Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-04683/USCOURTS-cand-4_15-cv-04683-3/pdf.json

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

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

WILLIAM ANDERSON and MAYUKA

SHIBATA,

Plaintiffs,

 v.

WELLS FARGO BANK, N.A. and DOES 1-50,

inclusive,

Defendants. /

No. C 15-04683 JSW

ORDER GRANTING MOTION TO

DISMISS PORTIONS OF SECOND

AMENDED COMPLAINT

Now before the Court is the motion filed by Defendant Wells Fargo Bank, N.A. (“Wells

Fargo”) to dismiss certain claims of the Second Amended Complaint (“SAC”) filed by Plaintiffs

William Anderson (“Anderson”) and Mayuka Shibata (“Shibata”) (collectively “Plaintiffs”). The

motion is fully briefed and ripe for decision. The Court has considered the parties’ papers, relevant

legal authority, and the record in this case, and finds this matter suitable for disposition without oral

argument. See N.D. Cal. Civ. L.R. 7-1(b). Accordingly, the hearing set for April 29, 2016 is

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

case management conference is CONTINUED to April 29, 2016 at 11:00 a.m. The motion by

Plaintiffs’ counsel to appear by telephone is DENIED. It is both moot and counsel is not identified

as lead counsel on the case. The motion by Wells Fargo’s counsel is DENIED as moot. The parties

shall file an amended joint case management statement by no later than April 22, 2016.

Case 4:15-cv-04683-JSW Document 36 Filed 04/13/16 Page 1 of 6
United States District Court

For the Northern District of California

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BACKGROUND

This action related to three home loans that Anderson and/or his spouse, Shibata, have with

Wells Fargo for properties in Santa Rosa, California. 

In May 2002, Anderson obtained a $369,000 home loan from Wells Fargo’s predecessor, 

World Savings Bank, FSB (“World Savings”). (See SAC ¶ 26.) The $369,000 loan was

memorialized in a promissory note and secured by a deed of trust recorded against 3755 Paxton

Place, Santa Rosa, California 95404. (Id.; see also RJN Ex. F.) 

In December 2002, Anderson obtained a $380,900 home loan from World Savings with

which he purchased a neighboring property. (Id.) The $380,900 loan was memorialized in a

promissory note and secured by a deed of trust recorded against 3747 Paxton Place, Santa Rosa,

California 95404. (Id.; see also RJN Ex. G.) 

In January 2007, Shibata obtained a $550,000 refinance loan from World Saving. (SAC ¶

10.) The $550,000 loan was memorialized in a promissory note and secured by a deed of trust

recorded against 3715 Paxton Place, Santa Rosa, California 95404, now Plaintiffs’ primary

residence. (Id. at ¶¶ 10-11; see also RJN Ex. H.)

On February 24, 2014, a notice of default was entered against Shibata relating to the property

at 3715 Paxton Place for purportedly failing to pay monthly mortgage payments beginning

November 15, 2011 and reflecting a loan arrearage in the amount of $81,099.21 at the time of filing

of the default. (See RJN Ex. I.)

According to the second amended complaint, although Plaintiffs currently reside at the 3715

Paxton Place property, they had previously rented the property until 2013 when they evicted their

tenant. (See SAC ¶ 11.) Upon eviction, Plaintiffs “learned that the property had been damaged by

the prior tenant and was in need of repair,” and they “filed an insurance claim with Farmer’s

Insurance (“Farmer’s”) and would eventually complete the repairs using their own personal

resources.” (Id. ¶ 12.) In January 2015, Farmer’s sent the insurance claim check for repairs to

Plaintiffs for approximately $30,000, made payable both to Plaintiffs and to Wells Fargo under the

policy protecting the property. (Id. at ¶13.) Wells Fargo indicated that Plaintiffs would need to

provide documentation for the repairs before disbursing the insurance proceeds. (Id. at ¶¶ 18-20.) 

Case 4:15-cv-04683-JSW Document 36 Filed 04/13/16 Page 2 of 6
United States District Court

For the Northern District of California

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Plaintiffs allege that they completed the repairs “personally and using their own resources,” and

were therefore “unable to produce contracts and proof of payment pursuant thereto.” (Id. at ¶¶ 12,

20, 22-25.) Plaintiffs allege that Wells Fargo’s requirement to produce documentation of the repairs

is “clearly inapplicable to [Shibata], given that Plaintiff and her husband had completed the repairs

personally and using their own resources.” (Id. at ¶ 19.) Plaintiffs allege that despite the fact that

the property has passed inspection twice for the repairs done, Wells Fargo “continues to demand that

Plaintiff produce non-existent contracts in order to obtain the insurance funds they are entitled to.” 

(Id. at ¶ 22.) 

Based on these and other allegations, Plaintiffs assert claims against Wells Fargo for: (1)

conversion; (2) and (3) breach of the implied covenant of good faith and fair dealing (separate

claims for 3747 and 3755 Paxton Place properties); (4) violation of Civil Code section 2954; and (5)

violations of California Business and Professions Code section 17200 et seq. On December 22,

2015, Wells Fargo moved to dismiss the amended complaint. 

Defendants moved to dismiss claims from the first amended complaint and the Court granted

the motion with leave to amend. In response, Plaintiffs have filed a second amended complaint,

changing little and omitting the previously dismissed claim for breach of contract.

The Court shall address additional facts as necessary to its analysis in the remainder of this

Order.

ANALYSIS

A. Legal Standard on Motion to Dismiss.

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the

complaint fails to state a claim upon which relief can be granted. The Court’s “inquiry is limited to

the allegations in the complaint, which are accepted as true and construed in the light most favorable

to the plaintiff.” Lazy Y Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008). Even under the

liberal pleadings standard of Federal Rule of Civil Procedure 8(a)(2), “a plaintiff’s obligation to

provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a

formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).

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United States District Court

For the Northern District of California

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Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but must

allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. “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.” Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). If the allegations are insufficient to state a

claim, a court should grant leave to amend, unless amendment would be futile. See, e.g. Reddy v.

Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990); Cook, Perkiss & Lieche, Inc. v. N. Cal.

Collection Serv., Inc., 911 F.2d 242, 246-47 (9th Cir. 1990).

As a general rule, “a district court may not consider material beyond the pleadings in ruling

on a Rule 12(b)(6) motion.” Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994), overruled on other

grounds, Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002) (citation omitted). 

However, documents subject to judicial notice may be considered on a motion to dismiss. In doing

so, the Court does not convert a motion to dismiss to one for summary judgment. See Mack v. South

Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986), overruled on other grounds by Astoria Fed.

Sav. & Loan Ass’n v. Solimino, 501 U.S. 104 (1991). The Court may take judicial notice of the

existence of the notice of default as a matter of public record, but may not take judicial notice of a

fact contained in the filing if that fact is “subject to reasonable dispute.” See Lee v. City of Los

Angeles, 250 F.3d 668, 689-90 (9th Cir. 2001).

B. The Court Grants Wells Fargo’s Request for Judicial Notice.

Wells Fargo requests that judicial notice be taken of documents related to its own corporate

existence as well as the relevant deeds of trust on Plaintiffs’ properties and the notice of default on

the 3715 Paxton Place property. Plaintiffs do not oppose Wells Fargo’s request for judicial notice of

these documents. These documents are proper for judicial notice because they are public records

and government documents generally considered not to be subject to reasonable dispute. See Hite v.

Wachovia Mortgage, 2010 U.S. Dist. LEXIS 57732, at *7 (E.D. Cal. June 10, 2010) (taking judicial

notice of these documents); see also Gens v. Wachovia Mortgage Corp., 2010 U.S. Dist. LEXIS

54932, at *2 (N.D. Cal. May 12, 2010) (taking judicial notice of a letter issued by OTS confirming

World Savings’ request to change its name to Wachovia); Ibarra v. Loan City, 2010 U.S. Dist.

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LEXIS 6583, at *3 (S.D. Cal. Jan. 27, 2010) (taking judicial notice of documents related to

defendant’s status as an operating subsidiary of a federal savings association). Therefore, the Court

GRANTS Wells Fargo’s request for judicial notice.

C. First Claim for Conversion.

Plaintiffs allege a claim against Wells Fargo for conversion based on the allegation that

Wells Fargo’s retention of the insurance proceeds is unlawful. 

“The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession

of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights;

and (3) damages.” Burlesci v. Petersen, 68 Cal. App. 4th 1062, 1066 (1998). Only personal

property and not real property can be converted. Munger v. Moore, 11 Cal. App. 3d 1, 7 (1970). 

When a plaintiff alleges the defendant converted money, the plaintiff must specifically identify the

sum of money converted, and allege that he had a right to possess it when the defendant converted it. 

See Haigler v. Donnelly, 117 P.2d 331, 335 (Cal. 1941); Baxter v. King, 253 P. 172, 172 (Cal. 1927).

Again in the second amended complaint, Plaintiffs fail to state a claim for conversion

because they do not sufficiently allege any of the elements of the claim. As the Court previously

found in its original order granting dismissal of the breach of contract claim, the allegations in the

complaint do not amount to a breach of the terms of the contract which grants Wells Fargo

discretion on reimbursement of insurance proceeds. Plaintiffs fail to allege facts to support the

contention that Plaintiffs have a right to possession of the insurance funds held by Wells Fargo,

pending documentation designed to prevent insurance fraud. Further, Plaintiffs specifically allege

that the check for insurance proceeds was made out to both Plaintiffs and Wells Fargo and therefore

do not contend that the proceeds are Plaintiffs’ exclusive property. (See SAC ¶¶ 13, 48.) Lastly,

there is no allegation that Wells Fargo has converted or disposed of the proceeds; rather, the

allegations still indicate that Wells Fargo refuses to endorse the check, holds the insurance proceeds

in a suspense account, and refuses to release the funds lacking proof that Plaintiffs paid for

construction repairs. (See id. at ¶¶ 46-48, 52-53.) 

Accordingly, the claim for conversion fails and the Court GRANTS Wells Fargo’s motion to

dismiss the first cause of action. Because the Court previously gave Plaintiffs an opportunity to

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amend their claim for conversion to set forth the elements of the claim, and because Plaintiffs were

unable to do so, the Court now dismisses this claim without leave to amend.

D. Second and Third Claims for Breach of the Implied Covenant of Good Faith and Fair

Dealing.

Plaintiffs do not contest and the Court finds that Shibata does not have standing to allege a

cause of action for breach of the implied covenant of good faith and fair dealing for the 3747 and

3755 Paxton Place properties as she was not a signatory to the loans on those properties. Only

Anderson has standing to pursue both implied covenant claims.

E. Fifth Claim for Violation of Business & Professions Code Section 17200.

The derivative fifth claim for relief for unfair competition is entirely dependant upon

Plaintiffs’ first claim for conversion. See, e.g., Rubin v. Wal-Mart Stores, Inc., 599 F. Supp. 2d

1176, 1179 (N.D. Cal. 2009). As the Court has dismissed Plaintiffs’ claim for conversion without

leave to amend, the unfair competition claim is dismissed as well without leave to amend.

CONCLUSION

For the foregoing reasons, Wells Fargo’s motion to dismiss claims from the Second

Amended Complaint is GRANTED without leave to amend. The case management conference shall

be continued to April 29, 2016 at 11:00 a.m. The parties shall file an amended joint case

management statement by no later than April 22, 2016.

IT IS SO ORDERED.

Dated: April 13, 2016 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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