Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_13-cv-02015/USCOURTS-caed-1_13-cv-02015-3/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1692 Fair Debt Collection Act

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

Summit Management Company, LLL; Caliber Home Loans, Inc.; and Vericrest Opportunity 

Loan Trust 2011-NPL1 (collectively, “Defendants”) seek dismissal of the complaint filed by Plaintiffs 

Manuel Lazo and Oralia Lazo pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 

14.) The matter was referred for the entry of Findings and Recommendations pursuant to 28 U.S.C. § 

636(b)(1) and Local Rule 72. (See Doc. 16.) Because the Court determined the matter was suitable for 

decision without oral argument, the motion is deemed submitted pursuant to Local Rule 230(g). For 

the following reasons, the Court recommends Defendants’ motion be GRANTED IN PART.

I. Factual and Procedural History

Plaintiffs initiated this action by filing a complaint against Defendants Caliber Home Loans, 

Inc. (“Caliber”); Summit Management Company, LLC (“Summit”); and Vericrest Opportunity Loan 

Trust 2011-NPL1 (“Vericrest”) alleging twenty-one causes of action based upon the foreclosure of the 

MANUEL LAZO and ORALIA LAZO,

 Plaintiffs,

v.

SUMMIT MANAGEMENT COMPANY, 

LLC; CALIBER HOME LOANS, INC; and 

VERICREST OPPORTUNITY LOAN 

TRUST 2011-NPL1, 

Defendants.

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Case No.: 1:13-cv-02015 - AWI - JLT

FINDINGS AND RECOMMENDATIONS 

GRANTING IN PART DEFENDANTS’ MOTION 

TO DISMISS 

(Doc. 14)

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mortgage on their primary residence. (Doc. 1.) Defendants filed a motion to dismiss on March 10, 

2014, asserting Plaintiffs’ complaint fails to state a claim upon which relief can be granted. (Doc. 14.) 

Defendants contend the complaint should be dismissed without leave to amend, because Plaintiffs 

cannot state facts sufficient to cure the defects of the complaint. (Id.)

II. Background and Plaintiffs’ Allegations

Plaintiffs allege they purchased real property identified as “Assessor’s Parcel Number 515-573-

12-00-5,” commonly known as 4418 Serene Oak Drive in Bakersfield, California (“the Property”) on

May 20, 2004. (Doc. 1 at 3-5, ¶¶ 5, 15.) On November 1, 2005, Plaintiffs financed the Property with 

Ameriquest Mortgage Company, executing a note in the amount of $279,000.00. (Id. at 5, ¶ 16.) A 

Deed of Trust was recorded on the Property and assigned document number 0205303251 on November 

1, 2005, “identifying Plaintiff as “Trustor,” identifying Ameriquest Mortgage Company as “Lender,” 

and identifying Town and Country Title Services, Inc. as the “Trustee.” (Id. at 5, ¶ 16.)

On April 12, 2007, S.A. Wileman, Sr., attorney for Ameriquest Mortgage Company, signed an 

Assignment Deed of Trust, which assigned the Property to Citifinancial Mortgage Company, Inc.” 

(Doc. 1 at 6, ¶ 17.) The Assignment, Kern County Recorder document number 0206099770, included 

“the described deed of trust, together with certain note(s) described with all interest, all liens, and any 

right due or to become due thereon...” (Id.) Plaintiffs allege the Assignment “described the deed of 

trust (document 0205303251) but did not describe the ‘note(s).’” (Id.)

“Citifinancial Mortgage Company, Inc. merged out and became CitiMortgage, Inc.” on July 1, 

2006. (Doc. 1 at 6, ¶ 18.) Plaintiffs allege they were not notified of the merger, but received a letter 

dated June 11, 2008, which informed Plaintiffs the servicing of their loan would be transferred to 

CitiMortgage, effective July 1, 2008. (Id. at 7, ¶ 19.) According to Plaintiffs, “The problem with this is 

that ‘CitiFinancial Mortgage Corporation’ does not exist.” (Id.) Further, Plaintiffs report that “[t]here 

is no known record of any subsequent assignment by either Citifinancial Mortgage Company, Inc. or 

CitiMortgage, Inc.” (Id. at 7-8, ¶ 20.) Plaintiffs allege they later received notice that the servicing of 

their loan was being transferred from CitiMortgage to Defendant Vericrest effective October 20, 2010. 

(Id. at 8, ¶ 21.) 

Plaintiffs contend that CitiMortgage and Defendants Caliber and Vericrest agreed to provide 

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home mortgage loan modifications through the Home Affordable Modification Program (“HAMP”). 

(Doc. 1 at 15-16, ¶¶ 33-41.) Plaintiffs allege that in January 2010, CitiMortgage provided Plaintiffs 

with a HAMP Trial Payment Plan (“TPP”), under which Plaintiffs were required to make three 

payments. (Id. at 19, ¶ 48.) Plaintiffs allege they made the payments, but “CitiMortgage failed to 

provide a permanent loan modification and transferred the servicing rights to Defendant Caliber.” (Id., 

¶ 49.) Plaintiffs assert that CitiMortgage informed them that Caliber was servicing their loan and 

“would honor the HAMP requirements since the TPP was completed.” (Id. at 18, ¶ 45.) However, 

Plaintiffs report that Caliber failed to honor the completed TPP. (Id., ¶¶ 45, 49.)

According to Plaintiffs, they submitted “at least three separate and complete loan modification 

packages” to Caliber in late 2010 and 2011, each of which was denied. (Doc. 1 at 18, ¶ 46; id. at 20, ¶ 

51.) Caliber sent Plaintiffs an approval letter dated February 21, 2011, stating that their request for 

modification would be approved if they made “a ‘good faith’ payment of $6,120.20.” (Id. at 20, ¶ 52.) 

Plaintiffs allege this cannot be required under HAMP, and they did not make the payment. (Id.)

Plaintiffs allege that “a Notice of Default and Election to Sell Under Deed of Trust was 

recorded on the Property by ‘Summit Management Company, LLC, as Agent for Beneficiary’” on 

April 28, 2011. (Doc. 1 at 8, ¶ 22.) Plaintiffs assert that “there is no assigned beneficiary identified 

and Defendant Summit is not the beneficiary.” (Id.) Further, Plaintiffs report that Summit is registered 

with California “as a foreign limited liability company from the State of Delaware,” but a search of the 

Delaware Division of Corporations reveals no such entity. (Id. at 12, ¶¶ 29-30.) Summit recorded a 

second “Notice of Default and Election to Sell Under Deed of Trust” with the Kern County Recorder’s 

Office on May 11, 2011. (Id. at 9, ¶ 23.) Plaintiffs allege that the Notices of Default failed to identify 

the beneficiary, and the only differences were that the default amount increased and the second notice 

required document to be mailed to Vericrest, at the same address as Summit. (Id., ¶¶ 24- 25.)

Plaintiffs allege that a Substitution of Trustee was recorded on the Property on August 15, 

2011, through which “Summit was substituted in place of Town and Country Title Services, Inc. as the 

Trustee.” (Doc. 1 at 10, ¶ 26.) Plaintiffs contend the document “contains a number of fatal defects 

and its voidness can be determined on its face” because:

The Substitution of Trustee document states: “Whereas, the undersigned is the present 

Beneficiary under said Deed of Trust ... the undersigned hereby substitutes Summit 

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Management Company, LLC, as Trustee ...” The Substitution is signed on April 26, 2011, 

by Nivin Youssef, AVP, for Wells Fargo Delaware Trust Company, N.A., as Trustee for 

Vericrest Opportunity Loan Trust 2011-NPL1, as Attorney in Fact. Neither on the 

execution date of April 26, 2011, or on the recording date of August 16, 2011, was the 

Wells Fargo Delaware Trust Company, N.A., as Trustee for Vericrest Opportunity Loan 

Trust 2011- NPL1 the executing person or entity the ‘present Beneficiary’ under the Deed 

of Trust or Note. There is no Attorney in Fact document attached setting forth any such 

authority to act for the unidentified ‘present Beneficiary’ and there is an internal 

contradiction with the notary, Carrie Anderson, attesting that Nivin Youssef, AVP, came 

before her on August 16, 2011, when the Substitution of Trust is, on its face, dated April 

26, 2011. Most importantly, there is no record that Wells Fargo Delaware Trust Company, 

N.A., as Trustee for Vericrest Opportunity Loan Trust 2011-NPL1 had authority to sign 

for the last known beneficiary following the assignment to Citifinancial Mortgage 

Company, Inc. or that Citifinancial Mortgage Company, Inc. assigned or otherwise 

transferred the Deed of Trust and/or Note to Wells Fargo Delaware Trust Company, N.A., 

as Trustee for Vericrest Opportunity Loan Trust 2011-NPL1.

(Doc. 1 at 10, ¶ 27.)

Plaintiffs allege that Summit recorded a Notice of Trustee’s Sale with the Kern County 

Recorder’s Office on August 11, 2011, “seeking an unpaid balance of $293,403.46.” (Doc. 1 at 10-11, 

¶ 28.) According to Plaintiffs, “Caliber owned, controlled, and otherwise directed the activities of 

Defendant Summit, ignoring independent legal entity status.” (Id. at 14, ¶ 34.) Plaintiffs assert that 

Caliber “sought to defraud and hide the true ownership, operation, control, and to prevent liability for 

Defendant Summit and to protect their own misdeeds.” (Id.) Further, Plaintiffs report Summit filed 

paperwork “in other legal proceedings,” in which it was identified as a limited liability company 

formed in Delaware with Caliber is its sole member. (Id., ¶ 35.)

Plaintiffs allege that on August 17, 2011, the Assignment of Deed of Trust was signed, and 

recorded on October 6, 2011, the same date as a Trustee’s Deed Upon Sale was Recorded. (Doc. 1 at 

11-12, ¶¶ 27, 30.) The Assignment of Deed of Trust assigned “the Deed of Trust and Note to Wells 

Fargo Delaware Trust Company, N.A., as Trustee for Vericrest Opportunity Loan Trust 2011- NPL1 

stating “the undersigned corporation hereby grants, assigns, and transfers to ... All beneficial interest 

under that certain Deed of Trust ... together with the Promissory Note secured by said Deed of Trust...” 

(Id., ¶ 30.) 

Based upon the foregoing facts, Plaintiffs initiated this action by filing a complaint on 

December 10, 2013, asserting the following causes of action: (1) cancellation of instruments pursuant 

to Cal. Civ. Code § 3412, (2) quiet title, (3) wrongful foreclosure based on Cal. Comm. Code § 3301, 

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(4) wrongful foreclosure based on Cal. Civ. Code § 2934a(a)(1), (5) wrongful foreclosure based on Cal. 

Civ. Code § 2932.5, (6) violation of the Racketeer Influenced and Corrupt Organizations (“RICO”) 

Act, (7) breach of contract with servicer participation agreement or Making Home Affordable Plan, (8) 

violations of the federal and state Fair Debt Collections Acts, (9) breach of contract with the trial 

payment plan agreement, (10) promissory estoppel, (11) fraud based on false assignment, (12 and 13) 

intentional fraud based on Cal. Civ. Code § 2923.5(b), (14) to set aside trustee sale, (15) cancellation of 

trustee’s deed, (16) slander of title, (17) civil conspiracy, (18) violations of Cal. Bus. & Prof. Code 

§17200, (19) imposition of constructive trust, (20) declaratory relief, and (21) accounting. 

In response, Defendants filed the motion to dismiss now pending before the Court, seeking 

dismissal of all of Plaintiffs’ claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. 

(Doc. 14.)

III. Legal Standards for a Motion to Dismiss

A Rule 12(b)(6) motion “tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 

729, 732 (9th Cir. 2001). Dismissal under Rule 12(b)(6) is appropriate when “the complaint lacks a 

cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. 

Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). Thus, under Rule 12(b)(6), “review is 

limited to the complaint alone.” Cervantes v. City of San Diego, 5 F.3d 1273, 1274 (9th Cir. 1993). 

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as 

true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Supreme Court explained, 

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. The plausibility standard is not akin to a “probability requirement,” but it asks 

for more than a sheer possibility that a defendant has acted unlawfully. Where 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.’”

Iqbal, 556 U.S. at 678 (internal citations, quotation marks omitted). Further, allegations of a complaint 

must be accepted as true when the Court considers a motion to dismiss. Hospital Bldg. Co. v. Rex 

Hospital Trustees, 425 U.S. 738, 740 (1976). 

A court must construe the pleading in the light most favorable to the plaintiff, and resolve all 

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doubts in favor of the plaintiff. Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). “The issue is not 

whether a plaintiff will ultimately prevail, but whether the claimant is entitled to officer evidence to 

support the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote 

and unlikely but that is not the test.” Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). However, the 

Court “will dismiss any claim that, even when construed in the light most favorable to plaintiff, fails to 

plead sufficiently all required elements of a cause of action.” Student Loan Marketing Assoc. v. 

Hanes, 181 F.R.D. 629, 634 (S.D. Cal. 1998). Leave to amend should not be granted if “it is clear that 

the complaint could not be saved by an amendment.” Livid Holdings Ltd. v. Salomon Smith Barney, 

Inc., 416 F.3d 940, 946 (9th Cir. 2005).

IV. Requests for Judicial Notice

Defendants filed a request for judicial notice in conjunction with the motion to dismiss on 

March 10, 2014. (Doc. 15.) Specifically, Defendants seek judicial notice of the following documents: 

(1) the Deed of Trust recorded in the official records of Kern County as Instrument No. 0205303251,

(2) the Assignment of Deed of Trust recorded in the official records of Kern County as Instrument No. 

02060997, (3) a letter to Plaintiffs dated June 11, 2008, (4) a letter to Plaintiffs dated October 20, 2010, 

(5) the Notice of Default recorded in the official records of Kern County as Instrument No. 

0211055277, (6) the Notice of Default recorded in the official records of Kern County as Instrument 

No. 0211061330, (7) the Notice of Trustee’s Sale recorded in the official records of Kern County as 

Instrument No. 0211104032, (8) the Trustee’s Deed Upon Sale recorded in the official records of Kern 

County as Instrument No. 000211130634; (9) the Substitution of Trustee recorded in the official 

records of Kern County as Instrument No. 0211104031; and (10) the California Secretary of State 

Internet print-out regarding Summit Management Company, LLC. (Doc. 15 at 2.) Plaintiffs do not 

oppose the requests for judicial notice.

In considering a motion to dismiss, the Court may consider material outside the pleadings that is 

properly the subject of judicial notice. See Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 

2001); MGIC Indemnity Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986). The Court may take 

judicial notice of a fact that “is not subject to reasonable dispute because it (1) is generally known 

within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from 

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sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201. In addition, the Court 

also may take judicial notice of material incorporated by reference into the complaint without 

converting the motion to dismiss into a motion for summary judgment. Coto Settlement v. Eisenberg, 

593 F.3d 1031, 1038 (9th Cir. 2010); Intri-Plex Technologies, Inc. v. Crest Group, Inc., 499 F.3d 1048, 

1052 (9th Cir. 2007). Documents are incorporated into the complaint by reference “in situations where 

the complaint necessarily relies upon a document or the contents of the document are alleged in a 

complaint, the document’s authenticity is not in question and there are no disputed issues as to the 

document's relevance.” Coto Settlement, 593 F.3d at 1038; see also United States v. Corinthian 

Colleges, 655 F.3d 984, 999 (9th Cir. 2011). 

Here, each of the documents identified above are incorporated into Plaintiffs’ complaint by 

reference, and several are attached as exhibits thereto. In addition, the recorded documents are matters 

of public record, certified and maintained by the Kern County Recorder’s Office. Accordingly, 

Defendants’ unopposed request for judicial notice is GRANTED.

V. Discussion and Analysis

As an initial matter, the parties disagree regarding which causes of action are subject to the 

heightened pleading requirements of Rule 9(b), which requires a plaintiff to state “with particularity the 

circumstances constituting fraud.” Fed. R. Civ. P. 9(b). In other words, the plaintiff must articulate the 

“who, what, when, where, and how” of the fraud alleged. Kearns v. Ford Motor Co., 567 F.3d 1120, 

1126 (9th Cir. 2009). Defendants argue the entire complaint is subject to Rule 9(b), because “[t]he 

entire premise . . . is that Defendants and each of them fraudulently conveyed a beneficial interest in 

the subject Dead of Trust and then wrongfully foreclosed on and sold the property.” (Doc. 14-1 at 11.) 

Defendants contend that “each cause of action is based on the alleged fraud” and “contain conclusions 

of law that fraudulent conduct occurred without alleging specific facts.” (Id.) On the other hand, 

Plaintiffs assert that Rule 9(b) applies only to the eleventh, twelfth, and thirteenth causes of action for 

fraud. (Doc. 20 at 11.)

Importantly, when a plaintiff alleges that the defendants engaged in “a unified course of 

fraudulent conduct” and relies upon that conduct to support a claim, the plaintiff’s claim is “grounded 

in fraud,” and must satisfy the particularity requirement of Rule 9. Kearns v. Ford Motor Co., 567 F.3d 

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1120, 1125 (9th Cir. 2009). Thus, the heightened pleading standards may be applied to factual 

allegations of a complaint even where fraud is not an element of a claim. See Vess v. Ciba-Geigy Corp. 

USA, 317 F.3d 1097, 1105 (9th Cir. 2003). Because Plaintiffs’ claims for cancellation of instruments, 

quiet title, violation of RICO, civil conspiracy, the Rosenthal Act and violation Cal. Bus. & Prof. Code 

§ 17200, are based upon alleged fraudulent conduct, the standards of Rule 9(b) are applicable. See e.g., 

Smith v. Bank of Am. Corp., 485 Fed. Appx. 749 (6th Cir. 2012) (applying Rule 9(b) to a claim for 

quiet title where the plaintiffs alleged the defendant “committed fraud, in one form or another, leading 

up to the foreclosure proceeding, and their quiet title claim flows from that conduct); Lanini v. 

JPMorgan Chase Bank, 2014 U.S. Dist. LEXIS 47348 at *33 (E.D. Cal. Apr. 4, 2014) (dismissing the 

plaintiffs’ claim for a violation of Cal. Bus. & Prof. Code §17200 for failure to meet the Rule 9(b)

pleading requirements); Boyter v. Wells Fargo Bank, N.A., 2012 WL 1144281 at *4 (N.D. Cal. Apr. 4, 

2012) (“to the extent that plaintiff relies on fraud as a basis for his cancellation of instruments claim, 

the claim must be plead with sufficient particularity”).

To avoid dismissal for failure to meet the heightened pleading standards under Rule 9(b), “[a] 

complaint would need to state the time, place, and specific content of the false representations as well 

as the identities of the parties to the misrepresentation.” Edwards v. Marin Park, Inc., 356 F.3d 1058, 

1066 (9th Cir. 2004). “For corporate defendants, a plaintiff must allege the names of the persons who 

made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they 

said or wrote, and when it was said or written.” Flowers v. Wells Fargo Bank, N.A., 2011 WL 2748650, 

at *6 (N.D. Cal. July 13, 2011). If allegations of fraud do not meet the heightened pleading standard, 

the “averments . . . should be disregarded, or stripped from the claim for failure to satisfy Rule 9(b).” 

Kearns, 567 F.3d at 1124 (quotations omitted).

A. Tender and Standing

Defendants assert that Plaintiffs complaint fails because they do not allege tender. (Doc. 14-1 

at 11.) “A tender is an offer of performance made with the intent to extinguish the obligation.”

Arnolds Mgmt. Corp. v. Eischen, 158 Cal. App. 3d 575, 580 (1984) (internal citations and quotations 

omitted). “A tender must be one of full performance . . . and must be unconditional to be valid.” Id. 

Under California law, the “tender rule” requires that an action to set aside a sale “for 

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irregularities in sale notice or procedure” must be “accompanied by an offer to pay the full amount of 

the debt for which the property was security.” Arnolds Management Corp. v. Eischen, 158 Cal. App. 

3d 575, 578 (1984) (citing Karlsen v. American Savings and Loan Association, 15 Cal.App.3d 112, 

117 (1971)). Thus, any “cause of action ‘implicitly integrated’ with the irregular sale fails unless the 

trustor can allege and establish a valid tender.” Id. at 589. (citing Karlsen, 15 Cal.App.3d at 121.) The 

Third District Court of Appeal explained:

[G]enerally “an action to set aside a trustee’s sale for irregularities in sale notice or 

procedure should be accompanied by an offer to pay the full amount of the debt for which 

the property was security.” . . . . This rule . . . is based upon the equitable maxim that a 

court of equity will not order a useless act performed. . . . “A valid and viable tender of 

payment of the indebtedness owing is essential to an action to cancel a voidable sale 

under a deed of trust.” . . . The rationale behind the rule is that if plaintiffs could not have 

redeemed the property had the sale procedures been proper, any irregularities in the sale 

did not result in damages to the plaintiffs. 

FPCI RE-HAB 01 v. E & G Investments, Ltd., 207 Cal.App.3d 1018, 1021(1989) (citations omitted). 

The “tender rule” is meant to prevent courts “from uselessly setting aside a foreclosure sale on a 

technical ground when the party making the challenge has not established his ability to purchase the 

property.” Keen v. Am. Home Mortg. Servicing, Inc., 664 F. Supp. 2d 1086, 1101 (E.D. Cal. 2009).

Defendants contend, “To have proper standing to pursue an action to set aside a foreclosure 

sale, i.e., to cancel a voidable sale under a deed of trust, and for related damages, Plaintiffs must have 

tendered the undisputed amount owed on the loan, and must show their ability to make said payment.” 

(Doc. 14-1 at 11, citing Karlsen v. American Savings and Loan Assoc., 15 Cal.App.3d 112 (1971)). 

Defendants assert, “California Courts have expanded the application of the tender rule to ‘any cause of 

action’ that is based upon allegations of wrongful foreclosure or that seeks redress from foreclosure.” 

(Id. at 11, citing, e.g., Abdallah v. United Sav. Bank, 43 Cal.App.4th 1101, 1109 (1996); United States 

Cold Storage v. Great W. Sav. & Loan Ass’n, 165 Cal.App.3d 1214, 1225 (1985)). Because Plaintiffs 

do not “allege that they were reading, willing, and able to tender the entire amount due on the loan 

obligation,” Defendants conclude that “the Complaint fails as a matter of law.” (Id. at 12.)

In response, Plaintiffs assert that tender was not required because the trustee sale was void. 

(Doc. 20 at 12, citing Glaski v. Bank of Am., N.A., 218 Cal.App.4th 1078, 1100 (2013); Dimick v. 

Emerald Props., 81 Cal.App.4th 868, 877-78 (2000); Intengan v. Bank of Am., 214 Cal.App.4th 1047, 

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1053-54 (2013); Pfeifer v. Countrywide Home Loans, 211 Cal.App.4th 1250, 1281 (2012)). In Glaski, 

the Fifth District Court of Appeal “reject[ed] the view that a borrower’s challenge to an assignment 

must fail once it is determined that the borrower was not a party to, or third party beneficiary of, the 

assignment agreement.” Id., 218 Cal.App.4th at 1095. The court found that a borrower “may challenge 

the securitized trust’s chain of ownership by alleging the attempts to transfer the deed of trust to the 

securitized trust (which was formed under New York law) occurred after the trust’s closing date.” 

Glaski, 218 Cal. App. 4th at 1083. Plaintiffs argue Court should follow Glaski and find wrongful 

securitization of the loan rendered the deed of trust invalid. (Doc. 20 at 13-14, citing Kling v. Bank of 

Am., N.A., 2013 WL 7141259 (C.D. Cal. Sept. 4, 2013).

Significantly, however, a majority of California courts have declined to follow Glaski, and 

have instead followed the Fourth District Court of Appeal’s conclusion that a borrower is “an 

unrelated third party to the alleged securitization and any other subsequent transfers of the beneficial 

interest under [a] promissory note”and as such “lacks standing to enforce any agreements.” Jenkins v. 

JP Morgan Chase Bank, N.A., 216 Cal.App.4th 497, 515 (2013). In Jenkins, the court explained: 

“[E]ven if the asserted improper securitization (or any other invalid assignments or transfers of the 

promissory note subsequent to her execution of the note . . .) occurred, the relevant parties to such a 

transaction were the holders (transferors) of the promissory note and the third party acquirers 

(transferees) of the note.” Id., 216 Cal.App.4th 497 at 515. This Court has consistently followed the 

reasoning of Jenkins, and rejected Glaski. See e.g., Lanini v. JPMorgan Chase Bank, 2014 WL 

1347365, at *5 (E.D. Cal. Apr. 4, 2014); Flores v. EMC Mortg. Co., 2014 WL 641097, at *6 (E.D. 

Cal. Feb. 18, 2014). In Flores, the Court explained:

Glaski addressed neither federal pleading requirements nor a F.R.Civ.P. 12(b)(6) 

challenge. Glaski addressed New York trust law, which plaintiffs fail to demonstrate 

applies here. Of key importance, numerous courts disagree with and refuse to follow 

Glaski, including this Court. See Snell v. Deutsche Bank Nat. Trust Co., 2014 U.S. Dist. 

LEXIS 11122, 2014 WL 325147, at *5 (E.D. Cal. 2014) (“Until either the California 

Supreme Court, the Ninth Circuit, or other appellate courts follow Glaski or address the 

discrepancy between Glaski and Jenkins, this Court will continue to follow the Jenkins

rule. Therefore, Plaintiff’s claims based on alleged violation of the PSA [pooling and 

servicing agreement] are not viable”); Newman v. Bank of New York Mellon, 2013 U.S. 

Dist. LEXIS 147562, 2013 WL 5603316, at *3, n. 2 (E.D. Cal. 2013) “the court held that 

a borrower like Newman has standing to assert a violation of a PSA. However, no courts 

have yet followed Glaski and Glaski is in a clear minority on the issue. Until either the 

California Supreme Court, the Ninth Circuit, or other appellate courts follow Glaski, this 

Court will continue to follow the majority rule”).

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Flores, 2014 WL 641097, at *6.

“The rules which govern tenders are strict and are strictly applied.” Nguyen v. Calhoun, 105 

Cal.App.4th 428, 439 (2003). “The tenderer must do and offer everything that is necessary on his part 

to complete the transaction, and must fairly make known his purpose without ambiguity, and the act of 

tender must be such that it needs only acceptance by the one to whom it is made to complete the 

transaction.” Gaffney v. Downey Savings & Loan Assoc., 200 Cal.App.3d 1154, 1165 (1988). Because 

Plaintiffs fail to allege tender, their claims for wrongful foreclosure, quiet title, to set aside the trustee 

sale, slander of title, and cancellation of title fail. See Karlsen, 15 Cal.App.3d at 117; United States 

Cold Storage v. Great Western Savings & Loan Assn., 165 Cal.App.3d 1214, 1224 (1985) (“It would be 

futile to set aside a foreclosure sale on the technical ground that notice was improper, if the party 

making the challenge did not first make full tender and thereby establish his ability to purchase the 

property”).

Moreover, Plaintiffs lack standing because, as borrowers, they were not parties to the 

challenged assignments and the assignments were not made for their benefit. See Jenkins, 216 

Cal.App.4th at 515; see also Fontenot v. Wells Fargo Bank., 198 Cal.App.4th 256, 272-73 (2011) 

(stating the borrower had no cause of action for irregularities in the assignment process); Gieseke v. 

Bank of Am., N.A., 2014 WL 718463, at *5 (N.D. Cal. Feb. 23, 2014) (holding the plaintiff’s claims 

for wrongful disclosure, quiet title, slander of title, and cancellation of instruments could be dismissed 

for lack of standing because the plaintiff was a third-party borrower). Consequently, Plaintiffs lack 

standing to proceed on causes of action premised on irregularities in the assignment and securitization 

of their loan, and the Court recommends Defendants’ motion, on these grounds, be GRANTED.

B. Wrongful Foreclosure Claims

Plaintiffs allege three causes of action for wrongful foreclosure, based upon Cal. Commercial 

Code § 3301, Cal. Civ. Code § 2934a(a)(1), and Cal. Civ. Code § 2932.5. (See Doc. 1 at 26-31, ¶¶ 81-

120.) Defendants argue the claims should be dismissed because “Plaintiffs make broad sweeping 

allegations that are unsupported by facts and misinterpret the applicable law.” (Doc. 14-1 at 7.)

1. Deeds of trust and the foreclosure process

A loan for real property “generally involves two documents, a promissory note and a security 

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instrument.” Alliance Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1235 (1995). The security 

instrument— most commonly a deed of trust— “entitles the lender to reach some asset of the debtor if 

the note is not paid.” Id.; see also Bartold v. Glendale Federal Bank, 81 Cal.App.4th 816, 821 (2000) 

(explaining that the financing “is generally accomplished in California through a deed of trust”). If 

borrower defaults and the deed of trust contains a power of sale clause, then the lender may initiate 

foreclosure. McDonald v. Smoke Creek Live Stock Co., 209 Cal. 231, 236-37 (1930). 

The foreclosure process may be conducted by a “trustee, mortgagee or beneficiary or any of 

their authorized agents.” Cal. Civ. Code § 2924(a)(1). Those “authorized to record the notice of 

default or the notice of sale” include “an agent for the mortgagee or beneficiary, an agent of the named 

trustee, any person designated in an executed substitution of trustee, or an agent of that substituted 

trustee.” Cal. Civ. Code § 2924b(b)(4). Pursuant to California law, foreclosure is the “only. . . form of 

action for the recovery of any debt or the enforcement of any right secured by a mortgage or deed of 

trust. Alliance Mortgage Co., 10 Cal.4th at 1236 (citing Cal. Code Civ. Pro. §§ 725a, 726(a)).

2. California Commercial Code § 3301

Plaintiffs allege that “California Commercial Code § 3301 specifically identifies the persons 

who are entitled to enforce a security interest, such as instituting a foreclosure sale under a Deed of 

Trust.” (Doc. 1 at 26, ¶ 82.) According to Plaintiffs, the defendants lacked standing to foreclose, and 

“no Defendant is a ‘person[] entitled to enforce’ the security interest on the Property, as that term is 

defined in California Commercial Code § 3301.” (Id. ¶ 83.)

Importantly, “[t]he comprehensive statutory framework established to govern nonjudicial 

foreclosure sales is intended to be exhaustive.” Moeller v. Lien, 25 Cal.App.4th 822, 834 (1994); see 

also I.E. Assoc. v. Safeco Title Ins. Co., 39 Cal.3d 281, 285 (1985) (explaining the provision of Civil 

Code §§ 2924, et seq., “cover every aspect of exercise of the power of sale contained in a deed of 

trust”). Consequently, this Court has determined that “section 3301 . . . does not govern nonjudicial 

foreclosures, which [are] governed by California Civil Code section 2924.” Castaneda v. Saxon Mortg. 

Servs., 687 F. Supp. 2d 1191, 1201 (E.D. Cal. 2009); see also Valenzuela v. Wells Fargo Bank, 2014 

U.S. Dist. LEXIS 10449, at *28 (E.D. Cal. Jan. 28, 2014) (“section 3301 does not apply to nonjudicial 

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foreclosure”). Therefore, the Court recommends this Plaintiffs’ third cause of action for “wrongful 

disclosure based on California Commercial Code § 3301” be DISMISSED without leave to amend.

3. Cal. Civ. Code § 2932.5

Plaintiffs allege Defendants failed to comply with the provisions of § 2923.5, which provides: 

“Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument 

intended to secure the payment of money, the power is part of the security and vests in any person who 

by assignment becomes entitled to payment of the money secured by the instrument. The power of sale 

may be exercised by the assignee if the assignment is duly acknowledged and recorded.” (Doc. 1 at 29, 

¶ 103-106.) 

In Calvo v. HSBC Bank USA, N.A., the California Court of Appeal explained that “[i]t has been 

established since 1908 that this statutory requirement that an assignment of the beneficial interest in a 

debt secured by real property must be recorded in order for the assignee to exercise the power of sale 

applies only to a mortgage and not to a deed of trust.” Id., 199 Cal.App.4th 118, 122 (2011) (emphasis 

added). Further, the Ninth Circuit has determined that “California Civil Code section 2932.5 does not 

apply to deeds of trust.” Caballero v. Bank of America, 468 Fed. Appx. 709, 710 (9th Cir. 2012). 

Moreover, California’s nonjudicial foreclosure statutes do not require a recording of assignments of 

interests in deeds of trust prior to foreclosure. See Parcray v. Shea Mortgage, 2010 U.S. Dist. Lexis 

40377, at *31 (E.D. Cal. Apr. 23, 2010) (“There is no requirement under California law for an 

assignment to be recorded in order for an assignee beneficiary to foreclose”); Caballero v. Bank of 

America, 2010 WL 4604031, at *3 (N.D. Cal. 2010) (“§ 2932.5 does not require the recordation of an 

assignment of a beneficial interest for a deed of trust, as opposed to a mortgage”).

Because Cal. Civ. Code § 2932.5 is inapplicable and the nonjudicial statutes do not require a 

recording, the Court recommends Plaintiffs’ fifth cause of action be DISMISSED without leave to 

amend.

4. Prejudice and wrongful foreclosure

“[T]o maintain a wrongful foreclosure claim, Plaintiffs must allege that 1) Defendants caused 

an illegal, fraudulent, or willfully oppressive sale of the property pursuant to a power of sale in a 

mortgage or deed of trust; (2) Plaintiffs suffered prejudice or harm; and (3) Plaintiffs tendered the 

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amount of the secured indebtedness or were excused from tendering. Nugent v. Fed. Home Loan 

Mortgage Corp., 2013 WL 1326425, at *7 (E.D. Cal. Mar. 29, 2013) (citing Lona v. Citibank, N.A., 

202 Cal.App.4th 89, 112 (2011)).

Importantly, “mere irregularities” in the foreclosure process are insufficient to show prejudice. 

Fontenot v. Wells Fargo Bank., 198 Cal.App.4th 256, 272 (2011) (citing Meux v. Trezevant, 132 Cal. 

487, 490, 64 P. 848 (1901)). Further, California courts have determined plaintiffs are unable to show 

prejudice when the borrowers were in default and the allegedly improper assignment does not affect the 

borrower’s ability to pay, or the borrower is unable to allege that the original lender would not have 

foreclosed. See, e.g., Siliga v. Mortg. Elec. Registration Sys., Inc., 219 Cal.App.4th 75, 85 (2013) 

(“The assignment of the deed of trust and the note did not change [plaintiffs’] obligations under the 

note, and there is no reason to believe that . . . the original lender would have refrained from foreclosure 

in these circumstances”); Herrera v. Fed. Nat’l Mortg. Assoc., 205 Cal.App.4th 1495, 1508 (2012) 

(finding no prejudice where the borrowers defaulted on the loan and the borrowers failed to tender or

cure default); Fontenot, 198 Cal.App.4th at 272 (finding no prejudice where borrower was in default 

and did not allege that transfer of note interfered with borrower’s ability to pay). Here, it is undisputed 

that Plaintiffs were in default, and there are no facts supporting a determination the original lender 

would have refrained from foreclosure. Accordingly, Plaintiffs do not allege prejudice,1and their third, 

fourth, and fifth causes of action for wrongful foreclosure should be DISMISSED without leave to 

amend.

C. Cancellation of Instruments

Plaintiffs seek the cancellation of instruments pursuant to Cal. Civ. Code § 3412, which 

provides for the cancellation of a written instrument when there is “reasonable apprehension that if left 

outstanding it may cause serious injury to a person against whom it is void or voidable.” “To plead a 

cause of action for cancellation of instrument, plaintiff must show that he will be injured or prejudiced 

if the instrument is not cancelled, and that such instrument is void or voidable.” Zendejas v. GMAC 

Wholesale Mortg. Corp., 2010 WL 2629899, at *7 (E.D. Cal. June 29, 2010).

 

1

In addition, as noted above, there is no showing Plaintiffs made a full tender of payment.

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According to Plaintiffs, “[a]ll of Defendants’ actions are predicated on a void assignment of the 

Note and Deed of Trust against the Property.” (Doc. 1 at 21, ¶ 54.) Therefore, Plaintiffs “seek[]to 

cancel all foreclosure related documents recorded, including the Notices of Default, the Substitution of 

Trustee, the Notice of Sale, the 2nd Assignment to Defendant Caliber’s predecessor, and the Trustee’s 

Deed Upon Sale.” (Id. at 23, ¶ 63.) On the other hand, Defendants assert that this action must fail 

because “a threshold issue which the parties must first address, before considering the merits of the 

action to cancel a sale, is the ‘valid and viable tender of payment’ of the debt owed.” (Doc. 14-1 at 11, 

quoting Napue v. Gor-Mey West, Inc., 175 Cal. App.3d 608, 621(1985)). 

As addressed above, Plaintiffs have not alleged tender. However, even if Plaintiffs alleged 

tender of payment, it appears the action would fail because Plaintiffs are unable to show prejudice. See

Dick v. Am. Home Mortg. Servicing, Inc., 2014 WL 172537 at *5 (E.D. Cal. Jan. 15, 2014) (finding the 

“plaintiffs cannot allege prejudice here because they cannot plausibly allege that the improper 

assignment affected their inability to pay their debt” and dismissing the cancellation of instruments 

claim with prejudice); Wilson v. Household Fin. Corp., 2013 WL 1310589, at *8 (E.D. Cal. Mar. 28, 

2013) (explaining that “a party is unable to show prejudice “if he is unable to pay his reasonable 

indebtedness). Accordingly, the Court recommends Plaintiffs’ first cause of action for the cancellation 

of instruments be DISMISSED without leave to amend.

D. Quiet Title

An action to quiet title is brought “to establish title against adverse claims to real or personal 

property or any interest therein.” Cal. Civ. Proc. Code § 760.020; see also Peterson v. Gibbs, 147 Cal. 

1, 81 P. 121, 123 (Cal. 1905) (quiet title is brought “to settle and determine, as between the parties, all 

conflicting claims to the property in controversy, and to decree to each such interest or estate therein as 

he may be entitled to”). To establish a claim for quiet title, Plaintiffs must file a verified complaint that 

includes: (a) a description of the property; (b) plaintiffs’ title as to which a determination is sought; (c) 

the adverse claims to the title; (d) the date as to which the determination is sought; and (e) a prayer for 

the determination of title. Cal. Civ. Proc. Code § 761.020.

A plaintiff must pay or offer to pay any outstanding debts on the subject property maintain an 

action to quiet title. Hamilton v. Bank of Blue Valley, 746 F. Supp. 2d 1160, 1177-78 (E.D. Cal. 2010) 

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(citing Abdallah v. United Savings Bank, 43 Cal.App.4th 1101, 1109 (1996); Sipe v. McKenna, 88 

Cal.App.2d 1001, 1006, 200 P.2d 61 (1948)). As discussed above, Plaintiffs do not allege that they 

have met, or are able to meet, the financial debts on the Property. As such, their claim for quiet title 

fails, and Defendants motion to dismiss this claim should be GRANTED.

E. Fraud

Plaintiffs’ eleventh, twelfth, and thirteenth causes of action are for fraud related to the 

Assignment and Notices of Default. (Doc. 1 at 41-47, ¶¶ 176-214.) Defendants assert that “Plaintiffs 

fail to provide specific facts regarding any alleged fraud . . . and then ignore the proof of no such 

wrongdoing in the very documents submitted as exhibits to their own complaint.” (Id. at 14-1.)

1. Elements of Fraud

Under California law, Plaintiffs must allege the following to support a claim of fraud: “a false 

representation, knowledge of its falsity, intent to defraud, justifiable reliance, and damages.” Moore v. 

Brewster, 96 F.3d 1240, 1245 (9th Cir. 1996); see also Cal. Civ. Code § 1572. The burden to establish 

fraud is “heavy,” Robi v. Five Platters, Inc., 918 F.2d 1439, 1444 (9th Cir. 1990), because “when 

fraud is alleged, ‘a party must state with particularity the circumstances constituting fraud.’” Kearns, 

567 F.3d at 1124 (quoting Fed. R. Civ. P. 9(b)). 

2. Claim 11- Fraud against Defendant Caliber

Plaintiffs allege that “Caliber caused its employee, Adam Roesner, to execute the assignment 

dated August 17, 2011.” (Doc. 1 at 41, ¶ 177.) According to Plaintiffs, Ms. Roesner was “the 

Assistant Vice President for Vericrest Financial, Inc. (predecessor to Defendant Caliber) and not in 

any way an agent, employee, or officer of” “the statutory trusts, entitled ‘LSF7 Bermuda NPL I as 

Trustee for Vericrest Opportunity Loan Trust 2011-NPL1.’” (Id., ¶¶ 178-79.) Plaintiffs allege Caliber 

intended to deceive them, and “knew . . . that Mr. Roesner was not signing on behalf of the statutory 

trusts, knew that the authority presented by the signature was false and proceeded to utilize to gain an 

advantage over others and Plaintiff.” (Id. at 42, ¶ 183-84.) According to Plaintiffs, Mr. Roesner’s 

“signature was submitted to assign documents, record the assignment, and to otherwise justify the 

ability to foreclose on the Property on behalf of Defendant Caliber.’ (Id. at 41, ¶ 181.) Plaintiffs allege 

that they “relied on this act to [their] detriment.” (Id. ¶ 182.)

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Notably, Plaintiffs do not allege any facts regarding when they learned of the alleged 

misrepresentation to support a conclusion that they relied upon the allegedly false representation. 

Indeed, Plaintiffs fail to allege any actions taken in reliance on the assignment, whether it was false. 

Further, Plaintiffs were in default prior to the recording of the assignment, and the facts do not support 

a finding that Plaintiffs suffered damages based upon the Assignment. Defendants foreclosed on 

Plaintiffs because of they were in default, not because of Roesner’s signature on the Assignment. 

Because Plaintiffs fail allege facts sufficient under Rule 9(b) to support a claim of fraud by Caliber 

related to the Assignment recorded on October 6, 2011, the Court recommends the claim be 

DISMISSED with leave to amend.

3. Claims 12 and 13- Fraud against Defendants Summit and Caliber

Plaintiffs assert the Notices of Default recorded on April 28, 2011 and May 11, 2011 failed to 

comply with Cal. Civ. Code § 2923.5 requirements2, and Summit and Caliber knew the documents 

asserted “false compliance” by Robbi Denson. (Doc. 1 at 43-47, ¶¶ 189-214.) According to Plaintiffs, 

the declarations in the Notices of Default were “false and impossible to be generated” because Summit 

and Caliber “knew that there had been no[] purported assignment of the Property.” (Id. ¶¶ 194, 208.) 

According to Plaintiffs, the defendants “intended to deceive” and “Plaintiff[s] relied on this act to their 

detriment.” (Id., ¶¶ 197, 209.)

Again, Plaintiffs claims for fraud related to the Notices of Default fail to meet the heightened 

standard of Rule 9(b). Plaintiffs fail to allege any acts they took in reliance on the Notices of Default, 

or damages caused by the reliance. Consequently, the Court recommends the twelfth and thirteenth 

causes of action be DISMISSED with leave to amend.

F. Violations of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act

Plaintiffs allege Defendants are liable for a violation of the Racketeer Influenced and Corrupt 

Organizations Act (“RICO”), which allows a private citizen to recover damages for conduct of an 

 

2

Cal. Civ. Code § 2923.5 governs notice requirements to borrowers and was intended “to assess the borrower’s 

financial situation and explore options for the borrower to avoid foreclosure.” See Cal. Civ. Code § 2923.5(a)(2). To the 

extent that Plaintiffs’ fraud claim is an attempt to re-frame a claim for failure to comply with the notice requirements, the 

claim must fail. The only remedy available for a violation of § 2923.5 is the postponement of a foreclosure sale. Mabry v. 

Superior Court, 185 Cal.App.4th 208, 212 (2010). Accordingly, once a property has been sold at foreclosure, there is no 

remedy for a violation of § 2932.5. Davenport v. Litton Loan Servicing, LP, 725 F.Supp.2d 862, 877-78 (N.D. Cal. 2010).

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enterprise through a pattern of racketeering activity or the collection of an unlawful debt. (See Doc. 1 

at 31-34, ¶¶ 122-135). To state a cognizable claim under RICO, a plaintiff must allege “(1) conduct (2) 

of an enterprise (3) through a pattern (4) of racketeering activity (known as ‘predicate acts’) (5) causing 

injury to plaintiff's business or property.” Living Designs, Inc. v. E.I. DuPont de Nemours Co., 431 

F.3d 353, 361 (9th Cir. 2005); Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S. Ct. 3275, 87 L. 

Ed. 2d 346 (1985).

Defendants argue Plaintiffs fail to allege facts sufficient under Rule 9(b) to support their claim 

of a RICO violation. (Doc. 14-1 at 16; Doc. 23 at 9, citing Edwards v. Marin Park, Inc., 356 F.3d 

1058, 1065-66 (9th Cir. 2004)) On the other hand, Plaintiffs assert that the RICO claim was “properly 

plead.” (Doc. 20 at 20.) Plaintiffs assert that they “identified and alleged the conduct of Defendants, 

the documents that were created, that are fraudulent, that were placed in the United States Mail, the 

goal of the conspiracy – foreclosure (Complaint ¶ 124); the acts of other enterprise members 

(Complaint ¶ 125); the time period (Complaint ¶¶126 & 127) the knowledge of the wrongful and 

unlawful conduct, including other conduct pled in the Complaint and the mediums untilized (sic) to 

engage into interstate commerce (Complaint ¶¶ 128 & 129); and more.” (Id. at 19.) 

1. Enterprise

An “enterprise” is a “group of persons associated together for a common purpose of engaging in 

a course of conduct.” United States v. Turkette, 452 U.S. 576, 583 (1981). To plead the existence of an 

enterprise, Plaintiffs must allege “an ongoing organization, formal or informal, and by evidence that the 

various associates function as a continuing unit.” Id.; see also Odom v. Microsoft Corp., 486 F.3d 541, 

552 (9th Cir. 2007). Under RICO, an alleged “enterprise” requires an independent legal entity such as 

a corporation or an “association in fact” of individuals. 18 U.S.C. § 1961(4). 

Here, Plaintiffs fail to allege facts that suggest the existence of an ongoing enterprise between

Defendants. Rather, the allegations of the complaint relate only to the foreclosure of their home. 

Without more, Plaintiffs fail to allege facts supporting the existence of an enterprise under Rule 9. See 

Elliott v. Foufas, 867 F.2d 877, 881 (5th Cir. 1989) (“to avoid dismissal for failure to state a claim, a 

plaintiff must plead specific facts, not mere conclusory allegations, which establish the existence of an 

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enterprise); Bergman v. Bank of Am., 2013 WL 5863057, *29-30 (N.D. Cal. Oct. 23, 2013) (collecting 

cases and dismissing similar claims with prejudice).

2. Pattern of Racketeering Activity

“Racketeering activity” is defined as any one of certain “generically specified criminal acts as 

well as the commission of one of a number of listed predicate offenses.” Sosa v. Directv, Inc., 437 F.3d 

923, 939 (9th Cir. 2006). These activities include “any act or threat involving murder, kidnapping, 

gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled 

substance or listed chemical . . ., which is chargeable under State law and punishable by imprisonment 

for more than one year.” 18 U.S.C. § 1961(1)(A). To establish the existence of a pattern, a plaintiff 

must allege “at least two acts of racketeering activity, one of which occurred [after October 15, 1970]

and the last of which occurred within ten years (excluding any period of imprisonment) after the 

commission of a prior act of racketeering activity. 18 U.S.C. § 1951(5). Further, Plaintiffs must allege 

“that the racketeering predicates are related [to each other] and that they amount to or pose a threat of 

continued criminal activity.” H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 239 (1989). 

Plaintiffs allege Defendants engaged in the following “racketeering activities”: (a) “mailed 

mortgage statements to collect monies on loans not belonging to them;” (b) engaged in communications 

over telephone lines to collect monies on loans not belong to them;” (c) “misrepresented to Plaintiff and 

other borrowers that they own the loans;” (d) engaged in the foreclosure of Plaintiff’s home while not

being the owner of the loan or having the authority to foreclose; and” (e) conspired with each other and 

other wrongdoers to commit these wrongs.” (Doc. 1 at 32-33, ¶ 127.) Moreover, Plaintiffs have failed 

to allege facts to demonstrate a pattern, because the factual allegations of the complaint focus entirely 

on the foreclosure of Plaintiffs’ home. See, e.g., Gamboa v. Trustee Corps., 2009 WL 656285, at *5-6 

(N.D. Cal. 2009) (finding that the plaintiffs failed to plead a RICO claim where the complaint is 

“focused on one foreclosure sale” and does “not describe any other attempted foreclosure or loan 

collection activities” but makes only “the conclusory allegation” of a pattern or practice); Martinez v. 

Quality Loan Service Corp., 2009 WL 586725, at *8 (C.D. Cal. 2009) (dismissing the RICO claim 

where the plaintiff’s factual allegations only addressed their foreclosure). 

Importantly, as Defendants argue, the pleading standards of Rule 9(b) are applicable to 

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Plaintiffs’ RICO claim because it is grounded on the fact of fraud. Lancaster Cmty. Hosp. v. Antelope 

Valley Hosp. Dist., 940 F.2d 397, 405 (9th Cir. 1991). Furthermore, Rule 9(b) does not allow a 

plaintiff to merely lump multiple defendants together, but requires plaintiffs to inform each defendant 

separately of the allegations surrounding his alleged participation in the fraud. United States v. 

Corinthian Colleges, 655 F.3d 984, 997-98 (9th Cir. 2011). As a result, this Court has dismissed 

similar RICO claims where the plaintiff failed, as Plaintiffs do here, to allege “any of the circumstances 

surrounding the alleged fraud, such as the dates the letters were sent, to whom the letters were sent, and 

who sent the letters on behalf of the Defendants.” Heflebower v. JPMorgan Chase Bank, NA, 2014 WL 

897352 at *6 (E.D. Cal. Mar. 3, 2014); see also Snell, 2014 WL 325147, at *10 (dismissing a plaintiff’s 

RICO claim where the complaint “contain[ed] general allegations of mail fraud, but fail[ed] to satisfy 

the heightened pleading requirement of Rule 9(b)”). 

3. Damages

As part of a RICO claim, plaintiff must allege a concrete financial loss as an injury. Canyon 

County v. Syngenta Seeds, Inc., 519 F.3d 969, 975 (9th Cir. 2008); see also Newcal Indus. v. Ikon 

Office Solution, 513 F.3d 1038, 1055 (9th Cir. 2008). Generally, RICO damages are calculated by 

“monies paid out minus any value received.” Negrete v. Allianz Life Ins. Co., 2011 WL 4852314, *8

(C.D. Cal. Oct. 13, 2011) (citing Jed S. Rakoff, RICO Civil and Criminal Law and Strategy § 4.02[2] at 

4-6 (2007)). Personal injury, including emotional distress, is not compensable under section 1964(c) of 

RICO, even if pecuniary loss is incurred from emotional distress. Berg v. First State Ins. Co., 915 F.2d 

460, 464 (9th Cir. 1990).

Here, Plaintiffs allege that “as a direct and proximate result of Defendants’ complained of acts, 

Plaintiff[s] ha[ve] suffered and continues to suffer damages, including but not limited to, monetary 

damages and emotional distress.” (Doc. 1 at 34, ¶ 132.) The alleged harm is not concrete, and cannot 

be calculated by “monies paid out minus any value received.” See Heflebower, 2014 WL 897352 at *7. 

Further, Plaintiffs fail to support the conclusion that the damages incurred were the result of the alleged 

racketeering activity, rather than their default. See Rivac v. Ndex West LLC, 2013 WL 3476659 at * 8 

(N.D. Cal. July 10, 2013) (dismissing a similar RICO claim because the alleged damages arose from 

default, rather than the defendants’ actions).

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Because Plaintiffs have not alleged sufficient facts to support a RICO claim, Plaintiff’s sixth 

claim for relief should be DISMISSED without leave to amend. 

G. Violations of the Fair Debt Collection Practices Act and Rosenthal Act

Under the provisions of the Fair Debt Collection Practices Act (“FDCPA”), debt collectors are 

prohibited “from making false or misleading representations and from engaging in various abusive and 

unfair practices.” Heintz v. Jenkins, 514 U.S. 291, 292 (1995); Donohue v. Quick Collect, Inc., 592 

F.3d 1027, 1030 (9th Cir. 2010). California’s Rosenthal Fair Debt Collection Practices Act (“Rosenthal 

Act”), “like its federal counterpart, is designed to protect consumers from unfair and abusive debt 

collection practices.” Robinson v. Managed Accounts Receivable Corp., 654 F.Supp.2d 1051, 1060 

(C.D. Cal. 2009) (citing Cal. Civ. Code § 1788.1). The provisions of FDCPA are incorporated into the 

Rosenthal Act under Cal. Civ. Code § 1788.17. Consequently, conduct by a debt collector that violates 

the FDCPA violates Rosenthal Act as well. See Hosseinzadeh v. M.R.S. Assocs., 387 F. Supp. 2d 1104, 

1118 (C.D. Cal. 2005); Abels v. JBC Legal Group, P.C., 227 F.R.D. 541, 548 (N.D. Cal. 2005).

To establish a violation of the FDCPA and the Rosenthal Act, Plaintiffs must allege: (1) they 

were consumers (2) who were the object of a collection activity arising from a consumer debt, and (3) 

the defendant is a “debt collector,” (4) who engaged in an act or omission prohibited by the FDCPA or 

Rosenthal Act. Miranda v. Law Office of D. Scott Carruthers, 2011 WL 2037556, at *4 (E.D. Cal. May 

23, 2011) (citing Turner v. Cook, 362 F.3d 1219, 1227-28 (9th Cir. 2004)). Here, Plaintiffs allege 

Defendants were debt collectors and their actions constituted violations of the fair debt collection acts 

because “they threatened to take actions or did take actions not permitted by law, including but not 

limited to calling Plaintiff and threatening to take his home, falsely stating the amount of a debt; 

increasing the amount of a debt by including amounts that are not permitted by law or contract; and 

using unfair and unconscionable means in an attempt to collect a debt.” (Doc. 1 at 35, ¶¶ 139, 143.)

1. FDCPA

Defendants argue that Plaintiffs’ claims fail because they do not meet the statutory definition of 

“debt collector” and that they were not engaged in “debt collection activity.” (Doc. 23 at 10-11.) The 

FDCPA defines the term “debt collector” as including: (1) “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 

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debts,” and (2) any person “who regularly collects or attempts to collect, directly or indirectly, debts 

owed or due or asserted to be owed or due to another.” 15 U.S.C. § 1692a(6). To adequately plead this 

claim, a plaintiff must allege specific facts showing that a defendant is a “debt collector” within the 

meaning of the statute. Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1208 (9th Cir. 2013).

However, Plaintiffs are unable to carry this burden, because the FDCPA does not apply to actions taken 

in nonjudicial foreclosures. See Usher v. Chase Home Fin. LLC, 2010 WL 4008496, *4 (E.D. Cal. 

2010) (action taken in foreclosure “does not constitute collection of a debt within the meaning of the 

FDCPA”); Arostegui v. Bank of Am., 2014 WL 1230762, at *6 (N.D. Cal. Mar. 21, 2014) (same). 

Accordingly, to the extent that Plaintiffs’ seventh cause of action is based upon the FDCPA, it should 

be DISMISSED without leave to amend.

2. Rosenthal Act

The Rosenthal Act definition of “debt collector” “broader than that contained in the FDCPA.” 

Izenberg v. ETS Servs., LLC, 589 F. Supp.2d 1193, 1199 (C.D. Cal. 2008). Under the Rosenthal Act, a 

“debt collector” is defined as “any person who, in the ordinary course of business, regularly, on behalf 

of himself or herself or others, engages in debt collection.” Cal. Civ. Code § 1788.2(c). “Thus, a 

mortgage servicer may be a ‘debt collector’ under the Rosenthal Act even if it is the original lender, 

whereas, such an entity would be excluded from the definition of debt collector under the federal act.” 

Reyes v. Wells Fargo Bank, N.A., 2011 WL 30759, at *19 (N.D. Cal. Jan. 3, 2011).

Here, Plaintiffs allege Defendants violated the Rosenthal Act by “calling . . . and threatening to 

take [their] home, falsely stating the amount of a debt; increasing the amount of debt by including 

amounts that are not permitted by law or contract; and using unfair and unconscionable means in an 

attempt to collect a debt.” (Doc. 1 at 35-36, ¶ 143.) These general allegations are insufficient to give 

Defendants fair notice of the wrongful acts. Further, to the extent Plaintiffs allege fraudulent activity 

by falsely stating the amount of the debt, the allegations are insufficient to meet the pleading standards 

of Rule 9(b). Plaintiffs fail to allege which Defendant contacted them and when, who falsely stated the 

amount of debt and when, how the debt was increased, or what “unfair and unconscionable means” 

were used in the course of debt collection. See Jacobsen v. Balboa Arms Drive Trust, 2011 WL 

3328487 (S.D. Cal. Aug. 1, 2011) (finding the same allegations as those alleged here were “vague” and 

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did not meet the minimal pleading standards of Rule 8). Accordingly, the Court recommends 

Plaintiffs’ claim for a violation of the Rosenthal Act be DISMISSED with leave to amend.

H. Slander of Title

Slander of title “occurs when a person, without privilege to do so, publishes a false statement 

that disparages title to property and causes pecuniary loss.” Truck Ins. Exchange v. Bennett, 53 

Cal.App.4th 75, 85 (1997). Therefore, to state a claim for slander of title, Plaintiffs must allege: “(1) a 

publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss.” Sumner 

Hill Homeowners’ Assoc. v. Rio Mesa Holdings, LLC, 205 Cal.App.4th 999, 1030 (2012). 

Here, Plaintiffs allege that Defendants disparaged their title “by and through by and through 

the preparing, posting, publishing and recording of the documents previously described herein, 

including, but not limited to, the Notices of Default, Notice of Trustee’s Sale, Substitution of Trustee, 

and Trustee’s Deed Upon Sale.” (Doc. 1 at 49, ¶ 229.) Plaintiffs assert Defendants published the 

documents “with the malicious intent” to injure Plaintiffs and deprive them of their “exclusive right, 

title, and interest in the Property.” (Id., ¶ 232.) According to Plaintiffs, they have “incurred expenses, 

including reasonable attorneys’ fees, in order to clear title to the Property.” (Id., ¶ 230.)

Significantly, however, non-judicial foreclosure documents are privileged communications, 

unless the recordation was done with malice. Kachlon v. Markowitz, 168 Cal. App. 4th 316, 333 

(2008); see also Dubose v. Suntrust Mortg., Inc., 2012 WL 1376983, at *3 (N.D. Cal. Apr. 19, 2012) 

(dismissing a slander of title claim because the recording of a notice of default, notice of trustee sale, 

and substitution of trustee were privileged); McFadden v. Deutsche Bank Nat’l Trust Co., 2011 U.S. 

Dist. LEXIS 91010, at *42 (E.D. Cal. Aug. 2011) (finding the plaintiffs’ claim for slander of title 

failed because the recording of the trustee’s deed upon sale was “subject to a qualified privilege[]” and 

the plaintiffs failed to allege facts supporting the conclusion that the recording was done with malice). 

Plaintiffs fail to allege facts supporting the conclusion that Defendants acted with malice, such that the 

“publication was motivated by hatred or ill will” or that Defendants “acted in reckless disregard of the 

plaintiffs’ rights.” See Kachlon, 168 Cal.App.4th at 336 (citing Sanborn v. Chronicle Pub. Co., 18 

Cal. 3d 406, 413, (1976)). Furthermore, this Court has determined a slander of title claim cannot stand 

upon the allegation that the defendants lacked authority to foreclose. See, e.g., Lanini, 2014 U.S. Dist.

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LEXIS 47348 at *29-30) (dismissing the slander of title claim without leave to amend where the 

plaintiffs based the claim on the allegations that the recordation was false and the defendant lacked 

authority to foreclose). Consequently, the Court finds that even if Plaintiff had standing, they fail to 

state a claim for slander of title, and recommends that Plaintiffs’ sixteenth cause of action be 

DISMISSED without leave to amend. 

I. Civil Conspiracy

Civil conspiracy is “a legal doctrine that imposes liability on persons who, although not 

actually committing a tort themselves, share with the immediate tortfeasors a common plan or design 

in its perpetration.” Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 510-11 

(1994). To state a claim for a civil conspiracy, a plaintiff must allege: “(1) the formation of a group of 

two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful 

act committed pursuant to the agreement; and (3) resulting damages.” City of Industry v. Fillmore, 198 

Cal.App.4th 191, 211-12 (2011). Importantly, plaintiffs must plead a claim for civil conspiracy “with 

particularity” when the object of the agreement is fraudulent, in compliance with Rule 9(b). See Wasco 

Prods. v. Southwall Techs., Inc., 435 F.3d 989, 990-92 (9th Cir. 2006). The Ninth Circuit explained, 

“Rule 9(b) does not allow a complaint to merely lump multiple defendants together but require[s] 

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).

Defendants argue, “Plaintiffs fail to provide specific facts regarding any alleged fraud or 

conspiracy.” (Doc. 14-1 at 16.) In response, Plaintiffs assert that “the elements and wrongful actions 

of the conspiracy have been sufficiently alleged” because: 

Plaintiffs have alleged the existence of a conspiracy to defraud borrowers by a scheme of 

false promises of loan modifications. Plaintiffs have identified the co-conspirators. The 

actions taken in furtherance of the conspiracy are alleged as the cause of damages 

incurred by Plaintiffs. 

(Doc. 20 at 19, citing Doc. 1 ¶¶235-240.) 

In the complaint, Plaintiffs allege Defendants conspired together “to implement a scheme to 

defraud and victimize Plaintiff[s] through . . . predatory lending practices and other unlawful acts.” 

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(Doc. 1 at 50, ¶ 236.) Further, Plaintiffs allege Defendants “committed acts in furtherance of the 

conspiracy, and/or lent aid and encouragement to their co-conspirators and/or ratified and adopted the 

acts of their co-conspirators.” (Id., ¶ 238.) These general allegations are insufficient to state a claim 

for conspiracy under Rule 9(b). Plaintiffs provide no specific factual allegations to support the 

conclusion that Defendants entered into a conspiracy, and fail to identify specific actions taken by each 

Defendant in furtherance of a conspiracy. Accordingly, the Court recommends this claim be 

DISMISSED.

J. Plaintiffs’ Contract-Based Claims

Plaintiffs allege Caliber is liable for a breach of contract and breach of the duty of good faith 

and fair dealing related to the Servicer Participation Agreement and the Trial Payment Plan (“TPP”). 

(Doc. 1 at 36-40.) In addition, Plaintiffs state a claim for promissory estoppel against Caliber for 

representations made in the TPP. (Id. at 40-41.) Defendants argue that these causes of action must 

fail for the following reasons:

[F]irst...there is no binding authority that plaintiffs are a third- party beneficiary to any 

agreements that Defendants may have had with the United States government. Second, 

any agreement to modify the terms of the loan must be in writing, and since there is no 

writing the alleged loan modification violates the statute of frauds. Third, Plaintiffs’ do 

not state facts that they actually complied with the alleged HAMP agreement by 

continuing to make payments, and in fact allege that the purported loan modification was 

contingent on a good faith payment, which they refused. [Citation.] Finally, the alleged 

contract was a mere negotiation, and not a final offer and acceptance of a loan 

modification agreement, so there is no valid contract.

(Doc. 14-1 at 15.)

In response, Plaintiffs assert they are third-party beneficiaries to the HAMP loan modification 

agreement, and that the Ninth Circuit has determined that a bank may be “required to . . . offer a 

permanent modification.” (Doc 30 at 14-15, citing Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878, 

885 (9th Cir. 2013.))

1. HAMP background

Congress passed the Emergency Economic Stabilization Act, Pub. L. No. 110-343, 122 Stat. 

3756 in 2008. This included the Troubled Asset Relief Program “which required the Secretary of the 

Treasury, among many other duties and powers, to ‘implement a plan that seeks to maximize 

assistance for homeowners and . . . encourage the servicers of the underlying mortgages . . . to take 

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advantage of . . . available programs to minimize foreclosures.’” Corvello, 728 F.3d at 880 (quoting 

Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 556 (7th Cir. 2012); 12 U.S.C. § 5219(a)). In 

response, the Treasury Department initiated the Home Affordable Modification Program (“HAMP”) 

“to incentivize banks to refinance mortgages of distressed homeowners so they could stay in their 

homes.” Corvello, 728 F.3d at 880.

Home loan servicers such as Caliber signed a Servicer Participation Agreement, under which 

“servicers agreed to identify homeowners who were in default or would likely soon be in default on 

their mortgage payments, and to modify the loans of those eligible under the program.” Wigod, 673 

F.3d at 556. Under the SPA, “servicers would receive a $1,000 payment for each permanent 

modification, along with other incentives.” Id. Servicers were directed to perform loan modification 

pursuant to “guidelines and procedures issued by the Treasury,” and follow “any supplemental 

documentation, instructions, bulletins, letters, directives, or other communications . . . issued by the 

Treasury.” Id.

The Treasury set out the process for applying for and receiving loan modification in Treasury 

Supplemental Directive 09-01 (“SD 09-01”). See Corvello, 728 F.3d at 880. The Ninth Circuit 

summarized the process as follows:

First, borrowers supply information about their finances and their inability to pay their 

current mortgage to the servicer, and the servicer must evaluate whether the borrowers qualify 

for a loan modification. SD 09-01. The servicer computes modified mortgage payments on the 

basis of the borrowers’ information. Id.

For borrowers who appear eligible to participate in HAMP, the servicer then prepares a 

TPP. The TPP requires borrowers to submit documentation to confirm the accuracy of their 

initial financial representations, and to make trial payments of the modified amount to the 

servicer. The servicer must use the documentation to “confirm that the borrower[s]” meet the 

eligibility criteria for a permanent modification. Id.

In the step most critical to this litigation, the servicer then must report to the borrowers 

the results of the eligibility determinations. Id. If a borrower does not qualify for the HAMP 

program, the servicer must not only alert the borrower, but must consider alternatives. The 

servicer should “promptly communicate that [ineligibility] determination to the borrower in 

writing and consider the borrower for another foreclosure prevention alternative.” Id. For 

borrowers who have made all their payments and whose representations remain accurate, the 

servicer must offer a permanent home loan modification. Id.

Corvello, 728 F.3d at 880-81.

///

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2. Private right of action 

In general, as Defendants argue, courts have determined that HAMP does not authorize a 

private right of action against participating lenders. See, e.g., Dodd v. Fed. Home Loan Mortg. Corp., 

2011 WL 6370032 at *12 (E.D. Cal. Dec. 19, 2011) (“there is no express or implied private right of 

action to sue lenders or loan servicers for violation of HAMP.”); Eisan v. Wells Fargo Bank, 2014 WL 

1794144 at *5 (N.D. Cal. May 6, 2014); see also Bank of America, N.A. v. Roberts, 217 Cal.App.4th 

1386, 1399 (2013) (noting that HAMP “has been consistently construed to create no private rights or 

private causes of action on the part of borrowers”). Because there is no private right of action for a 

borrower for a breach of the Servicer Participation Agreement, the Court recommends Plaintiff’s 

eighth claim for relief for breach of the SPA by Caliber be DISMISSED without leave to amend.

3. Breach of the TPP

Recently, the Ninth Circuit held in Corvello that if borrowers “fulfilled all of their obligations 

under the TPP, and the loan servicer has failed to offer a permanent modification, the borrowers have

valid claims for breach of the TPP agreement.” Corvello, 728 F.3d at 884 (citing West v. JPMorgan 

Chase Bank, N.A., 214 Cal.App.4th 780 (4th Dist. 2013)). Facts supporting a breach of an agreement, 

“like all essential elements of a breach of contract cause of action, must be pleaded with specificity.” 

Levy v. State Farm Mut. Auto. Ins. Co., 150 Cal.App. 4th 1, 5 (2007). 

Plaintiffs allege that they entered a TPP with CitiMortgage, under which they made the required 

payments. (Doc. 1 at 19, ¶¶ 48-49.) However, CitiMortgage “failed to provide a loan modification and 

transferred the servicing rights to Defendant Caliber. (Id. at 19, ¶ 49.) Plaintiffs allege that “Caliber 

failed to honor the completed TPP and offer a permanent loan modification.” (Id.) According to 

Plaintiffs, they submitted “at least three separate and complete loan modification packages” to Caliber 

in late 2010 and 2011, each of which was denied. (Id. ¶¶ 46, 51.) 

From the facts alleged, it is not clear that Plaintiffs had a TPP with Caliber. Further, although 

Plaintiffs allege they made the payments required under the TPP, they do not allege that they fulfilled 

all of the obligations under the TPP with CitiMortgage. The TPP was conditioned on being qualified 

for a HAMP loan, which was denied by Caliber. Thus, the facts presented differ from those in 

Corvello, where the borrowers alleged they completed their TPP but Wells Fargo never told them 

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whether they qualified for a loan modification. See Corvello, 728 F.3d at 881. Here, as Plaintiffs 

allege, Caliber denied loan modification on multiple occasions. 

Moreover, Plaintiffs have not pled facts sufficient to support claim for a breach of the implied 

covenant. “In California, the factual elements necessary to establish a breach of the covenant of good 

faith and fair dealing are: (1) the parties entered into a contract; (2) the plaintiff fulfilled his obligations 

under the contract; (3) any conditions precedent to the defendant's performance occurred; (4) the 

defendant unfairly interfered with the plaintiff's rights to receive the benefits of the contract; and (5) the 

plaintiff was harmed by the defendant’s conduct.” Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F. 

Supp. 2d 952, 968 (N.D. Cal. 2010) (citing Judicial Council of California Civil Jury Instruction 325). 

“Importantly, to state a claim for breach of the implied covenant of good faith and fair dealing, a 

plaintiff must identify the specific contractual provision that was frustrated.” Plastino v. Wells Fargo 

Bank, 873 F. Supp. 2d 1179, 1191 (N.D. Cal. 2012) (emphasis added). As discussed above, it is not 

clear that Plaintiffs had an agreement with Caliber, and Plaintiffs fail to identify a specific contractual 

provision that was frustrated in the TPP. 

Plaintiffs have not adequately pled a claim for a breach of the TPP or an implied covenant of 

good faith and fair dealing. Therefore, the Court recommends Plaintiffs’ ninth claim for relief be 

DISMISSED with leave to amend.

4. Promissory Estoppel

Plaintiffs’ tenth claim for relief is for promissory estoppel against Caliber. (Doc. 1 at 40). 

“Promissory estoppel applies whenever a promise which the promissor should reasonably expect to 

induce action or forbearance on the part of the promisee or a third person and which does induce such 

action or forbearance would result in an injustice if the promise were not enforced.” Lange v. TIG Ins. 

Co., 68 Cal.App.4th 1179, 1185 (1998). To state a claim for promissory estoppel, a plaintiff must 

allege: “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the 

promise is made; (3) his reliance must be both reasonable and foreseeable; and (4) the party asserting 

the estoppel must be injured by his reliance.” Laks v. Coast Fed. Sav. & Loan Assn., 60 Cal. App. 3d 

885, 890 (1976).

Here, Plaintiffs allege that “Defendant Caliber, through its predecessor and itself, and by way of 

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its TPP Agreements, made representations to Plaintiff[s] that if [they] returned the TPP Agreements 

executed and with supporting documentation, and made the TPP payments, Plaintiff[s] would receive 

permanent HAMP modifications.” (Doc. 1 at 40, ¶ 170.) The allegation that Caliber and CitiMortgage 

made representations to Plaintiffs regarding the TPP is not “clear and unambiguous.” Plaintiffs fail to 

allege specific facts regarding promises that were made, and by whom. Because the facts alleged are 

insufficient to determine whether Plaintiffs may state a cognizable claim for promissory estoppel, the 

Court recommends the claim be DISMISSED with leave to amend. See Alimena v. Vericrest Fin., 964 

F.Supp.2d 1200, 1219 (E.D. Cal. 2013) (dismissing a promissory estoppel claim based upon a TPP 

because the plaintiffs did not allege facts sufficient to determine the entities’ involvement in making a 

promise embodied in the TPP).

K. Claim for Violation of California Business and Professions Code § 17200

Plaintiffs’ eighteenth cause of act ion is for a violation of California’s Unfair Competition Law, 

as set forth in Cal. Bus. & Prof. Code § 17200, et. seq. (Doc. 1 at 51.) Defendants contend that the 

claim fails because Plaintiffs “stat[e] vague generalizations and references to the conduct alleged in 

their other causes of action.” (Doc. 14-1 at 17.) In addition, Defendants argue that the claim fails 

because “Plaintiffs predicate their UCL claim on the same allegations and theories which fail to state 

any other viable claim,” and UCL claim must be based on another substantive cause of action. (Id., 

citing Krantz v. BT Visual Images, 89 Cal.App.4th 164, 178 (2001)).

Under §17200, unfair competition includes any “unlawful, unfair, or fraudulent business act or 

practice.” Cal. Bus. & Prof. Code § 17200. Therefore, there are three prongs under which a claim 

may be established under §17200. Daro v. Superior Court, 151 Cal.App.4th 1079, 1093 (2007) 

(“Because section 17200 is written in the disjunctive, a business act or practice need only meet one of 

the three criteria—unlawful, unfair, or fraudulent—to be considered unfair competition”); Lozano v. 

AT&T Wireless Servs., 504 F.3d 718, 731 (9th Cir. 2007) (“[e]ach prong . . . is a separate and distinct 

theory of liability”). Further, as Defendants observe, a claim under § 17200 must rest on a violation of 

another law. Farmers Ins. Exch. v. Superior Court, 2 Cal.4th 377, 383, 6 Cal.Rptr.2d 487, 826 P.2d 

730 (1992). Here, Plaintiffs alleged “Defendants committed unlawful, unfair, and/or fraudulent 

business practices,” and incorporated all other prior factual allegations in the complaint by reference. 

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(Doc. 1 at 51, ¶¶ 242-43.) Opposing dismissal of the claim, Plaintiffs assert they alleged sufficient 

facts to satisfy all three prongs of § 17200. (Doc. 20 at 20-22.)

1. Unlawful act or practice

Actions prohibited by § 17200 include “any practices forbidden by law, be it civil or criminal, 

federal, state, or municipal, statutory, regulatory, or court-made.” Saunders v. Superior Court, 27 

Cal.App.4th 832, 838-39, 33 Cal.Rptr.2d 438 (1994). Thus, the “unlawful” prong requires an 

underlying violation of law. Krantz v. BT Visual Images, 89 Cal.App.4th 164, 178, 107 Cal.Rptr.2d 

209 (2001). Here, as detailed above, Plaintiffs have not alleged facts sufficient to support a finding 

that Defendants violated underlying laws. 

2. Unfair act or practice 

A claim under the “unfair” prong requires “conduct threatening incipient violation of antitrust 

laws, or violates the policy or spirit of those laws . . . , or otherwise significantly threatens or harms 

competition.” Cal-Tech Communications v, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 

163, 187, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999). In this case, Plaintiffs have neither alleged a 

violation of antitrust laws, nor alleged threatened or harmed competition.

3. Fraudulent act or practice

A “fraudulent” act under § 17200 is “one which is likely to deceive the public,” and “may be 

based on misrepresentations . . . which are untrue, and also those which may be accurate on some level, 

but will nonetheless tend to mislead or deceive.” McKell v. Washington Mutual, Inc., 142 Cal.App.4th 

1457, 1474, 49 Cal.Rptr.3d 227 (2006). Thus, the term “fraudulent” under §17200 “does not refer to 

the common law tort of fraud,” Puentes v. Wells Fargo Home Mortg., Inc., 160 Cal.App.4th 638, 645 

(Ct. App. 2008), but still requires allegations that the misrepresentation was directly related to injurious 

conduct, and that the claimant actually relied on the alleged misrepresentation. In re Tobacco II Cases, 

46 Cal.4th 298, 36-27 (2009). Nevertheless, claims based upon the “fraudulent” prong of §17200 

remain subject to the heightened pleading requirements of Rule 9(b). Kearns, 567 F.3d at 1124-25; 

Meridian Project Sys., 404 F.Supp.2d at 1219. Because Plaintiffs failed to plead the circumstances 

surrounding fraud with particularity, their claim for fraudulent practices under § 17200 fails as well. 

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Plaintiffs fail to allege facts sufficient to support a claim that Defendants acted in an “unlawful, 

unfair, or fraudulent business act or practice” in violation of Cal. Bus. & Prof. Code § 17200. Thus, 

the Court recommends Plaintiffs’ eighteenth cause of action be DISMISSED with leave to amend.

L. Accounting

Plaintiffs seek an accounting against Caliber and Vericrest, alleging that “some or all of the 

monies paid have been misapplied.” (Doc. 1 at 54, ¶ 265.) Defendants assert that this cause of action 

“fails as a matter of law.” (Doc. 14-1 at 18.)

A claim for accounting “is a proceeding in equity for the purpose of obtaining a judicial 

settlement of the accounts of the parties in which proceeding the court will adjudicate the amount due, 

administer full relief and render complete justice.” Verdier v. Superior Court, 88 Cal.App.2d 527, 531 

(1948). An accounting cause of action is equitable and may be sought where the accounts are so 

complicated that an ordinary legal action demanding a fixed sum is impracticable. Civic Western Corp. 

v. Zila Industries, Inc., 66 Cal.App.3d 1, 14 (1977). 

Importantly, a party’s “right to an accounting is derivative; it must be based on other claims.” 

Janis v. California State Lottery Com., 68 Cal.App.4th 824, 833-834, 80 Cal.Rptr.2d 549 (1998). Here, 

Plaintiffs’ complaint lacks the factual support to support an accounting, particularly in light of the 

dismissal of the claims which may give rise to an accounting. Moreover, as the parties owing money, 

Plaintiffs have “no right to seek an accounting.” See Quinteros v. Aurora Loan Services, 740 F. Supp.

2d 1163, 1170 (E.D. Cal. 2010) (explaining that a borrower, “as the party owing money, not the party 

owed money, has no right to seek an accounting”). Thus, the Court recommends the claim accounting

be DISMISSED without leave to amend.

M. Declaratory Relief

Plaintiffs assert that “[a] judicial declaration is necessary and appropriate at this time under the 

circumstances in order that [Plaintiffs’] may ascertain [their] title to the Property, [their] obligations 

and to whom those obligations, if any, are due.” (Doc. 1 at 53, ¶ 260.) Accordingly, Plaintiffs seek 

Plaintiffs seek “a judicial determination of the validity of the Defendant Vericrest’s acquisition of the 

Note and Deed of Trust against the Property and related non- judicial foreclosure procedures and 

manner that Defendants have employed them,” as well as a determination “as to the validity of whether 

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Defendant Vericrest is a real party in interest vis- -vis as the mortgagee of the Property.” (Id., ¶¶ 258-

59.) Defendants argue that Plaintiffs’ request for declaratory relief “fails as a matter of law” because 

they fail to satisfy the test under the Declaratory Judgment Act. (Doc. 14-1 at 15.)

The Declaratory Judgment Act allows a federal court to “declare the rights and other legal 

relations” of parties to a “case of actual controversy.” 28 U.S.C. § 2201; Spokane Indian Tribe v. 

United States, 972 F.2d 1090, 1091 (9th Cir. 1992). The Court has the discretion to determine whether 

to entertain an action for declaratory relief, because the Declaratory Judgment Act “gave the federal 

courts competence to make a declaration of rights; it did not impose a duty to do so.” Public Affairs 

Assoc. v. Rickover, 369 U.S. 111, 112 (1962); Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1223 

(9th Cir. 1998). A declaratory relief claim operates “prospectively,” not to redress past wrongs. Britz 

Fertilizers, Inc. v. Bayer Corp., 665 F.Supp.2d 1142, 1173 (E.D. Cal. 2009).

The Ninth Circuit determined that “[d]eclaratory relief is appropriate (1) when the 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 the uncertainty, insecurity, and controversy giving rise to the 

proceeding.” Eureka Fed. Sav. & Loan Assoc. v. American Cas. Co., 873 F.2d 229, 231 (9th Cir. 1989). 

To determine whether a controversy invokes declaratory relief, the Court must determine whether there 

is a “substantial controversy, between parties having adverse legal rights, or sufficient immediacy and

reality to warrant the issuance of a declaratory judgment.” Maryland Cas. Co. v. Pacific Coal & Oil 

Co., 312 U.S. 270, 273 (1941).

As an equitable remedy, declaratory relief is “dependent upon a substantive basis for liability”

and has “no separate viability” if all other causes of action are barred. Glue-Fold, Inc. v. Slautterback 

Corp., 82 Cal.App.4th 1018, 1023, n. 3, 98 Cal.Rptr.2d 661 (2000). Defendants contend that “because 

the contentions underlying Plaintiffs’ declaratory relief request are without basis in fact or law, they 

cannot establish an actual present controversy that justifies this remedy.” (Doc. 14-1 at 15.) Plaintiffs 

respond to Defendants’ assertion that they cannot establish a present controversy by asserting there is 

a controversy regarding “[t]he right of any Defendant to foreclose on the Property.” (Doc. 20 at 18.) 

However, as discussed above, Plaintiffs claims related to wrongful foreclosure fail for lack of standing 

and their inability to allege prejudice. Consequently, declaratory relief as to the rights of Defendants 

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to foreclose is not appropriate, and the Court recommends Plaintiffs’ twentieth claim be DISMISSED

without leave to amend.

N. Requests for Relief Characterized as Causes of Action

Plaintiffs assert “claims” to set aside trustee sale (fourteenth claim), to cancel the trustee’s deed 

(fifteenth claim), imposition of constructive trust (nineteenth claim). However, these are remedies, not 

independent claims. See Glue-Fold, 82 Cal.App.4th t at1023 n. 3 (a constructive trust is “not an 

independent cause of action but merely a type of remedy”); Sirrium v. Bank of Am., N.A., 2012 WL 

2450715 at *2 (E.D. Cal. June 25, 2012) (“cancellation of a trustee’s deed is an equitable remedy); 

Capodiece v. Wells Fargo Bank, 2013 WL 1962310 at *7 (N.D. Cal. May 10, 2013) (noting the 

plaintiffs’ requests for injunctive relief and for an order setting aside the trustee’s sale “cannot be 

independent claims [because] they are types of remedies”). Accordingly, the Court recommends the 

fourteenth, fifteenth, and nineteenth causes of action be DISMISSED without leave to amend.

VI. Findings and Recommendations

Based upon the foregoing, IT IS HEREBY RECOMMENDED that Defendants’ motion to 

dismiss be GRANTED IN PART as follows:

1. Plaintiffs’ claims for cancellation of instruments (Count 1); quiet title (Count 2); 

wrongful foreclosure (Counts 3, 4, and 5); RICO violation (Count 6); breach of contract 

based upon the Servicer Participation Agreement (Count 7), Fair Debt Collection 

Practices Act (portion of Count 8), slander of title (Count 16), and civil conspiracy 

(Count 17) be DISMISSED without leave to amend; 

2. Plaintiffs’ claims for a violation of the Rosenthal Act (Count 8); breach of contract 

related to the Trial Payment Plan (Count 9); promissory estoppel (Count 10); fraud

(Counts 11, 12, and 13); and violation of Cal. Bus. Prof. Code § 17200 (Count 18) be 

DISMISSED with leave to amend; and

3. Plaintiffs be granted 21 days after the date of service of the Order addressing these 

Findings and Recommendations to file a First Amended Complaint.

These Findings and Recommendations are submitted to the United States District Judge 

assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 304 of the Local 

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Rules of Practice for the United States District Court, Eastern District of California. Within 14 days 

after being served with these Findings and Recommendations, any party may file written objections 

with the court. Such a document should be captioned “Objections to Magistrate Judge’s Findings and 

Recommendations.” Any response thereto shall be filed within 7 days after service of the Objections.

The parties are advised that failure to file objections within the specified time may waive the right to 

appeal the District Court’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

IT IS SO ORDERED.

Dated: July 9, 2014 /s/ Jennifer L. Thurston 

UNITED STATES MAGISTRATE JUDGE

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