirements of Rule 9(b), a district court may dismiss the complaint. Vess, 317 F.3d at 1107. 

Dismissals under Rule 9(b) and Rule 12(b)(6) are treated in the same manner. Id. When 

evaluating such a motion, the court must accept all material allegations in the complaint as true 

and construe them in the light most favorable to the non-moving party. In re Quality Sys., Inc. 

Sec. Litig., 865 F.3d 1130, 1140 (9th Cir. 2017). “[C]onclusory allegations of law and 

unwarranted inferences,” however, “are insufficient to defeat a motion to dismiss for failure to 

state a claim.” Caviness v. Horizon Cmty. Learning Ctr., Inc., 590 F.3d 806, 812 (9th Cir. 2010). 

IV. DISCUSSION

A. Requests for Judicial Notice

Defendants request that several documents be judicially noticed. (See Dkt. 29, 53.) 

Plaintiffs do not object to Exhibits T through W, but oppose Exhibits A through Q and Exhibit S 

on the grounds that they are hearsay and irrelevant. Additionally, Plaintiffs oppose Exhibit R 

because it is not a document from a judicial proceeding, is hearsay, and is not an undisputedly 

authentic document. Finally, Plaintiffs make their own requests for judicial notice: (1) the 

supplemental declaration of Servicelink Agency Sales and Posting, LLC (“ASAP”) filed in the 

related bankruptcy case (Ex. 1); (2) duplicating Defendants’ request for judicial notice of the 

bankruptcy court’s February 14, 2019 order (Ex. 2); and (3) Robinson’s supplemental opposition 

brief to Wells Fargo’s motion for annulment (Ex. 3). (See Dkt. 45.) 

Judicial notice is appropriate for “adjudicative fact[s]” that are “not subject to reasonable 

dispute.” Fed R. Evid. 201. This includes facts that “can be accurately and readily determined 

from sources whose accuracy cannot reasonably be questioned.” Id. Contrary to Plaintiffs’ 

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contention, hearsay is not a factor to consider in this analysis. Because notice may be taken of 

public records reflecting official acts of the executive branch, see So Young Kang v. Wells Fargo 

Bank, N.A., No. 16-cv-04309-DMR, 2018 WL 1586237, at *4 (N.D. Cal. Apr. 2, 2018), and 

information obtained from government websites, see, for example, Paralyzed Veterans of Am. v. 

McPherson, No. C 06-4670 SBA, 2008 WL 4183981, at *7-8 (N.D. Cal. Sept. 9, 2008), 

Defendants’ request for judicial notice is granted for Exhibits A through E. Defendants’ request 

will be granted with respect to the remaining documents except for Exhibit R because they are 

copies of public records and therefore easily verifiable. Exhibit R, however, is not easily 

verifiable and therefore is inappropriate for judicial notice. Nor is it incorporated by reference in 

the FAC, as Plaintiffs do not appear to rely on this settlement agreement as the basis for any of 

their claims. See Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018) 

(defining the judicial doctrine of incorporation by reference).

As for Plaintiffs’ request, Exhibit 2 is necessarily noticed by the granting of Defendants’ 

request for judicial notice of Exhibit X. Exhibit 1 is not necessary to this decision, therefore the 

Court declines to take judicial notice. See In re LeapFrog Enter., Inc. Sec. Litig., 200 F. Supp. 3d 

987, 992 (N.D. Cal. 2016) (declining to take judicial notice of exhibits not necessary to decide the 

motion). Finally, judicial notice of Exhibit 3 will also be declined. Although it is a court filing, 

and therefore easily verifiable, it is not relevant to the cause at hand. Plaintiffs assert the exhibit is 

offered to illustrate that the bankruptcy court did not have before it the issues of bad faith and 

sanctions when it ruled upon Wells Fargo’s annulment motion. This fails for two reasons: first, 

the bankruptcy court clearly ruled on such issues in its order, (RJN Ex. X), and second, the fact 

that Robinson did not discuss bad faith or sanctions in his brief says nothing about whether the 

issues were before the bankruptcy court. 

 

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B. Automatic Stay Violation (11 U.S.C. § 362(a), (k)) & Threshold Issues

In Defendants’ original motion, they conceded the viability of the first claim turned on 

factual issues that could not be resolved at the pleadings stage. (Mot. at 1 n.1.) Since that time, 

however, the bankruptcy court ordered Defendants to unwind the sale-at-issue, (RJN Ex. X), 

which Defendants proceeded to record in February 2019, (RJN Ex. Y). Furthermore, the court 

held Defendants did not act in bad faith in the sale of the property and that sanctions were not 

warranted for the violation of the automatic stay. (RJN Ex. X.) This casts serious doubt on the 

continued viability of Plaintiffs’ first claim for relief. Indeed, Plaintiffs concede the bankruptcy 

court’s order establishes they have “already prevailed as to their first cause of action . . . .” (Dkt. 

45.) Although not presented in Defendants’ motion, in light of Plaintiffs’ concession that their 

first claim for relief is moot, it is dismissed with prejudice.

As a threshold matter, Plaintiffs assert throughout the FAC that Wells Fargo is not the 

actual owner of the note secured by Plaintiffs’ property. The theory that Wells Fargo lacked 

standing to conduct a foreclosure must fail. The deed of trust identifies “World Savings Bank, 

FSB, its successors and/or assignees” as the lender. (RJN Ex. F.) Wells Fargo is the successor-ininterest to World Savings. (RJN Exs. A-E.) Moreover, Plaintiffs contradict themselves by 

acknowledging they attempted to secure a loan modification from Wells Fargo. (FAC ¶¶ 18, 63.) 

As to Plaintiffs’ allegation that Barrett LLP is not registered with the California Secretary 

of State and thus is not authorized to conduct business or to maintain action in California, 

Plaintiffs qualify their allegation with the phrase “on information and belief.” This creates the 

inference that Plaintiffs likely lack knowledge of the underlying facts to support the assertion, and 

are instead engaging in speculation to an undue degree. See Delphix Corp. v. Actifo, Inc., No. C 

13-4613 RS, 2014 WL 4628490, at *2 (N.D. Cal. Mar. 19, 2014). Since the FAC provides no 

factual allegations to support Plaintiffs’ conclusion beyond “information and belief,” it is 

insufficient to satisfy the pleading requirements of Rule 8(a)(2). Iqbal, 556 U.S. at 678. 

Moreover, the record shows a legitimate transfer of the beneficiary interest from Golden West 

Savings Association Service Co. to Barrett LLP. (RJN Ex. I.) 

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C. Intentional Infliction of Emotional Distress

To state a claim for intentional infliction of emotional distress, a plaintiff must show: “(1) 

extreme and outrageous conduct by the defendant with the intention of causing, or reckless 

disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or 

extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the 

defendant’s outrageous conduct.” Hughes v. Pair, 46 Cal. 4th 1035, 1050 (2009) (internal 

quotation marks omitted). A defendant’s conduct must be “intended to inflict injury or engaged in 

with the realization that injury will result.” Id. (internal quotation marks omitted). Conduct is 

outrageous when it is so “extreme as to exceed all bounds of that usually tolerated in a civilized 

community.” Id. (internal quotation marks omitted). 

Plaintiffs claim fails for numerous reasons. First, in response to the bankruptcy court’s 

order, the sale-at-issue was rescinded in February 2019. (RJN Ex. Y.) Thus, the foreclosure sale 

has been set aside and title has been returned to Smith. As an initial matter, this would appear to 

moot the claim for intentional infliction of emotional distress. Moreover, as a matter of law, “[a]n 

assertion of legal rights in pursuit of one’s own economic interests does not qualify as 

‘outrageous’ under this standard.” Yu v. Signet Bank/Va., 69 Cal. App. 4th 1377, 1398 (1999). In 

conducting the sale, Defendants were doing nothing more than asserting their legal rights in 

pursuit of their economic interests. 

Further, a claim for intentional infliction of emotional distress cannot be maintained where 

the defendant’s conduct was privileged. Girard v. Ball, 125 Cal. App. 3d 772, 786-87 (1981). 

Under California law, the performance of foreclosure procedures by a trustee or beneficiary under 

a deed of trust are privileged communications under the qualified, common-interest privilege of 

Civil Code section 47(c)(1). Kachlon v. Markowitz, 168 Cal. App. 4th 316, 333 (2008); Girard, 

125 Cal. App. 3d at 787 (“The assertion of an economic interest in good faith is privileged.”).7

 

 

7

 Civil Code section 2924 grants privilege protection not only to trustees, but also to beneficiaries 

insofar as they may act as trustees. Kachlon v. Markowitz, 168 Cal. App. 4th 316, 340 (2008). 

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This privilege can only be lost if an act is motivated by ill will. Kachlon, 168 Cal. App. 4th at 

336; see also Permito v. Wells Fargo Bank, N.A., No. C-12-00545-YGR, 2012 WL 1380322, at *8 

(N.D. Cal. Apr. 20, 2012) (allegations that “Wells Fargo acted recklessly” during the foreclosure 

were insufficient to pierce the statutory privilege); Snyder v. Wachovia Mortg., No. CV F 10-

1168-LJO-SKO, 2010 WL 2736945, at *7 (E.D. Cal. July 12, 2010) (shielding lender under the 

qualified privilege). Since this qualified privilege creates a presumption that any action is made in 

good faith, any pleadings seeking to pierce this privilege must contain affirmative allegations of 

malice. Smith v. Hatch, 271 Cal. App. 2d 39, 47 (1969). Here, Defendants did nothing more than 

enforce their rights under the trust deed. The mortgage was delinquent for several years and 

Defendants pursued their economic interest by completing the foreclosure. The FAC contains no 

facts showing that Defendants acted with malice when enforcing their security interest. 

Plaintiffs respond by reiterating their conclusory allegation that Defendants’ act of 

proceeding with the sale in spite of receiving notice of Robinson’s bankruptcy was an act of ill 

will. Plaintiffs are precluded from reasserting this argument when they already had it heard in the 

bankruptcy court. After denying Defendants’ motion for annulment, the court went on to clarify 

that “Movant [Wells Fargo] or Movant’s foreclosure trustee did not act in bad faith in the May 31, 

2018 sale of the Property” and that Defendants’ conduct in violation of the automatic stay “d[id] 

not arise to the level to warrant sanctions . . . .” (RJN Ex. X.) Finally, the allegations in the FAC 

are wholly conclusory as to Plaintiffs’ alleged suffering or connecting Defendants’ conduct to 

such suffering. For these reasons, Plaintiffs’ claim for intentional infliction of emotional distress 

is dismissed without leave to amend. 

D. Quiet Title

To state a claim to quiet title, a complaint must include: (1) a legal description of the 

property and its street address or common designation; (2) the title of the plaintiff and the basis of 

the title; (3) the adverse claims to the title of the plaintiff; (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. Cal. Civ. Proc. Code § 761.020. 

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California law also requires the complaint to be verified. Id. Since the FAC is not 

verified, Defendants contend the quiet title claim must be dismissed on this threshold reason 

alone.8 It is not clear, however, if verification of the FAC is an element of the cause of action, 

rather than a state procedural rule. At least one California district court has held this requirement 

does not govern in federal court under Erie. In re SFPP Right-of-Way Claims, No. SACV 15-

00718 JVS (DFMx), 2016 WL 6138423, at *5-6 (C.D. Cal. Jan. 21, 2016). Since this issue was 

not briefed by the parties and there are other deficiencies regarding this cause of action that 

warrant dismissal, Defendants’ request to dismiss the claim on this basis need not be reached. 

Under California law, a plaintiff seeking to quiet title in the face of a foreclosure must 

allege tender or an offer of tender of the amount borrowed. Lueras v. BAC Home Loans Servicing, 

LP, 221 Cal. App. 4th 49, 86 (2013). An offer of performance is of no effect if the person making 

it is not able to perform. Cal. Civ. Code § 1495; Karlsen v. Am. Sav. & Loan Ass’n, 15 Cal. App. 

3d 112, 118 (1971). Such a tender must be in good faith and unconditional. Intengan v. BAC 

Home Loans Servicing LP, 214 Cal. App. 4th 1047, 1053 (2013). 

Plaintiffs’ FAC is ambiguous as to whether they are alleging tender of redemption of the 

property or of reinstatement of the loan. The difference is crucial for alleging a quiet title claim. 

A tender of the entire amount owing to the beneficiary is a redemption: it does not reinstate the 

loan, but rather pays the debt in full and requires a release of the deed of trust or mortgage. Turner 

v. Seterus, Inc., 27 Cal. App. 5th 516, 528 (2018). In contrast, a reinstatement is a tender of the 

amount required for a cure of the default (back payments and costs) that reinstates the loan 

according to the original terms as if no default had occurred. Id.

Plaintiffs allege that on May 29, 2018, “Smith attempted to tender the claimed amount in 

arrears to Wells.” (FAC ¶ 29.) On its face, it is unclear if Plaintiffs meant for “claimed amount in 

arrears” to mean the total accumulated debt or the amount necessary to reinstate the loan. 

 

8

 Months later, prior to filing their TRO application, Robinson, but not Smith, filed an affidavit 

verifying the FAC. (Dkt. 65.) Robinson has not presented authority to suggest that his 

verification may serve in place of Smith’s verification. 

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Considering the full context of the FAC, however, it is reasonable to infer the Plaintiffs were 

referring to reinstatement and not redemption. In their “foreclosure,” breach of contract, and 

negligence causes of action, Plaintiffs accuse Wells Fargo of refusing a good faith tender of a 

sufficient reinstatement payment. (FAC ¶¶ 63, 67, 74.) Additionally, there is nothing in the FAC 

to suggest that Plaintiffs were attempting to tender the entire debt owed in order to redeem the 

property. Thus, the FAC alleges a tender to reinstate the loan, not a redemption. A redemption is 

necessary to quiet title against the mortgagee, because the cloud on title remains until the full debt 

is paid. Lueras, 221 Cal. App. 4th at 86. Mere reinstatement of the loan would be grounds to cure 

the default and extinguish the subsequent foreclosure, but it cannot permit borrowers to recoup the 

property without tender of the entire debt, as that would give them an inequitable windfall by 

allowing them to evade their lawful debt. Turner, 27 Cal. App. 5th at 528. 

Even if Plaintiffs had alleged a tender of redemption, the FAC contains no facts to suggest 

Smith was able to perform the tender. The FAC only provides the bald statement that Smith 

“attempted to tender the claimed amount in arrears to Wells” on May 29, 2018, and that “good 

faith effort went nowhere.” (FAC ¶ 29.) The FAC, however, has no facts to suggest (i) how the 

tender was communicated, (ii) what assets, cash or otherwise, Smith had to satisfy the tender, or 

(iii) when and how Wells Fargo communicated its rejection of the tender. Without such facts, it 

cannot be reasonably inferred that a valid tender was made and rejected. See Iqbal, 556 U.S. at 

678; see also In re Spiegel, 678 F. App’x 528 (9th Cir. 2017) (affirming bankruptcy court’s 

finding that debtor had failed to produce evidence demonstrating his ability to tender payment). 

Therefore, Plaintiffs’ claim to quiet title is dismissed with leave to amend. 

E. “Foreclosure”

Construing the FAC in the most favorable light to Plaintiffs, it appears their claim for 

“foreclosure” is a claim for wrongful foreclosure. To state a claim for wrongful foreclosure, 

Plaintiffs must allege “(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully 

oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the 

party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or 

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harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or 

mortgagor tendered the amount of the secured indebtedness or was excused from tendering.” 

Lona v. Citibank, N.A., 202 Cal. App. 4th 89, 104 (2011). Although difficult to parse from the 

FAC, Plaintiffs appear to allege three justifications for setting aside the foreclosure sale to satisfy 

the first element: (i) Wells Fargo ceased engaging in good faith loan modification discussions; (ii) 

Wells Fargo refused a good faith and sufficient reinstatement payment; and (iii) both Defendants 

proceeded with the sale despite being made aware of the automatic stay. None are sufficiently 

plead. 

First, as discussed above, the bankruptcy court has already ordered Defendants to unwind 

the May 31, 2018 sale, and Defendants subsequently recorded the rescission in February 2019. 

(RJN Ex. X, Y.) Since the foreclosure has already been set aside, this claim is moot and is 

dismissed without leave to amend. 

Even if the claim were not moot, however, the FAC still fails to state a basis for relief. As 

discussed above, there are significant differences between a tender of redemption and of 

reinstatement. An additional critical difference between the two for purposes of Plaintiffs’ 

wrongful foreclosure claim is the time frame such tenders can be made prior to the foreclosure. 

On one hand, the debtor may tender redemption any time prior to the sale of the property at 

foreclosure. Cal. Civ. Code §§ 2903, 2905; Turner, 27 Cal. App. 5th at 527. The period for 

reinstatement, however, continues until five days prior to the date of the sale, including any 

postponement. Cal. Civ. Code §§ 2924c(a)(1), (e). The FAC alleges the tender for reinstatement 

was made on May 29, 2018, only two days prior to the May 31, 2018 sale date. Defendants, 

therefore, were within their rights to proceed with the sale. Id. Plaintiffs’ Opposition invokes 

Turner v. Seterus, Inc., 27 Cal. App. 5th 516 as persuasive authority for a court that permitted a 

similar fact pattern as this case to proceed. That case, however, is readily distinguishable by the 

simple fact that those plaintiffs made a legitimate offer to tender reinstatement ten days prior to the 

scheduled sale. Turner, 27 Cal. App. 5th at 521. Furthermore, as discussed with regards to 

Plaintiffs’ claim for quiet title, Plaintiffs failed to allege any facts to suggest a legitimate tender of 

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reinstatement or redemption, or when or how Wells Fargo refused the tender. Although the 

reinstatement amount was significantly lower than the total debt, Plaintiffs fail to allege facts 

suggesting they were capable of tendering even the amount necessary to reinstate the loan. 

Additionally, any of Plaintiffs’ claims based on Wells Fargo’s allegedly culpable conduct 

regarding Plaintiffs’ 2016 request for a loan modification are precluded. In two prior actions that 

were removed to the Northern District, Plaintiffs alleged improper conduct by Wells Fargo in 

reviewing the 2016 request. (RJN Ex. L ¶¶ 12, 20, Ex. P ¶¶ 12, 20.) Both actions were dismissed 

with prejudice pursuant to a settlement. (RJN Ex. N, Ex. S.) Yet the allegations regarding the 

2016 loan modification request are copied almost word for word in the FAC. (Compare FAC 

¶¶ 18, 26, with RJN Ex. L ¶¶ 12, 20, and Ex. P ¶¶ 12, 20.) When the parties stipulate to a 

voluntary dismissal with prejudice, it is considered a final judgment on the merits for the purposes 

of res judicata. See Intermedics, Inc. v. Ventritex, Inc., 775 F. Supp. 1258, 1262 (N.D. Cal. 1991). 

Plaintiffs, therefore, may not assert claims based on such allegations.9

F. Breach of Contract

Plaintiffs next claim is against Wells Fargo only. To state a claim for breach of contract, 

“the plaintiff must demonstrate a contract, the plaintiff’s performance or excuse for 

nonperformance, the defendant’s breach, and damage to the plaintiff.” Amelco Elec. v. City of 

Thousand Oaks, 27 Cal. 4th 228, 243 (2002). Although difficult to parse from the FAC, the 

contract at issue appears to be the settlement agreement for Smith’s second lawsuit against 

Defendants. (FAC ¶ 18; cf. RJN Ex. L, M, N.) Only Smith was involved with the lawsuit and so 

would be the only plaintiff to have signed the settlement agreement with Defendants. The same is 

true of the settlement of Smith’s third lawsuit against Defendants. (Cf. RJN Ex. P, Q, S.) 

 

9

 While Robinson was not a party to these prior lawsuits, he is in privity with Smith, as both 

individuals reside in the property, have been married since 2004, and share certain assets. Based 

on this alignment of financial interests, the dismissal of Smith’s prior lawsuits constituted an 

adjudication on the merits barring any future suit by either Smith or Robinson. Gikas v. Zolin, 6 

Cal. 4th 841, 849 (1993) (holding the party against whom preclusion is sought must be the same 

as, or in privity with, the party to the former proceeding). 

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This claim fails for many of the reasons discussed above. First, Robinson has no standing 

to bring suit against Wells Fargo for breach of contract, as only Smith was the holder of the 

mortgage note and a party to the settlement agreement. Ambers v. Wells Fargo Bank, N.A., No. 

13-cv-03940-NC, 2014 WL 883752, at *4 (N.D. Cal. Mar. 3, 2014). Additionally, any claims 

based on Wells Fargo’s handling of Smith’s loan modification in 2016 are precluded. Especially 

here, where the alleged breach is copied word for word from the complaint in Smith’s third 

lawsuit that was dismissed with prejudice. (Compare FAC ¶¶ 18, 26, with RJN Ex. P ¶¶ 12, 20.) 

That lawsuit asserted those allegations in support of a claim for the breach of the implied covenant 

of good faith and fair dealing and not for breach of contract. Claim preclusion, however, bars not 

only claims that were raised, but also those that “might have been offered[.]” Commissioner v. 

Sunnen, 333 U.S. 591, 597 (1948). Switching legal theories or adding allegations does not create 

a new claim sufficient to avoid res judicata. McClain v. Apodaca, 793 F.2d 1031, 1033-34 (9th 

Cir. 1986). “A party’s breach of the implied covenant of good faith and fair dealing gives rise to a 

contract claim.” Jenkins v. J.P. Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 525 (2013), 

disapproved of on other grounds by Yvanova v. New Century Mortg. Corp., 62 Cal. 4th 919 

(2016). Smith can no longer assert claims that were raised, or could have been raised, in this prior 

action. 

Furthermore, Smith not only fails to allege a timely tender of reinstatement, but she also 

fails to aver how Wells Fargo’s alleged refusal of the tender would breach not only the second 

lawsuit settlement agreement, but any contract with Wells Fargo. Finally, Smith’s damages 

allegations are conclusory, listing a laundry list of harms without defining what it is that Smith has 

suffered in response to Defendants’ averred conduct. Smith must plead specific allegations to 

allow for the reasonable inference, not the sheer possibility, of harm. Iqbal, 556 U.S. at 678-79. 

Therefore, Smith is given leave to amend this claim except as to allegations regarding the 2016 

loan modification request. 

 

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G. Negligence

To state a claim for negligence, a plaintiff must allege: (1) the defendant owed the plaintiff 

a duty of care; (2) the defendant breached that duty; and (3) the breach proximately caused the 

plaintiff’s damages or injuries. Lueras, 221 Cal. App. 4th at 62. Whether a duty of care exists is a 

question of law to be decided on a case-by-case basis. Id. “[A]s a general rule, a financial 

institution owes no duty of care to a borrower when the institution’s involvement in the loan 

transaction does not exceed the scope of its conventional role as a mere lender of money.” 

Nymark v. Heart Fed. Sav. & Loan Ass’n, 231 Cal. App. 3d 1089, 1096 (1991). Rather, 

“[l]iability to a borrower for negligence arises only when the lender actively participates in the 

financed enterprise beyond the domain of the usual money lender.” Id. (internal quotation marks 

omitted). 

Plaintiffs’ claim for negligence fails for the same reasons as does their claim for breach of 

contract: claims based on allegations regarding the 2016 loan modification request are precluded, 

Plaintiffs have failed to allege a timely tender of reinstatement, and their damages allegations are 

conclusory. Moreover, the FAC refers to “statutory duties” on behalf of Defendants without 

identifying what those duties are or how they were breached in this instance. Therefore, the claim 

is dismissed with leave to amend except as to allegations regarding the 2016 loan modification 

request. 

H. UCL

Plaintiffs bring claims under the unlawful, unfair, and fraudulent prongs of the UCL. 

Although unclear from the FAC, Plaintiffs clarify in their Opposition that their UCL claims are 

based on Defendants violation of the automatic stay. As explained above, all claims based on 

violation of the stay appear to be mooted by the bankruptcy court’s order rescinding the sale and 

the subsequent recording of the rescission. Moreover, the California Supreme Court has held that 

remedies for the UCL are “generally limited to injunctive relief and restitution.” Cel-Tech 

Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 179 (1990). Since the sale has been 

rescinded and there is nothing to enjoin, this is further reason to believe that Plaintiffs’ UCL 

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claims are moot. Besides the home itself, the additional harms Plaintiffs allege besides the initial 

loss of the property, such as decrease in the value of the home, higher property taxes, and expenses 

are alleged in a wholly conclusory fashion. Therefore, the claim is dismissed without leave to 

amend. 

I. Intentional/Negligent Misrepresentation

Plaintiffs combine the two causes of action for intentional misrepresentation and negligent 

misrepresentation into one claim for “intentional/negligent misrepresentation.” Under California 

law, the elements of intentional misrepresentation are: (1) misrepresentation (false representation, 

concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud; (4) 

justifiable reliance; and (5) resulting damages. Charnay v. Cobert, 145 Cal. App. 4th 170, 184 

(2006). “The elements of negligent misrepresentation are similar to intentional fraud except for 

the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege 

the defendant made an intentionally false statement, but simply one as to which he or she lacked 

any reasonable ground for believing the statement to be true.” Id.; see also id. at 185 (stating that 

negligent misrepresentation is a species of the tort of deceit and, like fraud, requires a 

misrepresentation, justifiable reliance, and damage (citing Alliance Mortgage Co. v. Rothwell, 10 

Cal. 4th 1226, 1239 n.4 (1995))). 

Both claims fail for several reasons. First, as discussed above, any fraud theory appears to 

be precluded by the bankruptcy court’s ruling that neither Defendant acted in bad faith in 

conducting the sale. (RJN Ex. X.) Plaintiffs therefore fail to plead scienter for intentional 

misrepresentation. As for negligent misrepresentation, although the FAC alleges Defendants 

made representations that the auction would not proceed before the sale was conducted, there are 

no facts to suggest that Defendants lacked any reasonable ground for believing their statements to 

be true. Plaintiffs also fail to plead justifiable reliance and damage. Plaintiffs aver they were 

induced to “put their minds at ease” and to make no further attempts to halt the sale because of 

Defendants’ assurances. (FAC ¶ 81.) Yet, Plaintiffs also aver the auctioneer could not confirm 

that the auction had been cancelled, thereby inspiring Robinson repeatedly to contact Defendants 

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seeking assurances that the sale would not proceed. This does not suggest that either Plaintiff had 

put their minds at ease prior to the sale. Additionally, the FAC states that Robinson announced at 

the foreclosure sale to attendees that the sale was prohibited by law by virtue of the automatic stay 

and that anyone purchasing the property would be violating that stay. Robinson therefore admits 

that he continued to make attempts to halt the sale after receiving Defendants’ assurances that the 

sale would not proceed. Finally, Plaintiffs fail to allege how they were harmed because of 

Defendants’ representations on the day of the sale. In light of these deficiencies, this claim is 

dismissed with leave to amend only as to negligent misrepresentation. 

V. CONCLUSION

For the foregoing reasons, Defendants’ motion to dismiss is granted with leave to amend 

only with regard to quiet title, breach of contract, negligence, and negligent misrepresentation. 

While it appears doubtful that further amendment can cure the defects outlined above, the record 

does not demonstrate that such an effort would be entirely futile. In light of the fact that this is 

Plaintiffs’ first complaint to be dismissed in this action, and Rule 15’s liberal application, 

Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2009) (reversing and 

remanding to the district court plaintiff’s motion to amend where plaintiff already amended his 

complaint three times, but sought leave of court in good faith to meet with the court’s heightened 

pleading requirements), Plaintiffs may make one more attempt to amend where leave has been 

given, provided they can do so in good faith. An amended complaint must contain specific, 

clearly defined averments to give fair notice of the claims brought against Defendant. Should 

Plaintiffs elect to amend their pleading, they must do so within 21 days from the date of this order. 

If Plaintiff does not file an amended complaint by that date, the case will be dismissed with 

prejudice. Furthermore, should Plaintiffs once again fail to respond timely to a motion to dismiss, 

this case will be dismissed with prejudice. 

 

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IT IS SO ORDERED. 

Dated: June 19, 2019 

______________________________________ 

RICHARD SEEBORG 

United States District Judge 

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