Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_16-cv-04798/USCOURTS-cand-4_16-cv-04798-6/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Petition for Removal

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

KINGSWAY CAPITAL PARTNERS, LLC,

Plaintiff,

v.

CALIBER HOME LOANS, INC., et al.,

Defendants.

Case No. 16-cv-04798-PJH 

ORDER GRANTING RTR'S MOTION 

TO DISMISS

Re: Dkt. No. 108

Before the court is defendant Real Time Resolutions, Inc.’s motion to dismiss 

plaintiff’s first amended complaint. The matter is briefed and suitable for decision without 

oral argument. Accordingly, the hearing set for April 12, 2017 is VACATED. Having read 

the parties’ papers and carefully considered their arguments and the relevant legal 

authority, and good cause appearing, the court hereby GRANTS the motion, for the 

following reasons.

BACKGROUND

A. The October 27, 2016 Dismissal Order

This case centers on former plaintiff Nathaniel Sobayo’s efforts to purchase the 

property located at 329 Hawk Ridge Drive, Richmond, CA 94806 (the “Property”) from 

Martin Musonge via a short sale. The original complaint asserted three causes of 

action—breach of contract, promissory estoppel, and fraud—relying primarily on a 

February 11, 2015 letter from defendant Bank of America, N.A. (“BANA”) to Musonge, 

approving a short sale. Dkt. 1-1 Ex. A (the “Letter” or “February 11 Letter”). BANA, 

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Caliber Home Loans, Inc. (“Caliber”), Summit Management Company, LLC (“Summit”), 

and Real Time Resolutions, Inc. (“RTR”) were named as defendants.

In an order dated October 27, 2016, the court granted RTR’s and BANA’s motions 

to dismiss the original complaint. Dkt. 88. The court held that Sobayo did not have 

standing to pursue the claims pro se on behalf of Kingsway Capital Partners, LLC 

(“Kingsway”). Id. at 8. In addition, the court dismissed the complaint on the merits for 

failure to state a claim, with leave to amend. Id. at 8–9. The court instructed the plaintiff 

as follows regarding amendment:

First, any amended complaint must be brought on behalf of Kingsway 

Capital Partners, LLC. Kingsway must be represented by legal counsel, 

who shall enter an appearance on the docket.

Second, to the extent that Kingsway wishes to rely on the Letter as the 

operative contract/promise, it must allege specific facts that explain why the 

April 10, 2015 deadline was inapplicable and/or had been extended by the 

defendants. A similar explanation must be made with regard to the fact that 

the purchase price in the contract between Kingsway and Musonge is lower 

than that approved in the Letter. To the extent that Kingsway wishes to rely 

on other short sale approvals by defendants, those facts must be pled in the 

complaint.

Third, to the extent that Kingsway seeks to assert claims against RTR, 

Caliber, and Summit, it must allege a contract, promise, or 

misrepresentation made by these defendants. As pled, the complaint 

focuses on representations made by [BANA] to Musonge in the Letter. 

Even presuming that Kingsway can claim to be a third party beneficiary to 

the Letter, it is not clear to the court why RTR, Caliber, or Summit would be 

bound by the representations in the Letter. Any amended complaint shall 

make clear what specific contracts/promises/representations were made by 

each defendant, or why each defendant is bound by the 

contracts/promises/representations of another defendant. It is not sufficient 

to treat all of the defendants as an undifferentiated group.

Fourth, to the extent Kingsway seeks to rely on the theory that defendants 

failed to notify it regarding the transfer of servicing of Musonge’s loans, 

Kingsway must explain why any defendant had a duty to notify Kingsway 

about the transfer of servicing. . . . 

Finally, no new causes of action may be asserted in the amended 

complaint.

Dkt. 88 at 9–10. 

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Subsequently, Sobayo secured counsel, substituted Kingsway as plaintiff, 

and filed the first amended complaint (“FAC”) on December 22, 2016. Dkt. 96. 

B. The Allegations in First Amended Complaint

On February 11, 2015, Musonge entered into a written agreement with BANA 

approving a short sale of the Property to Kingsway with the sales price of $580,000. FAC 

¶ 8; Dkt. 1-1 Ex. A. The February 11 Letter expressly required closing to take place “no 

later than 03/26/2015.” Id. Although this fact is not pleaded, the documents attached to 

the original complaint indicate that BANA subsequently extended the deadline to April 10, 

2015. Dkt. 1-1 Ex. A at 7.

The FAC alleges that BANA, at an unspecified “[s]ubsequent” time, “orally and in 

writing waived the requirement that the short sale be for a sales price of $580,000 and 

also waived the closing date of March 26, 2015, leaving both subjects open for 

negotiation.” FAC ¶ 10. The February 11 Letter “was made for the benefit of a purchaser 

of said short sale real property, including Plaintiff.” FAC ¶ 11. Relying on the Letter, 

Kingsway entered into a written agreement to purchase the Property from Musonge. 

FAC ¶ 12. The purchase agreement was entered into on July 10, 2015, and lists a price 

of $570,000. Dkt. 1-1 Ex. B.

On July 7, 2015, the first deed of trust on the Property was transferred from BANA 

to Caliber. FAC ¶ 13. On November 6, 2015, Caliber approved a short sale with a 

closing “no later than 12/04/2015” and a purchase price of $570,000. FAC ¶¶ 14–17; 

Dkt. 1-1 Ex. C. Caliber’s approval “was made for the benefit of a purchaser of said short 

sale real property, including Plaintiff.” FAC ¶ 14. Although plaintiff was “ready” and 

“willing” to pay $570,000, the “Defendants refused to complete the short sale,” which 

“failed” as a result. FAC ¶ 17.

Based on these facts, Kingsway asserts three causes of action:

1. Breach of Contract (against all defendants). Alleges that plaintiff “performed 

all the terms and conditions of the subject contracts”—presumably, BANA and 

Caliber’s short sale approval letters. However, “Defendants refused to complete 

the short sale.” FAC ¶¶ 17–19.

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2. Fraud Per Cal. Civil Code § 1572(4) (against all defendants). Alleges that at 

the time that “Defendants” issued their letters promising to approve the short sale 

of the Property, “they had no intention of performing such promises.” Plaintiff 

reasonably relied on these “fraudulent promises.” FAC ¶¶ 21–24.

3. Declaratory Relief (against all defendants). Plaintiff seeks a judicial 

declaration “setting forth the rights and duties” of the parties with regard to the 

short sale. FAC ¶¶ 26–27.

C. Subsequent Procedural History

On February 23, 2017, the court granted BANA’s motion to dismiss the FAC with 

prejudice. Dkt. 109. The court found that the claim for breach of contract against BANA 

did not plausibly plead that the purchase price and closing deadlines of the Letter were 

waived. Id. at 6–7. The second claim for fraud failed because it was not pleaded with 

particularity, and did not identify any misrepresentations made by BANA to Kingsway. Id.

at 7. The third claim for declaratory relief was not permitted by the court’s prior order, 

and is not a standalone cause of action in any event. Id. Accordingly, BANA was 

dismissed from the action.

RTR has now filed its own motion to dismiss. Dkt. 108. Kingsway has not 

responded to RTR’s motion.

DISCUSSION

A. Legal Standards

1. Federal Rule of Civil Procedure 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the 

legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, Inc., 349 F.3d 

1191, 1199–1200 (9th Cir. 2003). To survive a motion to dismiss for failure to state a 

claim, a complaint generally must satisfy the requirements of Federal Rule of Civil 

Procedure 8, which requires that a complaint include a “short and plain statement of the 

claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).

A complaint may be dismissed under Rule 12(b)(6) for failure to state a claim if the 

plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to 

support a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 

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(9th Cir. 1990). The court is to “accept all factual allegations in the complaint as true and 

construe the pleadings in the light most favorable to the nonmoving party.” Outdoor 

Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 899–900 (9th Cir. 2007). 

Legally conclusory statements, not supported by actual factual allegations, need 

not be accepted by the court. Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009). The 

allegations in the complaint “must be enough to raise a right to relief above the 

speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations 

and quotations omitted). “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, 556 U.S. at 678 (citation omitted). “[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of 

misconduct, the complaint has alleged – but it has not ‘show[n]’ – ‘that the pleader is 

entitled to relief.’” Id. at 679. In the event dismissal is warranted, it is generally without 

prejudice, unless it is clear the complaint cannot be saved by any amendment. See

Sparling v. Daou, 411 F.3d 1006, 1013 (9th Cir. 2005).

2. Federal Rule of Civil Procedure 9(b)

In actions alleging fraud, “the circumstances constituting fraud or mistake shall be 

stated with particularity.” Fed. R. Civ. P. 9(b). This requires allegations of the “time, 

place, and specific content of the false representations as well as the identities of the 

parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 

2007) (citations omitted). “[A]llegations of fraud must be specific enough to give 

defendants notice of the particular misconduct which is alleged to constitute the fraud 

charged ‘so that they can defend against the charge and not just deny that they have 

done anything wrong.’” Sanford v. MemberWorks, Inc., 625 F.3d 550, 558 (9th Cir. 2010) 

(citation omitted). In addition, plaintiff must explain why the disputed statement was 

untrue or misleading at the time that it was made. Yourish v. Cal. Amplifier, 191 F.3d 

983, 992–93 (9th Cir. 1999).

///

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B. Analysis

Plaintiff failed to comply with the court’s instructions regarding amendment in 

several respects. First, the FAC purports to make a new claim for a declaratory judgment 

even though the court ordered that “no new causes of action may be asserted in the 

amended complaint.” Second, and critically, the FAC continues to treat all of the 

defendants as “an undifferentiated group,” without establishing “a contract, promise, or 

misrepresentation made” by each defendant. Literally the only thing that the FAC says 

about RTR is that it is an “assignee” of Caliber and BANA. FAC ¶ 3.

As to the first claim, the FAC does not plausibly plead any breach of contract by 

RTR. All the FAC alleges is that RTR is an “assignee” of BANA and Caliber. This 

conclusory allegation is not sufficient to explain why RTR would be bound by the 

promises or representations of other defendants. See Dkt. 88 at 8. The FAC does not 

even explain what interest was assigned to RTR by BANA or Caliber. Because RTR is 

not a party to any contract alleged in the FAC, and Kingsway ignored this court’s specific 

instruction to explain why RTR would be bound by the promises of other defendants, the 

court dismisses the contract claim against RTR, with prejudice.

The second and third claims must also be dismissed. Fraud must be pleaded with 

particularity, and the FAC nowhere specifically alleges any misrepresentations (or, 

indeed, any statements of any kind) made by RTR to Kingsway. Plaintiff has therefore 

not pleaded “the who, what, when, and how” of the fraud as required by Rule 9(b). Vess 

v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quotation omitted). 

There is no explanation why RTR would be liable for any alleged misrepresentations 

made by BANA or Caliber.

The third claim for declaratory relief was not permitted under the court’s prior 

order. Regardless, this is not an independent cause of action, but a remedy that must be 

based upon some other viable legal claim. Wishnev v. Nw. Mut. Life Ins. Co., 162 F. 

Supp. 3d 930, 952 (N.D. Cal. 2016) (“Declaratory relief is not an independent cause of 

action or theory of recovery, only a remedy.”).

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CONCLUSION

For the foregoing reasons, RTR’s motion to dismiss is GRANTED, and the FAC is 

dismissed as to RTR. Because plaintiff has already been afforded an opportunity to 

amend, but failed to cure the complaint’s deficiencies despite the clear instructions of the 

court, the dismissal is WITH PREJUDICE. RTR shall be terminated as a defendant in 

this matter.

IT IS SO ORDERED.

Dated: March 30, 2017

__________________________________

PHYLLIS J. HAMILTON

United States District Judge

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